okeygroup.lu
O'KEY GROUP
Annual Report
2023
2 – 3
Contents
Overview 4
Strategic Report 16
Operational Review 40
Financial Review 58
Corporate Governance 66
Financial Statements 84
2023 at a glance . . . . . . . . . . . . 6
Business Review . . . . . . . . . . . .18
O’KEY Hypermarkets . . . . . . . 42
FY 2023 financial highlights . 60
About O’KEY Group . . . . . . . . . 8
Our Geography . . . . . . . . . . . . . 12
Main Events of 2023 . . . . . . . . 15
Russia’s Food Retail Market
Overview . . . . . . . . . . . . . . . . . 20
Delivering on our Strategy . . 22
Business model . . . . . . . . . . . . 23
Sustainable Development . . . 24
DA! Discounters . . . . . . . . . . . . 51
Corporate Governance
System . . . . . . . . . . . . . . . . . . . 68
General Meeting
of Shareholders . . . . . . . . . . . 70
Independent auditors’
report . . . . . . . . . . . . . . . . . . . . 86
Consolidated financial
statements . . . . . . . . . . . . . . . .91
Board of Directors . . . . . . . . . .72
Glossary . . . . . . . . . . . . . . . . . .132
Abbreviations . . . . . . . . . . . . .134
Contacts . . . . . . . . . . . . . . . . .136
Committees of the Board
of Directors . . . . . . . . . . . . . . . .73
Risk Management . . . . . . . . . . .76
Information for Shareholders
and Investors . . . . . . . . . . . . . 79
Management & Directors
Responsibility Statement . . . 83
Annual ReportOverview Strategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 1
OVERVIEW
O’KEY Group is one of the leading Russian food retailers.
The Group’s business model combines two modern
complementary retail formats (hypermarkets and discounters)
and a fast growing omnichannel e-commerce platform.
4 – 5
21 years
on the market
RUB
207.9 bn
Group revenue in 2023
TOP-10
Grocery retailer in Russia
Annual ReportOverview Strategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 2023 at a glance
About the Report
6 – 7
297
+24 YoY
Total number of stores
77
O’KEY hypermarkets
TOP-10
Grocery retailer in Russia1
220
DA! discounters
RUB 207.9 bn
+2.8% YoY
Group revenue
RUB 7.7 bn
+24.0% YoY
Total online sales
1 Market position provided by Infoline, 2023.
The Annual Report 2023 (“the Report”) has been prepared
by O’KEY GROUP S.A. (“O’KEY Group”, “the Group”,
or “the Company”).
This Report discloses information on the implementation
of the Group’s strategy in 2023, presents the Group’s
operating and financial results, and describes the Group’s
corporate governance framework and corporate social
responsibility activities. The Report has been prepared
based on consolidated IFRS financial statements for 2023.
The Report has been prepared based on the information
available to the Group as of the time of producing
this Report, including information obtained from third
parties. The Company reasonably believes that this
information is complete and accurate as of the publication
date of this Report. However, it does not constitute
any representation or warranty that this information
will not be updated, revised, or otherwise amended
in the future.
This Report includes estimates or forward-looking
statements related to operating, financial, economic,
social, and other measures that can be used to assess
the performance of O’KEY GROUP S.A. The Company does
not make any representation or warranty that the results
anticipated by such forward-looking statements
will be achieved. The Company shall not be liable
to any individual or legal entity for any loss or damage
which may arise from their reliance on such forward-
looking statements.
Further Information
Further information regarding O’KEY Group’s strategy,
our businesses and performance, our approach
to governance and risk management can be found at our
corporate website www.okgroup.lu.
An archive of annual and strategic reports as well as a full
suite of additional information materials are available
at www.okeygroup.lu.
Disclaimer
The existing global economic environment, including
the current geopolitical climate and market fluctuations
in currency and stock markets, as well as significant
currency exchange rate variations, is probably having
an impact on companies in all sectors of the economy.
We are closely observing the potential effects of these
evolving macroeconomic circumstances and shifts
in the retail market on the O’KEY Group’s financial
and operational performance in the medium to long term.
Nonetheless, we acknowledge that the grocery
retail industry is among the most resilient sectors
of the economy and is continually sought after
by consumers. Furthermore, we have confidence
in the Group’s efficient business strategy, which utilises
two complementary retail formats and a robust online
platform that caters to all customer requirements
and demographics. This approach establishes a strong
foothold in the market and provides a considerable buffer
against macroeconomic instability.
Our Company is well-equipped to handle any potential
alterations in the supply chain due to the fact that
around 80% of our procurement is obtained from nearby
suppliers and manufacturers. By actively fostering our
proprietary brands, maintaining our long-standing
and productive partnerships with a significant number
of inventive, advanced, and rapidly expanding farms
and producers, and participating in regional and national
quality initiatives and programmes that support local
suppliers, we can successfully navigate any market
challenges and uncertainties.
Therefore, O’KEY Group, with its well-established
and well-integrated corporate governance
and management structure, is securely positioned
in the market and poised to withstand macroeconomic
turbulence and market volatility, while effectively serving
the needs of its stakeholders.
Annual ReportOverview Strategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 8 – 9
About O’KEY Group
Our purpose/mission
O’KEY Group is one of the leading Russian food retailers.
Since the opening of our first hypermarket in St. Petersburg
in 2002, we have continued to strive for excellence.
O’KEY Group develops two clearly positioned and complementary
retail formats: O’KEY hypermarkets and DA! discounters.
The Company also operates an online platform for O’KEY
hypermarkets. This well-balanced combination of formats
allows us to meet different customer needs and purchasing
models in all regions of presence and in all sales channels.
Our vision
We strive
for excellence
We provide a simple
and easy shopping
experience
We take our social
responsibility
seriously and act
accordingly
We offer fresh
and high-quality
products to each
family
We aim to create
an effective
working
environment
Our values
The new hypermarket
for the new era
The best value for money
discounter
Innovativeness
Impeccable
service
Effective
team
Outstanding
results
Atmosphere
of professionalism
Annual ReportOverview Strategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Our Key Strengths
● A flexible business model based on two competitive
shopping formats and an e-commerce platform,
covering all customer segments and needs
● Exceptional expertise in private labels
and own production, empowering us to build
an appealing customer value proposition
● O’KEY hypermarket: a well-recognised brand
and market positioning in major Russian cities
● Highly centralised logistics: five distribution
centres in Moscow and St. Petersburg
● DA! discounters: one of the fastest
growing grocery chains in the market
● Focus on cutting-edge IT solutions
and a progressive infrastructure
● A TOP10 e-grocery retailer with a 100% online
coverage of the cities of O’KEY presence
● High standards of corporate governance: a transparent
ownership structure, a Astana International Exchange,
London Stock Exchange and Moscow Exchange listing,
and a proficient management team with extensive
experience in Russian and international retail
Our ESG Approach
In the volatile macroeconomic and geopolitical context
we are facing, ESG is becoming even more relevant and important.
O’KEY Group sees itself as a socially responsible company
and acts respectively in the interests of all our stakeholders:
employees, customers, suppliers, partners, and shareholders.
Customers
Satisfying customer needs across all market segments,
delivering top-notch services and creating the value
proposition of each Group format remains the key priority
of O’KEY’s interaction with customers.
Though the economic environment is unstable, we make
every effort to ensure uninterrupted deliveries, redirect
logistics flows where necessary, fill the shelves with goods
and meet the demand of our customers.
In the face of growing inflation, we were one of the first
to fix a minimum markup on a number of essentials.
We find it important to pay attention to the most
recent changes in consumption patterns and needs,
including the rush in demand for certain product
categories and price sensitivity. The Company
is committed to meeting the current rate of demand
and maintaining a minimum markup on socially important
goods as well as reasonable prices for the entire product
range, while providing a consistently high level of quality
and service. We are developing new routes and searching
for new efficient ways of working with suppliers in order
to keep the wide assortment of our products.
A thorough cost control in all areas of the Group’s
business enables us to ensure a decent price level
and competitiveness of all retail formats in general.
The Company works closely with the Association of Retail
10 – 11
Companies, the Russian Ministry of Industry and Trade,
and other market regulators and structures to execute
this approach.
Suppliers
When communicating with suppliers, the utmost
attention is given to the formation of mutually beneficial
partnerships. This will ensure timely and stable supply
of high-quality items as well as presence of various
products on the shelves no matter what.
Since its foundation, the O’KEY Group has been actively
engaging local producers: around 80% of the Company’s
purchases are accounted for by products made by Russian
producers. As such, the share of imported goods
in the Company is small.
For years, the Group has been cooperating
with a substantial number of innovative, sophisticated
and fast-growing farms and producers. This is specifically
relevant in terms of evolving the Group’s own brands:
the private label range of O’KEY hypermarkets
and DA! discounters totals 1,910 SKUs and 1,367 SKUs,
respectively. The Company is also involved in developing
programmes to support local producers and therefore
takes part in regional and national quality initiatives,
namely “Made on Don”, as well as the initiatives for fair
certification in the Northwest and Central regions
of Russia. Amid economic volatility O’KEY Group further
cooperates with them while ensuring regular purchases
and mutual benefits. Changes in market environment may
lead to changes in supply chains which are nevertheless
quite stable due to a high proportion of Russian-made
products. The Company makes efforts to optimise
logistical costs and provide effective inventory
management.
Investors and shareholders
O’KEY is responsible to its investors and shareholders
and strives to maintain and increase the Company’s
shareholder value.
Considering current volatility of the Russian Rouble
and a number of macroeconomic factors that create
great uncertainty, the Company refrains from short-term
and long-term forecasts for both operating and financial
performance. At present, the O’KEY management
team is analysing the potential impact of micro-
and macroeconomic conditions on subsequent operating
and financial results of the Group.
Along with that, we believe that the Group’s effective
business model, which is based on two complementary
retail chains with clear positioning (hypermarkets
and discounters) as well as on strong e-commerce,
will help respond to all the headwinds and satisfy
customer needs in various market segments.
Hypermarkets are most suitable for new consumer
behaviour since they offer a wide range of products
and customers often stock up. Our discounters
build a solid medium-term basis by using the EDLP
pricing model to meet the trend for conscious
consumption and offer consistently high-quality
products at the lowest market prices.
We will be doing our best to achieve our medium-term
goals by means of supply chain optimisation and strict
cost control.
The Group’s Global Depositary Receipts (GDRs) are listed
on London Stock Exchange since November 2010.
The GDRs have been also trading on Moscow Exchange
(MOEX) since December 2020. O’KEY aims to keep
its GDRs available to all market participants, including
those of individual investors, on MOEX. In March 2023,
in order to further increase the liquidity of its stock
and diversify the investor base, the Group listed its GDRs
on the Astana International Exchange.
Employees
O’KEY Group’s first priority is its people. The Company
employs over 19 thousand people. We take responsibility
for providing residents of regions of the Company’s
presence with jobs as well as for creating safe, favourable
and decent working conditions for our employees.
Besides, we steadfastly follow the Labour Code
of the Russian Federation.
Over the years, the Company has been committed
to delivering high-standard corporate governance,
personnel management and training, and, therefore,
gained a high position in the market.
In 2023, O’KEY Group put much effort into ensuring
labour safety for its employees, improved its corporate
voluntary health insurance and target KPIs under
the current premium programme, continued staff training
as part of O’KEY Academy, and launched professional skills
competitions and incentive programmes.
In a context of volatility, the Company continues being
committed to its policy aimed at preserving jobs, providing
decent wages and social benefits, and developing
personnel training and motivation programmes.
Annual ReportOverview Strategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Our Geography
O’KEY Group retail
space in 2023 (km2)
North
-West
209.0
209.0
East
106.7
106.7
South
97.9
97.9
Central
102.2
148.1
250.3
Total
515.8
148.1
663.9
Hypermarkets Discounters Group
Central Federal
District
Murmansk
St. Petersburg
1
Surgut
1
24
3
12 – 13
Мoscow
Central Federal District
Tver region
Kaluga region
Tula region
8
12
2
19
1
16 36
135
3
1
7
Ivanovo
Vladimir region
Moscow region
Ryazan region
Lipetsk
Voronezh
100 %
online coverage in cities of
O’KEY presence
297total stores
55 total DCs
1
4
3
1
3
2
1
3
3
1
1
2
Omsk
Tyumen
Syktyvkar
2
1
220
DA! discounters
1 DC
for discounters
100%
Centralisation rate
77
O’KEY hypermarkets
4 DCs
for hypermarkets
63%
Сentralization
rate
Novosibirsk
Krasnoyarsk
Irkutsk
Astrakhan
Rostov-on-Don
Krasnodar
Sochi
Ekaterinburg
Ufa
Orenburg
Togliatti
Nizhniy Novgorod
O’KEY online delivery
O’KEY hypermarkets
O’KEY distribution centers
Online delivery via partners
DA! discounters
DA! distribution centers
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022 2023
Number of stores
O’KEY hypermarket
DA! discounters
17
23
28
35
42
52
60
69
71
35
74
54
78
67
100
78
118
77
82
78
220
77
194
152 79
78
Annual ReportOverview Strategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023
14 – 15
In 2023, O’KEY introduced a mentoring system that
involves not only new employees but also existing
ones aimed at horizontal or vertical development
in the mentoring format.
Financial & Operational
Highlights
Indicators
Group net retail revenue, RUB bn
• O’KEY net retail revenue, RUB bn
• DA! net retail revenue, RUB bn
Group LFL net retail revenue, %
• O’KEY LFL net retail revenue, %
2021
185.2
150.4
34.8
+3.7%
+1.4%
2022
200.2
146.9
53.3
+2.1%
(3.6%)
• DA! LFL net retail revenue, %
+16.3%
+26.8%
Total selling space, k m2
• O’KEY selling space, k m2
• DA! selling space, k m2
Total revenue, RUB bn
• O’KEY Revenue, RUB bn
• DA! Revenue, RUB bn
Group EBITDA, RUB bn
625.6
522.7
102.9
187.1
152.3
34.8
15.5
656.2
525.8
130.4
202.2
148.8
53.3
17.0
2023
205.8
141.9
63.8
(1.6%)
(3.3%)
+3.0%
663.9
515.8
148.1
207.9
144.0
63.9
17.0
2023/2022, %
+2.8%
(3.4%)
+19.8%
+1.1%
(1.9%)
+13.2%
+2.8%
(3.3%)
+19.8%
-
Main Events
of 2023
March
The Group lists its GDRs
on Astana International
Exchange
April
The Company opens
a new O’KEY hypermarket
in St. Petersburg
June
O’KEY’s a RUB5.0 bn bonds issue
starts trading on the Moscow Exchange
June
Expert RA rating agency
confirms the “ruA-“ credit rating
with Stable outlook for O’KEY
July
NCR rating agency
assigns O`KEY ‘A.RU’
credit rating with Stable outlook
November
The Group receives
primary listing for its GDRs on
Moscow Exchange, in addition
to its primary listing on LSE
and secondary listing on AIX
The Group changes its corporate
management structure
and appoints two CEOs
of hypermarket and discounter
chains with direct reporting
to the Board of Directors
Annual ReportOverview Strategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 2
STRATEGIC
REPORT
We understand the importance of a socially
responsible business and implement the best principles
and approaches toward sustainable development.
16 – 17
297 stores
across Russia
RUB
407 mn
Social benefits in 2023
19,230
Employees
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Business Review
Outlook
18 – 19
Despite the challenges faced by various sectors of the
economy, we recognise that the grocery retail industry
remains highly resilient and is continually sought after by
customers. Additionally, we believe in the Group’s efficient
business approach, which includes two complementary
retail formats and an omnichannel online platform that
addresses the needs of all customer segments. With the
integration of this approach and a proven corporate
governance structure alongside the streamlined
operational management, our ability to maintain a sound
foothold in the market and minimise the impact of any
economic fluctuations is assured.
O’KEY Group managed to demonstrate solid results
despite the turbulent market environment over the
reporting year. We were able to maintain a stable
performance in our hypermarket format and continued to
grow across our discounters and e-commerce business.
In 2023, we were again among the top ten Russian food
retailers based on annual revenue and market share.
Group revenue rose by 2.8% to RUB 207.9 bn, while the
Group’s EBITDA remained stable at RUB 17.0 bn, with
EBITDA margin comprising 8.2%.
We believe that our hypermarkets will continue to thrive
in the current and future market landscape thanks to our
vast sourcing opportunities, our agile response to the
constantly changing market conditions, the synergy effect
with our discounters and the e-commerce business as well
as the smart management and the prudent cost control.
As cost-cautious consumption is increasingly popular in
the current economic volatility, we saw another strong
year of growth in the discounters segment in 2023. The
DA! network with its 220 stores in the Central region
showed both expansion and LFL growth, resulted in a
19.8% YoY net retail revenue increase, reaching 31.0%
of the Group’s net retail revenue in 2023. Despite
experiencing some temporary pressure from newly
opened immature stores, the discounters’ EBITDA grew
by 20.3% YoY, while EBITDA margin also improved and
reached 6.9% in 2023.
A key element contributing to the DA! success, along
with operational and cost effectiveness and EDLP pricing
policy, is the prudent selection of our own brands,
comprising approximately 50% of the discounter’s
revenue. Over 2023, we continued to develop a long-term
and mutually beneficial partnership with local suppliers,
enabling us to introduce new SKUs into our offerings.
We strongly believe that DA! is ideally positioned to grow
in today’s challenging environment and will remain a key
growth driver for the Group, being a unique international
format, specially tailored to the needs and desires of
Russian customers.
We consider online shopping a significant catalyst for
transformation in the highly competitive retail sector both
in the way it affects the conventional offline formats and
simultaneously emerging as a promising sales channel in its
own right. The online grocery market in Russia witnessed
another year of rapid growth to reach RUB 918 bn in 2023.
O’KEY’s total online sales rose by 24.0% YoY to RUB 7.7
bn in 2023. We used both our own delivery services and
partner capacities to fulfil almost 3.5 mn online orders
in 2023. By the end of the reporting year, we operated
36 e-commerce pick-up and delivery points at O’KEY
hypermarkets in key cities of pour presence: Moscow, St.
Petersburg, Sochi, and Krasnodar.
Throughout the year, we strived to maintain the high
level of our corporate governance system, which is based
on the principles of professionalism, accountability,
equality, and transparency in compliance with the best
international and Russian practices. In 2023, we again
saw the recognition of our efficient risk management,
strategic oversight, and transparency, coupled with a
well-established operational and financial position, as
Expert RA confirmed our “ruA-” credit rating with a stable
outlook. Later in 2023, NCR credit rating agency awarded
the Company with an “A.ru” rating with a stable outlook,
highly appreciating the Group’s significant geographical
distribution, a diversified supplier base, and the successful
development of the discounter format as a response to
current trends in consumer demand in Russia.
Despite the current market fluctuations, we are dedicated
to actively communicating and accommodating the
interests of all our investors and shareholders. In March
2023, O’KEY GROUP S.A. obtained a listing of its GDRs
on the Astana International Exchange (AIX). This is aimed
to further increase the liquidity of our stock and provide
access to a wider range of individual and institutional
investors. In November 2023, we also changed our GDRs’
listing status on the Moscow Exchange to primary. The
registration of the prospectus and receiving primary
listing status aims to maintain the continuity of trading of
the Group’s GDRs on the Moscow Exchange in order to
sustain the growth of the stock liquidity in the future.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Russia’s Food Retail
Market Overview
The Russian food retail market grew by 13.4%
year-on-year to RUB 22.8 trn in 2023 as compared
to RUB 21.0 trn in 2022, according to Infoline.
By the end of 2023, the overall number of stores
of TOP-200 grocery chains in Russia exceeded
104.0 thousand (plus 12.4 thousand stores YoY), and their
total space comprised 35.9 million m2 (plus 2.6 million
m2 YoY).
According to Infoline, there has been a downsizing trend
in the total average selling space since 2015, by 21.5%
to 304.2 m2, by the end of 2023.
increased by 2.2 p.p. to 76.6%, while their selling space
increased by 10.5% (by 2.7 million m2) year-on-year
and reached 28.9 million m2 in 2023.
The selling space of hypermarket format stood almost flat
year-on-year and accounted for 5.4 million m2 by the end
of 2023, according to Infoline.
In 2023, the TOP-10 leading food retailers increased their
market share by 2.0 p.p. year-on-year to 40.5%.
According to Infoline, discounters and proximity
stores continued to increase the footprint in 2023.
The aggregate share of discounters and proximity stores
O`KEY Group was 10th largest food retailer in Russia
in 2023, according to Infoline.
Top-10 food retailers in Russia (by net retail revenue)
14.6%
10.6%
6.1%
2.3%
1.6% 1.2% 1.2% 1.0%
1.0%
0.9%
X5 Retail
Group
Magnit
Mercury
Retail Group
Lenta
Svetofor
Auchan
Vkusvill
Monetka
METRO
O’KEY
Group
Source: Infoline, revenue net of VAT
20 – 21
Online Grocery Market in Russia
In 2023, according to Infoline, Russian e-grocery market
continued its rapid growth having increased by 47% year-
on-year to RUB 918 bn and reached a 4.0% share in total
Russian food retail market (plus 1.0 p.p. YoY).
In the course of 2023, marketplaces continued
to outperform the e-grocery market by expanding
the range and increasing the number of sellers to provide
maximum breadth of choice. According to Infoline, leading
marketplaces and food delivery operators increased their
combined market share in e-grocery by 6.3% year-on-year
to 44.5% in 2023 compared to 38.2% in 2022.
Russian e-grocery market structure in 2023, %
15.9
10.8
9.5
8.3
55.5
Samokat
Wildberries
OZON
Other
Yandex: Lavka & Market
In 2023, according to Infoline,
O`KEY Group was ranked
9th largest food retail chain
in online.
RUB
918 bn
Russian e-grocery market value1
Top-10 grocery retailers in Russia
by Gross Online Sales, RUB bn
Retailer
VkusVill
X5 Group
Lenta & Utkonos
Magnit
METRO (B2C)
Auchan
Globus
Azbuka Vkusa
O’KEY
Myasnov
RUB bn
140.0
133.1
61.1
44.8
41.8
26.9
13.1
11.4
8.7
3.9
Source: Infoline research 2023, excluding marketplaces, grocery
aggregators and food delivery operators. Revenue includes VAT
1 Infoline research 2023.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Delivering
on our Strategy
O’KEY Group operates two shopping formats, namely hypermarkets
and discounters, and a developed online omnichannel platform.
The strategic priorities depend on the format. However, all formats
are focused on building a tempting value proposition and providing
our customers with the best quality products and superior service.
O’KEY Hypermarkets
DA! discounters
E-commerce
BUSINESS DEVELOPMENT:
• Carrying on the format development
keeping up with the most innovative
market trends
• Looking for the best opportunities
to expand the business: developing
new enhanced hypermarkets; make
use of the latest technologies
and solutions in retail, supply,
and logistics; extend the network
in high-priority regions and optimise
the store portfolio
• Unlocking the opportunities
for the format’s top- and bottom-
line growth by steadily transforming
and adapting it to meet the diverse
consumer needs
• Raise the operational efficiency
•
• Expanding to the entire Central Federal
District and the surrounding regions
Introducing and evolving DA!
discounters as a growth driver
for the Group’s top- and bottom-line
• Focusing on operational effectiveness
and targeted profitability
• Making further advancement
of the omnichannel approach, which
makes it possible to raise sales volumes
by covering all customers segments
and needs
• Developing a partnership
with specialised delivery operators
to seek for operational efficiencies
• Enlarging the range of partners
via collaboration with marketplaces
DELIVERY OF THE BEST VALUE PROPOSITION:
• Offering the most convenient
• Focusing on the “every day low price”
•
and up-to-date shopping experience
along with a well-balanced product
assortment with a focus on fresh
and ultra-fresh categories
Increasing the share of private label
products and own products in total
sales
•
approach
• Offering the most competitive pricing
on the market without compromising
quality
• Taking the lead in developing the PLs
portfolio
BENEFIT FROM SYNERGIES BETWEEN THE FORMATS:
Integrating IT-solutions with partners
to synergise on additional operational
and cost efficiency
• Enhancing the productivity
of e-commerce operations
• Working on express-delivery service
implementation and cost efficiency
• Developing synergies
• Benefitting from joint procurement
• Benefitting from O’KEY hypermarkets
with the discounter business in joint
procurement and direct import
of fresh products, as well as benefiting
from the private label insight
• Evolving synergies with e-commerce
by using an omnichannel approach .
Benefitting from the increased
number of orders placed through
the website and the mobile app
of branded assortments
with hypermarkets
• Sharing storage space on O’KEY
distribution centres in the Central
Region for some of DA!’s assortment
serving as pick-up points
and an omnichannel delivery platform
for online orders
22 – 23
Business model
O’KEY Group has devised a distinctive business model
pivoting around two straightforwardly positioned
and complementary retail formats (hypermarkets
and discounters) and a fast-growing e-commerce platform
with an omnichannel approach. Such a combination
of formats empowers us to meet the needs of various
customer segments and to keep up to date with the most
recent market trends. Within the Group, all formats
are instrumental parts of the business model.
Consequently, such a business approach proved
its efficiency and is fundamental for our prospective
success.
O’KEY hypermarkets
DA! discounters
E-commerce
A discount model unique
for the Russian market and based
on the world’s best practices
tailored to local consumers
A high growth potential
segment meeting rapid changes
in the consumer shopping
patterns
One of the leaders in its segment
with more than 20-year
expertise in the market
enhanced by the innovative store
concept
Sound base for e-commerce
growth
● Among the Russian
retail market leaders,
commanding a substantial
market presence in key Russian
cities
● A discount concept with a hinge
on premium
● A fast-developing chain
of stores in the best locations,
offering superior-quality
products at the best possible
prices
● Advanced insight into fresh
supply and own brands
● A modern hypermarket concept
to follow the market tendencies
● A pivot on centralisation
and cost efficiency
● A balanced range of goods
with a focus on fresh
and ultra-fresh
● An optimised offer of non-food
products
● Superior customer service
● A modern shopping
environment
● Top-of-the-range private label
expertise (own brands account
for about 50% of revenue)
● Every day low price policy, which
is mostly supported by own
brands, offers a 20–30% cost
saving to our customers
● Comfortable and reasonably
spacious layouts and interiors
● Boosting e-grocery since 2015
● One of Russia’s Top-10 food
retailers in online
● An omnichannel
approach: a modern
and convenient omnichannel
mobile application and award-
winning online store, a delivery
or pick-up option, a unified
bonus system and product
range across online and retail
channels
● Online orders are processed
by the closest hypermarkets
in Moscow and St. Petersburg
and in partnership with delivery
operators in all cities
of operation
● 36 specially dedicated zones
for online orders fulfilment
in hypermarkets in Moscow,
St.Petersburg, Sochi,
and Krasnodar
● 77 hypermarkets in 23 cities
● 220 stores in 6 regions
● 100% online coverage
in 6 federal districts of Russia
of the Central Federal District
of Russia
in the regions of O’KEY Group’s
presence
● Hypermarkets reformatting
is aimed at bolstering their
market position and supporting
long-term LFL growth
● +19.8% YoY net retail revenue
growth in 2023
● DA! discounters’ share
in the Group’s net retail revenue
reached 31.0%
● 36 e-commerce points in O’KEY
hypermarkets for online orders
sorting, picking-up and delivery
● +24.0% YoY total online sales
growth in 2023
● DA! will carry on being a growth
driver for the Group’s top-
and bottom-line in mid-term
● Online sales reached 5.4%
of O’KEY Group’s net retail
revenue in 2023
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 24 – 25
Sustainable
Development
accordingly. We believe that businesses have a crucial
role to play in society and we strive to make a positive
impact through our operations. We are committed
to sustainable development and we take steps
to minimise our environmental impact. We also believe
that it is important to give back to the community,
and hence we support various charitable initiatives
and organisations that align with our values.
Overall, we remain committed to delivering the best
possible experience to our customers, employees,
shareholders, investors, suppliers, and local community
representatives. We believe that by continuing
to prioritise sustainability and innovation, we can
continue to grow and develop our business
in a responsible way.
Sustainability Approach
O’KEY Group is a retail company that has
established a widespread presence in various regions
of Russia. Since its inception, the Company has been
catering to a diverse array of stakeholders, including
customers, employees, shareholders, investors, suppliers,
and local community representatives. As a company,
we consistently develop strategies for engaging
with regulatory and government authorities, the media,
and NGOs, as we believe that fostering partnerships
is essential for the continuous growth and development
of our business as a whole. Our commitment to sustainable
development is embedded in our core values. We strive
for excellence in our daily operations by providing
families with fresh and high-quality products, along
with a convenient and hassle-free shopping experience.
RUB
407 mn
employees’ social benefits in 2023
RUB
244.1 mn
proceeds from sales of recyclable
materials in 2023
19,230
number of Group employees
Recognising the significance of socially responsible
businesses, we endeavour to create customised
methods, incorporate global standards of accountability
and community assistance, and adhere to regulations
regarding labour relations and environmental safety.
At O’KEY Group, we prioritise creating an effective
and positive work environment for our employees.
We believe that our employees are the backbone of our
business, and we are committed to ensuring their well-
being and career growth. We provide our employees
with opportunities to develop their skills and knowledge
through training and development programmes,
and we strive to create a culture of innovation
and collaboration.
In addition to our commitment to our employees,
we take our social responsibility seriously by acting
Benefits for Our Key
Stakeholders
Investors and Shareholders
Customers and local communities
In 2023, we continued to develop both modern
O’KEY hypermarkets, fast-growing DA! discounters
and e-commerce platform. We are committed
to maintaining our focus on creating value
for shareholders, prioritising loyalty and convenience
for our customers, and ensuring rigorous capital
discipline. O’KEY Group has been listed on the London
Stock Exchange since 2010.
In March 2023, O`KEY Group’s GDRs received a secondary
listing in the main market on the Astana International
Exchange. We expect that the listing of O’KEY Group’s
GDRs on Astana International Exchange will provide
access to the capital to a wider range of investors and will
allow us to share our sustainable and long-term success
with the shareholders.
In November 2023, the Group also completed
the procedure for changing its listing status
on the Moscow Exchange (MOEX) to primary. Earlier,
in December 2020, the Group received a secondary
listing of its depositary receipts on MOEX. The Company’s
GDRs were included in Tier 1 quotation list, and have been
traded on the main market ever since. The registration
of the securities prospectus and the Company’s
acquisition of primary listing status in 2023 are aimed
at ensuring the continuity of trading of the Group’s GDRs
on the Moscow Exchange in the future.
O’KEY Group is providing high-quality products
at competitive prices under own brands. Our precise
product selection is aimed to ensure that our customers
receive the best value. As we expand, we remain
committed to reinvesting in our competitiveness to offer
the best prices to our customers while maintaining
the highest standards of quality. We are also a socially
responsible company, spearheading campaigns to support
low-income members of the public, and children
with disabilities, and raise consumer awareness
for vulnerable groups. Our goal is to make a positive
impact on the communities we serve and create a better
future for all.
Suppliers
O’KEY Group sources more than 80% of its products
from local suppliers based in Russia. This strategy enables
us to maintain a stable supply of essential products.
We prioritise supporting local enterprises and innovative
manufacturers throughout all regions where we operate.
Additionally, the Group is an active participant in various
regional and national quality initiatives, particularly
in the South and Central regions of Russia.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 To further streamline our operations, we have
implemented a unified method of processing
and approving direct import supplies. We optimise
costs, which allows us to invest these cost savings
in enhancing our supply chain and improving the quality
of our products. By continuing to work closely with local
suppliers and regulatory bodies, we are confident in our
ability to maintain high standards of quality and efficiency
in all our operations.
O’KEY Group’s mission is to develop and maintain sound
relationships with local suppliers and producers. This
partnership ensures that we offer our customers a wide
range of high-quality products in important categories
such as poultry meat, dairy products, sausages, bakery
goods, and confectionery. To further enhance our
product assortment, we have added unique local products
with exceptional quality and organoleptic properties.
