OVOSTAR UNION
AANNUALL REPORT
FINANCIAL YEAR ENDED 31 DECEMBER 2021
5
10
12
13
16
18
19
20
Corporate summary
Market Overview
Key Financials
Segment Activities
Financial Results
Outlook for 202Ϯ
Human Resources
Risk Management and Internal Control
Shareholders and Share Information
26
C
CONTENTS
The Board of Directors 28
Committees of the Board of Directors 32
Meetings with Shareholders 33
Corporate Governance and Control 35
Non-financial Informaon 37
MANAGEMENT REPORT
C
ORPORATE GOVERNANCE
F
INANCIAL STATEMENTS
Consolidated financial statements 40
Company financial statements 85
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MANAGEMENT REPORT
2021 ANNUAL REPORT 3
Dear Shareholders,
While reporng on the results of the fi-
nancial year 2021 we have to at all mes
bear in mind the tragedy that befell
Ukraine on February 24, 2022. Once a
peaceful flourishing country was bla-
tantly aacked by the Russian military
forces who ever since keep bringing cha-
os and destrucon to our homes and
taking lives of our people. On the back-
ground of these horrible events Ovostar
Union strives to make its modest contri-
buon to the common effort aimed at
defending Ukraine. As a producer of
basic foods like eggs and egg products,
we realize how important our work is
for the country’s food security. Since the
beginning of the invasion our produc-
ons sites never stopped operang pro-
ducing and delivering nutrion to the
people. I want to thank everyone from
Ovostar team for their dedicaon and
courage that has been leading the com-
pany through the hardest of mes. I also
want to say words of appreciaon to our suppliers and customers and, of course, to the brave men and
women who are fighng for our victory over the enemy. Back in 2021 Ovostar had many plans for the year
ahead. The company had progress in terms of operaonal efficiency that together with favorable market
condions laid solid basis for further development. The Group became #1 egg producer in Ukraine and
remained one of the biggest exporters to Europe. Today, however, like most Ukraine-located businesses
we have to shi focus and adjust the strategy to the new business environment full of risks and uncertain-
es. We believe that the day is close when the jusce will be restored and the enemy defeated.
Sincerely,
Borys Bielikov
C
CEO’s
Statement
M
MANAGEMEN
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REPOR
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CORPORAT
E
E SUMMAR
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Y
COMPANY OVERVIEW
Ovosta
r
r Unio
n
n Publi
c
c Compan
y
y Limite
d
d
is a
holding enty originally incorporated under
the laws of the Netherlands in 2011 and re-
domiciled to Cyprus in 2018. It consolidates
companies with producon assets located in
Ukraine and non-Ukrainian trading compa-
nies in Latvia, Brish Virgin Islands and Unit-
ed Arab Emirates (hereinaer referred to as
“we, us”). Our shares have been quoted on
the Warsaw Stock Exchange since June 2011.
Our goal has been to produce ecologically
clean and healthy food for our clients in
Ukraine and abroad. We are growing organi-
cally by gradually increasing the volume of
eggs produced and expanding the range of
egg products offered. For over a decade
Ovostar Union has been one of leaders of the
local egg industry belonging to the top 3 pro-
ducers in Ukraine.
With focus on developing the export mar-
kets, we are expanding our sales geography
supplying shell eggs and egg products of con-
sistently high quality around the countries of
Europe, Middle East, Africa and Asia.
Within the egg segment, we possess shell
egg porolio of over 20 sub-brands and sup-
ply our branded eggs to the largest retail
chains in Ukraine. As a result of export mar-
kets development we are gradually increas-
ing the deliveries of shell eggs outside of
Ukraine.
Within the egg products segment, we offer
the full range of egg products of both liquid
and dry forms. We enjoy loyalty of the larg-
est food processing companies in Ukraine
and abroad by adjusng our products to the
clients’ needs while maintaining the superior
quality.
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MANAGEMENT REPORT
2021 ANNUAL REPORT
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MANAGEMENT REPORT
2021 ANNUAL REPORT 6
C
CORPORAT
E
E SUMMAR
Y
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BUSINESS GEOGRAPHY
We are a vercally integrated agricultural
holding with key producon facilies and
supporng infrastructure concentrated
within Kyiv region of Ukraine in close
proximity to one another other.
Two poultry farms with total flock of 8
million hens (including parents, young
hens and layers) ensure producon of
nearly 1.8 eggs per year. Two egg pro-
cessing plants have manufacturing capaci-
ty for yearly output of 3.5 tons of dry and
14 tons of liquid egg products.
The state-of-the-art equipment installed
at our producon sites comes from the
best experts such as Big Dutchman, Sal-
met, MOBA and others. Combined with
the innovave technology soluons and
best pracces deployed it makes us a rec-
ognized industry leader.
K
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MANAGEMENT REPORT
2021 ANNUAL REPORT 7
We employ the most up-to-date poultry and processing equipment and progressive technological
concepts at our producon sites in order to ensure efficiency of producon processes and superior
quality of final products.
Having inially adopted a large-scale producon approach, we have built up a vercally integrated
business model with full producon cycle spanning from parent flock to egg processing.
Alongside our core business we maintain our own fodder producon, rapeseeds processing and grain
storage, which secure the high quality of fodder for our poultry flock.
Our products are compliant with internaonal quality standards ISO 9001:2015 and FSSC 22000 v.5 as
well as applicable naonal Ukrainian standards and sanitary norms. We also possess the Halal Cerficate
to export internaonally and are cerfied to export both shell eggs of class “A” and egg products to the
European Union.
C
CORPORAT
E
E SUMMAR
Y
Y
BUSINESS MODEL
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MANAGEMENT REPORT
2021 ANNUAL REPORT 8
We supply Ukrainian market with the widest range
of packaged shell eggs under brand name
Yasensvit™. Key customers of egg segment are
large local and internaonal retail chains in
Ukraine.
Price for branded packaged eggs is tradionally
higher than the average egg price on the market.
Having YasensvitTM for over 15 years on the
Ukrainian market, the price premium is jusfied by
consumers’ recognion of consistently high quality
of products under YasensvitTM brand and the wide
range of assortment adjusted to specific consumer
preferences.
In 2021 we kept the posion of one of the major
producers of private label eggs in Ukraine.
Our eggs branded by retail network labels are
supplied to Auchan, Silpo, Metro, Novus, ATB,
Velyka Kyshenya and a number of smaller regional
retail chains.
In 2019 new design and logo of YasensvitTM was
introduced in response to the fast changing market
condions and consumer needs. These steps, as a
part of the upgraded markeng strategy, are aimed
at building up the exisng customer loyalty and
aracng new clientele.
In 2020 a free range poultry house was completed
and cerfied for producon of shell eggs marked as
“Free Range”. The Company is one and only among
local industrial egg producers who launched free
range egg producon.
P S
Over 15 years the most recognizable
trade mark on the Ukrainian market;
Consistently high product quality;
Supplier to the largest retail chains
in Ukraine;
Whole product porolio of premi-
um, standard, economy and private
label categories.
CORPORAT
E
E SUMMAR
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Y
OUR BRANDS
-
- SHELL EGGS
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MANAGEMENT REPORT
2021 ANNUAL REPORT 9
We offer a wide range of separated and whole egg
products in dry and liquid form under the OVOSTAR
brand. The demand for egg products mainly comes
from food processing companies in Ukraine and
abroad.
The segment is mainly B2B-oriented as the egg
products are used for producon of confeconary,
mayonnaise, meat products etc. Each client
requests the egg product with certain
characteriscs needed for the final good. Our
flexibility to adjust to clients’ needs maintains the
loyalty of our major clients as well as our posion
of market maker of liquid egg products in Ukraine.
Among our key local customers are Roshen,
Schedro, Mondelez Ukraine, Volyn Holding, Kharkiv
Biscuit and others. We are also the exclusive
supplier of eggs and egg products to McDonalds
Ukraine.
Inspired by the success of boled liquid egg white
and liquid whole egg, offered to our customers in
2018, in 2019 we introduced a new egg product in
retail segment - boled scrambled eggs. Further, in
2020 we launched producon of liquid white, liquid
eggs and omelets in pure-pak cartons, that are now
available in most retail-chains all over the country.
Brand-new liquid egg products in pure-
pak cartons are now available to retail
customers under TM YASENSVIT and
OVOSTAR
CORPORAT
E
E SUMMAR
Y
Y
OUR BRANDS
-
- EGGS PRODUCTS
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MANAGEMENT REPORT
2021 ANNUAL REPORT 10
Ukraine is an emerging free-market economy, with
many of the components of a major European
economy including a well-educated and well-
trained workforce, a solid industrial base, and rich
farmlands.
Following a polical and economic crisis in 2014-
2015 and a cumulave economic decline of 16%,
Ukraine’s economy began slowly growing in 2016
with two percent year-over-year growth. While the
country’s turn-around was primarily aributable to
reforms implemented by Ukraine’s first
technocrac government, growth in 2016 was
driven by a rebound in domesc investment
acvity and a modest recovery in household
consumpon. Domesc demand and strong
agricultural harvests connued to fuel the
economic growth of 3.3 % in 2018 and 3.2 % in
2019.
In 2021, Ukraine’s economy recovered mildly at
3.6%, which is faster than ancipated and the
growth rate rose to 3.8% in 2022 as the spread of
Covid-19 slows.
Ukraine’s global trade grew with imports
tradionally significantly outpacing exports,
resulng in a trade deficit of $6.2 billion, which is a
$4.2 billion improvement in comparison with the
previous year. Import of goods and services
increased by 8.8% in 2021, while export by
5.6%. Trade balance surplus in services is
increased by approximately 6 % to $16.4 billion,
reflecng Ukraine’s growing role as an informaon
technology (IT) leader.
Despite its slow past economic growth and
expanding trade deficit, Ukraine’s economy has
several bright spots, most notably agriculture,
which generated approximately 9.3% of GDP in
2020. Ukraine harvested about 76 million tons of
grain in 2021, up from 65 million tons in 2020.
Ukraine ranks among the world’s top producers of
grain crops including wheat, corn, and barley.
Stable agricultural growth presents significant
opportunies for U.S. exporters of agricultural
machinery, as well as other inputs like seeds and
ferlizers.
Ukraine’s economic recovery and macroeconomic
stabilizaon since 2016 are supported by the
Internaonal Monetary Fund (IMF). In June 2020,
Ukraine and the IMF entered into an 18-month $5
billion stand-by arrangement. At that me, the IMF
disbursed the first tranche of $2.1 billion in
concessionary loans to help the Ukrainian
economy to weather the coronavirus pandemic.
Due to reform setbacks, Ukraine has not yet
qualified for a second disbursement as of
September 2021. On August 23, 2021, Ukraine
received $2.7 billion worth of IMF Special Drawing
Rights under a worldwide program to support the
global economy during the pandemic. Future IMF
disbursements will depend on fulfilling reform
commitments in the areas of an-corrupon,
judicial reform and fiscal discipline. According to
the IMF, per capita GDP in Ukraine is just 13% of
the EU average in 2020 and the lowest level of all
Eastern European countries. Faster, sustainable,
and inclusive growth is needed to recover lost
ground and improve living standards.
The populaon of Ukraine has undergone a major
decline since the 1990s, due primarily to the low
birth rate and emigraon. Ukraine’s populaon
totaled 41.4 million people as of July 2021.
Approximately 15.2% of the populaon is age 0-14,
59.5% is 16-59, and 17.4% is 65 years and over.
M
MARKET OVERVIEW
MACROECONOMIC INDICATORS
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2021 ANNUAL REPORT 11
L H F
Ukrainian egg market is characterized by significant
share of laying hens farmed by households from
April to September, therefore, it can be assumed
that the number of laying hens provided by State
Stascs Service of Ukraine as at the end of the
year presents the industrial flock.
As December 31, 2021 the industrial laying hens
flock decreased by 5% YoY and amounted to 28.8
million heads (2020: 30.4 million heads).
Ovostar Union share in total laying hens flock as of
December 31, 2021 made up 24% (2020: 22%).
S
Total volume of eggs produced in Ukraine in 2021
fell by 13% in comparison to the previous year and
reached 14 bln (2020: 16.2 bln eggs).
The Ukrainian shell egg market is historically
divided into industrial and household producon.
The volume of eggs produced in industrial format
in 2021 decreased by 22% YoY to 6.9 bln eggs, or
50% of total producon volume (2020: 8.9 bln
eggs, or 55%). Ovostar Union share in industrial
shell eggs producon in 2021 was 24% (2020:
19%).
In 2021 egg consumpon rate in Ukraine
amounted to approximately 280 eggs per capita
according to the data of Ukrainian Poultry Farmers
Union (2020: 282 eggs per capita).
E
In 2021 esmated producon volume of dry egg
products market in Ukraine decreased by 36% YoY
to 5.5 thous. tons, output of liquid egg products
grew by 8% to 17.4 thous. tons.
Ovostar Union esmated share in total volume of
dry egg products output in 2021 equals 54% (2020:
43%); share in total liquid egg products produced -
83% (2020: 85%).
L H F:
U* O U
36.1
30.5
6.7
6.6
19%
22%
24%
2019 2020 2021
Total Laying Flock, mln heads
Ovostar Union, mln heads
Ovostar Union share, %
MARKE
T
T OVERVIE
W
W
COMPETITIVE POSITION
28.8
7.0
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MANAGEMENT REPORT
2021 ANNUAL REPORT 12
B S (mUSD)
31-Dec-2020 31-Dec-2021 ∆ YY, %
Assets 131.3
141,0
7%
Non-current assets 88.2
91,5
4%
Current assets 43.1
49,5
15%
-
Equity and Liabilies 131.3
141,0
7%
Equity
104.4
109,9
5%
Non-current liabilies
5.5
7,5
36%
Current liabilies 21.4
23,7
11%
C F (mUSD) 2020 2021 ∆ YY, %
Net cash generated by operang acvies 15.0 18.2 21%
Net cash used in invesng acvies
(17.2) (20.2) 17%
Net cash generated by financing acvies (0.8) 2.6 (425%)
D P (mUSD) 31-Dec-2020 31-Dec-2021 ∆ YY, %
Total debt 10.8 12.9 19%
Cash and cash equivalents 1.6 2.4 50%
Net debt 9.1 10.4 14%
I S (mUSD) 2020 2021 ∆ YY, %
Revenue 98.9 133.3 35%
Gross profit 13.4 13.6 1%
EBITDA 8.0 5.7 (29%)
Profit before tax 2.8 1.6 (43%)
Net profit 2.6 1.6 (38%)
K
KE
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202
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1 UPDATE
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MANAGEMENT REPORT
2021 ANNUAL REPORT 13
S
P
As of 31 December 2021 the Company’s total flock
equaled 8.4 mln hens. The number of laying hens
was 7.0 mln heads which represents a 7% increase
as compared to December 31, 2020. The
producon volume, however, remained at the level
of the previous year—1 691 mln eggs (2020: 1 672
mln eggs).
S
In the reporng period the sales volume in shell
eggs segment increased by 8% to 1 150 mln eggs
(2020: 1 067 mln). The volume of eggs exported
was 264 mln that makes up 23% of the total sales in
the segment (2020: 349 mln or 32%). .
S
Average price of eggs in UAH terms rose by 35% YoY and reached 2.178 UAH/egg, while in USD terms it
rose to 0.080 USD/egg (2020: 1.608 UAH/egg or 0.060 USD/egg respecvely).
525
349
756
622
Local Sales, mln eggs
Export Sales, mln eggs
2019 2020 2021
Branded
Unbranded
Export
2020 2021
20
21
32%
46%
22%
S
SEGMEN
T
T ACTIVITIE
S
S
EGG SEGMENT
264
886
23%
55%
22%
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MANAGEMENT REPORT
2021 ANNUAL REPORT 14
L E P SD E P S
Dry egg products local sales, thous. tons
Average price, USD/kg net of VAT
4.15
4.11
P
In 2021 the volume of eggs processed was 501 mln,
which represents a 15% decrease as compared to
the previous year (2020: 589 mln eggs). The volume
of dry egg products output decreased by 15% YoY
and reached 2 699 tons (2020: 3 161 tons). The
output of liquid egg products decreased by 8% YoY
to 14 136 tons (2020: 15 371 tons).
S
The volume of dry egg products sold fell by 1% and
equaled to 3 237 tons (2020: 2 270 tons), out of
which 2 064 tons, or 64%, were exported (2020: 2
268 tons or 69%). The volume of liquid egg
products sales fell by 5% YoY and totaled 14 391
tons (2020: 15 165 tons), 4 098 tons, or 28%, of
which were exported (2020: 4 647 tons or 31%).
Average sales price of dry egg products increased by 23% YoY in UAH terms to 136.85 UAH/kg and by
22% in USD terms to 5.02 USD/kg (2020: 110.84 UAH/kg or 4.11 USD/kg). Average price of liquid egg
products rose by 36% in UAH terms and was 47.07 UAH/kg, while in USD terms it was 1.73 USD/kg (2020:
34.71 UAH/kg, 1.29 USD/kg).
2.1
0.7
2.3
1.0
6.5
7.2
4.6
8.6
1.44
1.22
Dry egg products export sales, thous. tons
2019 2020 2021
Liquid egg products local sales, thous. tons
Average price, USD/kg net of VAT
Liquid egg products export sales, thous. tons
2019 2020 2021
SEGMEN
T
T ACTIVITIES
EGG PRODUCTS SEGMENT
2.1
1.2
5.02
4.1
10.3
1.73
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MANAGEMENT REPORT
2021 ANNUAL REPORT 15
E
The Group exports eggs and egg products under the brand name OVOSTAR to around 50 coun-
tries of the world through its representave offices in Latvia and UAE. Key export markets are
Europe and Middle East.
In 2021 28% of the total revenues of the Company came from export acvies. Export revenues
totaled to USD 37.7 million. Sales to Middle East contributed 13% to the total revenues (2020:
19%), sales to European Union made up 10% of total revenues (2020: 16%).
S
SEGMENT ACTIVITIES
SALES GEOGRAPHY BY SEGMENT
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2021 ANNUAL REPORT 16
G
The cost of sales increased in 2021 by 36% YoY
from USD 81.7 mln to USD 111.2 mln mainly as a
result of the larger sales volume of shell eggs. The
other factor was connuing growth of feed mix
components prices in the 1st half of the year.
Gross profit totaled to USD 13.6 mln (2020: USD
13.4 mln).
N
Net profit for the year amounted to USD 1.7 mln
(2020: USD 2.6 mln).
EBITDA
In 2021 EBITDA fell to USD 5.7 due to significant
negave change in revaluaon of biological assets
(2020: USD 8.0 mln).
R S S P D, USD
Shell eggs, local
Shell eggs, export
Egg Products, local
Egg Products, export
EBITDA, mUSD
Net profit/loss, mUSD
-15.5
-20.0
R
In 2021total revenues increased by 35% as compared to the previous year and amounted to USD 133.4
mln (2020: USD 98.9 mln). The main factors accounng for the increase are larger sales volumes in egg
segment and higher prices of shell eggs and egg products, mostly on the local markets.
The contribuon of shell egg segment to the total revenues in 2021 was USD 92.2 mln, or 69% (2020:
USD 68.8 mln, or 70%). Egg products segment contributed USD 41.2 mln, or 301 (2020: USD 30.1, or
30%).
2020 2021 2019 2020 2022
17%
47%
13%
23%
8.0
2.6
F
FINANCIA
L
L RESULT
S
S
FINANCIAL PERFORMANCE
13%
54%
18%
15%
5.7
1.7
1
MANAGEMENT REPORT
2021 ANNUAL REPORT 17
A,
As of December 31, 2021 the total assets
amounted to USD 141 mln, which represents a 7%
increase YoY (2020: USD 131.3 mln).
The total equity increased by 5% YoY and
amounted to USD 109.9 mln (2020: USD 104.4
mln), mainly due to the change in foreign currency
translaon reserve.
L
As of December 31, 2021 the total amount of
interest-bearing loans and borrowings was USD
12.9 mln, represenng a 20% growth YoY (2020:
USD 10.8 mln). Net debt as of December 31, 2021
totaled to USD 10.4 mln (2019: USD 9.1 mln).
C
In 2021 Net cash flows from operang acvies
was USD 18.2 mln (2020: USD 15.0 mln).
Net CF used in investment acvies was USD 20.2
mln (2020: 17.2 mln)
Net CF from financing acvies was USD 2.6 mln
(2020: (0.8) million).
mln USD 2019 2020 2021
Operang CF 17.3 15.0 18.2
Invesng CF (21.8 ) (17.2) (20.2)
Financing CF (5.9) (0.8) 2.6
C F
F
FINANCIA
L
L RESULT
S
S
FINANCIAL POSITION
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MANAGEMENT REPORT
2021 ANNUAL REPORT 18
S
Our organic growth strategy has been aimed at
strengthening the Company’s market posion and
expanding the presence its products in and
outside of Ukraine simultaneously maintaining the
customer loyalty. The focus on consistently high
quality of our products and long-term
relaonships with our clients offset any external
challenges that the egg industry may face.
The results we deliver are based on commitment
of every employee. The cooperaon across
departments results in higher producvity of day-
to-day operaons and stronger synergy effect. In
2022 we intend to connue advancing employee
skills to be more compeve and efficient.
O 2022
The Company makes all efforts to adjust its
strategy to the changing business environment
and to respond to the new challenges. Being a part
of crical infrastructure in Ukraine, the Company
keeps operang, having introduced even stricter
rules of producon safety and control at its
producon sites in order to minimize risks for the
employees and consumers. Under the
circumstances we expect that in 2022 the focus
will be placed on maintenance of the exisng
producon facilies and increasing operang
efficiency.
The management makes steps to secure the
supply chain which is vital for the operaons
connuity. Acvies in the export markets have
not suffered, however, further developments are
subject to the success of measures taken locally
and internaonally to curb the crisis and migate
its effects.
I
The CAPEX of 2022 is expected to be moderate
with focus on maintenance and infrastructure. .
2020 YoY
(21/20)
2021 YoY
(22/21)
2022F
Laying hens flock, mln heads 6,6 7% 7,0 2% 7,2
Eggs produced, mln 1 671 1% 1 691 14% 1 921
Dry egg products produced, tons 3 161 -15% 2 699 85% 5 000
Liquid egg products produced, tons 13 504 5% 14 136 -8% 13 000
O
OUTLOO
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K FO
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R 202
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2
STRATEGY AND OUTLOOK
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MANAGEMENT REPORT
2021 ANNUAL REPORT 19
The majority of our employees are involved in pro-
ducon processes on the premises located in Kyiv
and Cherkasy regions. We recruit, employ and pro-
mote employees on the sole basis of their qualifica-
on and abilies. Equal employment opportunies
and career perspecves are provided for all em-
ployees, regardless of their gender, age, naonality
or religious views.
Our personnel policy is aimed to create and retain a
well consolidated and highly professional team of
individuals that are able to respond effecvely to
changing market environment. We strive to ensure
a posive, producve and successful work environ-
ment. The level of sasfacon is, among other cri-
teria, confirmed by high employee retenon rates
(97% on average for the last 5 years).
We aim to maintain a fair and comprehensive sys-
tem of remuneraon. Overall remuneraon of our
employees is divided into material and non-
material porons. Material remuneraon consists
of a basic fixed salary plus a variable component
like bonuses that depend on achievement of corpo-
rate and personal targets.
Non-material remuneraon consists of professional
trainings, corporate team-building events and free
use of corporate gym.
Legal relaonships between the Company and its
employees are regulated by the Labor Code of
Ukraine and executed in the form of term and
termless labor agreements. We cooperate with the
State Pension Fund making monthly social insur-
ance contribuons. A corporate pension schedule
has not been established.
Our employees other than some of the Board
members do not have any shareholdings in Ovostar
Union PCL, to our knowledge; nor do they hold any
stock opons or other rights to shares nor parci-
pate in any other way in the capital of Ovostar Un-
ion PCL. Currently, no arrangements relang to
such parcipaon are planned in the short-term
perspecve.
Q 31 D
2019 2020 2021
Employees, EoY, incl. 1 590 1 543 1 525
ProducƟon 1 374 1 353 1 352
AdministraƟve 216 190 173
HUMA
N
N RESOURCE
S
S
OVERVIEW
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MANAGEMENT REPORT
2021 ANNUAL REPORT 20
R
Risk management is an essenal part of the deci-
sion-making process providing reasonable assur-
ance that risks are controlled to the furthest extent
possible. Risk management and internal control
systems are being regularly discussed with the ex-
ecuve management and the Audit Commiee. In
their review of our risk profile, the main focus is
placed on principal risks that could significantly de-
teriorate our operaonal and financial results.
It has to be noted that proper idenficaon of risks
significantly reduces but does not completely elimi-
nate the possibility of human error, poor judgment
in decision making, fraud or occurrence of unfore-
seeable events. The risks that we face in the course
of regular operaons are not limited to the risks
described above, but those above are regarded as
the most significant in the short-term perspecve.
No an-takeover measures are in place. Some risks
are yet unknown and some risks that are insignifi-
cant at the moment could become material in the
future.
The Board of Directors is ulmately responsible for
establishing, controlling and enhancing our internal
control system. We consider risk management to
be a connuous process of monitoring, assessing
and migang risks through internal control sys-
tems and procedures at each level within the or-
ganizaon.
We use guidelines, instrucons and procedures ap-
plied to operaons, financial reporng, planning,
human resource and customer management etc.;
these are being reviewed and updated on a regular
basis. Our employees are trained to implement and
comply with these guidelines, instrucons and pro-
cedures.
Key elements of the internal control system are
budgeng, investment management, operaonal
management and financial reporng. They monitor
the progress and the actual results of the compa-
ny’s operang acvies. We also use a staff evalua-
on and appraisal system. The process of enhance-
ment of the internal control system will be conn-
ued in 2021.
