ETLN.L Regulatory News (ETLN)

8 June 2011

ETALON GROUP LIMITED

("Etalon Group" or "the Company")

ETALON GROUP TO BUILD NEW MASS-MARKET RESIDENTIAL NEIGHBOURHOOD

PROVIDING 220,000 SQM OF NSA IN THE NORTH OF MOSCOW

Etalon Group (LSE: ETLN) announces that it has entered into an agreement to start a new mass market residential neighbourhood development project in the "Dmitrovskiy" metropolitan region of Moscow. This is the first new project the Company has added to its development pipeline since its lPO on the London Stock Exchange in April and its third project in the Moscow Metropolitan Area ("MMA").

Etalon Group has entered into the investment contract, through its wholly owned subsidiary OJSC Etalon-Invest. The 10.3 ha site will be developed as a multi-storey residential complex, which will deliver approximately 220,000 sqm of Net Sellable Area ("NSA"). The contracting party will provide the required utility infrastructure, including water and electrical supplies, for the construction period, which is expected to start in 2012.

The site borders Yahromsky passage to the north and Dmitrovskoye highway to the east, and can be accessed easily from either of these major transport routes, meaning that it is possible to reach the centre of Moscow by car in approximately 20 minutes, in non-peak hours. There are plans to build a metro station, Yubileinaya, adjacent to the site in the next few years, and there are also a number of bus stops situated within walking distance.

Beskudnikovo railway station, Savelovskoe direction is just 1.5 km from the complex, providing easy access to the centre of Moscow in five minutes. In addition, the complex is situated in a pleasant environment, close to Dmitrovsky Park, VISKHOM Park and Veteran Theme Park.

Etalon Group has with two other large-scale development projects in the MMA, located in the Krasnogorsk and Butovo regions, which are currently ongoing.

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

"The Moscow Metropolitan Area is a strategically important region for Etalon Group and this project represents an excellent opportunity for us to fulfill our strategy of expanding our development portfolio there through the construction of a significant new residential project in an area offering great potential through its central location and access to the city centre."

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%.