In order to achieve this, we conduct specialised trading
and purchasing sessions in all the cities we operate
in, which allows us to set up direct communication
and interaction with potential suppliers. We take great
care in selecting our partner suppliers, and our main
criteria include the quality of production facilities, a well-
implemented quality control system, and the highest
quality characteristics of the products. Our focus on these
criteria ensures a steady supply of high-quality products
for our customers, which in turn promotes a mutually
beneficial partnership with our suppliers and local
producers.
Employees
The experience and expertise of our employees
are fundamental components of our business model,
and we believe that they are the backbone of our
success. For this reason, we invest in our employees’
personal and professional growth and provide them
with ample opportunities to develop their skills
and knowledge so that they can continue to provide
exceptional customer service to both internal and external
customers. We want to ensure that every employee
in our business understands the crucial role they play
in creating a positive and welcoming environment
for our customers. By doing this, we believe that we can
create a strong service culture that is not just beneficial
for our customers but also for our employees’ job
satisfaction and overall well-being.
26 – 27
Our Employees
O’KEY Group’s HR policy is poised to steadily improve
onboarding, learning, development, and acknowledgement
of the Company’s employees. We aspire to create a productive
work environment and empower professional and personal
potential in accordance with the Company’s HR strategy. Systems-
level and holistic HR management and sensitivity to people
and their needs make O’KEY Group an attractive employer.
O’KEY Group’s HR strategy pillars are:
● creating a culture of engagement and effectiveness;
● creating an environment for development
● We completed implementation of automated trainings
for managers to learn occupational health and safety
(OHS) disciplines.
● The Company provided OHS procedures as part of HR
and an effective work environment;
practices;
● introducing modern technologies and automating HR
● To improve safety, we continue
services;
● building an effective organisational structure
and management team;
● building a positive employer brand in the Russian
labour market;
● applying a systematic approach to attract, retain
and develop personnel; and
● introducing the best HR practices.
Major HR and staff management
events in 2023:
● Successful staff development helped the Company
amid labour market restructuring and increasing
competition for top talent. We used the most
efficacious recruitment sources: referral
programme “Bring a friend”, the websites
of Headhunter and Avito.
● More in-depth and automated HR analytics. Regular
HR reporting has been transferred to the Power BI
platform, which allows prompt access to information,
increases the speed and quality of decisions made.
● A mentoring system was developed for working not
only with new employees in the format of classical
mentoring, but also with existing ones aimed
at horizontal or vertical development in the mentoring
format.
to implement e-workplace — Occupational Health
and Safety Control System (OHSCS).
● The page designs on the corporate website,
as well as on the Headhunter and Avito websites were
updated.
In 2024, we will focus
on developing an effective
work environment, developing
employee potential
and increasing productivity,
protecting the health of our
employees and strengthening
the employer brand. In 2024,
we will address:
● Development of a corporate culture that supports
the implementation of the Company’s strategy;
● Formation of an effective management team;
● Increase of the attractiveness of the employer’s brand;
and
● Creation of an effective work environment
by automating HR processes and increase
of the availability of HR services for our employees.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 28 – 29
Key indicators
Staff training and development
● gifts for employees’ children on New Year ‘s holidays;
● financial assistance to employees who find themselves
employees and the management. Since 2019, the Company
has had a Whistleblowing Policy in place.
Below are O’KEY Group’s key personnel metrics.
19,230
Number of employees
(as of 31 December 2023)
Gender distribution, %
29
71
Female
Male
Age distribution, %
10
11
22
25
32
18–25
26–35
36–45
46–55
56+
The Company’s success hinges on its people.
In the reporting year, we proceeded with the personal
and professional growth of our employees.
2023 staff training and development highlights:
in a difficult life situation; and
● instalment payment for membership in fitness clubs.
In 2023, the Group additionally implemented:
● motivational payments for work experience of more
● Over 111,000 e-learning courses were completed
than 10, 15, and 20 years;
by our employees;
● a wide corporate loyalty programme with offers
● About 2,000 trainings and educational webinars were
from partners.
conducted; and
● 25 educational products were created
for the development of hard and soft skills.
Talent Pool Academy
Over the year of 2023, O’KEY Group continued to develop
its new Talent Pool Academy.
In addition to the Academy’s three existing faculties:
store department head faculty “ROST’OK” for linear
management positions, deputy hypermarket
director “Leadership School” faculty for middle
management positions, and store manager faculty “School
with Meaning” for the hypermarket director position:
● A new faculty “School of Mentors” was launched,
forming a culture of mentoring and continuous
improvement of the training and development system
in the Company;
● As of the end of 2023, 288 employees were studying
at the Academy;
● As of the end of 2023, 165 students of the Academy
were appointed to the following positions: head
of hypermarket department, deputy director
of hypermarket, and director of hypermarket; and
● About 18% of appointments to senior positions were
made from the internal personnel reserve.
● 6,050 employees participated in offline trainings
● 4,800 employees participated in webinars
● 117 available courses at the O’KEY Academy
● 111,000 completed e-courses
Staff retention and motivation
O’KEY Group provides social support to its employees
in accordance with legal requirements and implements
additional programmes aimed at creating the most
comfortable conditions for them, among them:
● VMI on the terms of co-financing (payment
by the Company in the amount of up to 80%);
● discounts in the Group ‘s stores and a cumulative
employee points system;
● payment of meals for employees of individual
departments;
In 2023, the Company’s social benefits expenses,
including payment for VMI, children’s New Year holidays,
financial assistance, and lunch payments, amounted
to RUB 407 million. Employees of the Group receive
shopping benefits in all stores of the Company.
In 2023, we maintained the set of services and the quality
level of the corporate VMI system at the usual high level.
In addition, the Company expanded the list of grounds
for providing financial assistance to our employees.
To retain the best specialists, the Company effectively
uses a combination of financial and non-financial
employee motivation systems, and also strives
to guarantee a competitive salary level. The Company
applies a KPI system that takes into account both
individual and corporate goals.
In order to increase the Company’s competitiveness
in the labour market, in 2023, a large-scale revision
of remuneration and motivation systems was carried out
in accordance with the current external environment
and the internal values of the Company. Bonus
systems for operating units were updated. Within
the framework of the current bonus programme to ensure
the achievement of the specified financial results,
as well as to increase operational efficiency, in accordance
with the financial development plan of the Company,
the list of target KPIs was updated.
In 2024, we plan to maintain the existing benefits
and expand the list of partner programmes for our
employees.
Reporting violations
The Group’s employees feel free to call the compliance
hotline or use other feedback channels to make good-faith
reports of violations.
O’KEY Group is focused on resolving ethics and labour law
violations as well as cases of misunderstanding between
We operate several whistleblowing channels: a call centre,
dedicated manager-employee meeting hours, and morning
meetings.
116
reports received in 2023 compared
to 189 in 2022
100%
of reports addressed and followed
up by feedback
Increasing the attractiveness
of the Company’s HR brand
In 2023, the Company paid special attention to attracting
and retaining personnel, and, among other things,
changed the approach to working with young professional
candidates.
As part of our work with students in 2023,
the following initiatives were implemented:
● some of the Company’s stores have become a platform
for the practical training of college and university
students in the professions of cook, baker and food
technologists;
● a campaign was held to attract students to pre-
graduate practice and summer season work
at the Company’s facilities;
● the head office and distribution centre in Moscow
became a platform for the practical training
of students of the Russian Academy of National
Economy and Public Administration under
the President of the Russian Federation, studying
finance, commerce and logistics; and
● O’KEY employees took part in lectures and open days
at colleges and universities.
In 2023, the design of the Company’s page on the key
recruitment sites — Headhunter and Avito,
as well as VKontakte community “Career at O’KEY” were
updated in line with the Company’s current positioning
in the labour market.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Health and Safety
O’KEY Group is committed to reducing work-
related hazards as well as providing safe workplace
and comfortable customer experience.
We strive to minimise injuries at all our facilities
and constantly improve our occupational health and safety
(OHS) management system. The Group’s approach hinges
on full compliance with Russian laws.
Our core regulatory documents in this field are:
● The Labour Protection and Occupational Health,
Environmental, Industrial and Fire Safety Policy, and
● The Occupational Safety Management System.
monitoring
the workplace
monitoring
employee
health
training
employees
in workplace
safety
investigating
injuries
taking
preventive
measures
support-
ing labour
inspections
conducted
by governmen-
tal supervisory
authorities.
2023 highlights
Dedicated
assessment
of working
conditions
and occupational
risks in every
workplace
A total of
49
accidents
40 of them
occupational injuries
(including 1 severe
one)
0
fatalities
We track and rigorously investigate all occupational
injuries that involve our employees and customers.
In 2023, the total number of accidents
in the Company was 49, including:
● 47 minor injuries (the investigation classified 9 of them
as non-occupational); and
● 2 severe injuries (the investigation classified 1 of them
as non-occupational).
Most common causes in 2023:
● negligence and haste
● violated OHS requirements;
● ill health; and
● Insufficient control by the immediate supervisor.
The Company also monitors and investigates all customer
and contractor incidents. We updated related procedures
to receive earlier warnings and prevent similar incidents
going forward. Total number of incidents involving
O’KEY Group’s employees, customers, and third-party
organisations went down by 283% year-on-year in 2023.
The decrease was led mainly by advanced approaches
to monitoring working conditions and health, identifying
causes during the investigation, training employees
in workplace safety, as well as taking preventive measures
by the Company.
Supporting inspections of governmental
supervisory authorities
Indicator
2021
2022
2023
Number of supported
inspections
Number of violations
Including OHS violations
7
2
1
6
2
1
12
1
1
Indicator
2021
2022
2023
Penalties (RUB)
362,000 210,000
18,000
Including OHS penalties
(RUB)
130,000
50,000
0
30 – 31
Number of occupational injuries
53
49
42
2021
2022
2023
Number of incidents
Customers
Third-party
employees
O'KEY Group
employees
173
106
105
163
146
44
41
40
67
2021
2022
2023
We regularly audit occupational
health and safety in our stores
and distribution centres
for compliance with Russian
health and safety laws. In 2023,
governmental supervisory
authorities (conducted off-site
inspections of Group stores.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023
805
employees trained
in occupational
health and safety
in a licensed training
centre
586
employees trained
in fire safety
in a licensed training
centre
790
employees trained
in a licensed
training centre
in first aid in case
of occupational
injuries
Dedicated assessment
of working conditions
and occupational risks took
place throughout O’KEY Group.
O’KEY Group’s plans in 2024:
● to beef up the OHS management system;
● to make a dedicated assessment of working conditions
and occupational risks in new workplaces;
● to re-evaluate professional risks;
● to proceed with workplace safety and first aid
trainings;
● to implement the Occupational Health and Safety
Control System, an automated toolkit for our
OHS management system efficacy. It helps to plan,
establish responsibility, identify resources, take
measures and analyse the entire occupational health
and safety management system; and
● to strengthen safety measures for high-risk work
performed by the Company’s employees and third-
party organisations.
32 – 33
Anti-Corruption
O’KEY Group remains committed to honesty, openness, and integrity.
The Group’s ever-improving anti-corruption system combines
organisational, economic, legal, and informational measures. We have
zero tolerance to corruption: the Company and all of its employees
must comply with the relevant laws and ethical business practices.
The anti-corruption policy enshrines applicable law
enforcement procedures as per Federal Law No. 273-
FZ “On Combating Corruption”. Adhering to our
rules and policies, we audited various focus areas
of the Company in the reporting year. We investigated
every report received from our employees or partners,
identified the causes, developed corrective measures,
or undertook actions.
In addition, the Company operates various risk
management and business data privacy tools to avoid
breaking the law and incurring financial and reputational
losses. We use a dedicated Red Flag Report system
in which we can track and identify unlawful affiliation
as well as any anomalies or violations of the Company’s
anti-corruption policy. Thanks to this tool, we can respond
to confirmed corruption cases much faster.
Over the course of 2023, we proceeded
with the procurement transparency methods developed
in 2021. Our Anti-Corruption Department regularly
analyses purchases in chain stores using loyalty
programmes to identify internal and external fraud
based on partner reports prepared in accordance
with the Company’s requirements, as well as monitors
the commercial procurements and electronic bidding
on CisLin and Tender.pro e-commerce platforms. Thus,
we rule out possible fake competition for counterparties
taking part in the bidding.
In the reporting year, we also undertook routine measures
to instil confidence of employees and contractors.
The Company actively joined general meetings
and negotiations with suppliers to promote a culture
of zero tolerance to corruption in any form.
The Group has an ever-improving anti-corruption
portal in line with the strategy to simplify and expedite
investigations related to anonymous warnings, disputes,
or legal requests.
In 2023, the ultra-fresh (meat/fish) commercial
procurements were finally moved to an automated trading
platform. We also automated the analysis of in-store
purchases under the loyalty programmes for internal
and external fraud.
The Company aspires to partner with those
counterparties who follow the principles of legality
and anti-corruption laws. Every contract
with a counterparty includes a binding anti-corruption
clause; otherwise, it will not be negotiated.
The Company consistently trains its employees in anti-
corruption, advocating zero tolerance in accordance
with the Company’s Anti-Corruption Policy. To ensure
transparency, employees of the Economic Security
Department regularly join procurement commissions. All
potential conflicts of interest are reported to the internal
audit and security departments of hypermarkets
and supermarkets which assess corruption risks.
All employees of O’KEY Group can go through
the anti-corruption policy and relevant procedures
when being hired. If specific procedures change,
new versions of documents are sent to employees
for review. The Company’s staff undertakes to respond
to all corruption cases without delay. We guarantee
confidentiality of the person who reports corruption.
Anonymous hotline numbers are available to all employees
and suppliers in every branch and on the Group’s website.
Information posters about
zero-tolerance behaviour in our
offices remind employees
to report any suspicious actions
or incidents to the relevant
hotline.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Internal measures
External measures
• new employees are checked for corruption risks prior
to employment;
• all employees sign a pledge to follow the Anti-Corruption
Policy;
We thoroughly inspect all potential suppliers and service
providers prior to contracting, namely:
• documentation;
• financial health (balance sheets, assets, turnover, debts,
• employees from the procurement and real estate
credits, and court proceedings);
departments as well as in our stores take anti-corruption
courses and attend briefings;
• employees exposed to higher corruption risk, for example,
from procurement and real estate departments, fill out
declarations;
• contracts are monitored every six months;
• critical business processes (e .g ., receipts, write-offs
and returns) are subject to oversight procedures using
IT monitoring software; and
• appeals are addressed via feedback channels .
• absence of affiliation to our other suppliers or our employees;
• customer base, turnover matching the declared tax history;
•
• our suppliers sign a binding agreement in which they accept
local suppliers are additionally monitored;
•
all anti-corruption policy clauses;
if suppliers and contractors violate the anti-corruption
policy, O’KEY Group is entitled to terminate their contracts
immediately .
These measures imply
compliance tests for employees
and suppliers to make
transactions more transparent
and better detect violations.
The year of 2023 marked four violations of the Company’s
rules and standards. Internal checks were carried
out on all identified violations, resulted in a dismissal
of a hypermarket director and two of his deputies. Three
hotline messages were also received. All the revealed
facts and reports were promptly investigated by the Anti-
Corruption Unit of the Security and Risk Department.
In three cases, the information was not confirmed.
In 2023, a number of anti-corruption procedures
were updated to obtain earlier warnings and prevent
such incidents. In 2024, we plan to further implement
and enhance our action plans to develop a culture of zero
tolerance of the Company’s employees and suppliers
to corruption in any form.
On the eve of the New Year 2024, we conducted a win-
win lottery among the employees of O’KEY Group
to draw gifts received from our suppliers and contractors
and given by our commercial department employees
to the lottery fund.
The Company plans to complete the implementation
of a programme for the full-scale use of the DLP (Data
Loss Prevention) system. The system is set to prevent
leakage of commercial and sensitive information
and personal data of the Company’s employees.
We also plan to conduct internal audits in the Company’s
departments in order to identify and prevent
any possible corruption among employees, including
eliminating conditions and causes that may contribute
to the emergence of corruption schemes in the future.
34 – 35
Environmental Responsibility
Our customers are increasingly conscious of environmental issues.
The retail industry is impacted by shifts in environmental regulations
and investor evaluations that are based on environmental, social,
and governance (ESG) criteria. Consequently, it has become necessary
for businesses to adopt environmentally responsible practices in order
to secure their position in the market sustainably. At O’KEY Group,
we prioritise resource conservation and minimisation of our carbon
footprint, and thus we implement various strategies to achieve this.
Since 2019, our Company has been implementing the Live
Green corporate policy, which serves as a guiding force
for our operations. This policy motivates us to initiate
projects that align with our core values. We are constantly
seeking out innovative methods to reduce resource
consumption and we are advocating for ESG principles
amongst our customers to improve our sustainability
initiatives. Working with environmental and social
NGOs provides us with a platform to launch awareness
campaigns that serve this purpose.
Reducing the use of disposable
plastic packaging
O’KEY Group has launched various initiatives to reduce
the use of disposable plastic packaging across
its operations. The Company has been gradually
introducing eco-friendly alternatives to replace traditional
plastic packaging. For instance, O’KEY Group has launched
an initiative to replace plastic bags with paper bags
or reusable bags. The Company has also introduced eco-
friendly packaging for fruits and vegetables, such as using
biodegradable mesh bags or cardboard trays. We offer
this type of packaging not only at the cash desk but also
in the department of loose-weight products, thereby
accustoming customers to the new social norm.
At our stores, we offer bio-bags that are fully
biodegradable within a year. These bio-bags are just
as strong and high-quality as traditional plastic bags,
and they are safe to use with food items. By introducing
this initiative, O’KEY Group continues to lead the way
in the Russian food retail by offering a unique
biodegradable solution.
The Group started partnering with NGOs and suppliers.
O’KEY Group collaborates with non-governmental
organisations and suppliers to launch initiatives aimed
at reducing plastic waste. For instance, the Company
works with NGOs to raise awareness about the negative
impact of plastic waste and encourages customers to use
eco-friendly alternatives.
O’KEY Group is also working on reducing the amount
of packaging used for products. This includes exploring
ways to optimise product packaging to reduce
the use of plastic and other materials. Overall, O’KEY
Group’s initiatives to reduce the use of disposable
plastic packaging are aligned with its commitment
to environmental responsibility and sustainability.
To demonstrate our commitment to responsible
consumption and retail practices, we conduct
regular internal audits to ensure strict compliance
with the Russian environmental regulations. Additionally,
we perform a quarterly monitoring of atmospheric
and noise pollution in the intermediate zone to guarantee
that our stores do not negatively impact the local
community’s living conditions.
Energy efficiency
At O’KEY Group, we prioritise the energy efficiency
of our operations and continuously work towards
reducing our overall energy consumption. We closely
monitor environmental data, including energy use in our
supermarkets, and undertake measures to minimise
energy usage. To achieve this, we have implemented
various initiatives such as replacing outdated luminescent
lighting with modern recuperators and energy-efficient
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 LED lights and LED signboards. We have also replaced
outdated refrigeration elements and HVAC systems
with state-of-the-art, energy-saving devices. Furthermore,
we have adopted energy-efficient building management
systems (BMS) to maximise energy efficiency.
The energy-saving measures we implemented have
yielded impressive results. By installing LED lamps
in the parking lot and replacing some of the interior
lighting with LED fixtures, as well as implementing a “Smart
House” system that automatically controls the interior
lighting and disconnects part of the ventilation systems
at night, we were able to reduce energy consumption
by nearly 15% in the stores where these measures were
implemented.
Compared to the same
period last year, electricity
consumption was reduced
by 5.1% in 2023
Total amount
of consumed
energy, kWh
LFL
2021
2022
2023
387,849
372,356
353,373
380,726
364,612
338,110
Waste Management
The Waste Management Policy is applied across all of our
stores at O’KEY Group to regulate our waste management
processes.
Proceeds from sales
of recyclable materials,
RUB mn
2021
389.4
2022
293.3
2023
244.1
At our company, we prioritise reducing the amount
of waste that ends up in landfills by implementing separate
waste collection. We take additional steps by transporting
biological waste and lamps to specialised facilities, while
recyclable waste such as polythene film, plastic boxes,
and wastepaper is compressed and sold for further
recycling. Additionally, we collect and sell banana boxes,
waste oil, pallets, and metal scrap for recycling purposes.
To ensure responsible waste management, our main
operational sites feature water treatment facilities that
include petrol and sand catchers to filter stormwater
from parking areas. Before being discharged into public
sewers, we employ grease catchers that filter wastewater
from our production facilities.
36 – 37
Our Communities
O’KEY Group extends support to disadvantaged communities
within its operational regions. This includes individuals and families
who face financial hardship, single mothers, those belonging
to large families, elderly individuals who require assistance,
and children with disabilities. Our aid efforts in 2023 were
carried out independently and in collaboration with various
stakeholders, including non-profit organisations volunteers,
and charitable foundations. These partnerships allowed us
to distribute funds and food to those in need more effectively.
Priorities of O’KEY
Group’s charity
programmes
● To help people in hardship
● To help veterans of the Great
Patriotic war
● To support children’s artistic
endeavours
Major charity
partners
Directions
of help
● Advita
● “Step forward” festival
● Local charity foundations
● Various humanitarian
organisations that help people
in need
● Providing financial assistance
● Collaborating with foundations
and non-profit organisations
to feature fundraising activities
and grocery donations
● Providing assistance with food
supplies
Supporting Vulnerable Groups
Being a socially responsible corporation, our aim
is to assist disadvantaged communities and hike consumer
awareness regarding the significance of caring for those
who require the most help.
The high inflation rate and unstable economic
conditions had adverse effects on various social
groups. In collaboration with charitable foundations
and customers, O’KEY hypermarkets conducted initiatives
to gather essential items for economically disadvantaged
communities. The campaigns were aimed at aiding low-
income families with children, the elderly, disabled
individuals, and those facing the difficult choice between
purchasing food or medicine.
Several “Basket of Kindness” campaigns were conducted
in various regions of the country with the aim of assisting
individuals in need. As part of this initiative, designated
boxes were placed in supermarkets where patrons
could donate food. The groceries were made available
in a straightforward and uncomplicated manner. Such
assistance has been and will continue to be crucial
for individuals facing difficult circumstances. Foodbank
Rus is a Russian charitable organisation that provides
direct support to local communities and serves
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 38 – 39
Over RUB
1.7 mn
raised through donation boxes
in 2023
RUB
17.5 mn
raised in total
Veterans support
Since 2002, O’KEY has been showing its support
for the veterans of the Great Patriotic War through
an annual campaign. This initiative aims to honour
and provide aid to those who fought for the country’s
freedom and peace.
Throughout the years, we have extended our assistance
to veterans of the Great Patriotic War in all the regions
where we operate. As part of our efforts, we distribute
gift cards to them ahead of this significant holiday. This
gesture allows them to make purchases in our stores,
which we hope would make their lives more comfortable.
as an exemplary model for transparent and effective social
outreach efforts.
We also entered into a long-term partnership
with the “Dari Edu” charitable foundation to install
boxes in our stores on a permanent basis to collect
food products with an extra shelf life. On a regular
basis, volunteers from the foundation empty the boxes
and donate food to those in need.
Child Support
Supporting children is a top priority for O’KEY Group.
Our objective is to foster the creative abilities of children
with disabilities.
Throughout 2023, we provided charitable aid to the “Step
Forward” International Art Festival for such children in line
with our primary objective. The festival is a sustainable
platform that showcases the artistic potential of children
with disabilities. Renowned artists, academic symphony
orchestras, and conductors participated in concert
programmes alongside these children. O’KEY Group
donated RUB 500 thousand to the festival to assist these
children in realising their full potential, building self-
assurance, and fulfilling their cherished aspirations.
Support with Treatment
Since 2016, O’KEY Group has been dedicated to providing
financial assistance for medical treatment for children
and adults with cancer. O’KEY Group is a long-time
partner of AdVita, a St. Petersburg-based charitable
foundation that specialises in helping and has been one
of its loyal charity partners for a long time. We have
installed donation boxes next to our counters in our
hypermarkets in St. Petersburg, so that our customers can
aid those in need.
For several years now, the funds collected through these
donation boxes have been utilised primarily for diagnosis
and treatment. Various medications and laboratory
supplies are purchased, especially for the laboratory
of the Raisa Gorbacheva Memorial Research Institute
of Children Oncology, Hematology, and Transplantation,
which is a participant in the programme.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 3
OPERATIONAL
REVIEW
Our three complementary formats, O’KEY hypermarkets,
DA! discounters, and the e-commerce platform, ensure
the fulfilment of customers’ needs. We have online
delivery in all cities of O’KEY presence.
40 – 41
RUB
205.8 bn
+2.8% Group net retail revenue in 2023
RUB
63.8 bn
31% reached DA! in Group net retail revenue
RUB
7.7 bn
5.4% E-commerce in Group net retail revenue
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 42 – 43
on the fresh and ultra-fresh categories, at enhancing
the quality and range of our food and non-food products
under our own brands, maintaining an impeccable quality
of the assortment and the best service, and at renovating
hypermarkets. As of the end of 2023, O’KEY Group has
remodelled 17 O’KEY stores in its key cities of presence:
Moscow, St. Petersburg, and Sochi.
In 2024 and further, we will roll out gradually
the reformatting programme across all our hypermarket
chain. The Group believes that hypermarkets will remain
competitive in the future on the basis of intelligent
management of this format.
Hypermarkets business
in 2023 at a glance
40,000
SKUs
RUB 141.9 bn
Net retail revenue
>50%
Fresh & Ultra-fresh in revenue
6,700 m2
Average selling space
O’KEY
Hypermarkets
At the heart of our business are the O’KEY hypermarkets that
provide our customers with a well-curated and extensive selection
of products, aimed at creating a compelling value proposition.
We firmly believe that hypermarkets will continue to be a competitive
and potentially lucrative format. Our approach incorporates
the best practices from the food retail sector and upholds
quality standards across the spectrum, ranging from assortment
strategies to customer service and store layout design.
Performance overview
As a part of the strategic programme to enhance
the competitiveness of its hypermarkets, the Company
is upgrading its O’KEY stores. We intend to gradually
upgrade stores in key regions and locations depending
on the competitive environment.
including 300 items of ready-to-eat meals and bakery
products from the chain’s own bakery. Their growing
share in our offering follows a similar trend in consumer
behaviour observed over the past few years, with more
and more customers looking to buy ready-to-eat meals.
Apart from the new design, this means implementing
a new approach towards the product range, the customer
service, and the experience. We focused on the fresh
and ultra-fresh categories, own brands and own
production, the wine and deli selection. In 2023, fresh
and ultra-fresh product categories accounted over half
of the chain’s net retail revenue.
As of 31 December 2023, the total number of O’KEY
hypermarkets was 77, with a total selling space
of 515.8 thousand m2. In 2023, we solidified our position
in our key North-West Region of Russia by opening a new
O’KEY store in St. Petersburg. The hypermarket has
a selling space of 5,125 m2 and follows a renewed concept
created in response to market challenges.
Today, O’KEY hypermarkets are proud to offer more than
40 thousand food and non-food items, including a more
than 6 thousand SKU range of fresh meat, poultry, fish,
and dairy products, confectionery, fruit and vegetables.
All chain stores offer products of their own production,
O’KEY is proceeding with the hypermarket transformation
programme as a part of the Group’s strategy related
to strengthening its market position and supporting
its sustainable long-term growth. The programme aims
at rebalancing the assortment with a specific focus
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Private Labels
O’KEY private labels (PL) have earned an excellent reputation
for outstanding quality and a wide selection of goods. Over
the years, we have been successful in our strategy of the rapid
development of own brands, delivering on a more balanced
assortment and offering our customers goods of superior quality
at a better price (15–20% cheaper than branded alternatives).
Our variety of private label products has three major
brands covering the entry, medium, and premium price
segments, as well as several own brands in Pet Food
and C&D categories.
O’KEY DAILY
(That’s what you need!)1
Fantasy Brands
(Pet Food and C&D)
entry segment 348 SKUs
324 SKUs
O’KEY
Selection of O’KEY
44 – 45
Throughout 2023, we worked hard to ensure an excellent
value for money for our customers. With the ultimate goal
of offering a variety of high-grade products at attractive
prices to customers, O’KEY continued to enhance
the quality and to update the existing range of its private
labels.
Despite the challenges we faced for private labels
in the reporting year, we managed to expand our
imports by 70% year-on-year with new offers for PLs,
as well as exclusive brands (Basso, CLEACE, Delicios,
Lapiths, Los Tres, and Verdini).
In 2023, the share of private label products amounted
to 7.0% of O’KEY hypermarkets net retail revenue,
and to 10.9% of the net retail revenue of respective
product categories where private labels are present.
In 2023, O’KEY and the O’KEY Selection private label
products won ten gold medals at the prestigious
international Quality Guarantee competition, and three
products received a diploma.
Plans
Our strategic priority in our own brands development
is to ensure the highest quality of products along
with a diverse assortment.
Gold medals
● Preserved mussels in oil 180gO’KEY
● Camembert cheese 50% O’KEY
● Beef for cooking cuts
chilled 400g O’KEY
● Chips paprika 140g O’KEY
● Milk UHT 3 .2% O’KEY
● Raspberry jam O’KEY
● Beans jar 460g O’KEY
● Canned corn 340g O’KEY
● Condensed milk 8 .5% 380g O’KEY
● Mineral water with gas 1,5l O’KEY
medium segment 1,134 SKUs
premium segment 104 SKUs
In 2024, we plan:
1,910 private label SKUs
available in O’KEY hypermarkets
1 “O’KEY DAILY” is applied for food categories, “That’s What You Need!” is applied for wine and non-food categories.
● to enlarge the range of bio/organic products under
private labels;
● to double imports and increase the exclusive brands
in terms of both SKUs and customer needs we meet;
● to expand the geography of imports (India, South
America, Australia, Germany, etc.), launching new
tastes for our customers;
● to continue rebranding and redesign of premium SKUs;
● to continue revision of the C&D range towards more
premium level; and
● to continue to improve the quality of the current
assortment to provide customers with the most
delicious and attractive PLs products.
Diplomas
● Chevapchichi Balkan 300g O’KEY
● Moiva smoked fish 300g O’KEY
● Herring cut file in oil
with dill 500g O’KEY
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Supply Chain
Quality and Safety
46 – 47
O’KEY Group operates an efficient supply chain that allows us to serve
our customers’ needs in all our regions of operation. In 2023, we continued
to enhance our supply chain via upgrading our existing distribution
centres, improving our logistic operations, implementing cutting-edge
digital solutions, and building transparent relationships with suppliers.
At O’KEY Group, we are committed to maintaining the utmost
standards of safety and quality throughout our entire supply
chain, with a focus on providing our customers with the freshest
and highest-quality products possible. To ensure top-quality
goods across all of our stores and to meet the evolving needs
of our customers, we implement a risk analysis and critical control
point (HACCP) approach. Our quality control system covers
every aspect of our operations, from production to consumption,
and is complemented by internal standards that often exceed
industry requirements. By adhering to these rigorous standards,
we strive to deliver unparalleled quality and safety to our customers.
Murmansk
OVERALL NUMBER OF DCs: 4
Moscow: 2
(53.8 k m2 and 18.1 k m2)
Categories:
Fruits
and vegetables
Fresh
FMCG
Non-food
Alcohol
St. Petersburg
NORTH-WEST FD
The O’KEY logistics system encompasses four distribution
centres: two federal centres in Moscow and two regional
centres in St. Petersburg with a total floor space
of 101.3 thousand square metres as of December 2023.
The federal distribution centres are based in Moscow
and distribute fresh products, fruits, and vegetables,
FMCG, non-food, and alcohol products to all stores across
the country. The regional distribution centres are located
in St. Petersburg, one of them specialising in FMCG
and non-food, and the other — in fruits and vegetables
and fresh products. This supply chain organisation enables
O’KEY Group to balance between logistical costs, stock
management, and a high level of service.
In 2023:
● The 3PL project has been fully launched. The average
turnover per month is 750–800 thousand boxes.
● Improvements to Pallet Height Management
were implemented – the pallet height parameter
can be parameterised individually for each client,
as a result – the utilisation of transport increased
without compromising the frequency of shipments.
