VSA Capital Daily Consumer Comment

This research brochure is a MARKETING COMMUNICATION. It is not investment research and has not been prepared in accordance with legal requirements
designed to promote investment research independence and is also not subject to any prohibition on dealing ahead of dissemination of investment research.

27 June 2023



VSA Daily Consumer Comment
Cooks Coffee Company (CCC NZ/COOK ASE)
#

FY23 Results
Cooks Coffee Company (CCC) announced its FY23 results on 20 June. Revenues of NZ$6.6m (£3.4m) were
down 10%, which reflects the Group’s revenue recognition polies and timing of store openings, as well as
the challenging consumer backdrop. The delay in store openings meant that capital related non-recurring
revenues declined 30% to NZ$2.9m (£1.4m). Positively, however, franchised store sales are up 24%,
alongside 15% growth in recurring revenues. Despite the decrease in revenue, the group delivered an
adj.EBITDA of NZ$0.75m (£0.4m).
Steady progress against the well documented headwinds
CCC has delivered encouraging results given the circumstances, and the underlying performance of the
outlets remains positive; evidenced by the strong growth in franchised store sales and recurring revenue.
Over the year, CCC opened 16 new stores and closed 15, bringing the total to 84 stores in the UK/Eire.
While this is slightly behind previous estimates, several store openings were moved into the current year,
due to the effects of supply chain disruptions in Q3/4. Reassuringly, these headwinds appear to be easing
and a conversion of the strong pipeline should materialise in FY24. This should solidify the Group’s
positioning as the 4th largest coffee focused café chain in the UK.
Profitability impacted; roadmap to margin expansion evident
Over the year, the group saw its gross margin expand by 5%pts to c85%, which helped drive a positive
adj.EBITDA of NZ$0.75m (£0.4m). On a reported basis, however, PBT was down from NZ$(0.2)m to
NZ$(3.3)m. This was primarily driven by impairment of goodwill (NZ$2.5m) and impairment loss on
receivables (NZ$0.5m). The former is associated with the Triple Two business; a mixture of poorer trading
results in FY23 (due to the slowdown in store openings vs forecasts) has resulted in a revision to forecasts
to reflect a more conservative new store opening schedule in FY24.
Outlook; positive signs going into FY24
The group has started FY24 well; an additional 5 stores have been opened in the UK and Ireland post year
end with further store openings planned (5 planned in June alone). This is in line with the long-term
strategy, which centres around building on the existing network, augmented by potential synergistic
acquisitions/vertical integration. The dual listing on Acquis in Nov’22 and appointment of Elena Garside,
the 1st UK based NED, will further support the group wide long-term ambition. On a going concern basis,
the Directors have noted that CCC has the ability to meet its cash commitments for the foreseeable future
and have established mitigating actions should the backdrop worsen. Management projects a positive
cash inflow of NZ$0.6m in FY24. Additionally, the group has a track record of obtaining financial support
from corner stone investors and related parties.
Please note that Alex Estefanous has assumed coverage of the stock and intends to publish an updated
recommendation and forecasts in due course.














Alex Estefanous,
Equity Analyst

+44 (0)20 3005 5016 |
aestefanous@vsacapital
.com
acabral @ vsacapital.com
Prepared solely for Alexander Cabral. Not to be distributed anywhere. Strictly for personal use.

VSA Capital Limited is Authorised and Regulated by the Financial Conduct Authority © VSA Capital Limited, 2023, all rights reserved
Park House, 16-18 Finsbury Circus, EC2M 7EB | +44 (0)20 3005 5000 | www.vsacapital.com Registered in England: No. 02405923
VSA Capital Limited is a member of the London Stock Exchange
Stock Information
Stock BBG TKR Exchange Currency Mkt Cap
(m)
Last Close
(p)
Rec TP Date of
Recommendation
Cooks Coffee Company Ltd# CCC NZ NZSE NZ$/¢ 15.7 0.003 UR n/a 27/06/23
COOK LN AQSE £/p 7.6 0.21
NOTE: #VSA house stock. SOURCE: Eikon, VSA Capital estimates. Pricing as of last close.
Disclaimer
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acabral @ vsacapital.com
Prepared solely for Alexander Cabral. Not to be distributed anywhere. Strictly for personal use.

VSA Capital Limited is Authorised and Regulated by the Financial Conduct Authority © VSA Capital Limited, 2023, all rights reserved
Park House, 16-18 Finsbury Circus, EC2M 7EB | +44 (0)20 3005 5000 | www.vsacapital.com Registered in England: No. 02405923
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Equities breakdown: 27/06/23 BUY SPEC BUY HOLD SELL
Overall equities coverage 84% 16% 0% 0%
Companies to which VSA has supplied investment banking services 100% 100% n/a n/a


acabral @ vsacapital.com
Prepared solely for Alexander Cabral. Not to be distributed anywhere. Strictly for personal use.