UKRPRODUCT GROUP
Annual Report
2008
May, 2009 TABLE OF CONTENTS
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Chairman’s Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Chief Executive’s Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Financial Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
The Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Corporate Governance Report . . . . . . . . . . . . . . . . . . . . . . . . .13
Corporate Social Responsibility Report . . . . . . . . . . . . . . . .15
Remuneration Committee Report . . . . . . . . . . . . . . . . . . . . . .17
Statement of Directors’ Responsibility . . . . . . . . . . . . . . . . .19
Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . .20
CONSOLIDATED INCOME STATEMENT . . . . . . . . . . . . . . . . .22
CONSOLIDATED BALANCE SHEET . . . . . . . . . . . . . . . . . . . . .23
CONSOLIDATED CASH FLOW STATEMENT . . . . . . . . . . . . .24
CONSOLIDATED STATEMENT 
OF CHANGES IN EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Corporate Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
Shareholder Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65 FINANCIAL HIGHLIGHTS
Revenue GBP 52.3 million
2008 increased 8.7% 
Gross Profit GBP 10.8 million
2008 increased 3.4%
Dividends per share GBP 0.8 p
2008 decreased 42.8%
Basic Earnings per share GBP 5.4 p
2008 decreased 30.8%
1
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
2007 48.1
2008 52.3
2007 10.5
2008 10.8
2007 1.4
2008 0.8
2007 7.8
2008 5.4 CHAIRMAN’S STATEMENT
Dear Shareholder
I
am delighted to present you with our Annual Report providing an overview
of Ukrproduct Group’s operating and financial performance in 2008.
Despite challenging market conditions during the period under review,
Ukrproduct has delivered robust growth in branded products’ revenues and
gross profits. In line with our stated strategy we continue to focus on brand
ed products, including processed and hard cheese and packaged butter. We
are well positioned to take advantage of changes in market demand by offer
ing a range of products in relevant price categories and appropriate quality for
the majority of consumer segments. Our skimmed milk powder (“SMP”) seg
ment has reversed its highly positive trend in 2007 and has been impacted by
price volatility in global dairy markets. 
It has been the Group’s dividend policy to reward shareholders in line with the
trading performance of the business and financial results whilst maintaining
the cash position of the business and supporting the balance between rein
vesting profits and dividend distributions. In line with this policy the Board is
recommending paying a final dividend of 0.40 pence per ordinary share for
2008, resulting in the total dividend payment of 0.80 pence per ordinary share
for the full year 2008. If approved at the AGM, the final dividend will be paid
on 27 July 2009 to the shareholders on record as at 26 June 2009.
In 2008, Irina Yevets and Dmitry Dragun have stepped down from their
respective roles as Chief Executive Officer and Chief Financial Officer in order
to pursue other business interests. Subsequently, Sergey Evlanchik was
appointed as Chief Executive Officer and Roman Prannichuk was appointed as
Chief Financial Officer of Ukrproduct Group, with immediate effect. Between
February 2005 and June 2006, Sergey served as Chief Executive Officer of the
Group and guided Ukrproduct through a successful flotation on AIM in the
beginning of 2005 and was instrumental in establishing Ukrproduct as a lead
ing Ukrainian dairy producer. 
Looking forward, we seek to improve our market share in each product cate
gory and segment of operation. We believe that we have the right strategy for
this market and expect it to see us through this challenging period success
fully. The Group plans to introduce new types and different packaging for
processed cheese in order to address the increasing demand in the low end
and mid market segments, and to further develop its sales to retail regional
outlets. We intend to continue promoting our brands and products through a
series of targeted marketing campaigns and take further steps in increasing
the shelf space in regional chains, developing and optimising our sales and
distribution network. In the second half of 2009, we plan to launch new mar
keting campaign for “Nash Molochnik” and “Molendam” brands. However,
2
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 SMP prices are anticipated to remain weak until there are signs of recovery in
the global economy and commodity markets. In 2009 the Group expects to
continue reducing its cost structure through optimisation of its overhead and
energy costs. 
We are optimistic that Ukrproduct will continue to benefit from its strong posi
tion in the domestic dairy market with a brand portfolio that targets a wide
range of consumer segments. We believe that the Ukrainian dairy market
offers growth potential despite the prevailing economic environment. Indeed,
under current market conditions there may be consolidation opportunities
that Ukrproduct will be able to take advantage of provided that they fit the
Group’s strategy.
Ukrproduct’s financial position remains stable. The Group’s cash levels are
sufficient to meet the current debt obligations in the short and medium term.
In addition, the Group has access to additional banking facilities if required.
On behalf of the Board, I would also like to thank our management team and
all our employees for their commitment and achievements during the year.
Jack Rowell
Chairman Ukrproduct Group Ltd
21 May 2009
3
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 CHIEF EXECUTIVE’S STATEMENT
Overview of Group operating performance in 2008
I
n 2008 Ukrproduct generated positive performance
whilst operating in the difficult market environment
driven by constricted retail demand, lack of monetary
liquidity and falling Hryvnia as a result of the broader
global financial crisis. The Group’s main business seg
ment, branded products, increased its production vol
umes by 19.7% year on year. Ukrproduct’s total pro
duction was up by 4% year on year following a 42.6%
year on year decline in the skimmed milk powder
("SMP") segment as a result of the continued price
volatility in global dairy markets. 
The Group has further expanded its portfolio of branded
products beyond its core products – soft (processed)
cheese and packaged butter, and continued to increase
the production volume of hard cheese. The capacity util
isation of the Group’s hard cheese production facilities
has increased to over 60% by the year end following the
launch in December 2007.
Group structure 
The Group comprises five dairy plants which are conve
niently located in the Western and Central regions of
Ukraine:
• Molochnik Plant produces processed cheese and
packaged butter
• Starokonstantinovskiy Dairy Plant is engaged in the
production of bulk butter, packaged butter and
skimmed milk powder (SMP) 
• Zhmerinka Butter and Cheese Plant manufactures
smoked cheese, processed cheese and butter 
• Krasyliv Plant produces bulk and packaged butter
• Letichiv Dairy Plant manufactures butter, fatfree
cheese and casein 
The Group owns one of the largest logistics and distri
bution networks in Ukraine which operates domestical
ly through AgroSpetsResursy LLC and exports its SMP
products through UkrProdExpo.  
Branded products 
In 2008 Ukrproduct delivered strong growth in the
branded products segment which comprises processed
4
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 and hard cheeses, butter and spreads. These results
were underpinned by a series of successful marketing
and sales activities during the year targeting domestic
national and regional retail chains, as well as the expan
sion of direct sales network with two new depot branch
es in Donetsk and Dnepropetrovsk.
The branded products segment accounted for 86.8% of
the Group’s total production. In 2008 the Group
increased its market shares in core products – butter
and processed cheese to 8% and 23%, respectively.
Market shares of Ukrproduct’s branded products
improved, whilst prices kept pace with inflation.
The Group has a diversified brand portfolio which is tai
lored to several consumer market niches. In 2008
Ukrproduct responded to shifting consumer demand
towards less expensive dairy products by increasing the
production of processed cheese and spreads. The Group
also grew its sales of butter as a result of the consolida
tion in the market. 
Ukrproduct significantly increased the production of
hard cheese following its launch in December 2007.
Ukrproduct’s sales of hard cheese more than tripled in
the second half of 2008, compared to the first half. In
June 2008, Ukrproduct expanded its brand portfolio to
include a new premium brand ‘Molendam’ for middle
class consumers. The Group offered two types of hard
cheese, Dutch and Gouda, packaged butter and
processed cheese under this brand to supermarket
chains throughout Ukraine.
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. During the year Ukrproduct expanded
its product offering under “Nash Molochnik” brand to
include sausage cheese with different flavours. In August
2008, the Group launched a new marketing campaign in
Ukraine to promote this brand.
Skim Milk Powder (SMP) 
In 2008 the skimmed milk powder ("SMP") segment has
reversed its highly positive trend and was impacted by
price volatility in global dairy markets. In addition,
import restrictions on the Ukrainian hard cheese and
SMP exports introduced by the Russian authorities in
August 2008 impacted domestic pricing. The Group’s
production of SMP declined by 42.6% year on year in
2008. In the beginning of 2009, Ukrproduct extended a
number of contracts with several leading international
food companies to supply its SMP products.  
Proprietary milk zone 
In 2008, the Group’s raw milk consumption share
accounted for around 1% of total raw milk production in
Ukraine. Ukrproduct purchases raw milk from individual
farmers and collective farms located in close proximity
to its production facilities in Western and Central
regions of Ukraine. The Group has established long
term relationships with its suppliers over the last eight
years. As at the end of the reporting period, the Group
had 93 collecting points and 93 cooling tanks.
5
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 In the first half of 2008 Ukrproduct enjoyed lower pur
chase prices of raw milk as a result of the falling domes
tic demand for the raw material driven by declining pro
duction volumes of SMP in Ukraine. Ukrproduct has
introduced a set of measures to effectively manage its
cost base. 
Sales and Distribution 
In 2008 the Group continued to sell the majority of its
products in Ukraine. Ukrproduct considers its own
logistics, sales and distribution network to be a signifi
cant competitive advantage in the market. The Group
has further developed its retail presence throughout the
country whilst operating seven regional depots as well
as a central warehouse. As at 31 December 2008, the
Group’s fleet comprised more than 120 vehicles. In
2008 Ukrproduct has optimised the delivery schedules
of both raw materials and finished goods which enabled
it to have a better control over its distribution costs.
In September 2008, the Group launched a nationwide
marketing campaign for its leading brand ‘Our
Dairyman'. The campaign was launched as part of the
Group’s strategy to expand the distribution of its prod
ucts to regional retail outlets and to increase the shelf
space in large national chains throughout Central,
Eastern and Western Ukraine. During the year the Group
appointed three new deputy sales directors to increase
its presence in these regions, opened regional sales
offices in two cities and increased its sales force by 11
people to 387. As at the end of the reporting year, the
number of national and regional retail chains and out
lets, selling Ukrproduct’s dairy products, was 69 and
978, respectively. The Group’s products were sold in
eight out of the top ten Ukrainian supermarket chains.
During September and October 2008, Ukrproduct con
ducted a retail audit to measure the presence of its
branded products in stores across Ukraine. According
to the audit’s findings, ‘Our Dairyman’ branded butter
and cheese was found in 50% and 30%, respectively, of
Ukrainian retail chains. 
Sergey Evlanchik
Chief Executive Officer
21 May 2009
6
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 FINANCIAL REVIEW
Revenue
I
n 2008 Ukrproduct delivered positive performance
with revenue increasing by 8.7% year on year to GBP
52.3 million (GBP 48.1 million). The Group derived the
majority of its revenue from the branded products seg
ment which contributed GBP 38.2 million (2007: GBP
25.2 million) to its results and accounted for 73.0% of
the total sales (2007: 52.3%). Skimmed milk powder
revenues declined 43.4% year on year as a result of the
price volatility in global dairy markets and contributed
GBP 11.6 million (2007: GBP 20.4 million) to total rev
enues. 
Gross Profit and Selling, Distribution 
& Administrative expenses (SG&A)
The current product mix reflects the Group’s strategy to
increase the sales of higher value added branded prod
ucts. The Group’s gross profit increased by 3.4% year
on year and totalled GBP 10.8 million in 2008 (2007:
GBP 10.5 million). The gross profit margin was 20.7%
in 2008, compared to 21.7% in 2007, as a result of the
margin pressure in the skimmed milk powder segment.
The gross profit in branded products segment increased
by 45.9% year on year with gross profit margin of
23.9% compared to 24.9% in the previous year follow
ing the increase in costs associated with the rollout of
hard cheese in 2008. The Group’s gross profit margin
was further impacted by 35% increase year on year in
energy and raw material costs, as well as higher infla
tion in 2008. 
Selling, Distribution and Administrative expenses
increased by 22.2% year on year from GBP 5.69 million
to GBP 6.95 million, primarily as a result of the rise in
marketing and distribution expenses.
EBITDA and Profit after tax
Group EBITDA declined by 13.4% year on year and
amounted to GBP 4.8 million in 2008 (2007: GBP 5.5
million) with EBITDA margin of 9.1% compared to
11.4% in the previous period, as a result of the decline
in SMP prices.
Depreciation and amortisation expense increased by
27.6% year on year from GBP 1.4 million to GBP 1.8 mil
lion in 2008, following the launch of the hard cheese pro
duction unit and the installation of a smoking chamber. 
Profit after tax decreased by 30.2% year on year to GBP
2.3 million in 2008, compared to GBP 3.3 million in
2007.
Earnings per share and dividends
The Group’s basic earnings per share (EPS) declined
30.8% year on year from 7.8 pence to 5.4 pence in
2008. The diluted earnings per share declined 28.0%
year on year from 7.5 pence to 5.4 pence in the same
period.
An interim dividend of 0.40 pence per share was paid on
25 October 2008. In line with the Group’s dividend poli
cy, the Board of Directors proposed to pay a final divi
dend of 0.40 pence per ordinary share for 2008, result
ing in the total dividend payment of 0.80 pence per ordi
7
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Gross Gross Gross Gross
Sales 2008 Share in Sales 2007 Share in Profit margin Profit margin
£ 000 Sales 2008 £ 000 Sales 2007 2008 2008 2007 2007
£ 000 £ 000
Branded 38,197 73.0% 25,155 52.3% 9,138 23.9% 6,263 24.9%
SMP 11,561 22.1% 20,410 42.4% 1,274 11.0% 3,804 18.6%
Other 2,554 4.9% 2,545 5.3% 406 15.9% 391 15.4%
Total 52,312 100% 48,110 100% 10,818 20.7% 10,458 21.7% nary share for the full year 2008 (2007: 1.4 pence). The
final dividend is expected to be paid on 27 July 2009 to
shareholders on record as at 26 June 2009, subject to
the approval of the AGM of shareholders.
Cash flow and net debt 
Net cash generated by the operating activities totaled
GBP 2.6 million in 2008 (2007: GBP 3.6 million) after
absorbing the increase in working capital given the rise
in sales. 
Net cash used in investing activities totaled GBP 1.9 mil
lion in 2008 (2007: GBP 2.5 million), with GBP 1.4 mil
lion spent on capital expenditure (2007: GBP 2.7 mil
lion). During the year, Ukrproduct invested in the
increase of hard cheese production capacity and the
expansion of the milk collection zone. In the second half
of 2008, the Group reduced its capital expenditure going
forward to the level of essential maintenance expense. 
Net cash used in financing activities amounted to GBP
0.66 million in 2008 (2007: GBP 0.08 million) following
the redemption of GBP 0.81 million of local bonds. 
The Group’s cash balances stood at GBP 0.69 million as
at 31 December 2008, compared to GBP 1.1 million as
at 31 December 2007. The Group’s net debt was GBP
2.99 million as at 31 December 2008, compared to GBP
3.13 million as at 31 December 2007. Further informa
tion is disclosed in note 6.
Bank facilities
The Group maintained a working capital facility in local
currency, Ukrainian Hryvnia, with Ukraine OTP bank
equivalent to up to GBP 4.0 million (2007: GBP 4.0 mil
lion). As at 31 December 2008, Ukrproduct has drawn
GBP 3.2 million of the available facility (GBP 3.4 mil
lion). Ukrproduct also has available additional overdraft
facilities for up to GBP 0.7 million.
Financial reporting
The financial statements included in this report were
prepared in accordance with International Financial
Reporting Standards as adopted by the European Union
(“IFRS”).
