2
2023 ANNUAL REPORT
CONTENTS
MANAGEMENT REPORT
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
CORPORATE GOVERNANCE
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
FINANCIAL STATEMENTS
Consolidated financial statements .............................. 38
Company financial statements .................................... 85
2023 ANNUAL REPORT
3
1
MANAGEMENT REPORT
CEO’S STATEMENT
Dear Shareholders,
2023 proved to be another year of glob-
al instability which affected lives of
thousands of people and changed the
operation mode of many companies.
The year was specifically hard for
Ukraine and Ukrainians who have been
desperately fighting against the Rus-
sian military invasion. With due respect
to the armed forces we should not for-
get the huge effort of the civilians and
businesses across the country who
every day make their feasible contribu-
tion to the victory.
Like any other company in Ukraine,
Ovostar Union lived through 2023 fac-
ing numerous challenges ranging from
physical safety issues to the disruptions
of international logistic chains. Looking
back we are proud to say that most of
these issues were resolved and the
Company’s 2023 results look quite
mpressive.
Ovostar Union remains one of the top 3
egg producers in Ukraine and plays a
prominent role in terms of national food
security. Our eggs and egg products,
being one of the best-balanced and af-
fordable sources of protein, can be
found in most markets throughout the
country which is vital in the current un-
easy economic situation.
It would have been impossible without
our team who I want to thank for their
hard work and commitment to the com-
pany. This together with the valuable
cooperation and support from our
shareholders, partners and clients
helps us achieve good results today
and strive for even better performance
tomorrow.
Sincerely,
Borys Bielikov
2023 ANNUAL REPORT
4
MANAGEMENT
REPORT
1
2023 ANNUAL REPORT
5
1
MANAGEMENT REPORT
CORPORATE SUMMARY
Company Overview
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 compa-
nies 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 organi-
cally by gradually increasing the volume of
eggs produced and expanding the range of
egg products offered. For over a decade
Ovostar Union has been one of leaders of the
local egg industry belonging to the top 3 pro-
ducers in Ukraine.
With focus on developing the export markets,
we are expanding our sales geography sup-
plying shell eggs and egg products of consist-
ently high quality around the countries of Eu-
rope, Middle East, Africa and Asia.
Within the egg segment, we possess shell
egg portfolio of over 20 sub-brands and sup-
ply our branded eggs to the largest retail
chains in Ukraine. As a result of export mar-
kets development we are gradually increas-
ing the deliveries of shell eggs outside of
Ukraine.
Within the egg products segment, we offer
the full range of egg products of both liquid
and dry forms. We enjoy loyalty of the largest
food processing companies in Ukraine and
abroad by adjusting our products to the cli-
ents’ needs while maintaining the superior
quality.
2023 ANNUAL REPORT
6
1
MANAGEMENT REPORT
CORPORATE SUMMARY
Business Geography
We are a vertically integrated agricultur-
al holding with key production facilities
and supporting infrastructure concen-
trated within Kyiv region of Ukraine in
close proximity to one another other.
Two poultry farms with total flock of 7.7
million hens (including parents, young
hens and layers) ensure production of
nearly 1.8 eggs per year. Two egg pro-
cessing plants have manufacturing ca-
pacity 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,
Salmet, MOBA and others. Combined
with the innovative technology solutions
and best practices deployed it makes us
a recognized industry leader.
Kyiv region
2023 ANNUAL REPORT
7
1
MANAGEMENT REPORT
CORPORATE SUMMARY
Business Model
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 class “A”
and egg products to the European Union.
2023 ANNUAL REPORT
8
1
MANAGEMENT REPORT
CORPORATE SUMMARY
Our Brands - Shell Eggs
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 2023 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 premium,
standard, economy and private label
categories.
2023 ANNUAL REPORT
9
1
MANAGEMENT REPORT
CORPORATE SUMMARY
Our Brands - Eggs Products
Brand-new liquid egg products in pure-pak
cartons are now available to retail custom-
ers under TM YASENSVIT and OVOSTAR
We offer a wide range of separated and
whole egg products in dry and liquid form un-
der the OVOSTAR brand. The demand for
egg products mainly comes from food pro-
cessing companies in Ukraine and abroad.
The segment is mainly B2B-oriented as the
egg products are used for production of con-
fectionary, mayonnaise, meat products etc.
Each client requests the egg product with cer-
tain characteristics needed for the final good.
Our flexibility to adjust to clients’ needs main-
tains 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 cus-
tomers in 2018, in 2019 we introduced a new
egg product in retail segment - bottled scram-
bled eggs. Further, in 2020 we launched pro-
duction of liquid white, liquid eggs and ome-
lets in pure-pak cartons, that are now availa-
ble in most retail-chains all over the country.
2023 ANNUAL REPORT
10
1
MANAGEMENT REPORT
KEY FINANCIALS
2023 Update
BALANCE SHEET (MUSD)
31-DEC-2022 31-DEC-2023 ∆ YOY, %
Assets 110,7 142.2 28%
Non-current assets 46,6 37.1 (20%)
Current assets 64,1 105.1 64%
Equity and Liabilities 110,7 142.2 28%
Equity
83,9 125.1 49%
Non-current liabilities
8,6 1.8 (79%)
Current liabilities 18,2 15.3 (16%)
CASH FLOW (MUSD) 2022 2023 ∆ YOY, %
Net cash generated by operating activities 19.5 85.7 340%
Net cash used in investing activities
(8.7) (11.7) (34%)
Net cash generated by financing activities (1.6) (13.0) (721%)
DEBT POSITION (MUSD) 31-DEC-2022 31-DEC-2023 ∆ YOY, %
Total debt 10,9 2.4 (78%)
Cash and cash equivalents 12,2 72.5 495%
Net debt (1,3) 70.1 (5502%)
INCOME STATEMENT (MUSD) 2022 2023 ∆ YOY, %
Revenue 135,6 162.5 20%
Gross profit 22,8 62.6 175%
EBITDA 11,1 50.4 353%
Profit before tax 6,6 50.9 672%
Net profit 6,1 45.0 640%
2023 ANNUAL REPORT
11
1
MANAGEMENT REPORT
SEGMENT ACTIVITIES
Egg Segment
PRODUCTION
As of year end 2023 the Group’s total flock was
7,7 mln heads (+7% YoY). The number of lay-
ers totaled to 6,43 mln heads (+6% YoY). The
increase is accounted for by the partial flock
recovery following the reduction during the first
half of 2022 on the background of falling de-
mand, shrinking egg production and limited ex-
ports caused by the war in Ukraine. This
helped to avoid oversupply of the local market
and balance the prices.
Egg production volume in 2023 totaled to 1,531
bln (-1% YoY).
SALES
In 2023 the sales volume in the egg segment
was 970 bln. The decrease against the previ-
ous year made up 10% resulting from the allo-
cation of more eggs to processing and egg
products output.
Export sales, however, grew by 18% YoY
reaching 344 mln eggs against 290 mln in
2022, which is explained by the more favorable
market situation on the export markets during
the year.
SHELL EGGS SALES
SHELL EGGS SALES STRUCTURE
Average selling price of eggs in 2023 rose by 27% YoY in USD terms up to 0,114 USD/egg.
Local Sales, mln eggs
Export Sales, mln eggs
2021 2022 2023
2022
2023
2023 ANNUAL REPORT
12
1
MANAGEMENT REPORT
SEGMENT ACTIVITIES
Egg Products Segment
PRODUCTION
The volume of eggs processed increased by
15% YoY – from 427 mln in 2022 to 492 mln in
2023, consequently leading to the increase in
egg products output, mostly liquid.
In 2023 2 512 tons of dry egg products were
produced (-1% YoY). The production volume of
liquid eggs products in 2023 was 12 998 tons
representing a 20% increase YoY.
SALES
The sales volume of dry egg products grew by
15% YoY to 2 468 tons. 69% of total sales vol-
ume were exported, which is by 1 p.p. higher
compared to 2022. The sales volume of liquid
eggs products grew by 20% up to 12 828 tons,
5 170 of which were exported. Share of export
sales in 2023 remained at the level of 2022 -
40%.
LIQUID EGG PRODUCT SALES DRY EGG PROUCT SALES
Dry egg products local sales, thous. tons
Average price, USD/kg net of VAT
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.
Dry egg products export sales, thous. tons
2021 2022 2023
Liquid egg products local sales, thous.
tons
Average price, USD/kg net of VAT
Liquid egg products export sales, thous. tons
2021 2022 2023
2023 ANNUAL REPORT
13
1
MANAGEMENT REPORT
SEGMENT ACTIVITIES
Sales Geography by Segment
EXPORT MARKETS DEVELOPMENT
The Group exports eggs and egg products un-
der the brand name OVOSTAR to around 50
countries of the world through its representative
offices in Latvia and UAE. Key export markets
are Europe and Middle East.
In 2023 46% of the total revenues of the Com-
pany came from export activities. Export reve-
nues totaled to USD 74,6 million. Sales to Mid-
dle East contributed 5% to the total revenues
(2022: 5%), sales to European Union made up
39% of total revenues (2022: 30%).
Shell eggs segment accounted for 60% of the
total export revenues, the remaining 40% came
from egg products segment.
2023 ANNUAL REPORT
14
1
MANAGEMENT REPORT
FINANCIAL RESULTS
Financial Performance
REVENUE
In 2023 total revenues grew by 20% YoY to USD 162.5 mln. Among the key growth drivers is sig-
nificant increase of price for eggs and egg products.
Shell eggs segment contributed USD 110.1 mln, or 68% to the total revenues, the remaining
USD 52.4 mln, or 32% come from egg products segment. Export revenues made up 46% of the
total amount.
REVENUE STRUCTURE BY SEGMENT
PROFITABILITY DYNAMICS, MUSD
Shell eggs, local
Shell eggs, export
Egg Products, local
Egg Products, export
Net profit, mUSD
EBITDA, mUSD
GROSS PROFIT AND COST OF SALES
Cost of sales fell by 12% YoY from USD mln
86.6 mln to USD 76, mln as a result of the flat
dynamics of production volume and steep fall
of the local prices of poultry feed components,
such as wheat and corn, caused by the hostili-
ties in Ukraine (limited export).
Gross profit equaled USD 62,6 mln (2022: USD
22,8 mln)
NET PROFIT
Net profit for the year amounted to USD 45,0
mln (2021: USD 6,1 mln).
EBITDA
In 2023 EBITDA rose to USD 50,4 (2022: USD
11,1 mln).The prices of eggs and egg products
steadily growing in the first half of 2023 provid-
ed for better marginality as compared to the
previous years.
2022 2023
Revenue, mUSD
2021 2022 2023
2023 ANNUAL REPORT
15
1
MANAGEMENT REPORT
FINANCIAL RESULTS
Financial Position
ASSETS, LIABILITIES AND EQUITY
As of 31.12.2023 the Group’s total assets in-
creased by 28% YoY to USD 142,2 mln mainly
as a result of accumulation of the significant
amount of cash in bank accounts (USD 72,5
mln as of 31.12.23).
LOANS AND BORROWINGS
During the year the Group repaid around USD
8,5 mil of bank loans and made no new borrow-
ings for the working capital financing.
Net debt as 31.12.2023 was negative totaled
USD (70.1) mil
CASH FLOW
In 2023 the Group demonstrated a solid cash
flow the details of which are as follows:
Net cash flows from operating activities:
USD 85,7 mln
Net cash flows used in investing activities:
USD (11,7) mln
Net cash flows used in financing activities:
USD (13,0) mln
The cash balance as of 31.12.2023 is USD
72,5 mln
2023 ANNUAL REPORT
16
1
MANAGEMENT REPORT
STRATEGY AND OUTLOOK
Outlook for 2024
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 rela-
tionships with our clients offset any external
challenges that the egg industry may face.
The results we deliver are based on commit-
ment of every employee. The cooperation
across departments results in higher productivi-
ty of day-to-day operations and stronger syner-
gy effect. In 2024 we intend to continue ad-
vancing 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 mini-
mize risks for the employees and consumers.
Under the circumstances we expect that in
2024 the focus will be placed on maintenance
of the existing production facilities and increas-
ing 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 2024 is expected to be moder-
ate with focus on maintenance and infrastruc-
ture. .
2023 ANNUAL REPORT
17
1
MANAGEMENT REPORT
HUMAN RESOURCES
Overview
The majority of our employees are involved in
production processes on the premises located
in Kyiv and Cherkasy regions. We recruit, em-
ploy and promote employees on the sole basis
of their qualification and abilities. Equal employ-
ment opportunities and career perspectives are
provided for all employees, regardless of their
gender, age, nationality or religious views.
Our personnel policy is aimed to create and re-
tain a well consolidated and highly professional
team of individuals that are able to respond ef-
fectively to changing market environment. We
strive to ensure a positive, productive and suc-
cessful work environment. The level of satisfac-
tion is, among other criteria, confirmed by high
employee retention rates (97% on average for
the last 5 years).
We aim to maintain a fair and comprehensive
system 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 corporate and personal targets.
Non-material remuneration consists of profes-
sional 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
insurance 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 participate in any other way in the
capital of Ovostar Union PCL. Currently, no ar-
rangements relating to such participation are
planned in the short-term perspective.
Quantity of employees as of 31 December
2021 2022 2023
Employees, EoY,
incl.
