Full Year Results

Operational highlights

Franchisee store highlights

Current trading² and outlook

RNS Number : 2116Q

Cake Box Holdings PLC

27 June 2022

Cake Box Holdings plc

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

Audited Full Year Results for the 12 months ended 31 March 2022

Strong results and robust current trading, confident of further progress

Cake Box Holdings plc, the specialist retailer of fresh cream cakes, today announces its audited full year results for the twelve months ended 31 March 2022.

Financial Highlights

	Full year	Full year	Change
	ended	ended
	31-Mar-22	31-Mar-21
Revenue	£33.0m	£21.9m	+50.7%
Gross profit	£15.8m	£10.9m	+45.0%
EBITDA*	£8.8m	£4.9m	+79.6%
Pre-tax profit	£7.7m	£4.2m	+83.3%
Adjusted Pre-tax profit**	£7.0m	£4.7m	+48.9%
Cash at Bank	£6.6m	£5.1m	+29.4%
Earnings per share	15.8p	8.4p	+88.1%
Adjusted Earnings per share**	13.8p	9.6p	+43.8%
Final dividend recommended	5.1p	3.7p	+37.8%

· Group revenue up 50.7% to £33.0m (2021: £21.9m).

· Gross margin reduced to 47.9% (2021: 49.8%), due to exceptional increase in new store openings.

· Cash from operations of £5.3m (2021: £4.3m).

· Strong balance sheet with £6.6m cash at period end (2021: £5.1m).

· Dividend per share for the full year: 5.1 pence per share recommended (Interim dividend of 2.5 pence per share).

· 41% growth in online sales

· Exceptional number of new franchise store openings, with 31 opened in the year (2021: 24).

· 185 franchise stores in operation at the end of FY22 (2021: 157).

· Continued expansion of kiosk offering ; now with 15 supermarket kiosks (2021:5); in addition to 20 kiosks in shopping malls (2021:16).

· New warehouse opened in Enfield in December 2021 to support ongoing expansion.

· Like-for-like¹ sales growth of 12% in franchise stores in ten-month period to 31 March 2022.³

· Franchisee total turnover up 55% to £66.0m (2021: £42.7m)

· Franchisee online sales up 41% to £13.3m (2021: £9.4m)

Finished goods and goods for resale

· Sales have remained robust post period end against a very strong comparative trading period in FY22. However, the Board remains mindful of an increasingly challenging economic and trading environment.

· We continue to increase our geographic presence with a strong store opening programme to drive future growth, whilst investing in marketing to grow brand awareness and strengthening our digital capabilities.

· We have continued to invest in strengthening the Group's senior leadership team and internal functions to improve governance and processes to support a larger franchise estate .

Sukh Chamdal, Chief Executive Officer, commented:

"Despite a challenging economic and trading environment, we have delivered yet another strong set of results and continue to trade robustly post period end.

"I founded Cake Box at the height of the financial crisis in 2008. These are difficult times for everyone, but as we've seen before, the Group's unique customer and franchisee proposition remains both exciting and enticing. Our people have proven their resilience and commitment through tough times and now is the time for the Cake Box Family of extraordinary entrepreneurs to shine, with support from a bigger, better and more experienced Group function.

"The Cake Box Family is bigger and more geographically diverse than ever before, and we are serving more customers than ever, with a keen focus on value for money. As I said at the height of the Covid pandemic, there will still be birthdays, marriages and countless moments in our lives to celebrate with a slice of our delicious cake."

EBITDA is calculated as operating profit before depreciation and amortisation

** Calculated after adjusting for exceptional items (2022 - £782k, 2021 - £486k) see note 10

¹ Like-for-like: Stores trading for at least one full financial year prior to 31 March 2022

² Current trading defined as average store turnover for last 12 weeks to week ended 27 June 2022

³ Trading was affected by COVID lockdowns and associated store closures during the first 2 months of FY22

For further information, please contact:

Cake Box Holdings plc

Sukh Chamdal, CEO

David Forth, CFO

Enquiries via MHP Communications

Shore Capital

Stephane Auton

Patrick Castle

+44 (0) 20 7408 4090

MHP Communications

Simon Hockridge

Pete Lambie

+44 (0) 20 3128 8570

cakebox@mhpc.com

Chairman's Statement

Expanding our reach

We are very pleased with our performance over the last year, with 31 new shop openings, taking our total store estate to 185, and 14 new kiosks opened across both supermarkets and shopping malls, bringing the total number to 35. Our Coventry depot is now fully operational, meaning we have Enfield serving the South of England, Bradford serving the North of England and Scotland, and Coventry serving the Midlands and Wales. Having depots in these strategic locations has also allowed to us to significantly reduce our road mileage and carbon footprint. We have learned that building capability early is key to sustaining the resilience of the business.

The Board recognises and remains cognisant of the concerns previously raised by some shareholders around the Group's internal governance, finance and audit processes, and continues to work to evolve, improve and further professionalise the Group, bringing in the experience and capabilities to support our growth ambitions. We have invested significantly in Cake Box's senior management and Group functions, including the appointments of David Forth as Interim Chief Financial Officer, Richard Zivkovic as Chief Operating Officer and the creation of a new Chief Commercial Officer role for Dr Jaswir Singh. As well ensuring our operation is fit for purpose as we grow, we continue to review and improve working with external partners, ensuring we run our business effectively with accurate reporting.

During the period, we also recruited a new Marketing Director, Chay Watkins, IT Director Paul Owers, a Customer Service Manager and Learning & Development Manager as well as expanding the Group's IT, Finance and procurement functions.

I would like to welcome all of our new colleagues to the Cake Box Family and look forward to their contribution to our continued future growth.

Through our strategic expansion, we have created the capacity to significantly increase our volume and reach communities nationwide and we remain focused on maximising productivity to meet the additional demand. For the coming year we have a target of another 24 new store openings and we will continue with kiosk development. This should bring us the 200th Cake Box store in the autumn of 2022, well in line with our stated ambition of having 250 stores.

We continue to successfully open stores in new areas throughout the UK such as Sunderland, Cardiff and Exeter, increasing our geographical presence and becoming a national brand. There are still many opportunities for Cake Box within the UK, so for the time being this is where we continue to concentrate our growth plans.

Cake Box also continues to adapt and evolve in other ways. E-commerce is a key sales channel, and we continue to increase our capability and expand our customer reach through a dedicated delivery service. This will form an integral part of our growth over the next two to three years with the potential for Cake Box to be a 50/50 online and bricks-and-mortar business.

Building resilience

To come out of the pandemic stronger, it has been key to support our franchisees in setting up and growing their businesses. In the period, we continued our already-established Franchise Support Fund initiative, lending money during this financial year to franchisees to help them set up and at a time when it has been hard to access traditional lending.

The franchise model is unique in that it creates a community of genuine entrepreneurs with the drive to make things work. We have a healthy pipeline of franchisee applications for new stores and we always welcome more entrepreneurs who want to run their own businesses.

The increasing number of franchisee enquiries at Cake Box shows that these entrepreneurs have an appetite to take control of their lives and also their income, as well as creating additional employment for others. Over the last four years, the Cake Box franchise model has created hundreds of jobs across the UK.

Creating social value

Community has always been central to what we do, and why we actively encourage our franchisees to engage with the communities in which they operate through local initiatives. We support their endeavours through money-raising initiatives - donating the proceeds of carrier bag sales back into communities for example. Our voluntary work at head office level also continues, including our large-scale programme serving food to the homeless.

More recently, we have set up an Environmental, Social and Governance (ESG) committee, focusing on how we conduct our business, from the packaging we use through to miles travelled, and how and where we source our products. We consider our ESG activities to be a moral obligation to our investors, customers, franchisees and supplier base. A huge focus going into 2023 and beyond will be on how we measure the outcomes and set meaningful targets.