Roman Prannychuk
Chief Financial Officer 
21 May 2009
8
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 Jack Rowell
Nonexecutive Chairman
Dr. Rowell (70) has acted as
Chairman of a number of
companies in the public and
private sector, mainly within
the food production industry.
He was previously an execu
tive director on the board of
Dalgety plc responsible for the
consumer foods division.
Jack also serves as Chairman
of Celsis plc, a public company quoted on AIM, and is also
Manager of Bath Rugby Club, the Champion of England’s
Rugby Football Union. Prior to this, Dr. Rowell was CEO of
Golden Wonder Ltd. and Lucas Food Ingredients (also part
of the Dalgety Food Group). He was educated at Oxford
University and is a Chartered Accountant.
Sergey Evlanchik 
Chief Executive Officer
Sergey Evlanchik is respon
sible for the Group’s overall
performance and strategy
implementation and is a
founder of Ukrproduct
Group. He studied at
Vladivostok State University
of Economics & Service in
the Russian Federation and
at Oxford University in the
UK, where he received his MBA degree. Together with
Alexander Slipchuk, he established the equity trading
company, AlfaBroker in 1994 in the Far East of the
Russian Federation. After the recess of the Russian and
Ukrainian equity markets in 1998, Mr Evlanchik refo
cused his activities on business development in the
industrial sector of Ukraine, particular within the dairy
industry, where he joined the companies that would
subsequently form Ukrproduct Group in 2004. Sergey
then led the Group to its successful listing on London
Stock Exchange in 2005.
9
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
THE BOARD OF DIRECTORS
As of the date of the 2008 Annual Report approval, the names of the Board members are as follows: 
In the first half of 2008, Iryna Yevets resigned as Chief Executive Officer and President of Ukrproduct and left the
Board of Directors. In September 2008, Dmitry Dragun resigned as Chief Financial Officer and left the Board. Roman
Prannichuk was appointed to the Board as his replacement.
The names and other biographical details of the Board members are presented below:
Name Positiom Date appointed
Jack Rowell Nonexecutive Chairman November 2004
Sergey Evlanchik CEO April 2008
Roman Prannichuk CFO September 2008
Alexander Slipchuk Executive Director November 2004 Roman Prannichuk
Chief Financial Officer
Roman Prannichuk was
appointed Chief Financial
Officer in August 2008 and
prior to this he has served
as Head of Finance
Department of Ukrproduct
Group. Roman joined the
Company in 2001 as an
auditor. From 2005 until his
most recent appointment,
he held the position of Head of Internal Audit. Mr.
Prannichuk is a certified auditor with qualifications con
ferred by the Ukrainian Audit Chamber, as well as a
holder of CAP certificate. Roman’s career as an
accountant and auditor is now in its 15th year. Within
the Group he is responsible for the operational financial
controls and the internal audit in Ukraine.
Alexander Slipchuk
Executive Director
Alexander Slipchuk studied at
FarEastern High Engineering
Marine School in Russia and
graduated as a maritime navi
gator in 1989. Together with
his partner Sergey Evlanchik,
Alexander established the
securities house AlfaBroker
in 1994, developed the equity
trading business in the far
east of the Russian Federation, and acquired initial stakes in
the companies that later became part of Ukrproduct Group.
Later in 1998, Alexander took the executive positions at the
Molochnik and the Starakonstantinovskiy Dairy plants,
Ukrproduct’s two main operating assets. He serves as the
Group’s Executive Director in advisory capacity.
10
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 DIRECTORS’ REPORT
T
he Directors present their report and the audited
consolidated financial statements of Ukrproduct
Group Ltd for the year ended 31 December 2008.
Principal Activities and business review
Ukrproduct Group Ltd (the Company) is a holding com
pany for a group of dairy based FMCG (fast moving con
sumer goods) businesses located in Ukraine. The prin
cipal activities of Ukrproduct Group are the production
and distribution of highly branded dairy foods in Ukraine
and the export of milk powder. The Group is one of the
leading branded food producers in Ukraine with its own
nationwide distribution network. More detailed com
mentary on the Group’s activities during the year, its
financial performance, future plans, and prospects are
outlined in the Chairman’s and Chief Executive’s
Statements and in the Financial Review.
Results and Dividends
The results of the Group for the period are set out on
page 22 and show a profit for the period of GBP 2.277
million (2007: GBP 3.262 million). 
An interim dividend of 0.40 pence per share was paid on
25 October, 2008. The shares are quoted ‘ex dividend’
from 1 October 2008. Based on the Group’s financial
performance in 2008, the Board of Directors proposed
to pay a final dividend of 0.40 pence per ordinary share
for 2008, which would lead to 0.80 pence per ordinary
share for the full year (2007: 1.4 pence). The final divi
dends will be paid on 27 July 2009 to shareholders on
the register as at 26 June 2009, subject to shareholders’
approval at the 2009 Annual General Meeting.
Directors
Details of members of the Board of Directors are shown
on page 9. 
The Directors’ interests in the share capital of the
Company as at 31 December 2008 and 31 December
2007 are shown below:
Powers of the Directors
Subject to the Company’s Memorandum and Articles of
Association, the Law and any directions given by special
resolution, the business of the Company shall be man
aged by the Directors who may pay all expenses
incurred in setting up and registering the Company and
who may exercise all such powers of the Company. The
rules in relation to the appointment and replacement of
Directors are set out in the Company’s Article’s of
Association.
11
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Shares Share options
2008 2007 2008 2007
Executive
Sergey Evlanchik 14,422,383 14,422,383   Alexander Slipchuk 14,487,383 14,487,383   Iryna Yevets (resigned)    234,299
Dr Dmitry Dragun
(resigned)    117,149
Nonexecutive
Dr Jack Rowell 18,690 18,690 130,290 130,290 Financial Risks Facing the Group
The principal risks of the business is the credit risk, liq
uidity risk and market risk, including fair value or cash
flow interestrate risk and foreign exchange risk.  The
main purpose of the Group’s risk management pro
gramme is to evaluate, monitor and manage these risks
and to minimise potential adverse effects on the Group’s
financial performance and shareholders. The Chief
Financial Officer of the Group is in charge of risk man
agement and introduction of all policies as approved by
the Board of Directors. 
For further details of the Group’s risk management
please see note 5 on page 36.
Employees
The Group is committed to ensuring provision of equal
opportunities for all employees, which is reflected by its
selection, recruitment and training policies. The Group
considers its employees to be one of its most valuable
assets and rewards high performance through compet
itive remuneration and incentive schemes. The Directors
also consider it a priority to give employees the oppor
tunity to communicate their ideas and opinions to all
levels of management, both directly and through various
surveys. Ukrproduct Group had a total of 2,089 employ
ees as at 31 December 2008 (2007: 2,014).
Payment Policy
The Group has a general set of guidelines for paying its
suppliers based on specific criteria. However, it is nor
mal practice to agree payment terms with a specific
supplier when entering into a purchase contract. The
Group seeks to abide by the payment terms agreed
whenever it is satisfied that the goods or services have
been provided in accordance with the agreed terms and
conditions.
Going concern
Following a review of the Group’s financial position and
its budgets and plans, the directors have concluded that
the Group has sufficient financial resources to meet
working capital requirements for a period of up to 12
months from the date of these financial statements.
Annual General Meeting
Ukrproduct’s AGM will be held on 26 June 2009. The
Notice of AGM and agenda will be sent to shareholders
no less than 25 days prior to the date of the meeting. 
Auditors
BDO Stoy Hayward LLP was reappointed as the Group’s
auditors for 2008 financial year at the Annual General
Meeting of Shareholders held on June 24, 2008.
All of the current Directors have taken the necessary
steps to make themselves aware of any information
needed by the Company’s auditors for the purposes of
their audit and to establish that the auditors are aware of
that information. The directors are not aware of any rel
evant audit information of which the auditors are
unaware.
Sergey Evlanchik
Chief Executive Officer
21 May 2009
12
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 CORPORATE GOVERNANCE
REPORT
Corporate Governance Policy
Effective corporate governance is a priority of the Board
and outlined below are details of how the Company has
applied the principles set out in The Combined Code on
Corporate Governance (the “Code”) revised in July 2006
by the Financial Reporting Council.  Under the rules of
AIM, a market operated by the London Stock Exchange,
the Company is not required to comply with the Code and
the Board considered that the size of the Group does not
warrant compliance with all of the Code’s requirements.
The Board fully supports the principles on which the Code
is based and seeks to comply with best practice in such
respects as they consider appropriate for a Group of its
size and nature. The Board has a wide range of experi
ence directly relevant to the Group and its activities and
its structure ensures that no one individual or Group
dominates the decision making process.
The Board
The Board consists of one nonexecutive and three
Executive Directors. The roles of the Chairman of the
Board and the Chief Executive of the Group are held sep
arately with a clear division of responsibility between
them. The Chairman of the Board is an independent
nonexecutive Director. 
Within the scope of the corporate governance proce
dures, the Board meets regularly to consider the finan
cial results, budgets, and major items of capital expen
diture of all the Group’s companies. This body is also
responsible for formulating, reviewing and approving
the Group’s strategy and the phases of its development.
The meetings of the Board of Directors take place in
Ukraine or Jersey, or any other suitable jurisdiction as
decided by the Board. Teleconference calls are also a
possibility, when Directors are present in either (or
both) Jersey or Ukraine.
The Board met seven times during 2008 and all the
directors, then current, attended all meetings, with the
exception of Mr Jack Rowell, who attended six of seven
meetings, missing one by prior arrangement.
Board Committees
The Board is assisted by Audit and Remuneration
Committees. 
13
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 Audit Committee
The Audit Committee consists of one nonexecutive
Director, Jack Rowell. The member of the Audit
Committee has relevant financial experience. This
Committee, inter alia, is responsible for reviewing the
Annual and Interim financial statements, in addition to
the systems of internal control and risk management,
and also for ensuring the integrity of the financial infor
mation reported to the shareholders. 
The Audit Committee meet with the external auditors
twice during the year.
Remuneration Committee
The Remuneration Committee comprises one nonexec
utive Director, Jack Rowell. This Committee is sched
uled to meet at least twice per annum to advise the
Board on the Group’s remuneration strategy and to
determine the terms of employment and total remuner
ation of the Executive Directors, including the granting
of share options. Among others, the objective of this
Committee is to attract, retain and motivate Executives
capable of delivering the Group’s objectives. The
Remuneration Committee is also responsible for the
evaluation of the performance of Executive Directors.
Relations with shareholders
The Group maintains regular contact with its institution
al and private shareholders, fund managers, financial
analysts and brokers through a series of presentations,
conference calls and meetings. All corporate materials,
including annual reports, financial results statements
and other information, are available on the Group’s web
site www.ukrproduct.com
Chief Executive Officer and Chief Financial Officer hold
conference calls and meetings with shareholders on a
regular basis. The Board believes that it is essential to
discuss with its shareholders and keep them updated
with regards to the Group’s financial performance, strat
egy and business developments. The Chairman is also
accessible to major shareholders, if such meetings are
required.
The Board invites all shareholders to attend the Company’s
Annual General Meeting and encourage them to exercise
their voting right and participate with questions.
Internal Control
The Group adheres to comprehensive and strictly regu
lated budgeting and reporting procedures that are aimed
at more efficient internal control and risk management.
The Board is responsible for the Group’s system of inter
nal control and for reviewing its effectiveness, however, it
is recognised that any control system can only provide
reasonable and not absolute assurance against material
misstatement or loss.
The principal elements of the internal control system are
as follows:
• documented policies, procedures and authorisation
levels;
• clearly defined lines of responsibility in the organisa
tional structure of the Group;
• a management structure which facilitates ease of com
munication both vertically and horizontally;
• annual budgeting and monthly reporting procedures.
The annual budgets consist of monthly budgets, which
are updated each month once actual figures become
available. Due to the dynamic development of the
macroeconomic environment of the country the Group
operates in, variances in actual figures for sales, prices
and other underlying assumptions from those forecast
ed may occur. Hence, the budget is flexed to better
reflect the future of the Group. Such variances by each
company within the Group are discovered and recom
mendations for further actions are formulated.
The internal control system is further enforced by the
Group’s internal audit department. The main objectives of
the internal audit function are to ensure the safety of the
Company’s assets and the reliability of accounting records.
The internal audit department is responsible for auditing
the financial statements and accounting procedures of the
companies within the Group, as well as for disclosing and
reducing various types of risks related to Group operations.
Each company within the Group has a designated auditor,
who systematically performs the audits.
14
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 CORPORATE SOCIAL
RESPONSIBILITY REPORT
Corporate Social Responsibility
The Board is committed to developing and implementing
corporate social responsibility (CSR) policies aimed at:
• Promoting equality and fairness among employees,
partners and suppliers 
• Ensuring safe working conditions 
• Maintaining the Group’s corporate reputation and
dedication to business ethics 
• Supporting the communities in which the Group oper
ates 
• Establishing longterm and healthy relationships with
the Group’s partners, customers and other affiliated
parties.
The main elements of the Group’s approach towards ful
filling the above objectives are as follows:
Employees
The Group is committed to ensuring equal opportunities
to all its employees, both current and prospective. Each
employee’s efforts are highly valued and the Board
believes that a diverse mix of the workforce facilitates
innovation, efficiency and teamwork. As a matter of cor
porate policy, regular training and development work
shops are conducted for Ukrproduct’s staff. These are
aimed at all employee groups, including managerial,
technical and production personnel. The training pro
grammes encourage staff to progress up the career lad
der and are central to the Group’s continuing growth
and success.
15
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 Health and safety
Management at business units within the Group are
responsible for developing and maintaining the underly
ing practices that provide for a safe working environ
ment. Special attention is given to the production facili
ties, where the equipment, including lighting, air condi
tioning, workspace and other constituents, undergo
constant reviews and improvements. Regular monitor
ing is carried out to ensure that the required standards
are met and that employees use the provided communi
cation channels to further improve their surrounding
working conditions.
Customers
Customer satisfaction is at the core of the Group’s busi
ness model. Therefore, the Board is keen to continue
supplying the customers with high quality, affordable
products required by current market demands. The
Group’s segmentation practices are aimed at segregat
ing various customer groups in order to meet their
respective needs with maximum efficiency. In addition,
regular market research and surveys are conducted to
ensure maximum value is consistently offered to cus
tomers.
Environment 
The Group recognises the importance of good environ
mental practices and seeks to minimise a negative
impact that its operations or products might have on the
production sites and surrounding areas. The Group
adopted the environmental laws and regulations of
Ukraine to reduce, control and eliminate various types
of pollution and to protect natural resources.
Ukrproduct monitors and controls all its production
facilities regularly in order to ensure that air quality is
not adversely impacted by its operations. The Group
focuses on cutting water and energy consumption, as
well as reducing the volumes of waste. Collection and
processing of waste have been organised through the
local waste collection plants. The Group’s development
programme of 20082012 puts specific emphasis on
acquiring and installing only the most advanced and
environmentallyfriendly production and auxiliary equip
ment. 
Food safety 
Food safety is one of key priorities for the Group.
Ukrproduct is committed to produce high quality and
safe food and ensures that high standards are main
tained within its supplier base. The certified food safety
management system in compliance with ISO
22000:2005 was implemented by the Group. This sys
tem provides the possibility to fully monitor all produc
tion stages – from forage control and sound health of
the cattle to the final product distribution. During 2008,
food safety standards were audited at all Group’s pro
duction facilities by the leading international food pro
ducers.
