CAKE BOX HOLDINGS PLC
ANNUAL REPORT AND ACCOUNTS
2024
Expanding our
business and
customer base
Cake Box is the UK’s largest retailer
of fresh cream celebration cakes
Our Purpose
We believe in the power and joy of
togetherness. We understand the
importance
of
celebrating
life’s
special moments and our promise is
to bring handmade happiness to as
many customers as possible.
As we continue to execute our strategy to appeal to
more customers, in more locations, with more
products, our focus is on building on our multi-channel
success online and offline. Over the past year we have
successfully built a model that will continue to broaden
the brand and customer footprint.
We design |
We create
We care |
We are responsible
We lead |
We collaborate
We invest |
We empower
2
Contents
Strategic Report
4
•
Financial Highlights
4
•
Chair’s Statement
6-7
•
Chief Executive’s Statement
8-9
•
Financial Review
10-11
•
Brand Refresh
12
•
New Stores
14-15
•
New Product
16-17
•
New Customers, Loyalty & Data
18-19
•
Q&A with Franchisees
20
•
Market Growth & Reasons to Invest
21
•
Environmental, Social and Governance Report
22-25
•
Principal Risks and Uncertainties
26-29
•
Section 172 Statement
30-31
Governance
32
•
Board of Directors
32-33
•
Corporate Governance Statements
34-37
•
Report of the Audit Committee
38-40
•
Board Committees
41
•
Report of the Remuneration Committee
42-47
•
Report of the Nomination Committee
48-49
•
Directors’ Report
50-51
•
Statement of Directors’ Responsibilities
52
Financial Statements
53
•
Independent Auditor’s Report on the Group and Company 53-59
•
Consolidated Statement of Comprehensive Income
60
•
Consolidated Statement of Financial Position
61
•
Consolidated Statement of Cash Flows
62
•
Consolidated Statement of Changes in Equity
63
•
Notes to the Consolidated Financial Statements
64-97
•
Company Statement of Financial Position
98
•
Company Statement of Cash Flows
99
•
Company Statement of Changes in Equity
100
•
Notes to the Company Financial Statements
101-104
Company Information
106
2013
2015
2018
2020
2021
2022
2008
Our journey continues
Sukh Chamdal founded
Cake Box
27,000 sq ft bulk storage warehouse
in Enfield
2023
200th store opened in Sneinton, Nottingham
2024
Launched new brand refresh nationwide,
together with a new website and CRM platform
5,000 sq ft baking and warehousing
facility acquired to support up
to 35 stores
Purchase of current 40,000 sq ft site
in Enfield
Celebrated 100 opened stores and
listed on the London Stock Exchange
Started delivery of cakes with Uber Eats,
Just Eat and Deliveroo
Opened warehouse and distribution
centres in Bradford and Coventry, reducing
road miles by more than 80%
3
4
Cake Box Holdings Plc
Annual Report 2024
Operational
Highlights
• Group added 20 new stores in line
with it’s roll-out plan, taking the total
franchise stores to 225 (FY23: 205).
• 16.1% growth in online sales for the
year to £16.1m (FY23: £13.8m).
• Franchisee store sales increased
year-on-year by 9.1%.
• We entered new locations such as
Liverpool, Cambridge and Dibsbury.
Franchisee Store
Highlights
• Like-for-like1 sales growth of
4.4% in franchise stores
for FY24 (FY23: 1.0%).
• Franchisee total turnover up
9.1% to £78.8m (FY23: £72.1m).
• Number of multisite franchisees
increased to 47.
Group revenue
£37.84m
FY23: £34.80m
Gross profit
£19.94m
FY23: £17.17m
EBITDA*
£7.70m
FY23: £6.66m
Adjusted EBITDA**
£7.46m
FY23: £6.66m
Pre-tax profit
£6.26m
FY23: £5.43m
Adjusted pre-tax profits**
£6.02m
FY23: £5.43m
Cash at bank
£8.45m
FY23: £7.35m
Earnings per share
11.65p
FY23: 10.59p
Final dividend recommended
6.10p
FY23: 5.50p
*
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.
1. Like-for-like: Stores trading for at least one
full financial year prior to 31 March 2023.
• Group revenue up 8.7% year-on-year to £37.8m
(FY23: £34.8m), a testament to our strong business
model and strategic initiatives.
• Gross margin increased to 52.7% (FY23: 49.4%),
due to enhanced efficiencies in the production
facilities and the stabilisation of raw material and
freight costs.
• Strengthened balance sheet with a significant
increase in the Group’s net cash position,
£7.3m at the period end (FY23: £6.1m).
• Total dividend per share increased 10.8% to 9.0p
(FY23: 8.125p).
Financial Highlights
5
Strategic Report
6
I am delighted to present my inaugural
Chair’s Statement for Cake Box since being
appointed to the role in October 2023. It is
an honour to have taken up the role of Chair
and to contribute to the continued success
of Cake Box, one of the UK’s retail success
stories.
Since joining as a Non-Executive Director
upon our listing on the AIM market of the
London Stock Exchange in 2018, I have been
consistently impressed by the entrepreneurial
ethos, commitment to values, quality of
products and ambition to drive growth.
It is pleasing to report a year of growth
for Cake Box, cementing the Company’s
position as the UK’s largest retailer of fresh
cream celebration cakes. Despite navigating
uncertain economic conditions, Cake Box
has demonstrated resilience and strength,
continuing to deliver growth across the
business.
Strategic Growth Initiatives
At the start of the year, the Board and
management team outlined five key
strategic pillars to strengthen the Company’s
operations and build a platform for long
term sustainable growth. These pillars
focused on enhancing our presence across
multiple sales channels, expanding our store
estate, adopting a data-driven approach,
optimising operational efficiencies, and
strengthening our governance and
commitment to Environmental, Social, and
Governance (“ESG”) initiatives.
Throughout the year, our management team
diligently executed these strategic initiatives,
resulting in a strengthened foundation on
which the Company may continue to thrive
and pursue its growth. Our multifaceted
approach, blending our high street presence
with digital marketing strategies and an
enhanced online sales platform, not only
boosted customer demand and improved
customer retention, but also amplified
engagement levels significantly.
Entrepreneurial Excellence
Our franchisees and their success are the
backbone of the business, embodying the
entrepreneurial spirit that defines Cake Box.
Our franchise stores continued to perform
well with like-for-like sales increasing year-
on-year and we successfully opened 20
new high street stores, a testament to the
resilience and effectiveness of our franchise
model. We also benefited from the contin-
ued stabilisation in the cost of raw materials
during the year and gained further efficiency
benefits from investment in the business.
New look for next phase of
growth
The Company is now seeing the benefit
of investment in key areas to position it for
long term sustainable growth. Significantly,
our focus on targeted marketing initiatives,
coupled with the launch of an upgraded
website featuring our convenient ‘click-and-
collect’ service, underscores our commitment
to enhancing customer experience and
driving operational efficiency. Adopting
a data-driven approach has further
empowered us to discern market trends,
attract fresh consumers, and nurture lasting
loyalty among our customer base.
By expanding our reach into new areas and
demographics, our multi-channel strategy
Chair’s Statement
Cake Box has demonstrated resilience and strength,
continuing to deliver growth across all facets of the business
Our franchisees and their success are the backbone of the business,
embodying the entrepreneurial spirit that defines Cake Box
Martin Blair
Chair
“
“
Cake Box Holdings Plc
Annual Report 2024
7
has yielded tangible results, enabling
us to connect with additional customers
through various touchpoints. Additionally,
the successful launch of a brand refresh
in the second half of the year has been
well-received and is already contributing
to increased awareness of Cake Box and
demand for our products.
Community Commitment
We believe our stores can serve as catalysts
for boosting foot traffic on the high street
and play their part in fostering a sense of
community within local areas. Cake Box has
been built on solid values and our strong
relationships with our franchisees and
customers underpin a commitment to making
a positive difference in the communities we
operate in.
We continue to initiate and support local
initiatives to give back to the communities that
support us and are committed to ensuring our
operations align with our ESG principles.
Board changes
We continue to strengthen our Board
and management team. Following my
appointment as Chair, I am excited to
continue helping Cake Box in the next phase
of its development. Having been on the Board
as an Independent Non-Executive Director
since the Company listed on AIM in June 2018,
I have a deep understanding of the business
and appreciation of what is required to
continue our growth.
I replaced Nilesh (“Neil”) Sachdev who, after
more than five years in the role, stepped
down from the Board. I would like to take this
opportunity to thank him for his significant
contribution to the business.
In February 2024, we welcomed Shaun
Smith – who has extensive leadership and
Board experience – as an Independent
Non-Executive Director. Shaun sits on
the Remuneration, Nomination and ESG
Committees and will become Chair of the
Audit Committee following the Annual
General Meeting (“AGM”) on 30 July 2024.
Looking ahead
Cake Box is well-positioned to capitalise on
anticipated market trends in the Celebration
Cakes and Sweet Baked Goods segments.
There are many exciting opportunities for
growth ahead for the business and we are
committed to continue to produce high quality
products that resonate with our customers.
As evidenced by the continued expansion
of our store estate, with 225 Cake Box shops
trading as at 31 March 2024, we remain
steadfast in our commitment to growth. Our
ambitious target of reaching 400 stores in
the medium term underscores our confidence
in the scalability and resilience of our
business model. Additionally, our investment
in marketing and e-commerce capabilities
will help to broaden our reach and increase
demand.
With a strengthened, experienced leadership
team and ambitious strategy, I am confident
that the Group will continue to deliver growth
for all stakeholders.
Finally, I would like to thank the Board and the
entire Cake Box team for their dedication and
tireless efforts and extend my gratitude to our
shareholders for their continued support.
Martin Blair
Chair
10 June 2024
Strategic Report
8
I am proud to report a year of excellent
progress at Cake Box with strong growth
across the business. Throughout the year, the
strategic initiatives we implemented yielded
excellent results, with increases in sales, profits,
cash reserves, and dividends. This success
is a testament to our commitment to cost
discipline and our ability to maintain robust
trading momentum despite challenging
macroeconomic conditions.
The Company invested in a comprehensive
brand refresh, revamped its e-commerce
platform with a new website, and launched
a new customer relationship management
(“CRM”) system. Our expansion efforts, both
in physical stores and online, have seamlessly
integrated the traditional charm of brick-and-
mortar establishments with the latest technology,
optimising our reach, enhancing customer
engagement, and increasing online sales.
Strategic initiatives delivering
growth
In early 2023, we identified key strategic
initiatives to invest in the business and drive
growth for 2024 and beyond. It is pleasing to
report that these initiatives were successfully
implemented, bringing tangible results for
Cake Box.
Franchise Expansion
Our franchise partners continue to play a vital
role in our growth story. During the period, we
opened 20 new stores, bringing our total store
count to 225 at the end of FY24 (FY23: 205).
This included expansion into new locations
such as Cambridge, Didsbury, and Liverpool,
which has allowed us to connect with new
customers and increase brand awareness.
Trading momentum was strong during the
year with an increase in total franchise store
sales of 9.1% and like-for-like sales increase of
4.4%, reflecting new store openings and strong
customer demand.
We remain committed to further expanding
our footprint, with a target of reaching 400
stores. Progress with external property
consultants, appointed to develop a strategy
to reach this goal, has been encouraging and
we have already identified a number of areas
with potential either for a first Cake Box store
or additional stores to complement our existing
presence.
The demand for new stores has remained
strong among our existing franchisee network,
as well as in the form of inquiries from
prospective franchisees. We now have 95
franchisees with 47 of them operating more
than one Cake Box store at the end of FY24.
In addition to our focus on new stores, we
concentrated on supporting our franchisees
to help deliver operational efficiencies. This,
coupled with stabilised food costs, resulted in
an increase in Group margins to 52.7% and
15.1% increase in profit before tax. The positive
downward trends for utility costs combined with
the stabilisation of food costs, has had a positive
impact on franchisee margins and profitability.
Marketing and a multi-channel
approach
Our brand awareness, customer experience
and loyalty has been further enhanced by
CEO’s Statement
By staying alert and responsive to market trends, we can
position ourselves as a leader in the celebration cake market
In the second half of the year, we unveiled our new brand refresh to
broaden our appeal to new customers and demographics and amplify
opportunities for new store openings
Sukh Chamdal
Chief Executive Officer
10 June 2024
“
“
Cake Box Holdings Plc
Annual Report 2024
9
the success of our refined marketing strategy
and capabilities. Investment in marketing,
particularly in digital and e-commerce
capabilities, has been a focal point of our
growth strategy, and helped online sales
increase by 16.1% for FY24.
Our online ‘click-and-collect’ feature, whereby
customers can order a personalised, fresh
cream celebration cake online and collect
it within the hour, sets us apart from the
competition and is constantly growing in
popularity with our customer base.
The launch of our new website in June 2023
has seen excellent performance, with website
visits up 40.5% since launch, a 13.3% increase
in the volume of orders, translating into higher
sales and strong conversion rates from both
new and returning customers.
In addition, we created an annual central
marketing fund with our franchisees, aimed at
enhancing digital marketing initiatives to raise
brand awareness and expand our customer
base. National radio and outdoor advertising
campaigns, launched in September 2023,
have further bolstered brand awareness and
helped attract new customers to Cake Box.
Harnessing data for growth
Central to our marketing strategy is the
utilisation of customer data to drive long-
term sales and support our multi-channel
approach.
Since launching a new CRM system in May
2023, we have seen strong growth in customer
subscriptions and engagement. Marketing
subscriptions increased by 68.0% and we grew
our SMS sign ups from a zero base to 182,000
at the end of FY24, underscoring the benefits of
our data-driven approach.
As part of this strategy, we continue to invest
in our technology systems to build a complete
end-to-end ‘make to sell’ process – the ‘Cake
Box Hub’. It is a centralised system to connect
all our customer touchpoints and will further
enhance our ability to leverage data insights
driving commercial efficiencies and sales in
the future.
Through understanding consumer preferences
and behaviour patterns, going forward, we
will be able to tailor our products, promotions
and customer experience to better resonate
with our target audience, ultimately increasing
customer loyalty.
Brand refresh
In the second half of the year, we unveiled our
new brand identity to broaden our appeal
to new customers and demographics and
amplify opportunities for new store openings.
Nine of the new stores opened during the
financial year now carry the new branding,
which will be rolled out across the business.
The positive reception of our new brand
identity from customers, franchisees and
partners, reaffirms Cake Box’s position as
a market leader and provides an excellent
foundation for increased brand recognition
and heightened demand.
In addition, leveraging our existing distribution
channels and growing brand awareness, Cake
Box can effectively penetrate new regions in
the UK and reach untapped customers, further
driving sales and market share expansion.
The market opportunity
The market opportunity for our company within
the Celebration Cakes and Sweet Baked Goods
segments is significant and poised for growth.
In 2022, these two main target markets had a
combined market value of £2.85 billion and
were forecast to grow to £3.2 billion by 2027
(Mintel Report 2022).
This presents a great opportunity for Cake Box
to cater to the growing demand for high-quality
celebration cakes and sweet baked goods and
we are well-positioned to capture market share
and expand on our position in this space.
Outlook and current trading
Trading so far in FY25 has been in line with
management expectations. Whilst the outlook
for the retail sector remains challenging, we
are well positioned for the year ahead.
The increased investment in our marketing
campaigns, alongside the refresh of our brand
and website, will further strengthen Cake Box’s
presence and will help drive demand.
We will continue to introduce new product
lines, designs and customisation options to
enhance our celebration cakes. Through our
revamped e-commerce platform and click-
and-collect online feature, we are reaching
more people, whilst making it easier for our
customers to get the cakes they want.
By staying alert and responsive to market
trends, we will continue to position ourselves
as a leader in the Celebration Cakes and
Sweet Baked Goods industry, capturing a
larger share of the growing market and driving
sustainable long-term growth for our company.
Cake Box remains an asset-light, and cash-
generative business with a robust balance
sheet. Our plans are in place to drive
customer demand with our new marketing
initiatives, and to continue our store expansion
programme with a healthy pipeline of new
store openings.
Strategic Report
10
Group revenue
Reported Group revenue for the year
increased by 8.7% to £37.8m (FY23: £34.8m).
This was achieved through an increase in
franchise store like-for-like sales of 4.4%
as well as the addition of 20 new franchise
stores opening in the year. This was a very
positive outcome, considering the continued
challenging economic and tough consumer
environment, with high inflation and interest
rates impacting on consumer’s disposable
income.
Gross profit
Gross profit as a percentage of Group
revenue increased from 49.4% to 52.7% for
the full year. This increase was as a result of
the efficiencies gained from investments in
the production facilities in prior years and the
stabilisation of raw material and freight costs
during the year. The stabilisation of costs
enabled the Group to minimise any increase
in pricing to its franchisee partners, which in
turn benefited the margins of the franchisees.
Pricing to our customers was reviewed on
a regular basis to ensure we remained
competitive in a continued tough economic
climate throughout the year. We were able
to keep retail sales price increases to a lower
rate than the food retail sector, as in the prior
year, while not impacting on volumes.
EBITDA
Reported EBITDA increased 15.6% to £7.7m
as a result of the increased Group revenues,
with progression in gross margins offset by
the planned increase in overheads. Adjusted
EBITDA increased by 12.0% to £7.5m for the
year. The difference between Reported and
Adjusted EBITDA related to the reversal of
a £0.2m provision created in prior years
for a website data breach, which has been
classified as an exceptional item now that the
matter has been closed.
Exceptional items
The exceptional income items comprise solely
of a £0.2m provision made in FY21 following a
website data breach.
Following information provided to the
Information Commissioner’s Office (“ICO”)
regarding the enhancement of the Group’s
security measures, the ICO informed the
Group that it would not be pursuing any
enforcement action relating to the case and
considered the case closed.
As a result, the Group has released this
provision in the 2024 financial results and
classified the release as an exceptional item, in
line with the treatment of the original provision.
Balance sheet
The Group’s balance sheet has strengthened
further, with cash balances of £8.5m (FY23:
£7.4m). The Group’s only debt remains its
mortgages of £1.1m (FY23: £1.2m), secured by
its freehold properties in Enfield, Bradford and
Coventry.
As the Group operates a franchise model,
it has relatively low capital expenditure
requirements and a flexible cost base.
The Board is confident that the Group’s
cash levels and liquidity are sufficient for the
operational requirements of the Group, despite
the continued tough macroeconomic climate.
Financial Review
A very positive outcome, considering the continued challenging
economic and tough consumer environment
Michael Botha
Chief Financial Officer
10 June 2024
* EBITDA is calculated as operating profit before depreciation and amortisation
** Adjusted EBITDA and pre-and post-tax profits are after adjusting for exceptional items
*** % change is based on amounts in the Consolidated Statement of Comprehensive Income
Cake Box Holdings Plc
Annual Report 2024
FY24
As restated
FY23
Change***
£m
£m
Group Revenue
37.84
34.80
8.7%
Gross Profit
19.94
17.17
16.1%
Operating expenses before exceptional items
(13.76)
(11.60)
(18.7%)
Exceptional items
0.24
-
Operating profit
6.42
5.57
15.1%
Net finance cost
(0.16)
(0.14)
(16.4%)
Profit before tax
6.26
5.43
15.1%
Adjusted profit before tax**
6.02
5.43
10.6%
Taxation
(1.61)
(1.20)
(33.1%)
Profit for the period
4.65
4.23
10.0%
Adjusted profit for the period**
4.41
4.23
4.2%
Revaluation of freehold property
0.22
0.19
Deferred taxation on revaluation
(0.06)
(0.04)
Tax rate changes on revaluation reserve for freehold property
-
(0.34)
Total comprehensive income for the year
4.81
4.04
19.1%
EBITDA*
7.70
6.66
15.6%
Adjusted EBITDA**
7.46
6.66
12.0%
11
Property
At each year end, surveyors are instructed to
value the Company’s three freehold depots,
Enfield, Bradford and Coventry, to ensure
a consistent value base. The new valuation
has resulted in a further uplift of £0.2m in
the reported values of the three sites for the
consolidated report and accounts.
In FY22, the Group entered into a lease for a
warehouse in Enfield, which supports the growth
in all three of our production sites. This site is
classified as a right-to-use asset in the report
and accounts. All bulk and raw material stock,
utilised in the production of sponge, is stored in
this warehouse and distributed to the three sites
when required. The centralisation of stock has
increased control and minimised stock losses.
Taxation
The effective rate of taxation was 25.6%
(FY23: 22.2%). As part of the Budget 2021
announcement by the Government on 3 March
2021, the corporation tax rate has increased
for all companies with profits above £250,000
to 25% from 19%. This was effective from 1
April 2023 and therefore applied for the full
financial year under review.
The effective tax rate was higher than the
statutory rate due to expenses not allowable
for tax purposes and adjustments relating to
prior periods.
Earnings per share (“EPS”)
Reported earnings per share was 10.0% above
the prior year, at 11.65p (FY23: 10.59p). Profit
before tax (“PBT”) was 15.1% ahead of the prior
year. The difference in the growth year-on-year
between PBT and EPS is due to the increase in
the corporation tax rate from 1 April 2023 to
25% (FY23: 19%).
Adjusted earnings per share was 11.04p (FY23:
10.59p), 4.2% ahead of the prior year. This is
after the adjustment for the exceptional item
previously mentioned.
The number of shares in issue was 40,000,000
and is unchanged since the Company’s IPO in
June 2018.
Diluted earnings per share was 8.0% above
the prior year, at 11.44p (FY23: 10.59p). The
difference in the basic and diluted earnings per
share is due to the dilutive effect of the share
options granted during the year.
Dividend
Following the positive results and cash generation
reported for the 2024 financial year, the Board
is pleased to recommend a final dividend of
6.1p per share (FY23: 5.5p). The total dividend
for the year will be 9.0p (FY23: 8.125p), a 10.8%
increase year-on-year, continuing the progressive
dividend policy employed by the Board. The
dividend cover is 1.23x (FY23: 1.3x).
If approved by the shareholders at the
Company’s AGM on 30 July 2024, the final
dividend of 6.1p will be paid on 6 August 2024.
The record date for shareholders on the register
will be 12 July 2024, with an ex-dividend date of
11 July 2024.
Cash position
FY24
£m
As restated
FY23
£m
Intangible assets
0.73
0.40
Property, plant and equipment
11.48
11.27
Right-of-use-assets
2.27
2.57
Other financial assets
1.05
0.75
Lease liabilities
(2.43)
(2.70)
Provisions
-
(0.24)
Working capital
1.85
1.71
Net cash
7.31
6.12
Tax
(2.96)
(2.14)
Net assets
19.30
17.74
Adjusted EBITDA of £7.5m was
£0.8m above the prior year
(FY23: £6.7m). This increase was
offset by an increase of £0.4m in
working capital (FY23: decrease
of £1.0m), predominantly due
to the receivables for new store
openings in the final quarter of
the year.
Free cash flow generated
was £6.1m (FY23: £6.1m), this
was offset by £1.3m of capital
expenditure (FY23: £2.0m) and
returns to shareholders through
dividends of £3.4m (FY23: £3.1m).
The Group had £8.5m of cash
and cash equivalents at year
end, a £1.1m increase year-on-
year (FY23: £7.4m). The Group’s
net cash position was £7.3m
(FY23: £6.1m), a £1.2m increase
on the prior year. Net cash
position is calculated by taking
the cash and cash equivalents
less the outstanding mortgage
debt relating to the Group’s
freehold properties.
Intangible assets have increased
by £0.3m year-on-year, due to the
capitalisation of costs relating to
the new ERP system and website
development. Property, plant
and equipment has increased by
£0.2m, due to additions of £0.9m
and a further £0.2m increase in
the valuations of the Group’s three
freehold properties, offset by
£0.9m of depreciation charged
for the year. Right-of-use assets
has decreased by £0.3m, the
amortisation charge for the year.