Looking forward

The Cake Box Family can be incredibly proud of its achievements over the past year. Achievements only made possible through the collaborative culture that exists between our head office teams, diverse franchisee community and a supplier base that has continued to ensure no supply disruption despite the challenges they may have faced. We must sometimes remind ourselves what we have achieved in less than 11 years since we established the business and just four years after the IPO. In such a short period, we have built a strong brand with a solid loyalty base and huge growth trajectory. In what is a cash-generative business, our cash position remains strong, as does the overall balance sheet.

The Cake Box brand is a perfect example of how through collaboration we can remain strong through times of adversity, and we look forward to delivering value to our investors, customers and franchisees over the long-term.

A Family of extraordinary entrepreneurs

It is critical in the current economic environment to remind ourselves of what the Cake Box Family is. At its core, it is a Family of extraordinary entrepreneurs up and down the country, continuously creating jobs in their communities, often in underserved areas of the UK where investment is needed and most of the time, lacking.

To chair a business that ultimately provides a platform to facilitate this entrepreneurship makes me incredibly proud. Taking on a franchise and becoming a small business owner is a bold step at the best of times, and I am constantly reminded of how extraordinary our franchisees are when I meet them and hear about their entrepreneurial journeys. I would like to thank the entire Cake Box Family, our customers, our staff, franchisees and supply base for their continued commitment, hard work and dedication over the last year but also for the last two years of the pandemic.

Neil Sachdev MBE

Non-Executive Chairman

Chief Executive's review

Welcoming new franchisees

Despite the pandemic, we were able to uphold our unique proposition of an egg-free celebration cake. Born at the height of the 2008 recession, Cake Box learnt an important business lesson that while people may cut down on essential items, celebrating a special occasion provides that one chink of light. As a result, we saw double-digit growth in 2021 with the opening of 31 new stores and 14 kiosks across the UK.

One result of COVID-19 was that it prompted people to re-evaluate their life goals and, in some cases, to start their own business. They just needed that extra incentive and we were delighted to welcome new franchisees into the business.

Providing training support

Training support to franchisees has been an essential part of our business model prior to, during and since the pandemic. This happens online, via email, weekly forums, and through our dedicated hub where we provide training documents and videos that franchisees can access to conduct their own induction and refresher training.

During COVID-19, our training focus included topics such as minimum social distancing, safe practices at the front and back of house in often small operating spaces, hygiene and sanitisation, and offering masks to customers entering the store.

Franchisee commitment

We always owe a debt of thanks to the commitment of our franchisees. Our churn rate of shops changing hands remains low by industry standards. This shows the commitment and trust of our franchisees and ambitions to expand their business. 43% of our franchisees have more than one store.

The average earnings from a Cake Box store provides an attractive proposition for our franchisees, which is why there are so many multi-store operators. Also, as owner occupiers, it is in their interest that they operate optimally and efficiently. This in turn increases our head office revenue.

Ongoing people strategy

The need to grow our infrastructure in line with the expansion of our estate has guided both our distribution centre strategy and recruitment policy. We now have three UK distribution centres located in Enfield in the South, Bradford in the North, and more recently Coventry in the Midlands, giving us a reach across the whole of the UK, including Scotland and Wales.

We have also instigated a major recruitment drive of key head office positions across health and safety, food safety, marketing, HR, training, customer service and at C-suite level. Our long-term strategy is to make sure that we have the right quality of people to drive and sustain the business into the long-term.

Listening to the customer

It remains at the top of our agenda to give our customers the products they want. We collect data from the verbal customer feedback and online reviews our franchisees receive. We also have a feedback form which customers respond to regularly with their valuable insights. As a result, we can adjust our product offering in line with customer needs.

A recent example is the feedback that some customers wanted less cream on their cakes. This has resulted in our naked cake range, which has been received very positively. It is through such initiatives that we will be able to meet customer demands and set trends in the coming years.

Continuing the Cake Box journey

Over the last year we have seen some excellent quality franchisees come into the business. With 31 new store openings, FY22 delivered extraordinary results. For FY23, we remain ambitious while setting a realistic target of 24 new store openings.

It is interesting to reflect on the fact that when Cake Box first began in 2008, it was restricted to serving very specific communities. Today, our three main distribution centres can cater for the entire UK and buffer us from any potential supply chain issues, allowing us to distribute our products seamlessly and ensure business continuity.

A cake is an emotional purchase. Whether the customer wants to enjoy the sights and smells of a physical store or the convenience of ordering from the comfort of their own home, our objective remains the same - to provide the right cake to complete the perfect occasion.

I would like to thank Pardip Dass, my co-founder who left the business at the end of the financial year, for his important contribution to making Cake Box the success it is today.

A bigger, better business

Despite a challenging economic and trading environment, we have delivered yet another strong set of results and continue to trade robustly post period end.

I founded Cake Box at the height of the financial crisis in 2008. These are difficult times for everyone, but as we've seen before, the Group's unique customer and franchisee proposition remains both exciting and enticing. Our people have proven their resilience and commitment through tough times and now is the time for the Cake Box Family of extraordinary entrepreneurs to shine, with support from a bigger, better and more professional Group function.

The Cake Box Family is bigger than ever before, and we are serving more customers than ever, with a keen focus on value for money. As I said at the height of the Covid pandemic, there will still be birthdays, marriages and countless moments in our lives to celebrate with a slice of our delicious, egg free cake.

Sukh Chamdal

Chief Executive Officer

Financial Review

	FY22	FY21
	£m	£m
Revenue	33.0	21.9
Gross profit	15.8	10.9
Operating expenses before exceptional items	(8.8)	(6.2)
Exceptional Items	0.8	(0.5)
Operating profit	7.8	4.2
Finance Cost	(0.1)	-
Profit before tax	7.7	4.2
Adjusted Profit before tax*	7.0	4.7
Tax	(1.4)	(0.8)
Profit for the period	6.3	3.4
Adjusted Profit for the period*	5.5	3.9

Revaluation of freehold property	1.2	1.3***
Deferred tax on revaluation	(0.2)	(0.3)***
Total Comprehensive income for the year	7.3	4.4

EBITDA**

8.8

4.9

* Calculated after adjusting for exceptional items (2022 - £782k, 2021 + £486k) see note 10

** EBITDA is calculated as operating profit before depreciation and amortisation

*** Prior year comparatives have been restated see note 20

Revenue

Reported revenue for the year FY22 was £33.0m. Revenue increased by 50.7% compared to the previous financial year. This was achieved through an increase in store like-for-like sales and with the addition of 31 new stores around the UK in new locations including Cardiff, Exeter, Bournemouth, Plymouth, Sunderland, Chelmsford and Nuneaton.

Gross margin

Gross profit as a percentage of sales reduced from 47.9% from 49.8%, due to an exceptional increase in new store openings, with new store set-up margins being lower than margins on sales of products.

EBITDA

EBITDA increased by 79.6% to £8.8m as a result of the strong increase in sales and control over costs.

Exceptional items

Following the website data breach that occurred in 2020, the Group made a provision of £486k in FY21 allowing for legal and professional fees and potential fines relating to the breach. £243k of the original provision remains in place.

In FY22, despite the excellent performance of the Group, the vesting conditions in the Executive Share Scheme were not met, resulting in an exceptional gain of £486k to profit.

A review of provisions resulted in a further exceptional gain of £296k from reversing an accrual for rates in previous years.

Balance Sheet

Cake Box has a strong balance sheet with a cash balance at the year-end of £6.6m (FY21: £5.1m). The Group's only debts are mortgages of £1.4m secured by its freehold properties in Enfield, Bradford and Coventry.

The Group operates a franchise model and therefore has a relatively low and flexible cost base. The Board is therefore very comfortable with the Group's cash levels and liquidity despite the unprecedented events of the last two years.

Property

Our three main sites at Enfield, Bradford and Coventry are all freehold. At year end, we instructed surveyors to value all three properties in order to have a consistent value base. This resulted in a significant revaluation gain in respect of our head office site in Enfield of £2.5m compared to the previous revaluation in 2019.

We also rented a 27,000 sq ft warehouse to in Enfield to support our business expansion.

Taxation

The effective rate of taxation was 18.4% (FY21: 18.0%).