● Accounting of the recycled packaging was started.
Turnover control and increase in the volume of return
of containers to the DC.
St. Petersburg: 2
(21.8 k m2 and 7.6 k m2)
Categories:
Fruits
and vegetables
Non-food
Fresh
FMCG
CENTRALISATION RATE: 63.4%
Plans for 2024:
● To start operations 3PL in Yekaterinburg
and Krasnodar;
● Yard management System (YMS) – automation
● To optimise the distribution chain according
was implemented to assign suppliers to the gate
acceptance, notification of drivers on call and sms,
which increases the turnover of the dock.
● Fruits&Vegetables acceptance not later than 4:00 p.m.
was implemented for all temperature DCs. This led
to an increase in the share of PBL assortment and,
as a result, an improvement in the quality of products.
● Electronic signature verification functionality
was implemented for internal movements, avoiding
the paper version of TORG-13 when moving within
the Company.
to the logistics value of the goods;
● To move away from PBL waves to evenly distribute
the load on the DC along the PBL flow;
● To develop video analytics at DC to improve quality
at all stages of DC operations;
● To automate the business process
of selecting a contractor for the acceptance of goods
at the DC;
● To develop the 3PL project to connect new product
categories;
● To carry out remote pre-trip medical check-up;
● To implement automated inventory system of pallets
in stock; and
● To avoid batch accounting of alcohol.
Moscow
CENTRAL FD
Nizhny
Novgorod
Syktyvkar
URAL FD
O’KEY Group maintains quality and safety
through a dedicated quality control department, which
upholds internal quality standards that align with both
Russian Federation legal requirements and global best
practices in retail.
SIBERIA FD
Surgut
Ekaterinburg
VOLGA FD
Togliatti
Krasnodar
Sochi
Rostov-
on-Don
SOUTH FD
Astrakhan
Ufa
Tyumen
Omsk
Irkutsk
Novosibirsk
Krasnoyarsk
O’KEY Group’s Quality Management System (QMS) is built
upon the principles of risk analysis and Critical Control
Points (HACCP) to ensure the safety of our products. Our
QMS adheres to key hygiene control measures at all stages
of food production. As legislation and market dynamics
evolve, we continuously refine our approaches to quality
control, aligning our QMS with cross-functional targets,
customer needs, and business objectives. We also regularly
update our additional quality standards to align with global
retail best practices and the specific requirements of our
business.
Standard measures for ensuring quality and safety
at O’KEY Group include conducting preliminary quality
control procedures, monitoring product assortment
in both stores and warehouses, and conducting external
and internal audits of our stores and supply chain. Our own
production and private label products undergo laboratory
monitoring to confirm their high quality and safety.
In 2023, we conducted 822 quality checks of stores
for compliance with processes across the country.
In addition, in 2023, we tested 11,373 product names
in independent accredited laboratories, which
is an average of almost 1,000 items per month (948).
The products passed a full examination in terms of quality
and safety parameters, in accordance with the established
legal requirements, and often more stringent criteria
established by the Company.
We are also implementing initiatives to improve
the skills of our employees in quality control. In 2023,
all our employees in the stores passed special courses
on the following topics:
● – “Basic rules for assessing the quality of products
of the F&V category in the summer assortment
of O’KEY hypermarkets”; and
● – “Training on acceptance for the quality of alcoholic
beverages, directly imported goods, food products
except for F&V category, and non-food products”.
An informational introductory video was shot
on the process of acceptance of products of F&V category
at the Company’s distribution centres.
One of the key components of the guarantee
of constant product quality is to ensure compliance
with the requirements of internal processes; therefore,
we conduct internal quality audits of our hypermarkets
on the regular bases.
In 2023, 59 product quality specifications were developed
for internal use.
In 2023, we established a process for automating product
quality acceptance in O’KEY distribution centres, which
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 made the process of sampling and examination of goods
more standardised, orderly and efficient.
The Company actively participates in regional and national
quality initiatives. O’KEY Group successfully passed
the inspection audit and received an excellent status
as part of the voluntary certification “Made on Don”
in the Southern region of Russia. Moreover, the Company
took part in ACORT quality committee initiatives, such
as communication with authorities on legislative issues,
participation in round tables with state control bodies,
and contribution to new normative documents developing
procedures.
We participated as a speaker in various events organised
by the Ministry of Industry and Trade of the Russian
Federation, Roskachestvo, specialised unions and other
organisations.
Special attention is paid to the quality of products
manufactured under our private labels (PL). Last year,
463 new domestic products under various private labels
were approved by the Quality Control Department.
As a result of fruitful work, dairy products produced
under the O’KEY trademark received a distinctive “Quality
Mark” of the national monitoring system Roskachestvo
by the Government of the Russian Federation. The award
ceremony took place during Retail Week 2023.
At the “Quality Assurance 2023” International Competition,
our private labels and own production received 20 gold
medals and eight Quality Diplomas, which indicates that
the jury recognised the winning products as the best
in the presented nominations.
Over 2023, the Company continued its project for the risk
evaluation and quality audit of products from our suppliers.
In the reporting year, we conducted 21 audits of our own
production at supplier’s facilities. We also conducted
98 audits of our private label products’ suppliers. In 2024,
we will continue to do so to ensure the quality of our
products for our customers.
In addition, a supplier quality assessment system
has been developed, which is based on the following
main parameters: the results of laboratory control
of the supplier’s products, customer reviews of this
product, audits, and other essential quality and safety
parameters. In 2023, this rating covered high-risk products
manufactured under their own trademarks.
standards, technical instructions, procedures related
to the quality of products such as our own pastries, meat
and fish, processes in stores and work with contractors
providing various kinds of services. Together
with the commercial and operational teams, we have
developed 514 technical specifications of the dishes.
We have also introduced a new method of confirming
the expiration date for 60 items, including the category
of semi-finished products, in addition, the expiration dates
for 114 SKUs of packaged products of our own production
have been declared and confirmed, which can be sold both
through online delivery and through traditional retail.
During the year, we conducted all the necessary laboratory
tests of our own products and received 61 declarations
for 2,073 product names.
Before delivering goods directly to stores and distribution
centres, the quality control department monitors labelling
and documents for products at the stage of entering
into the assortment. This control is carried out on a joint
portal with ART-TRADE suppliers and allows you to quickly
resolve issues with suppliers in case of inconsistencies. This
allows us to upload the necessary data in a timely manner,
avoid technical errors on the part of suppliers and comply
with all necessary deadlines. In 2023, 15,682 product
names were agreed upon and delivered to stores using
the platform, which accounted for 100% of the supplier
applications received.
Plans
The Company intends to continue enhancing its quality
management system and food safety control procedures,
going forward in terms of supplied branded goods, own
production, private labels, imports as well as operations
at its distribution centres.
In 2024, we will focus on:
● Continuing the updating of the Сompany’s Quality
Management System;
● Training Hypermarket directors and key personnel
on product quality and safety issues;
● Maintaining the process of introducing new products
into the range of own production, own brands and all
categories of goods sold on the network;
● Ensuring optimal shelf life of products manufactured
in our hypermarkets;
● Automating the reporting on traceability systems
(FGIS Mercury);
In 2023, we continued to improve the quality of our own
products. To do this, we have developed and updated
the Company’s regulatory documents, including 24 internal
● Educating our suppliers in quality management;
● Expanding the scope of the suppliers evaluation
system “Supplier Quality Rating”;
48 – 49
● Creating quality catalogues for products of our
● Inspecting suppliers ‘ production facilities in terms
own production and our own brands, which will take
into account the best practices in terms of product
quality, including, but not limited to consumer
preferences, as well as communication through
packaging;
of quality and periodic laboratory testing
● Controlling products sold, paying special attention
to products under their own trademarks and goods
of their own production; and
● Changing the approach in creating PLs and own
production.
E-Commerce
In 2023, the main focus of the e-commerce development
was the optimisation of processes and increasing
the efficiency of operations. These initiatives allowed us
to maintain our solid position in a fast changing market
environment and demonstrate strong online revenue
growth.
A landmark event during the previous year was the pilot
launch of an O’KEY online store in the regions. In 2023,
as part of the test, our internet store was launched in two
new cities of Sochi and Krasnodar. The launches were
successful and showed potential for further development,
as we saw consumer demand in the regions as stable,
with a tendency for growth.
Also, in 2023 we put special focus on the quality
of service and goods sold via online channel. As part
of these measures, products marked with a Quality
Mark (Roskachestvo) were separately highlighted
on the showcases of our online store.
Highlights of 2023
Share of e-commerce in Moscow
Online sales
7.9%
+24% YoY
Share of e-commerce in St.
Petersburg
3.8%
Share of e-commerce in O’KEY
revenue
5.4%
3,646
thousand orders
6,053
thousand active users of the website
and mobile application
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Plans for 2024
1 . To further roll out our own internet store
4 . To retain focus on the quality of the goods sold
in the regions of O’KEY hypermarkets presence .
2 . To develop collaboration with aggregators in order
to widen the footprint of O’KEY’s online presence,
enhance brand recognition and increase revenue
growth .
via online channel .
5 . To enhance the functionality of our website
and mobile application in order to increase conversion
rate and improve users’ shopping experience .
6 . To further promote ‘fast delivery’ proposition
3 . To improve the assortment range of own production
with a high level of service and speed of delivery .
and bakery products in the online channel,
including planned redesign of presenting the dishes
on the website and in the mobile application .
7 . To present all promotions and the entire range
on the Company’s online storefronts .
8 . To grow the share of e-commerce channel
in the Company’s revenue .
50 – 51
DA! Discounters
The increasing emphasis on cost-effectiveness has
given rise to a new store format, which encouraged us
to reinvigorate our DA! discount concept with a premium
appeal. The DA! business continues to be a leading
expanding supermarket chain in the Russian
market, playing a crucial role in driving the Group’s
revenue growth. In 2023, DA!’s net retail sales
demonstrated a substantial growth of 19.8% year-on-
year, reaching 31.0% of the Group’s net retail revenue
in the same period.
DA! discounters leverage the best international practices,
cutting-edge in-house innovations and the state-
of-the-art technologies within the retail industry.
At the same time, DA! stores are specifically tailored
to meet the unique preferences and demands of our
target audience. Our business model has consistently
demonstrated its efficiency year after year, and we have
garnered significant recognition from our loyal customer
base.
DA! stores have a well-balanced product range, covering
all customer needs in terms of food items and the most
popular non-food items. We achieve this by integrating
our supply chain with O’KEY hypermarkets and securing
the most advantageous procurement arrangements
with our vendors, allowing us to provide our customers
with exceptional value for their money. Additionally, our
strategic store placement, exceptional customer service,
state-of-the-art equipment, and expansive shopping areas
grant DA! a distinct competitive advantage.
DA! discounters adhere to the “every day low price”
(EDLP) policy, which is largely supported by our own brand
products. Our proprietary brands provide evident cost
benefits of 20–30% in comparison to equivalent quality
branded products, effectively catering to price-sensitive
customers. These exclusive brands are meticulously
crafted and solely available at DA! stores.
Over the past three years, the discount segment of DA!
has demonstrated substantial and consistent average
annual revenue growth over 30%. We foresee a double-
digit revenue growth in the near future.
Strategic priorities of DA!
Own brands
development
Growth
and expansion
Achievement
of superior
financial results
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Discounter Business at a Glance
Performance
52 – 53
673 m2
average store selling space
31.0%
>60%
‘fresh’ in sales mix
~50%
of Group net retail revenue
own brands in net retail revenue
220
number of stores
3,420
SKUs
average product range
100%
logistics centralisation rate
DA! network has shown robust growth, transforming
from a relatedly small local network with 35 stores in 2015
to the major fast mover of the Russian grocery market
with 220 stores in Moscow, as well as in Tver, Tula, Kaluga,
Ryazan, and Moscow Regions.
RUB 63.8 bn
net retail revenue in 2023
+19.8% YoY
DA! discounters’ key principles
● We continue to adhere to the concept
● Cleanliness in stores, correctness
of a highly convenient store,
meeting all needs of our customers
and providing the highest possible
level of service . We strive that our
customers spend their time in our
stores with smiles and pleasure .
● Our customers’ wishes and rights
are our main values and guidelines .
● We welcome any feedback from store
visitors and consider every complaint
or claim without any exception
in the shortest possible time,
providing a prompt response .
● We value our customers’ convenience:
our wide aisles and block layouts make
shopping faster and more efficient .
Our personnel are always open
and friendly to the customer .
● We value our customers’ time:
we adhere to the principle of prompt
and friendly service .
of price tags, friendliness
and smartness of our personnel,
convenience and speed of the whole
shopping process ensure our
customers’ loyalty .
● We strive to respond to all current
market trends as quickly as possible
and are successful in offering our
customers novelties in our product
range on a weekly basis .
● We adhere to an EDLP policy,
largely supported by our own brand
products, which offer clear cost
advantages of 20–30% against
branded goods of comparable quality .
● We are focused on supplying our
customers with the freshest goods
by improving quality control across
supply chain and by expanding our
assortment in the fresh and ultra-
fresh categories .
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 In 2023, we:
● opened 27 new stores, net of closures;
● worked on the enhancement of our product range
with emphasis on fresh and ultra-fresh products
and ready-to-eat products;
● introduced more than 100 new SKUs under our private
labels;
● continued the digital transformation of the chain
through the development of a variety
of IT infrastructure projects and the implementation
of new software programs;
● DA! continued to optimise the supply chain in order
to provide a better customer experience;
● as part of our logistics optimisation, DA! expanded
its storage capacities for dry food products by renting
additional space of 10 thousand m2 at one of O’KEY
Group’s distribution centre in Moscow region; and
● modernised the lighting in DA! stores.
In our discounters’ marketing policy, we strive to get
closer to our customers and seek to meet all their
changing preferences. According to the latest marketing
research, our main customers are represented by young
families with dependent children or young childless
families, as well as working families of middle and older
age with a middle level of income. All of them are partly
promo-oriented but are willing to try fashionable new
products. Likewise, 68% of our assortment is evaluated
by customers as optimal and mostly good, which is 17%
higher than the average figures in the whole discounter
segment.
DA! discounters’ profit from synergies with O’KEY
hypermarkets in procurement, imports and relations
with suppliers and producers, which is mainly the result
of increased purchasing power, maintaining the economies
of scale effect, as well as improving the quality
of the goods we source.
To ensure robust growth, DA! discounters remained
focused on managing their balanced assortment and own
brand portfolio and continued offering the best value
for money to the customers.
In terms of our approach towards collaboration
with suppliers we strive to work directly
with manufacturers rather than with importers
and distributors. We also aim to build long-term
partnerships with our suppliers for our private labels,
while our own brand product sales often exceed
even A-branded product sales. On the other hand,
we contribute to the development of local manufacturers
by tapping into synergies with them and ensuring large-
scale purchases.
Fresh Offer
DA! discounters keep up with the general trend towards
fresh and ultra-fresh products, offering a wide range
of dairy, fresh meat and poultry, fruits and vegetables.
In 2023, the share of fruits and vegetables, fresh
and ultra-fresh products in the discounter’s sales mix
exceeded 60%.
Our range of fresh products includes own brand SKUs,
some of them under the “farm label” which represents
regional and traditional production of outstanding quality.
Another feature of our discounters is a wide (over 40 SKUs)
range of freshly baked pastries. In order to ensure freshness
of our goods, we practice direct import and deliver fruits
and vegetables to all our stores on daily basis.
54 – 55
Private Labels
and Own Production
We strive to offer all relevant private labels across all
our product range (with the exceptions of cigarettes,
sensitive goods and baby food) in order to motivate our
customers to recurrent visits to our shops. We have
achieved impressive results in optimising our operating
and advertising costs and applying the EDLP concept.
Therefore, our private label products are less expensive
than popular alternatives of comparable quality. We also
enhance constantly our supply chain, giving emphasis
to cost generating functions and passing all cost-saving
advantages to our customers while maintaining good
margins. All these factors enable us to build an appealing
customer value preposition and maintain relatively lower
prices than our competitors in the Russian discounter
format.
DA! own brands:
20–30%
cheaper than branded products
of the same quality
We are focused on the prudent selection of our own
brands manufacturers and strive to develop long-term
mutually beneficial collaborations with them in order
to provide an impeccable quality of goods and ensure
perfect packaging design close or similar to the branded
assortment. To ensure all our private label manufacturers
meet the highest quality standards, we only work
with innovative manufacturers that share our commitment
to quality.
Developing Own Brand
1
2
Thorough selection
of manufacturers —
innovative young
companies ready
to offer a special quality
product at the best
price and to meet our
requirements
Joint development
of product
and packaging, close
or similar to branded
assortment in terms
of quality
3
Strict quality
control
Private label (PL) products remain one of the key drivers
of DA!’s financial results and show better sales growth
than our branded products. In 2023, PLs accounted
for around 50% of DA! revenue. We are continuously
working on extending the range, improving the quality
and packaging of our own branded products. In 2023,
we introduced more than 100 SKUs. Our assortment
of private label SKUs reached 1,367 SKUs. For our private
label, we use more than 90 registered brands that
are used as umbrella brands for different categories
and quality levels.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Products Under Our Private Labels (Brands)
Supply Chain
56 – 57
DA! maintains smooth operations across all its supply chain
and stores, which enables us to ensure the robust growth
of our network and to quickly meet the bulk of customers’
needs. In the reporting year we continued to improve
the productivity and effectiveness of our supply chain
by applying the best digital solutions, improving both
collaboration with suppliers and our logistic capabilities.
The DA! supply chain includes one own distribution
centre, which is designed to serve a large number
of stores efficiently. The distribution centre with an area
of 60 thousand m2 is based in Stupino district
of the Moscow Region and provide services for all 220
DA! stores. We also operate two external warehouses
located in the Moscow Region and used for long-term
storage. In 2023, DA! expanded its storage space for dry
food products renting additional 10 thousand m2 at one
of O’KEY distribution centres in the Moscow Region.
We deliver products in the fresh, vegetable and fruit
categories on a daily basis with no stockholding
at our warehouse. This unique delivery model helps us
to maintain a high level of freshness and the utmost
product availability across our discounters. DA! logistics
is fully centralised with 100% centralisation rate.
Plans
In 2024, we plan:
● to focus on further improvement of our customer
● to take measures to even more strengthen our price
proposition at optimal prices;
● to enlarge the range of ultra-fresh products based on
positioning compared to the competitors; and
● to continue modernisation of trade equipment and
customer surveys;
in-store lighting.
● to continue to optimise our internal processes to
further improve business efficiency;
49.9%
share in DA! revenue in 2023
39.2%
share in number of SKUs
1,367 SKUs
under own brands
More than
100
private label SKUs was introduced
and improved recipes
We will do our upmost to further optimise and extend the private
label assortment, improve its quality and strengthen our positioning.
Quality and Safety
Another important feature of our DA! discounters’
network is the constant excellent quality of goods
in all stores. We aim to win the trust of our customers
through the freshness and quality of our product range,
maintaining an efficient quality management system, which
encompasses all stages of operations and is improved
on an ongoing basis. We strictly follow all provisions
of Russian legislation in terms of quality and safety,
as well as the requirements of the HACCP system.
The main focus of our attention is impeccable quality
of our private label products. In addition to complying
with all requirements provided by legislation
and the related standards, we conduct quality audits of all
our private label suppliers and their products.
Our private label products’ producers undergo external
audit according to the Global Food Safety Initiative
(GFSI) requirements. The GFSI is a business-driven
initiative for the continuous improvement of food safety
management systems with the ambition to ensure
confidence in the delivery of safe food to consumers
worldwide. The GFSI include the definition and control
of the minimum requirements for food safety certification
programmes and a robust benchmarking process.
GFSI benchmarking and recognition of existing private
standards is actively used for food safety certification
programmes with the objective to enhance confidence,
acceptance and implementation of third-party
certification along with the entire food supply chain.
The frequency of these audits depends on the results
of the previous audits and on the assessment
of the potential risks. We also arrange laboratory checks
with a frequency varying from one to twelve per year,
based on the potential risk of the product category
and on precise product features.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 4
FINANCIAL
REVIEW
O’KEY Group demonstrated solid results in the reporting
year. We were able to maintain a stable performance
in our hypermarket format and continued to improve
operational efficiencies of the discounter segment.
58 – 59
RUB
207.9 bn
Group revenue in 2023
RUB
47.7 bn
Group gross profit in 2023
RUB
17.0 bn
Group EBITDA in 2023
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 60 – 61
∆ YoY, %
2.8%
(3.3%)
19.8%
1.8%
(0.3 p.p.)
5.3%
0.5 p.p.
(56.3%)
28.8%
n/a
n/a
-
(0.2 p.p.)
(5.5%)
(0.2p.p.)
20.3%
0.1 p.p.
FY 2023 financial
highlights1
Group profit and losses
highlights in FY 2023
RUB mn
Total Group revenue
O`KEY
DA!
Gross profit
• Gross profit margin, %
Selling, general and administrative expenses
• SG&A, % of revenue
Other operating expenses, net
Finance costs, net
Foreign exchange (loss)/gain
Net (loss)/profit
Group EBITDA
• Group EBITDA margin, %
O`KEY EBITDA
• O`KEY EBITDA margin, %
DA! EBITDA
• DA! EBITDA margin, %
2023
207,865
143,980
63,885
47,660
22.9%
(42,516)
20.5%
(292)
(7,267)
(1,074)
(2,878)
17,026
8.2%
12,643
8.8%
4,383
6.9%
2022
202,171
148,824
53,347
46,808
23.2%
(40,390)
20.0%
(667)
(5,642)
313
242
17,020
8.4%
13,377
9.0%
3,643
6.8%
RUB
207.9 bn
Group revenue
(+2.8% YoY)
RUB
47.7 bn
Group gross profit
(+1.8% YoY)
22.9%
Group gross margin
RUB
17.0 bn
Group EBITDA
1 All results are according to IFRS 16, unless stated otherwise.
8.2%
Group EBITDA margin
RUB
12.6 bn
O’KEY hypermarkets
EBITDA
RUB
4.4 bn
DA! discounters EBITDA
(+20.3% YoY)
6.9%
DA! discounters EBITDA margin
(+0.1 p.p. YoY)
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Group revenue
RUB mn
Group total revenue
Retail revenue
Rental income
The Group’s total revenue increased by 2.8% YoY
to RUB 207,865 mn driven by both retail revenue
and rental income. The Group’s retail revenue grew
by 2.8% YoY to RUB 205,772 mn driven by DA! discounters
and online revenue growth in FY 2023. The Group’s
2023
207,865
205,772
2,093
2022
202,171
200,201
1,970
∆ YoY, %
2.8%
2.8%
6.2%
rental income increased by 6.2% YoY to RUB 2,093 mn
in FY 2023.
Group net retail revenue
and LFL revenue in 12M 2023
RUB mln
O`KEY Group
O`KEY hypermarkets
DA! discounters
2023
205,772
141,947
63,825
2022
200,201
146,904
53,297
YoY, %
2.8%
(3.4%)
19.8%
LFL, %
(1.6%)
(3.3%)
3.0%
For more details, please
refer to the Group’s
Q4 2023 Trading Update.
Group gross profit
In FY 2023, the Group’s gross profit increased
by 1.8% YoY to RUB 47,660 mn, mainly on the back
of reduced shrinkage costs and increased rental income,
offset partially by increased logistics costs. The Group’s
gross margin decreased by 0.3 p.p. YoY to 22.9%
in FY 2023, mainly due to the abovementioned increase
in logistics costs, as a percentage of revenue.
62 – 63
Group selling, general
and administrative expenses
RUB mn
Personnel costs
Depreciation and amortisation
Communication and utilities
Advertising and marketing
Repairs and maintenance
Insurance and bank commissions
Security expenses
Operating taxes
Legal and professional expenses
Materials and supplies
Operating leases
Other costs
2023
17,649
11,069
5,355
2,200
1,780
1,348
771
718
674
441
440
74
% of revenue
2022
% of revenue
∆ YoY, p.p.
8.5%
5.3%
2.6%
1.1%
0.9%
0.6%
0.4%
0.3%
0.3%
0.2%
0.2%
0.0%
16,850
10,662
4,587
2,296
1,582
1,260
785
766
651
460
448
43
8.3%
5.3%
2.3%
1.1%
0.8%
0.6%
0.4%
0.4%
0.3%
0.2%
0.2%
0.0%
0.2
-
0.3
-
0.1
-
-
(0.1)
-
-
-
-
Total SG&A expenses
42,516
20.5%
40,390
20.0%
0.5
The Group’s total SG&A expenses increased by 5.3% YoY
to RUB 42,516 mn in FY 2023. SG&A expenses,
as a percentage of revenue, rose by 0.5 p.p. YoY to 20.5%
in FY 2023. The increase was mainly due to the temporary
increase in personnel costs, communication and utilities,
and repair and maintenance expenses, as a percentage
of revenue, related to the discounters’ segment growth.
In FY 2023, personnel costs increased by 4.7% YoY
to RUB 17,649 mn and, as a percentage of revenue,
by 0.2 p.p. YoY to 8.5%. The growth was mainly associated
with new discounter openings and salary indexation.
Communication and utilities expenses grew
by 16.7% YoY to RUB 5,355 mn, and by 0.3 p.p. YoY
as a percentage of revenue in FY 2023, mainly
due to tariffs inflation and discounter chain growth.
Repairs and maintenance expenses increased
by 12.5% YoY to RUB 1,780 mn, and by 0.1 p.p. YoY
as a percentage of revenue in FY 2023, largely as a result
of the discounters’ chain growth.
The Group’s EBITDA stood almost flat YoY
at RUB 17,026 mn, while EBITDA margin decreased
by 0.2 p.p. YoY to 8.2% in FY 2023.
Net finance costs increased by 28.8% YoY
to RUB 7,267 mn, mainly due to a growth of weighted
average interest rate. A substantial part of interest
costs was attributable to non-current lease liabilities
(in accordance with IFRS 16).
In FY 2023, net foreign exchange loss amounted
to RUB 1,074 mn compared to a RUB 313 mn gain
in FY 2022. The loss resulted from Russian rouble
devaluation in FY 2023, and was largely attributable
to intragroup US dollar-denominated loans,
as well as lease contracts denominated in foreign
currencies. Losses from import operations had a relatively
small impact on the Group’s results. Net foreign exchange
loss has a non-cash nature.
Consequently, the Group reported a RUB 2,878 mn net
loss in FY 2023 compared to the profit of RUB 242 mn
in FY 2022.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 64 – 65
The Group’s audited
consolidated IFRS report
The Group’s audited report,
including the full set
of audited IFRS financial
statements, can be found
online.
Group cash flow
RUB mn
Net cash from operating activities
Net cash (used in) investing activities
Net cash (used in) financing activities
Net (decrease) / increase in cash and cash equivalents
Effect of exchange rate on cash and cash equivalents
Net cash from operating activities amounted
to RUB 15,276 mn in FY 2023 compared to RUB 12,958 mn
cash from operating activities in FY 2022. The increase
resulted from revenue growth and efficient working
capital management.
Net cash used in investing activities amounted
to RUB 4,341 mn in FY 2023, showing a decrease
in comparison with RUB 6,468 mn of cash used in FY 2022.
In FY 2023, the Group invested over RUB 2,000 mn
(excluding VAT) in hypermarket business development
and store renovation, and over RUB 2,800 mn (excluding
VAT) in the development of its discounter business.
2023
15,276
(4,341)
(11,158)
(223)
(30)
2022
12,958
(6,468)
(3,885)
2,605
(274)
Net cash used in financing activities amounted
to RUB 11,158 mn in FY 2023 compared to RUB 3,885 mn
in FY 2022. The dynamics resulted from the Group’s
regular credit portfolio refinancing in FY 2023.
As of 31 December 2023, the Group had RUB 16,560 mn
of available credit lines in Russian roubles with fixed
and floating interest rates, in respect of which all
conditions have been met. If necessary, proceeds
from these facilities may be used to finance operating
and investing activities.
Group net debt position
As of 31 December 2023
As of 31 December 2022
17,026
47,131
6,003
41,128
11,526
35,606
26,722
5,962
20,760
62,328
3.66x
17,020
45,486
9,961
35,525
11,779
33,707
22,545
5,621
16,924
56,251
3.30x
RUB mn
EBITDA
Total debt
Short-term debt1
Long-term debt
Cash & cash equivalents
Net debt
Total lease liabilities
Short-term lease liabilities
Long-term lease liabilities
Total interest-bearing liabilities (net of сash & сash
equivalents)
Total interest-bearing liabilities (net of сash & сash
equivalents) / EBITDA
As of 31 December 2023, the total interest-bearing
liabilities (net of cash) to EBITDA ratio grew
to 3.66x from 3.30x as of 31 December 2022, mainly
due to an increase in long-term debt and lease liabilities.
1 Short-term debt does not include interest accrued on loans and borrowings.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 5
CORPORATE
GOVERNANCE
O’KEY Group maintains its commitment to creating shareholder value.
O’KEY Group S.A. has a primary listing of its GDRs
on the London Stock Exchange and the Moscow Exchange,
and a secondary listing on the Astana International Exchange.
66 – 67
since
2010on LSE
since
2020on MOEX
since
2023on AIX
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Corporate
Governance System
O’KEY GROUP S.A. is a company incorporated under the Laws
of the Grand Duchy of Luxembourg with Global Depositary
Receipts (GDRs) listed on the London Stock Exchange, the Moscow
Exchange and the Astana International Exchange, and as such
is not required to comply with the UK Corporate Governance
Code and the Russian Corporate Governance Code.
O’KEY Group is committed to managing and conducting
its operations in accordance with the applicable regula-
tions of Luxembourg, and the London Stock Exchange,
the Moscow Exchange and the Astana International
Exchange with respect to disclosure under the Rules.
Report, the appointment of Directors, the amendments
to the Articles of Incorporation (hereinafter, the Articles)
and the approval of the final dividend for the financial
year are subject to review and approval at the Meeting
of Shareholders.
We recognise our obligation to our shareholders to adopt
the highest standards of governance and control, both
at the Board level and within our management teams,
and we aim to establish and support a corporate gov-
ernance framework that is suitable for the development
of our business and that meets the requirements of our
shareholders.
The most significant decisions affecting the life
of the Company and the rights of shareholders, includ-
ing the approval of financial statements and the Annual
The Board of Directors and its committees provide over-
all guidance for the business and strategic planning
for the Group. It sets strategic goals and oversees their
implementation by the CEO and senior Management
of the Group.
The Management Board and the Chief Executive Officer
are responsible for the day-to-day operations of the com-
panies of the Group and implement the strategy approved
by the Board of Directors.
68 – 69
Our Corporate Governance
Principles:
Professionalism
Equality
We strive to appoint individuals with relevant skills
and experience to the Board of Directors and its commit-
tees in order to enable them to carry out their respec-
tive duties and responsibilities effectively. The Board
is supplied, in a timely manner, with information in a form
and of a quality appropriate to allow it to perform
its duties.
O’KEY Group’s corporate governance system is designed
to protect the shareholders’ rights and ensure equal
treatment of all shareholders.
Accountability
Transparency
The Board of Directors is accountable to O’KEY Group’s
General Meeting of Shareholders and is responsible for:
● formulating the Group’s strategy;
● establishing and maintaining systems which ensure
due consideration of key decisions by experienced
individuals, including in the areas of remuneration
and incentives, internal control, and risk management;
and
● holding the management accountable for the success-
ful implementation of the Group’s strategy.
We strive to ensure the appropriate disclosure of reliable
information on all significant issues related to our opera-
tions, including financial status, social performance, oper-
ating results, and ownership.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 70 – 71
Appointment of the Directors,
Amendment of the Articles
Significant Agreements
or Essential Business Contracts
The rules governing the appointment and replacement
of the directors and the amendment of the Articles are set
out under Luxembourg Company Law and the Articles
(in particular, Articles 8, 15, and 16).
