REG - Cake Box Holdings - Half Year Results
14/11/2023 07:00
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RNS Number : 2987T Cake Box Holdings PLC 14 November 2023
Cake Box Holdings plc
("Cake Box", "the Company" or "the Group")
Unaudited Half Year Results for the six months ended 30 September 2023
Increase in revenues, profits, dividends and cash
Confident outlook, supported by investments in future growth platforms
Cake Box Holdings plc, the specialist retailer of fresh cream cakes, today
announces its half-year results for the six months ended 30 September 2023.
Sukh Chamdal, Chief Executive Officer, commented
"We have performed well in the first half of the year, generating strong
growth across key financial metrics and making further progress on our
strategy. We achieved double digit increases in profits, cash and dividends,
as raw material and input costs stabilised, and we started to benefit from the
recent investments we have made in the business to drive growth.
As outlined in our recent Capital Markets Event, our new website has increased
online sales and improved customer experience and loyalty, while brand
awareness continues to increase as a result of the success of our marketing
campaigns (including national radio) and multi-channel expansion.
Our franchise proposition remains attractive with nine new franchise stores
opening over the period and a strong pipeline of future openings. We continue
to engage with property consultants to identify target growth areas, which
will help us reach our 400-store target over the medium term. We are also
excited to launch our new Cake Box identity in the second half of the year,
which will broaden the appeal of our brand to new customers and demographics,
amplifying the opportunity for new store openings.
While we are mindful of the ongoing macro-economic uncertainty, customer
demand remains robust, demonstrating Cake Box's enduring appeal. We enter the
second half with momentum and are on track to deliver full year performance in
line with market expectations. The Board remains confident in the Company's
long-term prospects, underpinned by our ambitious growth strategy, the
attractiveness of the brand and focused investment programme."
Financial Highlights
Half year Half year Change*
ended
ended
%
30 September 2023
30 September 2022
Revenue £18.0m £16.8m 6.8%
Gross profit £8.9m £8.0m 11.0%
EBITDA** £3.1m £2.8m 10.4%
Pre-tax profit £2.4m £2.0m 18.0%
Net cash £5.9m £4.2m 41.8%
Cash at Bank £7.1m £5.5m 30.6%
Earnings per share 4.45p 3.72p 19.6%
Interim dividend 2.90p 2.625p 10.5%
*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 6.8% to £18.0m (H1 FY23: £16.8m).
o Driven by increased volumes from 20 stores opened in the prior year and 9
new stores opened in the six months to 30(th) September 2023
· The trading momentum for franchise store sales improved from the
second half of the prior year, with like-for-like sales growth of 6.2% for the
six months ended 30 September 2023.
· Gross margins increased to 49.6% (H1 FY23:47.7%) due to the partial
easing of input cost increases and enhanced yield benefits achieved in the
distribution centres.
· Continued balance sheet strength with net cash increasing to £5.9m
(H1 FY23: £4.2m).
· Interim dividend up 10.5% to 2.9p per share reflecting the Group's
progressive dividend policy and continued strong cash generation.
Operational highlights
· Franchise stores in operation increased to 214 as at 30 September
2023 (30 September 2022: 196).
· Nine new franchise stores added in the period (H1 FY23: 11 new
franchise stores), entering new geographies such as Liverpool, Cambridge and
Cheadle.
· Successful investments in growth platform, including:
o New website launched in June 2023
o Launch of our new CRM system in May 2023
o £2m co-funded annual marketing fund agreed with our franchisees, to drive
sales growth, raise brand awareness, broaden the customer base and evolve the
brand
· Continued innovation for growth through new product development.
o Summer launch of new premium Mango range proved very popular
· Effectively managing cost pressures, particularly through established
supplier relationships.
Franchise store highlights
· Franchise store sales up 12.9% to £36.1m (H1 FY23 £31.8m).
· Franchise total sales including kiosks up 10.7% to £38.5m (H1 FY23
£34.8m).
· Franchisee online sales increased 15.1% to £7.7m (H1 FY23: £6.7m).
· Number of multi-site franchisees increased to 46 (H1 FY23: 43).
Current trading and outlook
· Trading has continued positively post the half year, with total
franchise sales 5.1% ahead in October 2023 compared with the same period in
the prior year and online sales increasing 12.8% versus last year.
