NZAX & MEDIA RELEASE FEBRUARY 2018 COOKS EXPANDS ESQUIRES EUROPEAN BUSINESS COOKS GLOBAL FOODS THIRD QUARTER 2018 STRONG GROWTH IN THE UK AND IRELAND CONTINUES OPERATING METRICS AS NEW STORES IN PORTUGAL AND ROMANIA ARE SET TO ASSIST GROWTH. CONSOLIDATION OF OPERATIONS IN CHINA AND THE MIDDLE EAST CONTINUES. Cooks Global Foods (NZAX.CGF) today reports continued strong growth in constant currency1 quarterly sales across its global Esquires Coffee store network, with the ongoing store refurbishment programme underpinning performance. Constant currency network store sales - a leading indicator of the revenue Cooks expects to generate from design fees for new and refurbished stores and recurring revenues, such as royalties, coffee product and other retail sales, were $11.0 million in the three months to 31 December 2017. The result represents an 8.1% increase on the same period a year ago, and is a record quarterly result for the group. Esquires UK - Balham region. Indeed, the number of European coffee shops grew by 7.7% in 2017, while Romania was the fastest growing area in the EU, with the number of outlets rising by 30%2. ” The same-store results for the period showed similar improvements. Constant currency same store sales KEITH JACKSON increased 2.5% to $8.6 million from $8.4 million in the same three-month period a year ago. Executive Chairman GROUP TARGETS With the delay of the restructure of the China business, as flagged last year, and the closure of stores that are deemed “In the last three months, our UK and Irish operations, which non-strategic for the new China business, the target of generate more than 70% of total constant currency network 140 stores for the group by the end of the financial year is sales have performed very well and are continuing to grow under pressure. strongly. The uplift reflects the opening of new stores and the ongoing refurbishment and rebranding campaign, While Cooks currently expects to have around 100 stores which is also underpinning transaction volumes and across its existing network by the end of the financial year, average transaction values across the global network. the higher figure remains possible based on discussions with a number of potential partners that could deliver “We have also seen continued consolidation in key additional stores to the network. territories such as China and the Middle East, both of which are transitioning to new ownership arrangements.” says However, with less than two months before the year end, Cooks Executive Chairman Keith Jackson. Cooks expects these additional stores would more likely be delivered during the first half of the next financial year. “We opened a total of eight new stores across both territories in the past 12 months, but these gains have been Meanwhile, delays in the China restructure and significantly diluted by the closure of a total of 14 underperforming growing our network store numbers will likely mean the stores. transition to breakeven for the group will occur during the first six months of the new financial year. “At the end of the quarter we launched a new store in Porto, Portugal and two stores in Bucharest, Romania. These Mr Jackson said: “The delays in both China and the European bases represent beachheads for Esquires from discussions with potential new business partners are only which we expect to take advantage of the strong potential timing issues. We are confident that we are putting in place we see for artisan, Organic and Fairtrade cafes in the a structure that will allow Esquires Coffee to thrive over Note 1: Prior year figures are converted at the same exchange rate as current year to eliminate any exchange fluctuation effect. For the definition of all terms please see the last page. Note 2: Allegra Project Cafe Europe 2018. the medium to long term. We have been encouraged by We are still targeting 31 March 2018 for completion, but the depth of interest we have from partners seeking to there are Chinese regulatory processes associated with help Cooks accelerate its global growth plans even if these setting up the new companies and structures that are discussions may not be on the time frame we would prefer.” outside our control. With the disruption of Chinese New Year, the deadline may be pushed out into the new financial year. REGIONAL PERFORMANCE The United Kingdom Delays in the completion of this restructure have meant the existing China operation has continued to impact on the The UK business, which represented 41.1% of total sales for group’s financial results as a full subsidiary, for longer than the three months to 31 December 2017, continues to lead originally forecast. performance across the network. The territory benefited from an increase in store numbers to 34 from 27 at the end We have