In the course of the implementation of its previously announced project to construct Russia’s largest brick plant, OJSC Pobeda LSR (an LSR Group company) has entered into a contract for the supply of a line of special ceramic products with TECTON GmbH Keramikanlagen, Germany. The value of the contract is around ˆ 30 million and has been approved by the Board of LSR Group.

The contract provides for designing, manufacturing, supplying, installing and starting up a production line with a capacity of 25 million special ceramic items per annum. The new line is to go into operation in 2010.

Sergey Begoulev, CEO of OJSC Pobeda LSR commented:

“This production line is intended for house-building, which is developing rapidly in Russia.* While demand is constantly increasing, such products are currently imported from Europe and America, since Russia has no production facilities of its own. Meanwhile we roughly estimate the market volume in Russia for this type of product at 40 million pieces with an annual growth rate of 40%.”

Thus, the new brick plant will manufacture all possible types of bricks: facing clinker and road clinker bricks, original ceramic elements, unique types of facing bricks, porous building bricks and capping bricks.

As announced earlier, the new brick plant is to be commissioned in 2010. Its capacity will total 220 million NF bricks per year. The planned investment is around US$ 300 million. By now, contracts have been signed for equipment manufacture and supply as well as for construction work.

Two production lines – one of them with a capacity of 120 million NF porous building bricks, and the other one with a capacity of 75 million capping bricks – will be supplied by CERIC international group. The contract value is ˆ 71 million. A contract has also been signed with ZAO Kompakt which will act as the general construction contractor, under a contract worth ˆ 95 million.

At present, preparation work for the construction site has been fully completed, and a piling field of 8 hectares has been completed too. Construction work for the factory building is due to start in the 2nd half of June 2008.

*According to data provided by Resheniye analytical research company, in the Leningrad region alone the volume of homebuilding was 400,000 sq.m. in 2007 with 500,000 sq.m. to be completed in 2008 and 600,000 and 700 000 sq. m forecasted for 2009 and 2010 respectively.

Notes to editors:

OJSC Pobeda LSR (a subsidiary of LSR Group) is the largest producer of ceramic bricks in Russia. It comprises three brick factories in St. Petersburg and the Leningrad region: Keramika, Lenstroikeramika and Pobeda with a total annual capacity of 290 mln NF bricks. The product range of Pobeda LSR includes all types of building and facing bricks as well as porous large-format RAUF bricks. Pobeda LSR has been developing its own retail chain of Brick Centre outlets and owns sources of raw materials: Krasny Bor quarries of Cambrian Blue Clay and Lenstroikeramika-Karieyr. Pobeda LSR has a regional representative office in Moscow.

OJSC LSR Group is a diversified construction company founded in 1993 and operating in a number of complementary market segments. Its core business areas are building materials, construction and real estate development. The Group includes enterprises for extraction and processing of aggregates, production and transportation of building materials, and housing construction — from mass market large-panel housing to elite property built after designs made by leading domestic and foreign architects.

LSR Group has operations and offices in a number of cities in the Leningrad Oblast, in St. Petersburg, Moscow, Yekaterinburg, Lithuania, Latvia, Estonia, Ukraine and Germany. LSR Group employs over 15,000 people.

In 2005 and 2006, the revenues of LSR Group (according to IFRS statements) were $ 463 million and $ 777 million respectively. In 2007, the revenues amounted to $ 1,403 million.

In November 2007, OJSC LSR Group implemented an IPO, and now its GDRs are listed on the London Stock Exchange, and the shares — on MICEX and RTS.

LSR Group has a B1 rating, outlook – stable assigned by Moody’s Investors Service (assigned in July 2007 and confirmed on 30 May, 2008), and a B+ rating, outlook – stable assigned by Fitch Ratings (assigned on 30 May, 2008).

In 2007, LSR Group was bestowed a National Award in the field of business as ‘The Company of the Year’ in the ‘Construction’ category.

TECTON GmbH Keramikanlagen is a German company developing and supplying innovative equipment for the manufacture of building materials, tile roofs, ceramic pipes and sanitary and bathroom ceramics.