A 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.’

With a bit of time to spare, I've just been looking over Coffeeheaven's website again - it gets regularly updated and has loads of info.

I note in particular that Coffeeheaven should be part of any "ethical" portfolio:

"Many of Central Europe youngest citizens need support to help them develop the skills they need to share in the prosperity of new Europe.

Coffeeheaven is one of 40 leading companies in Poland who are proud to be members and active supporters of Foundation for Corporate Social Responsibility.

Founded by Bill Chasey (formally of the Red Cross and many of the worlds leading charities) this wonderful organisation provides practical day-to-day support to some of Polands poorest children."

Also interesting is that many of Coffeeheaven's outlets are WI-FI hotspots which will make them very attractive for business travellers.

It's amazing that this company has so little interest over here (and explains why COH are thinking of moving the listing to the Warsaw stock exchange - the Poles will recognise COH as a market leader and invest accordingly). Another comment summarises the mammoth achievements made so far:

"In less than four years coffeeheaven has grown from simply an idea to market leader in one of the largest consumer markets on the European continent.

And that is just the start . coffeeheaven already has a foothold in the Czech Republic and is active in several other Central European markets."

Overgrowth
"and explains why COH are thinking of moving the listing to the Warsaw stock exchange"
Do you know the answers to,
What will happen to current holders if this does de-list from aim and how could you trade the new stock?
I am looking to get in under the 1p mark but waiting to free up funds. Although this de-listing theory may temper my enthusiasum!

Ted1 - I'm not convinced that they're going to move exchanges, there are good tax advantages to be had in the AIM market and also raising cash for bonds in the past through Polish institutions has proved tricky (so they got HSBC to buy in) - I think it's more an expression of frustration from the CEO, that given all the hard work they've put in, there is very little to show for it in terms of share price (I have a feeling that this will change in 2005 - much much more business will be heading in Poland's direction).

If there is a transfer, I guess it will be business as usual. Existing holders will be told of the transfer in advance and if they don't want to hold shares in an internationally listed co. then they have the option of selling out when the company is still in AIM. Anyone who stays in, still holds the same amount of shares - all it means is that you need to execute your trades on an international exchange rather than AIM.

Having said that, I look at COH as a long term mega-earner, hence I won't be trading in and out every couple of weeks so the exchange on which they're listed makes little difference.

Most brokers have access to all international markets and will place a trade for you, though this will need to be over the phone as it's a special transaction.

Even if de-listing occurs, the reason is to ensure that the market cap. of the company reflects its status - hence we are likely to see a nice hike in share price if floating on the Warsaw Exchange actually takes place.

I think that Coffeeheaven will continue on and on to expand and ultimately they will be recognised as a superior solid growth company. Of course, they model themselves on Starbucks and should the big guys want a large chunk of the Central/Eastern European coffee shop cake - there is also a distinct possibility that they could be taken over (and you can be sure that Richard Worthington will want a very good price indeed, considering all the work he's put into this gem of a company).

Overgrowth
Just got back in from a meal at our local indian with the family. Many thanks to MXC for that!
Once again your response is comprehensive and thorough.
I understand what you say and it makes a lot of sense I shall be watching with interest.
Many thanks
Ted

451k buy at a near 5% premium to the quoted offer - someone keen to get in.

Happy New Year to all COH supporters. Looking forward to hearing how the Christmas trading period went.

shareshark - I think we'll be seeing more buys like this through the year - I'm seriously contemplating topping up again with a similar sized chunk myself when I get free some funds.

Happy New Year to you Richie - as more and more outlets are rolled out there will be the inevitable capital expeniture for set-up costs, however once these places are established (and most are in prime locations) we'll have lots to look forward to from trading figures.

As most of the Polish outlets are well established it will be very interesting to see how much clientel they were pulling in during the Christmas period.

Not chuffed with todays announcement - alot of dilution for investors to stomach.

Still good longterm prospects but number of shares in issue has been raised over 20%!

Sorry new to this stock: I'm not a holder (yet) - is this announcement right out of the blue? If so, it seems a little hard on existing shareholders, to put it mildly.

A hell of a lot of buys this PM - seems like those in the know are snapping up big chunks.

Well, there's 80 million new shares to shift.

pd1000 - It's not really hard at all on current holders, it's ensuring the continued interest of institutions who will be committing funds long term.

COH have extremely ambitious expansion plans and if good folks like ourselves invested now want want to sell our shares to Starbucks at 20p a throw in 4 years time and make mega profits, then we have to take the odd discounted fund raising like this on the chin. After all, you can't grow a business at the speed of light without some decent financial backing.

COH in Poland alone has 23 stores established and another 7 planned for opening in the period up to year end (31st March) this year. That will make a potential 40 stores trading at that time all going well.

The sales target for the Polish subsidiary (CHIP) is 3.6M (compared to 2.1M in 2004) and they expect this to be met.

Total revenues will be enhanced by second half income from the 2 new Czech stores and after 31st March we'll be factoring in income from the 7 new Latvian stores.

COH aim to have 18 stores open in the Czech Republic by the end of 2007.

However, they also are still on target for having their planned 50 stores trading in Poland alone by end of calendar 2006.

We're looking at a fast moving dynamic company here which is already well out of the starting blocks and capturing all the prime spots central/eastern European markets before anyone else gets there.

You guys won't be worrying too much about dilution when the sp starts to reflect the 10M+ turnover to come soon.

Volume yesterday suggests somethings afoot - over 36m shares traded!

But remember that most of those are probably from the 80 million new shares just been issued. Still leaves over 40m to be placed at about 0.75p before the overhang subsides.

If thats the case I dont understand.

I thought the shares were being placed with institutions/investors at 0.75p - the trades of the last two days have been 0.94 - 1.05p, with the 2x13m trades at 0.875p trades looking like sells supplying demand.

The new shares have not been issued yet have they?

The screen is completely blue except for one sell of 13.333 shares earlier in the day. So it was yesterday and the day before!
I've never seen this on any share before, there are usually more sells.
I suppose it could be because the bid price is so low with the spread being huge. If the bid moves above 1p the sells will probably start to appear.
Anyone else agree?

Some very strange trading going on with all those buys coming through much higher than placement issue price of 0.75p.

As more and more outlets get established, provided business and tourism continues increasing at current rates in central/eastern Europe, a substantial chunk of that extra income will be going straight to the bottom line.

Coffeeheaven is well on track to becoming a large and highly profitable business - this will take them way out of 1p territory.

As the company grows it becomes more attractive, I have a feeling that this could well be the last opportunity to snap up these shares at around the 1p mark.

Well, I've just taken a small position in these (having freed up some capital after closing out my Peacock holding following a poor trading statement).

Not keen on the ~20% spread but it is an interesting speculative play.

Someone has spoilt the party at 13:35 today selling 150,000 at 0.85p.
I hope this is not going to spark a selling trend.

UC - I don't think a sell of just over 1,000 will affect much lol!

You have to think long term with these guys. The handsome rewards are on their way and will be with us in due course.

If COH achieve their Polish sales targets at the end of March and have turnover to add from the new stores elsewhere, then sales could double by the next results after those, given the aggressive expansion plan in place.

The really good thing is that once the initial capital expenditure of the earlier stores has been returned in profits, we will then start to see a very healthy rise in the sp.