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LSR Group Enters the Ekaterinburg Market

17 December 2007

LSR Group (“LSR” or the “Group”), one of the leading real estate developers and building materials producers in St Petersburg and the Leningrad region (LSE: LSRG, MICEX, RTS: LSRG), announced today that as part of Group’s strategy of geographical diversification, it acquired 100% of the share capital of “Investproekt” LLC - an entity which owns two land plots in Ekaterinburg with a total area of 50 Ha. The transaction totaled Euro 50 million and was financed with borrowings as well as proceeds from the recent IPO of the Group.

Commenting on the acquisition, Mr. Levit, CEO and member of the Board of Directors of LSR Group, said:

‘Ekaterinburg is the third most important strategic market for us after St.Petersburg (and the St.Petersburg region) and Moscow (and the Moscow region). The acquisition of the two plots in Ekaterinburg was completed in a short period of time and represents the first step in building an integrated development and building materials presence of the LSR Group in the Urals region’

Ekaterinburg has a population of 1.3 million and is the forth largest market in terms of annual construction volume after Moscow (and the Moscow region), St.Petersburg and Kazan. During the last few years, the Ekaterinburg construction market has been growing at a fast pace – the total area of new construction in 2006 was 732,700 sq.m., up 90,000 sq.m. from 2005 and 1.5 times from 2004. According to the Ekaterinburg Administration, about 770,000 sq.m. of new construction will be commissioned in 2007.

The plots acquired by LSR Group are situated in a residential area of the city and, according to market participants, about 600,000 sq.m. of residential real estate can be built on them. Today the price of one square meter of mass market and business class residential real estate on the primary market of Ekaterinburg is approximately USD 1,800 – 2,500.

The acquisition was approved at a meeting of LSR Group’s Board of Directors. It will be consolidated in the financial results of LSR Group in December 2007 and will be reflected accordingly in the 2007 annual accounts of the Group as well as the Group’s land bank valuation to be performed by an independent valuation company as at 31 December 2007.

Notes to Editors

Founded in 1993, LSR Group is one of the leading real estate development, construction and building materials companies in St. Petersburg and the Leningrad region, combining two complementary market leading businesses.

The Group is one of the leaders in the development of elite residential real estate projects in St Petersburg and a significant developer of mass-market real estate there. The Group also has a market leading position in the production of building materials and aggregates in St Petersburg and the surrounding Leningrad region.

The Group is one of the largest producers of ceramic bricks in Russia and one of the largest producers of aerated concrete in Russia. In 2006 it was, and remains, the market leader in St. Petersburg and the Leningrad region in each of sand, crushed granite, bricks, reinforced concrete, ready-mix concrete and aerated concrete segments.

LSR manages and operates its businesses through two divisions:

• Real Estate Development, Commercial Real Estate and Construction, which represented approximately 35 per cent of consolidated revenues in 2006; and

• Building Materials, Aggregates and Construction Services, which represented approximately 64 per cent of consolidated revenues in 2006.

LSR Group employs nearly 15,000 people. In 2004, 2005 and 2006 the revenues of LSR Group were RUB 7,530.9 mln, RUB 13,085.5 mln, and RUB 21,110.8 mln respectively. For the six months of 2007 the Group’s revenues amounted to RUB 16,062.0 mln compared to RUB 9,336.4 mln for the same period last year. In July 2007, Moody’s Investors Service assigned a B1 rating to LSR Group; outlook — stable.

In December, 2007 LSR Group has been awarded a National Business Award as the Company of the Year in ‘Construction’ category.

For more details please contact:

Press Service, LSR Group
+7 (812) 314-1044
press@lsrgroup.ru
www.lsrgroup.ru

«LSR Group» discloses information on the page on the Internet of LLC Interfax-TsRKI — the news agency accredited by the Central Bank of the Russian Federation to disclosure of information.
Information is available here.



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