1 525 1 367 1 448
Production 1 352 1 214 1 282
Administrative 173 153 166
2023 ANNUAL REPORT
18
1
MANAGEMENT REPORT
RISK MANAGEMENT
& INTERNAL CONTROL
Overview
RISK MANAGEMENT
Risk management is an essential part of the
decision-making process providing reasonable
assurance that risks are controlled to the fur-
thest extent possible. Risk management and
internal control systems are being regularly dis-
cussed with the executive management and the
Audit Committee. In their review of our risk pro-
file, the main focus is placed on principal risks
that could significantly deteriorate our opera-
tional and financial results.
It has to be noted that proper identification of
risks significantly reduces but does not com-
pletely eliminate the possibility of human error,
poor judgment in decision making, fraud or oc-
currence of unforeseeable 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 signifi-
cant 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 man-
agement to be a continuous process of monitor-
ing, assessing and mitigating risks through in-
ternal control systems and procedures at each
level within the organization.
We use guidelines, instructions and procedures
applied to operations, financial reporting, plan-
ning, human resource and customer manage-
ment etc.; these are being reviewed and updat-
ed on a regular basis. Our employees are
trained to implement and comply with these
guidelines, instructions and procedures.
Key elements of the internal control system are
budgeting, investment management, operation-
al management and financial reporting. They
monitor the progress and the actual results of
the company’s operating activities. We also use
a staff evaluation and appraisal system. The
process of enhancement of the internal control
system will be continued in 2024.
For more information on risks please refer to
Note 30 of the 2023 Consolidated Financial
Statements.
DEFICIENCIES OF THE SYSTEM
In 2023, we did not identify any material weak-
nesses of the internal control system that might
adversely impact our operational activity, finan-
cial results and financial position. The risks are
clearly identified and controlled to the highest
possible extent by our top management within
their relevant function.
2023 ANNUAL REPORT
19
1
MANAGEMENT REPORT
RISK MANAGEMENT
& INTERNAL CONTROL
Identified Risks
Impact Mitigation 2023 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 re-
duce the possibility to ex-
port
Adherence to biosecurity
standards in line with the
best international practic-
es. Egg production and
egg processing facilities
are compliant with ISO
9001: 2015 and FSSC
22000 v.5 and Halal. Diver-
sification of sales channels
No occurrences of danger-
ous poultry diseases have
been ever registered on
our premises. We control
all the processes along the
full production cycle in or-
der 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 house-
hold and change in con-
sumer preferences
Worsening economic con-
ditions has little effect on
consumption of eggs per
capita because eggs re-
main the most affordable
source of animal-based
protein
In 2023 egg consumption
amounted to 280 eggs per
capita, demonstrating sta-
ble growth over the last
five years.
Macroeconomic Risk
Poor economic conditions
result in lack of debt fi-
nancing available
Historically, we have been
reliant primarily on own
positive cash flow and debt
financing is used only for
implementation of long-
term investment programs.
To offset he effects of the
current instability of Ukrain-
ian economy, we accumu-
lated the cash on our bank
accounts in foreign-owned
banks in Ukraine and out-
side
We use export financing
with comparatively low ef-
fective interest rate. How-
ever, excel-lent credit his-
tory allows to borrow funds
from Ukrainian banks on
favorable terms.
2023 ANNUAL REPORT
20
1
MANAGEMENT REPORT
RISK MANAGEMENT
& INTERNAL CONTROL
Identified Risks
Impact Mitigation 2023 Status / Notes
Price Risk
Devaluation of Ukrainian
Hryvnia leads to lower
price per item in USD
terms and thereby de-
creases periodic financial
results
Increase of export sales is
a natural hedge against
currency rate fluctuations.
Higher cost incurred in
UAH is being steadily trans-
ferred to the final consumer
through an increase of UAH
-based prices for shell eggs
and egg products on the
local market
In 2023 share of export rev-
enue was 46% (2022:
40%). YoY change of pric-
es in UAH terms: for shell
eggs +43%, for dry egg
products +10%, for liquid
egg products +29%.
Current capital restrictions
of National Bank of
Ukraine, although partially
weakened in 2019, may
limit the possibility to meet
the financial obligations
when due
We strictly control our work-
ing capital
As at December 31, 2023
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 finan-
cial instability in case of
loss of key customer
Our customer base is
mixed in terms of size and
industry. We are building a
balanced customer portfolio
In 2023 we had no clients
generating more than 10%
of our total revenue
Concentra-
tion of sales
2023 ANNUAL REPORT
21
1
MANAGEMENT REPORT
RISK MANAGEMENT
& INTERNAL CONTROL
Identified Risks
Impact Mitigation 2023 Status / Notes
Competition
Offering from the existing
competitors or new mar-
ket entrants may weaken
our competitive position
We have a unique for
Ukraine vertically integrated
business model with facili-
ties in close proximity to
each other, what results in
high production efficiency.
Having been offering prod-
ucts of consistently superior
quality and adjusting to the
market demands, we
achieved the recognition
and loyalty of our custom-
ers
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 out-
side Ukraine
Climate risks
Extreme weather condi-
tions can have a detri-
mental effect on the well-
being of poultry flock and
their production efficiency
Our egg production facili-
ties are equipped with an
automatic climate-control
system
Optimal climate conditions
for laying hens include 40-
60% humidity and ambient
temperature within 20-
25
o
C. Our production facili-
ties are equipped with so-
phisticated ventilation sys-
tems to keep all vial indica-
tors at normal levels
throughout the year.
2023 ANNUAL REPORT
22
1
MANAGEMENT REPORT
RISK MANAGEMENT
& INTERNAL CONTROL
War-related Risks
Having examined the existing and potential im-
plications of the war for the Ukraine located
businesses, the management of the Group
have identified several points of specific con-
cern that require careful analysis and assess-
ment. 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 fi-
nancing;
The Group places top priority on the person-
nel’s health and safety issues. All possible ac-
tion has been taken to minimize the existing
threats and support the staff during this dra-
matic period. The HR department on a daily ba-
sis keeps record of the location of each em-
ployee 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 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 bel-
arus, including those introduced or published
by various countries and organizations. In addi-
tion, the Group refrains from contacting individ-
uals or entities on the sanctions list. In this sit-
uation, 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
located in Kyiv region, in Fastivskyi and Bi-
lotserkivskyi districts, where no severe hostili-
ties took place. The poultry houses in Vasilkiv
and Stavyshche, as well as the egg-
processing factory in Vasilkiv, remain physi-
cally 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 fac-
tory 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 production facilities are intact and
operating, administrative building sustained
minor surficial damage.
The supporting facilities accommodating hatch-
ery, poultry houses for parent flock and young
layers have not been affected and are being
used in accordance with the technological pro-
cess.
All Group inventory is in good condition and in
safe storage.
2023 ANNUAL REPORT
23
1
MANAGEMENT REPORT
RISK MANAGEMENT
& INTERNAL CONTROL
War-related Risks
The Group has historically relied on the sup-
pliers located in the central part of Ukraine,
which implies efficient logistics and reasona-
bly prompt deliveries to the production sites.
Major contractors have not been affected by
the hostilities and continue to fulfill their con-
tractual obligations.
The military action had no critical impact on
the local distribution. The main distribution
channel for the egg segment is the large na-
tional retail chains. Geographically the sales
are concentrated in the central part of the
country. The share of sales in the most af-
fected regions does not exceed 10%;
export sales reduced significantly. Since the
start of the military campaign, the Group
faced significant obstacles to export activi-
ties due to the serious disruptions in logis-
tics. In particular, seizure of Odessa port op-
erations cut access to the Middle East mar-
kets, where the commodities were shipped
by sea. Overland deliveries to the EU coun-
tries 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 sup-
plements, vaccines, spare parts of produc-
tion equipment. These items are included in
the list of “critical imported goods” (as de-
fined 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 disci-
pline. 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 facili-
ties 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 foreseea-
ble 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;
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 num-
ber of internally displaced persons tem-
porarily reside;
the prescheduled repayments of main
debt have been planned to be resched-
uled to a later dates based on mutual
agreements with the banks.
24
2023 ANNUAL REPORT
SHAREHOLDERS
MANAGEMENT REPORT
1
& SHARE INFORMATION
Share Capital Structure
At 31 December 2023 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 2023, 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 Decem-
ber “.
KEY QUOTATION INDICATORS
SHARE CAPITAL STRUCTURE AT DEC-31
Shareholders
2023
2022
2021
Prime One Capital Ltd 66% 68% 68%
Generali
-
12%
11%
Fairfax Financial
Holdings Ltd
30% 9% 10%
Aviva
-
5%
5%
Others
5%
6%
6%
Total
100%
100%
100%
SHARE PRICE DYNAMICS IN 2023
OVO vs WIG-index
……………………………
Borys Bielikov
…………………………..
Vitalii Veresenko
……………………………….
Karen Arshakyan
Chief Executive Officer,
Chairman of the Board,
Head of Audit Committee,
Executive Director
Non-executive Director
Non-executive Director
…..……………………….
……………………………….
Markiyan Markevych
Vitalii Sapozhnik
Non-executive Director
Chief Financial Officer
Q4’22
Q3’22
Q2’22
Q1’22
OVO
WIG
2022 2021
68 83
68 88
38 66
45 68
2023
45
80
40
73
Share price, PLN
Opening
Maximum
Minimum
Closing
2023 ANNUAL REPORT
25
CORPORATE
GOVERNANCE
REPORT
2
2023 ANNUAL REPORT
26
2
CORPORATE GOVERNANCE REPORT
BOARD OF DIRECTORS
Composition of the Board
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 Rec-
ommendation 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 execu-
tive director performs duties of the Chief Executive officer.
The following composition of the Board of the Company was approved by the General Meeting
on July 14, 2023:
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 —
2023 ANNUAL REPORT
27
2
CORPORATE GOVERNANCE REPORT
BOARD OF DIRECTORS
Composition of the Board
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 Company’s re-domiciliation from the Netherlands to Cyprus. Mr Ar-
shakyan has a degree in Economics and Management of Agriculture
from Institute of Agriculture of Armenia. His work record includes com-
panies in Armenia, Canada and Cyprus.
Mr. Veresenko is at GC "Ovostar Union" since 1999. Till 2001 – Gen-
eral Director at CJSC "Malynove", and since 2001 up to now – Head of
the Supervisory Board of "Malynove" CJSC. Mr. Veresenko has diplo-
ma as automated management systems engineer of Kiev Air Defense
Radio Technical Engineers 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 hold-
ing the position of group Chief Executive Officer. Mr. Bielikov gained
the education as an aircrafts operation mechanic engineer at National
Aviation University (1994).
Markiyan Markevych is a Principal and President of Crossways MK
Consulting, 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
2023 ANNUAL REPORT
28
2
CORPORATE GOVERNANCE REPORT
BOARD OF DIRECTORS
Terms of Reference
REPRESENTATION
Members of the Board represent Ovostar Union
Group and the Board has the authority to ap-
point any official as a representative, and to de-
termine 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 conflict-
ed director may not participate in the decision-
making process concerning the matter causing
the conflict. Members of the Board are appoint-
ed and may be suspended or dismissed from
their position by the General Meeting of Share-
holders.
At each annual general meeting of the Compa-
ny 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 retir-
ing by rotation) shall be appointed (or reap-
pointed) 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 meet-
ing, notice executed by a Qualified Member has
been given to the Company of that member’s
intention to propose that individual for appoint-
ment (or reappointment) as director (stating the
particulars which would, if he were so appoint-
ed, be required to be included in the Compa-
ny’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 MEM-
BERS 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 re-
quirements of the EU Market Abuse Directive
and the company’s Insider Trading Rules, re-
flecting the essence of EU Market Abuse Di-
rective, 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 DIREC-
TORS
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 direc-
tor 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.
2023 ANNUAL REPORT
29
2
CORPORATE GOVERNANCE REPORT
BOARD OF DIRECTORS
Board of Directors meetings
In 2023 the Board of Directors held four (4) meetings. Due to the restrictions imposed on public
gatherings and international travelling the meetings were arranged in the form of teleconfer-
ences on conditions 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 2023 were
as follows:
24-APR-2023 Comments on the auditing process by Baker Tilly Klitou & Partners
and Independent Auditor’s Report;
Approval of the Group’s 2022 annual report together with 2022 an-
nual financial statements.
15-MAY-2023 Brief overview of the financial results of the Group for the Q1 2023.
Consideration and approval of the Company’s unaudited consoli-
dated condensed interim Financial Statements for the three months
ended 31 March 2023.
28-AUG-2023 The unaudited condensed consolidated financial statements of the
Company for the six months ended 30 June 2023 were reviewed
and considered and it was unanimously resolved that these finan-
cial 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 consolidated financial statements and Ovostar Union
PCL individual financial statements for the year ended 31 Decem-
ber 2023.
29-NOV-2023 The unaudited condensed consolidated financial statements of the
Company for the nine months ended 30 September 2023 were re-
viewed and considered and it was unanimously resolved that these
financial statements be approved and adopted.
2023 ANNUAL REPORT
30
2
CORPORATE GOVERNANCE REPORT
BOARD OF DIRECTORS
Audit Committee
The Board of Directors has established an Audit
Committee in order to meet the necessary cor-
porate 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 Di-
rectors in the areas of, among other things, the
completeness of financial reporting, our finan-
cial strategy, tax planning, including:
(i) functioning of control and internal risk man-
agement 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 exter-
nal auditors, etc.);
(iii) monitoring the compliance of our activities
with the recommendations of internal and exter-
nal auditors;
(iv) interaction with external auditors, including
control of the auditor’s independence, their re-
muneration and provision of any services out-
side the audit scope;
(v) our tax planning policy;
(vi) sources of our funding;
(vii) review of the annual budget and capital in-
vestments of the Group.
