2022
Corporate summary 5
Key Financials 10
Segment Activities 11
Financial Results 14
Outlook for 2023 16
Human Resources 17
Risk Management and Internal
Control
18
Shareholders and Share
Information
24
CONTENTS
The Board of Directors 26
Committees of the Board of
Directors
30
Meetings with Shareholders 31
Corporate Governance
and Control
33
Non-financial Information 35
Management Report
Corporate Governance
Financial Statements
Consolidated financial statements 38
Company financial statements 82
2022 ANNUAL REPORT 3
1
MANAGEMENT REPORT
Dear Shareholders,
Since the beginning of Russian full-scale military
invasion in Ukraine Ovostar Union went through
several stages.
The first one started on February 24, 2022 and last-
ed until the Kyiv region was deoccupied in April of
the same year. That was a hard challenge for the
company, when all supply and distribution chains
were immediately disrupted. One of the Group’s
production sites – Makariv egg processing factory –
got into the epicenter of hostilities with subsequent
temporary occupation by the Russian troops. Fortu-
nately, the company managed to timely evacuate
the personnel and avoid casualties. The production
assets, however, were partially damaged.
Another production site is located in close proximi-
ty to a military airfield in Vasilkiv that was repeat-
edly attacked by the enemy who attempted to land
troops there. So constant fighting around the facto-
ries was a part of daily routine. At that time our
main concern was to protect our people and,
where possible, save the production facilities and
flock from physical destruction. Looking back, we
can say that the task was coped with perfectly – no
one from our employees was injured, no assets
were damaged. There were days when the compa-
ny nearly ran out of feed for the hens, there were
great problems with the ready products distribu-
tion. And still we did our best to keep the company
operating and to help our armed forces.
The second stage spanned from the deoccupation
of Kyiv area to the start of severe attacks on the
critical infrastructure in October. This period was
marked by the gradual restoration of the logistics.
After the EU abolished duties and quotas on
Ukrainian goods the company could renew and lat-
er even expand its exports which led to stabilization
of operational and financial results.
The third stage began in October 2022 and still
lasts.
Massive attacks on the critical infrastructure to-
gether with the cold season brought new challeng-
es connected with continuity of the company’s op-
erations. Fortunately, the management took steps
to invest in alternative sources of electricity like
diesel generators and solar batteries which helped
to minimize the adverse effects.
Despite the full-scale war, the Group has managed
to keep afloat and show positive financial result in
2022.
We are happy to admit that our work makes certain
contribution to the Ukraine’s victory. Around 60
men from our company joined the armed forces.
And we genuinely believe that the good peaceful
times are soon to come back to our country.
Sincerely,
Borys Bielikov
CEO’S
STATEMENT
MANAGEMENT
REPORT
2022 ANNUAL REPORT 5
1
MANAGEMENT REPORT
1
MANAGEMENT REPORT
2021 ANNUAL REPORT 5
Ovostar Union Public Company Limited is a holding
entity originally incorporated under the laws of the
Netherlands in 2011 and re-domiciled to Cyprus in
2018. It consolidates companies with production
assets located in Ukraine and non-Ukrainian trading
companies in Latvia and United Arab Emirates
(hereinafter 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 organically 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 producers in
Ukraine.
With focus on developing the export markets, we
are expanding our sales geography supplying shell
eggs and egg products of consistently high quality
around the countries of Europe, Middle East, Africa
and Asia.
Within the egg segment, we possess shell egg
portfolio of over 20 sub-brands and supply our
branded eggs to the largest retail chains in Ukraine.
As a result of export markets development we are
gradually increasing the deliveries of shell eggs out-
side 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 largest food processing com-
panies in Ukraine and abroad by adjusting our prod-
ucts to the clients’ needs while maintaining the su-
perior quality.
CORPORATE SUMMARY
Company Overview
2022 ANNUAL REPORT 6
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MANAGEMENT REPORT
We are a vertically integrated agricultural
holding with key production facilities and
supporting 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 production 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 production sites comes from the
best experts such as Big Dutchman, Sal-
met, MOBA and others. Combined with
the innovative technology solutions and
best practices deployed it makes us a rec-
ognized industry leader.
Kyiv region
CORPORATE SUMMARY
Business Geography
2022 ANNUAL REPORT 7
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MANAGEMENT REPORT
We employ the most up-to-date poultry and processing
equipment and progressive technological concepts at our
production sites in order to ensure efficiency of production
processes and superior quality of final products.
Having initially adopted a large-scale production approach,
we have built up a vertically integrated business model
with full production cycle spanning from parent flock to egg
processing.
Alongside our core business we maintain our own fodder
production, rapeseeds processing and grain storage, which
secure the high quality of fodder for our poultry flock.
Our products are compliant with international quality
standards ISO 9001:2015 and FSSC 22000 v.5 as well as
applicable national Ukrainian standards and sanitary
norms. We also possess the Halal Certificate to export
internationally and are certified to export both shell eggs of
CORPORATE SUMMARY
Business Model
2022 ANNUAL REPORT 8
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MANAGEMENT REPORT
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 international retail chains in
Ukraine.
Price for branded packaged eggs is traditionally
higher than the average egg price on the market.
Having YasensvitTM for over 15 years on the
Ukrainian market, the price premium is justified by
consumers’ recognition of consistently high quality
of products under YasensvitTM brand and the wide
range of assortment adjusted to specific consumer
preferences.
In 2022 we kept the position 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
conditions and consumer needs. These steps, as a
part of the upgraded marketing strategy, are aimed
at building up the existing customer loyalty and
attracting new clientele.
In 2020 a free range poultry house was completed
and certified for production of shell eggs marked as
“Free Range”. The Company is one and only among
local industrial egg producers who launched free
range egg production.
Premium Standard
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 portfolio of premi-
um, standard, economy and private
label categories.
CORPORATE SUMMARY
Our Brands - Shell Eggs
2022 ANNUAL REPORT 9
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MANAGEMENT REPORT
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 production of confectionary,
mayonnaise, meat products etc. Each client
requests the egg product with certain
characteristics needed for the final good. Our
flexibility to adjust to clients’ needs maintains the
loyalty of our major clients as well as our position
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 bottled liquid egg white
and liquid whole egg, offered to our customers in
2018, in 2019 we introduced a new egg product in
retail segment - bottled scrambled eggs. Further, in
2020 we launched production 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
CORPORATE SUMMARY
Our Brands - Eggs Products
2022 ANNUAL REPORT 10
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MANAGEMENT REPORT
Balance Sheet (mUSD)
31-Dec-2021 31-Dec-2022 ∆ YoY, %
Assets 141,0 110,7 (22%)
Non-current assets 91,5 46,6 (49%)
Current assets 49,5 64,1 29%
-
Equity and Liabilities 141,0 110,7 (22%)
Equity
109,9 83,9 (24%)
Non-current liabilities
7,5 8,6 15%
Current liabilities 23,7 18,2 (23%)
Cash Flow (mUSD) 2021 2022 ∆ YoY, %
Net cash generated by operating activities 18,2 32,2 77%
Net cash used in investing activities
(20,2) (9,1) (55%)
Net cash generated by financing activities 2,6 (1,6) (161%)
Debt Position (mUSD) 31-Dec-2021 31-Dec-2022 ∆ YoY, %
Total debt 12,9 10,9 (15%)
Cash and cash equivalents 2,4 12,2 400%
Net debt 10,4 (1,3) (112%)
Income Statement (mUSD) 2021 2022 ∆ YoY, %
Revenue 133,3 135,6 2%
Gross profit 13,6 22,8 208%
EBITDA 5,7 11,1 96%
Profit before tax 1,6 6,6 304%
Net profit 1,6 6,1 268%
KEY FINANCIALS
2022 Update
2022 ANNUAL REPORT 11
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MANAGEMENT REPORT
Shell eggs sales
Production
As of year end 2022 the Group’s total flock was 7,2
mln heads (-13% YoY). The number of layers totaled
to 6,04 mln heads (-14% YoY). The laying flock was
deliberately reduced during the first half of 2022 on
the background of falling demand, shrinking egg
production and limited exports caused by the war in
Ukraine. This helped to avoid oversupply of the
local market and balance the prices.
Egg production volume in 2022 decreased to 1,546
bln (-9% YoY), which is explained by the laying flock
reduction.
Sales
In 2022 the sales volume in the egg segment was
1,081 bln. The decrease against the previous year
made up 6% resulting from the lower production
volumes.
Export sales, however, grew by 10% YoY reaching
290 mln eggs against 264 mln in 2021, which is
explained by the more favorable market situation
on the export markets during the year.
Shell eggs sales structure
Average selling price of eggs in 2022 rose by 13% YoY in USD terms up to 0,090 USD/egg.
349
756
Local Sales, mln eggs
Export Sales, mln eggs
2020 2021 2022
264
886
290
791
2021 2022
Branded
Unbranded
Export
23%
23%
54%
27%
21%
52%
SEGMENT ACTIVITIES
Egg Segment
2022 ANNUAL REPORT 12
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MANAGEMENT REPORT
Liquid Egg Product Sales Dry Egg Product Sales
Dry egg products local sales, thous. tons
Average price, USD/kg net of VAT
4.11
Production
The volume of eggs processed decreased by 15%
YoY – from 501 mln in 2021 to 427 mln in 2022,
consequently leading to a drop in egg products
output.
In 2022 2 542 tons of dry egg products were
produced (-6% YoY). The production volume of
liquid eggs products in 2022 was 10 797 tons
representing a 24% decrease YoY.
Sales
The sales volume of dry egg products fell by 34%
YoY to 2 137 tons. 68% of total sales volume were
exported, which is by 4 p.p. lower compared to
2021. The sales volume of liquid eggs products fell
by 26% down to 10 682 tons, 4 316 of which were
exported. Share of export sales in 2022 rose to 40%
from 28% in 2021.
Average selling price of dry egg products rose by 71% in USD terms and reached 8.59 USD/kg.
Average selling price of liquid egg products rose by 20% in USD terms and reached 2.06 USD/kg.
2.3
1.0
4.6
8.6
1.22
1.73
Dry egg products export sales, thous. tons
2020 2021 2022
Liquid egg products local sales, thous. tons
Average price, USD/kg net of VAT
Liquid egg products export sales, thous. tons
2020 2021 2022
5.02
2.06
8.59
2.1
1.2
1.5
0.7
4.1
10.3
4.3
6.4
SEGMENT ACTIVITIES
Egg Products Segment
2022 ANNUAL REPORT 13
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MANAGEMENT REPORT
Export markets development
The Group exports eggs and egg products under the brand name OVOSTAR to around 50 coun-
tries of the world through its representative offices in Latvia and UAE. Key export markets are
Europe and Middle East.
In 2022 41% of the total revenues of the Company came from export activities. Export revenues
totaled to USD 53,7 million. Sales to Middle East contributed 5% to the total revenues (2021:
13%), sales to European Union made up 30% of total revenues (2021: 10%).
SEGMENT ACTIVITIES
Sales Geography by Segment
2022 ANNUAL REPORT 14
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MANAGEMENT REPORT
Gross profit and cost of sales
Cost of sales fell by 22% YoY from USD mln 111,2
mln to USD 86,6 mln as a result of decrease of
production volume and steep fall of the local prices
of poultry feed components, such as wheat and
corn, caused by the hostilities in Ukraine (limited
export).
Gross profit equaled USD 22,8 mln (2021: USD 13,6
mln)
Net profit
Net profit for the year amounted to USD 6,1 mln
(2021: USD 1.7 mln).
EBITDA
In 2022 EBITDA rose to USD 11,1 (2021: USD 5,7
mln).The prices of eggs and egg products steadily
growing in the second half of 2022 provided for
better marginality as compared to the previous
years.
Revenue Structure by Segment
Profitability Dynamics, mUSD
Shell eggs, local
Shell eggs, export
Egg Products, local
Egg Products, export
Net profit/
EBITDA, mUSD
Revenue
In 2022 total revenues grew by 2% YoY to USD 135 mln. Among the key growth drivers is significant
increase of price for eggs and egg products.
Shell eggs segment contributed USD 95.6 mln, or 70% to the total revenues, the remaining USD 40 mln, or
30% come from egg products segment. Export revenues made up 40% of the total amount.
2021 2022 2020 2021 2022
8.0
2.6
6.1
11.1
5.7
1.7
FINANCIAL RESULTS
Financial Performance
2022 ANNUAL REPORT 15
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MANAGEMENT REPORT
Assets, liabilities and equity
As of 31.12.2022 the Group’s total assets
decreased by 22% YoY to USD 110,7 mln mainly as
a result of biological assets fair value decrease.
Another factor is the material devaluation of the
Ukrainian hryvna (19% YoY).
Loans and borrowings
During the year the Group repaid USD 3,7 mil of
bank loans and attracted EUR 2.8 mil for the
working capital financing.
Net debt as 31.12.2022 totaled USD (1,3) mil
Cash flow
In 2022 the Group demonstrated a solid cash flow
the details of which are as follows:
Net cash flows from operating activities:
USD 19,7 mln
Net cash flows used in investing activities:
USD (9,3) mln
Net cash flows used in financing activities:
USD (1,6) mln
The cash balance as of 31.12.2022 is USD 12,2 mln
FINANCIAL RESULTS
Financial Position
2022 ANNUAL REPORT 16
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MANAGEMENT REPORT
Strategy
Our organic growth strategy has been aimed at
strengthening the Company’s market position 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
relationships 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 cooperation across
departments results in higher productivity of day-
to-day operations and stronger synergy effect. In
2023 we intend to continue advancing employee
skills to be more competitive and efficient.
Outlook for 2023
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 critical infrastructure in Ukraine, the Company
keeps operating, having introduced even stricter
rules of production safety and control at its
production sites in order to minimize risks for the
employees and consumers. Under the
circumstances we expect that in 2023 the focus
will be placed on maintenance of the existing
production facilities and increasing operating
efficiency.
The management makes steps to secure the
supply chain which is vital for the operations
continuity. Activities in the export markets have
not suffered, however, further developments are
subject to the success of measures taken locally
and internationally to curb the crisis and mitigate
its effects.
Investment program update
The CAPEX of 2023 is expected to be moderate
with focus on maintenance and infrastructure. .
STRATEGY AND OUTLOOK
Outlook for 2023
2022 ANNUAL REPORT 17
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MANAGEMENT REPORT
The majority of our employees are involved in pro-
duction processes on the premises located in Kyiv
and Cherkasy regions. We recruit, employ and pro-
mote employees on the sole basis of their qualifica-
tion and abilities. Equal employment opportunities
and career perspectives are provided for all em-
ployees, regardless of their gender, age, nationality
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 effectively to
changing market environment. We strive to ensure
a positive, productive and successful work environ-
ment. The level of satisfaction is, among other cri-
teria, confirmed by high employee retention rates
(97% on average for the last 5 years).
We aim to maintain a fair and comprehensive sys-
tem of remuneration. Overall remuneration of our
employees is divided into material and non-
material portions. Material remuneration consists
of a basic fixed salary plus a variable component
like bonuses that depend on achievement of corpo-
rate and personal targets.
Non-material remuneration consists of professional
trainings, corporate team-building events and free
use of corporate gym.
Legal relationships 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 contributions. 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 options or other rights to shares nor partici-
pate in any other way in the capital of Ovostar Un-
ion PCL. Currently, no arrangements relating to
such participation are planned in the short-term
perspective.
Quantity of employees as of 31 December
2020 2021 2022
Employees, EoY, incl. 1 543 1 525 1 367
Production 1 353 1 352 1 214
Administrative 190 173 153
HUMAN RESOURCES
Overview
2022 ANNUAL REPORT 18
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MANAGEMENT REPORT
Risk management
Risk management is an essential 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-
ecutive management and the Audit Committee. In
their review of our risk profile, the main focus is
placed on principal risks that could significantly de-
teriorate our operational and financial results.
It has to be noted that proper identification 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 operations are not limited to the risks
described above, but those above are regarded as
the most significant in the short-term perspective.
No anti-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.
internal control system
The Board of Directors is ultimately responsible for
establishing, controlling and enhancing our internal
control system. We consider risk management to
be a continuous process of monitoring, assessing
and mitigating risks through internal control sys-
tems and procedures at each level within the or-
ganization.
We use guidelines, instructions and procedures ap-
plied to operations, financial reporting, 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, instructions and pro-
cedures.
Key elements of the internal control system are
budgeting, investment management, operational
management and financial reporting. They monitor
the progress and the actual results of the compa-
ny’s operating activities. We also use a staff evalua-
tion and appraisal system. The process of enhance-
ment of the internal control system will be contin-
ued in 2022.
For more information on risks please refer to Note
30 of the 2022 Consolidated Financial Statements.
Deficiencies of the system
In 2022, we did not identify any material weakness-
es of the internal control system that might ad-
versely impact our operational activity, financial
results and financial position. The risks are clearly
identified and controlled to the highest possible
extent by our top management within their rele-
vant function.
RISK MANAGEMENT
& INTERNAL CONTROL
Overview
2022 ANNUAL REPORT 19
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MANAGEMENT REPORT
Impact Mitigation 2022 Status / Notes
Biological Risk
Outbreaks of highly-
pathogenic avian influenza in
Europe and in the south of
Ukraine may severely limit
our ability to perform normal
operations and reduce the
possibility to export
Adherence to biosecurity
standards in line with the
best international practices.
Egg production and egg pro-
cessing facilities are compli-
ant with ISO 9001: 2015 and
FSSC 22000 v.5 and Halal. Di-
versification 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-
tion cycle in order to provide
the highest quality and ability
to react fast in case of need
Depreciation of Ukrainian
Hryvnia leads to deteriora-
tion of income per household
and change in consumer
preferences
Worsening economic condi-
tions has little effect on con-
sumption of eggs per capita
because eggs remain the
most affordable source of
animal-based protein
In 2022 egg consumption
amounted to 280 eggs per
capita, demonstrating stable
growth over the last five
years.
Macroeconomic Risk
Poor economic conditions
result in lack of debt financ-
ing available
Historically, we have been
reliant primarily on own posi-
tive cash flow and debt fi-
nancing is used only for im-
plementation 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
comparatively low effective
interest rate. However, excel-
lent credit history allows to
borrow funds from Ukrainian
banks on favorable terms.
RISK MANAGEMENT
& INTERNAL CONTROL
Identified Risks
2022 ANNUAL REPORT 20
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MANAGEMENT REPORT
Impact Mitigation 2022 Status / Notes
Price Risk
Devaluation 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 fluctuations.
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 2022 share of export reve-
nue was 40% (2021: 28%).
