Ukrproduct Announces Unaudited Financial Result...

Ukrproduct Group
                  

Ukrproduct Group Limited ('Ukrproduct' or the 'Group' or the 'Company') (AIM:
UKR), a leading producer and distributor of branded dairy products in Ukraine,
today announced its unaudited consolidated IFRS financial results for the six
months ended June 30, 2008.

FIRST HALF HIGHLIGHTS

(Figures in brackets are for the six months ended or as at, 30 June 2007)

    --  Consolidated revenues up by 7.7% year on year to GBP 23.6 million (GBP
        21.9 million)

    --  Revenues in branded products segment up by 50.6% year on year to GBP
        16.3 million (GBP 10.8 million)

    --  Gross profit decreased by 3.0% year on year to GBP 4.6 million (GBP 4.8
        million) with Gross margin of 19.6% (21.8%)

    --  Gross profit for branded products increased by 41.2% year on year to GBP
        3.8 million (GBP 2.7 million)

    --  EBITDA declined by 18.6% year on year to GBP 2.0 million (GBP 2.5
        million) with EBITDA margin of 8.6% (11.3%)

    --  Profit after tax decreased by 26.8% year on year to GBP 1.0 million (GBP
        1.4 million) with profit margin of 4.3% (6.3%)

    --  Total assets up by 16.0% to GBP 25.1 million (GBP 21.7 million)

Sergey Evlanchik, Chief Executive Officer of Ukrproduct, commented: 'Ukrproduct
has delivered strong growth in branded products' revenues and gross profits in
the first half of 2008. In line with our stated strategy we continue to focus on
branded products, including processed and hard cheeses, and packaged butter. Our
skim milk powder ('SMP') segment has reversed its highly positive trend in 2007
and was impacted by price volatility in global dairy markets.

Looking forward, we expect sales in our core branded products, soft cheese and
packaged butter, to continue growing at the same rate as in the first half.
Sales in our new product segment, hard cheese, are expected to be robust in the
second half as we continue to increase the production volume and receive
positive feedback from customers. Furthermore, Ukrproduct introduced a new
premium brand 'Molendam' for its cheeses and packaged butter to national
supermarket chains, and we expect this brand to compete successfully with
imported dairy products.

We anticipate global commodity pricing in skim milk powder to continue impacting
our performance in this segment in the second half. In addition, import
restrictions on the Ukrainian hard cheese and SMP exports introduced by the
Russian authorities in August may impact domestic pricing in the future.

Ukrproduct's position in the domestic market and its key brands remains strong.
We continue to invest in our core brand portfolio whilst exploring further
growth opportunities in the Ukrainian dairy sector.'

FINANCIAL REVIEW

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(GBP thousands)                 1H 2008      1H 2007     Year on Year
                                                            Change
------------------------------------------ ------------ --------------
Revenue                             23,612       21,924           7.7%
Gross Profit                         4,629        4,771         (3.0%)
EBITDA                               2,022        2,483        (18.6%)
Profit after tax                     1,017        1,389        (26.8%)
Basic earnings per share               2.4          3.3        (26.4%)
*T

Ukrproduct's consolidated revenues increased by 7.7% year on year or by GBP 1.7
million in the first half of 2008. The Group's branded products segment,
comprising cheeses and butter, generated 50.6% growth year on year and accounted
for 69.0% (49.4%) of total revenues. Segment market shares improved in line with
volume growth in branded products whilst prices kept pace with inflation. The
volume growth was underpinned by a series of successful marketing and sales
activities targeting domestic national and regional retail chains and expansion
of distribution network to include two new depot branches in Donetsk and
Dnipropetrovsk. Skim milk powder revenues declined by 38.9% year on year and
contributed 25.6% (45.9%) to total revenues. Furthermore, Ukrproduct launched a
new product segment, hard cheese, in late 2007, which made a promising
contribution to total revenues in the first half of 2008.

In June 2008, Ukrproduct launched a new design of its major brand 'Nash
Molochnik' (Our Dairyman). The design features provide better visuals aimed at
reflecting market leading quality of the Group's most successful brand. The
Group markets its cheese and butter products under this brand. In August 2008,
the Group launched a new marketing campaign in Ukraine to promote this brand.

