COFFEEHEAVEN INTERNATIONAL (COH)

Previous Stock Tip

These companies are all previous recommendations from the Red Hot Portfolio that I have subsequently recommended and then sold from the portfolio at a later date. By no means are these companies intended to be buy recommendations for you to go out and invest money towards their shares. For the opportunity to start making serious money from the recommendations I am making now, just start your no obligation trial!

COFFEEHEAVEN INTERNATIONAL (COH): Looking Pricey - Feb 2007

RHPS Recommendation - SELL

After its great recent run coffeeheaven is now valued at nearly £50m, which is generous for a business that has annual sales currently of roughly £10m and is only just making a profit. Founder Richard Worthington and fellow director Jonathon Cooper sold a total of 393,000 shares last month, and although another director William Currie bought these and a few besides, this is a cue for us to take our profit. We sold on 18 January. SELL

COFFEEHEAVEN INTERNATIONAL (COH): New 60p target - Jan 2007

RHPS Recommendation - HOLD

The shares are climbing steadily, and I have raised my target price to 60p. HOLD

COFFEEHEAVEN INTERNATIONAL (COH): Strong coffee -Dec 2006

RHPS Recommendation - HOLD

Trading in the first half of the financial year has not been "strong " or "very strong " - it has been "exceptionally strong "! The key figure of like-for-like sales growth was no less than 28%, and this has continued into October and November. "Combined Group Store Profitability " is well ahead of coffeeheaven's own expectations, and it confirms that it expects to report its first profit this year Coffeeheaven is now generating the cash required to expand its chain, and expects to be trading from 63 outlets by the end of March, despite some construction delays. The shares are on a very high rating, but coffeeheaven is proving to be a real winner. I will review my 40p target as and when we get there.

COFFEEHEAVEN INTERNATIONAL (COH): Stunning Progress - Aug 2006

RHPS Recommendation - BUY

The first quarter saw very strong sales growth, of 25% in Poland , 38% in the Czech Republic and 24% in Latvia . This enabled coffeeheaven to record its maiden pre-tax profit. Furthermore, it still has the £2.8m of net cash that came from the share placing last October, in spite of expanding its chain to 50 stores. This month it will open its first store in Slovakia . I have raised my buy limit to 30p and my target to 75p. BUY

COFFEEHEAVEN INTERNATIONAL (COH) : Full of beans? Too right! - May 2006

RHPS Recommendation - BUY

Group sales increased by 66% in the year to March 2006, enabling coffeeheaven to beat its indicated target of £5.7m by £0.6m. Strong like-for-like sales growth was recorded in every country, ranging from 10% in Poland to 42% in the Czech Republic. Sales accelerated in the second half of the year, helped by cold weather, successful new product launches and the general economic buoyancy of the region. This year coffeeheaven will be opening its first stores in Bulgaria , and has identified sites in Romania . Overall it expects to add 20 stores to its existing 43, and has projected sales of £9.3m.

COFFEEHEAVEN INTERNATIONAL (COH): Brewing Up Nicely - Apr 2006

RHPS Recommendation - BUY

Encouraged by the success of Café Nero, the city is waking up to the potential of coffeeheaven. In the past, Eastern European coffee drinkers have been 'victims' of their local cafes - slow service, dodgy kitchens, cigarette smoke, and strangers who sidle up and make unwelcome suggestions. But in coffeeheaven bars, consumers can see what they are getting, sit in smoke-free zones, and do not feel trapped. This formula has been particularly successful in attracting female customers.

Coffeeheaven now has 19 stores in Warsaw, but acceptance in new territories such as the Czech Republic and Latvia is even swifter, helped by the growing number of visitors from the West and also strong economic growth throughout the region. Coffeeheaven now has 42 stores in total, but it sees the potential for 350 and many more is it can crack the Ukrainian market. A trading statement in late April is likely to deliver positive news. I have raised my buy limit to 25p and the 12 month target to 40p.

COFFEEHEAVEN INTERNATIONAL (COH): Feb 2006

RHPS Recommendation - HOLD

Coffeeheaven has denied rumours that it will open coffee bars in Tesco's Eastern European stores.