For more informaon on risks please refer to Note
27 of the 2020 Consolidated Financial Statements.
D
In 2020, we did not idenfy any material weakness-
es of the internal control system that might ad-
versely impact our operaonal acvity, financial
results and financial posion. The risks are clearly
idenfied and controlled to the highest possible
extent by our top management within their rele-
vant funcon.
R
RISK MANAGEMENT
& INTERNAL CONTROL
OVERVIEW
1
MANAGEMENT REPORT
2021 ANNUAL REPORT 21
I M 2021 S / N
B R
Outbreaks of highly-
pathogenic avian influenza in
Europe and in the south of
Ukraine may severely limit
our ability to perform normal
operaons and reduce the
possibility to export
Adherence to biosecurity
standards in line with the
best internaonal pracces.
Egg producon and egg pro-
cessing facilies are compli-
ant with ISO 9001: 2015 and
FSSC 22000 v.5 and Halal. Di-
versificaon of sales channels
No occurrences of dangerous
poultry diseases have been
ever registered on our prem-
ises. We control all the pro-
cesses along the full produc-
on cycle in order to provide
the highest quality and ability
to react fast in case of need
Depreciaon of Ukrainian
Hryvnia leads to deteriora-
on of income per household
and change in consumer
preferences
Worsening economic condi-
ons has lile effect on con-
sumpon of eggs per capita
because eggs remain the
most affordable source of
animal-based protein
In 2021 egg consumpon
amounted to 280 eggs per
capita, demonstrang stable
growth over the last five
years.
M R
Poor economic condions
result in lack of debt financ-
ing available
Historically, we have been
reliant primarily on own posi-
ve cash flow and debt fi-
nancing is used only for im-
plementaon of long-term
investment programs. To off-
set he effects of the current
instability of Ukrainian econ-
omy, we accumulated the
cash on our bank accounts in
foreign-owned banks in
Ukraine and outside
We use export financing with
comparavely low effecve
interest rate. However, excel-
lent credit history allows to
borrow funds from Ukrainian
banks on favorable terms.
R
RISK MANAGEMENT
& INTERNAL CONTROL
IDENTIFIED RISKS
1
MANAGEMENT REPORT
2021 ANNUAL REPORT 22
I M 2021 S / N
P R
Devaluaon of Ukrainian
Hryvnia leads to lower price
per item in USD terms and
thereby decreases periodic
financial results
Increase of export sales is a
natural hedge against curren-
cy rate fluctuaons.
Higher cost incurred in UAH is
being steadily transferred to
the final consumer through an
increase of UAH-based prices
for shell eggs and egg prod-
ucts on the local market
In 2021 share of export reve-
nue was 28% (2020: 40%).
YoY change of prices in UAH
terms: for shell eggs +33%, for
dry egg products +23%, for
liquid egg products +43%.
Current capital restricons
of Naonal Bank of Ukraine,
although parally weakened
in 2019, may limit the possi-
bility to meet the financial
obligaons when due
We strictly control our work-
ing capital
As at December 31, 2021 all
payment obligaons were
met on me. Part of revenues
are accumulated on the bank
accounts of the subsidiaries
outside of Ukraine
L R
Excessive concentraon of
sales may lead to financial
instability in case of loss of
key customer
Our customer base is mixed in
terms of size and industry. We
are building a balanced cus-
tomer porolio
In 2021 we had no clients
generang more than 10% of
our total revenue
C
R
RISK MANAGEMENT
& INTERNAL CONTROL
IDENTIFIED RISKS
1
MANAGEMENT REPORT
2021 ANNUAL REPORT 23
I M 2021 S / N
C
Offering from the exisng
competors or new market
entrants may weaken our
compeve posion
We have a unique for Ukraine
vercally integrated business
model with facilies in close
proximity to each other, what
results in high producon effi-
ciency. Having been offering
products of consistently supe-
rior quality and adjusng to
the market demands, we
achieved the recognion and
loyalty of our customers
Yasensvit
TM
brand holds the
posion of the most-
recognized brand of shell eggs
in Ukraine.
We also have a possibility to
effecvely diversify our sales
to desnaons outside
Ukraine
C
Extreme weather condions
can have a detrimental
effect on the well-being of
poultry flock and their pro-
ducon efficiency
Our egg producon facilies
are equipped with an auto-
mac climate-control system
Opmal climate condions for
laying hens include 40-60%
humidity and ambient tem-
perature within 20-25
o
C. Our
producon facilies are
equipped with sophiscated
venlaon systems to keep all
vial indicators at normal levels
throughout the year.
R
RISK MANAGEMENT
& INTERNAL CONTROL
IDENTIFIED RISKS
1
MANAGEMENT REPORT
2021 ANNUAL REPORT 24
Having examined the exisng and potenal impli-
caons of the war for the Ukraine located busi-
nesses, the management of the Group have iden-
fied several points of specific concern that require
careful analysis and assessment. They idenfied
risks include, but are not limited to, the following:
x risks related to the personnel safety;
x risk of physical destrucon of the produc-
on assets;
x risks of disrupon of the supply and distri-
buon chains;
x risk of liquidity and limited access to financ-
ing;
The Group places top priority on the personnel’s
health and safety issues. All possible acon has
been taken to minimize the exisng threats and
support the staff during this dramac period. The
HR department on a daily basis keeps record of
the locaon of each employee to make sure that
everyone is in a safe place. All administrave staff
has been granted the opon to work remotely.
The Group closely monitors the needs of the team
and promptly reacts to them within the limits of its
capabilies. Forty men from the company’s staff
were called up to the military service.
The Group’s management connue to fulfill their
dues without interrupons.
The Group fully complies with all sancons rules
and regulaons regarding russia and belarus, in-
cluding those introduced or published by various
countries and organizaons. In addion, the Group
refrains from contacng individuals or enes on
the sancons list. In this situaon, the Group does
not expect any impact on the supply chain and
payment flow.
The currently known impacts of the War on the
Group
The Group’s major producon facilies are lo-
cated in Kyiv region, in Fasvskyi and Bi-
lotserkivskyi districts, where no severe hoslies
took place. The poultry houses in Vasilkiv and
Stavyshche, as well as the egg-processing factory
in Vasilkiv, remain physically undamaged and
keep operang.
The egg-processing factory in Makariv
(Buchanskiy district) had been temporarily shut
down unl the city was de- occupied by the
Ukrainian military forces in the end of March.
The subsequent inspecon of the factory
showed signs of crical damages to buildings
not involved in the manufacturing process
(waste, packing materials storages, not engaged
ice-cream producon facility), while main pro-
ducon facilies are intact and operang, ad-
ministrave building sustained minor surficial
damage. The management expect to put the fac-
tory back in operaon once the repairing works
of the premises are completed. The esmated
cost of damage is UAH 2 500 thousand.
The supporng facilies accommodang hatchery,
poultry houses for parent flock and young layers
have not been affected and are being used in ac-
cordance with the technological process.
All Group inventory is in good condion and in
safe storage.
R
RISK MANAGEMENT
& INTERNAL CONTROL
WAR-RELATED RISKS
1
MANAGEMENT REPORT
2021 ANNUAL REPORT 25
The Group has historically relied on the suppliers
located in the central part of Ukraine, which im-
plies efficient logiscs and reasonably prompt
deliveries to the producon sites. Major con-
tractors have not been affected by the hosli-
es and connue to fulfill their contractual obli-
gaons.
The military acon had no crical impact on the
local distribuon. The main distribuon channel
for the egg segment is the large naonal retail
chains. Geographically the sales are concentrat-
ed in the central part of the country. The share
of sales in the most affected regions does not
exceed 10%;
export sales reduced significantly. Since the start
of the military campaign, the Group faced signifi-
cant obstacles to export acvies due to the se-
rious disrupons in logiscs. In parcular, sei-
zure of Odessa port operaons cut access to the
Middle East markets, where the commodies
were shipped by sea. Overland deliveries to the
EU countries resumed in early April aer the
specific license had been issued to the company.
The Group’s producon companies depend on
imports in terms of certain feed mix supple-
ments, vaccines, spare parts of producon
equipment. These items are included in the list
of “crical imported goods” (as defined in the
Cabinet of Ministers of Ukraine’s Resoluon
No. 153 dated 24 February 2022) and there are
no restricons for their delivery to Ukraine. The
management also take steps to select adequate
substutes in the local market.
As of date of this report there are no signs of
material deterioraon of the payment discipline.
The Group has sufficient recourses to meet its
contractual obligaons. Interest bearing liabili-
es towards the banks are served mely.
The Group has taken the following acons in re-
sponse to the current situaon:
x opmized ulizaon of producon facilies
to meet domesc demand and export or-
ders;
x the group has enough inventory for the
producon and sale of its products, as well
as human resources in the foreseeable fu-
ture;
x selling, general and administrave and other
operang expenses, as well as CAPEX, have
been reduced to the minimum required to
meet the primary needs of the Group’s core
business;
x the Directors have decided not to declare a
final dividend for the 2021 financial year;
x the loss of the market in the east and south
of the country is expected to be offset by
increased demand in central and western
Ukraine, where a large number of internally
displaced persons temporarily reside;
x the prescheduled repayments of main debt
have been planned to be rescheduled to a
later dates based on mutual agreements
with the banks.
R
RISK MANAGEMENT
& INTERNAL CONTROL
WAR-RELATED RISKS
1
MANAGEMENT REPORT
2021 ANNUAL REPORT 26
At 31 December 2021 total share capital of Ovostar
Union PCL was 6 000 000 shares. Each share has a
nominal value of one vote at the General Meeng of
Shareholders.
According to publicly available informaon as at 31
December 2021, shareholders of Ovostar Union PCL
with substanal parcipaon of at least 5% of all
votes at the General Meeng of Ovostar Union PCL
shareholders are listed in the table “S
31 D “.
No substanal changes in shareholders' structure of
Ovostar Union PCL took place in 2021.
Free float remained at the level of 32.07%.
Shareholders 2021 2020 2019
Prime One Capital Ltd 68% 68% 68%
Generali 11% 11% 11%
Fairfax Financial
Holdings Ltd
10% 5% 5%
Aviva 5% 5% 5%
Others 6% 11% 11%
Total 100% 100% 100%
S 31 D
S 2021
O
OV
O
O WIG-
Share price, PLN 2021 2020 2019
Opening 83 75 113
Maximum 88 89 113
Minimum 66 60 70
Closing 68 83 75
K
Q1’21 Q2’21 Q3’21 Q4’21
SHAREHOLDER
S
S
&
& SHAR
E
E INFORMATIO
N
N
SHARE CAPITAL STRUCTURE
Q1
Q1
Q1
’2
’2
’2
1
1
1
1
Q2
’2
1
1
Q3
3
3
’2
’2
’2
2
1
1
1
Q4
’2
1
OVO
WIG
Borys Bielikov
Chief Execuve Officer,
Execuve Director
……………………………….
Vitali
i
i Veresenk
o
o
Chairman of the Board,
Non-execuve Director
……………………………….
Karen Arshakyan
Head of Audit Commiee,
Non-execuve Director
Vitalii Sapozhnik
Chief Financial Officer
C
CORPORAT
E
E
GOVERNANC
E
E
REPOR
T
T
2
CORPORATE GOVERNANCE REPORT
2021 ANNUAL REPORT 28
The Company is headed by the Board of Directors, whose main funcon is to lead and control the
company.
The number of the directors of the Company is four, the majority of whom are non-execuve, out of
whom two are independent within the meaning of Annex II of the European Commission
Recommendaon no 2005/162/WE of 15 February 2005 on the role of non-
execuve or supervisory
directors of listed companies and on the commiees of the (supervisory) board. The only execuve
director performs dues of the Chief Execuve officer.
The following composion of the Board of the Company was approved by the General Meeng on July
16, 2021:
Mr. Borys Bielokov Execuve Director, Chief Execuve Officer —
Mr. Vitalii Veresenko Non-Execuve Director, Chairman of the Board —
Mr. Karen Arshakyan Non-Execuve Independent Director —
Mr. Sergey Karpenko Non-Execuve Independent Director —
B
BOARD OF DIRECTORS
COMPOSITION OF THE BOARD
2
CORPORATE GOVERNANCE REPORT
2021 ANNUAL REPORT 29
Mr. Arshakyan joined the Board of Directors of Ovostar Union in June 2019.
Mr Arshakyan acted as an external adviser to the Board during the Compa-
ny’s re-domiciliaon from the Netherlands to Cyprus. Mr Arshakyan has a de-
gree in Economics and Management of Agriculture from Instute of Agricul-
ture of Armenia. His work record includes companies in Armenia, Canada and
Cyprus.
Mr. Veresenko is at GC "Ovostar Union" since 1999. Till 2001 – General Di-
rector at CJSC "Malynove", and since 2001 up to now – Head of the Supervi-
sory Board of "Malynove" CJSC. Mr. Veresenko has diploma as automated
management systems engineer of Kiev Air Defense Radio Technical Engi-
neers College (1990).
Mr.Bielikov founded GC "Ovostar Union" in 1999 (ll 2011 – LLC "Borispol
Agro Trade"). Since 2007 and up to now he has been holding the posion of
group Chief Execuve Officer. Mr. Bielikov gained the educaon as an air-
cras operaon mechanic engineer at Naonal Aviaon University (1994).
Mr. Karpenko served as a Deputy Head of investment policy and agrarian
business in Ministry of agrarian policy of Ukraine from 1997 to 2003. Aer
that Mr. Karpenko worked at «Union of Poultry Farmers of Ukraine» and
since 2006 has been acng as an Execuve Director of Union. Mr. Karpenko
graduated from Naonal agrarian university majoring in Agricultural manage-
ment (1997).
B B
E D, CEO
V V
N-E D, C B
K A
N-E D, H A C
S K
N-E D
B
BOAR
D
D O
F
F DIRECTOR
S
S
COMPOSITION OF THE BOARD
2
CORPORATE GOVERNANCE REPORT
2021 ANNUAL REPORT 30
R
Members of the Board represent Ovostar Union
Group and the Board has the authority to appoint
any official as a representave, and to determine
the list of his/her powers. The execuve director is
authorized to represent the Group on his own and
to sign documents on behalf of the Group. In case
of a conflict of interest between the Group and one
of the directors, the conflicted director may not
parcipate in the decision-making process
concerning the maer causing the conflict.
Members of the Board are appointed and may be
suspended or dismissed from their posion by the
General Meeng of Shareholders.
At each annual general meeng of the Company one
-third of the directors (or if their number is not a
mulple of three, the number nearest to three but
not exceeding one-third) shall rere by rotaon. No
person (including a director rering by rotaon) shall
be appointed (or reappointed) a director at a general
meeng of the Company unless:
(a) that individual is recommended by the board of
directors or by a commiee duly authorised by the
board for the purpose; or
(b) not less than seven nor more than 42 days before
the date appointed for holding the meeng, noce
executed by a Qualified Member has been given to
the Company of that member’s intenon to propose
that individual for appointment (or reappointment)
as director (stang the parculars which would, if he
were so appointed, be required to be included in the
Company’s register of directors) together with a
noce executed by that individual stang that he is
willing to act as director.
S B
Securies Rules have been established, which apply
to the Board members in relaon to the acquision
of securies share and transacons with them.
Furthermore, the condions and requirements of
the EU Market Abuse Direcve and the company’s
Insider Trading Rules, reflecng the essence of EU
Market Abuse Direcve, are applicable to the
Board members (and other persons related to
Board Members) in relaon o the acquision of
shares and equity parcipaon.
S B D
The Board of Directors of Ovostar Union PCL
hereby confirms that (1) none of the Board
members is a member of any supervisory board of -
or holds the posion of non-execuve director at
more than two listed companies; (2) none of the
Board members holds the posion of chairman of
any supervisory board - or of the board of
directors, in case such board consists of execuve
and non-execuve directors - of other companies,
except for our enterprises.
B
BOARD OF DIRECTORS
TERMS OF REFERENCE
2
CORPORATE GOVERNANCE REPORT
2021 ANNUAL REPORT 31
22-Apr-2021 The Company’s external auditors, Messrs. BAKER TILLY KLITOU & PARTNERS
were invited to inform the Board on the results of the audit of the 2020 fi-
nancial statements. The auditors confirmed their content with the annual
report. An unqualified auditor’s opinion for the 2020 financial statements
was issued. During the meeng the Board of Directors approved the Compa-
ny’s 2020 annual report.
12-May-2021 During the meeng the Board approved the Company’s unaudited consoli-
dated financial statements for the three months ended on March 31, 2021.
26-Aug-2021 During the meeng the Board approved the Company’s unaudited consoli-
dated financial statements for the six months ended on June 30, 2021.
12-Nov-2021 During the meeng the Board approved the Company’s unaudited consoli-
dated financial statements for the nine months ended on September 30,
2021.
In 2021 the Board of Directors held four (4) meengs. Due to the restricons imposed on public gather-
ings and internaonal travelling the meengs were arranged in the form of teleconferences on condi-
ons that the minutes of the meengs in all cases were taken by the secretary of that meeng at the
registered office of the company, or other premises on the territory of Cyprus and subsequently duly
signed by the Head of the Board.
The main issues that were included in the agenda of the meengs of the Board during 2021 were as fol-
lows:
B
BOARD OF DIRECTORS
BOARD OF DIRECTORS MEETINGS
2
CORPORATE GOVERNANCE REPORT
2021 ANNUAL REPORT 32
The Board of Directors has established an Audit
Commiee in order to meet the necessary
corporate governance requirements and to ensure
the Company’s financial transparency.
The Audit Commiee is responsible for advising
and monitoring the acvies of the Board of
Directors in the areas of, among other things, the
completeness of financial reporng, our financial
strategy, tax planning, including:
(i) funconing of control and internal risk
management systems;
(ii) provision of financial informaon (including
choice of the accounng policy, applicaon of new
rules and evaluaon of their impact on our
performance, interacon with internal and external
auditors, etc.);
(iii) monitoring the compliance of our acvies with
the recommendaons of internal and external
auditors;
(iv) interacon with external auditors, including
control of the auditor’s independence, their
remuneraon and provision of any services outside
the audit scope;
(v) our tax planning policy;
(vi) sources of our funding;
(vii) review of the annual budget and capital
investments of the Group.
At least one of the commiee members must be a
financial expert as defined in the CSE Corporate
Governance Code, and all commiee members
must be financially literate. Our Audit Commiee
sasfies these requirements.
Mr. Karen Arshakyan, a non-execuve independent
director of the Company acted as the Head of the
Audit Commiee and Mr. Karpenko connued as
the second independent member of the Audit
Commiee.
A
In 2021 the Audit Commiee of Ovostar Union PCL
held three (3) meengs.
16-Apr-2021 During the meeng the Audit
Commiee reviewed the auding process for the
year of 2020 and discussed the Group’s Annual
Report for 2020.
01-Jul-2021 Agenda of this meeng included
discussion on 2021 audit process.
05-Nov-2021 During the meeng the Audit
Commiee discussed potenal risks for the
business and their possible impact on the Group’s
operaons and results in the year of 2021.
R P
On 16 July 2021, by a resoluon of the General
Meeng, the limit for the total accumulated
amount of remunerang payable to the members
of the Board of Directors of the company for the
year 2021 was set at EUR 400 thousand.
B
BOARD COMMITTEES
AUDIT COMMITTEE
2
CORPORATE GOVERNANCE REPORT
2021 ANNUAL REPORT 33
The Company shall in each year hold a general
meeng as its annual general meeng. The annual
general meeng shall be held at such me and
place as the directors shall appoint, taking into
account that place and date of a general meeng
should be set so as to enable the parcipaon of
the highest possible number of members.
The directors may, whenever they think fit,
convene an extraordinary general meeng in the
same manner or in a manner as near as possible as
that in which meengs may be convened by the
directors.
N G M
An annual general meeng shall be called by
twenty-one days' noce at the least. The noce
shall, specify the following:
(a) the proposed agenda for the meeng;
(b) the procedures in respect of the
parcipaon and vong in the meeng required to
be complied with by the members entled to
aend and vote at the meeng, including:
(i) the right of the member to add items on the
agenda of the general meeng, to table dra
resoluons and to ask quesons related to items
on the agenda and the deadlines by which any of
those rights may be exercised;
(ii) the right of a member which is entled to
aend, to speak, ask quesons and vote, to
appoint a proxy;
(c) the procedure for vong by proxy,
including the forms to be used and the means by
which the Company is prepared to accept
electronic noficaon of the appointment of the
proxy;
(e) the Record Date and that only the
members registered as holders of shares conferring
the right to aend and vote at the meeng, as at
the close of business on the Record Date, shall be
entled to aend and vote at the meeng;
(f) where and how the full unabridged text
of the documents to be submied to the meeng
may be obtained; and
(g) the internet site at which the
informaon which is required to be provided to
members as well as the resoluons (if any)
proposed by members shall be made available,
subject always to the provisions of the Law.
The accidental omission to give noce of a meeng
to, or the non-receipt of noce of a meeng, by
any person entled to receive noce, shall not
invalidate the proceedings at that meeng.
S
SHAREHOLDERS MEETINGS
GENERAL MEETINGS
2
CORPORATE GOVERNANCE REPORT
2021 ANNUAL REPORT 34
P G M
All business shall be deemed special that is
transacted at an extraordinary general meeng,
and also all that is transacted at an annual general
meeng, with the excepon of declaring a
dividend, the consideraon of the accounts,
balance sheets, and the reports of the directors
and auditors, the elecon of directors in the place
of those rering, if any, and the appointment of,
and the fixing of the remuneraon of the auditors.
No business shall be transacted at any general
meeng unless a quorum of members is present at
the me when the meeng proceeds to business.
Three or more members present in person or by
proxy and entled to vote shall be a quorum.
All noces and other communicaon relang to
any general meeng which every member is
entled to receive must also be sent to the
auditors and the directors of the Company. The
directors and auditors shall be entled to aend
and speak at any meeng of the members. One or
more directors if necessary to answer quesons
asked at the general meeng parcipate in a
general meeng.
The chairman, if any, of the board of directors shall
preside as chairman at every general meeng of
the Company.
At any general meeng any resoluon put to the
vote of the meeng shall be decided by poll.
V M
Every member shall have one vote for each share
of which he is the holder. On a poll a member
entled to more than one vote need not use all of
his votes or cast all the votes he uses in the same
way
On a poll votes may be given either personally or
by proxy and any member and any proxy
appointed by a member shall have the right to cast
all or some of the votes to which such member or
proxy, as the case may be, is entled in favour of
and /or against the resoluon in queson and/or
abstain from vong on the resoluon in queson in
respect of all or some of his votes.
The chairman of a general meeng shall not have a
second or casng vote.
S
SHAREHOLDERS MEETINGS
G
ENERAL
MEETINGS
2
CORPORATE GOVERNANCE REPORT
2021 ANNUAL REPORT 35
The objecve of corporate governance is to
develop tools supporng efficient management,
effecve supervision, respect for shareholders’
rights, and transparent communicaons between
companies and the market. As a public company
that is domiciled in Cyprus and whose shares are
admied to trading on a regulated market in
Poland, Ovostar Union PCL has undertaken to
adhere to Cyprus Stock Exchange Corporate
Governance Code and the Code of Best Pracce
for WSE Listed Companies.
CSE C G C
The Code as updated in 2019 replaces the
Corporate Governance Code issued by the Cyprus
Stock Exchange Council in March 2011 and is
amended in September 2012.
The aim of the proposed regulaons is to
strengthen the monitoring role of the Board of
Directors in listed companies, protect small
shareholders, adopt greater transparency and
provide mely informaon as well as sufficiently
safeguard the independence of the Board of
Directors in its decision-making.
The Code includes the following secons: Α.
BOARD OF DIRECTORS ; Β. DIRECTORS’
REMUNERATION; C. ACCOUNTABILITY AND
AUDIT ;D. RELATIONSHIP WITH SHAREHOLDERS.
This Code proposes the establishment of three
Commiees of the Board of Directors, namely the
Nominaon Commiee, the Remuneraon
Commiee, the Audit Commiee and the Risk
Management Commiee. When the Board of
Directors of each company, given the parcularies
thereof, considers it expedient to establish more
commiees, it may proceed therewith. The terms
of reference as well as the acvies of each
Commiee of the Board of Directors should be
included in the Annual Report on Corporate
Governance. Annual Report on Corporate
Governance Listed companies have an obligaon to
include in their Annual Report, a Report by the
Board of Directors on Corporate Governance as
follows: In the first part of the Report, the
Company should report whether it complies with
the Code and the extent to which it implements its
principles. In the second part of the Report, the
Company should confirm that it has complied with
the Code provisions and in the event that it has
not, should give adequate explanaon.
S CSE C
G C
The Company confirms that in 2021 it complied
with most provisions of the Code, except Provision
Β.1.1. that requires a Remuneraon Commiee to
be established. The Company undertakes to
eliminate this discrepancy during 2022.
G
GOVERNANCE & CONTROL
CORPORATE GOVERNANCE C
ODE
2
CORPORATE GOVERNANCE REPORT
2021 ANNUAL REPORT 36
WSE C G R
Companies listed on the Warsaw Stock Exchange
are guided by the Rules. In 2016 the Best Pracce
for GPW Listed Companies was updated according
to the European Commission Recommendaon of
09 April 2014 on the quality of corporate govern-
ance reporng.
The “Best Pracce for GPW Listed Companies
2016” and related regulaons apply to issuers of
shares admied to trading on GPW’s regulated
market. The document is divided into themac sec-
ons: Disclosure Policy, Investor Communicaons;
Management Board, Supervisory Board; Internal
Systems and Funcons; General Meeng, Share-
holder Relaons; Conflict of Interest, Related Party
Transacons; Remuneraon.
