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LSR Group

October 11, 2007

LSR Group launches "The Ukrainian Project"

Today, on October 11, a foundation stone laying ceremony was held in Berezan, Kiev Region where a new autoclaved aerated concrete plant of Aeroc International AS, a subholding of LSR Group, is to be constructed.

In attendance at the solemn ceremony were Georgy Vedernikov, Managing Director (Building Materials and Construction Services) of LSR Group, Ivar Paplavskis, Chairman of the Board of  Aeroc International AS, as well as V.G. Yatsuba, Minister of Regional Development and Construction of Ukraine, A.I. Pikalo, Mayor of Berezan, members of the diplomatic corps, business and scientific communities.  

Addressing the participants, Mr. Vladimir Yatsuba stated that Ukraine welcomes investments in its industry which is particularly important with respect to aerated concrete due to the short supply of the material in Ukraine that has to import it from Belarus, Poland, and also from Turkey.

— For a year LSR Group analysts studied the situation in the Ukrainian construction market and drew the conclusion that this region is quite promising for us, said LSR Group’s Managing Director Georgy Vedernikov. — At present up to 1.5 mln sq. m of housing are completed annually in Kiev and its region while the housing prices are comparable to those in Moscow and St. Petersburg — up to 2,000 dollars per sq. m in the mass market segment. However, only relatively small aerated concrete plants are operating in the Ukrainian market, and their aggregate production capacity does not meet Ukrainian builders’ demand for this material.

The first aerated concrete blocks are to be supplied to Ukrainian construction projects already in the summer of 2008. The process equipment will be supplied by one of the world leaders, German-Dutch company HESS AAC Systems, the general contractor of the project is construction company Eurocon. Investments in the project total 30 mln US dollars.

Currently LSR Group has three aerated concrete plants already operating in Estonia, Latvia and St. Petersburg, and one more facility is under construction in Lithuania. The Berezan plant is the first project of LSR Group in Ukraine. With a planned capacity of 400,000 cub. m a year, the new plant will turn into the largest aerated concrete producer in the Ukrainian market of building materials.

For reference

Aeroc International AS, an aerated concrete subholding of LSR Group, is the leading producer of aerated concrete in Northeast Europe. In all of its markets it uses a single AEROC trademark — light as air, hard as rock.

Today Aeroc International AS is the 100 percent owner of its subsidiaries in 5 countries:

OOO Aeroc SPb   in Russia
Aeroc AS   in Estonia
Aeroc SIA   in Latvia
UAB Aeroc   in Lithuania
TOV Aeroc   in Ukraine

Three advanced plants with an aggregate annual production capacity of 800,000 cub. m are operating in St. Petersburg, Russia, in Estonia and Latvia, two more state-of-the-art aerated concrete plants of 400,000 cub. m annual capacity each are under construction in Lithuania and Ukraine. The companies of Aeroc International employ about 400 people.

OJSC LSR Group is a vertically integrated diversified holding company founded in 1993. Its core business areas are building materials, construction and real estate development. The Group comprises companies engaging in extraction and processing of aggregates (sand and crushed granite), manufacturing and transportation of building materials, and housing construction — from mass market large-panel housing to elite residential property built after designs made by leading domestic and foreign architects.

LSR Group has companies and offices in St. Petersburg, Moscow, a number of cities in the Leningrad Region, in Lithuania, Latvia, Estonia, Ukraine and Germany. LSR Group employs over 15,000 people.

According to the audited consolidated IFRS results of OAO LSR Group, its earnings in 2006 amounted to 21.1 billion rubles, a 61% increase over 2005, pre-tax income in 2006 reached 1.76 billion rubles, and net profit stood at 1.1 billion rubles.
In July 2007, Moody’s Investors Service assigned a B1 rating to LSR Group; outlook — stable.

For more details please contact:

LSR Group Press Service
+7 (812) 314-1044

Chairman of the Board
Aeroc International AS

Yana Goncharenko
General Director
TOV Aeroc, Ukraine




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