Cooks Coffee : Preliminary Reports 2022

NZX Release

30th May 2022

REPORT FOR THE 12 MONTHS TO 31 MARCH 2022

Cooks re-building with positive recovery from

Covid-19

SUMMARY

• Cooks Coffee Company reports net profit before tax from both continuing and discontinued operations was $0.34 million which compared to the prior period loss of $2.62m. The results reflect the recovery of café sales particularly in the UK, the full year contribution of the Triple Two acquisition and the benefits of prior restructuring and reduction of costs.
• The recovery in café sales in the UK where government restrictions on trading were relaxed from mid-July 2021 was positive with store sales in FY22 being 123% of the pre covid FY2019 year.
• In Ireland where the government restrictions did not relax until February 2022 the store sales were 75% of FY2019 figures. Store sales for Q4 (January - March) in Ireland were 97% of FY2019 equivalent. The trend points to sales recovering above pre covid levels providing that restrictions remain lifted.
• The acquisition of the fast-growing Triple Two Coffee business in June 2020 has added scale to the core UK market and placed Cooks as the #4 Coffee focused café chain in the UK according to Allegra Research. Triple Two had 20 cafes at the end of March 2022.
• Total group revenue from continuing activities increased 283.2% to $6.7 million.
• Cooks completed steps to restructure the balance sheet and with a combination of cash injections and debt to share conversions, company debt has been reduced by $3.3m as at 31st March 2022.
• Total Equity in the company improved to a positive $3.1m from negative equity of $1.7m last year.
• With much of its business activity in the United Kingdom and Ireland, the company is planning for a potential dual public listing in the UK in the near future.
• The company has changed its name to Cooks Coffee Company to better reflect the business that it is involved in and undertook a 15:1 share conversion on 30th March 2022.
• The company has appointed to the Board Michael Ambrose, who is an experienced and well-respected company director.

Cooks Executive Chairman Keith Jackson said that the year was the beginning of the recovery from the impact of the Covid-19 pandemic with the UK showing strong resilience, the recovery was expected to continue, and the store growth was expected to resume as Cooks works to consolidate its position as the 4th largest coffee focused café chain in the UK.

BALANCE SHEET

Total Equity in the company improved to a positive of $3.1m from a negative position of $1.7m last year. This improvement arose primarily from capital raising and debt conversions.

Borrowings reduced by $3.3m from $6.5m last year to $3.2m this year. The reduction included the debt conversion of $2m by parties related to the Chairman, Keith Jackson along with other debt to share conversions and some debts paid down.

Management assessed the Value in Use for the UK Triple Two business unit and as a result of this assessment impaired Goodwill by $5.5m. Main considerations for this impairment related to reassessing forecasts off the back of the Covid pandemic and the likely slow return to a more normalised business environment.

Contingent consideration was also reviewed against the terms of the original acquisition agreement for the Triple Two business and the forecast earnout likely to crystalise with the final earn out period ending 31 December 2022. This review resulted in $6.3m of contingent consideration payable being derecognised and an appropriate reduction in the previously recognised liability.

OPERATIONAL BUSINESS PERFORMANCE

THE UNITED KINGDOM

Esquires UK store numbers increased to 47 at the end of March. During the year, 3 new stores were opened and 2 were closed whilst 1 store was re-opened after a period of closure during covid.

TRIPLE TWO COFFEE

The Triple Two network that was acquired in June 2020, opened 10 new stores during the financial year and there were 20 cafes operating at the end of the financial year. Triple Two was identified as a "rising star" by IGD (Institute of Grocery Distribution) in a report into the UK Coffee Sector.

UK SUMMARY

With 67 stores operating at the end of March the group are the 4th largest coffee focused café chain in the UK after Costa, Starbucks & the Caffe Nero group, based on Allegra Research data. The growth pathway remains positive and with the combined Esquires and Triple Two brands we believe we have a scalable business with critical mass and are well placed to deliver strong and sustainable results.

IRELAND

Outlet numbers at the end of the year were 15 and there is an encouraging pipeline of new stores in development for the balance of 2022 and beyond.

GLOBAL

Cooks operating revenue in the segment was $0.3 million compared to last year's operating revenue of $0.2 million as the international franchised markets recovered in the Middle East in particular.

Saudi Arabia expanded with the addition of new stores in Mecca and Jeddah where a new store was opened at the new international airport in February 2022.