At least one of the committee members must be
a financial expert as defined in the CSE Corpo-
rate Governance Code, and all committee
members must be financially literate. Our Audit
Committee satisfies these requirements.
Mr. Karen Arshakyan, a non-executive inde-
pendent 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 2023 the Audit Committee of Ovostar Union
PCL held three (3) meetings.
20-Apr-2023 During the meeting the Audit Com-
mittee reviewed the auditing process for the
year of 2021 and discussed the Group’s Annual
Report for 2022.
25-Aug-2023 Agenda of this meeting included
discussion on 2023 audit process.
15-Nov-2023 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
2023.
REMUNERATION POLICY
On 14 July 2023, by a resolution of the General
Meeting, the limit for the total accumulated
amount of remunerating payable to the mem-
bers of the Board of Directors of the company
for the year 2023 was set at EUR 500 thou-
sand.
2023 ANNUAL REPORT
31
2
CORPORATE GOVERNANCE REPORT
SHAREHOLDERS MEETINGS
General Meetings
The Company shall in each year hold a general
meeting as its annual general meeting. The an-
nual 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 par-
ticipation of the highest possible number of
members.
The directors may, whenever they think fit, con-
vene an extraordinary general meeting in the
same manner or in a manner as near as possi-
ble 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 meet-
ing;
(b) the procedures in respect of the par-
ticipation 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 ap-
point 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;
(d) the Record Date and that only the
members registered as holders of shares con-
ferring the right to attend and vote at the meet-
ing, as at the close of business on the Record
Date, shall be entitled to attend and vote at the
meeting;
(e) where and how the full unabridged
text of the documents to be submitted to the
meeting may be obtained; and
(f) the internet site at which the infor-
mation which is required to be provided to
members as well as the resolutions (if any) pro-
posed 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 no-
tice, shall not invalidate the proceedings at that
meeting.
2023 ANNUAL REPORT
32
2
CORPORATE GOVERNANCE REPORT
SHAREHOLDERS MEETINGS
General Meetings
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 gen-
eral meeting, with the exception of declaring a
dividend, the consideration of the accounts, bal-
ance sheets, and the reports of the directors
and auditors, the election of directors in the
place of those retiring, if any, and the appoint-
ment 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 pre-
sent 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 au-
ditors 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 ques-
tions 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 ap-
pointed 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 enti-
tled in favour of and /or against the resolution in
question and/or abstain from voting on the res-
olution 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.
2023 ANNUAL REPORT
33
2
CORPORATE GOVERNANCE REPORT
GOVERNANCE & CONTROL
Corporate Governance Code
The objective of corporate governance is to de-
velop tools supporting efficient management,
effective supervision, respect for shareholders’
rights, and transparent communications be-
tween 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 un-
dertaken 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 Cor-
porate 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 SHARE-
HOLDERS.
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 particu-
larities thereof, considers it expedient to estab-
lish 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 Cor-
porate 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 2023 it complied
with most provisions of the Code, except Provi-
sion Β.1.1. that requires a Remuneration Com-
mittee to be established. The Company under-
takes to eliminate this discrepancy during 2024.
2023 ANNUAL REPORT
34
2
CORPORATE GOVERNANCE REPORT
GOVERNANCE & CONTROL
Corporate Governance Code
WSE CORPORATE GOVERNANCE RULES
Companies listed on the Warsaw Stock Ex-
change are guided by the Rules. In 2016 the
Best Practice for GPW Listed Companies was
updated according to the European Commis-
sion Recommendation of 09 April 2014 on the
quality of corporate governance reporting.
The “Best Practice for GPW Listed Companies
2016” and related regulations apply to issuers
of shares admitted to trading on GPW’s regulat-
ed market. The document is divided into the-
matic sections: Disclosure Policy, Investor
Communications; Management Board, Supervi-
sory Board; Internal Systems and Functions;
General Meeting, Shareholder Relations; Con-
flict of Interest, Related Party Transactions; Re-
muneration.
Each section of the Best Practice opens with a
general description of the goals to be pursued
by listed companies through compliance with
the provisions of the section. The recommenda-
tions that follow require the disclosure of com-
pliance details in a statement of compliance
with the corporate governance principles includ-
ed 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 Euro-
pean Commission, within the limits of its pow-
ers, the Exchange will monitor the companies’
compliance with the corporate governance reg-
ulations with a special emphasis on the quality
of explanations published by companies ac-
cording to the ‘comply or explain’ approach.
DEVIATIONS FROM THE WSE CORPORATE
GOVERNANCE RULES
In 2023 the Company did not comply with the
following requirements of the Code:
Best Practice Principle I.Z.1 - Currently we
have no audio or video recording of a general
meeting published at the company’s website as
all the information related to the general meet-
ing is available in writing at our website.
Additionally, we have not published the internal
rule of changing the company’s auditor as the
company strictly follows guidelines stated in the
Directive 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 pub-
lished the chart describing the division of re-
sponsibilities among the BoDi because their ar-
eas of responsibility 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 Ex-
change Regulations. 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 cor-
porate governance, as well as responds to the
postulates of market participants interested in
increasingly better corporate governance in
listed companies. Compared to the “Best Prac-
tice of WSE Listed Companies 2016”, the cur-
rent editorial has been shortened and simpli-
fied. The accessible and concise language and
clear structure of DPSN2021 are intended to
make it easier for issuers and investors to inter-
pret the principles correctly, facilitating the wid-
est application and formulating the best possi-
ble explanations. Additional support in this re-
gard is provided by guidance on the application
of the Good Practice, edited 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 inten-
tions of the authors of the Best Practice in for-
mulating specific principles and will indicate to
issuers and investors what conditions must be
met to deem a given principle applicable.
2023 ANNUAL REPORT
35
2
CORPORATE GOVERNANCE REPORT
NON-FINANCIAL
INFORMATION
Disclosure
According to the Directive 2014/95/EU of the
European Parliament and of the Council of 22
October 2014 we as a public entity with more
than 500 employees are obliged to make the
appropriate disclosure, providing information on
the environmental, social and employee mat-
ters, 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 Con-
duct (Annex 2.5 to the Corporate Governance
Rules available in writing at our website.
ENVIRONMENTAL MATTERS
The Company is committed to conducting its
operations 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 compliance programs to en-
sure the minimum adverse impact on the envi-
ronment. Such procedures and programs are
periodically being reviewed and appraised.
SOCIAL AND EMPLOYEE MATTERS
The Company recruits, employs and promotes
employees on the sole basis of their qualifica-
tions and abilities (including reputation and reli-
ability). The Company endeavors to enable
each individual to develop his or her talents in
various ways (including, when appropriate,
through training programs).
The Company considers safe and healthy work-
ing conditions for its employees to be funda-
mental. The Company believes that good com-
munication 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 Com-
pany. The Company recognizes that Corporate
Social Responsibility is an integral part of its
business practice and strategy. The Company
is therefore committed to running its business
to ethical, legal and professional standards.
We respect human rights as an absolute and
universal standard. In countries where the
Company operates, human rights of our em-
ployees are supported as appropriate in ac-
cordance with what reasonably can be ex-
pected from a similar commercial organization.
Furthermore, the Company refrains from dis-
crimination on any basis. As a result of the
above, respect for people forms a cornerstone
of our Company Values.
36
2023 ANNUAL REPORT
CORPORATE GOVERNANCE REPORT
2
NON-FINANCIAL
INFORMATION
Disclosure
ANTI-CORRUPTION AND BRIBERY MAT-
TERS
In dealing with customers and suppliers, which
may include governmental bodies, the Compa-
ny expects its managers and employees neither
to give nor to receive bribes or anything of val-
ue in order to retain or bestow business or fi-
nancial 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 provid-
ing reasonable business entertainment in the
course of the Company's business is accepta-
ble.
The Company does not participate in party poli-
tics or makes payments to political parties or to
the funds of groups whose activities are di-
rected at promoting a party’s political interests.
When dealing with governments or governmen-
tal 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 re-
quests from governments and other agencies
for legitimate and relevant information, observa-
tions or opinions on issues relevant to its busi-
ness and to participate in the development of
proposed legislation or regulations in areas
which may have an effect on its legitimate inter-
ests.
……………………………
Borys Bielikov
…………………………..
Vitalii Veresenko
……………………………….
Karen Arshakyan
Chief Executive Officer,
Chairman of the Board,
Head of Audit Committee,
Executive Director
Non-executive Director
Non-executive Director
…..……………………….
……………………………….
Markiyan Markevych
Vitalii Sapozhnik
Non-executive Director
Chief Financial Officer
2023 ANNUAL REPORT
37
FINANCIAL
STATEMENTS
3
CONSOLIDATED FINANCIAL STATEMENTS
3
2023 ANNUAL REPORT
38
STATEMENT
Of Directors Responsibility
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 2023 and comprise the consolidated statements of profit or loss and other comprehensive
income, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements,
including a summary of significant 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 relation 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, together with a description of the principal risks and
uncertainties that faces.
6 June 2024
……………………………
Borys Bielikov
…………………………..
Vitalii Veresenko
……………………………….
Karen Arshakyan
Chief Executive Officer,
Chairman of the Board,
Head of Audit Committee,
Executive Director
Non-executive Director
Non-executive Director
…..……………………….
……………………………….
Markiyan Markevych
Vitalii Sapozhnik
Non-executive Director
Chief Financial Officer
CONSOLIDATED FINANCIAL STATEMENTS
3
2023 ANNUAL REPORT
39
Consolidated statement of comprehensive income
For the year ended 31 December 2023 (in USD thousand, unless otherwise stated)
12 month ended
12 month ended
Note
31 December 2023
31 December 2022
Revenue from contracts with customers
8
Changes in fair value of biological assets
17
(23 453 )
(26 287 )
Cost of sales
9
(76 455 )
(86 574 )
Gross profit
Other operating income
12
Selling and distribution costs
10
(12 409 )
(12 081 )
Administrative expenses
11
(3 600 )
(3 757 )
Other operating expenses
13
(508 )
(186 )
Operating profit
Finance costs
14
(667 )
(555 )
Finance income
15
Other expenses
7
(265 )
Foreign exchange (loss)/gain, net
(274 )
Profit before tax
Income tax expense
16
(5 818 )
(504 )
Profit for the period
Other comprehensive income
Exchange differences on translation to presentation currency
(3 780 )
(27 879 )
Other comprehensive income for the period, net of tax
(3 780 )
(27 879 )
Total comprehensive income for the period, net of tax
(21 792 )
Profit for the period attributable to:
Equity holders of the parent company
Non-controlling interests
(159 )
Total profit for the period
Other comprehensive income attributable to:
Equity holders of the parent company
(3 784 )
(27 769 )
Non-controlling interests
(110 )
Total other comprehensive income
(3 780 )
(27 879 )
Total comprehensive income attributable to:
Equity holders of the parent company
(21 523 )
Non-controlling interests
(269 )
Total comprehensive income
(21 792 )
Earnings per share:
Equity holders of the parent company
Basic and diluted, profit for the period attributable to ordinary
equity holders of the parent (USD per share)
……………………………
Borys Bielikov
…………………………..
Vitalii Veresenko
……………………………….
Karen Arshakyan
Chief Executive Officer,
Chairman of the Board,
Head of Audit Committee,
Executive Director
Non-executive Director
Non-executive Director
…..……………………….
……………………………….
Markiyan Markevych
Vitalii Sapozhnik
Non-executive Director
Chief Financial Officer
CONSOLIDATED FINANCIAL STATEMENTS
3
2023 ANNUAL REPORT
40
Consolidated statement of financial position
For the year ended 31 December 2023 (in USD thousand, unless otherwise stated)
Note 31 December 2023 31 December 2022
Assets
Non-current assets
Biological assets
17
Property, plant and equipment and intangible assets
18
Deferred tax assets
16
Total non-current assets
Current assets
Inventories
19
Biological assets
17
Trade and other receivables
20
Prepayments to suppliers
Prepayments for income tax
Cash and cash equivalents
21
Total current assets
Total assets
Equity and liabilities
Equity
Issued capital
22
Share premium
22
Foreign currency translation reserve
(157 481 )
(153 697 )
Retained earnings
Result for the period
Equity attributable to equity holders of the
parent
Non-controlling interests
7
Total equity
Non-current liabilities
Interest-bearing loans and other financial
liabilities
23
Deferred income
12
Deferred tax liability
16
Total non-current liabilities
Current liabilities
Trade and other payables
24
Income tax payable
Deferred income
12
Advances received
Interest-bearing loans and other financial
liabilities
23
Total current liabilities
Total liabilities
Total equity and liabilities
……………………………
Borys Bielikov
…………………………..
Vitalii Veresenko
……………………………….
Karen Arshakyan
Chief Executive Officer,
Chairman of the Board,
Head of Audit Committee,
Executive Director
Non-executive Director
Non-executive Director
…..……………………….
……………………………….
