Cake Box Holdings plc

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

Unaudited Half Year Results for the six months ended 30 September 2021

Record first half performance with further strong growth and strategic progress

Cake Box Holdings plc, the specialist retailer of fresh cream cakes, today announces its half year results for the six months ended 30 September 2021 ("H1 FY22").

Financial Highlights

·    Strong growth across all financial metrics

·    For the four months to 30 September 2021³, when the full store estate had reopened in FY21:

o  Revenues up 50.5% to £11.2m (four months to 30 September 2020: £7.4m)

o  Gross profit up 48.0% to £5.5m (four months to 30 September 2020: £3.7m)

o  Pre-tax profit up 56.7% to £2.6m (four months to 30 September 2020: £1.65m)

·    Balance sheet and cash generation remain strong

o  Cash from operations of £2.4m (H1 FY21: £2.0m)

o  £4.15m net cash (H1 FY21: £3.80m)

·    Interim dividend of 2.50p per share up 35.1% (H1 FY21: 1.85p)

 Operational highlights

·    174 franchise stores in operation at 30 September 2021 (30 September 2020: 139)

·    20 new franchise stores added in the period (H1 FY21: six new franchise stores)

·    Successful trial of seven kiosks in Asda

·    No disruption to operations from supply chain

·    Continued successful launch of new product ranges, including "naked cake" range

Franchisee Store highlights

·    Like-for-like sales growth of 13.3% in franchise stores in the four months to 30 September 2021⁴ (H1 FY21: 12.1%)

·    Franchisee total turnover up 73.2% to £29.5m (H1 FY21: £17.0m); four months to 30 September 2021 up 31.6% to £19.4m (H1 FY21: £14.8m)

·    Franchisee online sales up 68.1% to £6.7m (H1 FY21: £4.0m); four months to 30 September 2021 up 37.0% to £4.6m (H1 FY21: £3.4m)

Current trading

·    Three new stores opened in the five weeks since the half year end

·    Trading remains strong with franchisee like for like sales at 14.4% in October and online sales up 46.6% in October

·    Four new kiosks opened in Asda stores following the successful trial in seven locations

·    Intention for further roll out of Asda kiosks during the remainder of FY22

·    Targeting 32 new franchise store openings in FY22 underpinned by record number of deposits from prospective franchisees and openings to date during the year

·    Supply chain remains robust, with several months of ingredients in stock

·    Confident in meeting full year expectations

¹ EBITDA is calculated as operating profit before depreciation

² FY21 half year includes six weeks during which all stores were closed which impacted first 2 months

³ Four months June-September 2020 excludes the impact of the March 2020 lockdown and associated store closures to provide a more relevant comparable period 

⁴ Like-for-like: Stores trading for at least one full financial year prior to 30 September 2021

Sukh Chamdal, Chief Executive Officer, commented:

"I'm delighted to report another strong performance over the last six months, demonstrating the continued appeal of Cake Box's unique offering. Our fantastic franchisees, supported by their dedicated team members, have helped us deliver record first half store openings, revenues, profits and dividends, while making further significant strategic progress that gives us momentum into the second half.

Our proven franchisee model continues to deliver and we now plan to open up to 32 new franchise stores this year, helping more entrepreneurs than ever build their own businesses and serve their local communities.

Despite continued uncertainty in the wider environment, it's clear that our unique customer proposition remains highly attractive as more customers choose our delicious, egg-free cakes to celebrate important occasions or simply satisfy their appetites for a tasty treat.

We look ahead with confidence in meeting full year expectations and making further progress in the years ahead."

Analyst presentation

There will be a presentation for analysts this morning at 09:30am at the offices of MHP Communications. If you would like to attend in person or virtually, please contact cakebox@mhpc.com

For further information, please contact:

Operational Review

Another strong half year performance

We delivered another pleasing performance in the first half of the year, with strong trading across the Group's store estate and online delivery channels, as customers continued to respond well to the core Cake Box product proposition and its brand marketing through local store marketing and social media.

This performance is testament to the continued dedication and hard work of the entire Cake Box Family, with over 90 fantastic franchisees and their staff members continuing their entrepreneurial journeys and serving their local communities.

