Rosinter Restaurants : 12/25/2020 Press Release – Operating and financial results 1H2

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PRESS RELEASE

ROSINTER RESTAURANTS HOLDING PJSC ANNOUNCES IFRS RESULTS FOR 1H 2020

Moscow, December 25, 2020: Rosinter Restaurants Holding PJSC (Rosinter or Rosinter Restaurants or the

Company) is one of the major operators in the casual dining restaurant segment in Russia (MICEX-RTS: ticker ROST) announces its operating and financial performance for 1H 2020, in accordance with IFRS. These statements have been confirmed by the auditor of the Company and have been prepared in accordance with the application of IFRS 16 "Leases" *.

FINANCIAL AND OPERATING HIGHLIGHTS

AND CORPORATE EVENTS IN 1H 2020

• Consolidated revenues[1] of Rosinter Restaurants Holding PJSC decreased by 54% in 1H 2020 compared to 1H 2019 and amounted to MRUB 1,748 as a result of the negative impact of restrictive measures imposed by the Government due to spread of COVID-19 in Russia and around the world. Those restrictive measures resulted in a lost revenue during the period when Group's restaurants were closed for almost the entire 2nd quarter of 2020. Guest traffic and, accordingly, revenue from restaurants drastically decreased at the end of the 1st quarter of 2020 due to negative news about the beginning of a COVID-19 pandemic.
• The IFRS 16 "Leases" had a significant effect on IFRS financial results. The impact of IFRS 16 led to an increase in EBITDA[2] by MRUB 1,048 to MRUB 938.2. Adjusted EBITDA (without the IFRS 16 effect) for 1H 2020 was negative and amounted to MRUB 110.2. Despite the decrease in revenue for 1H 2020 by MRUB 2,016 compared to 1H 2019, the Group managed to avoid a more significant to decrease in adjusted EBITDA[3], which amounted to MRUB 105.1 in 1H 2019.
• The impact of IFRS 16 Leases led to an increase of net loss by MRUB 545 to MRUB 1,031 due to foreign exchange losses from revaluation of foreign currency denominated lease liabilities. The adjusted[3] net loss amounted to MRUB 486.7.

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Margarita Kosteeva, CEO, Rosinter Restaurants Holding PJSC:

"Most of the Group's restaurants were closed due to quarantine restrictions imposed by the Government and regional authorities of the Russian Federation from March 28 to June 16, 2020. Commercial activity was carried out only by 15-20% of the restaurants of the total number of the Group's restaurants that worked for delivery. The decrease in guest traffic began in early March 2020, and quarantine restrictions were lifted at the end of June in Moscow and in August in other regions of Russia. The Group did not receive revenue for at least three calendar months. As a result, gross revenue for the 1H 2020 decreased by 54% and amounted to MRUB 1,748.

Rosinter is planning to gradually reopen at least 95% of restaurants after the pandemic (compared to the number at the beginning of 2020). Currently, more than 90% of corporate and franchised restaurants have already been reopened, mostly in city locations. The situation remains difficult at transportation hubs, since guest traffic directly depends on the level of passenger traffic, and restaurants will reopen as traffic restores.

Restart of the business after the spring lockdown, as well as the threat of a "second wave" of the pandemic, required us to change the tools and approaches in budgeting and cost management. Rosinter has revised the financial model of restaurants while maintaining EBITDA profitability and financial stability during the pandemic and post-pandemic periods that were affected by decrease in revenue due to drop in consumer demand and negative impact of macroeconomic factors.

The Group is working on optimizing the business model of the main restaurant brands (IL Patio, TGI Fridays, Planet Sushi, Shikari, Costa Coffee, American Bar and Grill, Mama Russia, etc.), in order to make them more affordable in the current economic environment and to develop them through franchising.

Rosinter has re-engineered the menu of restaurant concepts, adding new high-quality and more affordable dishes. Decrease in the purchasing power of people (along with the continuing threat of the spread of COVID-19) will be one of the main reasons preventing the recovery of the restaurant business in the near future. Updating the menu by introducing more affordable dishes will retain regular guests, allowing them to feel comfortable in the current position and not to abandon their favorite restaurants.

In addition, Rosinter has seriously changed the strategy of promoting restaurant brands in favor of digital tools, web personalization, working with the visual component of brands and Internet resources, this will ensure diversification of the client base and will increase the loyalty of regular guests in the future.

The Group's management has developed a number of cost-optimization measures to maintain its liquidity position, including:

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• Food and beverages cost reduction by re-engineering the menu and adapting it to the consumer. As a result, despite the volatility of the currency exchange rate, the economic consequences of the pandemic and the increase in purchase prices, decrease in the food and beverages cost as percent of revenue compared to the 1H 2019 amounted to about 3%.
• Since the beginning of the pandemic, the Group has been negotiating with landlords to revise the rental rates and provide a discount in proportion to the factual restaurants revenue for the COVID-19 recovery period when a consumer demand is low. As a result of negotiation, average rental payments decreased by 51.6% for the Group's restaurant portfolio over the reporting period.
• In the second quarter of 2020, we started negotiating with banks to restructure the Group's loan portfolio.

