Admission to trading on AIM

RNS Number : 6731S

Cake Box Holdings PLC

27 June 2018

 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, JAPAN, THE REPUBLIC OF IRELAND, THE REPUBLIC OF SOUTH AFRICA OR AUSTRALIA, OR TO BE TRANSMITTED OR DISTRIBUTED TO, OR SENT BY, ANY NATIONAL OR RESIDENT OR CITIZEN OF ANY SUCH COUNTRIES OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION MAY CONTRAVENE LOCAL SECURITIES LAWS OR REGULATIONS.

Cake Box Holdings plc

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

ADMISSION TO TRADING ON AIM AND FIRST DAY OF DEALINGS

Dealings commence at 8 am on 27 June 2018

Cake Box, the specialist retailer of fresh cream cakes, is pleased to announce that admission and dealings in its Ordinary Shares will commence today at 8.00 a.m. on the AIM market of the London Stock Exchange under the ticker symbol CBOX with ISIN GB00BDZWB751. The Company's admission document is available to view on its website www.eggfreecake.co.uk.

Shore Capital is acting as Nomad, Sole Bookrunner and Sole Broker in relation to the Admission and Placing and is acting as Nomad and Sole Broker to the Company following Admission.

The Placing undertaken in conjunction with the Admission was heavily oversubscribed and further detail is set out in the table below.

Placing statistics

Number of Existing Ordinary Shares in issue on Admission	40,000,000
Gross proceeds from the Placing for the Vendors	c. £16.5 million
Number of Placing Shares sold by the Vendors	15,298,720
Placing Price per Placing Share	108p
Placing Shares as a percentage of the Existing Ordinary Shares	c. 38.2 per cent.
Market capitalisation of the Company at the Placing Price on Admission	£43.2 million

Sukh Chamdal, Chief Executive Officer or Cake Box, commented:

"Our IPO is the latest phase of an exciting journey for Cake Box and I am delighted with the very strong reception we have received.

"Over the past decade, we have built a fast-growing franchise business, with a strong financial track record and history of profitable expansion, and I would like to personally thank all Cake Box franchisees, staff and suppliers for their contributions, as well as welcoming our new investors.

"Looking ahead, we are confident that we have all the ingredients to continue to grow our franchise estate to 250 stores and further expand our slice of the sizeable UK cake market, with a unique customer proposition and limited direct competition ."

For further information, please contact:

Cake Box Holdings plc Sukh Chamdal, CEO Pardip Dass, CFO	[phone]
Shore Capital - Nominated Adviser, Sole Bookrunner & Sole Broker Stephane Auton Patrick Castle James Thomas	[phone]
MHP Communications Oliver Hughes Simon Hockridge Charlie Baker Peter Lambie	[phone]

All defined terms used in this announcement have the meanings set out in the Company's admission document dated 21 June 2018 which is available on the Company's website.

Introduction to the Group

Cake Box is a franchise retailer of cakes with a growing store base across the UK. The first concept store opened in East London in 2008 from which the Group has grown to a franchise estate of 91 stores as at 13 June 2018. The Group specialises in making high quality, individually-crafted and personalised fresh cream cakes for purchase on demand or ordered in advance in store or online. In March 2018, Cake Box was recognised as one of the 100 fastest growing companies by turnover in the UK in the 2018 Sunday Times Virgin 100 Fast Track league table.

The Group offers an extensive range of fresh cream cakes in different sizes, many of which are available to be personalised and collected within one hour. Customers can personalise their cakes free of charge with a short message or an image for a small additional fee. This service is available while customers wait for cakes purchased on demand or can be included in an advance order. The Group's cakes are completely egg free, which the Directors believe has no effect on taste and texture and allows the Group to service a much larger potential market, including those customers who are unable to eat eggs for dietary or religious reasons.

