LenSpecSMU:

Regular Meeting with Investors

MICEX, 31/01/2007

Introduction and Overview

1. Market FundamentalsPricesMarket Size and DynamicsMarket ShareMarket PositionGrowth Potential

2. Business OverviewKey Milestones in 2006Growth in FiguresBusiness Strategy

3. Financial OverviewKey Milestones in 2006Financial RatiosFinancial PolicyFinancial StrategyKey IndicatorsForecastCovenants and Assumptions

Market Fundamentals

4

Prices, Market Size and Dynamics: In Figures

2006

Number of buildings under construction, pieces 305

Areas in different stages of development, mn m2 12.0

Inc. LenSpecSMU, mn m2 1.2

By construction technology

Brick-monolith 68%

Brick 13%

Panel 10%

Other 9%

By price (per sq. meter)

Brick-monolith, USD 2 185

Brick, USD 2 005

Panel, USD 1 941

LenSpecSMU pricing vs. St. Petersburg average prices, USD / m2 (excluding elite residences)

St. Petersburg residential real estate market – second by it’s size in Russia

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LenSpecSMU Average in SPb

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Other

Petersburgstroy-Skanska

Severny gorod

IVI-93

DSK Blok

Pragma

Stroimontazh

LEK

LenSpecSMU

`05`04`03

2.27

2.03

1.76

15.8%11.5%9.6%

64.3%

72.0%

74.6%

Market Share, Competitors

Newly-built residential areas accepted by State Committee, m2 mn

LenSpecSMU consequently holds leading positions in residential construction segment

St. Petersburg construction market is highly fragmented

Only 25 out of 100-115 construction companies registered locally have consistently appeared on the State construction committee report over the last 3 years.

LenSpecSMU has held and increased its market share during the last 3 years.

`06

2.37

10.1%

79.5%

114 115 100 109 Number of constructors

6

Market Share: Different Ratios

89,9%

10,1%

Share in acted by State Committee areas (2006)

Big share on a big market

Share in supply (2006)

Saint Petersburg

88,8%

11,2%

LenSpecSMU

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Market specialization: Development and investment in construction. Quarter building.

Legal structure: Vertical-integrated industrial holding company.

Activity caliber: According to GOSSTROY LenSpecSMU takes 2 place in “Elites of Russia

construction complex” and 2-nd place in TOP 130 Russian construction companies (see the report of session of Federal agency of construction and housing and communal services of 27.07.2006 - http://www.gosstroy.gov.ru/docum_63.htm);

In TOP 500 Russia largest companies “Finans-500” LenSpecSMU takes 439 place (see “Finance” magazine of 18.09.2006);

In TOP 350 most rapid growth Russian companies LenSpecSMU takes 49 place (see “The Firm’s Secret” magazine of 25.09.2006);

In TOP 200 largest investment deals in Russia in year 2006 LenSpecSMU takes 160 place (see “The Firm’s Secret” magazine of 20.11.2006).

Technology: Brick-monolith housing.

Real estate segment: Mass business class housing construction; Commerce construction; Civil construction.

New development ways: Industrial construction; New projects in Moscow and St. Petersburg; Own real estate in management.

Market Position

LenSpecSMU: Total area under construction, ‘000’ m2

860.3 901.5 908.5 968.61 231.7

`06`05`04`03 `07F

`05`04`03

2 273.42 031.91 758.0

15.8%11.5%9.6%

LenSpecSMU: Market share in newly-built residential areas, accepted by State Committee, ‘000’ m2

10.1%

2 375.7

`06

8

Assortment of LenSpecSMU production

1,9%

7,0%

11,2% 4,3%

75,6%

2005

Commercial areas – one of the priorities of LenSpecSMU

2006

Residential areas

Commercial areas

Balcony

Parking places

Non-sold areas

51,9%

3,7%

14,9%

26,4%

3,0%

9

Demand Indicators on Primary Market of Real Estate

94,1%

5,9%

93,4%

6,6%

2004

Only about 6% of total selling areas stay unsold to the moment of acting the objects by the State Committee

93,7%

6,3%

2005 2006

Selling areasUnsold areas to the moment of acting the objects by the State Committee

Business Overview

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Growth in Figures (Historical & Forecast)

`06`05`04`03`02`01

4 588

3 1612 541

3 1652 898

1 755

`06`05`04`03`02`01

239.9

359.9

222.5168.1

142.5123.0

Projects completed, area in ‘000’ m2 Number of SP agreements, items

LenSpecSMU – continuous growth of the business

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Corporate Strategy: Organic Growth

Environment TargetsOverall Strategy

* - Compound Annual Growth Rate

Ambitious, reasonable strategic goals, firm basis

Our market has historically been development and construction of residential and commercial real estate

Segments of operations: 80% of the total projects portfolio is

concentrated in the residential areas for middle and upper-middle class;

Remaining 20% are projects for a lower middle class segment;

It is planed to increase the amount of commercial real estate construction up to 40% by 2009.