Community support 
The Group is keen to further enhance and maintain its
partnership with local communities by supporting their
initiatives and charitable events. The Group contributes
cash donations and gifts, as well as employee time, by
encouraging staff to participate as volunteers.
16
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 REMUNERATION 
COMMITTEE REPORT 
T
his report is prepared by the Remuneration
Committee of the Board and sets out the Company’s
policy on the remuneration of the Directors, with a
description of service agreements and remuneration
packages for each Director.
Remuneration Committee
The Remuneration Committee comprises one non
executive Director, Jack Rowell. This Committee is
scheduled to meet at least twice per annum to advise
the Board on the Group’s remuneration strategy and to
determine the terms of employment and total remu
neration of the Executive Directors, including the
granting of share options. Among others, the objective
of this Committee is to attract, retain and motivate
Executives capable of delivering the Group’s objec
tives. The Remuneration Committee is also responsi
ble for the evaluation of the performance of Executive
Directors.
Remuneration Policy
The Company’s remuneration policy is to provide remu
neration packages which:
• are designed to attract, motivate and retain high cal
ibre Executives;
• are competitive and in line with comparable busi
nesses;
• are rooted in practices exercised in countries where
the Group operates;
• intend to align the interests of the Executives with
those of the shareholders by means of fixed and per
formance related remuneration; 
• and set challenging performance targets and moti
vate Executives to achieve those targets both in the
short and longterm.
Base salary
The Committee reviews base salaries of the Executive
Directors annually taking into account job responsibili
ties, competitive market rates and the performance of
the Executive concerned. Consideration is also given to
the cost of living and the Director’s professional experi
ence. While determining the base salaries, the
Committee also considers general aspects of the
employment terms and conditions of employees else
where in the Group.
Incentive bonus plans and equity arrangements
The Committee plans to consider developing longterm
equity incentive arrangements to make the overall
Executive Remuneration structure more performance
related, more competitive and aligned with sharehold
ers’ interests.
Service contracts
The appointments of executive Directors are valid for
an indefinite period and may be terminated with three
months notice given by either party at any time. The
Company’s provision for compensation for loss of
office is to provide compensation which reflects the
Company’s contractual obligations.
Bonus Scheme
The Committee has established a cash bonus scheme
for Executive Directors based on the overall perform
ance of the Company and attainment of the operating
profit targets.
Nonexecutive directors
The appointments of nonexecutive Directors are valid
for an indefinite period and may be terminated with
three months notice given by either party at any time.
The decision to reappoint, as well as the determination
of the fees of the nonexecutive Directors, rests with the
Board. The nonexecutive Directors may accept
appointments with other companies, although any such
appointment is subject to the Board’s approval and
terms and conditions of Service Agreements.
Directors’ remuneration
Details of the Directors’ cash remuneration are outlined
below:
17
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 Share based payments
In 2005 the Company granted share options to the
Directors. Details of the options outstanding at 31
December 2008 are shown below. The Directors’
Remuneration disclosed above does not include any
amounts for the value of options to acquire shares of
the Company.
These options were not exercised.
18
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
GBP Annual Bonus Total cash
Salary/fee remuneration
Executive 2008 2007 2008 2007 2008 2007
Iryna Yevets (resigned) 22,500 60,000  60,000 22,500 120,000
Dr Dmitry Dragun (resigned) 40,000 40,000  50,000 40,000 90,000
Roman Prannychuk 14,445   14,445  Alexander Slipchuk 70,000 45,000  22,500 70,000 67,500
Sergey Evlanchik 83,889 45,000  22,500 83,889 67,500
Nonexecutive
Dr Jack Rowell 45,000 37,500   45,000 37,500
Directors Share Option Exercise Price, pence Exercise Period
Jack Rowell 130,290 57.0 to 11/02/2009 STATEMENT OF DIRECTORS’
RESPONSIBILITY
T
he directors are responsible for keeping proper
accounting records which disclose with reasonable
accuracy at any time the financial position of the compa
ny, for safeguarding the assets, for taking reasonable
steps for the prevention and detection of fraud and other
irregularities and for the preparation of financial state
ments which comply with the requirements of the
Companies (Jersey) Law 1991 as amended.
The directors are responsible for preparing the annual
report and the financial statements in accordance with
the Companies (Jersey) Law 1991. The directors are
also required to prepare financial statements for the
Group in accordance with International Financial
Reporting Standards as adopted by the European Union
(IFRSs) and the rules of the London Stock Exchange for
companies trading securities on the Alternative
Investment Market.
International Accounting Standard 1 requires that finan
cial statements present fairly for each financial year the
company’s financial position, financial performance and
cash flows.  This requires the faithful representation of
the effects of transactions, other events and conditions
in accordance with the definitions and recognition crite
ria for assets, liabilities, income and expenses set out in
the International Accounting Standards Board’s
‘Framework for the preparation and presentation of
financial statements’.  In virtually all circumstances, a
fair presentation will be achieved by compliance with all
applicable International Financial Reporting Standards.
A fair presentation also requires the directors to:
• select and apply appropriate accounting policies;
• present information, including accounting policies, in
a manner that provides relevant, reliable, comparable
and understandable information; 
• and provide additional disclosures when compliance
with the specific requirements in IFRS is insufficient
to enable users to understand the impact of particular
transactions, other events and conditions on the enti
ty’s financial position and financial performance.
Financial statements are available on the Group’s web
site in accordance with the applicable legislation gov
erning the preparation and dissemination of financial
statements. The maintenance and integrity of the
group’s website is the responsibility of the directors.
The directors’ responsibility also extends to the ongoing
integrity of the financial statements contained therein.
Jack Rowell
Chairman Ukrproduct Group Ltd
21 May 2009
19
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 INDEPENDENT 
AUDITORS’ REPORT
To the shareholders of Ukrproduct Group Ltd
We have audited the Group financial statements (the
“financial statements”) of Ukrproduct Group Ltd for the
year ended 31 December 2008 which comprise the con
solidated income statement, the consolidated balance
sheet, the consolidated cash flow statement, the con
solidated statement of changes in equity and the related
notes. These financial statements have been prepared
under the accounting policies set out therein.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the annual
report and financial statements in accordance with
applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union
are set out in the statement of directors’ responsibilities.
Our responsibility is to audit the financial statements in
accordance with relevant legal and regulatory require
ments and International Standards on Auditing (UK and
Ireland).
We report to you our opinion as to whether the financial
statements give a true and fair view and have been prop
erly prepared in accordance with the Companies
(Jersey) Law 1991 as amended and whether the infor
mation given in the directors’ report is consistent with
those financial statements. We also report to you if, in
our opinion, the company has not kept proper account
ing records, if we have not received all the information
and explanations we require for our audit, or if informa
tion specified by law regarding directors’ remuneration
and other transactions is not disclosed.
We read other information contained in the Annual
Report and consider whether it is consistent with the
audited financial statements. The other information
comprises only the Directors’ Report, the Chairman’s
Statement, the Chief Executive’s Statement, Financial
Review, Corporate Governance Report and Corporate
Social Responsibility Report. We consider the implica
tions for our report if we become aware of any apparent
misstatements or material inconsistencies with the
financial statements. Our responsibilities do not extend
to any other information.
Our report has been prepared pursuant to the require
ments of our engagement letter and for no other pur
pose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this
report by virtue of and for the purpose of our engage
ment letter or has been expressly authorised to do so by
our prior written consent. Save as above, we do not
accept responsibility for this report to any other person
or for any other purpose and we hereby expressly dis
claim any and all such liability.
20
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 Basis of audit opinion
We conducted our audit in accordance with
International Standards on Auditing (UK and Ireland)
issued by the Auditing Practices Board. An audit
includes examination, on a test basis, of evidence rele
vant to the amounts and disclosures in the financial
statements.  It also includes an assessment of the sig
nificant estimates and judgments made by the directors
in the preparation of the financial statements, and of
whether the accounting policies are appropriate to the
group’s circumstances, consistently applied and ade
quately disclosed.
We planned and performed our audit so as to obtain all
the information and explanations which we considered
necessary in order to provide us with sufficient evi
dence to give reasonable assurance that the financial
statements are free from material misstatement,
whether caused by fraud or other irregularity or error.
In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the
financial statements.
Opinion
In our opinion:
• the group financial statements give a true and fair
view, in accordance with IFRSs as adopted by the
European Union, of the state of the group’s affairs as
at 31 December 2008 and of its profit for the year then
ended;
• the group financial statements have been properly
prepared in accordance with the Companies (Jersey)
Law 1991 as amended;
• and the information given in the directors’ report is
consistent with the financial statements.
BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors 
55 Baker Street
London
21 May 2009
21
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 22
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Year ended Year ended
Notes 31 December 2008 31 December 2007
£ ‘000 £ ‘000
Revenue 7 52,312 48,110
Cost of Sales 21 (41,494) (37,652)
Gross profit 10,818 10,458
Administrative expenses 21 (3,221) (2,770)
Selling and distribution expenses 21 (3,729) (2,919)
Other operating expenses 21 (837) (619)
Profit from operations 3,031 4,150
Finance income 22  20
Finance expense 22 (592) (493)
Profit before taxation 2,439 3,677
Income tax expense 24 (162) (415)
Profit for the year 2,277 3,262
Attributable to:
Equity holders 2,320 3,256
Minority interest 29 (43) 6
2,277 3,262
Earnings per share: 26
Basic 5.4 7.8
Diluted 5.4 7.5
CONSOLIDATED INCOME STATEMENT 23
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
CONSOLIDATED BALANCE SHEET
These financial statements were approved and authorised for issue by the Board of Directors on May 21, 2009 and
were signed on its behalf by:
Sergey Evlanchik
Chief Executive Officer
21 May 2009.
As at As at 
Notes 31 December 2008 31 December 2007
£ ‘000 £ ‘000
Assets
NonCurrent Assets
Property, Plant and equipment 8 10,527 11,903
Intangible assets 9 1,155 1,093
Available for sale investments 10 557 108
Deferred tax assets 11 117 51
Total noncurrent assets 12,356 13,155
Current assets
Inventories 12 3,511 4,008
Trade and other receivables 13 5,643 5,139
Current taxes 14 267 247
Other financial assets 14 35 29
Cash and cash equivalents 15 691 1,087
Total Current assets 10,147 10,510
Total assets 22,503 23,665
Equity and liabilities
Equity attributable to equity holders
Share capital 19 4,282 4,164
Other reserves 20 823 4,060
Retained earnings 10,814 7,031
Total equity attributable 
to equity holders of the parent 15,919 15,255
Minority interest 82 131
Total equity 16,001 15,386
Liabilities
NonCurrent Liabilities
Deferred tax liabilities 11 697 752
Promissory notes 16 285  Total NonCurrent Liabilities 982 752
Current Liabilities
Bank loans and overdrafts 16 3,400 3,407
Trade and other payables 18 2,011 3,211
Taxes payable 18 79 28
Bonds 16  811
Current income tax liabilities 30 70
Total Current Liabilities 5,520 7,527
Total equity and liabilities 22,503 23,665 24
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Year ended Year ended
31 December 2008 31 December 2007
£ ‘000 £ ‘000
Cash flows from operating activities
Profit for the year 2,277 3,262
Adjustments for:
Exchange difference 192 15
Depreciation and amortisation 1,750 1,371
Loss on disposal of property, plant and equipment 13 64
Interest expense 592 493
Interest income  (20)
Income tax expense 162 415
Decrease / (increase) of inventories 139 (1,444)
Increase in trade and other receivables (1,236) (1,884)
(Decrease) / increase in trade and other payables (984) 1,649
Cash generated from operations 2,905 3,921
Interest received  20
Income tax paid (264) (384)
Net cash generated by operating activities 2,641 3,557
Cash flows from investing activities purchase 
of loans and receivables
Payments for property, plant and equipment (1,384) (2,712)
Proceeds from sale of property, plant and equipment 62 28
Proceeds from sale of available for sale investments  176
Purchase of available for sale investments (530) (25)
Net cash used in investing activities (1,852) (2,533)
Cash flows from financing activities
Gross repayments from long term borrowing  (100)
(Repayments) / proceeds from issue 
of bonds net of issue costs (811) 463
Proceeds from issue of shares, net of issue costs 628 241
Dividends paid (523) (459)
Interest paid (629) (493)
Net proceeds from shortterm borrowing 348 267
Proceeds from issue of promissory notes 329  Net cash used in financing activities (658) (81)
Net increase in cash and cash equivalents 131 943
Effect of exchange rate changes 
on cash and cash equivalents (527) (15)
Cash and cash equivalents at the beginning of the year 1,087 159
Cash and cash equivalents at the end of the year 691 1,087
CONSOLIDATED CASH FLOW STATEMENT 25
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Attributable to equity holders Total
attributable
Share Other Retained to equity Minority Total
capital reserves earnings holders of interest Equity
the parent
£ ‘000 £ ‘000 £ ‘000 £ ‘000 £ ‘000 £ ‘000
Balance at 1 January 2007 4,121 4,181 4,141 12,443 199 12,642
Depreciation on revaluation 
of noncurrent assets  (122) 122    Reduction of revaluation reserve  (2)  (2)  (2)
Exchange differences on translation 
to presentation currency  (124) (90) (214) (4) (218)
Decrease of minority interest   (10) (10) (70) (80)
Net expense recognised 
directly in equity  (248) 22 (226) (74) (300)
Profit for the year   3,256 3,256 6 3,262
Total recognised income 
and expense for the year  (248) 3,278 3,030 (68) 2,962
Dividends paid   (459) (459)  (459)
Issue of shares (net of issue cost) 43 198  241  241
Reduction of options reserve  (71) 71    Balance at 31 December 2007 4,164 4,060 7,031 15,255 131 15,386
Depreciation on revaluation 
of noncurrent assets  (124) 124    Reduction of revaluation reserve  (2) 8 6  6
Exchange differences on translation 
to the presentation currency  (3,503) 1,736 (1,767) (6) (1,773)
Net expense 
recognised directly in equity  (3,629) 1,868 (1,761) (6) (1,767)
Profit for the year   2,320 2,320 (43) 2,277
Total recognised income 
and expense for the year  (3,629) 4,188 559 (49) 510
Dividends paid   (523) (523)  (523)
Issue of shares (net of issue cost) 118 510  628  628
Reduction of options reserve  (118) 118    Balance at 31 December 2008 4,282 823 10,814 15,919 82 16,001
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. Group and principal activities
The Company is a public limited liability entity regis
tered in Jersey with a registered office at 26 New Street,
St Helier, Jersey, JE2 3RA, Channel Islands.
The Group’s overall management and production facili
ties are based in Ukraine, with the HQ in Kyiv. The Group
commands leading positions in the Ukrainian processed
cheese and packaged butter markets and owns a range
of widely recognisable trademarks in Ukraine, including
“Nash Molochnik” (translated as Our Dairyman),
“Narodniy Product” (People’s Product) “Molendam”
and “Vershkova Dolina” (Creamy Valley). The average
number of employees of the Group during the year
ended 31 December 2008 was 2,089 (2007: 2,014).
2. Significant accounting policies
The principal accounting policies adopted in the prepa
ration of the financial information are set out below. The
policies have been consistently applied to all the years
presented, unless otherwise stated.
a) Basis of preparation
These consolidated financial statements have been pre
pared in accordance with International Financial
Reporting Standards, International Accounting
Standards and Interpretations (collectively IFRS) issued
by the International Accounting Standards Board (IASB)
as adopted by European Union.
The majority of companies making up the Group main
tain their accounting records in accordance with
Ukrainian regulations. The financial information has been
prepared from those accounting records and adjusted as
considered necessary in order to comply with IFRS.