· On track to deliver a full year performance in line with market
expectations.
*Like-for-like: Stores trading for at least one full financial year prior to
30 September 2023
Webcast recording
A recording of the results presentation webcast will be available via the
following link: https://brrmedia.news/CBOXHYR
(https://stream.brrmedia.co.uk/broadcast/654e2bbbeee1b91ce55ca4d1)
For further information, please contact:
Cake Box Holdings plc
Enquires via MHP
Sukh Chamdal, CEO
Michael Botha, CFO
Shore Capital (Broker and NOMAD)
+44 (0) 20
7408 4090
Stephane Auton
Patrick Castle
Rachel Goldstein
Fiona Conroy (Corporate Broking)
Liberum (Joint
Broker)
+44 (0) 20 3100 2000
Edward Thomas
Dru Danford
MHP Communications (Financial PR)
+44 (0) 7834
623818
Charlie
Barker
cakebox@mhpc.com (mailto:cakebox@mhpc.com)
Robert Collett-Creedy
Hugo Harris
Operational and Financial Review
Strong first half performance
Our trading momentum continued through the first half of the year, with
revenue growth of 6.8% and an increase in total franchise store sales of
12.9%, reflecting the strength of our proposition and continued robust
customer demand. Franchise store like-for-like sales were up 6.2% (H1 FY23:
down 1.6%) for the first half of the new financial year, compared to 3.4% H2
FY23.
In June 2023, we launched our new website and at the same time invested in
expanding our marketing team, which has helped to increase our online sales by
15.1% year on year. Our new website is delivering a consistent increase in
online sales month on month. Our new site improves our position by giving our
customers a better user experience and in doing so, increases conversion rate
and customer loyalty. The site is data driven and automated to deliver bespoke
marketing campaigns to increase customer lifetime value.
New product development once again played a vital role in our strong trading
performance, with the launch of our new premium Mango range, proving very
popular amongst our customers. The release of new premium ranges continues to
support our franchisee's ability to grow their margins through pricing.
Strategic progress with franchisee funding and marketing initiatives
During the period, we created a £2m co-funded annual marketing fund with our
franchisees to drive brand awareness, broaden the customer base and evolve the
brand. The fund will be utilised with the aim of creating the leading
multi-channel cake business in the UK. A large proportion of the fund is being
allocated for digital and social media marketing, and we are making good
progress as we build on Cake Box's already strong 40% brand awareness. Both
our national radio advertising campaigns, which went live in September 2023,
and our outdoor advertising have been favourably received by our customers,
driving increased demand.
Customer data is becoming central to our marketing strategy, and we have
experienced strong growth since launching our new CRM system in May 2023. Our
marketing database grew by 50%, from 200k to 300k in the five months to 30
September 2023, while our new SMS subscriptions went from zero to 80k in the
same period. We expect our database to significantly increase as the
investments we have made continue to deliver greater awareness and appeal.
Continued expansion in the franchise store estate
The confidence of our franchisees in our proposition continues with the
opening of a further nine franchise stores during the period, despite the
sharp rise in UK base interest rates. As a result, the total number of stores
at 30 September 2023 rose to 214 (H1 FY23: 196).
New locations added in the period include Liverpool, Cambridge and Cheadle,
where we have identified compelling growth opportunities and anticipate strong
customer demand.
We now have 95 franchisees with 46 of them owning more than one store, with
these multi store franchisees operating a total of 165 sites out of the total
214 stores. We continue to identify growth franchisees who are performing well
and are ambitious, harnessing their entrepreneurial skills and supporting them
in taking on additional sites.
Demand for new stores remains high, with 44 deposits held at the end of the
period. Of these 44 deposits, 20 are from existing franchisees. As outlined at
our recent Capital Markets Event, we continue to engage with our property
consultants and franchisees as we identify new attractive target geographies
to enhance growth.
Gross margin improvement
During the half-year, we saw a reduction and stabilisation of certain input
costs, most noticeably in fuel and utility prices, which will benefit both
franchisees and our Group profitability. This, coupled with the actions we
have taken to improve efficiency in the business, supported a rise in our
gross margin to 49.6% and an 18.0% increase in profit before tax.
Although our pricing strategy remains continually under review, we have been
mindful to not increase pricing to our franchisees and likewise to their
customers and maintain the value proposition, during the current period of
heightened cost-of-living challenges.
