Focused on capital requirements

Cooks Global Foods 5 September 2016 Update

Cooks Global Foods

Focused on capital requirements

Company update

Food & beverages

6 September 2016

Price

NZ$0.09

Market cap

NZ$37m

Net debt (NZ$m) as at 31 March 2016

2.7

Shares in issue

412.7m

Free float

~11%

Code

CGF

Primary exchange

NZX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

12.5

(18.2)

(28.0)

Rel (local)

11.2

(22.6)

(43..5)

52-week high/low

NZ$0.14

NZ$0.08

Business description

Cooks Global Foods owns the global rights to the Esquires Coffee House brand with 91 stores currently operating in the UK, Ireland, China and the Middle East under franchises and company owned stores. It is planning significant expansion in store numbers over the next five years.

Next events

AGM

5 September 2016

Analysts

Finola Burke

+61 (0)2 9258 1161

Moira Daw

+61 (0)2 9258 1161

Cooks Global Foods is a research client of Edison Investment Research Limited

Cooks Global Foods (CGF) has reaffirmed its 650-store budget for Esquires Coffee by March 2021, but has acknowledged that the growth path may not be smooth. The company needs to obtain additional funding to fuel this growth and in the short term has arranged a NZ$2m convertible loan facility from two of its largest shareholders. CGF also has shareholder approval to raise NZ$9m, and we understand the company is in discussions with strategic investors. The company’s auditor, PricewaterhouseCoopers, has issued a disclaimer of opinion on CGF’s going concern status. Our forecasts and valuation are predicated on management’s budgets for store openings and sales, and the assumption that the company will secure the required funding.

Year
end

Revenue (NZ$m)

PBT*
(NZ$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

03/15 restated

8.9

(3.5)

(1.27)

0.0

N/A

N/A

03/16 restated

12.4

(4.6)

(1.38)

0.0

N/A

N/A

03/17e

18.9

(1.5)

(0.30)

0.0

N/A

N/A

03/18e

31.5

1.6

0.25

0.0

36.0

N/A

Note: *PBT and EPS (fully diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

2016 results restated

Cooks Global Foods has restated its 2016 results and comparatives, following completion of its audited accounts and the release of its annual report. The company reported an underlying net loss of NZ$4.9m after one-off costs of NZ$3.0m (including impairment of intangibles of NZ$0.5m, restructuring costs of NZ$1.36m, acquisition and capital costs of NZ$0.4m and share-based payments of NZ$0.7m). The underlying EBITDA loss was NZ$4.16m. The statutory net loss was NZ$7.96m (previously reported by the company as a NZ$7.2m loss). A large part of the restructuring costs and share-based payments was attributable to the exit of the largest shareholder in November 2015. This restructuring, while strengthening the share register, has delayed both the company’s roll-out and capital raising plans.

CGF budgets for 650 stores, targets 800 by 2021

Cooks Global Foods has reaffirmed its budget for 650 stores and internal target for 800 stores by 2021. This includes a budget for 220 stores and target for 300 stores in China. Our forecasts are slightly lower than the company’s budgeted store roll-out and expected sales. We have adjusted our FY17 and FY18 forecasts to reflect the lower than target roll-out achieved in FY16 (actual of 87 vs a target of 120) and this has resulted in a downgrade to our earnings forecasts in both FY17 and FY18.

Valuation: DCF valuation reduced to NZ$0.145/share

Given the early stage in its lifecycle, we use a DCF valuation methodology to value CGF. We have increased our discount rate to 12% for risk (previously 10.7%) and this, together with our near-term earnings adjustments, has reduced our DCF valuation to NZ$0.145/share (previously NZ$0.245). Our valuation is predicated on the company rolling out 629 stores by the end of FY21. At 2.1x EV/revenue, CGF is trading at a 44% discount to the median multiple of its global listed peer group.

