LSRG.L Regulatory News (LSRG)

6 Feb 2008 07:00

Open Joint-Stock Company LSR Group06 February 2008 THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS RESTRICTED AND NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR into AUSTRALIA, CANADA, JAPAN OR THE UNITED STATES For immediate release LSR GROUP ANNOUNCES ITS OPERATIONAL RESULTS FOR 2007; STRONG GROWTH OF SALES VOLUMES St. Petersburg, 6 February 2008 - LSR Group ("LSR" or the "Group") one of theleading real estate developers and building materials producers in St Petersburgand the Leningrad region (LSE: LSRG, MICEX, RTS: LSRG), announced today itsoperational results for 2007. All of the Group's business divisions (Real Estate Development and Construction,Commercial Property, Production of Building Materials and Aggregates andProvision of Construction Services) have shown a strong performance attributableto a number of factors: • Favourable macroeconomic situation • increase in construction volumes and growth in demand • successful implementation of programmes aimed at upgrading existing production facilities and commissioning new ones • efficient marketing efforts Commenting on the results Igor Levit, the CEO of LSR Group said: "All ourproduct business units recorded strong growth of sales volumes in 2007. Positiveprice dynamics throughout the year will be the second growth driver of salesrevenues to be reflected in our 2007 financial results." Elite Residential Real Estate Development In 2007, LSR completed two developments in St. Petersburg at 56-58Kamennoostrovsky Prospekt, Phase 1 of the Dom u Morya (Seaside House)development and Phase 2 of the Konung development in Vyborg, Leningrad Region. A total of 41,500 sq. m of net sellable area and 494 parking spaces weretransferred to customers, an increase of 24% and 78% respectively compared to2006. (In accordance with the accounting policy of LSR Group, revenues and costs arerecognised in the income statement after the transfer of the property to thecustomer.) Mass Market Housing Real Estate Development In the mass market housing segment, LSR Group completed in St. Petersburg suchprojects as Pulkovsky Posad (Phase 2), Dom na Chudnovskogo and Dolgoozyorny(Phase 1). A total of 132,000 sq.m of net sellable area were transferred to customers, asignificant increase on last year of 124%. Gated Communities Development The development of gated communities in the suburbs of St. Petersburg in 2007resulted in approximately 3,000 sq.m of net sellable area transferred by LSR toits customers. Year on year comparable data is not available on this segment asLSR Group started to develop gated communities in 2004 and the first transfer ofproperties to customers took place in 2007. Business Class Real Estate Development in Moscow In Moscow, LSR Group completed its business class project the Dom naDavydkovskoy, the first property developed by LSR in Moscow. A total of 15,000 sq.m of net sellable area and 108 parking spaces weretransferred to the customers. Prefab Panel Construction In 2007, two house building operations forming part of LSR Group transferredapproximately 310,000 sq. m to their customers. Commercial Property In 2007, in the Commercial Property segment LSR Group completed 5,000 sq.m ofnet sellable office space and 21 parking spaces at the Apollo business centre(Class A) in St. Petersburg. The new business centre won a federal commercialproperty award in the 'Class A Business Centre - St. Petersburg' category of theCommercial Real Estate Federal Awards. In 2007, LSR Group granted a lease of 10,000 sq.m of office space: Apollo (5,000sq.m), Litera at Galernaya Street (2,100 sq. m of net rentable area) andHelios at Marata Street (2,600 sq. m of net rentable area and 16 parkingspaces). The occupancy rate of the business centres as at the end of 2007 was 99%. Production of Construction Materials and Aggregates, Provision of ConstructionServices The company has also shown stable growth in the production and sales volumes ofconstruction materials and aggregates. Last year LSR Group sold 578,000 cub.m of reinforced concrete products, 14%increase on 2006. For ready-mix concrete the quantity sold was 1.6 million cub.m(up by 31%), for bricks - 289 million pieces (up by 6%), for aerated concrete -555,000 cub.m (up by 6%). For aggregates the volumes sold in 2007 were as follows: sand - 13,451 thousandcub.m (up by 15% on 2006), crushed granite - 4,275 thousand cub.m (up by 19%).Overall, all the Group's production facilities in this segment were working atnearly 100% capacity. The capacity of LSR Group's construction services has also increased. In 2007,the company leased 45 new tower cranes, 40 of them imported from abroad (16Potain cranes and 24 Liebherr cranes). In addition, 12 Stros hoists and one100-ton Grove crane truck were purchased. All lifting equipment was immediatelyinstalled on construction sites: 24 units in St. Petersburg, and 21 units inMoscow. In 2007 LSR Group has expanded geographically and significantly increased theproduction capacity of its plants. The Group started construction of a newaerated concrete plant in Ukraine with an expected annual capacity of 400,000cub.m of aerated concrete. In 2007, work started to increase the capacity of theGroup's existing aerated concrete plant in Latvia from 82,000 (2006) to 102,000cub.m. (2007) to be subsequently brought to 205,000 cub.m. in 2008. The ready-mix concrete production and distribution business demonstrated fastgrowth during the year with two new concrete plants commissioned n Moscow andone plant commissioned in St. Petersburg to replace one of the existing plants. In aggregates production in 2007, the company started extracting quarry sandfrom two quarries, Kirsino and Pugarevo-3, as well as from theStirsudden-Kyurenniemi seabed sand deposit. In addition, the upgrading ofalluvial sand extraction equipment began. In the crushed granite segment newplants also became operational: in August 2007, the company put into service anew Telsmith mobile crushing and screening plant with the rated capacity of600,000 cub.m per year. In 2007, LSR Group continued implementation of two investment projects in theLeningrad Region for cement and brick production. A tender was launched andcontracts were signed with FLSmidth&Co. A/S (Denmark) for a total amount ofEUR126 million for