Half Year Results

RNS Number : 4073I

Cake Box Holdings PLC

26 November 2018

 

Cake Box Holdings plc

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

Unaudited Half Year Results for the six months ended 30 September 2018

Maiden results announced with growth in sales, profits and dividend

Cake Box Holdings plc, the specialist retailer of fresh cream cakes, today announces its half year results for the six months ended 30 September 2018.

Financial Highlights

	Half year	Half year	Change
	ended	ended
	30 September 18	30 September 17
Revenue	£8.28m	£5.75m	+44%
Gross profit	£3.67m	£2.50m	+47%
EBITDA*	£2.18m	£1.63m	+34%
Pre-tax profit	£1.37m	£1.47m	-7%
Adjusted Pre-tax profit**	£1.97m	£1.47m	+34%
Net cash	£2.40m	£1.46m	+64%
Earnings per share	2.85p	3.19p	-11%
Adjusted Earnings per share**	4.35p	3.19p	+36%
Interim dividend declared	1.20p	1.03p	+17%

* EBITDA is calculated as operating profit before depreciation

**Calculated after adjusting for AIM listing costs of £599k

·     Group revenue up 44.0% to £8.3m (H1 FY18: £5.8m)

·     Gross margin improved to 44.3% (H1 FY18: 43.4%)

·     Underling operating cash flow** of £1.62 million (H1 FY18: £1.33 million)

·     Strong balance sheet with £2.40 million cash (H1 FY18: £1.46 million)

Operational highlights

·     IPO on AIM successfully completed in June 2018

·     15 new franchise stores added in the period (H1 FY18: 10 new stores)

·     101 franchise stores in operation at 30 September 2018

·     Successful launch of new product ranges

Our Franchisee Store highlights

·     Franchisee total turnover up by 29% to £14.1 million (H1 FY18: £10.9 million)

·     Franchisee online sales up 86% to £1.99 million (H1 FY18: £1.07 million)

·     Like-for-like sales growth of 4.4% in franchise stores (H1 FY18: 9.0%)

 

Neil Sachdev, Non-executive Chairman commented:

"I am pleased to report a strong performance since our IPO on AIM in the summer. These results reflect the robust growth opportunity presented by our franchisee store roll-out strategy. I look forward to further progress in the remainder of our financial year. We celebrate 10 years of Cake Box with our staff and franchisees in 2019."

Sukh Chamdal, Chief Executive Officer, added:

"It's very exciting to be announcing our first set of results as a public company. The Cake Box brand has continued to go from strength to strength and we have made good progress since floatation with our strategic priorities of growing our store estate, investing further in our new products and developing our digital marketing.

Our performance during the first eight weeks of the second half has been encouraging and we have already opened four new stores. The Group is well placed for further progress and the Board remains confident of another successful year of growth." 

For further information, please contact:

Cake Box Holdings plc Sukh Chamdal, CEO Pardip Dass, CFO	[phone]
Shore Capital (NOMAD and  Broker) Stephane Auton Patrick Castle James Thomas	[phone]
MHP Communications (Financial PR) Oliver Hughes Simon Hockridge Charlie Barker Pete Lambie	[phone]

 

Operational Review

Results overview

We have delivered a strong trading performance for the half year, during which we successfully completed our IPO in June. We continue to build momentum with a record number of new franchise store openings and an increase in average sales per store.

This has led to significant financial progress for the Group. Revenue grew by 44% and underlying EBITDA rose by 34%, meaning that adjusted profit before tax also increased by 34% to £1.9m, ahead of our previous expectations. This was partly a result of an increase in our gross margin to 44.3% (H1 FY18: 43.4%), driven by better yield obtained from the new ovens which were installed earlier this year.

These results demonstrate the continuing appeal of the Cake Box brand and unique customer offer, combined with the financial strength of the Group and the strong cash generative nature of our business model. We have achieved impressive growth in revenues and profits despite the hot weather which adversely impacted high street footfall and therefore the like- for-like sales growth of many stores during the summer months. Despite this impact, our franchisees achieved like-for-like sales of +4.4% with franchisee total turnover rising to £14.1m for the half year.

Store openings

15 new franchise stores were added during the period, bringing the total number of stores to 101 at the half year end.  Recent store openings included Bletchley, Northampton and Derby. Our new stores continue to deliver strong returns and we were particularly pleased with our 100^th store in Bletchley near Milton Keynes which recorded the highest ever first week of sales for a new store.

