LSRG.L Regulatory News (LSRG)

15 Feb 2008 07:12

Open Joint-Stock Company LSR Group15 February 2008 NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN For immediate release 15 February 2008 LSR GROUP BOARD ELECTS BOARD COMMITTEES, RECEIVES 2007 RAS RESULTS AND APPROVES ACQUISITIONS On February 13, 2008 the first meeting of the LSR Group's Board of Directorselected at the company's extraordinary Shareholders Meeting on February 7 tookplace. 1. Board Appointments Dmitry Goncharov, Managing Director of LSR Europe GmbH (a company of LSR Group)who has been chairing the company's Board since April 2007 was re-elected asChairman of the Board of Directors. The Board of Directors also elected the members of the Audit Committee and theHuman Resources and Compensation Committee and set up a new Strategy andInvestments Committee. All three committees are chaired by independentdirectors. Audit Committee: - Seppo Juha Remes, Member of the Board of Directors of OJSC LSR Group, Independent Director - Chairman of the Committee. - Elena Tumanova, Member of the Board of Directors, CFO of OJSC LSR Group. - Sergey Skaterschikov, Member of the Board of Directors of OJSC LSR Group, Independent Director. Human Resources and Compensation Committee: - Sergey Skaterschikov, Member of the Board of Directors of OJSC LSR Group, Independent Director - Chairman of the Committee. - Lauri Ratia, Member of the Board of Directors of OJSC LSR Group, Independent Director. - Dmitry Goncharov, Managing Director of LSR Europe GmbH (a company of LSR Group). Strategy and Investments Committee: - Lauri Ratia, Member of the Board of Directors of OJSC LSR Group, Independent Director - Chairman of the Committee. - Igor Levit, Member of the Board of Directors, CEO of OJSC LSR Group. - Sergey Skaterschikov, Member of the Board of Directors of OJSC LSR Group, Independent Director. Commenting on today's announcement Igor Levit, CEO of LSR Group, said: "Thestrategic development plans of LSR Group provide for a major investmentprogramme including the construction and commissioning of new plants to producebuilding materials (such as cement, bricks and aerated concrete), growth of thecompany's real estate development portfolio and the implementation of newresidential and commercial property projects. "We also intend to continue our expansion into fast developing regions throughacquiring local businesses holding a substantial market share. Our new Strategyand Investments Committee will ensure a more detailed review of transactions andbalanced risk assessment, which, in turn, will increase the efficiency of thecompany's development for the benefit of its shareholders." 2. Approval of consolidated non-audited RAS statements for 2007 (consolidated balance sheet and income statement of OJSC LSR Group for 12 monthsof 2007 prepared in conformity with the Russian Accounting Standards (RAS) asper the Rules approved by Order of the RF Ministry of Finance of 30 December2006 No.112). According to the RAS statements,* the revenues of LSR Group in 2007 were RUB35,801 million showing annual growth at the rate of 78% (in 2006, the revenueswere RUB 20,078 million). EBITDA more than doubled and in 2007 was RUB 9,584million (compared to RUB 4,463 million in 2006). The net profit according to theresults of 2007 compared to 2006 grew by more than 2.5 times and totaled RUB4,862 million (compared to RUB 1,894 million in 2006). Such a dynamic growth of the company's financial performance is due to thegrowth of operational performance of all of LSR's business divisions includingincreased sales of building materials and completion of a number of propertydevelopment projects as well as rising prices for key products, high marketdemand and a favourable macroeconomic situation. \* The RAS statements preparation principles differ from the IFRS principles. The consolidated audited IFRS statements are to be published in May, 2008. 3. Approval of two transactions 3.1. Acquisition by a subsidiary of OJSG Rudas (a company of LSR Group) of a100% stake in OOO Kaskad owning two quarry sand pits, Novo-Toksovo andKingiseppsky GOK, their aggregated reserves exceeding 14.5 million cub.maccording to the license. The amount of transaction was RUB 308 million (approx.USD 12.5 million). Alexey Yushkov, Head of the Aggregates Division of LSR Group has commented asfollows: "The new acquisition will increase the raw materials stock of the companyproviding OJSC Rudas with additional materials for almost 10 years and willexpand the coverage of the company's operations to reach the Kingiseppsky,Slantsevsky and Volosovsky districts of the Leningrad Oblast. "Moreover, the new pits will broaden the product-mix of OJSC Rudas through thenew quartz sand product used for the production of aerated concrete, bricks anddry concrete mixes. All of the above, combined with the existing competitiveadvantages, will reinforce the company's strong market positions throughretaining a sizable market share and will contribute to its enhanced financialperformance." 3.2. Acquisition by OJSG LSR Group of a 100% stake in OOO Promrezerv, aYekaterinburg company holding a long-term lease of a 9.8 hectare plot of land inthe eastern part of Yekaterinburg bordering on the downtown area (theAnalytical Centre of the Urals Real Estate Chamber assigns the plot locationarea to Price Belt 1). The amount of transaction was EUR 7.065 million. According to an independentassessment by DTZ, the investment value of the plot is USD 22.1 million (overEUR 15 million). LSR Group proposes to use the land for neighbourhood real estate developments toinclude an economy class residential compound with a garage complex and a ClassB office building, as well as service outlets and various local shops. Accordingto the development concept, the total building area is estimated at 147,000sq.m. Even today the district features a developed social infrastructure with Schools,kindergartens, supermarkets and other facilities in close vicinity to the futuredevelopment. The area also boasts easy transportation access. In the long-term, the CityDevelopment Plan up to 2025 includes a proposal to build a metro line. By its strategic importance Yekaterinburg is the third geographical market ofLSR Group after St. Petersburg (and the Leningrad Oblast) and Moscow (and theMoscow Oblast). The new acquisition along with the land plots acquired by thecompany in Yekaterinburg at the end of 2007, will enable LSR to expand itsdevelopment projects portfolio in the Urals region and go on establishing anintegrated real estate development and construction division in Yekaterinburg. Today the population of Yekaterinburg is approx. 1.3 million people. By itsvolume of construction the region is fourth behind only Moscow (including theMoscow Oblast), St. Petersburg and Kazan. Over recent years, the constructionmarket of Yekaterinburg has been growing rapidly: e.g. the total volume ofhousing delivered in 2007 was 900,000 sq.m, almost 170,000 sq.m (22.8%) morethan in 2006 (732,700 sq.m). In 2006, the growth rate of housing delivery was14% compared to 2005 (approx. 640,000 sq.m). According to the reports of DTZ, as of late 2007 the cost per sq.m of economyand business class residential property in the primary market was USD2,150-2,500 while the average wages were 16,000 roubles (by this indicatorYekaterinburg holds third place in Russia). In 2007, Standard & Poors assigned aBB rating to Yekaterinburg, with a stable outlook. For reference: 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. For more details please contact: Press Service, LSR Group +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 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. The Company has not registered and does not intend to register anyportion of any offering in the United States or to conduct a public offering ofany securities in the United States. This communication is directed only at (i) persons who are outside the UnitedKingdom or (ii) persons who have professional experience in matters relating toinvestments falling within Article 19(1) of the Financial Services and MarketsAct 2000 (Financial Promotion) Order 2005 (the "Order") and (iii) high net worthentities, and other persons to whom it may lawfully be communicated, fallingwithin Article 49(2) of the Order (all such persons together being referred toas "relevant persons"). Any investment activity to which this communicationrelates will only be available to and will only be engaged with, relevantpersons. Any person who is not a relevant person should not act or rely on thisdocument or any of its contents. 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