YoY change of prices in UAH
terms: for shell eggs +34%, for
dry egg products +103%, for
liquid egg products +42%.
Current capital restrictions
of National Bank of Ukraine,
although partially weakened
in 2019, may limit the possi-
bility to meet the financial
obligations when due
We strictly control our work-
ing capital
As at December 31, 2022 all
payment obligations were
met on time. Part of revenues
are accumulated on the bank
accounts of the subsidiaries
outside of Ukraine
Liquidity Risk
Excessive concentration 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 portfolio
In 2022 we had no clients
generating more than 10% of
our total revenue
Concentration
of sales
RISK MANAGEMENT
& INTERNAL CONTROL
Identified Risks
2022 ANNUAL REPORT 21
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MANAGEMENT REPORT
Impact Mitigation 2022 Status / Notes
Competition
Offering from the existing
competitors or new market
entrants may weaken our
competitive position
We have a unique for Ukraine
vertically integrated business
model with facilities in close
proximity to each other, what
results in high production effi-
ciency. Having been offering
products of consistently supe-
rior quality and adjusting to
the market demands, we
achieved the recognition and
loyalty of our customers
Yasensvit
TM
brand holds the
position of the most-
recognized brand of shell eggs
in Ukraine.
We also have a possibility to
effectively diversify our sales
to destinations outside
Ukraine
Climate risks
Extreme weather conditions
can have a detrimental
effect on the well-being of
poultry flock and their pro-
duction efficiency
Our egg production facilities
are equipped with an auto-
matic climate-control system
Optimal climate conditions for
laying hens include 40-60%
humidity and ambient tem-
perature within 20-25
o
C. Our
production facilities are
equipped with sophisticated
ventilation systems to keep all
vial indicators at normal levels
throughout the year.
RISK MANAGEMENT
& INTERNAL CONTROL
Identified Risks
2022 ANNUAL REPORT 22
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MANAGEMENT REPORT
Having examined the existing and potential impli-
cations of the war for the Ukraine located busi-
nesses, the management of the Group have identi-
fied several points of specific concern that require
careful analysis and assessment. They identified
risks include, but are not limited to, the following:
• risks related to the personnel safety;
• risk of physical destruction of the produc-
tion assets;
• risks of disruption of the supply and distri-
bution chains;
• risk of liquidity and limited access to financ-
ing;
The Group places top priority on the personnel’s
health and safety issues. All possible action has
been taken to minimize the existing threats and
support the staff during this dramatic period. The
HR department on a daily basis keeps record of
the location of each employee to make sure that
everyone is in a safe place. All administrative staff
has been granted the option to work remotely.
The Group closely monitors the needs of the team
and promptly reacts to them within the limits of its
capabilities. Forty men from the company’s staff
were called up to the military service.
The Group’s management continue to fulfill their
duties without interruptions.
The Group fully complies with all sanctions rules
and regulations regarding russia and belarus, in-
cluding those introduced or published by various
countries and organizations. In addition, the Group
refrains from contacting individuals or entities on
the sanctions list. In this situation, 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 production facilities are lo-
cated in Kyiv region, in Fastivskyi and Bi-
lotserkivskyi districts, where no severe hostilities
took place. The poultry houses in Vasilkiv and
Stavyshche, as well as the egg-processing factory
in Vasilkiv, remain physically undamaged and
keep operating.
The egg-processing factory in Makariv
(Buchanskiy district) had been temporarily shut
down until the city was de- occupied by the
Ukrainian military forces in the end of March.
The subsequent inspection of the factory
showed signs of critical damages to buildings
not involved in the manufacturing process
(waste, packing materials storages, not engaged
ice-cream production facility), while main pro-
duction facilities are intact and operating, ad-
ministrative building sustained minor surficial
damage. The management expect to put the fac-
tory back in operation once the repairing works
of the premises are completed.
The supporting facilities accommodating 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 condition and in
safe storage.
RISK MANAGEMENT
& INTERNAL CONTROL
War-related Risks
2022 ANNUAL REPORT 23
1
MANAGEMENT REPORT
The Group has historically relied on the suppliers
located in the central part of Ukraine, which im-
plies efficient logistics and reasonably prompt
deliveries to the production sites. Major con-
tractors have not been affected by the hostili-
ties and continue to fulfill their contractual obli-
gations.
The military action had no critical impact on the
local distribution. The main distribution channel
for the egg segment is the large national 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 activities due to the se-
rious disruptions in logistics. In particular, sei-
zure of Odessa port operations cut access to the
Middle East markets, where the commodities
were shipped by sea. Overland deliveries to the
EU countries resumed in early April after the
specific license had been issued to the company.
The Group’s production companies depend on
imports in terms of certain feed mix supple-
ments, vaccines, spare parts of production
equipment. These items are included in the list
of “critical imported goods” (as defined in the
Cabinet of Ministers of Ukraine’s Resolution
No. 153 dated 24 February 2022) and there are
no restrictions for their delivery to Ukraine. The
management also take steps to select adequate
substitutes in the local market.
As of date of this report there are no signs of
material deterioration of the payment discipline.
The Group has sufficient recourses to meet its
contractual obligations. Interest bearing liabili-
ties towards the banks are served timely.
The Group has taken the following actions in re-
sponse to the current situation:
• optimized utilization of production facilities
to meet domestic demand and export or-
ders;
• the group has enough inventory for the
production and sale of its products, as well
as human resources in the foreseeable fu-
ture;
• selling, general and administrative and other
operating expenses, as well as CAPEX, have
been reduced to the minimum required to
meet the primary needs of the Group’s core
business;
• 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;
• the prescheduled repayments of main debt
have been planned to be rescheduled to a
later dates based on mutual agreements
with the banks.
RISK MANAGEMENT
& INTERNAL CONTROL
War-related Risks
2022 ANNUAL REPORT 24
1
MANAGEMENT REPORT
At 31 December 2022 total share capital of Ovostar
Union PCL was 6 000 000 shares. Each share has a
nominal value of one vote at the General Meeting of
Shareholders.
According to publicly available information as at 31
December 2022, shareholders of Ovostar Union PCL
with substantial participation of at least 5% of all
votes at the General Meeting of Ovostar Union PCL
shareholders are listed in the table “Share capital
structure at 31 December “.
No substantial changes in shareholders' structure of
Ovostar Union PCL took place in 2022.
Shareholders 2022 2021 2020
Prime One Capital Ltd 68% 68% 68%
Generali 12% 11% 11%
Fairfax Financial
Holdings Ltd
9% 10% 5%
Aviva 5% 5% 5%
Others 6% 6% 11%
Total 100% 100% 100%
Share capital structure at 31 December
Share price dynamics in 2021
OVO vs WIG-index
Share price, PLN 2022 2021 2020
Opening 68 83 75
Maximum 68 88 89
Minimum 38 66 60
Closing 45 68 83
Key quotation indicators
Q1’22 Q2’22 Q3’22 Q4’22
OVO
WIG
SHAREHOLDERS
& SHARE INFORMATION
Share Capital Structure
…………………………………
Borys Bielikov
Chief Executive Officer,
Executive Director
…………………………………
Vitalii Veresenko
Chairman of the Board,
Non-executive Director
…………………………………
Karen Arshakyan
Head of Audit Committee,
Non-executive Director
…………………………………
Markiyan Markevych
Non-executive Director
…………………………………
Vitalii Sapozhnik
Chief Financial Officer
CORPORATE
GOVERNANCE
REPORT
2
CORPORATE GOVERNANCE REPORT
2022 ANNUAL REPORT 26
The Company is headed by the Board of Directors, whose main function is to lead and control the
company.
The number of the directors of the Company is four, the majority of whom are non-executive, out of
whom two are independent within the meaning of Annex II of the European Commission
Recommendation no 2005/162/WE of 15 February 2005 on the role of non-executive or supervisory
directors of listed companies and on the committees of the (supervisory) board. The only executive
director performs duties of the Chief Executive officer.
The following composition of the Board of the Company was approved by the General Meeting on
August 03, 2022:
MR. BORYS BIELOKOV Executive Director, Chief Executive Officer —
MR. VITALII VERESENKO Non-Executive Director, Chairman of the Board —
MR. KAREN ARSHAKYAN Non-Executive Independent Director —
MR. MARKIYAN MARKEVYCH Non-Executive Independent Director —
BOARD OF DIRECTORS
Composition of the Board
2
CORPORATE GOVERNANCE REPORT
2022 ANNUAL REPORT 27
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-domiciliation from the Netherlands to Cyprus. Mr Arshakyan has a de-
gree in Economics and Management of Agriculture from Institute 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 (till 2011 – LLC "Borispol
Agro Trade"). Since 2007 and up to now he has been holding the position of
group Chief Executive Officer. Mr. Bielikov gained the education as an air-
crafts operation mechanic engineer at National Aviation University (1994).
Markiyan Markevych is a Principal and President of Crossways MK Con-
sulting, full-service investment consulting company with a focus on Eastern
Europe, which since 2014, has been responsible for M&A, along with direct
investment in Ukraine. Prior to that Mr. Markevych spent an extensive time
in the Structured Finance area with the Bank of Montreal. He holds an MBA
from Queens University and a Master of International Relations from Queens
University and a Master of Int. Relations (Lviv Univ.).
Borys Bielikov
Executive Director, CEO
Vitalii Veresenko
Non-Executive Director, Chairman of the Board
Karen Arshakyan
Non-Executive Director, Head of Audit Committee
Markiyan Markevych
Non-Executive Director
BOARD OF DIRECTORS
Composition of the Board
2
CORPORATE GOVERNANCE REPORT
2022 ANNUAL REPORT 28
Representation
Members of the Board represent Ovostar Union
Group and the Board has the authority to appoint
any official as a representative, and to determine
the list of his/her powers. The executive 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
participate in the decision-making process
concerning the matter causing the conflict.
Members of the Board are appointed and may be
suspended or dismissed from their position by the
General Meeting of Shareholders.
At each annual general meeting of the Company one
-third of the directors (or if their number is not a
multiple of three, the number nearest to three but
not exceeding one-third) shall retire by rotation. No
person (including a director retiring by rotation) shall
be appointed (or reappointed) a director at a general
meeting of the Company unless:
(a) that individual is recommended by the board of
directors or by a committee 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 meeting, notice
executed by a Qualified Member has been given to
the Company of that member’s intention to propose
that individual for appointment (or reappointment)
as director (stating the particulars which would, if he
were so appointed, be required to be included in the
Company’s register of directors) together with a
notice executed by that individual stating that he is
willing to act as director.
Shareholding by the Board members and
insider trading
Securities Rules have been established, which apply
to the Board members in relation to the acquisition
of securities share and transactions with them.
Furthermore, the conditions and requirements of
the EU Market Abuse Directive and the company’s
Insider Trading Rules, reflecting the essence of EU
Market Abuse Directive, are applicable to the
Board members (and other persons related to
Board Members) in relation o the acquisition of
shares and equity participation.
Statement of the Board of Directors
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 position of non-executive director at
more than two listed companies; (2) none of the
Board members holds the position of chairman of
any supervisory board - or of the board of
directors, in case such board consists of executive
and non-executive directors - of other companies,
except for our enterprises.
BOARD OF DIRECTORS
Terms of Reference
2
CORPORATE GOVERNANCE REPORT
2022 ANNUAL REPORT 29
22-Apr-2022 Brief overview of the operational results of the Group for the 3 months
ended 31 March 2022;
Discussion of the current status of the preparation of the Annual report for
the year 2021.
23-May-2022 Brief overview of the financial results of the Group for the Q1 2021. Con-
sideration and approval of the Company’s unaudited consolidated con-
densed interim Financial Statements for the three months ended 31
March 2022.
01-Jul-2022 Comments on the auditing process by Baker Tilly Klitou & Partners and
Independent Auditor’s Report;
Approval of the Group’s 2021 annual report together with 2021 annual
financial statements.
25-Aug-2022 The unaudited condensed consolidated financial statements of the Com-
pany for the six months ended 30 June 2022 were reviewed and consid-
ered and it was unanimously resolved that these financial statements be
approved and adopted.
It was resolved that Engagement letter be signed with Messrs Baker Tilly
as the company’s independent auditors for the audit of the Group’s con-
solidated financial statements and Ovostar Union PCL individual financial
statements for the year ended 31 December 2022.
15-Nov-2022 The unaudited condensed consolidated financial statements of the Com-
pany for the nine months ended 30 September 2022 were reviewed and
considered and it was unanimously resolved that these financial state-
ments be approved and adopted.
22-Dec-2022 Consideration and approval of the Company’s interim accounts for the
eleven months ended 30 November 2022;
Consideration and approval of declaration and distribution of interim div-
idends in aggregate amount of EUR 3,900,000.00.
In 2022 the Board of Directors held six (6) meetings. Due to the restrictions imposed on public gather-
ings and international travelling the meetings were arranged in the form of teleconferences on condi-
tions that the minutes of the meetings in all cases were taken by the secretary of that meeting 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 meetings of the Board during 2022 were as fol-
lows:
BOARD OF DIRECTORS
Board of Directors meetings
2
CORPORATE GOVERNANCE REPORT
2022 ANNUAL REPORT 30
The Board of Directors has established an Audit
Committee in order to meet the necessary
corporate governance requirements and to ensure
the Company’s financial transparency.
The Audit Committee is responsible for advising
and monitoring the activities of the Board of
Directors in the areas of, among other things, the
completeness of financial reporting, our financial
strategy, tax planning, including:
(i) functioning of control and internal risk
management systems;
(ii) provision of financial information (including
choice of the accounting policy, application of new
rules and evaluation of their impact on our
performance, interaction with internal and external
auditors, etc.);
(iii) monitoring the compliance of our activities with
the recommendations of internal and external
auditors;
(iv) interaction with external auditors, including
control of the auditor’s independence, their
remuneration 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 committee members must be a
financial expert as defined in the CSE Corporate
Governance Code, and all committee members
must be financially literate. Our Audit Committee
satisfies these requirements.
Mr. Karen Arshakyan, a non-executive independent
director of the Company acted as the Head of the
Audit Committee and Mr. Karpenko continued as
the second independent member of the Audit
Committee.
Audit committee meetings
In 2022 the Audit Committee of Ovostar Union PCL
held three (3) meetings.
22-Apr-2022 During the meeting the Audit
Committee reviewed the auditing process for the
year of 2021 and discussed the Group’s Annual
Report for 2021.
01-Jul-2022 Agenda of this meeting included
discussion on 2021 audit process.
15-Nov-2022 During the meeting the Audit
Committee discussed potential risks for the
business and their possible impact on the Group’s
operations and results in the year of 2021.
Remuneration Policy
On 03 August 2022, by a resolution of the General
Meeting, the limit for the total accumulated
amount of remunerating payable to the members
of the Board of Directors of the company for the
year 2022 was set at EUR 500 thousand.
BOARD OF DIRECTORS
Audit Committee
2
CORPORATE GOVERNANCE REPORT
2022 ANNUAL REPORT 31
The Company shall in each year hold a general
meeting as its annual general meeting. The annual
general meeting shall be held at such time and
place as the directors shall appoint, taking into
account that place and date of a general meeting
should be set so as to enable the participation of
the highest possible number of members.
The directors may, whenever they think fit,
convene an extraordinary general meeting in the
same manner or in a manner as near as possible as
that in which meetings may be convened by the
directors.
Notice of General Meetings
An annual general meeting shall be called by
twenty-one days' notice at the least. The notice
shall, specify the following:
(a) the proposed agenda for the meeting;
(b) the procedures in respect of the
participation and voting in the meeting required to
be complied with by the members entitled to
attend and vote at the meeting, including:
(i) the right of the member to add items on the
agenda of the general meeting, to table draft
resolutions and to ask questions 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 entitled to
attend, to speak, ask questions and vote, to
appoint a proxy;
(c) the procedure for voting by proxy,
including the forms to be used and the means by
which the Company is prepared to accept
electronic notification of the appointment of the
proxy;
(e) the Record Date and that only the
members registered as holders of shares conferring
the right to attend and vote at the meeting, as at
the close of business on the Record Date, shall be
entitled to attend and vote at the meeting;
(f) where and how the full unabridged text
of the documents to be submitted to the meeting
may be obtained; and
(g) the internet site at which the
information which is required to be provided to
members as well as the resolutions (if any)
proposed by members shall be made available,
subject always to the provisions of the Law.
The accidental omission to give notice of a meeting
to, or the non-receipt of notice of a meeting, by
any person entitled to receive notice, shall not
invalidate the proceedings at that meeting.
SHAREHOLDERS MEETINGS
General Meetings
2
CORPORATE GOVERNANCE REPORT
2022 ANNUAL REPORT 32
Proceedings at General Meetings
All business shall be deemed special that is
transacted at an extraordinary general meeting,
and also all that is transacted at an annual general
meeting, with the exception of declaring a
dividend, the consideration of the accounts,
balance sheets, and the reports of the directors
and auditors, the election of directors in the place
of those retiring, if any, and the appointment of,
and the fixing of the remuneration of the auditors.
No business shall be transacted at any general
meeting unless a quorum of members is present at
the time when the meeting proceeds to business.
Three or more members present in person or by
proxy and entitled to vote shall be a quorum.
All notices and other communication relating to
any general meeting which every member is
entitled to receive must also be sent to the
auditors and the directors of the Company. The
directors and auditors shall be entitled to attend
and speak at any meeting of the members. One or
more directors if necessary to answer questions
asked at the general meeting participate in a
general meeting.
The chairman, if any, of the board of directors shall
preside as chairman at every general meeting of
the Company.
At any general meeting any resolution put to the
vote of the meeting shall be decided by poll.
Votes of Members
Every member shall have one vote for each share
of which he is the holder. On a poll a member
entitled 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 entitled in favour of
and /or against the resolution in question and/or
abstain from voting on the resolution in question in
respect of all or some of his votes.
The chairman of a general meeting shall not have a
second or casting vote.
SHAREHOLDERS MEETINGS
General Meetings
2
CORPORATE GOVERNANCE REPORT
2022 ANNUAL REPORT 33
The objective of corporate governance is to
develop tools supporting efficient management,
effective supervision, respect for shareholders’
rights, and transparent communications between
companies and the market. As a public company
that is domiciled in Cyprus and whose shares are
admitted 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 Practice
for WSE Listed Companies.
CSE Corporate Governance Code
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 regulations is to
strengthen the monitoring role of the Board of
Directors in listed companies, protect small
shareholders, adopt greater transparency and
provide timely information as well as sufficiently
safeguard the independence of the Board of
Directors in its decision-making.