The Group's franchise estate has grown rapidly in recent years, from 20 stores as at 31 March 2013 to 91 franchise stores as at 13 June 2018. During the year ended 31 March 2018, the Group opened on average two franchise stores a month, an opening rate the Directors expect to continue. The Directors' current target is to grow to 250 franchise stores in the UK and they have identified a number of locations where they believe there is significant opportunity for a Cake Box store. For the year ended 31 March 2018, the Group's franchise stores had Mature Store like-for-like sales growth of 15.0 per cent. The Directors believe that Cake Box offers an attractive proposition for current and future franchisees and as at 31 March 2018, the average annual franchise store EBITDA across the business was c.£94,000.

The Group has experienced strong financial growth, more than doubling its revenue and EBITDA in the past two financial years. Revenue has increased from £5.6 million in the year ended 31 March 2016 to £12.8 million in the year ended 31 March 2018, with EBITDA increasing from £1.4 million to £3.7 million in the same period.

History and background of the Group

The Group's business concept was conceived in July 2008 by Sukh Chamdal in East London. In March

2009, Sukh Chamdal and Pardip Dass co-founded the Cake Box franchise business. The Directors believe that the Group's early success arose from being able to offer customers cakes made without eggs, addressing an unserved market of people who either had an egg allergy or observed a lacto-vegetarian diet. As the Group has grown, the business has increasingly appealed to a broader customer base who purchase the Group's cakes despite not requiring egg free products, thus reducing the Group's reliance on a narrower demographic.

The Group has grown predominantly through franchise expansion and today does not directly own or operate any Cake Box stores, although the Executive Directors have all previously run their own franchise stores. The Group has grown its franchise estate rapidly since its founding and the Group opened on average two franchise stores a month for the year ending 31 March 2018.

Strategy

The Group's strategy is primarily to grow the number of franchise stores in the UK and to increase sales at the franchise store level. The Group has identified a significant number of new areas and potential site locations for new franchise stores. The current target is to have up to 250 franchise stores in the UK and the Directors expect to continue to target on average two new franchise stores per month. The Directors believe that the Group's current facility in Enfield has the manufacturing capacity to support this franchise store target.

As a result of the nature of the Group's franchise model, the Directors believe that its current growth strategy can be successfully executed without requiring further external capital. Alongside the Group's primary growth strategy, it intends to expand the offering in stores through the introduction of additional complementary products. As the Group's franchise store estate grows, including into new geographic areas, the Group expects its online presence to grow which is anticipated to generate further additional revenue for the Group.

Current trading and prospects

Since 31 March 2018, the Group has traded in line with management's expectations. From 31 March 2018 to 13 June 2018, the Group has added five new franchise stores and as at 13 June 2018, the Group had 91 franchise stores. The Group has a strong pipeline of prospective new franchise stores.

Reasons for the Admission and Placing

The Group has undertaken the Admission in order to: increase its public profile to support the Group's growth; create a long term equity incentive opportunity and retention tool for key staff; and to provide a partial equity exit for the founders.

Dividend policy

The Board is adopting a progressive dividend policy from Admission to reflect the cash flow generation and earnings of the Group. The Company expects to pay an interim and final dividend in respect of the year ended 31 March 2019 and intends that the total dividend for the year (and future years) will split by one third for the first six months of the year to two thirds for the year end respectively.

Directors

Nileshbhai ("Neil") Sachdev, MBE, Independent Non-Executive Chairman

Neil Sachdev MBE is an experienced Chairman with a strong background in corporate governance and strategy. He was Chairman of Sirius Real Estate Limited until December 2017 and was Chairman of Market Tech Holdings Limited until June 2017. Neil stepped down as a Non-Executive Director of Intu Properties plc (formerly Capital Shopping Centres) in 2016 after ten years' service. Previously, Neil held the post of Group Property Director of J Sainsbury and before that served for 28 years with Tesco, where he rose to be Stores Board Director, responsible for property and operations for the entire UK business. He also holds a number of public sector positions and was awarded an MBE for his work in relation to Energy Efficiency & Sustainability in the retail sector. Mr Sachdev is currently the Chair of the Advisory Board of Warwick Business School. Mr Sachdev, MBE was appointed to the Board on 20 June 2018.

