30 June 2021

Cake Box Holdings plc

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

Full Year Results for the twelve months ended 31 March 2021

Another period of strong growth in an unprecedented year

 

	Full year	Full year	Change
	ended	ended
	31-Mar-21	31-Mar-20
Revenue	£21.9m	£18.7m	16.9%
Gross profit	£10.9m	£8.8m	23.8%
EBITDA*	£4.9m	£4.3m	14.6%
Pre-tax profit	£4.2m	£3.8m	11.8%
Adjusted Pre-tax profit**	£4.7m	£3.8m	24.8%
Cash at Bank	£5.1m	£3.7m	37.8%
Earnings per share	8.4p	7.8p	7.7%
Adjusted Earnings per share**	9.6p	7.8p	23.1%
Final dividend declared	3.7p	0.0p	-

*EBITDA is calculated as operating profit before depreciation

** Calculated after adjusting for provision for GDPR breach of £486k

 

Financial highlights

·    Another period of strong growth in an unprecedented year

·    Group revenue up 16.9% to £21.9m (2020: £18.7m)

·    Gross margin improved to 49.7% (2020: 46.7%)

·    Cash from operations of £5.2m (2020: £3.4m)

·    Strong balance sheet with £5.1m cash at period end (2020: £3.7m)

·    Dividend per share for the full year: 3.7 pence per share (Interim dividend of 1.85 pence per share)

Operational highlights

·    84% growth in online sales for the comparable period

·    Launch of own delivery platform to complement third party delivery and click and collect offerings

·    24 new franchise stores added in the year (2020: 20)

·    157 franchise stores in operation as at 31 March 2021 (2020: 133)

·    Successful ongoing trial of five kiosks with a national supermarket chain and four new shopping centre kiosks, taking total number of kiosks to 21 (2020: 12)

·    New product launches including egg-free custard, and further vegan and gluten-free options

·    Commenced operations at new bakery and distribution centre in Coventry in April 2021

·    Exceptional provision of £486k made for fines and related costs following a website data breach in 2020; customer remedial action taken alongside significant steps to improve security

 

Franchisee store highlights

·    Franchisee total turnover up by 17% to £42.7m (2020: £36.5m)

·    Franchisee online sales up 71% to £9.4m (2020: £5.5m)

·    Like-for-like¹ sales growth of 14.7% in franchise stores (2020: 5.1%) in the 40 week comparable period from 1^st June 2020 to 7^th March 2021³

 

Current trading² and outlook

·    Trading has remained strong post-period end

·    Nine new franchise stores opened in the first quarter of FY22

·    Targeting 18-24 new franchise store openings in FY22 underpinned by record number of deposits from prospective franchisees

·    One supermarket kiosk opened post period end, six new sites confirmed following successful initial trial.

·    Business opportunities for new and existing franchisees remains highly attractive

·    Confident of making continued progress in the years ahead

 

¹ Like-for-like: Stores trading for at least one full financial year prior to 31 March 2021

² Current trading defined as average store turnover for last 12 weeks to week ended 27 June 2021

³ Trading effected by COVID from mid-March to end of June 2020

 

Sukh Chamdal, Chief Executive Officer, commented: 

 

"Looking back to what we've achieved over the last twelve months, I am both incredibly proud of the Cake Box Family and optimistic for the future. We have achieved record results during a year which included a global pandemic and the temporary closure of our entire store estate. We have ultimately emerged a bigger, better business.

 

Trading has remained strong post-period end with nine new franchise stores opened in the first quarter.

 

We have a record number of holding deposits for new franchise stores wanting to start and grow their own businesses. This underpins our confidence in meeting our ongoing target of 18-24 franchise store openings for FY22.

 

Despite continued uncertainty in the operating environment, our unique proposition for customers and new and existing franchisees remains highly attractive and we are confident of making continued progress in the years ahead.

 

In June 2020, amidst the onset of the pandemic, I wrote that "there will still be birthdays, marriages and numerous other occasions, large and small, to celebrate up and down the country" and our performance this year has clearly shown this to be the case As we cautiously emerge from the pandemic, I am thrilled that more customers than ever will be celebrating reunions with friends, family and colleagues over a slice of our delicious, egg-free cake." 

 

 

For further information, please contact:

 

Cake Box Holdings plc Sukh Chamdal, CEO Pardip Dass, CFO	+44 (0) 20 8050 2026
Shore Capital Stephane Auton Patrick Castle	+44 (0) 20 7408 4090
MHP Communications Oliver Hughes Simon Hockridge Charlie Barker Pete Lambie	+44 (0) 20 3128 8540 cakebox@mhpc.com

 

 

Chairman's Statement

 

It has been an extraordinary year for the Cake Box Family and the country as a whole. There have been tough challenges for everyone, both within the business and personally. What has struck me most is the resilience, determination and compassion, which has allowed us to continue serving customers whilst looking out for one another.  

Results

Despite the ongoing impact of the Government's lockdown restrictions throughout the year, the Group delivered a strong performance, with a sustained recovery in trading as shops began to reopen after the first UK lockdown in May last year.

I want to thank our customers for their ongoing support through this extraordinary year and our staff and franchisees for their enormous commitment and effort.

For the year as a whole, Cake Box delivered a 16.9% increase in revenues, and a 24.8% increase in adjusted profit before tax. To have achieved these figures during an ordinary year would have been an achievement, but to deliver them during an undoubtedly extraordinary year we have had is a result that gives me immense pride in the whole Cake Box Family.

Website data breach

A malware attack occurred in 2020 which impacted our website payment system and resulted in a website data breach. We have contacted any customers whose personal information was potentially exposed during the attack and provide them with support where required. We have also informed the relevant authorities.

We take the security of our customers' personal information extremely seriously and took appropriate action to secure the website. We set up a dedicated team, available to impacted customers by email, to provide help including a complimentary fraud protection service and would like to apologise to customers for any inconvenience this attack may have caused.

Our franchise platform

The platform founded by our entrepreneurial management team over ten years ago has facilitated these record results, delivering for all of our stakeholders and gives us a simple recipe for future growth.

We have a franchisee proposition that supports entrepreneurship and job creation across the UK, often in underserved communities. Most of all we are delighted that we continue to attract many female franchisees.

We have a unique and attractive customer proposition, which we have made more accessible through strategic initiatives including our kiosk trials, third party delivery platforms and, more recently, our own online delivery channel.

We have an investment proposition which offers shareholders access to the attractive growth and returns we generate through our proven, capital light, cash generative franchise model.

Cake Box continues to serve our communities, whether that be through the donations of over 100,000 cakes to key workers during the pandemic, or simply through making sure that birthdays up and down the country can still be celebrated with a delicious slice of cake.

The Cake Box Family

At its core this business is a collection of extraordinary entrepreneurs, united by the Cake Box brand. These results are not just testament to the strength, resilience and adaptability of the franchise platform, but to our franchisees and committed staff across the UK, who have continued to serve and support their communities through a global health crisis. On behalf of the Board, I would like to thank them for their enthusiasm, dedication and perseverance.

The Cake Box Family has continued to grow throughout the last year, with the Group reaching the landmark achievement of opening our 150^th franchise store in Romford, Essex in February, as part of the 24 new stores opened during the year.

To open a small business for the first time during a pandemic is no mean feat, and I would like to welcome all our new franchisees to the Cake Box Family - from Hove to Sunderland. We have also had existing franchisees continue to expand their businesses during the last year, and I would like to commend them for their tenacity. These new store openings have allowed us to create more than 200 new roles, including 25 at our new and existing warehouse and bakery sites.

