Fundamental Insights About The Cake Box Holdings PLC

Fundamental Insights About The Cake Box Holdings PLC

Cake Box Holdings PLC (CBOX) is a United Kingdom-based manufacturer of cakes and franchise retailer company. The group works its retail stores under the name Egg free Cake Box. The company sells and manufactures personalized egg free cakes and fresh cream. The company provides a variety of cakes that include several cakes, mendhi cakes, kid’s cakes, wedding cakes, round cakes, photo cakes, platter cakes, cupcakes, and fruit cakes.

The company also provides customized or personalised cakes for purchase on order or demand advance via online through https://www.eggfreecake.co.uk/ or from the store. The company functions through 110 franchise stores in the United Kingdom.

In 2008, the company opened its initial store in the heart of East London.  The primary company mission was to offer the new idea in the United Kingdom market; delightful fresh cream Celebration Cakes made excluding eggs and an ‘on demand’ service.

Key Products: Eggless Classic Plain Cake, Chocolate Eggless Cake, Cake Box Chocolate Egg Less Muffins, Cake Box Plain Egg Less Muffins, Cheesecake, Luxury Fruit Spread, Milk Chocolate Cake Filling, Egg Less Black Forest Spread, Fresh Dairy Cream, Decorative Cream Substitute, Milk Chocolate Curls, White Chocolate Curls, Coloured Sprinkles, White Icing Paste, Ivory Icing Paste, Caramel Sauce, Cream Cheese Frosting, Ferrero Rocher, Rafaello, and Coconut.

Cake Box is a bakery with a difference. It only sells cakes made without eggs. Co-founder Pardip Dass began the business with Sukh Chamdal after failing to find an egg-free cake for his daughter’s birthday — many people of South Asian heritage follow a strict lacto-vegetarian diet.

Cake Box functions as a franchise. The sponges are baked in Enfield, London, and then decorated with fresh cream in shops. They are not suitable for vegans, but the chain is expanding fast, especially in areas with historic immigrant populations.

Recent News

On 2nd May 2019, the company announced that it was notified on April 30, 2019, that Dr Jaswir Singh, has purchased, in aggregate 9,346 ordinary shares of 1 pence each in the Company (“Ordinary Shares”) for his SIPP.

Financial Highlights (FY2019, £ million)

(Source: Full Year Results, Company Website)

During the last twelve months, the company’s average franchise store revenue surged by 18 per cent and the estate franchise stores increased by 27 to 113 stores.  In summer 2018, the lengthy period of hot weather inclined the rate of like-for-like franchise store sales progress, which decreased from 15 per cent in FY18 to 6.5 per cent in FY19.

As soon as temperatures returned to seasonal norms, the franchise stores saw an increase in sales progress, and this strengthened through the Q4 with franchise store like-for-like sales recovered to 8.6 per cent in the H2 as compared to 4.4 per cent in the H1. Franchisee total turnover rose to £30.7 million as compared with the financial year 2018 of £25.9 million.

The company’s reported revenue for the financial year 2019 increased by 33 per cent to £16.9 million as compared with the financial year 2018 of £12.7 million, due to the addition of a record several new stores openings in the year 2019 and an increase in store like-for-like sales.

In the financial year 2019, the Gross Profit accelerated by 41 per cent to GBP 7.7 million as compared to FY18 data of GBP 5.5 million. Gross profit margin rose by 2.8 per cent to 45.7 per cent as compared with the financial year 2018 data of 42.9 per cent. Cake sponge profitability increased from 67.3 per cent in FY18 to 69.1 per cent in FY19, due to increased productivity of production achieved by the setting up of new ovens at the starting of this financial year 2019.

Adjusted EBITDA, excluding AIM listing prices, stood at £599 thousand and fair value uplift was £444 thousand. The company’s adjusted EBITDA surged by 20 per cent to £4.4 million as compared with the financial year 2018 of £3.70 million.

The effective rate of taxation stood at 21 per cent, an increase of 4 per cent as compared with the financial year 2018 of 17 per cent. This was higher than the standard rate of 19 per cent, driven by the AIM listing prices.