This performance further demonstrates our successful business model through which new stores typically reach a break-even or profitable contribution to the Group within the first day of trade. We have a strong pipeline of new franchise stores for the second half of the year and are on track to open a similar number to that seen during the first half. 

Online

During the year we saw strong growth in franchisee online sales which were up 86% to £1.99 million (H1 FY18: £1.07 million). Online sales are processed centrally through the Group's website with orders fulfilled through our franchise estate. Franchise revenue from online sales is included in franchisee turnover totaling £14.1 million (H1 FY18: £10.9 million).

Products

We have successfully launched a number of new products to our range during the period. Of these, the introduction of our caramel and chocolate cheesecake products have been particularly well-received by customers. These are individually and expertly decorated by our in-store designers which create a real buzz with our customers who are excited by our evolving product range.

New Warehouse

We hope to complete soon on an additional warehouse and distribution Centre in the north of England which we anticipate will be in operation in the first half of 2019.  As well as acting as a distribution centre, the intention would be to install some sponge production capability at the new site which would enable us to reduce our existing distribution costs and provide a back up to our production facility in Enfield. It is expected that the entire funding required for the new warehouse will be generated through the sale of our investment property, which we hope to complete during the next few months.

Balance Sheet and Cashflow

We have a strong balance sheet with £2.40 million cash as at 30 September 2018 (H1 FY18: £1.46 million).

Net cash as at 30 September 2018 was £0.8m (H1 FY18: Net debt £0.4m).

Underlying operating cash flow for the period (excluding IPO costs of £599k) was £1.62 million dup from £1.33 million in the same period in 2017 despite early payment of 2017/18 corporation tax of £400k.

Dividend

As outlined at the time of IPO, the Company has adopted a progressive dividend policy to reflect the cash flow generation and earnings of the Group.

Today we are declaring an interim dividend of 1.2 pence per share. The Company 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. The interim dividend will be paid on 20 December 2018 to those shareholders on the register at the close of business on 7 December 2018. The ex-dividend date is therefore 6 December 2018.

Outlook

Our performance during the first eight weeks of the second half has been encouraging and we have already opened four new stores. The Group is well placed for further progress and the Board remains confident of another successful year of growth.

Unaudited Consolidated Statement Of Comprehensive Income

For The Six Months Ended 30 September 2018

		6 months to 30 September 2018		6 months to 30 September 2017		12 months to 31 March 2018
		(unaudited)		(unaudited)		(audited)
	Note	£		£		£
Revenue		8,283,338		5,753,628		12,833,659
Cost of sales		(4,616,474)		(3,254,911)		(7,263,209)
Gross profit		3,666,864		2,498,717		5,570,450
Administrative expenses		(1,680,671)		(1,087,629)		(2,273,128)
Other operating income		-		84,000		84,000
Operating profit		1,986,193		1,495,088		3,381,322
Exceptional items	5	(598,645)		-		-
Net finance costs		(18,919)		(22,879)		(45,672)
Profit before income tax		1,368,629		1,472,209		3,335,650
Income tax expense		(228,613)		(208,032)		(568,053)
PROFIT AFTER INCOME TAX		1,140,016		1,264,177		2,767,597
OTHER COMPREHENSIVE INCOME FOR THE PERIOD
Movement of deferred tax on the revaluation of tangible fixed assets		-		12,691		16,790
TOTAL COMPREHENSIVE PROFIT FOR THE PERIOD		1,140,016		1,276,868		2,784,567
EARNINGS PER SHARE
Basic & diluted	6	2.85p		3.19p		6.96p