Whilst there is much rhetoric (from financial institutions) of supporting small businesses across the UK economy, some of our franchisees have encountered significant challenges in obtaining financing from our usual banking relationship to open their stores. Therefore, we took the important decision to support several of these individuals who weren't able to secure a commercial loan during COVID-19, with a Franchisee Support Fund. The Franchisee Support Fund has been put in place whilst COVID-19 affects the availability of commercial loans to franchisees and matches the terms of commercial loans that have historically been available through the banks, some of which have been withdrawn during COVID 19 These loans typically amount to a £50k contribution to new franchise store start-up costs and to date, Cake Box has loaned c.£890k to 16 franchisees. The Board has set a limit of £1.5m that can be provided in aggregate as loans to franchisees through the Franchisee Support Fund. The expectation is that conditions normalise, commercial loans will become readily available again to new franchisees and we are in discussions to widen our banking relationships for franchisees. I am immensely proud of the management team for this initiative, which speaks to the passion they have in allowing other entrepreneurs to grow their own businesses.

Dividend

The Group reinstated its interim dividend in November, as well as declaring a special dividend on 1 September 2020, following the announcement in April 2020 that the Board did not feel it appropriate to recommend a final dividend. The decision to pay a special dividend and to reinstate the interim dividend reflected the Board's confidence in the strength of the balance sheet, and was taken only after we repaid all government monies received for the furloughing of Group level employees who were unable to work as a result of the immediate impact of COVID-19. The Group has taken no further Government support in the second half and remain very grateful for the support the government has offered.

The Group's balance sheet remains strong, underpinned by the highly cash generative nature of the Group's business model. Net cash at period end was £3.6m (FY20: £2.1m), up 71% on the prior year. In line with our progressive dividend policy, the Board has declared a dividend of 3.7p for the full year.

Looking ahead

As we cautiously emerge from the shadow of the COVID-19 pandemic, I can confidently say that I have never been more excited about the Group's prospects.

We have not only continued to grow the business over the last twelve months, we have also reinforced the foundations for our future growth with the opening of our Coventry and Bradford production facilities, and expanded the drivers of future growth through several strategic initiatives.

 

All of this is underpinned by the Cake Box franchise platform and the Cake Box Family, led by our founding executive management team Under their stewardship, this model and these extraordinary entrepreneurs have allowed us to thrive during an unprecedented crisis despite the challenges encountered with the GDPR issue. I am looking forward to Cake Box continuing to thrive and grow over the next year and beyond.

 

Neil Sachdev MBE

Non-executive Chairman

 

 

Chief Executive's Review

 

I am very pleased with the progress we made over this challenging year, marking our third consecutive year of double-digit revenue growth against the most difficult of backdrops.

 

In this climate, our first priority has remained the health, safety and wellbeing of our customers, colleagues, franchisees and their staff. I am immensely grateful that we successfully and safely reopened our store estate at the end of the first lockdown and continued to serve our customers through an incredibly challenging time.

 

This has been made possible through our continued commitment of backing our franchisees. Their dedication and that of everyone in the Cake Box Family has meant that we have been able to emerge stronger from a year marked by the global pandemic.

 

Sales

 

In the last 12 months the group achieved a total turnover up by 16.9% to £21.9m (2020: £18.7m), which has been driven by record franchisee sales in the last 12 months despite being closed for the first 6 weeks due to the pandemic. Pleasingly, when stores were trading, we saw like-for-like sales growth of 14.7% in franchise stores (2020: 5.1%) in the 40 week comparable period from 1st June 2020 to 7th March 2021.

 

A core driver of our sales is ensuring our differentiated customer proposition remains relevant, and that we continue to grow our product offering: keep the proposition fresh and to accommodate new tastes and flavours. Accordingly, during the year we introduced exciting new launches including an egg free custard to complement products such as our new packaged loaf cakes. We also developed further gluten free and vegan product options.

 

Store estate

 

Having started this business from a single shop in East London, the landmark of our 150th franchise store opening in Romford, Essex earlier this year was a significant moment for me both personally and professionally and I was thrilled to be able to stand next to the franchisee, Sharon, as her new store opened for trading.

 

Overall, there were 24 store openings during the year, taking the total number of franchise stores in the Cake Box estate to 157 at the period end.

 

Strategic initiatives

 

We have continued to make significant progress on our strategic initiatives to complement our franchise store estate growth, allowing new and existing franchisees to grow their businesses through new channels including kiosks and online delivery through third party platforms as well as our own delivery platform.

 

There was further substantial growth in the number of orders which were made online during the year, with online sales increasing 71% year-on-year (up 84% on a like for like week basis), making up 22% (2020: 14.9%) of total franchisee sales. Order volumes placed through our own-brand delivery platform have been encouraging since the launch.

 

Having successfully launched our shopping centre kiosk proposition, we are trialling five Cake Box kiosks with a national supermarket chain and the results so far have been very encouraging. Despite the reliance of our shopping centre kiosks on footfall, we are confident in the continued attractiveness of this offering for existing franchisees. Trading at these locations has resumed following the reopening of non-essential retail locations on 12 April 2021.

 

Following investment to support the Group's continued expansion, operations at Cake Box's new bakery and distribution centre in Coventry commenced in April this year, complementing existing facilities in Enfield and Bradford.

Bringing all of these initiatives together, we have both reinforced the foundations of the Group's future growth with the infrastructure to expand our franchise store growth, and we have expanded the drivers of future growth by creating new channels to make the Cake Box customer proposition more accessible across the UK.

 

Looking ahead

 

As we continue to grow the business, a key priority for the Board remains underpinning this growth with the appropriate level of experience and expertise for the Group's central functions, internal controls and processes. This includes the recruitment of an IT Director, a Commercial/Managing Director with responsibility for Group marketing and supply chain management, a Financial Analyst and strengthening our internal audit function to ensure that stronger ongoing controls are operated across the group particularly in light of the data breach and increased online sales.

Summary and Outlook

 

Looking back to what we've achieved over the last twelve months, I am both incredibly proud of the Cake Box Family and incredibly optimistic for the future. We have achieved record results during a year which included a global pandemic and the temporary closure of our entire store estate. We have ultimately emerged a bigger, better business.

 

Trading has remained strong post-period end with nine new franchise stores opened in the first quarter.

 

We have a record number of holding deposits for new franchise stores wanting to start and grow their own businesses. This underpins our confidence in meeting our ongoing target of 18-24 franchise store openings for FY22. Following a successful trial of five supermarket kiosk locations, we have already opened a further supermarket kiosk post period end and have had a further six new locations confirmed.

 

Despite continued uncertainty in the operating environment, our unique proposition for customers and new and existing franchisees remains highly attractive and we are confident of making continued progress in the years ahead.

In June 2020, amidst the onset of the pandemic, I wrote that "there will still be birthdays, marriages and numerous other occasions, large and small, to celebrate up and down the country" and our performance this year has clearly shown this to be the case. As we cautiously emerge from the pandemic, I am thrilled that more customers than ever will be celebrating reunions with friends, family and colleagues over a slice of our delicious, egg-free cake. 

 

 

Sukh Chamdal

Chief Executive Officer

 

Financial Review

 

	FY21	FY20
	£m	£m
Revenue	21.9	18.7
Gross profit	10.9	8.8
Operating expenses	6.2	5.0
EBITDA	4.9	4.3
Exceptional Item	0.5	0.0
Depreciation	0.7	0.5
Share Based Payment	0.3	0.2
Operating profit	4.7	3.8
Profit before tax	4.2	3.8
Adjusted Profit before tax*	4.7	3.8
Tax	0.8	0.6
Profit for the period	3.4	3.1
Adjusted Profit for the period*	3.9	3.1

 

*Calculated after adjusting for provision for GDPR breach of £486k

 

Another period of strong growth in an unprecedented year

Despite the ongoing impact of the Government's lockdown restrictions throughout the year, the Group delivered a strong performance, with a sustained recovery in trading as shops began to reopen after the first UK lockdown in May last year. In the 40 weeks from 1 June 2020 to 7 March 2021, like-for-like sales in franchise stores grew by 14.7%.

 

 

 

Revenue

Reported revenue for the year to 31 March 2021 was £21.9m. Revenue increased by 16.9% compared to the previous financial year. This was achieved through an increase in store like-for-like sales and with the addition of 24 new stores around the UK in new locations including Gloucester, Epsom, Newport, Ipswich and Hove and 9 new kiosk openings in shopping centre.