Loans to franchisees increased
by £0.3m during the year,
predominantly due to short term
bridging loans to franchisees for
new store openings until their
bank finance is approved and
funds released by their banks.
Capital employed and balance sheet
Strategic Report
FY24
£m
As restated
FY23
£m
EBITDA
7.70
6.66
Exceptional items (note 10)
(0.24)
-
Adjusted EBITDA
7.46
6.66
Add back:
Working capital
(0.44)
0.97
Share-based charge
0.09
-
Net finance cost
(0.16)
(0.14)
Corporation tax
(0.83)
(1.34)
Free cash flow
6.12
6.15
Capex
(1.35)
(1.96)
Proceeds on sale of assets
0.05
0.06
Dividends
(3.36)
(3.09)
Repayment of finance leases
(0.27)
(0.26)
Movement in net cash
1.19
0.90
Opening net cash
6.12
5.22
Closing net cash
7.31
6.12
Provisions related to the website data breach in FY21, with the amount outstanding at the end of
FY23 provided for potential fines to be imposed by the ICO. During FY24, based on the information
submitted to the ICO regarding the enhancements made to the Group’s security measures to prevent
similar breaches, the ICO informed the Group that it would not be pursuing enforcement action and
considered the case closed. This provision has therefore been released in the 2024 financial year.
Working capital increased by £0.1m, due to an increase of £1.5m in accounts receivable as a result of
new store openings in the fourth quarter of the year, offset by an increase of £1.1m in accounts payable
and a £0.2m decrease in inventories.
Events after the year end
Post year end the opportunity arose to purchase the land and buildings neighbouring the Group’s
current depot in Bradford. As these opportunities are rare to acquire the land adjacent to the Group’s
current facilities, the Board took the decision to move ahead and purchase the land and buildings.
This will enable the Group to service its further expansion in the north of England and Scotland. The
purchase price of the land and buildings was £0.7m. The purchase was concluded during May 2024,
out of current cash reserves.
12
In the second half of the year, we unveiled our
new brand identity to broaden the Company’s
appeal to new customers and demographics.
The revitalised brand not only positions us
to attract new customers but also amplifies
opportunities for expansion through new store
openings:
• The new brand has been well received by
customers and our valued franchisees.
• It has enhanced our appeal within the
celebration cake market, fostering
increased engagement across online and
offline channels.
• Nine stores were opened in the new style,
and we will build on this with the pipeline of
new stores and a refurbishment initiative to
elevate our brand presence.
Handmade Happiness
Every celebration cake sold is handmade in-store,
decorated and personalised at the customer request.
As we expand our presence across the UK, this
dedication to the finest quality fresh cream cakes for all
occasions helps us thrive in the celebration cake market.
We know the importance of celebration and that is why
we have put a promise of Handmade Happiness at the
centre of our brand.
Brand Refresh
The Brand Refresh marks a significant
stride in our brand evolution
Cake Box Holdings Plc
Annual Report 2024
13
Strategic Report
14
New Stores
Expanding our UK store footprint
We added 20 new stores to our estate
in FY24, entering new locations such as
Liverpool, Cambridge and Didsbury.
As the Company expands its national
footprint, the demand for Cake Box is
overwhelmingly positive.
The Cake Box franchise family is made up
of 95 franchisees:
• 9 franchisees with 5 or more stores
• 22 franchisees with 3 or more stores
• 64 franchisees with 1-2 stores
The target to reach 400 stores across the
UK is focused around three key pillars:
• Increase the number of multisite
franchisees
• A data-focused approach to locate new
stores
• Integration of the new brand refresh
throughout the estate
Cake Box Holdings Plc
Annual Report 2024
Store Count
3 - 10
10 - 17
17 - 24
24 - 31
31 - 38
Far East
Packaging
Delivery platforms
Bradford
Distribution & Bakery
UK/Europe
Turkey
Packaging
Home delivery
Coventry
Distribution & Bakery
Collections from stores
UK wide franchise stores
Distribution & Bakery
15
3
Distribution centres
Providing store deliveries within
90 minutes and reducing travel
miles. Enfield bulk warehouse
added for additional
capacity.
20
New store
openings in
FY24
225
Total stores
New store openings have
continued and delivered
increased sales.
Strategic Report
16
New Products
Delivering new products & ranges to our customers
Speculoos
caramelised
biscuit
Cake Box Holdings Plc
Annual Report 2024
17
In FY24, Cake Box launched more new products than ever before, using customer insight and a focus on seasonal
trends to ensure products reflected the customer’s needs.
New product development once again played a vital role in our strong performance, with the launch of a new
premium Mango range and Speculoos caramelised biscuit range proving very popular amongst our customers.
The ability to keep innovating and creating celebration cakes for all occasions and the release of new premium
ranges continues to support the franchisee’s ability to grow their margins through pricing.
• Premiumisation - 20% of launches focus on premium and indulgence.
• Vegan Friendly - 13% of launches are plant based.
• Seasonal launches - Focusing on seasonal flavours.
• Customisation gaining increased momentum.
Premium
Mango
Strategic Report
Over the past year we have built on
our capability and resource with a
focus on reaching new customers
through:
• Enhanced e-commerce and
marketing, focusing on bringing
new customers into the business
through a new website with
better user experience,
increasing our sales and
customer loyalty.
• A focus on customer acquisition
online demonstrated in strong
growth with sales up 16.1%, and
offline like-for-like sales growth
increasing by 4.4%, , driven by
click-and-collect orders.
• A data driven approach focused
on new customer sign-ups.
For FY24, the online customer
subscription database increased
68.0% and the SMS database
reached 182,000 from zero.
New Customers
As a multi-channel business, Cake Box is
attracting more customers online with our
popular click-and-collect in-store service
18
Cake Box Holdings Plc
Annual Report 2024
Marketing Subscriptions
SMS Subscriptions
Online Sales
Customer data is central to our marketing strategy,
providing valuable insights into the needs of our
customers and helping us to foster customer loyalty.
We expect our database to significantly increase as
the investments we have made continue to deliver
greater awareness and appeal.
Over 20,000 reviews rating Cake Box excellent
Loyalty & Data
As Cake Box continues to grow, we are better
prepared to serve our customers with
tailored marketing campaigns
19
CRM
The implementation of a
new CRM system has proven
instrumental in providing a
comprehensive, long-term view
of our customer base, and
helping to fuel growth.
New
Customer Leads
Our strategic investment in
e-commerce is focused on new
customer leads and has shown
strong conversion to
subscriptions and
sales growth.
Trustpilot
In June 2023, we launched
Trustpilot to better understand
customer satisfaction and we take
pride in the excellent feedback
received.
Loyalty
We look forward to the next
phase of our quest to drive
customer lifetime value and
loyalty that will become central
to the growth ambitions of
the business.
Cakes are delicious
Cakes are delicious, always fresh and light as air. The staff are so lovely
too. I’ve visited several times to buy their cake slices and bought a cake
for a birthday today and they added a beautiful iced message at no
extra cost. Highly recommend that you visit this cake shop the next time
you’re in need of a treat!
Victoria, 15th May 2024
Easy to use online service
Great selection of cakes to choose. The cake was delicious and delivered
as per instructions. We would definitely order from Cake Box again.
Thankyou!
Sheena, 3rd May 2024
Strategic Report
20
Vikas Sangwan –
Multisite Franchisee
How long have you been with Cake Box and
what drew you to the Company?
My wife was pregnant in 2012 and we were
looking for a lifestyle change. It seems fate
brought us to Cake Box with cravings and the
rest is history! I was working in IT at the time, but
we were so impressed by Cake Box’s product
quality, business model and transparency of
the leadership team that we decided to invest.
We opened our first store in April 2013 and
have since grown to almost 20 locations.
How has Cake Box supported your growth?
Cake Box has supported us through every
step, both financially and in a human way – we
truly feel like part of the family. Our franchisors
are easily approachable and available 24/7,
guiding us through the process of learning
to manage multiple franchises, managing
operations and retaining the product quality
that Cake Box is known for.
The head office is ready to help myself or our
store teams anytime, whether it’s the warehouse
team, IT team or marketing team. Our
Franchisors’ and the senior team’s enthusiasm,
positivity and encouragement has been integral
in helping us grow to where we are now.
How did the company support the franchisees
through Covid and the uncertain economic
climate?
During the pandemic, Cake Box supported
franchisees mentally and financially, with the
Directors helping us in trialling new delivery
platforms during the period that meant we not
only survived the Covid period, we thrived.
Would you recommend others open
a Cake Box store and why?
I would 100% recommend anyone to open a
Cake Box store. The quality of the products
speaks for itself, and the support provided by
the management at the head office creates an
environment for franchisees to succeed. The
simplicity of the business model coupled with
visible margins makes it very attractive for an
aspiring entrepreneur.
Nilesh Patel –
New Franchisee
What attracted you to Cake Box to establish
your store, and why now?
Having been a loyal Cake Box customer
for many years, with almost two decades
experience working in the food retail
sector, it was clear to me how Cake
Box stands apart from the competition
with the simplicity of its offer
accompanied by a strong brand
and great product range.
The cherry on top was Cake Box’s
online presence which drives further
sales in its brick and mortar stores! I
was excited by the dynamic nature
of the business and the head
office team, and was keen to
join and evolve with Cake Box
as a market leader which is
continuing to grow.
What benefits are there to having a Cake Box
franchise?
I was convinced by the franchise model,
being easy to manage with a strong support
system in place. Cake Box has a market
leading position in this space, and it stands out
from the competition. If anyone was thinking
of starting a franchise, I would definitely
recommend Cake Box.
What training and support do you receive in
setting up the store and ongoing?
The training and support I received every
step of the way whilst setting up my store was
fantastic, and the regular marketing and
operating support Cake Box provides let
me hit the ground running and keep up that
momentum. The opportunity to attend regular
franchise forums on a weekly and quarterly
basis allows me to connect with experienced
operators who I can learn from.
Q&A with Franchisees
“Cake Box has supported us through every step, both
financially and in a human way – we truly feel like part
of the family”
Vikas’ favourite
cake is Fresh
Mixed Fruit
Nilesh’s favourite cake is fruit and nut
Cake Box Holdings Plc
Annual Report 2024
21
Market Growth & Reasons to Invest
“A refreshed brand, new store openings,
new locations, and the next generation of shop refits,
with the ambition to reach 400 stores”
• A significant market opportunity:
Sweet Baked Goods and Celebration
Cakes total market of £2.85bn in 2022.
Forecast to grow to £3.2bn by 2027.
• 91% of people eat sweet baked goods
and 50% of the population treat
themselves at least 3 times a month.
• Cake Box is well-positioned to
capitalise on anticipated market
trends in the celebration cakes and
sweet baked goods segments. We are
increasing investment in marketing to
further grow brand awareness and
digital and e-commerce capabilities.
Source: Mintel Report 2022 Cakes,
Cake Bars and Sweet Baked Goods UK
Growing the Cake Box brand
A refreshed brand roll-out and territory
expansion with new store openings will create
the next generation of shops to achieve the
ambition to reach 400 shops.
Multi-channel sales model
Through our digital channels, including
delivery and the popular ‘click-and-collect’
feature, we are reaching more customers,
new demographics, and making it easier for
customers to get what they want.
Broadening our appeal and
driving loyalty
We are broadening our appeal and driving
loyalty through a data-driven approach,
with a new CRM system, which improves
communication and increases loyalty with
customers, while innovating with the latest
trends.
Focus on efficient franchisees
Working with franchisees on expansion
opportunities to increase the number of
multisite franchisees.
• Leading Market Presence: As the UKs largest retailer of fresh
cream celebration cakes, we hold a dominant position in the
market, synonymous with quality and taste.
• Robust Financial Performance: Delivering growth across key
financial metrics, including increases in revenues, profits,
dividends and cash.
• Expanding Market Reach: Expanding our footprint through
the addition of new stores and an enhanced online sales
platform, ensuring improved accessibility and convenience for
customers nationwide.
• Strategic Digital Integration: Leveraging digital and
data-driven strategies to increase customer acquisition and
foster loyalty, cementing our position in the industry.
• Efficient Business Model: An asset light and cash generative
model.
• £14.1m of aggregate dividends paid to shareholders since IPO.
Key Drivers of Growth
The Market
Reasons to Invest
£0m
£0.5m
£1m
£1.5m
£2m
£2.5m
£3m
£3.5m
2018
2019
2020
2021
2022
2023
2024
0.5
1.0
1.6
2.0
2.5
3.1
3.4
Dividends Per Year
Strategic Report
22
Our products
Cake Box is proud of its firm commitment
to quality and taste. This priority is key
to providing our customers with the best
products made with the finest ingredients
and it is the base of our success. We have a
solid commitment to work with our suppliers,
nationally and internationally, to protect the
rights of workers across the value chain.
Labour standards in our supply chain
We are determined to protect labour and
human rights across our supply chain. Our
Ethical Standards are included in our Supplier
Code of Conduct which outlines what we expect
from our contractors, suppliers, franchisees, and
other business partners.
This is the second year we have voluntarily
disclosed our Modern Slavery Statement. We
are committed to providing this statement every
year and to continuously improving our due
diligence process. We require all food suppliers
to complete self-assessment questionnaires
(SAQ), allowing us to better understand their
business and prioritise those suppliers that
require the most attention. We use third-party
data such as the Global Slavery Index to
analyse ethical risks in our value chain and
identify high-risk suppliers. We have processes
in place to ensure all high and medium-risk
suppliers are audited every two years1. As of 31
March 2024, 100% of our high-risk suppliers and
90% (10 out of 11) of our medium-risk suppliers
complied with this requirement. We are working
with a medium-risk supplier in India to ensure
they are audited by the end of 2024.
As part of our commitment, we also ensure that
our colleagues receive adequate training on
human trafficking and modern slavery. In FY24,
Stronger Together, a not-for-profit organisation,
delivered an annual training session to 20
key members of our Human Resources,
Procurement, Franchise, and Operations teams.
Our Board of Directors also received a refresher
training delivered by a specialised third party.
Product information
We want our customers to enjoy healthy lives. To
support them in enjoying our cakes as a treat,
we provide clear and transparent nutritional
information to our customers. Under the Calorie
Labelling (Out of Home Sector) (England)
Regulations 2021, the calorie content is labelled
on all products displayed in our store fridges
and is also available to online shoppers.
We have now centralised and automated
this process to make it even easier for our
franchisees to display this information.
Food safety
Ensuring food safety is a top priority for Cake
Box, and it is a commitment we uphold without
exception. We collaborate daily with our
colleagues, franchise partners, and suppliers to
uphold stringent food safety standards.
We are proud to share that, this year, we
achieved the British Retail Consortium
(BRC) Standard for food safety for our
main manufacturing site in Enfield,
receiving grade AA certification. We are
currently working to achieve this prestigious
certification for our other two sites, Bradford
and Coventry, as well as retaining it for
Enfield later in 2024. This independent
accreditation confirms that we align with
best practices on food safety standards both
in our operations and our supply chain.
Our Field Team also works closely with the
franchisees to ensure that the highest Health
and Safety and Food Safety standards are
maintained across our franchise estate. As
of 31 March 2024, 96.7% (FY23: 95.0%) of our
shops have received a rating of 4 or 5 out of 5
on the Food Hygiene Rating Scheme2, with an
average score of 4.8. Our ambition is for all
our stores to obtain a minimum score of 4 and
we actively support these franchisees who
require extra guidance.
Sustainable ingredients
We are committed to providing the best
ingredients for our customers, as much as
we are committed to supporting our supply
chain workers and reducing our impact on
the planet. In FY24, we started conversations
with our top suppliers, to identify those
offering alternative sustainable choices such
as certified Palm Oil and Fair-Trade Cocoa.
We are now changing our buying processes
to systematically request these alternatives
and, where possible, to replace ingredients
with them.
Since the opening of our first store in 2008 in East London, Cake Box has had a strong
commitment to positively impacting the communities we serve. Our ESG Committee,
chaired by Non-Executive Director Alison Green, drives our activities across three
pillars: Our Products, Planet, and People
1For all high-risk suppliers and for medium-risk suppliers outside the UK and the EU,
we require an independent audit undertaken by third-party experts. For medium-risk
suppliers based in the UK or the EU, our procurement team assess the need for a site
visit or third-party audit based on case-by-case basis based on SAQ results.
2This figure covers 210 out of our 225 shops that have already been visited by an
Environmental Health Officer (EHO).
Environmental, Social and Governance Report
Cake Box Holdings Plc
Annual Report 2024
23
Our planet
Decreasing our Greenhouse
Gas Emissions
This is the second year that we are voluntarily
disclosing our scope 1 (directly controlled by
the Group) and scope 2 (indirect through
utilities) emissions. Due to challenging market
pressures, we have seen a decrease in our
renewable energy consumption this year,
resulting in higher scope 1 and 2 emissions.
Despite the difficulties, we are still sourcing
72% of our electricity from renewable energy.
We also continuously explore energy-efficient
equipment, having already transitioned all our
operations to LED lighting.
We acknowledge that our vehicle fleet
produces the majority of our scope 1 and 2
emissions – about 51%. Although we have
not yet found electric vans that meet our
operational needs, we will continue evaluating
the low-carbon options available on the
market. Furthermore, in alignment with the UK
Government’s Net Zero Strategy, we plan to
phase out all diesel and petrol cars by 2035.
We do not yet report our scope 3 emissions, but
we understand the importance of supporting
our franchisees in managing their energy
consumption, helping them reduce both their
bills and their impact on the planet. In FY24, we
partnered with external sustainability experts
to conduct in-person assessments of a sample
of Cake Box franchise shops to provide tailored
energy-efficiency recommendations. During
our Franchise Summit in Summer 2023, we
shared these findings with our franchisees and
facilitated discussions and best practice sharing
amongst shop owners.
Tackling Waste and Packaging
We are committed to reducing waste to landfill
to a minimum. In FY24, we have worked closely
with our waste management partners to better
understand the waste we produced across
our three manufacturing sites and how it is
disposed of. We found that, across our main
sites in Enfield and Bradford, we produced 114
tons of waste, of which over 99% was diverted
from landfill. This will continue to be a focus in
FY25, including gaining better visibility over
waste production in our Coventry site. We will
also continue working across our three sites to
explore new ways to eliminate waste.
As part of our commitment, our Food Tech
Team has implemented a switch from
disposable Personal Protective Equipment (PPE)
to reusable fabric lab coats across our sites.
We have partnered with Elis Berendsen to
ensure the provision and laundering of the lab
coats to our colleagues whilst respecting the
highest hygiene standards.
We are also looking at ways to reduce plastic
and waste in our products and franchise estate.
In FY24, 98% of our retail packaging was
made of materials that are widely recyclable
in the UK. The same year, we redesigned our
packaging to remove the plastic window from
the cake boxes. Our 100% paper cake boxes
were distributed to franchisees for the first
time in March 2024. We are also introducing
non-woven polypropylene bags for life to
significantly reduce the use of plastic vest bags
in our shops.
3The rise in accidents in FY24 reflects the work we have done to improve our Health & Safety (H&S) reporting processes, working with H&S committee managers to ensure all accidents are reported on
time. We have observed that new starters and new machinery are a main cause of accidents. This is why we are improving training at the onboarding stage, upon installing new equipment as well as
yearly refreshers.
4This does not include the franchise shops awaiting inspection, shops falling under the Scotland Food Hygiene Information Scheme, or that closed during the reporting period.
5Emissions are calculated using the GHG Protocol Corporate Accounting and Reporting Standard. Consumption data has been converted to GHG emissions using the latest Defra emissions factors.
Unless otherwise stated, emissions reported above are calculated using the location-based method, using an operational control boundary.
6Data coverage for energy consumption (kWh) is 100% for FY24.
7Data coverage for energy consumption (kWh) is 94% for FY23. We restated some figures from our FY23 Annual Report to amend our methodology around f-gas, market-based, and fleet emissions.
2024 saw us taking our ESG programme to its next stage of maturity. We achieved the British Retail Consortium
(BRC) Standard (grade AA) at our Enfield site, demonstrating the highest food safety in our main manufacturing
site. We received the Great Place to Work certification, recognising our passionate commitment to the
wellbeing and development of our colleagues.
Alison Green
Chair of the ESG Committee
“
“
Our ESG data
2023/2024
2022/2023
2021/2022
% of high and medium-risk suppliers that
completed an ethical audit in the past two
years
96%
90%
N/A
% of colleagues who recommend Cake Box
as a great place to work
93%
93%
85%
Employee accidents
383
27
28
Employee reportable incidents
1
2
2
% of franchise shops rated 4 or 5 out of 5 for
Food Hygiene4
96.7%
95%
95%
Environmental KPIs, including Streamlined.
Energy and Carbon Report (SECR) data5
2023/20246
2022/20237
2021/2022
Total energy consumption (kWh)
3,903,536.1
3,738,014.1
3,158,775.6
Absolute direct GHG emissions
(scope 1) – (tCO2e)
681.6
674.6
546.3
Absolute indirect GHG emissions
(scope 2, location-based) – (tCO2e)
165.6
134.3
132.2
Absolute GHG emissions – direct and
indirect: location-based (tCO2e)
847.2
808.9
678.5
Absolute indirect GHG emissions
(scope 2, market-based) – (tCO2e)
81.6
42.1
145.4
Absolute GHG emissions – direct and
indirect: market-based (tCO2e)
763.2
716.7
691.7
Absolute GHG emissions intensity per
revenues (tCO2e/revenues – location-based)
22.4
23.2
20.6
% of renewable electricity
72%
83%
34%
Strategic Report
Our people are our best asset, and we take care of them. We want to create an
environment where our colleagues feel happy and valued. We are proud to share
that, in November 2023, we achieved the Great Place to Work Certification, which
recognises our commitment to employee wellbeing and development. As part of the
certification process, our employees were asked to complete a survey which showed
that 93% of them consider Cake Box as a great place to work.
Our people
Health and Safety
Health and Safety (H&S) is a non-negotiable
for Cake Box and a commitment we take
very seriously. Every colleague undergoes
mandatory H&S training when they join us.
Our H&S Committee, which consists of staff
representatives, meets every quarter. We work
closely with the Committee to identify and
remove all health risks and hazards.
As part of our “You Asked, We Did It”
programme, we use colleague suggestions
to improve our H&S programme. In FY24, we
engaged colleagues in our Bakery department
to better protect them from the health risks
associated with flour dust. In addition to high-
quality protective masks, we consulted with the
team and installed new equipment to keep dust
to a minimum. Our Bakery colleagues are also
offered an annual Lung Function Check-Up to
monitor and protect their health.
Wellbeing
It is not enough to keep our colleagues safe.
We also want them to feel happy at work.
We understand the importance of good
employment conditions and, as of 31 March
2024, we can report that all our colleagues
have permanent contracts.
We also want our colleagues to feel
comfortable talking about their mental health
and wellbeing. Since 2022, we have appointed
Mental Health First Aiders across our three
manufacturing sites. Our seven champions
received training from expert organisations
and serve as an initial point of contact for
anyone facing mental health challenges. In
FY25, we will deliver a refresher Mental Health
Awareness session for all our colleagues.
We also provide our colleagues with
comprehensive resources to support their
financial wellbeing. These are available to
all colleagues and include access to private
health insurance, a 24/7 support helpline, and
zero-interest company loans for any colleague
suffering hardship.
Learning and development
In FY24, we appointed a Learning and
Development Manager to help us develop
a comprehensive programme of learning
activities for our people. In the past months, we
started developing individual plans for each
colleague to gain the right skills and develop
in their role. We introduced the Training Room,
a digital platform with learning modules to
support the development of all Cake Box
colleagues. Modules on the platform include
for example Fire Safety Awareness, Manual
Handling, Driving for Business, and Food Safety
Allergen Training.
