‘THE BEST ESPRESSO THIS SIDE OF MILAN’
ANNUAL REPORT 2008
(JUNE 2007 – MAY 2008)
STORES 371 REVENUE (£M) 129.3 108.8 90.7 FY08 GROWTH 19% 70.1 50.5
REVENUE UP 19% TO £129.3M (2007: £108.8M) LIKE-FOR-LIKE STORE SALES INCREASED BY 2.4% EBITDA ROSE BY 20.5% TO £24.1M (2007: £20M) PRE TAX PROFIT CLIMBED BY 38% TO £13.2M (2007: £9.6M) STRONG CASH GENERATION CONTINUES TO FUND ROLL-OUT OF NEW STORES A NET INCREASE OF 61 NEW STORES DURING THE YEAR, BRINGING GROUP TOTAL TO 371 YEAR END LAUNCHED “NERO EXPRESS” CARTS FOR AIRPORT AND RAILWAY STATION HUBS: OPERATING WITH A TOTAL OF 15 NERO EXPRESS CARTS BY YEAR END (MAY 2008) ENTERED FIRST INTERNATIONAL MARKET - TURKEY. OPENED 7 STORES BY YEAR END (MAY 2008) CURRENTLY 393 STORES IN 210 UK CITIES AND TOWNS; ANTICIPATE 410 STORES BY CURRENT YEAR END (MAY 2009) 04 05 06 262 FY08 GROWTH 20% 214 162
STORE PROFIT (£M) 32.7 28.3 FY08 GROWTH 16% 10.6 23.0 16.8 FY08 GROWTH 20.5%
EBITDA (£M) 24.1 20.0 15.6 11.3 6.5
PROFIT BEFORE TAX (£M) 13.2 9.6 FY08 GROWTH 38% 7.3 5.1*
2.4 04 05 06 07 08
*BEFORE GOODWILL WRITE-OFF 01 05 08 09 10 12 FINANCIAL EVOLUTION CHAIRMAN’S STATEMENT GROUP INCOME STATEMENT GROUP BALANCE SHEET NOTES TO THE FINANCIAL STATEMENTS THE EXECUTIVE BOARD DIRECTORS & ADVISERS 13 CAFFÈ NERO STORES
FIGURES FOR 2004 ARE STATED UNDER UK GAAP AND PROFIT FIGURES ARE BEFORE GOODWILL AMORTISATION AND EXCEPTIONALS CAFFÈ NERO GROUP LTD ANNUAL REPORT 2008 FINANCIAL EVOLUTION
"CAFFÈ NERO HAD THE WIT AND VISION TO WISELY CULTIVATE A MORE ENDURING, SOPHISTICATED EUROPEAN IMAGE" SUNDAY HERALD 2008
INTRODUCTION The financial year 2008 (FY2008), for the Caffè Nero Group (“the Group” or “Caffè Nero”), was a year of launching into new business areas as well as expanding Caffè Nero’s core UK high street business. Despite a noticeable consumer slowdown from September 07 – May 08, Caffè Nero successfully launched a new division and format called Nero Express; opened in its first international territory – Turkey; progressed its UK expansion by moving into Northern Ireland; continued to rank as the top UK coffee house brand among its peers; and recorded a very solid financial performance. FINANCIAL During FY2008, the Group had success both with top line revenue and with bottom line profit. Although the surrounding economic environment in the UK was challenging, revenue still moved up by 19% to £129.3m (2007: £108.8m). Like for like store sales were a respectable 2.4%, marking 44 consecutive quarters of positive like for like store growth at Caffè Nero. Cash flow profit (EBITDA) also progressed significantly despite substantial rises in costs. Commodity prices – wheat, milk, coffee and oil – along with minimum wage and various other ingredient costs, all rose in the period. Whilst this put pressure on our margin, Caffè Nero was still able to grow EBITDA by nearly 21% to £24.1m (2007: £20m). Likewise, at the pre-tax profit line, respectable gains were made: pre-tax profit rose by 43% to £13.7m (2007: £9.6m), which was ahead of management expectations.
A second major advancement in the year was to open in our first international territory - Turkey. We launched Caffè Nero Turkey in October 2007, which entailed forming a separate JV company based in Istanbul, building a team, developing operational expertise, securing sites and constructing stores. We managed to do all of the above and open seven stores in the year. By the year end we had approximately 100 people in Caffè Nero Turkey. This was a great start for our first overseas territory, and a tribute to the hard work and dedication by our local partners and Turkish management team. The third area of progress was with our core UK business. We opened 39 new stores in the year, including our first foray into Northern Ireland. In a...
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