The Code includes the following sections: Α.
BOARD OF DIRECTORS ; Β. DIRECTORS’
REMUNERATION; C. ACCOUNTABILITY AND
AUDIT ;D. RELATIONSHIP WITH SHAREHOLDERS.
This Code proposes the establishment of three
Committees of the Board of Directors, namely the
Nomination Committee, the Remuneration
Committee, the Audit Committee and the Risk
Management Committee. When the Board of
Directors of each company, given the particularities
thereof, considers it expedient to establish more
committees, it may proceed therewith. The terms
of reference as well as the activities of each
Committee of the Board of Directors should be
included in the Annual Report on Corporate
Governance. Annual Report on Corporate
Governance Listed companies have an obligation 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 explanation.
Statement on compliance with CSE Corporate
Governance Code
The Company confirms that in 2022 it complied
with most provisions of the Code, except Provision
Β.1.1. that requires a Remuneration Committee to
be established. The Company undertakes to
eliminate this discrepancy during 2023.
GOVERNANCE & CONTROL
Corporate Governance Code
2
CORPORATE GOVERNANCE REPORT
2022 ANNUAL REPORT 34
WSE Corporate Governance Rules
Companies listed on the Warsaw Stock Exchange
are guided by the Rules. In 2016 the Best Practice
for GPW Listed Companies was updated according
to the European Commission Recommendation of
09 April 2014 on the quality of corporate govern-
ance reporting.
The “Best Practice for GPW Listed Companies
2016” and related regulations apply to issuers of
shares admitted to trading on GPW’s regulated
market. The document is divided into thematic sec-
tions: Disclosure Policy, Investor Communications;
Management Board, Supervisory Board; Internal
Systems and Functions; General Meeting, Share-
holder Relations; Conflict of Interest, Related Party
Transactions; Remuneration.
Each section of the Best Practice opens with a gen-
eral description of the goals to be pursued by listed
companies through compliance with the provisions
of the section. The recommendations 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 Practice
follow the ‘comply or explain’ approach.
In line with the recommendations of the European
Commission, within the limits of its powers, the
Exchange will monitor the companies’ compliance
with the corporate governance regulations with a
special emphasis on the quality of explanations
published by companies according to the ‘comply
or explain’ approach.
Deviations from the WSE
Corporate Governance Rules
In 2022 the Company did not comply with the fol-
lowing requirements of the Code:
Best Practice Principle I.Z.1 - Currently we have no
audio or video recording of a general meeting pub-
lished at the company’s website as all the infor-
mation related to the general meeting is available
in writing at our website.
Additionally, we have not published the internal
rule of changing the company’s auditor as the com-
pany strictly follows guidelines stated in the Di-
rective 2014/56/EU the European Union that was
adopted in April 2014 and enforced in June 2016.
Best Practice Principle II.Z.1 - Since we have a one-
tier governance structure we have not published
the chart describing the division of responsibilities
among the BoDi because their areas of responsibil-
ity are provided in writing at the website.
In 2021 the new edition of Best Practice 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-
tions. Similarly to the previous versions of the Best
Practice, developed by the experts comprising the
Corporate Governance Committee, DPSN2021
takes into account the current legal status and the
latest trends in corporate governance, as well as
responds to the postulates of market participants
interested in increasingly better corporate govern-
ance in listed companies. Compared to the “Best
Practice 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, facilitating the widest application
and formulating the best possible explanations. Ad-
ditional support in this regard is provided by guid-
ance on the application of the Good Practice, edit-
ed and updated by the Corporate Governance
Committee based on questions raised and practical
issues arising on an ongoing basis. The guidance
prepared in the Q&A format will help understand
the intentions of the authors of the Best Practice in
formulating specific principles and will indicate to
issuers and investors what conditions must be met
to deem a given principle applicable.
GOVERNANCE & CONTROL
Corporate Governance Code
2
CORPORATE GOVERNANCE REPORT
2022 ANNUAL REPORT 35
According to the Directive 2014/95/EU of the Euro-
pean Parliament and of the Council of 22 October
2014 we as a public entity with more than 500 em-
ployees are obliged to make the appropriate disclo-
sure, providing information on the environmental,
social and employee matters, respect for human
rights, anti-corruption and bribery matters and the
way they are dealt with.
The information provided in this statement is
based on the Company’s (our) Code of Conduct
(Annex 2.5 to the Corporate Governance Rules
available in writing at our website.
Environmental matters
The Company is committed to conducting its oper-
ations in an environmentally sound and sustainable
manner. To achieve protection 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.
Social and employee matters
The Company recruits, employs and promotes em-
ployees on the sole basis of their qualifications and
abilities (including reputation 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
conditions for its employees to be fundamental.
The Company believes that good communication
with employees is essential.
Respect for human rights
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-
tice and strategy. The Company is therefore com-
mitted 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
organization.
Furthermore, the Company refrains from discrimi-
nation on any basis. As a result of the above, re-
spect for people forms a cornerstone of our Com-
pany Values.
Disclosure
NON-FINANCIAL
INFORMATION
2
CORPORATE GOVERNANCE REPORT
2022 ANNUAL REPORT 36
Anti-corruption and bribery matters
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.
Accepting business entertainment and providing
reasonable business entertainment in the course of
the Company's business is acceptable.
The Company does not participate in party politics
or makes payments to political parties or to the
funds of groups whose activities are directed at
promoting a party’s political interests.
When dealing with governments or governmental
agencies the Company is encouraged to promote
and defend its legitimate commercial objectives.
The Company may do so directly or through bodies
such as trade associations.
The Company is encouraged to respond to requests
from governments and other agencies for
legitimate and relevant information, observations
or opinions on issues relevant to its business and to
participate in the development of proposed
legislation or regulations in areas which may have
an effect on its legitimate interests.
Disclosure
NON-FINANCIAL
INFORMATION
…………………………………
Borys Bielikov
Chief Executive Officer,
Executive Director
…………………………………
Vitalii Veresenko
Chairman of the Board,
Non-executive Director
…………………………………
Karen Arshakyan
Head of Audit Committee,
Non-executive Director
…………………………………
Markiyan Markevych
Non-executive Director
…………………………………
Vitalii Sapozhnik
Chief Financial Officer
FINANCIAL
STATEMENTS
3
CONSOLIDATED FINANCIAL STATEMENTS
2022 ANNUAL REPORT 38
28 April 2023
The Board of Directors is responsible for the preparation of the consolidated financial statements
that give a true and fair view of the financial position of Ovostar Union Public Company Limited (the
“Company”) and its subsidiaries (the “Group”) as of 31 December 2022 and of 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.
Statement of the Members of the Board of Directors
Members of the Board of Directors of Ovostar Union Public Company Limited in accordance with
Subsection (3c) and (7) of the Section (9) of the Law providing for transparency requirements in rela-
tion to information about issuers whose shares are admitted 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 International Financial Reporting
Standards as adopted by the European Union and in compliance with the requirements set
forth in Subsection (4) of the Section (9) of the Transparency Law , and
(ii) give a true and fair view of the assets, liabilities, financial position 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 position of the Group included in the consolidated accounts as a whole, to-
gether with a description of the principal risks and uncertainties that they face.
STATEMENT
Of Directors Responsibility
…………………………………
Borys Bielikov
Chief Executive Officer,
Executive Director
…………………………………
Vitalii Veresenko
Chairman of the Board,
Non-executive Director
…………………………………
Karen Arshakyan
Head of Audit Committee,
Non-executive Director
…………………………………
Markiyan Markevych
Non-executive Director
…………………………………
Vitalii Sapozhnik
Chief Financial Officer
3
CONSOLIDATED FINANCIAL STATEMENTS
2022 ANNUAL REPORT 39
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2022
(in USD thousand, unless otherwise stated)
…………………………………
Borys Bielikov
Chief Executive Officer,
Executive Director
…………………………………
Vitalii Veresenko
Chairman of the Board,
Non-executive Director
…………………………………
Karen Arshakyan
Head of Audit Committee,
Non-executive Director
…………………………………
Markiyan Markevych
Non-executive Director
…………………………………
Vitalii Sapozhnik
Chief Financial Officer
Note
12 ended 12 ended
31 December 2022 31 December 2021
Revenue from contracts with customers 8 135 626 133 366
Changes in fair value of biological assets 17 (26 287 ) (8 529 )
Cost of sales 9 (86 574 ) (111 223 )
Gross profit 22 765 13 614
Other operating income 12 547 565
Selling and distribution costs 10 (12 081 ) (8 296 )
Administrative expenses 11 (3 757 ) (3 656 )
Other operating expenses 13 (186 ) (1 000 )
Operating profit 7 288 1 227
Finance costs 14 (829 ) (380 )
Finance income 15 132 786
Profit before tax 6 591 1 633
Income tax expense 16 (504 ) 22
Profit for the period 6 087 1 655
Other comprehensive income - -
Exchange differences on translation to presentation currency (27 879 ) 3 830
Other comprehensive income for the period, net of tax (27 879 ) 3 830
Total comprehensive income for the period, net of tax (21 792 ) 5 485
Profit for the period attributable to: - -
Equity holders of the parent company 6 246 1 690
Non-controlling interests (159 ) (35 )
Total profit for the period 6 087 1 655
Other comprehensive income attributable to: - -
Equity holders of the parent company (27 769 ) 4 036
Non-controlling interests (110 ) (206 )
Total other comprehensive income (27 879 ) 3 830
Total comprehensive income attributable to: - -
Equity holders of the parent company (21 523 ) 5 726
Non-controlling interests (269 ) (241 )
Total comprehensive income (21 792 ) 5 485
Earnings per share: - -
Equity holders of the parent company 6 000 000 6 000 000
Basic and diluted, profit for the period attributable to ordinary equity holders of the
parent (USD per share) 1,04 0,28
3
CONSOLIDATED FINANCIAL STATEMENTS
2022 ANNUAL REPORT 40
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2022
(in USD thousand, unless otherwise stated)
…………………………………
Borys Bielikov
Chief Executive Officer,
Executive Director
…………………………………
Vitalii Veresenko
Chairman of the Board,
Non-executive Director
…………………………………
Karen Arshakyan
Head of Audit Committee,
Non-executive Director
…………………………………
Markiyan Markevych
Non-executive Director
…………………………………
Vitalii Sapozhnik
Chief Financial Officer
Note 31 December 2022 31 December 2021
Assets
Non-current assets
Biological assets
17
Property, plant and equipment and intangible assets 18
Deferred tax assets
16
Other non-current assets - -
Total non-current assets
Current assets
Inventories
19
Biological assets
17
Trade and other receivables
20
Prepayments to suppliers
21
Prepayments for income tax 1
22
Cash and cash equivalents 23 12 181 2 435
Total current assets
Total assets
Equity and liabilities
Equity
Issued capital
24
Share premium
Foreign currency translation reserve (153 697 ) (125 912 )
Retained earnings
Result for the period
Equity attributable to equity holders of the parent
Non-controlling interests7
Total equity
Non-current liabilities
Interest-bearing loans and other financial liabilities 25 6 509 7 141
Deferred income
12
Deferred tax liability
16
Total non-current liabilities
Current liabilities
Trade and other payables
26
Deferred income
12
Advances received
27
Interest-bearing loans and other financial liabilities 25 4 420 5 740
Total current liabilities
Total liabilities
Total equity and liabilities
3
CONSOLIDATED FINANCIAL STATEMENTS
2022 ANNUAL REPORT 41
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
(in USD thousand, unless otherwise stated)
…………………………………
Borys Bielikov
Chief Executive Officer,
Executive Director
…………………………………
Vitalii Veresenko
Chairman of the Board,
Non-executive Director
…………………………………
Karen Arshakyan
Head of Audit Committee,
Non-executive Director
…………………………………
Markiyan Markevych
Non-executive Director
…………………………………
Vitalii Sapozhnik
Chief Financial Officer
Issued
capital
Share
premium
Foreign
currency
translatio
n reserve
Retained
earnings
Result
for the
period
Total
Non-
control-
ling in-
terests
Total equity
As at 31 December 2020 74 30 933 (129 954 ) 199 931 2 702 103 686 718 104 404
Profit for the period 1 690 1 690 (35 ) 1 655
Other comprehensive income 4 036 4 036 (206 ) 3 830
Acquisition of a subsidiary
Total comprehensive income 4 036 1 690 5 726 (241 ) 5 485
Allocation of prior period result 2 702 (2 702 )
Dividends
Exchange differences (6 ) 6
As at 31 December 2021 68 30 933 (125 912 ) 202 633 1 690 109 412 477 109 889
Profit for the period 6 246 6 246 (159 ) 6 087
Other comprehensive income (27 769 ) (27 769 ) (110 ) (27 879 )
Acquisition of a subsidiary
Total comprehensive income (27 769 ) 6 246 (21 523 ) (269 ) (21 792 )
Allocation of prior period result 1 690 (1 690 )
Dividends (4 176 ) (4 176 ) (4 176 )
Exchange differences 16 (16 )
As at 31 December 2022 84 30 933 (153 697 ) 200 147 6 246 83 713 208 83 921
3
CONSOLIDATED FINANCIAL STATEMENTS
2022 ANNUAL REPORT 42
For translating results and financial position into a presentation 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.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
(in USD thousand, unless otherwise stated)
…………………………………
Borys Bielikov
Chief Executive Officer,
Executive Director
…………………………………
Vitalii Veresenko
Chairman of the Board,
Non-executive Director
…………………………………
Karen Arshakyan
Head of Audit Committee,
Non-executive Director
…………………………………
Markiyan Markevych
Non-executive Director
…………………………………
Vitalii Sapozhnik
Chief Financial Officer
Note
12 months ended 12 months ended
31 December 2022 31 December 2021
Operating activities
Profit before tax 6 591 1 633
Non-cash adjustment to reconcile profit before tax to net cash flows:
Depreciation of property, plant and equipment and amortisation of intangible
assets
9, 10,
11
Net change in fair value of biological assets 17 26 287 8 529
Disposal of property, plant and equipment (18 ) 2
Disposal of biological assets 1 842 2 753
Finance income (132 ) (786 )
Finance costs 829 380
Recovery of assets previously written-off 12 (22 ) (29 )
Government subsidies 12 (406 ) (283 )
Impairment of property, plant and equipment - 227
Impairment of doubtful accounts receivable and prepayments to suppliers 10 10 703
Working capital adjustments:
Decrease in trade and other receivables (13 738 ) (174 )
Decrease/(Increase) in prepayments to suppliers (288 ) (1 910 )
Decrease in other non-current assets - 14
Decrease/(Increase) in inventories (2 692 ) 535
(Increase) in trade and other payables and advances received (2 610 ) 2 164
Cash generated from operating activities 19 483 18 207
Income tax paid (12 ) (5 )
Net cash flows from operating activities 19 471 18 202
Investing activities
Purchase of property, plant and equipment (347 ) (1 690 )
Increase in biological assets 17 (8 789 ) (18 561 )
Proceeds from the purchase and sale of bonds 45 -
Proceeds from sale of property, plant and equipment 356 -
Net cash flows used in investing activities (8 735 ) (20 251 )
Financing activities
Proceeds from borrowings 2 461 4 730
Repayment of borrowings (3 679 ) (1 880 )
Interest received 87 10
Government subsidies 164 -
Interest paid (620 ) (243 )
Net cash flows used in financing activities (1 587 ) 2 617
Net (decrease)/increase in cash and cash equivalents 9 149 568
Effect from translation into presentation currency 597 241
Cash and cash equivalents at 01 January 2 435 1 626
Cash and cash equivalents at 31 December 12 181 2 435
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 43
1. Corporate information
on 22 March 2011 in Amsterdam under the laws of the Netherlands. Following resolution of the Extraordinary Meeting of Share-
holders 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 continuing in the Republic of Cyprus. As of 31 December
2022 the Company’s registered address is 22 Ierotheou Street, Strovolos, Nicosia 2028, Cyprus .
is 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 (the list of the subsidiaries
is disclosed in Note 7) and has a concentration of its business in Ukraine, where its production facilities are located. Subsidiary
companies are registered under the laws of Ukraine, British Virgin Islands, Latvia and United Arab Emirates. The registered ad-
dress and principal place of business of the subsidiary companies in Ukraine is 34 Petropavlivska Street, Kyiv, Ukraine.
Information on other related party relationships of the Group is provided in Note 28.
Total number of employees were presented as follows:
31 December
31 December
2022
2021
Production personnel
1 214 1 354
Administrative personnel
153 170
Total
1 367
1 524
The Group is controlled by the Beneficial Owners – Mr. Borys Bielikov and Mr. Vitalii Veresenko (hereinafter, the “Beneficial Own-
ers”)
The consolidated financial statements for the year ended 31 December 2022 were authorized by the Board of Directors on
28 April 2023.
2. Basis of preparation
2.1. Statement of compliance and basis of measurement
The consolidated financial statements are prepared in accordance with International Financial Reporting Standards as
adopted by the European Union (“IFRS EU” hereinafter).
The companies of the Group maintain their accounting records under Ukrainian Accounting Standards (“UAS” hereinafter).
UAS principles and procedures may differ from those generally accepted under IFRS EU. Accordingly, the consolidated financial
statements, which have been prepared from the Group entities’ UAS records, reflect adjustments necessary for such financial
statements 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 alternative basis on each reporting date.
Items Measurement bases
Biological assets Fair value less costs to sell
Details of the Group accounting 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 continuity 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 population of Ukraine with egg products.
Having examined the existing and potential implications of the war for the Ukraine located businesses, the managementof
the Group have identified several points of specific concern that require careful analysis and assessment.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 44
They include, but are not limited to, the following:
• risks related to the personnel safety;
• risk of physical destruction of the production assets;
• risks of disruption of the supply and distribution chains;
• risk of liquidity and limited access to financing;
The Group places top priority on the personnel’s health and safety issues. All possible action has been taken to minimize
the existing threats and support the staff during this dramatic period. The HR department on a daily basis keeps record of the
location of each employee to make sure that everyone is in a safe place. All administrative staff has been granted the option to
work remotely. The Group closely monitors the needs of the team and promptly reacts to them within the limits of its capabili-
ties. Forty men from the Group's staff were called up to the military service.
The Group’s management continue to fulfill their duties without interruptions.
