OREANDA-NEWS. May 22, 2012. OJSC Rosinter Restaurants Holding (Rosinter), the leading casual dining restaurants chain in Russia and CIS (RTS and MICEX ticker: ROST), announces its audited financial results for FY 2011 prepared in accordance with IFRS.

FY 2011 HIGHLIGHTS

•           Consolidated Net Revenue increased by 6.4% compared to prior year and amounted to RUB 10,371 mln

•           Gross profit amounted to RUB 2,107 mln in 2011, for a gross margin of 20.3% vs. 23.8% in 2010

•           EBITDA amounted to RUB 335.1 mln in 2011 vs. RUB 1,048 mln in 2010

•           Net loss amounted to RUB 281.2 mln in 2011 vs. Net profit of RUB 257.5 mln in 2010

•           Net debt increased by 10.4% to RUB 1,267 mln with Net debt/EBITDA (12M Rolling) of 3.8x reflecting EBITDA contraction in 2011

4Q 2011 HIGHLIGHTS

•           Gross profit amounted to RUB 635 mln in 4Q2011, for a gross margin of 23.2% vs. 22.6% in 4Q2010

•           Operating profit (after impairment) amounted to RUB 89.5 mln in 4Q2011 vs. operating profit of RUB 170.9 mln in 4Q2010

•           EBITDA amounted to RUB 197.2 mln in 4Q2011 vs. RUB 273.8 mln in 4Q2010

•           Net loss amounted to RUB 4.6 mln in 4Q2011 vs. Net profit of RUB 17.2 mln in 4Q2010

Andrey Astakhov, Chief Financial Officer, commented:

"In the fourth quarter we benefited from an improvement in profitability despite a challenging start to 2011. During the year we focused on finding the balance between maintaining guest traffic and supporting operating margins through passing the cost inflation on to consumers. Our corporate development program

was slowed-down in the short-run in order to revise site selection process, increase success rate and return on investments. Also it was a year of strengthening of our management team and realigning internal processes.

Our sales and traffic were under pressure in 2011. Despite step-by-step menu price increases our traffic in comparable stores trended downwards since the second quarter, and only in December we have seen signs of trend reversal. Average check increase has offset this traffic decline and overall sales growth in comparable stores amounted to 1.6%. In addition to that, a growing contribution of recently opened stores resulted in an increase of consolidated revenue of corporate outlets by 7.3% in 2011.

In the first half and especially in the first quarter of the year our operating performance was affected by higher than expected food inflation, labor inflation and changes in social taxes. We implemented gradual price revisions as not to adversely affect traffic flow. In addition to price increases we initiated a new program on store level labor productivity and tightened control on procurement and competitive suppliers selection process. This brought clear results with gross profit margin increasing to 23.2% in the fourth quarter (as compared to 17.2% in the first quarter), which was greater than the gross profit margin in the same period of 2010.

Our results in 2011 were negatively affected by impairment provisions of 265 million rubles and store closure related write-offs of non-current assets of 184 million rubles. Our EBITDA margin before such non-cash items as impairments and non-current assets write-offs was steadily growing. In the fourth quarter it reached 12.7% as compared to 8.3% in the third quarter, 4.4% in the first half of 2011 and 11.7% in 2010.

It was decided to slow-down corporate expansion in 2011 and focus on development of our core business, while giving full support to franchise expansion with 25 gross franchise openings. In order to increase our success rate and return on investments we have implemented new site search, selection and approval process. As a result some of the previously approved locations were postponed or even canceled and in total we have opened 17 new corporate restaurants in 2011. At the same time we optimized our corporate portfolio by exiting non-core and low-performing locations. Although the restaurant portfolio optimization process had some negative impact in overall store count, it made a positive impact on shareholders' value given its positive effects on the company cash-flow and consolidated financial results. Accounting for closures, our restaurant count grew from 362 to 382 outlets by the end of 2011. We have also expanded our geographical coverage by opening first outlets in Irkutsk, Kemerovo, Baku (Azerbaijan) and Sevastopol (Ukraine).

Going forward we will focus on providing high quality guest experience and implementing new strategic initiatives that will help us further improve operating performance and sales trends. Our marketing activities in 2012 will include new promotional campaigns, attractive menu offerings and greater usage of digital advertising. We will also continue our strategy of selecting top-quality locations for both corporate and franchise development".