Markiyan Markevych
Vitalii Sapozhnik
Non-executive Director
Chief Financial Officer
CONSOLIDATED FINANCIAL STATEMENTS
3
2023 ANNUAL REPORT
41
Consolidated statement of changes in equity
For the year ended 31 December 2023 (in USD thousand, unless otherwise stated)
Issued
capital
Share
premium
Foreign
currency
translatio
n reserve
Retained
earnings
Result for
the
period
Total
Non-
controlling
interests
Total equity
As at 31 December 2021
(125 912 )
Profit for the period
-
-
-
-
(159 )
Other comprehensive income
-
-
(27 769 )
-
-
(27 769 )
(110 )
(27 879 )
Total comprehensive income
-
-
(27 769 )
-
(21 523 )
(269 )
(21 792 )
Allocation of prior period result
-
-
-
(1 690 )
-
-
-
Dividends
-
-
-
(4 176 )
-
(4 176 )
-
(4 176 )
Exchange differences
-
(16 )
-
-
-
-
-
As at 31 December 2022
(153 697 )
Profit for the period
-
-
-
-
Other comprehensive income
-
-
(3 784 )
-
-
(3 784 )
(3 780 )
Total comprehensive income
-
-
(3 784 )
-
Allocation of prior period result
-
-
-
(6 246 )
-
-
-
As at 31 December 2023
(157 481 )
……………………………
Borys Bielikov
…………………………..
Vitalii Veresenko
……………………………….
Karen Arshakyan
Chief Executive Officer,
Chairman of the Board,
Head of Audit Committee,
Executive Director
Non-executive Director
Non-executive Director
…..……………………….
……………………………….
Markiyan Markevych
Vitalii Sapozhnik
Non-executive Director
Chief Financial Officer
CONSOLIDATED FINANCIAL STATEMENTS
3
2023 ANNUAL REPORT
42
Consolidated statement of cash flows
For the year ended 31 December 2023 (in USD thousand, unless otherwise stated)
Note
12 month ended
12 month ended
31 December 2023
31 December 2022
Operating activities
Profit before tax
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
Disposal of property, plant and equipment
(30 )
(18 )
Disposal of biological assets
Loss on impairment of goodwill
Finance income
15
(1 598 )
(132 )
Finance costs
14
Foreign exchange loss/(gain)
(3 107 )
Recovery of assets previously written-off
12
(22 )
(22 )
Government subsidies
12
(548 )
(406 )
Impairment of accounts receivable and prepayments to suppliers
Working capital adjustments:
Decrease/(increase) in trade and other receivables
(13 738 )
Decrease/(Increase) in prepayments to suppliers
(288 )
Increase in inventories
(1 969 )
(2 692 )
Increase in trade and other payables and advances received
(148 )
(2 610 )
Cash generated from operating activities
Income tax paid
(2 615 )
(12 )
Net cash flows from operating activities
Investing activities
Purchase of property, plant and equipment
18
(1 008 )
(347 )
Increase in biological assets
17
(12 392 )
(8 789 )
Interest received
Proceeds from the purchase and sale of bonds
Proceeds from sale of property, plant and equipment
Net cash flows used in investing activities
(11 675 )
(8 735 )
Financing activities
Proceeds from borrowings
Repayment of borrowings
(8 442 )
(3 679 )
Interest received
Government subsidies
Interest paid
(667 )
(620 )
Payment of dividends
(4 251 )
Net cash flows used in financing activities
(13 024 )
(1 587 )
Net (decrease)/increase in cash and cash equivalents
Effect from translation into presentation currency
(709 )
Cash and cash equivalents at 01 January
Cash and cash equivalents at 31 December
For translating transactions and balances 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.
……………………………
Borys Bielikov
…………………………..
Vitalii Veresenko
……………………………….
Karen Arshakyan
Chief Executive Officer,
Chairman of the Board,
Head of Audit Committee,
Executive Director
Non-executive Director
Non-executive Director
…..……………………….
……………………………….
Markiyan Markevych
Vitalii Sapozhnik
Non-executive Director
Chief Financial Officer
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 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
Shareholders 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 March 2021 the Company’s registered address is 22 Ierotheou Street, Strovolos, Nicosia 2028, Cyprus .
principal activity 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 and British Virgin Islands
(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 address 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 26.
Total number of employees were presented as follows:
31 December 2023 31 December 2022
Production personnel
1 262
1 214
Administrative personnel
146
153
Total
1 408
1 367
The Group is controlled by the Beneficial Owners – Mr. Borys Bielikov and Mr. Vitalii Veresenko (hereinafter, the
“Beneficial Owners”).
The consolidated financial statements for the year ended 31 December 2023 were authorized by The Board of Directors
on 24 April 2024.
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).
Some of the companies of the Group that are registered in Ukraine 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 disclosed 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. Today the war continues and its duration is unknown. 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 management
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
44
of the Group have identified several points of specific concern that require careful analysis and assessment. 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’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, remain physically undamaged and keep operating;
• the supporting facilities accommodating hatchery, poultry houses for parent flock and young layers have not
been affected 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 continue 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%;
• 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’s management continue to fulfill their duties without interruptions.
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
foreseeable future;
• selling, general and administrative and other operating expenses, have been reduced to the minimum required
to meet the primary needs of the Group’s core business;
To date, the Group has repaid the loan obtained under the state business support program in the amount of 90 million
UAH.
In 2023, the Group repaid its loan repayment obligations with OTP and UkrSibbank ahead of schedule. As of today, the
Group has no liquidity problems.
After the start of a full-scale invasion, the Company was forced to reduce the herd in order to optimize the production
and sale of its products. In Today, the Company's management to actively restore herd.
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:
• 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;
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
45
• road logistics routes that exist today will continue to be available;
• egg production for 2024 will be 1.648 million ( 1,573 million forecast in 2023);
• сapital investments for 2024 are planned in the amount of 2.2 million dollars (the fact for 2023 is 1.1 million
dollars).
The developments of ongoing military offensive of the Russian Federation including their magnitude, intensity or the
potential timing of the cessation of those actions are uncertain. The unpredictability of the further war development and its
potentially significant magnitude represent a material uncertainty which may cast significant doubt about the ability of the
Group to continue as going concern.
Despite the existing uncertainties arising from the future development of the military invasion, the management believes
the
above described analysis gives grounds to state that during at least 12 months 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
assumptionis applied to the financial statements for the year ended 31 December 2023.
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 manages
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 comparatives) 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 2023 and 2022, the exchange rate had`nt 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
decided to translate income and expense items at average quarterly rates. On consolidation, the assets and liabilities of the
subsidiaries 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”.
Relevant exchange rates are presented as follows:
Closing rate as at
31 December 2023
Closing rate as at
31 December 2022
USD/UAH
37,9824
36,5686
EUR/UAH
42,2079
38,9510
USD/PLN
3,9398
4,3923
USD/EUR
0,9061
0,9347
USD/RON
4,4769
-
Average rate
1-st quarter
2023
2-nd quarter
2023
3-rd quarter 2023
4-th quarter
2023
USD/UAH
36,5686
36,5686
36,5686
36,5942
EUR/UAH
39,2233
39,8205
39,8364
39,3628
USD/PLN
4,3924
4,1781
4,1367
4,1086
USD/EUR
0,9323
0,9188
0,9192
0,9295
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
46
Average rate
1-st quarter
2022
2-nd quarter
2022
3-rd quarter 2022
4-th quarter
2022
USD/UAH
36,5686
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
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.
3. Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31
December 2023. 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
circumstances 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 subsidiary 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:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
47
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
discounted 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
expectations. The plans take into account all relevant characteristics of poultry farming, including egg production, volume of
egg processing, prices for main components of mixed fodder. Thus, the production capacity is the basis for forecasting the
future production 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
impairment 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.
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 expectations.
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.
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
estimates 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 result 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
believes 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
categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
48
to the fair value measurement 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 unobservable.
Although some of these assumptions are obtained from published market data, the majority of these assumptions are
estimated 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, 29.
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 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 allowance for all trade and other receivables and contract assets. Cash and cash equivalents are also subject
to the impairment requirements of IFRS 9. No impairment of cash and cash equivalents was identified.
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
expectations 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 deductible temporary differences to the extent that it is probable that taxable
profit will be available against which the deductible temporary difference can be utilised. 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
individual asset or liability and the number of instruments held by the entity. This is the case even if a market's normal daily
trading volume 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
consideration 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 1: Measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
49
• Level 2: Valuations techniques with all material inputs observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices), and
• Level 3: Valuations not based on solely observable market data (that is, the measurement requires significant
unobservable inputs).
Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial
instrument. 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
repayments, plus accrued interest, and for financial assets less any write-down for incurred impairment losses. Accrued
interest includes 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.
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 calculation 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
transaction 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 income, 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
purchases 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 differences remain after calibration of model inputs, such differences are amortized on a straight-line basis over the term
of the currency 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: fair value through profit and loss
(FVTPL), fair value through other comprehencive income (FVOCI) and amortized cost (AC). The classification and
subsequent measurement of debt financial assets depends on:
1. The Group's business model for managing the related assets portfolio and
2. the cash flow characteristics of the asset.
As at 31 December 2023 and 31 December 2022 the Group did not hold financial assets at FVTPL and FVOCI.
Financial assets: Classification and subsequent measurement: business model
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
50
The business model reflects how the Group manages the assets in order to generate cash flows - whether the Group’s
objective is:
1. solely to collect the contractual cash flows from the assets ("hold to collect contractual cash flows”) or
2. 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 considered 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 embedded 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.
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
expected credit loss measurement are provided in Note 28.
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
exposures arising from loan commitments and financial guarantee contracts, for contract assets. The Group measures ECL
and recognizes Net impairment losses on financial and contract assets at each 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 period 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
receivables. 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
concluded 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
obtains;
•
the counterparty considers bankruptcy or a financial reorganisation;
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
51
• 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
otherwise expire or (b) the Group has transferred the rights to the cash flows from the financial assets or entered into a
qualifying passthrough 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 contractual 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
derecognizes 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, unless the substance of the difference is attributed to a capital transaction with owners.
In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the
originally agreed payments, the Group compares the original and revised expected cash flows to assets whether the risks
and rewards of the asset are substantially different as a result of the contractual modification. If the risks and rewards do not
change, the modified 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 creditadjusted 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.
5.5. Cash deposits
Cash deposits in the statement of financial position are held for the investment activities. For the purpose of the
consolidated 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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
52
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
activities, 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
previously recognized is recovered by adjusting the items in the income statement. In this case, the carrying amount of
financial investments at the date of recovery of impairment cannot exceed its 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
directly 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
contractual obligations.
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. 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 securities), 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
2023 and 31 December 2022 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
discharged, 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 present value of the cash flows under the new terms, including any fees paid net of any fees received and
discounted using the original 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 recognised 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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
53
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.
5.8.4. 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.
5.8.5. 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.
5.8.6. 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.
5.10. Biological assets
Biological assets represented by the commercial herd and herd replacements are recorded at fair value less estimated
selling 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 biological assets discounted at the appropriate rate.
The Group recognizes a biological asset only where it controls an asset as a result of past events; it is probable that the
economic benefits from the asset will flow to the Group; fair value or cost of an asset can be estimated with reasonable
certainty.
Profit or loss arising on initial recognition of biological assets at fair value less estimated selling and distribution expenses
is included in the consolidated income statement as incurred.
Agricultural products collected from a biological asset are measured at fair value less estimated selling and distribution
expenses. Profit or loss arising on initial recognition of agricultural products at fair value, less estimated selling and
distribution expenses, is recognized in the consolidated statement of comprehensive income.
5.11. Inventories
Inventories consist mainly of raw materials, package and packing materials, agricultural produce and finished goods.
Inventories are valued at the lower of cost and net realisable value.
Cost of goods includes the cost of 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 equipment 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 intentions of the Group's management; (c) initial assessment of the costs of dismantling and removal in
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
54
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
distribution of variable overheads associated with the construction and prepayments for the property, plant and equipment.
Construction 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 property, 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
straightline 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 - 10 years
Construction in progress and uninstalled equipment
No depreciation
The residual value, useful life and depreciation method are reviewed at the end of each financial year. Impact of any
changes 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
difference 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 impairment exist due to depreciation. If any such indication exists, the expected recoverable amount of an asset is
estimated to determine the amount of impairment losses, if any.
In order to determine the impairment losses, assets are grouped at the lowest levels for which it is possible to identify
separately 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 assessing the value of an asset in use, the estimated future cash flows associated with the asset, are discounted to their
present value 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 carrying 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 increased 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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
55
assets are not capitalized and expenditure is reflected in the income statement in the year in which the expenditure is
incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are 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
substantial 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 lessee 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.
Assets and liabilities arising from a lease are initially measured on a present value basis. The measurement includes
noncancellable 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 initial 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
estimate 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
provision 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
reim-bursed by a third party, the receivables are recognized as an asset if there is actual assurance that such reimbursement
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
56
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
transaction 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
payment 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
20). 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
consideration 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
require the exercise of judgment.
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.
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
57
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
obligations 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
calculated on the basis of financial results for the year adjusted to items that are not included in taxable income or that cannot
be attributed 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.
Assets and liabilities on deferred income tax are offset when: a) the Group has a legally enforceable right to offset the
recognized 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.
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
shipping goods to the customer or the date of receiving payment from the customer. VAT input is the amount that a taxpayer
is entitled 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.
For more details on VAT rates see note 27
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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
58
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 conditions attached to the grants are not met at the reporting date, the received funds are recorded in the Group’s
consolidated financial statements as deferred income.
Other government grants are recognised at the moment when the decision to disburse the amounts to the Group is
made.
Government grants are not recognised 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 transaction not only their legal form.
5.25. Reclassification
Certain comparative information presented in the consolidated financial statements for the year ended 31 December
2023 has been revised in order to achieve comparability with the presentation used in the consolidated financial statements
for the year ended 31 December 2022. Such reclassifications and revisions were not significant to the Group`s consolidated
financial statements.
