Research Report for Cooks Global Foods Limited

This report has been prepared by RaaS Advisory Pty Ltd (A.C.N. 614 783 363) on behalf of Cooks
Global Foods Ltd and should be read in conjunction with the disclaimer at the end of the report.
22 December 2017
Establishing new markets
CGF announced on December 13 that it had opened its first European store in Porto,
Portugal. The company is also poised to establish a presence in Romania with two stores
from a rival operation rebranding as Esquires. These new stores come ahead of a soon to
be opened first store in Pakistan and additional openings in the UK and Ireland which now
account for 46% of all stores in the group and 68% of total network sales. CGF’s success in
the UK, where it has 34 stores, was recognised in the UK publication Elite Franchise’s top
100 franchise guide where it ranked 58
th
of all franchises in the UK, 8
th
among food and
beverage franchises and the top-ranking coffee enterprise.
Restructuring still on track but slower than anticipated
The company has secured NZ$5.7m in new capital (including debt offsets) from its major
shareholders, YunNan Metropolitan Construction Investment Group (YMCI) and Jiajiayue
Holding Group (JJY) and is actively pursuing an additional NZ$4.3m which is being fully
underwritten by Cooks Investment Holdings, a company associated with Mr Keith Jackson,
CGF’s executive chairman. The recapitalisation has been struck alongside a restructure of
group operations in China and the Middle East where new joint ventures are being formed.
In China, the business is being transitioned to a new business venture arrangement with
Suzhou Yueying Enterprise Investment Partnership while in the Middle East, CGF is in the
process of establishing an equal partnership with its Saudi Arabian partner Anasia Foods.
The transition to these JVs has taken longer than anticipated and weighed on its results.
1H18 Operating Metrics, Earnings adjustments and Outlook
CGF generated NZ$20.9m in network sales in the 6 months to September 30, an increase of
11.4% in constant currency terms and 2.0% in reported terms on the prior year. Like for like
sales grew 1.7% to NZ$16.9m. The company reported a net loss of NZ$1.2m from
continuing businesses, down from a NZ$1.6m loss in 1H17. Discontinued businesses,
predominantly China, reported a loss of NZ$1.3m versus NZ$2.0m a year ago. The result
was below our expectations and reflects the delays in restructuring the business, currency
headwinds and discontinued adjustments. The company has reiterated its target to reach
cash-flow breakeven by the end of the current financial year but has flagged that its 140-
store target is dependent on development initiatives. We have trimmed our expectations
to 110 stores by year end with 10 of the 15 additional stores to be opened in the
UK/Ireland and downgraded our EBITDA forecast by 9% in FY18e and 25% in FY19e. Our
DCF valuation (WACC of 12.8%, beta of 1.5 and terminal growth rate of 2.0%) is NZ$62.3m
(ungeared) or NZ$0.13/share based on the current share count.

Cooks Global Foods Ltd
Company Update
Gaining traction, restructure taking time
Share details
NZAX Code CGF
Share price at 18 Dec ‘17 NZ$0.05
Market Capitalisation NZ$24.5M
Shares on issue (at 30
Sept ‘17)
489.57M
Net debt at 30 Sept ‘17 NZ$3.8m

Share performance (12 months)













Upside Case
Supported by large shareholders with strong
balance sheets
Targeting to be cashflow positive in continuing
businesses in FY18e
Acquisition opportunities available in its
strongest markets

Downside Case
Small executive team stretched across the
globe
Market is dominated by global giants
Limited opportunity to grow the brand in
Australia/New Zealand
Board of Directors
Keith Jackson Executive Chairman
Michael Hutcheson Non-Executive Director
Andrew Kerslake Non-Executive Director
Zhe Hui Non-Executive Director
Peihuan Wang Non-Executive Director

Company contacts
Keith Jackson
Executive Chairman
+64 21 702 509

www.cooksglobalfoods.com

RaaS Advisory contacts
Finola Burke +61 414 354 712
finola.burke@raasgroup.com
Moira Daw +61 418 697 275
moira.daw@raasgroup.com