 

Gross margin

Gross profit as a percentage of sales improved from 46.8% to 49.7% reflecting the combination of a volume increase and a price efficiency in sponge and cake supplies amounting to a 250 basis point saving.

 

EBITDA

EBITDA increased by 14.6% to £4.9m as a result of the strong increase in sales and improved margins. Adjusted EBIDTA rose by 25.9% to £5.4m as a result of strong trading.

 

Exceptional items

Following the website data breach that occurred in 2020, the Company was subsequently informed by its merchant services provider that it would be fined €204k in relation to this. The Company has made a total provision of £486k in FY21 allowing for additional legal and professional fees and potential fine relating to the breach. Given the one-off nature of the incident, this fine has been categorised as an exceptional item in the Group's accounts.

Balance sheet

 

Cake Box has a strong balance sheet with a cash balance at the year-end of £5.1m (2020: £3.7m). The Group's only debt is a mortgage of £1.5m secured by its freehold properties in Enfield, Bradford and Coventry.

The Group operates a franchise model and therefore has a relatively low and flexible cost base. The Board is therefore very comfortable with the Group's cash levels and liquidity despite the unprecedented events of 2020.

 

Taxation

 

The effective rate of taxation was 18.0% (2020: 16.9%). This is in line with relief obtained in Research and Development costs, being offset with corporation tax timing differences on capital assets.

 

Earnings per share (EPS)

 

Un-adjusted earnings per share were 8.42p (2020: 7.82p). Adjusted earnings per share was 9.63p (2020: 7.82p). An increase of 23% reflecting the increase in profitability of the Group. The number of shares in issue was 40,000,000 and is unchanged since the Company's IPO in June 2019.

 

Dividend

 

Having delivered a year of strong growth, the Board is pleased to propose a final dividend of 3.7 pence per share (2020: 0.0p), bringing the total dividend for the year to 5.55 pence per share excluding a special dividend of 3.2 pence paid in October 2020.

 

If approved by the shareholders at the Company's AGM on 6^th August 2021, the final dividend of 3.7 pence per share will be paid on 13^th August 2021 to shareholders on the register on 16^th July 2021.

 

As previously stated, the Company intends that the total dividend for each year will split into one third for the first six months of the year to two thirds for the year end.

 

Cash position

 

The Group had £5.1m of cash at year end, an increase of £1.5m. At the year end, the Group had a net cash position of £3.6m which was up £1.6m from the previous year. I am pleased to say that we have been able to increase our cash balance even after loans of £0.9m were drawn by our franchisees from our Franchisee Support Fund which we introduced this year to help with funding new franchisee loans.

 

Trade and other receivables

 

The Group had £3.35m of trade and other receivables (including other financial assets) at 31 March 2021, an increase on the prior year. The majority of this balance relates to trade receivables which have increased by £2.0m partly as result of not only the increase in turnover but also due to £0.9m being utilised by the Franchisee Support Fund mentioned earlier. Trading debts relating to purchases of products by franchisees remain low in comparison as credit terms have a defined seven day payment terms.

 

Trade and other payables

 

The Group had £3.35m of trade and other payables at the year end, an increase of £1.8m on the prior year. The Group actively sources cost effective suppliers without compromising on the quality of the products. Other payables are paid according to terms specified. 

 

Pardip Dass

Chief Financial Officer

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2021

                                                                                                                       

				2021		2020
		Note		£		£
Revenue		3		21,910,862		18,742,175
Cost of sales				(10,978,993)		(9,978,675)
Gross profit				10,931,869		8,763,500
Administrative expenses before exceptional items				(6,198,981)		(4,971,999)
Exceptional items		11		(486,319)		-
Administrative expenses		4		(6,685,300)		(4,971,999)
Other operating income		5		-		8,800
Operating profit		6		4,246,569		3,800,301
Net finance costs		7		(37,299)		(36,357)
Profit before income tax				4,209,270		3,763,944
Income tax expense		12		(842,362)		(635,349)
Profit after income tax				3,366,908		3,128,595
Other comprehensive income for the year
Revaluation of freehold property		14		24,901		1,400,000
Deferred tax on revaluation of freehold property		13		(4,731)		(266,000)
Total other comprehensive income for the year				20,170		1,134,000
Total comprehensive income for the year				3,387,078		4,262,595
Attributable to: Equity holders of the parent				3,387,078		4,262,595
Earnings per share
Basic		33		8.42p		7.82p
Diluted		33		8.42p		7.82p*

 

 

*The prior year diluted earnings per share has been corrected to reflect that performance conditions on share options have not been met at the balance sheet date

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2021

 

								2021		2020
				Note				£		£
Assets
Non-current assets
Property, plant and equipment				14				7,251,602		7,199,549
Other financial assets				17				656,005		10,000
Deferred tax asset				13				95,447		37,690
								8,003,053		7,247,239
Current assets
Inventories				15				1,902,171		1,396,235
Trade and other receivables				16				2,490,217		1,453,232
Other financial assets			17				382,808			-
Cash and cash equivalents								5,125,864		3,676,042
								9,901,060		6,525,509
Total Assets								17,904,113		13,772,748
Equity and liabilities
Equity
Issued share capital				18				400,000		400,000
Capital redemption reserve				19				40		40
Share option reserve				19				488,596		198,368
Revaluation reserve				19				1,609,592		1,589,422
Retained earnings				19				8,643,415		7,296,507
Equity attributable to the owners of the Parent company								11,141,643		9,484,337
Current liabilities
Trade and other payables				22				3,353,749		1,493,352
Short-term borrowings				20				167,754		167,754
Current tax payable								903,469		648,522
Provisions				23				486,319		-
								4,911,291		2,309,628
Non-current liabilities
Borrowings				21				1,318,005		1,446,288
Deferred tax liabilities				13				533,174		532,495
								1,851,179		1,978,783
Total Equity and Liabilities								17,904,113		13,772,748

 

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2021

                                                                                                                                                                       

	Note			2021		2020*
				£		£
Cash flows from operating activities
Profit before income tax				4,209,270		3,763,944
Adjusted for:
Depreciation				670,333		491,630
Exceptional items				486,319
Profit on disposal of tangible fixed assets				(18,972)		(5,608)
Increase in inventories				(505,936)		(486,519)
(Increase)/decrease in trade and other receivables				(1,172,047)		119,818
Increase/(decrease) in trade and other payables				1,860,396		(38,537)
Share based payment charge				288,000		198,368
Finance income				(4,087)		(17,872)
Cash generated from operations				5,813,276		4,025,224
Finance costs				41,386		54,229
Taxation paid				(646,995)		(727,898)
Net cash inflow from operating activities				5,207,667		3,351,555
Cash flows from investing activities
Sale of investment properties				-		650,000
Purchases of property, plant and equipment				(704,959)		(1,266,242)
Proceeds from sale of property, plant and equipment				26,446		28,462
Interest received				4,087		17,872
Issue of loans to franchisees				(1,016,813)		(124,005)
Repayment of franchisee loans				123,063		126,303
Net cash outflow from in investing activities				(1,568,176)		(567,610)
Cash flows from financing activities
Repayment of borrowings				(128,283)		(535,718)
Dividends paid	9			(2,020,000)		(1,600,000)
Interest paid				(41,586)		(54,229)
Net cash outflow from financing activities				(2,189,869)		(2,189,947)
Net increase in cash and cash equivalents				1,449,822		593,998
Cash and cash equivalents brought forward				3,676,042		3,082,044
Cash and cash equivalents carried forward	31			5,125,864		3,676,042

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2021

 