Accounting records of the Operating Group are main
tained in Ukrainian Hryvnia ("UAH"). The Hryvnia has also
been adopted as the functional currency for the purpose
of the consolidated financial statements. Since the
Ukrainian Hryvnia is not a major convertible or recognis
able currency outside of Ukraine, and also because the
Group’s public shareholder base has been located most
ly in the UK, the financial information has been translat
ed into British pounds sterling (hereinafter “GBP” or £)
as the Group’s presentational currency. The preparation
of financial statements in conformity with IFRS requires
the use of certain critical accounting estimates. It also
requires management to exercise its judgment in the
process of applying the Group’s accounting policies.
b) Changes in accounting policies
In preparing these financial statements, the following
amendments to published standards and interpretations
to existing standards effective in 2008 were adopted by
the Group. 
 IFRIC 11, IFRS 2 – Group and Treasury Share
Transactions (effective for accounting periods
beginning on or after 1 March 2007). Sharebased
payment transactions in which an entity receives
services as consideration for its own equity instru
ments shall be accounted for as equitysettled. This
applies regardless of whether the entity chooses or
is required to buy those equity instruments from
another party to satisfy its obligations to its employ
ees under the sharebased payment arrangement. It
also applies regardless of whether:  (a) the employ
ee’s rights to the entity’s equity instruments were
granted by the entity itself or by its shareholder(s);
or (b) the sharebased payment arrangement was
settled by the entity itself or by its shareholder(s).
Management is currently assessing the impact of
IFRIC 11 on the accounts.
The following standards, amendments and interpreta
tions to published standards are mandatory for account
ing periods beginning on or after 1 January 2008 but are
currently not relevant to the Group.
 IFRIC 12, Service Concession Arrangements (effec
tive for accounting periods beginning on or after 1
January 2008). IFRIC 12 gives guidance on the
accounting by operators for publictoprivate service
concession arrangements. IFRIC 12 is not relevant to
the Group operations due to absence of such
arrangements.
26
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008  IFRIC 14, IAS 19 – The Limit on a Defined Benefit
Asset, Minimum Funding Requirements and their
Interaction Interaction (effective for accounting peri
ods beginning on or after 1 January 2008). IFRIC 14
clarifies when refunds or reductions in future contri
butions should be regarded as available in accor
dance with paragraph 58 of IAS 19, how a minimum
funding requirement might affect the availability of
reductions in future contributions and when a mini
mum funding requirement might give rise to a liabil
ity. IFRIC 14 is not relevant to the Group operations
due to absence of such arrangements.
 IAS 39 – Reclassification of Financial Instruments
(effective for accounting periods beginning on or
after 1 July 2008). This Amendment permits an enti
ty to reclassify nonderivative financial assets (other
than those designated at fair value through profit or
loss by the entity upon initial recognition) out of the
fair value through profit or loss category in particular
circumstances. The Amendment also permits an enti
ty to transfer from the availableforsale category to
the loans and receivables category a financial asset
that would have met the definition of loans and
receivables (if the financial asset had not been desig
nated as available for sale), if the entity has the inten
tion and ability to hold that financial asset for the
foreseeable future. IAS 39 is not relevant to the Group
operations due to absence of such arrangements
The following standards, interpretations and amend
ments to published standards are mandatory for
accounting periods beginning on or after 1 January
2009 or later periods and which the Group has decided
not to adopt early.
 IFRS 8, Operating Segments (effective for account
ing periods beginning on or after 1 January 2009).
This standard sets out requirements for the disclo
sure of information about an entity’s operating seg
ments and also about the entity’s products and serv
ices, the geographical areas in which it operates, and
its major customers. It replaces IAS 14, Segmental
Reporting. The Group expects to apply this standard
in the accounting period beginning on 1 January
2009. As this is a disclosure standard it will not have
any impact on the results or net assets of the Group.
 IFRIC 13, Customer Loyalty Programmes (effective
for accounting periods beginning on or after 1 July
2008). IFRIC 13 addresses sales transactions in which
the entities grant their customers award credits that,
subject to meeting any further qualifying conditions,
the customers can redeem in future for free or dis
counted goods or services. Management is currently
assessing the impact of IFRIC 13 on the accounts.
 IAS 23 Borrowing Costs (revised) ) (effective from
1 January 2009). The main change from the previous
version is the removal of the option of immediately
recognising as an expense borrowing costs that
relate to assets that take a substantial period of time
to get ready for use or sale. The Group is currently
assessing its impact on the financial statements.
 Revised IFRS 3, Business Combinations and com
plementary Amendments to IAS 27, Consolidated and
separate financial statements (both effective for
accounting periods beginning on or after 1 July
2009). This revised standard and amendments to is
still to be endorsed by the EU. The revised IFRS 3 and
amendments to IAS 27 arise from a joint project with
the Financial Accounting Standards Board (FASB),
the US standards setter, and result in IFRS being
largely converged with the related, recently issued,
US requirements. There are certain very significant
changes to the requirements of IFRS, and options
available, if accounting for business combinations. 
The revision to IFRS 3 will be relevant to the Group
as and when such transactions falling into the scope
of the review standard occur. 
 Amendment to IFRS 2, Sharebased payments:
vesting conditions and cancellations (effective for
accounting periods beginning on or after 1 January
2009). The Amendment to IFRS 2 is of particular rel
evance to companies that operate employee shares
save schemes. This is because it results in an imme
diate acceleration of the IFRS 2 expense that would
otherwise have been recognised in future periods
should an employee decide to stop contributing to
the savings plan, as well as a potential revision to the
fair value of the awards granted to factor in the prob
ability of employees withdrawing from such a plan.
27
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 Management will continue to assess the impact of
the amendment prior to adoption.
 Amendments to IAS 27, Consolidated and Separate
Financial Statements (both effective for accounting
periods beginning on or after 1 July 2009).  This
Amendment relates in particular to acquisitions of
subsidiaries achieved in stages and disposals of inter
ests, with significant differences in the accounting
depending on whether control is gained or not, or a
transaction simply results in a change in the percent
age of the controlling interest. The Amendment does
not require the restatement of previous transactions.  
 Amendments to IFRS 1 and IAS 27, Cost of an
Investment in a subsidiary, jointlycontrolled entity
or associate (both effective for accounting periods
beginning on or after 1 January 2009).  This
Amendment allows a firsttime adopter that, in its
separate financial statements, elects to measure its
investments in subsidiaries, jointly controlled enti
ties or associates at cost to initially recognise these
investments either at cost determined in accordance
with IAS 27 or deemed cost (being either its fair
value at the date of transition to IFRSs or its previous
GAAP carrying amount at that date).
 Amendments to IAS 39, Financial Instruments:
Recognition and Measurement: Eligible Hedged
Items (both effective for accounting periods begin
ning on or after 1 January 2009). This Amendment
clarifies how the principles that determine whether a
hedged risk or portion of cash flows is eligible for
designation should be applied in the designation of a
onesided risk in a hedged item, and inflation in a
financial hedged item.
 IFRIC 16, Hedges of a Net Investment in a Foreign
Operation (both effective for accounting periods
beginning on or after 1 October 2008).  IFRIC 16
clarifies that:  (a) The presentation currency does not
create an exposure to which an entity may apply
hedge accounting. Consequently, a parent entity
may designate as a hedged risk only the foreign
exchange differences arising from a difference
between its own functional currency and that of its
foreign operation. (b) The hedging instrument(s)
may be held by any entity or entities within the
group, other than the entity being hedged. (c) While
IAS 39 Financial Instruments: Recognition and
Measurement must be applied to determine the
amount that needs to be reclassified to profit or loss
from the foreign currency translation reserve in
respect of the hedging instrument, IAS 21 The
Effects of Changes in Foreign Exchange Rates must
be applied in respect of the hedged item.  IFRIC 16
applies prospectively from its effective date.
 IFRIC 17, Distributions of Noncash Assets to
Owners (both effective for accounting periods begin
ning on or after 1 July 2009).  Prior to this interpre
tation, IFRSs did not address how an entity should
measure distributions of assets other than cash
when it pays dividends. Dividends payable were
sometimes recognised at the carrying amount of the
assets to be distributed and sometimes at their fair
value.  The Interpretation clarifies that: a dividend
payable should be recognised when the dividend is
appropriately authorised and is no longer at the dis
cretion of the entity; that an entity should measure
the dividend payable at the fair value of the net
assets to be distributed; and, that an entity should
recognise the difference between the dividend paid
and the carrying amount of the net assets distributed
in profit or loss.  The Interpretation also requires an
entity to provide additional disclosures if the net
assets being held for distribution to owners meet the
definition of a discontinued operation.  IFRIC 17
applies to pro rata distributions of noncash assets
except for common control transactions.  It does not
have to be applied retrospectively.
 IFRIC 18, Transfer of Assets from Customers (both
effective for accounting periods beginning on or after
1 July 2009).  The interpretation clarifies the treat
ment of agreements in which an entity receives from
a customer an item of property, plant and equipment
(or cash which must be used only to acquire or con
struct an item of property, plant and equipment) that
the entity must then use either to connect the cus
tomer to a network or to provide the customer with
ongoing access to a supply of goods or services.  The
interpretation clarifies whether and when an asset
should be recognised, and how it should be meas
28
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 ured.  It also clarifies how revenue arising from such
a transaction should be recognised.
c) Revenue recognition 
Revenues arising to the Group as a result of the sale of
goods and the rendering of services are recognised in
the period to which they relate and measured at the fair
value of the consideration received or receivable.
Revenue comprises the invoiced value of sales of goods
and services net of value added tax, rebates and dis
counts after eliminating sales within the Group.
d) Principles of consolidation
Where the Company has the power, either directly or
indirectly, to govern the financial and operating policies
of another entity or business so as to obtain benefits
from its activities, it is classified as a subsidiary. The
consolidated financial statements present the results of
the company and its subsidiaries ("the Group") as if they
formed a single entity. Intercompany transactions and
balances between Group companies are therefore elim
inated in full. 
e) Translation from functional to presentation currency
Management has considered what would be the most
appropriate functional and presentational currencies for
these financial statements. As a result of this review
management has concluded that:
• the Ukrainian Hryvnia is the currency of the primary
economic environment in which the Group operates.
Consequently the Ukrainian Hryvnia is the most
appropriate functional currency for the Group;
• the Group should use British pounds sterling as the
presentational currency for its consolidated IFRS
financial statements.
Consequently, management has used the following
basis for the translation of Ukrainian Hryvnia figures to
British pounds for presentation purposes:
• for current year figures all assets and liabilities are
translated at the rate effective at the balance sheet
date. Income and expense items are translated at
rates approximating to those ruling when the transac
tions took place. 
• for comparative figures all assets and liabilities are
translated at the closing rate existing at the relevant
balance sheet date. Income and expense items are
translated at rates approximating to those ruling when
the transactions took place. 
• all exchange differences resulting from the applica
tion of the translation methods described above are
recognised directly in equity as a separate component
of equity (IAS 21.39 (c))
Actual exchange rates applied in the translation are
detailed in note 2(o) below.
f) Segment reporting
A business segment is a group of assets and operations
engaged in providing products or services that are sub
ject to risks and returns that are different from those of
other business segments. A geographical segment is
engaged in providing products or services within a par
ticular economic environment that are subject to risks
and returns different from those of segments operating
in other economic environments. 
The Group has recognised business segments as pri
mary format of segment reporting. The secondary for
mat was chosen to be the geographical segment.
g) Property, plant and equipment
Figures calculated using Ukrainian statutory accounting
rules, have been adopted as deemed depreciated histor
ical cost for property, plant and equipment as at 1
January 2004. Subsequent additions have been record
ed at cost.
With effect from 1 January 2004, the Group adopted the
revaluation model (as defined in IAS 16: Property, Plant
and Equipment) for all classes of assets. The Group’s
assets were revalued in January 2004. This change of
accounting policy was made on the grounds that man
agement believe that this policy provides more reliable
and relevant financial information because it better
reflects the value in use of such assets to the Group. In
accordance with the provisions of that standard, the
29
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 revaluation model has not been applied retrospectively.
All categories of property, plant and equipment are sub
sequently carried at fair value at the date of revaluation,
less any subsequent accumulated depreciation and sub
sequent accumulated impairment losses. Changes in fair
value are recognised in equity (the “revaluation reserve”).
An appropriate transfer is made from the revaluation
reserve to the retained earnings when freehold land and
buildings are expensed through the income statement
(e.g. through depreciation, impairment or sale). 
Depreciation is applied to all items of property, plant
and equipment with the exception of land. Depreciation
is calculated using the straightline method to allocate
their cost or revalued amounts to their residual values
over their estimated useful lives, as follows:
Buildings 20 – 40 years;
Plant and machinery 7 – 15 years;
Equipment and motor vehicles 3 – 10 years.
Gains and losses on disposals are determined by com
paring proceeds with the carrying amount and are
included in operating profit.
h) Assets under construction
Assets under construction are reported at their cost of
construction including costs charged by third parties and
the capitalisation of the Group’s material costs incurred.
No depreciation is charged on assets during construc
tion. Upon the completion, the Group assess whether
there is any indication that an asset may be impaired. If
any such indication exists, the Group performs impair
ment testing as described in note 2 (k). In case no indi
cation exists that the asset may be impaired, all accu
mulated costs of the asset are transferred to the relevant
fixed asset category and depreciated at applicable rates
from the time the asset is completed and ready for use.
i) Intangible assets
Acquired computer software licences are capitalised on
the basis of the costs incurred to acquire and bring to
use the specialised software. These costs are amortised
over their estimated useful lives using the straightline
method (7 years). The amortisation expense is included
within Administrative expenses in the Income Statement.
Trademarks are shown at historical cost. Trademarks
have finite useful lives and are carried at cost less accu
mulated amortisation. Amortisation is calculated using
the straightline method to allocate the cost of trade
marks over their estimated useful lives (20 years). The
amortisation expense is included within Selling &
Distribution expenses in the Income Statement. 
Customer list is shown at fair value at the date of revalu
ation obtained by using the estimates of the independent
valuers, less any subsequent accumulated depreciation
and subsequent accumulated impairment losses.
Amortisation is calculated using the straightline method
to allocate the cost of the customer list over its estimat
ed useful lives (20 years). The amortisation expense is
included within Other expenses in the Income Statement.
j) Goodwill
Goodwill is an excess of acquisition costs above the fair
value of assets, liabilities and contingent liabilities
acquired at the acquisition date. Goodwill is reported in
intangible assets with any impairment being charged to
the Income Statement within Administrative expenses. 
Goodwill is assessed annually with respect to the
impairment of value and reported at cost net of total
loss from impairment of value. Gains or losses on dis
posal of a subsidiary include the carrying value of good
will related to the subsidiary sold.
k) Impairment of assets
Assets with indefinite useful life are not amortised and are
annually assessed with respect to the impairment of their
value. Assets subject to amortisation are assessed with
respect to the impairment of their value whole business
whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recov
ered. Whenever the carrying amount of an asset exceeds
its recoverable value, an impairment loss is recognised in
income. The recoverable amount is the higher of an
asset’s net selling price and value in use. The net selling
price is the amount obtainable from the sale of an asset
30
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 in an arm’s length transaction while value in use is the
present discounted value of estimated future cash flows
expected to arise from the continuing use of an asset and
from its disposal after the end of its useful life.
Recoverable amounts are estimated for individual assets
or, if it is not possible, for a cash generating unit.
