CAKE BOX HOLDINGS PLC

Earnings Release • Nov 8, 2021

National Storage Mechanism | Additional information

RNS Number : 5733R

Cake Box Holdings PLC

08 November 2021

Cake Box Holdings plc

("Cake Box", "the Company" or "the Group")

Unaudited Half Year Results for the six months ended 30 September 2021

Record first half performance with further strong growth and strategic progress

Cake Box Holdings plc, the specialist retailer of fresh cream cakes, today announces its half year results for the six months ended 30 September 2021 ("H1 FY22").

Financial Highlights

	Half year ended 30 September 2021 (H1 FY22)	Half year ended 30 September 2020 (H1 FY21) 2	Change
Revenue	£16.47m	£8.59m	+91.8%
Gross profit	£7.61m	£4.16m	+83.1%
EBITDA1	£4.14m	£1.98m	+109.1%
Pre-tax profit	£3.70m	£1.66m	+122.2%
Net cash	£4.15m	£3.80m	+9.2%
Cash at Bank	£5.57m	£5.34m	+4.3%
Earnings per share	7.46p	3.45p	+116.2%
Interim dividend	2.50p	1.85p	+35.1%

·    Strong growth across all financial metrics

·    For the four months to 30 September 20213, when the full store estate had reopened in FY21:

o  Revenues up 50.5% to £11.2m (four months to 30 September 2020: £7.4m)

o  Gross profit up 48.0% to £5.5m (four months to 30 September 2020: £3.7m)

o  Pre-tax profit up 56.7% to £2.6m (four months to 30 September 2020: £1.65m)

·    Balance sheet and cash generation remain strong

o  Cash from operations of £2.4m (H1 FY21: £2.0m)

o  £4.15m net cash (H1 FY21: £3.80m)

·    Interim dividend of 2.50p per share up 35.1% (H1 FY21: 1.85p)

Operational highlights

·    174 franchise stores in operation at 30 September 2021 (30 September 2020: 139)

·    20 new franchise stores added in the period (H1 FY21: six new franchise stores)

·    Successful trial of seven kiosks in Asda

·    No disruption to operations from supply chain

·    Continued successful launch of new product ranges, including "naked cake" range

Franchisee Store highlights

·    Like-for-like sales growth of 13.3% in franchise stores in the four months to 30 September 20214 (H1 FY21: 12.1%)

·    Franchisee total turnover up 73.2% to £29.5m (H1 FY21: £17.0m); four months to 30 September 2021 up 31.6% to £19.4m (H1 FY21: £14.8m)

·    Franchisee online sales up 68.1% to £6.7m (H1 FY21: £4.0m); four months to 30 September 2021 up 37.0% to £4.6m (H1 FY21: £3.4m)

Current trading

·    Three new stores opened in the five weeks since the half year end

·    Trading remains strong with franchisee like for like sales at 14.4% in October and online sales up 46.6% in October

·    Four new kiosks opened in Asda stores following the successful trial in seven locations

·    Intention for further roll out of Asda kiosks during the remainder of FY22

·    Targeting 32 new franchise store openings in FY22 underpinned by record number of deposits from prospective franchisees and openings to date during the year

·    Supply chain remains robust, with several months of ingredients in stock

·    Confident in meeting full year expectations

1 EBITDA is calculated as operating profit before depreciation

2 FY21 half year includes six weeks during which all stores were closed which impacted first 2 months

3 Four months June-September 2020 excludes the impact of the March 2020 lockdown and associated store closures to provide a more relevant comparable period 

4 Like-for-like: Stores trading for at least one full financial year prior to 30 September 2021

Sukh Chamdal, Chief Executive Officer, commented:

"I'm delighted to report another strong performance over the last six months, demonstrating the continued appeal of Cake Box's unique offering. Our fantastic franchisees, supported by their dedicated team members, have helped us deliver record first half store openings, revenues, profits and dividends, while making further significant strategic progress that gives us momentum into the second half.