The consolidated version of the Articles is published
under the Shareholders section of the Company web-
site and is available at: https://okeygroup.lu/investors/
shareholders/documents/
The Board is not aware of any significant agreements
to which O’KEY GROUP S.A. is a party and which take
effect, alter or terminate upon a change of control
of the Company following a takeover bid. The Board has
considered essential business contracts and has con-
cluded that there are not any significant agreements.
General Meeting
of Shareholders
The General Meeting of Shareholders is O’KEY GROUP
S.A.’s supreme governing body. The General Meetings
of Shareholders are convened and held in accordance
with Luxembourg legislative requirements and the Articles
of O’KEY GROUP S.A. According to the Articles of O’KEY
GROUP S.A., the annual General Meeting of Shareholders
shall be held within six (6) months of the end of each finan-
cial year in the Grand Duchy of Luxembourg at the reg-
istered office of the Company, or at any such other place
in the Grand Duchy of Luxembourg as may be specified
in the convening notice of the meeting.
The next annual General Meeting of Shareholders will
be held before 30 June 2024. A convening notice specify-
ing the date, time, address of the meeting and the agenda
will be sent and published no later than fourteen days (14)
before the meeting.
Special Control Rights
All the issued and outstanding shares of the Company
have equal voting rights and there are no special control
rights attached to the shares of the Company.
The Caraden Shareholder (as defined in the Articles)
has, under the condition of holding a minimum amount
of shares in the Company, a specific right with respect
to the appointment and removal of Directors as at least
one Director (designated as the Caraden Director)
must be appointed from a list of candidates proposed
by the Caraden Shareholder and may be removed
at the initiative of the Caraden Shareholder (additional
information may be found under Article 8 of the Articles).
The supporting vote of the Caraden Shareholder
is required, under certain conditions, to amend
the provisions of the Articles relating to: (i) the rights
and prerogatives of the Caraden Shareholder; and (ii)
the appointment, removal, replacement, rights, pre-
rogatives, and positive vote of the Caraden Director
(additional information may be found under Article 16.4
of the Articles).
Transfer Restrictions
As of 31 December 2023, and the date hereof,
to the knowledge of the Company all shares in issue
in the Company are freely transferrable, provided
that the transfer formalities set out under Article 6
of the Articles are fulfilled.
Control System in Employee
Share Scheme
The Company does not have an employee share scheme
allowing employees to acquire equity in the Company.
Voting Rights
Each share issued and outstanding in the Company bears
one vote.
The Articles do not provide for any voting restrictions.
In accordance with the Articles, a record date
for the admission to a general meeting of shareholders may
be set by the Board (Article 15 of the Articles). Only those
shareholders as the shareholders on any such record date
shall be entitled to be notified of and to vote at any general
meeting and any adjournment thereof, or to give any such
consent, as the case may be.
In accordance with the Articles, the Board may determine
such other conditions that must be fulfilled by sharehold-
ers for them to take part in any meeting of shareholders
in person or by proxy (Article 15 of the Articles).
Shareholders’ Agreements
with Transfer Restrictions
The Company has no information about any agreements
between shareholders, which may result in restrictions
on the transfer of securities or voting rights.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Board of Directors
The Company’s Board of Directors (the Board) plays
the key role in organising an efficient corporate governance
system. The Board is vested with the broadest powers
to manage the business of the Company and to authorise
and perform all acts of disposal and administration falling
within the purposes of the Company.
The Board is responsible for taking strategic deci-
sions in respect to the operation and development
of the Group, as well as overseeing the risk management
and internal audit functions of the Group. The decisions
related to the day-to-day operations of the Group are del-
egated to the management.
The Board is also a management body of O’KEY GROUP
S.A. and is authorised to take all decisions in respect
to O’KEY GROUP S.A., unless they are reserved
for the General Meeting of Shareholders. The Board
is not authorised to issue or buy back shares without
the approval of the shareholders meeting. The repurchase
by the Company of its own shares is subject to the condi-
tions set out in the Company Law and the Articles. There
are five members of our Board, including one independent
director. The General Meeting of Shareholders appoints
the Board members by a simple majority of votes cast,
for a period not exceeding six years or until their successors
are elected1.
Our current Board of Directors was elected
at the General Meeting of Shareholders held
on 13 October 2015 and re-appointed on 24 June 2020.
Meetings of the Board of Directors
Meetings of the Board of Directors are held regularly in com-
pliance with the approved work schedule for the year.
The Board’s work schedule is determined on the basis of stra-
tegic planning and the reporting cycle. Whenever an urgent
matter needs to be considered, Extraordinary Board meetings
are organised, or, if a personal meeting cannot be organised
due to a short notice, the Board can adopt a circular resolu-
tion by a unanimous vote. It is the Board Chairman’s respon-
sibility to determine the Board’s work plan and to include
additional items in the plan.
In 2023, the Board of Directors worked on the following key
tasks:
● preparation of the financial statements and annual
report, and review of the results for the year 2022;
● approval of the budget and business strategy
for the year 2023;
● review of the quarterly financial results, approval
of financial statements for six months of 2023, and mon-
itoring of compliance with risk management strategy,
and
● determination of the Group’s strategic and operational
priorities.
Information about the members of the Board
of Directors of O’KEY GROUP S.A.
as at 31 December 2023 is available at the Company’s
website at https://www.okeygroup.lu/about/
corporate-governance/committees/.
Meetings of the Board of Directors
Member
Heigo Kera
Dmitrii Troitskii
Dmitry Korzhev
Boris Volchek
Board of Directors
(2 meetings)
2 attended
2 by proxy
2 attended
2 by proxy
Mykola Buinyckyi
2 attended
Audit Committee (5 meetings) Remuneration Committee
5 attended
not a member
5 attended
3 attended,
2 by proxy
5 attended
(1 meeting)
Attended
by proxy
not a member
by proxy
not a member
1 The rules governing the appointment and replacement of the Directors are set out under the Law on Commercial Companies dated
10 August 1915, as amended, and the Articles (in particular, Articles 8, 15, and 16). The consolidated version of the Articles is published under
the Shareholders section of the Company website, available at: https://okeygroup.lu/investors/shareholders/documents/
72 – 73
Committees
of the Board
of Directors
The primary role of the Committees is to provide assistance
to the Board in preparing and adopting decisions
in its respective functional areas, as well as to ensure
that matters brought for consideration by the Board
of Directors are scrutinised prior to the Board meetings.
There are two committees on the Board of Directors:
the Audit Committee and the Remuneration Committee.
Audit Committee
Audit Committee members
Key Areas
As of 31 December 2023, the Audit Committee comprised:
● Mykola Buinyckyi, Committee Chairman, Independent
Director of the Board of Directors;
● Boris Volchek, Committee Member, Non-executive
Director of the Board of Directors;
● Dmitry Korzhev, Committee Member, Non-executive
Director of the Board of Directors;
● Heigo Kera, Committee Member, Chairman
of the Board of Directors;
● Ilya Ilin, Committee Member, Non-director, external
consultant; and
● Irina Nikiforova, Committee Member, Non-director,
external consultant.
The Audit Committee oversees the internal audit func-
tion, the effectiveness of risk management, and the internal
controls of the Company and the Group. It also approves
and monitors the performance of the internal audit plan
for the year. The Audit Committee assists the Board
of Directors in fulfilling its oversight responsibilities relating
to the financial statements, including periodically reporting
to the Board of Directors on its activities and the adequacy
of internal control systems over financial reporting.
According to the Statute of the O’KEY Audit Committee,
the Audit Committee shall consist of not fewer than three
current members of the Board of Directors and shall
be chaired by an independent director.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 The Committee’s remit includes:
● reviewed the effectiveness of the Company’s risk man-
agement and internal control systems;
Plans for 2024:
Diversity
74 – 75
O’KEY Group is working on the adoption of a diver-
sity policy. However, as can be seen from the informa-
tion on the senior management team, O’KEY Group
aims to employ the members of the team most suitable
and qualified for their post and function, irrespective
of their age, gender, or origin. The requirements of educa-
tional and professional backgrounds are such as to ensure
that the members of the team possess the skills and expe-
rience necessary to perform their functions effectively.
● reviewing the IFRS financial statements for integrity
● reviewed policies and procedures published
and transparency;
by the Company;
In 2024, the Group plans to keep the remuneration
and bonus policy in line with 2023.
Remuneration
Members of the Board of Directors of O’KEY GROUP
S.A. receive remuneration of the amount approved
by the General Meeting of Shareholders. Members
of the Board and its Committees may be compensated
for the expenses they incur in the course of their duties,
in accordance with the business and travel expenses pol-
icy of O’KEY GROUP S.A.
● analysing financial reporting processes, includ-
ing carrying out regular reviews and making
recommendations;
● recommending the appointment and remunera-
tion of the Company’s external auditor to the Board
of Directors and maintaining an ongoing relationship
with the external auditor; and
● analysing and supporting the internal audit system
and risk management procedures, including drafting
recommendations for their improvement.
Activities in 2023
During the reporting period, the Audit Committee held
five meetings where it:
● fulfilled oversight responsibilities relating to the integ-
rity of the Company’s annual financial statements;
● fulfilled oversight responsibilities relating to the integ-
rity of the Company’s half yearly financial statements;
● reviewed reports prepared by the Internal Audit
department;
● monitored reports per the Company’s Whistleblowing
Policy;
● planned and agreed the scope of the audit of financial
statements for year ended 2023 with the external audi-
tor of O’KEY Group;
● reviewed and approved provisions of non-audit ser-
vices for the Company by the external auditor; and
● approved the Internal Audit plan for the year 2023.
Plans for 2024
The Audit Committee and the Company continue to focus
on the following areas in 2024:
● monitoring the compliance with the Group’s risk
management policies and procedures, and the ade-
quacy of the risk management framework in relation
to the risks faced by the Group; and
● optimising internal business processes involved
in the preparation of financial reporting.
Remuneration Committee
Committee members
● Heigo Kera, Committee Chairman, Chairman
of the Board of Directors;
● Boris Volchek, Committee Member, Non-executive
Director of the Board of Directors;
● Dmitrii Troitskii, Committee Member, Non-executive
Director of the Board of Directors;
● Ilya Ilin, Committee Member, Non-director, external
consultant; and
● making proposals to the full Board of Directors regard-
ing the remuneration of Executive Directors and manage-
ment (including the Chief Executive Officer).
Activities in 2023:
During the reporting period, the Remuneration
Committee held one meeting where it:
● reviewed the report on the remuneration, bonuses
● Irina Nikiforova, Committee Member, Non-director,
and expenses of the Board:
external consultant.
The Committee’s remit includes:
● reviewing the compensation policy;
● advising on any benefit or incentive schemes; and
● reviewed the amount of remuneration to be allocated
to the management of the Group in 2023;
● approved the Remuneration Committee Report; and
● suggested the total maximum amount of remuneration
of Directors for 2023 and 1H of 2024 to be submitted
for the approval of the shareholders of the Company.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Risk Management
Principle Risks
76 – 77
We believe that effective risk management underpins
the successful delivery of our strategy. So the Company’s
goals will be achieved in a timely manner and the level
of risks faced by the Group remains acceptable for man-
agement and shareholders. Our unified approach to risk
management through the Group Risk Standard is sup-
ported by formal policies and procedures, clearly del-
egated authority levels, and comprehensive reporting.
As of the date of the approval of this Annual Report, our
framework is integrated into both our business planning
and viability assessment processes.
Our Board of Directors is ultimately responsible
for the Group’s risk management and internal controls
with a view to maintaining the Group’s risk management
framework. The Group’s Audit Committee is responsible
for the regular review/audit of the Group’s operations,
activities, systems and processes, in order to evalu-
ate and provide reasonable, independent, and objec-
tive assurance and consulting services designed to add
value and improve the Group’s operations. Internal Audit
assists the Group’s Audit Committee in its oversight role.
Internal Audit undertakes both regular and ad hoc reviews
of risk management controls and procedures and reports
its findings and recommendations to the Audit Committee.
The Group, through its training and management stan-
dards and procedures, aims to develop a disciplined
and constructive control environment in which all employ-
ees understand their roles and obligations. Identified risk
areas are monitored quarterly and followed by a coordi-
nated improvement programme.
Board of Directors
● Holds overall responsibility
for the establishment
and oversight of the Group’s
risk management framework
Audit Committee
● Oversees how management
monitors compliance with
the Group’s risk management
policies and procedures
● Reviews the adequacy
of the risk management
framework in relation
to the risks faced by the Group
Executive management
(CEO and Management Board)
● Oversees implementation
of, and adherence to, risk
management policies
● Monitors and manages risks
relevant to job function
● Carries out risk identification
and reporting
● Performs operational
risk management
Internal Audit
● Assists the Group’s Audit
Committee in its oversight role
● Undertakes both regular
and ad hoc reviews of risk
management controls
and procedures, the results
of which are reported
to Audit Committee
The current situation places new challenges
for the Russian economy, the business community,
and O’KEY Group in particular. Our well-balanced business
model offers a significant hedge against market volatility.
The above key factors have been reviewed in the context
of our current position and strategic plan. Nevertheless,
due to the current unprecedented global geopoliti-
cal and economic turbulence, we withhold from identify-
ing and assessing the key risks that could have a material
adverse effect on our business.
Below we are describing the key risks that could
have a material adverse effect on our business, our finan-
cial and operational performance and, as a result, could
affect our share price and our reputation. Additional risks
not known to us or those risks that we currently consider
immaterial may also impair our business operations. We do
not expect to incur any risks that may jeopardise the con-
tinuity of our business.
Name of Risk
Definition & Potential Impact
#
1
Economic outlook
2
Competition risk
3
Political risk
4
Regulatory risk
Our business may be affected by uncertainties associated with changing economic conditions, partic-
ularly in the current environment of global economic instability, including oil prices, financial markets
volatility, as well as substantial currency exchange fluctuations. Therefore, we may face reduced cus-
tomer demand as the income and purchasing power of our customers’ decreases under the impact
of the weaker macroeconomic environment exacerbated by declining oil prices and sustained rouble
volatility.
The retail sector in Russia is highly competitive. We face strong competition from other retailers
(Russian and international), some of which are larger and have greater resources. Retail chains compete
mainly over store locations, product ranges, price, service, and store conditions. Some competitors
might be more effective and faster in capturing certain market opportunities, which in turn may nega-
tively impact our market share and our ability to achieve our performance and expansion targets.
Political developments may adversely affect the macroeconomic environment and the market in which
our Company operates. The current geopolitical situation and global economics turbulence may affect
companies across all the sectors of the Russian economy, including our business.
Our operations are subject to various government regulations and industry specific legislation
with respect to quality, packaging, health and safety, labelling, distribution and other standards. Some
regulations are still being developed in Russia. Current and future government regulations or changes
thereto may require us to change the way we run our operations and could result in cost increases.
Failure to comply with regulations can also lead to reputational damage.
5
6
Changing customer
expectations
We strive to provide our customers with a wide range of goods and services, at competitive prices.
However, we recognise that our customers’ shopping habits and expectations are influenced
by the economic environment and will change over time.
Employee recruit-
ment and retention
Competition for highly qualified management and store personnel remains intense in Russia. To meet
our expansion plans, we need highly skilled employees. Our future success depends in part on our con-
tinued ability to hire and retain new employees. We understand that any inability to attract and retain
highly qualified employees and key personnel in the future could have a material adverse effect on our
business.
7
Supply chain risk
8
IT Platform
Development
Our financial performance depends in part on reliable and effective supply chain management. We rely
on third parties to supply us with merchandise and services. The third parties that supply us with mer-
chandise and services also have other customers and may not have sufficient capacity to meet all
of their customers’ needs, including ours, during periods of excess demand. Shortages and delays could
materially harm our business. Unanticipated increases in prices could also adversely affect our perfor-
mance. Furthermore, we may be exposed to risk of delays and interruptions to our supply chain because
of natural disasters in case we are unable to identify alternative sources of supply in a timely manner.
Execution of our strategic targets requires adaptation of current IT infrastructure to the changing
business needs. As the business grows, the complexity of processes supporting it and the diversity
of tasks around such growth are increasing. Delayed or inappropriate decisions on the development
of the infrastructure can lead to failures in meeting Group goals and impede attainment of longer-term
goals.
9
IT security threats We are observing an increase in IT security threats and higher levels of professionalism in computer
crime. Our systems and solutions, as well as those of our counterparties remain potentially vulnera-
ble to attacks. Depending on their nature and scope, such attacks could potentially lead to the leakage
of confidential information, improper use of our systems, manipulation and destruction of data, sales
downtimes and supply shortages, which in turn could adversely affect our reputation, competitiveness,
and business, financial and operational performance.
10
Providing sufficient
level of financing
Recent changes in the macroeconomic situation might result in a liquidity squeeze and tightening
of lending policies by Russian banks. Given the expansion programme in the coming periods, issues
with availability of external financing or significant changes in its cost can negatively impact our Group’s
ability to execute its expansion programme.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 #
11
Name of Risk
Definition & Potential Impact
Tax regulations
Russian tax law has complex tax rules, which may be interpreted in different ways and tax rules
are subject to frequent changes. Examinations by tax authorities and changes in tax regulations could
adversely affect our business, and financial and operational performance.
Changes in tax law could result in higher tax expense and payments. Furthermore, legislative changes
could materially impact tax receivables and liabilities as well as deferred tax assets and deferred tax
liabilities.
12 Changes in working
capital
Inability to control and manage elements of the working capital can result in negative changes
for the operating cash flow and lead to liquidity gaps and excessive reliance on external financing.
13
14
Risk of misstate-
ments in financial
statements
We face exposure to risks relating to failures in proper financial reporting and the classification
of accounting entries, and risks of making inaccurate accounting estimates.
Risks of currency
and interest rates
volatility
We are exposed to fluctuations in exchange rates because of loans received in USD and contractual
obligations in USD and EUR. Although measures are taken to minimise this risk, there can be no assur-
ance that exchange rate and interest rate fluctuations will not negatively influence our results.
Information
for Shareholders
and Investors
78 – 79
Internal Control and Risk
Management System
The Board receives monthly financial reports setting
out the Company’s financial performance in compari-
son to the approved budget and prior year figures.
● Any weaknesses in the system of internal controls
identified by either internal or external auditors
are promptly and fully addressed.
● The external auditors perform a limited review
of the Company’s half-year consolidated financial state-
ments and a full audit of the annual consolidated finan-
cial statements.
In accordance
with the requirements of IFRS,
we disclose detailed information
on the market, credit and foreign
exchange risk to which
it is exposed, as well as strategy
for managing the risks.
With respect to Internal Control over financial reporting,
our financial procedures include a range of system, trans-
actional and management oversight controls. Regarding
the internal controls in the area of accounting and finan-
cial reporting, the following should be noted:
● Staff involved in the Company’s accounting and finan-
cial reporting is appropriately qualified and kept up-to-
date with relevant changes in International Financial
Reporting Standards (‘IFRS’). Additionally, specific
training and written guidance on particular matters
are provided where needed. Written guidance, regu-
larly updated for business developments and regula-
tory changes, is available to all relevant staff members
and provides a summary of the Company’s accounting
and financial reporting policies and procedures.
● Controls have been established in the processing
of accounting transactions to ensure appropriate
authorisations for transactions, the effective segrega-
tion of duties, and the complete and accurate record-
ing of financial information.
● Completeness and timely recording of financial infor-
mation is ensured through regular reviews, monitor-
ing of specific key performance indicators, validation
procedures by functional leaders and as an additional
check, the process of internal and external audit.
● The Company relies on a comprehensive system
of financial information and oversight. Strategic plans,
business plans, budgets and the interim and full-year
consolidated accounts of the Company are drawn up
and brought to the Board of Directors for approval.
The Board also approves all significant investments.
Share Capital
O’KEY GROUP S.A. share capital amounts
to EUR 2,690,740, divided into 269,074,000 ordinary
shares of a nominal value of EUR 0.01 each. As of the date
of this Report, the Company’s share capital has remained
unchanged since 30 November 2010.
All shares issued by the Company have equal rights
as provided for by the law on commercial companies
dated 10 August 2015, as amended (the “Company Law”)
and as set forth in the Articles, save for the special rights
granted to the Caraden Shareholder.
The Company does not hold any of its own shares and has
not acquired them during the 2023 financial year.
Significant Shareholdings
As of 31 December 2023, the two major indirect share-
holders of the Group are its founders:
● Mr. Dmitrii Troitskii (who indirectly owns approximately
34.54% of the outstanding share capital of O’KEY
GROUP S.A.), and
● Mr. Boris Volchek (who indirectly owns approximately
34.14% of the outstanding share capital of O’KEY
GROUP S.A.)
Share Capital Structure
as of 31 December 2023 – Direct Holdings:
16,75
34,14
49,11
NISEMAX Co Limited
GSU Limited
Free-float and other holders
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 In March 2023, the Group also obtained a secondary list-
ing for its GDRs on Astana International Exchange (AIX).
The Company’s depositary bank is the Bank of New York
Mellon.
As of 31 December 2023, GDRs represented 50.22%
of O’KEY GROUP S.A. share capital.
No other securities have been issued by the Company.
Global Depositary Receipts
Global Depositary Receipts (GDRs) are issued in respect
of ordinary shares at a ratio of one ordinary share per one
GDR. The GDRs are listed on the London Stock Exchange
(LSE) since November 2010. In March 2022, LSE temporary
suspended admission to trading for a number of issuers,
including the GDRs of O’KEY GROUP S.A.
In December 2020, the GDRs also were listed and started
trading on the Moscow Exchange (MOEX). In November
2023, the Group changed its listing status from secondary
to primary on MOEX.
Stock Exchange
As of 31 December 2023, O’KEY GROUP S.A. GDRs were
listed on the LSE, the MOEX, and the AIX, and traded
on the MOEX.
Trading Floor of O’KEY GROUP S.A. GDRs
Trading floor
London Stock Exchange
Moscow Exchange
Astana International Exchange
Ticker code
OKEY
OKEY
OKEY
O’KEY GROUP S.A. Securities Identification Numbers
CUSIP1
Regulation S GDRs
Regulation S GDRs
Rule 144A GDRs
ISIN2
Regulation S GDRs
Regulation S GDRs
Rule 144A GDRs
Code
670866201
670866110
670866102
Code
US6708662019
US6708661102
US6708661029
1 CUSIP (Committee on Uniform Security Identification Procedures) – identification number given to the issue of shares for the purposes
of facilitating clearing.
1 ISIN (International Securities Identification Number) – international identification number of the share.
80 – 81
'000 GDR
45
40
35
30
25
20
15
10
5
0
O’KEY GROUP S.A. GDR Price Performance and Trading Volumes on MOEX in 2023
RUB
20000
15000
10000
5000
0
03.01.2022 03.02.2022 03.03.2022 03.04.2022 03.05.2022 03.06.2022 03.07.2022 03.08.2022 03.09.2022 03.10.2022
03.11.2022
03.12.2022
Price, RUB
Volume, '000 GDRs
Source: Moscow Exchange
O’KEY GROUP S.A. GDRs Trading Information on Moscow Exchange
In 2023, the cumulative trading volume of OKEY GDRs
on MOEX increased by 82.1% compared to 2022.
Annual maximum price, RUB
Annual minimum price, RUB
Year-end price, RUB
Trading volume (mn GDRs)
Source: MOEX, market transactions
Credit Ratings
Credit rating
Outlook
Last rating date
2022
44.98
17.20
24.37
110.9
Expert RA
ruA-
Stable
21 June 2023
2023
41.11
24.43
29.84
201.9
NCR
A.ru
Stable
27 July 2023
In June 2023, Expert RA affirmed the Company’s credit
rating of ‘ruA-’ with a stable outlook.
In July 2023, National Credit Rating agency assigned
a credit rating of ‘A.ru’ with a stable outlook to LLC O’KEY,
a main operating subsidiary of O’KEY GROUP S.A.
The ratings reflect the Group’s solid and stable oper-
ational and financial position in the market, low expo-
sure to market risks, and high standards of corporate
governance, risk management, strategic control,
and transparency.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 82 – 83
Management
& Directors
Responsibility
Statement
We confirm to the best of our knowledge that the con-
solidated financial statements provide a true and fair
view of the assets, liabilities, financial position, and profit
or loss of O’KEY GROUP S.A. and the companies included
in the consolidation as required by the International
Financial Reporting Standards as adopted
by the European Union, and that the consolidated man-
agement report provides a true and fair view of the devel-
opment and performance of the business and the position
of O’KEY GROUP S.A. and the companies included
in the consolidation taken as a whole, and that the consol-
idated management report provides a true and fair view,
and that the consolidated management report describes
the principal risks and uncertainties which O’KEY GROUP
S.A. and the companies included in the consolidation taken
as a whole are exposed to.
Luxembourg, 11 April 2024
Dmitry Korzhev
Member of the Board of Directors
Heigo Kera
Chairman of the Board of Directors
Mykola Buinyckiy
Member of the Board of Directors
Konstantin Arabidis
CЕO
Analyst Coverage
As of the end of 2023, three equity research ana-
lysts from leading Russian banks followed the Company
on a regular basis. O`KEY Group’s IR team monitors
and communicates analyst consensus to the Company’s
top management.
Analyst
Victor Dima
Marat Ibragimov
Mikhail Krasnoperov
Phone number
+7 (495) 213-03-44
+7 (495) 980-41-87
+7 (495) 933-98-38
Company
Aton
Gazprombank
Sberbank CIB
Source: the Company
Dividends
Dividend Policy
To determine the recommended amount of dividends
that will be payable, the Group’s Board of Directors
abides by the Dividend Policy. The General Meeting
of Shareholders, upon the recommendation of the Board
of Directors, determines how the remainder of the annual
net profits of the Company should be disposed of, includ-
ing through stock dividend, it being understood that
the remaining net profits of the Company left after
the payment of dividends shall be used for the busi-
ness development of the Company and its subsidiaries
and the development of the retail business of the Group
in Russia. Interim dividends may be declared and paid
(including through staggered payments) by the Board
of Directors, subject to observing the terms and con-
ditions provided by law either through a cash dividend
or through a dividend in kind.
Period
Interim dividends 2011
Interim dividends 2012
Interim dividends 2013
Interim dividends 2014
Interim dividends 2014
Interim dividends 2015
Interim dividends 2016
Interim dividends 2017
Interim dividends 2018
Interim dividends 2019
Interim dividends 2020
Interim dividends 2021
Interim dividends 2022
Interim dividends 2023
Taxation
Record date
Amount of dividend per
GDR (cents, gross)
12.09.2011
23.02.2012
15.02.2013
18.02.2014
17.10.2014
11.09.2015
08.07.2016
20.01.2017
25.01.2018
03.10.2019
04.11.2020
9.9481
10.254
18.953
22.670
7.433
8.920
8.548
9.167
12.367
0.05635
0.028275
Amount of accrued
dividend (gross)
USD 26,767,750.59
USD 27,590,847.96
USD 50,997,595.22
USD 60,999,075.80
USD 20,000,270.42
USD 24,001,400.80
USD 23,000,445.52
USD 24,666,013.58
USD 33,276,381.58
USD 15,162,319.90
USD 7,608,067.35
01.08.2022
EUR 0.03159
EUR 8,500,047.66
Not declared and distributed
Not declared and distributed
As a rule, the Company withholds 15% WHT from the div-
idend paid from Luxembourg for distribution to the hold-
ers of GDRs.
This information is provided for information purposes only.
Potential and current investors should seek the advice
of professional consultants on tax matters related
to investments in the shares and GDRs of the Company.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 84 – 85
The Independent Auditors’ Report and the consolidated
financial statements of O’KEY GROUP S.A.
for the year ended 31 December 2023.
STATEMENTS
6FINANCIAL
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Independent
Auditors’ Report
To the Shareholders of
O’KEY GROUP S.A.
25C, Boulevard Royal,
L-2449, Luxembourg
MOORE Audit S.A.
5, rue de Turi
L-3378 Livange
T +352 26 26 84 1
F +352 26 26 84 99
E mail@moore-audit.lu
www.moore-audit.lu
Report of the reviseur
d’entreprises agree
Report on the Audit of the consolidated Financial Statements
Opinion
Basis for Opinion
We have audited the consolidated financial statements
of O’KEY GROUP S.A. (the “Company”) and its subsidiaries
(the “Group”), which comprise the consolidated statement
of financial position as at 31 December 2023, and the con-
solidated statement of comprehensive income, consoli-
dated statement of changes in equity and consolidated
statement of cash flows for the year then ended, and notes
to the consolidated financial statements, including material
accounting policy information.
In our opinion, the accompanying consolidated finan-
cial statements (pages 90 to 131) present fairly, in all
material respects, the consolidated financial position
of the Company as at 31 December 2023, and of its con-
solidated financial performance and its consolidated cash
flows for the year then ended in accordance with IFRS
Accounting Standards as adopted by the European Union.
Key Audit Matters
We conducted our audit in accordance with the Law
of 23 July 2016 on the audit profession (“Law of 23 July
2016”) and with International Standards on Auditing
(“ISAs”) as adopted for Luxembourg by the “Commission de
Surveillance du Secteur Financier” (“CSSF”). Our responsi-
bilities under the Law of 23 July 2016 and ISAs as adopted
for Luxembourg by the CSSF are further described
in the «Responsibilities of “Réviseur d’Entreprises Agréé”
for the Audit of the Consolidated Financial Statements»
section of our report. We are also independent of the Group
in accordance with the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional
Accountants (IESBA Code) as adopted for Luxembourg
by the CSSF together with the ethical requirements that
are relevant to our audit of the consolidated financial state-
ments, and have fulfilled our other ethical responsibilities
under those ethical requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Key audit matters are those matters that, in our profes-
sional judgment, were of most significance in our audit
of the consolidated financial statements of the current
period.
These matters were addressed in the context of the audit
of the consolidated financial statements as a whole, and
in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
86 – 87
Key audit matter
How our audit addressed the key audit matter
RECOGNITION OF BONUSES FROM SUPPLIERS
Refer to Notes 4, 20 and 33 to the consolidated
financial statements of the Group.
The Group receives various types of bonuses from
suppliers relating to purchase of goods for resale.
The bonuses are provided in the form of volume dis-
counts, slotting fees and other counter payments.
Recognition of these bonuses leads to a signifi-
cant reduction of the cost of goods sold and inven-
tory value. While the major portion of the bonuses
is recognized and settled within the year, a signif-
icant amount of RUB 1,553,709 thousand remains
outstanding within trade and other receivables
as at the reporting date.
Recognition of bonuses from suppliers that are not
settled as at the reporting date was one of the mat-
ters of most significance in our audit because their
impact on the Group’s cost of goods sold, inventory
and trade and other receivable balances is material,
the number of underlying contracts with suppliers
is large and their terms can be complex. Further,
calculation of the period-end accrual for certain
supplier bonuses and allocation of bonuses to inven-
tory cost requires making estimates and applying
judgments.
NON-CURRENT ASSETS IMPAIRMENT ASSESSMENT
Refer to Notes 4, 14, 15 and 16 to the consolidated
financial statements of the Group.
As at 31 December 2023, the carrying value
of the Group’s non-current assets for which IAS 36
requires an assessment of whether there is any indi-
cation of impairment exceeds 55% of total assets.
These non-current assets are primarily attribut-
able to the Group’s stores in operation and groups
of assets held for future stores construction.
As at the reporting date, the Group assessed
whether there is any indication that the carrying
value of the non-current assets may not be recov-
erable or the impairment recognized in prior peri-
ods may not exist or may have decreased and tested
for impairment or reversal of impairment those
cash-generating units (CGUs) represented by indi-
vidual stores and groups of assets held for future
stores construction where such indications were
noted.
As at 31 December 2023 the recoverable amount
of the CGUs was determined based on value in use.
Based on the results of the impairment tests per-
formed as at 31 December 2023 and during the year
ended 31 December 2023, no impairment loss
was identified and recognized.
This is one of the key audit matters due to the mag-
nitude of the carrying value of the non-current
assets that require the assessment of any indication
of impairment, judgement exercised by the Group
in determining whether or not there is a specific
indication of impairment and judgements applied
in the calculation of the recoverable amount of these
assets.
