OREANDA-NEWS. April 21, 2010. LSR has released its 2H09 IFRS results, which came broadly in line with the forecasts published in our LSR Group 2H09 IFRS Results Preview of 12 April. We had expected the YoY numbers in the real estate development business to be good, while they were better than we expected for building materials (with the share of the latter in revenues and EBITDA declining), reported the press-centre of VTB Capital.

- Revenues increased 11.4% in roubles (all changes are in roubles in the report), 6.2% ahead of our forecast.

- Real estate development revenues came out 1.2% above our forecast, up 59.9% YoY. We note that development revenues and COGS do not show the picture for 2009 as they relate to cash sales done in 2006-08. Building materials revenues decreased 52% YoY on stronger price performance (23.6% above our forecast).

- SG&A expenses as a percentage of sales decreased from 13.4% in 2008 to 11.6% in 2009, mainly due to reduced labour costs and staff cuts. However, this was still more than our forecast of 8.6% as a percentage of sales.

- Results on the COGS side were broadly in line with our forecast, which means that the company managed to achieve higher margins than we had previously expected, mainly in development business.

- Total debt, as of 31 December 2009, was RUB 39,541mn (with net debt of RUB 36,645mn), almost unchanged QoQ.

- The company’s capex came 37% below our forecast. We note that capex is mainly associated with the construction of a cement plant and since LSR has not reported any delays in commissioning and project costs, we therefore attribute the difference to the allocation of costs between years.