COFFEEHEAVEN INTERNATIONAL (COH): Sweet Results - Jan 2006

RHPS Recommendation - BUY

Interim results showed that like for like sales across its chain of 44 coffee shops in Poland , Latvia and the Czech Republic have risen by 8% in the last eight months. The main Polish business is now profitable. The recent equity issue raised £6.2m, some of which will be used to pay off debt in Poland , cutting the annual interest cost by £270,000. I am raising my buy limit to 17p - my target is 30p.

COFFEEHEAVEN INTERNATIONAL (COH): Expansion Brewing - Dec 2005

RHPS Recommendation - BUY

Interim results for the important Polish subsidiary showed turnover up 32% and a maiden operating profit. Coffeeheaven has raised £6.2m through an issue of new shares, and has consolidated 10 shares into 1, moving the share price from 1.25p to 12.5p. The value of your holding has not been affected by this move.

COFFEEHEAVEN INTERNATIONAL (COH): Don't Miss Your Extra Shares - Nov 2005

RHPS Recommendation - BUY

Coffeeheaven has announced the interim results of its main Polish subsidiary. Turnover was up 32% and for the first time the business recorded an operating profit. This was wiped out by interest payments, so coffeeheaven is now raising £6.3m to pay off loans and give it extra working capital. It will also consolidate its shares, which means that every 10 shares that you own priced at 1.1p will be converted into 1 share priced at 11p. Then you will get the chance to subscribe for one new share for every five held, at a price of 11p. This is below the market price, and you don't have to pay any commission. So take up the offer.

COFFEEHEAVEN INTERNATIONAL (COH): Such Aromatic Results! - Oct 2005

RHPS Recommendation - BUY

Coffeeheaven achieved like-for-like sales growth of 6% in the financial year to March, and opened 14 outlets, making 36 in total. It now has three stores in the Czech Republic, seven in Latvia, has concluded joint ventures in Bulgaria and Romania, and is eyeing up the Ukraine. Further, the company now has a 20% market share in Poland and excellent brand awareness is enabling it go gain ground outside of Warsaw . Central distribution of non-perishable lines should boost profits this year. Coffeeheaven is now just about breaking even, excluding the costs of breaking into new markets.

COFFEEHEAVEN INTERNATIONAL (COH): Hitch a ride on the coffee shop explosion - target 117% gains form the company set to become the Starbucks of Eastern Europe - Aug 2005

RHPS Recommendation - BUY

If you are getting a bit bored by the menu at your local coffee shop, perhaps you would like to try a Latte Mrozona, a Goraca Czekolada or a Kawa Ekspresu Przelewowego? Perhaps you have already - if you have visited the 'new dynamic heartland' of the continent, and 'sampled the coffeeheaven experience - the brand that captures the optimistic mood and lifestyle aspiration of the new Europe '.

Ok, that's enough market hype! coffeeheaven may indeed offer a 'stylish, contemporary café setting', and 'superb coffee, fresh wraps, panini, and tostata', all served by staff trained by 'a top UK Barista' (not a member of the legal profession in case you're wondering). And it may spell its name without anything as old-fashioned as a capital letter. But to me a coffee shop, and the idea of sitting and watching the world go by over the rim of a cup may be relatively new to us here in the UK , but is hardly so in the market squares of Europe .

Soon, coffeeheaven will be the leading brand for 100m people

Several coffee shop ventures have ended in failure, either through expanding too quickly or by getting trampled under the weight of Starbucks. So I approached coffeeheaven international plc with a degree of scepticism, and started by taking a look at Starbuck's website. It lists the 37 countries outside the United Stated where it is present. But none of these is in Eastern Europe , an area of 100m people. Today the biggest branded coffee shop operator in Poland is coffeeheaven, and it is on the way to becoming the leading brand across Eastern Europe .

It has moved at a measured pace, though, It has not made the mistake of going flat out for market share, but has carefully built its support structure in line with scales, and has patiently acquired new sites. This has been especially important in Poland where there has been a rapid expansion in retail space (+25% in Warsaw within 12 months). Owners of these new shopping malls, hoping to cash in on the hype surrounding Poland 's accession to the EU last May, have been asking high rents. But Richard Worthington, coffeeheaven's Executive Chairman, reckons that this temporary oversupply of space will soon result in more realistic rentals, and has been playing a waiting game.