This is in line with relief obtained via the super deduction claim, which is a temporary increase by HMRC to capital allowances for capital expenditure of 130% compared to the normal rate of 100%, as well as other corporation tax timing differences on capital assets

Earnings per share (EPS)

Un-adjusted earnings per share were 15.8p (FY21: 8.4p). An increase of 88.1% reflecting the increase in profitability of the Group. The number of shares in issue was 40,000,000 and is unchanged since the Company's IPO in June 2018.

Dividend

Having delivered a year of strong growth, the Board is pleased to recommend a final dividend of 5.1 pence per share (FY21: 3.7p), bringing the total dividend for the year to 7.6 pence per share (FY21: 5.55p).

If approved by the shareholders at the Company's AGM on 20th September 2022, the final dividend of 5.1 pence per share will be paid on 27^th September 2022 to shareholders on the register on 26^th August 2022.

As previously stated, the Company intends that the total dividend for each year will split into one third for the first six months of the year to two thirds for the year end.

Cash position

The Group had £6.6m of cash at year end, an increase of £1.5m. At the year end, the Group had a net cash position of £5.2m which was up £1.6m from the previous year.

Trade and other receivables

The Group had £2.6m of trade and other receivables at the end of FY22, equal to the prior year. The majority of this balance relates to trade receivables which have remained at £2.0m, showing good credit control given the increase in revenue. Trading debts relating to purchases of products by franchisees have a defined seven-day payment term.

Trade and other payables

The Group had £2.7m of trade and other payables at the year end, a reduction of £0.7m on the prior year. The Group actively sources cost effective suppliers without compromising on the quality of the products. Other payables are paid according to terms specified.

We have been working with BDO as internal auditors to improve the control environment across the company to ensure that it remains appropriate to needs of a growing business.

David Forth

Interim Chief Financial Officer

Cake Box Holdings Plc

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

AS AT 31 MARCH 2022

Company Registration No. 08777765

			As restated
		2022	2021
	Note	£	£

Revenue	3	32,964,846	21,910,862

Cost of sales		(17,133,685)	(10,978,993)

Gross profit		15,831,161	10,931,869

Administrative expenses before exceptional items		(8,794,413)	(6,198,981)
Exceptional items	10	781,965	(486,319)
Administrative expenses	4	(8,012,448)	(6,685,300)

Operating profit	5	7,818,713	4,246,569

Finance income	6	1,802	4,087
Finance expense	6	(83,190)	(41,386)

Profit before income tax		7,737,325	4,209,270

Income tax expense	11	(1,425,709)	(842,362)

Profit after income tax		6,311,616	3,366,908

Other comprehensive income for the year
Revaluation of freehold property	13	1,250,175	1,274,901
Deferred tax on revaluation of freehold property	12	(237,533)	(242,231)
Total other comprehensive income for the year		1,012,642	1,032,670

Total comprehensive income for the year		7,324,258	4,399,578
Attributable to: Equity holders of the parent		7,324,258	4,399,587
Earnings per share
Basic	32	15.78p	8.42p
Diluted	32	15.78p	8.42p

The notes form part of these financial statements.

Cake Box Holdings Plc

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2022

Company Registration No. 08777765

					As restated
				2022	2021
		Note		£	£
Assets
Non-current assets
Property, plant and equipment		13		10,029,209	8,501,602
Right-of-use assets		14		2,874,430	-
Other financial assets		17		710,059	656,004
Deferred tax asset		12		-	95,447
				13,613,698	9,253,053
Current assets
Inventories		15		2,468,921	1,902,171
Trade and other receivables		16		2,553,209	2,490,217
Other financial assets	17		357,548		382,808
Cash and cash equivalents		31		6,571,558	5,125,864
				11,951,236	9,901,060

Total Assets				25,564,934	19,154,113

Equity and liabilities
Equity
Issued share capital		18		400,000	400,000
Capital redemption reserve		19		40	40
Revaluation reserve		19		3,634,734	2,622,092
Share option reserve		21		-	488,596
Retained earnings		19		12,475,031	8,643,415
Equity attributable to the owners of the Parent company				16,509,805	12,154,143

Current liabilities
Trade and other payables		23		2,661,372	3,353,749
Lease liabilities		14		260,191	-
Short-term borrowings		22		167,754	167,754
Current tax payable				837,946	903,469
Provisions		24		243,100	486,319
				4,170,363	4,911,291
Non-current liabilities
Lease liabilities		14		2,699,958	-
Borrowings		22		1,185,978	1,318,005
Deferred tax liabilities		12		998,830	770,674
				4,884,766	2,088,679

Total Equity and Liabilities				25,564,934	19,154,113

The financial statements were approved and authorised for issue by the Board on _26 June 2022__ and signed on its behalf by:

S R Chamdal

Director

The notes form part of these financial statements.

Cake Box Holdings Plc

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2022

			As restated
	Note	2022	2021
		£	£
Cash flows from operating activities
Profit before income tax		7,737,325	4,209,270
Adjusted for:
Depreciation	4 & 13	853,633	670,333
Amortisation of right-of-use assets	4 & 14	124,975	-
Exceptional items		-	486,319
Profit on disposal of tangible fixed assets		(13,154)	(18,972)
Increase in inventories		(566,749)	(505,936)
Increase in trade and other receivables		(82,993)	(1,172,048)
Increase in other financial assets		(28,794)	(893,749)
(Decrease)/increase in trade and other payables		(915,596)	1,860,596
Share based payment (credit)/charge		(486,368)	288,000
Finance income		(1,802)	(4,087)
Cash generated from operations		6,620,477	4,919,726

Finance costs		83,190	41,386
Taxation paid		(1,407,391)	(646,995)

Net cash inflow from operating activities		5,296,276	4,314,117

Cash flows from investing activities
Purchases of property, plant and equipment		(1,133,926)	(704,959)
Proceeds from sale of property, plant and equipment		16,014	26,446
Interest received		1,802	4,087
Net cash outflow from in investing activities		(1,116,110)	(674,426)

Cash flows from financing activities
Repayment of finance leases		(39,255)	-
Repayment of borrowings		(132,027)	(128,283)
Dividends paid	8	(2,480,000)	(2,020,000)
Interest paid		(83,190)	(41,586)
Net cash outflow from financing activities		(2,734,472)	(2,189,869)

Net increase in cash and cash equivalents		1,445,694	1,449,822

Cash and cash equivalents brought forward		5,125,864	3,676,042
Cash and cash equivalents carried forward	31	6,571,558	5,125,864

Prior year comparatives have been restated due to a change in presentation for the other financial assets only.

The notes form part of these financial statements.

Cake Box Holdings Plc

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2022

		Attributable to the owners of the Parent Company
					As restated		As restated
	Share capital £		Capital redemption reserve £	Share option reserve £	Revaluation reserve £	Retained earnings £	Total £

At 31 March 2020	400,000		40	198,368	1,589,422	7,296,507	9,484,337

Profit for the year	-		-	-	-	3,366,908	3,366,908
Revaluation of freehold property	-		-	-	1,274,901	-	1,274,901
Deferred tax on revaluation of freehold property	-		-	-	(242,231)	-	(242,231)
Total comprehensive income for the year	-		-	-	1,032,670	3,366,908	4,399,578
Transactions with owners in their capacity as owners
Share-based payments	-		-	288,000	-	-	288,000
Deferred tax on share-based payments				2,228			2,228
Dividends paid	-		-	-	-	(2,020,000)	(2,020,000)
At 31 March 2021	400,000		40	488,596	2,622,092	8,643,415	12,154,143

Profit for the year	-		-	-	-	6,311,616	6,311,616
Revaluation of freehold property	-		-	-	1,250,175	-	1,250,175
Deferred tax on revaluation of freehold property	-		-	-	(237,533)	-	(237,533)
Total comprehensive income for the year	-		-	-	1,012,642	6,311,616	7,324,258
Transactions with owners in their capacity as owners
Share-based payments	-		-	(486,368)	-	-	(486,368)
Deferred tax on share-based payments	-		-	(2,228)	-	-	(2,228)
Dividends paid	-		-	-	-	(2,480,000)	(2,480,000)
At 31 March 2022	400,000		40	-	3,634,734	12,475,031	16,509,805

The notes form part of these financial statements.

