Interim Results

RNS Number : 2240G
Cake Box Holdings PLC
14 November 2022
 

Cake Box Holdings plc

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

 

Unaudited Half Year Results for the six months ended 30 September 2022

 

Revenue growth against strong comparative period, continued investment in infrastructure whilst maintaining a

strong cash position

 

Cake Box Holdings plc, the specialist retailer of fresh cream cakes, today announces its half year results for the six months ended 30 September 2022.

 

Sukh Chamdal, Chief Executive Officer, commented

 

"Although revenue increased, trading in the first half of the period was against a very strong comparative period last year, and was impacted by exceptionally hot weather which went on for a far longer period than normal. In addition, higher levels of international travel in July and August, were coupled with the rising cost of living and inflation. Once the summer holiday period finished, we began to see a recovery in our sales, alongside the continued growth of our franchise store estate.

 

Encouragingly, the improvement in trading seen towards the end of the half year has continued into October. Whilst the Board remains cautious in light of the uncertain economic climate and the unpredictability in consumer spending, the Group's current trading is on track to achieve full year market expectations.

 

Longer term, the Board is confident in Cake Box's significant potential, underpinned by its attractive customer and franchisee proposition and bolstered by ongoing investment in the Group's functions and capabilities, and a strengthened leadership team."

 

Financial Highlights

 

 

Half year

Half year

Change1

 

ended

ended

 

 

30 September 2022

30 September 2021

 

Revenue

£16.8m

£16.5m

2.1%

Gross profit

£8.0m

£7.6m

5.5%

EBITDA*

£2.8m

£4.1m

(32.4%)

Pre-tax profit

£2.0m

£3.7m

(45.1%)

Net cash

£4.2m

£4.1m

1.2%

Cash at Bank

£5.5m

£5.6m

(2.0%)

Earnings per share

3.72p

7.46p

(50.0%)

Interim dividend

2.625p

2.5p

5.0%

 

1 Change % is calculated on the figures included in consolidated statement of comprehensive income and consolidated statement of financial position

* EBITDA is calculated as operating profit before depreciation and amortisation

 

· Group revenues up 2.1% to £16.8m (H1 FY22: £16.5m)

Sustained recovery in trading towards the end of the period against a very strong comparative, with like-for-like1 sales growth of 3.6% in September

· Gross margins increased to 47.7% (H1 FY22: 46.2%) despite input cost increases

· Reduction in EBITDA and pre-tax profit, reflects the previously reported challenging trading environment in H1, cost pressures and increased investment in the business

· Continued balance sheet strength with net cash increasing to £4.2m (H1 FY22: £4.1m)

· Interim dividend up 5% at 2.625p reflecting the Group's progressive dividend policy and continued cash generation despite continued investment in infrastructure to underpin future growth

 

Operational highlights

 

· 196 franchise stores in operation at 30 September 2022 (30 September 2021: 174)

· 11 new franchise stores added in the period (H1 FY22: 20 new franchise stores)

· Significant investment in production and distribution assets to improve efficiency

· Managing cost pressures, particularly though established supplier relationships

 

Franchise store highlights

 

· Like-for-like sales slight decline of 1.1% in the period against very strong comparative period

· Franchisee store sales in the period, up 7.9% to £31.8m (H1 FY22: £29.5m)

· Franchisee total sales including kiosks in the period up 9.9% to £34.7m (H1 FY22 £31.6m)

· Despite the lifting of lockdown last year, Franchisee online sales have been maintained at £6.7m (H1 FY22: £6.7m)

· Number of kiosks at 30 September 2022 is 33, with an increase in the number of supermarket kiosks to 20 (H1 FY22: 7 supermarket kiosks and 15 supermarket kiosks at 31 March 2022)

· Number of multi-site franchisees has increased to 43 (H1 FY22: 40)

 

Current trading and outlook

 

· Trading has improved post summer, with franchise sales up like-for-like 4.6% and online sales increasing 6.8% in October versus last year

· Whilst macro-economic challenges continue and consumer spending is likely to remain unpredictable, the Group's current trading is on track to achieve full year market expectations

· Three new stores have opened since the period end, with a strong pipeline for future openings (44 deposits held at period end)

· Further supermarket kiosk openings being negotiated

 

1 Like-for-like: Stores trading for at least one full financial year prior to 30 September 2022

 

There will be a virtual presentation for analysts and institutional investors this morning at 9.30am. For details, please contact  cakebox@mhpc.com .

