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.’

So state yours then,we're all interested to know how you come up with figures that show the price is too high.Here's a little help with the first line.The sales / store has risen each year as the stores mature.Last year they were 157k / store,Now do you think they will be say 163k / store or does that underestimate their growth rate ?The target is 90 stores so multiplying 90 by 163 would give you 14.67m sales.Simple isn't it or do you want to reconsider the 163 / store. I can help you with this if you want.

Come on sir you press the 9 then the zero then the cross,then the1,6 and 3 on the calculator.I this does not give you the figure you want you then justify whether the 90 or 163 are wrong.Easy isn't it.

Sir it is so easy even Numis can do it.

But I am not really interested in sales per store, but profit per store in the search for the all important intrinsic value.

You quote an average sales figue per store, and perhaps this is what is wrong with COH, as it would be more beneficial for us to know what stores are not making the grade and need to be closed. hense my earlier commentt of closing stores rather then opening new ones----I trust you can get it.

COH need to be telling us it bottom line profit expectations for each store.

Profit is the bye word LFL sales means little in this resepct as the its the bottom line profit figure that movea the SP and give a company value.

It would be good to know also what stores are not making your figure of 157K, what stores are surpassing it, and what stores are running on a loss.

Well Sir I did it, I pressed the 9 then the zero then the cross,then the1,6 and 3 on the calculator.
nHowever I came up with a number of loss making stores which would render the LFL sales figures pretty useless when looking for true value.

I wonder if you would kindly illuminate on that please.

When doing please give a target nett profit figure for each store and those exceeding that target and those that are not.

You see the EBITDA figures can so easliy mislead us, what we need is the
E(AFTER)ITDA, ie the nett profit figure when looking for the basis of all true company valuations, ie intrinsic value......anything else it would appear are bird peckings.

How do you calculate loss making stores,I'm interested

loss making? profit making? ..... either way, the chart says certainly no hurry to buy

OK you're a little shy,we'll work down to profit but we must start somewhere,i.e. total sales.Yes some stores will be making a lower turnover than others that's why it's called an average.The sales / store I quoted for last year was obtained by dividing the sales by the number of stores from the accounts.Now if some stores were performing poorly some must be doing better that's what averages are.If more stores were going backwards you would expect the average to fall but it's rising so things are improving.With me so far ? The average sales / store over the last 3 years has been 105k,148k and 157k. Not all stores will have the same turnover as some will only just have opened in the year.So let's say it takes a year to get up to speed.We can take a new store as say one third of an established store.In 05 they had 22 established stores + 1/3 of 14 new stores i.e. 26.7 established store equivalents.Sales were 3789k i.e. 142k / established store equivalent.In 06 the same calculation comes to 166k and this years figures 203k.Next year they say they're targeting 90 stores so we would have 65 established + 25 at 1/3 i.e. 73 store equivalents.At last years figure of 203k / store that would give a turnover of 14.9m.Now that assumes no LFL growth which was 28% at the interims.So you could pick a figure anywhere up to 28% higher.

Very good indeed solid effort, first class.

However, may I respectfully ask you why you are still talking sales and not in NETT profit?

Let me ask you please fOr the cost of runing each store, IE the working overhead costs.

Perhaps we can get somewhere tha way.

At least it would prove an interesting exercise for you.

We may even end up putting COH on the road to profit.

Cynic well said.


A Simple equation applies here viz:

NO NETT PROFITS = NO CHARTING BREAKOUT.

Q.E.D

from the headline .......

"Forecasts: Based on present trading conditions and current exchange rates we anticipate indicative sales of 9.3M for the year to 31 March 2007."

perhaps someone confusing turnover with profit, for there is no mention of the latter.

Well said cynic!

Exactly my point, and this is why so many of the smaller shareholders get suckered as they are bamboozeled with fancy impressive looking anacronyms that they never seem to even want to rememeber the basic element of stock valuation which of course is good old fashioned nett profit.

An earnings profit before deductions can look very impressive indeed, but as the hard nosed cigar chewing epitomy of good old fashioned USA styled capitalism always says as he spits the chunk of cigar that he was chewing to the floor----whats the bottom line Mac?

An anachronistic presentation of accounts and the acceptance thereof usually spell a disaster.

Look at this as cynic rightly points out, what the hell does it mean?

Humpty Dumpty has a 100 jelly beans or just five?-------COH actually put this imformation out-----"Forecasts: Based on present trading conditions and current exchange rates we anticipate indicative sales of 9.3M for the year to 31 March 2007."---it tells you "absolutley nothing" about what the company is actually make---all I am asking you to do is to stop and think about it.

