Rosinter Restaurants : 8/28/2014 Press Release - 1H 2014 Financial Results

Moscow, August 28, 2014 PRESS RELEASE

REVENUE AMOUNTED TO RUB 4 703 MLN EBITDA margin before impairment and write-offs at 8%

OJSC Rosinter Restaurants Holding (Rosinter), the leading casual dining restaurants chain in Russia and
CIS (Moscow Exchange MICEX-RTS ticker: ROST), announced today its unaudited financial results for 1H
2014 prepared in accordance with IFRS. This press release is available on www.rosinter.com.

 Consolidated net revenue stood at RUB 4 703 mln

 Revenue from restaurants decreased by (4.4)% to RUB 4 490 mln compared with 1H 2013

 Operating profit before impairment amounted to RUB 207 mln for an operating margin before impairment of 4.4% compared with a margin of 3.3% in 1H 2013

 EBITDA amounted to RUB 359 mln and EBITDA margin stood at 7.6% compared with a margin of

 Net profit for the period amounted to RUB 57 mln and net profit for the period margin stood at

 As of June 30, 2014 gross debt was RUB 1 480 mln, that was 100% long-term debt in total

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Sergey Zaytsev, President and Chief Executive Officer, commented:

"In the first half of 2014, our company has successfully continued the expansion of activities in transport hubs. During this period we opened 7 new restaurants and coffee shops in Kazansky, Belorussky, Paveletsky and Leningradsky Moscow railway stations. As of June 30 2014, Rosinter operates 54 stores in transport hubs.

We continued a strategy of portfolio optimization and focused business development throughout all territories of our presence. As a part of the strategy we sold our operations in Poland to a franchisee.

During the spring of 2014 we successfully launched two marketing campaigns. One to celebrate the 15th anniversary of one of our key brands, Planet Sushi, and the second was a promo- campaign for IL Patio, "Rome Vacations", offering a special spring menu that supported average check in challenging economic environment.

The slowdown of consumer spending affected our restaurant revenues. However the revitalization of brands and the optimization of fixed costs contributed to support our operational efficiency. Currently we have 14 revitalized restaurants in our portfolio that all deliver positive sales growth. Also, the optimization of fixed costs, such as headcount reduction in our support center with a corresponding payroll expense decrease by 12.3% compared to 6M 2013 made a positive contribution to our efficiency targets.

During the second half of 2014, we are continuing our portfolio optimization. We plan to sell corporate canteens business, continue restructuring of SG&A expenses and management processes as well as focusing on the further development of our business in transport hubs and strategic projects. At the same time, due to changes in import regulations, our target is to maintain

the F&B cost keeping the high quality of our meals."

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Income Statement Summary

(RUB) thousands

6M 2014 6M 2013

% Change

Y-o-Y

Net revenue 4 702 866 100,0 % 4 929 600 100,0 % (4,6)% Incl. Revenue from restaurants and canteens 4 490 001 95,5 % 4 697 325 95,3 % (4,4)% Incl. Revenue from franchising 133 739 2,8 % 151 638 3,1 % (11,8)%

Cost of sales 4 062 718 86,4 % 4 002 213 81,2 % 1,5 % Incl. Food and beverages 1 037 622 22,1 % 1 117 006 22,7 % (7,1)% Incl. Payroll and related taxes 1 058 793 22,5 % 1 076 669 21,8 % (1,7)% Incl. Rent 1 143 855 24,3 % 970 050 19,7 % 17,9 %

Gross profit 640 148 13,6 % 927 387 18,8 % (31,0)%

SG&A Expenses 594 530 12,6 % 681 715 13,8 % (12,8)% Incl. Payroll and related taxes 374 024 8,0 % 426 410 8,6 % (12,3)% Incl. Advertising 51 234 1,1 % 63 927 1,3 % (19,9)% Incl. Other expenses 38 941 0,8 % 49 964 1,0 % (22,1)%