 

For further information, please contact:

 

Cake Box Holdings plc

Sukh Chamdal, CEO

Martin Blair, Acting CFO

 

Enquiries via MHP Communications

Shore Capital (Broker and NOMAD)

Stephane Auton

Patrick Castle

Rachel Goldstein

Fiona Conroy - Corporate Broking

 

+44 (0) 20 7408 4090

Liberum (Joint Broker)

Clayton Bush

Edward Thomas

 

+44 (0) 20 3100 2000

MHP Communications (Financial PR)

Simon Hockridge

Pete Lambie

 

+44 (0) 20 3128 8570

Operational Review

Results overview

Last financial year was an exceptionally strong year for Cake Box with many retailers shut because of the Covid-19 pandemic.  However, we were permitted to open and as a result trading was strong, both in stores and online.  Against this good performance, we started the year with challenging comparatives; during the first few months we were trading at or slightly below last year on a like-for-like basis.  We continued to open new stores and trading was starting to improve in June. However, July and August were exceptionally hot and sunny and, as we have found in the past, this is not particularly conducive to cake sales.  Sentiment around the cost of living, inflation and utilities price rises also weighed on the consumer.  In addition, many customers took advantage of the relaxation in travel restrictions to take holidays they had been planning for the last two years, which also contributed to lower sales.  We were, however, encouraged to see our customers returning in September with like-for-like franchisee sales up 3.6%.

Reflecting the wider inflationary environment, we have inevitably seen significant increases in our raw material costs, namely cake mix and fresh cream.  We have absorbed some of these costs, however, we have had to pass some of these onto our franchisees and have made considered increases to our retail prices, whilst ensuring the value proposition that Cake Box is known for, remains.  Customers have been accepting of these increases, in line with the wider sector, and are still returning to enjoy our cakes, albeit we keep our pricing strategy continually under review.

Under the tough consumer-spending conditions it is encouraging to see an increase in overall revenues to £16.8m from £16.5m for the equivalent period last year and that we have achieved a small increase in gross margin. 

Continued investment for growth

We have continued investing for future growth in the business.  We had already enhanced our management team, bringing in a new Chief Operating Officer and a Marketing Director, as well as bolstering the production and food hygiene teams.  In the last six months, we have made a significant investment in our Enfield bakery by bringing in new state-of-the-art production facilities for cheesecakes, whilst also making other improvements to provide a better environment for our baking and production staff This investment is reflected in the significantly higher admin costs in the period of £5.9m compared to £3.9m last year.

We are also continuing to look at ways to improve our baking process to reduce waste and the cost of ingredients.  We have invested in our delivery van fleet, replacing older vans, and adding more refrigerated vehicles to reflect increased demand.  Planned van replacement last year was delayed into this year due to unavailability of new vehicles in the market.

Online Sales and new website

Online sales were flat compared to H1 FY22 due to much stronger trading conditions in the same period last year in the aftermath of Covid. During H2, we are investing in digital advertising, and this is now increasing online sales month by month. We expect this to accelerate with a new website which is planned to launch next month. The new site will give the customer a better user experience and in doing so, increase conversion rate and customer loyalty. The site will be data driven and automated to deliver bespoke marketing campaigns to increase customer lifetime value.

Franchisees and new stores

We now have 96 franchisees with 43 of them owning more than one store and between them managing 147 sites (out of the total 196 stores).  Where we know franchisees are performing well, we are actively encouraging them to take on additional sites so as to harness their entrepreneurial skills. 

