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LSR Group Completes Acquisition of Four Companies in Yekaterinburg

20 August 2008

LSR Group, one of the leading real estate developers and building materials producers in Russia (LSE: LSRG, MICEX, RTS: LSRG), announces that it has completed the acquisition of four companies in Yekaterinburg: ZAO NOVA-Stroy, the major real estate developer in the local market; OOO SMU NOVA-Stroy, the largest construction contractor; OOO PKU NOVA-StroyProekt design office; and OOO Uralscheben, a leading crushed stone producer.

LSR Group holds a 100% stake in the authorized capital of each of the aforesaid companies*.
The transactions were approved by the Board of LSR Group on 26 June 2008 and 15 July 2008.
LSR Group has created LSR Urals Management Company (OOO UK LSR Urals) in Yekaterinburg to manage the newly acquired assets.

LSR Group entered the construction market in Yekaterinburg at the end of last year and has acted quickly to implement its strategy, currently owning land plots of over 60 hectares where the Group is planning to develop new economy class residential neighbourhoods. The company also owns approx. 87% of the shares of OJSC Betfor Reinforced Concrete Factory, Yekaterinburg’s largest prefabricated construction company and producer of reinforced concrete, ready-mix concrete and aerated concrete.

*LSR Group has 100 percent control of OOO SMU NOVA-Stroy via ZAO NOVA-Stroy (100% of the authorized capital of OOO SMU NOVA-Stroy is held by ZAO NOVA-Stroy).

Notes to Editors:

ZAO Nova-Stroy is one of the leading developers in the Yekaterinburg property market occupying 3rd place among Yekaterinburg developers by its delivery volume with a market share of 4.3%, according to the report of the city’s Construction Committee for 2007. The company’s core businesses are district development and the construction of new neighbourhoods including housing construction combined with office and retail space, parking lots and social infrastructure in the economy and business class segments. Since its foundation in 2002, the company has constructed and delivered 20 residential properties with a total net sellable area in excess of 145,000 sq.m, 30 commercial built-in and attached premises and buildings with a total NSA of approx. 7,000 sq.m, and also a parking lot for 147 vehicles.
Today ZAO Nova-Stroy has the rights to properties under development and plots of land to construct housing with a total sellable area of over 530,000 sq.m. The market value of the above properties as of 1 February 2008 is US$ 198 million, according to the DTZ independent appraiser.
The Nova-Stroy brand is well-known in Yekaterinburg: according to independent research conducted by Socium Foundation Co. in March 2008, the aided awareness of ZAO Nova-Stroy is over 67% so by this indicator the company ranks 2nd among the Yekaterinburg developers. The company employs around 200 highly professional specialists.
OOO SMU NOVA-Stroy is Yekaterinburg’s largest construction contractor employing over 500 employees and holding a license to construct buildings and facilities. In 2007 alone, the company completed more than 40,000 sq.m of residential and office space.

OOO PKU NOVA-StroyProekt specialises in designing buildings from standalone houses to neighbourhood developments, designing panel and framework buildings, parking lots, garages and motor roads. The track record of the company includes around 400 completed projects.    

OOO Uralscheben is one of the key players in the crushed stone market of Yekaterinburg: according to the estimates by the specialists of OOO Uralscheben, the market share of the company in Yekaterinburg in 2007 was 5%.  OOO Uralscheben holds 100% shares in both OOO Rezhevsky DSZ and OOO Gagarinsky Granitny Kariyer, both companies having all necessary licenses to use the subsoil from the two quarries with a total volume of proven reserves around 160 million cub.m.
OJSC LSR Group is a diversified construction company founded in 1993 and operating in a number of complementary market segments. Its core business areas are building materials, construction and real estate development. The Group includes enterprises for extraction and processing of aggregates, production and transportation of building materials, and housing construction — from mass market large-panel housing to elite property built after designs made by leading domestic and foreign architects.
LSR Group has operations and offices in a number of cities in the Leningrad Oblast, in St. Petersburg, Moscow, Yekaterinburg, Lithuania, Latvia, Estonia, Ukraine and Germany. LSR Group employs over 15,000 people.
In 2005 and 2006, the revenues of LSR Group (according to IFRS statements) were US$ 463 million and US$ 777 million respectively. In 2007, the revenues amounted to US$ 1,403 million.
LSR Group has a B1 rating  from Moody’s Investors Service (outlook – Stable) assigned in July 2007 and confirmed on 30 May 2008 and a B+ rating by Fitch Ratings (outlook – Stable) assigned on 30 May 2008. The Group’s shares are listed on MICEX and RTS and on the London Stock Exchange in the form of GDRs since its IPO in November 2007. 
In 2007, LSR Group was awarded ‘The Company of the Year’ National Award in the ‘Construction’ category.

Yekaterinburg is the main city of the RF Urals Federal District. It is a major administrative, industrial, transport, trade, research and cultural centre. Yekaterinburg is the centre of the Sverdlovsk Oblast. The population of Yekaterinburg is around 1.3 million people. By its volume of construction the region ranks fourth after Moscow (including the Moscow region), St. Petersburg and Kazan. The construction market in Yekaterinburg has been rapidly growing over recent years: e.g. a total of 900,000 sq.m of housing were completed in 2007, nearly 170,000 sq.m (23% growth rate) more than in 2006 (732,700 sq.m). In 2006, the growth of housing construction compared to the 2005 volume (approx. 640,000 sq.m) was 14%. According to the reports of DTZ, as at end of 2007 the cost per sq.m of economy and business class residential property in the primary market was US$ 2,150 — US$ 2,500 while the average monthly wages were 16,000 roubles (by this indicator Yekaterinburg holds third place in Russia). In 2007, Standard & Poors assigned a BB rating to Yekaterinburg, with a stable outlook.

For more details please contact:

Press Service, LSR Group
+7 (812) 314-1044

«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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