Start-up expenses for new restaurants 79 838 1,7 % 65 047 1,3 % 22,7 %

Other gains 302 631 6,4 % 35 697 0,7 % 747,8 % Other losses 61 710 1,3 % 53 210 1,1 % 16,0 % Incl. Loss on disposal of non-current assets 38 894 0,8 % 31 562 0,6 % 23,2 %

Profit from operating activities before impairment 206 701 4,4 % 163 112 3,3 % 26,7 % (Reversal of)/loss from impairment of operating assets (22 649) (0,5)% 43 585 0,9 % (152,0)% Profit from operating activities after impairment 229 350 4,9 % 119 527 2,4 % 91,9 % Financial expenses, net 82 281 1,7 % 59 960 1,2 % 37,2 %

Foreign exchange gains/(losses), net 16 304 0,3 % 22 654 0,5 % (28,0)%

Profit before tax from continuing operations 163 373 3,5 % 82 221 1,7 % 98,7 % Income tax expense (51 025) (1,1)% (32 009) (0,6)% 59,4 % Profit for the period from continuing operations 112 348 2,4 % 50 212 1,0 % 123,7 %

Loss after tax for the period from discontinued operations (54 962) (1,2)% (94 455) (1,9)% (41,8)%

Net profit/(loss) 57 386 1,2 % (44 243) (0,9)% (229,7)%

Profit from operating activities after impairment 229 350 4,9 % 119 527 2,4 % 91,9 %

Depreciation and amortization 129 980 2,8 % 149 682 3,0 % (13,2)%

EBITDA (1) 359 330 7,6 % 269 209 5,5 % 33,5 %

(Reversal of)/loss from impairment (22 649) (0,5)% 43 585 0,9 % (152,0)%

EBITDA before impairment 336 681 7,2 % 312 794 6,3 % 7,6 %

Loss on disposal of non-current assets 38 894 0,8 % 31 562 0,6 % 23,2 %

EBITDA before impairment and write-offs 375 575 8,0 % 344 356 7,0 % 9,1 %

Within the framework of our portfolio optimization we transferred to franchisees our corporate operations in Poland. As of June 30, 2014 the disposed business was classified as discontinued operations and its results for periods of 1H 2014 and 1H 2013 are presented in a separate line in the Income Statement.
In 1H 2014 consolidated revenue amounted to RUB 4 703 mln. Corporate restaurants revenue decreased by (4.4)% which was mainly due to the implementation of the strategic plan to improve our portfolio, including exiting unprofitable and non-core restaurants as well as non-stable economic situation which influenced our transactions. Revenue from franchising decreased by 11.8% mainly due to absence of franchising fee payments related to prolongation of existing franchising contracts compared to previous
period.

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Gross profit margin decreased to 13.6% in 1H 2014 from 18.8% in 1H 2013 mainly driven by a 17.9%

increase in rent measured as a percentage of total revenue.
Payroll increase by 70 basis points was mainly driven by inflation; whereof food and beverages decrease by
60 basis points was caused by productivity optimization, those items measured as a percentage of sales.

Selling, general and administrative expenses decreased as a percentage of revenue to 12.6% in 1H

2014 from 13.8% in 1H 2013 driven mainly by a decrease of 60 basis points in payroll due to optimization of support center and 20 basis points in advertising expenses, all measured as a percentage of total revenue.

1H 2014 in comparison to 1H 2013 due to number of new openings in railway stations sites than our average per store and also to additional expenses related to our revitalization.

Other gains increased by 5.7% due to selling of non-core operational business in Siberian region, other losses increased by 20 basis points due to increase in loss on disposal of non-current assets, calculated as a percentage of total revenue in 1H 2014 in comparison to 1H 2013.

Profit from operating activities after impairment stood at 4.9% in 1H 2014 in comparison with Profit from operating activities after impairment of 2.4% in 1H 2013, all measured as a percentage of total revenue.

