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LSR GROUP Ltd. Summarizes Performance in 2004 |
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LSR GROUP Ltd., the largest group of construction companies in the North-West of Russia, hosted 23 May 2005 at the Grand Hotel "Europa" its traditional annual press conference to announce the performance results for 2004, as well as the plans and status of implementation in 2005. LSR GROUP Ltd. made its performance information available to public for the third time.
The review press conference was given by the top management of the company, including Igor Levit, Senior Vice President, Evgeny Yatsyshin, Georgy Bogachev and Georgy Vedernikov, Vice Presidents, as well as Alexey Yushkov, Executive Director.
In his introductory statement Igor Levit, Senior Vice-President of LSR GROUP Ltd., indicated: "All our development programs evolve within the framework of principles, as established, of which the most fundamental are the following: strict adherence to the once chosen specialization, determination to gain leadership positions, consistent high quality of products, care and support of personnel, participation in a large variety of public and charitable programs and business transparency".
It was made clear at the press conference that LSR GROUP Ltd. in 2004 followed its strategy of expanding business units both by acquisition of new companies, and by mergers between production facilities inside LSR GROUP Ltd. E.g. in July 2004 several concrete production plants of LSR GROUP Ltd. were reorganized into "Group 45" JSC. The acquisition of "458 Complex of Rock Minerals" JSC (KNI 458) and "Karier" JSC and the start-up of the new crushing-and-screening plant for the production of granite aggregate in lieu of the obsolete production facility enabled our holding company to ensure a substantial increase of the production output of aggregate at "Granite-Kuznechnoye" JSC. The Group reinforced its construction business division by acquiring the General Construction Company "PetroStroyInvest", and enhanced its brick production business by purchasing "Pobeda" JSC. The woodworking business, handled in recent past in the organization structure of LSR GROUP Ltd. by "Stroiles" JSC, was supplemented by "Yefimovskiy Integrated Logging Company" JSC. Also last year LSR GROUP Ltd. moved into the new market segments of infrastructure development and exurbia construction projects. With this in mind LSR GROUP Ltd. acquired "DorStroiProjekt" Group and established a company under the name "Osobnyak". The infrastructure development business is proposed to be subsequently reinforced by bridge construction and civil engineering companies. In 2004 LSR GROUP Ltd. acquired a share holding of "Transmost" JSC, a company specializing in engineering survey and design planning of new and renovation of the existing engineering structures on rail and motor roads. LSR GROUP Ltd. also established a new company under the name of "Sevzapmostostroy", which with time may evolve into a self-contained general contractor organization. "Dorstroiprojekt" today is the general contractor for the phase 2 construction project of the oil terminal in Primorsk. In foreseeable future LSR GROUP Ltd. may consider starting a railroad construction business. Since the acquisition of "Dorstroiprojekt" by LSR GROUP Ltd. significant changes have been undertaken in the company: trucks and dump trucks have been procured to a total amount of EUR 4,000,000. Within the next 3 years the company is planning on undertaking complete upgrading of the currently existing fleet of large-capacity dump trucks. In 2005 power shovels will be purchased. The investments into this project are equal to EUR 1,400,000.
For the nearest future LSR GROUP Ltd. contemplates moving into the Moscow market to as a supplier of its construction materials. Currently our holding company, based in St. Petersburg, is known to Moscow and Moscow region as a developer and vendor of some construction materials.
With a view to enlarging the range of its products, in spring LSR GROUP Ltd. launched into operation the biggest Russian expanded concrete production plant. The official ribbon-cutting ceremony of opening the plant is scheduled to be held in July.
LSR GROUP Ltd. had come to the end of last year with a total income of 19.3 billion rubles. This amount is almost double that reached in 2003 and close to 4.5 times the performance level in 2002. It is estimated that in 2005 the total aggregated income of the company will grow to 23.2 billion rubles. The investments in 2004 constituted RUB 6,684,000,000, and for 2005 approximately the same amount will be allocated for the purpose.
In the beginning of 2005 the company was initiated into the capital market with its first corporate bond issue to a total amount of 1 billion rubles. This bond issue was launched primarily to restructure the corporate portfolio and start creating a public credit history, as well as to borrow additional funds required for the investment programs of LSR GROUP Ltd. The issue was floated at 14% per annum. Today it constitutes a very successful offering for companies of the construction industry, which puts LSR GROUP Ltd. into the category of the most reliable Russian companies.