Geography of business: Prior to 2005 - St. Petersburg and

North Western Region of Russia;

Since 2005 - Moscow (2 projects in progress) and Russia’s regional markets;

By 2009 it is planed to increase the amount of construction in Russian’s regions up to 40% of the total amount;

Expansion into European residential and commercial real estate markets is currently under consideration.

Total turnover: CAGR* of 20-40% p.a.

Revenues from the general contracting segment to reach USD 400 mn by 2009.

Volume of completed construction projects: 300k-400k m2 p.a.

Volume of pre-funding: not less than annual revenues.

Pre-funding should be raised evenly over the life of the project.

Expansion of business geography

To expand additional services provided for the customers after their purchase of real estate

Image – building of a brand name has been one of the priorities from the first days of the Company’s existence

Pricing and payment schemes – offering a high quality product at prices that are on par or slightly lower than those of competitors

Quality – construction quality that is better than competitors’

Clear positioning of the company product

To expand the range of own production goods

To continue work on the development of the combined construction and technology system for buildings (CCTS) to complete it in 2008

Increase in development projects in the market of land plots

Increase in highly profitable projects

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Corporate Strategy: Profitability & Stability

Annual profitability of the entire Group of at least 20%.

For development projects: IRR of at least 30%.

For general contracting projects: margin calculated on a cost-plus basis to reach at least 15%.

Cash flows – please refer to the financial block of this presentation Sales of the residential units in the projects under construction –cumulative cash flows from on-going sales of units

in the started projects should generate enough cash to complete all in-progress projects. Therefore, every project should generate enough cash to finance itself after reaching 20%-25% of completion

Physical and monetary volume of projects in progress, in a preparatory stage and under preliminary analysis: a number of the in-progress projects should ensure that a targeted market share and an annual total volume

of the completed projects is achieved a number of projects in a preparatory stage should be large enough to replace the in-progress projects

reaching completion and to add new projects making sure that the growth targets are met Our experience shows that the number of projects under preliminary analysis should be at list three times

bigger than the number of projects in a preparatory stage. Legislation issues – at any time the level of actual and potential claims should not exceed 0.3% of total annual

turnover. HR issues – a targeted overall level of personnel turnover is set at 2% annually, including the middle management

turnover of not more than 1%. Compensation schemes and career planning should secure the changes on top-management level according the shareholders’ decision only.

Profitability

Stability

Strategic Goals:

Targeted profitability of the Group: 20%+ per annum

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Corporate Strategy: Resources

Reputation One of the strongest brands in St.Petersburg (spontaneous brand recognition in St.

Petersburg about 42%). The image of stability and reliability promotes clients’ trust. Business transparency. Long-term relationships with over 200 suppliers and partners. Good relationships with a financial community. Long-term working relationships with local and federal government authorities and officials. Well-deserved respect by the professional community. Social responsibility. Personal reputation of owners and top management.

Technological intangibles Portfolio of patents. Well-documented technological processes for all stages of a building construction. In-house architectural and engineering capabilities and the library of the standardized building

designs. Strong market research unit. Established marketing and customer service divisions. Core activities are fully licensed.

Ample financial resources.

Own construction equipment (more than 30K m2 of the wall and column forms, more than 40K m2 of the plane forms; construction machinery fleet of more than 100 units; transportation fleet of more than 250 units; etc.).

A wide range of other construction site equipment.

Own Headquarter building, equipped with all necessary IT systems (10 000 m2).