In June 2008, Ukrproduct expanded its brand portfolio to include a new premium
brand 'Molendam' for high-income consumers. The Group offered two types of hard
cheese, Dutch and Gouda, and packaged butter under this brand to supermarket
chains throughout Ukraine.

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(GBP thousands)        1H 2008           1H 2007        Year on Year
                                                           Change
------------------ ---------------- ------------------ ---------------
Revenue
-- Branded                   16,298             10,824           50.6%
-- SMP                        6,054              9,906         (38.9%)
-- Other                      1,260              1,194            5.5%
Gross Profit
-- Branded                    3,823              2,708           41.2%
-- SMP                          645              1,914         (66.3%)
-- Other                        161                149            8.1%
*T

Group gross profit decreased 3% year on year in the first half of 2008 with
gross profit margin declining to 19.6% compared to 21.8% in the first half of
2007 as a result of margin pressure in the skim milk powder segment. The gross
profit in branded products segment increased 41.2% year on year with gross
profit margin of 23.5% compared to 25.0% in the previous period as a result of
costs associated with rollout of hard cheese. The change in product mix
reflected the higher sales of branded products, however it was not sufficient to
offset the decrease in export prices of SMP and the rise in fuel and petrol
costs.

Group EBITDA decreased 18.6% year on year in the first half of 2008 with EBITDA
margin of 8.6% compared to 11.3% in the previous period, as a result of the
decline in SMP prices.

Depreciation and amortisation expense increased 12.5% year on year from GBP 0.67
million to GBP 0.75 million following the launch of the hard cheese unit and the
installation of a smoking chamber.

Selling, distribution and administrative expenses increased by 15.2% year on
year from GBP 2.7 million to GBP 3.1 million, primarily as a result of the wage
inflation and increase in marketing and distribution expenses.

Profit after tax decreased 26.8% year on year. The Group's basic earnings per
share(1) (EPS) declined 29% year on year from 3.34 pence to 2.37 pence. The
diluted earnings per share declined 26% year on year from 3.17 pence to 2.33
pence.

In view of the Group's current trading performance and cash generation, the
Board has approved an interim dividend of 0.4 pence per share to the
shareholders of record as at 3 October, 2008 payable on 25 October, 2008. The
shares will be quoted 'ex dividend' from 1 October 2008.

Net cash generated from operating activities decreased by 43.9% year on year to
GBP 1.10 million in the first half from GBP 1.96 million in the previous period.

Net cash used in investing activities totalled GBP 0.9 million in the first half
of 2008, with GBP 0.9 million spent on capital expenditure compared to GBP 1.46
million in the first half of 2007. The Group installed the hard cheese ripening
chamber and expanded its distribution network as well as the captive raw milk
collection zone.

Net cash used in financing activities amounted to GBP 0.97 million in the first
half of 2008, compared to GBP 0.34 million generated for the corresponding
period of 2007 following the repayment of GBP 0.21 million loan and redemption
of GBP 0.83 million local bond.

The Group's cash balances stood at GBP 0.32 million as at June 30, 2008,
compared to GBP 0.68 million as at June 30, 2007. The Group's net debt was GBP
3.74 million as at June 30, 2008 compared to GBP 3.56 million as at June 30,
2007.

Conference call information

Ukrproduct management will host a conference call today at 11 am (London time) /
12 pm (CET) / 1 pm (Kiev Time) to present and discuss the first half results.