The Group opened 11 new franchise stores in the period (excluding kiosk openings), with the total number of stores at 30 September 2022 being 196 (H1 FY22: 174). New locations added in the period include St. Neots, Gateshead, Nottingham, and Norwood (London).

The appeal of the Group's franchise proposition is reflected in the continuing strength of our pipeline of new potential franchisees, with 44 deposits held at period end.  Of these 44 deposits, 20 are from existing franchisees.

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 £5.5m, down only 2% from the same point last year, despite making significant investments in production and distribution facilities and paying a higher dividend. The Group's net cash position increased, by 1.2% to £4.2m (H1 FY22: £4.1m).

Dividends

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 2.625 pence per share representing an increase of 5.0% from last year.

The interim dividend will be paid on 9th December 2022 to those shareholders on the register at the close of business on 18th November 2022. The ex-dividend date is therefore 17th November 2022.

Outlook

The improvement in trading towards the end of H1 has continued into H2 with October like-for-like franchisee sales up 4.6%.and total franchisee sales in the six weeks to 6 November 2022 up 12.9%.

The Group's franchise store estate has continued to grow, with three new stores opened since the period end and a further 11 expected to open in the second half.

While the Board remains cognisant of the current economic climate and the unpredictability in consumer spending, the Group's current trading is on track to achieve full year market expectations .

Longer term, the Board is confident in Cake Box's significant potential, underpinned by its attractive customer and franchisee proposition and bolstered by ongoing investment in the Group's functions and capabilities, and a stronger leadership team.



 

CAKE BOX HOLDINGS PLC

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2022

 

 

 

 



6 months to  30 September 2022


6 months to  30 September 2021


12 months to  31 March

2022



(unaudited)


(unaudited)


(audited)


Note

£


£


£

Revenue

2

16,822,209


16,471,577


32,964,846

Cost of sales


(8,791,924)


(8,863,477)


(17,133,685)

Gross profit


8,030,285


7,608,100


15,831,161

Administrative expenses


(5,933,111)


(3,889,519)


(8,012,448)

Operating profit

 

2,097,174

 

3,718,581

 

7,818,713

Net finance costs


(67,128)


(19,202)


(81,388)

Profit before income tax


2,030,046


3,699,379


7,737,325

Income tax expense


(541,563)


(717,333)


(1,425,709)

PROFIT AFTER INCOME TAX


1,488,483


2,982,046


6,311,616

 


 





OTHER COMPREHENSIVE INCOME FOR THE PERIOD


 





Items that will not be reclassified to profit and loss, net of tax


 





Revaluation of freehold property


-


-


1,250,175

Deferred tax on revaluation of freehold property


-


-


(237,533)



 




TOTAL COMPREHENSIVE INCOME FOR THE PERIOD


1,488,483

 

2,982,046

 

7,324,258



 





 


 





EARNINGS PER SHARE

 

 





Basic

4

3.72p


7.46p


15.78p

Diluted

4

3.72p


7.46p


15.78p

 

 

 

 

 

 

 



  CAKE BOX HOLDINGS PLC

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2022

 



30 September

2022

(unaudited)

30 September 2021

(unaudited)

31 March

2022

(audited)

 

Note

£

£

£

ASSETS 


 



Non-current assets



 


Property, plant and equipment


10,750,275

8.707,374

10,029,209

Right-of-use assets


2,724,460

-

2,874,430

Other financial assets


595,314

564,194

710,059

Deferred tax asset


-

95,447

-



14,070,049

9,367,015

13,613,698

Current assets


 



Inventories


2,577,643

2,111,194

2,468,921

Trade and other receivables


2,962,332

2,861,845

2,553,209

Other financial assets


252,488

237,994

357,548

Cash and cash equivalents


5,464,364

5,565,501

6,571,558



11,256,827

10,776,534

11,951,236



 



TOTAL ASSETS


25,326,876

20,143,549

25,564,934



 