Impairment charges are included in the Administrative
expenses line item in the Income Statement, except to
the extent they reverse gains previously recognised in
the Statement of Changes in Equity.
l) Inventories
Inventories are stated at the lower of cost and net real
isable value. Cost is determined using the firstin, first
out method. The cost of finished and unfinished goods
comprises raw materials, direct labour, other direct
costs and related production overheads (based on nor
mal operating capacity) but excludes borrowing costs. 
m) Sharebased payments
Where share options are awarded to employees, the fair
value of the options at the date of grant is charged to the
income statement over the vesting period. Where the
terms and conditions of options are modified before
they vest, the increase in the fair value of the options,
measured immediately before and after the modifica
tion, is also charged to the income statement over the
remaining vesting period. Where equity instruments are
granted to persons other than employees, the income
statement is charged with the fair value of goods and
services received. Where fair value of goods and servic
es received from persons other than employees is diffi
cult to identify, the fair value of the instruments granted
is charged to income statement over the vesting period.
n) Income taxes
Taxation has been provided for in the financial state
ments in accordance with relevant legislation currently
in force. The charge for taxation in the Income
Statement for the year comprises current tax and
changes in deferred tax. Current tax is calculated on the
basis of the taxable profit for the year, using the tax
rates in force at the balance sheet date. Taxes, other
than on income, are recorded within Operating expens
es in the Income Statement.
Deferred income tax is provided, using the balance
sheet liability method, for all temporary differences aris
ing between the tax basis of assets and liabilities and
their carrying values for financial reporting purposes
except for those difference permanently disallowed. A
deferred tax asset is recorded only to the extent that it is
probable that taxable profit will be available against
which the deductible temporary differences can be
utilised. Deferred tax assets and liabilities are measured
at tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on
tax rates that have been enacted or substantively enact
ed at the balance sheet date.
o) Shortterm employee benefits
Shortterm employee benefits are recognised in the
period in which an employee has rendered service to the
Group. The Group recognises the undiscounted amount
of shortterm employee benefits a liability (accrued
expense), after deducting any amount already paid.  
p) Foreign currency translation
Transactions denominated in currencies other than the
Hryvnia ("foreign currencies") are recorded in Hryvnia at
the exchange rate effective on the transaction date.
Exchange differences resulting from the settlement of
transactions denominated in foreign currency are
included in the income statement using the effective
exchange rate on that date.
Monetary assets and liabilities denominated in foreign
currency are translated into Hryvnia at the official
exchange rate at the balance sheet date. Foreign curren
cy gains and losses arising from the translation of assets
and liabilities are reflected in the Income Statement as
foreign exchange translation gains and losses.
Income and expense figures have been converted to
British pounds for presentation purposes at rates
approximating to those ruling when the transactions
took place. The resulting exchange differences are
recognised as a separate component of equity.
31
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 For translation of the financial data, the exchange rates
of Ukrainian Hryvnia to GBP and USD officially set by the
National Bank of Ukraine were used. The weighted aver
age rate for the year was calculated based on the daily
exchange rates officially set by the Bank of Ukraine.
q) Pension costs
The Group contributes to the Ukrainian mandatory state
pension scheme, social insurance and employment
funds in respect of its employees. The Group’s pension
scheme contributions are expensed as incurred and are
included in staff costs. The Group doesn’t operate any
other pension schemes.
r) Financial assets
The Group classifies its financial assets into one of the
following categories, depending on the purpose for
which the asset was acquired:
Fair value through profit or loss: This category compris
es only inthemoney derivatives. They are carried in the
balance sheet at fair value with changes in fair value
recognised in the income statement. The Group does
not have any assets held for trading nor does it volun
tarily classify any financial assets as being at fair value
through profit or loss.
Loans and receivables: These assets are nonderivative
financial assets with fixed or determinable payments
that are not quoted in an active market. They arise prin
cipally through the provision of goods and services to
customers (trade receivables), but also incorporate
other types of contractual monetary asset. They are car
ried at amortised cost using the effective interest
method less any provision for impairment.
Impairment provisions are recognised when there is
objective evidence (such as significant financial difficul
ties on part of the counterparty or default or significant
delay in payment) that the Group will be unable to col
lect all of the amounts due under the terms receivable,
the amount of such a provision being the difference
between the net carrying amount and the present value
of the future expected cash flows associated with the
impaired receivable. For trade receivables, which are
reported net, such provisions are recorded in a separate
allowance account with the loss being recognised with
in administrative expenses in the income statement. On
confirmation that the trade receivable will not be col
lectable, the gross carrying value of the asset is written
off against the associated provision.
From time to time, the Group may renegotiate the terms
of trade receivables due from customers with which it
has previously had a good trading history. Such rene
gotiations will lead to changes in the timing of payments
rather than changes to the amounts owed and, in con
sequence, the new expected cash flows are discounted
at the original effective interest rate.
Cash and cash equivalents comprise cash on hand,
deposits held at call with banks and other shortterm
highly liquid investments with original maturities of
three months or less. Bank overdrafts are included in
current liabilities on the balance sheet.
The Group has not classified any of its financial assets
as held to maturity.
Available for sale investment. Nonderivative financial
assets not included in the above categories are classified
as availableforsale and comprise principally the Group’s
investments in entities not qualifying as subsidiaries as
32
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Hryvnia for Hryvnia for
1 GBP (£) 1 USD ($)
Official rate as at December 31, 2008 11.1430 7.0700
Official rate as at December 31, 2007 10.0973 5.0500
Weighted average rate for 2008 9.6613 5.2842
Weighted average rate for 2007 10.1124 5.0500 well as investment certificates. They are carried at fair
value with changes in fair value recognised directly in a
separate component of equity (availableforsale reserve).
Where there is a significant or prolonged decline in the fair
value of an available for sale financial asset (which consti
tutes objective evidence of impairment), the full amount of
the impairment, including any amount previously charged
to equity, is recognised in the Income statement.
s) Financial liabilities
The Group classifies its financial liabilities into cate
gories depending on the purpose for which the liability
was acquired. The Group has not classified any of its lia
bilities at fair value through profit and loss. 
Financial liabilities held at amortised cost include the
following items: 
Trade payables and other shortterm monetary liabili
ties, which are recognised at amortised cost.
Bank borrowings, overdrafts, promissory notes and
bonds issued by the Group are initially held at the
amount advanced net of any transaction costs directly
attributable to the issue of the instrument.  Such inter
est bearing liabilities are subsequently measured at
amortised cost using the effective interest rate method,
which ensures that any interest expense over the period
to repayment is at a constant rate on the balance of the
liability carried in the balance sheet.  “Interest expense”
in this context includes initial transaction costs and
interest payable on redemption, as well as any interest
or coupon payable while the liability is outstanding.
t) Dividends
Equity dividends are recognised when they become legal
ly payable. In the case of interim dividends are recognised
when they are paid. In the case of final dividends, this is
when approved by the shareholders at the AGM.
u) Share issue costs
All qualifying transaction costs in respect of the issue of
shares are accounted for as a deduction from share pre
mium, net of any related tax deduction. Qualifying trans
action costs include costs of preparing the prospectus,
accounting, tax and legal expenses, underwriting fees and
valuation fees in respect of the shares and of other assets.
v) Borrowing costs
Borrowing costs are recognised as an expense in the
period in which they are incurred.
w) Operating leases 
Operating leases and the corresponding rental charges
are charged to the income statement on a straightline
basis over the life of the lease.
3. Critical accounting estimates and judgments
The Group makes certain estimates and assumptions
regarding the future. Estimates and judgments are con
tinually evaluated based on historical experience and
other factors, including expectations of future events that
are believed to be reasonable under the circumstances.
In the future, actual experience may deviate from these
estimates and assumptions. The estimates and assump
tions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabil
ities within the next financial year are discussed below.
• Estimates of fair value of property, plant and equip
ment based on revaluation. The Group is required,
periodically as determined by the management, to
conduct revaluation on its property, plant and equip
ment. Such revaluations are conducted by the inde
pendent valuers and employ the valuation methods in
accordance with International Valuation Standards
such as cost method, comparison (market) method
and revenue (income) method.
• Impairment of goodwill. The Group is required to test,
on an annual basis, whether goodwill has suffered any
impairment. The recoverable amount is determined
based on value in use calculations. The use of this
method requires the estimation of future cash flows
and the choice of a discount rate in order to calculate
the present value of the cash flows. Actual outcomes
may vary. Further information is contained in note 9. 
• Useful lives of intangible assets and property, plant
and equipment. Intangible assets and property, plant
33
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 and equipment are amortised or depreciated over
their useful lives. Useful lives are based on the man
agement’s estimates of the period that the assets will
generate revenue, which are periodically reviewed for
continued appropriateness. Due to the long live
assets, changes to the estimates used can result in
significant variations in the carrying value. Further
information is contained in notes 8 and 9.
• Inventory. The Group reviews the net realisable value
of and demand for its inventory on a quarterly basis to
ensure recorded inventory is stated at the lower of
cost or net realisable value. Factors that could impact
estimated demand and selling prices are the timing
and success of future technological innovations, com
petitor actions, supplier prices and economic trends.
Further information is contained in note 12.
• Income taxes. The Group is subject to income tax in
several jurisdictions and significant judgement is
required in determining the provision for income taxes.
During the ordinary course of business, there are many
transactions and calculations for which the ultimate tax
determination is uncertain. As a result, the company
recognises tax liabilities based on estimates of whether
additional taxes and interest will be due. These tax lia
bilities are recognised when, despite the company’s
belief that its tax return positions are supportable, the
company believes that certain positions are likely to be
challenged and may not be fully sustained upon review
by tax authorities. The company believes that its accru
als for tax liabilities are adequate for all open audit
years based on its assessment of many factors includ
ing past experience and interpretations of tax law. This
assessment relies on estimates and assumptions and
may involve a series of complex judgments about
future events. To the extent that the final tax outcome
of these matters is different than the amounts record
ed, such differences will impact income tax expense in
the period in which such determination is made.
Further information is contained in notes 10 and 24.
• Legal proceedings. In accordance with IFRS the Group
only recognises a provision where there is a present
obligation from a past event, a transfer of economic
benefits is probable and the amount of costs of the
transfer can be estimated reliably. In instances where
the criteria are not met, a contingent liability may be dis
closed in the notes to the financial statements.
Realisation of any contingent liabilities not currently
recognised or disclosed in the financial statements
could have a material effect on the Group’s financial
position. Application of these accounting principles to
legal cases requires the Group’s management to make
determinations about various factual and legal matters
beyond its control. The Group reviews outstanding legal
cases following developments in the legal proceedings
and at each balance sheet date, in order to assess the
need for provisions in its financial statements. Among
the factors considered in making decisions on provi
sions are the nature of litigation, claim or assessment,
the legal process and potential level of damages in the
jurisdiction in which the litigation, claim or assessment
has been brought, the progress of the case (including
the progress after the date of the financial statements
but before those statements are issued), the opinions or
views of legal advisers, experience on similar cases and
any decision of the Group’s management as to how it
will respond to the litigation, claim or assessment.
• Quality claims. The Group supplies the consumers and
industrial customers in Ukraine with dairy products
manufactured in accordance with the current laws,
food safety standards and technical requirements of
the relevant Ukrainian authorities. The Group voluntari
ly applies nondomestic standards – ISO and HASSP –
to some of the Group’s operations. For the industrial
customers both domestically and outside of Ukraine,
the food products are manufactured to the technical
specifications agreed with the buyers in advance of the
sale. In instances where the quality criteria and/or tech
nical specifications are not met or the delivery of prod
ucts are made close to expiry date, a quality claim may
arise and the corresponding contingent liability may be
disclosed in the notes to the financial statements.
Realisation of any such contingent liabilities not cur
rently recognised or disclosed in the financial state
ments could have a material effect on the Group’s
financial position. Application of these accounting prin
ciples to quality claims requires the Group’s manage
ment to make determinations about the future matters
that may, at the time of determination, be beyond man
agement’s control. Among the factors considered in
making decisions on quality claims provisions are: the
nature of the claim, the quantifiable variances in quali
ty giving rise to a claim, the potential loss from satisfy
ing the claim and any decision of the Group’s manage
ment as to how it will respond to the claim.
34
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 35
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Proportion of 
Country of the Group’s Method of 
incorporation ownership interest consolidation
2008 2007
Molochnik OJSC** Ukraine 97.6% 97.6% Acquisition 
Starokonstantinovskiy Molochniy Zavod SC** Ukraine 100% 100% Acquisition
StarkonMoloko LLC** Ukraine 100% 100% Acquisition
Krasilovsky Molochny Zavod Private Enterprise SC** Ukraine 100% 100% Acquisition
Jmerinsky Maslosyrzavod LLC** Ukraine 100% 100% Acquisition 
Letichevsky Maslozavod OJSC*** Ukraine 92.7% 92.7% Acquisition 
Teofipolskiy Dairy Plant Private Enterprise SC** Ukraine 100% 100% Acquisition 
Podilskiy Dairy Plant Private Enterprise SC**** Ukraine 100%  Acquisition
Avtopark Starokonstantinov LLS*** Ukraine 100%  Acquisition
Ukrprodexpo SC** Ukraine 100% 100% Acquisition 
Ukrprodexport Private Enterprise SC** Ukraine 100% 100% Acquisition 
UkrproductLogistic LLC ** Ukraine 100% 100% Acquisition 
Agrospetsresursy LLC** Ukraine 100% 100% Acquisition 
Nash Molochnik Private Enterprise SC* Ukraine 100% 100% Acquisition 
Ukreuroprodukt SC* Ukraine 100% 100% Acquisition 
Agrospetsresursy Dnipro SC* Ukraine 100% 100% Acquisition 
Torgoviy Dom Maslayana SC* Ukraine 100% 100% Acquisition 
Torgoviy Dom Milko SC* Ukraine 100% 100% Acquisition 
Agrospetsresursy Lviv SC* Ukraine 100% 100% Acquisition 
Ukrproduct – Kharkov SC* Ukraine 100% 100% Acquisition 
Ukrproduct Group CJSC Ukraine 100% 100% Merger 
LinkStar Limited Cyprus 100% 100% Merger 
Dairy Trading Corporation Limited BVI 100% 100% Merger 
Ukrproduct Group LTD Jersey Parent
4. Subsidiaries 
The consolidated financial statements include the results of the companies set out in table below. 
* Subsidiaries of Agrospetsresursy LLC, the Group’s specialised distribution companies.
** The companies are held through Ukrproduct Group CJSC which is a 100%owned subsidiary of the Company 
*** The company is held through Ukrproduct Group CJSC and LinkStar Limited which are 100%owned subsidiaries of the Company
**** The company is held through StarkonMoloko LLC which is 100%  owned subsidiarie of the Company 5.  Financial instruments – Risk Management 
The principal risks facing the Group’s business are cred
it risk, liquidity risk and market risk, including fair value
or cash flow interestrate risk and foreign exchange risk.
The main purpose of the Group’s risk management pro
gramme is to evaluate, monitor and manage these risks
and to minimise potential adverse effects on the Group’s
financial performance and shareholders. The Chief
Financial Officer of the Group is in charge of risk man
agement and introduction of all policies as approved by
the Board of Directors. 
Principal financial instruments 
The principal financial instruments used by the Group,
from which financial instrument risk arises, are as follows:
• trade and other receivables;
• investments in unquoted equity securities in Ukraine;
• loans issued; 
• cash and cash equivalents;
• bank overdrafts;
• promissory notes;
• trade and other payables;
• other financial liabilities;
• bonds;
• fixed rate bank loans.
