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21 April 2011

Ukrproduct Group Limited (the “Company” or “Ukrproduct Group”) (AIM: UKR), one of the leading producers and distributors of branded dairy products in Ukraine, announces that Starokonstantinovskiy Molochniy Zavod, a subsidiary of the Company, has entered into a loan agreement with the European Bank for Reconstruction and Development (the “EBRD”) in terms of which the EBRD will provide Ukrproduct Group with access to loan finance of €11 million. The funds will be used to finance the upgrading of the energy efficiency and productivity of Ukrproduct’s dairy plant in Starokonstantyniv in the Khmelnitskiy Region of Western Ukraine.

The reconstruction of the dairy plant in Starokonstantyniv is expected to significantly improve energy efficiency and productivity at this production facility and supports Ukrproduct’s strategy to drive down unit costs and improve profit margins. The reconstruction will include the purchase of new equipment for the milk reception area, milk treatment, cream and butter production, whey and skimmed milk pre-drying equipment, as well as a new central boiler house, an electric substation and an ammonia/cooling unit. All upgrading works are scheduled to be completed by the end of 2012.

The Company expects that the most significant savings will come from direct energy savings, decreased input volumes of raw milk for production of SMP, savings on packaging for butters and spreads and more precise weights in butter and spread production. The modernisation is also expected to generate additional revenue from the production of higher quality skimmed milk powder and increased profit on whey powder due to a substantial reduction in the production costs.

The EBRD loan will be provided in two tranches over a period of two years. The interest rate on the loan is a floating rate based on a margin over the Euribor, and is in line with the market rate for similar loans in Ukraine.

The loan to Ukrproduct Group is the first to be approved by the EBRD under its new Agribusiness Sustainable Investment Facility (ASIF). ASIF is a €50 million facility which enables clients to implement investment programmes that reduce their input intensity and improve their environmental and social performance, leading to improved sustainability in the agribusiness sector.

Jack Rowell, Chairman of Ukrproduct Group said: “This loan from the EBRD is a vote of confidence for Ukrproduct Group’s growth strategy. Our drive to increase profit margins by improving production efficiency will create long-term value for shareholders.”

Sergey Evlanchik, CEO of Ukrproduct Group said: “I am delighted that the EBRD has chosen Ukrproduct Group as the first recipient of the new Agribusiness Sustainable Investment Facility. Our new energy investment initiative makes sense both from a commercial and an environmental perspective.”

To access the web-cast with Ukrproduct Group management please follow the link: http://mediaserve.buchanan.uk.com/2011/ukr210411/registration.asp



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