Cake Box Holdings Plc

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2022

1. General information

Cake Box Holdings Plc is a listed company limited by shares, incorporated and domiciled in England and Wales. Its registered office is 20 - 22 Jute Lane, Enfield, Middlesex, EN3 7PJ.

The financial statements cover Cake Box Holdings Plc ('Company') and the entities it controlled at the end of, or during, the financial year (referred to as the 'Group').

The principal activity of the Group continues to be the specialist retailer of fresh cream cakes and franchise operator.

2. Accounting policies

2.1 Basis of preparation of financial statements

The financial information set out in this statement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. This set of financial results was approved by the Board on 26 June 2022. The financial information for the years ended 31 March 2022 and 31 March 2021 has been extracted from the statutory accounts for each year. The auditors' report on the 2022 statutory accounts was (i) unqualified, (ii) did not include references to any matters to which the auditor drew attention by way emphasis without qualifying its reports and (iii) did not contain statements under section S498(2) or S498(3) of the Companies Act 2006. The audited statutory accounts for the year ended 31 March 2021 have been delivered to the Registrar of Companies.

The consolidated financial statements for the year ended 31 March 2022 have been prepared in accordance with United Kingdom adopted International Financial Reporting Standards (UK Adopted IFRS) and those parts of the Companies Act 2006 that are applicable to companies which apply UK adopted IFRS.

The consolidated financial statements have been prepared under the historical cost convention, other than certain classes of property, plant and equipment.

The numbers presented in the financial statements have been rounded to the nearest pound (£) unless otherwise stated.

Sources of estimation uncertainty

The preparation of financial statements under IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Estimates and assumptions are reviewed on an ongoing basis and any revision to estimates or assumptions are recognised in the period in which they are revised and in future periods affected.

Significant judgements and estimates

The material areas in which estimates, and judgements are applied are as follows:

Provisions - Judgement and Estimate

The Group had previously recognised provisions following a data breach which impacted the Group's website payment system. The provision relates to the fine received by the merchant service provider, and estimated costs associated including potential fines from the ICO in respect to GDPR breaches and associated legal and professional fees. Management use judgement in respect of potential fees and fines and estimates to calculate the quantum of costs.

Freehold property - Judgement

Freehold properties are held at valuation.

2.2 Functional and presentation currency

The currency of the primary economic environment in which the Parent and its subsidiaries operate (the functional currency) is Pound Sterling ("GBP or £") which is also the presentation currency.

2.3 Basis of consolidation

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group 'controls' an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated.

A list of the significant investments in subsidiaries, including the name, country of incorporation and proportion of ownership interest is given in note 29 to the Company's separate financial statements.

2.4 Application of New and Revised IFRS's

In the current year, the Group has applied a number of other amendments to Standards and Interpretations issued by the IASB that are effective for an annual period that begins on or after 1 January 2021. This has not had any material impact on the amounts reported for the current and prior years. These include:

		Effective Date
IFRS 9, IAS 39 & IFRS 7	IBOR (Inter-Bank Offered Rates) Reforms Phase 2	1 January 2021

At the date of authorisation of these financial statements the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective and are not expected to have a material impact on the Group:

		Effective Date
IFRS 3	Amendments References to the Conceptual Framework in IFRS standards.	1 January 2022
IAS 16	Amendments prohibiting a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use.	1 January 2022
IAS 37	Amendments regarding the costs to include when assessing whether a contract is onerous.	1 January 2022
IFRS 1, IFRS 9, IFRS 16 and IAS 41	Annual Improvements to IFRS Standards 2018-2020 (Amendments).	1 January 2022
		Effective Date
IAS 1 & IAS 8	Amendments regarding the disclosure of accounting policies and amendments regarding the definition of accounting estimates.	1 January 2023
IAS 12	Amendments to deferred Tax Related to Assets and Liabilities arising from a Single Transaction.	1 January 2023

2.5 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive directors that make strategic decisions. Whilst the Group trading has numerous components, the chief operating decision maker (CODM) is of the opinion that there is only one operating segment. This is in line with internal reporting provided to the executive directors.

2.6 Going concern

The directors pay careful attention to the cost base of the Group ensuring not only that it is kept at a level to satisfy the commercial requirements but also that it remains appropriate to the level of activity of the Group and the financial resources available to it.

The COVID-19 pandemic has been unprecedented in scale and impact and the directors have taken swift and decisive action to protect customers, colleagues, franchisees, and the communities in which the Group operates, by implementing the necessary steps to safeguard business through the crisis, in line with UK Government guidelines.

The current cash balance has increased by £0.2m to £6.8m, the Group continues to be cash generative.

Based on the current working capital forecast, there is no need to raise additional funds as the Group considers that they are in a position where the scenario of not meeting liabilities is remote. After making enquiries and considering the assumptions upon which the forecasts have been based, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the period of at least twelve months from the date of approval of these financial statements. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

2.7 Revenue recognition

The Group recognises revenue from the following major sources:

· Sale of sponges, fresh cream and other goods to franchisees

· Online sales of cakes and related products to customers;

· Franchise package

Sale of sponges and related ingredients to franchisees

For sales of goods to franchisees, revenue is recognised when control of the goods has transferred, being at the point at which the goods are dispatched. Payment of the transaction price is due within 14 days after delivery. The Group actively works with its franchisees to ensure credit terms are met and if terms are required to be extended a suitable debt recovery plan is agreed. It is considered highly unlikely that an impairment would ever be required.

Online sales of cakes and related products to customers

Online sales which include click and collect sales where the franchisee has the primary responsibility for the fulfillment of the order and the Group is collecting consideration on behalf of the franchisee as agent are not recognised as revenue of the Group. Only the net commission amount is recognised. Revenue is recognised at the date of order and payment is taken at this point.

Franchise package

The franchise package consists of up-front revenues which relate to pre and post-opening costs mainly for store fit-out; and initial set up costs to cover site selection,pre opening support, and franchisee and staff training Each part is considered distinct.

The pre and post-opening costs are required to get the new franchisee trading and are therefore recognised at a point in time which is at the end of the month in which trading commenced. Each package is tailored to a specific franchisee's needs and elements can be added or removed as appropriate which will affect the price. Each element carries its own price.

2.8 Current and deferred taxation

Current tax liabilities

Current tax for the current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of the current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset, limited to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.

A provision is recognised for those matters for which the tax determination is uncertain, but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable.

No material uncertain tax positions exist as at 31 March 2022. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact income tax expense in the period in which such determination is made.

Current taxes are calculated using tax rates and laws that are enacted or substantively enacted at the reporting date.

Deferred Tax

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and their corresponding tax bases (known as temporary differences). Deferred tax liabilities are recognised for all temporary differences that are expected to increase taxable profit in the future. Deferred tax assets are recognised for all temporary differences that are expected to reduce taxable profit in the future, and any unused tax losses or unused tax credits, limited to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.

The net carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to reflect the current assessment of future taxable profits. Deferred tax is calculated at the tax rates that are expected to apply to the taxable profit (tax loss) of the periods in which it expects the deferred tax asset to be realised or the deferred tax liability to be settled.

Deferred taxes are calculated using tax rates and laws that are enacted or substantively enacted at the reporting date that are expected to apply as or when the temporary differences reverses.

Tax Expense

Income tax expense represents the sum of the tax currently payable and deferred tax movement for the current period. The tax currently payable is based on taxable profit for the year.

Income taxes are recognised in profit or loss unless they relate to items recognised in other comprehensive income or equity, in which case the income tax is recognised in other comprehensive income or equity respectively.

2.9 Tangible fixed assets - held at cost

Property, plant and equipment, other than investment and freehold properties, are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Land is not depreciated. Depreciation on other assets is charged to allocate the cost of assets less their residual value over their estimated useful lives, using the straight‑line method.