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The dial-in numbers for the conference call are:
UK/International: [phone]


A replay will then be available for 7 days after the conference call.
 To access the replay, please dial:

UK/International: [phone]

PIN number: 140653#
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For further information, please visit www.ukrproduct.com or contact:

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Ukrproduct Group Ltd.                Shared Value Limited
Sergey Evlanchik                     Larisa Kogut-Millings
Chief Executive Officer              Investor Relations
Tel: [phone]                Tel. [phone]
[e-mail]      [e-mail]

WH Ireland Limited                   Metropol (UK) Limited
David Youngman                       Alexander Selegenev
Adrian Kirk                          Guerman Mikhailov
Tel: [phone]                Tel: [phone]
*T

Ukrproduct Group Ltd is a leading Ukrainian producer and distributor of branded
dairy products. The Group's product portfolio includes processed and hard
cheese, skimmed milk powder (SMP) and butter. Ukrproduct has built a range of
recognisable product brands ('Our Dairyman', 'People's Product', 'Creamy
Valley', Molendam', 'Farmer's') that are well known and highly regarded by
consumers. The Group has modern production facilities that comprise five dairy
plants in western and central regions of Ukraine (Molochnik,
Starokonstantinovskiy Dairy Plant, Krasilovskiy Dairy Plant, Zhmerinka Plant and
Letichiv Dairy Plant) with a total annual integrated capacity of approximately
70,000 tons of dairy products. With its own fleet of more than 120 vehicles,
Ukrproduct has one of the largest logistics and distribution networks in Ukraine
which covers the country's eight major cities. The Group reported total assets
of approximately GBP 25,128 million as at June 30, 2008 and consolidated
revenues of approximately GBP 23,612 million for the first six months of 2008.
Ukrproduct's securities are traded under the symbol 'UKR' on AIM, a market
operated by the London Stock Exchange.

Some of the information in this press release may contain projections or other
forward-looking statements regarding future events or the future financial
performance of the Group. You can identify forward looking statements by terms
such as 'expect,' 'believe,' 'anticipate,' 'estimate,' 'intend,' 'will,'
'could,' 'may' or 'might' the negative of such terms or other similar
expressions. These statements are only predictions and they may differ
materially from the actual events or results. We do not intend to update these
statements to reflect events and circumstances occurring after the date hereof
or to reflect the occurrence of unanticipated events. Many factors could cause
the actual results to differ materially from those contained in such projections
or forward-looking statements, including, among others, general economic
conditions, our competitive environment, risks associated with operating in
Ukraine, rapid technological and market change in our industry, as well as many
other risks specifically related to the Group and its operations.

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UKRPRODUCT GROUP
UNAUDITED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2008 AND 2007
(Amounts in thousands of GBP)

                                                   June 30, June 30,
                                                     2008      2007

                                                 unaudited  unaudited

------------------------------------------------ ---------- ----------
Revenue                                              23,612     21,924

Cost of Sales                                      (18,983)   (17,153)

                                                 ---------- ----------
Gross profit                                          4,629      4,771

Administrative expenses                             (1,561)    (1,342)
Selling and distribution expenses                   (1,499)    (1,322)
Other operating expenses                              (301)      (291)

                                                 ---------- ----------
Profit from operations                                1,268      1,816

Finance expense                                       (216)      (205)

                                                 ---------- ----------
Profit before taxation                                1,052      1,611

Income tax expense                                     (35)      (222)

                                                 ---------- ----------
Profit for the period                                 1,017      1,389

Attributable to:
Equity holders                                        1,014      1,377
Minority interest                                       (3)       (12)
                                                 ---------- ----------

Net Profit attributable to ordinary shareholders      1,014      1,377

Weighted average number of ordinary shares       42,817,849 41,214,953

Basic earnings per share (pence)                       2.37       3.34

Number of ordinary shares granted under warrants
 and option
agreements                                          612,028  2,214,924

Diluted average number of ordinary shares        43,429,877 43,429,877

Diluted earnings per share (pence)                     2.33       3.17
------------------------------------------------ ---------- ----------
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UKRPRODUCT GROUP
UNAUDITED CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2008 AND 2007
(Amounts in thousands of GBP)

                                                   June 30,  June 30,
                                                      2008      2007

                                                   unaudited unaudited

-------------------------------------------------- --------- ---------
Assets
Non-Current Assets
Property, plant and equipment                         12,773    11,635
Intangible assets                                      1,067     1,200
Investments                                              112       264
Deferred tax assets                                       75       104
                                                   --------- ---------
Total non-current assets                              14,027    13,203

