ETLN.L Regulatory News (ETLN)

27 June 2011

ETALON GROUP LIMITED

("Etalon Group" or "the Company")

ETALON GROUP TO BUILD NEW MASS-MARKET RESIDENTIAL NEIGHBOURHOOD

PROVIDING 50,000 SQM OF NSA IN THE SOUTH OF ST PETERSBURG

Etalon Group (LSE: ETLN) announces that it has acquired a 2.1 hectare land plot in the Moskovsky district of St Petersburg on which it plans to develop a new 50,000 sqm net sellable area ("NSA") mass market residential neighborhood project. This is the second new project the Company has added to its development pipeline since its lPO on the London Stock Exchange in April.

Etalon Group plans to develop a multi-storey residential complex, comprising housing, parking and commercial real estate on the site which is already fully equipped with the required utility infrastructure, including heat, water and electrical supplies. Construction is expected to start in 2012.

The site is located in the south of the Moskovsky district of St Petersburg and has good transport accessibility, being 2 km from Pulkovo Airport and 1 km from the airport railway station, close to the Pulkovskoe highway (which puts the centre of St Petersburg approximately 15 minutes away by car) and within a five minute walk of a number of bus stops.

In addition, the complex is within walking distance from a modern Pulkovo shopping and entertainment zone which comprises the LETO Shopping Mall, O'KEY hypermarket, Castorama DIY, LENTA, Pulkovo III Shopping Mall & Entertainment Centre and a METRO Cash & Carry.

Viacheslav Zarenkov, President and Chairman of the Board, commented:

"This acquisition is another positive step in the implementation of our post IPO strategy, which targets the growth of our operations through ongoing acquisitions of high quality development projects. We will now aim to start construction on site during 2012 as we continue to pursue further, similar acquisitions in our target geographies of the St Petersburg and Moscow Metropolitan areas."

ENQUIRIES:

Financial Dynamics - Financial Public Relations Adviser

ABOUT ETALON GROUP

Etalon Group is one of Russia's largest residential real estate developers. Since its original inception in 1987, the Company has built a leading position in the St. Petersburg Metropolitan Area, where it has recorded an 11% average annual market share of total residential completions in the private sector (excluding individual constructions) between 2000 and 2010. It also has a growing presence in the Moscow Metropolitan Area market.

Etalon Group has a strong portfolio focused on large-scale residential complexes, targeting the lower middle class and upper economy class price segments, providing high quality living at affordable prices.

As of 31 December 2010, the Company's portfolio comprised 28 projects with a total of 3.13 million sqm of unsold net sellable area ("NSA") in the St. Petersburg and Moscow Metropolitan Areas.

For the year ended December 31 2010, the Company recorded revenues of RUB 20.3 billion (USD 669 Million) and EBITDA of RUB 6.9 billion (USD 227 Million), with an EBITDA margin of 34%.