OREANDA-NEWS. September 20, 2012. OJSC Rosinter Restaurants Holding (Rosinter), the leading casual dining restaurants chain in Russia and CIS (RTS and MICEX ticker: ROST), announced its financial results for 1H 2012 prepared in accordance with IFRS. The Company’s unaudited consolidated financial statements for the period are posted on our web page at www.rosinter.com.

1H 2012 HIGHLIGHTS

Consolidated net revenue increased by 3.0% compared with 1H 2011 and stood at RUB 5,189 mln.

?Same store sales decreased by 1.2% during 1H 2012 as a result of a 3.4% increase in same store average check and a 4.4% decline in same store transactions.

Gross profit amounted to RUB 1,005 mln and gross profit margin stood at 19.4% compared with 17.5% in 1H 2011.

Operating profit before impairment amounted to RUB 177 mln for a margin in operation before impairment of 3.4% compared with a negative margin of 1.3% in 1H 2011

EBITDA[1] amounted to RUB 214 mln and EBITDA margin stood at 4.1% compared with a negative margin of 1.0% in 1H 2011.

EBITDA[1] before impairment and write–offs amounted to RUB 394 mln and EBITDA margin before impairment and write–offs charges stood at 7.6% compared with 4.6% in 1H 2011.

?Net loss amounted to RUB 75 mln and net loss margin stood at 1.4% compared with a loss margin of 6.4% in 1H 2011

Gross debt at RUB 1,398 mln, including RUB 782 mln long-term debt

Net debt decreased by 13.6% to RUB 1,095 mln, leading to a Net debt/EBITDA of 1.8x at June 30, 2012 in comparison with 3.8x as at December 31, 2011

Kevin Todd, President and Chief Executive Officer, commented:
“I would like to share with you the medium-term transformational strategy that we have put together for our business in order to provide a broader context for your analysis of our current results. The strategy is already being executed and has been approved by our board of directors in July. It is the result of a thorough review of our operation made by our team with the support of external consultants. The project was launched in March 2012 when the Chairman of the Board and the Board gave me the responsibility to lead the Rosinter business which has been facing for some time weak traffic flow to our restaurants, declining profitability margins and an increasing competition which has been posing additional pressure on our brands. The review allowed us to define a medium-term strategy that targets a stabilization of our business and building the foundation for long-term and sustainable growth.

Knowing that we would be facing challenges going forward reinforced my commitment to insure that we have the right people in the right place and best in class professionals in each area of responsibility. Simultaneously with the review, we launched a search for experienced top managers with deep restaurant business knowledge and with the experience required to execute with success our strategy and consolidate Rosinter as a guest-focused organization with compelling and profitable brands that excite our guests and build up sustainable growth of our EBITDA margins.

In our search, we looked for several characteristics in our new team members. We wanted them to be business minded, strong, challenging, independent, challenge-driven and hands-on, and I believe that we have succeeded in building a team that combines experience in big multi-branded international restaurant companies and in Rosinter, the biggest Russian multi-branded operator. This valuable mix of geographical experience is complemented by a strong combined track record of the team in brand development, turnaround, performance improvement, corporate development and franchising.

Let me walk you briefly through the five strategic directions that we have defined:

1. Focus the portfolio – refers to our commitment to reshape and concentrate our portfolio on profitable, scalable, growing or high potential brands and regions. This will reduce the distraction of management resources generated by non-core businesses. Our main brands will be IL Patio, Planet Sushi, TGI Friday’s®, and Costa Coffee, which will be complemented by McDonald’s and Mama Russia in our Transportation Hubs Business Unit.

2. Re-establish brand and operational competitiveness – addresses four initiatives that will bring our two main brands IL Patio and Planet Sushi to a major repositioning by 2014.

a. Menu revitalization - In 4Q 2102 we will be revitalizing our menus and launching simultaneously a series of complementary marketing actions that target an improved guest dynamic in our stores during our high season.

b. Assets upgrade - We will be investing RUB 280 mln approximately upgrading our assets base by 2013.

c. Genesis project - we are selecting a number of restaurants (both corporate and franchise) to create a “gold standard” in service to our guests where store managers and teams will demonstrate higher commitments and quality standards and a special passion for serving people that permeates everything that happens in the store. Rollout for the Genesis stores for Planet Sushi and IL Patio is planned to begin 2H 2013 and the test for these stores will be executed during 2H 2012 and 1H 2013.

d. Next Generation - is a major repositioning project for our two brands IL Patio and Planet Sushi for the next 10 years. We are working with world-class specialists to re-design how our two brands look, feel and even taste. Next Generation stores rollout for IL Patio and Planet Sushi is planned to begin during 2014, once the conceptual design and testing complete.

3. Improve profitability and sustainability – includes a series of operational efficiency and supply chain initiatives at restaurant and corporate levels that will impact positively our profitability. It also includes an overhead cost reduction.

4. Grow selectively – means focusing our corporate growth on higher-volume sites and on expanding further our transportation hubs business while providing enhanced support for our franchisees to continue growing their business. We expect lower corporate expansion in 2013, while we revitalize our core brands, with our corporate development expected to increase from 2014. Meanwhile, our franchise system will continue expanding with an enhanced support from our organization.

5. Reorganize and build capabilities – refers to several initiatives of which I would like to highlight three. The first is the reorganization of our operational team and clarification of accountabilities & responsibilities, especially closing the gap between brands & operations and also the link between how we operate our corporate estate and support the growing franchise portfolio. This will have a very positive impact in the way we deliver our brand experience. The second is a reorganization that will lead to a leaner and more effective support service team, and the third one is a transformation program to embed the strategy and values in the organization plan. We want “everyone in our organization to serve our guest or serve someone who does”.

We know that a strong commitment of our whole organization is needed to succeed in strategy execution and we are dedicating the necessary time and resources to communicate our new strategy at all levels in the organization and to strengthen the engagement of all our team in implementing effectively, phase-byphase, our mid-term transformational strategy.

Our top management team and I are very enthusiastic with the opportunity that lies ahead of us, challenges included, and we are confident that by focusing on and repositioning our core brands IL Patio and Planet Sushi, by reorganizing and strengthening our organization, including our franchise support, and by developing a greater customer focus we will be able to turn our business again into a market leading and profitable operation.

I look forward to our next two scheduled releases and conference calls which will give us the opportunity to update you on our progress: 9m 2012 results release early December and 4Q 2012 trade update January 2013.”