Food & Beverage Retail
Cooks Global Foods (CGF.NZAX) is a global integrated food and beverage
retail and supply company headquartered in New Zealand. The company’s
core operation is Esquires Coffee, a global coffee franchise group with 95
stores in its network across 12 countries. Cooks also owns Scarborough
Fair, a supplier of Organic and Fairtrade coffee, tea and hot chocolate, and
has a JV company Crux Products Ltd to channel high quality products
between New Zealand and China. CGF is in the process of restructuring
and recapitalising with the support of its three largest shareholders and is
targeting to be cash-flow breakeven in its continuing business in FY18e.
Historical earnings and RaaS Advisory estimates
Year
end
Revenue
(NZ$m)
EBITDA*
(NZ$m)
NPAT*
(NZ$m)
EPS*
(c)
P/E
(x)
03/16 6.2 (3.9) (4.5) (1.17) n/a
03/17 5.3 (2.8) (3.5) (0.86) n/a
03/18e 6.3 (0.79) (1.28) (0.27) n/a
03/19e 10.0 1.04 0.58 0.12 42.5
Source: CGF data, RaaS Advisory Estimates for FY18e & FY19e *Adj for discontinued businesses.

$-
$0.02
$0.04
$0.06
$0.08
$0.10
$0.12

Cooks Global Foods Ltd | 22 December 2017 2
1H18 Results analysis
CGF reported network sales of NZ$20.8m for the six months to September 30, an increase of 11.4% in
constant currency terms year-on-year and 2.0% in reported terms, reflecting currency movement.
Transactions across the Esquires Coffee network increased 7.0% over the prior period while the average
transaction value increased 4.1% in constant currency terms. The currency impact on average transaction
values across the two periods is evident in the reported average transaction value decline of 4.7%. Same
store sales increased 1.7% for the period, driven by a 5.3% increase in average transaction values, as the
following exhibit sets out.
Exhibit 1: Esquires Coffee Operating Metrics 1H18 vs 1H17
In NZ$m unless otherwise stated 1H17 1H18 % chg
Network sales (constant currency) 18.6 20.8 11.4%
No. of transactions (M) 2.1 2.3 7.0%
Average transaction value $ 8.73 $ 9.09 4.1%
Same store sales 16.6 16.9 1.7%
Transactions (M) 1.9 1.8 -3.4%
Average transaction value $ 8.81 $ 9.27 5.3%
Reported network sales 20.4 20.8 2.0%
No. of transactions (M) 2.1 2.3 7.0%
Average transaction value $ 9.54 $ 9.09 -4.7%
Source: Company data
The half year result saw losses from continued operations reduce by 27.5% to NZ$1.2m from NZ$1.6m a year
prior. This was achieved by an increase in sales from the Irish operations, which account for 30.6% of
network sales, increased sales from the supply business and reduced corporate costs. The Irish business
reported revenue of NZ$529,000, up 47% on prior, and posting a 74% increase in pre-tax profit of
NZ$179,000. On a constant currency basis, the Irish operations posted a 21% increase in network sales from
its 11 stores. The supply business posted a 9% increase in revenue to NZ$346,000 and an 8% reduction in net
loss to NZ$139,000. Corporate costs reduced by 6.0%. Offsetting these improved performances was a 5%
reduction in sales from the UK operations (37.2% of network sales) to NZ$1.2m due to currency weakness
resulting in a loss of NZ$13,000 from the division in 1H18, and a reduced loss of NZ$113,000 from the rest of
group operations (Middle East, Indonesia and Canada) from net loss of NZ$475,000 a year before. On a
constant currency basis, the UK’s network sales increased 22.2% year-on-year due to the addition of six new
stores and the benefits from its ongoing refurbishment program.
The company has now classified its Chinese coffee store network as discontinued as it is being transitioned
into the new business venture arrangement with Suzhou Yueying Enterprise Investment Partnership. CGF
will continue to own 30% of the Chinese business but the new partnership will assume control. We have set
out the reported P&L for 1H18 vs 1H17 and our forecasts which had included the discontinued businesses
and had not adjusted for the NZ$ strength against the Yuan.
Exhibit 2: CGF P&L 1H18 versus 1H17 and RaaS Forecast
In NZ$m unless otherwise stated 1H17 1H18 % chg RaaS 1H18
Revenue continued operations 2.7 2.8 2.8% 8.3
EBITDA continued operations -1.3 -0.9 -31.7% 1.4
NPAT continued operations -1.6 -1.2 -27.5% 0.9
Discontinued operations net loss -2.2 -1.3 -40.3% 0
Reported NPAT -3.8 -2.5 -34.8% 0.9
EPS adj ( c) -0.43 -0.27 -37.9% 0.19
Source: Company Data, RaaS Forecast
As at 30 September 2017, CGF had cash on hand of NZ$1.2m against overdraft balances of NZ$1.6m. Of the
remaining NZ$3.5m allocated to borrowings and other liabilities on the balance sheet, NZ$2m is in
borrowings with the rest a combination of accruals and provisions.
The company has reiterated its target to achieve cash flow breakeven from its continuing businesses by the
end of the current financial year. However, it has noted that its target for 140 stores by year end was
dependent on development initiatives.