We know that line managers play an essential
role in the wellbeing of our people and
the success of our business. This is why
we offer all site and line managers at
Cake Box an opportunity to complete an
Institute of Leadership & Management (ILM)-
accredited Leadership and Management
training course. We expect all our line
managers to complete the training by the end
of FY25.
To further strengthen our approach, we will be
developing Learning Paths for each role within
the business. These tailored pathways will help
us to deliver tailored training at the right time
to each colleague, ensuring they receive the
necessary knowledge and skills to do their jobs.
Franchise staff
The people working in our shops are the
public face of our business, and we provide
franchisees and their dedicated staff with
extensive support to ensure the highest working
standards.
In FY24, we reinforced our onboarding
process which now consists of an initial
four-day training session to get franchisees
started, followed later by ten intensive days to
reinforce and expand learnings. The training
covers everything shop owners need to know
to successfully lead their business – from
HR management to H&S and labour rights.
Franchisees must also register with Peninsula,
an HR outsourcing business, that provides
them with expert support and advice,
notably on employee contracts and
documentation.
24
Cake Box Holdings Plc
Annual Report 2024
Environmental, Social and Governance Report Continued
25
We also provide franchisees with ongoing
recommendations and training throughout the
year, facilitated by our Training Manager and
Field Team. In FY24, we expanded the Field
Team which conducted over 100 franchise
audits and follow-up visits per month. Our
new internal Store Scorecard allows us to
track and benchmark franchise performance
against indicators such as Trustpilot scores,
Food Hygiene Rating, and audit results. In
FY24, we offered specialised Customer Service
training to all franchisees, enabling them and
their employees to deliver exceptional service
to Cake Box customers. We were proud, as a
result, to earn an average 4.4 out of 5 score on
Trustpilot at the end of FY24.
We are always there to support and listen to our
franchisees. In September 2023, we conducted
our first Franchisee Satisfaction Survey, which
showed that 72% of our franchisees would
recommend our brand and 96% of them were
favourable to expanding their business with
Cake Box. We gained valuable insights from
the survey, which we are now using to improve
the way we work with our franchisees. Based
on these results, we identified six areas of
priority to focus on. In November 2023, we set
up working groups and we collaborated with
our franchisees to find solutions and ways to
improve in these areas.
Diversity & inclusion
Cake Box has a deep connection to the
communities it serves, and we take great pride
in having a workforce that represents the rich
diversity of the UK population. The majority of
our colleagues come from an ethnic minority
background, a representation that extends
through all levels of management within the
organisation. An example of this diversity is that
over 40 different languages are spoken by our
franchise staff.
We are also committed to gender equality
and empowering our female colleagues to
thrive within the business. We understand
that flexible working is an essential tool in
closing the UK Gender Pay Gap, as it allows
many women to continue working and
manage greater caring responsibilities. This is
why, in FY24, we revised our Flexible Working
Policy, offering new ways for our colleagues to
balance their professional and personal lives.
We also enhanced our parental leave policies
including enhanced leave for dads and co-
parents to better care for their newborn child
in the first months of their lives.
Our economic footprint
Our shops and our operations are embedded
across the local communities where we
contribute to a thriving economy. Our franchise
estate comprises 225 shops and 26 kiosks as
of 31 March 2024, employing approximately
1,500 people across the UK. During FY24, we
paid £7,609,081 in wages and salaries to 173
colleagues, a majority of whom come from an
ethnic minority background. We also worked
with over 150 suppliers and third-party partners.
Kiran Atwal -
From franchise owner to Head Office, a ten-year journey with Cake Box
93% of our employees
consider Cake Box as a
great place to work
“
“
My story with Cake Box started in 2014, shortly after I welcomed my first son. I had been working in Learning & Development (L&D)
roles for several years, but I was looking for a new professional activity that would allow me to spend more time with my family. I
knew Cake Box through my cousin, who was a franchisee. I loved the brand and the products, and it didn’t take long for me to take
the plunge and open my own store in Leamington Spa.
I’ll be honest, it wasn’t the immediate success I had hoped for. But I received unwavering support from the Cake Box team through
thick and thin. Ten years later, I am proud to say my Cake Box shop is still going strong and, with hard work and perseverance, we
managed to nearly triple our sales. This first franchise experience also became a springboard for me to successfully open three other
Cake Box Concessions within Asda.
In 2023, due to family circumstances, I decided to sell the concessions and look for paid employment in parallel to my franchise
activity. I heard the Cake Box Head Office was looking for an L&D manager, and this was the perfect opportunity for me. It’s only
been a few months, but I am enjoying every minute. Thanks to my hands-on experience as a shop owner, I understand exactly
what our franchisees need and how we can deliver the best training for them. I am excited to offer them the same support and
encouragement I received when I embarked on this journey 10 years ago.
Strategic Report
26
RISK
CATEGORY
POTENTIAL IMPACT
CONTROLS/MITIGATING ACTIVITIES
RISK
RATING
Robust
infrastructure
The Company is experiencing rapid growth,
which may put strain on its existing financial
and human resources as well as its physical
assets and capacity.
The Company prepares medium- and long-term strategic
plans and maps resource requirements against these. It
will then take the appropriate action to ensure the right
resources are in place and that its people have the right
skills to perform their jobs. Senior management reacts
quickly to changes in the financial, operational or strategic
risk profile facing the business and is able to implement
new processes and adapt products, including adding
additional resources if required.
Medium
Information
Security
Risk of non-compliance with data protection
laws is an increasing risk for the business.
As Cake Box increases its online sales, any
loss of availability or integrity could result
in a short-term impact on commercial
performance and longer-term loss of
customer confidence. There is significant
reliance on third parties for hosting the
transactional website and ensuring it is as
secure as it can be. The global cyber threat
landscape is continuing to evolve with
ransomware attacks, data breaches and
targeted cyber-attacks becoming more
sophisticated and commonplace.
We have significantly increased our investment in both
people and infrastructure as we expanded our internal
IT capabilities and worked with additional third-party
companies. This investment has improved the resilience of
the infrastructure (to correspond with the growth in online
orders) and how we interact with our customers.
Controls are in place to protect the platform availability
and ensure we have multiple backups of data both in
the cloud and on physical servers. We use an external
company to regularly test our website security and PCI
Security Standards.
Medium
Declining
sales
performance
The cost-of-living crisis has not abated and
many of our customers could potentially
have less disposable income. They may
face the choice or could be forced to
reduce spending on discretionary items like
celebration cakes, which may adversely
impact store sales and therefore Group
revenues.
Increased competition will mean that
customers have more choice which may
lead to lower sales.
Historically, at times of uncertainty, the celebration cake
market has not been impacted as much as the rest of
the economy due to the nature and frequency of the
purchase. Our franchisees have and will continue to
endeavour to moderate the level of any price increases
they put through to customers, just as we seek to mitigate
as much as possible the price increases in the supply
chain being passed on to franchisees. The Group has
invested in its marketing team as well as established a
national marketing fund supported and co-funded by its
franchisees, to grow brand awareness and sales.
We track what our competitors are doing and will
increase marketing activities in areas where we see
new competition. We also work proactively with all our
franchisees in improving the “Front of House” service and
ensuring the product is displayed to its best.
High
The Corporate Governance Report includes an overview of the Group’s approach to risk
management and internal controls. Set out below are the principal risks and uncertainties that
the Group faces, and the activities designed to mitigate these risks. The Board recognises that
the nature and scope of risks can change and that there may be other risks to which the Group is
exposed and therefore the list is not intended to be exhaustive.
Principal Risks and Uncertainties
Cake Box Holdings Plc
Annual Report 2024
27
RISK
CATEGORY
POTENTIAL IMPACT
CONTROLS/MITIGATING ACTIVITIES
RISK
RATING
Supply Chain
materially
fails to deliver
demand
The Group produces the sponge and
distributes it together with the fresh cream
and other products to stores each week. A
loss of one production site or depot due to
property damage, major manufacturing
breakdown, or a health and safety
issue, would require urgent contingency
arrangements to be executed. These risks, if
prolonged could have a significant impact
on financial performance and a loss of
market share, where a sufficient supply of
Cake Box’s products is not available to meet
consumer demands.
The Group has strong mitigation plans in place to reduce
the likelihood against the threat of a loss of part of its
production capacity, as a result of a major health & safety
incident, fire, adverse weather conditions, or mechanical
failure. These include health & safety management
systems; fire prevention, detection and suppression;
preventative maintenance; and stock of critical spares.
The Group has spare capacity at all its production sites, as
it currently runs one shift at each site.
In addition, the Group looks to source alternative suppliers to
ensure a broader, more resilient supply chain. We continue
to engage with our suppliers on a regular basis to ensure our
supply chains are as resilient as possible and that we always
have alternative suppliers for all key products.
Low
Cost of
Goods price
pressures
We are no longer seeing significant price
pressures on our raw materials. However,
we are aware that inflationary pressures
remain and that some raw material prices
will increase.
If we are not able to either absorb or pass
on some or all of these increases onto
franchisees, then this may lead to reduced
profits and potentially lower profits for
franchisees.
We work closely with our suppliers and due to the
volumes, that we purchase are able to obtain discounts
and ensure a regular supply. As part of our procurement
strategy, we do keep all of these key supplier relationships
under regular review and wherever possible ensure that
there are multiple suppliers available to mitigate the risk
of supply chain inflation.
Medium
Cost pressures
reduce
profits for
franchisees
Increased labour costs through rises in
the Living Wage / Minimum Wage and
increases in the costs to operate the stores
(e.g. energy costs, food and packaging
costs) mean that operating a franchise may
become less profitable. This could reduce
the interest in new franchises and also
lead to store closures if some stores were to
become unprofitable.
Franchisees enjoy healthy profit margins and so can
absorb some degree of increases in operating costs. Many
franchisees are multi store franchisees so even if one store
was to become loss making, they are able to continue to
operate that store based on the performance of their other
stores. Franchisees, with approval from Cake Box, can
also increase the retail price of cakes to maintain margin
as we are a specialist retailer with a unique offering.
Medium
Food
Hygiene/H&S
matters at a
production
facility
Low food hygiene and-/or health and
safety rating by authorities could lead
to a temporary closure of a production
site, which in turn could prevent certain
franchised stores from being able to trade,
which would adversely impact the revenues
of the Group.
The Company works with its Primary Authority Partner
to ensure that all standards are met and actions any
remedial works required via a team action plan.
We have a Technical Product Department to oversee
the process of ensuring we maintain the highest hygiene
standards in food production and labelling. Production
resilience is also ensured by having three production sites.
Medium
Reliance on
key staff
Loss of key management could impact
the Group’s ability to continue to deliver
against its strategic plan within the desired
timeframe, leading to loss of investor
confidence and a resulting reduction in the
value of the Group.
The Group is not reliant on any one single individual and
senior management has been materially strengthened
in key areas. Succession planning is reviewed for
senior managers and other key members of staff. The
Remuneration Committee seeks to ensure that key
individuals are suitability incentivised for retention
purposes.
Medium
Strategic Report
28
RISK
CATEGORY
POTENTIAL IMPACT
CONTROLS/MITIGATING ACTIVITIES
RISK
RATING
Ability to
recruit and
retain skilled
staff
The Group may fail to attract, retain, or
upskill talent. This could lead to a loss in
institutional knowledge, corporate memory,
and potential loss of business.
The Group has a good understanding of the employee
market and provides competitive reward packages.
There are clear job descriptions with defined recruitment
and onboarding processes and a buddy/mentor for new
staff. Each recruit has a clear induction plan with frequent
reviews by line managers.
Low
Ability to
recruit and
retain skilled
franchisees
The ability of the Group to attract and
retain new franchisees with the appropriate
attitude, expertise, and skills, in all of the
locations in which it wishes to operate cannot
be guaranteed. This may limit or prevent
further growth in the business.
The Group undertakes a rigorous recruitment and vetting
process and has become very experienced at identifying
good franchisees. There is strong demand from existing
franchisees for new stores, together with a strong pipeline
of new franchisees.
Medium
Consumer
Trends/
Health
concerns
Financial results can be materially impacted
by any material change in consumer habits
within the United Kingdom. There is an
increasing level of focus from media and
Government on health and obesity issues
in the UK. It is therefore important that we
continue to facilitate customers to make
informed decisions.
Our products are celebratory “treats” in the mind of the
consumer. We have developed new products to appeal
to a wider demographic such as vegan and nutritional
information for all products is now in place in our stores
and on the website to allow customers to make more
informed choices.
Low
Staff Training
The Group may fail to comply with existing
laws and regulations due to inadequate
monitoring which may lead to financial
impact, fines, potential loss of licenses,
reputational damage and customer loss.
The Group has documented policies and procedures and
carries out regular reviews of regulatory requirements
currently in place. There is mandatory training, updated
training based on changes to regulation and training for
new staff, so they understand regulated areas.
Low
Cake Box Holdings Plc
Annual Report 2024
Principal Risks and Uncertainties Continued
RISK
CATEGORY
POTENTIAL IMPACT
CONTROLS/MITIGATING ACTIVITIES
RISK
RATING
Product
Quality
A reduction in product quality as a result of
poor operational standards by franchisees
may deter customers, reducing sales at
store level and in turn supplies purchased
from Cake Box.
Sponge, the major constituent, is produced centrally
and quality tested regularly. Operational audits take
place regularly to ensure franchisees maintain the high
standards and quality that the brand is known for.
Low
Poor
Performance
of Franchisees
Multiple franchisees could underperform
in the market, which could result in lower
revenues for the Group and potential
damage to its reputation and financial
performance. Even though the Group has
the ability to terminate underperforming
franchisees, this may not in itself allow it to
stop any such potential damage.
Low food hygiene and health and safety
rating by authorities at a store level could
be very damaging to the brand and
potentially result in a reduction in system
sales.
The Directors believe that the Group provides its
franchisees with all the appropriate and necessary
training, guidance and support to operate their stores
successfully, safely and to the standards that the Group
expects of its franchise stores. The Group also undertakes
quarterly audits of its franchisee stores and assists those
stores that are performing less well in improving their
marketing and store results.
Poor Environmental Health Officer (‘EHO’) or audit scores
automatically trigger retraining of franchisee and their
staff. In addition, we undertake our own regular audits to
maintain high standards.
Low
Business
Interruption
/Business
Continuity
The Company relies on its supply chain and
the key IT systems underlying the business
to serve the franchisees (and therefore the
ultimate customer) effectively. Production
interruptions at any of its production sites
caused by events such as fire, flood or IT
systems failure, could impact the ability of
that site to provide stores with the items they
need to produce and sell cakes.
In recent years, we purchased two additional production
and distribution facilities in Bradford and Coventry. Both
of these are fully operational and can provide backup
facilities to our main production and distribution facility in
Enfield. In addition, we lease a bulk storage warehouse
in Enfield, which services all three of our production and
distribution sites.
Our internal data and systems are cloud based and
can be accessed from anywhere if the user has the
appropriate access security rights.
Low
29
Strategic Report
30
The Directors, in line with
their duties under S172 of
the Companies Act 2006, act
individually and collectively in
the way they consider, in good
faith, would be most likely
to promote the success of the
Company for the benefit of
its members, and in doing so
have regard, amongst other
matters, to:
• the likely consequences of any
decision in the long term;
• the interests of the Company’s
staff;
• the need to foster the
Company’s business
relationships with suppliers,
customers and others;
• the impact of the Company’s
operations on the community
and the environment;
• the desirability of the
Company maintaining a
reputation for high standards
of business conduct; and
• the need to act fairly as
between members of the
Company.
The Directors’ regard for these
matters is embedded in their
decision-making process,
through the Company’s business
strategy, culture, governance
framework, management
information flows and stakeholder
engagement processes. The
Company’s business strategy is
focused on achieving success
for the Company in the long-
term. In setting this strategy, the
Board takes into account the
impact of relevant factors and
stakeholder interests on the
Company’s performance. The
Board also identifies principal
risks facing the business and sets
risk management objectives.
The Board promotes a culture
of upholding the highest
standards of business conduct
and regulatory conduct. The
Board ensures these core
values are communicated to the
Company’s staff and embedded
in the Company’s policies and
procedures, employee induction
and training programmes and
its risk control and oversight
framework. The Board
recognises that building strong
and lasting relationships with
our stakeholders will help us to
deliver our strategy in line with our
long-term values and operate a
sustainable business.
The Directors are supported in the
discharge of their duties by:
• processes which ensure
the provision of timely
management information and
escalation through reporting
lines to the Board from the
Company’s business areas,
its risk and control functions,
support teams and committees
of the Board; and
• agenda planning for Board
and Committee meetings to
provide sufficient time for the
consideration and discussion
of key matters.
Stakeholders
The Board understands the
importance of engagement with
all of its stakeholders and gives
appropriate weighting to the
outcome of its decisions for the
relevant stakeholder in weighing
up how best to promote the
success of the Company. The
Board regularly discuss issues
concerning staff, franchisees,
customers, suppliers, community
and environmental impact,
regulators and its shareholders.
In addition, the Board seeks
to understand the interests
and views of the Company’s
stakeholders by engaging with
them directly, when required.
The following summarises the key
stakeholders and how we engage
with each:
Colleagues
Our colleagues contribute to a
positive working culture and healthy
working environment. They are key
to the success of our business.
Customers
Customers are at the centre of our
business.
Franchisees
The best managers are owner
occupiers which describes our
franchisees perfectly.
Community and
Environment
The Board’s approach to social
responsibility, diversity & the
community is of high importance.
Suppliers
As a growing business, we work with
a wide range of suppliers both in the
UK and overseas.
Regulators
The Board’s intention is to behave
responsibly and to ensure that the
management team operates the
business in a responsible manner.
Statement by the Directors relating to
their statutory duties under section
172(1) of the Companies Act 2006
Cake Box Holdings Plc
Annual Report 2024
Duty to Promote the Success of the Company (Section 172)
31
In addition to aiming to be a responsible
employer in our approach to pay and benefits, we
continue to engage with our teams to ascertain
which training and development opportunities
should be made available to improve our team’s
productivity and our individual colleague’s
potential within the business. We continually
invest in employee development and well-being
to create and encourage an inclusive culture
within the organisation. Our employee appraisal
programme encourages employee feedback and
facilitates the opportunity for both colleagues and
managers to set performance goals on an annual
basis. Our culture invites different perspectives,
new ideas and opportunities for growth. We work
hard to ensure staff feel welcome and are valued
and appreciated for their hard work. Colleagues
have access to a range of resources including a
monthly ‘well-being’ drop-in session to ensure
employee’s mental health is considered. We
provide our colleagues with a charging point for
hybrid or battery powered vehicles. We provide
fresh fruit every week as well as a subsidised
lunch programme with the local café to ensure
our colleagues can have a good value meal at
lunchtimes.
We have introduced compulsory “Front-of-
House” courses for franchisees that focus on
understanding customers and providing a
first-class service. In addition, our Area
Managers help train the staff in the shops and
educate franchisees on how to recruit the right
staff. The head office Marketing department
also work closely with the franchisees on local
marketing campaigns using social media to
present customers with attractive offerings.
They are fully dedicated to the development of
their business with additional benefit of support
from a network of franchisor personnel and
management giving them assistance at every
level to fully realise their shop potential. This has
led to 47 franchisees being multiple site owners
with 39 female franchisees of which 18 are
multisite owners.
At Cake Box, we strive to create sustainable
value and help investors seek more meaningful
returns. Our franchisees interact and support
their local communities, for example sponsoring
youth football and cricket teams. Our Newham
franchisee supports a hot kitchen for the
homeless and needy every week in the winter
months in conjunction with the local church.
Corporate social responsibility principles are
part of our culture and decision-making process.
Diversity and inclusion are key to the success of
Cake Box and our HR department ensures we
follow government guidelines.
We remain committed to being fair and
transparent in our dealings with all of our
suppliers. The Company has procedures
requiring all suppliers to maintain a due
diligence process ensuring internal governance
that includes, for example, their anti-bribery and
corruption policies along with data protection
and modern slavery. The Company has systems
and processes in place to ensure suppliers are
paid in a timely manner.
Acting with the high standards and good
governance expected of a regulated business
like ours. In doing so, we believe we will achieve
our long-term business strategy and further
develop our reputation in our sector. We have
a risk and control framework to ensure that the
Company complies with all legal and regulatory
requirements relating to the provision of products
and services to our clients.
Michael Botha
Chief Financial Officer
Strategic Report
32
Board of Directors
A deep well of experience
Martin Blair
Non-Executive Chair
Martin joined Cake Box Holdings as Non-Executive
Director in June 2018. He is Non-Executive Director
of AIM listed Kape Technologies plc and t42 IoT
Tracking Solutions plc. Previously Martin was Chief
Financial Officer of Pilat Media (AIM listed) from 2001
to 2014. Martin is a qualified Chartered Accountant.
• Nomination Committee Chair
• Audit Committee Chair
• Environmental, Social and
Governance Committee
member
Sukh Ram Chamdal
Chief Executive Officer
Sukh opened the first Cake Box concept store in
2008 and co-founded the franchise business in
2009. He has over 35 years’ experience in the
food manufacturing and food retail industry.
He was previously a consultant for a food
equipment company that specialised in high
volume food production.
Dr Jaswir Singh
Chief Commercial Officer
Dr Singh joined Cake Box Holdings as Chief
Operating Officer and has extensive retail
experience within the clothing industry. He
successfully ran his own restaurant business for
nine years before joining Cake Box in March
2010. He was appointed Chief Commercial
Officer in June 2022.
Cake Box Holdings Plc
Annual Report 2024
• Environmental, Social and Governance
Committee Chair
• Nomination Committee member
• Audit Committee member
• Remuneration Committee member
Michael Botha
Chief Financial Officer
Michael joined Cake Box Holdings as an Executive
Director in April 2023. Michael has worked in senior
finance and commercial roles for several franchise
businesses over the last 20 years, most recently for
one of the largest Domino’s Pizza franchise groups
in the UK and Ireland. Michael is a qualified
Chartered Accountant.
Adam Batty
Non-Executive Director
Adam joined Cake Box Holdings as Non-Executive
Director in June 2018. Adam is an experienced
corporate lawyer and was previously General Counsel
and Company Secretary of Domino’s Pizza Group plc,
Selfridges Group, McCarthy & Stone plc and The Very
Group. He is now General counsel for a Private Equity
house. In addition, Adam has run his own restaurant
business. Adam is a qualified solicitor.
Alison Green
Non-Executive Director
Alison joined Cake Box Holdings as Non-Executive
Director in August 2021. Alison has a corporate
background in marketing and branding, having
previously held the position of Chief Marketing
Officer at Optima Health and Head of Marketing
at AXA Health. Alison is a Masters Qualified
Executive Coach.
Shaun Smith
Non-Executive Director
Shaun joined Cake Box Holdings as a Non-Executive Director in
February 2024. Shaun has extensive listed company experience
and is currently the Non-Executive Chair of Driver Group Plc, a
Non-Executive Director of Inspecs Group Plc and Epwin Group
Plc, where he is also Audit Committee Chair. Shaun was Chief
Financial Officer at Norcros plc, a London Stock Exchange Main
Market listed supplier of bathroom and kitchen products, and
Group Finance Director at Aga Rangemaster Group plc. He also
previously served as a Non-Executive Director of Air Partner Plc.
Governance
33
• Audit Committee member
• Remuneration Committee
member
• Nomination Committee
member
• Environmental, Social and
Governance Committee
member
• Remuneration Committee Chair
• Audit Committee member
• Nomination Committee member
34
The Corporate Governance information was
last updated in March 2024.
The Board seeks to “Do the right thing” for
our customers, people, staff, suppliers, and
shareholders. The Board is strongly focused
on promoting a positive culture and we
believe that equality, diversity, inclusion
and sustainability are fundamental for our
strategy to be successful. The Board believes
this is vital to creating a sustainable growing
business and is a key responsibility of the
Company.