Our proven franchisee model continues to deliver and we now plan to open up to 32 new franchise stores this year, helping more entrepreneurs than ever build their own businesses and serve their local communities.

Despite continued uncertainty in the wider environment, it's clear that our unique customer proposition remains highly attractive as more customers choose our delicious, egg-free cakes to celebrate important occasions or simply satisfy their appetites for a tasty treat.

We look ahead with confidence in meeting full year expectations and making further progress in the years ahead."

Analyst presentation

There will be a presentation for analysts this morning at 09:30am at the offices of MHP Communications. If you would like to attend in person or virtually, please contact cakebox@mhpc.com

For further information, please contact:

Cake Box Holdings plc Sukh Chamdal, CEO Pardip Dass, CFO	+44 (0) 20 8050 2026
Shore Capital (Broker and NOMAD) Stephane Auton Patrick Castle Fiona Conway - Corporate Broking	+44 (0) 20 7408 4090
MHP Communications (Financial PR) Oliver Hughes Simon Hockridge Charlie Barker Pete Lambie	+44 (0) 20 3128 8570

Operational Review

Another strong half year performance

We delivered another pleasing performance in the first half of the year, with strong trading across the Group's store estate and online delivery channels, as customers continued to respond well to the core Cake Box product proposition and its brand marketing through local store marketing and social media.

This performance is testament to the continued dedication and hard work of the entire Cake Box Family, with over 90 fantastic franchisees and their staff members continuing their entrepreneurial journeys and serving their local communities.

This translated into strong growth across key financial metrics, with revenues up 92% to £16.4m (H1 FY21: £8.6m) and pre-tax profits more than doubling to £3.70m (H1 FY21: £1.7m). Looking at the four months to 30 September 2021, which excludes the impact of the March 2020 lockdown and associated store closures, revenues were up over 50% at £11.2m (4 months H1 FY21: £7.4m) and pre-tax profits up 56.7% to £2.6m over the same period.  Total franchisee sales up 13.3% on a like-for-like* basis to £19.4m

Exceptional growth of the Group's store estate

The Group opened 20 new franchise stores in the period (excluding kiosk openings), with the total number of stores at 30 September 2021 being 174 (H1 2020: 139). New locations added in the period include Fulham (London), Stevenage and Hull. The Group continuously evaluates the financial and quality standards of the franchise store estate and as a result three stores were closed during the period.

The appeal of the Group's franchise proposition is reflected in the current pipeline of new potential franchisees, with a record 62 deposits held at period end.

Continued strategic progress

We made further progress on our strategic initiatives to complement our franchise store estate growth and give the brand an even bigger reach. These initiatives are designed to enable new and existing franchisees to grow their businesses and our brand through new channels such as kiosks and online delivery through third party platforms, as well as our own delivery platform.

Accordingly, the Group has continued the roll out of its kiosk offer from existing franchise stores, with a net three new shopping centre kiosks opened in the period, including in the Arndale and Trafford centres in Manchester, taking the total to 19.

The successful trial of kiosks with the Asda supermarket chain expanded in the period, with two new kiosks opened, taking the total number of supermarket kiosks to seven.

Continuing to refresh the Group's core celebration cake range remains an important element of the Group's differentiated product offering. New launches during the period include the "naked cake" collection, which customers have responded well to.

We also continued to invest in future proofing the business and providing ourselves with the infrastructure to support our ongoing growth. We opened our new Coventry warehouse and distribution facility in April 2021 - our third warehouse and distribution facility, with sponge production capability that enables us to continue to reduce our existing distribution costs and provide a back up to our other production facilities in Enfield and Bradford. This has also created skilled employment opportunities in the area and reduced food delivery miles, supporting our goal of mitigating our environmental impact.

In addition, we have continued to invest in other areas of the business to position us for further growth. We have strengthened our internal IT capabilities by appointing an experienced IT Director and further invested in our IT systems. We have also appointed BDO to assist with implementing improved internal audit practices.