6. New and amended standards
The following amended standards became effective from 1 January 2023, but did not have any material impact on the
Group:
• IFRS 17 – Insurance Contracts and Amendments to IFRS 17;
• Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies;
• Amendments to IAS 8 – Definition of Accounting Estimates;
• Amendments to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction;
• Amendments to IAS 12 – International Tax Reform – Pillar Two Model Rules.
Certain comparative information presented in the consolidated financial statements for the year ended 31 December
2023 has been revised in order to achieve comparability with the presentation used in the consolidated financial statements
for the year ended 31 December 2022. Such reclassifications and revisions were not significant to the Group`s consolidated
financial statements.
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.
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:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
59
IFRS
Effective date:
Amendments to IFRS 10 and IAS 28 – Sale or contribution of assets
between an investor and its associate or joint venture
Deferred indefinitely / Available for optional
adoption
Amendments to IAS 1 – Classification of Liabilities as Current or Non-current
1 January 2024
Amendments to IAS 1 – Non-current Liabilities with Covenants
1 January 2024
Amendments to IAS 7 and IFRS 7 – Supplier Finance Arrangements
1 January 2024
Amendments to IFRS 16 – Lease Liability in a Sale and Leaseback
1 January 2024
Amendments to IAS 21 – Lack of Exchangeability
1 January 2025
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
60
7. Subsidiaries and Non-controlling interests
As at 31 December 2023 and 2022 the Group included the following subsidiaries:
Name of the company
Business activities
31 December 2023
31 December
2022
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%
Private Joint Stock Company
“Poultry Farm Ukraine”
Production of shell eggs, assets holding (Ukraine)
92,0%
92,0%
Private Joint Stock Company
“Malynove”
Production of shell eggs, assets holding (Ukraine)
94,0%
94,0%
Private 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)
0,0%
100,0%
OAE Food Trade FZE
Trade company (United Arab Emirates)
100,0%
100,0%
REMEDIUM FOODS B.V.**
Egg processing, distribution of egg
50,0%
50,0%
OVOSTAR ROMANIA S.R.L.***
Trade company (Romania)
51,0%
0,0%
FARM FRESH S.R.L.****
Trade company (Romania)
100,0%
0,0%
* Company has been strucc off from the BVI Government Register.
** 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 investments in this company are accounted for using the equity method. There were no
significant changes in value as of 31 December 2023.
*** In the second half of 2023, the Group established a company in Romania with a 51% ownership share with the aim
of expanding its activities in Europe. As of December 31, 2023, there was no activity for the company.
**** In December 2023, the company acquired 100% of the shares of the company located in Romania. Below are the
company's net assets at the time of acquisition, as well as the cost of acquisition.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
61
Fair value recognized on
acquisition
Assets
Property, plant and equipment and intangible assets
46
Inventories
26
Trade and other receivables
16
Cash and cash equivalents
2
Total
90
Liabilities
Trade and other payables
354
Total
354
Total identifiable net assets measured at fair value
(264)
Goodwill arising on acquisition
265
Consideration transferred upon acquisition
1
Based on the above, the investments in this company are accounted for using the equity method. There were no
significant changes in value as of 31 December 2023.
Upon acquisition, the goodwill was fully impaired, impairment loss was recognised as part of "other expenses".
The following tables summarize the information relating to each of the Group`s subsidiaries that has material NCI, before
any intragroup elimination:
31 December 2023
PJSC
“Poultry
Farm
Ukraine”
PJSC
“Malynove”
PJSC
“Krushynskyy
Poultry
Complex”
"SIA"
Ovostar
Europe"
SIA
"Gallusman"
SIA
"EPEX"
Total
NCI percentage
8,47%
5,69%
23,64%
11,0%
11,0%
11,0%
Non-current assets
333
8 921
1
2
43
1
Current assets
3 743
90
385
28 977
10 151
119
Non-current liabilities
-
(1 531)
-
-
-
-
Current liabilities
(1 966)
(9 598)
(9)
(26 866)
(9 688)
(53)
Net assets
2 110
(2 118)
377
2 113
506
67
Carrying amount of NCI
179
(120)
89
232
56
7
443
Revenue
90
623
-
64 446
-
-
Profit (loss)
(19)
(125)
(4)
2 033
103
59
OCI
(82)
82
(15)
64
20
1
Total comprehensive
income
(101)
(43)
(19)
2 097
123
60
Profit allocated to NCI
(2)
(7)
(1)
224
11
6
231
OCI allocated to NCI
(7)
5
(3)
7
2
-
4
Cash flows from operating
activities
-
7
-
1 251
36
107
Cash flows from
investment activities
-
-
-
15 972
-
-
Effect from translation into
presenta-tion currency
-
-
-
364
7
2
Net (decrease)/ increase
in cash and cash
equivalents
-
7
-
17 586
43
109
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
62
31 December 2022
PJSC
“Poultry
Farm
Ukraine
”
PJSC
“Malynove
”
PJSC
“Krushynsky
y Poultry
Complex”
"SIA"
Ovostar
Europe
"
SIA
"Gallusman
"
SIA
"EPEX
"
Total
NCI percentage
8,47%
5,69%
23,64%
11,0%
11,0%
11,0%
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
8. Segment information
All of the Group’s production 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
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:
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 performance.
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 2023 and 2022:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
63
12 month ended 31 December 2023
Operations segment
Egg
Egg products
Total
Revenue from contracts with
customers
183 811
99 880
283 691
Inter-segment revenue
(73 746)
(47 439)
(121 185)
Revenue from external buyers
110 065
52 441
162 506
Profit before tax
27 263
23 530
50 793
12 month 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
For the year ended 31 December 2023 and 2022 no sales were settled by barter transactions.
Segment assets, liabilities and other information regarding segments as at 31 December 2023 and 2022 were presented
as follows:
31 December 2023
Operations segment
Egg
Egg
products
Total
Total segment assets
110 251
31 955
142 206
Total segment liabilities
15 585
1 505
17 090
Addition to property, plant and equipment and intangible assets
823
275
1 098
Net change in fair value of biological assets and agricultural produce
(23 453)
-
(23 453)
Depreciation and amortization
(2 824)
(534)
(3 358)
Interest income
1 360
238
1 598
Interest on debts and borrowings
(667)
-
(667)
Income tax expense
(5 317)
(501)
(5 818)
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
222
538
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)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
64
The Group presented disaggregated revenue based on the type of goods or services provided to customers and the
geographical 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
reportable segment.
Set out below is the disaggregation of the Group’s revenue from contracts with customers:
12 month ended 31 December 2023
Operations segment
Egg
Egg
products
Total
Type of goods or service
Goods
109 654
52 336
161 990
Services
411
105
516
Total revenue from contracts with customers
110 065
52 441
162 506
Geographical markets
Ukraine
65 325
22 564
87 889
European Union
35 538
27 754
63 292
Middle East
6 748
1 514
8 262
Asia
2 356
493
2 849
Africa
98
48
146
CIS
-
68
68
Total revenue from contracts with customers
110 065
52 441
162 506
12 month 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
Middle East
4 515
1 741
6 256
European Union
21 150
19 752
40 902
CIS
-
35
35
Asia
6 036
459
6 495
Africa
-
50
50
Total revenue from contracts with customers
95 623
40 003
135 626
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
65
9. Cost of sales
12 month ended
31 December 2023
12 month ended
31 December
2022
Costs of inventories recognised as an expense
(54 924)
(65 242)
Packaging costs
(9 127)
(9 552)
Cost of goods purchased for resale
(1 375)
(215)
Wages, salaries and social security costs
(6 654)
(6 521)
Amortisation, depreciation and impairment
(3 098)
(3 535)
Other expenses
(1 277)
(1 509)
Total
(76 455)
(86 574)
10. Selling and distribution costs
12 month ended
31 December 2023
12 month ended
31 December 2022
Transportation expenses
(8 081)
(9 155)
Wages, salaries and social security costs
(1 641)
(1 623)
Cost of materials
(750)
(578)
Marketing and advertising expenses
(282)
(64)
Amortisation, depreciation and impairment
(83)
(94)
Other expenses
(1 572)
(567)
Total
(12 409)
(12 081)
11. Administrative expenses
12 month ended
31 December 2023
12 month ended
31 December 2022
Wages, salaries and social security costs
(1 849)
(1 564)
Legal, audit and other professional fees
(466)
(798)
Service charge expenses
(709)
(866)
Cost of materials
(274)
(210)
Amortisation, depreciation and impairment
(177)
(201)
Other expenses
(125)
(118)
Total
(3 600)
(3 757)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
66
12. Other operating income
Note
12 month ended
31 December 2023
12 month ended
31 December 2022
Income from refund under the special legislation:
Government subsidies
a)
548
406
Total income from refund under the special legislation
548
406
Gain on recovery of assets previously written off
22
22
Insurance compensation
1
-
Gain on disposal of property plant and equipment
30
18
Gain on disposal of other current assets
116
73
Other income
222
28
Total
939
547
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
In case of state compensation of the cost of fixed assets government grants are presented in the statement of financial
position as deferred income, 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
compensations are recognized as other income in the period in which such income is incurred. For the year ended 31
December 2023, such compensations amounted to USD 336 thousand (2022: USD 83 thousand).
The unamortized portion of the government subsidies as of 31 December 2023 is USD 1 734 thousand (31 December
2022: USD 2 012 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
531 thousand as at 31 December 2023 was classified as non-current liabilities.
13. Other operating expenses
12 month ended
31 December
2023
12 month ended
31 December 2022
Impairment of doubtful accounts receivable and prepayments to suppliers
(255)
(10)
Charity
(43)
(65)
Fines and penalties
(49)
(55)
Other expenses
(161)
(56)
Total
(508)
(186)
14. Finance costs
12 month ended
31 December
2023
12 month ended
31 December 2022
Interest on debts and borrowings
(667)
(555)
Total
(667)
(555)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
67
15. Finance income
12 month ended
31 December
2023
12 month ended
31 December 2022
Interest income
1 598
87
Other financial income
-
45
Total
1 598
132
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”
From April 2022 to July 2023, Ovostar Union LLC and Poultry Farm Ukraine PJSC were single tax payers (2% of income)
for the period of martial law and a state of emergency in Ukraine
During the year ended 31 December 2023, 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 2022: at a 18% rate). The deferred
income tax assets and liabilities as of 31 December 2023 were measured based on the tax rates expected to be applied to
the period when the temporary differences are expected to reverse. Income tax in the UAE and Latvia for Group companies
is 0%
The major components of income tax expense for the year ended 31 December 2023 and 2022 were:
12 month ended
31 December 2023
12 month
ended
31 December
2022
Current income tax
(5 739)
(649)
Deferred tax
(79)
145
Income tax benefit/(expense) reported in the income
statementt
(5 818)
(504)
Reconciliation between tax expense and the product of accounting profit multiplied by Ukraine’s domestic tax rate for
the years ended 31 December 2023 and 2022 was as follows:
12 month ended
31 December 2023
12 month
ended
31 December
2022
Accounting profit before income tax
50 793
6 591
At Ukraine’s statutory income tax rate of 18
9 143
1 186
Tax effect of:
Profits exempt from income tax
(4 238)
(307)
Utilisation of previously unrecognised tax losses
10
(962)
Effect of expenses that are not deductible in determining taxable
profit
899
510
Effect of translation to presentation currency
4
77
Income tax expense/(benefit)
5 818
504
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
68
Deferred tax
As at 31 December 2023 and 2022, deferred tax assets and liabilities comprised the following:
31 December
2023
Recognized
in
statement
of
comprehensi
ve
income
Effect
of
translation
into
presentation
currency
31
December
2022
Advances received and other payables
12
12
1
(1)
Prepayments to suppliers
28
8
(2)
22
Trade and other receivables
12
(120)
(5)
137
Inventories
214
21
(7)
200
Tax losses
82
10
(3)
75
Unrecognized deferred tax assets
(270)
(31)
9
(248)
Netted off against deferred tax assets
78
(100)
(7)
185
Property, plant and equipment and intangible assets
(223)
(5)
8
(226)
Trade and other receivables
(6)
15
1
(22)
Advances received and other payables
(9)
11
1
(21)
Netted off against deferred tax liabilities
(238)
21
10
(269)
Net deferred tax asset/(liability)
(160)
(79)
3
(84)
31 December
2022
Recognized in
statement of
comprehensive
income
Effect
of
translation
into
presentation
currency
31
December
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)
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.The following amounts,
determined after appropriate offsetting, are presented in the consolidated statement of financial position as at 31 December
2023 and 2022:
31 December 2023 31 December
2022
Non-current assets
78
185
Long term liabilities
(238)
(269)
Net deferred tax asset/(liability)
(160)
(84)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
69
17. Biological Assets
31 December 2023
31 December 2022
Number,
thousand
heads
Carrying
value
t
Number,
housand
heads
Carrying
value
Non-current biological assets
Replacement poultry
Hy-line
3 634
9 118
2 642
15 017
Total non-current biological assets
3 634
9 118
2 642
15 017
Current biological assets
Commercial poultry
Hy-line
4 093
3 232
4 601
10 119
Total current biological assets
4 093
3 232
4 601
10 119
Total biological assets
7 727
12 350
7 243
25 136
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 2023 and 2022
was presented as follows:
2023
2022
As at 01 January
25 136
60 538
Increase in value as a result of assets acquisition
715
241
Increase in value as a result of capitalization of cost
11 677
8 548
Income/(Losses) from presentation of biological assets at fair value
(23 453)
(26 287)
Decrease in value as a result of assets disposal
(1 250)
(1 842)
Exchange differences
(475)
(16 062)
As at 31 December
12 350
25 136
For the year ended 31 December 2023 the Group produced shell eggs in the quantity of 1 531 mln (31 December 2022:
1 546 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 25,5% (31 December 2022: 51.6%). Management supposes
that sale price and production 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 agricultural 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 calculation of fair value of biological assets as at 31 December 2023.