Depreciation is provided on the following annual basis:

Freehold property & improvements	-	Over 4 to 50 years
Plant & machinery	-	25% Straight-line method
Motor vehicles	-	25% Straight-line method
Fixtures & fittings	-	25% Straight-line method
Assets under construction	-	Not depreciated

Assets under the course of construction are carried at cost less any recognised impairment loss. Depreciation of these assets commences when the assets are ready for their intended use.

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the profit or loss.

2.10 Tangible fixed assets - held at valuation

Individual freehold properties are carried at fair value at the date of the revaluation less any subsequent accumulated impairment losses. Revaluations are undertaken with sufficient regularity to ensure the carrying amount does not differ materially from that which would be determined using fair value at each Consolidated Statement of Financial Position date.

Fair values are determined by an independent valuer and updated by the directors from market-based evidence.

Revaluation gains and losses are recognised in Other Comprehensive Income unless losses exceed the previously recognised gains or reflect a clear consumption of economic benefits, in which case the excess losses are recognised in the profit or loss.

2.11 Inventories

Inventories are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis.

2.12 Financial instruments

Recognition of Financial Instruments

Financial assets and financial liabilities are recognised when the Group becomes party to the contractual provisions of the instrument.

Trade and other receivables

Trade and other receivables without a significant financing component are initially measured at transaction price. All sales are made on the basis of normal credit terms, and the receivables do not bear interest. Where credit is extended beyond normal credit terms, receivables are measured at amortised cost using the effective interest method. At the end of each reporting period, the carrying amounts of trade and other receivables are reviewed. Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within cost of sales in the Consolidated Statement of Comprehensive Income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Other financial assets - Loans to franchisees

Other financial assets are initially measured at fair value and subsequently at amortised cost. At the end of each reporting period, the carrying amounts of other financial assets are reviewed on an individual balance basis and appropriate impairments is made if required.

Trade and other payables

Trade and other payables are initially measured at fair value and subsequently at amortised cost. Trade payables are obligations on the basis of normal credit terms and do not bear interest. Trade payables denominated in a foreign currency are translated into Sterling using the exchange rate at the reporting date. Foreign exchange gains or losses are included in other income or other expenses.

Bank loans and overdrafts

All borrowings are initially recorded at fair value, net of transaction costs. Borrowings are subsequently carried at amortised cost under the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

2.14 Finance costs

Finance costs are charged to the Consolidated Statement of Comprehensive Income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

2.15 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and deposits with maturities of three months or less from inception, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

2.16 Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an Annual General Meeting.

2.17 Leases

The Group assesses whether a contract is, or contains, a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease.

Lease payments included in the measurement of the lease liability comprise:

· Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;

· Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;

· The amount expected to be payable by the lessee under residual value guarantees;

· The exercise price of purchase options if the lessee is reasonably certain to exercise the options;

· Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease

The lease liability is presented as a separate line in the Consolidated Statement of Financial Position.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease

liability (at a constant rate) and by reducing the carrying amount to reflect the lease payments made.

The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:

· The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate;

· The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using a revised discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used);

· A lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

The Group did not make any such adjustments during the periods presented.

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments

made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under IAS 37. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the right-of-use asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.

The right-of-use assets are presented as a separate line in the consolidated statement of financial position. The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the 'Property, Plant and Equipment' policy.

2.18 Employee benefits

Short Term Employee Benefits

The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as leave pay and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.

Defined contribution pension plan

The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

The contributions are recognised as an expense in the profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Consolidated Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.

Termination benefits

The entity recognises the expense and corresponding liability for termination benefits when it is demonstrably committed to either of the following scenarios:

a. The termination of the employment of an employee or group of employees before the normal retirement age, or

b. The provision of termination benefits in relation to an offer made to encourage voluntary redundancy.

The value of such benefit is measured at the best estimate of the expenditure required to settle the obligation at the reporting date.

2.19 Provisions and contingencies

Provisions are recognised when the Group has an obligation at the reporting date as a result of a past event; it is probable that the Group will be required to transfer economic benefits in settlement; and the amount of the obligation can be estimated reliably.

Provisions are measured at the present value of the amount expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks to a specific obligation. The increase in the provision due to the passage of time is recognised as interest expense.

Provisions are not recognised for future operating losses.

Contingent assets and contingent liabilities are not recognised.

2.20 Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

2.21 Research and development

Research and development expenditure is charged to the Consolidated Statement of Comprehensive Income in the year in which it is incurred. The expenditure does not meet the definition of 'Development' under IAS 38.

2.22 Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

2.23 Share based payment

Where share options are awarded to employees, the fair value of the options (measured using the Black-Scholes model) at the date of grant is charged to the Statement of Comprehensive Income over the vesting period. Non-market vesting conditions are considered by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

The fair value of the award also considers non-vesting conditions. These are either factors beyond the control of either party or factors which are within the control of one or another of the parties. Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.

Lapsed share options are derecognised as soon as it known that vesting conditions will not be met. Previous charges to the Statement of Comprehensive Income are credited back to this statement.

2.24 Exceptional items

Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence.

3. Segment reporting

Components reported to the chief operating decision maker (CODM) are not separately identifiable and as such consider there to be one reporting segment. The Group makes varied sales to its customers but none are a separately identifiable component. The following information is disclosed:


	2022	2021
	£	£
Sales of sponge	12,301,051	8,199,509
Sales of food	5,479,076	3,542,798
Sales of fresh cream	3,442,619	2,419,431
Sales of other goods	7,023,665	4,581,678
Online sales commission	937,640	470,499
Franchise packages	3,780,795	2,696,947

	32,964,846	21,910,862

All revenue occurred in the United Kingdom for both financial years.

The operating segment information is the same information as provided throughout the consolidated financial statements and is therefore not duplicated.

The Group was not reliant upon any major customer during 2022 or 2021.

4. Expenses by nature

The Administrative expenses have been arrived at after charging/(crediting):



	2022	2021
	£	£
Wages and salaries	5,302,849	3,702,499
Travel and entertaining costs	372,303	210,587
Supplies costs	293,620	233,258
Professional costs	839,897	538,533
Depreciation	853,633	670,333
Amortisation of right-of-use assets	124,975	-
Rates and utilities costs	307,200	294,292
Property maintenance costs	338,817	193,607
Advertising costs	312,907	317,154
Other costs	48,212	38,718
Exceptional items (see note 10)	(781,965)	486,319

	8,012,448	6,685,300

5. Operating profit

The operating profit is stated after charging/(crediting):

		As restated
	2022	2021
	£	£
Depreciation of tangible fixed assets	853,633	670,333
Amortisation of right-of-use asset	124,975	-
Stock recognised as an expense	17,133,685	10,978,933
Profit on disposal of property, plant & equipment	(13,154)	(18,972)
Research and development charged as an expense	-	215,555
Fees payable to the Group's auditor and its associates for the audit of the Group's annual financial statements	75,000	87,000
Fees payable to the Group's auditor and its associates for the audit of the Group's interim financial statements	-	7,500
Share based payment (credit)/expense	(486,368)	288,000

The comparative figure for 'Stock recognised as an expense' has been corrected to represent the true value.

6. Net finance costs

	2022	2021
Finance expenses	£	£
Bank loan interest	33,971	35,771
Finance lease interest	46,228	-
Interest on overdue tax	2,991	5,615

Finance income
Bank interest receivable	(1,802)	(4,087)

	81,388	37,299

7. Staff costs

Staff costs, including directors' remuneration, were as follows:

	2022	2021
	£	£
Wages and salaries	4,737,683	3,055,008
Social security costs	456,259	287,875
Pension costs	56,798	42,080
Private health	52,109	29,536
Share-based payment expense	-	288,000
	5,302,849	3,702,499

Reversal of share-based payment expense (note 10)	(486,368)	-

	4,816,481	3,702,499

The average monthly number of employees, including directors, for the year was 155 (FY21 - 107). The breakdown by department is as follows;


	2022	2021
	£	£
Directors	7	7
Admin	31	24
Maintenance	17	11
Production & Logistics	100	65

	155	107

8. Dividends

	2022	2021
	£	£
Interim dividend of 1.85 per ordinary share	-	740,000
Final dividend of 3.2p per ordinary share proposed and paid during the year relating to the previous year's results	-	1,280,000
Interim dividend of 2.5 per ordinary share	1,000,000	-
Final dividend of 3.7p per ordinary share proposed and paid during the year relating to the previous year's results	1,480,000	-

	2,480,000	2,020,000

Since the year end the Directors recommend payment of a dividend of 5.1 pence (FY21 - 3.7 pence) per share totalling £2,040,000 (2021 - £1,480,000) for the year ended 31 March 2022.

