On 17 April 2009, the Board of Directors of OJSC LSR Group (LSE: LSRG, MICEX, RTS: LSRG) approved the 2008 consolidated financial statements prepared in accordance with the IFRS standards. The independent audit of the financial statements was carried out by KPMG.

In 2008 LSR Group demonstrated dynamic growth and achieved record operating financial results:

- Sales revenues rose by 39% to reach RUR 49,813 million

- EBITDA grew by 67% to RUR 13,178 million, and EBITDA margin grew from 22% to 26%.

- Normalised operating profit increased by 75% to RUR 11,130 million.

- Normalised net profit was up by 72% to RUR 5,298 million.

Igor Levit, CEO and member of the Board of Directors of LSR Group commented:

“2008 was a year of record achievements for our company: we demonstrated dynamic growth and showed high levels of revenue and EBITDA.

In 2008, we went on implementing a strategy aimed at strengthening our positions in the core segments of our home market as well as at expanding our influence in the key market regions. In particular, at the Urals we acquired building materials production facilities and the leading prefabricated construction company, and also a major real estate development company having a sizable land bank. As a result we succeeded in replicating the integrated business model of our company in the Yekaterinburg and the Urals region market strategically important for us.

In 2008, we obtained a dominating position in the Ukrainian aerated concrete market through launching a new aerated concrete plant and finalizing the acquisition of a major aerated concrete producer in the Kiev region.

We continued the realization of programmes aimed at increasing the efficiency of our manufacturing facilities and in accordance with our time table carried on with the construction of a cement plant we will be ready to put into operation in the second half of 2010.

On the other part, one cannot disregard the fact that last year was a year of dramatic changes in the economic development worldwide. The crisis affected the 2008 results of LSR Group too, causing a reduction in demand in the second part of 2008 and bringing about a negative result of the revaluation of our investment property. However, it is important to note, that even though the loss from revaluation reduces the profit recognized in the income statement, it has no effect on the cash flows and liquidity of the company. In addition, since the valuation parameters depend greatly on the market environment, we are convinced that once the crisis is over the valuation will be reconsidered in the positive direction.

In autumn 2008, we developed and launched an anti-crisis strategy and implemented cost reduction programme. We believe that we will emerge from the current economic cycle even stronger than before”.

Key Financials

RUR m	2006	2007	2008
Revenue	21,111	35,838	49,813
EBITDA	3,626	7,897	13,178
EBITDA margin	17%	22%	26%
Normalised operating profit	2,505	6,343	11,130
Normalised operating profit %	12%	18%	22%
Normalised net profit	1,002	3,072	5,298
Changes in fair value of investment property	130	8,037	(16,143)
Impairment of goodwill	-	-	(391)
Reported net profit	1,101	9,180	(8,007)
Gross cash flow	3,790	7,942	13,335
Operating cash flow	557	(8 491)	4,374
Amortisation and depreciation	1,121	1,554	2,049
Capitalised capital expenditure	2,965	6,519	10,330
Total debt	14,478	24,151	36,874
Net debt	12,870	15,498	33,628
Net debt/ EBITDA	3.5	2.0	2.6

Consolidated Profit and Loss Statement

RUR m	2006	2007	2008	Change from 2007 to 2008, %
Sales revenue	21,111	35,838	49,813	39%
Cost of sales	(13,796)	(23,861)	(31,807)	33%
Gross profit	7,314	11, 976	18,006	50%
Distribution expenses	(1,702)	(1, 754)	(2,226)	27%
Administrative expenses	(3,051)	(3,755)	(4,446)	18%
Other receipts and expenditures	(56)	(124)	(203)	64%
Impairment of goodwill	-	-	391
Changes in the fair value of investment property	130	8, 037	(16,143)
Operating profit (loss)	2,635	14,380	(5,404)	(138%)
Net financing expenses	(876)	(1,889)	(4,858)	157%
Profit (loss) before tax	1, 759	12,491	(10,262)	(182%)
Income tax	(658)	(3,311)	2,255	(168%)
Net profit (loss)	1,101	9,180	(8,007)	(187%)
Normalised items:
Normalised operating profit	2, 505	6, 343	11, 130	75%
Normalised operating profit %	12%	18%	22%
Normalised net profit	1,002	3,072	5,298	72%
EBITDA	3,626		13,178	67%
EBITDA %	17%	22%	26%

EBITDA equals to operating profit plus depreciation and amortization of fixed assets and intangible assets less changes in the fair value of investment property plus impairment of goodwill. EBITDA margin equals to the ratio between EBITDA and sales revenue.

Normalised operating profit equals to operating profit less the effects of revaluation of investment property and impairment of goodwill, which are non-cash items.

Normalised net profit calculated as net profit excluding effects of revaluation of investment property (incl. recalculation of deferred tax) and impairment of goodwill.

Normalised earnings per share calculated as earnings per share excluding effects of revaluation of investment property (incl. recalculation of deferred tax) and impairment of goodwill.

Total debt calculated as the sum of non-current loans and borrowings, current loans and borrowings and bank overdraft.

Gross cash flow represents operating profit before changes in working capital and provisions

Net debt calculated as total debt minus cash and cash equivalents.

Total debt/ EBITDA and Net debt/ EBITDA ratios are calculated on annualised basis

The measures described above are not defined in the International Financial Reporting Standards and should therefore be regarded only as supplementary information.

The financial indicators in this press release are rounded to whole numbers in RUR millions, and percentage changes in indicators are calculated using data in RUR thousands.

The complete consolidated financial statements of LSR Group for 2008 and press release can be downloaded at www.lsrgroup.ru/results.

Annual financial report for 2008 prepared in accordance with Disclosure and Transparency Rules requirements will be released in our website 30 April 2009.