MAY

1. OJSC “Creativ Group” – 2007 results and near-term development plans
   OJSC “Creativ Group” would like to provide an update on the activities and development plans of the Group.
   
   Key developments in 2007 and 2008 year to date
   Year 2007 has seen a number of important milestones achieved by the Group that laid a strong foundation for its further development and expansion of its business. In June 2007 we have launched our second modified fats and margarines plant with annual production capacity of 72,000 tons, thus having doubled our total Group production capacity of these products. Already in 2007 we achieved 65% capacity utilization rate and are expecting to increase it up to 85% in 2008. This new production has contributed significantly to our vegetable oil & fat and overall revenues in 2007 and is yet expected to contribute more during the full year in operation in 2008. In October 2007 the Group completed a private placement of 24% of secondary shares that were sold by the existing shareholders. The issue was placed among 15 international investors.
   On the back of increased production at existing facilities as well as launch of a new one, Creativ Group’s total net sales in 2007 increased 70% to US$112.1m from US$66.0m in 2006; EBITDA grew 37% to US$ 13.4m in 2007 from US$9.8m in 2006 and net income reached US$1.3m, up from US$0.4m in 2006. Thus, the Group is glad to report that production and financial targets set for 2007 were fully achieved.
   
   Development plans for 2008 and growth targets
   Expansion of vegetable oil extraction capacities
   The Group is continuing the construction of a new vegetable oil extraction plant (OEP) in Kirovograd with a planned installed capacity of 245,000 tons per annum, which will bring the total annual oil extraction capacity of the Group up to 345,000 tons. The new OEP is planned to be launched into production in November-December 2008. The plant will be equipped with the highly efficient modern equipment produced by Allocco (Argentina), Troika (India), Scafco (USA), the acquisition of which has already been financed and installation is expected to take place in August 2008. The Group has invested c. US$17m into construction and equipment purchases and further US$18.5 million is to be invested to complete financing of construction and installation works. The new OEP will provide the capacity to process sunflower seeds, rapeseeds and soybeans, and switching among the inputs will require minimum time and costs.
   Given that the new OEP will produce commodities which enjoy nearly constantly high demand the utilization rate of production capacities will largely depend on the available supply of raw materials (seeds) in the market. Capacity utilization could be up to 90-100% already in the first months of operation provided sufficient raw materials supplies. The full economic effect of the new OEP will be reflected in 2009 financial results when the plant will have been in operation for the full business year.
   
   Agricultural business
   With an aim of creating a vertically integrated business operation the Group is planning to develop its agricultural business that would be focused on growing crops of sunflower, rapeseed and soybeans. The key objective in developing this business line is to ensure continuous supplies of raw materials for the Group’s own processing business. The targeted 40-50% self-sufficiency ratio is planned to be achieved by 2010.
   Already in 2008 the Group has acquired land lease rights for c. 10,500 ha of agricultural land. We have further plans to increase the total land under cultivation to 100,000 ha in 2008-2010. As the next step in realization of this strategy, the Group plans to acquire the lease rights for further 20,000 ha in summer 2008. It is planned that the lease rights to be acquired in summer 2008 will extend to the land with crops already sewn, which will contribute to the Group’s EBITDA and net income already in 2008.
   
   New soybean processing plant
   We are currently seeing growing domestic demand for soybean products from Ukrainian businesses, largest groups represented by livestock farmers and food processing companies. Despite the growing volumes of soybean crops in Ukraine, about a half of the production is exported, while another half is processed into basic soybean products, including soy oil and soy fodder. At the same time, domestic demand for high-protein soybean products (soy protein isolate, concentrate, flour, tecsturated soy protein meal and white petal) is satisfied only by imports.
   Jointly with a Russian financial partner, Creativ Group (owns 51% of the JV) is completing construction of its modern soy processing plant in Kirovograd. This facility will be the first of its kind in the whole of the CIS region, with installed annual capacity of 82,000 tons allowing to satisfy a large part of the Ukrainian domestic demand both for basic and high-protein soy products. Construction, equipment purchases and installation have been fully financed and no further significant investment to put the plant into operation is required. The plant will be launched in May-June 2008 and will have the capacity to produce basic soybean products (soy oil and soy fodder) as well as high-margin products (soy protein isolate, flour, meal, tecsturated soy protein meal and white petal). The total capacity utilization rate will depend on production orientation on either basic or value-added products that are characterized by different profitability, on one hand, and stability of demand for such products, on the other.
   The Group targets to reach a 22% market share in the domestic consumption of high protein products with the total domestic demand estimated at 43.8 thousand tones in 2008 and 24% domestic market share of high protein fodder estimated at 450-500 thousand tones in 2008.
   Upon completion of the new investment projects, total net sales in 2008 are expected to reach US$262m and are targeted to grow further to US$480m in 2009 and US$523m 2010. Corresponding EBITDA is targeted to reach US$35m in 2008, US$84m in 2009 and US$109m in 2010. Following registration of the US$28m new equity injection in March 2008, our investment needs for 2008 will be financed with borrowed funds and cash from operations, and the net debt level at the end of 2008 is expected to reach US$189m. Further investment and working capital needs in 2009 and 2010 will be financed from operating cash flows and additional debt and targeted net debt levels for 2009 and 2010 are US$235m and US$201m, respectively.
   The Group is constantly reviewing its investment and development plans and is retaining maximum flexibility needed to react to the potentially changing market conditions. We are also closely monitoring agricultural industry trends and prices in Ukraine and worldwide in order to perform continuous assessment of our business plans and growth targets that may change upon change in operating environment. We are also analyzing other potential investment projects for the coming years and possible funding sources for such projects.
   