SUMMARY

FY22 has shown the benefits of the resilience of the company's brands and the strength of its core markets in the UK and Ireland that position the company well for future growth and development.

ABOUT COOKS COFFEE COMPANY

Cooks Global Foods operates in world markets and is listed on the NZX market operated by NZX Limited in New Zealand under the code CCC. It owns the intellectual property and master franchising rights to Esquires Coffee Houses worldwide (excluding New Zealand and Australia) & Triple Two Coffee globally. Cooks currently operates or franchises: Esquires Coffee in the United Kingdom, Ireland, Portugal, Bahrain, Kuwait, Saudi Arabia, Jordan, Pakistan & Indonesia; Triple Two Coffee in the United Kingdom and for more information visit: www.cookscoffeecompany.com

Results announcement

(for Equity Security issuer/Equity and Debt Security issuer)

Updated as at 17 October 2019

Results for announcement to the market

Name of issuer		Cooks Coffee Company Limited
Reporting Period		12 months to 31 March 2022
Previous Reporting Period		12 months to 31 March 2021
Currency
		Amount (000s)			Percentage change
Revenue from continuing	$6,659			283.2%
operations
Total Revenue	$6,659			283.2%
Net profit/(loss) from	$649			125.6%
continuing operations
Total net profit/(loss)	$339			113.3%
Interim/Final Dividend
Amount per Quoted Equity		It is not proposed to pay a dividend.
Security
Imputed amount per Quoted		N/A
Equity Security
Record Date		N/A
Dividend Payment Date		N/A
		Current period		Prior comparable period
Net tangible assets per	($0.19)			($0.50)
Quoted Equity Security
A brief explanation of any of		Cooks undertook a 1 for 15 share consolidation on 31 March
the figures above necessary		2022. For comparability, the consolidation has been applied to
to enable the figures to be		Net Tangible Assets per Quoted Equity Security for the prior
understood		comparable period.
		Refer to attached financial results and commentary.
Authority for this announcement
Name of person authorised		Keith Jackson
to make this announcement
Contact person for this		Keith Jackson
announcement
Contact phone number	021 702 509
Contact email address		[e-mail]
Date of release through MAP		30 May 2022

Unaudited financial statements accompany this announcement.

14912672_1

Appendix 1 Release

30 May 2022

Cooks Coffee Company Limited

This document covers Cooks Coffee Company Limited's unaudited financial results for the year ended 31 March 2022

1. Cooks Coffee Company Limited

Preliminary announcement for the year ended 31 March 2022

Preliminary unaudited full year report on consolidated results (including the results for the previous corresponding year) in in accordance with Listing Rule 10.4.2 are recorded below.

This report has been prepared in a manner which complies with generally accepted accounting practice and gives a true and fair view of the matters to which the report relates, and is based on unaudited financial statements. In the prior year, the Audit Report has made note of Material Uncertainty related to Going Concern.

The accounting policies used in the preparation of these financial statements are consistent with those used in the interim statements for the six months ended 30 September 2021, and in the audited financial statements for the year ended

31 March 2021.

The Listed Issuer has a formally constituted Audit & Risk Committee of the Board of Directors.

	Unaudited		Audited.
B: Consolidated Statement of Financial Performance	Mar-22	Up / Down	Mar-21
	$NZ '000	%	$NZ '000
Revenue	6,569	283.2%	1,714
Cost of sales	(1,212)	(777.7%)	(138)
Gross profit	5,357	239.9%	1,576
Operating expenses and staff costs	(4,927)	(42.9%)	(3,449)
Impairment of provision credit losses	(123)	(155.9%)	(48)
Other income	449	(55.7%)	1,013
Operating profit/(loss) before depreciation and amortisation	756	183.2%	(908)
Depreciation and amortisation	(627)	23.4%	(819)
Operating profit/(loss)	129	107.4%	(1,727)
Interest Income	1,076	(6.2%)	1,147
Impairment of Goodwill	(5,528)	-	-
Finance costs	(1,296)	36.4%	(2,038)
Revaluation of contingent consideration payable	6,265	-	-
Profit/(Loss) before income tax	646	124.7%	(2,618)
Income tax benefit/(expense)	3	(96.2%)	79
Net Profit/(Loss) for the year from continuing operations	649	125.6%	(2,539)
Net Profit/(Loss) for the year from discontinued operations	(310)	(5457.8%)	(6)
Net Profit/(Loss) for the year	339	113.3%	(2,545)
Earnings Per Share (Cents per share):	0.05		(0.42)