Sukh Chamdal, Chief Executive Officer

Sukh Chamdal founded the Cake Box concept in 2008 and co-founded the franchise arm of the business in 2009. He has over 35 years of experience in the food manufacturing and retail industry, having begun his career in the family business selling Indian sweets and savouries. He also acted as a consultant for a food equipment company specialising in high volume food production. Sukh previously owned a food catering company supplying vegetarian food for functions and events. Mr Chamdal has been a director of the Company since 15 November 2013 and of Eggfree Cake Box Limited since 27 March 2009.

Pardip Dass, Chief Financial Officer Pardip Dass co-founded the Cake Box franchise business in 2009. He qualified as an accountant whilst working for Starbucks and has over 15 years of experience in the food and beverage industry working for companies such as Masala Zone, Group Chez Gerard Restaurants and Real Pubs, where he was Finance Director. Mr Dass has been a director of the Company since 15 November 2013 and of Eggfree Cake Box Limited since 27 March 2009.

Dr Jaswir Singh, Chief Operations Officer Dr Singh joined Cake Box in 2010. He originally qualified as a medical doctor, before leaving medicine to join his family textile business, which he ran throughout the 1990s. He then ran his own restaurant business during the 2000s before joining Cake Box. Dr Singh was a director and is a shareholder of four companies which each own a Cake Box franchise store. The Directors believe that this provides the Group with a valuable insight into franchise store operations and the Group often trials new products and initiatives in these stores. Dr Singh has been a director of the Company since 8 May 2018 and of Eggfree Cake Box Limited since 18 June 2012.

Martin Blair, Independent Non-Executive Director Martin Blair is an experienced director with a strong financial background. He previously acted as CFO of Pilat Media Global plc, a company which was listed on both AIM and the Tel Aviv Stock Exchange. He joined Pilat Media in 2001, ahead of its admission to AIM in 2002. Pilat Media was acquired by SintecMedia Ltd for £63.3 million in April 2014. He qualified as a chartered accountant with Ernst & Young in 1982 and between 1983 and 1986 worked for PwC. He is also currently a non-executive director and Chairman of the audit committees at the Marketing Group, Green Biologics Ltd and AIM listed Kape Technologies plc. Mr Blair was appointed to the Board on 20 June 2018.

Adam Batty, Independent Non-Executive Director

Adam Batty is a non-executive director of AIM listed Stride Gaming plc and a founder and chief executive of a new, fast casual, premium chicken concept that is being rolled out in major cities across the UK. A corporate lawyer by training, he worked in private practice at Norton Rose Fulbright and in an investment bank before joining Mitchells & Butlers PLC in 2002 where he spent five years as legal director (and, latterly, risk and compliance director). He joined Domino's Pizza Group plc in 2007, where he spent five years as general counsel and company secretary, which involved being a member of its operating boards in the UK, Germany and Switzerland. From early 2013 until autumn 2017, Adam was the general counsel and company secretary at Selfridges Group, where he had a broad legal, governance and commercial role. Mr Batty was appointed to the Board on 20 June 2018.

DISCLAIMERS

The distribution of this announcement and other information in connection with Admission may be restricted by law in certain jurisdictions and persons into whose possession this announcement or any document or other information referred to herein should inform themselves about, and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. 

In particular, this announcement is not for distribution directly or indirectly, in or into the Republic of Ireland, Canada, Australia, Japan, the Republic of South Africa or the United States of America or to any national resident or citizen of the Republic of Ireland, Canada, Australia, Japan, the Republic of South Africa or the United States of America. The distribution of this announcement in other jurisdictions including (without limitation) the Republic of Ireland, Canada, Australia, Japan, the Republic of South Africa, or the United States of America (or to any resident thereof) may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves of and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

The Ordinary Shares have not been nor will be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or under the securities legislation of any state of the United States of America, nor under the relevant securities laws of the Republic of Ireland, Canada, Australia, Japan, or the Republic of South Africa, and may not be offered or sold in the United States of America, Canada, Australia, the Republic of Ireland, the Republic of South Africa or Japan or to, or for the account or benefit of, US persons (as such term is defined in Regulation S) under the Securities Act, or to any national, resident or citizen of Canada, Australia, the Republic of Ireland, the Republic of South Africa or Japan.  This announcement (or any part of it) is not to be reproduced, distributed, passed on, or the contents otherwise divulged, directly or indirectly, in or the Republic of Ireland , Canada, Australia, Japan, New Zealand, South Africa or the United States of America, or in any country, territory or possession where to do so may contravene local securities laws or regulations.

