OREANDA-NEWS. On 15 May 2008 LSR Group, one of the leading real estate developers and building materials producers in Russia, summarized its sales results for the 1st quarter of 2008. Almost all business segments have shown sustainable growth compared to the 1st quarter of 2007.

REAL ESTATE DEVELOPMENT

Elite Residential Property

In the 1st quarter of 2008, LSR Group completed Phase 3 of the Dom u Morya (Seaside House) development in St. Petersburg located at 62 Martynova Embankment. The net sellable area of the development is 9,765 sq.m.

In the elite residential property segment as a whole, 2,420 sq.m of net sellable area and 159 parking slots were transferred to customers in the 1st quarter of 2008, and contracts worth over US\\$ 55 million* were signed for the sale of 6,040 sq.m (44 flats, 4 commercial premises and 43 parking slots).

In the 1st quarter of 2008 versus December 31, 2007 LSR Group raised elite residential property prices by 7% to 15% depending on the property type. The average offer price in the elite property segment by the end of Q1, 2008 was US\\$ 10,416.

* The above cash will be recognised in the sales revenues once the property is delivered with the flats transferred to the buyers. The dollar exchange rate used for the calculations was as of March 31, 2008.

Economy Class Residential Property

In the economy class residential property segment, a total of 27,500 sq.m of net sellable area was transferred to customers. The increase in the net sellable area transferred to customers in the segment was 98% compared to the 1st quarter of 2007.

In addition, in the 1st quarter of 2008, contracts worth over US\\$ 143 million* were signed for the sale of 47,900 sq.m (1,026 flats, 2 commercial premises and 17 parking slots).

In the 1st quarter of 2008 versus December 31, 2007 LSR Group raised economy class property prices by an average of 27% while the average offer price in the segment by the end of Q1, 2008 was US\\$ 3,411.

* The above cash will be recognised in the sales revenues once the property is delivered with the flats transferred to the buyers. The dollar exchange rate used for the calculations was as of March 31, 2008.

Gated Communities

No gated communities in the suburbs of St. Petersburg were transferred to buyers by LSR Group in the 1st quarter of 2008. Since the gated communities business was started by LSR Group only in 2004 the first developments were transferred to the buyers at the end of last year.

In the 1st quarter of 2008, contracts worth over US\\$ 2 million* were signed in the gated communities segment.

* The above cash will be recognised in the sales revenues once the property is delivered with the flats transferred to the buyers. The dollar exchange rate used for the calculations was as of March 31, 2008.

Real Estate in Moscow

In the 1st quarter of 2008, contracts worth over US\\$ 11 million* were signed for the sale of 1,000 sq.m of apartments in the Grunvald compound in the residential property segment in Moscow.

* The above cash will be recognized in the sales revenues once the property is delivered with the flats transferred to the buyers. The dollar exchange rate used for the calculations was as of March 31, 2008.

CONSTRUCTION

The volume of installation work carried out in the 1st quarter of 2008 by the two prefabricated construction companies within LSR Group (DSK Blok and Gatchinsky DSK) totalled around 126,000 sq.m, 111% up on the 1st quarter of 2007.

COMMERCIAL PROPERTY

In the 1st quarter of 2008, a total of 10,000 sq.m of office space was available for lease, 5,000 sq.m more than in the 1st quarter of 2007, as a result of the commissioning of the new Apollo business centre.

The occupancy rate of business centres remained unchanged throughout the 1st quarter of 2008 and stood at 99%.

The Apollo business centre completed in 2007 won a Federal Award in the ‘Class A Business Centre – St. Petersburg’ category of the Commercial Real Estate Federal Awards.

BUILDING MATERIALS, AGGREGATES AND CONSTRUCTION SERVICES

LSR Group has also shown stable growth in the production and sales of building materials and aggregates and the provision of construction services.

Building Materials

In the 1st quarter of 2008, LSR Group sold 133,000 cub.m of reinforced concrete products, a 26% increase on the 1st quarter of 2007. For ready-mix concrete the quantity sold was 306,000 cub.m (up by 14% compared to Q1, 2007), for bricks – 64.4 million units (up by 17%), for aerated concrete – 178,000 cub.m (up by 42%).

The revenues* in the building materials segment in the 1st quarter of 2008 totalled over US\\$ 171 million, a 44% increase on the results for the same period last year.

* Hereinafter for the data on revenues the company’s non-audited non-IFRS compliant management accounting was used, the growth rates were calculated by conversion into US dollars based on the historical exchange rate.

Aggregates

For aggregates the volumes sold in the 1st quarter of 2008 were as follows: sand – around 2.8 million cub.m (up by 36% on Q1, 2007), crushed granite – 1,087 thousand cub.m (up by 40%). The growth was achieved through new capacities made operational: in sea and quarry sand production – through the upgrading and expansion of the dredging fleet as well as the start of operations in the new Novo-Toxovo deposit; in crushed granite production – through the introduction of a new crushing and screening plant with a 660,000 cub.m capacity in the summer of 2007, as well as the installation of new hydraulic Terex RH-40 excavators to replace the outdated electric-controlled ones.

The revenues in the aggregates segment in the 1st quarter of 2008 totalled over US\\$ 53 million, 34% more than in the 1st quarter of 2007.

On the average, in the 1st quarter of 2008 LSR Group raised its building materials and aggregates prices by 10% versus 31 December 2007.

Construction Services

LSR Group has also achieved higher business results in the construction services segment. The number of tower cranes by the end of the 1st quarter of 2008 totalled 201 units, 42 cranes more than at the end of the 1st quarter of 2007. As a result of the expansion of the lifting equipment fleet the volume of construction services provided in the 1st quarter of 2008 was up by 27% compared to the same period last year.

The revenues in the construction services segment in the 1st quarter of 2008 were US\\$ 29.3 million, a 44% increase on the results for the same period last year.