			Attributable to the owners of the Parent Company
	Share capital £			Capital redemption reserve £		Share option reserve£		Revaluation reserve £		Retained earnings £		Total £
At 31 March 2019	400,000			40		-		455,422		5,767,912		6,623,374
Profit for the year	-			-		-		-		3,128,595		3,128,595
Revaluation of freehold property	-			-		-		1,400,000		-		1,400,000
Deferred tax on revaluation of freehold property	-			-		-		(266,000)		-		(266,000)
Total comprehensive income for the year	-			-		-		1,134,000		3,128,595		4,262,595
Transactions with owners in their capacity as owners Share-based payments	-			-		198,368		-		-		198,368
Dividends paid	-			-		-		-		(1,600,000)		(1,600,000)
At 31 March 2020	400,000			40		198,368		1,589,422		7,296,507		9,484,337
Profit for the year	-			-		-		-		3,366,908		3,366,908
Revaluation of freehold property	-			-		-		24,901		-		24,901
Deferred tax on revaluation of freehold property	-			-		-		(4,731)		-		(4,731)
Total comprehensive income for the year	-			-		-		20,170		3,366,908		3,387,078
Transactions with owners in their capacity as owners
Share-based payments	-			-		288,000		-		-		288,000
Deferred tax on share-based payments	-			-		2,228		-		-		2,228
Dividends paid	-			-		-		-		(2,020,000)		(2,020,000)
At 31 March 2021	400,000			40		488,596		1,609,592		8,643,415		11,141,643

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2021

 

1.         General information

                                                           

Cake Box Holdings Plc is a listed company limited by shares, incorporated and domiciled in England and Wales. Its registered office is 20 - 22 Jute Lane, Enfield, Middlesex, EN3 7PJ.

 

The financial statements cover Cake Box Holdings Plc ('Company') and the entities it controlled at the end of, or during, the financial year (referred to as the 'Group').

 

The principal activity of the Group continues to be the specialist retailer of fresh cream cakes.

 

2.         Accounting policies    

 

            2.1        Basis of preparation of financial statements                                        

 

While the information included in this preliminary announcement has been prepared on a going concern basis, under historical cost convention other than certain classes of property, plant and equipment, and equity settled share-based payments in scope of IFRS 2, which are measured at fair value, and in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006, the above audited financial information does not constitute statutory financial statements as defined in section 434 of the Companies Act 2006. The above figures for the period ended 31 March 2021 have been extracted from the Group's financial statements which have been reported on by the Group's auditors and received an audit opinion which was unqualified. The Company's statutory financial statements for the year ended 31 March 2020 have been lodged with the Registrar of Companies. These financial statements received an audit report which was unqualified and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying their report or a statement under section 498(2) or section 498(3) of the Companies Act 2006. The financial statements for the year ended 31 March 2021 will be dispatched to the shareholders and filed with the Registrar of Companies. The preliminary announcement was approved by the Board and authorised for issue on 29 June 2021.

 

 

Sources of estimation uncertainty

The preparation of financial statements under IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Estimates and assumptions are reviewed on an ongoing basis and any revision to estimates or assumptions are recognised in the period in which they are revised and in future periods affected.

 

Significant judgements and estimates

The material areas in which estimates, and judgements are applied are as follows:

 

Provisions - Judgement and Estimate

The Group has recognised provisions following a data breach which impacted the Group's website payment system as further set out in Note 24. The provision relates to the fine received by the merchant service provider, and estimated costs associated including potential fines from the ICO in respect to GDPR breaches and associated legal and professional fees. Management use judgement in respect of potential fees and fines and estimates to calculate the quantum of costs which equate to £304,176 of the total provision.

 

Freehold property - Judgement

Freehold properties are held at valuation. Depreciation has not been provided as there is no difference between the carrying value and expected residual value.

 

One property held at valuation has been revalued by an independent valuer during the year. The directors consider that the value of the freehold property is representative of the current market value after consideration to similar properties in the surrounding area based upon extensive research at the balance sheet date. See note 14 for further information. 

 

Share-based payment - Estimate

Share based payments have been measured using the Black-Scholes valuation model which requires a range of input factors which are estimates based on historical data, expected data, benchmarking and consideration of non-market based performance conditions. Full details of these factors are detailed in note 20.

 

2.2        Functional and presentation currency

 

The currency of the primary economic environment in which the Group operates (the functional currency) is Pound Sterling ("GBP or £") which is also the presentation currency.

 

2.3        Basis of consolidation

 

The Group financial statements consolidate the financial statements of the Company and all its subsidiaries. Subsidiaries include all entities over which the Group has the power to govern financial and operating policies. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control commences until the date that control ceases. Intra-group transactions are eliminated in preparing the Consolidated Financial Statements.

 

A list of the significant investments in subsidiaries, including the name, country of incorporation and proportion of ownership interest is given in note 5 to the Company's separate financial statements.

 

2.4        Application of New and Revised IFRS's

 

As a result of the UK leaving the EU the group has early adopted the UK-adopted IFRS's. At the balance sheet date there were no material differences as a result of the adoption.

 

In the current year, the Group has applied a number of other amendments to Standards and Interpretations issued by the IASB that are effective for an annual period that begins on or after 1 January 2020. This has not had any material impact on the amounts reported for the current and prior years. These include:

 

 

		Effective Date
IAS 1 & 8	Definition of material	1 January 2020
IFRS 3	Definition of a business	1 January 2020
IFRS 9, IAS 39 & IFRS 7	IBOR (Inter-Bank Offered Rates) Reforms Phase 1 Amendment	1 January 2020
Conceptual Framework	Amendments References to the Conceptual Framework in IFRS standards	1 January 2020

 

At the date of authorisation of these financial statements the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective and are not expected to have a material impact on the Group:

 

		Effective Date
IFRS 9, IAS 39 & IFRS 7	IBOR (Inter-Bank Offered Rates) Reforms Phase 2 Amendment	1 January 2021
IFRS 3	'Amendments References to the Conceptual Framework in IFRS standards	1 January 2022
IAS 16	Amendments prohibiting a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use
IAS 37	Amendments regarding the costs to include when assessing whether a contract is onerous
IAS 1 & IAS 8	Amendments regarding the disclosure of accounting policies and amendments regarding the definition of accounting estimates	1 January 2023

 

            2.5        Segment reporting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive directors that make strategic decisions. Whilst the Group trading has numerous components, the chief operating decision maker (CODM) is of the opinion that there is only one operating segment. This is in line with internal reporting provided to the executive directors.

 

2.6        Going concern

 

The directors pay careful attention to the cost base of the Group ensuring not only that it is kept at a level to satisfy the commercial requirements but also that it remains appropriate to the level of activity of the Group and the financial resources available to it.

 

The COVID-19 pandemic has been unprecedented in scale and impact and the directors have taken swift and decisive action to protect customers, colleagues, franchisees, and the communities in which the Group operates, by implementing the necessary steps to safeguard business through the crisis, in line with UK Government guidelines.

There remains much uncertainty about the virus and how long it will continue to impact the Group, customers, and the wider public and economy but the directors are confident that the Group has the financial and operational resilience such that no material uncertainty exists.

 

Based on the current working capital forecast, the Group is unlikely to need additional funds within twelve months of the date of approval of these financial statements in order to maintain its proposed work levels and to continue successfully managing its cash resources. After making enquiries and considering the assumptions upon which the forecasts have been based, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the period of at least twelve months from the date of approval of these financial statements. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.       

 

2.7        Revenue recognition

 

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

 

Sale of goods

Turnover from the sale of goods is recognised when all of the following conditions are satisfied:

·             the Group has transferred the significant risks and rewards of ownership to the buyer;

·          the Group retains neither continuing managerial involvement to the degree usually associated with the ownership nor effective control over the goods sold;

·              the amount of turnover can be measured reliably;

·              it is probable that the Group will receive the consideration due under the transaction; and

·              the costs incurred or to be incurred in respect of the transaction can be measured reliably.

 

 

 

Fees

            Fees receivable from the franchisee for branding, equipment, training and initial support are recognised on delivery of the equipment and rendering of the services enabling the franchisee to operate at which time the Group has performed its obligations under the franchise agreement in respect of the fees.

 

Online sales

Online sales which include click and collect sales where the franchisee has the primary responsibility for the fulfillment of the order and the Group is collecting consideration on behalf of the franchisee as agent are not recognised as revenue of the Group. Only the net commission amount is recognised.

