Notes to and forming part of the Unaudited Interim Financial Statements

For the six months ended 30 September 2022

The Group's reportable segments are business units deriving Royalties, Product Sales, Franchise Fees and New Store Construction Revenue from Franchisees in geographical locations.

The New Zealand segment represents the head office operation for the Group. The franchise coffee store business, operating under the Esquires and Triple Two brands, covers the New Zealand Global Franchise trading entity and all regions owned by third party Master Franchisees; and the UK and Ireland franchising business segment owned directly by the Group.

The Group has also separated operating segments for the business activities intended to be sold (now relating to one owned Esquires store in the UK).

Segment information for the reporting period is as follows:

1.   General information

Cooks Coffee Company Limited ("Company" or "Parent"), together with its subsidiaries (the "Group") operate in the food and beverage industry.

The Company is a limited liability company incorporated and domiciled in New Zealand and is listed on the NZX Main Market board of the New Zealand stock exchange.

Statutory base

The Company is registered under the Companies Act 1993 and is a FMC reporting entity under part 7 of the Financial Markets Conduct Act 2013.

Reporting framework

The unaudited interim financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP). They comply with New Zealand equivalents to International Financial Reporting Standards ("IFRS") and other applicable New Zealand Reporting Standards as appropriate for profit-oriented entities. The financial statements comply with IFRS. These policies have been consistently applied to all periods presented, unless otherwise noted.

These financial statements for the six months ended 30 September 2022 have been prepared in accordance with NZ IAS 34, Interim Financial Reporting and should be read in conjunction with the financial statements published in the Annual Report for the year ended 31 March 2022. They also comply with the International Accounting Standard 34 interim Financial Reporting (IAS 34).

2.   Changes in significant accounting policies

Except as described below, the accounting policies applied by the Group in these consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 31 March 2022. The Group has not applied any standards, amendments and interpretations that are not yet effective.

3.   Profit/(loss) per share

Basic profit/(loss) per share is calculated by dividing the profit/(loss) attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding for the period.

Diluted profit/(loss) per share is determined by dividing the profit/(loss) attributable to ordinary shareholders and the weighted average number of shares outstanding for the effects of any dilutive potential ordinary shares.

Net tangible assets per share is determined by dividing the net asset value of the Group, adjusted by the intangible assets, and the number of shares issued at the end of the period.

The weighted average numbers of shares are calculated below:

Due to the share consolidation, a retrospective adjustment to the loss per share is outlined below based on the ordinary shares at 31 March 2022 being 53,059,493.

4.   Share Capital

The share capital of Cooks Global Foods Limited consists of issued ordinary shares, each share representing one vote at the company's shareholder meetings. The par value is nil (2022: nil). All shares are equally eligible to receive dividends and the repayment of capital.

During the year ended 31 March 2022, the company issued 103,317,794 new shares (2021: 101,853,883) bringing the total issued shares to 775,890,965 which were consolidated into 15:1 as at 30 March 2022. The company now has 51,726,160 quoted shares and 1,333,333 non-voting shares on issue at 30 September 2022. There were no shares cancelled.

At 30 September 2022, $nil of the ordinary share capital is unpaid (31 March 2022: $nil).

5.   Related party transactions

The Group's related parties include the directors and senior management personnel of the Group and any associated parties as described below. 

Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or received. 

Keith Jackson is a director of Cooks Investment Holdings Limited, Jackson & Associates Limited, Ascension Capital and Weihai Station Limited and a trustee of Nikau Trust.

Mike Hutcheson is a director of Image Centre Limited and Lighthouse Ventures Holdings Limited.

Michael Ambrose is a director of Ashville Consultancy Limited.

Peihuan Wang is a director of Jiajiayue Holding Group Limited and Weihai Station Limited.

Tony McVerry is a director of Esquires Coffee Houses Ireland Limited.

Aiden Keegan is a director of Esquires Coffee UK Limited.

Graham Hodgetts is a director of Triple Two Coffee Holdings Limited.

Sezan Walker is a director of Triple Two Coffee Holdings Limited.

David Hodgetts is a director of Triple Two Coffee Holdings Limited.