The increase of net financial expenses by 50 basis points is mainly driven by higher amounts of interest paid due to increased level of gross debt comparing to 1H 2013.
Income tax expense in 1H 2014 increased by 50 basis points compared to 1H 2013.
Loss after tax from discontinued operations in 1H 2014 amounted to RUB 55 mln. For more information please refer to note 5 of the financial statements for the six months ended June 30, 2014.
As a result, Net profit margin increased to 1.2% in 1H 2014 compared to net loss margin of (0.9)% in 1H
2013.

EBITDA margin in 1H 2014 increased to 7.6% from a margin of 5.5% in 1H 2013, EBITDA margin before impairment increased to 7.2% in 1H 2014 in comparison to 6.3% in 1H 2013. EBITDA margin before impairment and write-offs increased to 8% in 1H 2014 from 7% in 1H 2013.

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Cash Flow Performance

(RUB) thousands 6M 2014 6M 2013 % Change

Y-o-Y

Cash flow from operating activities before change in operating assets and liabilities stood at RUB 66 mln in 1H 2014 from RUB 289 mln in 1H 2013 mainly due to a lower gross operating profit earned by the company in 1H 2014 in comparison with 1H 2013.

Net cash flow used in investing activities increased by 146% to RUB 287 mln in 1H 2014 from RUB 117 mln in 1H 2013 mainly due to continued development in transportation hubs.

Net cash flow used in financing activities in 1H 2014 represents mainly repayment of bank loans as summarized in the table below.

Debt and Liquidity

(RUB) thousands 6m2014 12m2013 % Change

Y-o-Y

Total Gross Debt 1 480 000 100,0 % 1 553 940 100,0 % (4,8)% Short-term debt 0 - 33 940 2,2 % (100,0)% Long-term debt 1 480 000 100,0 % 1 520 000 97,8 % (2,6)% Net Debt 1 313 183 88,7 % 1 457 932 93,8 % (9,9)% Net Debt / EBITDA (2) 3,1 6,1 (48,4)%

Net Debt / EBITDA before impairment and write-offs (2) 2,5 3,3 (23,7)%

Total gross debt of the Group decreased by 4.8% and net debt decreased by 9.9% in 1H 2014 when compared with the corresponding figures as of December 31, 2013, mainly due to optimization of cash flow. The maturity profile of our debt portfolio improved with the long-term component increasing to 100% as of June 30, 2014 from 97.8% as of December 31, 2013. This is caused by successful refinancing of credit facilities. Also our debt portfolio is ruble denominated with fixed interest rates. Net debt/EBITDA ratio decreased to 3.1x as of June 30, 2014 from 6.1x as of December 31, 2013. Net debt/EBITDA before
impairment and write-offs ratio decreased to 2.5x as of June 30, 2014 from 3.3x as of December 31, 2013.

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Gross debt maturity schedule as of June 30, 2014 is illustrated below.

(RUB) mln Within 6M (2H 2014)

6M-12M (1H 2015)

12M-18M (2H 2015)

18M+ Total

Gross debt maturity

[1] EBITDA is calculated by adding back depreciation and amortization to profit from operating activities after impairment. EBITDA measures are not measurements of our operating performance under IFRS and should not be considered as an alternative to profit f or the year, operating profit or any other performance measures derived in accordance with IFRS or as an alternative to cash flow from operating activities or as a measure of our liquidity. Our approach to calculating EBITDA may differ from the approach of other companies.

[2] EBITDA is calculated over the 12 preceding calendar months.