The Group fully complies with all sanctions rules and regulations regarding Russia and Belarus, including those introduced
or published by various countries and organizations. In addition, the Group refrains from contacting individuals or entities on
the sanctions list. In this situation, 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:
• The Group’s major production facilities are located in Kyiv region, in Fastivskyi and Bilotserkivskyi districts, where no severe
hostilities took place. The poultry houses in Vasilkiv and Stavyshche, as well as the egg-processing factory in Vasilkiv, re-
main physically undamaged and keep operating;
• The egg-processing factory in Makariv (Buchanskiy district) had been temporarily shut down until the city was de- occu-
pied by the Ukrainian military forces in the end of March 2022. The subsequent inspection of the factory showed signs of
critical damages to buildings not involved in the manufacturing process (storages for waste and used packing materials; an
idle production facility, while main production facilities are intact and operating, administrative building sustained minor
surficial damage. The management expect to put the factory back in operation once the repairing works of the premises
are completed. The estimated cost of damage is USD 92 thousand;
• The supporting facilities accommodating hatchery, poultry houses for parent flock and young layers have not been affect-
ed and are being used in accordance with the technological process;
• All Group inventory is in good condition and in safe storage;
• The Group has historically relied on the suppliers located in the central part of Ukraine, which implies efficient logistics and
reasonably prompt deliveries to the production sites. Major contractors have not been affected by the hostilities and con-
tinue to fulfill their contractual obligations;
• The military action had no critical impact on the local distribution. The main distribution channel for the egg segment is the
large national 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%;
• Export sales reduced significantly. Since the start of the military campaign, the Group faced significant obstacles to export
activities due to the serious disruptions in logistics. In particular, seizure of Odessa port operations cut access to the Middle
East markets, where the commodities were shipped by sea. Overland deliveries to the EU countries resumed in early April
after the specific license had been issued to the company. Also on June, the Decision of the European Union on the aboli-
tion of duties on Ukrainian goods for a year came into force(see note 29)
• The Group’s production companies depend on imports in terms of certain feed mix supplements, vaccines, spare parts of
production equipment. These items are included in the list of “critical imported goods” (as defined in the Cabinet of Minis-
ters of Ukraine’s Resolution No. 153 dated 24 February 2022) and there are no restrictions for their delivery to Ukraine.
The management also take steps to select adequate substitutes in the local market;
• As of date of this report there are no signs of material deterioration of the payment discipline. The Group has sufficient
recourses to meet its contractual obligations. Interest bearing liabilities towards the banks are served timely.
The Group has taken the following actions in response to the current situation:
• optimized utilization of production facilities to meet domestic demand and export orders;
• the group has enough inventory for the production and sale of its products, as well as human resources in the fore-
seeable future;
• selling, general and administrative and other operating expenses, as well as CAPEX, have been reduced to the mini-
mum required to meet the primary needs of the Group’s core business;
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 45
• the Directors have decided not to declare a final dividend for the 2021 financial year;
• the loss of the market in the east and south of the country is expected to be offset by increased demand in central and west-
ern Ukraine, where a large number of internally displaced persons temporarily reside;
• the repayments of main debt has been rescheduled to a later dates based on mutualagreements with the banks.
In 2022, the Group entered into agreements that provide for new loan repayment terms with OTP, as well as an extension
of the loan repayment with UkrSibbank until 2025. This ensured that there were no gaps in the liquidity of the Group.
The Group also raised funds in 2022 under the state enterprise support program in the amount of UAH 90 million. The
loan was issued by Credit Agricole Bank. Maturity May 2023.
Management has prepared and reviewed, together with the directors, updated financial projections, including cash
flow projections, taking into account the most likely and possible negative scenarios for the continued impact of the war on
the business.
These forecasts were based on the following key assumptions:
• management will be able to use the cash from the approved credit lines to finance operations.
• the further development of the war and the military invasion of Ukraine will allow the use of most of the Group's
production capacity;
• the Group will be able to purchase a sufficient amount of agricultural products for poultry feed;
• remaining road logistic routes will continue to be available;
• egg production for 2023 will be 1.573 million ( 1,546 million in 2022);
Despite the existing uncertainties arising from the future development of the military invasion, the management be-
lieves the above described analysis gives grounds to state that during at least 12 months after the date of the present report
the Group will be able to realize its assets and discharge its liabilities in the normal course of business, thus going concern as-
sumptionis applied to the financial statements for the year ended 31 December 2022.
2.3. Functional and presentation currency.
The functional currency of the Company is U.S. dollar (USD). The consolidated financial statements are presented
in the Company’s functional currency, that is, U.S. dollar (USD). The functional currency of operating subsidiaries in Ukraine
is the Ukrainian hryvnia (UAH), in Latvia the euro, in the UAE the US dollar. All values are rounded to the nearest thousand
unless otherwise noted.
The USD has been selected as the presentation currency for the Group as: (a) management of the Group manag-
es business risks and exposures, and measures the performance of its businesses in the USD; (b) the USD is widely used as a
presentation currency of companies engaged primarily in agricultural; and (c) the USD is the most convenient presentation
currency for non-Ukrainian users of these IFRS consolidated financial statements.
The Group translates its results and financial position into the presentation currency as follows:
• assets and liabilities, as well as the issued capital, for each statement of financial position presented (i.e. including compara-
tives) shall be translated at the closing rate at the date of that statement of financial position;
• income and expenses for each statement of comprehensive income or separate income statement presented (i.e.
• including comparatives) shall be translated at exchange rates at the dates of the transactions; and
• all resulting exchange differences shall be recognized in other comprehensive income.
During year ended 31 December 2022 and 2021, the exchange rate had significant fluctuations. Consistent with IAS
21, if exchange rates fluctuate significantly, the use of the average rate for a period is inappropriate. Considering significant
depreciation of Ukrainian currency against major foreign currencies and seasonality of sales, Management of the Group decid-
ed to translate income and expense items at average quarterly rates. On consolidation, the assets and liabilities of the subsidi-
aries are translated at exchange rates prevailing on the reporting 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 transactions are used. Exchange differences arising, if any, are recognized in “Other comprehensive income” and
accumulated in the “Foreign currency translation reserve”.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 46
Relevant exchange rates are presented as follows:
Closing rate as at Closing rate as at
31 December 2022 31 December 2021
USD/UAH
36,5686 27,2782
EUR/UAH
38,9510 30,9226
USD/PLN
4,3923 4,0447
USD/EUR
0,9347 0,8815
Average rate for the
1st quarter 2022
Average rate for the
2d quarter 2022
Average rate for the 3d
quarter 2022
Average rate for the 4th
quarter 2022
USD/UAH
28,5545 29,2549 34,9787 36,5686
EUR/UAH
32,2788 31,1984 35,1843 37,2522
USD/PLN
4,1269 4,3655 4,7056 4,6388
USD/EUR
0,8915 0,9389 0,9926 0,9806
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 0,8301 0,8481 0,8744
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 47
3. Basis of consolidation
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:
• Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)
• Exposure, or rights, to variable returns from its involvement with the investee
• The ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when
the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circum-
stances in assessing whether it has power over an investee, including:
• The contractual arrangement with the other vote holders of the investee
• Rights arising from other contractual arrangements
• The Group’s voting rights and potential voting 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. Consolidation of a subsidiary begins when the Group obtains control over the subsid-
iary and ceases when the Group loses control of the subsidiary. Assets, liabilities, 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 until the
date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed 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
necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the
Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling
interest and other components of equity while any resultant gain or loss is recognized in profit or loss. Any investment retained is
recognized at fair value.
4. Use of estimates and assumptions
The preparation of the consolidated financial statements requires management to make estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of
the reporting period. However, due to uncertainty about these estimates, actual results recorded in future periods may differ from
such estimates.
These consolidated financial statements include management's estimates regarding the value of assets, liabilities, revenues,
expenses, and recognized contractual obligations. These estimates 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 identify signs of impairment of these assets.
If there is an indication 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 production plans formed on the basis of past experience and market expecta-
tions. The plans take into account all relevant characteristics of poultry farming, including egg production, volume of egg pro-
cessing, prices for main components of mixed fodder. Thus, the production capacity is the basis for forecasting the future produc-
tion volume for each subsequent year and related production costs.
Levels of costs included in projected cash flows are based on current long-term production plans. When conducting impair-
ment testing, recent levels of costs are taken into account, as well as the expected cost changes based on the current condition of
operating activities and in accordance with the requirements of IAS 36. IAS 36 provides a number of restrictions on future cash
flows, which may be recognized in respect of future restructuring and capital modernization expenses.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 48
Below are the key assumptions that formed the basis for forecasting future cash flows in the models:
• prices for main components of mixed fodder are based on internal forecasts of the Group's management;
• production data (production of eggs, safety of livestock, meat production volume, production of egg products) based on
internal forecasts of the Group's management from past experience;
• selling prices for eggs, egg products and poultry meat are based on forecasts of the Group's management and market ex-
pectations.
Management believes that calculations of the recoverable amount are most sensitive to changes in such assumptions as the
price of poultry meat, price of eggs and eggs product, price of poultry fodder and production data. Management believes that any
reasonably possible change in key assumptions 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.
Application of IAS 36 requires extensive judgments by the management regarding estimates and assumptions related to
future cash flows and discount rate. Given the nature of the current global economic environment, such assumptions and esti-
mates have a high degree of uncertainty. Therefore, other similar assumptions may lead to significantly different results.
4.2. Fair value of biological assets
Estimation 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 re-
sult of significant changes in any factors or assumptions used in the calculations.
Among such factors are:
• differences between actual prices and price assumptions used in estimating net realizable value of eggs;
• changes in productivity of laying hens;
• unforeseen operational problems inherent in the branch specificity;
• age of hens at the end of the reporting period;
• changes in production costs, costs of processing and products sales, discount and inflation rates and exchange rates that
could adversely affect the fair value of biological assets.
The key assumptions concerning biological assets based on discounted cash flow approach are presented as follows:
• cost planning at each stage of poultry farming will remain constant in future periods;
• egg production volume will not be significantly changed;
• egg sale price in future periods;
• long-term inflation 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 calculations of the fair value of biological assets are the most sensitive to changes in such
assumptions as the volume of egg production, cost planning and prices of eggs, eggs product and poultry meat. Management be-
lieves that any reasonably possible change in key assumptions will not cause any significant change in the fair value of biological
assets.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are catego-
rized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value meas-
urement as a whole:
• Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
• Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable.
• Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobserva-
ble.
Although some of these assumptions are obtained from published market data, the majority of these assumptions are esti-
mated 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, 31.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 49
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place
either:
• In the principal market for the asset or liability.
Or
• 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 lifetime expected loss allow-
ance for all trade and other receivables and contract assets. Cash and cash equivalents are also subject to the impairment require-
ments of IFRS 9, the identified impairment loss was immaterial.
4.4. Useful lives of property, plant and equipment
The Group estimates useful lives of property, plant and equipment at least at the end of each financial year and, if expecta-
tions differ from previous estimates, changes are recorded as changes in accounting estimates in accordance with IAS 8
"Accounting Policies, Changes in Accounting Estimates and Errors". These estimates can have a significant impact on the carrying
amount of property, plant and equipment and depreciation 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
expense 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. Summary of significant accounting policies
5.1. Recognition 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 transaction between
market participants at the measurement date. The best evidence of fair value is the price in an active market. An active market is
one in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information
on an ongoing basis.
Fair value of financial instruments traded in an active market is measured as the product of the quoted price for the individ-
ual asset or liability and the number of instruments held by the entity. This is the case even if a market's normal daily trading vol-
ume is not sufficient to absorb the quantity held and placing orders to sell the position in a single transaction might affect the
quoted price.
Valuation techniques such as discounted cash flow models or models based on recent arm's length transactions or consid-
eration of financial data of the investees are used to measure fair value of certain financial instruments for which external market
pricing information is not available. Fair value measurements are analysed by level in the fair value hierarchy as follows:
• Level one: Measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities,
• Level two: Valuations 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
• Level three: Valuations not based on solely observable market data (that is, the measurement requires significant unobserv-
able inputs).
Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial in-
strument. An incremental cost is one that would not have been incurred if the transaction had not taken place. Transaction costs
include fees and commissions paid to agents (including employees acting as selling agents), advisors, brokers and dealers, levies by
regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include debt premiums or
discounts, financing costs or internal administrative or holding costs.
Amortized cost is the amount at which the financial instrument was recognized at initial recognition less any principal re-
payments, plus accrued interest, and for financial assets less any write-down for incurred impairment losses. Accrued interest in-
cludes amortization of transaction costs deferred at initial recognition and of any premium or discount to the maturity amount
using the effective interest method. Accrued interest income and accrued interest expense, including both accrued coupon and
amortized discount or premium (including fees deferred at origination, if any), are not presented separately and are included in
the carrying values of the related items in the consolidated statement of financial position.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 50
The effective interest method is a method of allocating interest income or interest expense over the relevant period, so as
to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount. The effective interest rate is the
rate that exactly discounts estimated 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 effective
interest rate discounts cash flows of variable interest instruments to the next interest repricing date, except for the premium or
discount which reflects the credit spread over the floating rate specified in the instrument, or other variables that are not reset to
market rates. Such premiums or discounts are amortized over the whole expected life of the instrument. The present value calcu-
lation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate.
Financial instruments: initial recognition
Financial instruments at fair value through profit or loss are initially recorded at fair value. All other financial instruments
are initially recorded at fair value adjusted for transaction costs. Fair value at initial recognition is best evidenced by the transac-
tion price. A gain or loss on initial recognition is only recorded if there is a difference between fair value and transaction price
which can be evidenced by other observable current market transactions in the same instrument or by a valuation technique
whose inputs include only data from observable markets. After the initial recognition, an ECL allowance is recognized for financial
assets measured at amortized cost and investments in debt instruments measured at fair value through other comprehensive in-
come, resulting in an immediate accounting loss.
All purchases and sales of financial assets that require delivery within the time frame established by regulation or market
convention are recorded at trade date, which is the date on which the Group commits to deliver a financial asset. All other pur-
chases are recognized when the entity becomes a party to the contractual provisions of the instrument.
The Group uses discounted cash flow valuation techniques to determine the fair value of loans to related parties that are
not traded in an active market. Differences may arise between the fair value at initial recognition, which is considered to be the
transaction price, and the amount determined at initial recognition using a valuation technique with level 3 inputs. If any differ-
ences remain after calibration of model inputs, such differences are amortized on a straight-line basis over the term of the curren-
cy swaps, loans to related parties. The differences are immediately recognized in profit or loss if the valuation uses only level 1 or
level 2 inputs.
5.2. Financial assets
Financial assets: Classification and subsequent measurement: measurement categories
The Group classifies financial assets in the following measurement categories: FVTPL, FVOCI and AC. The classification and subse-
quent measurement of debt financial assets depends on:
i. the Group's business model for managing the related assets portfolio and
ii. the cash flow characteristics of the asset.
As at 31 December 2022and 31 December 2021 the Group did not hold financial assets at FVOCI.
Financial assets: Classification 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 objective 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 portfolio level) based on all relevant evidence about the activities
that the Group undertakes to achieve the objective set out for the portfolio available at the date of the assessment. Factors con-
sidered by the Group in determining the business model include the purpose and composition of a portfolio, past experience on
how the cash flows for the respective assets were collected, how risks are assessed and managed, how the assets' performance is
assessed and how managers are compensated.
Financial assets: Classification and subsequent measurement: cash flow characteristics
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 embed-
ded derivatives are considered in their entirety when determining whether their cash flows are consistent with the SPPI feature. In
making this assessment, the Group considers whether the contractual cash flows are consistent with a basic lending arrangement,
i.e. interest includes only consideration for credit risk, time value of money, other basic lending risks and profit margin.
Where the contractual terms introduce exposure to risk or volatility that is inconsistent with a basic lending arrangement,
the financial asset is classified and measured at FVTPL. The SPPI assessment is performed on initial recognition of an asset and it is
not subsequently reassessed.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 51
The Group holds the trade receivables with the objective to collect contractual cash flows and therefore measures them
subsequently at amortized cost using the effective interest method. Details about the Group's impairment policies and the ex-
pected credit loss measurement are provided in Note 31.
Financial assets: Reclassification
Financial instruments are reclassified only when the business model for managing the portfolio as a whole changes. The
reclassification has a prospective effect and takes place from the beginning of the first reporting period that follows after the
change in the business model. The entity did not change its business model during the current and comparative period and did not
make any reclassifications.
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 expo-
sures arising from loan commitments and financial guarantee contracts, for contract assets. The Group measures ECL and recog-
nizes Net impairment losses on financial and contract assets at each reporting date. The measurement of ECL reflects:
• an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes,
• time value of money and
• all reasonable and supportable information that is available without undue cost and effort at the end of each reporting peri-
od about past events, current conditions and forecasts of future conditions.
Financial assets of the Group that are subject to IFRS 9's new expected credit loss model are represented by trade receiva-
bles. The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime 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 identified impairment loss was immaterial.
Financial assets: Write-off
Financial assets are written-off, in whole or in part, when the Group exhausted all practical recovery efforts and has con-
cluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. Indicators that there is
no reasonable expectation of recovery include:
• the counterparty experiences a significant financial difficulty as evidenced by its financial information that the Group ob-
tains;
• the counterparty considers bankruptcy or a financial reorganisation;
• there is adverse change in the payment status of the counterparty as a result of changes in the national or local economic
conditions that impact the counterparty.
The Group may write-off financial assets that are still subject to enforcement activity when the Group seeks to recover
amounts that are contractually due, however, there is no reasonable expectation of recovery.
Financial assets: Derecognition
The Group derecognizes financial assets when (a) the assets are redeemed or the rights to cash flows from the assets other-
wise 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 substantially all the risks and rewards of ownership of the assets or (ii) neither
transferring nor retaining substantially all the risks and rewards of ownership but not retaining control.
Control is retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated third
party without needing to impose additional restrictions on the sale.
Financial assets: Modification
The Group sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Group assesses
whether the modification of contractual cash flows is substantial considering, among other, the following factors: any new con-
tractual terms that substantially affect the risk profile of the asset (e.g. profit share or equity-based return), significant change in
interest rate, change in the currency denomination, new collateral or credit enhancement that significantly affects the credit risk
associated with the asset or a significant extension of a loan when the borrower is not in financial difficulties.
If the modified terms are substantially different, the rights to cash flows from the original asset expire and the Group derec-
ognizes the original financial asset and recognizes a new asset at its fair value. The date of renegotiation is considered to be the
date of initial recognition for subsequent impairment calculation 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 substantially modified asset is recognized in profit or loss, un-
less the substance of the difference is attributed to a capital transaction with owners.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 52
In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the origi-
nally agreed payments, the Group compares the original and revised expected cash flows to assets whether the risks and rewards
of the asset are substantially different as a result of the contractual modification. If the risks and rewards do not change, the modi-
fied asset is not substantially different from the original asset and the modification does not result in derecognition. The Group
recalculates the gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate (or
credit-adjusted effective interest rate for POCI financial assets), and recognizes a modification gain or loss in profit or loss.
