Cake Box (CBOX): A potential stock disaster for 2022?

Good spot. I have searched for ‘change of auditor’ RNSs on SharePad and found 49 for 2021:

I found 3 among those 49 (Cake Box, PCF Bank and Integrated Diagnostics) referred to audit letters that in turn referred to matters that should be brought to the attention of shareholders.

The majority of RNSs I looked at had text such as this:

RSM replace Grant Thornton UK LLP (‘Grant Thornton’) who have formally resigned and confirmed that there are no reasons or matters connected with their ceasing to hold office as auditors which they consider should be brought to the attention of the members of Aptitude Software.

I have not checked every one of the 49 RNSs, but I have looked at enough to know that a resignation letter from an auditor citing concerns does not happen every day.

As noted earlier in this topic, MacIntyre Hudson has taken on Cake Box and PCF Bank.


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Whilst the jury is still out, CBOX scores a anoneish M-score of +2.18 which unfortunately puts it at 1,008th place out of 1,043 companies in the ftse (non investment trust) companies listing (if one hasn’t heard of this metric, above -2.22 is generally considered worthy of further investigation, according to SharePad).

This makes me think I should investigate others in my portfolio next week, such as POLR +1.42, CLIG -0.41, LUCE -1.58 and LIO -1.66. (CLIG may be due to their Karpus merger).

PS: By the same token, K3C and UPGS may merit review, with poor f-scores, to boot. (I don’t hold)

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Pleased to see two bull/rebuttal cases to my SharePad article have emerged:

Both write-ups suggest the various points raised in the article are minor mistakes. And I would agree – in isolation, any of those points could be seen as a reporting quirk and nothing to be overly concerned with.

But… you have to consider the wider picture – the fact that the annual report included so many unusual disclosures, including those I observed earlier in this thread and not mentioned in the article.

All those quirks add up and you have to consider that something may not be quite right. You also have to look at other companies to ensure CBOX is not an outlier. And you have to think of other small AIM companies that exhibited a similar batch of reporting quirks and what then happened to them.

So… we’ll see, but for now I remain unconvinced. The 2022 results will be published during the summer and I trust will clarify the situation.


Looking at it, maybe I am being a bit premature on the M-score for CBOX, with asset quality being such a large part of the overall M-score, as below?


Non-current assets were so small in 2020, it gave an exaggerated AQI index score when compared to 2021:


DSRI is inflated due to the 890k ‘franchisee support fund’.

I read this morning on Stockopedia that CBOX are apparently not members of the British Franchise Association. I tried to check this on the BFA website but my anti-virus checker blocked me!

However, assuming this information is correct it would seem rather unusual as membership would convey a certain level of authenticity / trust / compliance.

There may be a good reason for CBOX not being a member. On the other hand this might be another red flag?



I can confirm they are not listed. Image included.
(the site works but the cert is outdated so you have to accept that to progress)


Good spot. And I am pleased Paul Scott has double-checked my article:

Paul says:

However, the CFO selling 5% of the company 2 days before the auditor resigned with a critical departure letter, is outrageous.

Another good spot. Here is the statement:

The Company has been notified that on 14 September 2021, Mr Pardip Dass, Chief Financial Officer, sold 375,000 ordinary shares in the Company (“Ordinary Shares”) at a price of 345 pence per Ordinary Share (the “Dealing”). Following the Dealing and Mr Dass’s recent divorce, Mr Dass is beneficially interested in 2,010,678 Ordinary Shares, representing 5.03 per cent. of the current issued share capital. Mr Dass’s ex wife, Ms Kulwinder Kaur, is beneficially interested in 1,509,740 Ordinary Shares representing 3.77 per cent. of the current issued share capital.

The CFO sold 375k shares, so 16% of his then holding or 0.9% of the share count (Paul looks to have mistakenly written the FD sold 5% of the company on Stockopedia). The disposal took place on 14 September and the Change of Auditor statement confirmed the auditor’s resignation letter was indeed submitted two days later:

The Company’s previous auditor, RSM UK Audit LLP, submitted its letter of resignation to the Board of Directors on 16 September 2021. In accordance with the relevant Companies Act 2006 requirements, a copy of the resignation letter and statement of reasons will be sent to shareholders of the Company.

