LSRG.L Regulatory News (LSRG)

28 Mar 2008 08:04

Open Joint-Stock Company LSR Group28 March 2008 NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN LSR Group proceeds with the acquisition of OJSC Obukhiv Porous Concrete Plant in Ukraine as part of geographical diversification strategy LSR Group ("LSR" or the "Group") one of the leading real estate developers andbuilding materials producers in St Petersburg and the Leningrad region (LSE:LSRG, MICEX, RTS: LSRG), today announces that the Ukrainian AntimonopolyCommittee has granted permission to Aeroc International AS, a subsidiary of LSRGroup, for the acquisition of a 97% stake in OJSC Obukhiv Porous Concrete Plant,a major aerated concrete producer in Ukraine. The €30 million acquisition wasapproved by LSR's Board in February 2008 and is expected to be completed in thesummer 2008. OJSC Obukhiv Porous Concrete Plant (OPCP) is a leader in the Ukrainianautoclaved aerated concrete (AAC) market and the key AAC supplier in the Kievregion today. According to the All-Ukrainian Union of Building Materials andProducts Manufacturers, OPCP has an 18% share of the Ukrainian AAC market andover 50% of the market in the Kiev region. OPCP is located in the city ofObukhiv, 40 km from Kiev, the capital of Ukraine. In 2007, the company reportedoutput and sales of 150,000 cub.m. As part of an existing contract withWehrhahn, the world leader in the production of aerated concrete equipment, OPCPis completing a project aimed at increasing its annual capacity to 350,000cub.m. OPCP is LSR Group's second aerated concrete project in Ukraine. The firstproject - a new AAC plant with the capacity of 400,000 cub.m a year - is underconstruction in Berezan, 70 km from Kiev, and is due to be completed in thesummer of 2008. The equipment is supplied by HESS AAC-Systems, a well-knownGerman-Dutch manufacturer of AAC equipment. Commenting on the development, Igor Levit, CEO of LSR Group, has said: "We consider the Ukrainian market to be very attractive due to the steady growthin the volumes of construction and building materials consumption as well as thedynamics of housing price growth. The acquisition of OJSC Obukhiv PorousConcrete Plant by LSR Group, combined with the plant's upgrading up to thecapacity of 350,000 cub.m per annum, as well as the completion of a new 400,000cub.m plant that we are planning to make operational in the summer of 2008, willenable our company to occupy the dominating position in the Kiev region andbecome a leader in the Ukrainian aerated concrete market as a whole." Consequently, the aggregated production capacity of Aeroc International inUkraine is expected to exceed 700,000 cub.m a year. The company is planning tomake full use of the synergy of the two plants through promoting anddistributing AAC products under a single brand - AEROC. In addition, the newacquisition will enable the two Ukrainian plants to be specialized in particularproducts to more flexibly respond to different customers' needs. NOTES TO EDITORS: AAC market in Ukraine: According to the All-Ukrainian Union of BuildingMaterials and Products Manufacturers, the total aerated concrete output inUkraine was 730,000 cub.m in 2007. Another 110,000 cub.m were imported fromabroad. Thus the volume of sales in the Ukrainian AAC market in 2007 totalled840,000 cub.m with the prospect to reach 2,100,000 cub.m by 2011. The market hasbeen experiencing shortages due to limited supply of the product. Construction volume dynamics in Ukraine: according to the State StatisticsCommittee of Ukraine and the Analytics and Statistics Committee of the UkrainianRealtors Association, the total housing area completed in 2005 was 7.5 millionsq.m, in 2006 it was approx. 9 million sq.m, and in 2007 - over 10 million sq.m.The average residential property price in 2007 grew by 19.05%, and as of January1, 2008 was $3,173.35 per sq.m of total apartment area. Aeroc International AS is an aerated concrete subholding company of LSR Groupand the leading AAC producer in Northeast Europe. The company uses a singleAEROC trademark in all of its markets - light as air, hard as rock. Today Aeroc International AS is the 100% owner of its subsidiaries in fivecountries: OOO Aeroc SPb in Russia Aeroc AS in Estonia Aeroc SIA in Latvia UAB Aeroc in Lithuania TOV Aerok in Ukraine Three modern plants operate in St. Petersburg (Russia), Estonia and Latvia. InUkraine, in addition to the acquisition of Obukhiv Plant, another advanced plantis under construction with the annual capacity of 400,000 cub.m. The companiesof Aeroc International employ approx. 400 people. 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) 314-1044press@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. 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. This communication is distributed in any member state of the European EconomicArea which applies Directive 2000/71/EC (this Directive together with anyimplementing measures in any member state, the "Prospectus Directive") only tothose persons who are investment professionals for the purposes of theProspectus Directive in such member state, and such other persons as thisdocument may be addressed on legal grounds, and no person that is not a relevantperson may act or rely on this document or any of its contents. This information is provided by RNS The company news service from the London Stock Exchange