Further investments in people include the appointment of a Procurement manager and, in the second half, at a senior management level, we expect to create a new Head of Marketing role and to add a very senior hire in the Group's Operations function.

2020 data breach announced during H1

During the period, Cake Box announced that it had experienced a data breach in 2020. The Company is confident with all the actions it has taken in relation to the matter and that the exceptional provision of £486k as detailed in the full year results will be sufficient to cover all costs relating to the matter.

Balance Sheet and Cashflow

The Group's balance sheet remains strong, underpinned by the highly cash generative nature of our business model. Cash at period end was £5.6m, 4.3% higher than at the same point last year. The Group's net cash position also increased, by 9.2% to £4.15m (H1 FY21: £3.80m).

Dividend

In line with our progressive dividend policy to reflect the cash generation and earnings of the Group, today we are declaring an interim dividend of 2.5 pence per share representing an increase of 35.1% from last year.

The interim dividend will be paid on 10th December 2021 to those shareholders on the register at the close of business on 19th November 2021. The ex-dividend date is therefore 18th November 2021.

Outlook

Trading momentum has continued during the first five weeks of the second half, with three new franchise stores opened across various UK locations in Penge and Chingford in London and Shirley in the West Midlands.

The franchise store estate traded well in October, with like-for-like sales increasing by 14.4% and online sales continuing to grow strongly, up 46.6% in the five weeks since the end of September versus the same period last year.

The Group's supply chain remains robust, with several months of ingredients on hand and no disruption to supply to date.

With more deposits for new franchise stores held than ever before and 23 new franchise stores already opened during the financial year to date, we are now targeting up to 32 franchise stores openings for FY22.

Alongside this, we have partnered with Asda supermarket and following the successful trial of 7 kiosks we have added a further 4 kiosks since 30 September 2021 and have the intention to roll out more kiosks in Asda during the remainder of FY22.

Despite continued uncertainty in the operating environment, it's clear that our unique proposition for customers and new and existing franchisees remains highly attractive, while more and more customers choose our cakes to celebrate important moments or satisfy their appetite for a tasty treat.

Looking ahead, the Board is confident of making further progress in the second half and meeting full year expectations.

CAKE BOX HOLDINGS PLC

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

		6 months to     30 September 2021		6 months to     30 September 2020		12 months to       31 March 2021
		(unaudited)		(unaudited)		(audited)
	Note	£		£		£
Revenue	2	16,471,577		8,586,565		21,910,862
Cost of sales		(8,863,477)		(4,431,487)		(10,978,993)
Gross profit		7,608,100		4,155,078		10,931,869
Administrative expenses		(3,889,519)		(2,470,351)		(6,685,300)
Operating profit		3,718,581		1,684,727		4,246,569
Net finance costs		(19,202)		(19,501)		(37,299)
Profit before income tax		3,699,379		1,665,226		4,209,270
Income tax expense		(717,333)		(285,502)		(842,362)
PROFIT AFTER INCOME TAX		2,982,046		1,379,724		3,366,908
OTHER COMPREHENSIVE INCOME FOR THE PERIOD
Revaluation of freehold property		-		-		24,901
Deferred tax on revaluation of freehold property		-		-		(4,731)
TOTAL COMPREHENSIVE PROFIT FOR THE PERIOD		2,982,046		1,379,724		3,387,078
EARNINGS PER SHARE
Basic	4	7.46p		3.45p		8.42p
Diluted	4	7.46p		3.45p		8.42p

The notes on pages 11-13 form part of these interim financial statements.