   
2. Statement of Europeans about contaminated sunflower oil constrains to think over the state of fat-and-oil industry of Ukraine - «Creativ of Group»
   
   Statements of number of European countries about revealing in Ukrainian sunflower oil of petrochemical products raise the issue of readiness of domestic fat-and-oil industry to provide high standards of quality of EC market. Thereof on 5 of May, Yuri Davydov, chairman of board of OJSC «Creativ Group» said.
   «Safety of food products is a complex, which is based on quality of raw material, availability of modern technological equipment and skilled personnel, observance of technological parameters and quality control system on all stages of production of goods up to dispatch», - Mr. Davydov said.
   According to him, far not all Ukrainian producers of oil today can in full provide comprehensive approach to issues of products safety. Moreover, many enterprises use outdated equipment, consciously go to violation of technological processes, do not have certificates of standards compliance ISO:9001 and other necessary for export to EC countries documents. «Guilt for scandal which bursted out fully lies on such enterprises», - Mr. Davydov said.
   We will remind that on 25 of April, Agency on safety of food products of Spain (AESAN) spreaded information about detection in sunflower oil, raw material for production of which is imported from Ukraine, particles of mineral and fuel oils. For the purpose of safety AESAN ordered to withdraw all sunflower oil from sale, because it was not known, in oil of which brands harmful impurities could get in. Later, according to information of the French administration on issues of competition, consumption and struggle against violations of quality, consignment of low-grade vegetable oil, imported from Ukraine to France was found out. On 29 of April, the radio station "German wave" informed with reference to the expert of European commission, that about 40 thousand tons of sunflower oil from Ukraine, which the other day were withdrawn from the sale by sanitary services of France, Great Britain, Italy, Spain and Netherlands were contaminated intentionally.
   The representative of the European commission Michael Mann informed to journalists, that this organization does not plan to undertake some measures on facts of supplies to EC market contaminated by elements of petrochemical products of Ukrainian sunflower oil. "For today there are no plans of application of some specific legal measures in regard to Ukraine", - he said. According to him, authorities of country-producer must examine reasons of getting into the oil of petrochemical products. M. Mann also confirmed, that conducted analyses testifying that the chemical elements contained in sunflower oil make no risks for the health of people. His words were also confirmed by spokesman of the Federal Administration of health service of Switzerland Sabina Muller. Consignment of contaminated sunflower oil from Ukraine in this country was found out later, than in other states, about what representative of administration informed on 4 of May. It is said in report that found out in oil "foreign products do not carry any harm for health", however "such contaminations simply cannot be accepted". Therefore administration spread recommendation for private entrepreneurs and enterprises to withdraw from sale this oil, and also products, in which its content exceeds 10%.
   Ukrainian authorities already reacted on entering from Europe reports. In particular, the first vice-prime minister of Ukraine Alexander Turchinov declared that such statements are demonstration of unfair competition. "I am convinced, Ukraine produces ecologically clean products", - a vice-prime underlined, sat the same time he accented attention that government intends to conduct examination of supplied to Europe of Ukrainian sunflower oil.
   
   Note. OJSC «Creativ Group» - one of the leaders of the Ukrainian market on production of fats and margarines. Holding company unites assets on production of fat-and-oil goods, elevator complexes for storage of raw material, transport company, agricultural subdivision. In 2007 the volume of sales of group made more than $111 million.