5.3. Effective interest rate method
The effective interest rate method is used to calculate the amortized cost of a financial asset and distribute interest income
during the relevant period. The effective interest rate is the rate that enables discounting of estimated future cash receipts
through the expected life of a financial asset or a shorter period, if applicable.
Revenues relating to debt instruments are recorded using the effective interest rate method, except for financial assets at
fair value 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 position are held for the investment activities. For the purpose of the consolidat-
ed statement of cash flows, short-term deposits are included in the investing activities.
5.6. Impairment of financial assets
Financial assets, except for financial assets at fair value through profit or loss, at each reporting date are assessed for signs
indicating impairment. Impairment loss is recognized when there is objective evidence of reduction of the estimated future cash
flows on this asset as a result of one or more events that occurred after the financial asset was recorded in the accounting. For
financial assets at amortized cost, the amount of impairment is calculated as the difference between the asset's carrying amount
and present value of the expected future cash flows discounted using the effective interest rate.
Impairment loss directly reduces the carrying amount of all financial assets, except for accounts receivable on principal ac-
tivities, carrying amount of which is reduced due to the allowance formed. If the accounts receivable on principal activities are
uncollectible, they are written-off against the related allowance. Subsequently received reimbursements of amounts previously
written-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 decrease can be objectively related to an event occurring after the impairment was recognized, the impairment loss previous-
ly recognized is recovered by adjusting the items in the income statement. In this case, the carrying amount of financial invest-
ments at the date of recovery of impairment cannot exceed its amortized cost, which would be reflected in the case, if impairment
was not recognized.
In respect of equity securities available for sale, any increase in fair value after recognition of impairment loss relates direct-
ly to equity.
5.7. Writing-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 organization. If the Group does not transfer or
retain all the principal risks and rewards of ownership of the asset and continues 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 continue to account for the financial asset, and
reflect a secured loan on income earned.
5.8. Financial liabilities and equity instruments issued by the Group
5.8.1. Accounting as liabilities or equity
Debt and equity financial instruments are classified as liabilities or equity based on the substance of the corresponding con-
tractual obligations.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 53
5.8.2. Equity instruments
Equity instrument is any contract confirming the right for a share in the company's assets remaining after deduction of all
its liabilities. Equity instruments issued by the Group are recorded in the amount of generated income net of direct expenses for
their issue.
5.8.3. Liabilities under financial guarantee contracts
Liabilities under financial guarantee contracts are initially measured at fair value and subsequently recorded at the higher
of:
• cost of contractual obligations determined in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent As-
sets”, and
• cost, less, where applicable, accumulated depreciation reflected in accordance with the principles of revenue recognition
set forth below.
5.8.4. Financial liabilities
Financial liabilities - measurement categories
Financial liabilities are classified as subsequently measured at amortized cost, except for (i) financial liabilities at fair value
through profit or loss: this classification is applied to derivatives, financial liabilities held for trading (e.g. short positions in securi-
ties), contingent consideration recognized by an acquirer in a business combination and other financial liabilities designated as
such at initial recognition and (ii) financial guarantee contracts and loan commitments. As of 31 December 2022 and 31 December
2021 the Group did not have financial guarantee contracts and loan commitments or financial liabilities at fair value through profit
or loss.
Financial liabilities - derecognition
Financial liabilities are derecognised when they are extinguished (i.e. when the obligation specified in the contract is dis-
charged, cancelled or expires).
An exchange between the Group and its original lenders of debt instruments with substantially different terms, as well as
substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the
original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted pre-
sent value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the origi-
nal effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original
financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the
type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered. If an
exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recog-
nised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment,
any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified
liability.
Modifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative
catch up method, with any gain or loss recognised in profit or loss, unless the economic substance of the difference in carrying
values is attributed to a capital transaction with owners.
5.8.5. Trade and other accounts payable
Trade payables are recognized when the counterparty fulfills its contractual obligations and measured at amortized cost
using the effective interest rate.
5.8.6. Loans and borrowings
Loans and borrowings are initially recognized at fair value less costs incurred in the transaction. Subsequently, loans and
borrowings are stated at amortized cost; any difference between proceeds (net of transaction costs) and the amount of repayment
is reflected in the income statement over the period for which loans and borrowings are issued using the effective interest rate
method. Loans and borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement
of the obligation to at least one year after the date of balance sheet preparation.
5.8.7. Writing-off of financial liabilities
The Group writes-off financial liabilities only when they are repaid, cancelled or expire.
5.9. Foreign currency transactions
Transactions in currencies other than the functional currency are initially recorded at exchange rates set on the dates of
these transactions. Monetary assets and liabilities denominated in such currencies are translated at the rates applicable at the
reporting date. All realized and unrealized gains and losses resulting from exchange rate differences are included in profit or loss
for the period.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 54
5.10. Biological assets
Biological assets represented by the commercial herd and herd replacements are recorded at fair value less estimated sell-
ing and distribution expenses. Estimate 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 biologi-
cal 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 eco-
nomic benefits from the asset will flow to the Group; fair value or cost of an asset can be estimated with reasonable certainty.
Profit or loss arising on initial recognition of biological assets at fair value less estimated selling and distribution expenses is includ-
ed in the consolidated income statement as incurred.
Agricultural products collected from a biological asset are measured at fair value less estimated selling and distribution ex-
penses. Profit or loss arising on initial recognition of agricultural products at fair value, less estimated selling and distribution ex-
penses, 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. Inven-
tories are valued at the lower of cost and net realisable value.
Cost of goods includes the cost of acquisition and, where appropriate, costs incurred in bringing inventories to their present
condition and location. Cost is calculated using the weighted average method. Initial 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 estimated selling price in the ordinary course of business, less estimated costs of completion and
the estimated 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 transition to
IFRS, less accumulated depreciation and accumulated impairment losses. Historical cost of an asset of property, plant and equip-
ment includes (a) the purchase price, including non-recoverable import duties and taxes net of trade and other discounts; (b) any
costs directly related to bringing an asset to the location and condition, which allow its functioning in accordance with the inten-
tions of the Group's management; (c) initial assessment of the costs of dismantling and removal in the asset of property, plant and
equipment and restoring the occupied territory; this obligation is assumed by the Group either upon the acquisition of an asset, or
as a result of its operation for a certain period of time for the purposes not related to the production of inventories during this
period. Cost of assets created in-house includes cost of materials, direct labor costs and an appropriate proportion of production
overheads.
Construction in progress includes costs directly related to the construction of property, plant and equipment, including dis-
tribution of variable overheads associated with the construction and prepayments for the property, plant and equipment. Con-
struction in progress is not depreciated. These assets are depreciated from the moment when they are used in economic activity,
on the same basis as depreciation 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 generating capacity. Repairs and maintenance expenditures that do not meet the foregoing
criteria for capitalisation 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 residual value of an asset is the estimated amount that the company would receive to date from the sale of an item of proper-
ty, plant and equipment, less estimated costs of disposal if the asset reached the age and condition, in which, presumably, it will
be at the end of its useful life. Assets under finance lease are depreciated over the shorter of estimated useful life on the same
basis as own assets or over the period of the relevant lease.
Depreciation 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 fittings 3 - 5 years
Construction in progress and uninstalled equipment No depreciation
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 55
The residual value, useful life and depreciation method are reviewed at the end of each financial year. Impact of any chang-
es arising from estimates made in prior periods is recorded as a change in an accounting estimate.
Gains or losses arising from disposal or liquidation of an asset of property, plant and equipment, are defined as the differ-
ence between 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 reporting period the Group identifies signs of possible impairment of assets. If any such indication exists,
the Group reviews the carrying amount of its items of property, plant and equipment to determine whether any signs of impair-
ment exist due to depreciation. If any such indication exists, the expected recoverable amount of an asset is estimated to deter-
mine 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 identify sepa-
rately the cash flows (cash generating unit).
The recoverable amount is the higher of fair value less selling and distribution expenses and value of an asset in use. In as-
sessing the value of an asset in use, the estimated future cash flows associated with the asset, are discounted to their present val-
ue using pre-tax discount rate that reflects current market estimates of time value of money and the risks inherent in the asset.
If, according to the estimates, the recoverable amount of an asset (cash generating unit) is less than its carrying amount, the carry-
ing amount of an asset (cash generating 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 revaluation decrease.
In cases where impairment losses are subsequently reversed, the carrying amount of the asset (cash generating unit) is in-
creased to the revised estimate of recovery amount, however, in such a way that the increased carrying amount does not exceed
the carrying amount that would be determined, if an impairment loss was not recognized in respect of an asset (cash generating
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 revaluation increase.
5.14. Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a
business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost
less any accumulated amortization and any accumulated impairment losses. Internally generated intangible assets are not capital-
ized 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 amortised over the useful economic life and assessed for impairment whenever there
is an indication that the intangible asset may be impaired. The amortisation period and the amortisation 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
pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or
method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with
finite lives is recognised in the income statement in the expense category consistent with the function of the intangible asset.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or
at the cash generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life
continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.
Amortization 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 attributable to the acquisition, construction or production of an asset that necessarily takes a sub-
stantial period of time 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 entity incurs in
connection 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 liabilities similarly to other financial liabilities. As a consequence, a lessee recognises depreciation of the right-of-use asset
and interest on the lease liability. The depreciation would usually be on a straight-line basis. In the statement of cash flows, a les-
see separates the total amount of cash paid into principal (presented within financing activities) and interest (presented within
either operating or financing activities) in accordance with IAS 7.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 56
Assets and liabilities arising from a lease are initially measured on a present value basis. The measurement includes non-
cancellable lease payments (including inflation-linked payments), and also includes payments to be made in optional periods if the
lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. The ini-
tial 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 position either as part
of property, plant and equipment or as its own line item.
5.17. Contingent assets and liabilities
Contingent liabilities are not recognized in the consolidated financial statements. Such liabilities are disclosed in the notes
to the consolidated financial statements, except where the probability of outflow of resources embodying economic benefits is
insignificant.
Contingent 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 obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable esti-
mate can be made of the obligation amount.
The amount recognized as a provision is the best estimate of compensation necessary to repay a current liability on the
reporting date, which takes into account all the risks and uncertainties inherent in this liability. In cases where the amount of pro-
vision is estimated using cash flows that can be required to repay current liabilities, 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
reimbursed 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 recognition
Revenue is income arising in the course of the Group's ordinary activities. Revenue is recognized in the amount of transac-
tion price. Transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring
control over promised goods or services to a customer, excluding the amounts collected on behalf of third parties.
Revenue is recognized net of discounts, returns and value added taxes, export duties, other similar mandatory payments.
Group's contracts with customers are fixed-price contracts and generally include both advance payment and deferred pay-
ment for the same contracts. Generally, the sales are made with a credit term of 30-60 days, which is consistent with the market
practice 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 time
that the consideration is unconditional because only the passage of time 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 entity's obligation to transfer goods or services to a customer for which the entity has received con-
sideration from the customer.
The five-step model framework
The core principle of IFRS 15 is that an entity will recognize revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or
services. This core principle is delivered in a five-step model framework:
• Identify the contract(s) with a customer
• Identify the performance obligations in the contract
• Determine the transaction price
• Allocate the transaction price to the performance obligations in the contract
• Recognize revenue when (or as) the entity satisfies a performance obligation.
Application of this guidance will depend on the facts and circumstances present in a contract with a customer and will re-
quire the exercise of judgment.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 57
Step 1: Identify the contract with the customer
A contract with a customer are exists when:
• the contract has been approved by the parties to the contract;
• each party’s rights in relation to the goods or services to be transferred can be identified;
• the payment terms for the goods or services to be transferred can be identified;
• the contract has commercial substance; and
• it is probable that the consideration to which the entity is entitled 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 continues as to re-assess the contract going
forward to determine whether it subsequently meets the above criteria.
Step 2: Identify the performance obligations in the contract
At the inception of the contract, the Group assess as the goods or services that have been promised to the customer, and identify
as a performance obligation:
• a good or service (or bundle of goods or services) that is distinct;
• or a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the
customer.
Step 3: Determine the transaction price
The transaction price is the amount to which the Group expects to be entitled in exchange for the transfer of goods and services.
When making this determination, the Group considers past customary business practices.
Step 4: Allocate the transaction price to the performance obligations in the contracts
Where a contract has multiple performance obligations, the Group will allocate the transaction price to the performance obliga-
tions in the contract by reference to their relative standalone selling prices. If a standalone selling price is not directly observable,
the Group will need to estimate it using an adjusted market assessment approach or the expected cost plus a margin approach.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
Revenue is recognized as control is passed, either over time or at a point in time.
Control of an asset is defined as the ability to direct the use of and obtain substantially all of the remaining benefits from the asset.
These include:
• using the asset to produce goods or provide services;
• using the asset to enhance the value of other assets;
• using the asset to settle liabilities or to reduce expenses;
• selling or exchanging the asset;
• pledging the asset to secure a loan; and
• holding the asset.
The benefits related to the asset are the potential 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 legislation of Ukraine. Income tax is calculat-
ed on the basis of financial results for the year adjusted to items that are not included in taxable income or that cannot be attribut-
ed to gross expenses. It is calculated using tax rates effective at the reporting 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 liabilities in the financial statements and the corresponding tax base used
to calculate taxable income. Deferred tax liabilities 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 liabilities.
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 58
Assets and liabilities on deferred income tax are offset when: a) the Group has a legally enforceable right to offset the rec-
ognized current income tax assets and liabilities; b) the Group intends either to perform settlement by offsetting counterclaims, or
simultaneously sell the asset and settle the liability; c) deferred tax assets and liabilities relate to income taxes levied by the same
taxation authority in each future period in which it is intended to repay or reimburse a significant amount of deferred tax liabilities
and assets.
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 2022, Ukrainian corporate income tax was levied at a rate of 18% (2021: 18%).
5.21. Value Added Tax
VAT output equals the total amount of VAT collected within a reporting period, and arises on the earlier of the date of ship-
ping goods to the customer or the date of receiving payment from the customer. VAT input is the amount that a taxpayer is enti-
tled to offset against his VAT liability in the reporting period. According to Ukrainian legislation, 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 legislation 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 authorities.
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 compensation for the finance costs for agricultural producers. To the extent the con-
ditions attached to the grants are not met at the reporting date, the received funds are recorded in the Group’s consolidated fi-
nancial 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 until there is reasonable assurance that the Group will comply with the conditions attached
to them and that the grants will be received.
5.23. Partial compensation of interest rates on loans raised by the agricultural companies from financial
institutions
The Group companies are entitled to compensation from the government of a share of interest expenses incurred on loans
which were received for agricultural purposes. The amount of interest compensation depends on the term and purpose of the
loan. Due to the fact that the payment of interest compensations depends on the capabilities of the country's budget, they are
recognized on a cash basis as other operating income in the period of receipt.
5.24. Related party transactions
For the purposes of these consolidated financial statements, the parties are considered to be related if one of the parties has a
possibility to control or considerably influence the operational and financial decisions of the other company. While considering any
relation which can be defined as related party transactions it is necessary to take into consideration the substance of the transac-
tion not only their legal form.
5.25. Reclassification
Certain comparative information presented in the consolidated financial statements for the year ended 31 December 2022 has
been revised in order to achieve comparability with the presentation used in the consolidated financial statements for the year
ended 31 December 2021. Such reclassifications and revisions were not significant to the Group`s consolidated financial state-
ments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
6. New and amended standards
• The following amended standards became effective from 1 January 2022, but did not have any material impact on the
Group:
• Amendments to IAS 37 – Onerous Contracts – Costs to Perform a Contract (issued on 14 May 2020)
• Amendments to IAS 16 - Property, Plant and Equipment: proceeds before Use for the Intended Use (issued on 14 May
2020)
• Annual Improvements to IFRS 2018-2020 Period: Amendments to IFRS 1 First-Time Adoption of International Financial Re-
porting Standards – First-Time Adopter of International Financial Reporting Standards (issued on 14 May 2020)
• Annual Improvements to IFRS 2018-2020 Period: Amendments to IFRS 9 Financial Instruments – Fee for the 10% test to
derecognise financial liabilities (issued on 14 May 2020)
• Annual Improvements to IFRS 2018-2020 Period: Amendments to IAS 41 Agriculture – Taxation in Fair Value Measurement
(issued on 14 May 2020)
• Amendments to IFRS 3 – “References to the Conceptual Framework” (issued on 14 May 2020)
A) New and amended standards and interpretations adopted
Below is a list of new standards, clarifications and amendments that result in new disclosure requirements for future
reporting periods:
IFRS Effective date:
· IFRS 17 Insurance Contracts (including amendments to IFRS 17 issued in June 2020
and amendments to IFRS 17 Initial Adoption of IFRS 17 and IFRS 9 – comparative
information released in December 2021)
· Applicable to annual reporting periods
·
beginning on or after 1 January 2023. Not
yet endorsed for use in the EU.
· Amendments to IFRS 4 - Application of IFRS 9 Financial Instruments together with
IFRS 4 Insurance Contracts (including amendments to IFRS 4 - Extension of the tem-
porary exemption from the application of IFRS ( IFRS) 9" issued in June 2020)
· Annual reporting periods beginning on or
·
after 1 January 2023. Not yet endorsed for
use in the EU.
· Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabili-
ties as Current or Non-current and Classification of Liabilities as Current or Non-
current - Deferral of Effective Date (issued on 23 January 2020 and 15 July 2020 re-
spectively)
· Annual reporting periods beginning on or
·
after 1 January 2024. Not yet endorsed for
use in the EU.
· Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates
· and Errors: Definition of Accounting Estimates (issued on 12 February 2021)
· Annual reporting periods
·
· beginning on or after 1 January
· Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice
· Annual reporting periods
·
· Statement 2: Disclosure of Accounting policies (issued on 12 February 2021) · beginning on or after 1 January
· Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities
arising from a Single Transaction (issued on 7 May 2021)
· Annual reporting periods
·
· beginning on or after 1 January 2023
· Amendments to IFRS 16 – Lease Liability in a Sale and Leaseback ·
· Annual reporting periods
· beginning on or after 1 January
The management expects that the above standards, when effective, will not have a material effect on the consolidated financial
statements of the Group in future periods.