CAKE BOX HOLDINGS PLC

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2021

		30 September 2021 (unaudited)	30 September 2020 (unaudited)	31 March 2021 (audited)
	Note	£	£	£
ASSETS
Non-current assets
Property, plant and equipment		7,457,374	7,155,002	7,251,602
Other financial assets		564,194	4,000	656,004
Deferred tax asset		95,447	65,169	95,447
		8,117,015	7,224,171	8,003,053
Current assets
Inventories		2,111,194	1,369,819	1,902,171
Trade and other receivables		2,861,845	1,603,392	2,490,217
Other financial assets		237,994	-	382,808
Cash and cash equivalents		5,565,501	5,335,601	5,125,808
		10,776,534	8,308,812	9,901,060
TOTAL ASSETS		18,893,549	15,532,983	17,904,113
EQUITY AND LIABILITIES
Share capital and reserves
Issued share capital	4	400,000	400,000	400,000
Capital redemption reserve		40	40	40
Revaluation reserve		1,609,592	1,589,422	1,609,592
Share option reserve		488,596	342,996	488,596
Retained earnings		10,145,461	7,396,231	8,643,415
TOTAL EQUITY		12,643,689	9,728,689	11,141,643
Current liabilities
Trade and other payables		3,313,081	3,423,785	3,353,749
Short-term borrowings		167,754	167,754	167,754
Current tax payable		740,415	309,081	903,469
Provisions		243,100	-	486,319
		4,464,350	3,900,620	4,911,291
Non-current liabilities
Borrowings		1,252,336	1,371,179	1,318,005
Deferred tax liabilities		533,174	532,495	533,174
		1,785,510	1,903,674	1,851,179
TOTAL LIABILITES		6,249,860	5,804,294	6,762,470
TOTAL EQUITY & LIABILITIES		18,893,549	15,532,983	17,904,113

The notes on pages 11-13 form part of these interim financial statements.

CAKE BOX HOLDINGS PLC

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

	Share capital	Capital redemption reserve	Share option reserve	Revaluation reserve	Retained earnings	Total
	£	£	£	£	£	£
Balance at 1 April 2020	400,000	40	198,368	1,589,422	7,296,507	9,484,337
Total comprehensive income	-	-	-	-	1,379,724	1,379,724
Share based payments	-	-	144,628	-	-	144,628
Dividends paid	-	-	-	-	(1,280,000)	(1,280,000)
Balance at 30 September 2020	400,000	40	342,996	1,589,422	7,396,231	9,728,689
Total comprehensive income	-	-	-	-	1,987,184	1,987,184
Share based payments	-	-	143,372	-	-	143,372
Deferred tax on share-based payments	-	-	2,228	-	-	2,228
Revaluation of freehold property	-	-	-	24,901	-	24,901
Deferred tax on revaluation of freehold properties	-	-	-	(4,731)	-	(4,731)
Dividends paid	-	-	-	-	(740,000)	(740,000)
Balance at 31 March 2021	400,000	40	488,596	1,609,592	8,643,415	11,141,643
Total comprehensive income	-	-	-	-	2,982,046	2,982,046
Dividends paid	-	-	-	-	(1,480,000)	(1,480,000)
Balance at 30 September 2021	400,000	40	488,596	1,609,592	10,145,461	12,643,689

CAKE BOX HOLDINGS PLC

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

		6 months to 30 September 2021 (unaudited)	6 months to 30 September 2020 (unaudited)	12 months to 31 March 2021 (audited)
		£	£	£
Cash from operating activities:
Profit before income tax		3,699,379	1,665,226	4,209,270
Adjusted for:
Depreciation		425,833	292,529	670,333
Exceptional items		-	-	486,319
Profit on disposal of tangible fixed assets		(13,515)	(7,141)	(18,972)
(Increase)/Decrease in inventories		(209,023)	26,415	(505,936)
(Increase) in trade and other receivables		(371,630)	(144,160)	(1,172,047)
(Decrease)/Increase in trade and other payables		(283,886)	650,435	1,860,396
Share based payment charge		-	144,628	288,000
Finance income		(1,021)	(2,314)	(4,087)
Finance costs		20,223	21,815	41,386
Cash generated by operations		3,266,360	2,647,433	5,854,662
Taxation paid		(880,387)	(652,422)	(646,995)
Net cash inflow from operating activities		2,385,973	1,995,011	5,207,667
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		16,375	9,848	26,446
Purchase of property, plant and equipment		(634,466)	(250,690)	(704,959)
Interest received		1,021	2,314	4,087
Issue of loans to franchisees		(41,000)	-	(1,016,813)
Repayment of franchisee loans		277,626	-	123,063
Net cash flows used in investing activities		(380,444)	(238,528)	(1,568,176_
Cash flows from financing activities:
Repayment of borrowings		(65,669)	(75,109)	(128,283)
Dividends paid		(1,480,000)	-	(2,020,000)
Interest paid		(20,223)	(21,815)	(41,586)
Net cash flows used in financing activities		(1,565,892)	(96,924)	(2,189,869)
Net increase in cash and cash equivalents		439,637	1,659,559	1,449,822
Cash and cash equivalents brought forward		5,125,864	3,676,042	3,676,042
Cash and cash equivalents carried forward		5,565,501	5,335,601	5,125,864