        

2.8        Current and deferred taxation

 

            Current tax liabilities

Current tax for the current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of the current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset, limited to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.

 

            Deferred Tax

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and their corresponding tax bases (known as temporary differences). Deferred tax liabilities are recognised for all temporary differences that are expected to increase taxable profit in the future. Deferred tax assets are recognised for all temporary differences that are expected to reduce taxable profit in the future, and any unused tax losses or unused tax credits, limited to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.

 

The net carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to reflect the current assessment of future taxable profits. Any adjustments are recognised in the statement of comprehensive income. Deferred tax is calculated at the tax rates that are expected to apply to the taxable profit (tax loss) of the periods in which it expects the deferred tax asset to be realised or the deferred tax liability to be settled, on the basis of tax rates that have been enacted or substantively enacted by the end of the reporting period.

 

Tax Expense

Income tax expense represents the sum of the tax currently payable and deferred tax movement for the current period. The tax currently payable is based on taxable profit for the year.

           

2.9        Tangible fixed assets - held at cost

 

Property, plant & equipment, other than investment and freehold properties, are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

 

Land is not depreciated. Depreciation on other assets is charged to allocate the cost of assets less their residual value over their estimated useful lives, using the straight‑line method.

 

Depreciation is provided on the following annual basis:

 

Plant & machinery	-	25% Straight-line method
Motor vehicles	-	25% Straight-line method
Fixtures & fittings	-	25% Straight-line method
Assets under construction	-	Not depreciated

 

Assets under the course of construction are carried at cost less any recognised impairment loss. Depreciation of these assets commences when the assets are ready for their intended use.

 

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

 

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Statement of Comprehensive Income.

 

2.10      Tangible fixed assets - held at valuation

 

Individual freehold properties are carried at fair value at the date of the revaluation less any subsequent accumulated impairment losses. Revaluations are undertaken with sufficient regularity to ensure the carrying amount does not differ materially from that which would be determined using fair value at each Consolidated Statement of Financial Position date.

 

Fair values are determined by an independent valuer and updated by the directors from market-based evidence.

 

Revaluation gains and losses are recognised in Other Comprehensive Income unless losses exceed the previously recognised gains or reflect a clear consumption of economic benefits, in which case the excess losses are recognised in the Statement of Comprehensive Income.

 

            2.11      Inventories

 

Inventories are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis.

 

2.12      Financial instruments

 

Recognition of Financial Instruments

Financial assets and financial liabilities are recognised when the Group becomes party to the contractual provisions of the instrument.

 

Trade and other receivables

Trade and other receivables are initially measured at fair value and subsequently at amortised cost. All sales are made on the basis of normal credit terms, and the receivables do not bear interest. Where credit is extended beyond normal credit terms, receivables are measured at amortised cost using the effective interest method. At the end of each reporting period, the carrying amounts of trade and other receivables are reviewed. Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within cost of sales in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

 

Other financial assets

Other financial assets are initially measured at fair value and subsequently at amortised cost. At the end of each reporting period the carrying amount of these assets are reviewed on an individual balance basis and appropriate impairment is made if required.

Trade and other payables

Trade and other payables are initially measured at fair value and subsequently at amortised cost. Trade payables are obligations on the basis of normal credit terms and do not bear interest. Trade payables denominated in a foreign currency are translated into Sterling using the exchange rate at the reporting date. Foreign exchange gains or losses are included in other income or other expenses.

 

Bank loans and overdrafts

All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the income statement over the period of the relevant borrowing.

 

Interest expenses are recognised on the basis of the effective interest method and are included in finance costs.

 

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

 

2.13      Finance costs

 

Finance costs are charged to the Consolidated Statement of Comprehensive Income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 

 

2.14      Cash and cash equivalents

 

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

 

2.15      Dividends

 

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an Annual General Meeting.

 

2.16      Leases

 

Leases would have been recognised under IFRS16 but as the leases have less than twelve months until expiry, they have been recognised on a straight line basis.

 

2.17      Employee benefits

 

Short Term Employee Benefits

The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as leave pay and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.

 

Defined contribution pension plan

The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

The contributions are recognised as an expense in the Consolidated Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Consolidated Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.

 

Termination benefits

The entity recognises the expense and corresponding liability for termination benefits when it is demonstrably committed to either of the following scenarios:

a.     The termination of the employment of an employee or group of employees before the normal retirement age, or

b.     The provision of termination benefits in relation to an offer made to encourage voluntary redundancy.

 

The value of such benefit is measured at the best estimate of the expenditure required to settle the obligation at the reporting date.

 

 

2.18      Provisions and contingencies

 

Provisions are recognised when the Group has an obligation at the reporting date as a result of a past event; it is probable that the Group will be required to transfer economic benefits in settlement; and the amount of the obligation can be estimated reliably.

 

Provisions are measured at the present value of the amount expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks to a specific obligation. The increase in the provision due to the passage of time is recognised as interest expense.

 

Provisions are not recognised for future operating losses.

 

Contingent assets and contingent liabilities are not recognised.

 

2.19      Share capital

 

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

 

2.20      Research and development

 

Research and development expenditure is charged to the Consolidated Statement of Comprehensive Income in the year in which it is incurred. The expenditure does not meet the definition of 'Development' under IAS 38.

 

2.21      Fair value measurement

 

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

 

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

 

Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

 

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

 

 

 

 

2.22 Share based payment

 

Where share options are awarded to employees, the fair value of the options (measured using the Black-Scholes model) at the date of grant is charged to the Statement of Comprehensive Income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each Statement of Financial Position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

 

The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party or factors which are within the control of one or other of the parties. Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to Statement of Comprehensive Income over the remaining vesting period.

 

2.23 Exceptional items

 

Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence.

 

3.         Segment reporting

Components reported to the chief operating decision maker (CODM) are not separately identifiable and as such consider there to be one reporting segment. The Group makes varied sales to its customers but none are a separately identifiable component. The following information is disclosed:

 

	2021		2020
	£		£
Sale of goods	19,213,915		16,580,555
Sale of services	2,696,947		2,161,620
	21,910,862		18,742,175

 

            All revenue occurred in the United Kingdom for both financial years.

 

The operating segment information is the same information as provided throughout the consolidated financial statements and is therefore not duplicated.

 

            The Group was not reliant upon any major customer during 2021 or 2020.

 

 

 

 

4.         Expenses by nature

 

The Administrative expenses have been arrived at after charging:

	2021		2020
	£		£
Wages and salaries	3,702,499		2,821,761
Travel and entertaining costs	210,587		389,781
Supplies costs	233,258		99,254
Professional costs	538,533		433,513
Depreciation costs	670,333		491,630
Rates and utilities costs	294,292		291,626
Property maintenance costs	193,607		148,910
Advertising costs	317,154		231,013
Other costs	38,718		64,511
Exceptional items	486,319		-
	6,685,300		4,971,999

 

5.         Other operating income

 

	2021		2020
	£		£
Rent receivable	-		8,800
	-		8,800

 

 

6.         Operating profit

 

The operating profit is stated after charging/(crediting):

	2021		2020
	£		£
Depreciation of tangible fixed assets	670,333		491,630
Stock recognised as an expense	8,768,319		8,839,732
Profit on disposal of property, plant & equipment	(18,972)		(5,608)
Research and development charged as an expense	215,555		254,053
Lease expense	-		45,000
Fees payable to the Group's auditor and its associates for the audit of the Group's annual financial statements	87,000		60,000
Fees payable to the Group's auditor and its associates for the audit of the Group's interim financial statements	7,500		7,000
Share based payment charge	288,000		198,368

 

           

 

 

7.         Net finance costs

 

	2021		2020
	£		£
Finance expenses
Bank loan interest	35,771		54,229
Interest on overdue tax	5,615		-
Finance income
Bank interest received	(4,087)		(17,872)
	37,299		36,357

 

8.         Staff costs

           

            Staff costs, including directors' remuneration, were as follows:

	2021		2020
	£		£
Wages and salaries	3,055,008		2,341,395
Social security costs	287,875		221,297
Pension costs	42,080		32,780
Private health	29,536		27,921
Share based payment expense	288,000		198,368
	3,702,499		2,821,761

 

The average monthly number of employees, including directors, for the year was 107 (2020 - 81).