The Non-Executive Directors continue to
provide independent judgment on key issues
affecting the Company.
It is the Board’s job to ensure that Cake Box
is managed for the long-term benefit of
all shareholders, and intends to continue
to provide effective and efficient decision
making and a solid foundation for robust
corporate governance, to underpin the work
of the executive management team.
The Board seeks to follow best practice in
corporate governance as appropriate for
a company of our size, nature, and stage
of development. As a public company,
admitted to trading on AIM, we are
mindful of the trust placed in the Board
by institutional and retail investors, staff
and other stakeholders. We recognise the
importance of an effectively operating
corporate governance framework and
the 10 principles set out in the QCA Code,
and this statement briefly sets out how we
currently comply with the provisions of the
QCA Code.
Chair’s Introduction
Statement of Compliance with the QCA Corporate
Governance Code
The Board seeks to “Do the right thing” for our
customers, people, staff, suppliers, and shareholders
Martin Blair
Non-Executive Chair
“
“
Cake Box Holdings Plc
Annual Report 2024
35
Principle 1:
Establish a strategy and
business model which
promote long term value
for shareholders
The Board has clearly articulated its strategy and business model in the Company’s strategy
and business operations of the Group. The Board is responsible for the Group’s strategy and the
operation of the Board is documented in a formal schedule of matters reserved for its approval
which is reviewed annually. This includes the Group’s strategic aims and objectives. The Group’s
overall strategic objective is to become the UK customers’ number one choice when ordering
a celebration cake by increasing the range of cakes and other complimentary products and
by continuing to open new stores right across the UK. The Board believes that this approach
will continue to deliver significant long-term value for shareholders through a strong share
performance and a progressive dividend policy. The Board also believes that remaining admitted
to trading on AIM is of long-term value to shareholders as it offers a combination of access to
capital markets, flexibility to make acquisitions, incentives, and rewards to management through
share schemes, and a regulatory environment appropriate to the size of the Company.
Principle 2:
Seek to understand and
meet shareholder needs
and expectations
The Company recognises the importance of engaging with its shareholders in order to
communicate the Group/Company’s strategy and progress and to understand the expectations
and needs of shareholders. Beyond the Annual General Meeting, the Chief Executive Officer,
and Chief Financial Officer meet regularly with investors (including institutional shareholders) and
analysts to actively build the relationship, provide them with updates on the Group’s business and
to obtain feedback regarding the market’s expectations for the Group. Shareholders also have
access to current information on the Company through its website https://cakeboxinvestors.com,
and via its financial PR advisor.
Principle 3:
Consider wider stakeholder
and social responsibilities
and their implications for
long-term success
We recognise that we are responsible not only to shareholders and staff, but to a wider group of
stakeholders (including our franchisees, customers and suppliers) and the communities in which
we operate. The Company is focused on inclusivity, leadership, and engagement. The Company
strives for a visible benefit from everything it does, whether that is promoting diversity and
inclusivity through its events or creating value for its shareholders.
The Company acts with integrity, focuses on generating results and importantly values people –
from its members of staff to those who form the communities with which it engages. The Non-
Executive Directors are available to discuss any matter stakeholders might wish to raise. The
Company is especially focused on building and nurturing its relationships with the franchisees
who are key to the business model. The Company solidifies its relationship with the franchisees by
holding a bi-monthly video call. The Company also holds periodic face to face meetings where
current issues, new product launches and operational matters are discussed. There is an annual
conference where the senior managers and Directors interact with franchisees in team building
and strategy events.
Principle 4:
Embed effective risk
management, considering
both opportunities and
threats, throughout the
organisation
The Board is responsible for determining the nature and extent of significant risks that may have
an impact on the Company’s operations, and for maintaining a risk management framework.
The Board is responsible for the management of risk and carries out robust assessments of the
principal risks and uncertainties affecting the Company’s business, discussing how these could
affect operations, performance, and solvency and what mitigating actions, if any, should be taken.
Governance
36
Principle 5:
Maintain the board as a
well- functioning, balanced
team led by the Chairs
The Board includes a balance of Executive and Non-Executive Directors. All the Directors
have appropriate skills and experience for the roles they perform at Cake Box, including as
members of Board Committees. The Board is responsible to the Company’s shareholders and
sets the Company’s strategy for achieving long term success. It is also ultimately responsible for
the management, governance, controls, risk management, direction and performance of the
Company. The Board meets ten times per year as well as regular one-to-one meetings between
Executive and Non-Executive Directors. The Chair is responsible for ensuring that the Directors
receive accurate and timely information and ensures that any feedback or suggestions for
improvement on Board papers is fed back to management. Adam Batty, Martin Blair, Shaun
Smith and Alison Green are Non-Executive Directors of the Company and Martin Blair is the
Non-Executive Chair. In addition, Adam Batty is the Senior Independent Director (‘SID’), ensuring
effective governance, communication, and conflict resolution within the board structure. The Board
considers that Martin, Adam, Shaun and Alison are independent, in character and in judgement,
and have no business relationships which impact on their independence. The Board has
delegated specific responsibilities to the Audit, Remuneration, Nomination and ESG committees.
Each committee reports back to the Board and has written terms of reference setting out its duties,
authority and reporting responsibilities. The terms of reference are kept under continuous review
to ensure they remain appropriate and reflect any changes in legislation, regulation or best-
practice. Each committee meets at least two times per year and all meetings are documented. The
Company is satisfied that the current Board is sufficiently resourced to discharge its governance
obligations on behalf of all stakeholders. Directors are subject to re-election annually.
Principle 6:
Ensure that between
them the directors have
the necessary up-to-date
experience, skills, and
capabilities
The Board currently comprises of three Executive and four Non-Executive Directors with an
appropriate balance of sector, financial and public market skills, and experience. The experience
and knowledge of each of the Directors gives them the ability to constructively challenge strategy
and to scrutinise performance. See pages 32 and 33 for a list of the Directors and their skills and
capabilities.
Principle 7:
Evaluate board
performance based
on clear and relevant
objectives, seeking
continuous improvement
The Chair reviews the contributions of Board members, as well as the Board Committees and
conducts annual effectiveness reviews. The role of the SID is to provide advice, support, an
alternative perspective and act as a sounding board for the Chair. In addition, the Non-Executive
Directors will meet without the Chair present, and will evaluate his performance. All Non-Executive
Directors have a one-to-one meeting with the Chair to give and receive feedback annually.
In May 2023, the Board commissioned Board Excellence to conduct an independent Board
Effectiveness Review. Board Excellence are an experienced international Board advisory
business who have had no prior involvement with the Company. They undertake their reviews
in accordance with the Corporate Governance Institute’s Code of Practice for board reviewers.
Their review comprised the completion of a questionnaire by all Board members and certain
senior managers, one-to-one interviews with all respondents to the questionnaire and other
stakeholders. The review also included a review of a year’s worth of Board and Committee papers
and other governance related documents.
The report went onto make several recommendations around Board Dynamics and Key
Governance Relationships, many of which have been implemented which has, we believe,
improved the Board effectiveness. We will continue to review the Board’s effectiveness and the
way it works to continually improve the performance of the Board as a collective.
The Nomination Committee is responsible for succession planning of the executive leadership
team and makes recommendations to the Board for the re-appointment of any Non-Executive
Directors annually at the AGM. Succession planning is reviewed on an ongoing basis alongside
the capability of the senior management and Directors.
Cake Box Holdings Plc
Annual Report 2024
37
Principle 8:
Promote a corporate
culture that is based
on ethical values and
behaviour
The Board monitors and promotes a healthy corporate culture and considers how that culture is
consistent with the Company’s objectives, strategy, and business model and with the description of
principal risks and uncertainties. Our Franchise Manual is issued to all franchisees and provides
specific detail of the policies and procedures in place to promote and support ethical behaviour
and values. The Company employs Audit Managers who visit each shop to ensure policies,
procedures and standards are being adhered to. The Board has considered and assessed the
culture as being inclusive, transparent, and collaborative with appropriate behaviours. The Board
is satisfied that the Company has a ‘speak up’ culture and the Directors regularly observe this
occurring in practice. The Company has a Code of Conduct and policies and procedures relating
to whistleblowing stating the Company’s commitment to conducting its business with honesty
and integrity, its expectation that staff will maintain high standards, and encouraging prompt
disclosure of any suspected wrongdoing. The terms of reference of the Audit Committee include
reviewing the adequacy and security of the Company’s arrangements for its staff and contractors
to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters
and keeping under review the Company’s procedures for handling allegations from whistle-
blowers. The Board believes that diversity is a key to the future success of our business (we widen
our business to include franchisees) and we have put effort into monitoring and improving the
gender ratio in the Company as we firmly believe that part of the Company’s success is the global
and diverse nature of our workforce, and we intend to continue our effort to promote diversity.
Principle 9:
Maintain governance
structures and processes
that are fit for purpose and
support good decision-
making by the Board
The governance structure adopted by the Group is set out in the Governance section of this
annual report and on our website. This includes, but is not limited to, the composition and role
of the Board; roles and responsibilities of the Board; the roles of the Board Committees and the
compliance with our chosen corporate governance code. The terms of reference of our Board
Committees are available on our website. The Board believes our governance framework is
consistent with our culture and appropriate to our size and requirements. We will continue to
evolve our governance framework, as necessary. The Board has formal procedures to deal with
Directors’ conflicts of interest. The appointment letters of Non-Executive Directors state that they
may have to seek the Board’s agreement before accepting further commitments which either
might give rise to a conflict of interest or a conflict with any of their duties to the Company, or
which might impact on the time that they are able to devote to their role at the Company. Also,
if any Non-Executive Director becomes aware of any potential conflict of interest, the Chair and
Company Secretary must be notified as soon as possible.
On the admission of the Company’s shares to trading on AIM, the Company entered into a
Relationship Agreement with Sukh Chamdal, who holds approx. 25.41% of the issued share capital of
the Company as at 31 March 2024. This agreement is described in the Directors’ Report on page 50.
Principle 10:
Communicate how the
company is governed
and is performing by
maintaining a dialogue
with shareholders and
other relevant stakeholders
The above-mentioned formal schedule of matters reviewed annually by the Board includes
matters relating to effective communication with the Company’s shareholders. The Company
maintains communication with its institutional shareholders through individual meetings with
Executive Directors, particularly following publication of the Group’s interim and full year results.
Private shareholders are encouraged to attend the Company’s Annual General Meeting at which
the Company’s activities will be considered and questions answered. If 20% of the independent
votes have been cast against a resolution proposed at any general meeting, the Company will
include, on a timely basis, an explanation of what actions it intends to take to understand the
reasons behind that vote result, and, where appropriate, any different action it will take as a result
of that vote. The Non-Executive Directors are available to discuss any matter stakeholders might
wish to raise, and the Chair and Independent Non-Executive Directors will attend meetings with
investors and analysts as required.
Governance
38
Members of the Audit Committee
In October 2023 I became Chair of the
Group and in February 2024 we appointed
Shaun Smith as Non-Executive Director and
member of the Audit Committee. During
the year the Committee consisted of myself,
Martin Blair (as Chair), Adam Batty, Alison
Green and Board Chair Neil Sachdev,
until his departure in October 2023. I have
remained Chair of the Committee until the
completion of the 2024 audit at which point
Shaun will become Chair and I will leave the
Audit Committee to focus my attention on the
role of Chair of the Group.
The Chief Financial Officer, and other
Executive Directors may attend Committee
meetings by invitation. The Board is
satisfied that I, as Chair of the Committee,
and Shaun as the future Audit Chair have
recent and relevant financial experience.
I report the Committee’s deliberations at
the next Board meeting and the minutes
of each meeting are made available to all
members of the Board.
Duties
The main duties of the Audit Committee are
set out in its terms of reference, which are
available on the Group’s website
(www.cakeboxinvestors.com).
The main items of business considered by the
Audit Committee during the year included:
• responding to enquiries from the
Financial Reporting Council (“FRC”) on
the accounts for FY23;
• review of the FY24 audit plan and audit
engagement letter;
• consideration of key audit matters and
how they are addressed; review of
suitability of the external auditor;
• audit partner rotation;
• review of the financial statements and
Annual Report;
• consideration of the external audit report
and management representation letter;
• going concern review;
• review of the risk management and
internal control systems;
• review of the need for an internal audit
function;
• meeting with the external auditor without
management present; and
• review of whistleblowing and anti-bribery
arrangements.
Cake Box Holdings Plc
Annual Report 2024
Statement from the Chair of the Audit Committee
On behalf of the board, I am pleased to present
the Audit committee report for FY24
Martin Blair
Chair of the Audit Committee
“
“
39
Governance
Financial Reporting Council (“FRC”)
letter relating to the 2023 Annual
Report and Accounts
In February 2024, the Company received a
letter from the Corporate Reporting Review
team of the FRC as part of its regular review
and assessment of the quality of corporate
reporting in the UK, requesting further
information in relation to the Company’s
2023 Annual Report and Accounts.
The letter focused on franchisee deposits
for new stores, revenue recognised from
franchise packages, changes in assets’
useful economic lives, classification
of amounts recognised within other
comprehensive income and the disclosure
of impairment charges in respect of
receivables.
The Company responded to the enquiries
and agreed to make certain changes
within the 2024 financial statements
and Annual Report and Accounts. Prior
year comparative figures have been
restated in the Consolidated Statement
of Comprehensive Income and the
Consolidated Statement of Changes in
Equity. See note 2.1 – Basis of preparation of
financial statements (page 64), for further
information and the impact on the prior year
financial statements.
The FRC have confirmed that their enquiries
have been closed.
Auditor Objectivity, Independence
and Performance
The Audit Committee monitors the
relationship with the external auditor, MHA,
to ensure that auditor independence and
objectivity are maintained. As part of its
review the Committee monitors the provision
of non-audit services by the external auditor.
The Audit Committee considered the threats
to the independence of MHA created by
the provision of the non-audit services and
concluded that sufficient safeguards were in
place.
The external auditors are required to rotate
audit partners responsible for the Group
audit every five years and the current
lead audit partner, Andrew Moyser, was
appointed in 2021, on appointment of MHA.
The Audit Committee also assesses the
auditor’s performance. During the year, the
Committee reviewed performance and met
with the external auditors regularly without
management present. The Committee has
adopted a broad framework to review the
effectiveness of the Group’s external audit
process and audit quality which includes:
• assessment of the audit partner and team
with particular focus on the lead audit
engagement partner;
• planning and scope of the audit, with
identification of particular areas of audit
risk;
• the planned approach and execution of
the audit;
• management of an effective audit
process;
• communications by the auditors with the
Committee;
• how the audit contributes insights and
adds value;
• a review of independence and objectivity
of the audit firm; and
• the quality of the formal audit report to
shareholders.
Having reviewed the auditor’s
independence and performance, the Audit
Committee recommends that MHA be
re-appointed as the Group’s auditor at the
next AGM.
Areas of Key Significance in
the Preparation of the Financial
Statements
Prior to publication of this Annual Report
and Accounts, the Committee reviewed
the accounting policies and significant
judgements and estimates underpinning the
financial statements as disclosed in the notes
to the consolidated financial statements.
Significant focus is placed on key accounting
judgements and estimates, which underpin
the financial statements, namely:
• Inventory valuation
• Impairment of investments and property,
plant and equipment
• Revenue recognition
• Accounting for leases and right-of-use
assets
Internal Audit
The Group during the year has been
implementing an ERP system that integrates
many of the Group’s functions and provides
a single view of data across the Group. The
new system will bring additional controls as
well as unifying data. Until the system is fully
implemented the Audit Committee believes
it would not be appropriate to carry out
further internal audit work with BDO LLP.
The Committee believes that management is
able to derive assurance as to the adequacy
and effectiveness of internal controls and
risk management procedures without a
dedicated internal audit function. However,
the Audit Committee continues to assess this
as the Group develops.
40
Risk Management and Internal
Controls
As described on pages 34 to 37 of the
Corporate Governance report, the
Group has established a framework of
risk management and internal control
systems, policies and procedures. The Audit
Committee is responsible for reviewing
the risk management and internal control
framework and where appropriate, they are
enhanced and improved ensuring:
• proper business records are maintained
and reported on, which might reasonably
affect the conduct of the business;
• monitoring procedures for the
performance of the Group are presented
to the Board at regular intervals;
• budget proposals are submitted to the
Board no later than one month before the
start of each financial year;
• accounting policies and practices
suitable for the Group’s activities are
followed in preparing the financial
statements;
• the Group is provided with general
accounting, administrative and
secretarial services as may reasonably
be required; and
• interim and annual accounts are
prepared and submitted in time to
enable the Group to meet statutory filing
deadlines.
The Group continues to review its system of
internal control to ensure compliance with
best practice, whilst also having regard to its
size and the resources available.
The Committee supports the Board in its
overall responsibility for risk management
activities and implementing policies
to ensure that all risks are evaluated,
measured and kept under review by
way of appropriate KPIs. The Group
regularly conducts a thorough external
assessment of risks and the effectiveness
of associated controls. Presentations from
senior management across the business are
provided to the Board to further develop
information, understanding and debate on
risks.
The Group will continue to improve and
evolve its risk management framework by
developing and embedding the necessary
capabilities within the organisation to
support informed risk taking by the business.
Whistleblowing
The Group has in place a whistleblowing
policy which sets out the formal process
by which an employee of the Group may,
in confidence, speak up about concerns
about possible improprieties in financial
reporting or other matters. Whistleblowing is
a standing item on the Committee’s agenda.
The Committee is comfortable that the
current policy is operating effectively.
Anti-Corruption
The Board is also responsible for ensuring
the Group’s compliance with all applicable
anti-corruption legislation, including, but
not limited to, the UK Bribery Act 2010. The
Group complies and always has complied
with all applicable anti-corruption laws. In
view of the requirement in the UK Bribery
Act 2010 for relevant companies to have
adequate anti-bribery procedures, the
Group has devised and implemented
a suite of anti-corruption policies and
procedures designed to prevent corruption
by anyone working on its behalf. The
Group has adopted a zero-tolerance
approach to corruption and is committed to
ethical business practices. The Committee
is comfortable that the current policy is
operating effectively.
Martin Blair
Chair of the Audit Committee
Statement from the Chair of the Audit Committee Continued
Cake Box Holdings Plc
Annual Report 2024
41
Governance
BOARD COMMITTEES
To assist it in carrying out its duties, the Board has set up four committees comprising the Audit Committee, the Remuneration Committee,
the Nomination Committee and the ESG Committee with formally delegated duties and responsibilities and with written terms of reference.
From time-to-time separate committees may be set up by the Board to consider specific issues when the need arises. An explanation of the
responsibilities and composition of these committees is set out below and the terms of reference can be downloaded from our website.
AUDIT COMMITTEE
REMUNERATION
COMMITTEE
NOMINATION COMMITTEE
ESG COMMITTEE
The Audit Committee
consists of:
Martin Blair, Chair
Adam Batty
Shaun Smith
Alison Green
The Remuneration Committee
consists of:
Adam Batty, Chair
Shaun Smith
Alison Green
The Nomination Committee
consists of:
Martin Blair, Chair
Adam Batty
Alison Green
Shaun Smith
The ESG Committee
consists of:
Alison Green, Chair
Dr. Jaswir Singh
Shaun Smith
The Audit Committee is
expected to meet formally
at least four times a year
and otherwise as required.
It has responsibility for
ensuring that the financial
performance of the Group
is properly reported on and
reviewed, and its role includes
monitoring the integrity of
the financial statements of
the Group (including annual
and interim accounts and
results announcements),
reviewing internal control and
risk management systems,
reviewing any changes to
accounting policies, reviewing
and monitoring the extent
of the non-audit services
undertaken by external
auditors and advising on
the appointment of external
auditors.
The Remuneration Committee
is expected to meet no less
than twice a year and at such
other times as required. The
Remuneration Committee has
responsibility for determining,
within the agreed terms
of reference, the Group’s
policy on the remuneration
packages of the Company’s
Chief Executive, the Chair,
the Executives and Non-
Executive Directors, and
other senior executives. The
Remuneration Committee
also has responsibility
for determining the total
individual remuneration
package of the Chair, each
Executive Director and the
Chief Executive Officer
(including bonuses, incentive
payments and share options
or other share awards).
No director or manager may
be involved in any discussions
as to their own remuneration.
The Nomination Committee
is expected to meet not less
than once a year and at
such other times as required.
It has responsibility for
reviewing the structure, size
and composition (including
the skills, knowledge and
experience) of the Board,
and giving full consideration
to senior executive
and senior leadership
succession planning. It
also has responsibility
for recommending new
appointments to the Board.
The ESG Committee is
expected to meet no less than
twice a year and at such other
times as required. The ESG
Committee has responsibility
for understanding the views
of stakeholders as well as the
methods of engagement with
key stakeholders. Managing
ESG risks, and opportunities,
and ensuring the Company’s
ESG policies, management
of climate change and other
sustainability factors and
practices are in alignment
with its culture, purpose and
values. Oversight of external
reporting where appropriate
and the duty to promote
the success of the Company
with having regard to the
interests of the company’s
staff, shareholders and
stakeholders as a whole.
42
I am pleased to present this remuneration
report for the year ending 31 March 2024.
The report comprises a description of how
the Committee operates; a brief overview
of the remuneration policy in place in
the financial year and how we intend to
implement it in FY25; together with details of
compensation paid to the Board of Directors
within the financial year.
Business context
The business has, as in previous years, shown
considerable resilience in what has been a
very unpredictable economy, with stubborn
levels of inflation and high interest rates
weakening consumer demand generally. As
set out in the Financial Review:
• Like-for-like1 sales growth of 4.4% in
franchise stores in FY24 (FY23: 0.9%)
• 20 new shop openings
• We achieved record revenue of £37.8m,
up 8.7% on the prior year
• Adjusted profit before tax increased by
10.6% to £6.0m
• The Group’s balance sheet remains
strong, with net cash of £7.3m, up 19.5% on
the prior year
• A total dividend for the year of 9.0p
recommended (FY23: 8.125p)
Statement from the Chair of the Remuneration Committee
Ensuring an appropriate link between performance,
strategy and reward
Cake Box Holdings Plc
Annual Report 2024
FY24 has again been a busy year for the Remuneration Committee, with
significant focus on undertaking and reviewing executive directors’ pay
which included a market assessment of remuneration levels
Adam Batty
Remuneration Committee Chair
“
“
1Like-for-like: Stores trading for at least one full financial year prior to 31 March 2023.
43
Governance
FY24 Outcomes
Annual Bonus
The annual bonus opportunity for Executive
Directors was set at 75% of salary and
was based on a sliding scale of Adjusted
EBITDA targets (80%) and the achievement
of strategic objectives (20%). As a result of
Adjusted EBITDA for FY24 hitting £7.5m, the
financial element of the annual bonus will
pay out at 97.6% of the maximum and each
of the Executive Directors achieved varying
degrees of their personal objectives (worth
up to 20%). The overall bonus earned was
70.56% of salary for the Executive Directors.
Performance shares
No existing long term incentive awards were
capable of vesting in the year.
The Remuneration Committee believes
the annual bonus outcome is reflective of
performance over the period.
Remuneration policy and
implementation
During the year, the Committee undertook a
review of Executive Directors’ remuneration
and sought independent advice. This review
took place to ensure that the remuneration
levels set were appropriately competitive
in the market, recognised the skills and
experience of Executive Directors and
reflected the strong financial performance of
the business in a difficult trading environment.
The review looked at the operation of variable
incentive plans to ensure there continues to
be an appropriate link between strategy,
performance, and reward.
