TIDMCBOX
RNS Number : 8109D
Cake Box Holdings PLC
26 June 2023
Cake Box Holdings plc
("Cake Box", "the Company" or "the Group")
Audited Full Year Results for the 12 months ended 31 March
2023
Steady progress, investment in growth and robust current
trading, confident of further progress
Cake Box Holdings plc, the specialist retailer of fresh cream
cakes, today announces its audited full year results for the twelve
months ended 31 March 2023.
Financial Highlights
Full year Full year Change***
ended ended
31-Mar-23 31-Mar-22 (
as restated)
---------- --------------
Revenue GBP34.8m GBP33.0m 5.6%
---------- -------------- ----------
Gross profit GBP17.2m GBP15.8m 8.5%
---------- -------------- ----------
EBITDA* GBP6.7m GBP8.8m (24.3%)
---------- -------------- ----------
Adjusted EBITDA ** GBP6.7m GBP8.0m (16.9%)
---------- -------------- ----------
Pre-tax profit GBP5.4m GBP7.7m (28.6%)
---------- -------------- ----------
Adjusted pre-tax profits
** GBP5.4m GBP7.0m (22.9%)
---------- -------------- ----------
Cash at Bank GBP7.4m GBP6.6m 11.9%
---------- -------------- ----------
Earnings per share 10.6p 15.8p (31.7%)
---------- -------------- ----------
Final dividend recommended 5.5p 5.1p 7.8%
---------- -------------- ----------
*EBITDA is calculated as operating profit before depreciation
and amortisation.
**Adjusted EBITDA and pre-tax profits is after adjusting for the
exceptional items in the prior year
***% Change is based on amounts in the Consolidated Statement of
Comprehensive Income
-- Group revenue up 5.6% to GBP34.8m (2022: GBP33.0m), reflecting a resilient business model.
-- Gross margin increased to 49.4% (2022: 48.0%), due to enhanced controls.
-- Cash from operations of GBP6.3m (2022: GBP5.3m).
-- Strong balance sheet with GBP7.4m cash at period end (2022: GBP6.6m).
-- Dividend per share for the full year: 5.5 pence per share
recommended. (Interim dividend of 2.625 pence per share).
Operational highlights
-- 4.1% growth in online sales for the year to GBP13.8m (2022:
GBP13.3m) after 41% growth last year due to Covid restrictions.
-- 20 new franchise stores opened in the year (2022: 31).
-- 205 franchise stores in operation as at the end of FY23 (2022: 185).
-- Further expansion of our supermarket kiosk offering now with 18 supermarket kiosks (2022:15).
-- Significant investment in the baking facilities at Enfield leading to improved baking yield.
Franchisee store highlights
-- Like-for-like(1) sales growth of 1.0% in franchise stores in
the year to 31 March 2023. (2022:12.0%)
-- Franchisee total turnover up 9.6% to GBP72.1m (2022: GBP66.0m)
-- 17 shops opened in new towns or cities this year
Current trading and outlook
-- The Board is optimistic about the prospects for the year and
the sales performance continues to be robust, with franchise sales
up 5.4% like-for-like in the last 11 weeks.
-- Whilst we remain mindful of the ongoing economic challenges
and trading environment, inflation is starting to soften in some
areas which will support margin progression over the medium term.
We continue to expand our geographic presence with our targeted
store opening programme to drive future growth with a further 3
stores opened since the end of March 2023.
-- We have increased our investment in marketing via our
strengthened marketing team to grow brand awareness and to expand
our digital and e-commerce capabilities.
(1) Like-for-like: Stores trading for at least one full
financial year prior to 31 March 2023
Sukh Chamdal, Chief Executive Officer, commented:
"During the year we have continued to innovate to meet the needs
of our customers, worked on improving our operational
infrastructure despite facing a unique set of macro-economic
pressures and continued to grow sales and margins. We are looking
at new ways to reach our customers and the new website offers many
new marketing opportunities.
We have continued with our steady store opening program to add
to the 205 Cake Box shops we had at year end. As we approach the
250 target number of stores we set ourselves at our IPO almost 5
years ago to the day, we continue to look to stretch ourselves with
a new target of 400 and new ways to provide the UK consumer with
our unique egg-free fresh cream cakes.
The market outlook is improving, our capabilities have been
expanded, and the Cake Box brand is stronger than ever. We have the
right platform in place for the Group's development to accelerate
over the coming year and beyond."
A recording of our results presentation will be available on
Investor Meet Company via the link:
https://www.investormeetcompany.com/cake-box-holdings-plc/register-investor
For further information, please contact:
Cake Box Holdings plc Enquiries via MHP
Sukh Chamdal, CEO
Michael Botha, CFO
Shore Capital +44 (0) 20 7408
Stephane Auton 4090
Patrick Castle
Liberum (Joint Broker)
Clayton Bush +44 (0) 20 3100
Edward Thomas 200
MHP Communications +44 (0) 7834 623818
Charlie Barker cakebox@mhpc.com
Robert Collett-Creedy
Chairman's Statement
Sustainable growth
The past year has been filled with challenges for Cake Box, but
we have successfully navigated through them and emerge better
prepared for an exciting new chapter of growth for the business .
Despite the difficult trading environment caused by the Ukraine
war, inflationary pressures, an exceptionally hot summer and labour
shortages, we have shown determination and continued to grow.
Our franchisees have shown great resilience, and we anticipate
even greater opportunities with the return of normal lending
conditions from banks supporting our existing and new franchisees.
We recently celebrated the opening of our 200th Cake Box store and
continue to expand our store estate. During the past year, we
opened 20 new stores and 6 kiosks, welcoming 13 new franchisees to
our Cake Box family.
Our primary goal is to enable our family of franchisees to
fulfil their potential and grow their businesses. We have therefore
focused on empowering our franchisees, enhancing operational
standards and investing more money than ever before on marketing
and brand building initiatives. We work with multiple suppliers for
all our key products which has enabled us to control costs
effectively despite the inflationary pressures, enabling both the
Group's and our franchisees margins to be preserved. Our baking
processes have been optimised for greater efficiency, and we have
raised our hygiene, safety, and service standards. These efforts
have positioned us well for sustainable growth next year and
beyond.
Refining our Strategy
We have focused on expanding the reach of the Cake Box brand and
our marketing team over the last twelve months, which has enabled
us to engage with our customers and franchisees in many new and
effective ways. E-commerce has become integral to our growth story,
and our new website will allow for customised marketing campaigns.
We aim to become a fully integrated multi-channel business in the
next few years and are exploring new ways to optimise our store
rollout based on customer data to both improve new store
performance as well as refine our property strategy.
Our Environmental, Social, and Governance (ESG) Committee
continues to shape our ESG strategy, focusing on Supply chain due
diligence, waste reduction, and sustainability. For example, our
van fleet has been updated. The new vehicles are more
fuel-efficient, helping improve running costs and environmental
impact. We also continue to take steps to improve the Group's
governance, especially in respect of its finance and audit
processes.
The Cake Box Family
I extend my gratitude to our loyal customers, dedicated
franchisees, and hardworking staff. We now have 166 staff at our
various locations from a wide range of backgrounds, and we will
persist in improving gender and minority representation at all
levels. In respect of our franchisees, we provide the opportunity
for people in the UK from all walks of life to start a business no
matter what their background or education, enabling a real
inclusive and diverse community of entrepreneurs.
This year, we continued the process of putting in place an
experienced leadership team, capable of fostering sustainable
growth. We also acknowledge there is more to do to have a
leadership team that is fit for the future. We asked Martin Blair,
one of my Non-executive colleagues, to be our Interim CFO whilst we
looked for a permanent CFO. We have now handed over the baton to
our new CFO, Michael Botha. Michael is an exceptionally talented
individual who will bring a clear focus to what we want to achieve
with Cake Box over the long-term.
Our priorities for the year
Objective 1: Expanding Store Estate and Franchisee Growth
We remain committed to expanding our store estate and providing
opportunities for franchisees to grow their businesses. Despite the
challenging market environment, we have successfully opened 20 new
stores and 6 kiosks in the past year and our goal is to continue
this growth trajectory. We believe there are many more areas for us
to reach and the year ahead will be about agreeing the plan to
accelerate our expansion beyond our previously published target
with a new stretch target of 400 stores. We will achieve this goal
by supporting our franchisees and by creating an environment
conducive to their success and by leveraging their experience and
skills to build their Cake Box portfolios.
Objective 2: Focus on Operational Excellence
As we continue to grow our store estate, we recognise the need
to continue to strengthen our operational discipline. This will
underpin our ability to grow substantially and preserve both our
and our franchisees margins. We will focus on fine-tuning cost
controls, securing improved supplier terms, and identifying areas
for improved efficiencies. By optimising baking processes and
enhancing operational standards, including hygiene, safety, and
service, we will ensure that our stores and bakeries deliver the
highest quality products and customer experiences.
