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Cafédirect

Financial Performance

12 months to 31/12/2017

The company’s turnover for the year ended 31 December 2017 was £12.9m, which was a 3.6% increase on the prior year. In an extremely challenging year in the UK retail market, Cafédirect grew in its independent retailer sector, in food-service, in international sales and in its subscription club. Sales into multiple retail had a difficult first half of the year, but grew in the second half of the year through additional distribution and new product launches.

In addition to the above Cafédirect purchased the assets and intellectual property of The London Tea Company in May 2017. The London Tea Company is a contemporary, 100% Fairtrade tea brand. This acquisition provides Cafédirect with greater penetration into the higher growth tea sector of fruit and herbal teas, and has been a positive addition to the business in 2017 and for future growth

Strategic report

 

In 2017 Cafédirect successfully rebranded its total business including new packaging design across the range. The design was very positively received across the trade and helped gain additional listings. In addition Cafédirect launched its 100% Organic, 100% Fairtrade range supplied from its own roastery in London. Sales from the roastery increased as speciality coffee was extended beyond subscription into wholesale and food-service supply.

Sales grew with key partners and customers, such as GLL and The Royal Albert Hall. Internationally Cafédirect continued its successful growth, both expanding existing markets, such as Japan, Czech Republic, and Singapore and opening up new ones. Amongst the new markets opened The United States, Dubai, Canada and Italy all present significant future opportunity.

The Directors and management of the business continued their long term restructuring of the business in 2017 by:

  • restructuring the Company’s borrowing facilities from a short term overdraft facility to a £1,300,000, 8 year term loan plus a 5 year stock finance facility for short term seasonal raw material stock purchase requirements, and
  • the successful delivery of a £900,000 Rights Issue (£812,000 net of issue costs), which was completed in September 2017, and which will support continued brand investment and growth of the business.

The restructuring of operating costs in the business that commenced in 2016 continued in 2017 resulting in an overall reduction in operating costs of 8% versus the prior year.

The Directors are confident that the corporate financial restructuring; the broadening of Cafédirect’s reach through the acquisition of The London Tea Company; the continued focus on targeted sales and management of the Company’s cost base, will ensure a strong and growing business in the medium term.

The overall loss of the business for 2017 was £328k. This was a significant improvement from the £940k loss in 2016.

The directors are pleased to report that, despite the loss position, £556,094 (2016: £552,400) was invested in the growers and their communities via Fairtrade premiums and the Cafédirect Producers’ Foundation. Supporting the core costs of the Cafédirect Producers’ Foundation has enabled them to continue to deliver programmes with growers funded by third parties and to leverage an increased amount of 3rd party funding for their charitable activities with growers.

Total stock at the year-end was £2.9m (2016: £2.8m); debtors were reduced to £2.0m (£2016 2.3m) and creditors less than 1 year (excluding overdraft) were £1.6m (2016: £1.6m).

The combination of loan restructuring, loss for the year and working capital changes made during the year contributed to a cash balance at the year-end of £919,386 (2016: £89,805). 

 

Key performance indicators

The company’s key financial performance indicators, which are closely monitored throughout the year and measured against pre-set targets, include:

  • Sales values, analysed by product group and key sectors such as UK retail, UK out-of-home and international;
  • Gross profit, both in absolute terms and as a percentage of sales;
  • The level of administration expenses, looking at the ongoing UK business separately from other costs;
  • Operating profit and profit before tax;
  • The level of working capital employed, both in absolute terms and as a percentage of sales; and
  • Cash generated by the business.

.In addition, the company has a number of other key performance indicators, with the company’s performance against these indicators sometimes being called the company’s “social return”. These include:

  • The amounts paid by Cafédirect for its coffee, tea and cocoa raw materials over and above market prices. These amounts include, but are not necessarily restricted to Fairtrade premiums;
  • The amount donated to Cafédirect Producers’ Foundation; and
  • The volume of coffee, tea and cocoa raw materials purchased from growers.

Revenue and net profit

These graphs give you a snapshot of how the business has performed over the last five years. Revenue, which is sometimes also called turnover, shows you how much money the business has brought in every year for the last five years. The net profit shows you how much of that money ended up as profit after all of the costs of running the business, and after tax. Read more

Profit and loss summary and profitability indicators

The Profit and Loss summary and profitability indicator tables show how profitable the business has been over the last year. Read more

Profit and loss summary Profitability indicators
Revenue £12,863,692 Initial return on mean assets 56%
Gross Profit £2,431,918 Gross Margin 19%
Administrative costs and depreciation £2,677,379 Efficiency -13%
Profit before Tax -£327,598 Net Margin -13%
Net profit for the year -£327,598 Net return on mean assets 64%
Corporation Tax Paid -

Balance sheet summary and solvency indicators

The balance sheet of a business gives you a picture of everything the business has, including all the cash, and what it has done with it. Read more

Solvency indicators are designed to show you the most important factors affecting the amount of cash the business has available. Ethex shows different indicators according to whether the business is a trading business, (buying and selling goods), or a financial business, (taking money and lending or investing it on). Read more

Balance sheet summary Solvency indicators
Total assets £5,882,463 Gearing 40%
Total liabilities £1,757,701 Current assets ratio 1.8
Net equity £3,217,717
Profit and loss account -£3,768,924

Returns and value

The returns indicators show you how much return the business is making from all the money it has. A higher return means a more profitable business and more money for the shareholders. Read more

The share and asset value indicators are designed to help you understand better what the shares of the business might be worth. Read more

Returns indicators Share and asset value
Most recent dividend 0 pence View last traded price          Read more
Earnings per share -2.9 pence Net asset value per share £0.28
Distributable profits per share -33.1 pence

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