The outcome of the review showed that
the broad structure of the pay package
remains appropriate but that the annual
bonus opportunity was light compared with
market levels. This lack of focus on pay for
performance has been compounded by the
absence of annual awards of performance
shares. As a result of the comprehensive
review, the Committee has decided that
the annual bonus opportunity for Executive
Directors should be increased to 100% of
salary for FY25. The Committee will ensure
there continues to be an appropriate link
between performance, strategy and reward,
that will attract, motivate and retain high
quality individuals who will contribute fully to
the success of the Group.
Implementation of policy in FY25
The base salaries for Sukh Chamdal, Chief
Executive, Michael Botha, Chief Financial
Officer and Dr Singh, the Chief Commercial
Officer, have been increased by 6.7%,
6.8% and 11.8% respectively. The increases
for Sukh Chamdal and Michael Botha are
broadly aligned with the wider workforce
increase. The increase to Dr Singh’s salary
reflects the phased approach to increasing
his significantly below market salary towards
the market rate. The increases took effect
from 1 April 2024.
Executive Directors will participate in the
bonus at the higher opportunity of 100%
of salary and it is expected that they will
receive LTIP awards in the FY25 with a face
value of 100% of base salary. Further details
of their participation is provided in this
report.
Remuneration report
The Directors’ Remuneration report was
subject to an advisory shareholder vote
at the 2023 Annual General Meeting. I
would like to take the opportunity to thank
shareholders who gave us their views on
our revised policy pay arrangements and
we were pleased to receive over 99% vote
in favor. I do hope you will support the
remuneration resolution which will be tabled
at the forthcoming AGM.
Summary
Against the backdrop of an encouraging
performance in the first half and a continued
strong performance in the second half in its
sixth year as a public company, especially
in the face of the ongoing challenging
consumer environment, the Committee is
satisfied that the remuneration outcomes
for FY24 are appropriate and that the
current remuneration policy, which has been
reviewed and revised in the last financial
year, having been originally adopted in
FY22, continues to be appropriate for FY25.
We are satisfied that our policy operates in
such a way as to drive, support and reward
our critical leadership team to achieve our
strategy both operationally and over the
longer term, providing sustainable returns
for our investors.
Adam Batty
Remuneration Committee Chair
44
Annual report on
remuneration
How the Committee operates
The Committee is appointed by the Board
and is formed solely of Non-Executive
Directors. In the year under review, the
Committee was chaired by Adam Batty; the
other members of the Committee were Alison
Green, Martin Blair (up to 5 April 2024) and
Shaun Smith, the new Non-Executive Director
who joined the Board and the Committee
on 1 February 2024. Martin Blair, Chair of
the Board is no longer a member of the
Committee but will be invited to meetings
from time to time.
The Committee met three times during the
year and all Committee members attended
every meeting. The Committee’s terms of
reference, which were reviewed during the
year, are available for public inspection on
the Company’s website at
www.cakeboxinvestors.com.
Other members of the Board of Directors are
invited to attend meetings when appropriate,
but no Director is present when his
remuneration is discussed. FIT Remuneration
Consultants (“FIT”) provided advice to the
Committee during the year. FIT is a signatory
to the Remuneration Consultants Group code
of conduct and has no other connection with
the Company other than in the provision of
advice on remuneration from time to time.
The Committee’s principal duties remain as
follows:
• to review and make recommendations
in relation to the Company’s Senior
Executive remuneration policy;
• to apply these recommendations when
setting the specific remuneration packages
for each Executive Director, the Company
Chair and other selected members of
senior management and to include annual
bonuses, the eligibility requirements for
long-term incentive schemes, pension
rights, contracts of employment and any
compensation payments;
• to ensure that the remuneration policy
is aligned with the short and long-term
strategy of the Company;
• to manage performance measurements
and make awards under the Company’s
annual bonus and long-term incentive
plans;
• to consult with key shareholders
with regards to remuneration where
appropriate and take their views into
account; and
• to manage reporting and disclosure
requirements relating to Executive
remuneration.
The remuneration policy is designed
to provide an appropriate level of
compensation to senior management such
that they are sufficiently recognised and
rewarded for their strong performance, levels
of responsibility and complexity of their role
and to reflect their skills and experience over
time. Using appropriate measures of financial
and personal performance, as well as equity-
based rewards, helps to align the interests
of the Directors with those of the Company’s
shareholders.
The Committee has taken into account market
data when setting remuneration levels,
positioning Executives’ overall pay at or
below market levels relative to similarly sized
AIM-listed companies, as well as those from
the food sector. This provides a package which
is both fair and competitive within the market.
All Executive and Non-Executive Directors
are deemed to be Key Management Personnel.
Cake Box Holdings Plc
Annual Report 2024
The Directors received the following remuneration for the financial year ended 31 March 2024:
Salary and
fees
Benefits2 in
kind
Pension
Additional
pay
Annual
bonus
2024 Total
2023 Total
£
£
£
£
£
£
£
Executive Directors
Sukh Chamdal
243,800
13,3971
1,321
-
172,025
430,543
244,026
Michael Botha5
214,923
9,2871
881
25,0003
151,649
401,740
-
Dr Jaswir Singh
143,100
12,4401
991
-
100,971
257,502
148,361
601,823
35,124
3,193
25,000
424,645
1,089,785
392,387
Non-Executive Directors
Adam Batty
45,000
-
-
-
-
45,000
45,000
Martin Blair
57,500
-
-
46,8004
-
104,300
117,088
Alison Green
45,000
-
-
-
-
45,000
45,578
Neil Sachdev (resigned 31 October 2023)
50,000
-
-
-
-
50,000
75,000
Shaun Smith (joined 1 February 2024)
7,500
-
-
-
-
7,500
-
205,000
-
-
46,800
-
251,800
282,666
806,823
35,124
3,193
71,800
424,645
1,341,585
675,053
1. Includes £9,000 Car allowance for Sukh Chamdal and Dr Jaswir Singh and £7,000 for Michael Botha per annum.
2. Includes the provision of private medical insurance.
3. Michael Botha was paid a signing on bonus of £25,000 to compensate him for a long-term incentive payment he would have qualified for from his previous employer if he had waited to
hand in his notice.
4. Martin Blair was paid £46,800 for his services, through the Company’s payroll as Interim Chief Financial Officer till 23 June 2023.
5. Michael Botha joined the Company on 11 April 2023.
45
Governance
Non-financial targets (20 % weighting)
The non-financial objectives are related to delivering strategic milestones covering store openings and growth, product range and increasing
sales. The CEO had four broad categories of objectives covering operations, people, customers and finance, with specific objectives for each.
The CFO had four broad categories of objectives covering investor relations, franchisee relations, store openings and cashflow management,
with specific objectives for each. The CCO had four broad categories of objectives covering marketing and sales, IT, store openings and
ethical strategy, with specific objectives for each.
As a result of the financial performance of the business in the year under review meeting the upper end Adjusted EBITDA target set (with
Adjusted EBITDA of £7.5m meeting close to the maximum Adjusted EBITDA target set) and the achievement of 80% of their personal objectives,
the individual Executive Directors were eligible for an annual bonus of 70.56% of salary.
Long-term incentives
The Group operates two equity-settled share-based remuneration schemes. Awards are granted to recognise, retain and reward Executive
Directors in relation to long-term performance and achievement of the Company’s strategy. Payment in shares enables Executive Directors to
build on their existing shareholdings, promotes long-term shareholding and promotes alignment of interest with shareholders.
The EMI scheme awards are subject to stretching performance conditions set at the time of grant, which comprise metrics based on financial
performance in line with our key objectives of delivering returns to our shareholders through achievement of our growth strategy and ongoing
employment.
In terms of grants made, Sukh Chamdal and Dr Singh as two of the original Executive Directors received an initial award of performance
shares in FY20, at 250% of salary on a four-year vesting period.
Threshold
(25% payable)
Maximum
(100% payable)
Actual
% of Adjusted EBITDA
related bonus payable
Adjusted EBITDA
£7.0m
£7.7m
£7.5m
97.6%
Base salary
The base salary provides a base level of remuneration to support recruitment and retention of Executive Directors with the necessary
experience and expertise to deliver the Company’s strategy.
Base salaries are reviewed on an annual basis, and any increases become effective from the start of the next financial year.
During FY24, a salary benchmarking exercise was undertaken by the Committee and there was a resulting modest repositioning of salary
levels in order to attract and retain top talent as the business moved into its next stage of growth and maturity. In the year under review (and
as in the prior year), the Committee has undertaken its annual review of salaries for the Executive Directors and senior management and
awarded cost of living increases broadly in line with the rest of the workforce to Sukh Chamdal and Michael Botha. As a result, the base salary
of Sukh Chamdal increased to £260,000 and the base salary of Michael Botha to £235,000 with effect from 1 April 2024. Dr Singh’s salary
increased by c11.8% to £160,000 as part of a phased set of increases to reflect his materially below market rate positioning and his importance
to Cake Box.
Pension and benefits
The Executive Directors are entitled to a pension contribution of up to 2% of salary in the form of a defined contribution to a stakeholder pension
plan, in line with the rest of the workforce. Additionally, the Executive Directors are entitled to private medical insurance as a benefit in kind.
Annual bonus
The annual bonus provides an incentive linked to the achievement of delivering goals that are closely aligned with the Company’s strategy and
the creation of value for shareholders.
The remuneration policy allows the Committee, at its discretion, to make annual cash bonus awards to the Executive Directors, which was
limited to a bonus opportunity of 75% of salary for FY24. As set out earlier, as part of the review of pay, the Committee has increased the
maximum bonus opportunity to 100% of salary per annum for FY25 onwards.
Stretching performance targets are determined by the Committee at the start of the financial year, which are fully aligned with the Company’s
strategy and objectives. These targets (a majority of the bonus) are financial in nature (e.g. Adjusted EBITDA) with a minority of the bonus
payable for the achievement of qualitative strategic and personal performance targets that underpin the Company’s growth ambitions.
For the financial targets, a sliding scale target range is used, with no bonus payable for this element unless a threshold level of performance is
achieved (which will be achieving market consensus). Claw back provisions do apply.
The financial and non-financial targets and objectives applying to FY24 are set out below:
Financial targets (80% weighting)
46
In respect of the share option award made to Sukh Chamdal and Dr Singh in June 2019, the EPS performance targets that were set were for
aggregate growth in EPS to be a sliding scale between 36.41p and 43.68p. As the actual growth in EPS for the three financial years was 33.4p,
the performance condition was not met and the awards lapsed.
For various reasons, the Committee did not make any long-term incentive awards in FY21, FY22 or FY23. However, in FY24, the Committee made
an award of performance shares to Sukh Chamdal and Dr Singh, and a first award to Michael Botha on 9 October 2023.
The awards are structured as nominal cost options (exercise price £0.01) and are subject to the following FY26 EPS targets:
- EPS less than 14p – nil vesting
- EPS equal to 14p – 25% vesting
- EPS greater than or equal to 16.5p – 100% vesting
- For performance between 14p and 16.5p, vesting is determined on a straight-line basis.
Vested awards are subject to a further two-year holding period.
The Committee intends to make performance share awards in FY25. The proposed grant level will be 100% of salary with awards vesting after a
three-year period with a two-year holding period applying, thereby ensuring a five-year gap between grant and the first available opportunity to
benefit from a vested LTIP award.
The FY25 awards will be subject to an earnings per share measure relating to performance in FY27. Details of the EPS targets will be set out in the
announcement that accompanies the next grant of awards.
Non-Executive Director fees
Fees for Non-Executive Directors are set with reference to market data, time commitment, responsibilities and chairmanship of Board
Committees. Fees are normally reviewed biennially, and the current fees were set during FY22 to take effect from 1 April 2022. Following an
independent review of fees for Non-Executive Directors during the year, which included a benchmarking exercise and taking into account the
extensive amount of time each of the Non-Executive Directors commits to their role, the fees payable to the Non-Executive Directors for FY25
have increased to £78,750 for Martin Blair as Chair and to £47,250 for Adam Batty, Alison Green and Shaun Smith.
The fees payable to the Non-Executive Directors for FY24 were £75,000 for the Chair (Neil Sachdev until 31 October 2023 and then Martin
Blair from 31 October 2023) and £45,000 for Adam Batty, Alison Green, Martin Blair (until 30 October 2023) and Shaun Smith (from 01
February 2024).
Other than their annual fee, as well as appropriate travel expenses to and from Board meetings, no additional compensation is payable.
Pay and conditions elsewhere in the Company
The remuneration policy described above provides an overview of the structure that operates for the most senior executives in the Company,
with a significant element of remuneration dependent on Company and individual performances. A lower aggregate level of incentive
payment applies below Executive Director level. The vast majority of the Company’s staff participate in an annual bonus plan with the limits
and performance conditions varying according to job grade. The Committee believes in broad-based employee share ownership being a
key element in retention and motivation in the wider workforce, so a number of the more senior staff are provided with longer-term incentives
through discretionary share schemes. The Committee takes into account remuneration packages within the Company as a whole when
determining executive pay levels.
Annual report on remuneration Continued
Cake Box Holdings Plc
Annual Report 2024
Form of award
Basis of award
Face value of
award
Number of
awards
Performance
period
Vesting date
Sukh Chamdal
Nominal cost
options
100% of salary
£243,799
150,493
3 years ending
31/3/26
9/9/26
Michael Botha
Nominal cost
options
150% of salary
£330,000
203,703
3 years ending
31/3/26
9/9/26
Dr Singh
Nominal cost
options
100% of salary
£143,099
88,333
3 years ending
31/3/26
9/9/26
47
Adam Batty
Chair of the Remuneration Committee
Statement of Directors’ interests
The table below sets out the beneficial interests in shares and the unvested share options of all Directors holding office as at 31 March 2024:
Governance
Date of contract
Notice period
Executive Directors
Sukh Chamdal
20 June 2018
Six months
Dr Jaswir Singh
20 June 2018
Six months
Michael Botha
11 April 2023
Six months
Non-Executive Directors
Adam Batty
20 June 2018
Three months
Martin Blair
20 June 2018
Three months
Alison Green
6 August 2021
Three months
Neil Sachdev (resigned 31 October 2023)
20 June 2018
Three months
Shaun Smith
1 February 2024
Three months
Ordinary shares
Unexercised share options
Total interests
At 31/03/2024
At 31/03/2023
At 31/03/2024
At 31/03/2023
At 31/03/2024
At 31/03/2023
Sukh Chamdal
10,162,915
10,162,915
150,493
-
10,313,408
10,162,915
Dr Jaswir Singh
626,087
626,087
88,333
-
714,420
626,087
Neil Sachdev
(resigned 31 October 2023)
33,510
33,510
-
-
33,510
33,510
Alison Green
6,000
6,000
-
-
6,000
6,000
Martin Blair
20,000
20,000
-
-
20,000
20,000
Michael Botha
-
-
203,703
-
203,703
-
Adam Batty
-
-
-
-
-
-
Shaun Smith
(joined 1 February 2024)
-
-
-
-
-
-
10,848,512
10,848,512
442,529
-
11,291,041
10,848,512
Service agreements
The Executive Directors’ service agreements provide that their employment with the Company is on a rolling basis, subject to written notice
being served by either party of not less than six months.
The current service contracts and letters of appointment include the following terms:.
Under these service contracts, the Company may terminate an Executive Director’s employment immediately by making a payment in lieu of
base salary, benefits and statutory entitlements, and any bonus or commission payments pro-rated for the duration of the notice period. No
bonus would be payable in the event of an Executive Director’s resignation.
48
As part of the planned reorganisation of the Board in October 2023, Neil Sachdev stepped down as Non-Executive Chair of the Group and Chair
of the Nominations Committee. The Nomination Committee is now chaired by Martin Blair and its other members are Adam Batty, Alison Green
and Shaun Smith, who are all Independent Non-Executive Directors.
The Nominations Committee is responsible for reviewing the structure, size and composition (including the skills, knowledge, experience and
diversity) of the Board and making recommendations to the Board with regard to the changes. The Committee considers succession planning
taking into account the challenges and opportunities facing the Company now and in the future. The Board regularly reviews the skills and
expertise needed on the Board and in management, to ensure we are able to deliver our goals and objectives for the longer term. The Committee
regularly reviews how we lead, and the leadership needs of the business to ensure our values are upheld.
The Committee has met four times this year and has reviewed its terms of reference this year.
Time commitments
All Directors have been advised of the time requirement to fulfil their roles prior to appointment and all have confirmed they can make the
requirement before they were appointed. This requirement is also included in their letters of appointment.
The Board is satisfied that the Chair and each of the Non-Executive Directors can devote sufficient time to the Group’s business.
Board effectiveness review
Reviews are undertaken annually, being internally facilitated but with an external facilitator every third year. In May 2023 the Board commissioned
Board Excellence to conduct an independent Board Effectiveness Review. Board Excellence are an experienced international Board advisory
business who have had no prior involvement with the Company. They undertake their reviews in accordance with the Corporate Governance
Institute’s Code of Practice for board reviewers. Their review comprised the completion of a questionnaire by all Board members and certain
senior managers, one-to-one interviews with all respondents to the questionnaire and other stakeholders. The review also included a review of a
year’s worth of Board and Committee papers and other governance related documents.
Board Excellence provided their final report in August 2023 and this was discussed at subsequent Board meetings. The report established a Board
Effectiveness Baseline and made assessments in the following areas:
a) The Governance Infrastructure of the Board and its committees, and Board Induction programme;
b) Performance and Focus on the Company’s mission, vision and strategy, Risk Management and Decision Making;
c) Conformance and Oversight in relation to Code Compliance, Board Information and Succession Planning and Talent Development;
d) Dynamics and Culture covering Board Dynamics, Culture and Values and Key Governance Relationships; and
e) Board Engagement with Shareholders, Stakeholders and Employees as well as ESG.
The report went onto make several recommendations around Board Dynamics and Key Governance Relationships, many of which have
implemented which has, we believe improved the Board effectiveness. We will continue to review the Board’s effectiveness and the way it works to
continually improve the performance of the Board as a collective.
Continuous Development of Directors
The Directors are all required to keep themselves abreast of changes in relevant legislation and regulations. External training on appropriate
topics is provided. The Directors all received training on fiduciary duties, modern slavery, and the takeover code during the period. The Chair
and Non-Executives are encouraged to share their wider experiences at the Board to enhance the learning experiences of the whole Board at
every meeting.
Succession Planning and External Appointments
The Nominations Committee reviews succession planning for the senior management every year and considers any skill gaps in making its
recommendations to the Board on future recruitment. All senior appointments have material Non-Executive Director involvement, working
alongside the Executive Directors and staff external recruitment advisors to ensure a rigorous selection process for those candidates selected from
the appropriate talent pools. During the year, the Nominations Committee met several times initially to find a replacement for Neil Sachdev, to
strengthen the governance of the organisation through the appointment of Adam Batty as Senior Independent, and then to find a new Chair of
the Audit Committee as Martin Blair, the current Chair of the Audit Committee became Chair of the Company. After a number of interviews, we
were very pleased to appoint Shaun Smith as the new Non-Executive Director who took up his role in February 2024 and will become Audit Chair
on the conclusion of this year’s audit.
Statement from the Chair of the Nomination Committee
Cake Box Holdings Plc
Annual Report 2024
49
Governance
All new external appointments require the Chair’s approval.
The Board recognises the importance and need for a clear and orderly succession plan for both the non-executives and executives. We continue
to work closely with the executives to ensure we have the right skills and experience on the Board and in the senior management team as the
Company continues its growth.
As indicated last year, as most of the Non-Executive Directors have reached the end of their second term, we want to ensure there is a smooth
transition of Non-Executive Directors with the appropriate skills to guide the Board in its next phase. As indicated earlier, Neil Sachdev left the
Board in October last year and Adam Batty will be leaving the Board by November 2024. Alison Green has also indicated that for personal
reasons she would like to step down from the Board at the end of this calendar year. We will shortly commence the search for replacement
Non-Executive Directors and Senior Independent Director with the skills and experience we think are required to join us at the appropriate time.
Conflicts of interest
At each meeting the Board considers Directors’ conflicts of interest. The Company’s Articles of Association provide for the Board to authorise any
conflicts of interest.
Independent Professional Advice
Directors have access to independent professional advice at the Company’s expense. In addition, they also have access to the advice and
services of the Company’s advisors.
Directors and Officers Liability insurance
The Company has purchased directors’ and officers’ liability insurance during the year as permitted by the Company’s articles.
Election of Directors and Officers
Each of the Directors puts himself/herself up for re-election every year at the AGM.
Culture and Values
The Board monitors and promotes a value based corporate culture and has considered how the culture is consistent with the Company’s
objectives, strategy and business model. The Board review employee surveys to ensure that the values of the Company are fully embedded, and
actions followed through.
The Board has considered and assessed the culture and continues to monitor its inclusiveness. The Board are fully aware of the need to improve
gender balance on the Board and in senior management. There is an ongoing process of reviewing the make-up of the Board and senior
management for succession purposes.
The Company has a Code of Conduct, Anti Bribery and Corruption policy and a modern slavery statement. It has policies and procedures relating
to whistleblowing, stating the Company’s commitment to conducting its’ business with honesty and integrity, its expectation that staff maintain high
standards and encouraging prompt disclosure of any suspected wrongdoing.
The Directors follow the guidance set out by rule 21 of the AIM Rules relating to dealings by directors in company securities and to this end the
Company has adopted an appropriate share dealing code.
Martin Blair
Non-Executive Chair
50
The Directors present their annual report and audited financial statements for the Group for the year ended 31 March 2024.
Principal activity
The principal activity of the Group continues to be a specialist retailer of fresh cream celebration cakes.
The principal activity of the Company continues to be that of a holding company. The principal activities of its subsidiaries continue to be the
retail trade of cakes and associated services.
Review of business
A detailed review of the development of the business is contained in the Chair’s and Chief Executive’s Statements, which are included in the
Strategic Report.
Results
The Group made a profit before income tax of £6,265,427 (FY23: £5,443,567) for the year ended 31 March 2024 on revenue of £37,844,963
(FY23: £34,800,941). At 31 March 2024 the Group had total assets of £30,736,000 (FY23: £27,823,799).
Dividends
The Directors proposed the payment of a final dividend of 6.1 pence per share for the year ended 31 March 2024 bringing the total dividend for
the year to 9.0 pence per share (FY23: 8.125 pence).
Directors
The Directors who served during the year were:
S R Chamdal
Dr J Singh
M Botha
A Batty
A Green
M Blair
N Sachdev (resigned 31 October 2023)
S Smith (appointed 1 February 2024)
Substantial Shareholdings
So far as the Directors are aware the parties who are directly or indirectly interested in 3% or more of the nominal value of the Company’s share
capital at 31 March 2024 are as follows:
Directors’ Report
Cake Box Holdings Plc
Annual Report 2024
Name
Number of shares held
% of ordinary share capital
Sukh Chamdal
10,162,915
25.41
Ennismore Fund Management
2,601,749
6.50
River Capital
2,318,118
5.80
Trigo Capital
2,195,000
5.49
Cazenove Capital Management
2,001,462
5.00
River Global Investors
1,633,178
4.08
Kulwinder Kaur
1,309,740
3.27
51
Shareholders
No shareholder enjoys any special control rights, and, except as set out below, there are no restrictions in the transfer of shares or of voting rights.
As a significant shareholder Sukh Chamdal, on the admission of the Company’s shares to trading on AIM, entered into a written and legally
binding Relationship Agreement with the Company. This agreement seeks to ensure that the significant shareholder shall be managed in
accordance with the QCA Code. Under the terms of the Agreement, Sukh Chamdal undertook that, for so long as he is entitled to exercise,
or to control the exercise of, 20% or more of the rights to vote at general meetings of the Company, he will: conduct all transactions and
relationships with any member of the Group on arm’s length terms and on a normal commercial basis and not exercise any of his voting or
other rights and powers to procure any amendment to the Articles of Association of the Company.
As far as the Company is aware, the significant shareholder has complied with the terms of the Relationship Agreement.
