As the market participants are aware, the global economy was impacted by the outbreak of the COVID-19 pandemic. However, there are companies which could perform well moving forward. This company from the F&B space might navigate the challenging operating environment because of its sound business model. It could be said that because of the fall in overhead costs of the group, this company is well-positioned for the future profitability. Over the last 1 month, the stock rose by 40% and, over the last 3 months, it rose by ~28.9%.
Cooks Global Foods Limited
- CGF witnessed corporate costs of $0.8 Mn as compared to $1.2 Mn in the last year because of the overall reduced expenses, mainly in relation to the legal as well as consulting fees.
- During the year, the overall corporate costs witnessed a reduction because of the simplification of the business together with the sale of non-core business units.
- CGF delivered cash flow from the operating activities of positive $1.2 Mn as compared to the previous year’s figure of $0.2 Mn.
Overview of Cooks Global Foods Limited
Cooks Global Foods Limited (NZX: CGF) happens to be an integrated F&B retail as well as supply group which was founded on the globally leveraging NZ’s reputation for fresh as well as quality foods.
The company owns the intellectual property as well as master franchising rights to Esquires Coffee Houses worldwide (excluding Canada, Australia and NZ). CGF also owns numerous wholesale and retail companies in the related industries.
Preliminary Financial Results (For 12 Months Ended 31st March 2021)
Cooks Global Foods Limited recently released its financial results for the 12 months ended 31st March 2021 and the company stated that the impact of pandemic on trading was significant throughout all the markets. Also, the company witnessed delays in the store development as well as opening program. Notably, the acquisition of fast-growing triple two coffee business in the month of June 2020 managed to add scale to the core UK market. The company has also mentioned that the trading when the outlets were open offered increased revenue as compared to the prior years as well as broader industry comparisons. Notably, total group revenue from continuing activities witnessed a fall of 26.8% to $3.1 Mn. The company has posted net loss before tax from the continuing operations of $3.6 Mn and this was at the same level as compared to the same period of the previous year. This implies the benefits of the prior restructuring as well as fall in costs against fall in revenue because of the lockdowns due to the Covid-19 pandemic.
Overview of Results (Source: Company Reports)
The company posted cash flow from the operating activities of positive $1.2 Mn as compared to the previous year of $0.2 Mn. It was mentioned that the fall in revenue due to Covid-19 lockdowns was partly offset by the support packages announced by the government, mainly in the UK as well as Ireland. Even though there have been delays in timing with regards to new store openings, there were no closures of the existing stores or withdrawal from the opening plans of the new stores through the global network attributable to the pandemic.
With regards to the global segment, the company stated that its operating revenue amounted to $0.15 Mn as compared to the last year’s operating revenue of $1.4 Mn. It needs to be noted that the decline was related to the discontinued international product sales to the Middle East.
Overview of CGF’s Balance Sheet
The company’s borrowings witnessed a rise to $7.8 Mn from $5.5 Mn at the same time of the previous year. Notably, these consists of loans from the entities which are associated with Executive Chairman Keith Jackson as well as some other convertible loan notes. The company has been pursuing the financing options to better reflect the proper mix of equity as well as debt requirements for its business.
The company has managed to enter new debt facilities of ~$500,000 with the Summit Capital Limited. The company has also repaid all the facilities with the ANZ Bank. It has informed that it has allotted 100,000 mandatory convertible notes at the face value of $1.00 per note, garnering $100,000 of debt from the wholesale investor.
The company has stated that the permanent restructuring changes which were wrapped up during the last 12 months substantially reduced the overhead costs of the group. The company is well-positioned for the future profitability.
With regards to the COVID-19, the company has mentioned that it cannot accurately assess the full long-term impact.
CGF stated that its revenue in the supply business fell by $37k as compared to the same period a year ago. Also, crux products witnessed weaker sales mainly because of the timing of shipments as well as logistics challenges which are related to Covid-19 factors. Notably, supply operating profit amounted to $18k as compared to $0.124 Mn at the same time in the previous year.
On 18th June 2021, the stock closed at $0.049 per share.