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LSR Group Establishes LSR Urals Management Company in the Urals Region

14 August 2008

Today, on 14 August 2008, a press conference was held at the Interfax-Urals news agency to discuss LSR Group’s plans of development in the Urals region, finalization of acquisition of several companies as well as the establishment of LSR Urals Management Company. LSR Urals will operate as a separate business division and the regional representative office of LSR Group.

The conference was attended by Igor Levit, CEO of LSR Group and Andrey Bibikov, CEO of LSR Urals Management Company.

According to Igor Levit, LSR Group aims at setting up a complete holding company combining, just like in St. Petersburg, such businesses as Real Estate Development and Construction and Production of Building Materials, to enable the group to replicate the unique vertically integrated business model of LSR Group in the Urals region. To achieve this goal, LSR Group has already acquired approx. 87% of shares in OJSC Betfor Reinforced Concrete Factory, Yekaterinburg’s largest prefabricated construction company and producer of reinforced concrete, ready-mix concrete and aerated concrete as well as plots of land with a total area of 60 hectares where the company is planning to implement projects aimed at developing new economy class residential neighbourhoods. In addition, currently LSR Group is finalizing the acquisition of 100% stakes in the authorized capital of the following companies: ZAO NOVA-Stroy, a major real estate development company in Yekaterinburg, OOO PKU NOVA-StroyProekt design office, OOO SMU NOVA-Stroy construction contractor, and OOO Uralscheben, a leading crushed stone producer. The planned investments of LSR Group in boosting the Urals business starting from December 2007 and throughout 2008 are approx. US$ 300 million.

Further plans of LSR Group include building up the assets and strengthening the building materials businesses and providing construction services, and more particularly, through enhancing the range with additional products (similarly to the model used in St. Petersburg) including bricks and the rental of tower cranes. The company is also planning to promote a number of its own brands in the Urals market: Aeroc (aerated concrete production), and 45’ (concrete production). It should be noted that 45’ stands not just for a company brand but for a true know-how in the Russian concrete production market. The philosophy behind this business of LSR Group is “concrete at site” i.e. ensuring concrete delivery to the project site within 45 minutes, the timeframe complying with the GOST (Russian State Standard) and allowing to preserve the quality of concrete. For this purpose, the company has its concrete plants distributed along the city perimeter (this business concept is already implemented in St. Petersburg where LSR Group has 7 plants, and in Moscow — 4 plants). In addition, a unique customer online support system is being introduced to enable the customers to place an order from their workplace, be notified once the truck leaves for their site, and to develop an optimal delivery schedule.

Notes to Editors:

OJSC Betfor Reinforced Concrete Factory is the largest prefabricated construction company in Yekaterinburg manufacturing prefab construction panels (with a capacity of 200,000 sq.m a year). In addition, the company has manufacturing facilities to turn out reinforced concrete products (120,000 cub.m a year), aerated concrete (120,000 cub.m a year), concrete and dry mixes (50,000 cub.m a year). In 2007, Betfor’s market share of the panel construction segment in Yekaterinburg was 78.6%. Betfor has been the No.1 prefab construction company for several years now. The company is also one of the market leaders in building materials production. Thus, according to its own estimates, its share of the Yekaterinburg and Sverdlovsk Oblast market is 30.2% for aerated concrete, 37.4% for reinforced concrete products, and 5.1% for ready-mix concrete and mortar.

ZAO Nova-Stroy is one of the leading developers in the Yekaterinburg property market occupying 3rd place among the 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 area 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. 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 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.

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 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.

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.

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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