Indemnity of Directors
The Group has indemnified the directors of the Group for costs incurred, in their capacity as a director, for which they may be held personally
liable, except where there is a lack of good faith.
Employees
The Group employed 173 staff as at 31 March 2024 (FY23: 173).
The Group is committed to the principle of equal opportunity in employment. The Group recruits and selects applicants for employment based
solely on a person’s qualifications and suitability for the position, whilst bearing in mind equality and diversity. It is the Group’s policy to recruit
the most qualified and capable person available for each position. The Group recognises the need to treat all employees honestly and fairly.
The Group is committed to ensuring that its employees feel respected and valued and are able to fulfil their potential and recognises that the
success of the business relies on their skill and dedication.
The Group gives full consideration to employment applications from disabled persons where the candidate’s particular aptitudes and abilities
are consistent with adequately meeting the requirements of the job.
Likely future developments
Information on likely future developments of the Group is disclosed in the Strategic report.
Financial instruments
Information on the Group’s financial instruments is disclosed in the Strategic Report and note 26 to the Financial Statements.
Research and development activities
During the year the Company conducted research and development in respect of cake innovations improved production methods, innovative
packaging solutions and new products.
Political donations
The Company made no political donations in the year (FY23: £NIL).
Going concern
The Directors have prepared and reviewed financial forecasts and the cash flow requirements to meet the Group and the Company’s financial
objectives. The Directors are satisfied that, taking into account the current cash resources and facilities available to the business and its future
cash requirements, it is appropriate to prepare accounts on a going concern basis.
Post balance sheet events
There are no material events after the reporting period to report.
Disclosure of information to auditor
Each of the Directors who are in office at the date when this report is approved has confirmed that, as far as they are aware, there is no
relevant audit information of which the auditor is unaware. Each of the Directors have confirmed that they have taken all the steps that they
ought to have taken as directors to make themselves aware of any relevant audit information and to establish that the auditor is aware of such
information.
Auditors
MHA has signified its willingness to continue in office as Auditors to the Company. The Group is satisfied that MHA is independent and there
are adequate safeguards in place to protect its objectivity. A resolution to reappoint MHA as independent auditor will be proposed at the next
Annual General Meeting.
On behalf of the Board.
S R Chamdal
Director
10 June 2024
Governance
52
Cake Box Holdings Plc
Annual Report 2024
The Directors are responsible for preparing the Strategic Report and the Directors’ Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year. The Directors have
elected under company law to prepare group financial statements in accordance with International Accounting Standards (UK adopted
IAS) in conformity with the requirements of the Companies Act 2006 and have elected under company law to prepare the company financial
statements in accordance with UK adopted International Accounting Standards (UK adopted IAS) in conformity with the requirements of the
Companies Act 2006.
The Group and Company financial statements are required by law and international accounting standards in conformity with the requirements
of the Companies Act 2006 to present fairly the financial position of the Group and the Company and the financial performance of the Group.
The Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements
giving a true and fair view are references to their achieving a fair presentation.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the
state of affairs of the Group and the Company and of the profit or loss of the Group for that period.
In preparing each of the Group and company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with UK adopted International Accounting Standards (UK adopted IAS); and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will
continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and to enable them
to ensure that the financial statements comply with the Companies Act 2006 and as regards the Group financial statements. They are also
responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Cake Box
Holdings plc website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in
other jurisdictions.
Statement of Directors’ Responsibilities
53
Financial Statements
For the purpose of this report, the terms “we” and “our” denote MHA in relation to UK legal, professional and regulatory responsibilities and
reporting obligations to the members of Cake Box Holdings plc. For the purposes of the table on pages 54 to 56 that sets out the key audit
matters and how our audit addressed the key audit matters, the terms “we” and “our” refer to MHA. The Group financial statements, as
defined below, consolidate the accounts of Cake Box Holdings plc and its subsidiaries (the “Group”). The “Parent Company” is defined as
Cake Box Holdings plc, as an individual entity. The relevant legislation governing the Company is the United Kingdom Companies Act 2006
(“Companies Act 2006”).
Opinion
We have audited the financial statements of Cake Box Holdings plc for the year ended 31 March 2024.
The financial statements that we have audited comprise:
• the Consolidated Statement of Comprehensive Income;
• the Consolidated Statement of Financial Position;
• the Consolidated Statement of Cash Flows;
• the Consolidated Statement of Changes in Equity;
• Notes 1 to 33 to the Consolidated Financial Statements, including significant accounting policies;
• the Company Statement of Financial Position;
• the Company Statement of Cash Flows;
• the Company Statement of Changes in Equity; and
• Notes 1 to 15 to the Company financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted International Financial
Reporting Standards (“UK adopted IFRS”).
In our opinion the financial statements:
• give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2024 and of the Group’s profit for the
year then ended;
• have been properly prepared in accordance with applicable law and UK Adopted IFRS; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We
are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with those
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independent auditor’s report to the members of Cake Box Holdings plc
54
Cake Box Holdings Plc
Annual Report 2024
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of
the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and the Parent Company’s ability to continue to adopt the going concern basis of
accounting included:
• The consideration of inherent risks to the Group’s operations and specifically its business model.
• The evaluation of how those risks might impact on the Group’s available financial resources.
• Review of the mathematical accuracy of the cashflow forecast model prepared by management and corroboration of key data inputs to
supporting documentation for consistency of assumptions used with our knowledge obtained during the audit.
• Challenging management for reasonableness of assumptions in respect of the timing and quantum of cash receipts and payments included
in the cash flow model.
• Holding discussions with management regarding future financing plans, corroborating these where necessary and assessing the impact on
the cash flow forecast.
• Review of the Group’s external debt exposure to determine if any future repayments have been included within the Group’s cash flow
projections.
• Holding discussions with management and completing reviews of any events after the reporting period to identify if these may impact on
the Group’s ability to continue as a going concern.
• Evaluating the accuracy of historical forecasts against actual results to ascertain the accuracy of management’s forecasts.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s and Parent Company’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Overview of our audit approach
Independent auditor’s report to the members of Cake Box Holdings plc Continued
Scope
Our Group audit was scoped by obtaining an understanding of the Group and its environment,
including the Group’s system of internal control, and assessing the risks of material misstatement in the
financial statements. We also addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the directors that may have represented a risk of
material misstatement.
The Group consists of three reporting components, all of which were considered to be significant
components: Cake Box Holdings plc, Eggfree Cake Box Limited and Chaz Limited. The significant
components were subjected to full scope audits for the purposes of our audit report on the Group
financial statements.
Subsidiaries were classified based upon:
1) financial significance of the component to the Group as a whole, and
2) assessment of the risk of material misstatements applicable to each component.
Our audit scope results in all major operations of the Group being subject to audit work.
Materiality
2024
2023
Group
£313,000
£272,000
5% (2023: 5%) of profit before tax
Parent Company
£27,600
£18,300
2% (2023: 2%) of gross assets
Key audit matters
Recurring
• Inventory Valuation
• Revenue Recognition
55
Financial Statements
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.
These matters included those matters which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Inventory Valuation
Revenue Recognition
Key audit
matter description
The inventory held by the Group is a key and material area to the financial statements and accounts for
a large amount of the Group’s current assets. Due to the nature of the Group’s operations, the inventory
balance is inherently linked to both the purchases and the sales cycles.
Typically, inventory consists of the goods that are sold to the various franchisees, including sponges,
food product and also other non-perishable items such as equipment and boxes.
We consider inventory valuation to be a key audit matter due to its significant importance to the Group’s
operations, control weaknesses identified in prior periods and its linkage to multiple areas of the
financial statements.
How the scope of our audit
responded to the key audit
matter
Our audit work included, but was not restricted to the following:
• We attended 3 out of 4 year end inventory counts including sample testing of inventory items
recorded on inventory count sheets to physical inventory location in the warehouses and vice versa.
• We performed a reconciliation between the inventory report and the amount reported in the
consolidated statement of financial position and held discussions with management where any
discrepancies were identified.
• We reviewed the inventory listing and inventory physically present in the warehouses for any slow-
moving or obsolete inventory items which require write off or provisioning.
• We performed substantive testing for a sample of inventory items held at the year end to the original
purchase invoice and also to post year-end sales to ensure inventory is held at the lower of cost and
net realisable value in the accounts.
• We updated our understanding of the relevant key controls for the inventory system, which fed into
our overall assessment of the control environment.
Key observations
We have not identified any issues with inventory valuation from our procedures undertaken.
Key audit
matter description
The Group has a number of separately identifiable revenue streams that are broken down into
their different components for financial reporting purposes. Revenue and the costs associated with
generating that revenue must be recognised in the appropriate period as the related performance
obligations are satisfied. This is in line with the revenue recognition criteria set out under IFRS 15.
We consider revenue recognition to be a key audit matter due to its significant importance to the
Group’s performance and the number of separately identifiable streams which required testing as part
of the audit process.
How the scope of our audit
responded to the key audit
matter
Our audit work included, but was not restricted to the following:
• We obtained a detailed understanding of the internal processes, systems and controls surrounding
revenue recognition and subsequently performed a walkthrough test of each of the key revenue
streams from initiation to recording, to test the design and implementation of those controls.
• We completed cut-off testing by selecting a sample of sales transactions across the various streams
either side of the year end to ensure the revenue has been accounted for in the correct period.
• We confirmed that all new franchises in the year have a double signed contract in place and
ensured that each has associated shop build revenue and challenged management, where any
discrepancies were found.
• We used data analytics for the revenue cycle to identify any transactions which do not fall into the
typical cycle that we would expect, these have been discussed with management and supporting
documentation gathered where necessary.
• Substantive testing has been carried out across the different income streams by picking samples from
the initial point of sale and tracing to the appropriate supporting documentation.
• We completed a review of revenue recognised under IFRS15 and considered whether the accounting
policies were in accordance with the requirements of IFRS 15 and applied appropriately.
Key observations
No material issues have been identified from the audit procedures carried out on revenue recognition.
56
Cake Box Holdings Plc
Annual Report 2024
Our application of materiality
Our definition of materiality considers the value of error or omission on the financial statements that, individually or in aggregate, would change
or influence the economic decision of a reasonably knowledgeable user of those financial statements. Misstatements below these levels will not
necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as a whole. Materiality is used in planning the scope of our work, executing
that work and evaluating the results.
Overview of the scope of the Group and Parent Company audits
Our assessment of audit risk, evaluation of materiality and our determination of performance materiality sets our audit scope for each company
within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. This assessment takes into account
the size, risk profile, organisation / distribution and effectiveness of group-wide controls, changes in the business environment and other factors
such as recent internal audit results when assessing the level of work to be performed at each component.
In assessing the risk of material misstatement to the consolidated financial statements, and to ensure we had adequate quantitative and
qualitative coverage of significant accounts in the consolidated financial statements, of the 3 reporting components of the group, all components
are within the UK and represent the principal business units within the Group.
Full scope audits - Of the 3 components selected, audits of the complete financial information of all 3 components were undertaken, these entities
were selected based upon their size or risk characteristics.
Group
Parent
Overall Materiality
£313,000 (2023: £272,000)
£27,600 (2023: £18,300)
Basis of determining overall
materiality
We determined materiality based on 5% (2023: 5%)
of the Group’s profit before tax.
We consider profit before tax to be the main
measure by which the users of the financial
statements assess the financial performance and
success of the Group. Therefore, we consider this
to be the most appropriate benchmark for Group
materiality
We determined materiality on the basis of 2% (2023:
2%) of the Parent Company’s gross assets.
Gross assets were deemed to be the appropriate
benchmark for the calculation of materiality as this
is a key area of the financial statements because
the Parent Company is largely a holding company
incurring limited costs.
Performance materiality
£219,100 (2023: £190,400)
£19,300 (2023: £12,800)
Basis of determining overall
performance materiality
We set performance materiality based on 70%
(2023: 70%) of overall materiality.
We set performance materiality based on 70%
(2023: 70%) of overall materiality.
Performance materiality is the application of materiality at the individual account or balance level, set at
an amount to reduce, to an appropriately low level, the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality for the financial statements as a whole.
The determination of performance materiality reflects our assessment of the risk of undetected errors
existing, the nature of the systems and controls and the level of misstatements arising in previous audits.
Error reporting threshold
We agreed to report any corrected or uncorrected
adjustments exceeding £15,650 (2023: £13,600) to
the Audit Committee as well as differences below
this threshold that in our view warranted reporting
on qualitative grounds.
We agreed to report any corrected or uncorrected
adjustments exceeding £1,380 (2023: £915) to the
Audit Committee as well as differences below this
threshold that in our view warranted reporting on
qualitative grounds.
Independent auditor’s report to the members of Cake Box Holdings plc Continued
57
Financial Statements
The control environment
We evaluated the design and implementation of those internal controls of the Group, including the Parent Company, which are relevant to our
audit, such as those relating to the financial reporting cycle.
Climate-related risks
In planning our audit and gaining an understanding of the Group and Parent Company, we considered the potential impact of climate-related
risks on the business and its financial statements. We obtained management’s climate-related risk assessment, along with relevant documentation
and reports relating to management’s assessment and held discussions with management to understand their process for identifying and
assessing those risks.
We critically reviewed the operating activities of the Group to consider whether there were any other climate-related risks identified and where
necessary, challenged management’s assessment and the assumptions underlying their assessment.
Reporting on other information
The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon.
The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in
the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Strategic report and directors’ report
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained in the course of the audit,
we have not identified material misstatements in the Strategic report or the Directors’ report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our
opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received by
branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit;
58
Cake Box Holdings Plc
Annual Report 2024
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the Group or Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is
not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud.
These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud or error. The risk of
not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error and detecting irregularities that
result from fraud is inherently more difficult than detecting those that result from error, as fraud may involve collusion, deliberate concealment,
forgery or intentional misrepresentations. Also, the further removed non-compliance with laws and regulations is from events and transactions
reflected in the financial statements, the less likely we would become aware of it.
Identifying and assessing potential risks arising from irregularities, including fraud
The extent of the procedures undertaken to identify and assess the risks of material misstatement in respect of irregularities, including fraud,
included the following:
• We considered the nature of the industry and sector, the control environment, business performance including remuneration policies and
the Group’s, including the Parent Company’s, own risk assessment that irregularities might occur as a result of fraud or error. From our sector
experience and through discussion with the directors, we obtained an understanding of the legal and regulatory frameworks applicable to the
Group focusing on laws and regulations that could reasonably be expected to have a direct material effect on the financial statements, such as
provisions of the Companies Act 2006, UK tax legislation or those that had a fundamental effect on the operations of the Group and the Parent
Company.
• We enquired of the directors and management concerning the Group’s and the Parent Company’s policies and procedures relating to:
- identifying, evaluating and complying with the laws and regulations and whether they were aware of any instances of non-compliance;
- detecting and responding to the risks of fraud and whether they had any knowledge of actual or suspected fraud; and
- the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations.
• We discussed among the engagement team regarding how and where fraud might occur in the financial statements and any potential
indicators of fraud.
• We have undertaken a review of minutes of meetings of those charged with governance.
• We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur by evaluating
management’s incentives and opportunities for manipulation of the financial statements. This included utilising the spectrum of inherent risk
and an evaluation of the risk of management override of controls. We determined that the principal risks were related to posting inappropriate
journal entries to increase revenue or reduce costs, creating fictitious transactions to hide losses or to improve financial performance, and
management bias in any accounting.
Independent auditor’s report to the members of Cake Box Holdings plc Continued
59
Financial Statements
Audit response to risks identified
In respect of the above procedures:
• we corroborated the results of our enquiries through our review of the minutes of the Group’s and the Parent Company’s board and audit
committee meetings, inspection of legal documents and list of cases;
• audit procedures performed by the engagement team in connection with the risks identified included:
- reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and
regulations expected to have a direct impact on the financial statements;
- testing journal entries, including those processed late for financial statements preparation, those posted by infrequent or unexpected users
and those posted to unusual account combinations;
- evaluating the business rationale of significant transactions outside the normal course of business, and reviewing accounting estimates for bias;
- enquiry of management around actual and potential litigation and claims;
- challenging the assumptions and judgements made by management in its significant accounting estimates; and
- obtaining confirmations from third parties to confirm existence of a sample of transactions and balances.
• the Senior Statutory Auditor considered the experience and expertise of the engagement team to ensure that the team had the appropriate
competence and capabilities; and
• we communicated relevant laws and regulations and potential fraud risks to all engagement team members, and remained alert to any
indications of fraud or non-compliance with laws and regulations throughout the audit.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than
the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Andrew Moyser FCA FCCA (Senior Statutory Auditor)
for and on behalf of MHA, Statutory Auditor
London, United Kingdom
10 June 2024
60
Cake Box Holdings Plc
Annual Report 2024
Note
2024
As restated 2023
£
£
Revenue
3
37,844,963
34,800,941
Cost of sales
(17,905,058)
(17,626,671)
Gross profit
19,939,905
17,174,270
Administrative expenses before exceptional items
4
(13,947,694)
(11,314,803)
Impairment of receivables - writeback/(charge)
4
187,856
(280,425)
Exceptional items
10
243,100
-
Administrative expenses
4
(13,516,738)
(11,595,228)
Operating profit
6,423,167
5,579,042
Finance income
6
153,145
25,019
Finance expense
6
(310,885)
(160,494)
Profit before income tax
6,265,427
5,443,567
Income tax expense
11
(1,606,742)
(1,206,896)
Profit after income tax
4,658,685
4,236,671
Other comprehensive income for the year
Items that will not be subsequently reclassified to profit or loss:
Revaluation of freehold property
13
223,178
187,665
Deferred tax on revaluation of freehold property
12
(55,795)
(35,656)
Tax rate changes on revaluation reserve for freehold property
12
-
(337,088)
Total other comprehensive income for the year
167,383
(185,079)
Total comprehensive income for the year
4,826,068
4,051,592
Attributable to:
Equity holders of the parent
4,826,068
4,051,592
Earnings per share
Basic (pence)
33
11.65
10.59
Diluted (pence)
33
11.44
10.59
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
Company Registration No. 08777765
The notes on pages 64 to 97 form an integral part of these financial statements.
61
Financial Statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2024
Company Registration No. 08777765
The notes on pages 64 to 97 form an integral part of these financial statements.
The financial statements were approved and authorised for issue by the Board on 10 June 2024 and signed on its behalf by:
S R Chamdal
Director
Note
2024
As restated 2023
£
£
Assets
Non-current assets
Intangible assets
14
727,783
399,186
Property, plant and equipment
13
11,480,193
11,267,783
Right-of-use assets
15
2,274,550
2,574,490
Other financial assets
18
564,535
508,532
15,047,061
14,749,991
Current assets
Inventories
16
2,592,838
2,790,724
Trade and other receivables
17
4,154,184
2,683,621
Other financial assets
18
487,652
245,880
Cash and cash equivalents
31
8,454,265
7,353,583
15,688,939
13,073,808
Total Assets
30,736,000
27,823,799
Equity and liabilities
Equity
Issued share capital
19
400,000
400,000
Capital redemption reserve
20
40
40
Share option reserve
20
95,266
-
Revaluation reserve
20
3,617,038
3,449,655
Retained earnings
20
15,188,345
13,889,660
Equity attributable to the owners of the parent company
19,300,689
17,739,355
Current liabilities
Trade and other payables
23
4,892,228
3,766,413
Lease liabilities
15
280,425
270,117
Short-term borrowings
22
146,544
104,498
Current tax payable
948,523
294,262
Provisions
24
-
243,100
6,267,720
4,678,390
Non-current liabilities
Lease liabilities
15
2,149,413
2,429,838
Borrowings
22
997,050
1,132,292
Deferred tax liabilities
12
2,021,128
1,843,924
5,167,591
5,406,054
Total Equity and liabilities
30,736,000
27,823,799
62
Cake Box Holdings Plc
Annual Report 2024
Note
2024
2023
£
£
Cash flows from operating activities
Profit before income tax
6,265,427
5,443,567
Adjusted for:
Depreciation of property, plant, and equipment
4 & 13
856,282
777,571
Amortisation of intangible assets
4 & 14
106,810
54,110
Depreciation of right-of-use assets
4 & 15
299,940
299,940
Loss/(profit) on disposal of property, plant, and equipment
13,606
(50,733)
Share-based payment expense
7
93,445
-
Finance income
6
(153,145)
(25,019)
Finance cost
6
310,885
160,494
Decrease/(increase) in inventories
197,886
(321,803)
(Increase) in trade and other receivables
(1,470,563)
(360,950)
(Increase)/decrease in other financial assets
(297,775)
263,307
Increase in trade and other payables
1,125,815
1,105,042
(Decrease)/increase in provisions
(243,100)
280,425
Cash generated from operations
7,105,513
7,625,951
Taxation paid
(829,251)
(1,341,087)
Net cash inflow from operating activities
6,276,262
6,284,864
Cash flows from investing activities
Purchase of property, plant and equipment
13
(892,226)
(1,615,209)
Additions in intangible assets
14
(453,920)
(346,023)
Proceeds from sale of property, plant and equipment
51,620
61,002
Finance income
6
153,145
25,019
Net cash outflow from investing activities
(1,141,381)
(1,875,211)
Cash flows from financing activities
Repayment of finance leases
(270,118)
(260,192)
Repayment of borrowings
(93,196)
(116,942)
Dividends paid
8
(3,360,000)
(3,090,000)
Finance cost
6
(310,885)
(160,494)
Net cash outflow from financing activities
(4,034,199)
(3,627,628)
Net increase in cash and cash equivalents
1,100,682
782,025
Cash and cash equivalents at 1 April 2023
7,353,583
6,571,558
Cash and cash equivalents at 31 March 2024
31
8,454,265
7,353,583
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2024
The notes on pages 64 to 97 form an integral part of these financial statements.
63
Financial Statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
Attributable to the owners of the Parent Company
Share
capital
Capital
redemption
reserve
Share
option
reserve
As restated
revaluation
reserve
As restated
retained
earnings
As restated
total
£
£
£
£
£
£
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 on revaluation reserve for freehold property
-
-
-
(337,088)
-
(337,088)
Total comprehensive income for the year
-
-
-
(185,079)
4,236,671
4,051,592
Transactions with the owners in their capacity as owners
Dividends paid
-
-
-
-
(3,090,000)
(3,090,000)
At 31 March 2023
400,000
40
-
3,449,655
13,889,660
17,739,355
Profit for the year
-
-
-
-
4,658,685
4,658,685
Revaluation of freehold property
-
-
-
223,178
-
223,178
Deferred tax on revaluation of freehold property
-
-
-
(55,795)
-
(55,795)
Total comprehensive income for the year
-
-
-
167,383
4,658,685
4,826,068
Transactions with the owners in their capacity as owners
Share-based payments
-
-
93,445
-
-
93,445
Deferred tax on share-based payments
-
-
1,821
-
-
1,821
Dividends paid
-
-
-
-
(3,360,000)
(3,360,000)
At 31 March 2024
400,000
40
95,266
3,617,038
15,188,345
19,300,689
The notes on pages 64 to 97 form an integral part of these financial statements.
64
Cake Box Holdings Plc
Annual Report 2024
1.
General information
Cake Box Holdings plc is a listed company limited by shares, incorporated in England and Wales, with company number 08777765 and
domiciled in the United Kingdom. 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. Material accounting policy information
2.1
Basis of preparation of financial statements
The consolidated financial statements for the year ended 31 March 2024 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 (£) unless otherwise stated.
Changes to comparative period financial information
The following changes have been made to the comparative period presented within these financial statements:
• Impairment of receivables, of £280,425, have been disclosed separately from administrative expenses on the Consolidated Statement of
Comprehensive Income. There is no impact on net cash flows or basic and diluted earnings per share for the period.