2022 ANNUAL REPORT 59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
7. Subsidiaries and Non-controlling interests
As at 31 December 2022 and 2021 the Group included the following subsidiaries:
Name of the company Business activities
31 December
2022
31 December
2021
Limited Liability Company
“Ovostar Union”
Strategic management of subsidiary companies in
Ukraine
100.0% 100.0%
Limited Liability Company
“Ovostar”
Egg-products production and distribution (Ukraine) 100.0% 100.0%
Limited Liability Company
“Yasensvit”
Breeder farms, production of hatching eggs, farms
for growing young laying flock and for laying flock,
production and distribution of shell eggs, poultry
feed production (Ukraine)
100.0% 100.0%
Public Joint Stock Company
“Poultry Farm Ukraine”
Production of shell eggs, assets holding (Ukraine) 92.0% 92.0%
Public Joint Stock Company
“Malynove”
Production of shell eggs, assets holding (Ukraine) 94.0% 94.0%
Public Joint Stock Company
“Krushynskyy Poultry Complex”
Trading company, egg trading – non operational
activity (Ukraine)
76.0% 76.0%
Limited Liability Company
“Skybynskyy Fodder Plant”
In the process of liquidation (Ukraine) 98.6% 98.6%
"SIA" Ovostar Europe" Trade company (Latvia) 89.0% 89.0%
SIA "Gallusman" Production of shell eggs (Latvia) 89.0% 89.0%
SIA "EPEX" Egg-products production (Latvia) 89.0% 89.0%
International Food Trade Limited Trade company (British Virgin Islands) 100.0% 100.0%
OAE Food Trade FZE Trade company (United Arab Emirates) 100.0% 100.0%
*REMEDIUM FOODS B.V. Egg processing, distribution of egg products 50.00% 50.00%
* The group owns 50% of the company's shares. As a result, there is joint control of this company. The Group classifies joint
control as a joint venture because the following factors are present:
· joint activities are carried out when creating a separate company;
· there are no direct rights to assets and obligations to fulfill obligations in the contractual agreement between the parties;
· there are no other conditions that lead to the parties obtaining direct rights to assets and obligations to fulfill liabilities.
Based on the above, the company is an associate and investments are accounted for using the equity method. There were no signifi-
cant changes in value as of 31 December 2022
2022 ANNUAL REPORT 60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 61
The following tables summarize the information relating to each of the Group`s subsidiaries that has material NCI, before any intra
-group elimination:
31 December 2022
PJSC
“PoultryFar
m Ukraine”
PJSC
“Malynove
”
PJSC
“Krushynsk
yy Poultry
"SIA
"Ovostar
Europe"
SIA
"Gallusm
SIA "EPEX" Total
NCI percentage 8,00% 6,00% 24,00% 11,00% 11,00% 11,00%
Non-current assets 401 10 066 1 3 28 50
Current assets 3 877 625 402 29 997 361 62
Non-current liabilities - (1 801) - - - -
Current liabilities (2 068) (10 964) (6) (29 985) (6) (105)
Net assets 2 210 (2 074) 397 15 383 7
Carrying amount of NCI 187 (118) 94 2 42 1 208
Revenue 307 2 473 - 51 043 - 103
Profit (loss) (103) (2 736) (4) 35 26 (7)
OCI (783) (108) (136) (20) (24) (1)
Total comprehensive income (886) (2 844) (140) 15 2 (8)
Profit allocated to NCI (8) (156) (1) 4 3 (1) (159)
OCI allocated to NCI (66) (6) (32) (2) (3) (1) (110)
Cash flows from operating activities (1) 18 - 3 498 (11) 2
Cash flows from investment activities - (18) - (32) - -
Effect from translation into presenta-
tion currency - - - 6 - -
Net (decrease)/ increase in cash and cash
equivalents
(1) - - 3 472 (11) 2
31 December 2021
PJSC
“PoultryFar
m Ukraine”
PJSC
“Malynove
”
PJSC
“Krushynsk
yy Poultry
"SIA
"Ovostar
Europe"
SIA
"Gallusm
SIA "EPEX" Total
NCI percentage 8,00% 6,00% 24,00% 11,00% 11,00% 11,00%
Non-current assets 621 14 562 1 36 372 62
Current assets 5 571 13 554 543 3 633 57 261
Non-current liabilities - - - - - -
Current liabilities (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 2 477
Revenue 2 601 10 756 - 24 532 2 419
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 2 (35)
OCI allocated to NCI (175) (14) (103) 131 (45) - (206)
Cash flows from operating activities 1 18 - (85) (42) (11)
Cash flows from investment activities - (18) - (32) - -
Effect from translation into presenta- tion
currency
- - - (22) (2) -
Net (decrease)/ increase in cash and
cash equivalents 1 - - (139) (44) (11)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
8. Segment information
All of the Group’s operations are located within Ukraine.
Segment information is analyzed on the basis of the types of goods supplied by the Group’s operating divisions. The
Group’s reportable segments under IFRS 8 are therefore as follows:
Egg operations segment sales of egg
sales of chicken meat
Egg products operations segment sales of egg processing products
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 5.
Sales between segments are mainly carried out at market prices. Operating profit before tax represents segment result. This is the
measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment per-
formance.
For the purposes of monitoring segment performance and allocating resources between segments:
• All assets are allocated to reportable segments.
• All liabilities are allocated to reportable segments.
The following table presents revenue, results of operations and certain assets and liabilities information regarding segments for
the year ended 31 December 2022 and 2021
12 months ended 31 December 2022
Operations segment
Egg Egg products
Total
Revenue from contracts with customers 152 016 70 664 222 680
Inter-segment revenue (56 393) (30 661) (87 054)
Revenue from external buyers 95 623 40 003 135 626
Profit before tax (2 161) 8 752 6 591
12 months ended 31 December 2021
Operations segment
Egg Egg products
Total
Revenue from contracts with customers 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 before tax 4 513 (2 880) 1 633
In 2022 and 2021 no sales were settled by barter transactions.
2022 ANNUAL REPORT 62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 63
Segment assets, liabilities and other information regarding segments as at 31 December 2022and 2021 were presented as follows:
31 December 2022
Operations segment
Egg Egg products
Total
Total segment assets 95 735 14 960 110 695
Total segment liabilities 25 070 1 704 26 774
Addition to property, plant and equipment and intangible assets
316 223 539
Net change in fair value of biological assets and agricultural produce
(26 287) - (26 287)
Depreciation and amortization (3 238) (592) (3 830)
Interest income 81 6 87
Interest on debts and borrowings (555) - (555)
Income tax expense (106) (398) (504)
31 December 2021
Operations segment
Egg Egg products Total
Total segment assets 124 768 16 251 141 019
Total segment liabilities 30 749 381 31 130
Addition 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)
Depreciation and amortization (3 787) (662) (4 449)
Interest income 6 4 10
Interest on debts and borrowings (380) - (380)
Income tax expense (44) 66 22
The Group presented disaggregated revenue based on the type of goods or services provided to customers and the geo-
graphical region of goods and services. Entities will need to make this determination based on entity-specific and/or industry-
specific factors that would be most meaningful to their business.
The Group presented a reconciliation of the disaggregated revenue with the revenue information disclosed for each report-
able segment.
Set out below is the disaggregation of the Group’s revenue from contracts with customers:
12 months ended 31 December 2022
Operations segment
Egg Egg products
Total
Type of goods or service
Goods 95 179 39 727 134 906
Services 444 276 720
Total revenue from contracts with customers 95 623 40 003 135 626
Geographical markets
Ukraine 63 922 17 966 81 888
European Union 21 150 19 752 40 902
Middle East 4 515 1 741 6 256
Asia 6 036 459 6 495
Africa - 50 50
CIS - 35 35
Total revenue from contracts with customers 95 623 40 003 135 626
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 64
Revenue from external buyers divided by geographic location (continued)
12 months ended 31 December 2021
Operations segment
Egg Egg products
Total
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
Asia 4 212 1 270 5 482
Africa 152 711 863
Other 443 463 906
Total revenue from contracts with customers 92 150 41 216 133 366
9. Cost of sales
12 months ended 12 months ended
31 December 2022 31 December 2021
Costs of inventories recognised as an expense (65 242) (87 971)
Packaging costs (9 552) (9 525)
Cost of goods purchased for resale (215) (274)
Wages, salaries and social security costs (6 521) (7 886)
Amortisation, depreciation and impairment (3 535) (4 088)
Other expenses (1 509) (1 479)
Total (86 574) (111 223)
10. Selling and distribution costs
12 months ended 12 months ended
31 December 2022 31 December 2021
Transportation expenses (9 155) (5 302)
Wages, salaries and social security costs (1 623) (1 290)
Cost of materials (578) (999)
Marketing and advertising expenses (64) (94)
Amortisation, depreciation and impairment (94) (102)
Other expenses (567) (509)
Total (12 081) (8 296)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 65
11. Administrative expenses
12 months ended 12 months ended
31 December 2022 31 December 2021
Wages, salaries and social security costs (1 564) (1 475)
Legal, audit and other professional fees (798) (557)
Service charge expenses (866) (886)
Cost of materials (210) (262)
Amortisation, depreciation and impairment (201) (259)
Other expenses (118) (217)
Total (3 757) (3 656)
12. Other operating income
Note
12 months ended 12 months ended
31 December 2022 31 December 2021
Income from refund under the special legislation:
Government subsidies a) 406 283
Total income from refund under the special legislation 406 283
Gain on recovery of assets previously written off 22 29
Insurance compensation b) - 17
Gain on disposal of property plant and equipment 18
Gain on disposal of other current assets 73 19
Other income 28 217
Total 547 565
Recovery of assets previously written-off mainly represents amounts of inventory surplus identified in the reporting
period during the stock-taking and recovery of amounts previously recognized as doubtful.
a) Government subsidies
Government grants are presented in the statement of the financial position as deferred income, in case of compensation of the
cost of fixed assets, and recognised in profit or loss on a systematic basis over the useful life of the related assets.
Government subsidies also include compensation for interest on loans under the Affordable Loans program. Such amounts are
recognized as other income in the period in which such income is incurred. For 12 months of 2022, the amount amounted to
USD 88 thousand.
The unamortized portion of the government subsidies as of 31 December 2022 is USD 2 012 thousand (31 December 2021: USD 2
981 thousand).
The Group reconsidered the terms of use of property, plant and equipment acquired under government subsidies, which led to the
allocation of a long-term portion of the state subsidy, as a result, the share of deferred income amounted USD 1 801 thousand
as at 31 December 2022 was classified as non-current liabilities.
13. Other operating expenses
12 months ended 12 months ended
31 December 2022 31 December 2021
Impairment of doubtful accounts receivable and prepayments to suppliers (10) (930)
Charity (65) -
Loss on disposal of property plant and equipment - (2)
Fines and penalties (55) (21)
Other expenses (56) (47)
Total (186) (1 000)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
14. Finance cost
12 months ended 12 months ended
31 December 2022 31 December 2021
Interest on debts and borrowings (555) (380)
Foreign currency exchange loss (274) -
Total (829) (380)
12 months ended 12 months ended
31 December 2022 31 December 2021
Interest income 87 10
Foreign currency exchange profit - 776
Other financial income 45 -
Total 132 786
15. Finance income
16. Income tax
In 2022, there were changes in the taxation of a number of companies located in Ukraine. This is due both to changes in legislation
as of January 2022, as well as changes in legislation after the start of the war on the territory of Ukraine.
Below is a list of companies that have switched to the general taxation system since January 2022 and pay Corporate Income Tax:
• Limited Liability Company “Yasensvit”
• Private Joint Stock Company “Malynove”
Since April 2022, Limited Liability Company “Ovostar Union” and Private Joint Stock Company “Poultry Farm Ukraine” have be-
come single tax payers (2% of income) for the period of martial law and state of emergency in Ukraine. For this period, com-
panies are also not VAT payers.
During the year ended 31 December 2022, 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 2021: at a 18% rate). The deferred income tax as-
sets and liabilities as of 31 December 2022 were measured based on the tax rates expected to be applied to the period when
the temporary differences are expected to reverse.
12 months ended 12 months ended
31 December 2022 31 December 2021
Current income tax
(649) 16
Deferred tax 145 6
Income tax benefit/(expense) reported in the income statementt (504) 22
12 months ended 12 months ended
31 December 2022 31 December 2021
Accounting profit before income tax 6 591 1 633
At Ukraine’s statutory income tax rate of 18% (2020: 18%) 1 186 294
Tax effect of:
Income generated by FAT payers (exempt from income tax) (2) (34)
Current year losses for which no deferred tax asset was recognised at a rate of 0% (1) (305) (596)
Utilisation of previously unrecognised tax losses (962) -
Effect of expenses that are not deductible in determining taxable profit
510 325
Effect of translation to presentation currency 77 (11)
Income tax expense/(benefit) 504 (22)
The major components of income tax expense for the year ended 31 December 2022 and 2021 were:
Reconciliation between tax expense and the product of accounting profit multiplied by Ukraine’s domestic tax rate for the years
ended 31 December 2022 and 2021 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 International Food Trade Limited. The income tax rate in the BVI is 0%, Cyprus is 12.5%, Latvia is 0%.
2022 ANNUAL REPORT 66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The following amounts, determined
2022 ANNUAL REPORT 67
Deferred tax
As at 31 December 2022 and 2021, deferred tax assets and liabilities comprised the following:
Recognized in
Effect of transla-
31 December
statement of
tion into presen-
31 December
comprehensive
tation
2022 income 2021
Advances received and other payables (1) 4 (5) -
Prepayments to suppliers 22 - - 22
Trade and other receivables 137 133 (2) 6
Inventories 200 201 (1) -
Tax losses 75 (962) (352) 1 389
Unrecognized deferred tax assets (248) 789 352 (1 389)
Netted off against deferred tax assets 185 165 (8) 28
Property, plant and equipment and intangible assets (226) 10 82 (318)
Trade and other receivables (22) (22) - -
Advances received and other payables (21) (8) 3 (16)
Netted off against deferred tax liabilities (269) (20) 85 (334)
Net deferred tax asset/(liability) (84) 145 77 (306)
Recognized in
Effect of transla-
31 December
statement of
tion into presen-
31 December
comprehensive
tation
2022 income 2021
Advances received and other payables - (7) - 7
Prepayments to suppliers 22 20 - 2
Trade and other receivables 6 4 - 2
Inventories - - - -
Tax losses 1 389 819 20 550
Unrecognized deferred tax assets (1 389) (819) (20) (550)
Netted off against deferred tax assets 28 17 - 11
Property, plant and equipment and intangible assets (318) (6) (11) (301)
Trade and other receivables - - - -
Advances received and other payables (16) (5) - (11)
Netted off against deferred tax liabilities (334) (11) (11) (312)
Net deferred tax asset/(liability) (306) 6 (11) (301)
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
after appropriate offsetting, are presented in the consolidated statement of financial position as at 31 December 2022 and 2021:
31 December 2022 31 December 2021
Non-current assets
185 28
Long term liabilities
(269) (334)
Net deferred tax asset/(liability)
(84) (306)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
17. Biological assets
As at 31 December 2022 and 2021 commercial and replacement poultry were presented as follows:
31 December 2022 31 December 2021
Number, thousand Carrying Number, thousand Carrying
heads value heads value
Non-current biological assets
Replacement poultry
Hy-line 2 642 15 017 4 260 45 079
Total non-current biological assets 2 642 15 017 4 260 45 079
Current biological assets
Commercial poultry
Hy-line 4 601 10 119 4 111 15 459
Total current biological assets 4 601 10 119 4 111 15 459
Total biological assets 7 243 25 136 8 371 60 538
Classification 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.
Reconciliation of commercial and replacement poultry carrying values for the year ended 31 December 2022 and 2021 was
presented as follows:
2022 2021
As at 01 January 60 538 51 372
Increase in value as a result of assets acquisition
241 534
Increase in value as a result of capitalization of cost
8 548 18 026
Income/(Losses) from presentation of biological assets at fair
value
(26 287) (8 529)
Decrease in value as a result of assets disposal
(1 842) (2 753)
Exchange differences (16 062) 1 888
As at 31 December
25 136 60 538
For the year ended 31 December 2022 the Group produced shell eggs in the quantity of 1 546 mln (31 December 2021: 1
691 mln).
Fair value of biological assets was estimated by the Group's specialists which have experience in valuation of such assets.
Fair value was calculated by discounting of expected net cash flow (in nominal measuring) at the moment of eggs produced, using
corresponding discount rate which is equal to 51,6% (31 December 2021: 16.91%). Management supposes that sale price and pro-
duction and distribution costs fluctuations will comply with forecasted index of consumer price in Ukraine. The major assumptions
were performed on the basis of internal and external information 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 situation in Ukraine that provides a high degree of uncertainty in relation to many of the assumptions
in the biological assets revaluation model, and guided by the prudence concept, the Group used conservative approach for calcula-
tion of fair value of biological assets as at 31 December 2022.
2022 ANNUAL REPORT 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 69
Value measurement is a maximum value exposed to the following assumptions which were used in fair value calculations of bio-
logical assets (Based on the current situation in Ukraine):
Assumption as at Assumption as at
31 December 2022 31 December 2021
Eggs sale price, USD per item (UAH per item)
0,104 (3,80) 0,088 (2,40)
Discount rate, %
1 0
Short-term inflation rate of Ukrainian hrivnya, %
0 0
Maximum poultry life time, days
770 770
Changes in key assumptions that were used in fair value estimation of biological assets had the following influence on the value of
biological assets as at 31 December 2022 and 2021:
12 months ended 12 months ended
31 December 2022 31 December 2021
1% decrease in egg sale price
(541) (1 386)
1% increase in egg sale price
541 1 386
1% increase in discount rate
(299) (784)
1% decrease in discount rate
304 796
1% increase in short-term inflation rate of Ukrainian hrivnya (15) 55
1% decrease in short-term inflation rate of Ukrainian hrivnya 15 (55)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
18. Property, plant and equipment and intangible assets
Buildings
Plant and
equipment
Vehicles
Furniture
and
fittings
Construc-
tion in
progress
and unin-
stalled
equipment
Intangible
assets
Total
Cost or valuation
As at 31 December 2020
22 968 39 414 1 738 767 3 492 61 68 440
Additions
109 699 49 229 707 7 1 800
Transfer
157 197 - 17 (371) - -
Disposals
- (29) (13) (10) - - (52)
Impairment assessment
- - - - (227) - (227)
Currency translation difference
803 1 417 61 28 (247) 3 2 065
As at 31 December 2021
24 037 41 698 1 835 1 031 3 354 71 72 026
Additions
7 186 112 147 74 13 539
Transfer
99 127 - 35 (261) - -
Disposals
(341) (13) (7) (26) (192) - (579)
Currency translation difference
(6 040) (10 599) (464) (268) (772) (25) (18 168)
As at 31 December 2022
17 762 31 399 1 476 919 2 203 59 53 818
Depreciation and amortization
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 9 - - 50
Currency translation difference
(225) (469) (32) (19) - (2) (747)
As at 31 December 2021
(7 439) (16 387) (1 073) (692) - (52) (25 643)
Charge for the year
(908) (2 628) (150) (139) - (5) (3 830)
Disposals
- 11 7 25 - - 43
Currency translation difference
2 003 4 480 291 188 - 16 6 978
As at 31 December 2022
(6 344) (14 524) (925) (618) - (41) (22 452)
Net book value
As at 31 December 2022
11 418 16 875 551 301 2 203 18 31 366
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
Taking into account the situation in the country, the Group performed an impairment test for property, plant and
equipment as of 31 December 2022. The Group has not identified any signs of impairment as the recoverable amount of property,
plant and equipment exceeded their carrying amount.
