LSRG.L Regulatory News (LSRG)

6 Feb 2009 10:32



NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN

For immediate release

LSR Group Reports Summary Sales for 2008

LSR Group, one of the leading real estate developers and building materials producers in Russia (LSE: LSRG, MICEX, RTS: LSRG), today announces its sales results for the full year of 2008.REAL ESTATE DEVELOPMENT AND CONSTRUCTION

Elite Real Estate

In 2008 LSR Group signed the new sales contracts with the customers for 27 th m2 of net sellable area worth US$ 288m, 83% more than in 2007, in elite real estate segment in St Petersburg.

18 th m2 of net sellable area in the completed projects were transferred to the customers. The decrease of the volumes transferred to customers against the previous year was determined by the construction schedule. The majority of 2008 completions were made in the second half of December and the completed apartments will be transferred to the customers and therefore reflected in the results of 2009.

In 2008 the company completed the development of the second and third phases of elite residential complex "Dom u Morya" ("Seaside House") of net sellable area of 11 th m2, the residential building which is the part of Paradny Quarter project of net sellable area of 19 th m2 and the residential building in Kammenoostrovskaya Kollektsia project of net sellable area of 13 th m2.

Mass Market Residential Real Estate

In 2008 LSR Group signed the new sales contracts with the customers for 166 th m2 of net sellable area (including 25 th m2 in Yekaterinburg by the development company ZAO Nova Stroy acquired by LSR Group and consolidated starting from 1 September 2008) worth US$ 490m,75% more than in 2007, in mass market residential houses.

128 th m2 of net sellable area in the completed projects were transferred to the customers, including 43 th m2 in Yekaterinburg. The decrease of the volumes transferred to customers against the previous year was determined by the construction schedule. The majority of 2008 completions were made in the second half of December and the completed apartments will be transferred to the customers and therefore reflected in the financial results in the beginning of 2009.

In 2008 the company completed the development of the three buildings of net sellable area of more than 25 th m2 in the mass market residential complex "Pulkovsky Posad", one residential building in Komendantskiy prospect of net sellable area of 12,4 th m2, six residential buildings of net sellable area of 62 th m2 in the project "Dolgoozerniy" and two residential buildings of net sellable area of 22 th m2 in the project "Antey" in St Petersburg. In addition ZAO Nova-Story completed the development of 8 residential buildings of net sellable area of 50 th m2 from 1 September 2008 (Totally in 2008 Nova-Stroy completed 81.2 th sq. m. of net sellable area of real estate).  

Commercial Real Estate

The occupancy rates of LSR Group's three operating office centres Apollo, Gelios and Litera remained unchanged throughout 2008 and stood at 99%.

In the 3rd quarter of 2008 the company completed the development of the three new office buildings of 15 th m2 total area (10.6 th m2 of total net lettable area). All the three building are the part of "Paradny Quarter" project. LSR Group sold out one of the buildings of 5 th m2 of total area. The amount of the deal has not been disclosed due to confidentiality agreement.

Gated Communities and Moscow Real Estate Business Units

In 2008 LSR Group Gated Communities and Moscow Real Estate Business Units signed new contracts with the buyers for sales of real estate worth US$37 m, 6% more than in 2007.

Prefabricated Panel Construction

In 2008 the prefabricated panel factories of LSR Group built and transferred to the customers in St Petersburg and Yekaterinburg 464 th m2 of panel houses, 49% more than in 2007. Also starting from April 2008 when LSR Group consolidated control over prefabricated panel factory OJSC Betfor Reinforced Concrete Factory in Yekaterinburg, it sold to the customers 70 th m3 of panels for panel housing construction.

BUILDING MATERIALS, AGGREGATES AND CONSTRUCTION SERVICES

Building  Materials

In 2008 LSR Group sold 632 th m3 of reinforced concrete products (including 82 th m3 sold in Yekaterinburg) which is 9% more than in f 2007.

For aerated concrete the quantity sold was 914 th m3 (incliding 79 th m3 sold in Yekaterinburg), 65% increase against 2007. The increase of sales was driven by high demand, acquisitions of the production assets in Yekaterinburg and Ukraine,  starting up  the brand-new aerated concrete factory in Ukraine and extra sales via distribution contracts where LSR Group acted as a dealer of the 3rd party product. The sales volume of 3rd party aerated concrete was 191 th m3 in 2008 (included in the data in the table above). 

The sales volume of the ready-mix concrete was 1,507 th m3, 6% less than in 2007.

The sales volume of bricks was 265 mn units which is 8% less than in 2007. The decrease of sales of bricks  and ready-mix concrete occurred in the second part of 2008 and was driven by the delays of the start of the number of new construction projects in residential and commercial real estate segments in St Petersburg and Moscow.

Aggregates

In 2008 LSR Group sold 18 mn m3 of sand which is 34% more than in 2007 and 5.4 mn m3 of crushed granite which is 27% more than in 2007.

The growth of sales was driven by high demand in infrastructure sector and the increase of production capacity: the Sand BU increased capacity by modernization and addition of the equipment to the quarries and started the extraction works in two new deposits; the Crushed Granite BU put into operation the new mobile crushing plant with annual capacity of 600 th m3, the new crushed granite deposit and opened the extra storage and distribution facilities in St Petersburg. 344 th m3 of crushed granite was sold via distribution contracts where LSR Group acted as a dealer of the 3rd party product. Also in August 2008 LSR Group consolidated control over the crushed granite producer in Yekaterinburg which sold 102 th m3 of crushed granite from 1 August.

Construction Services

LSR Group increased its sales volume in the construction services segment. The volume of tower cranes services provided in 2008 grew by 21% compared to the same period last year.

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Notes: 

The sales volumes in this press release has been rounded to the nearest thousand while percentage changes in them has been calculated using data in units.

LSR Group's functional currency is the Russian Rouble. The financial data in this press-release has been convertered into the US Dollars at the average RUR/US$ exchange rate for 2008, which is 24.8553.

The sales volumes in Yekaterinburg are included in the tables above starting from the month in which LSR Group consolidated control over the acquired business units in Yekaterinburg in 2008 namely:

- Panels for panel housing construction, reinforced concrete products, ready-mix concrete , aerated concrete: starting from 1 April 2008;

- Crushed granite: starting from 1 August 2008;

- Development and construction: from 1 September 2008.

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 region, in St. Petersburg, Moscow, Yekaterinburg, Lithuania, Latvia, Estonia, Ukraine and Germany.  In 2007, the sales revenues of LSR Group (according to the IFRS-based financial statements) were US$ 1,403 million. LSR Group is a public company, with its GDRs listed and traded on the London Stock Exchange and its shares listed and traded on MICEX and RTS.  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) 314-1044press@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 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.