 Unaudited Consolidated Statement Of Financial Position

As At 30 September 2018

		30 September 2018 (Unaudited)	30 September 2017 (Unaudited)	31 March 2018 (audited)
	Note	£	£	£
ASSETS
Non-current assets
Investment property		342,629	342,629	342,629
Property, plant and equipment		3,620,035	3,413,528	3,340,520
Trade and other receivables		130,112	281,565	259,459
		4,092,776	4,037,722	3,942,608
Current assets
Inventories		800,866	663,524	709,212
Trade and other receivables		1,649,810	1,261,327	1,300,636
Cash and cash equivalents		2,401,318	1,459,918	2,505,657
		4,851,994	3,384,769	4,515,505
TOTAL ASSETS		8,944,770	7,422,491	8,458,113
EQUITY AND LIABILITIES
Share capital and reserves
Issued share capital	6	400,000	160	160
Capital redemption reserve		40	40	40
Revaluation reserve		455,422	451,143	455,422
Retained earnings		4,385,512	3,223,742	4,205,336
TOTAL EQUITY		5,240,974	3,675,085	4,660,958
Current liabilities
Trade and other payables		1,646,620	1,239,790	1,493,348
Short-term borrowings		176,544	178,095	185,594
Current tax payable		339,591	500,243	519,523
		2,162,755	1,918,128	2,198,465
Non-current liabilities
Borrowings		1,399,728	1,667,099	1,457,377
Deferred tax liabilities		141,313	162,179	141,313
		1,541,041	1,829,278	1,598,690
TOTAL LIABILITES		3,703,796	3,747,406	3,797,155
TOTAL EQUITY & LIABILITIES		8,944,770	7,422,491	8,458,113

Unaudited Consolidated Statement Of Changes In Equity

For The Six Months Ended 30 September 2018

	Share capital £	Capital redemption reserve             £	Revaluation reserve £	Retained earnings £	Total £
Balance at 1 April 2017	160	40	438,452	1,959,565	2,398,217
Total comprehensive income	-	-	-	1,264,177	1,264,177
Deferred tax on revalued property, plant and equipment	-	-	12,691	-	12,691
Balance at 30 September 2017	160	40	451,143	3,223,742	3,675,085
Total comprehensive income	-	-	-	1,503,420	1,503,420
Deferred tax on revalued property, plant and equipment	-	-	4,279	-	4,279
Dividends paid	-	-	-	(521,826)	(521,826)
Balance at 31 March 2018	160	40	455,422	4,205,336	4,660,958
Total comprehensive income	-	-	-	1,140,016	1,140,016
Share bonus issue	399,840	-	-	(399,840)	-
Dividends paid	-	-	-	(560,000)	(560,000)
Balance at 30 September 2018	400,000	40	455,422	4,385,512	5,240,974

Unaudited Consolidated Cash Flow Statement

For The Six Months Ended 30 September 2018

		6 months to 30 September 2018 (unaudited)	6 months to 30 September 2017 (unaudited)	12 months to 31 March 2018 (audited)
		£	£	£
Cash from operating activities:
Profit before income tax		1,368,629	1,472,209	3,335,650
Adjusted for:
Depreciation		198,381	132,796	318,548
Profit on Disposal		-	-	(5,181)
(Increase)/ decrease in inventories		(91,654)	(108,126)	(153,814)
(Increase)/ decrease in trade and other receivables		(220,134)	(347,272)	(364,269)
(Decrease)/ increase in trade and other payables		153,579	167,291	402,110
Finance income		(2,542)	(51)	(1,114)
Cash generated by operations		1,406,259	1,316,847	3,531,930
Finance costs		21,461	22,930	46,786
Taxation paid		(408,545)	(5,214)	(362,542)
Net cash inflow from operating activities		1,019,175	1,334,563	3,216,174
Cash flows from investing activities
Sale of investment properties		-	-	190,000
Purchase of property, plant and equipment		(477,896)	(233,124)	(530,688)
Interest received		2,542	51	1,114
Net cash flows used in investing activities		(475,354)	(233,073)	(339,574)
Cash flows from financing activities:
Repayment of borrowings		(52,606)	(61,716)	(249,847)
Repayment of finance leases		(14,093)	(32,627)	(28,185)
Dividends paid		(560,000)	-	(521,826)
Interest paid		(21,461)	(22,930)	(46,786)
Net cash flows used in financing activities		(648,160)	(117,273)	(846,644)
Net (decrease)/increase in cash and cash equivalents		(104,339)	984,217	2,029,956
Cash and cash equivalents brought forward		2,505,657	475,701	475,701
Cash and cash equivalents carried forward		2,401,318	1,459,918	2,505,657

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

Cash at bank and in hand	2,401,318	1,459,918	2,505,657
Bank overdraft	-	-	-
	2,401,318	1,459,918	2,505,657

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 2018 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 2018 was unqualified 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 2018 were prepared in accordance with UK GAAP Financial Reporting Standard 102. The financial statements for the year ended 31 March 2018 were converted to International Financial Reporting Standards as adopted for use in the EU ("IFRS") and this conversion of the historical financial information was included in the AIM Admission document. There was no material effect from conversion. The comparative information for the year ended 31 March 2018  presented in these half-year financial statements has been extracted from the historical financial information, which was published in the AIM admission document

The consolidated annual financial statements of Cake Box Holdings Plc for the year ended 31 March 2019 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 2019 and which were used in the preparation of the historic financial information for the year ended 31 March 2018 included in the AIM admission document.