FY16 results, Q1 update and earnings adjustments

Cooks Global Foods reported a lower than forecast audited result for FY16, complicated by the shareholder restructure and recapitalisation plan, which took management focus away from the business and resulted in a lower than target store roll-out. The company, which owns the Esquires Coffee brand globally, reported a normalised net loss of NZ$4.9m, compared with a normalised net loss of NZ$3.5m in FY15 and our forecast for a loss of NZ$2.6m. The company ended FY16 with 87 stores versus its target for 120 and up from 71 stores in the previous year. Revenue was higher than forecast due to the full year effect of the wholly owned stores in China, which were acquired in the final quarter of FY15. Exhibit 1 highlights the FY16 results versus our forecasts and the previous year results.

Exhibit 1: FY16 reported versus Edison estimates

Year ending 31 March

FY16 reported (restated)

FY16 Edison estimate

FY15 reported (restated)

Revenue (NZ$m)

12.4

9.4

8.9

EBITDA (NZ$m)

(4.2)

(2.8)

(2.8)

PBT normalised (NZ$m)

(4.6)

(3.6)

(3.5)

NPAT normalised (NZ$m)

(4.9)

(2.6)

(3.5)

NPAT reported (NZ$m)

(8.0)

(2.6)

(4.4)

EPS normalised (c)

(1.38)

(0.7)

(1.27)

Source: Cooks Global Foods data, Edison Investment Research

The composition of revenues had also changed on the prior year and was different to our previously forecast FY16 revenues. As Exhibit 2 shows, while overall revenues increased 39% y-o-y, revenues from the company’s owned coffee houses increased 142%, due predominantly to the increase in wholly owned stores in China. Fees from the redesign of stores in the UK, together with store openings globally, resulted in a 145% uplift in revenue year-on-year.

Exhibit 2: Revenue splits for FY16 vs FY15 and Edison’s FY16 forecast

NZ$m

FY16

FY15

% change

Edison FY16e

Sale of beverage product

2.0

1.4

42.1%

1.6

Sale of Kiwifruit/asparagus produce

1.4

2.3

-39.0%

2.1

Royalties

1.0

1.9

-46.1%

2.2

Owned coffee house revenue

4.4

1.8

142.1%

2.1

Fees and other revenue

3.6

1.5

144.9%

1.5

Total revenue

12.4

8.9

39.2%

9.4

Source: Cooks Global Foods data, Edison Investment Research

Going concern status

The company’s auditor PwC added a disclaimer to its signoff on the accounts on the basis that it was not able to obtain sufficient audit evidence to determine the viability of CGF’s funding initiatives and management’s future cash flow assumptions. This underscores the need for CGF to raise sufficient capital to fund its roll-out plans. The company has noted that to meet its forecast operating and cash flow projections up until 31 October 2016, it needs additional funds of NZ$2m to NZ$4m.

The board has, in the short term, addressed this by arranging a convertible note facility of NZ$2m from its two largest shareholders, Cooks Investment Holdings (CIH) and Shandong Jiajiayue Holding Co Ltd (JJY). It also is seeking an outstanding amount of NZ$2.8m from shares underwritten by Cooks Investment Holdings and is seeking to renegotiate the repayment of loan commitments that fall due between July, when the company issued its annual report, and October 2016. CGF has said it will also delay capital projects until funds from the equity raising are confirmed.

Shareholders approved a NZ$9m capital raising last November as part of a NZ$18m package to restructure and recapitalise the company. To date, NZ$9m has been spent by JJY and CIH (although as at 31 March 2016, CIH was still to provide the final payment of NZ$3.1m) to acquire the shareholding previously owned by the Deek brothers, who founded the company. The restructure of the company’s shareholding base in November 2015 has strengthened the company’s register. According to management, CGF now has a register of shareholders that have the capacity to support the company until it is generating sufficient cash flows to finance itself.

Q117 operating metrics

CGF has reported total store sales and transactions for Q117 versus Q116 and demonstrated 10.2% growth in transactions year-on-year and 2.7% growth in average transaction values on a constant currency basis.

On a same store basis, average transaction values rose 3.6% y-o-y to NZ$9.80, but transactions declined 1.5%. These results are set out in Exhibit 3. The company plans to report these metrics on a quarterly basis going forward.