All this new retail space has had a second consequence. Shoppers have been lured away from old centres to newer ones, diverting trade away from some off coffeeheaven's older outlets. But these are only some of the teething troubles one should expect from such a venture; despite this, coffeeheaven now has a total of 28 sites in Poland, 3 in the Czech Republic, 7 in Latvia and has recently signed partnership agreements to open stores in Romania and Bulgaria.

The company is already the major player in Poland

coffeeheaven is getting close to profitability as well. Interim results for the six months to September 2004 revealed a total group loss of £197,000 on turnover of £1.57m. But the £155,000 trading cash flows from Poland comfortably covered the debt interest costs of £110,000, so the loss was due to depreciation - which involves no outflow of cash - as well as the costs of launching new stores and the forced closure of of one in a building that turned out to have structural problems.

Bottom line profitability is not the immediate goal, however. Coffeeheaven is in a development phase, and it has taken time to educate local tastes, especially outside the major cities which have the benefit of tourists and business visitors. But the brand name is now established, and coffeeheaven beat off stiff competition to run the first contemporary branded coffee bar at Warsaw Airport . It was also selected by Hewlett Packard as its exclusive partner in the coffee bar sector for the launch of its Wireless Internet Connection Services throughout Poland .

Coffeeheaven is rapidly rolling out new stores across Eastern Europe - and will soon be top dog

The company is targeting 50 store sin Poland by the end of 2006, and thinks that a chain of 300 stores across Eastern Europe is an eventual possibility. It has opened two stores in Prague, where annual tourist numbers are more than three times the resident population, and expects to have 'little difficulty' in meeting its target of 18 in the Czech Republic by the end of 2007.

Last October it acquired 20% of a seven-strong chain in Latvia and bought out the remaining 80% in May. Its first Bulgarian outlet will be in the Mall of Sofia shopping complex, currently under construction. With a joint venture partner it is now looking for sites in Romania , while it has also been evaluating the potential in Ukraine and Slovakia .

coffeeheaven will announce its annual results in September, but has already given details of the results of its principal trading Subsidiary in Poland , CHI Polska. Sale sin the year end to March grew by 45%, allowing earning before interest, tax and depreciation to grow by 142%. It has also revealed that group turnover will have been £3.9m, some way ahead of the £3.6m forecast earlier, and that trading in the first three months of the new financial year to June has been 'very encouraging', with annual sales growth of 50%, including like-for-like sales growth in Poland of 3.5% and Latvia 10.3%.

RHPS Verdict: coffeeheaven has regularly issued new shares to finance its expansion, and this has kept a lid on the share price. It raised £600,000 through a placing of 80m shares at £0.75p in January (Richard Worthington subscribed for £25,000 worth) and a further "270,000 through an issue at 1p in May. It has invested in a comprehensive IT management system and central distribution process, and as sales rise over this fixed-cost base, coffeeheaven will move into profit and become self-financing. At that price the share price will start to reflect the fact that coffeeheaven is on the way to becoming the leading coffee shop brand in an area of 100m people. BUY

To take advantage of the recommendations RHPS is making today, start your no obligation trial now!

The figures refer to the past and past performance is not a reliable indicator of future results. The past recommendation highlighted here is a small company share.By their nature, such investments can be relatively illiquid and, as a result, hard to trade. This makes such shares more risky than other investments. Please seek independent financial advice if necessary. These figures do not include the bid-offer spread, unless otherwise stated. Since the service began on 01/12/98 running through to 31/07/07, the average overall performance of the shares recommended is up 19.91%.All gains exclude dividend payments and dealing costs, unless otherwise stated. Profits from share dealing are a form of income and subject to taxation. Levels and bases of, and reliefs from, taxation are subject to change, and depend on individual circumstances. Full portfolio available on request. Fleet Street Publications Ltd is authorised and regulated by the Financial Services Authority. FSA No. 115234.

www.fsa.gov.uk