Interim Financial Results

FOR IMMEDIATE RELEASE 17 September, 2013

UKRPRODUCT ANNOUNCES UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2013

Kyiv, Ukraine - 17 September 2013 - Ukrproduct Group Limited ("Ukrproduct" or the "Group") (AIM: UKR), one of the leading Ukrainian producers and distributors of branded dairy foods and beverages (kvass), today announces its unaudited interim consolidated IFRS financial results for the six months ended 30 June 2013.

KEY FIGURES

(Figures in brackets are for the six months ended or as at 30 June 2012)

· Revenues in dairy branded products segment increased by 20% year on year to GBP 19.1 million (GBP 16.0 million) but gross profit decreased by 29% year on year to GBP 2.6 million (GBP 3.7 million) owing to high raw milk costs.

· In kvass the revenues increased by 8% year on year to GBP 1.2 million (GBP 1.1 million) and gross profit up 6% year on year.

· Skimmed Milk Powder (SMP) revenues decreased by 13% to GBP 3.5 million (GBP 3.9 million) but gross profit margin saw a significant improvement to GBP 0.2 million (minus GBP 0.16 million).

· EBITDA declined by 11% to GBP 1.3 million (GBP 1.5 million) year-on-year.

· Finance expenses doubled to GBP 541,000 (GBP 268,000) due to a major reconstruction project with the loan finance from the European Bank for Reconstruction and Development.

· Cash balance standing at GBP 0.6 million (GBP 0.8 million).

· Earnings per share decreased to 0.4 pence (1.6 pence).

CEO'S REPORT 

The economic environment in the first half of 2013 continued to be challenging. The dairy sector was mainly marked by the significant increase in raw milk prices across both domestic and global markets and shortage of raw milk supply in Ukraine. The Company made an effort to off-set the pressure on the margins by lifting the consumer prices but the competitive market environment did not allow compensation for the increase in costs.

Nevertheless in terms of sales the branded dairy product groups performed well showing a 20% increase in value terms. However the profitability was undermined by the higher raw material costs resulting in a 29% decrease in gross profit.

The leading market shares in packaged butter and processed cheese were sustained and hard cheese increased.

In butter segment the Company saw the increase in both volumes and revenues, however the margins were challenged by the high input costs and competitive pricing. The overall market of spreads in Ukraine showed a declining trend as result of consumers switching their preferences back to the traditional butter. Ukrproduct managed to increase its sales of spreads and consequently the market share although similarly to butter the profitability was pressured.

Processed cheese showed further increase in revenues and volumes and improved aggregate margin due to securing new clients and adjusting the product mix especially in the premium price segment.

The Company continues to focus on the development of its hard cheese segment. In H12013 the sales showed a significant increase in both volumes and revenues along with the increase in profitability as result of better penetration into the profitable retail chains channel.

Skimmed Milk Powder (SMP) segment showed a strong recovery in profitability from the previous year benefitting from higher domestic and export demand and better prices. However the shortage of raw milk supply constrained the sales volumes. As result the sales declined by 13% year on year whilst the gross profit more than doubled compared to the last year.

BEVERAGES- The sales of kvass showed further increase supported by the improvement in geographical coverage as well as sales and marketing investment. Along with that the margins benefitted from the unique nature of this fresh product on the Ukrainian market.

distribution servicescontinued to develop with the focus on growing quality business with sustainable margins. Sales of products becoming commoditized and cash consuming have been eliminated. As the issues with VAT refund on export persisted, the Company mainly concentrated on domestic operations. While sales have been reduced returns have been substantially maintained.

Financial results for the half year reflect the sensitivity of the dairy business margins to the ongoing high raw milk prices with the previously buoyant butter category being affected in particular. However such pressure could only be partially mitigated by the gradual improvement of branded dairy sales, the resumption of SMP profitability, the containment of overheads and also the successful move into the beverages where kvass again showed its worth. Overall these factors led to EBITDA lower than the last year. Net income was impaired by the sizeable increase in interest charges arising from the EBRD loan. The Group's cash levels are sufficient to meet current debt obligations in the short and medium term.

OUTLOOK

Trading - The Company will pursue the positive sales trends being achieved in dairy. Though kvass will be affected by the poor weather and the curtailment of the kvass season. Given the inflation of dairy purchases, cost management has become even more an issue. This is being addressed with an improved sourcing capability, planning of responsible price increases and the ongoing costs reduction program. Overall the Company plans to improve profitability in the second half, however the aggregate profit for the year is expected to be below FY2012.

Meanwhile in operations EBRD has approved a further Euro 1.3 million loan for the second stage of modernization. This will focus on upgrading the production platform for butter and spreads improving both quality and cost. Such approval shows confidence in the Company and its plans to progress. Also the EBRD monitoring system of its investment adds weight to the Ukrproduct corporate governance.

Conference call information

Ukrproduct management will host a conference call today at 10.30 am (London time) / 11.30 am (CET) / 12.30 am (Kiev Time) to present and discuss the unaudited financial results for the six months ended 30 June 2013.

The dial-in numbers for the conference call are:

For the play-back or further information, please visit www.ukrproduct.com or contact:

Ukrproduct Group Ltd is one of the leading Ukrainian producers and distributors of branded dairy foods and beverages (kvass, a traditional fermented beverage). The Group's product portfolio includes processed and hard cheese, packaged butter, skimmed milk powder (SMP) and kvass. 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 four dairy plants in western and central regions of Ukraine (Zhytomyr, Starokonstantyniv, Krasyliv and Letychiv) with a total annual integrated capacity of approximately 60,000 tons of dairy products. With its own fleet of more than 200 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 35.2 million as at June 30, 2013 and consolidated revenues of approximately GBP 24.7 million for the six months ended June 30, 2013. Ukrproduct's securities are traded under the symbol "UKR" on AIM, a market operated by the London Stock Exchange. 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.