Some information in this review may contain "forward-looking statements" which include all statements other than statements of historical fact. Such forward-looking statements can often be identified by words such as "plans", "believes", "anticipates", "expects", "intends", "estimates", "will", "may", "continue", "should" and similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's and/or its Management control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward- looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made, and the Company and/or its Management does not intend and has no duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained herein to reflect any change in the Company's and/or its Management expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. The information and opinions contained in this review are provided as at the date of this review and are subject to change by the Company's own discretion without notice of any kind and form.
* * *

Investors and analysts enquiries:

Denis Tkach

Corporate Finance and IR Head

E-mail: ir@rosinter.ru

Tel.: + 7 495 788 44 88 ext. 2108

Press enquiries:

Elena Mazur

Director, Corporate Communications

E-mail: pr@rosinter.ru

Tel.: +7 495 788 44 88 ext. 2353

Note to Editors:

As of 30 June 2014 OJSC Rosinter Restaurants Holding is the leading casual dining restaurant company in Russia and CIS, which operates 369 outlets in 42 cities in Russia, CIS and Central Europe, including Baltic countries. The chain has 337 casual dining stores, including 134 franchised restaurants, and 32 Costa Coffee outlets. The Company offers casual dining Italian and Japanese cuisine under its proprietary brands IL Patio and Planet Sushi. In addition, Rosinter Restaurants Holding develops and operates under franchise agreements a chain of American restaurants TGI FRIDAYS and a chain of British cafeterias Costa Coffee. In March 2012 RAZVITIYE ROST LLC (a subsidiary of OJSC Rosinter Restaurants Holding) has acquired the right to develop McDonald's brand on a franchise basis in Moscow and Saint Petersburg transportation hubs. Rosinter Restaurants Holding is listed on the Moscow Exchange MICEX-RTS (moex.com) under the
stock ticker ROST.

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APPENDIX

Unaudited Interim Consolidated Incarne Statement for the six months ended June 30, 2014

(Ali amounts are in thousands ofRussianRoubles, unless specified otherwise)

Continuing operations

For the six months ended June 30,

2014 2013

Notes Unaudited

Revenue IO 4,702,866 4,929,600

Cost of sales Il (4,062,718) (4,002,213) Gross profit 640,148 927,387

Selling, generai and administrative expenses 12 (594,530) (681,715) Start-up expenses for new restaurants (79,838) (65,047) Other gains 13 302,631 35,697

Other losses 13 (61,710) (53,21 O) Profit from operating activities before impairment 206,701 163,112

Reversal ofì'(loss from) impairment of operating assets 14 22,649 (43,585) Profit from operating activities after impairment 229,350 119,527

Financial incarne 9,645 5,521

Financial expense (91,926) (65,481) Foreign exchange gain, net 16,304 22,654

Profit before income tax from continuing operations 163,373 82,221

Incarne tax expense (51,025) (32,009) Profit for the period from continuing operations 112,348 50,212

Discontinued operations

Loss after tax for the period from discontinued operations 5 (54,962) (94,455) Net profit/(loss) for the period 57,386 (44,243)

Attributable lo:

Equity holders of the parent entity 51,676 (43,236) Non-controlling interests 5,710 (l,007)

Earnings per share 8

Basic, eamings/(loss) per share 3.31 (2.77) Diluted, earnings/(loss) per share 3.16 (2.65)

Earnings per share for continuing operations

Basic, eamings per share from continuing operations 6.83 3.28

Diluted, eamings per share from continuing operations 6.51 3.13

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(Ali amounts are in thousands ofRussianRoubles, unless specified otherwise)

ASSETS

Non-current assets Property and equipment Intangibie assets Goodwill

Long-tenn Ioans due from reiated parties

Long-tenn receivabies due from reiated parties

Deferred income tax asset

Rent deposits and other non-current assets

Current assets

Inventories

VAT and other taxes recoverabie

Income tax prepaid

Trade and other receivabies

Advances paid

Receivabies from reiated parties

Short-tenn Ioans

Short-tenn Ioans due from reiated parties

Cash and cash equivaients

TOTAL ASSETS

EQUITY AND LIABILITIES

Equity

Equity attributabie to equity hoiders ofthe parent entity

Share capitai

Additionai paid-in capitai

Treasury shares

Other capitai reserves Accumulateci Iosses Transiation difference

Non-controlling interests

Non-current liabilities

Long-tenn Ioans and borrowings Long-tenn liabilities to partners Deferred income tax liabilities