supply of cement plant equipment. Another tender wasconducted to select equipment suppliers for the brick project. The winningbidder was CERIC international industrial group, with a contract amount ofEUR70.7 million. Expansion of LSR's Real Estate Development Portfolio At the end of December 2007, LSR Group acquired 100% of the share capital of "Investproekt" LLC - an entity which owns two land plots in Yekaterinburg with atotal area of 50 hectares. The transaction totaled Euro 50 million and wasfinanced with borrowings as well as proceeds from the recent IPO of the Group. Also in 2007, LSR Group acquired ownership of a total of 611 hectares of land.The plots are located in the Krasnogvardeysky District of St. Petersburg, nearPiskaryovsky Prospekt, where LSR Group is implementing its project known asTsvetnoy Gorod/Ruch'i. The area development concept provides for theconstruction of mass market housing, social and business centres, publicamenities centres and parking lots, which will result in creating an entirelynew housing quarter in St. Petersburg. As part of the St. Petersburg regionalauthority's Metro Development Programme plans are in place for an undergroundstation to be opened in Ruchi'i near the land plots owned by LSR. Following the auction conducted by the St. Petersburg Property Fund for theright to integrated planning and management of an area in the KrasnoselskyDistrict of St. Petersburg (lots 3 and 4 north-west of the junction of Doblestystreet and Marshala Zakharova Street), LSR has signed a lease agreement for theintegrated planning and management of a plot of land totalling 23.9 hectares. In 2007, LSR Group obtained the ownership of a 0.83 hectares plot of land at34-A Deputatskaya Street in St Petersburg. The area to develop is located onKrestovsky Island that today accommodates a large number of newly-built qualityproperties of business and elite categories as the area is one of the mostenvironment-friendly in the city. The plot is located along the banks of theSrednyaya Nevka and overlooks a park on Yelaginsky Island. The Group also entered into an investment contract to develop property on a 0.39hectares plot of land at 5 Kovensky Per. in St. Petersburg. The development areais located in St. Petersburg's Central Administrative District, in a quietneighbourhood just a few minutes' walk from the city's main street, NevskyProspekt. Notes to Editors Founded in 1993, LSR is one of the leading real estate development, constructionand 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 realestate projects in St Petersburg and a significant developer of mass-market realestate there. The Group also has a market leading position in the production ofbuilding materials and aggregates in St Petersburg and the surrounding Leningradregion. The Group is one of the largest producers of ceramic bricks in Russia and one ofthe largest producers of aerated concrete in Russia. In 2006 it was, andremains, the market leader in St. Petersburg and the Leningrad region in each ofsand, crushed granite, bricks, reinforced concrete, ready-mix concrete andaerated concrete segments. LSR manages and operates its businesses through two divisions: • Real Estate Development, Commercial Real Estate and Construction, whichrepresented approximately 35 per cent of consolidated revenues in 2006; and • Building Materials, Aggregates and Construction Services, whichrepresented approximately 64 per cent of consolidated revenues in 2006. LSR Group employs nearly 15,000 people. In 2004, 2005 and 2006 the revenues ofLSR Group were RUB 7,530.9 mln, RUB 13,085.5 mln, and RUB 21,110.8 mlnrespectively. For the six months of 2007 the Group's revenues amounted to RUB16,062.0 mln compared to RUB 9,336.4 mln for the same period last year. In July2007, 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 theCompany of the Year in 'Construction' category. For more details please contact: Press Service, LSR Group+7 (812) 314-1044press@lsrgroup.ruwww.lsrgroup.ru Legal disclaimer: NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES,AUSTRALIA, CANADA OR JAPAN ... Some of the information in these materials may contain projections or otherforward-looking statements regarding future events or the future financialperformance of the Company. You can identify forward looking statements by termssuch as "expect", "believe", "anticipate", "estimate", "intend", "will","could," "may" or "might" the negative of such terms or other similarexpressions. The Company wishes to caution you that these statements are onlypredictions and that actual events or results may differ materially. TheCompany does not intend to update these statements to reflect events andcircumstances occurring after the date hereof or to reflect the occurrence ofunanticipated events. Many factors could cause the actual results to differmaterially from those contained in projections or forward-looking statements ofthe Company, including, among others, general economic conditions, thecompetitive environment, risks associated with operating in Russia, rapidtechnological and market change in the industries the Company operates in, aswell as many other risks specifically related to the Company and its operations. Neither these materials nor any copy of it may be taken or transmitted into theUnited States, Australia, Canada or Japan. These materials do not constitute orform part of any offer or invitation to sell, or any solicitation of any offerto purchase nor shall it (or any part of it) or the fact of its distribution,form the basis of, or be relied on in connection with, any contract therefor.The offer and the distribution of these materials and other information inconnection with the listing and offer in certain jurisdictions may be restrictedby law and persons into whose possession any document or other informationreferred to herein comes should inform themselves about and observe any suchrestriction. Any failure to comply with these restrictions may constitute aviolation of the securities laws of any such jurisdiction. These materials are not an offer for sale of any securities in the UnitedStates. Securities may not be offered or sold in the United States absentregistration or an exemption from registration under the U.S. Securities Act of1933. 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