Each secon of the Best Pracce opens with a gen-
eral descripon of the goals to be pursued by listed
companies through compliance with the provisions
of the secon. The recommendaons that follow
require the disclosure of compliance details in a
statement of compliance with the corporate gov-
ernance principles included in the issuer’s annual
report. The detailed provisions of the Best Pracce
follow the ‘comply or explain’ approach.
In line with the recommendaons of the European
Commission, within the limits of its powers, the
Exchange will monitor the companies’ compliance
with the corporate governance regulaons with a
special emphasis on the quality of explanaons
published by companies according to the ‘comply
or explain’ approach.
D WSE
C G R
In 2021 the Company did not comply with the fol-
lowing requirements of the Code:
Best Pracce Principle I.Z.1 - Currently we have no
audio or video recording of a general meeng pub-
lished at the company’s website as all the infor-
maon related to the general meeng is available
in wring at our website.
Addionally, we have not published the internal
rule of changing the company’s auditor as the com-
pany strictly follows guidelines stated in the Di-
recve 2014/56/EU the European Union that was
adopted in April 2014 and enforced in June 2016.
Best Pracce Principle II.Z.1 - Since we have a one-
er governance structure we have not published
the chart describing the division of responsibilies
among the BoDi because their areas of responsibil-
ity are provided in wring at the website.
In 2021 the new edion of Best Pracce for GPW
Listed Companies was issued hat issuers of shares
listed on the WSE Main Market have been subject
to since 2002 under the Stock Exchange Regula-
ons. Similarly to the previous versions of the Best
Pracce, developed by the experts comprising the
Corporate Governance Commiee, DPSN2021
takes into account the current legal status and the
latest trends in corporate governance, as well as
responds to the postulates of market parcipants
interested in increasingly beer corporate govern-
ance in listed companies. Compared to the “Best
Pracce of WSE Listed Companies 2016”, the cur-
rent editorial has been shortened and simplified.
The accessible and concise language and clear
structure of DPSN2021 are intended to make it eas-
ier for issuers and investors to interpret the princi-
ples correctly, facilitang the widest applicaon
and formulang the best possible explanaons. Ad-
dional support in this regard is provided by guid-
ance on the applicaon of the Good Pracce, edit-
ed and updated by the Corporate Governance
Commiee based on quesons raised and praccal
issues arising on an ongoing basis. The guidance
prepared in the Q&A format will help understand
the intenons of the authors of the Best Pracce in
formulang specific principles and will indicate to
issuers and investors what condions must be met
to deem a given principle applicable.
G
GOVERNANCE & CONTROL
CORPORATE GOVERNANCE CODE
2
CORPORATE GOVERNANCE REPORT
2021 ANNUAL REPORT 37
According to the Direcve 2014/95/EU of the Euro-
pean Parliament and of the Council of 22 October
2014 we as a public enty with more than 500 em-
ployees are obliged to make the appropriate disclo-
sure, providing informaon on the environmental,
social and employee maers, respect for human
rights, an-corrupon and bribery maers and the
way they are dealt with.
The informaon provided in this statement is
based on the Company’s (our) Code of Conduct
(Annex 2.5 to the Corporate Governance Rules
available in wring at our website.
E
The Company is commied to conducng its oper-
aons in an environmentally sound and sustainable
manner. To achieve protecon of the health and
safety of employees, customers and the public, the
Company has established procedures and compli-
ance programs to ensure the minimum adverse
impact on the environment. Such procedures and
programs are periodically being reviewed and ap-
praised.
S
The Company recruits, employs and promotes em-
ployees on the sole basis of their qualificaons and
abilies (including reputaon and reliability). The
Company endeavors to enable each individual to
develop his or her talents in various ways
(including, when appropriate, through training pro-
grams).
The Company considers safe and healthy working
condions for its employees to be fundamental.
The Company believes that good communicaon
with employees is essenal.
R
People are the key to success of any business, and
this is not different with respect to the Company.
The Company recognizes that Corporate Social Re-
sponsibility is an integral part of its business prac-
ce and strategy. The Company is therefore com-
mied to running its business to ethical, legal and
professional standards.
We respect human rights as an absolute and uni-
versal standard. In countries where the Company
operates, human rights of our employees are sup-
ported as appropriate in accordance with what rea-
sonably can be expected from a similar commercial
organizaon.
Furthermore, the Company refrains from discrimi-
naon on any basis. As a result of the above, re-
spect for people forms a cornerstone of our Com-
pany Values.
N
NON-FINANCIAL INFORMATION
DISCLOSURE
2
CORPORATE GOVERNANCE REPORT
2021 ANNUAL REPORT 38
A-
In dealing with customers and suppliers, which may
include governmental bodies, the Company expects
its managers and employees neither to give nor to
receive bribes or anything of value in order to
retain or bestow business or financial advantages.
The employees of the Company are directed that
any demand for or offer of such bribe or anything
of value must be immediately rejected.
Accepng business entertainment and providing
reasonable business entertainment in the course of
the Company's business is acceptable.
The Company does not parcipate in party polics
or makes payments to polical pares or to the
funds of groups whose acvies are directed at
promong a party’s polical interests.
When dealing with governments or governmental
agencies the Company is encouraged to promote
and defend its legimate commercial objecves.
The Company may do so directly or through bodies
such as trade associaons.
The Company is encouraged to respond to requests
from governments and other agencies for
legimate and relevant informaon, observaons
or opinions on issues relevant to its business and to
parcipate in the development of proposed
legislaon or regulaons in areas which may have
an effect on its legimate interests.
N
NON-FINANCIAL INFORMATION
DISCLOSURE
Borys Bielikov
Chief Execuve Officer,
Execuve Director
……………………………….
Vitalii Veresenko
Chairman of the Board,
Non-execuve Director
……………………………….
Karen Arshakyan
Head of Audit Commiee,
Non-execuve Director
Vitalii Sapozhnik
Chief Financial Officer
F
FINANCIA
L
L
STATEMENT
S
S
3
CONSOLIDATED FINANCIAL STATEMENTS
2021 ANNUAL REPORT 40
01 July 2022
The Board of Directors is responsible for the preparaon of the consolidated financial statements
that give a true and fair view of the financial posion of Ovostar Union Public Company Limited (the
“Company”) and its subsidiaries (the “Group”) as of 31 December 2021 and of the consolidated
statements of profit or loss and other comprehensive income, changes in equity and cash flows for
the year then ended, and notes to the consolidated financial statements, including a summary of
significant accounng policies.
S M B D
Members of the Board of Directors of Ovostar Union Public Company Limited in accordance with
Subsecon (3c) and (7) of the Secon (9) of the Law providing for transparency requirements in rela-
on to informaon about issuers whose shares are admied to trading on a regulated market (L.190
(I)/2007 - “Transparency Law”) herewith confirms that to the best of their knowledge:
a) The present annual consolidated financial statements
(i) have been prepared in accordance with the applicable Internaonal Financial Reporng
Standards as adopted by the European Union and in compliance with the requirements set
forth in Subsecon (4) of the Secon (9) of the Transparency Law , and
(ii) give a true and fair view of the assets, liabilies, financial posion and profit or loss of
the issuer and the undertakings included in the consolidated accounts taken as a whole, and
(b) The Management report includes a fair review of the development and performance of the
business and the posion of the Group included in the consolidated accounts as a whole, to-
gether with a descripon of the principal risks and uncertaines that they face.
S
STATEMENT
OF DIRECTORS RESPONSIBILITY
Borys Bielikov
Chief Execuve Officer,
Execuve Director
……………………………….
Vitalii Veresenko
Chairman of the Board,
Non-execuve Director
……………………………….
Karen Arshakyan
Head of Audit Commiee,
Non-execuve Director
Vitalii Sapozhnik
Chief Financial Officer
3
CONSOLIDATED FINANCIAL STATEMENTS
2021 ANNUAL REPORT 41
C
CONSOLIDATE
D
D STATEMEN
T
T O
F
F COMPREHENSIV
E
E INCOM
E
E
FOR THE YEAR ENDED 3
1
1 DECEMBER 202
1
1
(IN US
D
D THOUSAND
,
, UNLESS OTHERWISE STATED
)
)
12 months ended 12 months ended
Note
31 December 2021 31 December 2020
Revenue from contracts with customers
Changes in fair value of biological assets 17 (8 529 ) (3 742 )
Cost of sales
(111 223 ) (81 747 )
Gross profit 13 614 13 418
Other operang income 12 565 2 346
Selling and distribuon costs 10 (8 296 ) (7 621 )
Administrave expenses 11 (3 656 ) (3 625 )
Other operang expenses 13 (1 000 ) (476 )
Operang profit 1 227 4 042
Finance costs 14 (380 ) (1 320 )
Finance income 15 786 58
Profit before tax 1 633 2 780
Income tax expense 16 22 (188 )
Profit for the period 1 655 2 592
Other comprehensive income
Exchange differences on translaon to presentaon currency 3 836 (19 140 )
Other comprehensive income for the period, net of tax 3 836 (19 140 )
Total comprehensive income for the period, net of tax 5 491 (16 548 )
Profit for the period aributable to:
Equity holders of the parent company 1 690 2 702
Non-controlling interests (35 ) (110 )
Total profit for the period 1 655 2 592
Other comprehensive income aributable to:
Equity holders of the parent company 4 042 (18 848 )
Non-controlling interests (206 ) (292 )
Total other comprehensive income 3 836 (19 140 )
Other comprehensive income aributable to:
Equity holders of the parent company 5 732 (16 146 )
Non-controlling interests (241 ) (402 )
Total comprehensive income 5 491 (16 548 )
Earnings per share:
Equity holders of the parent company 6 000 000 6 000 000
Basic and diluted, profit for the period aributable to ordinary equity holders of the parent (USD
per share)
Borys Bielikov
Chief Execuve Officer,
Execuve Director
……………………………….
Vitali
i
i Veresenk
o
o
Chairman of the Board,
Non-execuve Director
……………………………….
Karen Arshakyan
Head of Audit Commiee,
Non-execuve Director
Vitalii Sapozhnik
Chief Financial Officer
3
CONSOLIDATED FINANCIAL STATEMENTS
2021 ANNUAL REPORT 42
C
CONSOLIDATE
D
D STATEMEN
T
T O
F
F FINANCIA
L
L POSITIO
N
N
FOR THE YEAR ENDED 3
1
1 DECEMBER 202
1
1
(IN USD THOUSAND
,
, UNLESS OTHERWISE STATED
)
)
Note 31 December 2021 31 December 2020
Assets
Non-current assets
Biological assets 17 45 079 40 234
Property, plant and equipment and intangible assets 18 46 383 47 943
Deferred tax assets 16 28 11
Other non-current assets 19-
Total non-current assets 91 490 88 209
Current assets
Inventories 20 13 022 13 216
Biological assets 17 15 459 11 138
Trade and other receivables 21 15 471 15 865
Prepayments to suppliers 22 3 114 1 233
Prepayments for income tax 23 28 27
Cash and cash equivalents 24 2 435 1 626
Total current assets 49 529 43 105
Total assets 141 019 131 314
Equity and liabilies
Equity
Issued capital
25 68 74
Share premium 30 933 30 933
Foreign currency translaon reserve (125 912 ) (129 954 )
Retained earnings 202 633 199 931
Result for the period 1 690 2 702
Equity aributable to equity holders of the parent
Non-controlling interests
Total equity 109 889 104 404
Non-current liabilies
Interest-bearing loans and other financial liabilies 26 7 141 5 172
Deferred tax liability 16 334 311
Total non-current liabilies 7 475 5 483
Current liabilies
Trade and other payables 27 14 391 12 379
Deferred income 12 2 981 3 149
Advances received 28 543 306
Interest-bearing loans and other financial liabilies 26 5 740 5 593
Total current liabilies 23 655 21 427
Total liabilies 31 130 26 910
Total equity and liabilies 141 019 131 314
Borys Bielikov
Chief Execuve Officer,
Execuve Director
……………………………….
Vitali
i
i Veresenk
o
o
Chairman of the Board,
Non-execuve Director
……………………………….
Karen Arshakyan
Head of Audit Commiee,
Non-execuve Director
Vitalii Sapozhnik
Chief Financial Officer
3
CONSOLIDATED FINANCIAL STATEMENTS
2021 ANNUAL REPORT 43
C
CONSOLIDATE
D
D STATEMEN
T
T O
F
F CHANGE
S
S I
N
N EQUIT
Y
Y
FOR THE YEAR ENDED 3
1
1 DECEMBER 202
1
1
(IN USD THOUSAND
,
, UNLESS OTHERWISE STATED
)
)
Issued
capital
Share
premium
Foreign
currency
translaon
reserve
Retained
earnings
Result for
the
period
Total
Non-
controlling
interests
Total equity
As at 31 December 2019 78 30 933 (111 110 ) 219 945 (20 014 ) 119 832 1 120 120 952
Profit for the period
Other comprehensive income
(18 848 ) (18 848 ) (292 ) (19 140 )
Total comprehensive income (18 848 ) 2 702 (16 146 ) (402 ) (16 548 )
Allocaon of prior period result
(20 014 ) 20 014
Dividends-
Exchange differences (4 )4
As at 31 December 2020 74 30 933 (129 954 ) 199 931 2 702 103 686 718 104 404
Profit for the period
Other comprehensive income
Acquision of a subsidiary
Total comprehensive income 4 036 1 690 5 726 (241 ) 5 485
Allocaon of prior period result
Dividends-
Exchange differences (6 )6
As at 31 December 2021 68 30 933 (125 912 ) 202 633 1 690 109 412 477 109 889
Borys Bielikov
Chief Execuve Officer,
Execuve Director
……………………………….
Vitali
i
i Veresenk
o
o
Chairman of the Board,
Non-execuve Director
……………………………….
Karen Arshakyan
Head of Audit Commiee,
Non-execuve Director
Vitalii Sapozhnik
Chief Financial Officer
3
CONSOLIDATED FINANCIAL STATEMENTS
2021 ANNUAL REPORT 44
For translang results and financial posion into a presentaon currency, the Group applies IAS 21 "The Effects of Changes in
Foreign Exchange Rates". Procedures and rules applied by the Group are specified in Note 2.3.
C
CONSOLIDATE
D
D STATEMEN
T
T O
F
F CAS
H
H FLOW
S
S
FOR THE YEAR ENDED 3
1
1 DECEMBER 202
1
1
(IN US
D
D THOUSAND
,
, UNLESS OTHERWISE STATED
)
)
Note
12 months ended 12 months ended
31 December 2021 31 December 2020
Operang acvies
Profit before tax
Non-cash adjustment to reconcile profit before tax to net cash flows:
Depreciaon of property, plant and equipment and amorsaon of intangible assets
9, 10
Net change in fair value of biological assets
17
Disposal of property, plant and equipment2 3
Disposal of biological assets 2 753 2 977
Finance income (786 ) (58 )
Finance costs 380 1 320
Recovery of assets previously wrien-off
12
(29 ) 20
Government subsidies
12
(283 ) (254 )
Impairment of property, plant and equipment 227
Impairment of doubul accounts receivable and prepayments to suppliers
10 703 373
Working capital adjustments:
Decrease in trade and other receivables (174 ) 2 762
Decrease/(Increase) in prepayments to suppliers (1 910 ) 1 143
Decrease in other non-current assets 14 152
Decrease/(Increase) in inventories 535 (2 579 )
(Increase) in trade and other payables and advances received 2 164 (1 216 )
Cash generated from operang acvies 18 207 15 076
Income tax paid (5 ) (55 )
Net cash flows from operang acvies 18 202 15 021
Invesng acvies
Purchase of property, plant and equipment (1 690 ) (2 476 )
Increase in biological assets
17
(18 561 ) (15 569 )
Government subsidies 826
Net cash flows used in invesng acvies (20 251 ) (17 219 )
Financing acvies
Proceeds from borrowings 4 730 4 419
Repayment of borrowings (1 880 ) (4 936 )
Interest received 10 58
Interest paid (243 ) (292 )
Net cash flows used in financing acvies 2 617 (751 )
Net (decrease)/increase in cash and cash equivalents 568 (2 949 )
Effect from translaon into presentaon currency 241 97
Cash and cash equivalents at 01 January 1 626 4 478
Cash and cash equivalents at 31 December 2 435 1 626
Borys Bielikov
Chief Execuve Officer,
Execuve Director
……………………………….
Vitali
i
i Veresenk
o
o
Chairman of the Board,
Non-execuve Director
……………………………….
Karen Arshakyan
Head of Audit Commiee,
Non-execuve Director
Vitalii Sapozhnik
Chief Financial Officer
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 45
1. C
22 March 2011 in Amsterdam under the laws of the Netherlands. Following resoluon of the Extraordinary Meeng of Sharehold-
ers held in Amsterdam on 30 August 2018 the Company was redomiciled to Cyprus and on 29 November 2018 was registered
with the Register of Companies of the Republic of Cyprus as a company connuing in the Republic of Cyprus. As of 31 March
2021 the Company’s registered address is 22 Ierotheou Street, Strovolos, Nicosia 2028, Cyprus .
the holding of ownership interests in its subsidiary and strategic management.
The Group operates through a number of subsidiaries in Ukraine, Latvia, United Arab Emirates and Brish Virgin Islands (the
list of the subsidiaries is disclosed in Note 7) and has a concentraon of its business in Ukraine, where its producon facilies are
located. Subsidiary companies are registered under the laws of Ukraine, Brish Virgin Islands, Latvia and United Arab Emirates.
The registered address and principal place of business of the subsidiary companies in Ukraine is 34 Petropavlivska Street, Kyiv,
Ukraine.
Informaon on other related party relaonships of the Group is provided in Note 29.
Total number of employees were presented as follows:
The Group is controlled by the Beneficial Owners – Mr. Borys Bielikov and Mr. Vitalii Veresenko (hereinaer, the “Beneficial Own-
ers”)
The consolidated financial statements for the year ended 31 December 2021 were authorized by the Board of Directors on
01 July 2022.
2. B
2.1. Statement of compliance and basis of measurement
The consolidated financial statements are prepared in accordance with Internaonal Financial Reporng Standards as adopted by
the European Union (“IFRS EU” hereinaer).
The companies of the Group maintain their accounng records under Ukrainian Accounng Standards (“UAS” hereinaer). UAS
principles and procedures may differ from those generally accepted under IFRS EU. Accordingly, the consolidated financial state-
ments, which have been prepared from the Group enes’ UAS records, reflect adjustments necessary for such financial state-
ments to be presented in accordance with IFRS EU.
The consolidated financial statements have been prepared on the historical cost basis except for the following items, which are
measured on an alternave basis on each reporng date.
Details of the Group accounng policies are included in Note 5.
2.2. Going concern basis
On February 24, 2022, russian troops launched a military invasion of Ukraine, which led to a full-scale war on the territory of
the Ukrainian state. Focusing on the connuity and sustainability of its business and maintaining value for all stakeholders, the
Group has focused on such key areas as the safety of its employees and the food security of the country, giving priority to the
uninterrupted supply of the populaon of Ukraine with egg products.
Having examined the exisng and potenal implicaons of the war for the Ukraine located businesses, the management of
the Group have idenfied several points of specific concern that require careful analysis and assessment. They include, but are
not limited to, the following:
31 December
2021
31 December
2020
Producon personnel
1 354 1 353
Administrave personnel
170 190
Total 1 524 1 543
Items
Measurement bases
Biological assets Fair value less costs to sell
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 46
x risks related to the personnel safety;
x risk of physical destrucon of the producon assets;
x risks of disrupon of the supply and distribuon chains;
x risk of liquidity and limited access to financing;
The Group places top priority on the personnel’s health and safety issues. All possible acon has been taken to minimize
the exisng threats and support the staff during this dramac period. The HR department on a daily basis keeps record of the
locaon of each employee to make sure that everyone is in a safe place. All administrave staff has been granted the opon
to work remotely. The Group closely monitors the needs of the team and promptly reacts to them within the limits of its ca-
pabilies. Forty men from the Group's staff were called up to the military service.
The Group’s management connue to fulfill their dues without interrupons.
The Group fully complies with all sancons rules and regulaons regarding Russia and Belarus, including those introduced
or published by various countries and organizaons. In addion, the Group refrains from contacng individuals or enes on
the sancons list. In this situaon, the Group does not expect any impact on the supply chain and payment flow.
The currently known impacts of the War on the Group are:
x the Group’s major producon facilies are located in Kyiv region, in Fasvskyi and Bilotserkivskyi districts, where no se-
vere hoslies took place. The poultry houses in Vasilkiv and Stavyshche, as well as the egg-processing factory in Vasilkiv,
remain physically undamaged and keep operang;
x The egg-processing factory in Makariv (Buchanskiy district) had been temporarily shut down unl the city was de- occu-
pied by the Ukrainian military forces in the end of March. The subsequent inspecon of the factory showed signs of
crical damages to buildings not involved in the manufacturing process (storages for waste and used packing materials;
an idle producon facility, while main producon facilies are intact and operang, administrave building sustained
minor surficial damage. The management expect to put the factory back in operaon once the repairing works of the
premises are completed. The esmated cost of damage is USD 92 thousand;
x the supporng facilies accommodang hatchery, poultry houses for parent flock and young layers have not been affect-
ed and are being used in accordance with the technological process;
x all Group inventory is in good condion and in safe storage;
x the Group has historically relied on the suppliers located in the central part of Ukraine, which implies efficient logiscs
and reasonably prompt deliveries to the producon sites. Major contractors have not been affected by the hoslies and
connue to fulfill their contractual obligaons;
x the military acon had no crical impact on the local distribuon. The main distribuon channel for the egg segment is
the large naonal retail chains. Geographically the sales are concentrated in the central part of the country. The share
of sales in the most affected regions does not exceed 10%;
x export sales reduced significantly. Since the start of the military campaign, the Group faced significant obstacles to export
acvi
es due to the serious disrupons in logiscs. In parcular, seizure of Odessa port operaons cut access to the Mid-
dle East markets, where the commodies were shipped by sea. Overland deliveries to the EU countries resumed in early
April aer the specific license had been issued to the company. Also on June, the Decision of the European Union on the
abolion of dues on Ukrainian goods for a year came into force (see note 30)
x the Group’s producon companies depend on imports in terms of certain feed mix supplements, vaccines, spare parts of
producon equipment. These items are included in the list of “crical imported goods” (as defined in the Cabinet of Min-
isters of Ukraine’s Resoluon No. 153 dated 24 February 2022) and there are no restricons for their delivery to Ukraine.
The management also take steps to select adequate substutes in the local market;
x as of date of this report there are no signs of material deterioraon of the payment discipline. The Group has sufficient
recourses to meet its contractual obligaons. Interest bearing liabilies towards the banks are served mely.
The Group has taken the following acons in response to the current situaon:
x opmized ulizaon of producon facilies to meet domesc demand and export orders;
x the group has enough inventory for the producon and sale of its products, as well as human resources in the foreseea-
ble future;
x selling, general and administrave and other operang expenses, as well as CAPEX, have been reduced to the
x minimum required to meet the primary needs of the Group’
s core business;
x the Directors have decided not to declare a final dividend for the 2021 financial year;
x The loss of the market in the east and south of the country is expected to be offset by increased demand in central and
western Ukraine, where a large number of internally displaced persons temporarily reside;
x The prescheduled repayments of main debt have been planned to be rescheduled to a later dates based on mutual
agreements with the banks.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 47
x as of date of this report the companies of the Group had unulized fully collateralized credit facilies in total amount of
USD 5 000 thousand available on demand. One of the reasons for non-drawing of which is the reducon in lending to
Ukrainian borrowers.
There is a risk of breach of financial covenants under the loan agreement with the OTP for year ended December 31,
2022, based on negave financial results for February-April 2022. In the event of such a breach of the OTP's financial cove-
nants, the borrower is entled to demand early repayment of the loan. Management plans to ask the OTP to provide a leer
Weaver to ease its commitment to enforce financial covenants by 2022. The amount of cash flow, which ensures the absence
of liquidity gaps, depends significantly on the OTP's intenon not to require early repayment.
Management has prepared and reviewed, together with the directors, updated financial projecons, including cash flow
projecons, taking into account the most likely and possible negave scenarios for the connued impact of the war on the busi-
ness.
These forecasts were based on the following key assumpons:
x management will be able to use the cash from the approved credit lines to finance operaons.
x the further development of the war and the military invasion of Ukraine will allow the use of most of the Group's pro-
ducon capacity;
x the Group will be able to purchase a sufficient amount of agricultural products for poultry feed;
x remaining road logisc routes will connue to be available;
x Egg producon for 2022 will be 1.452 million (1,691 million in 2021);
Despite the exisng uncertaines arising from the future development of the military invasion, the management believes
the above described analysis gives grounds to state that during at least 12 months aer the date of the present report the
Group will be able to realize its assets and discharge its liabilies in the normal course of business, thus going concern as-
sumpon is applied to the financial statements for the year ended 31 December 2021.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 48
2.3. Funconal and presentaon currency
The funconal currency of the Company is U.S. dollar (USD). The consolidated financial statements are presented in the Company’s
funconal currency, that is, U.S. dollar (USD). The operang subsidiaries have Ukrainian Hryvnia (UAH) as their funconal currency.
All values are rounded to the nearest thousands, except when otherwise is indicated.
The USD has been selected as the presentaon currency for the Group as: (a) management of the Group manages business risks
and exposures, and measures the performance of its businesses in the USD; (b) the USD is widely used as a presentaon currency
of companies engaged primarily in agricultural; and (c) the USD is the most convenient presentaon currency for non-Ukrainian
users of these IFRS consolidated financial statements.
The Group translates its results and financial posion into the presentaon currency as follows:
x assets and liabilies, as well as the issued capital, for each statement of financial posion presented (i.e. including compara-
ves) shall be translated at the closing rate at the date of that statement of financial posion;
x income and expenses for each statement of comprehensive income or separate income statement presented (i.e. including
comparaves) shall be translated at exchange rates at the dates of the transacons; and
x all resulng exchange differences shall be recognized in other comprehensive income.
