Moscow, Russia, Paris, France - January 2, 2008 - Sistema-Hals (LSE, MICEX, RTS: HALS), a leading diversified company in the Russian and CIS real estate market, and  Apsys, a leading European developer and asset manager specialized in the real estate retail industry, today announced the signing of a long term strategic partnership agreement to co-develop and manage retail projects in Russia.

Pursuant to the agreement, Apsys and Sistema-Hals will each control 50% of a joint venture, which will carry out retail development projects jointly selected by the parties.

The joint venture's first investment is the acquisition from Sistema-Hals of 100% of the shares of the company holding Leto City, a super-regional 2 storey, retail & entertainment center under construction with approximately 75,000 m2 GLA located on a 17.7 ha site in Pulkovskoye Schosse to the South of St. Petersburg.

"This partnership will contribute to the high-grade growth of our retail activity, through a combination of  Apsys' recognized expertise in the development, leasing and management of retail properties, and the strong track record of Sistema-Hals as a leader in the Russian real estate development market," said Felix Evtushenkov, President of JSC Sistema-Hals.

"This partnership is our first investment in Russia, and we are happy that this important step is made with Sistema-Hals. We believe that the complementary nature of the strengths of our two companies will ensure the success of this joint venture and will enable it to build a leading retail portfolio in Russia", said Maurice Bansay, President of  Apsys.

Note to editors

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 facilities and property 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 company group FJSC 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 Central and Eastern Europe real estate markets.

Since starting its operations in 1994, Sistema-Hals has successfully completed more than 30 projects with a total area of about 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 Moscow City Telephone Network, rebuilding the Hotel Peking and the flagship Children's World toy store near Lubyanka Square, and pursuing a series of other projects.

Sistema-Hals has assembled a balanced and diversified portfolio of assets in fast-growing sectors of the market. The company 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 the properties and projects in its portfolio at USD 2,882 million as at 1 July 2007.

Apsys is a global retail real estate operator with a long term investment portfolio with the shopping centers that it develops. The core business of  Apsys and its affiliates is the development, the letting and the management of shopping centers.

The  Apsys group has been created in 1996 by its President Maurice Bansay and Fonci?re Euris, a Paris listed group dedicated to retail (FMCG et sport) and real estate. Apsys has first developed its activities in Poland, where it is now the leader in the shopping center industry, and in France since 2002.

The group has completed over 450,000 sq.m. retail development, among which the landmark Manufaktura retail and entertainment center in the Center of Lodz, Poland's second largest city, a 150,000 sq.m. development in an 19^th century textile factory. Manufaktura has been awarded by many international prizes, such as the ULI Award for Excellence - World 2007 by the Urban Land Institute.

The Apsys group operates 17 shopping centers in Poland and France, which generate a total rental flow of ? 60 million per year. It signs 300 lease agreements every year and enjoys close relations with all the major brands in the retail industry.

The Aspys group is currently developing 15 projects in France and Poland, adding up to a total of 700,000 sq.m., including the Beaugrenelle project, a 45,000 sq.m. re-development and extension of an out fashioned shopping center in Paris. These developments will represent an investment of approximately ? 1.3 billion.

By taking into account the local characteristics and its specificities (including on a cultural and historical level) and the clients' specific needs and desires, each Apsys project is a unique, tailored response with a specific identity, creating a genuine link with the city and the citizens.

The Apsys group is moving to the strategic Russian market, where it aims to develop a network of large shopping centers. It will dedicate substantial human and financial resources in order to carry out an ambitious development plan in this buoyant, under-supllied market.