Monday 30th November 2020
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Executive Chairman’s Report
The first half of FY21 financial year was dominated by the impact of Covid-19 that slowed the positive momentum that the company had built up at the end of the FY20 year. Despite the Coivd-19 lockdowns and the other related implications which reduced group sales by 50% from $3.8 million to $1.9 million compared to the same period last year. The net operating loss increased only slightly from $0.6 million to $0.8 million and the overall loss from continuing operations reduced by $391k from ($1,432)k last year to ($1,041)k in FY21. The comprehensive loss reduced by $708k from ($1,743)k to ($1,035)k.
This performance reflects the restructuring changes in the business that are being realized along with the impact of positive government support packages relating to Covid-19 plus the positive impact of the performance of Triple Two Coffee in the UK that was acquired in June 2020.
Whilst difficult to quantify exactly, the store closures and a period of time where stores were only able to partially open with takeout and delivery only saw lost store sales of an estimated $10 million for the 6 months in the core markets of UK & Ireland. This translated directly to significantly reduced revenue from Royalties & product related rebates for the period and indirectly to the delay in new franchisees being acquired and new stores being opened and that were planned pre Covid-19. The company is confident that this growth trend will be recovered in FY22 and beyond as we are predicting a return to pre-Covid-19 trading from Q2 in 2021 onwards.
The Directors are confident about the prospects for the business in the year ahead. Despite the impact of Covid-19 on the sector in general we have been encouraged by the resilience shown by the business in the post lockdown trading in UK & Ireland through the July – October period when outlets were allowed to open in an almost normal manner. Restructuring initiatives instituted last year have delivered real benefits in the first half of the FY21 financial year and further benefits will be realized in the second half.
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