 

 

9.         Dividends

 

	2021		2020
	£		£
Interim dividend of 1.6p per ordinary share	-		640,000
Final dividend of 2.4p per ordinary share proposed and paid during the year relating to the previous year's results	-		960,000
Interim dividend of 1.85 per ordinary share	740,000		-
Final dividend of 3.2p per ordinary share proposed and paid during the year relating to the previous year's results	1,280,000		-
	2,020,000		1,600,000

 

On 10 August 2020 the directors declared a final dividend for the year ended 31 March 2020 of 3.2p per ordinary share, which was paid on 23 October 2020.

 

Since the year end the Directors proposed the payment of a final dividend of 3.7 pence (2020 - 3.2 pence) per share totaling 1,480,000 (2020 - £1,280,000) for the year ended 31 March 2021.

 

 

 

 

10.        Directors' remuneration and key management personnel

 

The Directors' remuneration is disclosed within the Directors' Remuneration Report. The Executive Directors are considered key management personnel. Employers NIC paid on Directors' remuneration in the year was £62,287 (2020 - £51,970).

 

 

11.        Exceptional items

 

	2021		2020
	£		£
Website data breach	486,319		-
	486,319		-

 

            Please see note 24 for further information.

 

12.        Taxation

           

			2021		2020
			£		£
Corporation tax
Current tax on profits for the year			900,406		648,521
Adjustments in respect of previous periods			1,536		(19,574)
Deferred tax
Arising from origination and reversal of temporary differences			(59,580)		6,402
Taxation on profit on ordinary activities			842,362		635,349
Factors affecting tax charge for the year
The tax assessed for the year is lower than (2020 - lower than) the standard rate of corporation tax in the UK of 19% (2020 - 19%). The differences are explained below:
			2021		2020
			£		£
Profit on ordinary activities before tax			4,209,270		3,763,944
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2020 - 19%)			799,761		715,149
Effects of:
Expenses not deductible for tax purposes, other than goodwill amortisation and impairment			95,115		50,795
Adjustment in research and development tax credit leading to a decrease in the tax charge			(53,242)		(111,021)
Difference in tax rates used within share-based payments			(808)		-
Adjustments to tax charge in respect of prior periods			1,536		(19,574)
Total tax charge for the year			842,362		635,349

 

Factors that may affect future tax charge

 

At the Budget 2021 on 3 March 2021, the Government announced that the Corporation Tax rate will increase to 25% for companies with profits above £250,000 with effect from 1 April 2023, as well as announcing a number of other changes to allowances and treatment of losses. These changes are not yet substantively enacted, and the Company has not yet undertaken a full analysis of the impact of the changes.

 

13.        Deferred taxation                     

                                                           

	2021		2020
	£		£
Balance brought forward	494,805		222,403
Charged to other comprehensive income:
Deferred tax on revalued freehold property	4,731		266,000
Charged directly to reserves:
Employee benefits (including share-based payments)	(2,228)		-
Charged to profit and loss:
Deferred tax on revalued investment properties	-		(78,169)
Accelerated capital allowances	(3,715)		122,261
Employee benefits (including share-based payments)	(55,529)		(37,690)
Other short-term timing differences	(337)		-
Balance carried forward	437,727		494,805

           

	2021		2020
	£		£
Deferred tax liabilities
Accelerated capital allowances	197,261		200,976
Other short-term timing differences	(1,751)		(1,414)
Property revaluations (including indexation)	337,664		332,933
	533,174		532,495
Deferred tax assets
Employee benefits (including share-based payments)	(95,447)		(37,690)
	437,727		494,805

 

Movements in deferred tax in direct relation to freehold property revaluation are recognised immediately against the revaluation reserve.

 

 

 

 

 

14.        Property, plant and equipment

	Assets under construction	Freehold property	Plant & machinery	Motor vehicles	Fixtures & fittings	Total
	£	£	£	£	£	£
Cost or valuation
At 1 April 2019	1,570,793	2,500,000	1,103,652	392,310	1,002,422	6,569,177
Additions	306,927	-	120,348	253,837	585,130	1,266,242
Disposals	-	-	-	(49,142)	-	(49,142)
Transfer between classes	(839,543)	724,851	(207,972)	4,025	318,639	-
Assets written off	-	-	(30,579)	-	(86,701)	(117,280)
Revaluations	-	1,400,000	-	-	-	1,400,000
At 31 March 2020	1,038,177	4,624,851	985,449	601,030	1,819,490	9,068,997
Depreciation
At 1 April 2019	-	-	624,893	204,296	692,197	1,521,386
Charge for the year	-	-	93,359	122,321	275,950	491,630
Disposals	-	-	-	(26,288)	-	(26,288)
Transfer between classes	-	-	(39,640)	2,934	36,706	-
Assets written off	-	-	(30,579)	-	(86,701)	(117,280)
At 31 March 2020	-	-	648,033	303,263	918,152	1,869,448
Net book value
At 31 March 2020	1,038,177	4,624,851	337,416	297,767	901,338	7,199,549
	Assets under construction	Freehold property	Plant & machinery	Motor vehicles	Fixtures & fittings	Total
	£	£	£	£	£	£
Cost or valuation
At 1 April 2020	1,038,177	4,624,851	985,449	601,030	1,819,490	9,068,997
Additions	82,396	-	88,295	146,005	388,263	704,959
Disposals	-	-	-	(44,165)	-	(44,165)
Revaluations	-	24,901	-	-	-	24,901
At 31 March 2021	1,120,573	4,649,752	1,073,744	702,870	2,207,753	9,754,692
Depreciation
At 1 April 2020	-	-	648,033	303,263	918,152	1,869,448
Charge for the year	-	-	138,766	132,471	399,096	670,333
Disposals	-	-	-	(36,691)	-	(36,691)
At 31 March 2021	-	-	786,799	399,043	1,317,248	2,503,090
Net book value
At 31 March 2021	1,120,573	4,649,752	286,945	303,827	890,505	7,251,602

 

The valuation at the balance sheet date has been made by the directors based upon costs incurred during the construction phase.
 

 

On 24 February 2021 existing freehold property was revalued by an independent qualified valuer, in accordance with the RICS Valuation - Global Standards 2017 (the Red Book). This valuation was maintained by the directors after consideration to similar properties in the surrounding area based upon extensive research at the balance sheet date. 

 

The directors have judged previous third party and internal valuations, made on the same basis as above, on other freehold property as a true measure of value for at the balance sheet date.

 

The fair value of freehold property is categorised as a level 3 recurring fair value measurement.   

 

If the Freehold properties had been accounted for under the historic cost accounting rules, the properties would have been measured as follows:
	2021		2020
	£		£
Historic cost	2,817,188		2,817,188
	2,817,188		2,817,188

 

15.        Inventories                                                                              

				2021		2020
				£		£
Finished goods and goods for resale				1,902,171		1,396,235

                                                                                                           

Inventories are charged to cost of sales in the Consolidated Statement of Comprehensive Income.

 

 

16.        Trade and other receivables

 

					2021		2020
					£		£
	Trade receivables				2,041,673		934,763
	Other receivables				17,147		179,236
	Prepayments				431,397		204,170
					2,490,217		1,318,169
	Non-current				-		-
	Current				2,490,217		1,453,232
					2,490,217		1,463,232

 

The fair value of those trade and other receivables classified as financial assets at amortised cost are disclosed in the financial instruments. (Note 27).

 

The Group's exposure to credit and market risks, including impairments and allowances for credit losses, relating to trade and other receivables is disclosed in the financial risk management and impairment of financial assets note.

