28 May 2008 09:05
NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN
| 28 May 2008 | PRESS RELEASE | St. Petersburg |
LSR Group Lays the Foundation Stone for the Construction of its New Cement Plant
Yesterday, on 27 May a gala ceremony took place in Slantsy, Leningrad Region to lay the foundation stone for the construction of the new LSR Group cement plant. The new project will help to provide a full-fledged solution to the shortage of cement in Northwest Russia*.
The event was attended by Governor of the Leningrad Region Valery Serdyukov, the Deputy Plenipotentiary of the RF President to the Northwest Federal District Alexandr Nesterov, Senator for the Leningrad Region in the RF Federation Council of the State Duma Andrey Molchanov, the Managing Director of LSR Group Mikhail Romanov, the President of Hefei Cement Research and Design Institute, China Xu Ning, the Vice President of FLSmidth & Co. A/S, Denmark Kim Pandrup Kristensen, the Consul General of the PRC in St. Petersburg Tian Erlong and the Consul General of Denmark in St. Petersburg Soren Kragholm.
LSR Group is building the cement plant in Slantsy, Leningrad Region. Phase 1 of the project with an annual capacity of 1.85 million tons of cement is to be completed in 2010. By 2010, the company is to invest approx. US$ 600 million. Subsequently, it is proposed to increase the capacity up to 3.7 million tons through launching a second production line. Currently, the project construction site is fully prepared with all of the necessary infrastructure provided and construction design work started while the equipment design work is nearing completion with the first machines to be supplied as early as in the summer of 2008.
According to the Governor of the Leningrad region Valery Serdyukov, the project is important not only for the Leningrad region but for Russia as a whole:
- Cement is necessary to build houses, factories, roads. Where construction projects are underway there is future, development and stability. The prioritized national project provides for doubling the volume of housing construction. Last year 840,000 sq.m of housing were completed in the Leningrad region but we need to build 1.7 million sq.m annually i.e. 1 sq.m per capita in the region each year. To accomplish this task, building materials should be available including cement. LSR's new plant will result in entirely eliminating the cement shortage in Northwest Russia. The Government of the Leningrad region will contribute to the completion of the project on schedule to make sure this state-of-the-art plant goes operational as early as possible.
Mikhail Romanov, Managing Director responsible for new projects of LSR Group, said that "the construction of the cement plant in Slantsy is a project undertaken by three countries represented by their leading companies: LSR Group of Russia, Hefei Cement Research and Design Institute of China, and FLSmidth & Co. A/S of Denmark. The experience of the best builders from Europe and Asia will be used for the benefit of the Northwest region."
Design and construction work is being implemented by a subsidiary of Hefei Cement Research and Design Institute, OOO Cement Northwest established specifically to implement the construction of LSR Group's plant in the Russian Federation. Hefei Cement Research and Design Institute has extensive experience of constructing cement plants and in the last three years alone the company has completed construction and design projects for over ten plants worldwide. The contract amount totals EUR 163 million.
The equipment for the new project is to be designed and supplied by FLSmidth & Co. A/S of Denmark. The contracts signed with the Danish company are worth over EUR 128.9 million. FLSmidth has over 120 years of experience in the manufacture and supply of cement production equipment. FLSmidth machines are currently in operation in the USA, China, Africa and most European countries. However the key advantage is that FLSmidth has experience in the manufacture and supply of equipment capable of using non-traditional raw materials for cement production. Today there are over 100 million tons of used shale accumulated in the landfills of Slantsy after being extracted and processed by the companies Leningradslanets and Slanets in Slantsy. These landfills account for an aggregate of 400 hectares of land taken out of circulation. The new project boasts a unique technology for processing the landfills and using them as an additional source of cement production inputs. Hence, as a result of implementing the cement plant project the environmental situation in the region will substantially improve with more land made available for cultivation.
In addition, the new cement project of LSR Group will provide around 420 jobs for the local population and will be one of the key taxpayers in the region with the volume of tax deduction reaching EUR 31 million per annum by 2015.
*According to the Reshenie consulting and research company, the shortage of cement production in the Northwest Federal District of the Russian Federation in 2006 was 1.05 million tons while the market volume was 4.7 million tons. In 2008, the market volume will reach 5.65 million tons while the shortage will grow up to at least 1.34 million tons, Reshenie forecasts.
NOTES TO EDITORS:
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 $ 463 million and $ 777 million respectively. In 2007, the revenues amounted to $ 1,403 million.
In November 2007, OJSC LSR Group implemented an IPO, and now its GDRs are listed on the London Stock Exchange, and the shares - on MICEX and RTS.
LSR Group has a B1 rating; outlook - stable assigned by Moody's Investors Service.
In 2007, LSR Group was bestowed a National Award in the field of business as 'The Company of the Year' in the 'Construction' category.
For more details please contact:
Press Service, LSR Group
Tel.: +7(812) 314-1044
press@lsrgroup.ru
www.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 other forward-looking statements regarding future events or the future financial performance of the Company. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could," "may" or "might" the negative of such terms or other similar expressions. The Company wishes to caution you that these statements are only predictions and that actual events or results may differ materially. The Company does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries the Company operates in, as well 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 the United States, Australia, Canada or Japan. These materials do not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to 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 in connection with the listing and offer in certain jurisdictions may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
These materials are not an offer for sale of any securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933. The Company has not registered and does not intend to register any portion of any offering in the United States or to conduct a public offering of any securities in the United States.
This communication is directed only at (i) persons who are outside the United Kingdom or (ii) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") and (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as "relevant persons"). Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.
This communication is distributed in any member state of the European Economic Area which applies Directive 2000/71/EC (this Directive together with any implementing measures in any member state, the "Prospectus Directive") only to those persons who are investment professionals for the purposes of the Prospectus Directive in such member state, and such other persons as this document may be addressed on legal grounds, and no person that is not a relevant person may act or rely on this document or any of its contents.