Objective 3: Data-driven Approach and Multi-channel
Expansion
To refine our strategy and stay ahead of the competition, we
will adopt a data-driven approach. We recognise the importance of
e-commerce and its potential to drive growth. Our online sales have
been progressing well, and we aim to become a fully integrated
multi-channel business in the next few years. By leveraging data
provided by our franchisees, we will target regions with limited
Cake Box presence, ensuring a sophisticated and strategic store
rollout that maximises growth opportunities.
Objective 4: Strengthening Leadership and Governance
Building a strong leadership team is crucial to fostering
sustainable growth. We have made significant progress in assembling
an experienced leadership team capable of driving growth. We will
continue to strengthen our leadership team, focusing on succession
planning to ensure a smooth transition and long-term success.
Additionally, we are committed to improving governance, finance,
and audit processes to uphold the highest standards and support our
growth objectives.
We are also ever conscious of the need to take opportunities to
further professionalise the Group, and as our minds turn to
succession planning for the long term, our leadership team will
continue to evolve in that regard.
Objective 5: Commitment to Community and ESG Initiatives
Community engagement and responsible business practices are core
to our mission. We will continue to positively impact the
communities we serve by supporting local initiatives and engaging
in volunteer work. Our ESG Committee will play a vital role in
shaping our ESG strategy, focusing on providing clear nutritional
information, reducing waste, and implementing sustainable practices
throughout our operations.
Moving forward together
The challenges faced in the first half of the year have been
managed with resilience, and we enter the new financial year with a
solid foundation. A strong balance sheet, underpinned by the highly
cash generative nature of our business model, and an increased
dividend is testament to this. While macro-economic challenges and
unpredictable consumer spending persist, we are optimistic about
the future. We are committed to ensuring Cake Box's sustainable
growth, building on our improved practices and disciplined
strategies.
Thank you for your continued support.
Neil Sachdev MBE ,
Chairman of Cake Box
Chief Executive's review
Meaningful progress, well positioned for growth
A resilient business
Cake Box performed resiliently during the year, with revenue
growth of 5.6% and total franchisee sales growth of 9.6%
demonstrating the continued appeal of our products and proposition.
We continued to innovate to meet the needs of our customers,
improved our operational infrastructure and responded to an
exceptional set of circumstances that Cake Box, like many
retailers, faced in 2022.
Having emerged confidently from the pandemic, we encountered the
combination of rising energy prices, raw materials inflation, and
increased living costs for customers - a unique cocktail of
interlinked macro-economic pressures that made growth hard to come
by. Alongside this, pent-up demand for holidays from the pandemic
took customers away from our stores and a nine week-long heat wave
over the summer created a difficult trading environment for a
business such as ours.
Despite these headwinds, we were able to again grow sales and
gross margins, supported by shrewd purchasing decisions. We
strengthened our procurement team, to take advantage of volatility
in the prices of commodities and essential products, and as a
result have been able to be highly selective with any price
increases. This has been supported by our renting a bulk storage
facility to maintain continuity of supply. The 27,000 sq ft
premises is a stone's throw from our Enfield site and has given us
greater purchasing power.
As ever, we aim to improve and expand our customer offer so that
more people experience Cake Box products and build a relationship
with our brand. We have made great strides in that respect this
year, with our franchisees selling 1.45m cakes and 2.89m slices,
worth GBP43.2m and GBP10.5m respectively in FY23.
To complement this core approach, we have been exploring new
ways to reach customers. Our marketing team has been working on our
new website which went live in June 2023 that will provide
additional functionality, a better customer experience and allow us
to glean more product and customer consented data. Franchisee
online sales have risen to GBP13.8m (FY22: GBP13.3m) or 20.8% of
total franchise store sales (FY22: 21.8%) and we are optimistic
this figure will continue to grow on the back of the new website
and increasingly sophisticated digital marketing.
Franchisees at the forefront
We were able to advance many aspects of the Cake Box business in
2023. I'm particularly pleased with the development of our roll-out
programme and in spite of the difficult retail conditions we opened
20 new stores over the year, taking us to a total of 205 stores
across the country. Our pipeline of potential franchisees remains
strong (with 47 deposits held at year end) and there is increasing
ambition amongst existing franchisees, with many looking to expand
their portfolios and own multiple sites where they can demonstrate
their business acumen.
Franchisees remain at the heart of our business - when they win,
we win - and we are there to support them every step of the way. We
now have three regional area sales and support managers who help
franchisees develop their business, as well as four compliance
officers who audit stores on average once every six weeks. These
are under the leadership of a Field Operations Manager who reports
to the Head of Franchise Operations.
Refreshing our offer
Our Research & Development team are constantly expanding our
product range, to keep it current and on tre nd. For the 2023
summer season, we look forward to promoting our variety of mango
products - mango cake, cheesecake, slices, cupcakes, and sundaes
have all been introduced to our stores. Recent upgrades to improve
processes at our facilities give us much more scope to explore
exciting new recipes and products, and to expand our gifting and
treat product ranges as well as our celebration cakes. We are
confident that they will delight our customers. Our new cheesecake
line, with its capacity to produce products in an array of
flavours, is also now fully operational.
The right ingredients for growth
This year has shown, more than most, just how much of Cake Box's
success relies on the collective endeavours of the whole Cake Box
Family. We are fortunate to have such dedicated staff, and a
motivated supplier base which helped us meet the many challenges we
have had to confront in the past twelve months. I would also like
to thank Martin Blair for stepping up as Interim CFO this past
year, whilst we waited for our new permanent CFO, Michael Botha, to
complete his notice period prior to joining the team.
My main take-away from the year was a feeling of making
meaningful progress across the business in difficult circumstances.
The market outlook is improving, our capabilities have been
expanded, and the Cake Box brand is stronger than ever. We have the
right platform in place for the Group's development to accelerate
over the coming year and beyond.
Sukh Chamdal,
Chief Executive Officer
Financial Review
FY23 As restated
FY22
GBPm GBPm
------------------------ ------- ------------
Revenue 34.8 33.0
Gross profit 17.2 15.8
Operating expenses
before exceptional
items (11.6) (8.8)
Exceptional Items - 0.8
Operating profit 5.6 7.8
Finance Cost (0.2) (0.1)
Profit before tax 5.4 7.7
Adjusted Profit before
tax 5.4 6.9*
Tax (1.2) (1.4)
------- ------------
Profit for the period 4.2 6.3
Adjusted Profit for
the period* 4.2 5.5
------- ------------
Revaluation of freehold
property 0.2 1.2
Deferred tax on revaluation - (0.2)
---- ------
Total Comprehensive
income for the year 4.4 7.3
---- ------
EBITDA 6.7 8.8
Adjusted EBITDA* 6.7 8.0
* Calculated after adjusting for exceptional items in 2022 see
note 10
Another year of growth when the headwinds of economic pressure
were very much against us confirms the resilient nature of the Cake
Box model. Franchisee total turnover increased 9.6% to
GBP72.1m.
Revenue
Reported revenue for the year FY23 was GBP34.8m. Whilst below
our prior expectations, still amounted to an increase of 5.6% year
on year despite the challenging economic and consumer environment.
This was achieved through an increase in store like-for-like sales
and with the addition of 20 new stores around the UK in new
locations including Rugby, Aylesbury, Bristol, Camberley and
Leeds.
Gross margin
Gross profit as a percentage of sales increased from 48.0% to
49.4%, despite significant rises in raw materials and freight costs
in the first half of the year. As the year progressed, input prices
stabilised and we were able to pass on some price rises to
franchisees who in turn were able to raise sales prices to
customers albeit at a lower rate than the food retail sector
without having a significant impact on volumes.
EBITDA
EBITDA decreased by 24.3% to GBP6.7m as a result of a planned
increase in overheads and lower than anticipated revenue growth
during the year. Adjusted EBITDA was 16.9% below prior year.
Balance Sheet
Cake Box has a strong balance sheet with a cash balance at the
year-end of GBP7.4m (FY22: GBP6.6m). The Group's only debts are
mortgages of GBP1.3m (FY22: GBP1.4m) 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 the last three years.
Property
Our three main sites at Enfield, Bradford and Coventry are all
freehold. At year end, we instructed surveyors to value all three
properties in order to have a consistent value base. This resulted
in a revaluation gain in respect of our properties of GBP0.2m
compared to the previous revaluation in 2022 (FY22: GBP2.5m which
was apportioned between FY22 and FY21 in the accounts).
Last year, we also took a lease on a 27,000 sq. ft warehouse in
Enfield to support our business expansion. This warehouse has
allowed us to remodel our Enfield depot into a state-of-the-art
facility, with bulk stock stored in the new warehouse and then
distributed to our other depots. Having stock all in one place
allows us to control stock more efficiently.