 

 

 

 

17.        Other financial assets

				2021		2020
				£		£
Other financial assets				1,038,812		145,063
				1,038,812		145,063
Non-current				656,004		10,000
Current				382,808		135,063
				1,038,812		145,063

 

All non-current assets are due within five years of the statement of financial position date. The loans are interest free and payable in equal monthly instalments.

 

 

 

18.        Share capital

 

		2021		2020
		£		£
40,000,000 Ordinary shares of £0.01 each		400,000		400,000
		400,000		400,000

 

            All shares rank equally in all respects.

 

19.        Reserves

 

            The following describes the nature and purpose of each reserve within equity:

 

            Capital redemption reserve

            Amounts transferred from share capital on redemption of issued shares.

 

            Revaluation reserve

            Gain/(losses) arising on the revaluation of the Group's property (other than investment property).

 

            Retained earnings

All other net gains and losses and transactions with owners (e.g. dividends, fair value movements of investment property) not recognised elsewhere.

 

Share option reserve

Gains/losses arising on amounts in respect of equity-settled share options outstanding. See note 20 for more information.

 

 

 

 

 

 

 

20.        Share-Based Payments

 

The Group operates two equity-settled share-based remuneration schemes for certain employees at management and Executive Director level: A United Kingdom tax authority approved scheme for senior managers and an executive director and an unapproved scheme for executive directors. The main vesting condition for senior managers is EBITDA reaching £19 million by the third anniversary of the date of the grant. The main vesting condition for the executive director is Earnings Per Share reaching a minimum of 36.41p by the third anniversary of the date of the grant on which 30% will be exercisable. This increases by 0.0963% for every penny over the minimum level. The individuals must remain employees of the Group over the 3 or 4 year period. Under the unapproved scheme, options vest on the same basis as the approved scheme for the executive director. In addition, the options will lapse 10 years after the grant date.

 

	2021	2021	2020	2020
	Weighted average exercise price (pence)	Number	Weighted average exercise price (pence)	Number
Outstanding as at 1 April	64	688,400	-	-
Granted during the year	-	-	64	688,400
Forfeited during the year	-	-	-	-
Exercised during the year	-	-	-	-
Lapsed during the year	-	-	-	-
Outstanding as at 31 March	64	688,400	64	688,400

The exercise price of options outstanding at 31 March 2021 ranged between 1 penny and 165 pence which represented the grant of the unapproved and approved options respectively. Their weighted average remaining contractual life of these options at the year end date was 520 days (2020 - 885 days)

 

Of the total number of options outstanding at 31 March 2021, none had vested nor were any exercisable. No options were exercised during the year.

 

		2021		2020
		£		£
Option pricing model used		Black-Scholes		Black-Scholes
Share price at date of grant (pence)		181		181
Contractual life (days)		1096 - 1461		1096 - 1461
Exercise price (pence)		1-165		1-165
Volatility		20%		20%
Risk free interest rate		0.71%		0.71%

 

The volatility assumption, measured at the standard deviation of expected share price returns, is based on a statistical analysis of share prices of similar listed entities over the recent years.

 

The share based payment expense of £288,000 (2020 - £198,368) is included in notes 6 and 8. This is calculated on the above assumptions over the relevant period and that the attrition rate is 100%.

 

The Group did not enter into any share-based payment transactions with parties other than employees during the current or previous years.

 

 

 

21.        Borrowings

 

		2021		2020
		£		£
Non-current borrowings
Bank loans		1,318,005		1,446,288
		1,318,005		1,446,288
Current borrowings
Bank loans		167,754		167,754
		167,754		167,754

 

Bank loans have fixed charges over the properties to which they relate and interest of 2.15% - 2.23% above Bank of England base rate are charged on the loans. The loans are repayable in monthly instalments with final payments due between March 2024 and November 2025.

 

22.        Leases

 

            Operating Leases - Lessee

 

The Group leased a building under non-cancellable operating lease agreements. There are no lease commitments at the year-end date

 

            The total future value of minimum lease payments is as follows:

           

		2021		2020
		£		£
Land and buildings
Not later than 1 year		-		23,671
Later than 1 year and not later than 5 years		-		-
Total		-		23,671

 

Operating Leases - Lessor

 

One leased property was sub-leased. The total future value of minimum lease payments receivable is due as follows:

 

		2021		2020
		£		£
Not later than 1 year		-		46,288
Later than 1 year and not later than 5 years		-		-
Total		-		46,288

 

 

 

 

23.        Trade and other payables

				2021		2020
				£		£
Trade payables				2,495,741		684,767
Other taxation and social security				242,473		207,336
Other payables				21,099		142,250
Accruals and deferred income				594,436		458,999
				3,353,749		1,493,352

 

The fair value of the trade and other payables classified as financial instruments are disclosed in the financial instruments (Note 27).

 

The Group's exposure to market and liquidity risks related to trade and other payables is disclosed in the financial risk management and impairment of financial assets note. The Group pays its trade payables on terms and as such trade payables are not yet due at the statement of financial position dates.

 

24.        Provisions

				2021		2020
				£		£
Website data breach				486,319		-

 

Website data breach

A malware attack occurred in 2020 which impacted our website payment system. The company has made a total provision of £486,319, which represents the fine issued by the merchant services provider totalling €204k. This amount is expected to be settled in the next financial year. In addition, further provisions represent the potential fines from the Information Commissioner's Office ("ICO") in respect to breach of General Data Protection Regulation ("GDPR) and other associated legal and professional fees. The amount provided for is based on independent legal advice and timing of settlement is uncertain.

 

Given the one-off nature of the incident, this fine has been categorised as an exceptional item in the Group's accounts. 

 

						Website data breach
						£
Carrying amount at the start of the year						-
Additional amounts recognised						486,319
Carrying amounts at the end of the year						486,319

 

25.        Pension commitments

 

The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £42,080 (2020 - £32,780). Contributions totaling £10,089 (2020 - £10,652) were payable to the fund at the statement of financial position date.

 

 

 

 

 

26.        Related party transactions

 

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. Related party transactions are considered to be at arms-length.    

 

            Details of amounts paid to key management personnel which includes executive and non-executive directors are included within note 10 and the Directors Remuneration Report.

 

            Key management personnel had an interest in dividends as follows:

		2021	2020
		£	£
Mr Sukh Chamdal		645,790	661,517
Mr Pardip Dass		196,719	146,817
Mr Jaswir Singh		28,079	21,867
Mr Neil Sachdev		935	741
		871,523	830,942

 

During the year the Group made sales to companies under the control of the directors. All sales were made on an arms-length basis. These are detailed as follows with director shareholding % shown in brackets:

 

Mr Sukh Chamdal *		2021		2020
		£	£	£	£
		Sales	Balance	Sales	Balance
Cake Box (Crawley) Limited (0%)		111,825	2,639	132,092	13,708
Cake Box CT Limited (0%)		222,752	20,157	126,110	-
Cake Box (Strood) Limited (0%)		147,985	3,361	123,298	6,197
Cake Box (Gravesend) Limited (0%)		123,162	(1,021)	116,814	19,060
		605,724	25,136	498,314	38,965

 

Mr Pardip Dass		2021		2020
		£	£	£	£
		Sales	Balance	Sales	Balance
Eggfree Cake Box Barking Limited (30%)		242,150	2,840	206,152	6,075
		242,150	2,840	206,152	6,075

           

Dr Jaswir Singh		2021		2020
		£	£	£	£
		Sales	Balance	Sales	Balance
Luton Cake Box Limited (10%)		361,150	7,563	315,243	(996)
Peterborough Cake Box Limited (30%)		219,363	10,227	187,136	-
Cream Cake Limited (30%)		171,051	6,107	319,432	-
MK Cakes Limited (0%)**		218,676	(3,578)	185,575	-
Bedford Cake Box Limited (0%)**		145,883	1,432	134,251	-
Chaz Cakes Limited (50%)		161,371	1,231	-	-
Eggless Cake Company (50%)		165,623	2,698	-	-
		1,443,117	25,680	1,141,637	(996)

 

* 100% Owned by Mr. Chamdal's daughter

** 100% Owned by Dr Singh's son/daughter

27.        Financial instruments

 

In common with other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

 

The significant accounting policies regarding financial instruments are disclosed in note 2.