This translated into strong growth across key financial metrics, with revenues up 92% to £16.4m (H1 FY21: £8.6m) and pre-tax profits more than doubling to £3.70m (H1 FY21: £1.7m). Looking at the four months to 30 September 2021, which excludes the impact of the March 2020 lockdown and associated store closures, revenues were up over 50% at £11.2m (4 months H1 FY21: £7.4m) and pre-tax profits up 56.7% to £2.6m over the same period.  Total franchisee sales up 13.3% on a like-for-like* basis to £19.4m

 Exceptional growth of the Group's store estate

The Group opened 20 new franchise stores in the period (excluding kiosk openings), with the total number of stores at 30 September 2021 being 174 (H1 2020: 139). New locations added in the period include Fulham (London), Stevenage and Hull. The Group continuously evaluates the financial and quality standards of the franchise store estate and as a result three stores were closed during the period.

The appeal of the Group's franchise proposition is reflected in the current pipeline of new potential franchisees, with a record 62 deposits held at period end.

Continued strategic progress

We made further progress on our strategic initiatives to complement our franchise store estate growth and give the brand an even bigger reach. These initiatives are designed to enable new and existing franchisees to grow their businesses and our brand through new channels such as kiosks and online delivery through third party platforms, as well as our own delivery platform.

Accordingly, the Group has continued the roll out of its kiosk offer from existing franchise stores, with a net three new shopping centre kiosks opened in the period, including in the Arndale and Trafford centres in Manchester, taking the total to 19.

The successful trial of kiosks with the Asda supermarket chain expanded in the period, with two new kiosks opened, taking the total number of supermarket kiosks to seven.

Continuing to refresh the Group's core celebration cake range remains an important element of the Group's differentiated product offering. New launches during the period include the "naked cake" collection, which customers have responded well to.

We also continued to invest in future proofing the business and providing ourselves with the infrastructure to support our ongoing growth. We opened our new Coventry warehouse and distribution facility in April 2021 - our third warehouse and distribution facility, with sponge production capability that enables us to continue to reduce our existing distribution costs and provide a back up to our other production facilities in Enfield and Bradford. This has also created skilled employment opportunities in the area and reduced food delivery miles, supporting our goal of mitigating our environmental impact.

In addition, we have continued to invest in other areas of the business to position us for further growth. We have strengthened our internal IT capabilities by appointing an experienced IT Director and further invested in our IT systems. We have also appointed BDO to assist with implementing improved internal audit practices.

Further investments in people include the appointment of a Procurement manager and, in the second half, at a senior management level, we expect to create a new Head of Marketing role and to add a very senior hire in the Group's Operations function.

 2020 data breach announced during H1

During the period, Cake Box announced that it had experienced a data breach in 2020. The Company is confident with all the actions it has taken in relation to the matter and that the exceptional provision of £486k as detailed in the full year results will be sufficient to cover all costs relating to the matter.

Balance Sheet and Cashflow

The Group's balance sheet remains strong, underpinned by the highly cash generative nature of our business model. Cash at period end was £5.6m, 4.3% higher than at the same point last year. The Group's net cash position also increased, by 9.2% to £4.15m (H1 FY21: £3.80m).

Dividend

In line with our progressive dividend policy to reflect the cash generation and earnings of the Group, today we are declaring an interim dividend of 2.5 pence per share representing an increase of 35.1% from last year.

The interim dividend will be paid on 10^th December 2021 to those shareholders on the register at the close of business on 19^th November 2021. The ex-dividend date is therefore 18^th November 2021.

Outlook

Trading momentum has continued during the first five weeks of the second half, with three new franchise stores opened across various UK locations in Penge and Chingford in London and Shirley in the West Midlands.

The franchise store estate traded well in October, with like-for-like sales increasing by 14.4% and online sales continuing to grow strongly, up 46.6% in the five weeks since the end of September versus the same period last year.

The Group's supply chain remains robust, with several months of ingredients on hand and no disruption to supply to date.

With more deposits for new franchise stores held than ever before and 23 new franchise stores already opened during the financial year to date, we are now targeting up to 32 franchise stores openings for FY22.

Alongside this, we have partnered with Asda supermarket and following the successful trial of 7 kiosks we have added a further 4 kiosks since 30 September 2021 and have the intention to roll out more kiosks in Asda during the remainder of FY22.

Despite continued uncertainty in the operating environment, it's clear that our unique proposition for customers and new and existing franchisees remains highly attractive, while more and more customers choose our cakes to celebrate important moments or satisfy their appetite for a tasty treat.

Looking ahead, the Board is confident of making further progress in the second half and meeting full year expectations.