Taxation
The effective rate of taxation was 22.2% (FY22: 18.4%). This
includes the relief obtained via the super deduction claim, which
is a temporary increase by HMRC to capital allowances for capital
expenditure of 130% compared to the normal rate of 100%, as well as
other corporation tax timing differences on capital assets. The
effective tax rate is higher than the statutory rate due to the
impact of tax rate increases in deferred tax calculations.
Earnings per share (EPS)
Earnings per share were 10.59p (FY22: 15.78p). A decrease of
31.7% reflecting the decrease in profitability of the Group year on
year. The number of shares in issue was 40,000,000 and is unchanged
since the Company's IPO in June 2018.
Dividend
In-line with our progressive dividend policy, having performed
resiliently and increased our cash generation, the Board is pleased
to recommend a final dividend of 5.5 pence per share (FY22: 5.1
pence ), bringing the total dividend for the year to 8.125 pence
per share (FY22: 7.6 pence).
If approved by the shareholders at the Company's AGM on 22(nd)
August 2023, the final dividend of 5.5 pence per share will be paid
on 29(th) August 2023. The record date for shareholders on the
register will be 28(th) July 2023, with an ex-dividend date of
27(th) July 2023.
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 GBP7.4m of cash at year end, an increase of
GBP0.8m. At the year end, the Group had a net cash position of
GBP6.1m which was up GBP0.9m from the previous year. Net cash is
calculated as GBP7.4m of cash, less GBP1.3m of mortgage debt
relating to the Group's freehold properties.
Trade and other receivables
The Group had GBP2.7m of trade and other receivables at the end
of FY23, compared to GBP2.6m at the end of FY22. The majority of
this balance relates to trade receivables which have remained at
GBP1.7m (FY22: GBP2.0m), showing good credit control given the
increase in revenue. Trading debts relating to purchases of
products by franchisees have a defined seven-day payment term.
Trade and other payables
The Group had GBP3.8m of trade and other payables at the year
end, an increase of GBP1.1m 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.
Michael Botha
Chief Financial Officer
Cake Box Holdings Plc
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 MARCH 2023
Company Registration No. 08777765
2023 As restated
2022
Note GBP GBP
Revenue 3 34,800,941 32,964,846
Cost of sales (17,626,671) (17,133,685)
--------------------------------------- -----------------
Gross profit 17,174,270 15,831,161
Administrative expenses
before Exceptional items (11,595,228) (8,794,413)
Exceptional items 10 - 781,965
------------------------------ ----- --------------------------------------- -----------------
Administrative expenses 4 (11,595,228) (8,012,448)
Operating profit 5 5,579,042 7,818,713
Finance income 6 25,019 1,802
Finance expense 6 (160,494) (83,190)
--------------------------------------- -----------------
Profit before income
tax 5,443,567 7,737,325
Income tax expense 11 (1,206,896) (1,425,709)
Profit after income
tax 4,236,671 6,311,616
Other comprehensive
income for the year
Revaluation of freehold
property 13 187,665 1,250,175
Deferred tax on revaluation
of freehold property 12 (35,656) (237,533)
--------------------------------------- -----------------
Total other comprehensive
income for the year 152,009 1,012,642
Total comprehensive
income for the year 4,388,680 7,324,258
======================================= =================
Attributable to: 4,388,680 7,324,258
Equity holders of the
parent
Earnings per share
Basic 34 10.59 15.78p
Diluted 34 10.59 15.78p
======================================= =================
The notes on pages form an integral part of these financial
statements.
Cake Box Holdings Plc
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As restated As restated
2023 2022 01 April 2021
Note GBP GBP GBP
Assets
Non-current
assets
Intangible assets 15 399,186 107,273 -
Property, plant
and equipment 13 11,267,783 10,252,748 8,791,072
Right-of-use
assets 16 2,574,490 2,874,430 -
Loans to
franchisees 19 508,532 710,059 656,004
Deferred tax
asset - - 95,447
14,749,991 13,944,510 9,542,523
--------------------------- -------------------------------- ----------------------------
Current assets
Inventories 17 2,790,724 2,468,921 1,902,171
Trade and other
receivables 18 2,683,621 2,553,209 2,490,217
Other financial
assets 19 245,880 357,548 382,808
Cash and cash
equivalents 32 7,353,583 6,571,558 5,125,864
13,073,808 11,951,236 9,901,060
--------------------------- -------------------------------- ----------------------------
Total Assets 27,823,799 25,895,746 19,443,583
=========================== ================================ ============================
Equity and
liabilities
Equity
Issued share
capital 20 400,000 400,000 400,000
Capital
redemption
reserve 21 40 40 40
Share option
reserve 21 - - 488,596
Revaluation
reserve 21 3,786,742 3,634,734 2,622,092
Retained earnings 21 13,552,573 12,742,989 8,877,886
Equity
attributable to
the owners of
the Parent
company 17,739,355 16,777,763 12,388,614
--------------------------- -------------------------------- ----------------------------
Current
liabilities
Trade and other
payables 24 3,766,413 2,661,372 3,353,749
Lease liabilities 16 270,117 260,191 -
Short-term
borrowings 23 104,498 167,754 167,754
Current tax
payable 294,262 837,946 903,469
Provisions 25 243,100 243,100 486,319
4,678,390 4,170,363 4,911,291
--------------------------- -------------------------------- ----------------------------
Non-current
liabilities
Lease liabilities 16 2,429,838 2,699,958 -
Borrowings 23 1,132,292 1,185,978 1,318,005
Deferred tax
liabilities 12 1,843,924 1,061,684 825,673
5,406,054 4,947,620 2,143,678
--------------------------- -------------------------------- ----------------------------
Total Equity and
liabilities 27,823,799 25,895,746 19,443,583
=========================== ================================ ============================
Company Registration No. 08777765
The financial statements were approved and authorised for issue
by the Board on 25 June 2023 and signed on its behalf by
S R Chamdal
Director
The notes on pages form an integral part of these financial
statements
Cake Box Holdings Plc
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MARCH 2023
Note 2023 As restated
2022
GBP GBP
Cash flows from operating activities
Profit before income tax 5,443,567 7,737,325
Adjusted for:
4 &
Depreciation 13 831,681 853,633
Depreciation of right-of-use 4 &
assets 16 299,940 124,975
Profit on disposal of tangible
fixed assets (50,733) (13,154)
(Increase)/decrease in inventories (321,803) (566,749)
(Increase)/decrease in trade
and other receivables (360,950) (82,993)
(Increase)/decrease in other
financial assets 263,307 (28,794)
(Decrease)/increase in trade
and other payables 1,105,042 (915,596)
(Increase in provisions 280,425 -
Share based payment (credit)/charge - (486,368)
Finance income (25,019) (1,802)
------------- ------------
Cash generated from operations 7,465,457 6,620,477
Finance costs 160,494 83,190
Taxation paid ( 1,341,087) (1,407,391)
Net cash inflow from operating
activities 6,284,864 5,296,276
------------- ------------
Cash flows from investing activities
Purchases of property, plant
and equipment (1,961,233) (1,133,926)
Proceeds from sale of property,
plant and equipment 61,003 16,014
Interest received 25,019 1,802
Net cash outflow from in investing
activities (1,875,211) (1,116,110)
------------- ------------
Cash flows from financing activities
Repayment of finance leases (260,192) (39,255)
Repayment of borrowings (116,942) (132,027)
Dividends paid 8 (3,090,000) (2,480,000)
Interest paid (160,494) (83,190)
------------- ------------
Net cash outflow from financing
activities (3,627,628) (2,734,472)
Net increase in cash and cash
equivalents 782,025 1,445,694
Cash and cash equivalents at
1 April 2022 6,571,558 5,125,864
------------- ------------
Cash and cash equivalents at
31 March 2023 32 7,353,583 6,571,558
============= ============
The notes on pages form an integral part of these financial
statements.