 

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous years unless otherwise stated in this (See Note 28)

 

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

 

Financial Assets
			Held at amortised cost
			2021		2020
			£		£
Cash and cash equivalents			5,125,864		3,676,042
Trade and other receivables			2,058,820		1,113,999
Other financial assets			1,038,812		145,063
			8,223,496		4,935,104

 

Financial Liabilities
			Held at amortised cost
			2021		2020
			£		£
Trade and other payables			3,111,275		1,286,016
Secured Borrowings			1,485,759		1,614,042
			4,597,034		2,900,058

 

28.        Financial risk management

 

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, while retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's finance function. The board receives regular reports from the Chief Financial Officer through which it reviews the effectiveness of processes put in place and the appropriateness of the objectives and policies it sets.

 

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:

 

 

 

Credit risk and impairment

 

Credit risk arises principally from the Group's trade and other receivables. It is the risk that the counter party fails to discharge its obligation in respect of the instrument. The maximum exposure to credit risk equals the carrying value of these items in the financial statements as the group has the power to stop supplying the customer until payment is received in full.

 

Definition of default

 

            The loss allowance on all financial assets is measured by considering the probability of default.

 

Receivables are considered to be in default when the principal or any interest is more than 90 days past due, based on an assessment of past payment practices and the likelihood of such overdue amounts being recovered.

 

Determination of credit-impaired financial assets

 

The Group considers financial assets to be 'credit-impaired' when the following events, or combinations of several events, have occurred before the year-end:

•           significant financial difficulty of the counterparty arising from significant downturns in operating results and/or significant unavoidable cash requirements when the counterparty has insufficient finance from internal working capital resources, external funding and/or group support;

•           a breach of contract, including receipts being more than 240 days past due;

•           it becoming probable that the counterparty will enter bankruptcy or liquidation.

 

Write-off policy

 

Receivables are written off by the Company when there is no reasonable expectation of recovery, such as when the counterparty is known to be going bankrupt, or into liquidation or administration.  Receivables will also be written off when the amount is more than 300 days past due and is not covered by security over the assets of the counterparty or a guarantee.

           

            Impairment of trade receivables  and other financial assets

 

The Group calculates lifetime expected credit losses for trade receivables and other financial assets using a portfolio approach.  All items are grouped based on the credit terms offered and the type of product sold.  The probability of default is determined at the year-end based on the aging of the receivables and historical data about default rates on the same basis.  That data is adjusted if the Group determines that historical data is not reflective of expected future conditions due changes in the nature of its customers and how they are affected by external factors such as economic and market conditions.

 

In accordance with IFRS 9, the Group performed a year end impairment exercise to determine whether any write down in amounts receivable was required, using an expected credit loss model. The expected loss rate for receivables less than 90 days old is 0% on the basis of the group's history of bad debt write offs and above 90 days has not been considered on the basis of immateriality.

As at 31 March 2021, the total loss allowances against the Group's financial assets were immaterial and no charge to the income statement was recognised.

 

Liquidity risk

 

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due.

 

The Board receives cash flow projections on a regular basis which are monitored regularly. The Board will not commit to material expenditure in respect of its ongoing development programme prior to being satisfied that sufficient funding is available to the Group to finance the planned programmes.

 

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:

 

Borrowings
	2021		2020
	£		£
Borrowings - Due within one year	167,754		167,754
Borrowings - Due between one to five years	1,318,005		1,446,288
	1,485,759		1,614,042

 

Trade and other payables
	2021		2020
	£		£
0 to 30 Days	2,364,512		1,105,254
30 to 60 Days	447,476		45,509
60 to 90 Days	41,348		475
90 to 120 Days	40,300		119,278
120 Days to 1 year	217,639		15,500
	3,111,275		1,286,016

 

Interest rate risk

 

The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining good relationships with banks and other lending providers and by ensuring cash reserves are high enough to cover the debt. Where possible fixed terms of interest will be sought.

 

 

The Group analyses the interest rate exposure on a regular basis. A sensitivity analysis is performed by applying a simulation technique to the liabilities that represent major interest-bearing positions. Various scenarios are run taking into consideration refinancing, renewal of the existing positions, alternative financing and hedging. Based on the simulations performed, the impact on profit or loss and net assets of a 25 basis-point shift (being the maximum reasonable expectation of changes in interest rates) would be a change of £3,714 (2019 - £4,035).

 

Capital risk management

 

The Group considers its capital to comprise its ordinary share capital and retained profits as its equity capital. In managing its capital, the Group's primary objective is to provide return for its equity shareholders through capital growth and future dividend income. The Group's policy is to seek to maintain a gearing ratio that balances risks and returns at an acceptable level and also to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims, either through new share issues or the issue of debt, the Group considers not only its short-term position but also its long-term operational and strategic objectives.

 

Details of the Group's capital are disclosed in the Statement of Changes in Equity.

 

There have been no other significant changes to the Group's management objectives, policies and procedures in the year nor has there been any change in what the Group considers to be capital.

 

 

 

Currency risk

 

The Group is not exposed to any significant currency risk. The Group also manages its currency exposure by retaining its cash balances in Sterling.

 

 

29.        Post statement of financial position events

 

            Post year end the Group has declared a final dividend of 3.7p (2020 - 3.2p per share).

 

The assets under construction, being the new warehouse in Coventry, became fully operational in April 2021.

 

As noted in Note 11 and Note 24, the Group suffered a website data breach during 2020. Subsequent to the year-end, the Group notified customers who were potentially impacted and informed the Information Commissioners Office (ICO) of the breach. We have recognised a provision of expected fines and associated costs in respect to this matter.

 

 

30.        Subsidiary undertakings

 

            The following were subsidiary undertakings of the Company included in the Group results:

 

Name	Country of incorporation	Class of shares	Holding	Principal activity
Eggfree Cake Box Ltd	United Kingdom	Ordinary	100%	Franchisor of specialist cake store
Chaz Ltd	United Kingdom	Ordinary	100%	Property rental company

 

            The above subsidiaries have the same registered office address as Cake Box Holdings Plc.

 

 

 

 

31.        Notes supporting statement of cashflows

           

            Cash and cash equivalents for the purposes of the statement of cashflows comprise of:

 

	2021		2020
	£		£
Cash at bank available on demand	5,123,796		3,675,981
Cash on hand	2,068		61
	5,125,864		3,676,042

 

There were no significant non-cash transactions from financing activities (2020 - none).

 

Non-cash transactions from financing activities are shown in the reconciliation of liabilities from financing transactions below:

 

		Non-current borrowings £		Current borrowings £		Total £
As at 1 April 2019		1,937,577		212,183		2,149,760
Cash flows
Repayments		(349,494)		(186,224)		(535,718)
Non-Cash flows:
Non-current loans becoming current    during the year		(141,795)		141,795		-
As at 31 March 2020		1,446,288		167,754		1,614,042
Cash flows
Repayments		-		(167,754)		(167,754)
Non-Cash flows:
Interest		39,471		-		39,471
Non-current loans becoming current    during the year		(167,754)		167,754		-
As at 31 March 2021		1,318,005		167,754		1,485,759

 

 

32.        Ultimate controlling party

 

            The Group considers there is no ultimate controlling party.

 

 

33.        Earnings per share

	2021		2020
	£		£
Profit after tax attributable to the owners of Cake Box Holdings Plc	3,366,908		3,128,595
	Number		Number
Weighted average number of ordinary shares used in calculating basic earnings per share	40,000,000		40,000,000
Weighted average number of ordinary shares used in calculating diluted earnings per share	40,000,000		40,000,000
	Pence		Pence
Basic earnings per share	8.42		7.82
Diluted earnings per share	8.42		7.82*

*The prior year diluted earnings per share has been corrected to reflect that performance conditions on share options which have not been met at the balance sheet date