In addition, strong competition in the Russian
retail market, political, economic tension,
due to the Ukraine-Russian crisis underpin the uncer-
tainty of accounting estimates and the risk of signif-
icant adjustments in future periods to the carrying
value of the Group’s non-current assets recognized
in the consolidated financial statements.
Our audit procedures to address the key audit matter included the following:
• Understanding, evaluation of design of relevant control activities that
the Group has established in relation to recognition of bonuses from
suppliers .
• Understanding and evaluation of the accounting policy applied by the Group
for accounting for bonuses from suppliers .
• Reading significant contracts with suppliers and understanding of the terms
that entitle the Group to bonuses from suppliers .
• Performing a retrospective analysis of prior year bonuses receivable against
subsequent settlements to assess accuracy of the Group’s estimates
in the current year .
• Performing analytical procedures over the accuracy and existence
of the bonuses recognized in the current year based on historical data .
• Agreeing bonuses receivable as at the reporting date to external confirma-
tions obtained from suppliers on a sample basis, or alternative procedures
through tracing the amounts recognized against underlying agreements
and other relevant documentation .
• Performing analytical procedures to assess allocation of bonuses
to the goods that remain in stock at the reporting date .
• Confirming that the accounting policy for offsetting of bonuses receivable
from suppliers against trade payables is in line with IFRS and that the factual
offsetting is in line with the accounting policy .
• Considering adequacy of disclosures of information about the bonuses from
suppliers in the consolidated financial statements of the Group .
Our audit procedures to address the key audit matter included the following:
• We obtained understanding and evaluated the design of the Group’s rele-
vant control activities around the impairment review .
• We also considered the Group’s approach to determination of CGUs and
identification of indication that these CGUs represented by the Group’s
stores or groups of assets held for future stores construction may
be impaired or impairment recognised in prior periods may not exist or may
have decreased .
• For those significant CGUs where indication of impairment was identified
or where there was an indication that an impairment loss recognized in prior
periods may no longer exist or may have decreased, we assessed whether
the value in use approach applied by the Group to determine recoverable
amount in each particular case is appropriate in the circumstances . We fur-
ther obtained and analyzed underlying calculations prepared by the Group
for the impairment tests .
Our audit procedures were carried out with the involvement of internal valua-
tion experts and included:
• Reviewing the adequacy and consistency of methods applied to measure-
ment of value in use, and the calculations’ mathematical accuracy .
• Evaluating the reasonableness of the Group’s key assumptions and forecasts
in the prior period, in order to assess the accuracy of the Group’s forecasts
for future periods .
• Verifying the appropriateness of budgets of the CGUs for projected peri-
ods used in the measurement of value in use through inquiries of the Group,
corroborating the Group’s explanations, examining supporting documenta-
tion and comparing inputs against available external industry data .
• Analyzing and assessing in detail the key assumptions that signifi-
cantly affect future cash flows of the CGUs and the discount rate
applied by the Group to measure the recoverable amount, by compar-
ing it to the weighted-average cost of capital determined for the Group
with due regard to its inherent risks, as well as considering whether
the Ukraine-Russian crisis had an impact on these key assumptions by ana-
lyzing the Group’s performance and the Russian retail industry dynamics
in the current year .
• Re-performing sensitivity analysis of the results of the Group’s assessment
to reasonably possible changes to key assumptions .
We have tested the presentation and disclosure of information about
the impairment test as carried out by the Group in the consolidated financial
statements for its consistency with requirements of IAS 36 and its adequacy
in the context of the consolidated financial statements as a whole.
MOORE Audit S.A. Société Anonyme - Cabinet de révision agréé. R.C.S. Luxembourg Nr. B 165 462. Capital Social 51.000 EUR
MOORE Audit S.A. Société Anonyme - Cabinet de révision agréé. R.C.S. Luxembourg Nr. B 165 462. Capital Social 51.000 EUR
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023
Key audit matter
How our audit addressed the key audit matter
RECOVERABILITY OF DEFERRED TAX ASSETS RECOGNIZED FOR THE CARRYFORWARD OF UNUSED TAX LOSSES
Those charged with governance are responsible for over-
seeing the Group’s financial reporting process.
Refer to Notes 4, 12 and 33 to the consolidated
financial statements of the Group.
As at 31 December 2023, the carrying value
of the Group’s deferred tax assets amounts
to RUB 6,082,047 thousand, including
RUB 3,554,526 thousand arising on the accumu-
lated tax losses carried forward by LLC Fresh
Market that develops the Group’s chain of dis-
counter stores under the DA! brand starting from
2015.
A deferred tax asset shall be recognized
for the carryforward of unused tax losses
to the extent that it is probable that future taxable
profit will be available against which the unused tax
losses can be utilized.
The Group performed the assessment of and con-
cluded on the recoverability of the deferred tax
assets. This analysis was based on the long-term
financial projections for LLC Fresh Market, which
includes estimates of its future profits.
This area was significant to our audit because
of the history of tax losses generated by LLC Fresh
Market, the complexity and subjectivity
of the recoverability assessment and long-term
budgeting process, which is based on assump-
tions that are inherently uncertain and affected
by the expected pace of new openings of the dis-
counters. In addition, we considered the overall
impact of the Ukraine crisis on the Russian econ-
omy that increases the degree of uncertainty
of these assumptions.
The audit procedures we have performed to address the key audit matter con-
sisted of the following:
• Understanding and evaluation of design of relevant control activities that
the Group has in place in relation to recognition of current and deferred
income taxes and long-term budget preparation .
• Comparing the Group’s forecasts in the long-term budget prepared in prior
year to actual performance to assess adequacy of the Group’s estimates
in the current year .
• Assessing accuracy of the deferred tax calculations .
• Considering whether there are any limitations to the amount and tim-
ing of utilization of the unused tax loss as established by the Russian tax
legislation .
• Obtaining the long-term budget prepared by the Group for LLC Fresh
Market and challenging the expected future profits and assumptions
regarding future earnings as reflected therein, including by comparing
to actual results to date and industry trends .
• Considering to what extent the Ukrainian-Russian crisis impacted the per-
formance of LLC Fresh Market in the current year by analyzing its revenue
and consumer behavior, expenses and the pace of new stores openings,
as well as its impact on the ability of the discounters segment to adhere
to the long-term budget .
• Analyzing the treatment of differences between accounting and tax books
in the planning of future taxable profit .
• Considering adequacy of disclosures on the deferred tax positions and
assumptions used in assessing recoverability of the deferred tax assets
from tax losses carry forward in the consolidated financial statements .
Other information
The Board of directors is responsible for the other infor-
mation. The other information comprises the information
stated in the annual report including the directors’ report
but does not include the consolidated financial statements
and our report of “Réviseur d’Entreprises Agréé” thereon.
Our opinion on the consolidated 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 finan-
cial statements, our responsibility is to read the other
information and, in doing so, consider whether the other
information is materially inconsistent with the consoli-
dated financial statements or our knowledge obtained
in the audit or otherwise appears to be materially mis-
stated. If, based on the work we have performed, we con-
clude that there is a material misstatement of this other
information, we are required to report this fact. We have
nothing to report in this regard.
Responsibilities of the Board
of Directors and Those Charged with
Governance for the consolidated
Financial Statements
The Board of Directors is responsible for the preparation
and fair presentation of the consolidated financial state-
ments in accordance with IFRS Accounting Standards
as adopted by the European Union, and for such internal
control as the Board of Directors determines is necessary
to enable the preparation of consolidated financial state-
ments that are free from material misstatement, whether
due to fraud or error.
In preparing the consolidated financial statements,
the Board of Directors is responsible for assessing
the Group’s ability to continue as a going concern, dis-
closing, as applicable, matters related to going con-
cern 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 alter-
native but to do so.
Responsibilities of the “Réviseur
d’Entreprises Agréé”
for the Audit of the consolidated
Financial Statements
The objectives of our audit are to obtain reasonable assur-
ance about whether the consolidated financial state-
ments as a whole are free from material misstatement,
whether due to fraud or error, and to issue a report
of “Réviseur d’Entreprises Agréé” that includes our opin-
ion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance
with the Law of 23 July 2016 and with ISAs as adopted
for Luxembourg by the CSSF will always detect a material
misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken
on the basis of these consolidated financial statements.
As part of an audit in accordance with the Law of 23
July 2016 and with ISAs as adopted for Luxembourg
by the CSSF, we exercise professional judgment and main-
tain professional skepticism throughout the audit. We also:
● Identify and assess the risks of material misstatement
of the consolidated financial statements, whether
due to fraud or error, design and perform audit pro-
cedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to pro-
vide 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, misrepresen-
tations, or the override of internal control.
● Obtain an understanding of internal control rele-
vant 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 effec-
tiveness of the Group’s internal control.
● Evaluate the appropriateness of accounting poli-
cies used and the reasonableness of accounting esti-
mates and related disclosures made by the Board
of Directors.
● Conclude on the appropriateness of Board
of Directors’ use of the going concern basis
of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related
88 – 89
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 report
of “Réviseur d’Entreprises Agréé” to the related dis-
closures in the consolidated financial statements or, if
such disclosures are inadequate, to modify our opin-
ion. Our conclusions are based on the audit evidence
obtained up to the date of our report of “Réviseur
d’Entreprises Agréé”. However, future events or con-
ditions may cause the Group to cease to continue
as a going concern.
● Evaluate the overall presentation, structure and con-
tent of the consolidated financial statements, including
the disclosures, and whether the consolidated financial
statements represent the underlying transactions and
events in a manner that achieves fair presentation.
● Obtain sufficient appropriate audit evidence regard-
ing the financial information of the entities and
business activities within the Group to express
an opinion on the consolidated 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 iden-
tify during our audit.
We also provide those charged with governance with
a statement that we have complied with relevant ethical
requirements regarding independence, and to commu-
nicate 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 finan-
cial statements of the current period and are therefore
the key audit matters. We describe these matters in our
report unless law or regulation precludes public disclo-
sure about the matter or when, in extremely rare cir-
cumstances, we determine that a matter should not
be communicated in our report because the adverse con-
sequences of doing so would reasonably be expected
to outweigh the public interest benefits of such
commucation.
MOORE Audit S.A. Société Anonyme - Cabinet de révision agréé. R.C.S. Luxembourg Nr. B 165 462. Capital Social 51.000 EUR
MOORE Audit S.A. Société Anonyme - Cabinet de révision agréé. R.C.S. Luxembourg Nr. B 165 462. Capital Social 51.000 EUR
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 OKEH
Annual Report 2023 ------------------
Over view
Stril t e g,c
Repor t
Oper i1t1o n11!
Rev ew
Fmc1 nc11
Rev ew
Corpo rate Governilnce
90-91
.
Report on Other Legal and Regulatory Requirements
Tlw dir-<'c-Mr's 1'C'port (p:l~Jf'S 16 1:0 83) 1!; i:-c111s1stcnr w1tl~
the consu l1cbtcd hn;:inc:1;:il stJtcmcnts c1nd h~s been prc-
1>orNI in :lc-cordonrc- 1,v11:h J1)plic;1b l0 lcg:;11 r·C'c1t1iremcnts.
MOORE Audit S.A.
oschetter
Rev,seur d'Entrepnscs A.grece
L,vange. '11 Arn i 2024
Consolidated
financial statements
Contents
Consolidated Statement of Financial Position as at 31 December 2023
92
Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2023 93
94
Consolidated Statement of Changes in Equity for the year ended 31 December 2023
Consolidated Statement of Cash Flows for the year ended 31 December 2023
95
Notes to the Consolidated f1nancral StiJtcments for the year ended 31 December 2023
96
1 Bad-9rNH1d
/. f·fa!-.1'> ol p1 qn1 al.Ion
J. 1·u1 ,ctl•>11.il ,1r1d pr 1•,;;c•i1tal1on <'lit 11111t...}
4. Use ,>I t...·sl11n:1Le<; :..inJ 1uJ9111< nl:-
96
97
97
97
~1. New ur 1 1.•vbcd •_,1.,md ,rt!.., . 1 d rtllt•r-p11.•l,1l.1u11~. ,1dn~Li.:<.I
by the Cruuµ
6. Sc~rncr1t 1nfoi-m,1(or
7. Prine pril <; 11b'l d ,~nes
S. ()cnc1·~11. sclli119 ~:mJ adrninisr:rar:ivc cxµcn::c:;
9. Orh0.r upcr;itinu mcornc :md expenses. 110.t
10. Fsna1,c0 111cornc Jnd fin~111cc ci>O::t!,
11. Foreign exchange (loss)/goin
12. lncon1e ta:-.
13. lnvestmem propP.rty
14. f'ropc.-,·ty. pl.:int and 0qu1rin<'m ::iric I ro11,;cru,·r1,>r1
1n progrr'>'i
15. R1ghr·1.A-w-.L .. ~s.c:ts
16. lnt
34. Evr.nt<; SUO'iC(!Uf'llt to rhc l'Cl-)Ol'ting cl:1tr
114
116
121
121
122
124
124
131
92 – 93
Consolidated Statement of Profit
or Loss and Other Comprehensive
Income for the year ended
31 December 2023
’000 RUB
Revenue
Cost of goods sold
Gross profit
General, selling and administrative expenses
Other operating income and (expenses), net
Operating profit
Finance income
Finance costs
Foreign exchange (loss)/gain
(Loss)/Profit before income tax
Income tax benefit (expense)
(Loss)/Profit for the year
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that will never be reclassified to profit or loss:
Exchange differences on translation to presentation currency
Other comprehensive income
Other comprehensive income/(loss) for the year, net of income
tax
Note
2023
2022
6
8
9
10
10
11
12
207,864,636
202,170,726
(160,204,388)
(155,362,939)
47,660,248
(42,515,886)
(291,634)
4,852,728
252,676
(7,519,479)
(1,074,086)
(3,488,161)
610,099
(2,878,062)
507,145
-
507,145
46,807,787
(40,389,935)
(666,903)
5,750,949
438,380
(6,080,150)
312,806
421,985
(180,455)
241,530
(320,252)
170,999
(149,253)
Total comprehensive (loss)/income for the year
(2,370,917)
92,277
(LOSS)/EARNINGS PER SHARE
Basic and diluted (loss)/earnings per share
(in RUB per share)
23
(10.7)
0.9
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the notes
to, and forming part of, the consolidated financial statements set out on pages 96 to 131
Consolidated Statement
of Financial Position as at
31 December 2023
’000 RUB
ASSETS
Non-current assets
Investment property
Property, plant and equipment
Construction in progress
Right-of-use assets
Intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Prepaid income tax
Prepayments
Cash and cash equivalents
Non-current assets held for sale
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Legal reserve
Additional paid-in capital
Retained earnings
Translation reserve
Total equity
Non-current liabilities
Loans and borrowings
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Loans and borrowings
Interest accrued on loans and borrowings
Lease liabilities
Trade and other payables
Current income tax payable
Total current liabilities
Total liabilities
Total equity and liabilities
Note
31 December 2023
31 December 2022
13
14
14
15
16
12
18
19
20
17
21
13
22
24
25
12
24
24
25
26
1,257,218
43,240,482
1,122,363
23,309,763
1,214,553
6,082,047
872,104
77,098,530
24,975,926
2,516,192
97,140
800,312
11,525,791
-
39,915,361
117,013,891
119,440
10,597
8,555,657
447,347
1,961,350
11,094,391
41,128,448
20,760,179
683,833
62,572,460
6,002,850
254,450
5,962,202
31,062,083
65,455
43,347,040
105,919,500
117,013,891
1,474,333
42,609,851
1,326,017
19,216,816
1,205,515
5,245,595
1,801,139
72,879,266
23,916,987
2,930,220
59,282
1,177,461
11,779,334
305,000
40,168,284
113,047,550
119,440
10,597
8,555,657
3,325,409
1,454,205
13,465,308
35,525,212
16,924,142
532,644
52,981,998
9,960,796
215,737
5,620,662
30,636,945
166,104
46,600,244
99,582,242
113,047,550
The consolidated statement of financial position is to be read in conjunction with the notes to, and forming part of,
the consolidated financial statements set out on pages 96 to 131
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 94 – 95
Consolidated Statement
of Cash Flows for the year
ended 31 December 2023
’000 RUB
Note
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Other cash receipts
Interest received
Cash paid to suppliers and employees
Taxes other than on income
Other cash payments
VAT paid
Income tax paid
Net cash from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
238,395,137
231,986,614
620,203
227,217
663,715
442,130
(218,251,832)
(215,153,159)
(757,037)
(24,321)
(763,441)
(51,033)
(4,675,763)
(3,509,800)
(257,872)
15,275,732
(657,281)
12,957,745
Purchase of property, plant and equipment (excluding VAT)
(4,391,908)
(6,290,524)
Purchase of intangible assets (excluding VAT)
Proceeds from sale of investment property (excluding VAT)
Proceeds from sale of property, plant and equipment (excluding VAT)
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans and borrowings
Repayment of loans and borrowings
Interest paid on loans and borrowings
Repayment of principal amount of lease liabilities
Interest paid on lease liabilities
Dividends paid
Other financial payments and proceeds
Net cash used in financing activities
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash and cash equivalents
Cash and cash equivalents at the end of the year
(446,618)
156,014
341,637
(331,473)
148,966
5,438
(4,340,875)
(6,467,593)
15,500,003
(13,834,268)
(4,939,018)
(5,268,297)
(2,491,371)
-
(125,188)
17,772,121
(9,958,485)
(3,966,907)
(5,094,982)
(2,075,250)
(480,594)
(80,560)
(11,158,139)
(3,884,657)
(223,282)
11,779,334
(30,261)
11,525,791
2,605,495
9,447,998
(274,159)
11,779,334
27
27
27
27
27
22
27
21
21
The consolidated statement of cash flows is to be read in conjunction with the notes to, and forming part of, the consoli-
dated financial statements set out on pages 96 to 131
507,145
507,145
Net increase in cash and cash equivalents
Consolidated Statement
of Changes in Equity for the year
ended 31 December 2023
’000 RUB
Note
Share
capital
Legal
reserve
Additional
paid-in capital
Retained
earnings
Translation
reserve
Total equity
Balance at 1 January 2022
119,440
10,597
8,555,657
3,393,474
1,774,457
13,853,625
COMPREHENSIVE
INCOME FOR THE YEAR
Profit for the year
OTHER COMPREHENSIVE
INCOME
Foreign currency transla-
tion differences
Other comprehensive
income
Total other comprehen-
sive loss
Total comprehensive
income for the year
TRANSACTIONS
WITH OWNERS RECORDED
DIRECTLY IN EQUITY
Dividends declared
22
Total transactions
with owners recorded
directly in equity
Balance at
31 December 2022
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
241,530
-
241,530
-
(320,252)
(320,252)
170,999
-
170,999
170,999
(320,252)
(149,253)
412,529
(320,252)
92,277
(480,594)
(480,594)
-
-
(480,594)
(480,594)
119,440
10,597
8,555,657
3,325,409
1,454,205
13,465,308
Balance at 1 January 2023
119,440
10,597
8,555,657
3,325,409
1,454,205
13,465,308
COMPREHENSIVE
LOSS FOR THE YEAR
(Loss) for the year
OTHER COMPREHENSIVE
INCOME
Foreign currency transla-
tion differences
Other comprehensive
income
Total other comprehen-
sive income
Total comprehensive loss
for the year
Balance at
31 December 2023
(2,878,062)
-
(2,878,062)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
507,145
507,145
(2,878,062)
507,145
(2,370,917)
119,440
10,597
8,555,657
447,347
1,961,350
11,094,391
The consolidated statement of changes in equity is to be read in conjunction with the notes to, and forming part of,
the consolidated financial statements set out on pages 96 to 131
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Notes to the Consolidated
Financial Statements for the year
ended 31 December 2023
1. Background
(a) The Group and its operations
These consolidated financial statements for the year
ended 31 December 2023 have been prepared for O’KEY
GROUP S.A. (the “Company”) and its subsidiaries (together
referred to as the “Group”).
The Company was incorporated and is domiciled
in Luxembourg. The Company is a public limited com-
pany (société anonyme) and was set up in accordance
with Luxembourg regulations. The main part of the Group
is located and conducts its business in the Russian
Federation.
The Company does not have an immediate parent or an ulti-
mate controlling party.
As at 31 December 2023 and 2022, the Company’s major
indirect shareholders are Mr. Troitskii, Mr. Volchek.
As at 31 December 2023 global depository receipts (”GDRs”)
represented 50.22% of the Company’s shares, 38.172%
of the Company’s shares in the form of GDRs were listed
on the London Stock Exchange (as at 31 December 2022
GDRs represented 50.22% of the Company’s shares,
38.172% of the Company’s shares were admitted to trad-
ing on the London Stock Exchange in the form of GDRs).
On 15 February 2022, some ordinary shares were converted
into GDRs and as a result, GDRs share reached 50.22%
in the Company’s shares, 38.172% of the Company’s shares
were admitted to trading on the London Stock Exchange
in the form of GDRs. In March 2022, the London Stock
Exchange temporally suspended the admission to trad-
ing of the Group’s GDRs, which has not been resumed
as of the date of these consolidated financial statements.
Starting 14 December 2020, the Company’s GDRs are also
traded on Moscow Exchange. As of the date of these con-
solidated financial statements the Group’s GDRs and bonds
remain admitted to trading on Moscow Exchange.
In March 2023 the Astana International Exchange (“AIX”) has
approved the listing of global depositary receipts (“GDRs”)
of the Group. Since 20 March 2023 O’KEY Group’s GDR’s
started trading on the AIX.
In November 2023, the Bank of Russia decided to reg-
ister a prospectus for the Company’s global depositary
receipts (GDRs), each representing one ordinary share
of O’KEY GROUP S.A. Thus, the Group has changed its list-
ing status on Moscow Exchange (“MOEX”) to primary.
The Company’s GDRs remain in the Level 1 quotation list
and continue trading on MOEX.
The Company’s registered office is 25C Boulevard Royal,
L-2449 Luxembourg.
The Group’s principal business activity is operation of retail
chains in Russia under the brand names “O’KEY” (hypermar-
kets) and “Da!” (discounter stores). At 31 December 2023,
the Group operated 297 stores including 220 discounter
stores (31 December 2022: 273 stores including 194 dis-
counter stores) in major Russian cities, including but
not limited to Moscow and towns in Moscow region,
St. Petersburg, Murmansk, Nizhniy Novgorod, Rostov-
on-Don, Krasnodar, Lipetsk, Ekaterinburg, Novosibirsk,
Krasnoyarsk, Ufa, Astrakhan and Surgut.
(b) Business environment
The Group’s operations are primarily located in the Russian
Federation which displays characteristics of an emerging
market. Its economy is particularly sensitive to oil and gas
prices. The legal, tax and regulatory frameworks con-
tinue to develop and are subject to varying interpreta-
tions and frequent changes which together with other legal
and fiscal impediments contribute to the challenges faced
by entities operating in the Russian Federation. The Russian
economy continued to be negatively impacted by ongoing
political tension in the region and international sanctions
against certain Russian companies and individuals.
In 2022 ongoing political tension in the region esca-
lated as a result of further developments of the situation
with Ukraine which have negatively impacted commodity
and financial markets, and increased volatility, particularly
with regard to foreign exchange rates. Since February 2022,
96 – 97
several packages of sanctions have been imposed by USA,
UK, and EU countries against several Russian sectors
of economy, enterprises and individuals. However, no
sanctions have been imposed against the Company, nor
any of its subsidiaries, nor its major indirect shareholders.
The Bank of Russia key rate also was volatile during
the reporting period. As a part of comprehensive mea-
sures to ensure the stability of credit institutions, the Bank
of Russia has been gradually increased the key rate
during 2023 from 7.5% in December 2022 up to 16% p.a.
in December 2023.
Despite the volatility on the capital market, the Group’s
financial position and ability to attract financing remained
solid in the reporting period. In June 2023 Expert RA rat-
ing agency affirmed a credit rating of ‘ruA-’ for O`KEY LLC,
the main operating subsidiary of O`KEY Group S.A. The out-
look of the rating remains Stable. Also in July 2023, NCR rat-
ing agency assigned the credit rating of O’Key LLC, as “A.
ru”, outlook Stable. The rating reflects highly appreciated
Group’s business profile due to its significant geopraphical
distribution, a diversified supplier base and the lack of con-
centration of risk on any large asset. The agency also noted
solid and stable operational and financial position in the mar-
ket, low exposure to market risks, and high standards of cor-
porate governance, risk management, strategic control
and transparency.
It is not possible to determine how long the increased vol-
atility in the financial market will last or at what level it will
eventually level out. It is not possible for the management
to predict with any degree of certainty an impact of this
uncertainty on the Group’s operations. Whilst these uncer-
tainties may affect the future dividend income of the share-
holders in the medium term, they do not affect the Group’s
ability to continue its operations in the foreseeable future.
Any changes to these consolidated financial statements
after issue require approval of the Board of Directors.
3. Functional and presentation
currency
The functional currency of each of the Group’s consol-
idated entities is the currency of the primary economic
environment in which the entity operates. The functional
currency of the Company and the Group’s subsidiaries out-
side of the Russian Federation is the US Dollar (“USD”)
and the functional currency of the Group’s Russian subsid-
iaries is the Russian Rouble (“RUB”). The consolidated finan-
cial statements are presented in RUB, which is the Group’s
presentation currency. All financial information presented
in RUB has been rounded to the nearest thousands, except
when otherwise indicated.
The results and financial position of the Group enti-
ties, which functional currencies are different from RUB,
are translated into the presentation currency as follows:
● assets and liabilities for each statement of financial
position presented are translated at the closing rate
at the end of the respective reporting period;
● income and expenses are translated at the date
of transaction;
● components of equity are translated at the historic rate;
and
● all resulting exchange differences are recognised
in other comprehensive income.
At 31 December 2023 the principal rates of exchange
used for translating foreign currency balances
were USD 1 = RUB 89.6883; EUR 1 = RUB 99.1919
(31 December 2022: USD 1 = RUB 70.3375;
EUR 1 = RUB 75.6553).
2. Basis of preparation
4. Use of estimates and judgments
(a) Statement of compliance
These consolidated financial statements have been pre-
pared in accordance with International Financial Reporting
Standards (“IFRSs”) as adopted by the European Union
under the historical cost convention, as modified by the ini-
tial recognition of financial instruments based on fair value,
and by the revaluation of investment properties and finan-
cial instruments at fair value.
These consolidated financial statements were authorised
for issue by the Board of Directors on 11 April 2024.
The preparation of consolidated financial statements in con-
formity with IFRSs requires management to make estimates
and assumptions that affect the application of account-
ing policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from those
estimates.
Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimates
are revised and in any future periods affected.
Management also exercises certain judgements, apart
from those involving estimations, in the process of applying
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 the accounting policies. Judgments that have the most
significant effect on the amounts recognised in the con-
solidated financial statements and estimates that can
cause a significant adjustment to the carrying amount
of assets and liabilities within the next financial year include:
Tax legislation. The Group is subject to taxation in sev-
eral jurisdictions. The major part of the tax burden refers
to the Russian tax legislation, which is subject to vary-
ing interpretations when being applied to the transac-
tions and activities of the Group. Significant judgement
is required in determining whether the tax positions
and interpretations the Group has taken can be sustained.
Refer to Note 30.
Bonuses from suppliers. The Group receives various
bonuses from suppliers which represent a significant reduc-
tion in cost of goods sold and inventory cost. The calcula-
tion of these amounts is in part dependent on an estimation
of whether the amounts due under agreements with suppli-
ers have been earned at the reporting date based on inven-
tory purchased and other conditions. In particular, estimates
and judgements are applied in determining the peri-
od-end accrual for the supplier bonuses that are condi-
tional on the volume of promotional or marketing activities
provided. The allocation of the bonuses to inventory cost
also has some element of judgement in relation to the attri-
bution of the bonuses earned to the cost of specific goods
received from suppliers based on the proportion of goods
purchased.
Determination of recoverable amount of non-cur-
rent assets. For those non-current assets where impair-
ment indicators exist as at reporting date, the Group
estimates the recoverable amount being the higher
of their value in use and fair value less costs of disposal.
For details of impairment assessment performed as at
31 December 2023 refer to Notes 14–16.
Recoverability of deferred tax asset. Significant judgment
is required in assessment of recoverability of deferred tax
asset on tax losses of LLC Fresh Market, the Group’s entity
that develops a discounter chain and does not yet generate
profit. The Group performs analysis of future taxable profit
to cover the accumulated tax losses on the basis of the long-
term budget for the entity. Recognition of the deferred tax
asset is contingent on the ability of the Group management
to adhere to the long-term budget. Refer to Note 12.
Lease term. In determining the lease term, management
considers all facts and circumstances that create an eco-
nomic incentive to exercise an extension option, or not
exercise a termination option. Extension options (or peri-
ods after termination options) are only included in the lease
term if the lease is reasonably certain to be extended (or not
terminated).
If the contractual lease term does not align with the eco-
nomics of the transaction, management considers whether
there are any non-contractual enforceable rights beyond
the written agreement to determine the lease term with ref-
erence to mutual understanding between the parties,
respective laws and regulations and other relevant factors.
The assessment is reviewed if a significant event or a sig-
nificant change in circumstances occurs which affects this
assessment and that is within the control of the lessee.
The Group leases land and trade and other premises based
on the lease agreements with various termination and exten-
sion options. To determine the lease term the management
has applied judgement in performing its ‘reasonably certain’
assessment and determined that it is reasonably certain
that the extension options will be exercised or termination
options will not be exercised during the lease period which
is based on the Group’s business plan with the respective
planning horizon.
Most extension options in leases of trade premises have
been included in the lease liability, because the Group
is unlikely to replace the assets within the Group’s planning
horizon.
The lease term is reassessed if an option is actually exer-
cised (or not exercised) or the Group becomes obliged
to exercise (or not exercise) it. The assessment of rea-
sonable certainty is only revised if a significant event
or a significant change in circumstances occurs, e.g. asset
reconstruction, renovation and other, which affects this
assessment, and that is within the control of the lessee.
For lease agreements of trade and other premises
with various extension and termination options, where
the lease period is based on the Group’s business plan
with the respective planning horizon, the Group also per-
forms its ‘reasonably certain’ reassessment and determines
that it is reasonably certain that the extension options
will be exercised or termination options will not be exer-
cised closer to the end of the lease term, usually six months
before the end of the lease. Six-month period is considered
to be sufficient to make a decision to vacate the property
or continue with the lease. The financial effect of revising
the lease terms to reflect the effect of exercising extension
and termination options was included in the ‘Modifications
and reassessments’ captions in Notes 15 and 25.
An increase in the lease term by 1 year for the leases
assuming extension options at the reporting date
would have increased the balances of right-of-use
assets and lease liabilities by RUB 4,076,999 thousand
98 – 99
and RUB 4,076,999 thousand, respectively
(31 December 2022: by RUB 3,862,759 thousand
and RUB 3,863,779 thousand, respectively).
A decrease of the lease term by 1 year for the leases assum-
ing extension options at the reporting date would have
decreased the balances of right-of-use assets and lease lia-
bilities by RUB 4,401,328 thousand and RUB 4,448,900 thou-
sand, respectively (31 December 2021:
by RUB 3,689,575 thousand and RUB 4,252,993 thousand,
respectively).
This analysis assumes that all other variables, in particular
incremental borrowing rate, remain constant.
Discount rates used for determination of lease liabilities.
The Group uses its incremental borrowing rate as a base
for calculation of the discount rate because the interest rate
implicit in the lease cannot be readily determined. In 2023,
the Group’s incremental borrowing rate applied to lease
liabilities denominated in Russian Roubles ranged from 9
to 14%, and for contracts denominated in other curren-
cies from 6 to 11% (2022: from 10 to 20%, and from 5 to 6%,
respectively).
An increase in the discount rate by 100 basis points
at the reporting date would have decreased the bal-
ances of right-of-use assets and lease liabilities
by RUB 506,432 thousand and RUB 553,113 thousand,
respectively (31 December 2022: by RUB 578,512 thousand
and RUB 606,158 thousand, respectively).