London Stock Exchange plc ("London Stock Exchange") has not examined or approved the contents of this announcement. This announcement is not an admission document or a prospectus. It does not constitute or form part of, and should not be construed as, an offer to sell or issue, or a solicitation of any offer to buy or subscribe for, any securities, nor should it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Investors should not subscribe for or purchase any securities referred to in this announcement except on the basis of information in the admission document (the "Admission Document") published on 21 June 2018 by Cake Box Holdings plc ("Cake Box" or the "Company" and, together with its subsidiaries, the "Group") in connection with the application for admission of the Ordinary Shares in the capital of the Company ("Ordinary Shares") to trading on AIM, a market operated by the London Stock Exchange. The Admission Document is available on the Company's website at www.eggfreecake.co.uk.

This announcement is directed only at persons having professional experience in matters relating to investments who fall within the definition of investment professionals in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the "Order") or who are high net worth entities falling within Article 49 of the Order, and to other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons"). The contents of this announcement must not be acted on or relied upon by persons who are not relevant persons.

This announcement does not constitute or form part of, and should not be construed as, an offer for sale or subscription or solicitation of or invitation to make any offer to buy or subscribe for any Ordinary Shares, and neither this announcement nor any part of it shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever. No reliance may or should be placed by any person for any purposes whatsoever on the information contained in this announcement or on its completeness, accuracy or fairness. The information in this announcement is subject to change.

Shore Capital and Corporate Limited and Shore Capital Stockbrokers Limited make no representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from this announcement) or of any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents, or otherwise arising in connection herewith.

The Company, Shore Capital and Corporate Limited and Shore Capital Stockbrokers Limited expressly disclaim any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement (other than as required by the AIM Rules) whether as a result of new information, future developments or otherwise.

Shore Capital and Corporate Limited and Shore Capital Stockbrokers Limited, which are authorised and regulated in the United Kingdom by the Financial Conduct Authority, are acting as the Company's nominated adviser and broker respectively and for no-one else in connection with this announcement, the proposed placing and Admission and will not be responsible to any person other than the Company.

 FORWARD-LOOKING STATEMENTS

This announcement includes forward-looking statements relating to the Group's future prospects, developments and strategies and are based on the Directors' current expectations projections, and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Forward-looking statements are sometimes identified by the use of terms and phrases such as "believe", "expects", "envisage", "may", "will", "could", "should", "shall", "risk", "intends", "estimates", "aims", "plans", "predicts", "continues", "assumes", "positioned", "targets" or "anticipates" or the negative thereof, variations or comparable expressions, including reference to assumptions.  These forward-looking statements include all matters that are not historical facts.  They appear in a number of places throughout this announcement and include statements regarding the intentions, beliefs or current expectations of the Directors or the Group relating to the Group's future prospects, developments and strategies and are based on assumptions and estimates and involve risks, uncertainties and other factors that may cause the actual results, financial condition, performance or achievements of the Group or industry results to be materially different from any future results, performance or achievement expressed or implied by such forward looking statements.  No assurance can be given that such future results will be achieved.  New factors may emerge from time to time that could cause the Group's business not to develop as it expects and it is not possible for the Group to predict all such factors.  Each forward-looking statement contained in this announcement speaks only as of the date of the particular statement.  The Company, the Directors, Shore Capital and Corporate Limited and Shore Capital Stockbrokers Limited each expressly disclaim any obligation to update these forward-looking statements contained in this announcement to reflect any change in their expectations or any change in future events or developments on which such statements are based unless required to do so by applicable law or regulation, the AIM Rules for Companies or the AIM Rules for Nominated Advisers.

 

END

 

 

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