As at 31 December 2022 construction in progress and uninstalled equipment also included prepayments for the property,
plant and equipment which amounted to USD 84 thousand (2021: USD 352 thousand).
The impairment of prepayments for fixed-assets as of 31 December 2021 amounts to USD 227 thousand.
As at 31 December 2022, property, plant and equipment included fully depreciated assets with the original cost of USD 3
964 thousand (2021: USD 4 474 thousand).
2022 ANNUAL REPORT 70
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 71
19. Inventories
31 December 2022 31 December 2021
Raw materials
4 371 5 504
Agricultural produce and finished goods
4 183 2 263
Package and packing materials
1 952 2 398
Work in progress
215 1 343
Other inventories
1 304 1 533
Less: impairment of agricultural produce and finished goods
(12) (19)
Total
12 013 13 022
20. Trade and other receivables
31 December 2022 31 December 2021
Trade receivables
13 344 13 550
VAT for reimbursement
744 1 724
Other accounts receivable
12 807 347
Credit loss allowance
(88) (150)
Total
26 807 15 471
Other accounts receivable include a loan in the amount of USD 12 753 thousand issued by Prime One Capital with a maturi-
ty of February, 2023. The interest rate on the loan is 1% per annum.
Trade receivables from third parties are non-interest bearing and are generally on 30-90 days credit terms. For larger cus-
tomers the Group grants credit for up to 45-180 days.
Trade and other receivables net of impairment loss provisions denominated in the following currencies:
31 December 2022 31 December 2021
UAH 9 226 12 736
USD 1 884 1 191
EUR 15 697 1 544
Total 26 807 15 471
21. Prepayments to suppliers
As at 31 December 2022 prepayments to suppliers included prepayments for the goods and services amount to USD 3 006
thousand (2021: USD 3 114 thousand).
22. Prepayments for income tax
As at 31 December 2022 prepayments for income tax amount to USD 1 thousand (2021: USD 28 thousand).
23. Cash and cash equivalents
31 December 2022 31 December 2021
Cash in banks
12 171 2 419
Cash on hand
10 16
Total
12 181 2 435
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
a) Cash in banks by country of bank location denominated in the following currencies:
31 December 2022 31 December 2021
Cash in banks 12 171 2 419
Cash on hand 10 16
Total 12 181 2 435
Currency 31 December 2022 31 December 2021
Ukraine UAH 6 591 1 430
Ukraine USD 678 83
Ukraine EUR 565 447
Total in Ukraine 7 834 1 960
Latvia USD 1 725 107
Latvia EUR 1 981 135
Total in Latvia 3 706 242
United Kingdom USD 6 1
United Kingdom EUR 51 7
Total in United Kingdom 57 8
United Arab Emirates AED 1 53
United Arab Emirates USD 573 155
United Arab Emirates EUR - 1
Total in United Arab Emirates 574 209
Total cash in banks 12 171 2 419
24. Equity
Issued capital and capital distribution
For the year ended 31 December 2022 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 2022 and 31 December 2021 the shareholder interest above 5% in the Share capital of Company was as
follows:
31 December 2022 31 December 2021
Prime One Capital Ltd 67,93% 67,93%
Generali Otwarty Fundusz Emerytalny 10,93% 10,93%
FAIRFAX FINANCIAL Holdings Limited 9,09% 10,39%
AVIVA Otwarty Fundusz Emerytalny Aviva BZ WBK 5,02% 5,02%
Foreign currency translation reserve
The Company's share capital as of 31 December 2022 has been converted at the exchange rate in force at the time of for-
mation(historical rate). The EUR 60 000 (equivalent to 6 000 000 shares) as of 31 December 2022, has been converted into USD 84
324 (31 December 2021: at the exchange rate as of 31 December 2021 which amounted to 68 052). The result arising from ex-
change rate differences has been recorded in the “Foreign currency translation reserve”.
The foreign currency translation reserve is used also to record exchange differences arising from the translation of the
financial statements of foreign subsidiaries.
Share premium
As has been mentioned previously, in June 2011 the Group’s shares have been placed on WSE. As a result of the transaction,
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 2022 and 2021, there
were no movements in share premium.
2022 ANNUAL REPORT 72
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 73
25. Interest-bearing loans and other financial liabilities
Curren cy
Effective interest
rate, %
Maturity
31 December 31 December
2022 2021
Current interest-bearing loans and other financial liabilities
AKA Ausfuhrkredit-Gesellschaft
mbH
EUR
2.25%+ EURIBOR
(6m)
30.06.2023 - 607
UkrSibbank EUR 3,70% 26.02.2025 - 2 780
Prime One Capital Limited EUR 3,00% 29.09.2022 - 2 353
OTP Bank EUR
2,6%+ EURIBOR
(3m)
02.10.2023
1 948 -
Crédit Agricole UAH 13,05% 06.05.2023 2 472 -
Total current interest-bearing loans and other financial liabilities 4 420 5 740
Non-current interest-bearing loans and other financial liabilities
OTP Bank EUR
2,6%+ EURIBOR
(3m)
02.10.2025 3 894 7 141
UkrSibbank EUR 3,70% 26.02.2025 2 615 -
Total non-current interest-bearing loans and other financial liabilities 6 509 7 141
Total interest-bearing loans and other financial liabili- 10 929 12 881
Covenants
The Group’s loan agreements contain a number of covenants and restrictions, which include, but are not limited to, financial
ratios and other legal matters. Covenant breaches generally permit lenders to demand accelerated repayment of principal and
interest.
As at 31 December 2022 and 2021 the Group was not in breach of any financial covenants which allow lenders to demand
immediate repayment of loans.
Reconciliation of liabilities arising from financing activities.
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non–cash
changes. Liabilities arising from financing activities 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 activities:
31 December
2021
Financing
cash flow
payment
Financing
cash flow
received
Increase/
decrease
(as a result
of accruals
and other)
Exchange
differ-
ences
31 December
2022
Interest-bearing loans
12 791 (3 679) 2 461 - (664) 10 909
Interest expenses
90 (620) - 555 (5) 20
Other borrowings
- - - - - -
Total
12 881 (4 299) 2 461 555 (669) 10 929
31 December
2020
Financing
cash flow
payment
Financing
cash flow
received
Increase/
decrease
(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
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 74
26. Trade and other payables
31 December 2022 31 December 2021
Trade payables 5 920 12 373
Dividend liability 4 176
Employee benefit liability 442 600
Liability for unused vacation 898 863
Taxes payable 201 257
VAT liabilities 447 200
Income tax payables 617
Other payables 292 98
Total 12 993 14 391
27. Advances received
As at 31 December 2022 advances received amount to USD 571 thousand (2021: USD 543 thousand).
28. Related party disclosures
For the purposes of these consolidated financial statements, the parties are considered to be related, if one of the parties
has the ability to exercise control over the other party or influence significantly the other party in making financial and operating
decisions. Considering the transactions with each possible related party, particular attention is paid to the essence of relationships,
not merely their legal form.
Related parties may enter into transactions, which may not always be available to unrelated parties, and they may be sub-
ject to such conditions and such amounts that are impossible in transactions with unrelated parties.
According to the criteria mentioned above, related parties of the Group are divided into the following categories:
(A). Key management personnel;
(B). Companies which activities are significantly influenced by the Beneficial Owners;
(C). Other related parties.
The following companies and individuals are considered to be the Group's related parties as at 31 December 2022 and
2021:
(A). Key management personnel
Key management personnel 2022: Position:
Borys Bielikov Executive Director / CEO
Vitalii Veresenko Non-executive director
Markiyan Markevych Non-executive director
Vitalii Sapozhnik Chief Financial Officer
Rossi Kurt Chief Commercial Officer
Arnis Veinbergs Deputy CEO in charge of Production activity
Karen Arshakyan Non-executive director
Yuliya Flyorova Production director
Key management personnel 2021:
Position:
Borys Bielikov
Executive Director / CEO
Vitalii Veresenko
Non-executive director
Sergii Karpenko
Non-executive director
Vitalii Sapozhnik
Chief Financial Officer
Arnis Veinbergs
Deputy CEO in charge of Production activity
Karen Arshakyan
Non-executive director
Vitalii Voron
Production director
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
(B). Companies which activities are significantly influenced by the Key management personnel
Aleksa LTD LLC 2022/2021
Prime One Capital Limited 2022/2021
As at 31 December 2022 and 2021 trade accounts receivable from related parties and advances issued to related parties were pre-
sented as follows:
31 December 2022 31 December 2021
(B). Companies which activities are significantly influenced by the Beneficial Owners:
Prepayments to related parties
Aleksa LTD LLC
34 47
Other accounts receivables
Prime One Capital Limited
12 755 -
Total
12 789 47
Debt with Prime One Capital Limited is disclosed in note 25
For the year ended 31 December 2022 and 2021 the transactions with related parties amounted to:
31 December 2022 31 December 2021
(B). Companies which activities are significantly influenced by the Beneficial Owners:
Interest on debts and borrowings:
Prime One Capital Limited
(9) (71)
Interest income:
Prime One Capital Limited
11 -
General and administrative expenses:
Aleksa LTD LLC
(24) (24)
Total
(22) (95)
Compensation of key management personnel of the Group
The amount of remuneration of key management personnel of the group for the year ended 31 December 2022, and 2021 was
presented as follows:
(C). Other related parties:
12 months ended 12 months ended
31 December 2022 31 December 2021
Salaries and contribution to social security fund (short-term employee benefits):
Borys Bielikov
202 -
Rossi Kurt
172 -
Vitalii Veresenko
96 -
Markiyan Markevych
30 -
Karen Arshakyan
21 24
Vitalii Sapozhnik
14 17
Vitalii Voron
- 9
Other key management personnel
254 266
Total
789 316
For the year ended 31 December 2022, and 2021 the Group has no other related parties.
2022 ANNUAL REPORT 75
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 76
29. Commitments and contingencies
Operating environment
All production facilities of the Group are located in Ukraine and its operations are highly dependent on the develop-
ments in this jurisdiction.
On February 24, 2022, Russian troops launched a military invasion of Ukraine, which led to a full-scale war on the terri-
tory of the Ukrainian state. The ongoing military attack has caused and continues to cause significant casualties, population
displacement, infrastructure damage and disruption to economic activity in Ukraine Seaports and airports are closed and
damaged. Export through seaports was completely frozen. The situation remains highly volatile and the outlook highly uncer-
tain. The economic consequences are already very serious. As a result, the government has imposed martial 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 financial deficits. The Ukrainian authorities continue to service their external debt obligations,
and the country's payment system continues to operate, banks are open and mostly liquid. Most Ukrainian companies still
pay taxes. At the time of reporting, the occupied territories of central Ukraine, where the production of the Ovostar Union
group of companies is concentrated, were liberated from the invaders, but hostilities continue in the eastern and southern
parts of Ukraine, and the entire territory is subjected to rocket attacks.
International organizations (IMF, EBRD, EU, World Bank), along with individual countries and charities, have provided
Ukraine with financing, donations and material support. In total, international support has reached more than USD 23 billion.
In June 2022, the National Bank of Ukraine (NBU) decided to raise the discount rate from 10% to 25%. In July 2022, the Na-
tional Bank of Ukraine made a one-time correction of the official hryvnia exchange rate against the dollar and fixed it at UAH
36.5686/USD. USA. The new level of the exchange rate will anchor the economy and give it resilience in the face of uncertain-
ty. The continuation of the fixed exchange rate policy will enable the National Bank to maintain control over inflation dynam-
ics, as well as maintain the smooth operation of the financial system.
Despite the current unstable situation, the banking system remains stable, with sufficient liquidity even as martial law
continues, all banking services are available to its customers, both legal entities and individuals.
As of May 2022, the Verkhovna Rada of Ukraine has approved a package of amendments to taxation to support Ukraini-
an businesses during the war. The law establishes a special economic regime for the period of martial law. The key innovation
is that all companies can now waive VAT and income tax (CIT) by switching to a 2% sales tax. Physically lost goods are not sub-
ject 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 contribution for 1 year after the end of martial law). For automotive fuel,
the excise tax is reset to zero, and the VAT rate is reduced from 20% to 7%. In addition, support for national military action is
exempt from taxation.
The International Monetary Fund (IMF) predicts modest economic growth in Ukraine in 2023 at 1.0%. According to the
baseline scenario, GDP growth will be 4.0% in 2024, 3.4% in 2025, 3.6% in 2026 and 3.0% in 2027.
On June 4, 2022 the Decision of the European Union on the abolition of duties on Ukrainian goods for a year came into
force:
• duties on industrial products, suspension of the entry price system for fruits and vegetables and all tariff quotas for agri-
cultural products;
• all anti-dumping duties on imports of goods originating from Ukraine and the application of global protective measures in
relation to Ukrainian goods are suspended.
The liberalization of trade relations also implies that Ukraine will abide by European rules of origin and related proce-
dures under the Association Agreement, will refrain from any new restrictions on imports from the EU, and will ensure re-
spect for democratic principles, human rights and fundamental freedoms, the rule of the law, fight against corruption.
Taxation
Ukrainian legislation regarding taxation and other operational issues continues to evolve as a result of the transition
economy. Legislation and regulations are not always clearly defined and their interpretation depends on the views of local,
regional and other government authorities. Cases of conflicting opinions are not unusual.
Ukraine has a corporate income tax system, under which taxable profit of companies (i.e. financial profit adjusted by tax
differences) is subject to 18% tax rate.
Transfer pricing rules apply to transactions with related non-residents and “low-tax” non-residents (i.e. non-residents,
taxed domestically at a significantly lower corporate income tax rate than the Ukrainian tax rate of 18%), subject to a compa-
ny’s minimum income threshold of UAH 150 million and transactions volume threshold with each individual non- resident of
UAH 10 million.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
Domestic 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, royalties, dividends etc.) to non-residents of Ukraine is subject to withholding tax at a
standard 15% rate unless double tax treaties 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
attributable to sales of agricultural raw materials produced by such company. Under the simplified tax system, companies are sub-
ject to a fixed tax, which depends on the type, location and monetary value of farmland used by such companies. Changes were
made to the Tax Code and from January 1, 2022, egg producers, in particular, ceased to fall under this category.
On July 1, 2021, the Law on the abolition of the moratorium on the sale of agricultural land came into force, but it provides
for a number of restrictions related to the maximum size of land that can be sold to an individual buyer, restrictions on the sale of
land in certain territories and certain categories of buyers. After 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 operations and financial position will continue to be affected by political developments in Ukraine, including
the application of current and future legislation and tax regulations. Management believes that the Group has complied with all
applicable tax laws and has paid or accrued all applicable taxes.
Legal issues
The Group is involved in litigations and other claims that are in the ordinary course of its business activities. As at 31 December
2022, Group is involved in litigations in the amount of USD 589 thousand (2021: USD 2 394 thousand). Management believes that
based on the past history of court resolutions of similar lawsuits by the Group, it is unlikely that a significant settlement will arise
out of such lawsuits and therefore no respective provision is required in the Group’s financial statements as of the reporting date.
30. Financial risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maxim-
izing the return to shareholders through a combination of debt and equity capital. The management of the Group reviews the capi-
tal 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 redemption of existing debt.
The capital structure of the Group consists of debt, which includes the borrowings and cash and cash equivalents disclosed
in Notes 25 and 23 respectively, and equity attributable to the equity holders of the parent, comprising issued capital, share premi-
um, reserves and retained earnings.
Gearing ratio
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
31 December
2022
2021
Debt liabilities*
10 929 12 881
*
Cash and cash equivalents and deposits
(12 181) (2 435)
Net debt
(1 252) 10 446
Equity**
88 097 109 889
Gearing ratio
-1,4% 9,5%
Debts include short-term and long-term borrowings.
** Equity includes the share capital, share premium, retained earnings and foreign currency translation reserve.
2022 ANNUAL REPORT 77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
Financial risk management
The main risks inherent to the Group’s operations are those related to credit risk exposures, liquidity risk, market move-
ments in currency rates and interest rates and potential negative 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 obliga-
tion 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 characteristics of
each client. The Group's policy for credit risk management provides systematic work with debtors, which includes: analysis of
solvency, determination of maximum amount of risk related to one customer or a group of customers and control over timeliness
of debt repayment. The majority of Group's clients are longstanding clients, there were no significant losses during 2022 and 2021
resulting from non-fulfillment of obligations by clients. Concentration of credit risk on trade accounts receivable is characterized by
the following indicators:
For the year ended 31 December 2022 USD 47 659 thousand or 35% of Group's sales revenue is related to sales transac-
tions, realized with 5 major customers of the Group. As at 31 December 2022 USD 5 370 thousand or 40% of trade accounts re-
ceivable relates to 5 major debtors.
The credit quality of the gross trade receivables from related and third parties was as follows:
31 December 2022 31 December 2021
Fully performing 12 355 12 392
Past due but not impaired 903 1 013
Impaired 86 145
Total trade receivables (gross) 13 344 13 550
As at 31 December 2022 and 2021 the ageing of trade account receivables that were not impaired was as follows:
% 31 December 2022 31 December 2021
0-30 days 96,20% 12 753 12 520
31-90 days 2,55% 338 778
91-180 days 0,36% 47 70
181-360 days 0,85% 113 37
more than 360 days 0,05% 7 -
Total trade receivables (gross) 13 258 13 405
Liquidity risk
Liquidity risk is the risk of the Group's failure to fulfill its financial obligations 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 obligations in due time (both in normal conditions and in non-standard situations), by avoiding unacceptable losses or the
risk of damage to the reputation of the Group.