Alistair Tillen is a director of Triple Two Coffee Holdings Limited.

Transactions with related parties

Balances outstanding with related parties

Director transactions

6.   Capital Commitments, Contingent Liabilities

There were no capital commitments as at 30 September 2022 (31 March 2022: $nil).

There were no changes in capital commitments, contingent liabilities and contingent assets that would require disclosure for the six months ended 30 September 2022 (31 March 2022: $nil).

7.   Going Concern

The Group reported a comprehensive profit of $62,000 (2021: $11,000) for the six-month period to 30 September 2022.

Operating net cash outflow for the six-month period to 30 September 2022 was $26,000. For the twelve-month period ended 31 March 2022 the net cash outflow was $632,000.

As at 30 September 2022 the Group has reported Net Assets of $2,460,000 (at 31 March 2022: $2,398,000) and current liabilities exceed current assets by an amount of $6,332,000 (at 31 March 2022: $6,253,000).

The ability of the Group to pay its debts as they fall due and to realise their assets and extinguish their liabilities in the normal course of business at the amounts stated in the consolidated financial statements has been considered by the Directors in the adoption of the going concern assumption during the preparation of these financial statements.

The Directors forecast that the Group can manage its cash flow requirements at levels appropriate to meet its cash commitments for the foreseeable future being a period of at least 12 months from the date of authorisation of these consolidated financial statements. In reaching this conclusion, the Directors have considered the achievability of the plans and assumptions underlying those forecasts. The key assumptions include:

The Directors have reasonable expectation that the Group has sufficient headroom in its cash resources and shareholder support to allow the Group to continue to operate for the foreseeable future or alternatively it can manage its working capital requirements to create additional required headroom.

Any significant departure from the above assumptions may cast significant doubt over the ability to continue as a going concern for the foreseeable future.

Whilst the Directors acknowledge that there are capital raising, credit, exchange and liquidity risks in the global economic market in which the Group operates, they are confident that additional capital or funding will be sourced by the Group. In particular, the Directors have received a confirmation from related parties of Keith Jackson, that they will continue to financially support the Group for the foreseeable future. They note the Group has a track record of obtaining financial support from cornerstone investors and related parties and, where necessary, negotiating the deferment of debt repayments.

The Directors are also confident that operating cash flows will continue to improve as a result of the recovery from the various government imposed restrictions related to Covid-19, restructuring activities that have been undertaken, and the disposal of remaining assets held for sale in the UK, to reduce the extent of cash outflow and improve profitability.

The Directors continue to consider other opportunities to further improve the Group's cash position which include discussing collaborations with partners overseas, negotiations with potential strategic equity partners, investigating new facility lines, ongoing discussions in the UK and Ireland relating to potential acquisitions, and greater focus on improving existing core business activities.

After considering all available information, the Directors have concluded that there are reasonable grounds to believe that the forecasts and plans are achievable, the Group will be able to pay its debts as and when they become due and payable, there is sufficient headroom in available cash resources, and the basis of preparation of the financial report on a going concern basis is appropriate.

Should the Group be unable to continue as a going concern it may be required to realise its assets and discharge its liabilities other than in the normal course of business and at amounts different to those stated in the consolidated financial statements. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of liabilities that might result should the Group be unable to continue as a going concern and meets its debts as and when they fall due.

8.   Subsequent Events

As a result of a rights issue undertaken in October (and part allotment under associated shortfall placement) the Group issued an additional 2,797,814 new ordinary shares on the 2^nd of November 2022. These shares were issued at a price of NZ$0.36 (£0.18) per share. In addition, and to ensure compliance with the Takeovers Code, the Trustees of the Nikau Trust agreed with the company to reclassify 1,035,667 of their existing ordinary shares as non-voting shares, reducing the number of ordinary shares on issue.

These shares were issued for cash and as a set off against debts owed by the Group.

As previously forecast, the Group completed its dual listing on the Access Segment of the Aquis Stock Exchange ("AQSE") Growth Market, with trading commencing on 2^nd November 2022. Ordinary shares now trade on AQSE under the ticker "COOK".