During the end-of-year audit process, the Board became aware of an issue concerning technical compliance with the Companies Act 2006 in relation to past dividend payments. Although there were sufficient distributable reserves and cash held in the Group which could have been distributed, dividends were declared at a time when the Group's holding company itself, Cake Box Holdings plc, did not hold adequate distributable reserves by reference to its last set of annual accounts. The Group's historic reported trading results and financial condition are entirely unaffected.

The Board proposes to put resolutions to Shareholders at the time of the 2022 Annual General Meeting to address this past issue.

9. Directors' remuneration and key management personnel

The Directors' remuneration is disclosed within the Directors' Remuneration Report in the Group's Annual Report & Accounts. The Executive Directors are considered key management personnel. Employers NIC paid on Directors' remuneration in the year was £114,388 (FY21 - £62,287).

10. Exceptional items


	2022	2021
	£	£
Website data breach (note 23)	-	486,319
Lapse of share options (note 20)	(486,368)	-
Reversal of accrued rates	(295,597)	-

	(781,965)	486,319

Rates and utilities costs includes a credit of £295,597 related to an accrual raised in a previous year, which has been released on the basis the directors have received confirmation it is no longer required. Please see relevant notes for further information on the website data breach and lapse of share options.

11. Taxation

	2022	2021
	£	£
Corporation tax
Current tax on profits for the year	1,340,469	900,406
Adjustments in respect of previous periods	(838)	1,536

Deferred tax
Arising from origination and reversal of temporary differences	86,078	(59,580)

Taxation on profit on ordinary activities	1,425,709	842,362

Factors affecting tax charge for the year

The tax assessed for the year is lower than (FY21 - higher than) the standard rate of corporation tax in the UK of 19% (FY21 - 19%). The differences are explained below:

	2022	2021
	£	£
Profit on ordinary activities before tax	7,737,325	4,209,270

Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (FY21 - 19%)	1,470,092	799,761
Effects of:
Expenses not deductible for tax purposes, other than goodwill amortisation and impairment	11,700	95,115
Income not taxable	(22,267)	-
Deferred tax not provided	22	-
Use of super deduction allowance	(33,808)	-
Adjustment in research and development tax credit leading to a decrease in the tax charge	-	(53,242)
Difference in tax rates used within share-based payments	808	(808)
Adjustments to tax charge in respect of prior periods	(838)	1,536

Total tax charge for the year	1,425,709	842,362

Factors that may affect future tax charge

At the Budget 2021 on 3 March 2021, the Government announced that the Corporation Tax rate will increase to 25% for companies with profits above £250,000 with effect from 1 April 2023, as well as announcing a number of other changes to allowances and treatment of losses.

12. Deferred taxation

		As restated
	2022	2021
	£	£

Balance brought forward	675,227	494,805

Charged to other comprehensive income:
Deferred tax on revalued freehold property	237,533	242,231

Charged directly to reserves:
Employee benefits (including share-based payments)	2,228	(2,228)

Charged to profit and loss:
Accelerated capital allowances	(7,557)	(3,715)
Share -based payments	93,219	(55,529)
Other short-term timing differences	(1,820)	(337)

Balance carried forward	998,830	675,227


	2022	2021
	£	£
Deferred tax liabilities
Accelerated capital allowances	189,704	197,261
Other short-term timing differences	(3,571)	(1,751)
Property revaluations (including indexation)	812,697	575,164
	998,830	770,674

Deferred tax assets
Employee benefits (including share-based payments)	-	(95,447)

	998,830	675,227

Movements in deferred tax in direct relation to freehold property revaluation are recognised immediately against the revaluation reserve.

See note 20 for more information for restated comparatives.

13. Property, plant and equipment

	As restated
	Assets under construction	Freehold property & Improvements	Plant & machinery	Motor vehicles	Fixtures & fittings	Total
	£	£	£	£	£	£
Cost or valuation
At 1 April 2020	1,038,177	4,786,703	985,449	601,030	1,657,638	9,068,997
Additions	82,396	115,206	88,295	146,005	273,057	704,959
Disposals	-	-	-	(44,165)	-	(44,165)
Revaluations	-	1,274,901*	-	-	-	1,274,901
At 31 March 2021	1,120,573	6,176,810	1,073,744	702,870	1,930,695	11,004,692

Depreciation
At 1 April 2020	-	70,539	648,033	303,263	847,613	1,869,448
Charge for the year	-	116,704	138,766	132,471	282,392	670,333
Disposals	-	-	-	(36,691)	-	(36,691)
At 31 March 2021	-	187,243	786,799	399,043	1,130,005	2,503,090

Net book value
At 31 March 2021	1,120,573	5,989,567	286,945	303,827	800,690	8,501,602

	Assets under construction	Freehold property & Improvements	Plant & machinery	Motor vehicles	Fixtures & fittings	Total
	£	£	£	£	£	£
Cost or valuation
At 1 April 2021	1,120,573	6,176,810	1,073,744	702,870	1,930,695	11,004,692
Additions	-	555,446	107,697	373,516	97,267	1,133,926
Disposals	-	-	-	(43,910)	-	(43,910)
Transfers between classes	(1,120,573)	1,120,573	-	-	-	-
Revaluations	-	1,250,175	-	-	-	1,250,175
At 31 March 2022	-	9,103,004	1,181,441	1,032,476	2,027,962	13,344,883

Depreciation
At 1 April 2021	-	187,243	786,799	399,043	1,130,005	2,503,090
Charge for the year	-	236,353	84,866	180,840	351,574	853,633
Disposals	-	-	-	(41,049)	-	(41,049)
At 31 March 2022	-	423,596	871,665	538,834	1,481,579	3,315,674

Net book value
At 31 March 2022	-	8,679,408	309,776	493,642	546,383	10,029,209

Assets under construction became operational during the year.

* During the year the Directors expanded the freehold property column in the fixed assets note to include property improvement costs which were previously included in fixtures and fittings in order to provide more clarity. This included a revaluation of freehold properties as detailed in note 20. Prior year comparatives have been restated.

As at 31 March 2022, all freehold property was valued by independent 3rd party qualified valuers, in accordance with the RICS Valuation - Global Standards 2017 (the Red Book). The directors believe these valuations to be representative of the fair value as at the balance sheet date.

The fair value of freehold property is categorised as a level 3 recurring fair value measurement.

The following table summarises the quantitative information about the significant unobservable inputs used in recurring level 3 fair value measurements:

Property	Fair value at 31 March 2022 £	Valuation technique	Sq ft	Rate per sq ft
				Min	Max	Average
Enfield	7,000,000	Vacant possession	39,121	125	250	179
Coventry	1,080,000	Vacant possession	13,000			83
Bradford	525,000	Vacant possession	9,358			56
Improvements at Mollison	74,408	Net book value	n/a	n/a	n/a	n/a
Total	8,679,408

If the Freehold properties had been accounted for under the historic cost accounting rules, the properties would have been measured as follows:
	2022	2021
	£	£

Historic cost	3,433,746	2,442,744

14. Leases

The Consolidated Statement of Financial Position shows the following amounts in relation to leases:

						Properties
						£
Cost
At 1 April 2021						-
Additions						2,999,405
At 31 March 2022						2,999,405

Depreciation
At 1 April 2021						-
Charge for the year						124,975
At 31 March 2022						124,975

Net book value
At 31 March 2022						2,874,430

Additions relate to the lease of a new property undertaken in the year.

The group leases one property and the term is ten years. There are no variable lease payments or commitment to short term leases.