During 2020 and 2019, the exchange rate had significant fluctuaons. Consistent with IAS 21, if exchange rates fluctuate signifi-
cantly, the use of the average rate for a period is inappropriate. Considering significant depreciaon of Ukrainian currency against
major foreign currencies and seasonality of sales, Management of the Group decided to translate income and expense items at
average quarterly rates. On consolidaon, the assets and liabilies of the subsidiaries are translated at exchange rates prevailing
on the reporng date. Income and expense items are translated at the average quarterly rates, unless the exchange rates fluctuate
significantly during that period, in which case the exchange rates at the dates of the transacons are used. Exchange differences
arising, if any, are recognized in “Other comprehensive income” and accumulated in the “Foreign currency translaon reserve”.
Relevant exchange rates are presented as follows:
Closing rate as at Closing rate as at
31 December 2021 31 December 2020
USD/UAH
27.2782 28.2746
EUR/UAH 30.9226 34.7396
USD/PLN 4.0447 3.7230
USD/EUR 0.8815 0.8153
Average rate for the
1st quarter 2021
Average rate for the
2d quarter 2021
Average rate for the 3d
quarter 2021
Average rate for the 4th
quarter 2021
USD/UAH
27.9694 27.5910 26.9110 26.6806
EUR/UAH 33.7569 33.2332 31.7388 30.5167
USD/PLN 3.7675 3.7582 3.8700 4.0367
USD/EUR 0.8296 0.8300 0.8481 0.8744
Average rate for the
1st quarter 2020
Average rate for the
2d quarter 2020
Average rate for the 3d
quarter 2020
Average rate for the 4th
quarter 2020
USD/UAH
25.0525 26.9143 27.5996 28.2678
EUR/UAH 27.6154 29.6028 32.2429 33.6965
USD/PLN 3.9226 4.1000 3.7995 3.7740
USD/EUR 0.9069 0.9087 0.8557 0.8386
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 49
3. B
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2021.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if,
the Group has:
x Power over the investee (i.e., exisng rights that give it the current ability to direct the relevant acvies of the investee)
x Exposure, or rights, to variable returns from its involvement with the investee
x The ability to use its power over the investee to affect its returns
Generally, there is a presumpon that a majority of vong rights result in control. To support this presumpon and when the
Group has less than a majority of the vong or similar rights of an investee, the Group considers all relevant facts and circumstanc-
es in assessing whether it has power over an investee, including:
x The contractual arrangement with the other vote holders of the investee
x Rights arising from other contractual arrangements
x The Group’s vong rights and potenal vong rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control. Consolidaon of a subsidiary begins when the Group obtains control over the subsidiary and
ceases when the Group loses control of the subsidiary. Assets, liabilies, income and expenses of a subsidiary acquired or disposed
of during the year are included in the consolidated financial statements from the date the Group gains control unl the date the
Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are aributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When nec-
essary, adjustments are made to the financial statements of subsidiaries to bring their accounng policies into line with the
Group’s accounng policies. All intra-group assets and liabilies, equity, income, expenses and cash flows relang to transacons
between members of the Group are eliminated in full on consolidaon.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transacon.
If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilies, non-controlling inter-
est and other components of equity while any resultant gain or loss is recognized in profit or loss. Any investment retained is recog-
nized at fair value.
4. U
The preparaon of the consolidated financial statements requires management to make esmates and assumpons that affect the
reported amounts of revenues, expenses, assets and liabilies, and the disclosure of conngent liabilies, at the end of the re-
porng period. However, due to uncertainty about these esmates, actual results recorded in future periods may differ from such
esmates.
These consolidated financial statements include management's esmates regarding the value of assets, liabilies, revenues, ex-
penses, and recognized contractual obligaons. These esmates mainly include:
4.1. Impairment of property, plant and equipment
In accordance with IAS 36 "Impairment of Assets" the Group reviews the carrying amount of non-current tangible assets (mainly
property, plant and equipment) to idenfy signs of impairment of these assets.
If there is an indicaon that an asset may be impaired, the Group uses a model of strategic planning in order to calculate the dis-
counted cash flows (using the "value in use" method, as defined in IAS 36) and, thus, assess the recoverability of the carrying
amount of property, plant and equipment. The model was based on budgets and forecasts approved by the management for the
next 5 years.
Expected future cash flows reflect long-term producon plans formed on the basis of past experience and market expectaons.
The plans take into account all relevant characteriscs of poultry farming, including egg producon, volume of egg processing, pric-
es for main components of mixed fodder. Thus, the producon capacity is the basis for forecasng the future producon volume
for each subsequent year and related producon costs.
Levels of costs included in projected cash flows are based on current long-term producon plans. When conducng impairment
tesng, recent levels of costs are taken into account, as well as the expected cost changes based on the current condion of oper-
ang acvies and in accordance with the requirements of IAS 36. IAS 36 provides a number of restricons on future cash fl ows,
which may be recognized in respect of future restructuring and capital modernizaon expenses.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 50
Below are the key assumpons that formed the basis for forecasng future cash flows in the models:
x prices for main components of mixed fodder are based on internal forecasts of the Group's management;
x producon data (producon of eggs, safety of livestock, meat producon volume, producon of egg products) based on
internal forecasts of the Group's management from past experience;
x selling prices for eggs, egg products and poultry meat are based on forecasts of the Group's management and market ex-
pectaons.
Management believes that calculaons of the recoverable amount are most sensive to changes in such assumpons as the price
of poultry meat, price of eggs and eggs product, price of poultry fodder and producon data. Management believes that any rea-
sonably possible change in key assumpons on which the recoverable amount of the Group is based will not cause the excess of
carrying amount of the Group over its recoverable amount.
Applicaon of IAS 36 requires extensive judgments by the management regarding esmates and assumpons related to future
cash flows and discount rate. Given the nature of the current global economic environment, such assumpons and esmates have
a high degree of uncertainty. Therefore, other similar assumpons may lead to significantly different results.
4.2. Fair value of biological assets
Esmaon of fair value of biological assets is based on the discounted cash flow model. The fair value of biological assets might be
affected by the fact that the actual future cash flows will differ from the current forecast, which typically occurs as a result of sig-
nificant changes in any factors or assumpons used in the calculaons.
Among such factors are:
x differences between actual prices and price assumpons used in esmang net realizable value of eggs;
x changes in producvity of laying hens;
x unforeseen operaonal problems inherent in the branch specificity;
x age of hens at the end of the reporng period;
x changes in producon costs, costs of processing and products sales, discount and inflaon rates and exchange rates that
could adversely affect the fair value of biological assets.
The key assumpons concerning biological assets based on discounted cash flow approach are presented as follows:
x cost planning at each stage of poultry farming will remain constant in future periods;
x egg producon volume will not be significantly changed;
x egg sale price in future periods;
x long-term inflaon rate of Ukrainian UAH in future periods;
discount rate for determining the present value of future cash flows expected from the biological assets (Note 17).
Management determined that calculaons of the fair value of biological assets are the most sensive to changes in such assump-
ons as the volume of egg producon, cost planning and prices of eggs, eggs product and poultry meat. Management believes that
any reasonably possible change in key assumpons will not cause any significant change in the fair value of biological assets.
All assets and liabilies for which fair value is measured or disclosed in the consolidated financial statements are categorized with-
in the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as
a whole:
x Level 1: Quoted (unadjusted) market prices in acve markets for idencal assets or liabilies.
x Level 2: Valuaon techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable.
x Level 3: Valuaon techniques for which the lowest level input that is significant to the fair value measurement is unobserva-
ble.
Although some of these assumpons are obtained from published market data, the majority of these assumpons are esmated
based on the Group’s historical and projected results.
Fair value related disclosures for financial instruments and non-financial assets that are measured at fair value or where fair values
are disclosed, are summarized in Notes 17, 32.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transacon between market
parcipants at the measurement date.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 51
The fair value measurement is based on the presumpon that the transacon to sell the asset or transfer the liability takes place
either:
x In the principal market for the asset or liability.
Or
x In the absence of a principal market, in the most advantageous market for the asset or liability.
4.3. Expected credit losses
Financial assets of the Group that are subject to IFRS 9's expected credit loss model are represented by trade receivables. The
Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifeme expected loss allowance for
all trade and other receivables and contract assets. Cash and cash equivalents are also subject to the impairment requirements of
IFRS 9, the idenfied impairment loss was immaterial.
4.4. Useful lives of property, plant and equipment
The Group esmates useful lives of property, plant and equipment at least at the end of each financial year and, if expectaons
differ from previous esmates, changes are recorded as changes in accounng esmates in accordance with IAS 8 "Accounng
Policies, Changes in Accounng Esmates and Errors". These esmates can have a significant impact on the carrying amount of
property, plant and equipment and depreciaon expenses during the period.
4.5. Deferred tax assets
Deferred tax assets are recognized for all unused tax losses to the extent that the inflow of taxable profit is possible, at the ex-
pense of which these losses may be implemented. Significant judgments are required from the management in determining the
amount of deferred tax assets that can be recognized on the basis of the possible terms of receipt and the level of future taxable
profit together with the future tax planning strategy.
5. S
5.1. Recognion and measurement of financial instruments
Financial instruments: key measurement terms
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transacon between market
parcipants at the measurement date. The best evidence of fair value is the price in an acve market. An acve market is one in
which transacons for the asset or liability take place with sufficient frequency and volume to provide pricing informaon on an
ongoing basis.
Fair value of financial instruments traded in an acve market is measured as the product of the quoted price for the individual as-
set or liability and the number of instruments held by the enty. This is the case even if a market's normal daily trading volume is
not sufficient to absorb the quanty held and placing orders to sell the posion in a single transacon might affect the quoted
price.
Valuaon techniques such as discounted cash flow models or models based on recent arm's length transacons or consideraon
of financial data of the investees are used to measure fair value of certain financial instruments for which external market pricing
informaon is not available. Fair value measurements are analysed by level in the fair value hierarchy as follows:
x Level one: Measurements at quoted prices (unadjusted) in acve markets for idencal assets or liabilies,
x Level two: Valuaons techniques with all material inputs observable for the asset or liability, either directly (that is, as pric-
es) or indirectly (that is, derived from prices), and
x Level three: Valuaons not based on solely observable market data (that is, the measurement requires significant unobserv-
able inputs).
Transacon costs are incremental costs that are directly aributable to the acquision, issue or disposal of a financial instrument.
An incremental cost is one that would not have been incurred if the transacon had not taken place. Transacon costs include fees
and commissions paid to agents (including employees acng as selling agents), advisors, brokers and dealers, levies by regulatory
agencies and securies exchanges, and transfer taxes and dues. Transacon costs do not include debt premiums or discounts,
financing costs or internal administrave or holding costs.
Amorzed cost is the amount at which the financial instrument was recognized at inial recognion less any principal repayments,
plus accrued interest, and for financial assets less any write-down for incurred impairment losses. Accrued interest includes amor-
zaon of transacon costs deferred at inial recognion and of any premium or discount to the maturity amount using the effec-
ve interest method. Accrued interest income and accrued interest expense, including both accrued coupon and amorzed dis-
count or premium (including fees deferred at originaon, if any), are not presented separately and are included in the carrying
values of the related items in the consolidated statement of financial posion.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 52
The effecve interest method is a method of allocang interest income or interest expense over the relevant period, so as to
achieve a constant periodic rate of interest (effecve interest rate) on the carrying amount. The effecve interest rate is the rate
that exactly discounts esmated future cash payments or receipts (excluding future credit losses) through the expected life of the
financial instrument or a shorter period, if appropriate, to the gross carrying amount of the financial instrument. The effecve in-
terest rate discounts cash flows of variable interest instruments to the next interest repricing date, except for the premium or dis-
count which reflects the credit spread over the floang rate specified in the instrument, or other variables that are not reset to
market rates. Such premiums or discounts are amorzed over the whole expected life of the instrument. The present value calcu-
laon includes all fees paid or received between pares to the contract that are an integral part of the effecve interest rate.
Financial instruments: inial recognion
Financial instruments at fair value through profit or loss are inially recorded at fair value. All other financial instruments are ini-
ally recorded at fair value adjusted for transacon costs. Fair value at inial recognion is best evidenced by the transacon
price. A gain or loss on inial recognion is only recorded if there is a difference between fair value and transacon price which
can be evidenced by other observable current market transacons in the same instrument or by a valuaon technique whose in-
puts include only data from observable markets. Aer the inial recognion, an ECL allowance is recognized for financial assets
measured at amorzed cost and investments in debt instruments measured at fair value through other comprehensive income,
resulng in an immediate accounng loss.
All purchases and sales of financial assets that require delivery within the me frame established by regulaon or market conven-
on are recorded at trade date, which is the date on which the Group commits to deliver a financial asset. All other purchases are
recognized when the enty becomes a party to the contractual provisions of the instrument.
The Group uses discounted cash flow valuaon techniques to determine the fair value of loans to related pares that are not trad-
ed in an acve market. Differences may arise between the fair value at inial recognion, which is considered to be the transacon
price, and the amount determined at inial recognion using a valuaon technique with level 3 inputs. If any differences remain
aer calibraon of model inputs, such differences are amorzed on a straight-line basis over the term of the currency swaps, loans
to related pares. The differences are immediately recognized in profit or loss if the valuaon uses only level 1 or level 2 inputs.
5.2. Financial assets
Financial assets: Classificaon and subsequent measurement: measurement categories
The Group classifies financial assets in the following measurement categories: FVTPL, FVOCI and AC. The classificaon and subse-
quent measurement of debt financial assets depends on:
i. the Group's business model for managing the related assets porolio and
ii. the cash flow characteriscs of the asset.
As at 31 December 2020 and 31 December 2019 the Group did not hold financial assets at FVOCI.
Financial assets: Classificaon and subsequent measurement: business model
The business model reflects how the Group manages the assets in order to generate cash flows - whether the Group’s objecve is:
i. solely to collect the contractual cash flows from the assets ("hold to collect contractual cash flows”) or
ii. to collect both the contractual cash flows and the cash flows arising from the sale of assets (“hold to collect contractual
cash flows and sell”) or, if neither of (i) and (ii) is applicable, the financial assets are classified as part of “other” business
model and measured at FVTPL.
Business model is determined for a group of assets (on a porolio level) based on all relevant evidence about the acvies that the
Group undertakes to achieve the objecve set out for the porolio available at the date of the assessment. Factors considered by
the Group in determining the business model include the purpose and composion of a porolio, past experience on how the cash
flows for the respecve assets were collected, how risks are assessed and managed, how the assets' performance is assessed and
how managers are compensated.
Financial assets: Classificaon and subsequent measurement: cash flow characteriscs
Where the business model is to hold assets to collect contractual cash flows or to hold contractual cash flows and sell, the Group
assesses whether the cash flows represent solely payments of principal and interest (“SPPI”). Financial assets with embedded de-
rivaves are considered in their enrety when determining whether their cash flows are consistent with the SPPI feature. In mak-
ing this assessment, the Group considers whether the contractual cash flows are consistent with a basic lending arrangement, i.e.
interest includes only consideraon for credit risk, me value of money, other basic lending risks and profit margin.
Where the contractual terms introduce exposure to risk or volality that is inconsistent with a basic lending arrangement, the fi-
nancial asset is classified and measured at FVTPL. The SPPI assessment is performed on inial recognion of an asset and it is not
subsequently reassessed.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 53
The Group holds the trade receivables with the objecve to collect contractual cash flows and therefore measures them subse-
quently at amorzed cost using the effecve interest method. Details about the Group's impairment policies and the expected
credit loss measurement are provided in Note 31.
Financial assets: Reclassificaon
Financial instruments are reclassified only when the business model for managing the porolio as a whole changes. The reclassifi-
caon has a prospecve effect and takes place from the beginning of the first reporng period that follows aer the change in the
business model. The enty did not change its business model during the current and comparave period and did not make any
reclassificaons.
Financial assets: Credit loss allowance for ECL
The Group assesses, on a forward-looking basis, the ECL for debt instruments measured at AC and FVOCI and for the exposures
arising from loan commitments and financial guarantee contracts, for contract assets. The Group measures ECL and recognizes Net
impairment losses on financial and contract assets at each reporng date. The measurement of ECL reflects:
x an unbiased and probability weighted amount that is determined by evaluang a range of possible outcomes,
x me value of money and
x all reasonable and supportable informaon that is available without undue cost and effort at the end of each reporng peri-
od about past events, current condions and forecasts of future condions.
Financial assets of the Group that are subject to IFRS 9's new expected credit loss model are represented by trade receivables. The
Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifeme expected loss allowance for
all trade and other receivables and contract assets. Cash and cash equivalents are also subject to the impairment requirements of
IFRS 9, the idenfied impairment loss was immaterial.
Financial assets: Write-off
Financial assets are wrien-off, in whole or in part, when the Group exhausted all praccal recovery efforts and has concluded that
there is no reasonable expectaon of recovery. The write-off represents a derecognion event. Indicators that there is no reasona-
ble expectaon of recovery include:
x the counterparty experiences a significant financial difficulty as evidenced by its financial informaon that the Group ob-
tains;
x the counterparty considers bankruptcy or a financial reorganisaon;
x there is adverse change in the payment status of the counterparty as a result of changes in the naonal or local economic
condions that impact the counterparty.
The Group may write-off financial assets that are sll subject to enforcement acvity when the Group seeks to recover amounts
that are contractually due, however, there is no reasonable expectaon of recovery.
Financial assets: Derecognion
The Group derecognizes financial assets when (a) the assets are redeemed or the rights to cash flows from the assets otherwise
expire or (b) the Group has transferred the rights to the cash flows from the financial assets or entered into a qualifying pass-
through arrangement whilst (i) also transferring substanally all the risks and rewards of ownership of the assets or (ii) neither
transferring nor retaining substanally all the risks and rewards of ownership but not retaining control.
Control is retained if the counterparty does not have the praccal ability to sell the asset in its enrety to an unrelated third party
without needing to impose addional restricons on the sale.
Financial assets: Modificaon
The Group somemes renegoates or otherwise modifies the contractual terms of the financial assets. The Group assesses wheth-
er the modificaon of contractual cash flows is substanal considering, among other, the following factors: any new contractual
terms that substanally affect the risk profile of the asset (e.g. profit share or equity-based return), significant change in interest
rate, change in the currency denominaon, new collateral or credit enhancement that significantly affects the credit risk associat-
ed with the asset or a significant extension of a loan when the borrower is not in financial difficules.
If the modified terms are substanally different, the rights to cash flows from the original asset expire and the Group derecognizes
the original financial asset and recognizes a new asset at its fair value. The date of renegoaon is considered to be the date of
inial recognion for subsequent impairment calculaon purposes, including determining whether a SICR has occurred. The Group
also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference between the carrying amount of
the original asset derecognized and fair value of the new substanally modified asset is recognized in profit or loss, unless the sub-
stance of the difference is aributed to a capital transacon with owners.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 54
In a situaon where the renegoaon was driven by financial difficules of the counterparty and inability to make the originally
agreed payments, the Group compares the original and revised expected cash flows to assets whether the risks and rewards of the
asset are substanally different as a result of the contractual modificaon. If the risks and rewards do not change, the modified
asset is not substanally different from the original asset and the modificaon does not result in derecognion. The Group recalcu-
lates the gross carrying amount by discounng the modified contractual cash flows by the original effecve interest rate (or credit-
adjusted effecve interest rate for POCI financial assets), and recognizes a modificaon gain or loss in profit or loss.
5.3. Effecve interest rate method
The effecve interest rate method is used to calculate the amorzed cost of a financial asset and distribute interest income during
the relevant period. The effecve interest rate is the rate that enables discounng of esmated future cash receipts through the
expected life of a financial asset or a shorter period, if applicable.
Revenues relang to debt instruments are recorded using the effecve interest rate method, except for financial assets at fair val-
ue through profit or loss.
Financial assets at fair value through profit or loss - a financial asset is classified as at fair value through profit or loss if it is held for
trading or designated at fair value through profit or loss.
5.4. Cash and cash equivalents
Cash and cash equivalents include cash on hand and cash in bank accounts and deposits with an original maturity date of three
months or less and are stated at fair value.
5.5. Cash deposits
Cash deposits in the statement of financial posion are held for the investment acvies. For the purpose of the consolidated
statement of cash flows, short-term deposits are included in the invesng acvies.
5.6. Impairment of financial assets
Financial assets, except for financial assets at fair value through profit or loss, at each reporng date are assessed for signs indi-
cang impairment. Impairment loss is recognized when there is objecve evidence of reducon of the esmated future cash fl ows
on this asset as a result of one or more events that occurred aer the financial asset was recorded in the accounng. For financial
assets at amorzed cost, the amount of impairment is calculated as the difference between the asset's carrying amount and pre-
sent value of the expected future cash flows discounted using the effecve interest rate.
Impairment loss directly reduces the carrying amount of all financial assets, except for accounts receivable on principal acvies,
carrying amount of which is reduced due to the allowance formed. If the accounts receivable on principal acvies are uncollec-
ble, they are wrien-off against the related allowance. Subsequently received reimbursements of amounts previously wrien-off
are recorded in credit of the allowance account. Changes in the carrying amount of the allowance account are recorded in the
profit and loss.
Except for equity instruments available for sale, if in a subsequent period the amount of impairment loss decreases and such de-
crease can be objecvely related to an event occurring aer the impairment was recognized, the impairment loss previously rec-
ognized is recovered by adjusng the items in the income statement. In this case, the carrying amount of financial investments at
the date of recovery of impairment cannot exceed its amorzed cost, which would be reflected in the case, if impairment was not
recognized.
In respect of equity securies available for sale, any increase in fair value aer recognion of impairment loss relates directly to
equity.
5.7. Wring-off of financial assets
The Group writes-off a financial asset only if rights for cash flows under the corresponding contract terminated the treaty or if a
financial asset and corresponding risks and rewards are transferred to other organizaon. If the Group does not transfer or retain
all the principal risks and rewards of ownership of the asset and connues to control the transferred asset, it shall record its share
in the asset and related liability in the amount of possible payment of corresponding amounts. If the Group retains all the principal
risks and rewards of ownership of the transferred financial asset, it shall connue to account for the financial asset, and reflect a
secured loan on income earned.
5.8. Financial liabilies and equity instruments issued by the Group
5.8.1. Accounng as liabilies or equity
Debt and equity financial instruments are classified as liabilies or equity based on the substance of the corresponding contractual
obligaons.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 55
5.8.2. Equity instruments
Equity instrument is any contract confirming the right for a share in the company's assets remaining aer deducon of all its liabili-
es. Equity instruments issued by the Group are recorded in the amount of generated income net of direct expenses for their is-
sue.
5.8.3. Liabilies under financial guarantee contracts
Liabilies under financial guarantee contracts are inially measured at fair value and subsequently recorded at the higher of:
x cost of contractual obligaons determined in accordance with IAS 37 “Provisions, Conngent Liabilies and Conngent As-
sets”, and
x cost, less, where applicable, accumulated depreciaon reflected in accordance with the principles of revenue recognion
set forth below.
5.8.4. Financial liabilies
Financial liabilies - measurement categories
Financial liabilies are classified as subsequently measured at amorzed cost, except for (i) financial liabilies at fair value through
profit or loss: this classificaon is applied to derivaves, financial liabilies held for trading (e.g. short posions in securies), con-
ngent consideraon recognized by an acquirer in a business combinaon and other financial liabilies designated as such at ini-
al recognion and (ii) financial guarantee contracts and loan commitments. As of 31 December 2020 and 31 December 2019 the
Group did not have financial guarantee contracts and loan commitments or financial liabilies at fair value through profit or loss.
Financial liabilies - derecognion
Financial liabilies are derecognised when they are exnguished (i.e. when the obligaon specified in the contract is discharged,
cancelled or expires).
An exchange between the Group and its original lenders of debt instruments with substanally different terms, as well as substan-
al modificaons of the terms and condions of exisng financial liabilies, are accounted for as an exnguishment of the original
financial liability and the recognion of a new financial liability. The terms are substanally different if the discounted present val-
ue of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effec-
ve interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial
liability. In addion, other qualitave factors, such as the currency that the instrument is denominated in, changes in the type of
interest rate, new conversion features aached to the instrument and change in loan covenants are also considered. If an ex-
change of debt instruments or modificaon of terms is accounted for as an exnguishment, any costs or fees incurred are recog-
nised as part of the gain or loss on the exnguishment. If the exchange or modifica
on is not accounted for as an exnguishment,
any costs or fees incurred adjust the carrying amount of the liability and are amorsed over the remaining term of the modified
liability.
Modificaons of liabilies that do not result in exnguishment are accounted for as a change in esmate using a cumulave catch
up method, with any gain or loss recognised in profit or loss, unless the economic substance of the difference in carrying values is
aributed to a capital transacon with owners.
5.8.5. Trade and other accounts payable
Trade payables are recognized when the counterparty fulfills its contractual obligaons and measured at amorzed cost using the
effecve interest rate.
5.8.6. Loans and borrowings
Loans and borrowings are inially recognized at fair value less costs incurred in the transacon. Subsequently, loans and borrow-
ings are stated at amorzed cost; any difference between proceeds (net of transacon costs) and the amount of repayment is re-
flected in the income statement over the period for which loans and borrowings are issued using the effecve interest rate meth-
od. Loans and borrowings are classified as current liabilies, unless the Group has an uncondional right to defer selement of the
obligaon to at least one year aer the date of balance sheet preparaon.
5.8.7. Wring-off of financial liabilies
The Group writes-off financial liabilies only when they are repaid, cancelled or expire.