The pandemic has had a tremendous impact on the restaurant industry. We have faced unprecedented challenges related self-isolation, quarantine, implementation of digital tools and high levels of economic instability. The economic landscape has changed not only for individual trading territories, but for entire cities. Consumer behavior and purchasing power are changing. We understand that the restaurant business will work in new realities after restoration. And we are ready for this.

I would like to thank each Rosinter Restaurants employee for their loyalty to the company and selfless work during this difficult period, to say words of gratitude to partners for constructive cooperation and willingness to meet halfway and to shareholders - for their trust and support!

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Financial and operating highlights for the 1H 2020 and 1H 2019 without the IFRS 16 effect.

(RUB) thousands		6M 2020			6M 2019		% Change,		p.p. change,
				Y-o-Y		Y-o-Y
Net revenue	1,747,663	100.0 %	3,763,280	100.0 %	(53.6)%	-
Incl. Revenue from restaurants	1,677,292	96.0 %	3,628,032	96.4 %	(53.8)%	(0.4)%
Incl. Revenue from franchising	43,958	2.5 %	102,291	2.7 %	(57.0)%	(0.2)%
Cost of sales	1,736,904	99.4 %	3,359,755	89.3 %	(48.3)%	10.1 %
Incl. Food and beverages	320,305	18.3 %	796,872	21.2 %	(59.8)%	(2.9)%
Incl. Payroll and related taxes	450,827	25.8 %	813,236	21.6 %	(44.6)%	4.2 %
Incl. Rent	533,177	30.5 %	1,101,303	29.3 %	(51.6)%	1.2 %
Gross profit	10,759	0.6 %	403,525	10.7 %	(97.3)%	(10.1)%
SG&A Expenses	313,401	17.9 %	398,253	10.6 %	(21.3)%	7.3 %
Start-up expenses for restaurants	24,851	1.4 %	36,161	1.0 %	(31.3)%	0.4 %
Other gains	31,052	1.8 %	10,364	0.3 %	199.6 %	1.5 %
Other losses	11,912	0.7 %	32,671	0.9 %	(63.5)%	(0.2)%
Incl. Loss on disposal of non-current assets	7,885	0.5 %	16,397	0.4 %	(51.9)%	0.1 %
Loss from operating activities before impairment	(308,353)	(17.6)%	(53,196)	(1.4)%	479.7 %	(16.2)%
Loss from impairment of operating assets	93,139	5.3 %	13,776	0.4 %	576.1 %	4.9 %
Loss from operating activities after impairment	(401,492)	(23.0)%	(66,972)	(1.8)%	499.5 %	(21.2)%
Financial expenses, net	259,573	14.9 %	181,504	4.8 %	43.0 %	10.1 %
Foreign exchange (loss)/gain, net	(7,798)	(0.4)%	1,776	-	(539.1)%	-0.4%
Loss before income tax		(668,864)	(38.3)%		(246,700)	(6.6)%		171.1 %		(31.7)%
Income tax benefit/(expense)	182,218	10.4 %	(13,494)	(0.4)%	(1450.4)%	10.8 %
Net loss		(486,646)	(27.8)%		(260,194)	(6.9)%		87.0 %		(20.9)%
Loss from operating activities before impairment	(308,353)	(17.6)%	(53,196)	(1.4)%	479.7 %	(16.2)%
Depreciation and amortization	190,204	10.9 %	141,946	3.8 %	34.0 %	7.1 %
Loss on disposal of non-current assets		7,885	0.5 %		16,397	0.4 %		(51.9)%		0.1 %
EBITDA before impairment and write-offs		(110,264)	(6.3)%		105,147	2.8 %		(204.9)%		(9.1)%

Consolidated revenues amounted to MRUB 1,748 in 1H 2020 and decreased by 53.6% compared to 1H 2019.

The restaurants' revenue decreased by 53.8% compared to 1H 2019.

The decrease in revenue was due to the implementation of quarantine measures in the 1H 2020, which led to the closure of most of our restaurants.

Cost of sales increased by 10.1% in comparison to 1H 2019 due to increase in rent cost by 1.2%, increase in payroll costs by 4.2% in 1H 2020. All indicators were measured as percentage of revenue.

The payroll costs as a percentage of revenue increased due to a significant decrease in sales during the COVID-19 pandemic, while the Group retained the required number of restaurant employees for stable operation.

At the same time, the Group succeeded in reducing the level of food cost by 2.9% due to re-engineering of the menu by introducing dishes at affordable prices. The indicator was measured as percentage of revenue.

Gross profit margin amounted to 0.6% in 1H 2020, and decreased by 10.1% as percentage of revenue compared to 10.7% in 1H 2019 and generally due to the increase of rent and payroll costs as percentage of

revenue.

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