Current assets
Inventories                                            4,118     2,997
Trade and other receivables                            5,590     4,481
Current taxes                                          1,077       304
Cash and cash equivalents                                316       679
                                                   --------- ---------
Total Current assets                                  11,101     8,461

                                                   --------- ---------
Total assets                                          25,128    21,664

Equity and liabilities
Equity attributable to equity holders
Share capital                                          4,282     4,121
Other reserves                                         5,046     3,992
Retained earnings                                      7,904     5,255
                                                   --------- ---------
Total equity attributable to equity holders of the
 parent                                               17,232    13,368
Minority interest                                        141       207
                                                   --------- ---------
Total equity                                          17,373    13,575

Liabilities
Non-Current Liabilities
Deferred tax liabilities                                 750       791
                                                   --------- ---------
Total Non-Current Liabilities                            750       791

Current Liabilities
Bank loans and overdrafts                              3,361     3,260
Bonds                                                      -     1,051
Trade and other payables                               3,535     2,770
Taxes payables                                            60        42
Current income tax liabilities                            49       175
Total Current Liabilities                              7,055     7,298
                                                   --------- ---------
Total equity and liabilities                          25,128    21,664
-------------------------------------------------- --------- ---------
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UKRPRODUCT GROUP
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2008 AND 2007
(Amounts in thousands of GBP)

                                                   June 30,  June 30,
                                                      2008    2007

                                                   unaudited unaudited

-------------------------------------------------- --------- ---------
Cash flows from operating activities
  Profit for the period                                1,017     1,389
  Adjustments for:
   Exchange difference                                  (10)         2
   Depreciation and amortisation                         754       669
   Loss on disposal of property, plant and
    equipment                                              2        30
   Interest expense                                      216       203
   Income tax expense                                     35       222
   (Increase) / decrease in inventories                   81     (442)
   (Increase) / decrease in trade and other
    receivables                                      (1,043)   (1,026)
   Increase / (decrease) in trade and other
    payables                                             167      1016
                                                   --------- ---------
Cash generated from operations                         1,219     2,063
   Income tax paid                                     (119)     (102)
                                                   --------- ---------
Net cash generated by operating activities             1,100     1,961

Cash flows from investing activities
  Payments for property, plant and equipment           (934)   (1,462)
  Purchase of available-for-sale investments               -      (25)
  Proceeds from sale of property, plant and
   equipment                                              44        21
  Proceeds from sale of available-for-sale
   investments                                             1        20
  Loans issued to the third parties                     (14)     (320)
                                                   --------- ---------
Net cash used in investing activities                  (903)   (1,766)

Cash flows from financing activities
  Proceeds from issue of shares                          628         -
  (Repayments) / proceeds from issue of bonds          (828)       578
  Dividends paid                                       (351)     (210)
  Interest paid                                        (216)     (203)
  Net proceeds from short-term borrowing               (205)       177
                                                   --------- ---------
Net cash (used in) / generated by financing
 activites                                             (973)       342

                                                   --------- ---------
Net (decrease) / increase in cash and cash
 equivalents                                           (776)       537

Effect of exchange rate changes and restatements
 on cash and cash equivalents                              5      (17)

Cash and cash equivalents at the beginning of the
 period                                                1,087       159
Cash and cash equivalents at the end of the period       316       679
-------------------------------------------------- --------- ---------
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NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Basis of preparation

This financial information has been prepared using the recognition and
measurement principles of International Accounting Standards, International
Financial Reporting Standards and Interpretations adopted for use in the
European Union. The principal accounting policies used in preparing the interim
results are those the group expects to apply in its financial statement for the
year ended 31 December 2008 and are unchanged from those disclosed in the
group's Annual Report and Consolidated Financial Statements 2007 for the year
ended 31 December 2007. The financial information for the six months ended 30
June 2008 and 30 June 2007 is not reviewed and unaudited and does not constitute
the group's statutory financial statements for those periods.

(1) Basic EPS is calculated by dividing net profit attributable to ordinary
shareholders by the weighted average number of shares in issue during the
period.