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Coffee Heaven - A heavenly share for penny punters ? (COH)     

overgrowth - 06 Oct 2003 22:47

underground01_2.jpgA busy day in the Warsaw Underground ! Not just another coffee shop chain - this one is a brand leader and is only trading in Eastern/Central Europe (i.e. the countries recently admitted to the EU destined for substantial business growth). The company is creating new outlets at a fair old pace and take a look at their website - these are quality stores in high-profile locations like major airports, railway stations etc. Website: http://www.coffeeheaven.eu.com

APRIL 2006 TRADING UPDATE!!! Total Gross Revenues for 12 months to 31st March up 66% to £6.3M (2005: £3.8M) Lots more info. on new markets and stores click here to read the full details. Stores: 43 (up from 32) stores currently trading (Poland: 30 (up from 23), Czech Republic: 6 (Up from 2), Latvia: 7 with a further 5 units under construction including Bulgaria and sites secured in Romania (subject contract). Bulgaria & Romania are seeking to join the EU from January 2007. Sites located in key high street, shopping malls or Airport locations. Company growth target: increase number of units by at least 20 units to some 63 units by 31 March 2007. Aim being to achieve this level of growth within present Cash resources.Cash balances at 31 March 2006 were approximately £2.9M (2005: £0.7M). Debt was nil (2005: £ 2.5M): Nil Debt! Positive EBITDA: For the year ending 31 March 2006, Group EBITDA expected to be firmly positive after charging UK and new market development costs but before exceptional costs relating to the cancellation of bonds (previous Debt). Forecasts: Based on present trading conditions and current exchange rates we anticipate indicative sales of £9.3M for the year to 31 March 2007. This includes indicative sales of £0.4M from Bulgaria, which will be reported but not consolidated. From Richard Worthington (Chairman and Chief Executive): ‘The new financial year has started well. There is no doubt that the significant economic improvement in our markets is feeding through to consumer confidence and spending. The strength of the coffeeheaven brand ensures we are ideally positioned to benefit from our customers' increasing prosperity.’

Chart.aspx?Provider=Intra&Code=COH&Size=Chart.aspx?Provider=EODIntra&Code=COH&Si

Ultimate Cynic - 04 May 2005 17:16 - 172 of 2037

Weak holders selling out @ 1.35p. Wonder if price will dip again tomorrow or are the MM's just tempting people to sell?
UC.

Dave1980 - 12 May 2005 14:20 - 173 of 2037

does anyone know why the drop in SP

stockpick - 12 May 2005 19:46 - 174 of 2037

I do not know they keep on moving the spread and price does not matter if there is a lot of buys or sells. I have had these for ages and still know I will have to wait but I am geting a bit sick and tired of the moves. still interesting 1m transaction and there have been a few of those so who knows.

overgrowth - 12 May 2005 19:56 - 175 of 2037

This one's a long termer guys - the MMs will carry on moving prices up and down to drum up both buying and selling trade at these levels, after all that's how they earn their money.

COH haven't quite proved themselves yet in the eyes of watching investors. The company is going from strength to strength, however all of the results in the trading update were not eye opening material (for temporary reasons as explained in the interims).

A string of ever improving results is all that will be needed to attract a flock of buyers and the price will go zooming up. Until then sit back and relax and think of the time in the future with COH shareprice at 20p+ when you'll be glad that you were one of the few with vision who bought in at around the 1p mark.

sjtee - 18 May 2005 09:50 - 176 of 2037

Any thoughts on why this is now drifting down. After good results and with lots of potential. Agree this will take time and ever improving results will attract buyers but ther does not appear to be anything out there to warrent this reaction

AdieH - 18 May 2005 11:16 - 177 of 2037

i'm with you cannot understand what is happening would expect small rises not these drops, cannot sustain any rises for some reason...

overgrowth - 18 May 2005 12:18 - 178 of 2037

With the May issue of the European Business Magazine carrying this article it's amazing that the price is slipping:

"COFFEE BEANS & BUCKS
To become a big fish in the coffee-bar market, first find a smaller pond

How do you win the UK's increasingly competitive coffee bar game, with US powerhouse Starbucks pushing down margins and driving up prime real-estate prices for locals like CaffNero and Costa Coffee? Answer: Go to Poland.

And then Latvia and the Czech Republic and maybe Ukraine, Romania, Bulgaria...Yalta.

Well, that's what Richard Worthington's theory was four years ago when he opened a coffee bar chain, called Coffee Heaven, in Poland. It now has 32 locations in three countries and is headed for 350 shops in the next few years stretching from Warsaw to Odessa..."

Website is: http://www.europeanbusiness.eu.com/index.html

Dave1980 - 25 May 2005 10:45 - 179 of 2037

I've been building a nice stake in COH over the past month,

Has anyone got any views why the price is not moving?

overgrowth - 25 May 2005 12:07 - 180 of 2037

Dave - COH certainly have plenty of media exposure but still relatively few buyers are interested.

I believe that this is because all the stores are in Central/Eastern Europe and UK investors find it difficult to gauge all the differing cultural and economic factors in these wide ranging geographical locations to convince them to invest into an early stage growth company.

The only thing which will gradually make UK investors sit up is a consistent flow of results which show ever increasing profits - suddenly the realisation that this is a great company will dawn and the floodgates will be opened - until then it's a bit of a waiting game.

I've always had COH down as a safe long term hold - i.e. come back in a few years and see your original investment multiplied many times over.