Invested for growth opportunities
Since our IPO we have invested £7.7m, primarily on expanding and enhancing
our production, warehousing and distribution capabilities. During that time,
we have also focused on enhancing our IT and e-commerce to capitalise on our
significant growth opportunities.
In addition, we have strengthened our management team, as well as bolstering
the teams within the business, who will all be integral in delivering our
strategy. These changes implemented across the 2023 financial year and the
first half of the current year, have resulted in a planned increase in
administration costs in the period to £6.4m (H1 FY23: £5.9m).
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 £7.1m, up
30.6% from the same point last year, which is post paying a final dividend of
£2.2m in August 2023. The Group's net cash position increased, by 41.8% to
£5.9m (H1 FY23: £4.2m).
Dividends
In line with our progressive dividend policy which reflects our cash
generation, earnings progression and confidence in our outlook, today we are
declaring an interim dividend of 2.9 pence per share representing an increase
of 10.5% from last year. The interim dividend will be paid on 15 December 2023
to those shareholders on the register at the close of business on 24 November
2023. The ex-dividend date is therefore 23 November 2023.
Board update
On 30 October 2023, the Board was delighted to announce the appointment of
independent Non-Executive Director, Martin Blair as Non-Executive Chairman of
the Company. He replaced Nilesh ("Neil") Sachdev who, after more than five
years in the role, stepped down from the Board on 31 October 2023 to
concentrate on his growing commitments outside of Cake Box.
Martin has a deep knowledge of Cake Box and its strategy, having sat on the
Board as an Independent Non-Executive Director and chair of the Audit
Committee, since the Company was admitted to trading on the AIM market of the
London Stock Exchange in June 2018.
As announced at the same time, another of the Company's independent
Non-Executive Directors, Adam Batty, was appointed to the role of Senior
Independent Director. The Board has initiated a process to recruit a new
independent Non-Executive Director to chair the Audit Committee. A further
announcement will be made in this regard in due course. Until such time,
Martin will continue to chair the Audit Committee.
Outlook
The investments made in our business continue to make a positive impact, with
our marketing campaigns and improvements in digital, increasing brand
awareness and driving online sales growth. This has supported ongoing trading
momentum into H2 2024, with total franchise sales 5.1% ahead in October 2023.
Our engagement with property consultants and franchisees to identify target
growth areas for new openings is progressing well and we are confident of
reaching our medium-term store estate targets.
Cake Box's proposition continues to evolve, with an exciting range of new
products in development and the launch of our new brand identity set for the
second half, which will broaden the appeal of the Cake Box brand.
Whilst we remain mindful of the ongoing macro-economic challenges, consumer
demand remains robust, and the Group's is on track to deliver a full year
performance in line with market expectations. The Board remains confident in
Cake Box's long term growth potential, underpinned by its attractive customer
and franchisee proposition, strong balance sheet and ongoing investment in the
business.
CAKE BOX HOLDINGS PLC
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS
ENDED 30 SEPTEMBER 2023
6 months to 6 months to 12 months to
30 September
30 September
31 March
2023
2022
2023
(unaudited)
(unaudited)
(audited)
Note £ £ £
Revenue 2 17,960,580 16,822,209 34,800,941
Cost of Sales (9,047,974) (8,791,924) (17,626,671)
Gross profit 8,912,606 8,030,285 17,174,270
Administrative Expenses (6,454,032) (5,933,111) (11,595,228)