Working personnel was also focused on at the press conference. The following data were announced: the number of employees working today for the companies of LSR GROUP Ltd. is 15 thousand persons; their average monthly pay is higher than that across the industry and is equal to RUB 15,500; over 70 million rubles were allocated for social benefits in 2004; the benefits package includes free meals, financial aid, sports competitions and corporate celebrations, voluntary medical insurance, paid sanatorium-and-resort vouchers, etc.; continued training of personnel at the Training Center of LSR GROUP Ltd. and at the training centers of "UM-260" JSC and "Barrikada" JSC.
LSR GROUP Ltd. views its social responsibilities in a wider context than care for its own personnel only. In 2004 LSR GROUP Ltd. laid out 55 million rubles for charity programs, which is more than double the amount allocated in 2003. Among our large-scale charity programs there are such as the project carried out together with the foundation "Parental Bridge" which has resulted in the adoption of ten 4-year old children abandoned by their parents. This summer during the White Nights LSR GROUP Ltd., in cooperation with the Institute of special education and psychology of the International Raul Wallenberg University of Family and Child and the foundation "Parental Bridge", is planning on bringing Beslan victims over here to St. Petersburg for rehabilitation.
"Large-scale investment programs to support our production development projects in 2004 enabled us not only to retain our market share, but in some segments even to increase it",- indicated Igor Levit, Senior Vice President of LSR GROUP Ltd. He also provided the following breakdown of the market share of LSR companies in 2004 across St. Petersburg and Leningrad region: the market of premium-quality real estate - 52%, large-panel housing blocks - 55% (the share of LSR GROUP Ltd. is estimated on the assumption that the floor area erected in total across the market is equal to the floor area actually delivered); production of aggregate and sand - 35% and 70%, respectively; brick products – 75%, concrete and mortars - 26%, reinforced concrete structures - 56%; wooden window unit structures – 30% and 25% for metal plastic units; on-site construction support and trucking services - 33%.
In 2005 LSR GROUP Ltd. intends to carry out a number of investment projects to a total amount of over 6 billion rubles. The most important among them are the following: procurement of cranes, including those manufactured by LIEBHERR, for "UM-260", acquisition of specialized machinery and new equipment for "Dorstroiprojekt", upgrading and repair of the existing facilities of "Rudas" JSC. The investment program for the current year comprises companies, including "Barrikada" JSC, "Pobeda" JSC, House-Building Complex "Blok" JSC, Group 45" JSC, Research-and-Production Complex "Keramika" JSC, "Lenstroikeramika" JSC. In addition to bringing together the brick production facilities under the trade name of "Pobeda LSR", LSR GROUP Ltd. in 2005 developed a product line of bricks for private consumers and offered them on the market under the brand name RAUF. Since this spring these products have been distributed through four "Brick Centers" of LSR GROUP Ltd.
LSR GROUP Ltd. keeps on with its aggressive policy of investing into construction projects both in the city center of St. Petersburg, and in other districts, including the suburban areas. The Moscow leg of our development business is handled by our company "Mosstroirekonstruktsiya". Currently two projects are being built in Moscow: a multi-storey housing block on Davydkovskaya St. and a low-rise housing compound in Zarechye.
In 2004 the Construction Corporation “Revival of Saint Petersburg” (building of premium-quality housing units) completed 8 projects with a total floor area of 60,000 square meters. Total investments into the construction program amounted to 1.3 billion rubles. Among the projects actually delivered are housing blocks on Marata St., 11th Line of VO, 2nd Berezovaya Alley, Nevskiy Avenue, on Krestovskiy Island and on Karpovka River Emb, as well as a class B+ business center on Shpalernaya St. and an Office building on Galernaya St.
Currently the Corporation is involved in construction, rebuilding and design planning of more than 10 projects with a total floor area of over 500,000 square meters. Today the Corporation "Revival of Saint Petersburg" is the only company on the market of premium-quality real estate to engage in such large-scale construction activities in the historical city center. In 2005 the total investments will amount to approximately 2.3 billion rubles. Housing projects with a total floor area of 70 thousand square meters on 14th Line of VO, on Bolshaya Morskaya St., on Shpalernaya St. and on Robespierre Emb will be delivered.
The house-building complexes of LSR GROUP Ltd. (Gatchinskiy DSK and House-Building Complex "Blok") commissioned 200 thousand square meters of housing space and erected 253.7 thousand square meters. Our development company "Gatchinskiy DSK" Ltd. commissioned over 53 thousand square meters of housing and commercial floor area. Exurbia real estate construction business is also getting underway. In June our company "Osobnyak", established specifically for the development of such projects, will offer for sale two country house villages simultaneously: "New World" (Repino-Leninskoye) and "Pearl of Waterflood" (Sestroretsk).
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