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Coffeeheaven International PLC
09 May 2008
coffeeheaven international plc
('coffeeheaven international' or 'the Company')
Trading Update year to 31 March 2008
coffeeheaven international plc, the AIM-listed speciality coffee bar business
based in central Europe, is pleased to announce the following trading update for
the 12 months to 31 March 2008.
• Total store gross sales up 65% to approximately £16.8M
• Like- for-like sales growth +16% (after 'Easter adjustment' +18%)
• 24 new stores opened
• 85 stores trading in 6 markets at 31 March 2008
• Net cash and equivalents at 31 March 2008 £1.0M
(All figures shown above are unaudited)
Sales
Total store net sales (unaudited) for the year ended 31 March 2008 were
approximately £16.8M (2007: £10.2M). This represents a 65% increase over the
prior year (a 53% increase at constant foreign exchange rates).
Group like-for-like annual sales growth (unaudited) was a robust +16% (2007:
+27%).
Gross sales by market and like-for-like sales growth (unaudited) for the year to
31 March 2008 was:
Market Sales Like-for-sales growth
Poland £11.7M (2006: £7.4M) +16%
Czech Republic £3.3M; (2006: £1.6M) +15%
Latvia £1.1M(2006: £0.9M) +10%
Other £0.7M ( 2007: £0.3M)) -
Total stores £16.8M (2006: £10.2M) +16%
As expected, the particularly strong Group like- for- like sales growth reported
for the first half year (20%) moderated slightly in the second half. This has
been strongly influenced by two exceptional factors.
First, the comparative timing of the 2008 Easter holiday period as many
customers went on holiday. With an appropriate 'Easter adjustment', full year
Group like- for like- sales growth would have been approximately 18%.
Second, a slow down in fourth quarter like-for-like sales growth in the Czech
Republic at High Street locations as a result of fewer tourist numbers in
Prague. We believe this is probably a result of currency appreciation of the
Czech Crown. Shopping Mall locations have however generally been unaffected.
Sales growth drivers for coffeeheaven across central Europe remain:
• Growing awareness and appeal of the coffeeheaven brand to consumers
• Increased market penetration through increased numbers of stores
• Continued product innovation driving additional footfall
• Favourable macro-economic conditions
Stores
The total number of stores trading at 31 March 2008 was 85 - an increase of 24
new units less 4 closures (3 Empik stores in Poland and 1 store in Latvia).
Costs (including unamortized capital costs) associated with the closure of the
Empik stores were for the most part recovered. The target of 90 stores by 31
March 2008 was not met for specific reasons (mainly timing delays with openings)
not as a result of a change in Group strategy.
Currently the number of trading units by market is as follows:
Poland 52
Czech Republic 18
Latvia 8
Bulgaria 4
Slovakia 2
Hungary 2
Romania 1
Group 87
Looking forward, a number of additional new sites have already been secured
(either under or subject to contract) and we are actively seeking further
locations.
Operating results:
Market Indicative Market EBITDA (after all market costs including admin)
2008 2007
Poland 2.1M 1.5M
Czech Republic -0.2M 0.1M
Others combined -0.2M 0.0M
Combined 1.7M 1.6M
Indicative normalized Group EBITDA is expected to be approximately £0.7M (2007:
£0.9M). Normalized EBITDA excludes (where applicable) goodwill, FRS20
adjustments, unrealized exchange gains/losses and exceptional items but after
charging all other costs including pre-opening expenses.
Robust operating profits from our major trading subsidiary in Poland have been
offset by higher development costs in the Czech Republic and the costs of
entering two new markets. Since the Group is now established in most of its
target markets, future development expenditure is expected to reduce.
Trading indicators from our operating companies for the year to 31 March 2008
are as follows:
Poland:
Full year sales exceeded management's expectations. The 14 new store openings
went ahead as planned.
Store margins (after depreciation) fully recovered in the second half (from a
weaker first half 17%) to finish the full year at 19% - just below our 20%
benchmark (after depreciation). Local market profits are expected to exceed
management's expectations due to the higher than anticipated sales.
Current levels of store margins are expected to be maintained in the year to 31
March 2009.
Czech Republic:
Full year sales have doubled but were marginally lower than management
expectations given the lower than planned number of new store openings (total
openings 6).
However development and other costs associated with the substantial growth of
this business in the current year have resulted in store margins (after
depreciation) remaining weak to finish the full year at 1%. Local market losses
are therefore expected to be higher than management's expectations.
