REG - Cooks Coffee Company - Preliminary results for year ended 31 March 2024

Cooks CoffeeAnnouncement

31/05/2024 07:30

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RNS Number : 6179Q  Cooks Coffee Company Limited  31 May 2024

 

31 May 2024

 

Cooks Coffee

("Cooks Coffee", the "Company" or the "Group")

 

Preliminary results for the year ended 31 March 2024

 

An ethical café group with great cafes owned and run by local people.

 

Cooks Coffee (NZX:CCC; AQUIS:COOK), the international coffee focused cafe
chain and parent company of the Esquires, The Organic Coffee Co brand, which
is dual listed on the Aquis Market in London and the NZX in New Zealand,
announces the Company's Preliminary Report for the financial year ended 31
March 2024 ("FY24"). Figures reported below are for continuing business and
the prior period has been restated to provide the appropriate comparative
data.

 

Highlights

 

-      Total franchisee store sales in UK & Ireland up 18% at
NZ$58.2m (FY23: NZ$49.5m).

-      UK store sales up 21% at NZ$38.3m (FY23: NZ$31.6m), double the
industry average of 9%.

-      Ireland store sales up 11% at NZ$19.9m, (FY23: NZ$17.9m) compared
to the industry growth of 1%.

-      75 Group sites in the UK and Ireland as at 31 March 2024, up from
64 as at 1 April 2023.

-      Net store numbers growth in UK of 18% and 15% in Ireland versus
industry growth of 4% in UK and 1% in Ireland.

-      Group revenue, which is highly correlated to store sales, up 19%
at NZ$4.7m, NZ$3.9m.

-      EBITDA of NZ$0.4m before impairment of receivables.

-      The focus on suburbs and market towns has sheltered Esquires
branded stores from the permanent changes in consumer behaviours post Covid,
such as the working from home lifestyle change.

-      The strategic direction plus the focus on organic coffee products
and an enhanced food offering with local sourcing where possible, delivered by
local owners of the franchised stores - 'The local chain' has proved
successful for the brand.

-      Growth in UK has been driven through strong performances by the
Regional Developers in the Southeast, London, East England & East
Midlands. The appointment of two new Regional Developers during FY24 for the
North of England and the Southwest and South Wales will accelerate the growth
in those regions.

-      Appointment of Aiden Keegan as Group CEO. Aiden brings more than
20 years' experience with the company in both core markets of UK & Ireland
to the role.

-      Esquires Coffee Houses Ireland were awarded the Irish Enterprise
Award for 2024 as the 'Best Modern Organic Coffee Shop Enterprise'.

-      Esquires Coffee at Caerphilly were awarded the 'Best Sustainable
Café Chain' in Gwent at the Welsh Enterprise Awards in 2023.

-      Target store numbers for UK & Ireland by FY34 is 305.

Commenting, Cooks Coffee Executive Chairman Keith Jackson said: "We are
delighted to report strong sales growth across our existing estate of coffee
stores as we continue our expansion programme of new store openings. We have
an exciting growth pathway clearly defined and have Aiden Keegan appointed to
drive the future development of the business. Aiden is uniquely qualified for
the role having spent 14 years as Operations Manager of the Irish business and
the last almost six years as CEO of Esquires Coffee UK."

 

Operational Business Performance

 

United Kingdom

Esquires Coffee UK store numbers increased to 60 at 31 March 2024, from 51 as
at 31 March 2023, with 13 new Esquires stores opened and 4 closed.

Store sales grew 21% with like for like sales up 6%. The strong pipeline of
new outlets that were open for the full years FY23 and FY24 contributed 21.6%
of total sales in FY24.

Sales in FY24 were particularly affected by the refurbishment programme at
Horsham, where the store was closed for 13 weeks, but the sales on re-opening
have exceeded expectations by more than doubling pre-refurbishment sales
levels.

As at the end of May 2024 there are 64 stores operating, with new stores
opened in Colliers Wood and Pinner in London, Newport in Wales, and Sudbury in
Suffolk, during April and May 2024.

Two new Regional Developers were appointed in the UK in FY24 with one covering
the Southwest of England and South Wales, and the other covering the North of
England, including the North of Wales.

The Regional Developer model that has been operating in the Southeast of
England since 2018 and in London, East England and the East Midlands since
2021, has proved very successful and is now being rolled out to the remainder
of the UK. Developers for Scotland and Northern Ireland are currently being
sought.

Ireland

Store sales increased by 11%, totalling NZ$19.9m (FY23 NZ$17.9m). Like for
like store sales were up 6.8% versus FY23.

Outlet numbers at the end of the year were 15, a growth of 15%, with an
encouraging pipeline of new stores in development for the balance of 2024 and
beyond. Store numbers in Ireland have been restated from prior years to
reflect actual locations even if the site itself has multiple points of sales.

Sales in FY24 were affected by the impact of the fire in the Longford store
that meant the store operated from temporary premises for most of the year.
The franchisee and staff did a superb job, and sales were maintained at
approximately 45% of normal levels. In addition, the Airside store at Swords
in Dublin was closed for 17 weeks for a refurbishment programme. Management
estimate that absent these factors and the 53-week year that the Irish
normalised sales would have been more than 20% up on FY23.