STATEMENT OF CHANGES IN EQUITY
Attributable to the owners
of the Parent Company
As restated As restated
Share Capital Share Revaluation Retained Total
capital redemption option reserve earnings
GBP reserve reserve
GBP GBP GBP GBP GBP
At 31 March
2021 400,000 40 488,596 2,622,092 8,643,415 12,154,143
Profit for
the year - - - - 6,311,616 6,311,616
Revaluation
of freehold
property - - - 1,250,175 - 1,250,175
Deferred tax
on
revaluation
of freehold
property - - - (237,533) - (237,533)
---------------------- ------------------ ------------------- --------------- --------------- -------------------
Total
comprehensive
income for
the year - - - 1,012,642 6,311,616 7,324,258
Transactions
with owners
in their
capacity
as owners
Share-based
payments - - (486,368) - - (486,368)
Deferred tax
on
share-based
payments - - (2,228) - - (2,228)
Adjustment
to asset
lives
(see below*) - - - - 330,812 330,812
Deferred tax
on adjust
to asset live - - - - (62,854) (62,854)
Dividends
paid - - - - (2,480,000) (2,480,000)
---------------------- -------------------
At 31 March
2022 400,000 40 - 3,634,734 12,742,989 16,777,763
====================== ================== =================== =============== =============== ===================
Profit for
the year - - - - 4,236,671 4,236,671
Revaluation
of freehold
property - - - 187,665 - 187,665
Deferred tax
on
revaluation
of freehold
property - - - (35,656) - (35,656)
----------------------
Tax rate
changes (337,088) (337,088)
Total
comprehensive
income for
the year - - - 152,009 3,899,583 4,051,592
Transactions
with owners
in their
capacity
as owners
Dividends
paid - - - - (3,090,000) (3,090,000)
---------------------- ------------------ ------------------- --------------- --------------- -------------------
At 31 March
2023 400,000 40 - 3,786,743 13,552,572 17,739,355
====================== ================== =================== =============== =============== ===================
The notes on pages form an integral part of these financial
statements.
Cake Box Holdings Plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 MARCH 2023
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 and franchise
operator.
2. Accounting policies
2.1 Basis of preparation of financial statements
The financial information set out in this statement does not
constitute statutory accounts as defined in section 435 of the
Companies Act 2006. This set of financial results was approved by
the Board on 25 June 2023. The financial information for the years
ended 31 March 2023, 31 March 2022 and 31 March 2021 has been
extracted from the statutory accounts for each year. The auditors'
report on the 2023 statutory accounts was (i) unqualified, (ii) did
not include references to any matters to which the auditor drew
attention by way emphasis without qualifying its reports and (iii)
did not contain statements under section S498(2) or S498(3) of the
Companies Act 2006.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards, this announcement does not itself contain sufficient
information to comply with those standards. The Company expects to
publish full financial statements that comply with International
Financial Reporting Standards in August 2023.
The consolidated financial statements for the year ended 31
March 2023 have been prepared in accordance with United Kingdom
adopted International Financial Reporting Standards (UK Adopted
IFRS) and those parts of the Companies Act 2006 that are applicable
to companies which apply UK adopted IFRS.
The consolidated financial statements have been prepared under
the historical cost convention, other than certain classes of
property, plant and equipment.
The numbers presented in the financial statements have been
rounded to the nearest pound (GBP) unless otherwise stated.
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 had previously recognised provisions following a data
breach which impacted the Group's website payment system. 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.
The Group applies the Expected Cash Loss (ECL) on trade and
other receivables and on loans to franchisees as set out in the
accounting policy on financial instruments.
Freehold property - Judgement
Freehold properties are held at valuation. When measuring the
fair value of an asset or liability, the Group uses observable
market data as far as possible. Fair values are categorised into
different levels in a fair value hierarchy based on the inputs used
in the valuation techniques as follows:
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e.as prices) or indirectly (i.e. derived from prices).
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
The fair value of investment property was determined by
external, independent property valuers, having appropriate
recognised professional qualifications and recent experience in the
location and category of the property being valued. The independent
valuers provide the fair value of the Group's investment property
portfolio every 12 months.
2.2 Functional and presentation currency
The currency of the primary economic environment in which the
Parent and its subsidiaries operate (the functional currency) is
Pound Sterling ("GBP or GBP") which is also the presentation
currency.
2.3 Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
'controls' an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date on which control
commences until the date on which control ceases.
Changes in the Group's interest in a subsidiary that do not
result in a loss of control are accounted for as equity
transactions.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are
eliminated.
A list of the significant investments in subsidiaries, including
the name, country of incorporation and proportion of ownership
interest is given in note 29 to the Company's separate financial
statements.
2.4 Application of New and Revised IFRS's
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
IAS 1 The amendments aim to improve accounting policy 1 January
disclosures and to help users of the financial 2023
statements to distinguish between changes
in accounting estimates and changes in accounting
policies.
IAS 12 Amendments requiring a company to recognise 1 January
deferred tax on transactions that, on initial 2023
recognition give rise to equal amounts of
taxable and deductible temporary differences.
IAS 1 Amendments clarify how conditions with which 1 January
an entity must comply within twelve months 2024
after the reporting period affect the classification
of a liability.
IFRS 16 Amendments include requirements for sale and 1 January
leaseback transactions in IFRS 16 to explain 2024
how an entity accounts for a sale and leaseback
after the date of the transaction
Effective
Date
IAS 1 Amendments regarding the disclosure of accounting 1 January
& IAS policies and amendments regarding the definition 2023
8 of accounting estimates.
IAS 12 Amendments to deferred Tax Related to Assets 1 January
and Liabilities arising from a Single Transaction. 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 current cash balance has increased by GBP0.8m to GBP7.4m,
the Group continues to be cash generative.
Based on the current working capital forecast, there is no need
to raise additional funds as the Group considers that they are in a
position where the scenario of not meeting liabilities is remote.
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
The Group recognises revenue from the following major
sources:
-- Sale of sponges, fresh cream and other goods to franchisees
-- Online sales of cakes and related products to customers
-- Franchise package
Sale of sponges and related ingredients to franchisees
For sales of goods to franchisees, revenue is recognised when
control of the goods has transferred, being at the point at which
the goods are dispatched. Payment of the transaction price is due
within 14 days after delivery. The Group actively works with its
franchisees to ensure credit terms are met and if terms are
required to be extended a suitable debt recovery plan is
agreed.
Online sales of cakes and related products to customers
Online sales which include click and collect sales where the
franchisee has the primary responsibility for the fulfilment 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. Revenue is recognised
at the date of order and payment is taken at this point.
Franchise package
The franchise package consists of up-front revenues which relate
to pre and post-opening costs mainly for store fit-out; and initial
set up costs to cover site selection, pre opening support, and
franchisee and staff training. Each part is considered
distinct.
The pre and post-opening costs are required to get the new
franchisee trading and are therefore recognised at a point in time
which is at the end of the month in which trading commenced. Each
package is tailored to a specific franchisee's needs and elements
can be added or removed as appropriate which will affect the price.
Each element carries its own price.
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.
A provision is recognised for those matters for which the tax
determination is uncertain, but it is considered probable that
there will be a future outflow of funds to a tax authority. The
provisions are measured at the best estimate of the amount expected
to become payable.
No material uncertain tax positions exist as at 31 March 2023.
This assessment relies on estimates and assumptions and may involve
a series of complex judgments about future events. To the extent
that the final tax outcome of these matters is different than the
amounts recorded, such differences will impact income tax expense
in the period in which such determination is made.
Current taxes are calculated using tax rates and laws that are
enacted or substantively enacted at the reporting date.
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. 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.
Deferred taxes are calculated using tax rates and laws that are
enacted or substantively enacted at the reporting date that are
expected to apply as or when the temporary differences
reverses.
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.
Income taxes are recognised in profit or loss unless they relate
to items recognised in other comprehensive income or equity, in
which case the income tax is recognised in other comprehensive
income or equity respectively.
2.9 Property, Plant and Equipment - held at cost
Property, plant and 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:
Freehold property improvements - Over 4 to 30 years
Plant & machinery - 4 years
Motor vehicles - 4 years
Fixtures & fittings - Over 4 to 12 years
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 become available for 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 profit
or loss.
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
depreciation and subsequent 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 profit or loss.
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 without a significant financing
component are initially measured at transaction price which
approximates fair value at the transaction date. 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. All trade receivables are subsequently measured at
amortised cost. At the end of each reporting period, the carrying
amounts of trade and other receivables are reviewed. Impairment
allowance 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 allowances are recorded in a separate allowance account with
the loss being recognised in the statement of profit or loss. On
confirmation that the trade receivable will not be collectable, the
gross carrying value of the asset is written off against the
associated provision.
Loans to franchisees
Loans to franchisees include an upfront charge which is spread
over the term of the loan and used to calculate the effective
interest rate and are initially measured at fair value and
subsequently at amortised cost. At the end of each reporting
period, the carrying amounts of other financial assets are reviewed
on an individual balance basis and appropriate impairments is made
if losses are anticipated..
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.
2.13 Financial instruments
Bank loans and overdrafts
All borrowings are initially recorded at fair value, net of
transaction costs. Borrowings are subsequently carried at amortised
cost under the effective interest method.
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.
2.14 Finance costs and income
Finance costs are charged to the profit and loss 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.
Finance income is charged to the profit and loss on receipt or
accrued if there is a signed agreement in place.
2.15 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and deposits
with maturities of three months or less from inception, 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.
2.16 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.
2.17 Leases
The Group assesses whether a contract is, or contains, a lease,
at inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets (such as tablets and personal
computers, small items of office furniture and telephones). For
these leases, the Group recognises the lease payments as an
operating expense on a straight-line basis over the term of the
lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased assets are
consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease.
