Additional Information for Q4 2005

1.   The Company has not published any forecasts of financial results.

2. According to the information available to the Company, as at the date of release of this quarterly report, that is March 1st 2006, the following shareholders submitted information on holding directly or indirectly (through subsidiaries) at least 5% of the total vote at the General Shareholders Meeting of AmRest Holdings N.V.

Shareholder	Number of shares	% of share capital held	Number of votes at GM	% share of the total vote at GM	
IRI  LLC*	5,338,000	39.54%	5,338,000	39.54%	
ING Nationale – Nederlanden Polska Otwarty Fundusz Emerytalny (Open Pension Fund)	838,046	6.21%	838,046	6.21%	
American Life Insurance and Reinsurance Company	767,202	5.68%	767,202	5.68%	
PZU Życie S.A.	694,986	5.15%	694,986	5.15%	
PZU S.A. 	158,638	1.18%	158,638	1.18%	
Other shareholders	5,703,128	42.25%	5,703,128	42.25%	
Total	13,500,000	100.00%	13,500,000	100.00%	
*IRI  LLC  is wholly-owned by American Retail Concepts Inc.

Since the date of filing the previous quarterly report the Company has become aware of the following significant changes in the structure of large shareholdings in AmRest Holdings N.V:

SG Asset Management of London reduced the number of shares held in AmRest Holdings N.V. to 663,146 shares, which represent 4.91% of the Company’s share capital and confer the right to 663,146 votes at the General Shareholders Meeting, i.e. 4.91% of the total vote.

Excerpt from the information conveyed to the Company:

“(...) I am writing to inform you that further to our letter dated 21 September 2005, we have since sold a number of shares of AmRest. Following a sale of 13,427 shares on 
2 December 2005, SG Asset Management now has a non-beneficial interest of 663,146 shares or 4.91% of the issued share capital. (…)”

On January 18th 2006, IRI LLC, the major shareholder in AmRest Holdings N.V., reduced its shareholding by 45,000 shares and currently holds 5,338,000 shares, which account for 39.54% of the share capital and confer the right to 5,338,000 votes at the General Shareholders Meeting, i.e. 39.54% of the total vote.

3. According to the information available to the Company, since the date of filing the previous quarterly report there have been no changes in the numbers of shares or options (rights to shares) held by the management and supervisory staff of AmRest Holdings N.V. 

4. As at the date of release of this quarterly report, no court, arbitration or administrative proceedings whose single or aggregate value exceeds 10% of the Company’s equity were pending against the Company.

5. Important transactions or agreements resulting in related party transactions:

On February 3rd 2006, American Restaurants Sp. z o.o., a subsidiary, acquired from Zbigniew Cylny 10% of shares in SCM Sp. z o.o., with a par value of PLN 10,000, thereby increasing its shareholding in SCM Sp. z o.o. to 45%. The other shareholders in SCM Sp. z o.o. include Zbigniew Cylny and Beata Szafarczyk-Cylny, who hold 50% and 5% of shares, respectively. SCM Sp. z o.o. provides to American Restaurants Sp. z o.o. services which consist in intermediation and negotiation of terms of supplies for the restaurants, including the negotiation of terms of distribution agreements.

In December 2005, AmRest Ukraina t.o.w. (LLC) of Kiev, Ukraine, was registered. AmRest Holdings N.V., holds, through its subsidiary American Restaurants Sp. z o.o., 100% of shares in this newly-established company. AmRest Ukraina t.o.w.’s share capital amounts to UAH 252,500. The company was established in order to supervise investments and operate restaurants in Ukraine. The first Pizza Hut restaurant is to be opened in Kiev between June and July this year. The company plans to open two restaurants, in aggregate, on the Ukrainian market by the end of 2006.

6. During the period covered by this quarterly report, AmRest Holdings N.V. did not extend sureties under any loans, borrowings or guarantees, whose value would represent 10% or more of the Company’s equity.

7. Other information important for the assessment of the Company’s personnel, economic and financial position as well as its financial result.

a) Important personnel changes

On November 17th 2005, the Supervisory Board of AmRest Holdings N.V. accepted Mr Peter Whiskerd-Węgorzewski’s resignation from the position of a Member of the Management Board and the Company’s Managing Director.

Simultaneously, the Supervisory Board, by virtue of its Resolution of November 17th 2005, appointed Mr Wojciech Mroczyński for the position of a Member of the Management Board of AmRest Holdings N.V. and entrusted him with the duties of the Managing Director at the Company. Mr Mroczyński was employed by the Company in September 2005. He has sat on the Management Board of American Restaurants Sp. z o.o, a subsidiary of AmRest Holdings N.V. since September 23rd 2005, and has been the CFO of the AmRest Group since September 30th 2005. In addition, since June 2005, Mr Mroczyński has been a member of the Supervisory Board of Wydawnictwa Szkolne i Pedagogiczne S.A., a company listed on the Warsaw Stock Exchange.

b) Company’s Performance

In the fourth quarter of 2005, AmRest Holdings N.V. posted sales of PLN 141,310 thousand, up by 17.4% on the analogous period of 2004. Cumulative sales for the four quarters of 2005 amounted to PLN 499,810 thousand, that is 7.9% more compared with 2004. Sales growth in 2005, compared with 2004, was significantly more rapid in Q3 and Q4.

In the fourth quarter of 2005 the Company posted an 8.2% increase in sales relative to the third quarter of 2005, a 16.4% increase relative to the second quarter, and a 32.8% increase relative to the first quarter of the year.