Cooks Global Foods Ltd | 22 December 2017 3
Earnings Adjustments
We have adjusted our earnings forecasts for FY18 and FY19 following the company’s comment on its target
stores for the year and the reported 1H18 result. We have also adjusted the share count for the current
shares on issue. Previously we had assumed that the remaining NZ$4.3m raise in the NZ$10m restructure
would be completed by year end. Our recast numbers reflect an expectation that the company will still
achieve its target of cashflow breakeven by the end of the year but report a greater loss. We are forecasting
a net loss of NZ$1.28m for the year, compared with our previous forecast of NZ$0.87m.
Our DCF valuation based on the current share count is NZ$0.13/share. This is based on a WACC of 12.8%,
beta of 1.5 and terminal growth rate of 2.0%. Exhibit 3 sets out our earnings adjustments.
Exhibit 3: Earnings adjustments to FY18 and FY19
FY18 FY19
New Forecasts
Revenue (NZ$m) 6.25 9.99
EBITDA (NZ$M) (0.79) 1.04
NPAT Adjusted (NZ$M) (1.28) 0.58
EPS ( c ) (0.27) 0.12
Shares on issue (M) 489.6 489.6
DCF (NZ$) 0.13
Previous forecasts
Revenue (NZ$m) 15.10 30.65
EBITDA (NZ$M) (0.87) 1.39
NPAT (NZ$M) (0.87) (0.14)
EPS ( c ) (0.13) (0.03)
Shares on issue (M) 545.64 545.64
DCF (NZ$) 0.11
% change
Revenue (NZ$m) -59% -67%
EBITDA (NZ$M) -9% -25%
NPAT (NZ$M) 46% -515%
EPS ( c ) 117% -563%
Shares on issue (M) -10% -10%
DCF (NZ$) 11%
Source: RaaS Advisory
Valuation: Sensitive to store build
Our DCF valuation of NZ$0.13/share, or NZ$62.3m, is predicated on CGF organically rolling out 625 stores by
FY22e. We do not incorporate gearing in our valuation. If we were to include gearing of 20% or 30%, the DCF
valuation would rise to NZ$0.18/share or NZ$0.21/share respectively. We note that our expectations for the
store rollout now below the company’s budget for 650 stores in FY21e. We feel that given the delays to the
restructuring program for China and the Middle East that it is prudent to model a slower rollout.
It should also be noted that we have modelled CGF on the basis that it can achieve this rollout without
recourse to equity capital raisings. Instead we have assumed capex beyond FY18e be funded from debt and
free cashflow and a mixture of joint venture arrangements and self-funding special purpose vehicles. As
Exhibit 4 below demonstrates, our forecasts anticipate that net debt will be NZ$2.6m in FY18, down from
NZ$7.4m in FY17 due to the recapitalisation of the business.
Exhibit 4: Earnings projections
FY18e FY19e FY20e FY21e FY22e
Number of stores at year end 110 174 299 462 625
Network sales (NZ$m) 47 78 138 224 323
Revenue (NZ$m) 6.3 10.0 18.4 29.3 39.0
EBITDA (NZ$m) (1.0) 1.0 5.0 9.3 11.6
NPAT Adj (NZ$m) (1.3) 0.6 3.3 6.3 7.9
NPAT Reported (NZ$m) (2.4) 0.6 3.3 6.3 7.9
Net debt/(cash) (NZ$m) 2.6 1.9 (0.3) (5.7) (14.2)
Source: RaaS forecasts