Exhibit 3: Q117 operating metrics versus Q116 on a constant currency basis

Q117

Q116

% diff

Esquires Coffee Store sales (NZ$m)

10.40

9.19

13.25

Transactions (m)

1.06

0.96

10.21

Average transaction value (NZ$)

9.84

9.58

2.71

Number of stores at quarter end

88

72

22.22

Same store comparison

Esquires Coffee Store sales (NZ$m)

8.37

8.21

1.99

Transactions (m)

0.85

0.87

-1.51

Average transaction value (NZ$)

9.80

9.46

3.59

Source: Cooks Global Foods

Company budgeting for 650 stores by FY21

CGF is budgeting for 650 stores by FY21, but has noted that management has set a target for 800 stores.

The company, however, has also noted that there are uncertainties in achieving its budget growth in store numbers including:

the availability of interested and quality store operators with the necessary start-up funds;

the availability of appropriate store sites;

delays in opening new stores;

counterparty default risk; and

the strength of operational relationships with joint venture partners.

The final risk is particularly relevant to China, where CGF expects its greatest store growth, as Exhibit 4 demonstrates. By FY21, CGF anticipates that at least 220 of its 650 budgeted stores will be in China, up from 29 today. Since balance date, CGF has opened seven new stores and closed two underperforming stores.

Exhibit 4: Number of stores currently and budgeted, targeted and forecast for March 2021

Mar-15

Aug-16

Mar-21

Mar-21

Mar-21

Location

Number of stores

Number of stores

Budgeted stores

Target stores

Edison forecast

UK

24

24

100

120

115

Ireland

5

10

27

30

30

Middle East

21

23

70

80

64

China

21

27

220

300

216

Canada

0

3

32

40

31

South-East Asia

0

2

40

50

29

US

0

0

125

140

116

Europe

0

0

36

40

28

Total

71

89

650

800

629

Source Cooks Global Foods data, Edison Investment Research

Earnings adjustments

We have adjusted our FY17 and FY18 earnings forecasts following the lower than expected FY16 result. Our forecasts are based on the assumption that the company will be able to secure the funding it requires to continue as a going concern.

We anticipate that by the end of FY17, CGF will have 167 stores in operation. We are forecasting revenue of NZ$18.9m. The significant increase in revenue from our previous forecast takes into account the wholly owned stores in China and the joint venture arrangements, which will report total store sales rather than our previous expectation of royalties revenue. Offsetting this is the expectation that the revenues from the more mature UK and Irish markets will be generated from master franchise fees and royalties. We have also reduced our expectations for the food processing businesses in the group as these delivered a lower than forecast FY16 result. As a consequence, we have increased our forecasts for gross profit by 15% in FY17 and 26% in FY18, but anticipate that overhead costs will be higher, resulting in an increased EBITDA loss of NZ$0.5m (previously NZ$0.1m) in FY17. Our EBITDA forecasts for FY18e are largely unchanged but we anticipate higher depreciation charges from the wholly owned stores and higher interest costs. This has resulted in a 45% reduction in our FY18 EPS forecast to NZ$0.25/share.

Exhibit 5: FY17e and FY18e earnings adjustments

Year ending March 31

FY17e new

FY17e old

% chg

FY18e new

FY18e old

% chg

Number of stores at year end

167

199

-16%

254

298

-15%

Store sales, royalties, fees and coffee sales

16.7

9.6

75%

29.1

13.2

120%

Sales from food processing

2.2

4.3

-48%

2.5

5.4

-54%

Total Revenue (NZ$m)

18.9

13.8

37%

31.5

18.6

70%

Gross Profit (NZ$m)

12.3

10.6

15%

18.3

14.6

26%

EBITDA (NZ$m)

(0.5)

(0.1)

333%

2.8

2.8

-1%

PBT* (NZ$m)

(1.5)

(0.8)

89%

1.6

2.6

-40%

NPAT (NZ$m)

(1.3)

(0.6)

116%

1.0

1.9

-45%

EPS* (c)

(0.30)

(0.14)

114%

0.25

0.46

-46%

Source: Edison Investment Research. Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Valuation

Given CGF’s early stage in its lifecycle, we use a DCF valuation methodology to value CGF. The increased risk to the business due to going concern issues necessitates a higher discount rate. We have increased the discount rate (WACC) to 12.0% (previously 10.7%) and this, together with our earnings downgrade, has resulted in a reduction of our DCF valuation to NZ$0.145/share (previously NZ$0.245/share). If we keep our discount rate at 10.7%, our DCF valuation, following our earnings adjustments, would be NZ$0.167/share. Our valuation parameters and DCF valuation are set out in the following exhibit.