General objectives, policies and processes
The Group’s overall risk management programme recog
nises the unpredictability of financial markets and seeks
to minimise potential adverse effects on the Group’s
financial performance. Risk management is carried out
by the Group Chief Financial Officer (CFO) under policies
approved by the Board of Directors. The Group CFO iden
tifies and evaluates financial risks in close cooperation
36
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
As at December 2008 As at December 2007
£ ‘000 £ ‘000
Financial assets
Loans and receivebles:
 trade and other receivables 5,129 4,707
 cash and cash equialents 691 1,087
 loans issued 35 26
Availlable for sale investments:
 unquoted investments 557 108
6,412 5,928
Financial liabilities
Held at amortised cost:
 bank loans 3,200 3,407
 overdrafts 165   promissory notes 285   other financial liabilities 35 26
 bonds  811
 trade and other payables 1,475 1,621
5,160 5,865 with the Group’s operating units. The management board
provides broad guidance and operating principles for
overall risk management, as well as written policies cov
ering specific areas, such as foreign exchange risk, inter
estrate risk, credit risk, and investing excess liquidity.
The Board has overall responsibility for the determination
of the Group’s risk management objectives and polices
and, whilst retaining ultimate responsibility for them, it
has delegated the authority for designing and operating
processes that ensure the effective implementation of the
objectives and policies to the group’s finance function.
The Board receives monthly updates from the Group CFO
and Head of Internal Audit through which it reviews the
effectiveness of the processes put in place and the appro
priateness of the objectives and policies it sets. The
Group’s internal operating auditors review the risk man
agement policies and processes and report their findings
to CEO and the Audit Committee, if and when necessary.
The overall objective of the Board is to set polices that
seek to reduce risk as far as possible without unduly
affecting the Group’s competitiveness and flexibility.
Further details regarding these policies are laid out below. 
Credit risk
Credit risk is the risk that a counterparty will not be able
to meet its obligations in full when due. Ukrproduct
Group is mainly exposed to credit risk from credit sales
to the customers in Ukraine. The Group manages its
credit risk through the Group’s risk assessment policy
by evaluating each new customer before signing a con
tract using the following criteria: trading history and the
strength of own balance sheet. The Group attempts to
reduce credit risk by conducting periodic review which
includes obtaining external ratings and in certain cases
bank references. 
According to the Group’s risk assessment policy, imple
mented locally, every new customer is appraised before
entering contracts; trading history and the strength of
the own balance sheet being the main indicators of
creditworthiness. While starting the commercial rela
tionship with the Group, a new customer is offered the
terms that are substantially tighter than those for the
existing customers and stipulate, as a rule, the cashon
delivery payments terms and noreturns policy (quality
related claims exempted). If the relationship progresses
successfully, the terms are gradually relaxed to fall in
line with the Group’s normal business practices and
local specifics as required by the market. The Group’s
periodic review includes external ratings, when avail
able, and in some cases bank references. Purchase lim
its are established for each customer, which represents
the maximum open amount without requiring approval
from CEO. These limits are reviewed quarterly.
Customers that fail to meet the Group’s benchmark
creditworthiness may transact with the Group on a pre
payment basis only.
Quantitative discloses of the credit risk exposure in rela
tion to Trade and other receivables, which are neither
past due nor impaired, are made in note 13. The Group
does not rate trade receivables by category or recover
ability as the Group’s historical default rates have been
negligible in the past (less than 0.01%); essentially all
trade receivables due to the Group had been recovered.
In the future, the default rate on trade receivables over
due is expected to remain stable or even fall because in
Ukraine the Group deals increasingly with the modern
format retailers whose creditworthiness is conducive to
the payment discipline. 
Maximum exposure to the Trade and other receivables
component of credit risk at the reporting date is the fair
value of Trade and other receivables. There is no collat
eral held as security or other credit enhancements.  
The Group’s credit controllers monitor the utilisation of the
credit limits on a daily basis by customer and apply the
delivery stop orders immediately if the individual limits are
exceeded. The Group’s procedure for recovery of the trade
receivables past due includes the following steps: 
• identification of the date and exact amount of the
receivable past due, termination of all further deliver
ies and forwarding to the customer of the details of
the amount due and the notice of the failure to pay –
3 days after the past due date; 
• delivery to the customer of the formal claim for the
amount overdue and the visit of the representative of
the commercial credit control department to the cus
tomer premises 2 weeks thereafter;
• filing a claim to the commercial court for repayment
37
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 of the amount overdue and late payment fees – 2
weeks thereafter;
• obtaining a court order for repayment of the amount
due and collaboration with bailiff – 2 weeks thereafter. 
As a result of the credit control and risk assessment
procedures, the Group does not expect any losses from
nonperformance by the counterparties at the reporting
date from any of the financial instruments currently
employed in the business.
Credit risk also arises from cash and cash equivalents
and deposits with banks and financial institutions. The
Group reviews the banks and financial institutions it
deals with to ensure that standards of credit worthiness
are maintained.
Maximum exposure to the cash and cash equivalents
and deposits with banks and financial institutions com
ponent of credit risk at the reporting date is the fair
value of the cash balances due from such banks and
financial institutions. There is no collateral held as secu
rity or other credit enhancements.  
The Group does not enter into derivatives to manage cred
it risk, although in certain isolated cases may take steps to
mitigate such risks if it is sufficiently concentrated.
Liquidity risk
Liquidity risk is a function of the possible difficulty to be
encountered in raising funds to meet financial obliga
tions. The Group’s policy is to ensure that it will always
have sufficient cash to allow it to meet its liabilities when
they become due by maintaining the minimum cash bal
ances and agreed overdraft facilities. The Group also
seeks to reduce liquidity risk by fixing interest rates and
hence cash flows on substantially all of its borrowings.
The Group’s operating divisions (plants) have different
liquidity requirement profiles. As Group’s products have
short and longcycled production, the liquidity risk of
each plant is monitored and managed centrally by the
Group Treasury function. Each plant has a cash facility
based on cash budgets with the Group Treasury. The
cash budgets are set locally and agreed by the CFO in
advance. The main element of the Group’s liquidity
management is to reduce liquidity risk by fixing interest
rates and hence cash flows on substantially all of its
longterm borrowings.
CEO (and the Board, if requested) receives rolling quar
terly cash flow projections on a monthly basis as well as
information regarding the daily cash balances at each
plant and overall. In the ordinary course of business, the
Group relies on a combination of the available overdraft
facilities and cash balances to fund the ongoing liquid
ity needs. Capital expenditures are usually funded
though longerterm bank loans. In case of the inade
quate cash balances and the overdraft facilities close to
the agreed ceilings, the Group is expected to revert to
the emergency funding made available through tempo
rary freeze to the current portion of capital spending,
immediate operating cost reductions, postponement of
payments to the third parties, and expansion of the
overdraft ceilings. Although undesirable and never
occurring in the past, such emergency funding is the
last resort on which the Group may have to draw while
ensuring the ongoing continuity of the business.  
Maturities of the Group’s financial instruments are dis
closed further in the notes to these financial statements.  
Market risk
Market risk may arise from the Group’s use of interest
bearing, tradable and foreign currency financial instru
ments. Market risk comprises fair value interest rate
risk, foreign exchange rates and commodity price risk. 
Cash flow and fair value interestrate risk
As the Group has no significant interestbearing assets,
the Group’s income and operating cash flows are sub
stantially independent of changes in market interest
rates. The Group’s interestrate risk arises only from
overdrafts, and considered to be insignificant. The
Group analyses the interest rate exposure on a monthly
basis. As at 31 December 2008 and 2007, all Group’s
borrowings were at fixed rates (note 16). 
The Group analyses the interest rate exposure on a month
ly basis. A sensitivity analysis is performed by applying
various interest rate scenarios to the borrowings at fixed
rates. Various methods and assumptions are used in the
38
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 analysis, in particular the likelihood of the change in inter
est rates, supplementary (alternative) funding and the cost
of arranging the backup funding facilities. Based on the
sensitivity analysis performed, the maximum exposure
(impact on profit or loss and net assets) of a 700 basis
point shift (being the maximum reasonably possible
expectation of changes in interest rates) would be an
increase of GBP 80,000 (2007: GBP 79,000) or a decrease
of GBP 80,000 (2007: GBP 79,000).
Foreign exchange risk
All of the Group’s production facilities are located in
Ukraine and the Board believes that the foreign exchange
risk is minimal. The Group’s international operations
consist primarily of the export of milk powders to the
various markets around the world. The primary currency
for export sales is the US Dollar. The Group’s established
corporate policy towards minimising the potential for
eign exchange risk is to require the customers to pay for
the export shipments of the skimmed milk powders in
full and in advance. The Group’s purchases of the raw
milk, semiprocessed materials and other components
of the manufacturing cost are made in Ukraine and are
entirely Hryvniadenominated. All outstanding balances
of trade payable by the Group are in Hryvnia. Currency
analysis is provided in Note 30 
The management believes that the foreign exchange risk
is immaterial at present and is likely to remain so in the
future. No sensitivity analysis is required under circum
stances. 
Commodity price risk
The Ukraine economy has been characterized by high
rates of inflation. As we tend to experience inflationdriv
en increase in certain of our costs, including salaries and
rents, which are sensitive to rises in the general price level
in Ukraine. In this situation, due to competitive pressures,
we may not able to raise the prices we charge for products
and services sufficiently to preserve operating margins.
Accordingly, high rates of inflation in Ukraine could
increase our cost and decrease our operating margins. 
The Group is also exposed to commodity price risk for
skimmed milk powder. The price for this product is pre
dominately determined by the world market and the
activities of large international trading companies in this
market. Since the beginning of 2008 global prices for
skimmed milk powder have fallen. The Group took
measures in order to reduce its dependence on volatile
commodity prices by increasing production of other
products, which were less volatile.
The Group controls the prices for branded products
through timely changes of sales prices according to the
market situation and competition. The prices for SMP in
Ukraine tend to grow or decrease depending on the
world SMP prices and if in 2008 the prices had not
halved the Group would have received an additional
gross profit amounting to GBP 1.0 million but if the
decrease had been 1520% more significant that could
have led to receiving the profit of GBP 0.2 million less
than due.
6. Capital management policies 
The Group’s definition of the capital is an ordinary share
capital, share premium, accumulated retained earnings
and other equity reserves. The Directors view their role
as that of corporate guardians responsible for preserva
tion and growth of the capital, as well as for generation
of the adequate returns to shareholders.  
The Group’s objectives when maintaining and growing
capital are:
• to safeguard the Group’s ability to continue as a going
concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; 
• to identify the appropriate mix of debt, equity and
partner sharing opportunities in order to balance the
highest returns to shareholders overall with the most
advantageous timing of investment flows;
• to provide an adequate return to shareholders by
delivering the products in demand by the customers
at prices commensurate with the level of risk and
expectations of shareholders. 
The Group sets the amount of capital it requires in pro
portion to risk. The Group manages its capital structure
and makes adjustments to it in the light of changes in eco
nomic conditions and the risk characteristics of the cur
39
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008 rent trading environment. The Group’s core assets consist
predominantly of the property, plant and equipment – the
resources that have proven their ability to withstand the
competitive erosion and inflationary pressure. 
In order to maintain or adjust the capital structure, the
Group may issue new shares, adjust the amount of divi
dends paid to shareholders, repay the debt, return capital
to shareholders or sell assets to improve the cash position.
Historically, the first three methods were used to achieve
and support the desired capital structure. The Group mon
itors capital on the basis of the net debt to equity ratio (D/E
ratio). This ratio is calculated as net debt to shareholder
equity. Net debt is calculated as total debt (as shown in the
balance sheet) less cash and cash equivalents. 
Traditionally, the Group’s conservative strategy was to
maintain the D/E ratio at 0.6 (60%) maximum. In 2008,
as well as in the prior years, the D/E ratio did not exceed
this level. The Directors believe that for the Group, as an
operating company and a public entity, the maintenance
of the prudent debt policy is crucial in preserving the
capital of the business. Excessive leverage – defined by
the Group as D/E ratio in excess of 0.6 – could be justi
fied only under exceptional circumstances and requires
the full Board’s consent. 
The D/E ratios at 31 December 2008 and at 31
December 2007 were as follows.
40
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Total debt 3,685 4,218
Less: Cash and cash equivalents 691 1,087
Net debt 2,994 3,131
Total equity 15,919 15,255
D/E ratio 18,8% 20,5% 7. Segment information 
At 31 December 2008, the Group was organised internationally into three main business segments: 
1. Branded product – (processed cheese, hard cheese, butter, packaged butter and packaged spreads) 
2. Skimmed milk powders.
3. Other (transport services and resale of thirdparty goods).
The segment results for the year ended 31 December 2008 are as follows:
The unallocated corporate liabilities represent bank loans, overdrafts and accruals.
41
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Branded Skimmed Un
£ 000 products milk Other allocated Total
powder
Sales, Total 93,388 20,106 9,278  122,772
Sales to internal customers 55,191 8,545 6,724  70,460
Sales to external customers 38,197 11,561 2,554  52,312
Gross profit 9,138 1,274 406  10,818
Administrative expenses (2,310) (241) (49) (621) (3,221)
Selling and distribution expenses (3,364) (53) (46) (266) (3,729)
Other operating expenses    (645) (645)
Loss from exchange differences    (192) (192)
Profit before interest and taxation 3,464 980 311 (1,724) 3,031
Finance expenses    (592) (592)
Profit before taxation 3,464 980 311 (2,316) 2,439
Taxation    (162) (162)
Profit for the year 3,464 980 311 (2,478) 2,277
Segment assets 16,662 2,026 822  19,510
Unallocated corporate assets    2,876 2,876
Unallocated deferred tax    117 117
Consolidated total assets 16,662 2,026 822 2,993 22,503
Segment Liabilities 794 363 311  1,468
Unallocated corporate liabilities    4,337 4,337
Unallocated deferred tax    697 697
Consolidated total liabilities 794 363 311 5,034 6,502
Other segment information:
Depreciation and amortisation 1,379 279 17 75 1,750
Capital expenditure 1,204 319 12 20 1,555 The basis of pricing of the intersegment transfers is the current market price at which the goods could be bought on
the spot market externally but not lower than the full production costs plus the accompanying transport expenses. 
The segment results for the year ended 31 December 2007 are as follows:
The unallocated corporate liabilities represent bank loans, overdrafts, bonds and accruals. 
42
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Branded Skimmed Un
£ 000 products milk Other allocated Total
powder
Sales, Total 72,974 35,805 15,060  123,839
Sales to internal customers 47,819 15,395 12,515  75,729
Sales to external customers 25,155 20,410 2,545  48,110
Gross profit 6,263 3,804 391  10,458
Administrative expenses (1,813) (335) (49) (573) (2,770)
Selling and distribution expenses (2,051) (75) (51) (742) (2,919)
Other operating expenses    (604) (604)
Loss from exchange differences    (15) (15)
Profit before interest and taxation 2,399 3,394 291 (1,934) 4,150
Finance expenses    (493) (493)
Finance income    20 20
Profit before taxation 2,399 3,394 291 (2,407) 3,677
Taxation    (415) (415)
Profit for the year 2,399 3,394 291 (2,822) 3,262
Segment assets 16,846 3,780 518  21,144
Unallocated corporate assets    2,470 2,470
Unallocated deferred tax   51 51
Consolidated total assets 16,846 3,780 518 2,521 23,665
Segment Liabilities 1,133 1,288 271  2,692
Unallocated corporate liabilities    4,835 4,835
Unallocated deferred tax    752 752
Consolidated total liabilities 1,133 1,288 271 5,587 8,279
Other segment information:
Depreciation and amortisation 998 274 31 68 1,371
Capital expenditure 2,043 444 119 70 2,676 Secondary reporting format – geographical segments:
The majority of the Group’s assets and liabilities are in Ukraine. Sales to the countries in Europe represent sales to
international traders of milk powders located in Europe. These traders consequently resell the milk powders to other
countries worldwide.
