Moscow, Russia - 8 April, 2008 - Detsky Mir group and Sistema-Hals announce that the decision has been taken to close the Detsky Mir building on Lubyanka Square (5/1 Teatralny Proyezd) for reconstruction and restoration with effect from 1 July 2008.

The sophisticated plans for the reconstruction project and the use of modern building technology and design will enable the store to retain its image as one of the capital's outstanding landmarks and at the same time update the interior to make it more convenient for shoppers.

The total area of the building after reconstruction is expected to increase from 57,500 square meters to 74,000 square meters, and the shop floor area will nearly double from its current 19,000 square meters.

The building's external appearance, existing dimensions, height, plot size and silhouette will remain unchanged.

JSC Sistema-Hals is a leading diversified company in the Russian and CIS real estate market. The core businesses of Sistema-Hals are development, project management and construction, and property and facilities management.

Sistema-Hals was the first Russian property developer to list its shares on the main market of the London Stock Exchange. The company's shares are also listed on the Moscow Interbank Currency Exchange and the Moscow Stock Exchange. The Parent company Sistema holds a 71.1% stake and there is an 18% free float. Sistema-Hals is one of the largest companies by capitalisation operating in the real estate markets of Central and Eastern Europe.

Since starting operations in 1994, Sistema-Hals has successfully completed more than 30 projects with a total area in the region of 300,000 square metres, including the headquarters of DaimlerChrysler, the Hals Tower office building, the headquarters of Trubnaya Metallurgical Company and a hotel for the MaMaison chain (Orco Property Group).

At present Sistema-Hals is constructing the Leningradsky Towers complex, which comprises two buildings, one of which will be the headquarters of Siemens in Moscow. It is also carrying out a complex redevelopment of the property portfolio of the Moscow City Telephone Network, and rebuilding the Peking Hotel, as well as the flagship Detsky Mir toy store near Lubyanka Square, and pursuing a series of other projects.

Sistema-Hals has built a balanced and diversified portfolio of assets in fast-growing sectors of the market. The company's strategy is focused on building Class A and B office space, mixed-use retail and office complexes, business-class homes, residential estates and land development.

Cushman & Wakefield valued Sistema-Hals' share of properties and projects in its portfolio at USD 2,882m as at 1 July 2007.

Detsky Mir group is Russia's leading retailer of goods for children and young people, comprising the Detsky Mir store chain and S-Toys, one of the country's largest producers and importers of toys. The chain has 171,000 square meters of floor space in 97 supermarket and hypermarket stores in 48 cities across Russia. Revenues under US GAAP for Detsky Mir amounted to USD 335.3m for the year 2006 and USD 333.7m for the first 9 months of 2007. The group's holding company is Detsky Mir - Centre, which has AFK Sistema as its major shareholder.