Core competence: acquisition of development projects and supervision of all steps of project realization

Intangible Resources Core Tangible Resources

Necessary combination of resources in place

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Customer Project Project status

OJSC Transneft Construction of a pumping station Complete

FGUP Admiralteiskie verfi Reconstruction of a building berth Complete

VINCI Construction Grands Projects Construction of a multi-functional trade centre (foundation) Complete

FGUP ROSTEK Construction of the administrative building for a Customs terminal Pulkovo In progress

RAO UES Construction of a South-Western Power Station In progress

TOYOTA Construction of fascine fields Complete

NISSAN Construction of fascine fields In progress

Industrial Construction

LenSpecSMU experience in industrial construction

Industrial construction – new operational segment expanding rapidly

Up to date LenSpecSMU successfully completed 4 industrial construction projects. Other 3 projects are in progress. Project pipe line for industrial construction rapidly increasing.

In 2005 LenSpecSMU entered a new business segment – construction of industrial facilities.

Rapid economic growth of the North West region and substantial demand for construction of industrial facilities led to creation of a new Group’s entity that specializes on industrial construction – CJSC EtalonPromstroy.

Financial Overview

Present Situation Future Situation

Financial Strategy

17

Debt restructuring: LenSpecSMU increased the share of public debt and its maturity, and decreased the interest rate;

On 5th May 2006 LenSpecSMU executed its liabilities under put-option of bonds series 01;

On 26th July 2006 bonds series 02 were issued (1.5 bln rubles for 3.5 years);

Consolidated financial statements under IFRS (IAS) for the last 3 years were completed;

Standard & Poor’s has assigned rating ‘B’ outlook ‘Stable’ to LenSpecSMU.

LenSpecSMU continues its financial strategy execution

Present Situation 1Key Milestones in 2006

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In 2006 LenSpecSMU paid the principal of the debt for the sum of 46 mln USD and about 323 mln rubles ahead of the schedule;

New borrowings totalled 12 mln USD and 1500 mln rubles in 2006; As a result, the structure of the debt has much changed to public debt,

longer maturity and lower interest rate.

In 2006 the debt structure became more comfortable

Present Situation 2Debt Restructuring

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LenSpecSMU is a private closed joint-stock company. Therefore at the stage LenSpecSMU does not perform fund rising by the means of public equity market. However corporate strategy of the company assumes IPO in Russia or abroad during nearest 5 years.

LenSpecSMU became the first construction company of St. Petersburg to tap public debt capital markets, issuing RR 1.0 bln of bonds on Moscow Interbank Currency Exchange. Second bond issue (RR 1.5 bln) rapidly followed in 2006. By the beginning of 2007 LenSpecSMU plans to issue USD 100 mln credit-linked notes.

Bonds (01 series) Bonds (02 series)Placement 28.04.2005 26.07.2006Volume RR 1.0 bln RR 1.5 blnMaturity 5 years 3.5 years

Redemption

10% - 25.10.200715% - 23.10.200820% - 23.04.200925% - 22.10.200930% - 22.04.2010

100% - 20.01.2010

Put-option dates 05.05.200605.05.2008 28.07.2008

Call-option >1 year NoneCoupon payment 182 days 182 days

Coupon rate

1 – 15.5% 2 – 15.5%3 – 12.0%

4 – 11.75%5 – 11.25%6 – 11.0%

7-10 – TBD*

1 – 11.69%2 – 11.44%3 – 11.19%4 – 10.94%5-7 TBD*

* - To Be Determined

Rapid progression on Capital Markets

Present Situation 3Access to the Capital Markets

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Repayment of principle Interest rate

RR mln USD mln RR mln USD mln

2007 67.7 4.0 250.7 1.0

2008 101.5 2.5 230.1 0.6

2009 304.5 2.5 193.5 0.4

2010 1 703.0 2.5 84.9 0.2

2011 - 0.5 - 0.01

TOTAL 2 176.7 12.0 759.2 2.2

LenSpecSMU has a number of opportunities to make its debt position lighter

Current debt position of LenSpecSMU

Current debt position of LenSpecSMU reflects vast additional borrowing capacity

Present Situation 4Schedule of Debt Service and Repayment

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2003 2004 2005

Balance (‘000’ RR)

Total assets 5 227 166 6 685 075 9 769 734

Loans and borrowings (interest-bearing debt) 213 618 267 668 1 568 491

Equity 134 906 327 091 625 958

P&L (‘000’ RR)