Lease payments included in the measurement of the lease
liability comprise:
-- Fixed lease payments (including in-substance fixed payments),
less any lease incentives receivable;
-- Variable lease payments that depend on an index or rate,
initially measured using the index or rate at the commencement
date;
-- The amount expected to be payable by the lessee under residual value guarantees;
-- The exercise price of purchase options if the lessee is
reasonably certain to exercise the options;
-- Payments of penalties for terminating the lease, if the lease
term reflects the exercise of an option to terminate the lease
The lease liability is presented as a separate line in the
Consolidated Statement of Financial Position.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease
liability (at a constant rate) and by reducing the carrying
amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
-- The lease term has changed or there is a significant event or
change in circumstances resulting in a change in the assessment of
exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a
revised discount rate;
-- The lease payments change due to changes in an index or rate
or a change in expected payment under a guaranteed residual value,
in which cases the lease liability is remeasured by discounting the
revised lease payments using a revised discount rate (unless the
lease payments change is due to a change in a floating interest
rate, in which case a revised discount rate is used);
-- A lease contract is modified, and the lease modification is
not accounted for as a separate lease, in which case the lease
liability is remeasured based on the lease term of the modified
lease by discounting the revised lease payments using a revised
discount rate at the effective date of the modification.
The Group did not make any such adjustments during the periods
presented.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments
made at or before the commencement day, less any lease
incentives received and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and
impairment losses.
Whenever the Group incurs an obligation for costs to dismantle
and remove a leased asset, restore the site on which it is located
or restore the underlying asset to the condition required by the
terms and conditions of the lease, a provision is recognised and
measured under IAS 37. To the extent that the costs relate to a
right-of-use asset, the costs are included in the related
right-of-use asset, unless those costs are incurred to produce
inventories.
Right-of-use assets are depreciated over the shorter period of
lease term and useful life of the right-of-use asset. If a lease
transfers ownership of the underlying asset or the cost of the
right-of-use asset reflects that the Group expects to exercise a
purchase option, the related right-of-use asset is depreciated over
the useful life of the underlying asset. The depreciation starts at
the commencement date of the lease.
The right-of-use assets are presented as a separate line in the
consolidated statement of financial position. The Group applies IAS
36 to determine whether a right-of-use asset is impaired and
accounts for any identified impairment loss as described in the
'Property, Plant and Equipment' policy.
2.18 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 staff. 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 profit or
loss 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
staff 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.
2.19 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 liabilities are not recognised in the consolidated
financial statements. They are disclosed if the possibility of an
outflow of resources embodying economic benefit is remote. A
contingent asset is not recognised in the consolidated financial
statements but disclosed when an inflow of economic benefit is
probable.
2.20 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.
2.21 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.
2.22 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.
2.23 Share based payment
Where share options are awarded to staff, the fair value of the
options (measured using the Black-Scholes model) at the date of
grant is charged to the profit and loss over the vesting period.
Non-market vesting conditions are considered by adjusting the
number of equity instruments expected to vest at each reporting
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 considers non-vesting
conditions. These are either factors beyond the control of either
party or factors which are within the control of one or another 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 profit or loss over the remaining vesting period.
Lapsed share options are derecognised as soon as it known that
vesting conditions will not be met. Previous charges to the
Statement of Comprehensive Income are credited back to this
statement.
2.24 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.
2.25 Impairment of non-financial assets
Non-financial assets
At each reporting date, the Group reviews the carrying amounts
of its non-financial assets to determine whether there is any
indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated.
For impairment testing, assets are grouped together into the
smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows or
other assets of CGUs.
The recoverable amount of an asset or CGU is the greater of its
value in use and its fair value less costs of disposal. Value in
use is based on the estimated future cash flows, discounted to
their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks
specific to the asset or CGU. An impairment loss is recognised if
the carrying amount of an asset or CGU exceeds its recoverable
amount. Impairment losses are recognised in profit or loss. They
are allocated first to reduce the carrying amount of any goodwill
allocated to the CGU, and then to reduce the carrying amounts of
the other asset in the CGU on a pro rate basis. An impairment loss
is reversed only to the extent that the asset's carrying amount
does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment
loss had been recognised.
2.26 Intangible assets
Intangible Assets Policy
The purpose of this policy is to outline the guidelines and
procedures for managing and accounting for intangible assets,
specifically focusing on Website costs, Software, and ERP Systems.
These assets are valuable resources that contribute to the
organisation's competitive advantage and need to be properly
identified, evaluated, recorded, and monitored.
1. Recognition and Initial Measurement:
a. Website Costs:
Expenditures related to developing or acquiring a website should
be capitalised when they meet
the following criteria:
- It is probable that the future economic benefits associated
with the website will flow to the
organisation.
- The costs of the website can be reliably measured.
- Website costs should be amortised over their estimated useful
life or expensed if they have a short useful life.
b. Software:
Software costs should be capitalised if they meet the following
criteria:
- The software is intended for internal use.
- It is probable that the organisation will derive future economic benefits from the software.
- The costs of the software can be reliably measured.
- Capitalised software costs should be amortised over their
estimated useful life or expensed if they have a short useful
life.
c. ERP Systems:
The costs related to acquiring, implementing, and customising an
Enterprise Resource Planning (ERP)
system should be capitalised if they meet the following
criteria:
- The ERP system is intended for internal use.
- It is probable that the organisation will derive future
economic benefits from the ERP system.
- The costs of the ERP system can be reliably measured.
- Capitalised ERP system costs should be amortised over their
estimated useful life or expensed if they
have a short useful life.
3. Subsequent Expenditure:
Subsequent expenditures related to intangible assets, such as
enhancements, upgrades, or additions,
should be evaluated to determine if they meet the criteria for
capitalisation.
If the subsequent expenditure enhances the future economic
benefits or extends the useful life of
the asset, it should be capitalised and added to the carrying
amount of the asset.
Otherwise, the expenditure should be expensed as incurred.
4. Amortisation:
Intangible assets subject to amortisation should be amortised
over their estimated useful lives.
The amortisation method should be applied consistently and
reflect the pattern in which the asset's
economic benefits are consumed or utilised.
The amortisation expense should be recorded in the
organisation's financial statements.
The estimated useful lives for current and comparative periods
are as follows:
Website - 4 years
Software - 4 years
ERP - 4 years
5. Monitoring and Impairment Testing:
a. Regular Reviews:
Periodic reviews should be conducted to assess the ongoing value
and useful life of intangible
assets.
Changes in market conditions, technology advancements, or other
factors should be considered
during these reviews.
b. Impairment Testing:
If indicators of impairment exist, such as a significant decline
in the asset's market value or changes in the asset's usefulness,
an impairment test should be performed.
If an impairment is identified, the asset's carrying amount
should be reduced to its recoverable amount, and an impairment loss
should be recognised in the financial statements.
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:
2023 2022
GBP GBP
Sales of sponge 13,631,930 12,301,051
Sales of food 5,870,607 5,479,076
Sales of fresh cream 3,976,694 3,442,619
Sales of other goods 7,454,354 7,023,665
Online sales commission 1,001,192 937,640
Franchise packages 2,866,164 3,780,795
34,800,941 32,964,846
============ ===========
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 2023 or
2022.
4. Expenses by nature
The Administrative expenses have been arrived at after
charging/(crediting):
As restated
2023 2022
GBP GBP
Wages and salaries 6,140,162 5,302,849
Travel and entertaining
costs 599,151 372,303
Supplies costs 481,596 293,620
Professional costs 1,729,948 839,897
Depreciation 831,681 853,633
Amortisation of right-of-use
assets 299,940 124,975
Rates and utilities costs 595,697 307,200
Property maintenance costs 265,400 338,817
Advertising costs 308,564 312,907
Other costs 62,664 48,212
Impairment of receivables 280,425 -
Exceptional items (see
note 10) - (781,965)
11,595,228 8,012,448
5.Operating profit
The operating profit is stated after charging/(crediting):
As restated
2023 2022
GBP GBP
Depreciation of tangible fixed assets 831,681 522,821
Depreciation of right-of-use asset 299,940 124,975
Stock recognised as an expense 17,626,671 17,133,685
Profit on disposal of property, plant
& equipment (50,733) (13,154)
Fees payable to the Group's auditor
and its associates for the audit of
the Group's annual financial statements 85,000 75,000
Fees payable to the Group's auditor 13,000 -
and its associates for the audit of
the Group's interim financial statements
Share based payment (credit)/expense - (486,368)
6. Net finance costs
2023 2022
Finance expenses GBP GBP
Bank loan interest 55,686 33,971
Finance lease interest 104,808 46,228
Interest on overdue tax - 2,991
Finance income
Bank interest receivable (25,019) (1,802)
135,475 81,388
=============== ========
7. Staff costs
Staff costs, including directors' remuneration, were as
follows:
2023 2022
GBP GBP
Wages and salaries 5,426,189 4,737,683
Social security costs 561,337 456,259
Pension costs 74,144 56,798
Private health 78,492 52,109
6,140,162 5,302,849
Reversal of share-based payment expense
(note 10) - (486,368)
6,140,162 4,816,481
==================== ==========
The average monthly number of staff, including directors, for
the year was 173 (FY22 - 155). The breakdown by department is as
follows;
2023 2022
Directors 6 7
Admin 41 31
Maintenance 19 17
Production & Logistics 107 100
173 155
===== =====
8. Dividends
2023 2022
GBP GBP
Interim dividend of 2.625p per ordinary share 1,050,000 -
Final dividend of 5.1p per ordinary share proposed
and paid during the year relating to the previous
year's results 2,040,000 -
Interim dividend of 2.5 per ordinary share - 1,000,000
Final dividend of 3.7p per ordinary share proposed
and paid during the year relating to the previous
year's results - 1,480,000
3,090,000 2,480,000
=================== ===================
Since the year end the Directors recommend payment of a dividend
of 5.5 pence (FY22 - 5.1 pence) per share totaling GBP2,120,000
(2022 - GBP2,040,000) for the year ended 31 March 2023.