• Tax rate changes on revaluation of property, plant and equipment have been recognised separately under ‘Other comprehensive income for
the year’, as required by IAS 12 ‘Income Taxes’. This has resulted in a restatement of the Consolidated Statement of Comprehensive Income. The
Consolidated Statement of Changes in Equity was also restated to reclassify £337,088 from retained earnings to the revaluation reserve. There
is no impact on net cash flows or basic and diluted earnings per share for the period.
The above changes were prompted by an inquiry from the Corporate Reporting Review Team of the FRC as part of its regular review and
assessment of the quality of corporate reporting in the UK. They requested further information in relation to the Company’s 2023 Annual Report
and Accounts, as explained further in the Audit and Risk Committee report on page 38. The Company agreed to make the above changes within
its 2024 financial statements.
The FRC’s review is limited to the published 2023 Annual Report and Accounts; it does not benefit from a detailed understanding of underlying
transactions and provides no assurance that the Annual Report and Accounts are correct in all material respects.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
65
Financial Statements
Judgements
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.
Expected Credit Loss Allowance
The Group exercises judgement in relation to the calculation of expected credit losses on trade receivables and franchisee loans. This includes
ascertaining what constitutes a significant increase in credit risk, what is defined as loan default and how forward-looking information has been
incorporated into the simplified approach for trade receivables. Please see Note 28 for further details.
As restated 2023
Adjustment
Reported 2023
1) Impairment of receivables disclosed in the Consolidated Statement of
Comprehensive Income
Consolidated Statement of Comprehensive Income
Administrative expenses before exceptional items
(11,314,803)
280,425
(11,595,228)
2) Tax rate changes on revaluation reserve for freehold property - recognised
separately under 'Other comprehensive income for the year’
Consolidated Statement of Comprehensive Income
Other comprehensive income for the year
Items that will not be subsequently reclassified to profit or loss:
Revaluation of freehold property
187,665
-
187,665
Deferred tax on revaluation of freehold property
(35,656)
-
(35,656)
Tax rate changes on revaluation reserve for freehold property
(337,088)
(337,088)
-
Total other comprehensive income for the year
(185,079)
(337,088)
152,009
Consolidated Statement of Financial Position
Revaluation reserve
As reported in 2023
3,634,734
-
3,634,734
Revaluation of freehold property
187,665
-
187,665
Deferred tax on revaluation of freehold property
(35,656)
-
(35,656)
Reclassification of tax rate changes on revaluation reserve for freehold property
(337,088)
(337,088)
-
3,449,655
(337,088)
3,786,743
66
Cake Box Holdings Plc
Annual Report 2024
2.
Accounting policies (continued)
Areas of significant estimation uncertainty
The following areas of estimation uncertainty which have had the most significant effect on amounts recognised in the financial statements:
Provisions
The Group had previously recognised provisions following a data breach which impacted the Group’s website payment system. The provision
related to the fine received by the merchant service provider, and estimated costs associated including potential fines from the ICO in respect of
GDPR breaches and associated legal and professional fees. Management used judgement in respect of potential fees and fines and estimates to
calculate the quantum of costs.
Freehold property
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 £”) 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
30 to the Company’s separate financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
67
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 were in issue and have been applied in these
financial statements. There has not been a material impact on the Group following their application:
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 disclosures and to help users of the
financial statements to distinguish between changes in accounting estimates and changes in
accounting policies.
1 January 2023
IAS 12
Amendments requiring a company to recognise deferred tax on transactions that, on initial
recognition give rise to equal amounts of taxable and deductible temporary differences.
1 January 2023
IAS 1 & IAS 8
Amendments regarding the disclosure of accounting policies and amendments regarding
the definition of accounting estimates.
1 January 2023
IAS 12
Amendments to Deferred Tax Related to Assets and Liabilities arising from a Single
Transaction.
1 January 2023
Effective Date
IAS 1
Amendments clarify how conditions with which an entity must comply within 12 months after
the reporting period affect the classification of a liability.
1 January 2024
IFRS 16
Amendments include requirements for sale and leaseback transactions in IFRS 16 to explain
how an entity accounts for a sale and leaseback after the date of the transaction.
1 January 2024
IFRS 18
IFRS 18 is the future standard that replaces IAS 1 in its entirety and will thus deal with
presentation of primary statements and notes. Some key impacts are as follows:
• Improving structure of the statement of profit or loss by requiring information to be
classified in either operating, investing, financing, taxation, or discontinued categories.
• Improving the requirements over the level of aggregation and disaggregation of line
items and the information in notes in order to provide more useful information.
• Providing specific requirements over the reporting of additional sub-totals, line items,
and other aspects of presentation that relate to alternative performance measures
(for example non-IFRS measures).
Applicable for
financial years
beginning on or
after 1 January
2027 and is not yet
endorsed for use in
the United Kingdom.
The Company is
considering the
impact of IFRS 18 on
its future reporting.
IFRS 19
IFRS 19 is a new standard that enables reduced disclosures in the IFRS accounts of
subsidiaries that do not have public accountability. IFRS 19 is not relevant at this level of the
Group as the Company is a parent and not a subsidiary.
IFRS 19 is applicable
for financial years
beginning on or
after 1 January
2027 and is not yet
endorsed for use in
the United Kingdom.
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Cake Box Holdings Plc
Annual Report 2024
2.
Accounting policies (continued)
2.5
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (‘CODM’).
The CODM, 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’s trading has numerous components, the 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 £1.0m to £8.5m, and 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 it is 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
12 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 foods and goods to franchisees
• Online commission on the sales of cakes and related products to customers
• Franchise packages
• National marketing levy
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 and delivered, which occurs on the same day. Payment of the transaction price is due within 7 days after statements are forwarded to
franchisees. 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 commission on the 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 the consideration paid by the customers 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 packages
The franchise packages consist of revenues which relate to pre- and post-opening costs mainly for store fit-out; and initial set up costs for
pre-opening support, and franchisee and staff training.
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 commences. Each package is tailored to a specific franchisee’s needs and elements can be added or removed
as appropriate which will affect the price. The performance obligation of the Group is met, when the store is handed over to the franchisee and
he/she accepts it and commences trading. The franchisee is then obligated to settle the invoices raised by the Group for the costs incurred by the
Group in getting the store in a position where it can start trading. Included in the franchise packages, is a franchise fee, the amount of which will
depend on whether it is a new or existing franchisee opening the new store.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
69
Financial Statements
Holding deposits received from franchisees for new stores are not treated as revenue when received. The deposits are held under ‘Other
Payables’ in the Group’s financial statements. If the new store is completed and the franchisee accepts it and commences trading, the deposit is
allocated against the costs associated with the new store and recognised as revenue at this point. If the new store does not proceed, the deposit is
refunded to the franchisee.
National marketing Levy
Franchisees contribute a percentage of their franchise sales to the National Marketing Fund managed by the Group. The purpose of the fund is
to build franchise sales through increased awareness of the Cake Box brand and the website. For the funds received, the Group provides national
marketing initiatives and services. These performance obligations are considered to constitute a revenue stream, and the contributions received
by the Group are therefore recognised as revenue. Revenue recognition is measured on an input basis as the costs of providing the services
are incurred. The Group provides the services on a break-even basis, such that the fund does not retain a long-term surplus or deficit. As such,
the level of revenue and costs recognised in respect of fulfilling the national marketing obligations are equal. Any timing difference between
contributions received and costs incurred are held as a contract asset or liability on the Consolidated Statement of Financial Position.
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 2024. This assessment relies on estimates and assumptions and may involve a series of
complex judgements about future events. To the extent that the final tax outcome of these matters is different from 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 the
Company 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.
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Cake Box Holdings Plc
Annual Report 2024
2.
Accounting policies (continued)
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 buildings
-
Over 40 to 50 years
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 Property, plant and equipment – 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 are recognised in Other Comprehensive Income. Revaluation losses are recognised in the profit and loss, unless the losses relate to
previously recognised gains, in which case it will be recognised in Other Comprehensive Income. Any 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
71
Financial Statements
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.
Other financial assets
Included in other financial assets are loans to franchisees. These loans are interest free, however include an arrangement fee, at the discretion
of the Group, which is spread over the term of the loan. These loans have been discounted to fair value using a market rate. The impact of this
discounting has been recognised in finance costs. At the end of each reporting period, the carrying amounts of other financial assets are reviewed
on an individual balance basis and appropriate impairments are made if losses are anticipated. If a previously impaired balance is subsequently
received, the impairment is reversed through the profit and loss. See notes 27 and 28 for further details.
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.
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Cake Box Holdings Plc
Annual Report 2024
2.
Accounting policies (continued)
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 Group’s incremental borrowing rate.
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; and
• 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); or
• 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
73
Financial Statements
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the right-of-use asset. Right-of-use assets currently in
use are depreciated over 10 years, which is the term of the lease.
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.
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Cake Box Holdings Plc
Annual Report 2024
2.
Accounting policies (continued)
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 payments
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 is 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
75
Financial Statements
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.
2.26.1. 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.
2.26.2. 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.
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Cake Box Holdings Plc
Annual Report 2024
2.
Accounting policies (continued)
2.26.3. 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
2.26.4. 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 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:
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 2024 or 2023.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2024
2023
£
£
Sales of sponge
14,983,166
13,631,930
Sales of other food
6,700,487
5,870,607
Sales of fresh cream
4,082,584
3,976,694
Sales of other goods
7,824,308
7,454,354
Online sales commission
1,100,711
1,001,192
Franchise packages
2,484,043
2,866,164
National Marketing levy
669,664
-
37,844,963
34,800,941
77
Financial Statements
The prior year comparative has been restated as the amortisation of intangible assets is now shown separately.
The prior year comparative has been restated as the amortisation of intangible assets is now shown separately.
2024
Restated 2023
£
£
Staff costs
7,609,081
6,140,162
Travel and entertaining costs
613,284
599,151
Supplies costs
801,291
481,596
Professional costs
1,236,911
1,729,948
Depreciation of property, plant, and equipment
856,282
777,571
Amortisation of intangible assets
106,810
54,110
Depreciation of right-of-use assets
299,940
299,940
Rates and utilities costs
657,601
595,697
Property maintenance costs
328,279
265,400
Advertising costs
1,377,584
308,564
Other costs
60,631
62,664
13,947,694
11,314,803
Impairment of receivables – writeback/(charge) (note 27)
(187,856)
280,425
Exceptional items (note 10)
(243,100)
-
13,516,738
11,595,228
2024
Restated 2023
£
£
Depreciation of property, plant, and equipment
856,282
777,571
Amortisation of intangible assets
106,810
54,110
Depreciation of right-of-use assets
299,940
299,940
Inventory recognised as an expense
17,905,058
17,626,671
Loss/(Profit) on disposal of property, plant & equipment
13,605
(50,733)
Fees payable to the Group's auditor and its associates for the audit of the Group's
annual financial statements
105,000
85,000
Fees payable to the Group's auditor and its associates for the audit of the Group's
prior year annual financial statements
17,600
50,000
Fees payable to the Group's auditor and its associates for the review of the Group's
interim financial statements
13,000
13,000
Share-based payment expense
93,445
-
4.
Expenses by nature
The Administrative expenses have been arrived at after charging/(crediting):
5.
Operating profit
The operating profit is stated after charging/(crediting):
78
Cake Box Holdings Plc
Annual Report 2024
6. Net finance costs
7.
Staff costs
Staff costs, including directors’ remuneration, were as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2024
2023
£
£
Finance expenses
Bank loan interest
82,050
55,686
Finance lease interest
94,881
104,808
Other interest paid
14,704
-
Finance cost of discounted franchisee loans*
119,250
-
310,885
160,494
Finance income
Bank interest receivable
(153,145)
(25,019)
Net finance costs
157,740
135,475
2024
2023
£
£
Wages and salaries
6,638,952
5,426,189
Social security costs
670,237
561,337
Pension costs
84,208
74,144
Private health
122,239
78,492
7,515,636
6,140,162
Share-based payment expense
93,445
-
7,609,081
6,140,162
2024
2023
Directors
7
6
Administration
42
41
Maintenance
20
19
Production and Logistics
104
107
173
173
*There is no comparative for the prior year as this was immaterial.
The average monthly number of staff, including directors, for the year was 173 (FY23:173).
The breakdown by department is as follows:
79
Financial Statements
2024
2023
£
£
Interim dividend of 2.9p per ordinary share
1,160,000
-
Final dividend of 5.5p per ordinary share proposed and paid during the year
relating to the previous year's results
2,200,000
-
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
3,360,000
3,090,000
2024
2023
£
£
Corporation tax
Current tax on profits for the year
1,483,512
789,096
Adjustments in respect of previous periods
-
8,305
Deferred tax
Arising from origination and reversal of temporary differences
62,065
262,433
Effect of changes in tax rates
-
142,951
Adjustments in respect of previous periods
61,165
4,111
Taxation on profit on ordinary activities
1,606,742
1,206,896
2024
2023
£
£
Reversal of provision relating to website data breach (credit)
(243,100)
-
8. Dividends
11. Taxation
9. Directors’ remuneration and key management personnel
The Directors’ remuneration is disclosed within the Directors’ Remuneration Report on page 42. The Executive Directors and Non-Executive
Directors are considered key management personnel. Employers NIC paid on Directors’ remuneration in the year was £110,431 (FY23:£90,861).
10. Exceptional items
During FY21 the Group made a provision for estimated costs and fines with regards to a website data breach. During the 2024 financial year,
based on the information submitted to the Information Commissioner’s Office (“ICO”) regarding the Group’s security measures in place to prevent
similar breaches, the ICO informed the Company that it would not be pursuing enforcement action in this case and consider the case closed.
80
Cake Box Holdings Plc
Annual Report 2024
11. Taxation (continued)
Factors affecting tax charge for the year
The tax assessed for the year is 25.6% (FY23:22.2%), which is higher than the standard rate of corporation tax in the UK of 25% (FY23:19%).
The differences are explained below:
12. Deferred taxation
At the 2021 Budget speech on 3 March 2021, the Government announced that the Corporation Tax rate will increase to 25% for companies with
profits above £250,000 with effect from 1 April 2023, as well as announcing a number of other changes to allowances and treatment of losses.
This has impacted the Company’s current tax charge accordingly.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2024
2023
£
£
Profit on ordinary activities before tax
6,265,427
5,443,567
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK
of 25% (FY23: 19%)
1,566,357
1,034,279
Effects of:
Expenses not deductible for tax purposes, other than goodwill amortisation and
impairment
35,882
96,260
Income not taxable
(56,662)
(79,010)
Effect of changes in tax rates
-
142,951
Adjustments to tax in respect of prior periods
61,165
12,416
Total tax charge for the year
1,606,742
1,206,896
2024
2023
£
£
Balance brought forward
1,843,924
1,061,684
Charged to other comprehensive income:
Deferred tax on revalued freehold property
55,795
35,656
Tax rate changes on revaluation reserve for freehold property
-
337,088
Charged directly to reserves:
Employee benefits (including share-based payments)
(1,821)
-
Charged to profit and loss:
Accelerated capital allowances
82,681
266,659
Tax rate changes
-
142,951
Share-based payments
(23,361)
-
Adjustments in respect of prior periods
64,734
4,111
Other short-term timing differences
(824)
(4,225)
Balance carried forward
2,021,128
1,843,924
81
Financial Statements
Movements in deferred tax in direct relation to freehold property revaluation are recognised immediately in the Consolidated Statement of
Comprehensive Income, under other comprehensive income for the year.
2024
2023
£
£
Deferred tax liabilities
Accelerated capital allowances
717,772
573,926
Other short-term timing differences
(5,052)
(7,797)
Share-based payments
(25,182)
-
Property valuations (including indexation)
1,333,590
1,277,795
2,021,128
1,843,924
Freehold Land
and Building
Freehold
improvements
Plant &
machinery
Motor
vehicles
Fixtures
& fittings
Total
£
£
£
£
£
£
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
777,571
Disposals
-
-
-
(101,734)
-
(101,734)
At 31 March 2023
499,099
121,132
841,936
699,881
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
12. Deferred taxation (continued)
13. Property, plant, and equipment
82
Cake Box Holdings Plc
Annual Report 2024
13. Property, plant, and equipment (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Freehold Land
and Building
Freehold
improvements
Plant &
machinery
Motor
vehicles
Fixtures
& fittings
Total
£
£
£
£
£
£
Cost or valuation
At 1 April 2023
9,214,099
788,130
943,386
1,402,416
2,399,519
14,747,550
Additions
-
193,672
91,101
251,422
356,031
892,226
Disposals
-
-
(53,492)
(105,585)
-
(159,077)
Revaluations
(339,099)
-
-
-
- (339,099)
At 31 March 2024
8,875,000 981,802
980,995
1,548,253
2,755,550
15,141,600
Depreciation
At 1 April 2023
499,099
121,132
841,936
699,881
1,317,719
3,479,767
Charge for the year
63,178
168,109
56,801
305,705
262,489
856,282
Revaluations
(562,277)
-
-
-
-
(562,277)
Disposals
-
-
(25,896)
(86,469)
-
(112,365)
At 31 March 2024
-
289,241
872,841
919,117
1,580,208
3,661,407
Net book value
At 31 March 2024
8,875,000 692,561
108,154
629,136
1,175,342
11,480,193
Fair value at 31 March 2024
Valuation technique
Sq ft
Rate per sq ft - average
£
Property
Enfield
7,050,000
Vacant possession
39,121
180
Coventry
1,200,000
Vacant possession
13,000
92
Bradford
625,000
Vacant possession
9,358
67
Total
8,875,000
This year the Directors have disclosed the Freehold Land and Building column in the above note on a net basis as this gives a clearer
understanding of the revaluation effect on the asset class in the year and for the future periods.
As at 31 March 2024, 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 considered 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 31
March 2024.
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:
If the Freehold properties had been accounted for under the historic cost accounting rules, the properties would have been measured as follows:
2024
2023
£
£
Historic cost
3,433,746
3,433,746
83
Financial Statements
14. Intangible assets
Website
Software
ERP system
Total
£
£
£
£
Cost
At 1 April 2022
170,670
60,270
57,265
288,205
Additions
263,432
18,358
64,233
346,023
At 31 March 2023
434,102
78,628
121,498
634,228
Amortisation
At 1 April 2022
108,125
47,754
25,053
180,932
Charge for the year
28,447
11,347
14,316
54,110
At 31 March 2023
136,572
59,101
39,369
235,042
Balance at 31 March 2023
297,530
19,527
82,129
399,186
Website
Software
ERP system
Total
£
£
£
£
Cost
At 1 April 2023
434,102
78,628
121,498
634,228
Additions
133,881
111,000
209,039
453,920
Disposals
(22,215)
-
-
(22,215)
At 31 March 2024
545,768
189,628
330,537
1,065,933
Amortisation
At 1 April 2023
136,572
59,101
39,369
235,042
Charge for the year
83,293
9,201
14,316
106,810
Disposals
(3,702)
-
-
(3,702)
At 31 March 2024
216,163
68,302
53,685
338,150
Balance at 31 March 2024
329,605
121,326
276,852
727,783
84
Cake Box Holdings Plc
Annual Report 2024
15. Leases
The Consolidated Statement of Financial Position shows the following amounts in relation to leases:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Property
£
Cost
At 1 April 2023
2,999,405
Additions
-
At 31 March 2024
2,999,405
Depreciation
At 1 April 2023
424,915
Charge for the year
299,940
At 31 March 2024
724,855
Net book value
At 31 March 2023
2,574,490
At 31 March 2024
2,274,550
2024
2023
£
£
Lease liabilities
Current
280,425
270,117
Non-Current
2,149,413
2,429,838
2,429,838
2,699,955
2024
2023
£
£
Amortisation expense of right-of-use assets
299,940
299,940
Interest expense on lease liabilities
94,881
104,808
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:
The total cash outflow for leases amount to £365,000 (FY23: £365,000).
85
Financial Statements
2024
Restated 2023
£
£
Raw materials
361,842
295,891
Goods held for resale
2,230,996
2,494,833
2,592,838
2,790,724
2024
Restated 2023
£
£
Trade receivables
3,532,253
1,974,313
Impairment allowance
(92,569)
(230,537)
Trade receivables net of impairment allowance
3,439,684
1,743,776
Other receivables
266,508
370,222
3,706,192
2,113,998
Prepayments
447,992
569,623
4,154,184
2,683,621
Inventories are charged to cost of sales in the Consolidated Statement of Comprehensive Income. Inventories have been disclosed between raw
materials for production purposes and goods held for resale. Prior year disclosure has been restated to reflect the above change in disclosure.
The prior year disclosure has been restated to show the gross trade receivables and impairment allowance as at the end of the financial year.
The balances have not changed, only the manner in which it is disclosed.
The fair value of those trade and other receivables classified as financial assets at amortised cost are disclosed in the financial instruments note
(note 27).
The Group’s exposure to credit and market risks, including impairments and allowances for credit losses, relating to trade and other receivables is
disclosed in the financial risk management and impairment of financial assets note (note 28).
Trade receivables are non-interest bearing, are generally on 14-day terms and are shown net of impairment allowance. Management’s
assessment is that a loss allowance of £92,569 (FY23: £230,537) is required against some receivables from franchisees.
The age profile of the trade receivables is shown in note 28.
16. Inventories
17. Trade and other receivables
86
Cake Box Holdings Plc
Annual Report 2024
18. Other financial assets
19. Share capital
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2024
2023
£
£
Current
487,652
245,880
Non-current
564,535
508,532
1,052,187
754,412
2024
2023
£
£
40,000,000 Ordinary shares of £0.01 each
400,000
400,000
2024
2023
£
£
Total loans to franchisees
1,052,187
804,300
Impairment allowance
-
(49,888)
1,052,187
754,412
Other financial assets consist of loans to franchisees. 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 are valued at fair value at market rates. See note
27 (Financial Instruments) and 28 (Financial Risk Management) for further information regarding the impairment of Other Financial Assets.
All of the ordinary shares of £0.01 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.
20. 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 properties (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
The share option reserve represents the movement in cost of equity-settled transactions in relation to the long-term incentive plans.
See note 21 for more information.
87
Financial Statements
21. Share-based payments
The expense recognised for share-based payments in respect of employee services received during financial year ended 31 March 2024 was
£93,445 (FY23: £NIL).
Long Term Incentive Plan (‘LTIP’)
All employees and full-time Executive Directors of the Group are eligible to participate in the LTIP at the discretion of the Remuneration Committee.
Share awards may be granted subject to objective performance conditions and vest over a vesting period determined by the Remuneration
Committee at the time of grant.
During 2024 the Remuneration Committee approved the grant of the following share options under the LTIP scheme. All grants are in the form of
equity settled share options.
Enterprise Management Incentive Scheme (‘EMI’)
It was proposed and agreed by the Remuneration Committee to issue a total of 534,842 share options under the EMI scheme to 24 employees
(including two Executive Directors). These options are capable of vesting on the third anniversary of the grant of the options, based on the
following performance criteria being met:
- 25% of the option vests if an aggregate Earnings Per Share (“EPS”) of 14.0p is achieved over the three financial yeas starting from the financial
year in which the date of the grant occurs in.
- An additional 0.1% of the option vests for every 0.0033p achieved above an aggregate EPS of 14.0p, up to a maximum of 100% of the option held.
- In full if an aggregate EPS of 16.5p is achieved over the three financial years starting from the financial year in which the date of grant occurs in.
The options may not be exercised later than on the tenth anniversary of the date of grant.
Unapproved Share Option Scheme
It was proposed and agreed by the Remuneration Committee to issue a total of 199,876 share options under the EMI scheme to two Executive
Directors. These options are capable of vesting on the third anniversary of the grant of the options, based on the following performance criteria
being met:
- 25% of the option vests if an aggregate Earnings Per Share (‘EPS’) of 14.0p is achieved over the three financial years starting from the financial
year in which the date of the grant occurs in.