Lease liabilities	2022	2021
	£	£

Current	260,191	-
Non-current	2,699,958	-

	2,960,149	-

The Group's obligations are secured by the lessor's title to the leased assets for such leases.

Amounts recognised in the Consolidated Statement of Comprehensive Income are as follows:

	2022	2021
	£	£

Depreciation expense of right-of-use assets	124,975	-
Interest expense on lease liabilities	46,228	-

The total cash outflow for leases amount to £85,483 (FY21 - £Nil).

15. Inventories

Inventories are charged to cost of sales in the Consolidated Statement of Comprehensive Income.

16. Trade and other receivables

	2022	2021
	£	£

Trade receivables	2002,807	2,041,673
Other receivables	280,613	17,147
Prepayments	269,789	431,397

	2,553,209	2,490,217


Current	2,553,209	2,490,217

	2,553,209	2,490,217

The fair value of those trade and other receivables classified as financial assets at amortised cost are disclosed in the financial instruments (note 26).

The Group's exposure to credit and market risks, including impairments and allowances for credit losses, relating to trade and other receivables is disclosed in the financial risk management and impairment of financial assets note(note 27).

17. Other financial assets

	2022	2021
	£	£

Loans to franchisees	1,067,607	1,038,812

	1,067,607	1,038,812


Non-current	710,059	656,004
Current	357,548	382,808

	1,067,607	1,038,812

Loans are interest free and payable in equal monthly instalments. All non-current assets are due within five years of the statement of financial position date. The carrying amount of the loans is considered to be equal to their fair value.

18. Share capital

	2022	2021
	£	£

40,000,000 Ordinary shares of £0.01 each	400,000	400,000

All of the ordinary shares of £0.01 each carry voting rights, the right to participate in dividends, and entitle the shareholders to a pro-rata share of assets on a winding up.

19. Reserves

The following describes the nature and purpose of each reserve within equity:

Capital redemption reserve

Amounts transferred from share capital on redemption of issued shares.

Revaluation reserve

Gain/(losses) arising on the revaluation of the Group's property (other than investment property).

Retained earnings

All other net gains and losses and transactions with owners (e.g., dividends, fair value movements of investment property) not recognised elsewhere.

Share option reserve

Gains/losses arising on amounts in respect of equity-settled share options outstanding. See note 21 for more information.

20. Prior Period Adjustment

During the year it was discovered that an uplift in fair value of freehold properties was not properly reflected in the financial statements in the prior year. This has been corrected in the financial statements.

The following financial statements were affected as a result:

Extract of Consolidated Statement of Comprehensive Income

	As previously reported	Adjustment to fair value of properties	Restated

Profit after income tax	3,366,908	-	3,366,908

Other comprehensive income for the year
Revaluation of freehold property	24,901	1,250,000	1,274,901
Deferred tax on revaluation of freehold property	(4,731)	(237,500)	(242,231)
Total other comprehensive income for the year	20,170	1,012,500	1,032,670

Total comprehensive income for the year	3,387,078	1,012,500	4,399,578

Extract of Consolidated Statement of Financial Position

	As previously reported	Adjustment to fair value of properties	Restated

Property, plant and equipment	7,251,602	1,250,000	8,501,602
Total Assets	8,003,053	1,250,000	9,253,053


Revaluation reserve	1,609,592	1,012,500	2,622,092
Equity Attributable to the owners of the Parent Company	1,609,592	1,012,500	2,622,092


Deferred tax liabilities	533,174	237,500	770,674
Total Equity and Liabilities	17,904,113	237,500	19,154,113

There is no impact on the Group's basic or diluted earnings per share and no impact on the total operating, investing or financing cash flows for the years ended 31 March 2021 or 2022.

21. Share-Based Payments

The Group operates two equity-settled share-based remuneration schemes for certain employees at management and executive director level: A United Kingdom tax authority approved scheme for senior managers and an executive director and an unapproved scheme for executive directors. The main vesting condition for senior managers is aggregated EBITDA reaching £19 million by the third anniversary of the date of the grant. The main vesting condition for the executive director is aggregated Earnings Per Share reaching a minimum of 36.41p by the third anniversary of the date of the grant on which 30% will be exercisable. This increases by 0.0963% for every penny over the minimum level. The individuals must remain employees of the Group over the 3 or 4 year period. Under the unapproved scheme, options vest on the same basis as the approved scheme for the executive director. In addition, the options will lapse 10 years after the grant date.

	2022	2022	2021	2021
	Weighted average exercise price (pence)	Number	Weighted average exercise price (pence)	Number

Outstanding as at 1 April	64	688,400	64	688,400
Lapsed during the year	(64)	(688,400)	-	-
Outstanding as at 31 March	-	-	64	688,400

No share options were granted, forfeited, or exercised during current or prior year. The share options lapsed during the year as the vesting conditions were not met.

22. Borrowings

	2022	2021
	£	£
Non-current borrowings
Bank loans	1,185,978	1,318,005

	1,185,978	1,318,005

Current borrowings
Bank loans	167,754	167,754

	167,754	167,754

Bank loans have fixed charges over the properties to which they relate and interest of 2.15% - 2.23% above Bank of England base rate are charged on the loans. The loans are repayable in monthly instalments with final payments due between March 2024 and November 2025.

23. Trade and other payables

	2022	2021
	£	£

Trade payables	1,994,411	2,495,741
Other taxation and social security	340,035	242,473
Other payables	36,497	21,099
Accruals	290,429	594,436

	2,661,372	3,353,749

The fair value of the trade and other payables classified as financial instruments are disclosed in the financial instruments (note 27).

The Group's exposure to market and liquidity risks related to trade and other payables is disclosed in the financial risk management and impairment of financial assets note. The Group pays its trade payables on terms and as such trade payables are not yet due at the statement of financial position dates.

24. Provisions

The provision represents a website data breach in 2020. The amount remaining represents potential fines in respect of the website data breach and is based upon independent legal advice.

						Website data breach
						£

Carrying amount at the start of the year						486,319
Reversed during the year						(243,219)

Carrying amounts at the end of the year						243,100

25. Pension commitments

The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £56,798 (FY21 - £42,080). Contributions totalling £19,890 (FY21 - £10,089) were payable to the fund at the statement of financial position date and are included in other payables (see note 23).

26. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. Related party transactions are considered to be at arms-length.

Details of amounts paid to key management personnel which includes executive and non-executive directors are included within note 9 and the Directors Remuneration Report in the Group's Annual Report & Accounts.

Key management personnel had an interest in dividends as follows:

	2022	2021
	£	£

Sukh Chamdal	792,851	645,790
Pardip Dass	133,995	196,719
Jaswir Singh	34,473	28,079
Neil Sachdev	1,148	935
Alison Green	222	-
	962,689	871,523

During the year the Group made sales to companies under the control of the directors. All sales were made on an arms-length basis. These are detailed as follows with director shareholding % shown in brackets:

Mr. Sukh Chamdal	2022		2021
	£	£	£	£
	Sales	Balance	Sales	Balance
Cake Box (Crawley) Limited (0%)	168,684	11,095	111,825	2,639
Cake Box CT Limited (0%)	280,706	19,326	222,752	20,157
Cake Box (Strood) Limited (0%)	157,247	2,241	147,985	3,361
Cake Box (Gravesend) Limited (0%)**	-	-	123,162	(1,021)

	606,637	32,662	605,724	25,136

* 100% Owned by Mr. Chamdal's daughter

** This store no longer considered a related party

Mr. Pardip Dass	2022		2021
	£	£	£	£
	Sales	Balance	Sales	Balance
Eggfree Cake Box Barking Limited (30%)	250,382	6,803	242,150	2,840

	250,382	6,803	242,150	2,840

Dr Jaswir Singh	2022		2021
	£	£	£	£
	Sales	Balance	Sales	Balance
Luton Cake Box Limited (10%)	419,676	15,544	361,150	7,563
Peterborough Cake Box Limited (30%)	258,807	5,983	219,363	10,227
Cream Cake Limited (30%)	230,591	12,971	171,051	6,107
MK Cakes Limited (0%)***	292,202	10,532	218,676	(3,578)
Bedford Cake Box Limited (0%)***	199,553	5,436	145,883	1,432
Chaz Cakes Limited (50%)	266,563	6,446	161,371	1,231
Eggless Cake Company (50%)	194,201	9,366	165,623	2,698

	1,861,593	66,278	1,443,117	25,680

*** 100% owned by Dr Singh's son or daughter

27. Financial instruments

The Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

The significant accounting policies regarding financial instruments are disclosed in note 2.