In accordance with plans of the Group, its working capital needs are satisfied by cash flows from operating activities, as well as by
use of loans if cash flows from operating activities are insufficient for liabilities to be settled.
The table below represents the expected maturity of components of working capital:
Carrying
Contractu-
Less than 3
3-6
6-12
31 December 2022
Over 1 year
value
al cash
months
months
months
Non-derivative financial liabilities:
Trade and other payables 12 993 12 993 12 095 898
Current interest-bearing loans and other
financial liabilities
4 420
4 420
3 446
974
Non-current interest-bearing loans and other
financial liabilities
6 509
6 509
6 509
Total 23 922 23 922 12 095 4 344 974 6 509
2022 ANNUAL REPORT 78
3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-81 form an integral part of these financial statements
2022 ANNUAL REPORT 79
the expected maturity of components of working capital (continued):
31 December 2021
Carrying
value
Contractu-
al cash
flows
Less than 3
months
3-6
months
6-12
months
Over 1
year
Non-derivative financial liabilities:
Trade and other payables
14 391 14 391 13 528 863
Current interest-bearing loans and other financial lia-
5 740 5 740 5 133 607
Non-current interest-bearing loans and other financial
7 141 7 141 7 141
Total 27 272 27 272 13 528 5 996 607 7 141
Currency risk
Currency risk – Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign ex-
change rates. The Group undertakes certain transactions denominated in foreign currencies. The Group does not use any deriva-
tives to manage foreign currency risk exposure, at the same time the management of the Group sets limits on the level of expo-
sure by currencies.
Exposure to foreign currency risk
The carrying amounts of the Group’s foreign currency denominated monetary assets and liabilities as of 31 December 2022
and 2021 were as follows:
This sensitivity rate represents the management’s assessment of the reasonably possible change in foreign exchange rates. The
sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the
period end for expected change in foreign currency rates.
Effect in USD thousand:
Increase in currency rate Effect on profit
against UAH Before Tax
31 December 2022
USD 15% 492
EUR 15% (454)
31 December 2021
USD 15% 191
EUR 15% (2 040)
31 December 2022
(in conversion to USD thousand) AED USD EUR UAH Total
Assets
Cash and cash equivalents
1 2 982 2 597 6 601 12 181
Trade receivables
- 381 4 435 8 442 13 258
Liabilities
Current interest-bearing loans and other financial liabilities - - (1 948) (2 472) (4 420)
Non-current interest-bearing loans and other financial liabilities - - (6 509) - (6 509)
Trade accounts payable
(1) (85) (1 386) (4 448) (5 920)
Other payables
(1) - (218) (73) (292)
Net exposure to foreign currency risk
(1) 3 278 (3 029) 8 050 8 298
31 December 2021 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
Liabilities
Current interest-bearing loans and other financial liabilities - - (5 740) - (5 740)
Non-current interest-bearing loans and other financial liabilities - - (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)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
The effect of foreign currency sensitivity 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 major part of the Group’s borrowings bear variable interest rates which are linked to EURIBOR. Other borrowings are present-
ed at fixed interest rates.
The below details the Group’s sensitivity to increase or decrease of floating rate by 1%. The analysis was applied to interest
bearing liabilities (bank borrowings under facility agreements) based on the assumption that the amount of liability outstanding as
of the balance sheet date was outstanding for the whole year.
31 December 2022 31 December 2021
EURIBOR EURIBOR
Profit/(loss) 19/(19) 6/(6)
The effect of interest rate sensitivity 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 out-
breaks of diseases, which are highly contagious and destructive to susceptible livestock, such as avian influenza or bird flu for its
poultry operations. The diseases could result in mortality losses. Disease control measures were adopted by the Group to minimize
and manage this risk. The Group’s management is satisfied with its current existing risk management and quality control processes
are effective and sufficient to prevent any outbreak of livestock diseases and related losses.
31. Financial instruments
Estimated fair value disclosure of financial instruments is made in accordance with the requirements of International Finan-
cial Reporting Standard 7 “Financial Instruments: Disclosure”. Fair value is defined as the amount at which the instrument could be
exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in forced or
liquidation 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 conditions and specific risks attributable to the instrument. The estimates pre-
sented herein are not necessarily indicative of the amounts the Group could realize in a market exchange from the sale of its full
holdings of a particular instrument.
The Group uses the following hierarchy for determining the fair value of financial instruments:
Level 1 ("L1") - quoted (unadjusted) prices in active markets for identical assets or liabilities;
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 derivative financial instruments for trading purposes.
2022 ANNUAL REPORT 80
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
Notes on pages 43-81 form an integral part of these financial statements
The following table presents the classification, subsequent measurement, carrying values and fair values of the Group's financial
assets:
31 December 2022 31 December 2021
Subsequent
Carrying
Carrying
measurement
Fair value
Fair value
value
value
Financial assets:
Trade and other receivables (a) Amortized cost 26 807
26 807 5 471 15 471
Cash and cash equivalents
12 181
12 181
2 435 2 435
Total
38 988
38 988 7 906 17 906
Financial liabilities:
Current interest-bearing loans and borrowings (a) Amortized cost 4 420
4 420
5 740 5 740
Non-current interest-bearing loans and borrow-
Amortized cost
ings (b)
6 509
6 509
7 141
7 141
Trade and other payables (current) (a) Amortized cost 12 993
12 993 4 391 14 391
Total
23 922
23 922 7 272 27 272
The following methods and assumptions were used to estimate 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 amortized cost which, due to their short term nature, approximates
their fair value.
b) The fair values of other financial assets and financial liabilities (excluding those described above) are determined in
accordance with generally accepted pricing models based on discounted cash flow analysis.
32. Subsequent events
In accordance with the resolution passed by the Board of Directors on 22 December 2022 the Group declared interim
dividends for the financial year 2022 in amount of EURO 0,65 per share. As of 31 December 2022 the total amount of Euro
3,9 mln was accrued on the balance sheet. Actual pay-out to the shareholders took place on 26 January 2023 through the
Central Securities Depositary of Poland.
The duration and consequences of the war in Ukraine are currently unclear. It is not possible to reliably estimate the
duration and severity of these consequences, as well as their impact on the financial position and results of the Group in
future periods. After considering all available evidence and the actions taken and planned by the Group to offset the ad-
verse impact of the ongoing military intervention 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.
2022 ANNUAL REPORT 81
OVOSTAR UNION PUBLIC COMPANY LIMITED
COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2022
3
INDIVIDUAL FINANCIAL STATEMENTS
2022 ANNUAL REPORT 83
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
(IN USD THOUSAND, UNLESS OTHERWISE STATED)
Note
12 months ended 12 months ended
31 December 2022 31 December 2021
Dividend income 485 4 525
Administrative expenses (502) (232)
Operating profit
(17) 4 293
Finance costs (87) (181)
Finance income 151 370
Profit before tax
47 4 482
Income tax expense (20)
Profit for the period
56 4 462
3
INDIVIDUAL FINANCIAL STATEMENTS
2022 ANNUAL REPORT 84
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2022
(IN USD THOUSAND, UNLESS OTHERWISE STATED)
Note 31 December 2022 31 December 2021
Assets
Non-current assets
Investment in subsidiaries 46 097 46 097
Loan receivable 10 5 591 5 835
Total non-current assets
51 688 51 932
Current assets
Cash and cash equivalents 13 57
Short-term loan receivable
12
12 755
Prepayments to suppliers
Other accounts receivables 11 35 11
Total current assets
12 851 26
Total assets
64 539 51 958
Equity and liabilities
Equity
Issued capital 14 85 68
Share premium 15 30 933 30 933
Foreign currency translation reserve
17
Retained earnings
13 643 13 357
Result for the period
56 4 462
Total equity
44 717 48 837
Non-current liabilities
Interest-bearing loans and other financial liabilities 16
Total non-current liabilities
Current liabilities
Trade and other payables 17 4 272 161
Interest-bearing loans and other financial liabilities 16 15 550 2 960
Total current liabilities
19 822 3 121
Total liabilities
19 822 3 121
Total equity and liabilities
64 539 51 958
3
INDIVIDUAL FINANCIAL STATEMENTS
2022 ANNUAL REPORT 85
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
(IN USD THOUSAND, UNLESS OTHERWISE STATED)
Is-
sued
capi-
tal
Share
premi-
um
Foreign
currency
translation
reserve
Retained
earnings
Total equity
As at 31 December 2020 74 30 933 11 13 357 44 375
Profit for the period
Exchange rate differences
(6)
4 462
4 462
As at 31 December 2021 68 30 933 17 17 819 48 837
Profit for the period 56 56
Dividends (4 176) (4 176)
Exchange rate differences 17 (17)
As at 31 December 2022 85 30 933 13 699 44 717
3
INDIVIDUAL FINANCIAL STATEMENTS
2022 ANNUAL REPORT 86
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
(IN USD THOUSAND, UNLESS OTHERWISE STATED)
12 months ended 12 months ended
31 December 2022 31 December 2021
Cash flows from operating activities
Profit before tax 47
4 482
Non-cash adjustment to reconcile profit before tax to net cash flows:
Dividend income
(485)
(4 525)
Interest income (151)
(370)
Interest expense 87
181
Working capital adjustments:
Decrease/(Increase) in receivable balances 300 (3 018)
Decrease/(Increase) in short-term loan receivable (12 509)
Decrease/(Increase) in prepayments to suppliers (2)
Decrease/(Increase) in payable balances (50) 38
Cash used in operations
Dividends received 461 5 135
Income tax paid (9) (5)
Net cash flows from operating activities (12 307) 1 916
Cash flows from investing activities
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from borrowings 16 364 397
Repayment of borrowings (3 889) (2 275)
Interest paid (120) (43)
Net cash flows used in financing activities 12 355 (1 921)
Net (decrease)/increase in cash and cash equivalents 48 (5)
Cash and cash equivalents at 01 January 14
Cash and cash equivalents at 31 December 57
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 87-92 form an integral part of these financial statements
2022 ANNUAL REPORT 87
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 ultimate hold-
ing company of LLC “Ovostar Union” and its subsidiaries. Hereinafter, “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 activities of the Group include production and distribution of shell eggs and egg products. The largest share-
holder of the Company is Prime One Capital Ltd., Cyprus. Its principal activity is the holding of ownership interests in its sub-
sidiary and strategic management.
Use of estimates
The preparation of financial statements under IFRS requires estimates to be used and assumptions to be made that
affect the amounts shown in these financial statements. These estimates assume the operation is a going concern and are
drawn up on the basis of the information available at the time. Estimates may be revised if the circumstances on which they
were based change or if new information becomes available. Actual results may be different from these estimates.
Basis of preparation
The financial statements for the year ended 31 December 2022 have been prepared using the IFRS.
The IFRS individual financial statements were approved by the Board of Directors on 31 December 2022
For information 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 identified.
3. FUNCTIONAL AND PRESENTATION CURRENCY
The functional currency of the Company is U.S. dollar (USD). The financial statements are presented in the company’s
functional currency, that is, U.S. dollar (USD).
4. DIVIDEND INCOME
12 months ended 12 months ended
31 December 2022 31 December 2021
Dividend income from OAE Food Trade FZE
485 4 525
Total 485 4 525
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 87-92 form an integral part of these financial statements
2022 ANNUAL REPORT 88
5. ADMINISTRATIVE EXPENSES
6. FINANCE COSTS
7. FINANCE INCOME
8. CORPORATE INCOME TAX
Tax recognized in profit or loss:
The taxation on the Company's profit/(loss) before taxation differs from theoretical amount that would arise using the
applicable tax rates as follows:
12 months ended 12 months ended
31 December 2022 31 December 2021
Wages, salaries and social security costs 349 29
Legal, audit and other professional fees 126 181
Service charge expenses 27 22
Total 502 232
12 months ended 12 months ended
31 December 2022 31 December 2021
Interest on debts and borrowings 87 181
Total 87 181
12 months ended 12 months ended
31 December 2022 31 December 2021
Interest income 67 45
Foreign currency exchange 84 325
Total 151 370
12 months ended 12 months ended
31 December 2022 31 December 2021
Corporation tax 19
Corporation tax – prior years (9)
Charge for the year (9) 20
12 months ended 12 months ended
31 December 2022 31 December 2021
Profit before tax
47 4 482
Applicable tax rates
12,50% 12,50%
Tax calculated at the applicable tax rates
560
Tax effect of expenses not deductible for tax purposes
56 92
Tax effect of allowances and income not subject to tax
(71) (635)
10% additional charge
(1)
Charge for the year
19
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 87-92 form an integral part of these financial statements
2022 ANNUAL REPORT 89
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 an-
num, with a maturity date of May 2029 in USD.
11. OTHER ACCOUNTS RECEIVABLES
12. SHORT-TERM LOAN RECEIVABLE
Loan receivable as of December 31, 2022 consist of a loan and interest accrued by Prime One Capital Limited, issued at
1% per annum, with a maturity date of June 2023.
13. CASH AND CASH EQUIVALENTS
The Company’s cash balances are available upon demand.
14. 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.
The Company's share capital as of 30 September 2022 has been converted at the exchange rate in force at the time of
formation(historical rate). The EUR 60 000 (equivalent to 6 000 000 shares) as of 31 December 2022, has been converted into
USD 84 324 (31 December 2021: at the exchange rate as of December 31, 2021 which amounted to 68 064).
31 December 2022 31 December 2021
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
International Food Trade Limited
Total
46 097 46 097
31 December 2022 31 December 2021
LLC Yasensvit
5 591 5 835
Total
5 591 5 835
31 December 2022 31 December 2021
OAE Food Trade FZE
35 11
Total
35 11
31 December 2022 31 December 2021
Prime One Capital Limited USD 1 502
Prime One Capital Limited EUR 11 253
Total
12 755
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 87-92 form an integral part of these financial statements
2022 ANNUAL REPORT 90
15. SHARE PREMIUM
As has been mentioned previously, in June 2011 the Group’s shares have been placed on WSE. As a result of the transac-
tion, 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 2022
and 2021, there were no movements in share premium.
16. LOANS AND BORROWINGS
As part of loans and borrowings, there is a loans received from a related parties Prime One Capital Limited, Ovostar Europe
LLC and OAE Food Trade FZE.
17. TRADE AND OTHER PAYABLES
18. DIRECTORS
The Company is managed by the Board of Directors which consists of four members: one Executive Director and three
Non-Executive directors.
The Board of Directors as at 31 December 2022 comprised:
Borys Bielikov Chief Executive Officer, (non-independent)
Vitalii Veresenko Chairman of the Board, Non-Executive Director (non-independent)
Markiyan Markevych Non-Executive Director (independent)
Karen Arshakyan Non-Executive Director (independent)
Currency Effective
interest rate,
%
Maturity
31 December
2022
31 December
2021
Current interest-bearing loans and other
financial liabilities
Landesbank Berlin AG/AKA Ausfuhrkredit-
Gesellschaft mbH
EUR
2.25%+ EURI-
BOR (6m)
30.06.2023 607
Ovostar Europe LLC
EUR 2.5% 15.06.2023 854
Ovostar Europe LLC
USD 2.5% 15.06.2023 223
Ovostar Europe LLC
EUR 0.5% 02.03.2023 5 965
Ovostar Europe LLC
EUR 0.5% 02.06.2023 5 947
Ovostar Europe LLC
USD 0.5% 02.06.2023 1 551
OAE Food Trade FZE
USD 2.5% 25.07.2023 1 010
Prime One Capital Limited
EUR 3,00% 10.07.2024
2 353
Total current interest-bearing loans and other financial liabilities
15 550 2 960
Total interest-bearing loans and other financial liabili-
ties
15 550 2 960
31 December 2022 31 December 2021
Dividend liability 4 176
Baker Tilly Ukraine, LLC 24 50
Baker Tilly Klitou & Partners Ltd 17 35
Ovostar Europe LLC 54 57
Other 19
Total 4 272 161
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 87-92 form an integral part of these financial statements
2022 ANNUAL REPORT 91
19. 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 financial
statements and its subsidiaries.
20. RELATED PARTY DISCLOSURES
As at 31 December 2022 and 2021 other receivables and payables from related parties are presented as follows:
For the year ended 31 December 2022 and 2021 the transactions with related parties amounted to:
12 months ended
12 months ended
31 December 2022 31 December 2021
(B). Companies which activities are significantly influenced by the Benefi-
cial Owners:
Interest on debts and borrowings:
Ovostar Europe LLC 39
OAE Food Trade FZE 10
Prime One Capital Limited 9
71
Total 58
71
Interest income:
LLC Yasensvit 56
44
Total 56
44
31 December 2022 31 December 2021
Baker Tilly Ukraine:
Audit and review of financial statements 43 50
Baker Tilly Klitou & Partners Ltd
Audit fees 33 36
Total
76 86
31 December 2022 31 December 2021
(B). Companies which activities are significantly influenced by the Beneficial
Owners:
Other non-current assets
LLC Yasensvit 5 591 5 835
Other accounts receivables
OAE Food Trade FZE 35 11
Short-term loan receivable
Prime One Capital Limited 12 755
Total 18 381 11
Trade and other payables to related parties
Ovostar Europe LLC 54 57
Total 54 57
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 87-92 form an integral part of these financial statements
2022 ANNUAL REPORT 92
21. SUBSEQUENT EVENTS
For events subsequent to the reporting date refer to note 33 of the consolidated financial statements.
…………………………………
Borys Bielikov
Chief Executive Officer,
…………………………………
Vitalii Veresenko
Chairman of the Board,
…………………………………
Karen Arshakyan
Head of Audit Committee,
…………………………………
Markiyan Markevych
Non-executive Director
…………………………………
Vitalii Sapozhnik
Chief Financial Officer
Forward-looking statements notice
All forward-looking statements contained in this annual report with
respect to our future financial and operational performance and
position are, unless otherwise stated, based on the beliefs, expec-
tations, projections and the estimates of our management repre-
senting their judgment as at the dates on which the statements
have been made. Forward-looking statements are generally identi-
fiable by the use of the words “may”, “will”, “should”, “plan”,
“forecast”, “expect”, “anticipate”, “estimate”, “believe”, “intend”,
“project”, “goal” or “target” or the negative of these words or oth-
er variations on these words or comparable terminology. Our actu-
al operational and financial results or the same of our industry in-
volve a number of known and unknown risks, uncertainties 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 information, 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 Relations inquiries:
Investor Relations Department
Anna Tews
ir@ovostar.ua
Cell: +38 050 439 05 05
Landline: +38 044 354 29 60