Ovostar Union : 05.06.2024 pdf5.32 mb ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2023

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

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CEO'S STATEMENT

Dear Shareholders,

2023 proved to be another year of global 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 forget the huge effort of the civilians and businesses across the country who every day make their feasible contribution to the victory.

Like any other company in Ukraine, Ovostar Union lived through 2023 facing 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 affordable sources of protein, can be found in most markets throughout the country which is vital in the current uneasy 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

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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-Ukrainiantrading companies in Latvia and United Arab Emirates (hereinafter referred to as "we, us"). Our shares have been quoted on the Warsaw Stock Exchange since June 2011.

Our goal has been to produce ecologically clean and healthy food for our clients in Ukraine and abroad. We are growing organically by gradually increasing the volume of eggs produced and expanding the range of egg products offered. For over a decade Ovostar Union has been one of leaders of the local egg industry belonging to the top 3 producers in Ukraine.

With focus on developing the export markets, we are expanding our sales geography supplying shell eggs and egg products of consistently high quality around the countries of Eu- rope, Middle East, Africa and Asia.

Within the egg segment, we possess shell egg portfolio of over 20 sub-brands and supply our branded eggs to the largest retail chains in Ukraine. As a result of export markets development we are gradually increasing the deliveries of shell eggs 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.

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CORPORATE SUMMARY

Business Geography

We are a vertically integrated agricultural holding with key production facilities and supporting infrastructure concentrated within Kyiv region of Ukraine in close proximity to one another other.

Two poultry farms with total flock of 7.7 million hens (including parents, young hens and layers) ensure production of nearly 1.8 eggs per year. Two egg processing plants have manufacturing capacity 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

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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.

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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.

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CORPORATE SUMMARY

Our Brands - Eggs Products

We offer a wide range of separated and whole egg products in dry and liquid form under the OVOSTAR brand. The demand for egg products mainly comes from food processing companies in Ukraine and abroad.

The segment is mainly B2B-oriented as the egg products are used for production of con- fectionary, mayonnaise, meat products etc. Each client requests the egg product with certain characteristics needed for the final good. Our flexibility to adjust to clients' needs maintains the loyalty of our major clients as well as our position of market maker of liquid egg products in Ukraine.

Among our key local customers are Roshen, Schedro, Mondelez Ukraine, Volyn Holding, Kharkiv Biscuit and others. We are also the exclusive supplier of eggs and egg products to McDonalds Ukraine.

Inspired by the success of bottled liquid egg white and liquid whole egg, offered to our customers in 2018, in 2019 we introduced a new egg product in retail segment - bottled scrambled eggs. Further, in 2020 we launched production of liquid white, liquid eggs and omelets in pure-pak cartons, that are now available in most retail-chains all over the country.

Brand-new liquid egg products in pure-pak cartons are now available to retail customers under TM YASENSVIT and OVOSTAR

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KEY FINANCIALS

2023 Update

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%

BALANCE SHEET (MUSD)	31-DEC-202231-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%)

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