Operating Profit 2,458,574 2,097,174 5,579,042
Finance income 44,130 6,711 25,019
Finance expenses (107,593) (73,839) (160,494)
Profit before income tax 2,395,111 2,030,046 5,443,567
Income tax expense (615,344) (541,563) (1,206,896)
PROFIT AFTER INCOME TAX 1,779,767 1,488,483 4,236,671
OTHER COMPREHENSIVE INCOME FOR THE PERIOD
Items that will not subsequently be classified to profit or loss
- Revaluation of freehold property - - 187,665
-Deferred tax on revaluation of freehold property - - (35,656)
Total other comprehensive income for the period - - 152,009
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD 1,779,767 1,488,483 4,388,680
EARNINGS PER SHARE - pence
Basic 5 4.45 3.72 10.59
Diluted 5 4.45 3.72 10.59
CAKE BOX HOLDINGS PLC
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2023
6 months to 6 months to 12 months to
30 September
30 September
31 March
2023
2022 - as restated
2023
(unaudited)
(unaudited)
(audited)
Note £ £ £
ASSETS
Non-current assets
Intangible assets 480,924 107,273 399,186
Property, plant and equipment 11,095,006 10,973,813 11,267,783
Right-of-use assets 2,424,520 2,724,460 2,574,490
Other financial assets 562,931 595,314 508,532
14,563,381 14,400,860 14,749,991
Current Assets
Inventories 2,426,905 2,577,643 2,790,724
Trade and other receivables 2,188,484 2,962,332 2,683,621
Other financial assets 364,412 252,488 245,880
Cash and cash equivalents 7,135,660 5,464,364 7,353,583
12,115,461 11,256,827 13,073,808
TOTAL ASSETS 26,678,842 25,657,687 27,823,799
EQUITY AND LIABILITIES
EQUITY
Issued share capital 4 400,000 400,000 400,000
Capital redemption reserve 40 40 40
Revaluation reserve 3,786,743 3,616,383 3,786,743
Retained earnings 13,132,338 12,209,822 13,552,572
EQUITY attributable to the owners of the parent company 17,319,121 16,226,245 17,739,355
Current liabilities
Trade and other payables 3,116,420 2,996,742 3,766,413
Lease liabilities 275,224 213,963 270,117
Short-term borrowings 96,295 167,754 104,498
Current tax payable 401,736 749,834 294,262
Provisions 243,100 243,100 243,100
4,132,775 4,371,393 4,678,390
Non-current liabilities
Lease liabilities 2,290,940 2,617,568 2,429,838
Borrowings 1,092,082 1,101,223 1,132,292
Deferred tax liabilities 1,843,924 1,341,258 1,843,924
5,226,946 5,060,049 5,406,054
TOTAL LIABILITIES 9,359,721 9,431,442 10,084,444
TOTAL EQUITY & LIABILITIES 26,678,842 25,657,687 27,823,799
CAKE BOX HOLDINGS PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED
30 SEPTEMBER 2023
Share Capital Revaluation As restated - Retained Total
capital
redemption
reserve
earnings
reserve
£ £ £ £ £
At 1 April 2022 400,000 40 3,634,734 12,475,030 16,509,804
Adjustment to asset lives* - - - 330,812 330,812
Deferred tax on adjustment to asset lives - - - (62,854) (62,854)
At 1 April 2022 - as restated 400,000 40 3,634,734 12,742,988 16,777,762
Total comprehensive income for the period - - - 1,488,483 1,488,483
Transfer of excess depreciation on revalued assets - - (18,351) 18,351 -
Dividends paid - - - (2,040,000) (2,040,000)
At 30 September 2022 400,000 40 3,616,383 12,209,822 16,226,245
Total comprehensive income - - - 2,748,188 2,748,188
Revaluation of freehold property - - 187,665 - 187,665
Deferred tax on revaluation of freehold property - - (35,656) - (35,656)
Tax rate changes - - - (337,088) (337,088)
Transfer of excess depreciation on revalued assets - - 18,351 (18,351) -
Dividends paid - - - (1,050,000) (1,050,000)
At 31 March 2023 400,000 40 3,786,743 13,552,571 17,739,354
Total comprehensive income - - - 1,779,767 1,779,767
Dividends paid - - - (2,200,000) (2,200,000)
At 30 September 2023 400,000 40 3,786,743 13,132,338 17,319,121
* During the prior financial year, the Directors reviewed the fixed assets
category and made adjustments to change the asset lives of various assets
and determined that some assets were still being used by the business despite
being almost fully depreciated.