For the purposes of the cash flow statement, cash and cash equivalents comprise the following:

Cash at bank and in hand	5,565,501	5,335,601	5,125,864

CAKE BOX HOLDINGS PLC

NOTES TO THE INTERIM ACCOUNTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

1.    Notes to the Interim Report

Basis of preparation

The consolidated half-yearly financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2021 have been filed with the Registrar of Companies at Companies House. The auditor's report on the statutory accounts for the year ended 31 March 2020 was unqualified, did not include any matters to which the auditor drew attention by way of emphasis and did not contain any statements under Section 498 (2) or (3) of the Companies Act 2006.

The published financial statements for the year ended 31 March 2021 were prepared in accordance with International Financial Reporting Standards as adopted for use in the EU ("IFRS").

The consolidated annual financial statements of Cake Box Holdings Plc for the year ended 31 March 2022 will be prepared in accordance with UK adopted IFRS. Accordingly, these interim financial statements have been prepared using accounting policies consistent with those which will be adopted by the Group in the financial statements for the year ended 31 March 2022 but do not contain all the information necessary for full compliance with UK adopted IFRS.

The consolidated half-yearly financial statements have been prepared under the going concern assumption and historical cost convention as modified by fair value for property, plant and equipment.

Basis of consolidation

The Group consolidated half-yearly financial statements consolidates the company and its subsidiaries. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

2.    Segment reporting

Components reported to the chief operating decision maker, the board of directors, are not separately identifiable. The group makes varied sales to its customers, but none are a separately identifiable component. The following information is disclosed:
	6 months to 30 September 2021 (unaudited)	6 months to 30 September 2020 (unaudited)	12 months to 31 March 2021 (audited)
	£	£	£
Sale of goods	14,179,845	7,898,916	19,213,915
Sale of services	2,291,732	687,649	2,696,947
	16,471,577	8,586,565	21,910,862

3.    Dividends

	6 months to       30 September 2021	6 months to       30 September 2020	12 months to           31 March   2021
	(unaudited)	(unaudited)	(audited)
	£	£	£
Dividends paid	1,480,000	-	2,020,000
No interim dividend (H1 FY20 1.85 per share) was declared.

4.    Share Capital

	6 months to       30 September 2021	6 months to       30 September 2020	12 months to           31 March 2021
	(unaudited)	(unaudited)	(audited)
	£	£	£
40,000,000 Ordinary shares of £0.01 each	400,000	400,000	400,000

On the 21 September 2021, the Group granted share options for 114,784 shares with an exercise price of £3.48 per share. The options' vesting conditions are based on financial performance over three years. An option pricing model was used to determine the value of these options at the reporting date.

Earnings per share

The basic earnings per share is calculated by dividing the earnings attributable to equity shareholders by the weighted average number of shares in issue. In calculating the diluted earnings per share, share options outstanding have been taken into account where the impact of these is dilutive.

	6 months to       30 September 2021	6 months to       30 September 2020	12 months to           31 March 2021
	(unaudited)	(unaudited)	(audited)
	£	£	£
Basic earnings per share	7.46p	3.45p	8.42p
Diluted earnings per share	7.46p	3.45p	8.42p

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