Current liabilities

Trade and other payabies

Short-tenn Ioans and borrowings

Payabies to reiated parties

Short-tenn Ioans due to reiated parties Short-tenn liabilities to partners Deferred income

Income tax payabie

TOTAL EQUITY AND LIABILITIES

June 30, December 31,

2014, 2013, Notes unaudited audited

4 l ,854,054 I,733,528 l 01,004 I07,I31

150,229 176,153

6 23,038 20,642

6 915 1,577

108,834 167,261

246,875 244,040

2,484,949 2,450,332

145,014 182,924

149,691 172,783

40,836 43,660

436,839 161,614

173,491 357,247

6 103,557 53,439

12,793 19,087

6 8,994 8,994

166,817 96,008

1,238,032 1,095,756

3,722,981 3,546,088

7 2,767,015 2,767,015

2,204,190 2,204,190

7 (413,085) (413,085)

19,405 25,941 (4,274,326) (4,326,002)

3,614 (18,165)

306,813 239,894

9,077 4,530

315,890 244,424

9 l ,480,000 1,520,000

17,807 19,755

29,976 53,261

1,527,783 1,593,016

1,643,078 1,469,448

9 33,940

6 131,172 70,917

6 1,359 2,376

15,074

22,903 37,897

80,796 78,996

1,879,308 1,708,648

3,722,981 3,546,088

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Unaudited Interim Consolidated Statement of Cash Flows for the six months ended June 30, 2014

(Ali amounts are in thousands ofRussianRoubles, unless specified otherwise)

Operating activities

For the six months ended June 30,

2014 2013

Notes Unaudited

Profit before tax from continuing operations

Loss before tax from discontinued operations 5

163,373 (54,720)

82,221 (93,613)

Ac:{justments to reconcile profit!(loss) before tax to net cash provided by operating activities:

Depreciation and amortization

Reclassification adjustments for losses included in profit or loss

Foreign exchange gains, net

Gain from disposal of subsidiaries

Financial incarne

Financial expense

Allowance for impainnent/(Reversal of impainnent) of advances paid, taxes recoverable and receivables

Reversal of write-doVll of inventories to net realisable value

Loss on disposal of non-cment assets

Impairment of assets

Gain on the disposal of discontinued operation

Contingent liabilities and provisions

Share based payment

131,457

5 64,333 (14,427) (294,818) (9,645)

91,958

3,242 (15,327)

38,893

Il ,246

5 (49,800) l 0,950 (10,774)

154,323 (21,307)

(7 ,271)

66,812

(10,905) (2,139)

37,780

79,647

3,058

Changes in operating assets and liabilities:

65,941 288,606

Decrease in inventories

Decrease in advances, taxes recoverable, receivables, rent deposits and other non-cment assets

Decrease in receivables from related parties Increase/(decrease) in payables to related parties Increase/(decrease) in trade and other payables

50,159

185,605

1,211

47,018

193,732

48,256

2,503

27,559 (11,175) (120,131)

Net cash generated from operations

543,666 235,618

Interest paid Interest received Incarne tax paid

(87 ,061)

761 (15,295)

(60,587)

4,825 (47 ,838)

Net cash flows from operating activities

442,071 132,018

Investing activities

Purchases of property and equipment

Loans issued to third parties

Purchase of intangible assets

Proceeds from repayment of loans issued to third parties Proceeds from disposal of property and equipment Proceeds from repayment of loans issued to related parties Loans issued to related parties

Net inflow from cash and cash equivalents in respect of disposal subsidiaries

Net cash flows used in investing activities

(286,821) (5,900) (3,466)

5,961

1,112

2,327 (286,787)

(137,717) (724)

4,566

17,148

1,226 (1,190)

(116,691)

Continued on the next pa:ze

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Unaudited Interim Consolidated Statement of Cash Flows (continued)

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