5.9. Foreign currency transacons
Transacons in currencies other than the funconal currency are inially recorded at exchange rates set on the dates of these
transacons. Monetary assets and liabilies denominated in such currencies are translated at the rates applicable at the reporng
date. All realized and unrealized gains and losses resulng from exchange rate differences are included in profit or loss for the
period.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 56
5.10. Biological assets
Biological assets represented by the commercial herd and herd replacements are recorded at fair value less esmated selling and
distribuon expenses. Esmate of fair value of biological assets of the Group is based on discounted cash flow models, according
to which the fair value of biological assets is calculated using present value of the expected net cash flows from biological assets
discounted at the appropriate rate.
The Group recognizes a biological asset only where it controls an asset as a result of past events; it is probable that the economic
benefits from the asset will flow to the Group; fair value or cost of an asset can be esmated with reasonable certainty.
Profit or loss arising on inial recognion of biological assets at fair value less esmated selling and distribuon expenses is includ-
ed in the consolidated income statement as incurred.
Agricultural products collected from a biological asset are measured at fair value less esmated selling and distribuon expenses.
Profit or loss arising on inial recognion of agricultural products at fair value, less esmated selling and distribuon expenses, is
recognized in the consolidated statement of comprehensive income.
5.11. Inventories
Inventories consist mainly of raw materials, package and packing materials, agricultural produce and finished goods. Inventories
are valued at the lower of cost and net realisable value.
Cost of goods includes the cost of acquision and, where appropriate, costs incurred in bringing inventories to their present condi-
on and locaon. Cost is calculated using the weighted average method. Inial cost of inventories includes the transfer of gains
and losses on qualifying cash flow hedges, recognised in OCI, in respect to the purchases of raw materials.
Net realisable value is the esmated selling price in the ordinary course of business, less esmated costs of compleon and the
esmated costs necessary to make the sale.
5.12. Property, plant and equipment
Property, plant and equipment are recorded at historical cost or deemed cost, equal to fair value at the date of transion to IFRS,
less accumulated depreciaon and accumulated impairment losses. Historical cost of an asset of property, plant and equipment
includes (a) the purchase price, including non-recoverable import dues and taxes net of trade and other discounts; (b) any costs
directly related to bringing an asset to the locaon and condion, which allow its funconing in accordance with the intenons of
the Group's management; (c) inial assessment of the costs of dismantling and removal in the asset of property, plant and equip-
ment and restoring the occupied territory; this obligaon is assumed by the Group either upon the acquision of an asset, or as a
result of its operaon for a certain period of me for the purposes not related to the producon of inventories during this period.
Cost of assets created in-house includes cost of materials, direct labor costs and an appropriate proporon of producon over-
heads.
Construcon in progress includes costs directly related to the construcon of property, plant and equipment, including distribuon
of variable overheads associated with the construcon and prepayments for the property, plant and equipment. Construcon in
progress is not depreciated. These assets are depreciated from the moment when they are used in economic acvity, on the same
basis as depreciaon on other assets.
Subsequently capitalised costs include major expenditures for improvements and replacements that extend the useful lives of the
assets or increase their revenue generang capacity. Repairs and maintenance expenditures that do not meet the foregoing crite-
ria for capitalisaon are charged to the consolidated statement of comprehensive income as incurred.
Depreciable amount is the cost of an asset of property, plant and equipment, or any other amount, less its residual value. The re-
sidual value of an asset is the esmated amount that the company would receive to date from the sale of an item of property,
plant and equipment, less esmated costs of disposal if the asset reached the age and condion, in which, presumably, it will be at
the end of its useful life. Assets under finance lease are depreciated over the shorter of esmated useful life on the same basis as
own assets or over the period of the relevant lease.
Depreciaon is provided to write-off the depreciable amount over the useful life of an asset and is calculated using the straight-
line method. Useful lives of the groups of property, plant and equipment are as follows:
Buildings 10 - 40 years
Plant and equipment 5 - 25 years
Vehicles 3 - 10 years
Furniture and fings 3 - 5 years
Construcon in progress and uninstalled equipment No depreciaon
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 57
The residual value, useful life and depreciaon method are reviewed at the end of each financial year. Impact of any changes aris-
ing from esmates made in prior periods is recorded as a change in an accounng esmate.
Gains or losses arising from disposal or liquidaon of an asset of property, plant and equipment, are defined as the difference be-
tween sales proceeds and carrying amount of an asset and recognized in profit or loss.
5.13. Impairment of property, plant and equipment
At the end of each reporng period the Group idenfies signs of possible impairment of assets. If any such indicaon exists, the
Group reviews the carrying amount of its items of property, plant and equipment to determine whether any signs of impairment
exist due to depreciaon. If any such indicaon exists, the expected recoverable amount of an asset is esmated to determine the
amount of impairment losses, if any.
In order to determine the impairment losses, assets are grouped at the lowest levels for which it is possible to idenfy separately
the cash flows (cash generang unit).
The recoverable amount is the higher of fair value less selling and distribuon expenses and value of an asset in use. In assessing
the value of an asset in use, the esmated future cash flows associated with the asset, are discounted to their present value using
pre-tax discount rate that reflects current market esmates of me value of money and the risks inherent in the asset.
If, according to the esmates, the recoverable amount of an asset (cash generang unit) is less than its carrying amount, the carry-
ing amount of an asset (cash generang unit) is reduced to the recoverable amount. An impairment loss is recognized immediately
in the income statement, except when the asset is recorded at a revalued amount. In this case the impairment loss is considered
as a revaluaon decrease.
In cases where impairment losses are subsequently reversed, the carrying amount of the asset (cash generang unit) is increased
to the revised esmate of recovery amount, however, in such a way that the increased carrying amount does not exceed the carry-
ing amount that would be determined, if an impairment loss was not recognized in respect of an asset (cash generang unit) in
previous years. Reversal of impairment loss is recognized immediately in the income statement, except when the asset is recorded
at a revalued amount. In this case, the reversal of an impairment loss is considered as a revaluaon increase.
5.14. Intangible assets
Intangible assets acquired separately are measured on inial recognion at cost. The cost of intangible assets acquired in a busi-
ness combinaon is its fair value as at the date of acquision. Following inial recognion, intangible assets are carried at cost less
any accumulated amorzaon and any accumulated impairment losses. Internally generated intangible assets are not capitalized
and expenditure is reflected in the income statement in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amorsed over the useful economic life and assessed for impairment whenever there is an
indicaon that the intangible asset may be impaired. The amorsaon period and the amorsaon method for an intangible asset
with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected paern
of consumpon of future economic benefits embodied in the asset is accounted for by changing the amorsaon period or meth-
od, as appropriate, and are treated as changes in accounng esmates. The amorsaon expense on intangible assets with finite
lives is recognised in the income statement in the expense category consistent with the funcon of the intangible asset.
Intangible assets with indefinite useful lives are not amorsed, but are tested for impairment annually, either individually or at the
cash generang unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life connues
to be supportable. If not, the change in useful life from indefinite to finite is made on a prospecve basis.
Gains or losses arising from derecognion of an intangible asset are measured as the difference between the net disposal pro-
ceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.
Amorzaon is calculated on a straight line basis over the useful life of an asset, which is 10 years.
5.15. Borrowing costs
Borrowing costs directly aributable to the acquision, construcon or producon of an asset that necessarily takes a substanal
period of me to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are
expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an enty incurs in connecon
with the borrowing of funds.
5.16. Leases
A lessee measures right-of-use assets similarly to other non-financial assets (such as property, plant and equipment) and lease
liabilies similarly to other financial liabilies. As a consequence, a lessee recognises depreciaon of the right-of-use asset and
interest on the lease liability. The depreciaon would usually be on a straight-line basis. In the statement of cash flows, a lessee
separates the total amount of cash paid into principal (presented within financing acvies) and interest (presented within either
operang or financing acvies) in accordance with IAS 7.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 58
Assets and liabilies arising from a lease are inially measured on a present value basis. The measurement includes non-
cancellable lease payments (including inflaon-linked payments), and also includes payments to be made in oponal periods if the
lessee is reasonably certain to exercise an opon to extend the lease, or not to exercise an opon to terminate the lease. The ini-
al lease asset equals the lease liability in most cases.
The lease asset is the right to use the underlying asset and is presented in the statement of financial posion either as part of
property, plant and equipment or as its own line item.
5.17. Conngent assets and liabilies
Conngent liabilies are not recognized in the consolidated financial statements. Such liabilies are disclosed in the notes to the
consolidated financial statements, except where the probability of oulow of resources embodying economic benefits is insignifi-
cant.
Conngent assets are not recognized in the consolidated financial statements, but disclosed in the notes to the extent that it is
probable that the economic benefits will flow to the Group.
5.18. Provisions
Provisions are recognized when the Group has a present obligaon (legal or construcve) as a result of a past event, it is probable
that an oulow of resources embodying economic benefits will be required to sele the obligaon and a reliable esmate can be
made of the obligaon amount.
The amount recognized as a provision is the best esmate of compensaon necessary to repay a current liability on the reporng
date, which takes into account all the risks and uncertaines inherent in this liability. In cases where the amount of provision is
esmated using cash flows that can be required to repay current liabilies, its carrying amount represents the present value of
these cash flows.
Where there is a possibility that one or all of the economic benefits necessary to recover the amount of provision will be reim-
bursed by a third party, the receivables are recognized as an asset if there is actual assurance that such reimbursement will be
received and the amount of receivables can be measured reliably.
5.19. Revenue recognion
Revenue is income arising in the course of the Group's ordinary acvies. Revenue is recognized in the amount of transacon
price. Transacon price is the amount of consideraon to which the Group expects to be entled in exchange for transferring con-
trol over promised goods or services to a customer, excluding the amounts collected on behalf of third pares.
Revenue is recognized net of discounts, returns and value added taxes, export dues, other similar mandatory payments.
Group's contracts with customers are fixed-price contracts and generally include both advance payment and deferred payment for
the same contracts. Generally, the sales are made with a credit term of 30-60 days, which is consistent with the market pracce
and consequently trade receivables are classified as current assets.
A receivable is recognized when the goods are delivered or dispatched based on delivery terms as this is the point in me that the
consideraon is uncondional because only the passage of me is required before the payment is due (Note 21). Contract assets
are immaterial and therefore not presented separately in the consolidated financial statements.
A contract liability is an enty's obligaon to transfer goods or services to a customer for which the enty has received considera-
on from the customer.
The five-step model framework
The core principle of IFRS 15 is that an enty will recognize revenue to depict the transfer of promised goods or services to cus-
tomers in an amount that reflects the consideraon to which the enty expects to be entled in exchange for those goods or ser-
vices. This core principle is delivered in a five-step model framework:
x Idenfy the contract(s) with a customer
x Idenfy the performance obligaons in the contract
x Determine the transacon price
x Allocate the transacon price to the performance obligaons in the contract
x Recognize revenue when (or as) the enty sasfies a performance obligaon.
Applicaon of this guidance will depend on the facts and circumstances present in a contract with a customer and will require the
exercise of judgment.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 59
Step 1: Idenfy the contract with the customer
A contract with a customer are exists when:
x the contract has been approved by the pares to the contract;
x each party’s rights in relaon to the goods or services to be transferred can be idenfied;
x the payment terms for the goods or services to be transferred can be idenfied;
x the contract has commercial substance; and
x it is probable that the consideraon to which the enty is entled to in exchange for the goods or services will be collected.
If a contract with a customer does not yet meet all of the above criteria, the Group connues as to re-assess the contract going
forward to determine whether it subsequently meets the above criteria.
Step 2: Idenfy the performance obligaons in the contract
At the incepon of the contract, the Group assess as the goods or services that have been promised to the customer, and idenfy
as a performance obligaon:
x a good or service (or bundle of goods or services) that is disnct;
x or a series of disnct goods or services that are substanally the same and that have the same paern of transfer to the
customer.
Step 3: Determine the transacon price
The transacon price is the amount to which the Group expects to be entled in exchange for the transfer of goods and services.
When making this determinaon, the Group considers past customary business pracces.
Step 4: Allocate the transacon price to the performance obligaons in the contracts
Where a contract has mulple performance obligaons, the Group will allocate the transacon price to the performance obliga-
ons in the contract by reference to their relave standalone selling prices. If a standalone selling price is not directly observable,
the Group will need to esmate it using an adjusted market assessment approach or the expected cost plus a margin approach.
Step 5: Recognize revenue when (or as) the enty sasfies a performance obligaon
Revenue is recognized as control is passed, either over me or at a point in me.
Control of an asset is defined as the ability to direct the use of and obtain substanally all of the remaining benefits from the asset.
These include:
x using the asset to produce goods or provide services;
x using the asset to enhance the value of other assets;
x using the asset to sele liabilies or to reduce expenses;
x selling or exchanging the asset;
x pledging the asset to secure a loan; and
x holding the asset.
The benefits related to the asset are the potenal cash flows that may be obtained directly or indirectly.
5.20. Income tax
Income tax is calculated in accordance with the requirements of the applicable legislaon of Ukraine. Income tax is calculated on
the basis of financial results for the year adjusted to items that are not included in taxable income or that cannot be aributed to
gross expenses. It is calculated using tax rates effecve at the reporng date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences
between the carrying amount of assets and liabilies in the financial statements and the corresponding tax base used to calculate
taxable income. Deferred tax liabilies are generally recognized for all taxable temporary differences and deferred tax assets are
recorded taking into account the degree of certainty in sufficient taxable income, which enables to realize temporary differences
related to gross expenses.
Deferred tax is calculated at tax rates, which presumably will be applied during the sale of related assets or repayment of related
liabilies.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 60
Assets and liabilies on deferred income tax are offset when: a) the Group has a legally enforceable right to offset the recognized
current income tax assets and liabilies; b) the Group intends either to perform selement by offseng counterclaims, or simulta-
neously sell the asset and sele the liability; c) deferred tax assets and liabilies relate to income taxes levied by the same taxaon
authority in each future period in which it is intended to repay or reimburse a significant amount of deferred tax liabilies and as-
sets.
Deferred income tax is recognized in the income statement, except when it relates to items recognized directly in equity. In this
case the deferred tax is also recognized in equity.
In 2021, Ukrainian corporate income tax was levied at a rate of 18% (2020: 18%).
The majority of the Group companies that are involved in agricultural producon (poultry farms and other enes engaged in agri-
cultural producon) benefit substanally from the status of an agricultural producer. These companies are exempt from income
taxes and pay the Fixed Agricultural Tax instead (Note 16).
5.21. Value Added Tax
For the year ended 31 December 2021 and 2020, VAT was levied at two rates: 20% on Ukrainian domesc sales and imports of
goods, works and services and 0% on export of goods and provision of works or services to be used outside Ukraine. In 2020 VAT
rate remains at the same level.
VAT output equals the total amount of VAT collected within a reporng period, and arises on the earlier of the date of shipping
goods to the customer or the date of receiving payment from the customer. VAT input is the amount that a taxpayer is entled to
offset against his VAT liability in the reporng period. According to Ukrainian legislaon, rights to VAT input arise on the earlier of
the date of payment to the supplier or the date goods are received.
5.22. Government grants
Government grants are stated at fair value when there is reasonable assurance that the grant will be received.
Ukrainian legislaon provides a variety of tax benefits and subsidies for agricultural companies. Such benefits and subsidies are
approved by the Supreme Council of Ukraine, the Ministry of Agrarian Policy, Ministry of Finance, local authories. Under the ap-
plicable legislaon, agricultural producers are entled to use VAT benefit regarding agricultural transacons.
Government grants related to VAT
Upon introducon of a new agricultural support system in early 2017, Ukraine canceled specific VAT subsidies.
Early in 2016, under this program, the Group’s companies are subject to special tax treatment for VAT (Note 12.b). The Group’s
enterprises, which qualify as agricultural producers, are entled to retain the net VAT payable. VAT amounts payable are not
transferred to the State, but credited to the enty’s separate special account to support the agriculture acvies of the Group. Net
result on VAT operaons, calculated as excess of VAT liability over VAT credit is charged to profit or loss. VAT receivable exceeding
VAT liability is used as a reducon in tax liabilies of the next period.
In 2017, the State Budget for agricultural support envisages that support automacally distributed among agricultural producers
proporonally based on sales of agricultural products by those producers on a monthly basis. The budget subsidy for a sector is
calculated on a monthly basis and is proporonal to overall VAT paid. According to the Law of Ukraine On Agricultural Support, all
agricultural producers that apply for the subsidy must be included in the State Registry of Budget Subsidy Recipients. An agricultur-
al producer is defined as a farm or a company that derived 75% of its sales over the last 12 reporng periods (months) from sales
of agricultural products. From 2017 onwards, budget subsidies will be provided unl 1 January 2022. The agricultural producers
will be engaged in the producon of farm animals, as well as fruit and vegetable farmers. For each agricultural producer, the
amount of the subsidy is not to exceed the amount of VAT tax paid by the producers, and will be distributed on a monthly basis
(Note 12.a).
Government grants are recognised as income over the periods necessary to match them with the related costs, or as an offset
against finance costs when received as compensaon for the finance costs for agricultural producers. To the extent the condions
aached to the grants are not met at the reporng date, the received funds are recorded in the Group’s consolidated financial
statements as deferred income.
Other government grants are recognised at the moment when the decision to disburse the amounts to the Group is made.
Government grants are not recognised unl there is reasonable assurance that the Group will comply with the condions aached
to them and that the grants will be received.
5.23. Paral compensaon of interest rates on loans raised by the agricultural companies from financial
instuons
The Group companies are entled to compensaon from the government of a share of interest expenses incurred on loans which
were received for agricultural purposes. The amount of interest compensaon depends on the term and purpose of the loan. Due
to the fact that the payment of interest compensaons depends on the capabilies of the country's budget, they are recognized
on a cash basis as other operang income in the period of receipt.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 61
5.24. Related party transacons
For the purposes of these consolidated financial statements, the pares are considered to be related if one of the pares has a
possibility to control or considerably influence the operaonal and financial decisions of the other company. While considering any
relaon which can be defined as related party transacons it is necessary to take into consideraon the substance of the transac-
on not only their legal form.
5.25. Reclassificaon
Certain comparave informaon presented in the consolidated financial statements for the year ended 31 December 2020 has
been revised in order to achieve comparability with the presentaon used in the consolidated financial statements for the year
ended 31 December 2020. Such reclassificaons and revisions were not significant to the Group`s consolidated financial state-
ments.
6. N
The following amended standards became effecve from 1 January 2021, but did not have any material impact on the Group:
x Interest rate benchmark (IBOR) reform – phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (issued
x on 27 August 2020 and effecve for annual periods beginning on or aer 1 January 2021).
x Covid-19-Related Rent Concessions – Amendments to IFRS 16 (issued on 31 March 2021 and effecve for annual periods
beginning on or aer 1 April 2021).
New and amended standards and interpretaons adopted
Below is a list of new standards, clarificaons and amendments that result in new disclosure requirements for future
reporng periods:
The management expects that the above standards, when effecve, will not have a material effect on the consolidated financial
statements of the Group in future periods.
IFRS
Effecve date:
IFRS 17 Insurance Contracts (including amendments to IFRS 17 issued in June 2020 and amendments
to IFRS 17 Inial Adopon of IFRS 17 and IFRS 9 – comparave informaon released in December
2021)
Applicable to annual reporng periods
beginning on or aer 1 January 2023.
Not yet endorsed for use in the EU.
Amendments to IFRS 4 - Applicaon of IFRS 9 Financial Instruments together with IFRS 4 Insurance
Contracts (including amendments to IFRS 4 - Extension of the temporary exempon from the applica-
on of IFRS ( IFRS) 9" issued in June 2020)
Annual reporng periods beginning on
or aer 1 January 2023. Not yet en-
dorsed for use in the EU.
Amendments to IAS 1 Presentaon of Financial Statements: Classificaon of Liabilies as Current or
Non-current and Classificaon of Liabilies as Current or Non-current - Deferral of Effecve Date
(issued on 23 January 2020 and 15 July 2020 respecvely)
Annual reporng periods beginning on
or aer 1 January 2023. Not yet en-
dorsed for use in the EU.
Amendments to IAS 37 – Onerous Contracts – Costs to Perform a Contract (issued on 14 May 2020)
Annual reporng periods
beginning on or aer 1 January 2022.
Amendments to IAS 16 - Property, Plant and Equipment: proceeds before Use for the Intended Use
(issued on 14 May 2020)
Annual reporng periods
beginning on or aer 1 January 2022.
Annual Improvements to IFRS 2018-2020 Period: Amendments to IFRS 1 First-
Time Adopon of Internaonal Financial Reporng Standards – First-Time Adopter of Internaonal
Financial Reporng Standards (issued on 14 May 2020)
Annual reporng periods
beginning on or aer 1 January 2022.
Annual Improvements to IFRS 2018-2020 Period: Amendments to IFRS 9
Financial Instruments – Fee for the 10% test to derecognise financial liabilies (issued on 14 May 2020)
Annual reporng periods
beginning on or aer 1 January 2022.
Annual Improvements to IFRS 2018-2020 Period: Amendments to IAS 41
Agriculture – Taxaon in Fair Value Measurement (issued on 14 May 2020)
Annual reporng periods
beginning on or aer 1 January 2022.
Amendments to IFRS 3 – “References to the Conceptual Framework” (issued on 14 May 2020)
Annual reporng periods beginning on
or aer 1 January 2022.
Amendments to IAS 8 Accounng policies, Changes in Accounng Esmates and Errors: Definion of
Accounng Esmates (issued on 12 February 2021)
Annual reporng periods
beginning on or aer 1 January 2023.
Amendments to IAS 1 Presentaon of Financial Statements and IFRS Pracce Statement 2: Disclosure
of Accounng policies (issued on 12 February 2021)
Annual reporng periods beginning on
or aer 1 January 2023
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilies arising from a
Single Transacon (issued on 7 May 2021)
Annual reporng periods beginning on
or aer 1 January 2023
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 62
7. S N-
As at 31 December 2021 and 2020 the Group included the following subsidiaries:
Name of the company Business acvies
31 December
2021
31 December
2020
Limited Liability Company
“Ovostar Union”
Strategic management of subsidiary companies in
Ukraine
100.0% 100.0%
Limited Liability Company
“Ovostar”
Egg-products producon and distribuon (Ukraine) 100.0% 100.0%
Limited Liability Company
“Yasensvit”
Breeder farms, producon of hatching eggs, farms
for growing young laying flock and for laying flock,
producon and distribuon of shell eggs, poultry
feed producon (Ukraine)
100.0% 100.0%
Public Joint Stock Company
“Poultry Farm Ukraine”
Producon of shell eggs, assets holding (Ukraine) 92.0% 92.0%
Public Joint Stock Company
“Malynove”
Producon of shell eggs, assets holding (Ukraine) 94.0% 94.0%
Public Joint Stock Company
“Krushynskyy Poultry Complex”
Trading company, egg trading – non operaonal
acvity (Ukraine)
76.0% 76.0%
Limited Liability Company
“Skybynskyy Fodder Plant”
In the process of liquidaon (Ukraine) 98.6% 98.6%
"SIA" Ovostar Europe" Trade company (Latvia) 89.0% 89.0%
SIA "Gallusman" Producon of shell eggs (Latvia) 89.0% 89.0%
SIA "EPEX" Egg-products producon (Latvia) 89.0% 89.0%
Internaonal Food Trade Limited Trade company (Brish Virgin Islands) 100.0% 100.0%
OAE Food Trade FZE Trade company (United Arab Emirates) 100.0% 100.0%
Limited Liability Company "BVV
EQUIPMENT"
Non-operaonal acvity (Ukraine) 0.0% 100.0%
Limited Liability Company “BV
TRADING”
Non-operaonal acvity (Ukraine) 0.0% 100.0%
*REMEDIUM FOODS B.V. Egg processing, distribuon of egg products 50.00% 50.00%
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 63
The following tables summarize the informaon relang to each of the Group`s subsidiaries that has material NCI, before any intra
-group eliminaon:
31 December 2021
PJSC
“Poultry
Farm
Ukraine”
PJSC
“Malynove”
PJSC
“Krushyns
kyy
Poultry
Complex”
"SIA"
Ovostar
Europe"
SIA
"Gallusm
an"
SIA
"EPEX"
Total
NCI percentage
8,0% 6,0% 24,0% 11,0% 11,0% 11,0%
Non-current assets 621 14 562
36 372 62
Current assets 5 571 13 554 543 3 633 57 261
Non-current liabilies
Current liabilies (3 095) (27 346) (7) (3 670) (48) (308)
Net assets 3 097 770 537 (1) 381 15
Carrying amount of NCI 262 44 127 42 477
Revenue 2 601 10 756
24 532 419
Profit (loss) 738 (4 856) 430 293 380 29
OCI (2 063) (248) (435) 1 191 (413) (1)
Total comprehensive income
(1 325) (5 104) (5) 1 484 (33) 28
Profit allocated to NCI 63 (276) 102 32 42 (35)
OCI allocated to NCI (175) (14) (103) 131 (45) (206)
Cash flows from operang acvies
18 (85) (42) (11)
Cash flows from investment acvies
(18) (32)
Effect from translaon into presenta-
on currency
(22) (2)
Net (decrease)/ increase in cash and cash equivalents
(139) (44) (11)
31 December 2020
PJSC
“Poultry
Farm
Ukraine”
PJSC
“Malynove”
PJSC
“Krushyns
kyy
Poultry
Complex”
"SIA"
Ovostar
Europe"
SIA
"Gallusm
an"
SIA
"EPEX"
Total
NCI percentage
8,0% 6,0% 24,0% 11,0% 11,0% 11,0%
Non-current assets 534 20 302
365 56
Current assets 3 587 5 034 533 5 515 114 108
Non-current liabilies
Current liabilies (515) (20 001) (6) (6 077) (69) (174)
Net assets 3 606 5 335 527 (553) 410 (10)
Carrying amount of NCI 288 320 127 (61) 45 (1) 718
Revenue 2 376 8 276
25 968 88
Profit (loss) 70 (1 953) (4)
21 (5)
OCI (870) (1 148) (110) (1 178) 34 (1)
Total comprehensive income
(800) (3 101) (114) (1 175) 55 (6)
Profit allocated to NCI (117) (1) (1) (110)
OCI allocated to NCI (71) (69) (26) (130)
(292)
Cash flows from operang acvies
(280)
Cash flows from investment acvies (9) (11)
Effect from translaon into presenta- on currency
18 16
Net (decrease)/ increase in cash and
cash equivalents
(271)
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 64
8. S
All of the Group’s operaons are located within Ukraine.