Cooks Global Foods Ltd | 22 December 2017 4
Exhibit 5: Financial Summary

Source: RaaS Advisory
COOKS GLOBAL FOODS (CGF.NZX)Share price (15th December 2017)NZ$0.05
Profit and Loss (NZ$m)Interim (NZ$m)H116AH216AH117AH217AH118FH218F
Y/E 31 MarchFY15AFY16AFY17AFY18FFY19FRev enue4.5 1.9 2.7 2.8 2.8 3.6
NO OF ST ORES92 98 110 178 EBITDA1.1- 2.8- 1.3- 1.4- 0.9- 0.1
T OT AL REVENUE34.4 48.7 72.3 EBIT 1.4- 2.7- 1.4- 1.6- 1.0- 0.0
Rev enue8.96.25.36.310.0N PAT (normalised)1.5- 2.9- 1.6- 1.9- 1.2- 0.0-
EBITDA(3.3)(3.9)(2.8)(0.8)1.0Minorities- - 0.2- 0.2 0.1- -
Depn(0.4)(0.2)(0.2)(0.1)(0.1)N PAT (reported)1.5- 6.4- 3.8- 8.4- 2.5- 0.0-
Amort0.00.00.00.00.0EPS (normalised)0.45- 0.71- 0.43- 0.43- 0.27- 0.00-
EBIT (3.8)(4.1)(3.0)(0.9)0.9EPS (reported)0.44- 1.55- 0.92- 2.02- 0.54- 0.00-
Interest(0.2)(0.3)(0.6)(0.3)(0.1)Div idend (cps)- - - - - -
Tax0.00.0(0.0)0.0(0.2)Imputation28.0 28.0 28.0 28.0 28.0 28.0
Minorities0.00.00.0(0.1)0.0Operating cash flow1.4- 4.8- 2.6- 3.0- 0.8- 1.5
Equity accounted assoc0.00.00.00.00.0Free C ash flow1.4- 3.9- 2.6- 2.8- 0.7- 1.9
N PAT pre significant items(4.0)(4.5)(3.5)(1.3)0.6DivisionsH116AH216AH117AH217AH118FH218F
Significant items(0.4)(3.5)(8.7)(1.2)0.0Rev - Franchises One-off0.7 0.1 0.8 0.6
NPAT (reported)(4.4)(7.9)(12.2)(2.4)0.6Rev - Franchises0.4 0.2 1.4 3.8
Cash flow (NZ$m)
Y/E 31 MarchFY15AFY16AFY17AFY18FFY19FRev - Supply0.4 0.5 0.5 0.5
EBITDA(3.3)(3.9)(2.8)(0.8)1.0Rev - C rux- 0.0 - 0.1
Interest (0.2)(0.2)(0.6)(0.3)(0.1)Rev - Acquisitions- - - -
Tax0.00.0(0.0)0.0(0.2)EBITDA - Franchises One-off0.5- 0.1 0.8 0.6
Working capital changes1.5(2.0)(2.3)1.81.1EBITDA - Franchises0.0- 0.2 1.0- 1.4
Operating cash flow(2.0)(6.1)(5.7)0.71.7
Mtce capex(0.3)(0.3)(0.1)(0.0)(0.1)EBITDA - Supply0.4- 0.1 0.4 0.4
Free cash flow(2.3)(6.4)(5.8)0.71.6EBITDA -C rux- 0.0 - 0.1
Grow th capex0.0(0.6)(0.1)(0.4)(0.9)EBITDA - Ov erheads1.0- 1.0- 4.1- 4.0-
Acquisitions/Disposals(2.2)(0.3)(0.1)(0.1)0.0EBITDA - acquisitons- - - -
Other0.00.00.00.00.0Margins, Lev erage, ReturnsFY15AFY16AFY17AFY18FFY19F
C ash flow pre financing(6.7)(13.7)(11.7)0.92.4EBITDA-37.5%-63.8%-51.6%-12.6%10.4%