Exhibit 6: DCF valuation

DCF valuation

Valuation parameters

NPV of free cash flow for forecast period (FY17e to FY26e) (NZ$m)

38.2

Risk free rate

2.2%

Terminal value (NZ$m)

24.2

Market risk premium

6.0%

NPV to capital (NZ$m)

62.4

Beta

1.60

Net (debt)/cash (NZ$m)

(2.7)

WACC

12.0%

NPV to equity (NZ$m)

59.7

Cost of equity

12.0%

Value per share (NZ$)

0.145

Terminal growth rate

2.0%

Source: Edison Investment Research

We have also undertaken a scenario analysis, shown in the sensitivity matrix below, to demonstrate the impact on valuation from different terminal growth rates and WACCs. As Exhibit 7 highlights, a higher discount rate would result in a lower valuation. Based on our estimates, the current share price of NZ$0.09 implies a discount rate (WACC) of c 16.5%. A WACC of 20% implies a valuation of NZ$0.07/share.

Exhibit 7: Valuation sensitivity (NZ$) to terminal growth rate and WACC

WACC

11.0%

11.5%

12.0%

12.5%

13.0%

Terminal growth rate

0.0%

0.154

0.145

0.138

0.131

0.124

0.5%

0.156

0.147

0.139

0.132

0.126

1.0%

0.158

0.149

0.141

0.134

0.127

1.5%

0.161

0.151

0.143

0.135

0.128

2.0%

0.163

0.154

0.145

0.137

0.129

2.5%

0.166

0.156

0.147

0.139

0.131

3.0%

0.170

0.159

0.149

0.141

0.133

3.5%

0.174

0.162

0.152

0.143

0.135

4.0%

0.178

0.166

0.155

0.145

0.137

Source: Edison Investment Research

Peer comparison

Cooks Global Foods operates in a dynamic space in the consumer foods industry. Its peer group of listed coffee houses is trading on a median EV/revenue of 3.8x and EV/EBITDA of 15.2x. On an EV/revenue basis, CGF is trading on 2.1x 12-months’ forward revenue, which is at a 44% discount to this group average. While a discount for its relative size might be justified, we are of the view that CGF’s growth profile should enable this gap to close.

Exhibit 8: Peer comparison (using 12 month forward consensus forecasts)

Company

Country

Currency

Price

Mkt cap (local, m)

Mkt cap (US$m)

P/E
(x)

EV/EBITDA (x)

EBITDA margin (%)

EV/revenue (x)

Cooks Global

NZ

NZ$

0.09

37

26

N/A

N/A

N/A

2.1

Starbucks Corp

US

US$

56.18

82,394

82,394

30.0

16.2

24.2

3.9

Dunkin' Brands Group

US

US$

49.35

4,523

4,523

23.3

15.7

51.2

8.1

Restaurant Brands International

US

US$

48.26

22,239

22,239

39.8

18.9

41.0

7.8

Retail Food Group

Australia

A$

6.82

1,125

856

16.5

11.0

35.0

3.8

Café de Coral Holdings

Hong Kong

HK$

27.60

16,111

2,078

29.4

15.2

12.6

1.9

Whitbread

UK

£

42.27

7,744

10,209

17.6

11.5

25.1

2.9

Minor International

Thailand

THB

39.50

174,098

4,889

30.4

27.7

19.9

5.5

Gourmet Master Co

US

US$

292.00

41,207

41,207

28.8

11.9

14.2

1.7

President Chain Store

US

US$

252.20

262,193

262,193

29.5

15.0

7.5

1.1

Coffee house companies

Median ex CGF

 

 

 

29.4

15.2

24.2

3.8

Source: Bloomberg. Note: Prices as at 5 September 2016.

Exhibit 9: Financial summary

Year-end March

NZ$000s

2014

2015 (restated)

2016 (restated)

2017e*

2018e*

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

4,488

8,931

12,436

18,902

31,525

Cost of Sales

(1,779)

(2,856)

(4,443)

(6,646)

(13,202)

Gross Profit

2,709

6,075

7,993

12,255

18,323

EBITDA

 

 

(3,773)

(2,812)

(4,159)

(504)

2,756

Operating Profit (before amort. and except.)

