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Financial Performance

12 months to 31/12/2019

The company’s turnover for the year ended 31 December 2019 was £14.0m, which was a 7.0% increase compared with 2019. Cafédirect has step changed its growth primarily through a significant improvement in its performance in the Grocery Retail sector, increasing sales by 18.4% versus the prior year. The appeal of the brand has increased and is attracting new consumers. The launch of a new decaffeinated version of Cafédirect’s best seller Machu Picchu has contributed over £0.5m in its first year.

Cafédirect successfully launched a premium range of coffees from its London Fields Roastery in East London. These products performed very well as an exclusive with one key customer and have subsequently been made more broadly available.

Strategic report

Growth in the UK retail sector continued to accelerate across all customers, in particular during the second half of the year, with an increase in market share of 12% compared with 2018 developing further to 17% by the last quarter.  Cafédirect’s UK Foodservice division exited 2019 in a strong fashion, delivering growth of 10% in the final quarter having sustained declines in the first three quarters, ending the year slightly down (-3%) versus the prior year. Increased resource and a clear strategy in this sector, combined with the performance improvement, provide the board with a high level of confidence in growth in 2020.

2019 was a highly significant year for Cafédirect. The step up in growth was accompanied by a profit in 2019 of £156k before adjusting for fair gains/losses on foreign exchange (2018: £171k). This is the second year that the Company has delivered a surplus since 2009. Importantly the growth improvement from 2.9% in 2018 to 7% in 2019, along with maintaining profitability, demonstrates the significant potential of the business.

Overall profitability was achieved whilst investing in operating expenses to drive future revenue and margin growth. Investment in capability included resource to review the operations of the business, identifying significant annual savings of £0.5m (realisable primarily in 2020) and resource to accelerate and expand innovation, which will increase new product development in the period 2020 – 2023.

In addition to this improvement in commercial performance Cafédirect’ has seen its impact increase to even higher levels. Cafédirect continues to support the lives and wellbeing of producer growers, through Fairtrade premiums, Organic premiums and via donations to its farmer led charitable organisation - Producers Direct; significant sums that deliver real impact.

During 2019 £990,284 (2018: £781,968) was invested in growers and their communities via Fairtrade premiums, Organic premiums and Producers Direct. Supporting the core costs of Producers Direct enabled them to continue to deliver programmes with growers funded by third parties and to leverage an increased amount of external funding for their charitable activities with growers.

The company’s capabilities were increased considerably in 2019. During the year key appointments were made to accelerate the company’s growth. In addition a project to implement SAP enterprise software was successfully delivered. This will have a major impact in 2020 and beyond, improving efficiency and providing greater insight for decision making. Also a complete review of Cafédirect’s operations will enable improvements in ways of working and cost savings.

Looking ahead to 2020, Cafédirect has further plans in place to build on its achievements in 2019. The potential impact of Covid-19 is discussed and considered on page 10 of this report.

The Directors are confident that growth can be attained at higher levels, whilst maintaining profitability and maximising impact.

Cafédirect’s is a proven leader in delivering social and environmental change. It is also a strong and progressive brand owner with a powerful purpose.

Total stock at the year-end was £3.4m (2018: £3.0m); debtors were £2.2m (£2018 £2.0m) and creditors less than 1 year were £2.1m (2018: £1.3m).

Working capital is carefully managed at Cafédirect - cash balances at year close of £550k (2018: £466k) reflected an increase in stock and debtors offset by an increase in the amount owed to creditors.  Consistent with its principles of social responsibility, it is a matter of policy that supplier liabilities are paid on time.

After making provision for potential losses on maturation on forward foreign currency contracts, the company year-end balance sheet showed net assets of £3.4m, (2018: £3.4m).

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
Revenue £14,025,825
Gross Profit £2,993,597
Administrative costs (£2,782,125)
Profit before Tax £156,484
Net profit for the year £226
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
Total assets £6,144,480
Total liabilities £2,125,811
Net equity £3,435,736
Profit and loss account -£3,441,539

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

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