Equity 8.03.50.02.30.0EBIT-42.2%-67.2%-55.6%-14.3%9.0%
Debt0.0(3.9)0.00.00.0N PAT pre significant items-44.7%-72.8%-66.5%-20.4%5.8%
Div idends paid0.00.00.00.00.0N et (Debt)C ash2.5- 3.7- 7.4- -2.6365661.9-
N et cash flow for y ear1.2(14.2)(11.7)3.22.4N et debt/EBITDA (x )(x )n/an/an/an/a1.829-
Balance sheet (NZ$m)N D/N D+Equity (% )(% )22.6%27.7%98.3%40.8%30.1%
Y/E 31 MarchFY15AFY16AFY17AFY18FFY19FEBIT interest cov er (x )(x )n/an/an/an/a0.1
C ash4.71.00.22.43.1ROA-18%-19.9%-17.8%-6.2%5.4%
Accounts receiv able1.34.63.31.71.1ROE-53%-88%-250%-124%14%
Inv entory1.00.80.50.20.3ROIC-35%-49%204%-13%14%
Other current assets2.23.35.28.38.3NT A (per share)n/a0.00 n/a0.00 0.00
Total current assets9.29.89.112.612.8Working capital0.7- 0.6- 0.9- 2.6- 3.7-
PPE1.11.50.30.71.6WC/Sales (%)-8%-9%-18%-42%-37%
Goodw ill10.39.63.03.03.0Revenue growth-31%-13%17%60%
Other intangibles0.00.00.00.00.0EBIT growth pan/an/an/a-201%
Deferred tax asset0.0(0.0)0.00.00.0PricingFY15AFY16AFY17AFY18FFY19F
Other0.00.10.00.00.0N o of shares (y /e) (m)338 413 417 490 490
Total non current assets11.411.23.33.74.6Weighted Av Dil Shares (m)295 353 413 434 490
T otal Assets20.621.012.416.317.3
Accounts pay able3.06.04.74.65.0EPS Reportedcps0.00- 1.99- 2.94- 0.54- 0.12
Short term debt7.24.76.13.33.3EPS N ormalised/Dilutedcps0.00- 1.17- 0.86- 0.27- 0.12
Tax pay able0.00.00.00.00.0EPS grow th (norm/dil)n/an/an/a-143%
Other current liabilities1.20.50.02.92.9DPS cps- - - - -
Total current liabilities11.411.310.810.811.3DPS Grow thn/an/an/an/a
Long term debt0.00.01.51.71.7Div idend y ield0.0%0.0%0.0%0.0%0.0%
Other non current liabs0.81.30.00.00.0Div idend imputation2828282828
Total long term liabilities0.81.31.51.71.7PE (x )- - - - 42.5
T otal Liabilities12.212.612.312.512.9PE market18.918.9
Net Assets8.48.40.13.84.4Premium/(discount)-100%124.7%
EV/EBITDA5.8- 6.2- 10.3- 34.3- 25.4
Share capital27.536.437.943.543.5
Accumulated profits/losses(19.2)(27.0)(38.9)(41.2)(40.6)
Reserv es0.0(0.0)1.11.21.2FC F/Sharecps-0.6-1.6-1.40.10.2
Minorities0.00.30.00.20.2Price/FC F share8- 3- 4- 87 28
T otal Shareholder funds8.49.60.13.84.4Free C ash flow Yield-11.8%-32.5%-27.5%1.1%3.6%

