REG - Cake Box Holdings - Interim Results
14/11/2022 07:00
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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 Change(1)
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)
o Sustained recovery in trading towards the end of the period against a very
strong comparative, with like-for-like(1) 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
(mailto:cakebox@mhpc.com) .
For further information, please contact:
Cake Box Holdings plc Enquiries via MHP Communications
Sukh Chamdal, CEO
Martin Blair, Acting 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
Clayton Bush
Edward Thomas
MHP Communications (Financial PR) +44 (0) 20 3128 8570
Simon Hockridge
Pete Lambie
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 30 September 2021 31 March
2022 (unaudited) 2022
(unaudited) (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 4 400,000 400,000 400,000
capital
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 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2022
Share capital Capital redemption reserve Share option reserve Revaluation reserve Retained earnings Total
£ £ £ £ £ £
Balance at 1 April 2021 400,000 40 488,596 1,609,592 8,643,415 11,141,643
Total comprehensive income - - - - 2,982,046 2,982,046
Dividends paid - - - - (1,480,000) (1,480,000)
Balance at 30 September 2021 (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 balance at 30 September 2021 (as restated) 400,000 40 488,596 2,622,092 10,145,461 13,656,189
Total 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)
Balance at 31 March 2022 400,000 40 - 3,634,734 12,475,031 16,509,805
Total 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 -
Balance at 30 September 2022 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 6 months to 12 months to
30 September 2022 30 September 2021 31 March 2022
(unaudited) (unaudited) (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
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 2022 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 2022 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 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.
The consolidated annual financial statements of Cake Box Holdings Plc for the
year ended 31 March 2023 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 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.
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 2022 30 September 31 March
(unaudited) 2021 2022
(unaudited) (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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