Value measurement is a maximum value exposed to the following assumptions which were used in fair value
calculations of biological assets:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
70
Assumption as at
Assumption as at
31 December 2023
31 December 2022
Eggs sale price, USD per item (UAH per item)
0,058 (2,22)
0,104 (3,80)
Discount rate, %
25,47%
51,60%
Short-term inflation rate of Ukrainian hrivnya, %
9%
28%
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:
12 month ended
12 month ended
31 December 2023
31 December 2022
1% decrease in egg sale price
(506)
(541)
1% increase in egg sale price
506
541
1% increase in discount rate
(158)
(299)
1% decrease in discount rate
161
304
1% increase in short-term inflation rate of Ukrainian hrivnya
(20)
(15)
1% decrease in short-term inflation rate of Ukrainian hrivnya
20
15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
71
18. Property, plant and equipment and intangible assets
Buildings
Plant
and
equipment
Vehicles
Furnitur
e and
fittings
Construction
in
progress
and
uninstalled
equipment
Intangible
assets
Total
Cost or valuation
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
Additions
12
441
345
41
257
2
1 098
Transfer
2
110
6
26
(144)
-
-
Disposals
-
(97)
(39)
(23)
(45)
-
(204)
Currency translation
difference
(662)
(1 181)
(67)
(35)
(81)
(2)
(2 028)
As at 31 December 2023
17 114
30 672
1 721
928
2 190
59
52 684
Depreciation and
amortization
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)
Charge for the year
(789)
(2 277)
(148)
(133)
-
(11)
(3 358)
Disposals
-
50
36
22
-
-
108
Currency translation
difference
265
622
39
26
-
2
954
As at 31 December 2023
(6 868)
(16 129)
(998)
(703)
-
(50)
(24 748)
Net book value
As at 31 December 2021 16 598 25 311
762
339
3 354
19
46 383
As at 31 December 2022
11 418
16 875
551
301
2 203
18
31 366
As at 31 December 2023
10 246
14 543
723
225
2 190
9
27 936
Taking into account the situation in the country, the Group performed an impairment test for property, plant and
equipment as of 31 December 2022, no impairment was recognised as the recoverable amount of property, plant and
equipment exceeded their carrying amount. As at 31 December 2023 the Group has not identified any indications of
impairment, no impairment test was prepared.
As at 31 December 2023 construction in progress and uninstalled equipment also included prepayments for the
property, plant and equipment which amounted to USD 105 thousand (2022: USD 84 thousand).
As at 31 December 2023, property, plant and equipment included fully depreciated assets with the original cost of USD
5 349 thousand (2022: USD 3 964 thousand).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
72
19. Inventories
31 December 2023 31 December 2022
Raw materials
4 122
4 371
Agricultural produce and finished goods
5 763
4 183
Package and packing materials
2 360
1 952
Work in progress
126
215
Other inventories
1 202
1 304
Less: impairment of agricultural produce and finished goods
(12)
(12)
Total
13 561
12 013
20. Trade and other receivables
31 December 2023 31 December 2022
Trade receivables
12 654
13 344
VAT for reimbursement
507
744
Other accounts receivable
350
12 807
Credit loss allowance
(315)
(88)
Total
13 196
26 807
The changes in the allowance for expected credit losses on accounts receivable and contract assets are as follows:
2023
2022
As at 01 January
88
150
Allowance for expected credit losses
225
(17)
Debt write-off
(3)
(8)
Currency translation difference
5
(37)
As at 31 December
315
88
Other accounts receivable include a loan in the amount of USD 12 753 thousand issued by Prime One Capital with a
maturity 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
customers the Group grants credit for up to 45-180 days.
Trade and other receivables net of impairment loss provisions denominated in the following currencies:
31 December 2023 31 December 2022
UAH
8 782
9 226
USD
65
1 884
RON
16
-
EUR
4 333
15 697
Total
13 196
26 807
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
73
21. Cash and cash equivalents
31 December 2023 31 December 2022
Cash in banks
72 494
12 171
Cash on hand
10
10
Total
72 504
12 181
Cash in banks by country of bank location denominated in the following currencies:
Currency 31 December 2023 31 December 2022
Ukraine
UAH
6 253
6 591
Ukraine
USD
4 914
678
Ukraine
EUR
19 315
565
Total in Ukraine
30 482
7 834
Cyprus
EUR
2
-
Total in Cyprus
2
-
Latvia
USD
1 545
1 725
Latvia
EUR
19 899
1 981
Total in Latvia
21 444
3 706
United Kingdom
USD
5 482
6
United Kingdom
EUR
13 440
51
United Kingdom
PLN
4
-
Total in United Kingdom
18 926
57
United Arab Emirates
AED
1
1
United Arab Emirates
USD
1 628
573
United Arab Emirates
EUR
11
-
Total in United Arab Emirates
1 640
574
Total cash in banks
72 494
12 171
22. Equity
Issued capital and capital distribution
For the year ended 31 December 2023 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 2023 and 31 December 2022 the shareholder interest above 5% in the Share capital of Company
was as follows:
31 December 2023 31 December 2022
Prime One Capital Ltd
65,93%
67,93%
Generali Otwarty Fundusz Emerytalny
-
10,93%
FAIRFAX FINANCIAL Holdings Limited
29,51%
9,09%
AVIVA Otwarty Fundusz Emerytalny Aviva BZ WBK
-
5,02%
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
74
Foreign currency translation reserve
The Company's share capital as of 31 December 2023 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) has been converted into USD 84 324”.
The foreign currency translation reserve is used 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 2023 and 2022, there were no movements in share premium.
23. Interest-bearing loans and other financial liabilities
Currency
Effective
interest
rate, %
Maturity
31 December
2023
31 December
202
2
Current interest-bearing loans and other
financial liabilities
OTP Bank
EUR
2,6%+ EURIBOR
(3m)
02.10.2023
-
1 948
Crédit Agricole
UAH
13,05%
31.03.2024
2 369
2 472
Total current interest-bearing loans and other financial liabilities
2 369
4 420
Non-current interest-bearing loans and
other financial liabilities
OTP Bank
EUR
2,6%+ EURIBOR
(3m)
02.10.2025
-
3 894
UkrSibbank
EUR
3,70%
26.02.2025
-
2 615
Total non-current interest-bearing loans and other financial liabilities
-
6 509
Total interest-bearing loans and other financial liabilities
2 369
10 929
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
2022
Financing
cash flow
payment
Financing
cash flow
received
Increase/decre
ase (as a result
of accruals
and
other)
Exchange
difference
s
31
December
2023
Interest-bearing loans
10 909
(8 442)
-
-
(116)
2 351
Interest expenses
20
(667)
-
667
(2)
18
Total
10 929
(9 109)
-
667
(118)
2 369
31 December
2021
Financing
cash flow
payment
Financing
cash flow
received
Increase/decreas
e (as a result of
accruals and
other)
Exchange
differences
31
December
2022
Interest-bearing loans
12 791
(3 679)
2 461
-
(664)
10 909
Interest expenses
90
(620)
-
555
(5)
20
Total
12 881
(4 299)
2 461
555
(669)
10 929
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
75
24. Trade and other payables
31 December 2023 31 December 2022
Trade payables
5 636
5 920
Dividend debt
-
4 176
Employee benefit liability
611
442
Liability for unused vacation
1 160
898
Provision for uncertain tax position
1 037
-
Taxes payable
288
201
VAT liabilities
579
447
Other payables
379
292
Total
9 690
12 376
25. Changes in presentation
The Group decided to make changes to the presentation of some reporting items. Below are the report items that have
changed:
Consolidated statement of comprehensive income
12 month ended
31 December 2023
12 month ended
31 December 2022
(changed)
12 month ended
31 December 2022
(Audit)
Finance costs
(667)
(555)
(829)
Finance income
1 598
132
132
Foreign exchange (loss)/gain, net
3 182
(274)
-
Total
4 113
(697)
(697)
Consolidated statement of financial position
31 December 2023
31 December 2022
(changed)
31 December 2022
(Audit)
Current liabilities
Trade and other payables
9 690
12 376
12 993
Income tax payable
2 703
617
-
Total
12 393
12 993
12 993
Consolidated statement of cash flows
12 month ended
31 December 2023
12 month ended
31 December 2022
(changed)
12 month ended
31 December 2022
(Audit)
Non-cash adjustment to reconcile profit before tax to net cash flows:
Finance income
(1 598)
(132)
(132)
Finance costs
667
555
829
Foreign exchange (loss)/gain, net
(3 182)
274
-
Total
(4 113)
697
697
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
76
26. 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
subject 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 2023 and
2022:
(A). Key management personnel
Key management personnel 2023: Position:
Borys Bielikov Executive Director / CEO
Vitalii Veresenko
Non-executive director
Markiyan Markevych
Non-executive director
Vitalii Sapozhnik
Chief Financial Officer
Rossi Kurt
Non-executive director
Arnis Veinbergs
Deputy CEO in charge of Production activity
Karen Arshakyan
Non-executive director
Yuliya Flyorova
Production director
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
Non-executive director
Arnis Veinbergs
Deputy CEO in charge of Production activity
Karen Arshakyan
Non-executive director
Yuliya Flyorova
Production director
(B). Companies which activities are significantly influenced by the Key management personnel
Aleksa LTD LLC 2023/2022
Prime One Capital Limited
2023/2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
77
As at 31 December 2023 and 2022 trade and other accounts receivable and payable issued to related parties were
presented as follows:
(B). Companies which activities are significantly influenced by the Beneficial
Owners:
Prepayments to related parties
Aleksa LTD LLC
33
34
Other accounts receivables
Prime One Capital Limited
-
12 755
Dividend debt
Prime One Capital Limited
-
2 837
Total
33
15 626
For the year ended 31 December 2023 and 2022 the transactions with related parties amounted to:
(B). Companies which activities are significantly influenced by the Beneficial
Owners:
Interest on debts and borrowings:
Prime One Capital Limited
-
(9)
Interest income:
Prime One Capital Limited
45
11
General and administrative expenses:
Aleksa LTD LLC
(28)
(24)
Total
17
(22)
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 2023 and
2022 was presented as follows:
12 month ended
31 December 2023
12 month ended
31 December
2022
Salaries and contribution to social security fund (short-term employee
benefits):
Borys Bielikov
105
202
Rossi Kurt
38
172
Vitalii Veresenko
49
96
Markiyan Markevych
30
30
Karen Arshakyan
22
21
Vitalii Sapozhnik
16
14
Other key management personnel
268
254
Total
528
789
(C). Other related parties:
For the year ended 31 December 2023 and 2022 the Group has no other related parties.
31 December 2023 31 December 2022
31 December 2023 31 December 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
78
27. Commitments and contingencies
Operating environment
All production facilities of the Group are located in Ukraine and its operations are highly dependent on the developments
in this jurisdiction.
On February 24, 2022, Russian troops launched a military invasion of Ukraine, which led to a full-scale war on the
territory of the Ukrainian state. The ongoing military attack has caused and continues to cause significant casualties,
population displacement, infrastructure damage and disruption to economic activity in Ukraine. Seaports and airports were
closed and damaged. In 2022, exports through seaports were completely frozen. To date, Ukraine has managed to resume
exports through seaports, but rocket attacks continue. The situation remains highly volatile and the outlook highly uncertain.
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, since the beginning of the war, as of January 1, 2024, the
state budget of Ukraine has attracted about $75 billion in international financial assistance. In June 2022, the National Bank
of Ukraine (NBU) decided to increase the discount rate from 10% to 25%, but from December 2023 it lowered it to 15%.
Also, the National Bank of Ukraine, which since the end of July 2022 has maintained the official hryvnia exchange rate of
36.5686 UAH/1 dollar, has switched to a regime of managed exchange rate flexibility since October 2023. This is due to the
fact that managed flexibility of the official exchange rate will become a mechanism for adapting the economy to changes in
internal and external conditions, as well as an important prerequisite for a return to inflation targeting in the future.
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.
In the spring of 2022, against the backdrop of a full-scale Russian invasion, unprecedented tax breaks were introduced
for Ukrainian entrepreneurs. In particular, all imports were exempted from VAT and duties, and they were also allowed to
switch to a simplified taxation system and pay only 2% of income not only to individual entrepreneurs, but also to large
companies. After almost a year and a half, Ukrainian business has adapted to life in conditions of large-scale aggression,
and from August 1, 2023, the simplified system, taking into account the specifics of taxation, was abolished with the possibility
of a certain choice. On July 1, 2023, pre-war fuel taxation resumed. VAT returned to 20%, and excise tax was also resumed
In 2024, the International Monetary Fund (IMF) expects GDP growth of 4-5% if the war continues. However, the IMF
adds that the outlook remains subject to significant risks from extremely high uncertainty caused by the war, potential policy
errors and delays or shortfalls in external financing.
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
agricultural 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
procedures under the Association Agreement, will refrain from any new restrictions on imports from the EU, and will ensure
respect for democratic principles, human rights and fundamental freedoms, the rule of the law, fight against corruption.
The EU reserves the right to reinstate tariffs if imports of Ukrainian products such as poultry, eggs and sugar significantly
exceed 2022 and 2023 volumes.