Cooks Global Foods Ltd | 22 December 2017 5
FINANCIAL SERVICES GUIDE


RaaS Advisory Pty Ltd
ABN 99 614 783 363
Corporate Authorised Representative, number 1248415

of

BR SECURITIES AUSTRALIA PTY LTD
ABN 92 168 734 530
AFSL 456663











Effective Date: 11
th
May 2017

Cooks Global Foods Ltd | 22 December 2017 6
About Us
BR Securities Australia Pty Ltd (BR) is the holder of Australian Financial Services License (“AFSL”) number
456663. RaaS Advisory Pty Ltd (RaaS) is an Authorised Representative (number 1248415) of BR.
This Financial Service Guide (FSG) is designed to assist you in deciding whether to use RaaS’s services and
includes such things as
- who we are
- our services
- how we transact with you
- how we are paid, and
- complaint processes
Contact Details, BR and RaaS
BR Head Office: Level 2, 129 Robertson Street, Fortitude Valley QLD, 4006
RaaS. 20 Halls Road Arcadia, NSW 2159
P: +61 414 354712
E: finola.burke@raasgroup.com
RaaS is the entity providing the authorised AFSL services to you as a retail or wholesale client.
What Financial Services are we authorised to
provide? RaaS is authorised to
- provide general advice to retail and wholesale clients in relation to
- Securities
- deal on behalf of retail and wholesale clients in relation to
- Securities
The distribution of this FSG by RaaS is authorized by BR.
Our general advice service
Please note that any advice given by RaaS is general advice, as the information or advice given will not take
into account your particular objectives, financial situation or needs. You should, before acting on the advice,
consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If
our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any
relevant Prospectus, Product Disclosure Statement or like instrument. As we only provide general advice we
will not be providing a Statement of Advice.
We will provide you with recommendations on securities
Our dealing service
RaaS can arrange for you to invest in securities by firstly sending you the offer document and then assisting
you fill out the application from if needed.
How are we paid?
RaaS earns a fee from companies for providing a research report and/or a financial model on the company, for
dealing in its securities or for assisting in raising capital. You don’t pay anything.
Associations and Relationships
BR, RaaS, its directors and related parties have no associations or relationships with any product issuers other
than when advising retail clients to invest in managed funds when the managers of these funds may also be
clients of BR. RaaS’s representatives may from time to time deal in or otherwise have a financial interest in
financial products recommended to you but any material ownership will be disclosed to you when relevant
advice is provided.
Complaints
If you have a complaint about our service you should
­ contact your Adviser and tell them about your complaint, the adviser will follow our internal dispute resolution
policy, including sending you a copy of the policy if required
­ BR is a member of the Financial Ombudsman Service, our external dispute resolution provider.
Financial Ombudsman Service GPO Box 3 Melbourne VIC 3001 Telephone: 1300 78 08 08 Email:
nfo@fos.org.au
Professional Indemnity Insurance
BR has in place Professional Indemnity Insurance which satisfies the requirements for compensation under
s912B of the Corporations Act and that covers our authorized representatives.

Cooks Global Foods Ltd | 22 December 2017 7

DISCLAIMER and DISCLOSURES
This report has been commissioned by Cooks Global Foods Ltd and prepared and issued by RaaS Advisory Pty Ltd in Australia and New Zealand. RaaS
Advisory received a fee from Cooks Global Foods for the preparation of this report. All information used in the publication of this report has been
compiled from publicly available sources that are believed to be reliable, however neither Cooks Global Foods Ltd nor RaaS Advisory guarantee the
accuracy or completeness of this report. Opinions contained in this report represent those of the principals of RaaS Advisory at the time of
publication. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as
financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as
described in sections 5(c) (1)(a), (b) and (c) of the FAA). This research is issued in Australia by RaaS Advisory and any access to it should be read in
conjunction with the Financial Services Guide on the previous two pages. RaaS Advisory holds Corporate Authorised Representative no 1248415 of
AFSL 456663. This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document.
This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities
mentioned or in the topic of this document. Forward-looking information or statements in this report contain information that is based on
assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current
expectations. Past performance is not a guarantee of future performance. To the maximum extent permitted by law, RaaS Advisory, its affiliates, the
respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the
information contained in this report and do not guarantee the returns on investments in the products discussed in this publication.
Copyright 2017 RaaS Advisory Pty Ltd (A.B.N. 99 614 783 363). All rights reserved.