CAKE BOX HOLDINGS PLC
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30
SEPTEMBER 2023
6 months to 6 months to 12 months to
30 September
30 September
31 March
2023
2022
2023
(unaudited)
(unaudited)
(audited)
£ £ £
Cash flows from operating activities
Profit before income tax 2,395,111 2,030,046 5,443,567
Adjusted for:
Depreciation 421,366 520,309 777,571
Depreciation of right-of-use assets 149,970 149,970 299,940
Amortisation of intangible assets 53,504 26,035 54,110
Profit on disposal of tangible fixed assets - (34,204) (50,733)
Decrease/(Increase) in inventories 363,819 (108,722) (321,803)
Decrease/(Increase) in trade and other receivables 495,137 (409,123) (360,950)
(Increase)/decrease in other financial assets (172,932) 219,804 263,307
(Decrease)/Increase in trade and other payables (649,993) 335,371 1,105,042
Increase in provision - - 280,425
Share based payment provision - - -
Finance income (44,130) (6,711) (25,019)
Finance expense 151,723 73,839 160,494
Cash generated from operations 3,163,575 2,796,614 7,625,951
Taxation paid (507,876) (350,100) (1,341,087)
Net cash inflow from operating activities 2,655,699 2,446,514 6,284,864
Cash flows from investing activities
Proceeds from sale of property, plant and equipment - 34,204 61,003
Purchase of property, plant and equipment (383,825) (1,267,412) (1,961,233)
Finance income 44,130 6,711 25,019
Net cash flows from investing activities (339,695) (1,226,497) (1,875,211)
Cash flows from financing activities
Repayment of finance leases (133,792) (128,618) (260,192)
Repayment of borrowings (48,412) (84,754) (116,942)
Dividends paid (2,200,000) (2,040,000) (3,090,000)
Finance expense (151,723) (73,839) (160,494)
Net cash flows from financing activities (2,533,927) (2,327,211) (3,627,628)
Net increase in cash and cash equivalents (217,923) (1,107,194) 782,025
Cash and cash equivalents brought forward 7,353,583 6,571,558 6,571,558
Cash and cash equivalents carried forward 7,135,660 5,464,364 7,353,583
CAKE BOX HOLDINGS PLC
NOTES TO THE INTERIM ACCOUNTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
1.Notes to the Interim Report
Basis of preparation
The consolidated half-yearly financial statements do not constitute statutory
accounts within the meaning of Section 434 of the Companies Act 2006. The
statutory accounts for the year ended 31 March 2023 have been filed with the
Registrar of Companies at Companies House. The auditor's report on the
statutory accounts for the year ended 31 March 2023 was unqualified, did not
include any matters to which the auditor drew attention by way of emphasis and
did not contain any statements under Section 498 (2) or (3) of the Companies
Act 2006.
The published financial statements for the year ended 31 March 2023 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.
The consolidated annual financial statements of Cake Box Holdings Plc for the
year ended 31 March 2024 will 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 2024, 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 2023 have not been audited or reviewed by auditors.
The consolidated half-yearly financial statements have been prepared under the
going concern assumption and historical cost convention as modified by fair
value for property, plant and equipment.
Basis of consolidation
The Group consolidated half-yearly financial statements consolidates the
company and its subsidiaries. All intra-group transactions, balances, income
and expenses are eliminated on consolidation.
2.Segment reporting
Components reported to the chief operating decision maker, the board of
directors, are not separately identifiable. The Group makes varied sales to
its customers, but none are a separately identifiable component. The following
information is disclosed:
6 months to 6 months to 12 months to
30 September
30 September
31 March
2023
2022
2023
(unaudited)
(unaudited)
(audited)
£ £ £
Sales of sponge 7,385,751 6,170,612 13,631,930
Sales of food 3,151,169 2,930,966 5,870,607
Sales of fresh cream 2,083,960 1,761,069 3,976,694
Sales of other goods 3,700,104 3,686,104 7,454,354
Online sales commission 546,021 487,168 1,001,192
Franchise packages 969,055 1,786,290 2,866,164
Marketing Levy 124,520 - -
17,960,580 16,822,209 34,800,941
3.Dividends
6 months to 6 months to 12 months to
30 September
30 September
31 March
2023
2022
2023
(unaudited)
(unaudited)
(audited)
£ £ £
Dividends paid 2,200,000 2,040,000 3,090,000
4.Share Capital
6 months to 6 months to 12 months to
30 September
30 September
31 March
2023
2022
2023
(unaudited)
(unaudited)
(audited)
£ £ £
40,000,000 Ordinary Shares of £0.01 400,000 400,000 400,000
5.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 6 months to 12 months to
30 September
30 September
31 March
2023
2022
2023
(unaudited)
(unaudited)
(audited)
Pence Pence Pence
Basic earnings per share 4.45 3.72 10.59
Diluted earnings per share 4.45 3.72 10.59
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