The company’s pre-tax profit climbed by 14 per cent to £3.8 million as compared with the financial year 2018 of £3.3 million. Adjusted pre-tax profit was up by 19 per cent to £4 million against the £3.3 million in FY2018.

In the financial year 2019, the Earnings per share increased by 9 per cent to 7.5 pence as compared to the 6.9 pence in the financial year 2018. Adjusted earnings per share stood at 7.90 pence, an increase of 0.98 pence as compared with the financial year 2018 of 6.92 pence. The issued number of shares stood at 40,000,000. From the Company’s IPO in June 2018, the number of shares issued was unchanged.

The company have delivered solid growth in the dividend.  The Board proposed a final dividend per share of 2.4 pence and surged by 50 per cent as compared with the financial year 2018 data of 1.6 pence. The company’s total dividend per share for the financial year 2019 stood at 3.6 pence.

The purchase of the two distribution centres and freehold warehouse, a combined investment of £1.4 million, was partly funded by mode of a new 15-year mortgage which was £650 thousand, with the rest being paid over existing cash resources.

The Group’s cash at the bank increased by £0.6 million or 23 per cent to £3.1 million as compared with the financial year 2018 of £2.5 million. The payment for the freehold warehouses was £0.75 million and payment of a H1 dividend per share of 1.2 pence which accounted for £0.4 million. At year-end, the company has a net cash position of £0.9 million which was unchanged from the corresponding period of the last financial year of 2018

On 31st March 2019, the Group’s trade and other receivables were £1,585,348, a marginal surge from the previous year data. Most of this sense of balance relates to trade receivables which have declined by 5.9 per cent despite the surge in revenue.

In the financial year 2019, the group trade and other payables stood at £1,414,693, a surge of 2.6 per cent as compared with the previous year data. The company enthusiastically sourced price effective dealers without compromising on the value of the products.

Total assets as at March-31-2019 (financial year 2019) stood at £11,274,897 as compared to £8,458,113 recorded last year in the financial year 2018. Net cash inflow from the operational activities stood at £3,149,079 and the net cash outflow from the investing activities was recorded at £1,990,966.

Cake Box Holdings Plc – Share Price Performance

 Daily price chart (as on June 24, 2019), before the market close. (Source: Thomson Reuters)

On 24th June 2019, at the time of writing (before the market close, GMT 4:00 PM), CBOX shares were trading at GBX 169.13 and surged by 1.58 per cent against the previous day close. During the last one-year, shares have registered a 52w high of GBX 192.00 and a 52w low of GBX 118.00 and at current market price, the stock was trading 11.91 per cent lower against the 52w high level and 43.33 per cent above the 52w low level. Cake Box Holdings PLC’s outstanding market capitalisation of around GBP 67.4 million ranks it among the small-cap stocks trading on the London Stock Exchange.

On the dividend front, the dividend yield of the Cake Box Holdings PLC stood at 3.02 per cent.

On the valuation front, the stock was trading at a trailing twelve months PE multiple of 25.2x.

In the last one month, the stock was up by 2.15 per cent and on three months basis, the stock price increased by 5.38 per cent. On a year-to-date basis, the stock has surged by around 1.83 per cent.

On the volume front, the 5-day average daily volume traded on the London Stock Exchange stood at 7,478.80, which was 70.23 per cent below the 30-day average daily volume of 25,119.33. The 90 Day Average volume stood at 30,035.90.

At a simple moving average standpoint, shares were trading higher against the 30day and 60day simple moving averages by 1.71 per cent and 1.93 per cent but slightly higher against the 200day simple moving average by 0.35 per cent respectively.

The 30-days, 14-days, 9-days, and 3-days RSI of the stock stood at 56.28, 64.71, 73.39 and 90.84, respectively.

A recent trading update for the year to March 31, 2019, showed like-for-like sales growth of 6.5 per cent. The company expected delivery of the growth plans and execution of the strategy into 2019 and beyond. The company also remained attentive on what works for consumers and delivering them the top products over the United Kingdom market. The company showed decent full-year results from the IPO launched. The company have a solid pipeline of new franchise store introductions and are assured of supplying the growth strategy of six new franchise stores during the year end.

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