In 2008 the Group expanded the geography of milk powder sales and continues to increase the sales of butter and
processed cheeses to Eastern Asia.
8. Property, plant and equipment
cont. on page 44
43
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Sales by country Year ended 31 Sales by country Year ended 31
(consignees) December 2008 (consignees) December 2008
£ 000 £ 000
Ukraine 42,937 Ukraine 32,127
Germany 1,676 Denmark 3,658
Nigeria 1,461 Holland 3,432
Azerbaijan 1,458 Japan 2,322
Other countries 4,780 Germany 1,085
Other countries 5,486
Total 52,312 Total 48,110
Assets under Land and Plant and Vehicles and
Construction Buildings Machinery equipment Total
£ ‘000 £ ‘000 £ ‘000 £ ‘000 £ ‘000
Cost or valuation
Opening balance at 1 January 2007 2,841 6,012 4,027 3,096 15,976
Additions 2,611612,672
Transfers from AUC (4,816) 2,040 1,847 929  Disposals  (45) (51) (260) (356)
Exchange differences on translation 
to the presentation currency (58) (112) (75) (56) (301)
Closing balance 578 7,895 5,748 3,770 17,991
Accumulated depreciation
Opening balance at 1 January 2007  1,929 1,489 1,693 5,111
Depreciation charge  262 551 496 1,309 Fixed assets with a net book value of GBP 5,837,414 at 31 December 2008 (GBP 7,189,696 at 31 December 2007)
were pledged as collateral for loans. 
The assets of the Group were last revalued in 2005 at the effective valuation date of 31 December 2004. The valu
ation included a combination of different methods used by two independent appraisers: by “PodiliaExpert” LLC
(Ukraine), who valued the assets using the cost and comparables method, and by “BGSAktiv” LLC (Ukraine), who
used the asset cash generating method.
In accordance with IAS16 the Group carries out revaluations on a regular basis and conducts a full valuation exer
cise if there is an indication of impairment. An impairment review was conducted at the balance sheet date and no
impairment was identified. The Group’s business is a single cash generating unit.
44
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Assets under Land and Plant and Vehicles and
Construction Buildings Machinery equipment Total
£ ‘000 £ ‘000 £ ‘000 £ ‘000 £ ‘000
Disposals  (4) (41) (192) (237)
Exchange differences on translation 
to the presentation currency  (36) (28) (31) (95)
Closing balance at 31 December 2007  2,151 1,971 1,966 6,088
Cost or valuation
Opening balance at 1 January 2008 578 7,895 5,748 3,770 17,991
Additions 1,3504121,366
Transfers from AUC (1,734) 477 369 888  Disposals  (100) (238) (110) (448)
Exchange differences on translation 
to the presentation currency (3) (787) (555) (457) (1,802)
Closing balance at 31 December 2008 191 7,485 5,328 4,103 17,107
Accumulated depreciation
Opening balance at 1 January 2008  2,151 1,971 1,966 6,088
Depreciation charge  327 713 644 1,684
Disposals  (35) (43) (98) (176)
Exchange differences on translation 
to the presentation currency  (288) (373) (355) (1,016)
Closing balance at 31 December 2008  2,155 2,268 2,157 6,580
Net book amount at 31 December 2008 191 5,330 3,060 1,946 10,527
Net book amount at 31 December 2007 578 5,744 3,777 1,804 11,903
Net book amount at 31 December 2006 2,841 4,083 2,538 1,403 10,865 9. Intangible assets
45
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Computer Trade Customer
software marks list Goodwill Total
£ ‘000 £ ‘000 £ ‘000 £ ‘000 £ ‘000
Cost or valuation
At 1 January 2007 25 369 752 184 1,330
Additions 4    4
Reduction in goodwill corresponding to 
decrease in external minority equity stakes    (80) (80)
Exchange differences on translation 
to the presentation currency  (7)   (7)
At 31 December 2007 29 362 752 104 1,247
Accumulated amortisation
At 1 January 2007 14 35 44  93
Amortisation charge for the year 6 18 38  62
Exchange differences on translation 
to the presentation currency 1 (1) (1)  (1)
At 31 December 2007 21 52 81  154
Cost or valuation
At 1 January 2008 29 362 752 104 1,247
Additions 15    15
Exchange differences on translation 
to the presentation currency (2) 138   136
At 31 December 2008 42 500 752 104 1,398
Accumulated amortisation
At 1 January 2008 21 52 81  154
Amortisation charge for the year 5 20 41  66
Exchange differences on translation 
to the presentation currency (2) 25   23
At 31 December 2008 24 97 122  243
Net book amount at 31 December 2008 18 403 630 104 1,155
Net book amount at 31 December 2007 8 310 671 104 1,093
Net book amount at 31 December 2006 11 334 708 184 1,237 46
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
The remaining amortisation periods of the intangible
assets are as follows: 
Computer software 4 – 9 years;
Trademarks 17 years;
Customer list 17 years. 
Acquired intangible assets and Goodwill
At the year end, the carrying valueinuse was deter
mined by discounting the expected future cash flows of
the Group’s business to their present value. The key
assumptions for the valueinuse calculations were
those regarding discount rate and growth rates of the
business. The Directors estimate discount rates that
current market assessments of the time value of money
and risks appropriate to the Dairy business. The dis
count rate that is considered by the Directors to be
appropriate is a discount rate of 25% being the Group’s
specific weighted average cost of capital.
In estimating the future cash flows the Group has used
conservative estimates in respect in revenues generated
and costs incurred. An annual growth rate of 2% was
used for 2009, 7% for 2010 and 11% for 20112012. 
The Group regularly monitors the carrying value of its
acquired intangible assets and goodwill, or when such
events or changes in circumstances indicate that there
may be impaired. The result of the review, undertaken at
31 December 2008, was that no impairment needs to be
recognised and the carrying value of the acquired intan
gible assets and goodwill is considered appropriate. 
After having analyzed all key factors the Group’s
Management decided that as of December 31, 2008 the
Goodwill of Letichiv Diary Plant did not suffer any
impairment. Besides, this asset has unlimited useful life
duration and has been tested as part of Group’s single
generating unit.
Group’s production plans are based on the established
practice of production and distribution of dairy products
in the raw material zone of Letichiv Diary Plant and fore
see the use of this asset during an unlimited period of
time.
Maintenance of Goodwill does not require considerable
costs and the Group does not plan such inputs in the
future.
Taking info consideration all the factors mentioned
above the Group’s Management does not see any
impairment in goodwill as of December 31, 2008 and
considers that the amount of GBR 0.1 million approxi
mates to its fair value.
10. Available for sale investments
The currency profile of the Group’s available for sale investments is as follows.
Floating rate Fixed rate Total as at 31 Total as at 31
assets assets December 2008 December 2007
£ ‘000 £ ‘000 £ ‘000 £ ‘000
UAH 557557108
USD     EUR      557 557 108 Fair values 
The book value and fair value of available for sale investments are as follows.
Details of investments, including the percentage of the share capital owned by the Operating Group, are as follows.
11. Deferred tax
The tax rate used in deferred tax calculations is 25% (2007: 25%)
47
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Book value as at Fair value as at Book value as at Fair value as at
31 December 2008 31 December 2008 31 December 2007 31 December 2007
£ ‘000 £ ‘000 £ ‘000 £ ‘000
Investment certificates 152 152
Other 
unquoted investments 
(less than 5% holding) 405 405 108 108
557 557 108 108
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Investment certificates 152  Other unquoted investments (less than 5% holding) 405 108
557 108
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Deferred tax asset at the beginning of the period (51) (42)
Deferred tax liability at the beginning of the period 752 767
Deferred tax recognised 
in income statement during the year 21 40
Reduction in deferred tax due to decrease 
in property, plant and equipment revaluation 
reserve because of amortisation (78) (57)
Exclusion from Group  6
Exchange differences on translation 
to the presentation currency (64) (13)
Deferred tax asset at the end of the period (117) (51)
Deferred tax liability at the end of the period 697 752 12. Inventories
As at 31 December 2008 no inventories were pledged as collateral (GBP 1,013,268 at 31 December 2007).
Amounts of inventories recognised as an expense during both periods are disclosed in note 21.
13. Trade and other receivables
The Group’s management believes that carrying value is a reasonable approximation of fair value for trade and other
receivables.
There is no concentration of credit risk with respect to trade receivables as the Group has large number of cus
tomers, primarily in Ukraine.
Maturity of trade and other receivables
As at 31 December 2008 there were no trade and other receivables past due not impaired (2007: nil).
48
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Raw materials 636 1,053
Finished goods 2,128 2,299
Other inventories 747 656
3,511 4,008
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Trade receivables 4,738 3,771
Other receivables 391 936
Prepayments 514 432
5,643 5,139
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
In less than 1 year 5,643 5,139
In more than one year but not more than two years   In more than two years but not more than five years   In more than five years   5,643 5,139 14. Other assets
Loans issued are denominated in Hryvnia, are short term in nature, and are interest free. Loans are issued to Group
employees.
15. Cash and cash equivalents
16. Financial liabilities – borrowings 
Bank loans and promissory notes
Bank loans include a secured 3year credit line of up to UAH 40,000,000 (?4,000,000) from OTP Bank CJSC denom
inated in Ukrainian Hryvnia (UAH). As at 31 December 2008 an amount of GBP 3,199,551 was drawn from this cred
it line (2006: GBP 3,406,868). The average interest rate as at 31 December 2008 was 17.0% (2007: 14.5%). This
loan is secured by the assets of OJSC Molochnik, Starokonstantinovskiy Molochniy Zavod SC and StarkonMoloko
LLC.
At December 31, 2008 there was a debt connected to the promissory notes issued amounting to UAH 3,178,739
(GBP 285,000) with the maturity date of 2011. 
Maturity of financial liabilities.  
The carrying amounts of financial liabilities are reported in the following table.
49
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
VAT receivable 267 247
Prepaid profit tax  3
Loans issued to employees 35 26
302 276
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Cash – in UAH 12 10
Bank – in UAH 368 234
Bank – in foreign currency 311 843
691 1,087 Interest rate profile of financial liabilities 
The Group’s has borrowing facilities available at 31 December 2008 in which all conditions have been met
Currency profile of financial liabilities 
The currency profile of the Group’s financial liabilities is as follows.
50
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Floating rate Fixed rate Total as at 31 Total as at 31
£ ‘000 £ ‘000 December 2008 December 2007
£ ‘000 £ ‘000
On demand 165  165  Expiry within 1 year  3,235 3,235 4,218
Expiry within 1 and 2 years     Expiry in more than 2 years 285 285
165 3,520 3,685 4,218
Floating rate Fixed rate Total as at 31 Total as at 31
liabilities liabilities December 2008 December 2007
£ ‘000 £ ‘000 £ ‘000 £ ‘000
UAH 1653,5203,6854,218
USD     EUR     165 3,520 3,685 4,218
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
On demand 165  In less than 1 year 3,235 4,218
In more than one year but not more than two years   In more than two years but not more than five years 285  3,685 4,218 The book value and fair value of financial liabilities are as follows:
Current portion of longterm liabilities 
On 6 March 2008 Agrospetsresursy LLC redeemed the bonds in full, and as of December 31, 2008 the Group does
not have any liabilities related to the longterm loans and bonds.
17. Noncancellable lease commitments
As at 31 December 2008, the operating lease commitments on noncancellable leases for all the companies includ
ed into the consolidation totalled GBP 485,000 (2007: GBP 38,500).
The total future value of minimum lease payments are due as follows
Noncancellable lease commitments represent rent of offices and warehouses.  
51
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Book value as at Fair value as at Book value as at Fair value as at
31 December 2008 31 December 2008 31 December 2007 31 December 2007
£ ‘000 £ ‘000 £ ‘000 £ ‘000
Bank loans 3,200 3,200 3,407 3,407
Bank overdrafts 165 165   Promissory notes 285 285
Bonds   811 811
Other financial liabilities 35 35   3,685 3,685 4,218 4,218
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Bonds  811
285 811
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Not later than 1 year 404 39
Later than one year but not later than five years 81  Later than five years   485 39 18.  Trade and other payables
The Group’s management believes that fair value is a reasonable approximation of carrying value for trade and other
payables.
19. Share capital
The average share price at the date of exercise of the warrants in 2008 was 74 pence.
In January – February of 2008 WH Ireland exercised warrants granted at the date of the Company’s initial public
offering with an exercise price of 53.5 pence. The total consideration received was GBP 628,000.
52
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Trade payables 1,235 1,395
Other payables 160 385
Prepayments 372 1,033
Accruals 244398
VAT and other taxation payable 79 28
2,090 3,239
Authorised
As at 31 As at 31 As at 31 As at
December December December December
2008 2008 2007 2007
Number Number
‘000 £ ‘000 ‘000 £ ‘000
Ordinary shares of 10p each 50,000 50,000
5,000 5,000
Issued and fully paid at beginning and end of the year
2008 2008 2007 2007
Number Number
‘000 £ ‘000 ‘000 £ ‘000
Ordinary shares of 10p each
At beginning of the year 41,645 4,164 41,215 4,121
Issues during the year 1,173 118 430 43
At end of the year 42,818 4,282 41,645 4,164 20. Other reserves
The reduction in revaluation reserve is due to sale of property, plant and equipment which have previously been
revalued. 
The following describes the nature and purpose of each reserve within owners’ equity.
Reserve Description and purpose
Share capital Amount subscribed for share capital at nominal value.
Share premium Amount subscribed for share capital in excess of nominal value.
Revaluation Gains arising on the revaluation of the Group’s property. The balance on this reserve is whol
ly undistributable.
Merger Losses arising on the application of the pooling of interests method of consolidation used to
account for the merger of Ukrproduct Group Ltd and its subsidiaries.
53
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Share Merger Share option Translation Revaluation Total
premium reserve reserve reserve reserve other reserves
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Balance at 1 January 2007 3,918 (1,427) 216 (370) 1,844 4,181
Issue of shares 198     198
Reduction of options reserve   (71)   (71)
Depreciation on revaluation 
of property, plant and equipment     (122) (122)
Reduction of revaluation reserve     (2) (2)
Exchange differences on translation 
to the presentation currency 1  (1) (89) (35) (124)
Balance at 31 December 2007 4,117 (1,427) 144 (459) 1,685 4,060
Issue of shares 510     510
Depreciation on revaluation of
property, plant and equipment     (124) (124)
Reduction of revaluation reserve     (2) (2)
Reduction of options reserve   (118)   (118)
Exchange differences on translation 
to the presentation currency (5)  (2) (3,365) (131) (3,503)
Balance at 31 December 2008 4,622 (1,427) 24 (3,824) 1,428 823 Share option Amount arising from share based payments (issue of share options).
Retained earnings Cumulative net gains and losses recognised in the consolidated income statement. 
Translation Amount of all foreign exchange differences arising from the translation of the financial infor
mation of foreign subsidiaries. 
Minority interest Portion of the profit or loss and net assets of the subsidiary attributable to equity interests that
are not owned, directly or indirectly through the subsidiaries, by the parent. 