9. Directors' remuneration and key management personnel
The Directors' remuneration is disclosed within the Directors'
Remuneration Report on page 31. The Executive Directors are
considered key management personnel. Employers NIC paid on
Directors' remuneration in the year was GBP90,861 (FY22 -
GBP114,388).
10. Exceptional items
2023 2022
GBP GBP
Lapse of share options (note 20) - (486,368)
Reversal of accrued rates - (295,597)
- (781,965)
==== =========
In FY22 rates costs included a credit of GBP295,597 related to
an accrual raised in a previous year, which has been released on
the basis the Directors have received confirmation it is no longer
required.
11. Taxation
2023 2022
GBP GBP
Corporation tax
Current tax on profits for the year 789,096 1,340,469
Adjustments in respect of previous periods 8,305 (838)
Deferred tax
Arising from origination and reversal of
temporary differences 262,433 86,078
Effect of changes in tax rates 142,951 -
Adjustments in respect of previous periods 4,111 -
Taxation on profit on ordinary activities 1,206,896 1,425,709
Factors affecting tax charge for the year
The tax assessed for the year is lower than (FY22 - 19%) the
standard rate of corporation tax in the UK of 19% (FY22 - 19%).
The differences are explained below:
2023 2022
GBP GBP
Profit on ordinary activities before tax 5,443,567 7,737,325
Profit on ordinary activities multiplied
by standard rate of corporation tax in
the UK of 19% (FY22 - 19%) 1,034,279 1,470,092
Effects of:
Expenses not deductible for tax purposes,
other than goodwill amortisation and impairment 96,260 11,700
Income not taxable (79,010) (22,267)
Deferred tax not provided - 22
Use of super deduction allowance - (33,808)
Effect of changes in tax rates 142,951 808
Adjustments to tax charge in respect of
prior periods 12,416 (838)
Total tax charge for the year 1,206,896 1,425,709
========== ==========
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 GBP250,000 with effect from 1 April 2023, as
well as announcing a number of other changes to allowances and
treatment of losses. This will impact the Company's future tax
charge accordingly.
12. Deferred taxation
As restated
2023 2022
GBP GBP
Balance brought forward 1,061,684 675,227
Charged to other comprehensive income:
Deferred tax on revalued freehold property 35,656 237,533
Tax rate changes 337,088 -
Charged directly to reserves:
Employee benefits (including share-based payments) - 2,228
Adjustment in respect of prior years - 62,854
Charged to profit and loss:
Accelerated capital allowances 266,659 (7,557)
Tax rate changes 142,951 -
Share -based payments - 93,219
Adjustments in respect of prior periods 4,111 -
Other short-term timing differences (4,226) (1,820)
Balance carried forward 1,843,923 1,061,684
========= ==================
2023 2022
GBP GBP
Deferred tax liabilities
Accelerated capital allowances 603,425 189,704
Other short-term timing differences (7,797) (3,571)
Property revaluations (including indexation) 1,248,295 875,551
--------- ---------
1,843,923 1,061,684
1,843,923 1,061,684
========= =========
Movements in deferred tax in direct relation to freehold
property revaluation are recognised immediately against the
revaluation reserve.
See note 20 for more information for restated comparatives.
13. Property, plant and equipment
Assets Freehold Freehold Plant Motor Fixtures Total
under construction Land Improvements & vehicles &
and machinery fittings
Building
GBP GBP GBP GBP GBP GBP GBP
Cost or valuation
At 1 April 2021 1,120,573 6,176,810 - 1,073,744 702,870 1,930,695 11,004,692
Additions - 478,876 76,570 107,697 373,516 97,267 1,133,926
Disposals - - - - (43,910) - (43,910)
Transfers between
classes (1,120,573) 1,120,573 - - - - -
Reclassification
of Intangible
assets - - - (288,205) - - (288,205)
Revaluations - 1,250,175 - - - - 1,250,175
As restated at
31 March 2022 - 9,026,434 76,570 893,236 1,032,476 2,027,962 13,056,678
------------------------ ---------- ------------- ---------- ---------- ---------- -----------
Depreciation
At 1 April 2021 - 187,243 786,799 399,043 1,130,005 2,503,090
Charge for the
year - 234,191 2162 84,866 180,840 351,574 853,633
Adjustment to
asset
lives (see
below*) - - - 109,292 (23,814) (416,290) (330,812)
Removal of
depreciation
charged on
Intangible
assets - - - (180,932) - - (180,932)
Transfers between - - - - - - -
classes
(depreciation)
Disposals - - - - (41,049) - (41,049)
As restated at
31 March 2022 - 421,434 2,162 800,025 515,020 1,065,289 2,803,930
------------------------ ---------- ------------- ---------- ---------- ---------- -----------
Net book value
------------------------ ---------- ------------- ---------- ---------- ---------- -----------
As restated 31
at March 2022 - 8,605,000 74,408 93,211 517,456 962,673 10,252,748
------------------------ ---------- ------------- ---------- ---------- ---------- -----------
Assets Freehold Freehold Plant Motor Fixtures Total
under Land improvements & machinery vehicles & fittings
construction and
Building
GBP GBP GBP GBP GBP GBP
Cost or
valuation
At 1 April
2022 - 9,026,434 76,570 893,236 1,032,476 2,027,962 13,056,678
Additions - - 711,560 50,150 481,942 371,557 1,615,209
Disposals - - - - (112,002) - (112,002)
Revaluations - 187,665 - - - - 187,665
At 31 March
2023 - 9,214,099 788,130 943,386 1,402,416 2,399,519 14,747,550
--------------- ---------- ------------------------ ----------------- ---------- --------------- -----------
Depreciation
At 1 April
2022 - 421,434 2,162 800,025 515,020 1,065,289 2,803,930
Charge for
the year - 77,665 118,970 41,911 286,595 252,430 777,570
Disposals - - - - (101,733) - (101,733)
At 31 March
2023 - 499,099 121,132 841,936 699,882 1,317,719 3,479,767
--------------- ---------- ------------------------ ----------------- ---------- --------------- -----------
Net book
value
--------------- ---------- ------------------------ ----------------- ---------- --------------- -----------
At 31 March
2023 - 8,715,000 666,998 101,450 702,535 1,081,800 11,267,783
--------------- ---------- ------------------------ ----------------- ---------- --------------- -----------
Assets under construction became operational during the
year.
* During the year the Directors reviewed the asset lives of the
various assets and determined that some assets were still being
used by the business despite being almost fully depreciated. The
asset lives were amended to more appropriate lengths and the
depreciation for all assets in use were adjusted.
As at 31 March 2023, all freehold property was valued by
independent 3rd party qualified valuers, in accordance with the
RICS Valuation - Global Standards 2017 (the Red Book). During their
valuation, the valuers have taken into account the various
geographical areas the properties are located in and the market
values of similar properties in the same areas. The directors
believe these valuations to be representative of the fair value as
at the balance sheet date.
The fair value of freehold property is categorised as a level 3
recurring fair value measurement.
The following table summarises the quantitative information
about the significant unobservable inputs used in recurring level 3
fair value measurements:
Fair value
at 31 March
2023 Valuation
Property GBP technique Sq ft Rate per sq ft
Average
Enfield 7,000,000 Vacant possession 39,121 179
Coventry 1,150,000 Vacant possession 13,000 83
Bradford 565,000 Vacant possession 9,358 56
Total 8,715,000
------------------ ------------------------ ------------------ ------- ----- ----- ------------
If the Freehold properties had been accounted for under the historic
cost accounting rules, the properties would have been measured
as follows:
2023 2022
GBP GBP
Historic cost 3,433,746 3,433,746
==================== ===================
14. Change in Asset Lives and Transfer of Intangible Assets
During the year the Directors reviewed the fixed assets category
and made adjustments to change the asset lives of various assets
and determined that some assets were still being used by the
business despite being almost fully depreciated. The change in
asset lives was made to better align the use of the assets with the
periods they were depreciated so that the charge in the profit and
loss better represented that use.
