The founders of Polish coffee bars operator Coffeheaven International plan to float DP Poland, the Domino’s Pizza master franchise owner in Poland, on Aim by the end of July 2010.
Executive chairman Richard Worthington, marketing director Peter Shaw and non-executive director Rob Morrish were all involved with Coffeeheaven.
Whitbread’s subsidiary Costa Coffee acquired Coffeeheaven for 24p a share, which is a 140% increase on its post-consolidation flotation price, at the beginning of this year. Although, it was below the 30.5p a share at which the company raised £3.5m in June 2008. The bid valued the operator of 90 coffee shops in central and eastern Europe at £36m.
Coffeeheaven joined Aim in December 2001, not a good time for the market, and raised £750,000 at 1p a share – equivalent to 10p a share after the 10-for-one share consolidation in November 2005. The business was demerged from Aim-quoted in-store bakery operator Bakery Services.
The plan for DP Poland is to open at least 27 company-owned stores in Poland by 2012. Sub-franchising will be considered later. No valuation for the company or figure for the amount being raised has been announced.
One thing to consider is that this is a start up business hungry for cash. That is the opposite of Domino’s Pizza UK and Ireland which is enormously cash generative because it has built up a chain of 627 stores, nearly all of which are franchised. This means that opening costs are not significant and they are swamped by the cash generated elsewhere. This will not be the case for DP Poland for at least a few years.
A better comparison is Global Brands, the Switzerland Domino’s Pizza master franchise owner, which has consistently made losses and is only just moving towards profitability. Regional difference also needs to be taken into account so DP Poland may need to tweak the formula in Poland.
Download the July edition of AIM Journal at www.hubinvest.com/AIMPDFJuly2010_10.pdf
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