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
79
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
company’s minimum income threshold of UAH 150 million and transactions volume threshold with each individual non-
resident of UAH 10 million.
The legislation allows the tax authorities to make transfer pricing adjustments and impose additional tax liabilities in
respect of transactions in scope of transfer pricing regulations if the transaction price is not at arm's length and is not
supported by appropriate documentation. Management believes it is taking appropriate measures to ensure compliance with
the new transfer pricing legislation.
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 subject 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 2023, Group is involved in litigations in the amount of USD 1 117 thousand (2022: USD 589 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.
28. 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
maximizing the return to shareholders through a combination of debt and equity capital. The management of the Group
reviews the capital structure on a regular basis. Based on the results of this review, the Group takes steps to balance its
overall capital structure through the issue of new debt or the 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 premium, 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
2023
31 December
2022
Debt liabilities*
2 369
10 929
Cash and cash equivalents and deposits
(72 504)
(12 181)
Net debt
(70 135)
(1 252)
Equity**
125 116
83 921
Gearing ratio
-56,1%
-1,5%
* Debts include short-term and long-term borrowings.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
80
** Equity includes the share capital, share premium, retained earnings and foreign currency translation reserve.
Financial risk management
The main risks inherent to the Group’s operations are those related to credit risk exposures, liquidity risk, market
movements 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
obligation 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 2023 and 2022 resulting from non-fulfillment of obligations by clients.
For the year ended 31 December 2023 USD 52 154 thousand or 31% of Group's sales revenue is related to sales
transactions, realized with 5 major customers of the Group. As at 31 December 2023 USD 5 148 thousand or 41% of trade
accounts receivable relates to 5 major debtors.
The credit quality of the gross trade receivables from related and third parties was as follows:
31 December
2023
31 December
2022
Fully performing
9 559
12 355
Past due but not impaired
2 783
903
Impaired
312
86
Total trade receivables (gross)
12 654
13 344
As at 31 December 2023 and 2022 the ageing of trade account receivables that were not impaired was as follows:
2023(%)
2022(%
)
31 December
2023
31 December
2022
0-30 days
89,13% 96,19%
11 001
12 753
31-90 days
9,85% 2,55%
1 216
338
91-180 days
1,01% 0,35%
125
47
181-360 days
0,00% 0,85%
-
113
more than 360 days
0,00% 0,05%
-
7
Total trade receivables (gross)
12 342
13 258
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 liquidity management is to ensure, to the extent possible, permanent availability of sufficient liquidity for the Group to fulfill
its financial 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:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
81
31 December 2023
Carrying
value
Contractual
cash flows
Less than 3
months
3-6
months
6-12
months
Over 1
year
Non-derivative financial liabilities:
Trade and other payables
9 690
9 690
7 493
1 160
1 037
Current interest-bearing loans and other
financial
liabilities
2 369
2 369
2 369
-
Total
12 059
12 059
7 493
3 529
1 037
-
31 December 2022
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
12 376
12 376
11 478
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
23 305
23 305
11 478
4 344
974
6 509
Currency risk
Currency risk – Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign
exchange rates. The Group undertakes certain transactions denominated in foreign currencies. The Group does not use any
derivatives to manage foreign currency risk exposure, at the same time the management of the Group sets limits on the level
of exposure by currencies.
Exposure to foreign currency risk
The carrying amounts of the Group’s foreign currency denominated monetary assets and liabilities as of 31 December
2023 and 2022 were as follows:
31 December 2023
RON
PLN
AED
USD
EUR
UAH
Total
(in conversion to USD thousand)
Assets
Cash and cash equivalents
4
1
13 569
52 667
6 263
72 504
Trade receivables
10
-
65
4 288
7 979
12 342
Other receivables
6
-
-
45
803
854
Liabilities
Current interest-bearing loans and other financial liabilities
-
-
-
(2 369)
(2 369)
Trade accounts payable
(198)
(3)
(1)
(106)
(1 484)
(3 844)
(5 636)
Other payables
(156)
-
-
(159)
(64)
(379)
Net exposure to foreign currency risk
(338)
1
-
13 528
55 357
8 768
77 316
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
82
31 December 2022
AED USD EU
R
UAH Total
(in conversion to USD thousand)
Assets
Cash and cash equivalents
1
2 982
2 597
6 601
12 181
Trade receivables
-
381
4 435
8 442
13 258
Other receivables
-
1 503
11 262
784
13 549
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)
4 781
8 233
8 834
21 847
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
against UAH
Effect on profit
before
tax
31 December 2023
USD
15%
2 029
EUR
15%
8 304
31 December 2022
USD
15%
717
EUR
15%
1 235
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
presented 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
2023
31 December
2022
Profit/(loss)
EURIBOR
EURIBOR
0/(0)
19/(19)
The effect of interest rate sensitivity on shareholders’ equity is equal to that on profit or loss.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes on pages 43-83 form an integral part of these financial statements
3
2023 ANNUAL REPORT
83
Livestock diseases risk
The Group’s agro-industrial business is subject to risks of outbreaks of various diseases. The Group faces the risk of
outbreaks of diseases, which are highly contagious and 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.
29. Financial instruments
Estimated fair value disclosure of financial instruments is made in accordance with the requirements of International
Financial 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 presented 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 observable market data.
The Group does not acquire, hold or issue derivative financial instruments for trading purposes.
Fair value of financial assets and financial liabilities as at 31 December 2023 and 31 December 2022 is approximately
equal to their net carrying amounts.
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.
Fair value of financial assets and financial liabilities as at 31 December 2023 and 31 December 2022 is approximately
equal to their net carrying amounts.
30. Subsequent events
On April 22, 2024 the Shareholders of the Company holding jointly 95.44% of the voting rights (the Offerors) publicly
informed about their intention to announce a voluntary tender offer, addressed to all the shareholders of the Company, for
the acquisition of all the issued shares in the Company listed on the Warsaw Stock Exchange.
Following the completion of the Tender Offer, the Offerors intend to conduct a squeeze-out of the Company’s shares
held by the shareholders that have not responded to the Tender Offer in accordance with the provisions of Cypriot law and
with the prior approval of the Cyprus Securities and Exchange Commission.
To date, the Group has repaid the loan obtained under the state business support program in the amount of 90 million
UAH.
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 adverse
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.
OVOSTAR UNION PUBLIC COMPANY LIMITED
COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 December 2023
3
INDIVIDUAL FINANCIAL STATEMENTS
2023 ANNUAL REPORT
85
Statement of financial position
For the year ended 31 December 2023 (in USD thousand, unless otherwise stated)
Note 31 December 2023 31 December
2022
Assets
Non-current assets
Investment in subsidiaries
9
46 098
46 097
Loan receivable
10
-
5 591
Total non-current assets
46 098
51 688
Current assets
Cash and cash equivalents
13
18 927
57
Short-term loan receivable
12
166
12 755
Prepayments to suppliers
1
4
Other accounts receivables
11
535
35
Total current assets
19 629
12 851
Total assets
65 727
64 539
Equity and liabilities
Equity
Issued capital
14
85
85
Share premium
15
30 933
30 933
Foreign currency translation reserve
-
-
Retained earnings
13 624
13 643
Result for the period
20 668
56
Total equity
65 310
44 717
Total non-current liabilities
-
-
Current liabilities
Trade and other payables
17
138
4 272
Interest-bearing loans and other financial liabilities
16
279
15 550
Total current liabilities
417
19 822
Total liabilities
417
19 822
Total equity and liabilities
65 727
64 539
3
INDIVIDUAL FINANCIAL STATEMENTS
2023 ANNUAL REPORT
86
Statement of comprehensive income
For the year ended 31 December 2023 (in USD thousand, unless otherwise stated)
Note
12 month ended
12 month
ended
31 December 2023
31 December 2022
Dividend income
4
20 687
485
Administrative expenses
5
(388)
(502)
Other operating expenses
(1)
-
Operating profit
20 298
(17)
Finance costs
6
(79)
(87)
Finance income
7
380
151
Profit before tax
20 599
47
Income tax expense
8
(6)
9
Profit for the period
20 593
56
3
INDIVIDUAL FINANCIAL STATEMENTS
2023 ANNUAL REPORT
87
Statement of changes in equity
For the year ended 31 December 2023 (in USD thousand, unless otherwise stated)
Issued
capital
Share
premium
Foreign
currency
translatio
n reserve
Retained
earnings
Total
equity
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
Profit for the period
-
-
-
20 593 20 593
As at 31 December 2023
85
30 933
-
34 292
65 310
3
INDIVIDUAL FINANCIAL STATEMENTS
2023 ANNUAL REPORT
88
Statement of cash flows
For the year ended 31 December 2023 (in USD thousand, unless otherwise stated)
12 month ended
12 month ended
31 December 2023
31 December 2022
Cash flows from operating activities
Profit before tax
20 599
47
Non-cash adjustment to reconcile profit before tax to net cash
flows:
Dividend income
(20 687)
(485)
Interest income
(161)
(151)
Interest expense
79
87
Exchange differences from financial activities
178
-
Working capital adjustments:
Decrease/(Increase) in receivable balances
-
300
Decrease/(Increase) in short-term loan receivable
12 743
(12 509)
Decrease/(Increase) in prepayments to suppliers
3
2
Decrease/(Increase) in loan receivable
5 459
-
Decrease/(Increase) in payable balances
109
(50)
Cash used in operations
Dividends received
20 187
461
Income tax paid
-
(9)
Net cash flows from operating activities
38 509
(12 307)
Cash flows from investing activities
Interest received
139
-
Net cash flows used in investing activities
139
-
Cash flows from financing activities
Proceeds from borrowings
1 164
16 364
Repayment of borrowings
(16 571)
(3 889)
Interest paid
(120)
(120)
Payment of dividends
(4 251)
-
Net cash flows used in financing activities
(19 778)
12 355
Net (decrease)/increase in cash and cash equivalents
18 870
48
Cash and cash equivalents at 01 January
57
9
Cash and cash equivalents at 31 December
18 927
57
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 89-94 form an integral part of these financial statements
2023 ANNUAL REPORT
89
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
holding 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
shareholder of the Company is Prime One Capital Ltd., Cyprus. Its principal activity is the holding of ownership interests in
its subsidiary 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 2023 have been prepared using the IFRS.
The IFRS individual financial statements were approved by the Board of Directors on 24 May 2024
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 month ended
12 month ended
31 December 2023
31 December 2022
Dividend income from OAE Food Trade FZE
20 687
485
Total
20 687
485
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 89-94 form an integral part of these financial statements
2023 ANNUAL REPORT
90
5. Administrative expenses
12 month ended
12 month ended
31 December 2023
31 December 2023
Wages, salaries and social security costs
206
349
Legal, audit and other professional fees
160
126
Service charge expenses
22
27
Total
388
502
6. Finance costs
12 month ended
12 month ended
31 December 2023
31 December 2022
Interest on debts and borrowings
79
87
Total
79
87
7. Finance income
12 month ended
12 month ended
31 December 2023
31 December 2022
Interest income
161
67
Foreign currency exchange
219
84
Total
380
151
8. Corporate Income tax
Tax recognized in profit or loss:
12 month ended
12 month ended
31 December 2023
31 December 2022
Corporation tax
6
-
Corporation tax – prior years
-
(9)
Charge for the year
6
(9)
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 month ended
12 month ended
31 December 2023
31 December 2022
Profit before tax
20 599
47
Applicable tax rates
12,50%
12,50%
Tax calculated at the applicable tax rates
2 575
6
Tax effect of expenses not deductible for tax purposes
44
56
Tax effect of allowances and income not subject to tax
(2 614)
(71)
10% additional charge
1
(1)
Charge for the year
6
-
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 89-94 form an integral part of these financial statements
2023 ANNUAL REPORT
91
9. Investment in subsidiaries
31 December 2023
31 December 2022
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
3
3
International Food Trade Limited
-
1
REMEDIUM FOODS B.V.*
0,
1
0,1
OVOSTAR ROMANIA S.R.L.**
1
-
FARM FRESH S.R.L.***
1
-
Total
46 098 46 097
* The group owns 50% of the company's shares. As a result, there is joint control of this company. For more details, see
Note 7 of the consolidated financial statements.
** In the second half of 2023, the Group established a company in Romania with a 51% ownership share with the aim of
expanding its activities in Europe. As of December 31, 2023, there was no activity for the company.
*** In December 2023, the company acquired 100% of the shares of the company located in Romania.
10. Loan receivable
31 December 2023
31 December 2022
LLC Yasensvit
-
5 591
Total
-
5 591
Loan receivable as of December 31, 2022 consist of a loan and interest accrued by Yasensvit LLC, issued at 1% per
annum, with a maturity date of May 2029 in USD. As of December 31, 2023, the principal portion of the debt was repaid.
11. Other accounts receivables
31 December 2023
31 December 2022
OAE Food Trade FZE
535
35
Total
535
35
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 89-94 form an integral part of these financial statements
2023 ANNUAL REPORT
92
12. Short-term loan receivable
31 December 2023
31 December 2022
Prime One Capital Limited
USD
-
1 502
Prime One Capital Limited
EUR
-
11 253
LLC Yasensvit
USD
166
-
Total
166
12 755
The loan receivable as of December 31, 2023 consists of interest outstanding accrued by Yasenvit LLC, accrued at 1%
per annum. 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 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) has been converted into USD 84 324.
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
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 2023 and 2022, there were no movements in share premium.