21.  Expenses by nature 
54
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
As at As at 
31 December 2008 31 December 2007
£ ‘000 £ ‘000
Raw materials and consumables used, cost of goods sold 33,580 31,991
Wages and salaries 4,218 3,460
Social security costs 1,355 1,112
Deprecation of property, plant and equipment 1,684 1,309
Amortisation of intangible assets 66 62
Operating lease expense (Property) 536 352
Other (sale of equity stake)  22
Loss on disposal of fixed assets 13 42
Audit fees 72 94
Exchange difference 192 15
Other expenses 7,565 5,501
Total cost of goods sold, marketing and distribution costs 
and administrative expenses 49,281 43,960 22. Finance income and expense 
Recognised in income statement
23.  Employee benefit expense 
Remuneration of key management personnel 
The key management personnel are all of directors of the Company (Ukrproduct Group Ltd).
55
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
As at As at 
31 December 2008 31 December 2007
£ ‘000 £ ‘000
Finance income 
Interest income on loans to related parties  20
Total interest income calculated using effective interest method  20
Finance expense 
Interest expense on bank loans (563) (407)
Interest expense on bonds (27) (84)
Other finance expense (2) (2)
Total finance expense (592) (493)
Net finance expense recognised in income statement (592) (473)
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Wages and salaries 
(including key management personnel) 4,218 3,460
Social security costs 1,355 1,112
5,573 4,572
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Salaries 276 227
Bonuses  155
276 382 24.  Income tax expense
Income tax comprised the following:
Differences in treatment of certain elements of financial statements by IFRS and Ukrainian statutory taxation regu
lations give rise to temporary differences. The tax effect of the movement on these temporary differences is recog
nised at the rate of 25% (2006: 25%).
The numerical reconciliation between tax charge and the product of accounting profit multiplied by the applicable
tax rate(s) is provided in the following table. 
56
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Year ended 31 Year ended 31
December 2008 December 2007
£ ‘000 £ ‘000
Current tax charge – Ukraine 208 426
Current tax charge – nonUkraine 11 6
Deferred tax relating to the origination 
and reversal of temporary differences (57) (17)
Income tax charge for the year 162 415
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Profit before tax – Ukraine (898) 1,058
Profit before tax – nonUkraine 3,337 2,619
2,439 3,677
Tax calculated at domestic tax rates applicable 
to profits in the relevant countries 102 271
Expenses not deductible for tax purposes 60 144
Tax charge 162 415
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Profit before tax: 
Ukraine (898) 1,058
Cyprus 1,01765
Other (BVI, Jersey) 2,320 2,554
Profit before tax, total 2,439 3,677 The weighted average applicable tax rate was 4.2% (2007: 7.4%). The charge is due to the changes in profitability
of the companies comprising the Group in the respective countries. 
Ukraine currently has a system of taxation broadly similar in scope to those of the developed market economies.
There are a number of laws related to various taxes imposed by both central and regional governmental authorities.
Although laws related to these taxes have not been in force for significant periods, the practice of taxation and
implementation of regulations are well established, documented with a sufficient degree of clarity and adhered to
by the taxpayers. Nevertheless, there remain certain risks in relation to the Ukrainian tax system: few court prece
dents with regard to tax related issues exist; different opinions regarding legal interpretation may arise both among
and within government ministries and regulatory agencies; tax compliance practice is subject to review and inves
tigation by a number of authorities with overlapping responsibilities.
Generally, tax declarations remain subject to inspection for an indefinite period. In practice, however, the risk of
retroactive tax assessments and penalty charges decreases significantly after three years. The fact that a year has
57
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Tax calculated at domestic tax rates applicable 
to profits in the relevant countries
Ukraine (25%)  265
Cyprus (10%) 102 6
BVI, Jersey (0%)   102 271
Net income not subject to tax and expenses 
not deductible for tax purposes
Ukraine 150 144
Cyprus (90) BVI, Jersey   60 144
Tax charge
Ukraine 151 409
Cyprus 116
BVI, Jersey   162 415
The weighted average applicable tax rate
Ukraine Nil 25%
Cyprus 10%10%
BVI, Jersey Nil Nil
4.2% 7.4% been reviewed does not preclude the Ukrainian tax service performing a subsequent inspection of that year.
The Group’s management believes that it has adequately provided for tax liabilities in the accompanying financial
statements; however, the risk remains that those relevant authorities could take different positions with regard to
interpretive issues.
During the period under review, the Ukrainian companies within the Group paid royalties and interest charge on the
outstanding credits and bonds to another Group company – Linkstar Limited (Cyprus). These payments were not
taxable in Ukraine due to the existing Double Taxation Treaty between Ukraine and Cyprus.
25. Sharebased payments
The Company operates an equitysettled share based remuneration scheme for employees. During the period under
review the Company did not grant share options to the Directors. All options granted to the Directors in the prior
periods and outstanding as at 31 December 2008 vested on 11 February 2006 and expired on February 11, 2009. 
The fair value of the options granted in 2005 was GBP 95,336. No income statement charge was recognised in
respect of share based payments in 2008 and 2007 due to that fact that all options vested in 2006.
The fair value of options granted in 2005 has been calculated based on the following data.
58
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
2008 2008 2007 2007
Weighted Number Weighted Number
average exercise average exercise
price (£) price (£)
Outstanding at beginning of the year 0.570 612,028 0.570 912,028
Granted during the year     Forfeited during the year 0.570 481,738   Exercised during the year   0.570 300,000
Lapsed during the year     Outstanding at the end of the year 0.570 130,290 0.570 612,028
Exercisable at the end of the year 0.570 130,290 0.570 612,028
Item 2005
Option pricing model used Adjusted BlackScholes
Weighted average share price at the grant date 0.545
Exercise price 0.535
Weightedaverage contractual life, years 3.947
Expected volatility 25%
Expected dividend yield 5%
Expected dividend growth rate 0%
Weightedaverage riskfree interest rate 4.44% To account for dividend yield in the BlackScholes model, the modified current stock prices were calculated at
option grant dates by subtracting present value of future dividend payments from the actual stock price at those
dates. Dividends were assumed to be paid in two halfyearly instalments. Expected volatility was approximated by
an average historical volatility of the peer group companies. The latter was calculated from daily standard devia
tions of the peer group stock returns during last 4 years.
26. Earnings per share
Basic earnings per share has been calculated by dividing net profit attributable to the ordinary shareholders by the
weighted average number of shares in issue.
As at 31 December 2008, there were no warrants in issue (2007: 1,172,896).
27. Warrants 
The Company granted warrants to the broker WH Ireland at the admission to the Alternative Investment Market of
the London Stock Exchange on 11 February 2005. They were exercised on 11 February 2008. During the period
under review the Company did not grant warrants to any parties. 
59
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
31 December 2008 31 December 2007
Net profit attributable to ordinary shareholders, £'000 2,320 3,256
Weighted number of ordinary shares in issue 42,817,849 41,644,953
Basic earnings per share, pence 5.4 7.8
Weighted number of WH Ireland warrants in the money  1,172,896
Weighted number of Directors’ option shares in the money  612,028
Diluted average number of shares 42,817,849 43,429,877
Diluted earnings per share, pence 5.4 7.5
2008 2007
Weighted 2008 Weighted 2007
average Number average Number
exercise exercise
price (£) price (£)
Outstanding at beginning of the year 0.535 1,172,896 0.535 1,302,896
Granted during the year     Forfeited during the year     Exercised during the year 0.535 1,172,896 0.535 130,000
Lapsed during the year     Outstanding at the end of the year 0.535  0.535 1,172,896 The average share price at the date of exercise of the warrants in 2008 was 74 pence (2007: 90 pence).
At 31 December 2008,  no warrants were exercisable (2007: 1,172,896). 
28. Dividends
As at 27 April 2009, the Board of Directors proposed the final dividend payment of 0.40 pence per ordinary share
for the year ended 31 December 2008 which would lead to 0.80 pence per ordinary share for the full year. If
approved at the AGM, the final dividend will be paid on 27 July 2009 to the shareholders on the register as at 26
June 2009. No tax consequences for the Group will arise out of this transaction as the Group’s parent company is
an entity registered under the Jersey laws. 
The directors are proposing a final dividend of 0.40 pence (2007 – 0.82 pence) per share totalling GBP 172,000
(2007: GBP 351,000). This dividend has not been accrued at the balance sheet date.
29. Minority interest
As at 31 December 2008 a minority interest of 2.4% (2007: 2.4%) was held in Molochnik OJSC, and 7.3% was held
in Letichevsky Maslozavod OJSC (2007:  7.3%).
60
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Year ended 31 Year ended 31
December 2008 December 2007
£ ‘000 £ ‘000
Final dividend for 2007 of 0.82 pence (2006 – 0.51 pence) 
per ordinary share proposed and paid during the year relating 
to the previous year’s results 351 210
Interim dividend of 0.40 pence (2007 – 0.60 pence) 
per ordinary share paid during the year 172 249
Total 523 459
Year ended 31 Year ended 31
December 2008 December 2007
Balance at 1 January 131 199
Net profit for the period (43) 6
Decrease of minority interest  (70)
Exchange differences on translation to the presentation currency (6) (4)
Balance at 31 December 82 131 30.  Related party transactions
Parties are considered to be related if one party has the ability to control the other party or exercise significant influ
ence over the other party in making financial or operational decisions as defined by IAS 24 “Related Party
Disclosures". In considering each possible related party relationship, attention is directed to the substance of the
relationship, not merely the legal form. 
Transactions and balances between the Group companies and other related parties are set out below. Remuneration
of key management personnel is disclosed in note 23.  
Sales of goods and services to related parties and purchases from related parties are summarised below. All sales
and purchases were with related parties under common control of the ultimate beneficiaries of the Company.
Balances due from/(to) related parties at each period end are shown below.
Trade and other payable include payables to the shareholders of the Company. 
In 2008, the Group’s commercial relationships with the related parties comprised sales, purchases, provision and
repayment of loans. The terms and conditions for the contracts with the related parties were similar to the terms
and conditions applied in dealings with unrelated parties. There were no guarantees given to or provided by from
the Group to related parties and vice versa. 
The ultimate controlling owners and beneficiaries of the related parties were Messrs Alexander Slipchuk and Sergey
Evlanchik. 
61
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
Year ended 31 Year ended 31
December 2008 December 2007
Sales 71 374
Purchases 69 370
Interest received  20
Loans  405
Repayment of loans  405
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Receivables and prepayments 131 190
Trade and other payable (59) (31) 31.  Currency analysis
Currency analysis for the period ended 31 December 2008 is set out below:
62
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
£ ‘000 UAH USD RUR GBP ЕUR Total
NonCurrent Assets
Property, Plant and equipment 10,495 32    10,527
Intangible assets 18 403  734  1,155
Available for sale investments 535 22    557
Deferred tax assets 117     117
Current assets
Inventories 3,511     3,511
Trade and other receivables 4,613 766 264   5,643
Current taxes 267     267
Other financial assets 35     35
Cash and cash equivalents 130 258  303  691
Total assets 19,721 1,481 264 1,037  22,503
NonCurrent Liabilities
Deferred tax liabilities 697     697
Promissory notes 285     285
Current Liabilities
Bank loans and overdrafts 3,400     3,400
Trade and other payable 1,909  12 90  2,011
Taxes payable 79     79
Current income tax liabilities 30     30
Total Liabilities 6,400  12 90  6,502 Currency analysis for the period ended 31 December 2007 is set out below:
32. Notes supporting the consolidated cash flow statement 
Cash and cash equivalents for purposes of the cash flow statement comprise:
In the period under consideration, there were no major noncash transactions (2007 – nil). 
63
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
£ ‘000 UAH USD RUR GBP ЕUR Total
NonCurrent Assets
Property, Plant and equipment 11,880 23    11,903
Intangible assets 10 309  774  1,093
Available for sale investments 83 25    108
Deferred tax assets 51     51
Current assets
Inventories 4,008     4,008
Trade and other receivables 4,951 170  7 11 5,139
Current taxes 247     247
Other financial assets 29     29
Cash and cash equivalents 244 197  645 1 1,087
Total assets 21,503 724  1,426 12 23,665
NonCurrent Liabilities
Deferred tax liabilities 752     752
Current Liabilities
Bank loans and overdrafts 3,407     3,407
Trade and other payable 1,807 937 13 454  3,211
Taxes payable 28 28
Current income tax liabilities 811     811
Total Liabilities 70     70
Total Liabilities 6,875 937 13 454  8,279
As at 31 December 2008 As at 31 December 2007
£ ‘000 £ ‘000
Cash available on demand 691 1,087
691 1,087 33.  Post balance sheet events 
There are no significant post balance sheet events.
64
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
CORPORATE ADVISERS
Company secretary
Bedell Secretaries Limited
PO Box 75
26 New Street
St Helier
Jersey JE2 3RA
Nominated adviser and broker
W H Ireland Limited
11 St James’s Square
Manchester M2 6WH
Registered accountants and auditors
BDO Stoy Hayward LLP
55 Baker Street
London W1U 7EU
UK legal advisers 
Cobbetts 
70 Gray’s Inn Road 
London WC1X 8BT
Jersey legal advisers
Bedell Cristin 
PO Box 75
26 New Street
St Helier
Jersey JE4 8PP
Principal bankers
Deutsche Bank International Limited
PO Box 727
St. Paul’s Gate
New Street
St Helier
Jersey JE4 8ZB
Registrars
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU 65
UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008
SHAREHOLDER INFORMATION
Registered office
26 New Street 
St Helier
Jersey JE4 8PP
Registered number 88352 in Jersey
Financial Calendar 
31 December 2008 Financial year end
29 April 2009 Preliminary Announcement of full year 2008 results
26 June 2009 Annual General Meeting
27 July 2009 Final Dividend Payment
End of September 2009 Announcement of first half of 2009 results
31 December 2009 Financial year end
Analysis of shareholding – at 31 December 2008
The ultimate controlling parties of Ukrproduct Group Ltd are Messrs Sergey Evlanchik and Alexander Slipchuk who
collectively controlled, as of 31 December 2008, 67.5% of the common shares of the company.
Share price (pence)  year to 31 December 2008
Size of shareholdings Number of holders % of total Total holdings, ‘000 % of total
Up to 5000 shares 43 42,2% 73 898,00 0,17%
5001 to 50000 shares 33 32,4% 559 910,00 1,31%
50001 to 200000 shares 11 10,8% 1 279 979,00 2,99%
Over 200000 shares 15 14,7% 40 904 062,00 95,53%
Total 102 100% 42 817 849,00 100,00%
At end of year: 17 p Lowest: 16.5 p Highest: 80.5 p Administrative enquiries
All enquiries relating to individual shareholder matters should be made to the registrar at: Capita Registrars
Shareholders Services Department, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU. The registrar
will assist with enquiries regarding any change of circumstances (e.g. name, address, bank account details,
bereavement, lost certificates, dividend payment and transfer of shares). All correspondence should be clearly
marked “Ukrproduct Group Ltd” and quote the full name and address of the registered holder of the shares.
Shareholder information, together with a range of online services for Ukrproduct Group Ltd shareholders is also
available at the registrar’s website www.capitaregistrars.com.
Investor Relations
Shared Value Ltd
20 Garrick Street
London WC2E 9BT, UK
Tel: +44 20 7321 5010
Email: ukrproduct@sharedvalue.net
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UKRPRODUCT GROUP LTD
ANNUAL REPORT 2008