As at the end of May 2024 there are 16 stores operating with a new store
opened in Galway in April 2024.

Global

Cooks operating revenue in the global segment was in line with the previous
financial year as the international franchised markets continue to recover.
New outlets were added in Pakistan and Portugal, with the Middle East markets
stable.

 

Balance Sheet

Total equity in the Company reduced to NZ$(4.0)m reflecting primarily the
non-cash impairment of goodwill and intangible assets relating to the Triple
Two business.

 

Triple Two

 

In September 2023, the Triple Two subsidiary was placed into voluntary
liquidation.

 

Triple Two had numerous sites that were non-viable in a post Covid market
environment as they were more central business district focused relative to
the suburban and smaller town focus of Esquires stores. Information became
available showing that commitments were made that potentially could have been
significant liabilities for the Company. This information showed that in
addition to sites that were no longer viable that the ongoing revenue streams
were well below expected levels.

 

The Triple Two investment was fully written off in the September FY24 half
year accounts. This non-cash write-down has resulted in the company reporting
NZ$3.99m of negative equity in the full year accounts.

 

The Board believes that there is no further impact of the Triple Two
liquidation going forward.

 

People

 

The Company announced the appointment of Aiden Keegan as Group CEO in March
2024. Aiden has had 20 years' experience with the Esquires brand, spending 14
years in the operations team in Ireland and since 2018 has been at the helm of
the Company's largest subsidiary, Esquires Coffee UK.

 

After almost 25 years with the Company that he founded our Irish Managing
Director, Tony McVerry has advised of his intention to retire at the end of
June 2024. He will be replaced by Brendan Duigenan. Brendan has been a
lifetime member of the coffee industry and has held senior roles in both AMT
and Starbucks in Ireland.

 

As part of the planned relocation of the Board to the UK, Mike Hutcheson will
retire from the Board in June 2024. Mike is a unique marketing talent who has
given excellent service and advice to the Company over the last 10 years. This
move along with Aiden's elevation shows the strong focus that the Company is
adopting on the core markets of UK and Ireland.

 

The Board would like to acknowledge the dedicated performances of all the
parties involved in the Group's activities delivering excellent service to our
customers every day. In the core markets of UK & Ireland an estimated
200,000 customers are now served each week by our great team led by Regional
Developers and franchisees along with their staff and ably supported by the
company's team.

 

Outlook

 

The FY25 financial year has begun strongly with four new stores opened in the
UK and one in Ireland in April & May. UK store sales after 8 weeks of FY25
were up 27.3% on FY24 whilst in Ireland sales were 7% up on FY24.

 

Summary

 

The Board is encouraged by the strong growth which continues to exceed
reported industry growth in both core markets and would like to acknowledge
the dedicated performances of all the parties involved in the Group's
activities delivering excellent service to our customers every day. In the
core markets of UK & Ireland an estimated 200,000 customers are now served
each week by our great team led by Regional Developers and franchisees along
with their staff and ably supported by the company's team.

 

Target stores for the end of March 2025 are 98 with 80 in the UK and 18 in
Ireland, a growth of 31% over the 75 operational at the end of March 2024. The
Company is expecting to continue to grow at this rate of stores being added
per annum to have more than 300 stores operational in UK and Ireland by FY34.

The Group's Esquires brand has a strong pipeline of opportunities as it
continues its commitment to building an ethical café group with great cafes
owned and run by local people. We look forward to making further progress and
to an improved financial performance in the current financial year with the
experienced Aiden Keegan at the helm.

 

Keith Jackson

Executive Chairman

 

The FY24 financial statements are appended to this announcement and may be
accessed here:
http://www.rns-pdf.londonstockexchange.com/rns/6179Q_1-2024-5-31.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/6179Q_1-2024-5-31.pdf)

 

Enquiries:

 

 Cooks Coffee Company Limited                        +64 21 702 509 (New Zealand)
 Keith Jackson (Executive Chairman)                  keith.jackson@cookscoffeecompany.com

                                                   (mailto:keith.jackson@cookscoffeecompany.com)
 Aiden Keegan (Chief Executive)
                                                     +44 (0) 7980 608 440 (UK)

                                                     aiden@esquirescoffee.co.uk (mailto:aiden@esquirescoffee.co.uk)

                                                     +44 (0) 20 3934 6630 (UK)
                                                     ukinvestorrelations@cookscoffeecompany.com
                                                     (mailto:ukinvestorrelations@cookscoffeecompany.com)

 IFC Advisory Limited (Financial PR & IR)            +44 (0) 20 3934 6630
 Tim Metcalfe, Graham Herring,                       cookscoffee@investor-focus.co.uk (mailto:cookscoffee@investor-focus.co.uk)

 Florence Chandler

 Oberon Capital (AQSE Corporate Adviser and Broker)  +44 (0) 20 3179 5300
 Nick Lovering, Adam Pollock, Mike Seabrook

 

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