Segment informaon is analyzed on the basis of the types of goods supplied by the Group’s operang divisions. The Group’s re-
portable segments under IFRS 8 are therefore as follows:
The accounng policies of the reportable segments are the same as the Group’s accounng policies described in Note 5. Sales be-
tween segments are mainly carried out at market prices. Operang profit before tax represents segment result. This is the meas-
ure reported to the chief operang decision maker for the purposes of resource allocaon and assessment of segment perfor-
mance.
For the purposes of monitoring segment performance and allocang resources between segments:
All assets are allocated to reportable segments.
All liabilies are allocated to reportable segments.
The following table presents revenue, results of operaons and certain assets and liabilies informaon regarding segments for
the year ended 31 December 2021 and 2020:
In 2021 and 2020 no sales were seled by barter transacons.
Egg operaons segment sales of egg
sales of chicken meat
Egg products operaons segment sales of egg processing products
Oilseed operaons segment sales of sunflower oil, rapeseed oil and related
products
12 months ended 31 December 2021
Operaons segment
Egg Egg products Consolidated
Revenue
155 320 54 964 210 284
Inter-segment revenue
(63 170) (13 748) (76 918)
Revenue from external buyers
92 150 41 216 133 366
Profit(Loss) before tax
4 513 (2 880) 1 633
12 months ended 31 December 2020
Operaons segment
Egg Egg products Consolidated
Revenue
125 272 45 242 170 514
Inter-segment revenue
(56 479) (15 128) (71 607)
Revenue from external buyers
68 793 30 114 98 907
Profit(Loss) before tax
1 248 1 532 2 780
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 65
Segment assets, liabilies and other informaon regarding segments as at 31 December 2021 and 2020 were presented as follows:
The Group presented disaggregated revenue based on the type of goods or services provided to customers and the geographical
region of goods and services. Enes will need to make this determinaon based on enty-specific and/or industry-specific factors
that would be most meaningful to their business.
The Group presented a reconciliaon of the disaggregated revenue with the revenue informaon disclosed for each reportable
segment.
Set out below is the disaggregaon of the Group’s revenue from contracts with customers:
Operaons segment
31 December 2021 Total
Egg Egg products
Total segment assets 124 768 16 251 141 019
Total segment liabilies 30 749 381 31 130
Addion to property, plant and equipment and intangible assets 398 153 551
Net change in fair value of biological assets and agricultural produce (8 529)
(8 529)
Depreciaon and amorzaon (3 787) (662) (4 449)
Interest income
10
Interest on debts and borrowings (380) (380)
Income tax expense (44) 66 22
Operaons segment
31 December 2020 Total
Egg Egg products
Total segment assets 113 728 17 586 131 314
Total segment liabilies 26 418 492 26 910
Addion to property, plant and equipment and intangible assets 2 181 583 2 764
Net change in fair value of biological assets and agricultural produce (3 742)
(3 742)
Depreciaon and amorzaon (3 468) (443) (3 911)
Interest income 33
42
Interest on debts and borrowings (449)
(449)
Income tax expense (76) (112) (188)
Operaons segment
12 months ended 31 December 2021 Total
Egg Egg products
Type of goods or service
Goods 92 077 41 161 133 238
Services 73 55 128
Total revenue from contracts with customers 92 150 41 216 133 366
Geographical markets
Ukraine 71 463 24 179 95 642
Middle East 12 026 4 862 16 888
European Union 3 854 9 658 13 512
CIS
73 73
Africa 152 711 863
Other 4 655 1 733 6 388
Total revenue from contracts with customers 92 150 41 216 133 366
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 66
Revenue from external buyers divided by geographic locaon (connued)
9. C
10. S
12 months ended
31 December 2021
12 months ended
31 December 2020
Costs of inventories recognised as an expense (87 971) (60 639)
Packaging costs (9 525) (7 489)
Cost of goods purchased for resale (274) (622)
Wages, salaries and social security costs (7 886) (7 722)
Amorsaon, depreciaon and impairment (4 088) (3 466)
Other expenses (1 479) (1 809)
Total (111 223) (81 747)
12 months ended
31 December 2021
12 months ended
31 December 2020
Transportaon expenses (5 302) (4 987)
Wages, salaries and social security costs (1 290) (1 031)
Cost of materials (999) (590)
Markeng and adversing expenses (94) (143)
Amorsaon, depreciaon and impairment (102) (94)
Other expenses (509) (776)
Total (8 296) (7 621)
Operaons segment
12 months ended 31 December 2020 Total
Egg Egg products
Type of goods or service
Goods 68 395 29 985 98 380
Services 398 129 527
Total revenue from contracts with customers 68 793 30 114 98 907
Geographical markets
Ukraine 46 071 13 032 59 103
Middle East 15 621 3 231 18 852
European Union 4 347 11 365 15 712
CIS 358 22 380
Africa
714 716
Other 2 394 1 750 4 144
Total revenue from contracts with customers 68 793 30 114 98 907
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 67
11. A
12. O
Recovery of assets previously wrien-off mainly represents amounts of inventory surplus idenfied in the reporng
period during the stock-taking and recovery of amounts previously recognized as doubul.
a) Government subsidies
On 7 February 2018, the Cabinet of Ministers of Ukraine approved the procedure to obtain livestock sector state support. During
the year ended 31 December 2021, the Group received government grants in accordance to the compensaon program for con-
strucon and reconstrucon of livestock farms in an amount of USD 0 thousand (2020: USD 826 thousand). Government grants are
presented in the statement of the financial posion as deferred income, which is recognised in profit or loss on a systemac
basis over the useful life of the related assets.
The unamorzed poron of the government subsidies as of 31 December 2021 is USD 2 189 thousand (31 December 2020: USD 3
149 thousand).
b) Insurance compensaon
In July 2020 the Company has received insurance recovery in amount of USD 1 805 thousand for the loss of fixed assets destroyed
in the fire accident in August 2019.
13. O
12 months ended
31 December 2021
12 months ended
31 December 2020
Wages, salaries and social security costs
(1 475) (1 352)
Legal, audit and other professional fees
(557) (425)
Service charge expenses
(886) (964)
Cost of materials
(262) (177)
Amorsaon, depreciaon and impairment
(259) (351)
Other expenses
(217) (356)
Total
(3 656) (3 625)
Note
12 months ended
31 December 2021
12 months ended
31 December 2020
Income from refund under the special legislaon:
Government subsidies
a)
283 254
Total income from refund under the special legislaon 283 254
Gain on recovery of assets previously wrien off
b)
29 20
Insurance compensaon 17 1 805
Gain on disposal of other current assets 19
Other income 217 267
Total 565 2 346
12 months ended
31 December 2021
12 months ended
31 December 2020
Wring off fixed assets
(25)
Impairment of doubul accounts receivable and prepayments to suppliers (930) (373)
Loss on disposal of property plant and equipment (2) (3)
Fines and penales (21) (20)
Other expenses (47) (55)
Total (1 000) (476)
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 68
14. F
15. F
16. I
Companies of the Group that are involved in agricultural producon pay the Fixed Agricultural Tax (the “FAT”) in accordance with
the applicable laws. The FAT is paid in lieu of corporate income tax, land tax, dues for geological survey works and dues for
trade patents.
The FAT is calculated by local authories and depends on the area and valuaon of land occupied. This tax regime is valid indefi-
nitely. FAT does not constute an income tax, and as such, is recognized in the statement of comprehensive income in administra-
ve expenses.
During the year ended 31 December 2021, the Group companies which have the status of the Corporate Income Tax (the “CIT”)
payers in Ukraine were subject to income tax at a 18% rate (31 December 2020: at a 18% rate). The deferred income tax assets
and liabilies as of 31 December 2021 were measured based on the tax rates expected to be applied to the period when the tem-
porary differences are expected to reverse.
The major components of income tax expense for the year ended 31 December 2021 and 2020 were:
Reconciliaon between tax expense and the product of accounng profit mulplied by Ukraine’s domesc tax rate for the years
ended 31 December 2021 and 2020 was as follows:
(1) Current year (income)/losses for which no deferred tax asset was recognized relate to Ovostar Union Public Company Limited,
the Cyprus company and Internaonal Food Trade Limited. The income tax rate in the BVI is 0%, Cyprus is 12.5%, Latvia is 0%.
12 months ended
31 December 2021
12 months ended
31 December 2020
Interest on debts and borrowings
(380) (449)
Interest on financial lease
Foreign currency exchange loss
(871)
Total
(380) (1 320)
12 months ended
31 December 2021
12 months ended
31 December 2020
Interest income 10 42
Foreign currency exchange profit 776
Other financial income 16
Total 786 58
12 months ended
31 December 2021
12 months ended
31 December 2020
Current income tax
16 (52)
Deferred tax
(136)
Income tax (expense)/benefit reported in the income statement
22 (188)
12 months ended
31 December 2021
12 months ended
31 December 2020
Accounng profit before income tax 1 633 2 780
At Ukraine’s statutory income tax rate of 18% (2020: 18%) 294 500
Tax effect of:
Income generated by FAT payers (exempt from income tax) (34) 339
Current year losses for which no deferred tax asset was recognised
at a rate of 0% (1)
(596) 477
Effect of expenses that are not deducble in determining taxable profit 325 (1 160)
Effect of translaon to presentaon currency (11) 32
Income tax expense/(benefit) (22) 188
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 69
Deferred tax
As at 31 December 2021 and 2020, deferred tax assets and liabilies comprised the following:
Deferred income tax assets and liabilies are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilies and when the deferred income taxes relate to the same fiscal authority. The following amounts, determined
aer appropriate offseng, are presented in the consolidated statement of financial posion as at 31 December 2021 and 2020:
31 December
2021
Recognized
in statement
of compre-
hensive
income
Effect of trans-
laon into
presentaon
currency
31 December
2020
Advances received and other payables
(7)
Prepayments to suppliers
22 20
Trade and other receivables
Inventories
Tax losses
1 389 819
20
550
Unrecognized deferred tax assets
(1 389) (819)
(20)
(550)
Need off against deferred tax assets
28 17
11
Property, plant and equipment and intangi-
ble assets
(318) (6)
(11)
(301)
Trade and other receivables
Advances received and other payables
(16) (5)
(11)
Need off against deferred tax liabilies
(334) (11) (11) (312)
Net deferred tax asset/(liability)
(306)
(11)
(301)
31 December
2020
Recognized in
statement of
comprehensive
income
Effect of trans-
laon into
presentaon
currency
31 December
2019
Advances received and other payables
(1)
Prepayments to suppliers
(1) (1)
Trade and other receivables
(5) (2)
Inventories
(47) (9) 56
Tax losses
550
(106) 656
Unrecognized deferred tax assets
(550)
106 (656)
Need off against deferred tax assets
11 (50) (13) 74
Property, plant and equipment and intangi-
ble assets
(301) (87) 41 (255)
Trade and other receivables
(1)
Advances received and other payables
(11)
(14)
Need off against deferred tax liabilies
(312) (85) 43 (270)
Net deferred tax asset/(liability)
(301) (135) 30 (196)
31 December
2021
31 December
2020
Non-current assets
28 11
Long term liabilies
(334) (312)
Net deferred tax asset/(liability)
(306) (301)
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 70
17. B
As at 31 December 2020 and 2019 commercial and replacement poultry were presented as follows:
Classificaon of biological assets into non-current and current component is based on the life cycle of a biological asset. Biological
assets that will generate cash flow more than one year are classified as non-current biological assets, biological assets that will
generate cash flow less than one year are classified as current biological assets.
Reconciliaon of commercial and replacement poultry carrying values for the year ended 31 December 2021 and 2020 was pre-
sented as follows:
For the year ended 31 December 2021 the Group produced shell eggs in the quanty of 1 691 mln (31 December 2020: 1 671
mln).
Fair value of biological assets was esmated by the Group's specialists which have experience in valuaon of such assets. Fair val-
ue was calculated by discounng of expected net cash flow (in nominal measuring) at the moment of eggs produced, using corre-
sponding discount rate which is equal to 16,91% (31 December 2020: 14.1%). Management supposes that sale price and produc-
on and distribuon costs fluctuaons will comply with forecasted index of consumer price in Ukraine. The major assumpons
were performed on the basis of internal and external informaon and it reflected Management's assessment of the future agricul-
tural prospect.
Biological assets of the Group are measured at fair value within Level 3 of the fair value hierarchy.
Based on the current situaon in Ukraine that provides a high degree of uncertainty in relaon to many of the assumpons in the
biological assets revaluaon model, and guided by the prudence concept, the Group used conservave approach for calculaon of
fair value of biological assets as at 31 December 2021.
2021 2020
As at 01 January
51 372 50 759
Increase in value as a result of assets acquision
534 1 581
Increase in value as a result of capitalizaon of cost
18 026 13 988
Income/(Losses) from presentaon of biological assets at fair value
(8 529) (3 742)
Decrease in value as a result of assets disposal
(2 753) (2 977)
Exchange differences
1 888 (8 237)
As at 31 December
60 538 51 372
31 December 2021 31 December 2020
Number,
thousand
heads
Carrying
value
Number,
thousand
heads
Carrying
value
Non-current biological assets
Replacement poultry
Hy-line
4 260 45 079 4 381 40 234
Total non-current biological assets
4 260 45 079 4 381 40 234
Current biological assets
Commercial poultry
Hy-line
4 111 15 459 3 612 11 138
Total current biological assets
4 111 15 459 3 612 11 138
Total biological assets
8 371 60 538 7 993 51 372
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 71
Value measurement is a maximum value exposed to the following assumpons which were used in fair value calculaons of bio-
logical assets (Based on the current situaon in Ukraine):
Changes in key assumpons that were used in fair value esmaon of biological assets had the following influence on the value of
biological assets as at 31 December 2021 and 2020:
Assumpon as at 31
December 2021
Assumpon as at 31
December 2020
Eggs sale price, USD per item (UAH per item)
0,088 (2,40) 0.071 (2.02)
Discount rate, %
16,91% 14,10%
Long-term inflaon rate of Ukrainian hrivnya, %
1,08 1,05
Maximum poultry life me, days
770 770
12 months ended
31 December 2021
12 months ended
31 December 2020
1% decrease in egg sale price (1 386) (1 197)
1% increase in egg sale price 1 386 1 197
1% increase in discount rate (784) (691)
1% decrease in discount rate 796 701
1% increase in long-term inflaon rate of Ukrainian hrivnya 55 61
1% decrease in long-term inflaon rate of Ukrainian hrivnya (55) (61)
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 72
18. P,
As at 31 December 2021 construcon in progress and uninstalled equipment also included prepayments for the property, plant
and equipment which amounted to USD 352 thousand (2020: USD 467 thousand).
The impairment of prepayments for fixed-assets as of 31 December 2021 amounts to USD 227 thousand.
As at 31 December 2021, included within property, plant and equipment were fully depreciated assets with the original cost of
USD 4 474 thousand (2020: USD 3 821 thousand).
19. O -
As of 31 December 2021 there were no loans included in Other non-current assets (USD 21 thousand as at 31 December 2020).
Buildings
Plant and
equipment
Vehicles
Furniture
and
fings
Construcon-
in-progress
and unin-
stalled equip-
ment
Intangible
assets
Total
Cost or valuaon
As at 31 December 2019 25 590 42 930 2 107 859 6 906 72 78 464
Addions 636 1 248
24 839 2 748
Transfer 877 2 285
55 (3 217)
Disposals (5) (57) (27) (31) (2) (122)
Currency translaon difference (4 130) (6 992) (342) (140) (1 034) (12)
(12
650)
As at 31 December 2020 22 968 39 414 1 738 767 3 492 61 68 440
Addions 109 699 49 229 707
1 800
Transfer 157 197
17 (371)
Disposals (29) (13) (10) (52)
Impairment assessment
(227) (227)
Currency translaon difference 803 1 417 61 28 (247) 2 065
As at 31 December 2021 24 037 41 698 1 835 1 031 3 354 71 72 026
Depreciaon and amorzaon
As at 31 December 2019 (6 238) (12 493) (820) (565) (23)
(20
139)
Charge for the year (981) (2 606) (193) (107)
(24) (3 911)
Disposals
56 15 30 106
Currency translaon difference 1 058 2 148 142 96
3 447
As at 31 December 2020 (6 156) (12 895) (856) (546)
(44)
(20
497)
Charge for the year (1 058) (3 051) (198) (136)
(6) (4 449)
Disposals
28 13 50
Currency translaon difference (225) (469) (32) (19)
(2) (747)
As at 31 December 2021 (7 439) (16 387) (1 073) (692)
(52)
(25
643)
Net book value
As at 31 December 2021 16 598 25 311 762 339 3 354 19 46 383
As at 31 December 2020 16 812 26 519 882 221 3 492 17 47 943
As at 31 December 2019 19 352 30 437 1 287 294 6 906 49 58 325
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 73
20. I
21. T
Trade receivables from third pares are non-interest bearing and are generally on 30-90 days credit terms. For larger customers
the Group grants credit for up to 45-180 days.
Trade and other receivables net of impairment loss provisions denominated in the following currencies:
22. P
As at 31 December 2021 prepayments to suppliers included prepayments for the goods and services amount to USD 3 114 thou-
sand (2020: USD 1 233 thousand).
23. P
As at 31 December 2021 prepayments for income tax amount to USD 28 thousand (2020: USD 27 thousand).
24. C
31 December
2021
31 December
2020
Raw materials
5 504 5 430
Agricultural produce and finished goods
2 263 3 945
Package and packing materials
2 398 1 682
Work in progress
1 343 821
Other inventories
1 533 1 357
(Less: impairment of agricultural produce and finished goods)
(19) (19)
Total
13 022 13 216
31 December
2021
31 December
2020
Trade receivables
13 550 12 994
VAT for reimbursement
1 724 2 689
Other accounts receivable
347 443
Credit loss allowance
(150) (261)
Total
15 471 15 865
31 December
2021
31 December
2020
UAH
12 736 11 992
USD
1 191 1 661
EUR
1 544 2 212
Total
15 471 15 865
31 December
2021
31 December
2020
Cash in banks
2 419 1 619
Cash on hand
16
Total
2 435 1 626
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 74
a) Cash in banks by country of bank locaon denominated in the following currencies:
25. E
Issued capital and capital distribuon
For the year ended 31 December 2021 there were no changes in issued capital.
As referred to in Note 1, the Company was incorporated on 22 March 2011.
The Company's authorized share capital amounts to EUR 225 000 and consists of 22 500 000 ordinary shares with a nominal value
off EUR 0.01 each. As at 31 December 2011, 6 000 000 ordinary shares were issued and fully paid. In June 2011 the shares of the
Company were listed on the Warsaw Stock Exchange.
As at 31 December 2021 and 31 December 2020 the shareholder interest above 5% in the Share capital of Company was as fol-
lows:
Foreign currency translaon reserve
The Company's share capital has been converted at the exchange rate prevailing at the reporng date. The EUR 60 000 (equivalent
to 6 000 000 shares) as of 31 December 2021, has been converted into USD 68 052 (31 December 2020: USD 73 382). The result
arising from exchange rate differences has been recorded in the “Foreign currency translaon reserve”.
The foreign currency translaon reserve is used also to record exchange differences arising from the translaon of the financial
statements of foreign subsidiaries.
Share premium
As has been menoned previously, in June 2011 the Group’s shares have been placed on WSE. As a result of the transacon, USD
33 048 thousand was raised while the IPO costs amounted to USD 2 115 thousand. In these financial statements funds raised as a
result of IPO are reflected in share premium as at 31 December 2011. For the year ended 31 December 2021 and 2020, there were
no movements in share premium.
31 December 2020 31 December 2019
Prime One Capital Ltd.
67,93% 67,93%
Generali Otwarty Fundusz Emerytalny
10,93% 9,94%
FAIRFAX FINANCIAL Holdings Limited
10,39% 5,35%
AVIVA Otwarty Fundusz Emerytalny Aviva BZ WBK
5,02% 5,02%
Currency
31 December 2021 31 December 2020
Ukraine UAH 1 430 522
Ukraine USD 83 119
Ukraine
EUR 447 379
Total in Ukraine 1 960 1 020
Cyprus EUR
Total in Cyprus
Latvia USD 107 51
Latvia EUR 135 385
Total in Latvia 242 436
United Kingdom USD
18
United Kingdom
EUR
United Kingdom
PLN
Total in United Kingdom 18
United Arab Emirates
AED 53 47
United Arab Emirates
USD 155 72
United Arab Emirates
EUR
26
Total in United Arab Emirates 209 145
Total cash in banks 2 419 1 619
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 75
26. I-
The Interest-bearing loans from AKA Ausfuhrkredit-Gesellscha mbH has been covered of Euler Hermes AG.
Covenants
The Group’s loan agreements contain a number of covenants and restricons, which include, but are not limited to, financial
raos and other legal maers. Covenant breaches generally permit lenders to demand accelerated repayment of principal and
interest.
As at 31 December 2021 and 2020 the Group was not in breach of any financial covenants which allow lenders to demand
immediate repayment of loans.
ReconciliaƟon of liabiliƟes arising from financing acƟviƟes.
The table below details changes in the Group’s liabilies arising from financing acvies, including both cash and non–cash
changes. Liabilies arising from financing acvies are those for which cash flows were, or future cash flows will be, classified in
the Group’s consolidated statement of cash flows as cash flows from financing acvies:
Currency Effecve inter-
est rate, %
Maturity
31 December
2021
31 December
2020
Current interest-bearing loans and other financial liabili-
AKA Ausfuhrkredit-Gesellscha mbH
EUR
2.25%+
EURIBOR (6m)
30.06.22 607 2 556
UkrSibbank
EUR
2,65%
17.08.22
2 780 3 013
Prime One Capital Limited
EUR
3,00%
10.07.24
2 353
Other current loans
UAH
24
Total current interest-bearing loans and other financial liabilies 5 740 5 593
Non-current interest-bearing loans and other financial
liabilies
OTP Bank
EUR
2,65%
02.10.24 7 141 2 703
Prime One Capital Limited
EUR 3,00% 10.07.24
2 469
Total non-current interest-bearing loans and other financial liabilies 7 141 5 172
Total interest-bearing loans and other financial liabilies 12 881 10 765
31 December
2020
Financing
cash flow
Financial
cash flow
received
Increase (as
a result of
accruals and
other)
Exchange
differences
31 December
2021
Interest-bearing loans
10 777
(1 880)
4 730
(836) 12 791
Interest expenses
(40)
(243)
380 (7) 90
Other borrowings
28
-
(25) (3)
Total
10 765
(2 123)
4 730 355 (846) 12 881
31 December
2019
Financing
cash flow
Financial
cash flow
received
Increase (as
a result of
accruals and
other)
Exchange
differences
31 December
2020
Interest-bearing loans
10 586
(4 936)
4 419
708 10 777
Interest expenses
(224)
(292)
449 27 (40)
Other borrowings
28
-
28
Total
10 390
(5 228)
4 419 449 735 10 765
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 76
27. T
28. A
As at 31 December 2021 advances received amount to USD 543 thousand (2020: USD 306 thousand).
29. R
For the purposes of these consolidated financial statements, the pares are considered to be related, if one of the pares has
the ability to exercise control over the other party or influence significantly the other party in making financial and operang deci-
sions. Considering the transacons with each possible related party, parcular aenon is paid to the essence of relaonships, not
merely their legal form.
Related pares may enter into transacons, which may not always be available to unrelated pares, and they may be subject to
such condions and such amounts that are impossible in transacons with unrelated pares.
According to the criteria menoned above, related pares of the Group are divided into the following categories:
The following companies and individuals are considered to be the Group's related pares as at 31 December 2021 and
2020:
(A). Key management personnel
(A). Key management personnel;
(B). Companies which acvies are significantly influenced by the Beneficial Owners;
(C). Other related pares.
31 December 2021 31 December 2020
Trade payables 12 373 10 561
Employee benefit liability 600 540
Liability for unused vacaon 863 797
Taxes payable 257 234
VAT liabilies 200 139
Income tax payables
21
Other payables 98 87
Total 14 391 12 379
Key management personnel 2021: Posion:
Borys Bielikov Execuve Director / CEO
Vitalii Veresenko Non-execuve director
Sergii Karpenko Non-execuve director
Vitalii Sapozhnik Chief Financial Officer
Arnis Veinbergs Deputy CEO in charge of Producon acvity
Karen Arshakyan Non-execuve director
Yuliya Flyorova Producon director
Key management personnel 2020: Posion:
Borys Bielikov Execuve Director / CEO
Vitalii Veresenko Non-execuve director
Sergii Karpenko Non-execuve director
Vitalii Sapozhnik Chief Financial Officer
Arnis Veinbergs Deputy CEO in charge of Producon acvity
Karen Arshakyan Non-execuve director
Vitalii Voron Producon director
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 77
(B). Companies which acvies are significantly influenced by the Key management personnel
Aleksa LTD LLC 2021/2020
Prime One Capital Limited 2021/2020
As at 31 December 2021 and 2020 trade accounts receivable from related pares and advances issued to related pares were pre-
sented as follows:
Debt with Prime One Capital Limited is disclosed in note 26
For the year ended 31 December 2021 and 2020 the transacons with related pares amounted to:
Compensaon of key management personnel of the Group
The amount of remuneraon of key management personnel of the group for the year ended 31 December 2021, and 2020 was
presented as follows:
(C). Other related pares:
For the year ended 31 December 2021, and 2020 the Group has no other related pares.