The share game is about making money and that is done by creating actual wealth which means hard cash NETT PROFITS!

Which is always the best way to go.

Its from the Nett profit that the larger more establishED companies pay their divies---and not from anachronistic dream paper.

If you want value investments then there can only be one way to go The value way!!---and what would that all said be worth without a plug for my favorite penny share?---

Please look at the ACCORUS DEAL, and smell the bottom line as its flavoured with good established nett profits which makes the SP fly.

That is what I base my investments on and of course the occasional flutter.

Have a great opening in the morning one and all-----

AND KEEP YOUR SPARE EYE ON MLR THIS WEEK!

Penny Shares can make you rich, very rich indeed if you call them right.

COH has done well for many and I take my hat off to the share price rise over the past two years. But its done its work!!

It rose on nothing but hype the naturAl progressive path of any SP calls for a stop and possible fall back as the share "ITSELF" takes its own stock on its true value---just as the MARKET DEMANDS THAT IT DOES.

Have a wonderful day yesterday, as my two great old friends of the fickering Silver Screen would say, but we all knew they meant tomorrow and still roared with laughter.!

Your turn,you're the one saying it's not worth the price.I'm just seeking to discover the fair price. What is your net profit / store ?

When COH tells us the nett each store then I can tell you.

Time for night night old chap, tomorrow is another day, or was that yesterday?
(scratching his head).

If you cannot give a figure how can you say it's overpriced ?

and how can one evaluate anything without knowing at least gross or better still, nett margins?

Well cynic it really is most gratifying to see another, obviously intelligent person, understanding that .

Thank you for your perception.

anyone other than someone blind for real or self-delusion is all that is required!

The important bit is at the bottom of the page!

This is the link to authenticate the article pasted below:-

http://gielda.wp.pl/POD,6,a,1,b,1,c,11,index.html?P%5Bnumer%5D=8883023&P%5Bobr%5D=ifx&ticaid=13d38


U.S. coffee chain Starbucks enters CEE market through Polish listed restaurateur AmRest 14:51 28.05.2007
poniedziałek

Polish listed restaurateur AmRest has sealed a joint venture agreement with U.S. coffee chain Starbucks, paving way to launch Starbucks stores in Poland, the Czech Republic and Hungary, the company said in a communique Friday.

The parties resolved to establish three separate Joint Venture Companies, one for each of the three countries in the Territory [Poland, the Czech Republic, Hungary]," the communique reads. "AmRest Poland shall contribute 82% and Starbucks 18% of the capital to the JV (joint venture) Companies."

Starbucks has the right to increase its share in the joint venture companies up to 50% in fifth and ninth year of their operation, or in the third and fourth year if AmRest fails to open the agreed minimum number of stores.

This is RW's comment on the Starbucks news:-

"We have of course been aware of this for sometime and have planned accordingly. The only surprise why it has taken SB so long to come to CE and the size of the royalties Amrest is paying to SB at 6% - we had expected 5%.

That's a huge burden for any business to carry given the margins.

As usually the likely winners out of this will be Starbucks with the franchisee carrying all the risk. Amrest are developing a number of brands like KFC/Pizza Hut as well as their own brands all in several CE markets. A lot of plates to keeping spinning with conflicting demands for capital.

What is important to us is that this is not SB but an SB franchise. In CE we believe that is a critically important difference for many reasons. As we have said many times we do not believe franchising is the correct business model for coffeeheaven in CE today.

In essence nothing changes for coffeeheaven. Most likely SB's entry will expand CE market growth and as sector market leader in CE coffeeheaven will be the biggest beneficiary.


Sincerely
Richard Worthington


I mr Worthinton's comment lay the secret of COH making or breaking.

Mr Worthington refers to, and I quote :- That's a huge burden for any business to carry given the margins.


Form this it is easy to deduce that COH are keenly aware of profit margin and have not cracked to problem in order to move COH into a comfortable NETT profit zone.

Thye have failed to do this up to now depite have little or no serious competition in Western styles coffeee bars---Now the competition is begining to roar, will Mr Worthington be unable to cower in the corner?

I wonder, as to date COH has only proven its worth in fund raising from its shareholders.

I wonder further if EMPIK were already aware of this when they dumped their major holding, as perhaps they saw no future with COH.

TIME WILL UNDOUBTED BE THE BEST JUDGE.

as with SEO and BFC???

DONT FOLLOW YOU.