AdieH - 25 May 2005 13:03 - 181 of 2037

Am with you overgrowth, this is long term hopefully a ten bagger or more but it won't happen over night, look at the lack of posters here for a start that indicates lack of exposure/investor interest, it will happen, the CEO has excellent track record of building brand, 5 years and I hope to be looking to pay off my mortage from COH investment...

stockdog - 25 May 2005 14:35 - 182 of 2037

There are three big pluses making COH a dead cert to hold till it comes good.

1) E. Europe has to be part of any serious investor's asset allocation - its potential for growth and the work ethic of a populatiion finally allowed to engage in free enterprise is enormous. Look at the potential for mortgages, credit cards and other personal financial products too, as they rise to meet the affluent standards of the old W. Europe.

2) The very caution of the CEO that keeps the SP from being a tearaway, volatile high-flyer is what will keep our company solvent in this frontier market long enough to enjoy the profits that must come.

3) Who occupies the prime retaile sites all over the West End of London - Starbucks, Caffe Nero, etc, etc. - the same in any city, new or old. Pouring hot water onto coffee grounds is probably the highest gross profit retail business ever.

Keep the faith - drink coffee (preferably in Warsaw!)

sd

overgrowth - 26 May 2005 15:56 - 183 of 2037

Here's why the price has been all over the place:

"RNS Number:8132M Coffeeheaven International PLC 26 May 2005

coffeeheaven international plc
('coffeeheaven' or the 'Company')
Issue of Equity

coffeeheaven is pleased to announce a placing of new ordinary shares to raise 270,000, before expenses. The funds raised will provide additional working capital for the Company and in particular, to fund expansion in the Czech Republic and Latvia.

In the placing the Company will issue 27,000,000 new ordinary shares of 0.1p each at a price of 1p each. The Company will make application for the 27,000,000 new ordinary shares to be admitted to trading on AIM and dealings in the new ordinary shares are expected to commence on 2 June 2005."

Looks as though it's all priced in now.

Worth the small dilution to ensure that the expansion of outlets continues at a rapid rate.

zscrooge - 26 May 2005 20:58 - 184 of 2037

How many dilutions in the past 2 years?

stockpick - 27 May 2005 23:15 - 185 of 2037

I am with you zscrooge. While I do believe in the longer term the price will never rise until the market sees some real return. If taking all the pain is now so the chain can be built, I suppose it has merit but to be honest the model is not yet proven. Perhaps a bit of consolidation may have been worthwhile after all there are still no major chains going in. Only time will tell. LOL

overgrowth - 31 May 2005 09:06 - 186 of 2037

An interesting article in the Warsaw Business Journal today:

http://www.wbj.pl/?command=article&id=26948

http://www.wbj.pl/?command=article&id=26979&type=wbj

zscrooge - 01 Jun 2005 13:00 - 187 of 2037

Interesting rumour about possible Starbucks pre-agreement with COH but are they buying up stores at too high a price?

More dilution after today's RNS?

fancyfootwork - 01 Jun 2005 13:08 - 188 of 2037

I seem to remember recently that when Cafe Nero published fantastic results COH benefited.... hopefully some good news on the speculative Coffee Rebublic takeover could also give COH a northwards push.
Here's hoping anyhow!

overgrowth - 07 Jun 2005 17:51 - 189 of 2037

Excellent trading from CHIP (CoffeeHeaven In Poland) announced today:

The growth is really starting to show through now - just look at the phenomenal increase in net cash flows!!!

"Coffeeheaven's principal trading subsidiary, CHI Polska S.A. ("CHIP"), today announced in Poland its results for the year ended 31 March 2005 prepared in accordance with PL GAAP.

An extract from this announcement is set out below.

During the year ended 31 March 2005 sales at CHIP grew 45% to 21.91M PLN and earnings before interest, taxation, depreciation and amortization (EBITDA) grew by 142% to 2.36M PLN (prior year 0.98M PLN).

Net cash flows from operating activities grew 533% to 2.93M PLN (prior year 0.46M PLN).

CHIP reported an operating profit of 0.47M PLN (prior year loss 0.40M PLN) before other operating expenses/income, financial expenses/income, extraordinary expenses/income and taxation."

stockdog - 07 Jun 2005 18:36 - 190 of 2037

og - I was quite excitred too until I saw the cost of finance in the figures at the end of the report which seem very burdensome - will this be alleviated to some extent by the recent capital raising? Can't see how they can reach profitability on the basis of those interest charges without massive further growth.

have a look - interested what you think.

sd

overgrowth - 07 Jun 2005 19:24 - 191 of 2037

sd - the report is made up in Zoltys, which makes the financing costs appear to be much more burdensome than they actually are.

Costs are in the region of 300,500 which doesn't seem too drastic for a whole year.

Richard Worthington predicted that there would be slowing in like-for-like sales in the Warsaw stores as the impact of increased retail space came on line - he also anticpated this to be a short term phenomenon. This suggests to me that we will be seeing much more powerful growth to come from the Polish outlets.

The recent fund raising won't have any impact on CHIP as it has been used to enable Coffeeheaven to purchase the Latvian outlets outright, so that they can benefit fully from future assest enhancement.

The coffee drinking phenomenon is only just starting to really take off in Poland, and as time goes on a substantial increase in throughput of customers is anticipated - this is what will provide the "massive further growth" for CHIP (they won't need to buy any more stores in Poland to achieve growth - it's now a matter of keeping things ticking over nicely and watching the profits start to multiply).
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