been working closely with our prospective of the same period last year and a growing contribution partner to restructure this business in preparation for the from new or refurbished stores. completion, which has meant closure of stores and staff redundancies where those stores no longer fit with the Over the past 12 months the UK company has opened 9 strategy for the new Chinese operation. new stores but has closed two underperforming stores. Quarterly constant currency store sales in the UK rose 24.1% No further funds have been invested in China since 30 in the same period last year. September 2017, with the joint venture partner providing funding until completion. Funds that we will owe as part Same store sales for the quarter increased 3.2% on the of this interim arrangement will likely be dealt with by an same period a year ago, reflecting improvements in the adjustment to the proportional ownership structure in the new business. The final numbers will be determined closer to the completion date. Quarterly constant-currency store sales fell 24.8% in the same period a year ago, reflecting the fall in store numbers to 20 from 26. However, the closure of nine underperforming stores lifted the same store operating performance for the period. Constant currency same store sales increased 3.9% on the same period last year. Liverpool - UK Hanley - UK The Middle East Quarterly constant currency store sales in the Middle East increased 3.8% on the same period a year ago as the region benefited from an improving store mix. Over the period the company closed five underperforming stores but opened five new stores. The strong top-line performance was diluted by a weaker same-store operating performance with same store sales, transaction volumes and average transaction values all falling in the territory. This was largely due to some one off Balham - UK Yate - UK events such as law changes in Kuwait that banned smoking inside malls and that had an immediate sales impact. Ireland We continue to target completion of the Middle East, North Africa and West Asia joint venture with our Saudi Arabian Store numbers declined in Ireland to 11 from 12 at the end partner Anasia Foods by the end of the 2018 financial year. of the same period a year ago, but quarterly constant currency store sales in the territory increased 6.8% for the same period comparison. Other territories The increase reflects the ongoing success in the territory Since the end of September, Cooks has established of increasing the average spend per customer. Constant beachheads in mainland Europe, opening a new store in currency same store sales increased 7.8%, due entirely to Portugal and two stores in Romania. These gains were the increased spending per customer. assisted by the opening of a new store in Indonesia but were offset by the closure of a store in Canada. China Cooks is continuing to work with Suzhou Yueying Enterprise Investment Partnership, to create a new company to become the master franchisee for the Esquires Coffee brand in China, Hong Kong, Macau and Taiwan. Cooks and its partners set 30 September 2017 as the base date for the commencement of the venture. It entered into a co-management arrangement from 1 October 2017 and is sharing operational costs on a 50:50 basis from that date with its partners until the joint venture agreements are Porto - Portugal Porto - Portugal completed. ESQUIRES COFFEE OPERATING METRICS 3 MONTHS TO 31 DECEMBER TOTAL NETWORK 2017 2016 VARIANCE Esquires Coffee Store sales NZ$10,965,924 NZ$10,142,847 8.1% Transactions 1,149,645 1,126,736 2.0% Average transaction value NZ$9.54 NZ$9.00 6.0% SAME STORE 2017 2016 VARIANCE Esquires Coffee Store sales NZ$8,572,760 NZ$8,359,738 2.5% Transactions 888,507 914,461 -2.8% Average transaction value NZ$9.65 NZ$9.14 5.5% 9 MONTHS TO 31 DECEMBER TOTAL NETWORK 2017 2016 VARIANCE Esquires Coffee Store sales NZ$32,239,342 NZ$29,218,658 10.3% Transactions 3,436,862 3,261,422 5.4% Average transaction value NZ$9.38 NZ$8.96 4.7% SAME STORE 2017 2016 VARIANCE Esquires Coffee Store sales NZ$25,619,328 NZ$25,114,144 2.0% Transactions 2,682,193 2,764,023 -3.0% Average transaction value NZ$9.55 NZ$9.09 5.1% Note all the figures in the above table are constant currency with prior year figures converted at the same exchange rate as current year to eliminate any exchange fluctuation effect. STORE NUMBERS THREE-MONTH STORE NUMBERS SEPTEMBER DECEMBER DECEMBER 2017 OPENED CLOSED 2017 2016 China 21 1 2 20 26 UK 31 4 1 34 27 Ireland 11 0 0 11 12 Middle East 23 1 0 24 24 Canada 3 0 1 2 3 Indonesia 3 0 0 3 2 New territories 0 3 0 3 0 TOTAL 92 9 4 97 94 ABOUT COOKS GLOBAL FOODS Cooks Global Foods operates in world markets and is listed on the NZAX market operated by NZX Limited in New Zealand under the code CGF.