Gross sales margin increased from 12.6% in 2004 to 13.6% as at the end of Q4 2005. As regards restaurant expenses, due to economies of scale, the cost of food and marketing expenses grew more slowly than sales (by 5.1% and 4.6%, respectively, compared with 2004). At the same time the cost of payroll increased at a faster pace than sales (up by 11.0% on 2004), due to changes in salaries and wages on the labour market.
 
AmRest continues to improve its financial performance. The cumulative EBITDA* for Q1Q4 2005 was PLN 61,151 thousand, representing a 13.8% increase on 2004. The EBITDA margin expanded from 11.6% for 2004 to 12.2% in Q1‑Q4 2005). As at the end of the fourth quarter of 2005, the cumulative EBIT* amounted to PLN 24,237 thousand, versus PLN 20,216 thousand generated in 2004. A factor that contributed to this result, apart from the sales growth, was  lower general and administrative expenses (PLN 40,717 thousand in 2004, and PLN 38,971 thousand in 2005). At the same time, the Company reported higher expenses related to revaluation of assets (PLN 5,228 thousand compared with PLN 2,411 thousand as at the end of 2004), and a loss on disposal of non-financial fixed assets as at the end of Q4 2005 (PLN 3,385 thousand compared with a gain of PLN 319 thousand as at the end of 2004).

As at the end of December 2005, AmRest continued in the trend of upward-bound margins, both at the level of the operating profit and the net profit. The operating profit* for Q1Q4 2005 grew to PLN 24,237 thousand, and was 19.9% higher than the amount reported for 2004. The operating margin* rose from 4.4% to 4.8% compared with 2004. Cumulative net profit* as at the end of Q4 2005 increased – compared with 2004 – by 92.8% (from PLN 12,270 thousand to PLN 23,656 thousand). As at the end of December 2005, the Company’s net margin* rose  compared with 2004 – from 2.6% to 4.7%. The net profit was affected by a change in the deferred tax asset (up by PLN 3,057 thousand in Q4, as a result on the recognition of unrealised retained deficit and timing differences). In 2005, the Company’s tax payments amounted of PLN 960 thousand.

The structure of the Company’s debt changed – short-term debts shrank from PLN 119,094 thousand as at the end of 2004 to PLN 18,321 thousand as at the end of Q4 2005. In the same period, its long-term debt increased from PLN 20,682 thousand to PLN 79,423 thousand.

The Company’s total debt decreased by 26.5% (from PLN 139,776 thousand as at the end of 2004 to PLN 97,744 thousand as the end of Q4 2005). The debt/equity ratio went down from 7.9x as at the end of 2004 to 0.8x as at the end of the fourth quarter of 2005.

c) Other information

In the current year AmRest Holdings N.V. plans to launch two new dining concepts. 

The first concept, Rodeo Drive (American Bar & Grill), is a casual dining restaurant serving meals based mostly on grilled meat and a wide range of drinks. The restaurants will operate in attractive locations and each will be able to serve 150–250 customers. In 2006 AmRest plans to open couple of  such restaurants. The opening of the first restaurant is planned for March 2006. 

Freshpoint, the second new concept, will be a chain of small restaurants operating in locations with high pedestrian traffic, serving sandwiches to eat in or take out. In 2006 AmRest plans to open several such restaurants, with the first of them to be launched in March of this year. 

8. The Company expects that its performance in the following quarters may be influenced by a number of factors, the most significant of which include:

a) growth of sales spurred by new openings as well as potential further investments;

b) launch of investments by AmRest Holdings N.V. in Ukraine, which may result in expenditure and expenses incurred by the Company to be recouped in later years; 

c) introduction of new dining concepts – Rodeo Drive and Freshpoint;

d) continued streamlining of the group’s structure in 2006, whereby smaller companies will be incorporated into American Restaurants Sp. z o.o. or American Restaurants s.r.o., the largest of the Group’s undertakings; the restructuring is aimed at lowering the general and administrative expenses; 

e) seasonality of sales – the lowest sales in the first quarter, which is attributable primarily to fewer operating days (February) and fewer people dining out. The next quarter in terms of sales is the second quarter, in which the restaurants achieve better results thanks to improving weather and a positive effect of the beginning of the holiday season in June. The highest sales are achieved at the end of the third and at the beginning of the fourth quarter. Very good performance in the third quarter is attributable to the increased tourist traffic. Autumn is traditionally a season when people tend to dine out more frequently, which translates into higher sales. An important time in the last three months of the year is the pre-Christmas period, when particularly high sales are reported by the restaurants situated in shopping centres;

f) changes in consumer preferences resulting from health concerns about the consumption of chicken, the key ingredient in KFC menu items, due to negative publicity concerning consumption of poultry and diseases carried by poultry. In such case there is a limited risk that demand for products offered by AmRest restaurants, as well as their competitors, may decrease. The Company mitigates this risk by using at the AmRest restaurants ingredients of the highest quality, sourced from proven and reputed suppliers, by complying with strict quality control and hygiene standards, and by applying the most advanced equipment and processes ensuring absolute safety of the meals.

g) anticipated use in 2006 of a significant portion of the deferred tax asset, which amounted to PLN 6,057 thousand as at December 31st 2005. AmRest expects that the use of the asset may materially affect the financial result for the year and the subsequent years. The expected charge will not influence cash flows.