(3,944)

(3,587)

(4,451)

(1,055)

1,911

Intangible Amortisation

0

(82)

(125)

0

0

Exceptionals

(1,055)

(793)

(2,966)

0

0

Other

0

0

(130)

0

0

Operating Profit

(4,999)

(4,380)

(7,672)

(1,055)

1,911

Net Interest

(86)

54

(192)

(466)

(330)

Profit Before Tax (norm)

 

 

(4,030)

(3,533)

(4,643)

(1,521)

1,582

Profit Before Tax (FRS 3)

 

 

(5,085)

(4,408)

(7,864)

(1,521)

1,582

Tax

0

0

(29)

0

(443)

Minority Interest

0

0

(65)

269

(105)

Profit After Tax (norm)

(4,030)

(3,533)

(4,862)

(1,251)

1,033

Profit After Tax (FRS 3)

(5,085)

(4,408)

(7,958)

(1,251)

1,033

Average Number of Shares Outstanding (m)

244.9

285.1

353.0

412.7

412.7

EPS - normalised (c)

 

 

(1.65)

(1.24)

(1.38)

(0.30)

0.25

EPS - normalised fully diluted (c)

 

 

(1.65)

(1.27)

(1.38)

(0.30)

0.25

EPS - IFRS (c)

 

 

(2.08)

(1.55)

(2.25)

(0.30)

0.25

Dividend per share (c)

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

60.4

68.0

64.3

64.8

58.1

EBITDA Margin (%)

-84.1

-31.5

-34.4

-2.7

8.7

Operating Margin (before GW and except.) (%)

-87.9

-40.2

-35.8

-5.6

6.1

BALANCE SHEET

Fixed Assets

 

 

5,256

11,399

11,151

11,789

12,359

Intangible Assets

4,006

10,265

9,575

9,575

9,575

Tangible Assets

945

1,105

1,476

2,114

2,684

Investments/Other

305

29

100

100

100

Current Assets

 

 

3,655

9,174

9,801

11,609

18,311

Stocks

298

1,013

828

1,258

2,099

Debtors

567

1,255

4,635

7,045

11,750

Cash

1,683

4,710

1,032

0

1,156

Other

1,107

2,196

3,306

3,306

3,306

Current Liabilities

 

 

(6,515)

(11,368)

(10,043)

(14,010)

(20,143)

Creditors

(5,125)

(3,437)

(6,335)

(9,476)

(15,610)

Short term borrowings

(1,390)

(7,931)

(3,708)

(4,533)

(4,533)

Long Term Liabilities

 

 

(1,420)

(810)

(1,262)

(1,262)

(1,262)

Long term borrowings

(1,420)

0

0

0

0

Other long term liabilities

0

(810)

(1,262)

(1,262)

(1,262)

Net Assets

 

 

976

8,395

9,647

8,126

9,265

CASH FLOW

Operating Cash Flow

 

 

(834)

(1,999)

(6,131)

(203)

3,344

Net Interest

(86)

(174)

(237)

(466)

(330)

Tax (incl GST)

0

0

0

0

(443)

Capex (net of disposals)

(447)

(260)

(291)

(1,189)

(1,415)

Acquisitions/disposals

(2,127)

(2,210)

(300)

0

0

Financing

3,528

7,851

2,672

0

0

Dividends

0

0

0

0

0

Net Cash Flow

34

3,208

(4,287)

(1,857)

1,156

Opening net (debt)/cash

 

 

(259)

(293)

(3,221)

(2,676)

(819)

HP finance leases initiated

0

0

0

0

0

Net related party advances/(repayments)

0

(280)

3,742

3,742

0

Closing net (debt)/cash

 

 

(293)

(3,221)

(2,676)

(819)

(1,975)

Source: Cooks Global Foods data, Edison Investment Research. Note: *Our forecasts are based on the assumption that the company will remain a going concern despite the auditor’s disclaimer on the accounts.

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Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Cooks Global Foods and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Cooks Global Foods and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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