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


3,616,383

2,622,092

3,634,734

Share option reserve


-

488,596

-

Retained earnings


11,941,865

10,145,461

12,475,031

TOTAL EQUITY


15,958,288

13,656,189

16,509,805



 



Current liabilities


 



Trade and other payables


2,996,742

3,313,081

2,661,372

Lease liabilities


213,963

-

260,191

Short-term borrowings


167,754

167,754

167,754

Current tax payable


749,834

740,415

837,946

Provisions


243,100

243,100

243,100



4,371,393

4,464,350

4,170,363

Non-current liabilities


 



Lease liabilities


2,617,568

-

2,699,958

Borrowings


1,101,223

1,252,336

1,185,978

Deferred tax liabilities


1,278,404

770,674

998,830



4,997,195

2,023,010

4,884,766



 



TOTAL LIABILITES


9,368,588

6,487,360

9,055,129

 


 



TOTAL EQUITY & LIABILITIES


25,326,876

20,143,549

25,564,934

 


 



 

  .

 

 

 

 

 

 

CAKE BOX HOLDINGS PLC

UNAUDITED CO NSOLIDATED STATEMENT OF CHANGES IN EQUITY

FO R THE SIX MONTHS ENDED 30 SEPTEMBER2022

 

 


Share capital

 

Capital redemption reserve

Share option reserve

Revaluation reserve

Retained earnings

Total


£

£

£

£

£

£

B a la n c e at 1 April2021

400,000

40

488,596

1,609,592

8,643,415

11,141,643

T o ta l comprehensive income

-

-

-

-

2,982,046

2,982,046

Dividends paid

-

-

-

-

(1,480,000)

(1,480,000)

B a la n c e at 30 September 2021 (as previously stated)

400,000

40

488,596

1,609,592

10,145,461

12,643,689

Revaluation of freehold property 1




1,250,000


1,250,000

Deferred tax on revaluation of freehold properties 1




(237,500)


(237,500)

Restated b a la n c e at 30 September 2021 (as restated)

400,000

40

488,596

2,622,092

10,145,461

13,656,189

T o ta l comprehensive income

-

-

-

-

3,329,570

3,329,570

Share based payments

-

-

(486,368)

-

-

(486,368)

Deferred tax on share based payments

-

-

(2,228)

-

-

(2,228)

Revaluation of freehold property

-

-

-

1,250,175

-

1,250,175

Deferred tax on revaluation of freehold properties

-

-

-

(237,533)

-

(237,533)

Dividends paid

-

-

-

-

(1,000,000)

(1,000,000)

B a la n c e at 31 March2022

400,000

40

-

3,634,734

12,475,031

16,509,805

T o ta l comprehensive income

-

-

-

-

1,488,483

1,488,483

Dividends paid

-

-

-

-

(2,040,000)

(2,040,000)

Transfer of excess depreciation on revalued assets

-

-

-

(18,351)

18,351

-

B a la n c e at 30 September2022

400,000

40

-

3,616,383

11,941,865

15,958,288

 

 

1 During the year to 31 March 2022 it was discovered that an uplift to value of freehold properties was not properly reflected in the financial statements in the prior year.  This was reflected in the financial statements to 31 March 2022


 

CAKE BOX HOLDINGS PLC

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2022

 

 

 



6 months to

30 September 2022

(unaudited)

6 months to

30 September 2021

(unaudited)

12 months to

31 March 2022

(audited)



£

£

£

Cash from operating activities:


 



Profit before income tax


2,030,046

3,699,379

7,737,325

Adjusted for:


 



Depreciation


546,344

425,833

853,633

Amortisation of right-of-use assets


149,970

-

124,975

Profit on disposal of tangible fixed assets


(34,204)

(13,515)

(13,154)

(Increase) in inventories


(108,722)

(209,023)

(566,749)

(Increase) in trade and other receivables


(409,123)

(371,630)

(82,993)

(Increase) in other financial assets


219,804

236,626

(28,794)

Increase / (decrease) in trade and other payables


335,371

(283,886)

(915,596)

Share based payment provision


-

-

(486,368)