None of the standards, interpretations and amendments effective for the first time from 1 January 2018, including IFRS 9 and IFRS 15, have had a material effect on the historical financial information. None of the standards, interpretations and amendments which are effective for periods beginning after 1 January 2019 and which have not been adopted early, are expected to have a material effect on the historical financial information.

The financial information contained in this interim report should be read in conjunction with the historical financial information included in the AIM Admission document.

On 27 June 2018, Cake Box Holdings Plc was admitted to the AIM market of London Stock Exchange Plc.

The consolidated half-yearly financial statements for the six months to 30 September 2018 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 investment property and 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.     Changes in accounting policies and disclosures

IFRS 15 'Revenue from Contracts with Customers'

The Group has applied this accounting standard from 1 April 2018 and has adopted the modified retrospective approach to its adoption which would result in any adjustments for contracts in progress at 1 April 2018 being made to opening retained earnings at that date. 

The Group has considered how franchise fees are recognised in accordance with IFRS 15 using the 5 step approach set out in that standard.  In undertaking this exercise the Group has not identified any material changes in how revenue would be recognised for the contracts in progress at 31 March 2018 nor with those that have been undertaken in the six months to 30 September 2018.

IFRS 9 'Financial Instruments'

The Group has applied this standard from 1 January 2018 but it has had no material effect on the Group's financial statements.

IFRS 16 'Leases'

The Group has considered how leases are accounted for in accordance with IFRS 16 'Leases', including consideration of transition method.  The standard is expected to only affect the Group in respect of leases that it has in place that are currently treated as operating leases in accordance with current standards.

The Group acts as a lessee and lessor but will not be required to recognise operating leases on the balance sheet when the new standard is implemented. The leases are expected to fall under the definition of exemption criteria. Early adoption of this standard has not been taken.

3.     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 2018 (unaudited)	6 months to 30 September 2017 (unaudited)	12 months to 31 March 2018 (audited)
	£	£	£
Sale of goods	6,687,900	4,875,831	10,490,687
Sale of services	1,535,038	833,212	2,248,797
Rental of properties	60,400	44,585	94,175
	8,283,338	5,753,628	12,833,659

4.     Dividends

	6 months to 30 September 2018	6 months to 30 September 2017	12 months to 31 March   2018
	(unaudited)	(unaudited)	(audited)
	£	£	£
Dividends paid	560,000	-	521,826

5.     Exceptional items

	6 months to 30 September 2018	6 months to 30 September 2017	12 months to 31 March   2018
	(unaudited)	(unaudited)	(audited)
	£	£	£
AIM listing costs	598,645	-	-

6.     Share Capital

	6 months to 30 September 2018	6 months to 30 September 2017	12 months to 31 March 2018
	(unaudited)	(unaudited)	(audited)
	£	£	£
40,000,000 Ordinary shares of £0.01 each	400,000	-	-
40,000,000 Ordinary shares of £0.000004 each	-	160	160

On 4 June 2018 a bonus issue was made in the proportion of 2,500 shares for every 1 existing Ordinary share held. Immediately after the bonus issue the 100 billion £0.000004 Ordinary shares in issue were consolidated into 40,000,000 ordinary shares of £0.01 each. No amendment to the rights and restrictions as set out in the Company's articles of association were made.

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 2018	6 months to 30 September 2017	12 months to 31 March 2018
	(unaudited)	(unaudited)	(audited)
	£	£	£
Basic earnings per share	2.85p	3.19p	6.96p
Diluted earnings per share	2.85p	3.19p	6.96p

Excluding exceptional AIM listing costs                                         

Basic earnings per share	4.35p	3.19p	6.96p
Diluted earnings per share	4.35p	3.19p	6.96p

 

END

 

 

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