Coffee Republic, a UK-based chain of coffee bars, has cut its losses in half and bought out rival chain Goodbean Ltd.

The company's losses before charges for the six months to September 30 fell to �600,000, 54% down on the same period last year, while sales jumped by 33% to �12.9m.

Coffee Republic chief executive Peter Morris said the buying out Goodbean, which owns 19 outlets in the south-east of England, will help the company to post a pre-tax profit by March 2003.

"We continue to improve operating performance and with the acquisition of Goodbean we are leading the consolidation process in our market," he said.

All of Goodbean's cafes will be rebranded as Coffee Republic outlets, Mr Morris added.

Shares in Coffee Republic rose 10% to 10.75 pence in afternoon trade in London.

Coffee Republic, along with Starbucks, Costa Coffee, and Caffee Nero, makes up the "Big Four" UK coffee bar chains.

Goodbean Ltd. is one of around 15 smaller operators with a combined total of 350 outlets.