Finance income


(6,711)

(1,021)

(1,802)

Finance costs


73,839

20,223

83,190

Cash generated by operations


2,796,614

3,502,986

6,703,667



 



Taxation paid


(350,100)

(880,387)

(1,407,391)

  Net cash inflow from operating activities


 

2,446,514

 

2,622,599

 

5,296,276

 


 



Cash flows from investing activities


 



Proceeds from sale of property, plant and equipment


34,204

16,375

16,014

Purchase of property, plant and equipment


(1,267,412)

(634,466)

(1,133,926)

Interest received


6,711

1,021

1,802

  Net cash flows used in investing activities


 

(1,226,497)

 

(617,070)

 

(1,116,110)

 


 



Cash flows from financing activities:


 



 


 



Repayment of finance leases


(128,618)

-

(39,255)

Repayment of borrowings


(84,754)

(65,669)

(132,027)

Dividends paid


(2,040,000)

(1,480,000)

(2,480,000)

Interest paid


(73,839)

(20,223)

(83,190)

 

Net cash flows used in financing activities


 

(2,327,211)

 

(1,565,892)

 

(2,734,472)

 

Net increase in cash and cash equivalents


 

(1,107,194)

 

439,637

 

1,445,694

 


 



Cash and cash equivalents brought forward


6,571,558

5,125,864

5,125,864

 

Cash and cash equivalents carried forward


 

5,464,364

 

5,565,501

 

6,571,558

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

 

Cash at bank and in hand

5,464,364

5,565,501

6,571,558


 





CAKE BOX HOLDINGS PLC

NOTES TO THE INTERIM ACCOUNTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2022

 

1.  Notes to the Interim Report

 

B a s is of preparation

T h e consolidated half-yearly financial statementsdo not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2022have been filed with the Registrar of Companies at Companies House. The auditor's report on the statutory accounts for the year ended 31 March 2022was 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 2022 were prepared in accordance with the recognition and measurement principles of UK adopted International Financial Reporting Standards ("UK adopted IFRS") that are expected to be applied in the preparation of the next annual report.

 

T h e consolidated annual financial statementsof Cake Box HoldingsPlc for the year ended 31 March 2023will be prepared in accordance with 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 2023, but do not contain all the information necessary for full compliance with IFRS.

 

The consolidated half-yearly financial statements for the six months to 30 September 2022 have not been audited or reviewed by auditors, pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.

 

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.

 

B a s is 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 2022

(unaudited)

6 months to

30 September

2021

(unaudited)

12 months to

31 March

2022

(audited)

 

 

£

£

£

Sales of sponge

6,170,612

5,991,526

12,301,051

Sales of food

2,930,966

2,717,955

5,479,076

Sales of fresh cream

1,761,069

1,707,951

3,442,619

Sales of other goods

3,686,104

3,309,034

7,023,665

Online sales commission

487,168

453,379

937,640

Franchise packages

1,786,290

2,291,732

3,780,795


16,822,209

16,471,577

32,964,846





 

 

 

 

 

CAKE BOX HOLDINGS PLC

NOTES TO THE INTERIM ACCOUNTS (cont'd)

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2022

 

3.  Dividends

 


6 months to  30 September 2022

6 months to 30 September 2021

12 months to    31 March  

2022


(unaudited)

(unaudited)

  (audited)


£

£

£

Dividends paid

2,040,000

1,480,000

2,480,000


 




 

4.  Share Capital

 


6 months to  30 September 2022

6 months to 30 September 2021

12 months to 31 March  

2022


(unaudited)

(unaudited)

  (audited)


£

£

£

40,000,000 Ordinary Shares of £0.01 each

400,000

400,000

400,000


 




 

  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 2022

6 months to  30 September 2021

12 months to  

31 March 

2022


(unaudited)

(unaudited)

  (audited)


£

£

£

Basic earnings per share

3.72p

7.46p

15.78p

Diluted earnings per share

3.72p

7.46p

15.78p


 




 

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