OJSC LSR Group - Contract with CERIC

RNS Number:7896L
Open Joint-Stock Company LSR Group
15 January 2008

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For immediate release

LSR Group to Invest €70.673 M in Equipment for One of the Largest Brick
Factories in Russia

As part of an investment project aimed at creating one of the largest brick
factories in Russia, OJSC Pobeda LSR (part of LSR Group) has signed a contract
for the delivery of brick-making equipment with CERIC, the world's leading
equipment manufacturer for ceramic building materials production. The value of
the contract is €70.673 million. Equipment delivery is to start this year.

The contract provides for the supply of two production lines, one for standard
building bricks with an annual capacity of 120 million, and the other for facing
bricks with a capacity of 75 million per annum. The total capacity of the
factory will subsequently be increased to 220 million standard bricks annually.
The factory is currently under construction in the Kirovsky District of the
Leningrad Region and will be operational in 2010. The total investment is
expected to represent $280 million and the project will be financed in part from
the IPO proceeds obtained by OJSC LSR Group in the autumn of 2007.

The new brick factory will help to address growing demand for this building
material resulting from an increase in the volume of construction and the
dynamic growth of the country housing segment (according to the Reshenie
research and consulting company, the ceramic brick market in St. Petersburg and
the Leningrad Region represented 356 million bricks in 2006 while in 2007 it
exceeded 390 million bricks).

Under the contract, CERIC specialists are also to carry out start-up work and
factory personnel training.

To select the equipment supplier for the new factory LSR Group invited bids from
a number of leading manufacturers of ceramic building materials equipment.
According to Georgy Vedernikov, managing director of LSR Group, the bid made by
CERIC provided the best value for money, and CERIC surpassed other major
European companies. "At this stage LSR Group has proceeded to select the main
contractor to undertake construction work," said Georgy Vedernikov.

Commenting on the contract concluded, Charles-Antoine de Barbuat, president of
CERIC Group noted that "in the course of tendering and deal preparation the
specialists of LSR Group have shown high professionalism and subtle knowledge of
the production process. The company knows exactly what it needs, Mr. de Barbuat
stressed, - so it can competently define both the engineering and financial
terms of the project. We feel privileged and proud to cooperate with such a
company."

Notes to Editors

Founded in 1993, LSR Group is one of the leading real estate development,
construction and building materials companies in St. Petersburg and the
Leningrad region, combining two complementary market leading businesses.

The Group is one of the leaders in the development of elite residential real
estate projects in St Petersburg and a significant developer of mass-market real
estate there. The Group also has a market leading position in the production of
building materials and aggregates in St Petersburg and the surrounding Leningrad
region.

The Group is one of the largest producers of ceramic bricks in Russia and one of
the largest producers of aerated concrete in Russia. In 2006 it was, and
remains, the market leader in St. Petersburg and the Leningrad region in each of
sand, crushed granite, bricks, reinforced concrete, ready-mix concrete and
aerated concrete segments.

LSR manages and operates its businesses through two divisions:

• Real Estate Development, Commercial Real Estate and Construction, which
represented approximately 35 per cent of consolidated revenues in 2006; and

• Building Materials, Aggregates and Construction Services, which
represented approximately 64 per cent of consolidated revenues in 2006.

LSR Group employs nearly 15,000 people. In 2004, 2005 and 2006 the revenues of
LSR Group were RUB 7,530.9 million, RUB 13,085.5 million, and RUB 21,110.8
million respectively. For the six months of 2007 the Group's revenues amounted
to RUB 16,062.0 million compared to RUB 9,336.4 million for the same period last
year. In July 2007, Moody's Investors Service assigned a B1 rating to LSR Group;
outlook - stable.

In December, 2007 LSR Group has been awarded a National Business Award as the
Company of the Year in 'Construction' category.

OJSC Pobeda LSR (a company of LSR Group) is the leading ceramic brick producer
in Russia comprising three brick factories in St. Petersburg and the Leningrad
Region - Keramika, Lenstroikeramika and Pobeda. The total capacity of the brick
association is 290 million standard bricks a year. Pobeda LSR produces all kinds
of building and facing ceramic bricks as well as porous large format RAUF
bricks, and has been extending its own retail network, Brick Centre. The
company also possesses its own resource base, the Krasny Bor and
Lenstroikeramika-Kariyer quarries of Cambrian blue clay. It has a regional
office in Moscow.

CERIC was founded in France in 1960 by a team of expert engineers from the
Technical Brick and Roofing-tile Centre (CTTB).

It is a world leader in the field of engineering and implementation of
integrated turnkey solutions for the production of ceramic building materials
and technical ceramics.

CERIC possesses expertise in manufacturing equipment for load handling and
preparation as well as in thermal technologies, and is a reputable provider of
services such as auditing, consulting, personnel training and supply of spare
parts.

Today CERIC is an international company employing 560 people and having
high-tech manufacturing facilities in France and Europe as well as commercial
representative offices in Russia, Ukraine and China. In 2006, CERIC was merged
with Legri Industry Group to form part of its KEIRIA division. At present KEYRIA
employs 2,000 workers and is engineering group No.1 in the world market of
plants for the production of building materials.

For more details please contact:

Press Service, LSR Group
+7 (812) 314-1044
press@lsrgroup.ru
www.lsrgroup.ru

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