A decrease of the discount rate by 100 basis points
at the reporting date would have increased the bal-
ances of right-of-use assets and lease liabilities
by RUB 608,474 thousand and RUB 608,474 thousand,
respectively (31 December 2021: by RUB 623,506 thousand
and RUB 653,263 thousand, respectively).
This analysis assumes that all other variables, in particular
lease term, remain constant.
5. New or revised standards
and interpretations
adopted by the Group
The following amendments to standards became effective
from 1 January 2023, but did not have any material impact
on the Group:
Deferred Tax related to Assets
and Liabilities arising from a Single
Transaction (Amendments to IAS 12)
The Group has adopted Deferred Tax related to Assets
and Liabilities arising from a Single Transaction
(Amendments to IAS 12) from 1 January 2023. The amend-
ments narrow the scope of the initial recognition exemption
to exclude transactions that give rise to equal and offset-
ting temporary differences – e.g. leases and decommis-
sioning liabilities. For leases and decommissioning liabilities,
an entity is required to recognise the associated deferred
tax assets and liabilities from the beginning of the earliest
comparative period presented, with any cumulative effect
recognised as an adjustment to retained earnings or other
components of equity at that date. For all other transac-
tions, an entity applies the amendments to transactions
that occur on or after the beginning of the earliest period
presented.
The Group previously accounted for deferred tax on leases
and decommissioning liabilities by applying the “integrally
linked” approach, resulting in a similar outcome as under
the amendments, except that the deferred tax asset or lia-
bility was recognised on a net basis. Following the amend-
ments, the Group has recognised a separate deferred
tax asset in relation to its lease liabilities and a deferred
tax liability in relation to its right-of-use assets. However,
there was no impact on the statement of financial position
because the balances qualify for offset under paragraph 74
of IAS 12. There was also no impact on the opening retained
earnings as at 1 January 2022 as a result of the change.
6. Segment information
Operating segments are components that engage in busi-
ness activities that may earn revenues or incur expenses,
whose operating results are regularly reviewed by the chief
operating decision maker (CODM) and for which discrete
financial information is available. The CODM is the per-
son or group of persons who allocate resources and assess
the performance for the entity. The CODM has been deter-
mined as the CEO of the Group and the Board of Directors
of the Company.
The Group is engaged in management of retail stores
located in the Russian Federation. Although the Group is not
exposed to concentration of sales to individual customers,
all of the Group’s sales are made in the Russian Federation.
As such, the Group is exposed to the economic develop-
ment in Russia, including the development of the Russian
retail industry. The Group has no significant non-current
assets outside the Russian Federation.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 100 – 101
The Group identified its operating segments in accor-
dance with the criteria set in IFRS 8, Operating Segments,
and based on the way the operations of the Group are reg-
ularly reviewed by the CODM to analyse performance
and allocate resources within the Group.
The Group has two operating segments that also represent
reportable segments: “O’Key” and “Da!”. Each segment has
similar format of their stores which is described below:
● O’Key – chain of modern style hypermarkets under
the “O’KEY” brand;
● Da! – chain of discounter stores in Moscow and Central
region.
The core assortment of goods in the stores of each seg-
ment is different, and the segments are managed separately.
For each of the segments, the CODM of the Group reviews
internal management reports at least on a monthly basis.
All business components within each reportable segment
demonstrate similar characteristics:
● the products and customers;
● the business processes are integrated and uniform:
the components manage their operations centrally.
Purchasing, logistics, finance, HR and IT functions
are centralised;
● the components’ activities are mainly limited to Russia
which has a uniform regulatory environment.
The CODM assesses the performance of the operating seg-
ments based on revenue and earnings before interest, tax,
depreciation and amortisation adjusted for certain one-off
items outlined below (“EBITDA”). The “EBITDA” term is not
defined in IFRS. Other information provided to the CODM
is measured in a manner consistent with that in the consol-
idated financial statements. The accounting policies used
for the segment reporting are the same as the accounting
policies applied for the consolidated financial statements
(Note 33).
Basis of segmentation used in these consolidated financial
statements is consistent with that used in the prior year.
A reconciliation of EBITDA to (loss) / profit for the year is as follows:
’000 RUB
EBITDA
Revaluation of investment property
Net loss from disposal of non-current assets and net impairment
of non-current assets
Loss from write-off of receivables and impairment of receivables
(Loss) from disposal of right-of-use assets
Depreciation and amortisation
Finance income
Finance costs
Foreign exchange (loss)/gain
Other one-off items
(Loss)/Profit before income tax
Income tax benefit/(expense)
(Loss)/Profit for the year
7. Principal subsidiaries
Note
9, 13
9
9
9
8
10
10
11
12
2023
2022
17,025,725
17,020,401
–
(349,457)
(229,027)
(80,067)
(11,068,518)
252,676
(7,519,479)
(1,074,086)
(445,928)
(3,488,161)
610,099
(2,878,062)
(135,000)
(215,749)
(197,916)
-
(10,661,819)
438,380
(6,080,150)
312,806
(58,968)
421,985
(180,455)
241,530
The segment information for the years ended 31 December 2023 and 31 December 2022 is as follows:
Details of the Company’s significant subsidiaries at 31 December 2023 and 31 December 2022, all 100% owned are as follows:
’000 RUB
O’Key
Da!
Total
2023
2022
2023
2022
2023
2022
EXTERNAL REVENUE
• Sales of trading stock
136,150,699
141,192,389
63,825,020
53,296,838
199,975,719
194,489,227
• Sales of self-produced catering
5,796,395
5,711,789
-
-
5,796,395
5,711,789
141,947,094
146,904,178
63,825,020 53,296,838
205,772,114
200,201,016
products
Revenue from contracts
with customers
Rental income
Total revenue
Subsidiary
LLC O’KEY
LLC Fresh Market
JSC Dorinda
LLC O’KEY management
LLC O’KEY Logistics
O’KEY Investments Ltd
Country
Russian Federation
Russian Federation
Russian Federation
Russian Federation
Russian Federation
Cyprus
Nature of operations
Retail
Retail and real estate
Real estate
Managing company
Import operations
Financing
2,032,979
1,919,460
59,543
50,250
2,092,522
1,969,710
143,980,073
148,823,638
63,884,563
53,347,088
207,864,636
202,170,726
8. General, selling and administrative expenses
Inter-segment revenue
323,420
415,786
1,627,792
1,697,088
1,951,212
2,112,874
EBITDA
12,642,821
13,377,419
4,382,904
3,642,982
17,025,725
17,020,401
’000 RUB
Personnel costs
Depreciation and amortisation
Communication and utilities
Advertising and marketing
Repairs and maintenance costs
Insurance and bank commissions
Security expenses
Operating taxes
Legal and professional expenses
Materials and supplies
Variable lease expenses and expenses relating to short-term and low
value leases
Other costs
Total general, selling and administrative expenses
Note
14–16
2023
17,648,595
11,068,518
5,355,003
2,199,563
1,779,811
1,347,555
770,506
717,655
673,604
441,329
439,631
2022
16,850,253
10,661,819
4,586,749
2,295,894
1,582,106
1,259,641
784,885
765,669
651,024
460,448
448,245
74,116
43,202
42,515,886
40,389,935
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 102 – 103
11. Foreign exchange (loss)/gain
The Group’s risk management policy is to receive loans and borrowings in the same currency in which revenues are gen-
erated (RUB). As at 31 December 2023, there are no USD-denominated loans and borrowings (31 December 2022: there
are no USD-denominated loans and borrowings). The Group’s exposure to currency risk is disclosed in Note 28.
’000 RUB
Foreign exchange loss on financial items
Foreign exchange gain on financial items
Net foreign exchange (loss)/gain on financial items
Foreign exchange loss on operating items
Total foreign exchange (loss)/gain
2023
(2,617,287)
1,764,243
(853,044)
(221,042)
(1,074,086)
2022
(4,277,117)
4,815,285
538,168
(225,362)
312,806
In 2023 and in 2022 substantial amount of the net foreign exchange gain relates to USD-denominated intercompany loans
between Group entities with different functional currencies which are eliminated on consolidation. The residual net for-
eign exchange gain is attributable to lease contracts in foreign currencies while foreign exchange losses arose mainly
from import operations.
12. Income tax
Income tax recognised in profit or loss
’000 RUB
Current tax expense
Deferred tax benefit
Total income tax benefit/(expense)
2023
(75,164)
685,263
610,099
2022
(512,422)
331,967
(180,455)
Reconciliation between the tax expense and profit or loss multiplied by applicable tax rate
The income tax rate applicable to the majority of the Group’s 2023 and 2022 income is 20%, the income tax rate estab-
lished by the Russian tax legislation. A reconciliation between the expected and the actual taxation benefit/charge is pro-
vided below.
Note
2023
2022
’000 RUB
25
252,676
252,676
(5,029,949)
(2,489,530)
(7,519,479)
(7,266,803)
438,380
438,380
(4,006,800)
(2,073,350)
(6,080,150)
(5,641,770)
(Loss)/Profit before income tax
Theoretical income tax at applicable tax rate of 20%
Effect of income taxed at different rates
Tax effect of items which are not deductible for taxation purposes:
•
Inventory shrinkage expenses
• Other non-deductible expenses
Adjustments to current income tax
Income tax (expense) for the year
2023
(3,488,161)
697,632
22,323
(7,274)
(61,730)
(40,852)
610,099
2022
421,985
(84,397)
76,856
(47,481)
(70,257)
(55,176)
(180,455)
of the employees (2022: 95% of the employees) are store
and warehouse employees and the remaining part is office
employees.
Fees billed to the Group by the independent auditors
for statutory and consolidated audits and other advisors
are as follows:
2023
31,941
4,300
1,500
37,741
2023
368,686
(349,457)
-
(53,476)
(175,551)
-
(80,067)
(1,769)
(291,634)
2022
21,768
9,011
9,622
40,401
2022
6,720
(110,658)
(105,000)
2,729
(200,645)
(135,000)
(91)
(124,958)
(666,903)
Note
14
13
Total employee benefits expense for the year ended
31 December 2023 included in the cost of goods
sold and general, selling and administrative expenses
is RUB 21,150,316 thousand (2022: 20,719,462 thousand).
During the year ended 31 December 2023 the Group
employed 19,7 thousand employees on average (2022:
21 thousand employees on average). Approximately 95%
’000 RUB
Fees for statutory audit of annual and consolidated accounts
Fees charged for other assurance services (other advisors)
Fees charged for tax advisory services (other advisors)
Total auditors’ remuneration
9. Other operating income and expenses, net
’000 RUB
Gain from modification of leases
Net loss from disposal of non-current assets
Impairment of non-current assets
Impairment of receivables/ Reversal of impairment
Loss from write-off of receivables
Loss from revaluation of investment property
Loss from disposal of right-of-use assets
Sundry income and expense, net
Total other operating income and expenses, net
10. Finance income and finance costs
’000 RUB
RECOGNISED IN PROFIT OR LOSS
Interest income on bank deposits
Total finance income
Interest expense on loans and borrowings
Interest expense on lease liabilities
Total finance costs
Net finance costs recognised in profit or loss
During 2023 the Group has capitalised borrowing costs in the amount of RUB 62,308 thousand (2022: RUB 61,051 thou-
sand) arising on financing directly attributable to the construction of the Group’s new stores. The capitalisation rate
was 12.9% (2022: 9.9%).
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Deferred tax assets and liabilities
(a) Deferred taxes in respect of subsidiaries
The Group has not recorded a deferred tax lia-
bility in respect of temporary differences
of RUB 25,648,263 thousand (31 December 2022:
RUB 27,729,964 thousand) associated with investments
in subsidiaries as the Group is able to control the timing
of the reversal of those temporary differences and does
not intend to reverse them in the foreseeable future. If
the temporary difference reversed in form of distribu-
tions remitted to the Company, then an enacted tax rate
of 5–15% would apply.
(b) Recognised deferred tax asset
on tax loss carried forward
Deferred tax asset recognised in respect of tax loss
carried forward relates to the losses accumulated
by the Group’s subsidiary LLC Fresh Market that devel-
ops a discounter chain and does not yet generate profit.
Starting from 1 January 2017 the amendments
to the Russian tax legislation became effective in respect
of tax loss carry forwards. The amendments affect tax
losses incurred and accumulated since 2007 that have
not been utilised. The 10-year expiry period for tax loss
carry-forwards that was in effect prior to 2017 no longer
applies, and the accumulated tax losses can now be car-
ried forward for utilisation in future periods without
any time limitation, with exception of limitation on util-
isation of tax loss carry forwards that applies during
the period from 2017 to 2026. The amount of losses that
can be utilised each year during this period is limited
to 50% of annual taxable profit.
The Group determined that future taxable profits will
be available at LLC Fresh Market in the foreseeable
future against which its accumulated losses can be uti-
lised. In making this assessment the Group considered
that according to the discounter chain’s long-term bud-
get the deferred tax asset of RUB 3,554,526 thousand
on accumulated losses generated by LLC Fresh Market
as at 31 December 2023 will be utilised in full by 2029.
In 2023 minor corrections to the Group’s long-term
plan for number of opening of new stores were made.
The Group is following its long-term budget approved
in prior years with insignificant changes on revenue
and expenses planned for 2024 in order to reflect changes
noted in 2023 with no impact on total net profit in mone-
tary terms.
Recognition of the deferred tax asset is contingent
on the ability of the Group management to adhere
to the key assumptions made in the long-term budget.
These key assumptions in the discounter chain’s long-
term budget covering 2024–2029 include annual expan-
sion by approximately 40 new discounter stores per year
except for 2024 year were focus on operational efficiency
is planned instead of intensive expansion; annual growth
in revenue comparable with past dynamics of the dis-
counter chain; and gradual decrease of share of semi-fixed
costs due to economies of scale.
In addressing the sensitivity of the timing of full utilisa-
tion of the deferred tax asset attributable to LLC Fresh
Market, the Group estimated that if the pace of openings
of new discounter stores in each of the years from 2025
to 2029 is lower by 20% as compared to the chain expan-
sion rate reflected in the segment’s long-term budget,
with all other assumptions held constant, the timing of full
utilisation of the deferred tax asset would shift from 2029
to 2030. The Group believes that any such shift does
not affect the probability that the deferred tax asset
would be fully utilised, since the tax losses can be car-
ried forward indefinitely and have no expiry date under
the Russian tax legislation.
(c) Movement in temporary
differences during the year
Differences between IFRS and statutory taxation regu-
lations in Russia and other countries give rise to tempo-
rary differences between the carrying amount of assets
and liabilities for financial reporting purposes and their tax
bases. The tax effect of the movements in these tempo-
rary differences is detailed below.
104 – 105
’000 RUB
1 January 2023
Recognised
in profit or loss
31 December 2023
TAX EFFECT OF DEDUCTIBLE/ (TAXABLE) TEMPORARY
DIFFERENCES AND TAX LOSS CARRY FORWARDS
Investment property
Property, plant and equipment
Construction in progress
Right-of-use assets
Intangible assets
Other non-current assets
Inventories
Trade and other receivables and payables
Long-term investments
Lease liabilities
Tax loss carry-forwards
Net deferred tax assets
Recognised deferred tax assets
Recognised deferred tax liabilities
179,953
(1,303,769)
(211,505)
(2,610,919)
(106,099)
(42,157)
258,045
440,124
5,785
4,689,130
3,414,363
4,712,951
5,245,595
(532,644)
-
43,210
(56,043)
(1,009,284)
208,721
193,234
10,067
(221,300)
-
1,376,495
140,165
685,263
-
-
179,953
(1,260,559)
(267,548)
(3,620,203)
102,622
151,077
268,112
218,824
5,785
6,065,625
3,554,526
5,398,214
6,082,047
(683,833)
’000 RUB
1 January 2022
Recognised
in profit or loss
31 December 2022
TAX EFFECT OF DEDUCTIBLE/ (TAXABLE) TEMPORARY
DIFFERENCES AND TAX LOSS CARRY FORWARDS
Investment property
Property, plant and equipment
Construction in progress
Right-of-use assets
Intangible assets
Other non-current assets
Inventories
Trade and other receivables and payables
Long-term investments
Lease liabilities
Tax loss carry-forwards
Net deferred tax assets
Recognised deferred tax assets
Recognised deferred tax liabilities
152,953
(1,464,399)
(73,423)
(2,909,161)
(96,079)
145,591
267,631
139,571
5,785
4,812,607
3,399,908
4,380,984
4,895,412
(514,428)
27,000
160,630
(138,082)
298,242
(10,020)
(187,748)
(9,586)
300,553
-
(123,477)
14,455
331,967
-
-
179,953
(1,303,769)
(211,505)
(2,610,919)
(106,099)
(42,157)
258,045
440,124
5,785
4,689,130
3,414,363
4,712,951
5,245,595
(532,644)
In the context of the Group’s current structure, tax losses and current tax assets of different Group companies may not
be offset against current tax liabilities and taxable profits of other Group companies and, accordingly, taxes may accrue
even where there is a consolidated tax loss. Therefore, deferred tax assets and liabilities are offset only when they relate
to the same taxable entity.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 13. Investment property
(a) Reconciliation of carrying amount
’000 RUB
Investment properties at fair value as at 1 January 2022
Loss from revaluation of investment property
Reclassification to non-current assets held for sale
Other changes
Investment properties at fair value as at 31 December 2022
Investment properties at fair value as at 1 January 2023
Disposals
Investment properties at fair value as at 31 December 2023
The trade premises of the Group included in invest-
ment property are subject to operating leases. As at
31 December 2023 the Group’s investment prop-
erty comprises three buildings and three land plots
(31 December 2022: three buildings and four land plots).
As at 31 December 2023 the lease agreement for one land
plot was ended.
(b) Measurement of fair value
The investment properties are valued annually
on 31 December at fair value, by an independent, pro-
fessionally qualified valuator who has recent experience
in valuing similar properties in the Russian Federation.
The carrying values of investment properties at 31 Dec
ember 2023 and 31 December 2022 agree to the valu-
ations reported by the external valuators with the use
of a combination of the market approach with reference
to comparable prices for orderly transactions with sim-
ilar properties and the income approach with reference
to estimates of future cash flows, supported by the terms
Note
9
1,947,218
(135,000)
(305,000)
(32,885)
1,474,333
1,474,333
(217,115)
1,257,218
of any existing lease and other contracts and by exter-
nal evidence such as current market rents for similar
properties in the same location and condition, and using
discount rates that reflect current market assessments
of the uncertainty in the amount and timing of the cash
flows.
The principal assumptions underlying the estima-
tion of the fair value with reference to the income
approach are those relating to: the annual net rent
rate of RUB 645–1,829 per sq. m. (31 December 2022:
RUB 912–1,829 per sq. m.); expected occupancy
of 82–100% in the subsequent years (31 December 2022:
82,0–100%); and appropriate discount rate of 9,82% –
15,6% (31 December 2022: 10,15% – 13,5%).
These valuations are regularly compared to actual market
yield data and actual transactions by the Group, and those
reported by the market.
The fair value measurement of investment prop-
erty has been categorised as a Level 3 fair value based
on the inputs to the valuation technique used.
106 – 107
14. Property, plant and equipment and construction in progress
’000 RUB
Land
Buildings
Leasehold
improvements
Machinery
and
equipment,
auxiliary
facilities
and other
fixed assets
Construction
in progress
Total
property,
plant and
equipment
Total
property,
plant and
equipment
and
construction
in progress
COST
Balance at
1 January 2022
Additions
Transfers
Disposals
Balance at
31 December 2022
Balance at
1 January 2023
Additions
Transfers
Disposals
Balance at
31 December 2023
DEPRECIATION
AND IMPAIRMENT
LOSSES
Balance at
1 January 2022
Depreciation
for the year
Impairment losses
Disposals
Balance at
31 December 2022
Balance at
1 January 2023
Depreciation
for the year
Disposals
Balance at
31 December 2023
NET BOOK VALUE
3,735,039
42,294,973
10,586,717
18,273,095
74,889,824
2,974,861
77,864,685
-
-
-
5,768
10,346
2,761,363
2,777,477
3,041,853
5,819,330
433,262
2,355,033
557,341
3,345,636
(3,345,636)
-
(546)
(115,203)
(929,780)
(1,045,529)
(37,290)
(1,082,819)
3,735,039
42,733,457
12,836,893
20,662,019
79,967,408
2,633,788
82,601,196
3,735,039
42,733,457
12,836,893
20,662,019
79,967,408
2,633,788
82,601,196
21,000
-
-
53,742
803,977
(19,255)
4,160
2,251,065
2,329,967
3,814,811
6,144,778
2,106,289
497,363
3,407,629
(3,407,629)
-
(320,272)
(1,108,648)
(1,448,175)
(610,835)
(2,059,010)
3,756,039
43,571,921
14,627,070
22,301,799
84,256,829
2,430,135
86,686,964
-
-
-
-
-
-
-
-
-
(13,237,435)
(5,903,739)
(14,131,511)
(33,272,685)
(1,202,772)
(34,475,457)
(1,397,560)
(1,924,340)
(1,748,345)
(5,070,245)
-
(5,070,245)
-
257
-
-
-
(105,000)
(105,000)
103,919
881,197
985,373
-
985,373
(14,634,738)
(7,724,160)
(14,998,659)
(37,357,557)
(1,307,772)
(38,665,329)
(14,634,738)
(7,724,160)
(14,998,659)
(37 357 557)
(1,307,772)
(38,665,329)
(697,560)
(2,237,291)
(1,994,998)
(4,929,849)
6,243
248,814
1,016,002
1,271,059
-
-
(4,929,849)
1,271,059
(15,326,055)
(9,712,637)
(15,977,655)
(41,016,347)
(1,307,772)
(42,324,119)
At 1 January 2022
3,735,039
29,057,538
4,682,978
4,141,584
41,617,139
1,772,089
43,389,228
At
31 December 2022
At
31 December 2023
3,735,039
28,098,719
5,112,733
5,663,360
42,609,851
1,326,016
43,935,867
3,756,039
28,245,866
4,914,433
6,324,144
43,240,482
1,122,363
44,362,845
Depreciation expense of RUB 4,929,849 thousand has been charged to selling, general and administrative expenses (2022:
RUB 5,070,245 thousand).
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Impairment assessment
At the end of each reporting period, the Group assesses
whether there is any indication that its non-current assets
including property, plant and equipment, right-of-use
assets and other non-current assets may be impaired.
Where the non-current assets relate to the Group’s
stores, these stores are treated as separate CGUs,
and impairment assessment is performed in respect
of the aggregate carrying value of the non-current assets
attributable to these CGUs with reference to their actual
and anticipated performance and other relevant factors.
For the CGUs subject to impairment testing, recoverable
amount was determined based on value-in-use.
Value in use calculations were prepared using cash flow
projections based on financial budgets and forecasts
approved by management covering a one-year period.
Cash flows beyond the one-year period are extrapolated
using an expected growth rate for each particular CGU
which depends on its maturity and other relevant factors.
The discount rates are post-tax and reflect management’s
estimate of the risks specific to the Group.
As the result of the impairment test performed as at
31 December 2023 no impairment was identified.
15. Right-of-use assets
(31 December 2022: impairment loss of RUB 105,000 thou-
sand in respect of construction in progress belonging
to O’Key segment).
The post-tax discount rate used in the assess-
ment under the value in use approach as at
31 December 2023 was 12.6% (31 December 2022:
12.3%). If the revised estimated post-tax discount rate
applied to the discounted cash flows of the CGUs had
been 800 basis points higher than management’s esti-
mates, the Group would need to reduce the carrying value
of property, plant and equipment by RUB 4,000 thou-
sand (2022: if the estimated post-tax discount rate
had been 100 basis points higher than manage-
ment’s estimates, the Group would need to reduce
the carrying value of property, plant and equipment
by RUB 40,000 thousand).
Pledged assets
At 31 December 2023, trade stores with carrying
value of RUB 7,769,535 thousand have been pledged
to third parties as collateral for bank borrowings
(31 December 2022: trade stores were pledged with car-
rying value of RUB 7,788,521 thousand).
The Group leases various trade premises, land and other assets. Rental contracts are typically made for fixed periods
of 3 to 30 years but may have extension and early termination options. Lease terms are negotiated on an individual basis
and contain a wide range of different terms and conditions.
The table below presents the right-of-use assets by class of underlying assets:
’000 RUB
Trade premises
Land
Other
Total
Balance at 1 January 2022
Additions
Modifications and reassessments
Depreciation
Balance at 31 December 2022
Balance at 1 January 2023
Additions
Modifications and reassessments
Depreciation
Disposals
14,915,114
2,199,768
1,906,936
(4,092,331)
14,929,487
14,929,487
1,845,165
4,011,602
(4,616,017)
-
3,717,642
1,558,143
20,190,899
-
(176,191)
(168,111)
3,373,340
3,373,340
251,805
28,939
(168,449)
(81,323)
133,059
(60,020)
(717,193)
913,989
913,989
7,977
3,643,558
(830,310)
-
2,332,827
1,670,725
(4,977,635)
19,216,816
19,216,816
2,104,947
7,684,099
(5,614,776)
(81,323)
Balance at 31 December 2023
16,170,237
3,404,312
3,735,214
23,309,763
The group ‘Other’ is mostly represented by office premises and warehouses.
108 – 109
Modifications and reassessments for the year ended
31 December 2023 were driven by the modification
of a warehouses leases, as well as by the modification
of a number of other leases, that changed either the con-
sideration for the lease, contractual lease term, or both.
Depreciation expense of RUB 5,599,427 thousand
(2023: RUB 4,970,334 thousand) has been charged
to general, selling and administrative expenses.
During 2023 the Group has capitalised depreciation
of right of use assets in the amount of RUB 15,349 thou-
sand (2022: RUB 7,301 thousand).
Right-of-use assets are assessed for indication of poten-
tial impairment as at each reporting date. For those assets
where impairment indicators exist, the Group estimates
recoverable amount being the higher of their value in use
and fair value less costs of disposal, on either individual
asset or CGU level.
No indicators of impairment were identified
for the Group’s right-of-use assets that are attributable
to individual leased assets and do not relate to stores
in operation as at 31 December 2023 and 2022.
For those right-of-use assets that relate to the Group’s
stores and are therefore assessed for impairment
on the store level together with the other non-current
assets attributable to the stores, impairment assessment
has been performed as disclosed in Note 14. No impair-
ment attributable to the right-of-use assets was identified
as at 31 December 2023 and 31 December 2022.
No reversal of impairment as at 31 December 2023 and 31
December 2022 was made.
16. Intangible assets
’000 RUB
COST
Balance at 1 January 2022
Additions
Disposals
Balance at 31 December 2022
Balance at 1 January 2023
Additions
Disposals
Balance at 31 December 2023
AMORTISATION AND IMPAIRMENT LOSSES
Balance at 1 January 2022
Amortisation for the year
Disposals
Balance at 31 December 2022
Balance at 1 January 2023
Amortisation for the year
Disposals
Software
Other intangible
assets
Total
1,964,058
836,228
(826,268)
1,974,018
1,974,018
456,824
(571,463)
1,859,379
316,432
103,282
(110,254)
309,460
309,460
272,123
(149,409)
432,174
(813,330)
(136,784)
(584,211)
481,320
(916,221)
(916,221)
(491,512)
520,939
(37,029)
12,071
(161,742)
(161,742)
(47,730)
19,266
2,280,490
939,510
(936,522)
2,283,478
2,283,478
728,947
(720,872)
2,291,553
(950,114)
(621,240)
493,391
(1,077,963)
(1,077,963)
(539,242)
540,205
Balance at 31 December 2023
(886,794)
(190,206)
(1,077,000)
CARRYING AMOUNTS
At 1 January 2022
At 31 December 2022
At 31 December 2023
1,150,728
1,057,797
972,585
179,648
147,718
241,968
1,330,376
1,205,515
1,214,553
Amortisation of RUB 539,242 thousand has been charged to selling, general and administrative expenses (2022:
RUB 621,240 thousand).
No indicators of impairment were identified for the Group’s intangible assets as at 31 December 2023 and 31 December 2022.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 110 – 111
17. Prepayments
’000 RUB
Prepayments for goods
Prepayments for variable lease payments – third parties
Prepayments for services
VAT on prepayments
Other prepayments
Total prepayments
18. Other non-current assets
31 December 2023
31 December 2022
320,267
126,277
192,597
86,172
74,999
800,312
514,967
118,645
299,642
44,462
199,745
1,177,461
The Group’s exposure to credit and currency risks and credit loss allowance as at 31 December 2023 and 31 December 202
2 related to trade and other receivables are disclosed in Note 28.
21. Cash and cash equivalents
’000 RUB
Cash on hand
Bank current accounts
Term deposits
Cash in transit
Total cash and cash equivalents
31 December 2023
31 December 2022
162,782
4,866,560
5,988,729
507,720
11,525,791
302,561
3,010,675
8,043,004
423,094
11,779,334
’000 RUB
31 December 2023
31 December 2022
Term deposits had original maturities of less than three months.
FINANCIAL ASSETS WITHIN OTHER NON-CURRENT ASSETS
Long-term refundable deposits to lessors
Total financial assets within other non-current assets
OTHER NON-CURRENT ASSETS
Prepayments for non-current assets
Total other non-current assets
564,621
564,621
307,483
872,104
570,419
570,419
1,230,720
1,801,139
19. Inventories
’000 RUB
Goods for resale
Raw materials and consumables
Write-down to net realisable value
Total inventories
31 December 2023
31 December 2022
24,145,751
1,562,829
(732,654)
24,975,926
22,846,326
1,736,759
(666,098)
23,916,987
The Group tested the inventories for obsolescence and wrote down the inventories to their net realisable value,
which resulted in a decrease of the carrying value of inventories by RUB 732,654 thousand as at 31 December 2023
(31 December 2022: RUB 666,098 thousand). The write down to net realisable value was determined by applying percent-
ages of discount on sales and write-offs of slow-moving goods to the appropriate aging of the goods. The percentages
of discount were based on the management’s best estimate following the experience of the discount sales.
20. Trade and other receivables
’000 RUB
31 December 2023
31 December 2022
FINANCIAL ASSETS WITHIN TRADE AND OTHER RECEIVABLES
Trade receivables
Bonuses receivable from suppliers
Other financial receivables
Total financial assets within trade and other receivables
OTHER RECEIVABLES
VAT receivable
Prepaid taxes other than income tax
Total trade and other receivables
420,326
1,553,709
169,427
2,143,462
138,294
234,436
2,516,192
332,773
2,031,406
210,178
2,574,357
338,689
17,174
2,930,220
The Group’s exposure to currency risk related to cash and cash equivalents is disclosed in Note 28.
22. Equity
As at 31 December 2023 and 31 December 2022,
the Company’s authorised, issued and fully paid share
capital of RUB 119,440 thousand, the RUB equiv-
alent of EUR 2,691 thousand, is represented
by 269,074,000 ordinary shares with a par value
of 0.01 EUR each. Each share is entitled to one vote,
except as may be otherwise provided by the Articles
of incorporation or by applicable law.
In accordance with Luxembourg Company Law,
the Company is required to transfer a minimum of 5%
of its net profits for each financial year to a legal reserve.
This requirement ceases to be necessary once the bal-
ance of the legal reserve reaches 10% of the issued share
capital. The legal reserve is not available for distribution
to the shareholders. As at 31 December 2023 and 2022,
the legal reserve was formed in full.
Additional paid-in capital represents the excess of con-
tributions received over par value of shares issued. There
were no movements in additional paid-in capital during
the years ended 31 December 2023 and 31 December 20
22.
In July 2022, the Company approved an interim dividend
on all shares in issue of EUR 8,500 thousand (0.03159
Euro per share), the equivalent of RUB 480,594 thousand
at the official exchange rate as of the date of the approval.
The corresponding payments were made to the share-
holders in August 2022 in full. Dividends declared were
recognised as distribution to owners in the consolidated
statement of changes in equity.
No dividends were declared and paid in 2023.
23. (Loss)/Earnings per share
Basic earnings per share are calculated by dividing
the profit or loss attributable to owners of the Company
by the weighted average number of ordinary shares
in issue during the year. The Company has no dilutive
potential ordinary shares; therefore, the diluted earnings
per share equals the basic earnings per share.
