Dear Shareholders:

The reporting year of 2005 was a milestone year in many positive aspects for AmRest.

It was the first year of AmRest as a public company. Since the day of our first listing our stock price has continued its upward march. The same can be said about our operating and financial results. 

The fiscal year of 2005 was a record year in many areas. Our sales increased by 7,9%. This growth was driven mostly by KFC Poland and new restaurants added to our network. The performance of KFC Czech was below our expectations as it struggled to rebound from VAT change enacted in 2004. The situation started to improve near the end of the year following the consolidation of our Czech and Polish leadership. Our Pizza Hut began its rebound in the second half of the year following the renovations which were significant part of our repositioning toward a more casual dining brand. 

Despite the costs related to IPO and our M&A activity we further improved our profitability on every level. The improvement of our EBITDA margin to 12,4% brings us closer to our mid-term goal of 15%. Such improvements were not only the result of higher sales but also of leveraging our scale, particularly in our supply chain.
 
Our successful IPO in April helped us establish a strong base for business growth. As mentioned earlier we concluded two important acquisitions by purchasing four of our flagship Pizza Hut and KFC restaurants in Warsaw (Spolpep) and a chain of restaurants in the Czech Republic called Big Food, which was successfully converted into new KFC stores. 

Another positive effect of our successful listing and financial performance was restructuring of our financing. It helped us not only to lower the cost of financing but also gave us a sound basis to finance our future growth.

Looking ahead, we want to expand our existing network by at least 20 stores annually and we are determined to do it in a profitable way. Our growth plans go beyond the existing brands, i.e. KFC and Pizza Hut, and markets, i.e. Poland and the Czech Republic. 

In 2005 we expressed our intention to enter a new market, Ukraine, as well as develop two new, proprietary brands, Rodeo Drive and Freshpoint. One of the critical aspects of our growth will be to secure the necessary resources, especially people and good locations. The success of our new ventures will also depend on how quickly we will be able to build the necessary brand awareness for the new concepts and in the new country. 
With our unique culture of “Wszystko jest możliwe”, over 13 years of experience, our operating capability and the market potential we see no other alternative but dynamic growth.
 
I realize that such a diversified growth portfolio will inevitably bring more complexity to our business. To address this issue we will continue to optimize our internal processes with particular focus on the management of our information systems. 

The restaurant business is all about people and making our customers smile. We have great people at AmRest! I would like to thank our employees and shareholders for their belief in our growth perspectives and for making this growth possible.

Henry McGovern
CEO
AmRest Holdings N.V.