Current levels of store margins are however expected to improve significantly in
the year to 31 March 2009.
Latvia:
Full year sales and operating results are materially in line with management
expectations.
Management changes initiated during the year have resulted in strong fourth
quarter sales and operating results.
Store margins (after depreciation) are expected to finish the full at 9% of
sales
Modest local market losses are expected to be in line with management's
expectations.
Current levels of store margin are expected to improve in the year to 31 March
2009.
Other Markets:
Bulgaria, Slovakia, and Hungary & Romania (opened shortly after the year end):
Costs of developing these markets have been marginally higher than anticipated
in the main for non-recurring reasons.
Balance Sheet & Foreign Exchange impact:
Net cash balances and equivalents at 31 March 2008 were approximately £1.0M
(2007: £1.9M). The Group has overdraft facilities in place to supplement cash
assets should this be required.
Most central European currencies have appreciated significantly in recent months
against the pound sterling. In the case of Poland this is some 25% on a year- on
-year basis.
Such currency movements will have a positive impact on our reported results.
However in applying IFRS accounting standards (where average rates are applied)
it is estimated that only 10% of the real favourable FX impact will be reflected
in reported results to 31 March 2008.
All figures shown for the financial year end to March 2008 are unaudited.
coffeeheaven brand
The coffeeheaven brand continues to build traction and credibility with
customers across central Europe.
coffeeheaven is now market leader in the branded coffee bar sector in central
Europe. (source: Allegra Strategies Project Cafe 7 Europe - European Coffee Shop
Market October 2007)
An important factor in coffeeheaven's success is our commitment to consistent
quality in all aspects of product and service. Key to achieving this are our
employee - partners.
For the second year running we were delighted that coffeeheaven baristas again
'swept the board' at the recent Polish round of the World Barista championships
by taking all three top places.
Last year's winner, coffeeheaven store manager Lukasz Jura, went on make the
'World Top Ten' in the 2007 World Championships held in Tokyo last year.
We are looking forward to store manager Slawek Saran repeating this success in
the 2008 World Championships to be held in Copenhagen in June 2008.
This achievement once again demonstrates the passion and expertise we put into
coffeeheaven's training and our commitment to excellence in coffee preparation
and customer service.
Competitive environment
The competitive environment in the central European coffee bar market continues
to change as more international operators seek to enter these markets mainly
through franchise operations.
In our view consumer education and awareness remains the most significant
constraint to sector growth in the fledgling central European markets.
In such a dynamically changing environment, maintaining the integrity and
distinctiveness of the coffeeheaven brand becomes even more important.
We believe direct company ownership to be the most appropriate long-term
business model for coffeeheaven within most markets of central Europe.
Future:
The improving macro-economic background in central Europe continues to feed
through to consumer confidence and spending.
Despite current uncertainties in world markets, we see no significant evidence
(expect in respect of tourist traffic in Prague referred to above) that this is
having a negative impact on spending by central European consumers.
The Board remains of the view that if there were to be some economic slowdown in
the region, this would be significantly less severe than what will be
experienced in some west European economies.
Our new financial year has started very well. Current like- for- like sales
growth remains strong and we expect a robust but possibly moderating rate of
like- for- like sales growth to be maintained throughout the year to 31 March
2009.
Based on present trading conditions and current foreign exchange rates, we
expect to maintain our unbroken historical annual Group sales growth rate of
around 50%.
During the year to 31 March 2009, we except to maintain a rate of new store
openings similar to that of prior years but with greater focus on our major
markets.
The strength of the coffeheaven brand continues to ensure that coffeeheaven is
ideally positioned to benefit from the increasing prosperity of consumers in our
markets.
Your Board and our dedicated management teams across central Europe look forward
to another successful year.
For further information, please see the Company's website, www.coffeeheaven.eu
or contact:
Richard Worthington,
Executive Chairman
Tel: +48 606818850 / +44 7973 442 331
E-mail:
richworth@aol.com
Simon Turton, Opera Public Relations
Tel: +44 (0)8450 600650/ (0)7976 826004
Email:
simon@operapr.com
Oliver Cardigan / Alex Ham, Numis Securities
Tel: +44 (0) 207 260 1000
+44 207 260 1216
Email: o.cardigan@numiscorp.com
This information is provided by RNS
The company news service from the London Stock Exchange
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2006 MoneyAM© |