Earnings per share is calculated as follows:
‘000 RUB
(Loss)/Profit for the year
Weighted average number of ordinary shares in issue (thousands)
Basic and diluted (loss)/earnings per ordinary share (in RUB per share)
2023
(2,878,062)
269,074
(10.7)
2022
241,530
269,074
0.9
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 112 – 113
24. Loans and borrowings
’000 RUB
Currency
Maturity
Carrying value
Maturity Carrying value
31 December 2023
31 December 2022
Compliance with loan covenants
The Group monitors compliance with loan covenants
on an ongoing basis. Where noncompliance is unavoidable
in management’s view, the Group requests waiver let-
ters from the banks before the year-end, confirming that
the banks waive their rights to demand early redemption.
NON-CURRENT LOANS AND BORROWINGS
Secured bank loans
Unsecured bank facilities
Unsecured bonds
Total non-current loans and borrowings
CURRENT LOANS AND BORROWINGS
Secured bank loans
Unsecured bank facilities
Unsecured bonds
Unsecured loans from third parties
Total current loans and borrowings
Unsecured bonds interest
Secured bank loans
Unsecured loans interest
Interest accrued on loans
and borrowings
Total current loans and borrowings,
including interest accrued
Total loans and borrowings
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
RUB
2025–2027
11,794,118
2024–2027
10,652,941
2025–2028
12,850,000
2024–2026
13,500,000
2026–2030
16,484,330
2024–2026
11,372,271
41,128,448
35,525,212
2024
2024
2024
-
3,500,000
2,500,000
2,850
6,002,850
240,529
3,305
10,615
254,450
6,257,300
47,385,748
2023
2023
2023
2023
729,412
3,033,333
6,195,201
2,850
9,960,796
209,488
2,034
4,215
215,737
10,176,533
45,701,745
Information about property, plant and equipment pledged
as collateral for the Group’s loans and borrowings is dis-
closed in Note 14.
As at 31 December 2023 the Group had
RUB 16,560,000 thousand (31 December 2022:
RUB 16,466,667 thousand) of undrawn committed bor-
rowing facilities available in RUB on fixed and floating rate
basis until March 2024-March 2028 in respect of which all
conditions have been met. Proceeds from these facilities
may be used to finance operating and investing activities,
if necessary.
In 2023 the Group repaid bonds issued during
2019–2020 and due in 2023–2025 in the amount
of RUB 6,062,700 thousand.
In 2022 the Group repaid bonds issued during
2019–2020 and due in 2023–2025 in the amount
of RUB 3,750,293 thousand.
The following issues of unsecured bonds were also placed
by the Group on Moscow exchange in 2019–2022:
● an issue made in April 2019 in the amount
of RUB 5,000,000 thousand bearing coupon rate
of 9.35% p.a. and maturing in April 2029 with an option
for the bondholders to claim early repayment
in April 2022. In October and November 2021 bonds
were partially repaid in the amount
of RUB 2,162,329 thousand. In April 2022 bonds were
partially repaid in the amount of RUB 2,445,494 thou-
sand. An option for the bondholders to claim early
was prolonged till April 2025 bearing coupon rate
of 9.9% p.a;
● an issue made in December 2019 in the amount
of RUB 5,000,000 thousand bearing coupon rate
of 7.85% p.a. and maturing in November 2024;
● an issue made in November 2020 in the amount
of RUB 5,000,000 thousand bear-
ing coupon rate of 7.50% p.a. and maturing
in October 2030 with an option for the bondhold-
ers to claim early repayment in November 2023.
In December 2022 bonds were partially repaid
in the amount of RUB 1,304,799 thousand;
● an issue made in November 2022 in the amount
of RUB 8,500,000 thousand bearing coupon rate
of 11.5% p.a. and maturing in November 2032
with an option for the bondholders to claim early
repayment in May 2026.
● an issue made in May 2023 in the amount
of RUB 7,500,000 thousand bearing coupon rate
of 11.75% p.a. and maturing in May 2033 with an option
for the bondholders to claim early repayment
in May 2026.
25. Lease liabilities
’000 RUB
Balance at 1 January
Additions
Modifications and reassessments
Repayment
Interest expense
Foreign exchange (loss)/gain
Disposals
Balance at 31 December
Non-current lease liabilities
Current lease liabilities
2023
2022
22,544,804
24,063,037
2,000,248
7,090,769
(7,759,668)
2,491,371
356,113
(1,256)
26,722,381
20,760,179
5,962,202
2,170,785
1,631,120
(7,170,232)
2,075,250
(225,247)
91
22,544,804
16,924,142
5,620,662
Interest expense in the amount of RUB 2,489,530 thou-
sand (2022: RUB 2,073,350 thousand) has been charged
to finance costs.
are recognised in profit or loss in the period in which
the condition that triggers those payments occurs.
Total cash outflow for leases in 2023 amounted
to RUB 8,207,325 thousand (2022:
RUB 7,612,899 thousand).
Some property leases contain variable payment terms
that are linked to sales generated by a store. Variable
payment terms are used for a variety of reasons, includ-
ing minimising the fixed costs base for newly established
stores. Variable lease payments that depend on sales
26. Trade and other payables
Expense relating to variable lease payments not included
in lease liabilities included in selling, general and admin-
istrative expenses for 2023 was RUB 379,814 thousand
(2022: RUB 420,488 thousand).
Expenses relating to short-term leases and to leases
of low-value assets that are not included in lease liabil-
ities, both included in selling, general and administra-
tive expenses, amounted to RUB 310 thousand (2022:
RUB 577 thousand) and RUB 59,507 thousand (2022:
RUB 27,180 thousand), respectively.
’000 RUB
31 December 2023
31 December 2022
FINANCIAL LIABILITIES AT AMORTISED COST
Trade payables
Other financial payables
Total financial liabilities at amortised cost
Payables to staff
Taxes payable other than income tax
Advances received from lessees
Contract liability related to gift cards
Total trade and other payables
27,883,950
198,290
26,771,109
184,761
28,082,240
26,955,870
1,472,151
1,028,784
391,144
87,764
1,397,271
1,683,457
520,096
80,251
31,062,083
30,636,945
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 The Group’s contract liabilities relate to contracts with customers for periods of less than one year. RUB 87,764 thousand
of revenue was recognised in the current reporting period related to the contract liabilities as at 31 December 2022, all
of which related to gift cards.
The Group’s exposure to currency and liquidity risks related to trade and other payables is disclosed in Note 28.
27. Reconciliation of movements of liabilities to cash
flows arising from financing activities
The table below sets out an analysis of liabilities from financing activities and the movements in the Group’s liabilities
from financing activities for each of the periods presented. The items of these liabilities are those that are reported
as financing in the consolidated statement of cash flows:
’000 RUB
Total cash flows from financing
activities
NON-CASH CHANGES
Additions to lease liabilities
Modifications and reassessments
of lease liabilities
Accrued interest
Disposals
Difference between the par value
of the placed bond and the actual cost
of the bond redemption (income)
’000 RUB
Note
Loans
and borrowings
Lease liabilities
Dividends
payable
Balance at 1 January 2023
45,701,745
22,544,804
Dividends declared
22
-
Effect of changes in foreign exchange
rates
(78,761)
(225,247)
Total non-cash changes
3,969,518
5,651,999
480,594
10,102,111
Balance at 31 December 2022
45,701,745
22,544,804
-
68,246,549
114 – 115
Note
Loans
and borrowings
Lease liabilities
Dividends
payable
Total
3,766,169
(7,170,232)
(480,594)
(3,884,657)
25
25
10,25
25
-
-
2,170,785
1,631,120
4,067,851
2,075,250
-
(19,572)
-
-
-
-
-
2,170,785
1,631,120
6,143,101
91
(19,572)
480,594
-
480,594
(304,008)
91
-
-
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from loans and borrowings
Repayment of loans and borrowings
Interest paid on loans and borrowings
Repayment of principal amount of lease
liabilities
Interest paid on lease liabilities
Other financial payments
Total cash flows from financing
activities
NON-CASH CHANGES
Additions to lease liabilities
Modifications and reassessments
of lease liabilities
Accrued interest
Disposals
Difference between the par value
of the placed bond and the actual cost
of the bond redemption (income)
Effect of changes in foreign exchange
rates
Total non-cash changes
Balance at 31 December 2023
Balance at 1 January 2022
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from loans and borrowings
Repayment of loans and borrowings
Interest paid on loans and borrowings
Repayment of principal amount of lease
liabilities
Interest paid on lease liabilities
Dividends paid
Other financial payments
15,500,003
(13,834,268)
(4,939,018)
-
-
(125,188)
-
-
-
(5,268,297)
(2,491,371)
-
(3,398,471)
(7,759,668)
25
25
10,25
25
-
-
5,029,949
-
(40,348)
2,000,248
7,090,769
2,491,371
(1,256)
-
92,873
356,113
5,082,474
11,937,245
47,385,748
26,722,381
37,966,058
24,063,037
-
-
-
(5,094,982)
(2,075,250)
17,772,121
(9,958,485)
(3,966,907)
-
-
-
(80,560)
-
-
(480,594)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
68,246,549
15,500,003
(13,834,268)
(4,939,018)
(5,268,297)
(2,491,371)
(125,188)
(11,158,139)
2,000,248
7,090,769
7,521,321
(1,256)
(40,348)
448,986
17,019,953
74,108,129
62,029,095
17,772,121
(9,958,485)
(3,966,907)
(5,094,982)
(2,075,250)
(480,594)
(80,560)
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 28. Financial risk management
(a) Overview
The risk management function within the Group is car-
ried out with respect to financial risks, operational risks
and legal risks. Financial risk comprises market risk
(including currency risk, interest rate risk and other price
risks), credit risk and liquidity risk. The primary function
of financial risk management is to establish risk limits and
to ensure that any exposure to risk stays within these lim-
its. The operational and legal risk management functions
are intended to ensure the proper functioning of internal
policies and procedures in order to minimise operational
and legal risks.
Risk management framework
The Board of Directors has overall responsibility
for the establishment and oversight of the Group’s risk
management framework.
The Group’s risk management policies are established
to identify and analyse the risks faced by the Group,
to set appropriate risk limits and controls, and to moni-
tor risks and adherence to limits. Risk management poli-
cies are reviewed regularly to reflect changes in market
conditions and the Group’s activities. The Group, through
its training and management standards and procedures,
’000 RUB
Long-term refundable deposits to lessors
Trade and other receivables
Cash and cash equivalents
Total
Due to the fact that the Group’s principal activities
are located in the Russian Federation, the credit risk
is mainly associated with its domestic market. The credit
risks associated with foreign counterparties are con-
sidered to be remote, as there are only few for-
eign counterparties and they were properly assessed
for creditworthiness.
(ii) Trade and other receivables
The Group has no considerable balance of trade receiv-
ables because the majority of its customers are retail con-
sumers, who are not provided with any credit. The Group’s
trade receivables primarily include receivables from ten-
ants and receivables connected to provision of services.
Other receivables are primarily represented by bonuses
aims to develop a disciplined and constructive control
environment in which all employees understand their roles
and obligations.
The Group’s Audit Committee oversees how manage-
ment monitors compliance with the Group’s risk manage-
ment policies and procedures and reviews the adequacy
of the risk management framework in relation to the risks
faced by the Group. The Group’s Audit Committee
is assisted in its oversight role by Internal Audit. Internal
Audit undertakes both regular and ad hoc reviews of risk
management controls and procedures, the results of which
are reported to the Audit Committee.
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a cus-
tomer or counterparty to a financial instrument fails
to meet its contractual obligations, and arises principally
from the Group’s cash and cash equivalents, trade receiv-
ables, bonuses receivable and other financial receivables.
(i) Exposure to credit risk
The carrying amounts of financial assets in the consoli-
dated statement of financial position represent the Group’s
maximum credit risk exposure. The maximum exposure
to credit risk at the reporting date was:
Note
Carrying amount
31 December 2023
31 December 2022
18
20
21
564,621
2,143,462
11,363,009
14,071,092
570,419
2,574,357
11,476,773
14,621,549
receivable from suppliers. The Group manages credit
risk in respect of those bonuses receivable by maintain-
ing a stable suppliers base and monitoring collectability
of amounts due on an ongoing basis.
To measure the ECL for trade and other receivables, those
have been grouped based on shared credit risk character-
istics and the days past due.
The expected loss rates are based on the payment
profiles of sales over a period of 36 months before
31 December 2023 and 31 December 2022 and the corre-
sponding historical credit losses experienced within this
period. The historical loss rates are adjusted to reflect cur-
rent and forward-looking information on macroeconomic
116 – 117
factors affecting the ability of the customers to settle
the receivables.
receivable from suppliers, adjusted to reflect relevant cur-
rent and forward-looking information.
The ECL for bonuses receivable from suppliers is deter-
mined on portfolio level based on historical default
percentages applied to the total amount of bonuses
The credit loss allowance as at 31 December 2023 deter-
mined with the use of provision matrix is summarised
in the table below.
’000 RUB
Trade receivables
Bonuses receivable from suppliers
Other financial receivables
Total
Gross amount
ECL
Carrying amount
444,579
1,560,372
207,718
2,212,669
(24,253)
(6,663)
(38,291)
(69,207)
420,326
1,553,709
169,427
2,143,462
The credit loss allowance as at 31 December 2022 determined with the use of provision matrix is summarised in the table
below.
’000 RUB
Trade receivables
Bonuses receivable from suppliers
Other financial receivables
Total
(iii) Cash and cash equivalents
The Group assesses credit risk for cash and cash equiva-
lents based on external ratings that are available publicly.
Cash and cash equivalents are mainly held with banks which
are rated from Baa3 to Ca based on Moody’s rating.
The Group operates in retail industry which assumes that
cash from the customers flows to the Group normally
at the point of sale at the moment when the revenue is rec-
ognized. Therefore, cash flow risk is considered as remote.
(c) Liquidity risk
Liquidity risk is the risk that the Group will encounter dif-
ficulty in meeting the obligations associated with its finan-
cial liabilities that are settled by delivering cash or another
financial asset. The Group’s approach to managing liquid-
ity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s
reputation.
Liquidity risk management is a responsibility of the Group’s
Treasury Department. The Group’s liquidity risk manage-
ment objectives are as follows:
● Maintaining financial independence: a share of one
creditor in debt portfolio should not exceed 30%;
Gross amount
339,854
2,045,886
223,556
2,609,296
ECL
(7,081)
(14,480)
(13,378)
(34,939)
Carrying amount
332,773
2,031,406
210,178
2,574,357
● Maintaining financial stability: the Net Debt / EBITDA
ratio should not exceed 5.0 (at some agreements 5.5),
where Net Debt is the total of long-term and short-
term loans and borrowings and lease liabilities less cash
and cash equivalents as presented in the consolidated
financial statements;
● Monitoring of compliance with debt covenants;
● Planning: timely preparation of operating, investing
and financing cash flow forecasts on rolling basis.
(i) Exposure to liquidity risk
The table below shows liabilities at 31 December 2023
by their remaining contractual maturity. The amounts dis-
closed in the maturity table are the contractual undis-
counted cash flows, including gross loan commitments.
Such undiscounted cash flows may differ from the amount
included in the consolidated statement of financial posi-
tion because the consolidated statement of financial
position amounts are based on discounted cash flows.
Where the amount payable is not fixed, the amount dis-
closed is determined by reference to the conditions exist-
ing at the end of the reporting period. Foreign currency
payments are translated using the spot exchange rate
at the end of the reporting period.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 31 December 2023
’000 RUB
FINANCIAL
LIABILITIES
AT AMORTISED
COST
Carrying
amount
Contractual
cash flows
Demand
and less than
6 months
From 6
to 12 months
From 1
to 5 years
More than
5 years
Secured bank loans
11,797,423
15,555,668
696,379
700,690
14,158,599
-
19,224,859
16,360,615
23,922,236
2,516,287
2,237,253
19,028,082
140,614
20,665,411
4,501,323
890,651
15,273,437
2,850
2,896
46
2,850
-
-
-
Unsecured bonds
Unsecured bank
facilities
Unsecured loans
from third parties
Lease liabilities
26,722,381
37,560,913
4,045,518
4,005,828
19,968,013
9,541,554
28,082,240
28,082,240
28,082,240
-
-
-
102,190,368
125,789,364
39,841,793
7,837,272
68,428,131
9,682,168
Trade and other
payables
Total future pay-
ments, including
future princi-
pal and interest
payments
As at 31 December 2023, the Group’s current liabilities exceeded its current assets by RUB 3,431,679 thousand
(31 December 2022: RUB 6,431,960 thousand). An excess of current liabilities over current assets is usual for the retail
industry. The Group uses excess of trade and other payables over inventory to finance its operating and investing
activities. The Group has reviewed its cash flow forecasts in the context of current and projected market conditions,
as well as available undrawn credit facilities disclosed in Note 24, and is confident that it will be able to meet its obligations
as they fall due.
31 December 2022
’000 RUB
FINANCIAL
LIABILITIES
AT AMORTISED
COST
Carrying
amount
Contractual
cash flows
Demand
and less than
6 months
From 6
to 12 months
From 1
to 5 years
More than
5 years
Secured bank loans
11,384,387
14,479,556
533,576
1,257,448
12,688,532
Unsecured bonds
17,776,960
21,540,117
2,008,245
5,700,389
13,831,483
Unsecured bank
facilities
Unsecured loans
from third parties
16,537,548
20,482,625
764,537
3,780,026
15,938,062
2,850
2,894
44
2,850
-
-
-
-
-
Lease liabilities
22,544,804
33,037,739
3,747,596
3,559,353
14,094,751
11,636,039
26,955,870
26,955,870
26,955,870
-
-
-
95,202,419
116,498,801
34,009,868
14,300,066
56,552,828
11,636,039
Trade and other
payables
Total future pay-
ments, includ-
ing future
principal and inter-
est payments
118 – 119
(d) Market risk
Market risk is the risk that changes in market prices, such
as foreign exchange rates, interest rates and equity prices
will affect the Group’s income or the value of its holdings
of financial instruments. The objective of market risk man-
agement is to manage and control market risk exposures
within acceptable parameters, while optimising the return.
Management sets limits on the value of risk that may
be accepted. However, the use of this approach does not
prevent losses outside of these limits in the event of more
significant market movements.
(i) Currency risk
The Group holds its business in the Russian Federation
and mainly collects receivables nominated in Russian
Roubles. However, financial assets and liabilities
of the Group are also denominated in other currencies,
primarily US Dollar, Euro.
Thus, the Group is exposed to currency risk, which may
materially influence the financial position and financial
results of the Group through the change in carrying value
of financial assets and liabilities and amounts on for-
eign exchange rate gains or losses. The Group ensures
that its exposure is kept to an acceptable level by keep-
ing the proportion of financial assets and liabilities in for-
eign currencies to total financial liabilities at an acceptable
level. From time to time the Group converts assets and lia-
bilities from one currency to another.
Exposure to currency risk
The Group’s exposure to currency risk in relation
to the USD, EUR and CNY the major foreign currencies
for the Group’s Russian subsidiaries, was as follows based
on notional amounts.
The Group’s exposure to currency risk in relation
to the USD was as follows based on notional amounts:
’000 RUB
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Total
31 December 2023
31 December 2022
7,283
361,035
(163,988)
204,330
689
28,507
(272,332)
(243,136)
The Group’s exposure to currency risk in relation to the EUR was as follows based on notional amounts:
’000 RUB
Cash and cash equivalents
Lease liabilities
Trade and other payables
Total
31 December 2023
31 December 2022
49,089
(1,509,597)
(49,088)
(1,509,596)
2
(1,459,682)
(102,224)
(1,561,904)
The Group’s exposure to currency risk in relation to the CNY was as follows based on notional amounts:
’000 RUB
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Total
31 December 2023
31 December 2022
7,815
693
(119,268)
(110,760)
1,065
443
(6,670)
(5,162)
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Sensitivity analysis
A 20% weakening/strengthening of the RUB against
the USD at 31 December 2023 would have decreased/
increased equity and profit or loss by RUB 40,866 thou-
sand (31 December 2022: 20% weakening/strength-
ening of the RUB against the USD would have
decreased/increased equity and profit or loss
by RUB 48,627 thousand).
A 20% weakening/strengthening of the RUB against
the EUR at 31 December 2023 would have decreased/
increased equity and profit or loss by RUB 301,919 thou-
sand (31 December 2022: 20% weakening/strength-
ening of the RUB against the EUR would have
decreased/increased equity and profit or loss
by RUB 312,381 thousand).
(31 December 2022: 20% weakening/strength-
ening of the RUB against the CNY would have
decreased/increased equity and profit or loss
by RUB 1,032 thousand).
This analysis was performed only for the foreign cur-
rency denominated monetary balances in the consolidated
statement of financial position related to the Group’s enti-
ties whose functional currency is the RUB and is based
on foreign currency exchange rate variances that
the Group considered to be reasonably possible
at the end of the reporting period. The analysis assumes
that all other variables, in particular interest rates, remain
constant.
(ii) Interest rate risk
A 20% weakening/strengthening of the RUB against
the CNY at 31 December 2023 would have decreased/
increased equity and profit or loss by RUB 22,152 thousand
The Group is exposed to the effects of fluctua-
tions in the prevailing levels of market interest rates
on its financial position and cash flows.
Profile
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments at their carrying
amounts was:
’000 RUB
FIXED RATE INSTRUMENTS
Cash and cash equivalents
Loans and borrowings
Lease liabilities
Total
VARIABLE RATE INSTRUMENTS
Loans and borrowings
Total
31 December 2023
31 December 2022
10,855,289
(37,328,691)
(26,722,381)
11,053,679
(38,849,812)
(22,544,804)
(53,195,783)
(50,340,937)
(10,057,057)
(10,057,057)
(6,851,933)
(6,851,933)
(e) Cash flow sensitivity analysis for variable rate instruments
A change of 500 basis points in interest rates at the reporting date would have increased / (decreased) equity and profit
or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates,
remain constant.
’000 RUB
31 DECEMBER 2023
Variable rate instruments
Cash flow sensitivity (net)
Profit or loss
Equity
500 bp increase
500 bp decrease
500 bp increase
500 bp decrease
502,853
502,853
(502,853)
(502,853)
-
-
-
-
120 – 121
(f) Offsetting of financial assets
and financial liabilities
The Group may enter into sales and purchase agree-
ments with the same counterparty in the normal course
of business. The related amounts receivable and pay-
able do not always meet the criteria for offsetting
in the consolidated statement of financial position. This
is because, while generally there is an intention to set-
tle on net basis, the Group may not have any currently
legally enforceable right to offset recognised amounts,
because the right to offset may be enforceable only
on the occurrence of future events. In particular, in accor-
dance with the Russian civil law an obligation can be set-
tled by offsetting against a similar claim if it is due, has no
maturity or is payable on demand, unless otherwise stated
in the agreement.
The following table sets out the carrying amounts of rec-
ognised financial instruments that are subject to the above
agreements.
’000 RUB
31 DECEMBER 2022
Gross amounts before offsetting
Amounts offset
Net amounts presented in the consolidated statement of financial
position
Amounts related to recognised financial instruments that do not meet
some or all of the offsetting criteria
Net amount
31 DECEMBER 2023
Gross amounts before offsetting
Amounts offset
Net amounts presented in the consolidated statement of financial
position
Amounts related to recognised financial instruments that do not meet
some or all of the offsetting criteria
Trade and other
receivables
Trade and other payables
4,528,600
(1,954,243)
2,574,357
28,910,113
(1,954,243)
26,955,870
(1,148,843)
(1,148,843)
1,425,514
25,807,027
3,376,647
(1,233,185)
2,143,462
29,315,426
(1,233,185)
28,082,241
(1,160,394)
(1,160,394)
Net amount
983,068
26,921,847
The net amounts presented in the consolidated statement
of financial position disclosed above form part of trade
and other receivables and trade and other payables,
respectively. Other amounts included in these line items
do not meet the criteria for offsetting and are not subject
to the agreements described above.
Amounts offset comprise mainly trade payables for goods
and bonuses receivable from suppliers.
(g) Capital management
The Group’s policy is to maintain a strong capital base
so as to maintain investor, creditor and market confi-
dence and to sustain future development of the busi-
ness. Neither the Company nor its subsidiaries are subject
to externally imposed capital requirements, except
for statutory requirement in relation to minimum level
of share capital and requirement in respect of positive
net assets of LLC “O’KEY” for external loan agreement;
the Group follows all requirements.
29. Capital commitments
The Group has capital commitments to acquire prop-
erty, plant and equipment, mostly relating to con-
struction of stores, and intangible assets amounting
to RUB 364,249 thousand as at 31 December 2023
(31 December 2022: RUB 1,363,338 thousand). The Group
has already allocated the necessary resources in respect
of these commitments. The Group believes that future
net income and funding will be sufficient to cover these
and any similar commitments.
30. Contingencies
(a) Legal proceedings
From time to time and in the normal course of busi-
ness, claims against the Group are received. On the basis
of its own estimates and both internal and external pro-
fessional advice, the management is of the opinion that
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 The impact of any of the challenges mentioned above
cannot be reliably estimated currently; however, it may
be significant to the financial position and/or the overall
operations of the Group.
In addition to the above matters, management esti-
mates that as at 31 December 2023, the Group has
other possible obligations of approximately 1.2% of rev-
enue (31 December 2022: 1.1% of revenue) from expo-
sure to other than remote tax risks arising from certain
transactions. These exposures are estimates that
result from uncertainties in interpretation of applica-
ble legislation and related documentation requirements.
Management will vigorously defend the Group’s positions
and interpretations that were applied in determining taxes
recognised in these consolidated financial statements if
these are challenged by the authorities.
31. Related party transactions
Parties are generally considered to be related if the par-
ties are under common control or if one party has the abil-
ity to control the other party or can exercise significant
influence or joint control over the other party in making
financial and operational decisions. In considering each
possible related party relationship, attention is directed
to the substance of the relationship, not merely the legal
form. Related parties may enter into transactions which
unrelated parties might not, and transactions between
related parties may not be effected on the same terms,
conditions and amounts as transactions between unre-
lated parties.
Related parties of the Group fall into the following
categories:
1 . The Company’s major indirect shareholders (Note 1);
2 . Other related parties under control of the major indi-
rect shareholders;
3 . Members of the Board of Directors of the Company
and other key management personnel .
no material losses will be incurred in respect of claims
outstanding.
(b) Tax contingencies
Russian tax legislation which was enacted or substan-
tively enacted at the end of the reporting period,
is subject to varying interpretations when being
applied to the transactions and activities of the Group.
Consequently, tax positions taken by management
and the formal documentation supporting the tax posi-
tions may be challenged by tax authorities. Russian tax
administration is gradually strengthening, including
the fact that there is a higher risk of review of tax transac-
tions without a clear business purpose or with tax incom-
pliant counterparties. Fiscal periods remain open to review
by the authorities in respect of taxes for three calendar
years preceding the year when decisions about the review
was made. Under certain circumstances reviews may cover
longer periods.
Russian transfer pricing (TP) legislation is gener-
ally aligned with the international TP principles devel-
oped by the Organisation for Economic Cooperation
and Development (OECD), although it has specific fea-
tures. The TP legislation provides for the possibility
of additional tax assessment for controlled transactions
(transactions between related parties and certain trans-
actions between unrelated parties) if such transactions
are not on an arm’s-length basis. The management has
implemented internal controls to comply with current TP
legislation.
Tax liabilities arising from controlled transactions
are determined based on their actual transaction prices.
It is possible, with the evolution of the interpretation
of the TP rules, that such prices could be challenged.
The impact of any such challenge cannot be reliably
estimated.
The Group includes companies incorporated outside
of Russia. The tax liabilities of the Group are determined
on the assumption that these companies are not subject
to Russian profits tax, because they do not have a perma-
nent establishment in Russia. This interpretation of rele-
vant legislation may be challenged.
As Russian tax legislation does not provide definitive guid-
ance in certain areas, the Group applies its judgement
in interpretations of such uncertain areas. While manage-
ment currently estimates that the tax positions and inter-
pretations that it has taken can probably be sustained,
there is a possible risk that an outflow of resources will
be required should such tax positions and interpretations
be challenged by the tax authorities.
122 – 123
(a) Transactions with key management personnel
Key management received the following remuneration during the year, which is included in personnel costs:
’000 RUB
SHORT-TERM EMPLOYEE BENEFITS:
Salaries and short-term bonuses
Social security contributions
Other short-term payments
Total
2023
2022
461,371
23,170
-
484,541
395,924
24,781
58,968
479,673
In addition, members of the Company’s Board of Directors received remuneration in the amount of RUB 82,114 thousand
for the year ended 31 December 2023 (2022: RUB 67,051 thousand) which is included in legal and professional expenses.
(b) Transactions with other related parties
(i) Revenue
’000 RUB
Sale of services
Total
Income
2023
2,204
2,204
2022
1,760
1,760
Receivables
31 December 2023
31 December 2022
-
-
473
473
All outstanding balances with other related parties are to be settled in cash within six months of the reporting date. None
of the balances are secured or impaired.
(ii) Expenses
’000 RUB
Variable lease expenses and expenses relating to short-term and low value leases
Interest expense on lease liabilities
Interest expense on loans and borrowings
Other services received
Total
(iii) Leases with other related parties
Expenses
2023
84,622
119,629
-
-
2022
33,265
127,593
56,100
11,375
204,251
228,333
Lease liabilities under related party arrangements were as follows:
’000 RUB
31 December 2023
31 December 2022
Lease liabilities due to other related parties, including:
Current lease liabilities
Non-current lease liabilities
1,380,514
536,736
843,778
1,651,238
444,160
1,207,078
Terms of the leases with other related parties are such that the Group pays rentals which include the reimbursement of all
operating expenses related to the hypermarkets leased and nearby leased areas and a certain percentage of the Group’s
retail revenue from the operation of these hypermarkets.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 32. Fair value disclosures
Fair value measurements are analysed and categorised
by level in the fair value hierarchy as follows:
1 . Level 1 are measurements at quoted prices (unad-
justed) in active markets for identical assets
or liabilities;
2 . Level 2 measurements are valuations techniques
with all material inputs observable for the asset or lia-
bility, either directly (that is, as prices) or indirectly
(that is, derived from prices); and
3 . Level 3 measurements are valuations not based
on observable market data (that is, unobservable
inputs) .
Management applies judgement in categorising financial
instruments using the fair value hierarchy. If a fair value
measurement uses observable inputs that require sig-
nificant adjustment, that measurement is a Level 3 mea-
surement. The significance of a valuation input is assessed
against the fair value measurement in its entirety.
(a) Recurring fair value measurements
Recurring fair value measurements are those that
the accounting standards require or permit in the state-
ment of financial position at the end of each reporting
period.
Investment property. Fair value of the investment prop-
erty is updated by the Group annually on 31 December
applying the income approach and market approach. Refer
to Note 13.
(b) Non-recurring fair value measurements
As at 31 December 2023, recoverable amount of some
of the Group’s non-current assets tested for impairment
was determined on the basis of the fair value less costs
of disposals approach. Refer to Note 14.
(c) Assets and liabilities not measured at fair
value but for which fair value is disclosed
Fair value was determined by the Group for initial recog-
nition of financial assets and liabilities which are subse-
quently measured at amortised cost.
Fair value of the Group’s financial assets and liabilities
measured at amortised cost approximates their carrying
amounts. Fair value of the Group’s bonds listed on Moscow
exchange was determined based on active market quo-
tations (Level 1 fair value). Fair value of the Group’s other
financial assets and liabilities at amortised cost belongs
to Level 2 measurements in the fair value hierarchy.
There were no transfers between the levels of the fair
value hierarchy or changes in valuation techniques for fair
value measurements during 2023 and 2022.
33. Significant accounting policies
The principal accounting policies set out below have been
consistently applied to all the periods presented in these
consolidated financial statements and have been applied
consistently by Group entities.