31 December
2021
31 December
2020
Salaries and contribuon to social security fund (short-term employ-
ee benefits)
Vitalii Voron
917
Vitalii Sapozhnik 17 16
Karen Arshakyan 24 22
Other key management personnel 266 246
Total
316 301
31 December
2021
31 December
2020
Prepayments to related pares
(B). Companies which acvies are significantly influenced by the
Beneficial Owners:
Aleksa LTD LLC 47 43
Total 47 43
31 December
2021
31 December
2020
(B). Companies which acvies are significantly influenced by the Beneficial Owners:
Interest on debts and borrowings:
Prime One Capital Limited 71 41
General and administrave expenses:
Aleksa LTD LLC 24 24
Total 95 65
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 78
30. C
Operang environment
All producon facilies of the Company are located in Ukraine and its operaons are highly dependent on the developments in
this jurisdicon.
In 2021, Ukraine faced significant public debt repayments, which required mobilising substanal domesc and external financing
in an increasingly challenging financing environment for emerging markets.
On February 24, 2022, Russian troops launched a military invasion of Ukraine, which led to a full-scale war on the territory of the
Ukrainian state. The ongoing military aack has caused and connues to cause significant casuales, populaon displacement,
infrastructure damage and disrupon to economic acvity in Ukraine Seaports and airports are closed and damaged. Export
through seaports was completely frozen. The situaon remains highly volale and the outlook highly uncertain. The economic con-
sequences are already very serious. As a result, the government has imposed maral law throughout the country, as well as other
relevant emergency measures to stabilize markets and the economy, but the country is facing large budgetary and external finan-
cial deficits. The Ukrainian authories connue to service their external debt obligaons, and the country's payment system con-
nues to operate, banks are open and mostly liquid. Most Ukrainian companies sll pay taxes. At the me of reporng, the occu-
pied territories of central Ukraine, where the producon of the Ovostar Union group of companies is concentrated, were liberated
from the invaders, but hoslies connue in the eastern and southern parts of Ukraine, and the enre territory is subjected to
rocket aacks.
Internaonal organizaons (IMF, EBRD, EU, World Bank), along with individual countries and charies, have provided Ukraine with
financing, donaons and material support. In total, internaonal support has reached more than USD 15 billion. In view of the
large-scale armed assault in Ukraine by Russian forces, the Naonal Bank of Ukraine (‘NBU’) decided to postpone a decision on
the discount rate, leaving it unchanged at 10% and, when the war started, moved to a fixed exchange rate of UAH 29.25 to the
US Dollar. As a result, commercial interbank quotes remain close to the officially imposed by NBU. The NBU has also said that once
the economy and financial system return to operaon, it will revert to the tradional format of inflaon targeng with a floang
exchange rate.
Despite the current unstable situaon, the banking system remains stable, with sufficient liquidity even as maral law connues,
all banking services are available to its customers, both legal enes and individuals. In the face of the invasion, the Ukrainian gov-
ernment has imposed export restricons for meat and livestock, rye, oats, millet, buckwheat, sugar and dietary salt. Furthermore,
the Ukrainian Ministry of Economy will issue export permits for the group of products, subjected for licensing: wheat, chicken
meat and eggs.
As of May 2022, the Verkhovna Rada of Ukraine has approved a package of amendments to taxaon to support Ukrainian busi-
nesses during the war. The law establishes a special economic regime for the period of maral law. The key innovaon is that all
companies can now waive VAT and income tax (CIT) by switching to a 2% sales tax. Physically lost goods are not subject to VAT.
VAT refunds for exporters are frozen. Private entrepreneurs (group 1 and group 2) are allowed to pay no taxes at all (and they are
not required to pay a single social contribuon for 1 year aer the end of maral law). For automove fuel, the excise tax is reset
to zero, and the VAT rate is reduced from 20% to 7%. In addion, support for naonal military acon is exempt from taxaon.
According to the IMF, GDP growth was 3.2% in 2021 (from -7.2% in 2020), and is expected to fall by -35% in 2022 (for
2023, the IMF has so far refrained from forecasng).
Due to the war on the territory of Ukraine, the budget deficit in 2022 will increase to -17.8% of GDP (IMF).
Public debt fell significantly from 60.8% of GDP in 2020 to 51.1% of GDP in 2021, but is expected to increase significantly in 2022
(86.2% of GDP) and remain high in 2023 (78% of GDP) (IMF) . In 2021, the hryvnia appreciated by 3.5% against the US dollar
(Ministry of Finance), but inflaon rose to 10% in 2021 (from 5% in 2020) due to higher energy prices and other producon costs
for a wide range of goods and services. The IMF does not undertake to predict inflaon in Ukraine for 2022.
On June 4, the Decision of the European Union on the abolion of dues on Ukrainian goods for a year came into force:
x dues on industrial products, suspension of the entry price system for fruits and vegetables and all tariff quotas for agri-
cultural products;
x all an-dumping dues on imports of goods originang from Ukraine and the applicaon of global protecve
measures in relaon to Ukrainian goods are suspended.
The liberalizaon of trade relaons also implies that Ukraine will abide by European rules of origin and related procedures under
the Associaon Agreement, will refrain from any new restricons on imports from the EU, and will ensure respect for demo-
crac principles, human rights and fundamental freedoms, the rule of . rights, fight against corrupon.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 79
Taxaon
Ukrainian legislaon regarding taxaon and other operaonal issues connues to evolve as a result of the transion economy.
Legislaon and regulaons are not always clearly defined and their interpretaon depends on the views of local, regional and oth-
er government authories. Cases of conflicng opinions are not unusual.
Ukraine has a corporate income tax system, under which taxable profit of companies (i.e. financial profit adjusted by tax differ-
ences) is subject to 18% tax rate.
Transfer pricing rules apply to transacons with related non-residents and “low-tax” non-residents (i.e. non-residents, taxed do-
mescally at a significantly lower corporate income tax rate than the Ukrainian tax rate of 18%), subject to a company’s minimum
income threshold of UAH 150 million and transacons volume threshold with each individual non- resident of UAH 10 million.
Domesc supplies of goods and services, as well as imports of goods and certain services, are subject to value added tax at a
standard rate of 20%, except for supplies of wheat and rye (meslin), barley, corn, soybeans, colza or rapeseed, sunflower. They are
taxed at a rate of 14%. A reduced tax rate of 0% applies to the export of goods from Ukraine.
Payment of passive income (i.e. interest, royales, dividends etc.) to non-residents of Ukraine is subject to withholding tax at a
standard 15% rate unless double tax treaes or the Tax Code of Ukraine provide another tax rate.
Agrarian producers of raw materials are allowed to apply a simplified tax system, given that at least 75% of their income is
aributable to sales of agricultural raw materials produced by such company. Under the simplified tax system, companies are
subject to a fixed tax, which depends on the type, locaon and monetary value of farmland used by such companies. Changes
were made to the Tax Code and from January 1, 2022, egg producers, in parcular, ceased to fall under this category.
On July 1, 2021, the Law on the abolion of the moratorium on the sale of agricultural land came into force, but it provides for a
number of restricons related to the maximum size of land that can be sold to an individual buyer, restricons on the sale of land
in certain territories and certain categories of buyers. Aer a full-scale Russian invasion of Ukraine on February 24, 2022, the sale
was suspended, but at the end of May, the sale resumed.
The Group's operaons and financial posion will connue to be affected by polical developments in Ukraine, including the appli-
caon of current and future legislaon and tax regulaons. Management believes that the Group has complied with all applica-
ble tax laws and has paid or accrued all applicable taxes.
Legal issues
The Group is involved in ligaons and other claims that are in the ordinary course of its business acvies. As at 31 December
2021, Group is involved in ligaons in the amount of USD 2 394 thousand (2020: USD 1 518 thousand). Management believes
that based on the past history of court resoluons of similar lawsuits by the Group, it is unlikely that a significant selement will
arise out of such lawsuits and therefore no respecve provision is required in the Group’s financial statements as of the reporng
date.
31. F
The Group manages its capital to ensure that enes in the Group will be able to connue as a going concern while maximizing the
return to shareholders through a combinaon of debt and equity capital. The management of the Group reviews the capital
structure on a regular basis. Based on the results of this review, the Group takes steps to balance its overall capital structure
through the issue of new debt or the redempon of exisng debt.
The capital structure of the Group consists of debt, which includes the borrowings and cash and cash equivalents disclosed in
Notes 24 and 26 respecvely, and equity aributable to the equity holders of the parent, comprising issued capital, share premi-
um, reserves and retained earnings.
Gearing rao
The Group’s management reviews quarterly the capital structure of the Group. As part of this review, the management considers
the cost of capital and the risks associated with each class of capital.
31 December
2021
31 December
2020
Debt liabilies* 12 881 10 765
Cash and cash equivalents and deposits (2 435) (1 626)
Net debt 10 446 9 139
Equity** 109 889 104 404
Gearing rao 9,5% 8,8%
* Debts include short-term and long-term borrowings.
** Equity includes the share capital, share premium, retained earnings and foreign currency translaon reserve.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 80
Financial risk management
The main risks inherent to the Group’s operaons are those related to credit risk exposures, liquidity risk, market movements in
currency rates and interest rates and potenal negave impact of livestock diseases.
Credit risk
The Group is exposed to credit risk which is the risk that one party to a financial instrument will fail to discharge an obligaon and cause the other party
to incur a financial loss.
The Group's exposure to credit risk regarding trade accounts receivable is primarily dependent on specific characteriscs of each client. The Group's
policy for credit risk management provides systemac work with debtors, which includes: analysis of solvency, determinaon of maximum amount of
risk related to one customer or a group of customers and control over meliness of debt repayment. The majority of Group's clients are longstanding
clients, there were no significant losses during 2021 and 2020 resulng from non-fulfillment of obligaons by clients. Concentraon of credit risk on trade
accounts receivable is characterized by the following indicators:
For the year ended 31 December 2021 USD 50 913 thousand or 38% of Group's sales revenue is related to sales transacons, realized with 5 major cus-
tomers of the Group. As at 31 December 2021 USD 5 844 thousand or 44% of trade accounts receivable relates to 5 major debtors.
The credit quality of the gross trade receivables from related and third pares was as follows:
As at 31 December 2021 and 2020 the ageing of trade account receivables that were not impaired was as follows:
Liquidity risk
Liquidity risk is the risk of the Group's failure to fulfill its financial obligaons at the date of maturity. The Group's approach to li-
quidity management is to ensure, to the extent possible, permanent availability of sufficient liquidity for the Group to fulfill its fi-
nancial obligaons in due me (both in normal condions and in non-standard situaons), by avoiding unacceptable losses or the
risk of damage to the reputaon of the Group.
In accordance with plans of the Group, its working capital needs are sasfied by cash flows from operang acvies, as well as by
use of loans if cash flows from operang acvies are insufficient for liabilies to be seled.
The table below represents the expected maturity of components of working capital:
31 December
2021
31 December
2020
Fully performing
12 392 11 502
Past due but not impaired
1 013 1 231
Impaired 145 261
Total trade receivables (gross)
13 550 12 994
%
31 December
2021
31 December
2020
0-30 days -
12 520 11 411
31-90 days -
778 1 106
91-180 days -
70 171
181-360 days 0%
37 45
more than 360 days 100%
Total
13 405 12 733
31 December 2021
Carrying
value
Contractu-
al cash
flows
Less
than 3
months
3-6
months
6-12
months
Over 1
year
Non-derivave financial liabilies:
Trade and other payables
14 391 14 391
13 528 863 - -
Current interest-bearing loans and other finan-
cial liabilies
5 740 5 740
- 5 133 607 -
Non-current interest-bearing loans and other
financial liabilies 7 141 7 141
- 7 141
Total
27 272 27 272
13 528 5 996 7 141
31 December 2020
Carrying
value
Contractu-
al cash
flows
Less
than 3
months
3-6
months
6-12
months
Over 1
year
Non-derivave financial liabilies:
Trade and other payables
12 379 12 379
11 582
797
-
Current interest-bearing loans and other finan-
cial liabilies
5 593 5 593 - 3 013 2 580 -
Non-current interest-bearing loans and other
financial liabilies
5 172 5 172
- 5 172
Total
23 144 23 144
11 582
3 810 2 580
5 172
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 81
Currency risk
Currency risk – Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange
rates. The Group undertakes certain transacons denominated in foreign currencies. The Group does not use any derivaves to
manage foreign currency risk exposure, at the same me the management of the Group sets limits on the level of exposure by
currencies.
Exposure to foreign currency risk
The carrying amounts of the Group’s foreign currency denominated monetary assets and liabilies as of 31 December 2021 and
2020 were as follows:
This sensivity rate represents the management’s assessment of the reasonably possible change in foreign exchange rates. The
sensivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translaon at the
period end for expected change in foreign currency rates.
Effect in USD thousand:
Increase in curren-
cy rate against
UAH
Effect on profit
before tax
31 December 2021
USD 15%
191
EUR 15%
(2 040)
31 December 2020
USD 15%
233
EUR 15%
(1 497)
31 December 2021
PLN AED USD EUR UAH Total
(in conversion to USD thousand)
Assets
Cash and cash equivalents
53 346 590 1 446 2 435
Trade receivables
1 196 1 235 10 974 13 405
Liabilies
Current interest-bearing loans and other financial liabilies 5 740) (5 740)
Non-current interest-bearing loans and other financial liabili-
es
7 141) (7 141)
Trade accounts payable
(266) 2 478) (9 629) (12 373)
Other payables
(67) (31) (98)
Net exposure to foreign currency risk
53 1 276 (13 601) 2 760 (9 512)
31 December 2020
PLN AED USD EUR UAH Total
(in conversion to USD thousand)
Assets
Cash and cash equivalents
47 259 791 529 1 626
Trade receivables
1 660 1 830 9 243 12 733
Liabilies
Current interest-bearing loans and other financial liabilies
5 569) (24) (5 593)
Non-current interest-bearing loans and other financial liabili-
es
5 172) (5 172)
Trade accounts payable (368) 1 790) (8 403) (10 561)
Other payables
(72) (15) (87)
Net exposure to foreign currency risk
47 1 551 9 982) 1 330 (7 054)
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 82
The effect of foreign currency sensivity on shareholders’ equity is equal to that on profit or loss.
Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect the value of the financial instruments. The ma-
jor part of the Group’s borrowings bear variable interest rates which are linked to EURIBOR. Other borrowings are presented at
fixed interest rates.
The below details the Group’s sensivity to increase or decrease of floang rate by 1%. The analysis was applied to interest bear-
ing liabilies (bank borrowings under facility agreements) based on the assumpon that the amount of liability outstanding as of
the balance sheet date was outstanding for the whole year.
The effect of interest rate sensivity on shareholders’ equity is equal to that on profit or loss.
Livestock diseases risk
The Group’s agro-industrial business is subject to risks of outbreaks of various diseases. The Group faces the risk of outbreaks of
diseases, which are highly contagious and destrucve to suscepble livestock, such as avian influenza or bird flu for its poultry op-
eraons. The diseases could result in mortality losses. Disease control measures were adopted by the Group to minimize and man-
age this risk. The Group’s management is sasfi ed with its current exisng risk management and quality control processes are
effecve and sufficient to prevent any outbreak of livestock diseases and related losses.
32. F
Esmated fair value disclosure of financial instruments is made in accordance with the requirements of Internaonal Financial
Reporng Standard 7 “Financial Instruments: Disclosure”. Fair value is defined as the amount at which the instrument could be
exchanged in a current transacon between knowledgeable willing pares in an arm’s length transacon, other than in forced or
liquidaon sale. As no readily available market exists for a large part of the Group’s financial instruments, judgment is necessary in
arriving at fair value, based on current economic condions and specific risks aributable to the instrument. The esmates pre-
sented herein are not necessarily indicave of the amounts the Group could realize in a market exchange from the sale of its full
holdings of a parcular instrument.
The Group uses the following hierarchy for determining the fair value of financial instruments:
Level 1 ("L1") - quoted (unadjusted) prices in acve markets for idencal assets or liabilies;
Level 2 ("L2") - other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either
directly or indirectly; and
Level 3 ("L3") - techniques which use inputs that have a significant effect on the recorded fair value that are not based on observ-
able market data.
The Group does not acquire, hold or issue derivave fi nancial instruments for trading purposes.
31 December 2021 31 December 2020
EURIBOR EURIBOR
Profit/(loss) 6/(6) 26/(26)
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 45-83 form an integral part of these financial statements
2021 ANNUAL REPORT 83
The following table presents the classificaon, subsequent measurement, carrying values and fair values of the Group's financial
assets:
The following methods and assumpons were used to esmate the fair values:
a) The Group's short-term financial instruments, comprising trade and other receivables, current interest-bearing loans and
borrowings, trade and other payables are carried at amorzed cost which, due to their short term nature, approximates
their fair value.
b) The fair values of other financial assets and financial liabilies (excluding those described above) are determined in accord-
ance with generally accepted pricing models based on discounted cash flow analysis.
c) Fair value of available-for-sale financial assets is derived from quoted market prices in acve markets, if available.
d) Fair value of unquoted available-for-sale financial assets is esmated using appropriate valuaon techniques.
33. S
On 24 February 2022, Russian forces commenced a military invasion of Ukraine resulng in a fullscale war across the Ukrainian
state. Many Ukrainian cies suffered substanal damage as a consequence of the connuous missile and arllery strikes, resulng
in thousands of deaths and injuries, including among civilians. As a result of hoslies, some areas of Kharkov, Zaporozhye, Kher-
son, Donetsk and Lugansk regions were under occupaon; The Black Sea ports in Ukraine have suspended their work, which tem-
porarily made exports through sea terminals unavailable.
As of the date of this report, the Group connues to operate. The management of the Group controls all its operaons. Office staff
work remotely, while producon staff perform their dues at their sites. About 40 employees of the Group were mobilized into
the Armed Forces of Ukraine.
At the end of the 1st quarter of 2022, the company recognized a loss from the revaluaon of biological assets in the amount of
$17.5 million, which is associated with a revision of the valuaon approach, as well as the events of February 24.
The Group has determined that the above events are not adjusng subsequent events. Accordingly, the financial posion and re-
sults of operaons for the year ended 31 December 2021 have not been adjusted for their impact. The duraon and consequences
of the war in Ukraine are currently unclear. It is not possible to reliably esmate the duraon and severity of these consequences,
as well as their impact on the financial posion and results of the Group in future periods. Aer considering all available evidence
and the acons taken and planned by the Group to offset the adverse impact of the ongoing military intervenon on the business
up to the date these financial statements are authorized for issue, management has concluded that it is appropriate to prepare the
financial statements on a going concern basis, recognizing that this material uncertainty in it, as indicated in Note 2.
Based on Resoluon 3 of the Annual General Meeng held on July 16, 2021, Mr Sergiy Karpenko resigned from the posion of
the non-execuve director of Ovostar Union PCL on January 1, 2022. Mr Markiyan Markevich became a non-
execuve director on the same date.
31 December 2021 31 December 2020
Subsequent
measurement
Carry-
ing
value
Fair value
Carry-
ing
value
Fair value
Financial assets:
Trade and other receivables (a) Amorzed cost 15 471
15 471 15 865 15 865
Cash and cash equivalents 2 435
2 435 1 626 1 626
Total 17 906
17 906 17 491 17 491
Financial liabilies:
Current interest-bearing loans and borrowings (a) Amorzed cost 5 740
5 740 5 593 5 593
Non-current interest-bearing loans and borrowings
(b)
Amorzed cost
7 141 7 141 5 172 5 172
Trade and other payables (current) (a) Amorzed cost 14 391
14 391 12 379 12 379
Total 27 272
27 272 23 144 23 144
OVOSTAR UNION PUBLIC COMPANY LIMITED
COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2021
3
INDIVIDUAL FINANCIAL STATEMENTS
2021 ANNUAL REPORT 86
S
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
(
IN USD THOUSAND, UNLESS OTHERWISE STATED)
Note
12 months ended 12 months ended
31 December 2021 31 December 2020
Dividend income
4 525 1 980
Administrave expenses
(232) (203)
Operang profit
4 293 1 777
Finance costs
(181) (635)
Finance income
370 35
Profit before tax
4 482 1 177
Income tax expense
(20) (6)
Profit for the period
4 462 1 171
3
INDIVIDUAL FINANCIAL STATEMENTS
2021 ANNUAL REPORT 87
S
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2021
(IN USD THOUSAND, UNLESS OTHERWISE STATED)
Note 31 December 2021 31 December 2020
Assets
Non-current assets
Investment in subsidiaries
46 097 46 097
Loan receivable 10 5 835
Total non-current assets
51 932 46 097
Current assets
Cash and cash equivalents 12
14
Prepayments to suppliers
Other accounts receivables 11 11 3 395
Total current assets
26 3 414
Total assets
51 958 49 511
Equity and liabilies
Equity
Issued capital 13 68 74
Share premium 14 30 933 30 933
Foreign currency translaon reserve
17 11
Retained earnings
13 357 12 186
Result for the period
4 462 1 171
Total equity
48 837 44 375
Non-current liabilies
Interest-bearing loans and other financial liabilies 15
2 469
Total non-current liabilies
2 469
Current liabilies
Trade and other payables 16 161 111
Interest-bearing loans and other financial liabilies 15 2 960 2 556
Total current liabilies
3 121 2 667
Total liabilies
3 121 5 136
Total equity and liabilies
51 958 49 511
3
INDIVIDUAL FINANCIAL STATEMENTS
2021 ANNUAL REPORT 88
S
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
(IN USD THOUSAND, UNLESS OTHERWISE STATED)
Issued
capital
Shar
e premi-
um
Foreign
currency
translao n
reserve
Re-
tained
earn-
ings
Total equity
As at 31 December 2019 78 30 933 12 186 43 204
Profit for the period
1 171 1 171
Exchange rate differences (4)
As at 31 December 2020 74 30 933 11 13 357 44 375
Profit for the period
4 462 4 462
Exchange rate differences (6)
As at 31 December 2021 68 30 933 17 17 819 48 837
3
INDIVIDUAL FINANCIAL STATEMENTS
2021 ANNUAL REPORT 89
S
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
(IN USD THOUSAND, UNLESS OTHERWISE STATED)
12 months ended 12 months ended
31 December 2021 31 December 2020
Cash flows from operang acvies
Profit before tax 4 482
1 177
Non-cash adjustment to reconcile profit before tax to net cash flows:
Dividend income
(4 525)
(1 980)
Interest income (370)
(35)
Interest expense 181
635
Working capital adjustments:
Decrease/(Increase) in receivable balances (3 018) 1 519
Decrease/(Increase) in prepayments to suppliers (2) (5)
Decrease/(Increase) in payable balances 38 (61)
Cash used in operaons
Dividends received 5 135 1 980
Income tax paid (5) (9)
Net cash flows from operang acvies 1 916 3 221
Cash flows from invesng acvies
Payment for purchase of investment in subsidiaries
Interest received
35
Net cash flows used in invesng acvies 35
Cash flows from financing acvies
Proceeds from borrowings 397 1 810
Repayment of borrowings (2 275) (4 936)
Interest paid (43) (161)
Net cash flows used in financing acvies (1 921) (3 287)
Net (decrease)/increase in cash and cash equivalents (5) (31)
Cash and cash equivalents at 01 January 14 45
Cash and cash equivalents at 31 December 14
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 90-95 form an integral part of these financial statements
2021 ANNUAL REPORT 90
1. GENERAL
Ovostar Union Public Company Limited (referred to herein as the “Company”) is a public limited company incorporated in
the Netherlands in 2011 and re-domiciled to Cyprus in 2018. Ovostar Union PCL was formed to serve as the ulmate holding
company of LLC “Ovostar Union” and its subsidiaries. Hereinaer, “Ovostar Union” and its subsidiaries are referred to as the
“Ovostar Union Group ” or the “Group”. The registered office and principal place of business of the Company is Ierotheou, 22,
4th floor, Strovolos, 2028 Nicosia, Cyprus.
Principal acvies of the Group include producon and distribuon of shell eggs and egg products. The largest share-
holder of the Company is Prime One Capital Ltd., Cyprus. Its principal acvity is the holding of ownership interests in its sub-
sidiary and strategic management.
Use of esmates
The preparaon of financial statements under IFRS requires esmates to be used and assumpons to be made that affect
the amounts shown in these financial statements. These esmates assume the operaon is a going concern and are drawn
up on the basis of the informaon available at the me. Esmates may be revised if the circumstances on which they were
based change or if new informaon becomes available. Actual results may be different from these esmates.
Basis of preparaon
The financial statements for the year ended 31 December 2021 have been prepared using the IFRS.
The IFRS individual financial statements were approved by the Board of Directors on 30 June 2022
For informaon on the companies belonging to Ovostar Union Group please refer to Note 1 of the Consolidated financial
statements.
Going concern
For going concern, see note 2(2.2) of the consolidated financial statements
2. SIGNIFICANT ACCOUNTING POLICIES
Investment in subsidiaries
Investment in subsidiaries is measured at cost less provision for impairment in value, which is recognised as an expense in
the period in which the impairment is idenfied.
3. FUNCTIONAL AND PRESENTATION CURRENCY
The funconal currency of the Company is U.S. dollar (USD). The financial statements are presented in the company’s
funconal currency, that is, U.S. dollar (USD).