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous years unless otherwise stated in this (See note 87).

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

Financial Assets
	Held at amortised cost
	2022	2021
	£	£

Cash and cash equivalents	6,571,558	5,125,864
Trade and other receivables	2,116,254	2,058,820
Other financial assets	1,067,607	1,038,812

	9,755,419	8,223,496

Financial Liabilities
	Held at amortised cost
	2022	2021
	£	£

Trade and other payables	2,584,437	3,111,275
Secured Borrowings	1,353,732	1,485,759

	3,938,169	4,597,034

28. Financial risk management

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, while retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's finance function. The board receives regular reports from the Chief Financial Officer through which it reviews the effectiveness of processes put in place and the appropriateness of the objectives and policies it sets.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:

Credit risk and impairment

Credit risk arises principally from the Group's trade and other receivables. It is the risk that the counter party fails to discharge its obligation in respect of the instrument. The maximum exposure to credit risk equals the carrying value of these items in the financial statements as the Group has the power to stop supplying the customer until payment is received in full.

Definition of default

The loss allowance on all financial assets is measured by considering the probability of default.

Receivables are considered to be in default when the principal or any interest is more than 90 days past due, based on an assessment of past payment practices and the likelihood of such overdue amounts being recovered.

Determination of credit-impaired financial assets

The Group considers financial assets to be 'credit-impaired' when the following events, or combinations of several events, have occurred before the year-end:

• significant financial difficulty of the counterparty arising from significant downturns in operating results and/or significant unavoidable cash requirements when the counterparty has insufficient finance from internal working capital resources, external funding and/or group support;

• a breach of contract, including receipts being more than 240 days past due;

• it becoming probable that the counterparty will enter bankruptcy or liquidation.

Write-off policy

Receivables are written off by the Company when there is no reasonable expectation of recovery, such as when the counterparty is known to be going bankrupt, or into liquidation or administration. Receivables will also be written off when the amount is more than 300 days past due and is not covered by security over the assets of the counterparty or a guarantee.

Impairment of trade receivables and other financial assets

The Group calculates lifetime expected credit losses for trade receivables and other financial assets using a portfolio approach. All items are grouped based on the credit terms offered and the type of product sold. The probability of default is determined at the year-end based on the aging of the receivables and historical data about default rates on the same basis. That data is adjusted if the Group determines that historical data is not reflective of expected future conditions due changes in the nature of its customers and how they are affected by external factors such as economic and market conditions.

In accordance with IFRS 9, the Group performed a year end impairment exercise to determine whether any write down in amounts receivable was required, using an expected credit loss model. The expected loss rate for receivables including other financial assets is 0% on the basis of the Group's history of bad debt write offs.

As at 31 March 2022, the total loss allowances against the Group's financial assets were immaterial and no charge to the income statement was recognised.

Liquidity risk

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due.

The Board receives cash flow projections on a regular basis which are monitored regularly. The Board will not commit to material expenditure in respect of its ongoing development programme prior to being satisfied that sufficient funding is available to the Group to finance the planned programmes.

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:

Borrowings
	2022	2021
	£	£

Borrowings - Due within one year	167,754	167,754
Borrowings - Due between one to two years	167,754	167,754
Borrowings - Due between two to five years	1,018,224	1,150,251

	1,353,732	1,485,759

Right-of-use assets - Due within one year	260,191	-
Right-of-use assets - Due between one to two years	270,119	-
Right-of-use assets - Due between two to five years	873,777	-
Right-of-use assets - Due after more than five years	1,556,062
	2,960,149	-

Trade and other payables
	2022	2021
	£	£

0 to 30 Days	2,049,774	2,364,512
30 to 60 Days	249,613	447,476
60 to 90 Days	17,646	41,348
90 to 120 Days	73,891	40,300
120 Days to 1 year	193,513	217,639

	2,584,437	3,111,275

Interest rate risk

The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining good relationships with banks and other lending providers and by ensuring cash reserves are high enough to cover the debt. Where possible fixed terms of interest will be sought.

The Group analyses the interest rate exposure on a regular basis. A sensitivity analysis is performed by applying a simulation technique to the liabilities that represent major interest-bearing positions. Various scenarios are run taking into consideration refinancing, renewal of the existing positions, alternative financing and hedging. Based on the simulations performed, the impact on profit or loss and net assets of a 25 basis-point shift (being the maximum reasonable expectation of changes in interest rates) would be a change of £3,384 (FY21 - £3,714).

Capital risk management

The Group considers its capital to comprise its ordinary share capital and retained profits as its equity capital. In managing its capital, the Group's primary objective is to provide return for its equity shareholders through capital growth and future dividend income. The Group's policy is to seek to maintain a gearing ratio that balances risks and returns at an acceptable level and also to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims, either through new share issues or the issue of debt, the Group considers not only its short-term position but also its long-term operational and strategic objectives.

Details of the Group's capital are disclosed in the Consolidated Statement of Changes in Equity.

There have been no other significant changes to the Group's management objectives, policies and procedures in the year nor has there been any change in what the Group considers to be capital.

Currency risk

The Group is not exposed to any significant currency risk. The Group manages any currency exposure by retaining a small holding in US Dollars however all other cash balances are held in Sterling.

29. Post statement of financial position events

Post year end the directors have recommended dividends of 5.1p per share (FY21 - 3.7p per share).

30. Subsidiary undertakings

The following were subsidiary undertakings of the Company included in the Group results:

Name

Country of
incorporation

Class of shares

Holding

Principal activity

Eggfree Cake Box Limited

United Kingdom

Ordinary

100%

Franchisor of specialist cake stores

Chaz Limited

United Kingdom

Ordinary

100%

Property rental company

The above subsidiaries have the same registered office address as Cake Box Holdings Plc.

31. Notes supporting statement of cashflows

Cash and cash equivalents for the purposes of the statement of cashflows comprise of:

	2022	2021
	£	£

Cash at bank available on demand	6,570,739	5,123,796
Cash on hand	819	2,068

	6,571,558	5,125,864

There were no significant non-cash transactions from financing activities (FY21 - none).

Non-cash transactions from financing activities are shown in the reconciliation of liabilities from financing transactions below:

	Non-current lease liabilities £	Current lease liabilities £	Non-current borrowings £	Current borrowings £	Total £
As at 1 April 2020	-	-	1,446,288	167,754	1,614,042
Cash flows
Repayments	-	-	-	(167,754)	(167,754)
Non-Cash flows:
Interest	-	-	39,471	-	39,471
Non-current liabilities becoming current during the year	-	-	(167,754)	167,754	-
As at 31 March 2021	-	-	1,318,005	167,754	1,485,759
Cash flows
New leases	2,999,405	-			2,999,405
Repayments	(85,484)	-	-	(167,754)	(253,238)
Non-Cash flows:
Interest	46,228	-	35,727	-	81,955
Non-current liabilities becoming current during the year	(260,191)	260,191	(167,754)	167,754	-

As at 31 March 2022	2,699,958	260,191	1,185,978	167,754	4,313,881

32. Ultimate controlling party

The Group considers there is no ultimate controlling party.

32. Earnings per share

	2022	2021
	£	£

Profit after tax attributable to the owners of Cake Box Holdings Plc	6,311,616	3,366,908

	Number	Number
Weighted average number of ordinary shares used in calculating basic earnings per share	40,000,000	40,000,000

Weighted average number of ordinary shares used in calculating diluted earnings per share	40,000,000	40,000,000

	Pence	Pence
Basic earnings per share	15.78	8.42
Diluted earnings per share	15.78	8.42

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