The following table summarises the impact of changes in the
asset lives and freehold land & buildings revaluation reserves
on the Group's financial statements as at 31 March 2022.
I. Consolidated statement of financial position
As Reported Adjustment As Restated
31 March 2022 31 March 2022
GBP GBP GBP
--------------- ----------- ---------------
Intangible assets - 107,273 107,273
--------------- ----------- ---------------
Property, plant and
equipment 10,029,209 223,539 10,252,748
--------------- ----------- ---------------
Right of use assets 2,874,430 - 2,874,430
--------------- ----------- ---------------
Loans to franchisees 710,059 - 710,059
--------------- ----------- ---------------
Total non-current
assets 13,613,698 330,812 13,944,510
--------------- ----------- ---------------
Current assets 11,951,236 11,951,236
--------------- ----------- ---------------
Total assets 25,564,934 330,812 25,895,746
--------------- ----------- ---------------
Retained earnings 12,475,031 267,958 12,742,989
--------------- ----------- ---------------
Others 4,034,774 - 4,034,774
--------------- ----------- ---------------
Total Equity 16,509,805 267,958 16,777,763
--------------- ----------- ---------------
Total Liabilities 9,055,129 62,854 9,117,983
--------------- ----------- ---------------
Total equity and
liabilities 25,564,934 330,812 25,895,746
--------------- ----------- ---------------
II. Consolidated statement of profit and loss
As Reported Adjustment As Restated
31 March 2022 31 March 2022
GBP GBP GBP
--------------- ----------- ---------------
Revenue 32,964,846 - 32,964,846
--------------- ----------- ---------------
Cost of sales (17,133,685) - (17,133,685)
--------------- ----------- ---------------
Gross profit 15,831,161 - 15,831,161
--------------- ----------- ---------------
Administrative expenses (8,012,448) 330,812 7,681,636
--------------- ----------- ---------------
Operating profit 7,818,713 330,812 8,149,525
--------------- ----------- ---------------
Finance income 1,802 - 1,802
--------------- ----------- ---------------
Finance costs (83,190) - (83,190)
--------------- ----------- ---------------
Profit before tax 7,737,325 330,812 8,068,137
--------------- ----------- ---------------
Income tax expense (1,425,709) (62,854) 1,488,563
--------------- ----------- ---------------
Profit after income
tax 6,311,616 267,958 6,579,574
--------------- ----------- ---------------
Other comprehensive
income for the year 1,012,642 - 1,012,642
--------------- ----------- ---------------
Total comprehensive
income for the year 7,324,258 267,958 7,592,216
--------------- ----------- ---------------
15. Intangible Assets
Reconciliation of carrying
amount
Website Software ERP System Total
Cost as at 1 April 2021 144,025 60,270 57,265 261,560
Acquisitions
External work on website 26,645 - - 26,645
Disposals - - - -
Amortisation to 31 March
2022 (108,125) (47,754) (25,053) (180,932)
Restated balance at 31 March
2022 62,545 12,516 32,212 107,273
------------------------------------- ---------- --------- ----------- ----------------
Acquisitions
External website design work 144,784 - - 144,784
Purchase of software - 18,358 - 18,358
Internally developed website
work 118,648 - 118,648
Internally developed ERP work - - 64,233 64,233
Disposals - - - -
Amortisation charge Financial
Year 2023 (28,447) (11,347) (14,316) (54,110)
Balance at 31 March 2023 297,530 19,527 82,129 399,186
------------------------------------- ---------- --------- ----------- ----------------
16. Leases
The Consolidated Statement of Financial Position shows the
following amounts in relation to leases:
Properties
GBP
Cost
At 1 April
2022 2,999,405
Additions -
At 31 March
2023 2,999,405
-----------
Depreciation
At 1 April
2022 124,975
Charge for
the year 299,940
At 31 March
2023 424,915
-----------
Net book value
-----------
At 31 March
2023 2,574,490
===========
Net book value
----------
At 31 March
2022 2,874,430
==========
The Group leases one property and the term is ten years. There
are no variable lease payments or commitment to short term
leases.
Lease liabilities 2023 2022
GBP GBP
Current 270,118 260,191
Non-current 2,429,838 2,699,958
2,699,956 2,960,149
========================= =========================
The Group's obligations are secured by the lessor's title to the
leased assets for such leases.
Amounts recognised in the Consolidated Statement of
Comprehensive Income are as follows:
2023 2022
GBP GBP
Depreciation expense of right-of-use assets 299,940 124,975
Interest expense on lease liabilities 104,808 46,228
============== =================================
The total cash outflow for leases amount to GBP365,000 (FY22 -
GBP85,483).
17. Inventories
2023 2022
GBP GBP
Finished goods and goods
for resale 2,790,724 2,468,921
========== ==========
Inventories are charged to cost of sales in the Consolidated
Statement of Comprehensive Income.
18. Trade and other receivables
2023 2022
GBP GBP
Trade receivables 1,743,776 2,002,807
Other receivables 370,222 280,613
Prepayments 569,623 269,789
2,683,621 2,553,209
========== ==========
The fair value of those trade and other receivables classified
as financial assets at amortised cost are disclosed in the
financial instruments (note 26).
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 (note 27).
Trade receivables are non-interest bearing, are generally on
14-day terms and are shown net of a provision for impairment.
Management's assessment is that a provision of GBPxx is required
against certain receivables from franchisees.
The age profile of the trade receivables is shown in Note 27
19. Loans to Franchisees
2023 2022
GBP GBP
Loans to franchisees 754,412 1,067,607
============== ==========
Non-current 508,532 710,059
Current 245,880 357,548
Loans are interest free and payable in equal monthly
instalments. All non-current assets are due within five years of
the statement of financial position date. The carrying amount of
the loans is considered to be equal to their fair value.
20. Share capital
2023 2022
GBP GBP
40,000,000 Ordinary shares of GBP0.01
each 400,000 400,000
======== =======================
All of the ordinary shares of GBP0.01 each carry voting rights,
the right to participate in dividends, and entitle the shareholders
to a pro-rata share of assets on a winding up.
21. 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 21 for more information.
22. Share-Based Payments
The Group's Share based payment scheme lapsed in 2022. The Group
does not currently have a new Share based payment scheme.
23. Borrowings
2023 2022
GBP GBP
Non-current borrowings
Bank loans 1,132,292 1,185,978
1,132,292 1,185,978
========== =========================
Current borrowings
Bank loans 104,498 167,754
104,498 167,754
========== =========================
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.
24. Trade and other payables
2023 2022
GBP GBP
Trade payables 2,648,770 1,994,411
Other taxation and social security 268,635 340,035
Other payables 316,375 36,497
Accruals 532,633 290,429
3,766,413 2,661,372
============== ============
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.
25. Provisions
The provision includes a website data breach in 2020. The amount
remaining represents potential fines in respect of the website data
breach and is based upon independent legal advice. The provision
for bad debts is made up of a provision for the impairment of
franchisee loans of GBP49,888 (FY22: Nil) and a provision for the
impairment of trade receivables of GBP230,537 (FY22:Nil)
2023 2022
GBP GBP
Website data breach 243,100 243,100
243,100 243,100
======== ========
26. 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 GBP74,144 (FY22 - GBP56,798). Contributions totaling
GBP16,904 (FY22- GBP19,890) were payable to the fund at the
statement of financial position date and are included in other
payables (see note 22).
27 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.
Key management personnel are only the executive and
non-executive directors and details of the amounts paid to them are
included within note 9 and the Directors Remuneration Report on the
Annual Report.
Key management personnel had an interest in dividends as
follows:
2023 2022
GBP GBP
Sukh Chamdal 777,435 792,851
Jaswir Singh 45,815 34,473
Neil Sachdev 2,589 1,148
Alison Green 464 222
Martin Blair 1,545 -
----------------------- -----------------------
827,848 828,694
======================= =======================
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 2023 2022
GBP GBP GBP GBP
Sales Balance Sales Balance
Cake Box (Crawley) Limited (0%)* 170,370 11,163 168,684 11,095
Cake Box CT Limited (0%) 287,837 18,198 280,706 19,326
Cake Box (Strood) Limited (0%) 132,353 6,824 157,247 2,241
Cake Box (Gravesend) Limited (0%)** 159,997 7,744 123,162 (1,021)
750,557 43,929 729,799 31,641
======== ======== ======== ========
* 100% Owned by Mr. Chamdal's daughter
** This store no longer considered a related party
Dr Jaswir Singh 2023 2022
GBP GBP GBP GBP
Sales Balance Sales Balance
Luton Cake Box Limited
(10%) 410,560 18 419,676 15,544
Peterborough Cake Box Limited
(30%) 229,149 (324) 258,807 5,983
Cream Cake Limited (30%) 246,223 - 230,591 12,971
MK Cakes Limited (0%)*** 228,082 - 292,202 10,532
Bedford Cake Box Limited
(0%)*** 197,808 - 199,553 5,436
Chaz Cakes Limited (50%) 177,785 - 266,563 6,446
Eggless Cake Company (50%) 178,344 - 194,201 9,366
1,667,951 (306) 1,861,593 66,278
---------- -------- ---------- --------
*** 100% Owned by Dr Singh's son or daughter
28. Financial instruments
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
87).
