LSRG.L Regulatory News (LSRG)

3 Apr 2008 07:01

Open Joint-Stock Company LSR Group03 April 2008 NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN For immediate release LSR Group enters into a design and construction contract for the new cement project St. Petersburg, 3 April 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), today announces that aspart of an investment project for construction of a cement plant in Slantsy inthe Leningrad region, OOO Cement (a subsidiary of LSR Group) has entered into aconstruction contract with OOO Cement Northwest, 100 percent owned by HefeiCement Research and Design Institute, China. The contract is worth approx. Euros163 million and is funded from LSR's IPO proceeds and borrowings. The agreementwas approved by the Board of LSR Group in March 2008. Under the contract, OOO Cement Northwest will act as the general contractor ofthe whole range of design and construction work planned to be completed in June2010. OOO Cement Northwest was established by the state-owned Chinese company, HefeiCement Research and Design Institute, specifically to construct the cement plantfor LSR Group in the Russian Federation. The company was awarded the contract byLSR Group following bids from many leading players in industrial design andconstruction because it offered the best combination of cost, quality and time.It should also be noted that Hefei Cement Research and Design Institute hasextensive experience in the construction of cement plants in particular and inthe last three years has built and designed more than ten such plants across theworld. Phase 1 of the project with a capacity of 1.85 million tons of cement is plannedto be operational in 2010. The Group will invest approx. US$600 million in theproject by 2010. Subsequently, the plant capacity will be increased up to 3.7million tons through the construction of a second production line. Currently, inaddition to the design and construction work contract, another contract is beingimplemented providing for the supply of equipment worth 126 million by FLSmidth& Co A/S of Denmark. Commenting on the announcement, Igor Levit, CEO and member of the Board ofDirectors of LSR Group, said: "We are pleased to say that LSR Group is on schedule with implementing thisstrategic project in Northwest Russia in line with the business plan. The Groupitself is one of the major cement consumers in Russia and needs up to 1 milliontons per year. Once operational, the new plant will enable LSR Group not only tosatisfy its own demand for cement, but also take a leading position in thecement market of the Northwest Federal District of Russia, which experiencesserious shortages of this building material." According to the Resheniye consulting and research company, the shortage ofcement in the RF Northwest Federal District in 2006 was 1.05 million tons whilethe market size was 4.70 million tons. In 2008, the market size is expected toreach 5.65 million tons, and the cement shortfall will grow up to at least 1.34million tons, according to Resheniye's forecasts. NOTES TO EDITORS: OJSC LSR Group is a diversified construction company founded in 1993 andoperating in a number of complementary market segments. Its core business areasare building materials, construction and real estate development. The Groupincludes enterprises for extraction and processing of aggregates, productionand transportation of building materials, and housing construction - from massmarket large-panel housing to elite property built after designs made by leadingdomestic and foreign architects. LSR Group has operations and offices in a number of cities in the LeningradOblast, 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 RUB 13,085.5 million and RUB 21,110.8million respectively. For the six months of 2007 the Group's revenues amountedto RUB 16,062.0 million compared to RUB 9,336.4 million for the same period lastyear. In July 2007, Moody's Investors Service assigned a B1 rating to LSR Group;outlook - stable. In November 2007, OJSC LSR Group implemented an IPO. InDecember 2007, LSR Group was bestowed a National Award in the field of businessas 'The Company of the Year' in the 'Construction' category. OOO Cement was established by LSR Group in 2006 to implement a cement project inthe Slantsy district, Leningrad region. The new plant will meet the demand ofthe cement market in St. Petersburg and the Leningrad region. The plant will use raw materials supplied from lime and clay quarries and wasteresulting from oil shale extraction and processing. For more details please contact: Press Service, LSR GroupTel.: +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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