4. DIVIDEND INCOME
12 months ended 12 months ended
31 December 2021 31 December 2020
Dividend income from Internaonal Food Trade
230
Dividend income from OAE Food Trade FZE
4 525 1 750
Total 4 525 1 980
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 90-95 form an integral part of these financial statements
2021 ANNUAL REPORT 91
5. ADMINISTRATIVE EXPENSES
6. FINANCE COSTS
7. FINANCE INCOME
8. CORPORATE INCOME TAX
Tax recognized in profit or loss:
The taxaon on the Company's profit/(loss) before taxaon differs from theorecal amount that would arise using the
applicable tax rates as follows:
12 months ended 12 months ended
31 December 2021 31 December 2020
Wages, salaries and social security costs 29 23
Legal, audit and other professional fees 181 149
Service charge expenses 22 26
Other expenses
Total 232 203
12 months ended 12 months ended
31 December 2021 31 December 2020
Interest on debts and borrowings 181 309
Foreign currency exchange
326
Total 181 635
12 months ended 12 months ended
31 December 2021 31 December 2020
Interest income 45 19
Foreign currency exchange 325
Other financial income
16
Total 370 35
12 months ended 12 months ended
31 December 2021 31 December 2020
Corporaon tax 19
Corporaon tax – prior years
Charge for the year 20
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 90-95 form an integral part of these financial statements
2021 ANNUAL REPORT 92
9. INVESTMENT IN SUBSIDIARIES
10. LOAN RECEIVABLE
Loan receivable as of December 31, 2021 consist of a loan and interest accrued by Yasensvit LLC, issued at 1% per annum,
with a maturity date of May 2029 in USD.
11. OTHER ACCOUNTS RECEIVABLES
12. CASH AND CASH EQUIVALENTS
The Company’s cash balances are available upon demand.
13. ISSUED CAPITAL
The authorized share capital amounts to EUR 225,000 divided into 22 500 000 ordinary shares of EUR 0.01 nominal value
each. During 2011, 6 000 000 shares have been issued. Using an exchange rate of 1 EUR = 1.198 USD.
For the movement schedule of issued capital, share premium, foreign currency translaon reserve and profit for the year
please refer to the specificaon of the Consolidated statement of changes in equity ncluded in the Consolidated financial
statements. Legal reserve subsidiary as at 31 December 2021 was in the amount of USD 68 064 (in 2020: USD 73 582).
12 months ended 12 months ended
31 December 2021 31 December 2020
Profit before tax 4 482 1 177
Applicable tax rates 12,50% 12,50%
Tax calculated at the applicable tax rates 560 147
Tax effect of expenses not deducble for tax purposes 92 176
Tax effect of allowances and income not subject to tax (635) (317)
10% addional charge
Charge for the year 19
31 December 2021 31 December 2020
LLC “Ovostar Union” 45 345 45 345
GALLUSMAN SIA 344 344
LLC “Yasensvit” 313 313
Ovostar Europe LLC 63 63
OAE Food Trade FZE 28 28
EPEX SIA
Internaonal Food Trade Limited
Total
46 097 46 097
31 December 2021 31 December 2020
LLC Yasensvit 5 835
Total
5 835
31 December 2021 31 December 2020
Internaonal Food Trade Limited
19
OAE Food Trade FZE 11 602
LLC Yasensvit
2 774
Total
11 3 395
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 90-95 form an integral part of these financial statements
2021 ANNUAL REPORT 93
14. SHARE PREMIUM
As has been menoned previously, in June 2011 the Group’s shares have been placed on WSE. As a result of the transac-
on, USD 33 048 thousand was raised while the IPO costs amounted to USD 2 115 thousand. In these financial statements
funds raised as a result of IPO are reflected in share premium as at 31 December 2011. For the year ended 31 December 2021
and 2020, there were no movements in share premium.
15. LOANS AND BORROWINGS
i) As at 31 December 2021 and 2020 loan and borrowings comprised loans received from AKA Ausfuhrkredit-Gesellscha
mbH. AKA Ausfuhrkredit-Gesellscha mbH loan are guaranteed by subsidiaries and has been covered of Euler Hermes AG. For
detail informaon about loans and borrowings refer to Note 24 in the Consolidated financial statements.
As part of loans and borrowings, there is a loan received from a related party Prime One Capital Limited.
16. TRADE AND OTHER PAYABLES
17. DIRECTORS
The Company is managed by the Board of Directors which consists of four members: one Execuve Director and three
Non-Execuve directors.
The Board of Directors as at 31 December 2021 comprised:
Currency Effecve inter-
est rate, %
Maturity
31 December
2021
31 Decem-
ber 2021
Current interest-bearing loans and other financial
liabilies
Landesbank Berlin AG/AKA Ausfuhrkredit-
Gesellscha mbH
EUR
2.25%+ EURI-
BOR (6m)
30.06.2022
607 2 556
Prime One Capital Limited
EUR
3,00%
10.07.2022
2 353
Total current interest-bearing loans and other financial liabilies
2 960 2 556
Non-current interest-bearing loans and
other financial liabilies
Prime One Capital Limited
EUR
3,00%
10.07.2022
2 469
Total non-current interest-bearing loans and other financial liabilies
2 469
Total interest-bearing loans and other financial liabilies
2 960 5 025
31 December 2021 31 December 2020
Baker Tilly Ukraine, LLC
50
25
Baker Tilly Klitou & Partners Ltd
35
17
Ovostar Europe LLC
57
61
Other
19
Total
161
111
Borys Bielikov Chief Execuve Officer, (non-independent)
Vitalii Veresenko Chairman of the Board, Non-Execuve Director (non-independent)
Sergii Karpenko Non-Execuve Director (independent)
Karen Arshakyan Non-Execuve Director (independent)
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 90-95 form an integral part of these financial statements
2021 ANNUAL REPORT 94
18. AUDIT FEE
Audit fees disclosed in the financial statements include the fees for professional services rendered by Baker Tilly
Ukraine and Baker Tilly Klitou & Partners Ltd and relate to the audit of the Company’s Consolidated and Company’s fi-
nancial statements and its subsidiaries.
19. RELATED PARTY DISCLOSURES
As at 31 December 2021 and 2020 other receivables and payables from related pares are presented as follows:
31 December 2021 31 December 2020
Baker Tilly Ukraine:
Audit and review of financial statements 50 49
Baker Tilly Klitou & Partners Ltd
Audit fees 36 34
Total
86 83
31 December 2021 31 December 2020
(A). Companies which acvies are significantly influenced by the Beneficial
Owners:
Other non-current assets
LLC Yasensvit 5 835
Other accounts receivables to related pares
OAE Food Trade FZE 11 602
LLC Yasensvit
2 774
Internaonal Food Trade Limited
19
Total 5 846 3 395
Trade and other payables to related pares
Ovostar Europe LLC 57 61
Total 57 61
12 months ended 12 months ended
31 December 2021 31 December 2020
(B). Companies which acvies are significantly influenced by the Beneficial
Owners:
Interest on debts and borrowings:
Prime One Capital Limited 71 41
Total 71 41
Interest income:
LLC Yasensvit 44 19
Total 186 101
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 90-95 form an integral part of these financial statements
2021 ANNUAL REPORT 95
20. SUBSEQUENT EVENTS
For events subsequent to the reporng date refer to note 33 of the consolidated financial statements
Borys Bielikov
Chief Execuve Officer,
Execuve Director
……………………………….
V
Vitalii Veresenko
Chairman of the Board,
Non-execuve Director
……………………………….
Karen Arshakyan
Head of Audit Commiee,
Non-execuve Director
Vitalii Sapozhnik
Chief Financial Officer
G
bakertilly
Corner C.
Hatzopoulou
&
30 Griva
Digheni
Avenue
1066,
Nicosia
P.O
Box
27783,
2433
Nicosia,
Cyprus
T: +357 22
458500
F:
+357
22
751648
Independent
Auditor's
Report
info@bakertilly.com.cy
www.bakertilly.com.cy
To
the
Members of
Ovostar Union
Public
Company
Limited
Report
on the
Audit of the
Consolidated and
Individual Financial
Statements
Opinion
We
have
audited the consolidated
financial
statements of
Ovostar Union Public
Company
Limited
(the
parent
Company,
herein
referred as the
"Campany")
and its
subsidiaries
(the "Group"),
and the individual
financial
statements of Ovostar Union
Public
Company
Limited
(the
parent Company,
herein
referred as
the
"Company"),
which are
presented
in
pages
39
to 95 and
comprise
the consolidated
statement of
financial
position
as at 31
December
2021,
and the
consolidated statements
of
comprehensive income,
changes
in
equity
and cash flows
for the
year
then
ended,
and notes to the
consolidated financial
statements,
including
a
summary
of
significant
accounting policies
and the individual statement of
financial
position
as at
31 December
2021,
and the
individual
statements of
comprehensive income, changes
in
equity
and cash
flows for the
year
then
ended,
and
notes to the
individual financial
statements, including
a
summary
of
significant
accounting
policies.
In
our
opinion,
the
accompanying
consolidated and
individual financial
statements
give
a true and fair view
of the
consolidated
and individual
financial
position
of the
Group
as at 31 December
2021,
and
of
its
consolidated and individual
financial
performance
and its consolidated
and individual cash flows for the
year
then ended in
accordance with
International
Financial
Reporting
Standards
(IFRSs)
as
adopted by
the
European
Union and the
requirements
of
the
Cyprus Companies
Law, Cap.
113.
Basis
for
Opinion
We conducted
our audit in
accordance with
International
Standards on
Auditing
(ISAs).
Our
responsibilities
under
those standards
are
further
described in the
"Auditor's
Responsibilities
for the Audit of the
Financiat
Statements"
section of our
report.
We
remained
independent
of the
Group
throughout
the
period
of
appointment
in
accordance with
the
"International Ethics
Standards Board for
Accountants' Code of Ethics
for
Professional
Accountants"
{including
International
Independence
Standards) (IESBA Code) together
with the ethical
requirements
that are
relevant to our
audit of the financial
statements
in
Cyprus,
and we
have
fulfilled
our other
ethical
responsibilities
in
accordance
with
these
requirements
and
the IESBA
Code.
We
believe that the audit
evidence we
have
obtained is sufficient
and
appropriate
to
provide
a basis for
our
opinion.
Material
uncertainty
related
to
going
concern
We draw
attention to Note 2.2
and Note
33 of the
consolidated financia!
statements which refer to
the
ongoing
Russian
military
invasion of Ukraine
since 24
February
2022. Due to
conditions that exist
during
the
military invasion,
a
material
uncertainty
exists
which
may
cast
significant
doubt about the
Group's
ability
to
continue as a
going
concern.
Our
opinion
is net modified in
respect
of this matter.
ADVISORY
-
ASSURANCE
-
TAX
96
Baker
Tilly
Klitou &
Partners Ltd
trading
as Baker
Tilly
is a member of the
global
network of Baker
Tilly
International
Ltd.,
the
members of which
are
separate
and
independent legal
entities.
96
Independent
Auditor's
Report
(continued)
G
ba
kertilly
To the
Members of
Ovostar Union Public
Company
Limited
Key
audit matters
incorporating
the most
significant
risks of material
misstatements,
including
assessed risk
of material misstatements due to
fraud
Key
audit
matters
are those matters
that,
in our
professional judgment,
were of most
significance
in
our
audit
of the consolidated
and individual financial statements of the
current
period.
These
matters were
addressed in
the context
of our audit
in
the consolidated
and individual financial statements
as a
whole,
and
informing
our
opinion
thereon,
and we do not
provide
a
separate opinion
on these matters.
The
key
audit matter
How the matter was addressed
in our audit
Biological
Assets Valuation
The
Group's biological
assets are measured at fair
value
less costs to sell.
As at 31 December 2021
the
biological
assets in the consolidated
financial
statements are
presented
at
a
carrying
value
of
USD
60.538.006
(2020:
USD
51.372.000).
We
refer to
Note 5 and
17 in the consolidated
financial statements for the related
disclosures.
The
Group
estimates
the fair value of the
biological
assets based on the discounted
cash flow
technique.
The
Group
determines
the fair value
internally, applying inputs
from
mostly
internal
sources which
require
estimates and
assumptions,
including
the future value
of the
produced eggs,
the
costs to maintain the
laying
hens until the end
of their
production period
and the discount rate.
Due to
the
level of
judgment
and
complexity
involved in
the
valuation of
biological
assets,
as
well as the
significance
of
biological
assets to the
Group's
financial
position,
this is
considered to be
a
key
audit matter.
We obtained an
understanding
of
management's
biolagical
assets' valuation
process
and evaluated
the
design
and tested the
operating
effectiveness
of internal controls related to
biological
assets.
Our audit
procedures
over the
valuation of
biological
assets
included, among
others:
¢
Testing
of the
design of,
and
validity
of
the
input
data used
in,
the
valuation
model
of
biological
assets;
*
Testing
the
completeness
and
accuracy
of
the data
used
through
recalculation
and
testing
of
inputs;
«
Assessment of the
methodology
adopted
by management
for the
valuation;
e
Assessment of the
key
valuation
assumptions
used in the mode]
against
prevailing
market
conditions;
«
Assessment of the
assumptions
used
to
derive to the discount rate
applied
in the
valuation
model;
e
Testing
of the
mathematical
accuracy
of
the model used for
valuation;
e
Assessment
of the
adequacy
and
appropriateness
of disclosures
for
compliance
with
the
applicable
accounting
standards.
Reporting
on other information
The Board of Directors is
responsible
for the other information. The
other information
comprises
the
information included in the
Management Report
and the
Corporate
Governance
Statement,
but does
not
include the consolidated
and
individual financial statements and our auditor's
report
thereon.
Our
opinion
on the consolidated and individual
financial
statements does not cover the
other information
and we do not
express any
form of assurance conclusion thereon.
In
connection with our audit
of the consolidated and individual financial
statements,
our
responsibility
is to
read the other information identified above
and,
in
doing so,
consider
whether the other
information
Is
materially
inconsistent with the consolidated and individual
financial statements or our
knowledge
obtained
in the
audit,
or otherwise
appears
to be
materially
misstated.
If,
based on the work we
have
performed,
we
conclude that there is
a material misstatement of this other
information,
we are
required
to
report
that
fact.
We have
nothing
to
report
in
this
regard.
97
97
Independent
Auditor's
Report (continued)
G
ba
kerti
lly
To
the Members
of Ovostar Union Public
Company
Limited
Responsibilities
of the Board of Directors and those
charged
with
governance
for the
Consolidated
and Individual Financial Statements
The Board
of Directors is
responsible
for the
preparation
of consolidated and individual financial statements
that
give
a true
and
fair
view in accordance with International Financial
Reporting
Standards as
adopted
by
the
European
Union and the
requirements
of the
Cyprus Companies
Law,
Cap. 113,
and for such
internal
control as
the Board of Directors
determines is
necessary
to enable the
preparation
of consolidated and
individual
financial statements that are free
from material
misstatement,
whether due to fraud or error.
In
preparing
the consolidated and
individual financial
statements,
the Board of Directors is
responsible
for
assessing
the
Group's
ability
to continue as a
going concern, disclosing,
as
applicable,
matters related to
going
concern
and
using
the
going
concern basis of
accounting
unless the Board of
Directors either
intends to
liquidate
the
Group
or to
cease
operations,
or has no realistic alternative but to do so.
Those
charged
with
governance
are
responsible
for
overseeing
the
Group's
financial
reporting process.
Auditor's
Responsibilities
for the
Audit
of the
Consolidated and Individuai Financial
Statements
Our
objectives
are to obtain
reasonable assurance about whether the consolidated and individual 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 will
always
detect a
material
misstatement
when it
exists. Misstatements can
arise from fraud or error and are considered material
if, individually
or
in
the
aggregate, they
could
reasonably
be
expected
to influence the economic
decisions of users taken
on the basis
of these consolidated and
individual financial statements.
As
part
of an
audit in accordance with
ISAs,
we exercise
professional judgment
and maintain
professional
scepticism
throughout
the audit.
We alse:
®
Identify
and assess
the risks of material misstatement of the consolidated
and
individual financial
statements,
whether due to fraud or
error, design
and
perform
audit
procedures responsive
to those
risks,
and obtain audit
evidence that is
sufficient and
appropriate
to
provide
a
basis for our
opinion.
The risk
of
not
detecting
a material
misstatement
resulting
from fraud is
higher
than for one
resulting
from
error,
as
fraud
may
involve
collusion,
forgery,
intentional
omissions, misrepresentations,
or the override of internal
control.
e
Obtain an
understanding
of Internal control relevant to the audit in order to
design
audit
procedures
that are
appropriate
in
the
circumstances,
but not for the
purpose
of
expressing
an
opinion
on
the
effectiveness of the
Group's
internal control.
*
Evaluate the
appropriateness
of
accounting policies
used and the
reasonableness of
accounting
estimates and
related disclosures
made
by
the Board of Directors.
°
Conclude on the
appropriateness
of
the
Board of Directors'
use
of the
going
concern basis
of
accounting and,
based
on the
audit evidence
obtained,
whether a material
uncertainty
exists related
to
events
or conditions that
may
cast
significant
doubt on the
Group's ability
to
continue
as
a
going
concern.
Tf
we conclude
that a material
uncertainty
exists,
we are
required
to draw attention in our auditor's
report
to the related
disclosures in the
consolidated and individual financial statements
or,
if such disclosures
are
inadequate,
to
modify
our
opinion.
Our
conclusions
are based on the
audit evidence obtained
up
to the
date
of our
auditor's
report. However,
future events or conditions
may
cause the
Group
to cease to continue
as a
going
concern.
.
Evaluate
the overall
presentation,
structure and content of the consolidated and
individual
financial
statements,
including
the
disclosures,
and whether the
consolidated and individual
financial
Statements
represent
the
underlying
transactions and events in a manner
that achieves a true
and
fair
view.
97
98
Independent
Auditor's
Report (continued)
G
bakerti
lly
To the
Members
of Ovostar
Union Public
Company
Limited
e
Obtain
sufficient and
appropriate
audit evidence
regarding
the financial information of
the entities
or
business activities within
the
Group
to
express
an
opinion
on the consolidated and individual
financial
statements.
We are
responsible
for the
direction, supervision
and
performance
of the
group
audit. We
remain
solely responsible
for our
audit
opinion.
We
communicate with those
charged
with
governance regarding, among
other
matters,
the
planned
scope
and
timing
of
the audit and
significant
audit
findings, including any significant
deficiencies in internal control
that we
identify during
our audit,
We
also
provide
those
charges
with
governance
with a statement that we have
complied
with relevant
ethical
requirements regarding
independence,
and to communicate with them all
relationships
and
other
matters that
may
reasonably
be
thought
to bear on our
independence,
and where
applicable,
actions taken
to
eliminate threats or
safeguards
applied.
From
the
matters communicated with
those
charged
with
governance,
we determine
those matters that
were of
most
significance
in
the audit of the
consolidated
and
individual financial statements of the
current
period
and are
therefore the
key
audit
matters.
Report
on
Other
Legal
and
Regulatory Requirements
Pursuant
to
the
requirements
of Article
10(2}
of the EU
Regulation
537/2014
we
provide
the
following
information in
our
Independent
Auditer's
Report,
which
is
required
in
addition to the
requirements
of
International Standards on
Auditing.
Appointment
of
the Auditor and
Period of
Engagement
We
were first
appointed
as auditors
of the
Group
on 30 November 2018
by
the
General
Meeting
of the
Company's
members to audit its
financial statements for the
year
ended 31
December 2018, Our
appointment
has been renewed
annually by
resolution at the
shareholder's Annual General
Meeting
representing
a
total
period
of
uninterrupted engagement appointment
of
4
years.
Consistency
of the
Additional
Report
to the Audit Committee
We
confirm that our
audit
opinion
on
the consolidated and individual financial
statements
expressed
in
this
report
is
consistent with the
additional
report
to the Audit Committee of the
Company,
which
we
issued on O1
July
2022 in
accordance with Article 11 of the EU
Regulation
537/2014,
Provision of
Non-audit
Services
We declare
that
no
prohibited
non-audit services
referred to
in
Article 5 of the EU
Regulation
537/2014
and Section 72 of
the
Auditors Law of 2017 were
provided.
In
addition,
there are no non-audit services
which
were
provided by
us to the
Group
and which
have net been disclosed in the
consolidated
and
individual financial
statements or
the
management report.
European Single
Electronic Format
The Board of
Directors
of Ovostar
Union Public
Company
Limited Is
responsible
for
preparing
and
submitting
the
consolidated and
the individual financial statements for the
year
ended 31 December
2021
in accordance
with the
requirements
set out in the EU
Delegated Regulation 2019/815
of 17 December
2018 of the
European
Commission
(the
"ESEF
Regulation').
Our
responsibility
is to
examine the
digital
files
prepared by
the Board of Directors of Ovostar Union
Public
Company
Limited.
According
with the
Audit Guidelines issued
by
the Institute of Certified
Public
Accountants of
Cyprus
(the
"Audit
Guidelines"),
we are
required
to
plan
and
perform
our audit
procedures
in
order to
examine whether the content of the consolidated and
the individual financial
statements
included in
the
digital
files
correspond
to the consolidated and the individual
financial
statements we have
audited,
and
whether the
digital
files have been
prepared
in all
material
respects,
in
accordance with
the
requirements
of the ESEF
Regulation.
97
99
Independent
Auditor's
Report
(continued)
G
bakerti
lly
To the
Members
of
Ovostar
Union
Public
Company
Limited
The consolidated
and
the
individual
financial statements
for the
year
ended
31
December
2021 in
accordance
with the
ESEF
Regulation
have not
yet
been submitted
to us at
the
date of
this
report.
A
separate report
will be
issued
accordingly.
If the
digital
files
will not be
submitted
to us within
a reasonable
timeframe,
we will
be
required
to
adjust
this
report
in
order to
state this.
Other
Legal Requirements
Pursuant to
the additional
requirements
of the
Auditors
Law of
2017,
we
report
the
following:
°
In our
opinion,
based
on the work
undertaken
in the
course
of our
audit,
the
management
report
has been
prepared
in accordance
with the
requirements
of the
Cyprus
Companies
Law,
Cap.
113,
and
the
information
given
ts consistent
with the
financial statements.
°
In the
light
of the
knowledge
and
understanding
of the
Group
and
its environment
obtained
in
the
course of
the
audit,
we
are
required
to
report
if we
have
identified
material
misstatements
in the
management
report.
We
have
nothing
to
report
in this
respect.
®
In our
opinion,
based
on the
work undertaken
in the course
of
our
audit,
the
information
included
in the
corporate
governance
statement
in accordance
with the
requirements
of
subparagraphs
(iv)
and
(v)
of
paragraph
2(a)
of Article
151 of
the
Cyprus
Companies
Law, Cap.
113,
and
which
is included
as
a
specific
section of
the
management
report,
have been
prepared
in accordance
with the
requirements
of the
Cyprus
Companies
Law, Cap,
113,
and
is consistent
with the
financial
statements.
*
In our
opinion,
based on
the work
undertaken
in the
course
of our
audit,
the
corporate
governance
statement
includes
all information
referred
to in
subparagraphs
(i), (il),
(iii), (vi)
and
(vii)
of
paragra
ph 2(a)
of
Article 151
of the
Cyprus
Companies
Law, Cap.
113.
In the
light
of the
knowledge
and
understanding
of
the
Group
and
its environment
obtained
in
the
course
of the
audit,
we
are
required
to
report
if we
have
identified
material
misstatements
in the
corporate
governance
statement
in
relation to
the
information
disclosed
for items
(iv)
and
(v)
of
subparagraph
2(a)
of
Article 151
of the
Cyprus
Companies
Law,
Cap.
113.
We have
nothing
to
report
in
this
respect.
Other
Matter
This
report,
inclu
in
accordalice
wi
r no}pther
ose
orto
g
the
opinion,
has
been
prepared
for
and
only
for
the
Company's
members
as a
body
Article
10(1)
of
the EU
Regulation
537/2014
and
Section
69 of the
Auditors
Law of
2017
. We do
not,
in
giving
this
opinion,
accept
or
assume
responsibility
for
any
other
riperson
to whose
knowledge
this
report
may
come
to.
ha
endagémen
e audit
resulting
in this
independent
auditor's
report
is Maria
Kaffa.
Maria
Kaffa
Certified
Public Accountant
and
Registered
Auditor
for and
on behalf
of
Baker
Tilly
Klitou and
Partners
Ltd
Certified
Public
Accountants
and
Registered
Auditors
Corner
C
Hatzopoulou
&
Griva
Digheni
30 Avenue
1066
Nicosia
Cyprus
Nicosia,
01
July
2022
97
100
F-
All forward-looking statements contained in this annual report with
respect to our future financial and operaonal performance and
posion are, unless otherwise stated, based on the beliefs, expec-
taons, projecons and the esmates of our management repre-
senng their judgment as at the dates on which the statements
have been made. Forward-looking statements are generally iden-
fiable by the use of the words “may”, “will”, “should”, “plan”,
“forecast”, “expect”, “ancipate”, “esmate”, “believe”, “intend”,
“project”, “goal” or “target” or the negave of these words or oth-
er variaons on these words or comparable terminology. Our actu-
al operaonal and financial results or the same of our industry in-
volve a number of known and unknown risks, uncertaines and
other factors and they are not guaranteed to be similar to the for-
ward-looking statements, although our management makes all
effort to make forward-looking statements as accurate as possible.
We do not undertake publicly to update or revise any forward-
looking statement that may be made herein, whether as a result of
new informaon, future events or otherwise.
Legal address:
Ovostar Union PCL
22 Ierotheou Street
2028 Nicosia , Cyprus
Correspondence address:
34 Petropavlivska street
04086 Kyiv, Ukraine
For Investor Relaons inquiries:
Investor Relaons Department
Anna Tews
ir@ovostar.ua
Cell: +38 050 439 05 05
Landline: +38 044 354 29 60