- An additional 0.1% of the option vests for every 0.0033p achieved above an aggregate EPS of 14.0p, up to a maximum of 100% of the option held.
- In full if an aggregate EPS of 16.5p is achieved over the three financial years starting from the financial year in which the date of grant occurs in.
The options may not be exercised later than on the tenth anniversary of the date of grant.
88
Cake Box Holdings Plc
Annual Report 2024
21. Share-based payments (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Exercise
price
Outstanding
at 31 March
2023
Granted
during the
period
Exercised
during the
period
Forfeited
during the
period
Outstanding
at 31 March
2024
Weighted
average
remaining life
Exercisable
at 31 March
2024
Number
Number
Number
Number
Number
Years
Number
EMI Scheme
1p - 162p
-
534,842
-
-
534,842
9.75
-
Unapproved share
option scheme
1p - 162p
-
199,876
-
-
199,876
9.64
-
Total
-
734,718
-
-
734,718
Weighted average
exercise price
65p
65p
The fair value of awards granted is estimated at the date of grant using the Black-Scholes option-pricing model using the terms and conditions
upon which they were granted. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the
options is indicative of future trends, which may not necessarily be the actual outcome. The following table summaries the inputs used in the fair
value models for grants made in the period ended 31 March 2024, together with the fair values calculated by those models:
For options granted the volatility reflects the historical volatility based on share transactions since listing. Daily closing share prices from since 27
June 2018 to the grant dates were reviewed and the standard deviation of the percentage movements in share price calculated and utilised in
determining the expected volatility.
The risk-free rate is the interest rate on a debt instrument that has zero risk, specifically default and reinvestment risk. The interest rate on zero-
coupon government securities, such as Treasury bills, notes, and bonds in the UK, is treated as a proxy for the risk-free rate. The interest rate on a
10-year government bond on the date of grant has been used in the fair value calculations of the options.
22. Borrowings
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 May 2029 and March 2030.
EMI Scheme
Unapproved share option scheme
Weighted average fair value - pence
119.2
148.3
Weighted average share price at grant - pence
156.1
149.0
Weighted average exercise price - pence
89.0
1.0
Number of periods to exercise - years
10.0
10.0
Dividend yield - %
4.8
4.8
Risk-free rates - %
4.0
4.1
Expected volatility - %
41.4
41.6
2024
2023
£
£
Current borrowings
Bank loans
146,544
104,498
Non-current borrowings
Bank loans
997,050
1,132,292
1,143,594
1,236,790
89
Financial Statements
2024
2023
£
£
Trade payables
2,953,202
2,648,770
Other taxation and social security
246,417
268,635
Other payables
399,605
316,375
3,599,224
3,233,780
Accruals
1,293,004
532,633
4,892,228
3,766,413
23. Trade and other payables
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 (note 28). The Group pays its trade payables on terms and as such trade payables are not yet due at the
statement of financial position dates.
24. Provisions
During FY21 the Group made a provision with regards to an estimation of costs and potential fines relating to a website data breach. The amount
outstanding at 31 March 2023 related to potential fines to be imposed by the ICO in respect of the data breach.
During the 2024 financial year, based on the information submitted to the ICO regarding the Group’s security measures in place to prevent similar
breaches, the ICO informed the Company that it would not be pursuing enforcement action in this case and consider the case closed, and the
Company therefore released the balance of the provision (see Note 10 Exceptional items).
25. Pension commitments
The Group operates a defined contribution 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 £84,208
(FY23: £74,144). Contributions totalling £20,206 (FY23: £16,904) were payable to the fund at the statement of financial position date and are
included in other payables (see note 23).
26. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. Related party
transactions are considered to be at arms-length.
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 page 42.
2024
2023
£
£
Website data breach
Balance brought forward
243,100
243,100
Released during the period
(243,100)
-
-
243,100
90
Cake Box Holdings Plc
Annual Report 2024
26. Related party transactions (continued)
Key management personnel had an interest in dividends as follows:
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:
*100% owned by Mr Chamdal’s daughter
** 100% owned by Dr Singh’s son or wife
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2024
2023
£
£
Sukh Chamdal
853,685
777,435
Dr Jaswir Singh
52,591
45,815
Neil Sachdev (resigned 31 October 2023)
2,815
2,589
Alison Green
504
464
Martin Blair
1,680
1,545
911,275
827,848
2024
2023
Sales
Balance
Sales
Balance
Mr. Sukh Chamdal
£
£
£
£
Cake Box (Crawley) Limited (0%) *
142,210
37,671
170,370
11,163
Cake Box CT Limited (0%) *
280,758
20,985
287,837
18,198
Cake Box (Strood) Limited (0%) *
133,116
19,449
132,353
6,824
556,084
78,105
590,560
36,185
2024
2023
Sales
Balance
Sales
Balance
Dr Jaswir Singh
£
£
£
£
Luton Cake Box Limited (10%)
445,802
18,618
410,560
18
Peterborough Cake Box Limited (30%)
230,447
9,827
229,149
(324)
Cream Cake Limited (30%)
285,131
13,574
246,223
-
MK Cakes Limited (0%)**
222,777
9,258
228,082
-
Bedford Cake Box Limited (0%)**
230,995
9,523
197,808
-
Chaz Cakes Limited (50%)
-
-
177,785
-
Ilford Cakes Limited (50%)
186,387
9,520
-
-
Eggless Cake Company Limited (50%)
193,378
7,610
178,344
-
1,794,917
77,930
1,667,951
(306)
91
Financial Statements
Held at amortised cost
2024
2023
£
£
Cash and cash equivalents
8,454,265
7,353,583
Trade and other receivables
3,798,761
2,344,536
Impairment of trade receivables
(92,569)
(230,537)
Net trade and other receivables
3,706,192
2,113,999
Other financial assets
1,052,187
804,300
Impairment of Other financial assets
-
(49,888)
Net other financial assets
1,052,187
754,412
13,212,644
10,221,994
Held at amortised cost
2024
2023
£
£
Trade and other payables
3,599,224
3,233,780
Secured borrowings
1,143,594
1,236,790
4,742,818
4,470,570
27. 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 material 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 note (note 28).
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
Financial assets
28. Financial risk management
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, while retaining ultimate
responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the
objectives and policies to the Group’s finance function. The Board receives regular reports from the Chief Financial Officer through which it reviews
the effectiveness of processes put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness
and flexibility. Further details regarding these policies are set out on the following page:
Financial liabilities
92
Cake Box Holdings Plc
Annual Report 2024
28. Financial risk management (continued)
Credit risk and impairment
Credit risk arises principally from the Group’s trade and other receivables and it’s other financial assets (which includes loans to franchisees). 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; and
• it becoming probable that the counterparty will enter bankruptcy or liquidation.
Write-off policy
Receivables and other financial assets 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 to 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:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2024
2023
Expected loss rate
£
£
0 - 30 days
0.1%
2,370,195
1,509,715
30 - 60 days
0.2%
623,834
43,111
60 - 90 days
0.5%
132,591
32,822
More than 90 days
1.0%
405,633
388,665
3,532,253
1,974,313
Impairment provision
(92,569)
(230,537)
3,439,684
1,743,776
93
Financial Statements
28. Financial risk management (continued)
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 as part of their financing for new store openings. The loans are interest free with an upfront arrangement
fee included in the loan. The loans are unsecured however if loan repayment schedules are not adhered to, supply of product and ingredients
are put on hold and franchisees are in breach of their franchise 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:
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:
Category
Group definition of category
Basis for recognition of expected credit
loss provision
Performing
Loans whose credit risk is in line with
original expectations.
12 month expected losses. Where the
expected lifetime of an asset is less than
12 months, expected losses are measured
at its expected lifetime (stage 1).
Underperforming
Loans for which a significant increase
in credit risk 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).
Lifetime expected losses (stage 2).
Non-performing (credit impaired)
Interest and/or principal repayments are
60 days past due or it becomes probable
a customer will enter bankruptcy.
Lifetime expected losses (stage 3).
Write-off
Interest and/or principal repayments
are 120 days past due and there is no
reasonable expectation of recovery.
Asset is written off.
Group internal credit rating
as at 31 March 2023
Expected credit loss
Gross carrying amount
(stage 1)
Gross carrying amount
(stage 2)
Gross carrying amount
(stage 3)
High
0.1%
754,412
-
-
Medium
10.0%
-
-
-
Low
20.0%
49,888
-
-
Group internal credit rating
as at 31 March 2024
Expected credit loss
Gross carrying amount
(stage 1)
Gross carrying amount
(stage 2)
Gross carrying amount
(stage 3)
High
0.1%
1,052,187
-
-
Medium
10.0%
-
-
-
Low
20.0%
-
-
-
94
Cake Box Holdings Plc
Annual Report 2024
28. Financial risk management (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Performing
Under-performing
Non-performing
Total
As at 31 March 2023
£
£
£
£
Individual financial assets transferred to
underperforming (lifetime expected credit losses)
-
49,888
-
49,888
Performing
Under-performing
Non-performing
Total
As at 31 March 2024
£
£
£
£
Individual financial assets transferred to
underperforming (lifetime expected credit losses)
-
-
-
49,888
No significant changes to estimation techniques or assumptions were made during the reporting period. The Group has assessed the default risk
as very low on franchisee loans as these loans are made to franchisee’s rather than a traditional third party. No expected credit loss has been
recognised for Stage 1 loans in line with management’s assessment.
The loss allowance for loans to franchisees as at 31 March 2023 and 31 March 2024 reconciles to the opening loss allowance for that provision as
follows:
Out of the total impairment provision of £92,569 (FY23: £280,425), £92,569 (FY23: £230,537) relates to specifically impaired trade receivable debt
and £NIL (FY23: £49,888) relates to 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:
2024
2023
£
£
Borrowings - due within one year
146,544
104,498
Borrowings - due within one to two years
158,337
109,296
Borrowings - due after more than two years
838,713
1,022,996
1,143,594
1,236,790
Lease liabilities - due within one year
280,425
270,117
Lease liabilities - due within one to two years
291,123
280,425
Lease liabilities - due within two - five years
941,720
907,113
Lease liabilities - due after more than five years
916,570
1,242,300
2,429,838
2,699,955
95
Financial Statements
28. Financial risk management (continued)
Trade and other payables
2024
2023
£
£
0 - 30 days
3,603,819
2,995,879
30 - 60 days
1,265,251
768,490
60 - 90 days
19,914
-
90 to 120 days
3,244
2,044
4,892,228
3,766,413
Interest rate risk
The Group is exposed to interest rate risk due to entities in the Group borrowing 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 (FY23:100 basis-point shift) would be a change of £11,436 (FY23:£12,368).
Capital risk management
The Group considers its equity capital to comprise its ordinary share capital and retained profits. 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 is 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.
29. Events after the reporting period
Final dividend
Post year end the Directors have recommended a final dividend of 6.1p per share (FY23:5.5p per share).
Purchase of land and buildings
Following the year end, the opportunity arose to purchase the land and buildings neighbouring our current depot in Bradford. As the opportunity
to acquire the land adjacent to our current facilities are rare, the Board took the decision to take advantage of the opportunity and move ahead
and purchase the land and buildings. This will enable the Group to service its further expansion in the north of England and Scotland. The
purchase price of the land and buildings was £0.7m. The purchase was concluded during May 2024, out of current cash reserves.
96
Cake Box Holdings Plc
Annual Report 2024
30. Subsidiary undertakings
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Name
Country of incorporation
Class of shares
Holding
Principal activity
Eggfree Cake Box Limited
United Kingdom
Ordinary
100%
Franchisor of specialist 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.
31. Note supporting statement of cashflows
There were no significant non-cash transactions from financing activities (FY23:none).
Non-cash transactions from financing activities are shown in the reconciliation of liabilities from financing transactions below:
2024
2023
£
£
Cash at bank available on demand
8,453,905
7,353,183
Cash on hand
360
400
8,454,265
7,353,583
Non-current
lease liabilities
Current lease
liabilities
Non-current
borrowings
Current
borrowings
Total
£
£
£
£
£
As at 31 March 2022
2,699,957
260,192
1,185,978
167,754
4,313,881
Cash flows
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
2,429,838
270,119
1,132,292
104,498
3,936,747
Cash flows
Repayments
-
(365,000)
-
(175,246)
(540,246)
Non-cash flows
Interest
-
94,881
11,302
70,748
176,931
Non-current liabilities becoming
current during the year
(280,425)
280,425
(146,544)
146,544
-
As at 31 March 2024
2,149,413
280,425
997,050
146,544
3,573,432
97
Financial Statements
2024
2023
£
£
Profit after tax attributable to the owners of Cake Box Holdings plc
4,658,685
4,236,671
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
40,734,718
40,000,000
Pence
Pence
Basic earnings per share
11.65
10.59
Diluted earnings per share
11.44
10.59
32. Ultimate controlling party
The Group considers there is no ultimate controlling party.
33. Earnings per share
98
Cake Box Holdings Plc
Annual Report 2024
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2024
Company Registration No. 08777765
Note
2024
2023
£
£
Assets
Non-current assets
Investments
5
37,716
200
37,716
200
Current assets
Trade and other receivables
6
591,416
549,761
Cash and cash equivalents
7
697,484
365,386
1,288,900
915,147
Total Assets
1,326,616
915,347
Equity and liabilities
Equity
Issued share capital
8
400,000
400,000
Capital redemption reserve
40
40
Share option reserve
37,516
-
Retained earnings
535,645
194,722
Equity attributable to the owners of the parent company
973,201
594,762
Current liabilities
Trade and other payables
9
232,875
299,187
Current tax payable
120,540
21,398
353,415
320,585
Total Equity and liabilities
1,326,616
915,347
The notes on pages 101 to 104 form part of these financial statements.
As permitted by Section 408 of the Companies Act 2006, no separate Statement of Comprehensive Income is
presented in respect of Cake Box Holdings Plc. Its profit after tax and total comprehensive income for the year
ended 31 March 2024 was £3,700,923 (FY23: £3,163,404).
The financial statements were approved by the Board on 10 June 2024 and signed on its behalf by:
S R Chamdal
Director
99
Financial Statements
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2024
Company Registration No. 08777765
The notes on pages 101 to 104 form part of these financial statements.
2024
2023
£
£
Cash flows from operating activities
Profit before income tax
3,818,387
3,184,802
Adjusted for:
(Increase)/decrease in trade and other receivables
(24,624)
8,929
(Increase)/decrease in amounts owed by Group entities
(17,031)
200,669
(Decrease) in trade and other payables
(66,312)
(34,222)
Cash generated from operations
3,710,420
3,360,178
Taxation paid
(18,322)
(4,514)
Net cash inflow from operating activities
3,692,098
3,355,664
Cash flows from financing activities
Dividends paid
(3,360,000)
(3,090,000)
Net cash outflow from financing activities
(3,360,000)
(3,090,000)
Net increase in cash and cash equivalents
332,098
265,664
Cash and cash equivalents at 1 April 2023
365,386
99,722
Cash and cash equivalents at 31 March 2024
697,484
365,386
100
Cake Box Holdings Plc
Annual Report 2024
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 March 2024
Company Registration No. 08777765
Share
capital
Capital
redemption
reserve
Share
option
reserve
Retained
earnings
Total
£
£
£
£
£
At 31 March 2022
400,000
40
-
121,318 521,358
Total comprehensive income for the year
-
-
-
3,163,404
3,163,404
Transactions with the owners in their
capacity as owners
Dividends paid
-
-
-
(3,090,000) (3,090,000)
At 31 March 2023
400,000
40
- 194,722 594,762
Total comprehensive income for the year
-
-
- 3,700,923 3,700,923
Transactions with the owners in their
capacity as owners
Share-based payments
-
-
37,516
- 37,516
Dividends paid
-
-
-
(3,360,000)
(3,360,000)
At 31 March 2024
400,000 40
37,516 535,645 973,201
The notes on pages 101 to 104 form part of these financial statements.
101
Financial Statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
1.
Material Accounting Policies
The accounting policies of the Company are shown in the Consolidated Financial Statements on pages 64 to 76. The following are additional
policies applicable to the Company
1.1
Investment in subsidiaries
Investments in subsidiaries are stated at cost less any provision for impairment which are considered annually by the Directors.
1.2
Share-based payments
The Company operates equity-settled share-based option plans. The fair value of the employee services received in exchange for the
participation in the plans are recognised as an expense in the profit and loss account, where the recipients are employees of the Company, and
recognised as an investment in subsidiary where the recipients are employees of a subsidiary. The corresponding credit has been recognised in
the share option reserve. The fair value of the employee service is based on the fair value of the equity instrument granted. Where the expense is
charged to the profit or loss account, it is spread over the vesting period of the instrument.
2.
Staff costs
The average number of staff, including Directors, during the year was 6 (FY23: 6). The Directors received remuneration during the year as
detailed in note 4.
3.
Dividends
4.
Directors’ remuneration
The Directors’ remuneration is disclosed within the Directors’ Remuneration Report on page 44. The Executive Directors are considered key
management personnel. Employers NIC paid on Directors’ remuneration in the year was £75,637 (FY23: £90,861).
5.
Investments
2024
2023
£
£
Interim dividend of 2.9p per ordinary share
1,160,000
-
Final dividend of 5.5p per ordinary share proposed and paid during the year
relating to the previous year's results
2,200,000
-
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
3,360,000
3,090,000
Investments in subsidiary companies
£
Cost
At 1 April 2022
200
Additions
-
Impairment
-
At 31 March 2023
200
Additions
37,516
Impairment
-
At 31 March 2024
37,716
Net book value
At 31 March 2023
200
At 31 March 2024
37,716
102
Cake Box Holdings Plc
Annual Report 2024
5.
Investments (continued)
The following companies are the principal subsidiary undertakings at 31 March 2024 and are all consolidated:
The subsidiary undertakings share the same registered office as that of the Company.
The additions in the year relate to the share-based payments of the Company’s shares offered to employees of subsidiary entities, which are
treated as a capital contribution by the Company.
6. Trade and other receivables
7.
Cash and cash equivalents
8. Issued share capital
All of the ordinary shares of £0.01 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.
9. Trade and other payables
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Name
Country of incorporation
Class of shares
Holding
Principal activity
Eggfree Cake Box Limited
United Kingdom
Ordinary
100%
Franchisor of specialist cake stores
Chaz Limited
United Kingdom
Ordinary
100%
Property rental company
2024
2023
£
£
Amounts receivable from subsidiaries
551,465
526,841
Prepayments
39,951
22,920
591,416
549,761
2024
2023
£
£
Trade payables
43,066
25,003
Other payables
294
587
Accruals
105,000
109,611
148,360
135,201
Other taxation and social security
84,515
163,986
232,875
299,187
2024
2023
£
£
Cash at bank
697,484
365,386
2024
2023
£
£
40,000,000 Ordinary shares of £0.01 each
400,000
400,000
103
Financial Statements
10. Capital commitments
There were no capital commitments at the end of 2024 and 2023.
11. Key management personnel compensation
Key management personnel compensation is disclosed in note 9 to the Consolidated Financial Statements.
12. Related party disclosures
The following transactions and balances occurred with related parties:
The above amounts due from own subsidiaries are interest free and repayable on demand.
See note 26 in the consolidated financial statements for the Group, for further detail of related party transactions.
13. Financial instruments
Details of key risks are included in note 28 to the Consolidated Financial Statements.
Evaluating significant increases in credit risk
The Company undertakes the following procedures to determine whether there has been a significant increase in the credit risk of its other
receivables, including Group balances, since their initial recognition. Where these procedures identify a significant increase in credit risk, the loss
allowance is measured based on the risk of a default occurring over the expected life of the instrument rather than considering only the default
events expected within 12 months of the year-end.
The Company’s Group receivables represent trading balances and interest free amounts advanced to other Group companies with no fixed
repayment dates.
The Company determines that credit risk has increased significantly when:
• there are significant actual or expected changes in the operating results of the Group entity, including declining revenues, profitability or
liquidity management problems, or;
• there is existing or forecast adverse changes to the business, financial or economic conditions that may impact the Group entity’s ability to meet
its debt obligations, and;
• the Group entity is unable to rely on the support of other Group entities to meet its debt obligations.
No impairment has been recognised in respect of this (FY23:£NIL).
The Company 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 Company 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.
2024
2023
£
£
Amounts due from own subsidiaries
551,465
526,841
Management charges to own subsidiaries
1,800,000
1,800,000
Dividends received from own subsidiaries
3,360,000
3,090,000
104
Cake Box Holdings Plc
Annual Report 2024
13. Financial instruments (continued)
In accordance with IFRS 9, the Company performed a year end impairment exercise to determine whether any write down in amounts receivable
was required, using an expected credit loss model. The expected loss rate for receivables including other financial assets is 0% on the basis of the
Group’s history of bad debt write offs. Amounts owed by Group entities can be settled via property. Where the value of the property exceeds the
amounts due on the loan the ECL is deemed to be £nil.
As at 31 March 2024, the total loss allowances against the Group’s financial assets were immaterial and no charge to the income statement was
recognised.
Categories of financial instruments:
Financial Assets at amortised cost
14. Events after the reporting period
Final dividend
Post year end the directors have recommended a final dividend of 6.1p per share (FY23:5.5p per share).
Purchase of land and buildings
Following the year end, the opportunity arose to purchase the land and buildings neighbouring our current depot in Bradford. As the opportunity
to acquire the land adjacent to our current facilities are rare, the Board took the decision to take advantage of the opportunity and move ahead
and purchase the land and buildings. This will enable the Group to service its further expansion in the north of England and Scotland. The
purchase price of the land and buildings was £0.7m. The purchase of the land was concluded during May 2024, out of current cash reserves.
15. Ultimate controlling party
There is no ultimate controlling party.
Financial Liabilities
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Held at amortised cost
2024
2023
£
£
Cash and cash equivalents
697,484
365,386
Trade and other receivables
551,465
526,841
1,248,949
892,227
Held at amortised cost
2024
2023
£
£
Trade and other payables
148,360
135,201
105
106
Cake Box Holdings Plc
Annual Report 2024
COMPANY INFORMATION
Directors
Sukh Chamdal - Chief Executive Officer
Michael Botha - Chief Financial Officer
Dr Jaswir Singh - Chief Commercial Officer
Adam Batty
- Independent Non-Executive Director
Martin Blair
- Independent Non-Executive Director
Alison Green
- Independent Non-Executive Director
Shaun Smith
- Independent Non-Executive Director
Company Secretary
Louise Park
Company number
08777765 (England & Wales)
Registered Office
20-22 Jute Lane
Enfield
Middlesex
EN3 7PJ
Auditor
MacIntyre Hudson LLP
Moorgate House
201 Silbury Boulevard
Milton Keynes
MK9 1LZ
Investor Website
https://cakeboxinvestors.com/
Legal advisor
Charles Russell Speechlys LLP
5 Fleet Place
London
EC4M 7RD
Registrars
Computershare Investor Services Plc
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Nominated advisor & broker
Shore Capital & Corporate Limited
& Shore Capital Stockbrokers Limited
Cassini House
57 St James’s Street
London
SW1A 1LD
Financial PR and media
Gracechurch Group PR
48 Gracechurch Street
London
EC3V 0EJ
107
Remembering
Chris Suddaby
Chris Suddaby joined Cake Box in 2015 as Franchise Manager to oversee the then small team of
franchisees. Over the following 9 years, Chris was instrumental in opening over 200 shops nationwide.
Chris was the first point of contact for franchisees from application to shop opening.
Sadly, Chris passed away suddenly on 5 May 2024.
A larger-than-life character, full of fun and always smiling, Chris will be missed by the Cake Box family.
Cake Box Holdings Plc
Head Office
20-22 Jute Lane
Enfield
London EN3 7PJ
Tel: 020 8050 2026
info@cakebox.com
https://cakebox.com