(a) Basis of consolidation
(i) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unreal-
ised gains arising from intra-group transactions, are elim-
inated in preparing the consolidated financial statements.
Unrealised losses are also eliminated unless the cost can-
not be recovered.
Loans between Group entities and related foreign
exchange gains or losses are eliminated upon consol-
idation. However, where the loan is between Group
entities that have different functional currencies, the for-
eign exchange gain or loss cannot be eliminated in full
and is recognised in the consolidated profit or loss, unless
the loan is not expected to be settled in the foreseeable
future and thus forms part of the net investment in for-
eign operation. In such a case, the foreign exchange gain
or loss is recognised in other comprehensive income.
(b) Foreign currency
(i) Foreign currency transactions and balances
Monetary assets and liabilities are translated into each
entity’s functional currency at the official exchange rate
of the Central Bank of the Russian Federation (“CBRF”)
at the respective end of the reporting period. Foreign
exchange gains and losses resulting from the settlement
of the transactions and from the translation of monetary
assets and liabilities into each entity’s functional currency
at year-end official exchange rates of the CBRF includ-
ing foreign exchange gains and losses on borrowings
and cash and cash equivalents, as well as any other foreign
exchange gains and losses are recognised in profit or loss
as a separate line item.
(ii) Foreign operations
The assets and liabilities of foreign operations are trans-
lated to RUB at the exchange rates at the reporting
date. The income and expenses of foreign operations
124 – 125
are translated to RUB at exchange rates at the dates
of the transactions.
(iii) Offsetting financial instruments
Foreign currency differences are recognised directly
in other comprehensive income. Since 1 January 2005 t
he Group’s date of transition to IFRSs, such differences
have been recognised in the foreign currency transla-
tion reserve. When a foreign operation is disposed of such
that control is lost, the cumulative amount in the transla-
tion reserve related to that foreign operation is reclassi-
fied to profit or loss as part of the gain or loss on disposal.
When the Group disposes of only part of its interest
in a subsidiary that includes a foreign operation while
retaining control, the relevant proportion of the cumula-
tive amount is reattributed to non-controlling interests.
(c) Financial instruments
(i) Financial assets impairment –
credit loss allowance for ECL
The Group assesses, on a forward-looking basis, the ECL
for debt instruments measured at AC. The Group mea-
sures ECL and recognises net impairment losses on finan-
cial assets at each reporting date. The measurement
of ECL reflects: (i) an unbiased and probability weighted
amount that is determined by evaluating a range of possi-
ble outcomes, (ii) time value of money and (iii) all reason-
able 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.
Debt instruments measured at AC are presented
in the consolidated statement of financial position net
of the allowance for ECL.
The Group applies the IFRS 9 simplified approach to mea-
suring expected credit losses which uses a lifetime
expected loss allowance for trade and lease receivables.
For other financial assets the Group applies a three stage
model for impairment, based on changes in credit quality
since initial recognition.
(ii) Financial liabilities – measurement categories
Financial liabilities are classified as subsequently mea-
sured at AC, except for (i) financial liabilities at FVTPL: this
classification is applied to derivatives and other financial
liabilities designated as such at initial recognition and (ii)
financial guarantee contracts and loan commitments, if
any (iii) financial liabilities at FVOCI: this classification
is applied to financial instruments carried at fair value
(swaps).
Financial assets and liabilities are offset and the net
amount reported in the consolidated statement of finan-
cial position only when there is a legally enforceable right
to offset the recognised amounts, and there is an inten-
tion to either settle on a net basis, or to realise the asset
and settle the liability simultaneously. Such a right of set
off (a) must not be contingent on a future event and (b)
must be legally enforceable in all of the following cir-
cumstances: (i) in the normal course of business, (ii)
in the event of default and (iii) in the event of insolvency
or bankruptcy.
(iv) Capitalisation of borrowing costs
General and specific borrowing costs directly attrib-
utable to the acquisition, construction or production
of assets that are not carried at fair value and that nec-
essarily take a substantial time to get ready for intended
use or sale (qualifying assets) are capitalised as part
of the costs of those assets.
The commencement date for capitalisation is when (a)
the Group incurs expenditures for the qualifying asset; (b)
it incurs borrowing costs; and (c) it undertakes activities
that are necessary to prepare the asset for its intended
use or sale.
Capitalisation of borrowing costs continues up to the date
when the assets are substantially ready for their use
or sale.
The Group capitalises borrowing costs that could have
been avoided if it had not made capital expenditure
on qualifying assets. Borrowing costs capitalised are cal-
culated at the Group’s average funding cost (the weighted
average interest cost is applied to the expenditures
on the qualifying assets), except to the extent that funds
are borrowed specifically for the purpose of obtain-
ing a qualifying asset. Where this occurs, actual borrowing
costs incurred on the specific borrowings less any invest-
ment income on the temporary investment of these bor-
rowings are capitalised.
(d) Transactions with owners
(i) Ordinary shares/share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to issue of ordinary shares are rec-
ognised as a deduction from equity, net of any tax effects.
Any excess of the fair value of consideration received over
the par value of shares issued is recorded as additional
paid-in capital in equity.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 (ii) Distributions to owners/contributions from owners
it is reasonably certain that the Group will obtain owner-
ship by the end of the lease term.
Earned rental income is recorded in profit or loss
for the year within revenue.
Dividends are recorded as a liability and deducted
from equity in the period in which they are declared
and approved. Any dividends declared after the reporting
period and before the consolidated financial statements
are authorised for issue are disclosed in the subsequent
events note.
(e) Property, plant and equipment
and construction in progress
(i) Recognition and measurement
Items of property, plant and equipment, except for land,
are measured at cost less accumulated deprecia-
tion and impairment losses. The cost of property, plant
and equipment at 1 January 2005, the date of transition
to IFRSs, was determined by reference to its fair value
at that date.
Cost includes expenditure that is directly attributable
to the acquisition of the asset. The cost of self-con-
structed assets includes the cost of materials and direct
labour, any other costs directly attributable to bring-
ing the asset to a working condition for their intended
use, the costs of dismantling and removing the items
and restoring the site on which they are located, and cap-
italised borrowing costs. Purchased software that
is integral to the functionality of the related equipment
is capitalised as part of that equipment.
Any gain or loss on disposal of an item of property, plant
and equipment is determined by comparing the proceeds
from disposal with the carrying amount of property, plant
and equipment, and is recognised net within “other oper-
ating income and expense” in profit or loss.
(ii) Depreciation
Land and construction in progress are not depreciated.
Other items of property, plant and equipment are depre-
ciated from the date that they are installed and are ready
for use, or in respect of internally constructed assets,
from the date that the asset is completed and ready
for use.
Depreciation is recognised in profit or loss on a straight-
line basis over the estimated useful lives of each part
of an item of property, plant and equipment, since this
most closely reflects the expected pattern of con-
sumption of the future economic benefits embod-
ied in the asset. Leased assets are depreciated over
the shorter of the lease term and their useful lives unless
The estimated useful lives of significant items of prop-
erty, plant and equipment for the current and comparative
periods are as follows:
● Buildings 50 years;
● Machinery and equipment, auxiliary facilities
2–20 years;
● Leasehold improvements the lowest of the useful life
or the term of underlying lease;
● Other fixed assets 2–10 years.
Depreciation methods, useful lives and residual values
are reviewed at each financial year end and adjusted if
appropriate.
(f) Investment property
Investment property is property held by the Group
to earn rental income or for capital appreciation or both,
including land held for a currently undetermined future
use, and which is not occupied by the Group. Properties
that are mainly occupied by the Group and insignifi-
cant portion of which is leased out to third parties mainly
for offering additional customer service are presented
within property, plant and equipment.
Investment property, including assets under construc-
tion for future use as investment property, is initially
recognised at cost, including transaction costs, and subse-
quently remeasured at fair value with any change therein
recognised in profit or loss within “other operating income
and expenses”. If fair value of investment property under
construction is not reliably determinable, the Group mea-
sures that investment property under construction at cost
until either its fair value becomes reliably determinable
or construction is completed (whichever is earlier).
Fair value of the Group’s investment property is the price
that would be received from sale of the asset in an orderly
transaction, without deduction of any transaction costs.
The best evidence of fair value is given by current prices
in an active market for similar property in the same loca-
tion and condition. Market value of the Group’s investment
property is determined based on reports of independent
appraisers, who hold recognised and relevant professional
qualifications and who have recent experience in the valu-
ation of property in the same location and category.
When the use of a property changes such that it is reclas-
sified as property, plant and equipment, its fair value
at the date of reclassification becomes its deemed cost
for subsequent accounting.
(g) Intangible assets
(i) Intangible assets
Intangible assets that are acquired by the Group have
finite useful lives and are measured at cost less accumu-
lated amortisation and accumulated impairment losses.
Intangible assets primarily include capitalised computer
software, patents and licenses. Acquired computer soft-
ware, licenses and patents are capitalised on the basis
of the costs incurred to acquire and bring them to use.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only when
it increases the future economic benefits embodied
in the specific asset to which it relates. All other expendi-
ture is recognised in the profit or loss as incurred.
(iii) Amortisation
Amortisation is based on the cost of the asset less its esti-
mated residual value.
Amortisation is recognised in profit or loss on a straight-
line basis over the estimated useful lives of intangi-
ble assets from the date that they are available for use
since this most closely reflects the expected pattern
of consumption of future economic benefits embodied
in the asset. The estimated useful lives for the current
and comparative periods are as follows:
● software 1–7 years;
● other intangible assets 1–5 years.
Amortisation methods, useful lives and residual values
are reviewed at each financial year end and adjusted if
appropriate.
(h) Leases
At inception of a contract, the Group assesses
whether a contract is, or contains, a lease. A contract
is, or contains, a lease if the contract conveys the right
to control the use of an identified asset for a period
of time in exchange for consideration. To assess
whether a contract conveys the right to control the use
of an identified asset, the Group assesses whether:
● The contract involves the use of an identified asset –
this may be specified explicitly or implicitly and should
be physically distinct asset. If the supplier has a sub-
stantive substitution right, then the asset is not
identified;
126 – 127
● The Group has the right to obtain substantially
all of the economic benefits from use of the asset
throughout the period of use; and
● The Group has the right to direct the use of the asset.
The Group has the right when it has the decision-mak-
ing rights that are most relevant to changing how and
for what purpose the asset is used. In rare cases where
the decision about how and for what purposes the asset
is used is predetermined, the Group has the right to direct
the use of the asset if either:
● The Group has the right to operate the asset; or
● The Group designed the asset in a way that predeter-
mines how and for what purpose it will be used.
Leases are recognised as a right-of-use asset and a cor-
responding liability at the date at which the leased
asset is available for use by the Group. Each lease pay-
ment is allocated between the liability and finance cost.
The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of inter-
est on the remaining balance of the liability for each
period. The right-of-use asset is depreciated over
the shorter of the asset’s useful life and the lease term
on a straight-line basis.
The estimated useful lives of right-of-use asset
are as follows:
● Trade premises 3–17 years;
● Land 2–47 years;
● Other 1–5 years.
At the commencement date, lease liabilities are measured
at an amount equal to the present value of the following
lease payments:
● fixed payments (including in-substance fixed pay-
ments), less any lease incentives receivable;
● variable lease payments that are based on an index
or a rate, initially measured using the index or rate
as at the commencement date;
● amounts expected to be payable by the Group under
residual value guarantees;
● the exercise price of a purchase option if the Group
is reasonably certain to exercise that option; and
● payments of penalties for terminating the lease, if
the lease term reflects the Group exercising that
option.
The following variable payments are not included
in the calculation of lease liability:
● payments under land lease agreements, the calculation
of which depends on the cadastral value of the land
plot and other coefficients established by government
decrees;
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 ● payments for utilities and other services, determined
upon the fact of consumption;
● variable lease payments that depend on turnover.
The Group presents right-of-use assets and lease liabil-
ities in the separate lines in the consolidated statement
of financial position.
Extension options (or period after termination options)
are only included in the lease term if the lease is reason-
ably certain to be extended (or not terminated). Lease
payments to be made under reasonably certain exten-
sion options are also included in the measurement
of the liability.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily deter-
mined, the Group’s incremental borrowing rate is used,
being the rate that the Group would have to pay to bor-
row the funds necessary to obtain an asset of similar value
to the right-of-use asset in a similar economic environ-
ment with similar terms, collateral and conditions.
The right-of-use assets are measured at cost comprising
the following:
● the amount of the initial measurement of the lease
liability;
● any lease payments made at or before the commence-
ment date less any lease incentives received;
● any initial direct costs.
The lease liability is measured at amortised cost using
the effective interest method. The carrying amount
of liability is remeasured to reflect any reassessment,
lease modification or revised in-substance fixed pay-
ments. It is remeasured when there is (i) a change
in future lease payments arising from a change in an index
or a rate;(ii) a change in the lease term depending
on the reassessment of whether the Group will exer-
cise extension or termination options; and (iii) lease
modifications, when the modification is not accounted
for as a separate lease. When the lease liability is remea-
sured, a corresponding adjustment is made to the car-
rying amount of the right-of-use asset or is recorded
in profit or loss if the carrying amount of the right-of-use
asset has been reduced to zero.
Payments associated with short-term leases and leases
of low-value assets are recognised on a straight-line
basis as an expense in profit or loss. Short-term leases
are leases with a lease term of 12 months or less. Low-
value assets comprise IT-equipment and refrigeration
equipment.
Some property leases contain variable payment terms
that are linked to sales generated by a store. Such vari-
able lease payments are recognised in profit or loss
in the period in which the condition that triggers those
payments occurs.
Lease payments including repayment of principal lease
liability and accrued interest are classified consistently
with payments of other financial liabilities in the consoli-
dated statement of cash flows.
Lease payments which were not included in the measure-
ment of the lease liabilities (including certain variable pay-
ments, short-term leases and leases of low-value assets)
are presented as operating cash flows.
(i) Inventories
Cost of goods for resale includes costs of purchase (com-
prising of the purchase price, including import duties
and other non-recoverable taxes, transport and han-
dling costs, and any other directly attributable costs, less
relevant supplier discounts, bonuses and similar items),
as well as other costs such as internal handling, packag-
ing and transport to the extent that it directly relates
to bringing the goods to the location and condition ready
for sale.
Where the goods for resale assume conversion, which
is the case for the Group’s self-produced catering prod-
ucts, their cost also includes items specifically attributable
to units of production (for example, direct labour, direct
expenses and sub-contracted work), as well as a system-
atic allocation of fixed and variable production overheads
incurred in the converting them into products ready
for sale.
The cost of inventories is based on the moving weighted
average principle.
Impairment losses recognised in prior periods
are assessed at each reporting date for any indica-
tions that the loss has decreased or no longer exists.
An impairment loss is reversed if there has been a change
in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent
that the asset’s carrying amount does not exceed the car-
rying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had
been recognised.
In testing a cash-generating unit for impairment,
the Group identifies all the corporate assets that relate
to the cash-generating unit under review. If a portion
of the carrying amount of a corporate asset can be allo-
cated on a reasonable and consistent basis to that unit,
the Group compares the carrying amount of the unit,
including the portion of the carrying amount of the cor-
porate asset allocated to the unit, with its recoverable
amount. If a corporate asset cannot be allocated on a rea-
sonable and consistent basis to the cash-generating unit,
the Group assesses the impairment of this corporate
asset on an individual basis.
(k) Employee benefits
(i) Short-term employee benefits
Wages, salaries, contributions to the state pension
and social insurance funds, paid annual leave and sick
leave, bonuses, and non-monetary benefits (such as health
services) are measured on an undiscounted basis
and accrued in the year in which the associated services
are rendered by the employees of the Group. The Group
has no legal or constructive obligation to make pen-
sion or similar benefit payments beyond the payments
to the statutory defined contribution scheme.
( j) Impairment of non-financial assets
(ii) Long-term employee benefits
The carrying amounts of the Group’s non-financial assets,
other than investment property and deferred tax assets,
are reviewed at each reporting date to determine whether
there is any indication of impairment. If any such indication
exists, then the asset’s recoverable amount is estimated.
An impairment loss is recognised if the carrying amount
of an asset or its cash-generating unit exceeds its recov-
erable amount. Impairment losses are recognised in profit
or loss within other operating income and expenses.
Impairment losses recognised in respect of cash-gener-
ating units are allocated to reduce the carrying amount
of assets in the unit (group of units) on a pro rata basis.
Long-term employee benefits represent long-term ser-
vice bonuses. Long-term employee benefits are expensed
evenly during the periods in which they are earned
by employees.
(l) Provisions
A provision is recognised if, as a result of a past event,
the Group has a present legal or constructive obliga-
tion that can be estimated reliably, and it is probable that
an outflow of economic benefits will be required to settle
the obligation.
128 – 129
(m) Revenue
Revenue is income arising in the course of the Group’s
ordinary activities. Revenue is recognised in the amount
of transaction price. Transaction price is the amount
of consideration to which the Group expects to be enti-
tled in exchange for transferring control over promised
goods or services to a customer, excluding the amounts
collected on behalf of third parties.
Revenue is recognised net of VAT, returns and discounts.
(i) Revenue from contracts with customers
Revenue from contracts with customers is represented
by sales of trading stock, including retail sales of goods
and sales of self-produced catering products. The major
source of sales of trading stock is retail revenue.
Revenue from sale of goods and self-catering products
is recognised when control of the goods and products has
transferred to the customer, normally for the customers
it is occurred in the store at the point of sale. No element
of financing is deemed present, as payment of the trans-
action price is due immediately.
In accordance with the Russian consumer protection leg-
islation, the customers have the right of return of goods
in a range of categories within 14 days after the purchase.
Such estimated returns are assessed at each reporting
date. Based on historical data about returns, it is probable
that a significant reversal in the cumulative revenue rec-
ognised will not occur.
Gift cards and award points issued by the Group
are recorded as a contract liability within trade and other
payables upon sale when prepaid by customers until they
are redeemed or expire.
In the reporting period, the Group’s hypermarkets busi-
ness maintained a loyalty program where retail custom-
ers were able to accumulate award points on purchases
of certain goods which entitled them to a discount
on future purchases in the hypermarkets. Also, from time
to time, the Group holds promotional campaigns where
the Group provides discount coupons to the customers
that purchase goods with total value above a pre-deter-
mined amount. The discount coupons entitle the custom-
ers to a free purchase or a discount on selected goods
immediately after the campaign ends. Such award points
and coupons represent a material right to the custom-
ers and give rise to a separate performance obligation
to deliver the customers additional or discounted goods.
The total transaction price is allocated on the portfo-
lio basis to the initial and the additional performance
obligations on a relative stand-alone selling price basis.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 The estimated stand-alone selling price of the award
points is determined with reference to the extent to which
future performance is not expected to be required
because the customer does not redeem the points
awarded.
(ii) Rental income
The Group leases out trade premises under operating
lease. Rental income from investment property is rec-
ognised in profit or loss on a straight-line basis over
the term of the lease. When assets are leased out under
an operating lease, the lease payments receivable are rec-
ognised as rental income on a straight-line basis over
the lease term. Lease incentives granted are recognised
as an integral part of the total rental income.
(n) Cost of goods sold
in equity because they relate to transactions that are also
recognised, in the same accounting period, in other com-
prehensive income or directly in equity.
In determining the amount of current and deferred tax
the Group takes into account the impact of uncertain
tax positions and whether additional taxes, penalties
and late-payment interest may be due. The Group believes
that its accruals for tax liabilities are adequate for all open
tax years based on its assessment of many factors, includ-
ing interpretations of tax law and prior experience. This
assessment relies on estimates and assumptions and may
involve a series of judgments about future events. New
information may become available that causes the Group
to change its judgment regarding the adequacy of exist-
ing tax liabilities; such changes to tax liabilities will impact
the tax expense in the period that such a determination
is made.
Cost of goods sold includes the cost of goods for resale
and self-produced catering products sold to customers.
(q) Earnings per share
The Group receives various types of bonuses from sup-
pliers of goods, primarily in the form of volume discounts,
slotting fees and counter services to suppliers related
to the purchases made. These bonuses decrease the cost
of the goods and are recorded as reduction of cost
of sales as the related goods are sold.
Losses from inventory shortages are recognised in cost
of goods sold.
(o) Finance income and costs
Finance income comprises interest income on issued
loans and bank deposits. Interest income is recognised
as it accrues in profit or loss, using the effective interest
method.
Finance costs comprise interest expense on borrowings
and lease liabilities and unwinding of the discount on pro-
visions, if any. Borrowing costs that are not directly attrib-
utable to the acquisition, construction or production
of a qualifying asset are recognised in profit or loss using
the effective interest method.
(p) Income tax
Income taxes have been provided in the consolidated
financial statements in accordance with the respective
legislation enacted or substantively enacted by the end
of the reporting period. Income tax comprises current
and deferred tax. Current tax and deferred tax are rec-
ognised in profit or loss except to the extent that they
are recognised in other comprehensive income or directly
Earnings per share are calculated by dividing
the profit or loss attributable to ordinary shareholders
of the Company by the weighted average number of par-
ticipating shares outstanding during the year.
(r) Segment reporting
Operating segments are reported in a manner consis-
tent with the internal reporting provided to the Group’s
chief operating decision maker. The chief operating
decision-maker is responsible for allocating resources
and assessing performance of the operating segments.
Operating segments whose revenue, results or assets
are ten percent or more of all the segments are reported
separately.
(s) Value added tax
Input VAT is generally reclaimable against sales VAT when
the right of ownership on purchased goods is trans-
ferred to the Group or when the services are rendered
to the Group. The tax authorities permit the settlement
of VAT on a net basis. VAT related to sales and purchases
which has not been settled at the balance sheet date
(VAT deferred) is recognised in the consolidated state-
ment of financial position on a gross basis and disclosed
separately as an asset and liability. Where provision has
been made for the ECL of receivables, the impairment loss
is recorded for the gross amount of the debtor, including
VAT.
130 – 131
(t) Presentation of the consolidated
statement of cash flows
Other accounting standards
The Group reports cash flows from operating activities
using direct method. Cash flows from investing activ-
ities are presented net of VAT. VAT paid to suppliers
of non-current assets and VAT in proceeds from sale
of non-current assets are presented in line “VAT paid”
within cash flows from operating activities.
The following new and amended accounting stan-
dards are not expected to have a significant impact
on the Group’s consolidated financial statements.
● Lease Liability in a Sale and Leaseback (Amendments
to IFRS 16)
● Lack of Exchangeability (Amendments to IAS 21).
34. Events subsequent
to the reporting date
In March 2024, the Group placed unsecured
bonds on the Moscow Exchange in the amount
of RUB 3,500,000 thousand bearing coupon rate
of 15.5% p.a. and maturing in March 2034 with an option
for the bondholders to claim early repayment in March
2027.
In April 2024, the Group received a resignation letter from
its depositary bank. The Group currently works on all pos-
sible scenarios related to such resignation.
(u) New accounting pronouncements
A number of new standards are effective for annual peri-
ods beginning after 1 January 2024 and earlier application
is permitted; however, the Group has not early adopted
the new or amended standards in preparing these consoli-
dated financial statements.
Supplier Finance Arrangements
(Amendments to IAS 7 and IFRS 7)
The amendments introduce new disclosures relat-
ing to supplier finance arrangements that assist users
of the financial statements to assess the effects of these
arrangements on an entity’s liabilities and cash flows
and on an entity’s exposure to liquidity risk. The amend-
ments apply for annual periods beginning on or after
1 January 2024.
As disclosed in Notes the Group participates in a supply
chain financing arrangement for which the new disclo-
sures will apply. The Group is in the process of assessing
the impact of the amendments, particularly with respect
to the collation of additional information needed to meet
the new disclosure requirements.
Classification of Liabilities as Current
or Non-Current and Non-current Liabilities
with Covenants (Amendments to IAS 1)
The amendments, as issued in 2020 and 2022, aim to clar-
ify the requirements on determining whether a liability
is current or non-current, and require new disclosures
for non-current liabilities that are subject to future cove-
nants. The amendments apply for annual reporting peri-
ods beginning on or after 1 January 2024.
The Group is in the process of assessing the potential
impact of the amendments on the classification of these
liabilities and the related disclosures.
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 132 – 133
Pick by Line (PBL) – an effective method of picking orders
used in logistics and warehouse management based
on the organisation of stocks by ordered product lines,
often in accordance with the sequence of their completion
or along the delivery route
Planogram – a diagram that shows how and where specific
retail products should be placed on retail shelves or dis-
plays in order to increase customer purchases
Point of Sale (POS) platform – a system which
allows the processing and recording of transactions
between a company and their consumers, at the time
in which goods and/or services are purchased
Stakeholder – any individual, group, or party
with an interest in an organisation and the outcomes
of its actions
Supply Chain Management (SCP) – the process of antic-
ipating the demand for products and planning their mate-
rials and components, production, marketing, distribution
and sale
Traffic – the number of tickets issued for the period
under review
Transport Management System (TMS) – software
for planning and executing the physical movement
of goods in the supply chain
Private Label (PL) – a brand owned not by a manufac-
turer or producer but by a retailer or supplier, who has
its goods made by a contract manufacturer under its own
label
Quality Management System (QMS) – a formalised sys-
tem that documents processes, procedures, and responsi-
bilities for achieving quality policies and objectives
Real Disposable Income – the post-tax and benefit
income available to households after an adjustment has
been made for price changes
Retail Predictive Application Server (RPAS) – con-
figurable software platform for developing forecasting
and planning applications
Selling Space – the area inside stores used to sell prod-
ucts, excluding areas rented out to third parties, own-pro-
duction areas, storage areas and the space between store
entry and the cash desk line
Stock Keeping Unit (SKU) – a number assigned to a par-
ticular product to identify the price, product options
and manufacturer of the merchandise
Warehouse Management Systems (WMS) – a set
of policies and processes intended to organise the work
of a warehouse or distribution centre and ensure
that such a facility can operate efficiently and meet
its objectives
Yard Management System (YMS) – a software solution
designed to monitor the movement of trailers in the yard
and dock of a facility, distribution centre, or warehouse
Glossary
3PL (Third Party Logistics) – is a type of logistics
in which a retailer uses outsourcing services (3PL opera-
tors) in managing its supply chain
Average Ticket – the figure calculated by dividing total
sales, net of VAT, at all stores during the relevant year
by the number of tickets in that year
Alternative Transients Program (ATP) – a universal
program system for simulation of transient phenomena
of electromagnetic as well as electromechanical nature,
which is used within the DA! discounters network
areas of an organisation’s business processes into a uni-
fied system
Extended Warehouse Management (SAP EWM) –
an IT system, which is used to efficiently manage inven-
tory in the warehouse and for supporting processing
of the movement of goods, which is used in the Company’s’
distribution centres
Global Depositary Receipt (GDR) – a bank certificate
issued in more than one country for shares in a foreign
company
Business Intelligence (BI) – comprises the strategies
and technologies used by enterprises for the data analysis
of business information. BI technologies provide historical,
current, and predictive views of business operations
Content Management System (CMS) – computer soft-
ware used to manage the creation and modification of dig-
ital content
Corporate Social Responsibility – Responsible attitude
in managing our impact on a range of stakeholders: cus-
tomers, colleagues, investors, suppliers, the community,
and the environment
Global Food Safety Initiative (GFSI) – a private organi-
sation established and managed by the international trade
association the Consumer Goods Forum under Belgian law
in May 2000, the GFSI maintains a scheme to benchmark
food safety standards for manufacturers as well as farm
assurance standards
Hazard Analysis and Critical Control Points (HACCP) –
a systematic preventive approach to food safety
from biological, chemical, and physical hazards in pro-
duction processes that can cause the finished product
to be unsafe, and designs measurements to reduce these
risks to a safe level
Customer Relations Management (CRM) – a process
in which a business or other organisation administers
its interactions with customers, typically using data analy-
sis to study large amounts of information
High-Performance Analytical Appliance In-Memory
Database (HANA) – an in-memory data platform that
is deployable as an on-premise appliance, or in the cloud,
which is used in the Company’s’ distribution centres
Customer Value Proposition (CVP) – a business or mar-
keting statement that describes why a customer should
buy a product or use a service
Human Resource Management (HRM) – the strate-
gic approach to nurturing and supporting employees
and ensuring a positive workplace environment
Endpoint Detection and Response (EDR) – a cyber-
security technology that continually monitors an “end-
point” (e.g., mobile, phone, laptop, and Internet-of-things
devices) to mitigate malicious cyber threats, which is used
within the DA! discounter chain
Every Day Low Price (EDLP) – a pricing strategy prom-
ising consumers a low price without the need to wait
for sale price events or comparison shopping
Enterprise Resource Planning (ERP) – a modular soft-
ware system designed to integrate the main functional
Like-for-Like Sales (LFL) – the method of comparing cur-
rent year sales figures to prior year sales figures excluding
the expansion effect
Network Traffic Analysis (NTA) – a method of monitor-
ing network availability and activity to identify anomalies,
including security and operational issues, which is used
within the DA! discounter chain
Net Revenue – the amount of a company’s gross revenue
plus all negative revenue items
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 Abbreviations
3PL – Third Party Logistics
Expert RA – Expert Rating Agency
ACORT – Association of Retail Trade Companies
F&V – Fruits and Vegetables
AIX – Astana International Exchange
FMCG – Fast-Moving Consumer Goods
BMS – Building Management System
FY – Financial Year
bn – Billion
GDR – Global Depositary Receipt
C&D – Cats and Dogs
GFSI – Global Food Safety Initiative
CEO – Chief Executive Officer
HACCP – Hazard Analysis and Critical Control Points
CJSC – Closed Joint Stock Company
HR – Human Resources
CRM – Customer Relationship Management
HVAC – Heating, Ventilation and Air Conditioning
DC – Distribution Centre
IFRS – International Financial Reporting Standards
DLP – Data Loss Prevention
IPO – Initial Public Offering
EBITDA – Earnings before Interest, Taxes, Depreciation
and Amortisation
IR – Investor Relations
EDLP – Every Day Low Price
ESG – Environmental, Social, and Governance
IT – Information Technology
JSC – Joint Stock Company
k – thousand
134 – 135
KPI – Key Performance Indicators
Q – Quarter of the Year
LED – Light Emitting Diodes
QMS – Quality Management System
LFL – Like-for-Like Sales
RUB – Russian Rouble
LLC – Limited Liability Company
SG&A – Selling, General and Administrative Expenses
LSE – London Stock Exchange
SKU – Stock Keeping Unit
m2 – Square metre
mn – Million
VAT – Value Added Tax
VMI – Voluntary Medical Insurance
MOEX – Moscow Exchange
WHT – Withholding Tax
NCR – National Credit Rating agency
WMS – Warehouse Management System
NGO – Non-Governmental Organisation
YMS – Yard Management System
OHS – Occupational Health and Safety
YoY – Year-on-Year
OHSCS – Occupational Health and Safety Control System
p.p. – Percentage Point
PBL –Pick by Line
PL – Private Label
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023 136 – 137
Auditor
Moore Audit S.A.
Luxembourg 3378 Livange, 5 rue de Turi
Tel.: +352 26 26 84 1
moore-global.com
Contacts
Contacts for Investors
and Media
Natalya Belyavskaya
Head of Investor Relations
Tel.: +7 (495) 663–66–77, ext. 266
Email: Natalya.Belyavskaya@okmarket.ru
Ekaterina Nayda
Head of Corporate
Addresses
Tel.: +7 (495) 663–66–77, ext. 458
Email: Ekaterina.Nayda@okmarket.ru
Marina Shagulina
Luxemburg Administrative Officer
Tel.: +352 (24) 52–70–84
Email: Marina.Shagulina@okeygroup.lu
23A Kirovogradskaya, bld. 1, Moscow, 117534
25C Boulevard Royal, L-2449 Luxembourg, Luxembourg
4/1 Energetikov avenue bld. 1, Saint-Petersburg, 195112
okeygroup.lu
Depositary
Bank of New York Mellon
101 Barclay Street, New York, 10286, U.S.A.
bnymellon.com
Annual ReportOverviewStrategic ReportOperational ReviewFinancial ReviewCorporate GovernanceFinancial Statements2023