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
Financial Assets
Held at amortised cost
2023 2022
GBP GBP
Cash and cash equivalents 7,353,583 6,571,558
Trade and other receivables 2,344,536 2,116,254
Other financial assets 804,300 1,067,607
Impairment of trade receivables (230,537) -
Impairment of franchisee loans (49,888) -
10,221,994 9,755,419
----------- -------------------------
Financial Liabilities
Held at amortised cost
2023 2022
GBP GBP
Trade and other payables 3,233,781 2,584,437
Secured borrowings 1,236,790 1,353,732
4,470,571 3,938,169
---------- -------------------------
29. 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:
Cake Box Holdings Plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 MARCH 2023
29. Financial risk management (continued)
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.
The age profile of the trade receivables and expected credit
loss is shown in the table below:
Expected 2023 2022
Loss Rate
GBP GBP
----------- ---------- ----------
0- 30 days 0.1% 1,509,715 1,475,111
----------- ---------- ----------
30 - 60 days 0.2% 43,111 261,482
----------- ---------- ----------
60 - 90 days 0.5% 32,822 9,132
----------- ---------- ----------
More than 90 days 1.0% 388,665 257,081
----------- ---------- ----------
Impairment provision (230,537) -
----------- ---------- ----------
Total 1,743,776 2,002,806
----------- ---------- ----------
The Group applies the IFRS 9 simplified approach to measure
credit losses using an expected credit loss provision for trade
receivables.
The Group provides loans to franchisees when the banks were not
lending to small businesses as they were focused on giving Covid
Recovery loans. The loans are interest free with an upfront
arrangement fee included in the loan. The loans are unsecured but
if loan repayments are not kept up supply of product is stopped and
franchisees are in breach of their franchisee agreement. As a
result the Group has the option to resell the franchise to another
interested party with the purchase price being used to first repay
the loan and any outstanding trade receivables, with any excess
going to the original franchisee. The loan periods are for periods
of one or five years.
The Group uses three categories for loans which reflect their
credit risk and how the loan loss provision is determined for each
of those categories. A summary of the assumptions underpinning the
Group's expected credit loss model is as follows:
Category Group definition of category Basis for recognition
of expected credit loss
provision
Performing Loans whose credit risk 12 month expected losses.
is in line with original Where the expected lifetime
expectations of an asset is less than
12 months, expected losses
are measured at its expected
lifetime (stage 1).
------------------------------ ------------------------------
Underperforming Loans for which a significant Lifetime expected losses
increase in credit risk (stage 2).
has occurred compared
to original expectations;
a significant increase
in credit risk is presumed
if interest and/or principal
repayments are 30 days
past due (see above in
more detail)
------------------------------ ------------------------------
Non-performing Interest and/or principal Lifetime expected losses
(credit impaired) repayments are 60 days (stage 3).
past due or it becomes
probable a customer will
enter bankruptcy
------------------------------ ------------------------------
Write-off Interest and/or principal Asset is written off
repayments are 120 days
past due and there is
no reasonable expectation
of recovery
------------------------------ ------------------------------
Interest-free loans are provided to franchisees to assist them
with new store build costs. The Group does not require the
franchisees to pledge collateral as security against the loan.
Over the term of the loans, the group accounts for its credit
risk by appropriately providing for expected credit losses on a
timely basis. In calculating the expected credit loss rates, the
Group considers historical loss rates and adjusts for
forward-looking macroeconomic data. The Group provides for credit
losses against loans to franchisees as follows:
Group internal Expected credit Gross carrying Gross carrying Gross carrying
credit rating loss rate amount (stage amount (stage amount (stage
as at 31 March 1) 2) 3)
2023
GBP GBP GBP
---------------- --------------- --------------- ---------------
High 0.1% 754,412 - -
---------------- --------------- --------------- ---------------
Medium 10.0% - - -
---------------- --------------- --------------- ---------------
Low 20.0% 49,888 - -
---------------- --------------- --------------- ---------------
Performing Under-performing Non-performing Total
GBP GBP GBP GBP
------------ ----------------- --------------- -------
Individual financial assets transferred
to under-performing (lifetime expected
credit losses) - 49,888 - 49,888
============ ================= =============== =======
No significant changes to estimation techniques or assumptions
were made during the reporting period.
The loss allowance for loans to franchisees as at 31 March 2022
and 31 March 2023 reconciles to the opening loss allowance for that
provision as follows:
The impairment provision of GBP280,425 (FY22: Nil) relates
GBP230,537 (FY22: Nil) to specifically impaired trade receivable
debt and GBP49,888 (FY22: Nil) franchisee loans.
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
2023 2022
GBP GBP
Borrowings - Due within one year 104,498 167,754
Borrowings - Due between one to two years 109,296 167,754
Borrowings - Due after more than two years 1,022,996 1,018,224
1,236,790 1,353,732
---------- -------------------------
Right-of-use assets - Due within one year 270,118 260,191
Right-of-use assets - Due between one to
two years 280,425 270,119
Right-of-use assets - Due between two to
five years 907,113 873,777
Right-of-use assets - Due after more than
five years 1,242,300 1,556,062
---------- -------------------------
2,699,956 2,960,149
========== =========================
Trade and other payables
2023 2022
GBP GBP
0 to 30 Days 2,995,879 2,049,774
30 to 60 Days 768,490 249,613
60 to 90 Days - 17,646
90 to 120 Days 2,045 73,891
120 Days to 1 year - 193,513
3,766,414 2,584,437
===================== ==========
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 100 basis-point shift
(FY22: 25 basis-point) would be a change of GBP12,368 (FY22-
GBP3,384).
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 Consolidated
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 manages any currency exposure by retaining a small holding in
US Dollars however all other cash balances are held in
Sterling.
30. Events after the reporting period
Post year end the directors have recommended dividends of 5.5 p
per share (FY22 - 5.1 p per share).
31. Subsidiary undertakings
The following were subsidiary undertakings of the Company
included in the Group results:
Country of Class
Name incorporation of shares Holding Principal activity
Eggfree Cake Box Franchisor of specialist
Limited United Kingdom Ordinary 100% cake stores
Chaz Limited United Kingdom Ordinary 100% Property rental company
The above subsidiaries have the same registered office address
as Cake Box Holdings Plc.
32. Notes supporting statement of cashflows
Cash and cash equivalents for the purposes of the statement of
cashflows comprise of:
2023 2022
GBP GBP
Cash at bank available on demand 7,353,183 6,570,739
Cash on hand 400 819
7,353,583 6,571,558
========== =========================
There were no significant non-cash transactions from financing
activities (FY22 - none).
Non-cash transactions from financing activities are shown in the
reconciliation of liabilities from financing transactions
below:
Non-current Current Non-current Current Total
lease liabilities lease liabilities borrowings borrowings
GBP GBP GBP GBP GBP
As at 31
March
2021 - - 1,318,005 167,754 1,485,759
Cash flows
New leases 2,999,405 - - - 2,999,405
Repayments (85,484) - - (167,754) (253,238)
Non-Cash
flows:
Interest 46,228 - 35,727 - 81,955
Non-current
liabilities
becoming
current
during the
year (260,191) 260,191 (167,754) 167,754 -
------------------ ------------------------- -------------- ----------------- --------------
As at 31
March
2022 2,699,958 260,191 1,185,978 167,754 4,313,881
Cash flows
New leases - - - - -
Repayments - (365,000) - (172,628) (537,628)
Non-Cash
flows:
Interest - 104,808 50,812 4,874 160,494
Non-current
liabilities
becoming
current
during the
year (270,119) 270,119 (104,498) 104,498 -
As at 31
March
2023 2,429,839 270,118 1,132,292 104,498 3,936,747
================== ========================= ============== ================= ==============
33. Ultimate controlling party
The Group considers there is no ultimate controlling party.
34. Earnings per share
2023 2022
GBP GBP
Profit after tax attributable to the owners
of Cake Box Holdings Plc 4,236,671 6,311,616
========================= =========================
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 10.59 15.78
Diluted earnings per share 10.59 15.78
========================= =========================
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