16. Loans and borrowings
Curre
n cy
Effective interest
rate, %
Maturity
31
December
2023
31
December
2022
Current interest-bearing loans and other
financial liabilities
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%
02.06.2023
-
5 965
Ovostar Europe LLC
EUR
0.5%
02.06.2023
-
5 947
Ovostar Europe LLC
USD
0.5%
02.06.2023
54
1 551
OAE Food Trade FZE
USD
2.5%
25.07.2023
-
1 010
OAE Food Trade FZE
EUR
2.5%
25.07.2023
225
-
Total current interest-bearing loans and other financial liabilities
279
15 550
Total interest-bearing loans and other financial
liabilities
279
15 550
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 89-94 form an integral part of these financial statements
2023 ANNUAL REPORT
93
As part of loans and borrowings, there is a loans received from a related parties, Ovostar Europe LLC and OAE Food
Trade FZE. Loans repaid in 2024.
17. Trade and other payables
31
December 2023
31 December 2022
Dividend liability
-
4 176
Baker Tilly Ukraine, LLC
24
24
Baker Tilly Klitou & Partners Ltd
17
17
Ovostar Europe LLC
55
54
TaylorWessing
24
-
Other
18
1
Total
138
4 272
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 2023 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)
19. Audit Fee
31 December 2023
31 December 2022
Baker Tilly Ukraine:
Audit and review of financial statements
48
43
Baker Tilly Klitou & Partners Ltd
Audit fees
33
33
Total
81
76
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.
3
NOTES TO INDIVIDUAL FINANCIAL STATEMENTS
Notes on pages 89-94 form an integral part of these financial statements
2023 ANNUAL REPORT
94
20. Related party disclosures
31 December 2023 31 December 2022
(B). Companies which activities are significantly influenced by the
Beneficial Owners:
Other non-current assets
LLC Yasensvit
-
5 591
Other accounts receivables
OAE Food Trade FZE
535
35
Short-term loan receivable
Prime One Capital Limited
166
12 755
Total
701
18 381
Dividend debt
Prime One Capital Limited
-
2 837
Trade and other payables to related parties
Ovostar Europe LLC
55
54
Total
55
2 891
For the year ended 31 December 2023 and 2022 the transactions with related parties amounted to:
12
month ended
31 December 2023
12
month ended
31 December 2022
(B). Companies which activities are significantly influenced by the
Beneficial
Owners:
Interest on debts and borrowings:
Ovostar Europe LLC
39
39
OAE Food Trade FZE
40
10
Prime One Capital Limited
45
9
Total
124
58
Interest income:
LLC Yasensvit
33
56
Total
33
56
21. Subsequent events
For events subsequent to the reporting date refer to note 30 of the consolidated financial statements
Borys Bielikov
Vitalii Veresenko
Karen Arshakyan
Chief Executive Officer,
Chairman of the Board,
Head of Audit Committee,
Executive Director
Non-executive Director
Non-executive Director
Markiyan Markevych
Vitalii Sapozhnik
Non-executive Director
Chief Financial Officer
95
Corner C. Hatzopoulou &
30 Griva Digheni Avenue
1066, Nicosia
P.O Box 27783,
2433 Nicosia, Cyprus
Independent Auditor's Report
To the Members of Ovostar Union Public Company Limited
Report on the Audit of the Consolidated and Separate Financial Statements
T: +357 22 458500
F: +357 22 751648
info@bakertilly.com.cy
www.bakertilly.com.cy
Opinion
We have audited the consolidated financial statements of Ovostar Union Public Company Limited (the
parent Company, herein referred as the “Company”) and its subsidiaries (the ''Group''), and the separate
financial statements of Ovostar Union Public Company Limited (the parent Company, herein referred as
the “Company”), which are presented in pages 37 to 94 and comprise the consolidated statement of
financial position as at 31 December 2023, and the consolidated statements of comprehensive income,
changes in equity and cash flows for the year then ended, and notes to the consolidated financial
statements, including a summary of material accounting policy information and the separate statement of
financial position as at 31 December 2023, and the separate statements of comprehensive income, changes
in equity and cash flows for the year then ended, and notes to the separate financial statements, including
a summary of material accounting policy information.
In our opinion, the accompanying consolidated and separate financial statements give a true and fair view
of the consolidated and separate financial position of the Group as at 31 December 2023, and of its
consolidated and separate financial performance and its consolidated and separate cash flows for the year
then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the
European Union and the requirements of the Cyprus Companies Law, Cap. 113.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the ''Auditor's Responsibilities for the Audit of the Financial
Statements'' section of our report. We remained independent of the Group throughout the period of
appointment in accordance with the ''International Ethics Standards Board for Accountants' Code of Ethics
for Professional Accountants'' (including International Independence Standards) (IESBA Code) together
with the ethical requirements that are relevant to our audit of the financial statements in Cyprus, and we
have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material uncertainty related to going concern
We draw attention to Note 2.2 of the consolidated financial statements which refer to the ongoing Russian
military invasion of Ukraine since 24 February 2022. Due to conditions that exist during the military
invasion, a material uncertainty exists which may cast significant doubt about the Group’s ability to continue
as a going concern. Our opinion is not modified in respect of this matter.
ADVISORY ASSURANCE TAX
Baker Tilly Klitou & Partners Ltd trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd.,
the members
of which are separate and independent legal entities.
96
Independent Auditor's Report (continued)
To the Members of Ovostar Union Public Company Limited
Key audit matters incorporating the most significant risks of material misstatements, including
assessed risk of material misstatements due to fraud
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated and separate financial statements of the current period. These matters were
addressed in the context of our audit in the consolidated and separate financial statements as a whole,
and informing our opinion thereon, and we do not provide a separate opinion on these matters.
The key audit matter
How the matter was addressed in our audit
Biological Assets Valuation
The Group’s biological assets are measured at
fair value less costs to sell. As at 31 December
2023 the biological assets in the consolidated
financial statements are presented at a carrying
value of USD 12.350.000 (2022: USD
25.136.000). We
refer to Note 5 and 17 in the consolidated financial
statements for the related disclosures.
The Group estimates the fair value of the biological
assets based on the discounted cash flow
technique. The Group determines the fair value
internally, applying inputs from mostly internal
sources which require estimates and
assumptions, including the future value of the
produced eggs, the costs to maintain the laying
hens until the end of their production period and
the discount rate.
Due to the level of judgment and complexity
involved in the valuation of biological assets, as
well as the significance of biological assets to the
Group's financial position, this is considered to be
a key audit matter.
We obtained an understanding of management’s
biological assets’ valuation process and evaluated
the design and tested the operating effectiveness
of internal controls related to biological assets.
Our audit procedures over the valuation of
biological assets included, among others:
• Testing of the design of, and validity of
the input data used in, the valuation
model of biological assets;
• Testing the completeness and accuracy
of the data used through recalculation
and testing of inputs;
• Assessment of the methodology adopted
by management for the valuation;
• Assessment of the key valuation
assumptions used in the model against
prevailing market conditions;
• Assessment of the assumptions used to
derive to the discount rate applied in the
valuation model;
• Testing of the mathematical accuracy of
the model used for valuation;
•
Assessment of the adequacy and
appropriateness of disclosures for
compliance with the applicable
accounting standards.
Reporting on other information
The Board of Directors is responsible for the other information. The other information comprises the
information included in the Management Report and the Corporate Governance Statement but does not
include the consolidated and separate financial statements and our auditor's report thereon.
Our opinion on the consolidated and separate financial statements does not cover the other information
and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated and separate financial statements, our responsibility is to
read the other information identified above and, in doing so, consider whether the other information is
materially inconsistent with the consolidated and separate financial statements, or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
97
Independent Auditor's Report (continued)
To the Members of Ovostar Union Public Company Limited
Responsibilities of the Board of Directors and those charged with governance for the
Consolidated and Separate Financial Statements
The Board of Directors is responsible for the preparation of consolidated and separate financial statements
that give a true and fair view in accordance with International Financial Reporting Standards as adopted
by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal
control as the Board of Directors determines is necessary to enable the preparation of consolidated and
separate financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, the Board of Directors is responsible for
assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the Board of Directors either intends
to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
The Board of Directors and those charged with governance are responsible for overseeing the Group’s
financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a
guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, separately or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated and separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated and separate financial
statements, whether due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Board of Directors.
• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the consolidated and separate financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
98
Independent Auditor's Report (continued)
To the Members of Ovostar Union Public Company Limited
Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements
(continued)
• Evaluate the overall presentation, structure and content of the consolidated and separate financial
statements, including the disclosures, and whether the consolidated and separate financial statements
represent the underlying transactions and events in a manner that achieves a true and fair view.
• Obtain sufficient and appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated and separate financial
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide those charges with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions taken
to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated and separate financial statements of the current
period and are therefore the key audit matters.
Report on Other Legal and Regulatory Requirements
Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following
information in our Independent Auditor’s Report, which is required in addition to the requirements of
International Standards on Auditing.
Appointment of the Auditor and Period of Engagement
We were first appointed as auditors of the Group on 30 November 2018 by the General Meeting of the
Company’s members to audit its financial statements for the year ended 31 December 2018. Our
appointment has been renewed annually by resolution at the shareholder’s Annual General Meeting
representing a total period of uninterrupted engagement appointment of 5 years.
Consistency of the Additional Report to the Audit Committee
We confirm that our audit opinion on the consolidated and separate financial statements expressed in this
report is consistent with the additional report to the Audit Committee of the Company, which we issued on
6 June 2024 in accordance with Article 11 of the EU Regulation 537/2014.
Provision of Non-audit Services
We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014
and Section 72 of the Auditors Law of 2017 were provided. In addition, there are no non-audit services
which were provided by us to the Group and which have not been disclosed in the consolidated and
separate financial statements or the management report.
99
Independent Auditor's Report (continued)
To the Members of Ovostar Union Public Company Limited
European Single Electronic Format
We have examined the digital files of the European Single Electronic Format (ESEF) of Ovostar Union
Public Company Limited for the year ended 31 December 2023 comprising an XHTML file which includes
the consolidated and separate financial statements for the year then ended and XBRL files with the
marking up carried out by the entity of the consolidated statement of financial position as at 31 December
2023, and the consolidated statements of comprehensive income, changes in equity and cash flows for
the year then ended, and all disclosures made in the consolidated financial statements or made by cross-
reference therein to other parts of the annual financial report for the year ended 31 December 2023 that
correspond to the elements of Annex II of the EU Delegated Regulation 2019/815 of 17 December 2018
of the European Commission, as amended from time to time (the “ESEF Regulation”) (the “digital files”).
The Board of Directors of Ovostar Union Public Company Limited is responsible for preparing and submitting
the consolidated and separate financial statements for the year ended 31 December 2023 in accordance
with the requirements set out in the EU Delegated Regulation 2019/815 of 17 December 2018 of the
European Commission (the “ESEF Regulation”).
Our responsibility is to examine the digital files prepared by the Board of Directors of Ovostar Union Public
Company Limited. According to the Audit Guidelines issued by the Institute of Certified Public Accoun
9
ta
6
nts
of Cyprus (the “Audit Guidelines”), we are required to plan and perform our audit procedures in order to
examine whether the content of the consolidated and separate financial statements included in the digital
files correspond to the consolidated and separate financial statements we have audited, and whether the
format and marking up included in the digital files have been prepared in all material respects, in
accordance with the requirements of the ESEF Regulation.
In our opinion, the digital files examined correspond to the consolidated and separate financial statements,
and the consolidated financial statements included in the digital files, are presented and marked-up, in all
material respects, in accordance with the requirements of the ESEF Regulation.
Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
• In our opinion, based on the work undertaken in the course of our audit, the management report
has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and
the information given is consistent with the financial statements.
• In the light of the knowledge and understanding of the Group and its environment obtained in the
course of the audit, we are required to report if we have identified material misstatements in the
management report. We have nothing to report in this respect.
• In our opinion, based on the work undertaken in the course of our audit, the information included
in the corporate governance statement in accordance with the requirements of subparagraphs (iv) and (v)
of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113, and which is included as a specific
section of the management report, have been prepared in accordance with the requirements of the Cyprus
Companies Law, Cap, 113, and is consistent with the financial statements.
• In our opinion, based on the work undertaken in the course of our audit, the corporate governance
statement includes all information referred to in subparagraphs (i), (ii), (iii), (vi) and (vii) of paragraph 2(a) of
Article 151 of the Cyprus Companies Law, Cap. 113.
• In the light of the knowledge and understanding of the Group and its environment obtained in the
course of the audit, we are required to report if we have identified material misstatements in the corporate
governance statement in relation to the information disclosed for items (iv) and (v) of subparagraph 2(a)
of Article 151 of the Cyprus Companies Law, Cap. 113. We have nothing to report in this respect.
Independent Auditor's Report (continued)
To the Members of Ovostar Union Public Company Limited
100
Other Matters
This report, including the opinion, has been prepared for and only for the Company's members as a body
in accordance with Article 10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017
and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other
purpose or to any other person to whose knowledge this report may come to.
The engagement partner on the audit resulting in this independent auditor’s report is Andreas Pittakas.
Andreas Pittakas
Certified Public Accountant and Registered
Auditor for and on behalf of
Baker Tilly Klitou and Partners Ltd
Certified Public Accountants and Registered Auditors
Corner C. Hatzopoulou & Griva Digheni 30
Avenue 1066 Nicosia
Cyprus
Nicosia, 6 June 2024
Forward-looking statements notice
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
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.