Revenue 1 964 887 6 145 168 5 629 222

EBITDA 48 429 201 702 547 008

Interest payable 3 942 5 572 37 778

Net profit 19 916 104 844 303 078

Ratios

Loans and borrowings / Total assets 4.1% 4.0% 16.1%

Loans and borrowings / Revenue 10.9% 4.4% 27.9%

Loans and borrowings / EBITDA 4.4 1.3 2.9

EBITDA / Interest payable 12.3 36.2 14.5

EBITDA margin (EBITDA / Revenue) 2.5% 3.3% 9.7%

Net profit margin (Net Profit / Revenue) 1.0% 1.7% 5.4%

3 years of IFRS accounting is possibility to study development on historical basis

Present Situation 5Key Indicators

22Cash flow is probably the best indicator of the construction company’s activity

Present Situation 6Cash Flow

3 305 020

4 872 764 5 155 221

9 799 486

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2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

7 000 0008 000 000

9 000 000

10 000 000

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rubl

es

2003 2004 2005 2006

23The main cash flow is still generated by sales of residential and commercial real estate, but other activities are also increasing

Present Situation 7Cash Flow Structure

87,2%

12,4%0,5%

Residential, commercial real estate and parking places

Hotel on Vasilevski Island (Project “At the Rostral columns”)

Industrial construction

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Group strategic goals

Market share in St. Petersburg region up to 20% (not less than 300 000 m2 p.a. by 2008)

Market share in other regions up to 5 %

(Up to 200 000 m2 p.a. by 2008)

Diversification:

Construction of commercial real estate (up to 300 000 m2 p.a. by 2008)

Construction of industrial real estate (up to 100 000 m2 p.a. by 2008)

Operational profitability not less than 25 % p.a.

Sustainable growth ≥1.5

Growth of Enterprise Value of 20-50% p.a.

Growth of Equity Value

Financial Strategy 1Group Strategic Goals

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Financial strategy of LenSpecSMU is based on transparency for investors and lenders.

IR efforts include mandatory and voluntary information disclosure in significant volumes, investors presentations, one-on-one meetings, obtaining credit ratings from one of the leading international rating agencies.

Financial Strategy 2Financial Policy

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Mandatory disclosure of information performed by only one entity, CJSC CUN (issuer of two bond loans). The entity performs disclosure in accordance with Federal Commission For Securities Markets (FCSM) regulations.

However, additional voluntary disclosure of information performed by the group on the regular basis since year 2004. In order to maintain and to increase level of corporate transparency LenSpecSMU created financial website www.finance.lenspecsmu.ru (both in Russian and in English).

Using financial website the company publishes on a regular basis the following information: material facts; quarterly reports; annual reports; lists pf affiliated parties; statutory documents and licenses; securities issue documents.

Other types of voluntary disclosed information includes: structure of Group LenSpecSMU; information about top management of the Group; operational results ; RAS and IFRS accounts; credit history; additional information for investors (“Investor’s calendar” - list of essential dates for bond holders).

Increasing level of transparency - important intangible investment

Financial Strategy 3Financial Policy. Information Disclosure and Transparency

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Growth of Equity by the means of retained earnings

Strategic / Financial Investor (Direct Equity)

Private placement

Initial and secondary public offerings

Financial Strategy 5Equity Strategy

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Debt denominated in depreciating currencies: USD, EUR

Fixed of step down interest rates

Increasing diversity of lenders in various segments of debt capital markets

Public transactions are the priority:CLNSyndicated loansEurobonds

Long-term loans and credits are preferable

If required, significant loans from major Russian banks are possible to arrange using pledge of property

Currency

Interest Rates

Lenders

Maturity of debt

Financial Strategy 6Debt Strategy

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Ratio Criteria 2005

Current ratio = Current assets / Current liabilities ≥ 2.0 1.8

Working capital / Total assets, % ≥ 40 39.4

Interest-bearing debt / EBITDA ≤ 4.0 2.9

EBITDA / Interest payable ≥ 2.5 14.5

Interest bearing debt / Tangible Net Worth ≤ 3.0 1.9

Profitability = Operating profit before interest and tax / Sales, % ≥ 25 8.8

RONA = Operating profit before interest and tax / Net assets, % ≥ 20 9.8

ROE = Net profit after tax / Opening equity ≥ 0.8 1.0

Sustainable Growth = Retained earnings / Opening equity ≥ 1.5 1.3

Financial Strategy 7Key Indicators