The words “recent divorce” in the share disposal RNS may have allayed fears at the time of the FD knowing something untoward. As noted earlier in this topic, the FD did sell 72% of his then holding at the IPO.

I do not have a Stockopedia subscription so don’t know if Paul has uncovered anything else.


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Good to see more rebuttals to my SharePad article.

This from Dr Paul Jourdan from Amati (from 22m20s):

"I think CBOX has been a remarkable growth story and I think what we are seeing is really classic growing pains in a company that has internal systems that are ok for one size but don’t really work when it gets bigger.

And the guy who wrote the blog made some valid points, and they made some very careless, just kind of administrative errors in their annual report, so what will be inevitably happening is that they will add in a whole load of extra processes, improve internal governance, there is no suggestion there is any kind of fraud or bad practice, but it has made the market very uneasy and the shares have sold off a long way as you point out. Hopefully good value here.

It’s been a remarkable growth story, there’s a lot more they can do with that business, but just hit a juncture where they clearly need to tighten up on some of their internal administrations and they’re appointing an internal auditor, extra NEDs and doing the right things

I think it’s the kind of situation where it takes a little while for the company then to prove it’s addressed the issues and moved on and hopefully we will continue to see the company really prospering."

Dr Jourdan has a good investment record, so is somebody worth listening to. CBOX is part of Amati’s UK Smaller Companies Fund, which is up 9-fold since Dr Jourdan took charge during 2000:

CBOX was a 1.1% holding from the last (July 2021) long-form report:

Among the other shares held is Alphawave IP, which was also a c1% position and was subject to a negative report on financial disclosures from the FT following Amati’s purchase :point_down:

Dr Jourdan was interviewed by Paul Hill, who participated in this Vox Markets podcast and also appeared keen on CBOX (from 10m:00s):

It had a negative, I would say journalist, report from a guy called Maynard Paton from ShareScope about 10 days ago, 7 days ago; the shares were trading at nearly 4 pounds and they’re currently being flattened to around about 2.50 or 2.40, just on the back of this report.

Because what happens is that they get sprayed around the internet, anybody who is remotely fearful sees the headlines and then just hits the checkout button and just sells and so you do get these enormous wild swings which are totally disproportionate to the fundamentals of the business, particularly when the company responded to the actual report.

Most of the issues are just to do with historical balance sheet reporting and frankly are just not significant. I’ve had a look at it, just not significant at all. And the company in their response said they’re actually trading really strongly anyway. They are cash generative and they’re growing really well, they had a good Christmas. And the share price has been absolutely flattened, so that really shows opportunity to long-term investors prepared to look through the short-term headwinds.

It’s a trend of social media, it’s unfortunately the double-edged sword. It’s good for informing people, but too many investors and too many of the general populace then just use it as effectively their decision-making process. They’re not rational themselves, they don’t think for themselves. They just rely on somebody else to do it for them and so when you get this guy like Maynard Paton and frankly I just think, ok, he’s a bright chap, no doubt about it, he’s done some good work there, but he’s drawn out largely historical issues that frankly are not significant for the intrinsic worth of the business. And it has just led to a huge avalanche of selling, totally disproportionate to the underlying strength of the business.



Hi Maynard,

CBOX is essentially a chain of cake shops (with franchisees being the equivalent of profit sharing employees).

At it’s peak, CBOX was trading on a PE greater than Microsoft (44.5x vs 38.4x). How was that ever going to end well? I don’t believe it has as many growth levers as MSFT, does it?

I notice none of the talking heads are disputing the facts in your article and it’s good to have both sides of the story reported. CBOX seems to be a classic story stock (just imo).

More power to you for writing about the shortfalls so PIs can see more balanced picture overall.

It will be interesting to see how this plays out over the next few years…

Keep up the good work!



a brief summary of CBOX by Paul Scott in the podcast here ScS, Joules, Cakebox, Purple Bricks, and more | February 4, 2022 - The Small Cap Value Report | Podcast on Spotify

“Next I looked at Cake Box CBOX, now Maynard Paton wrote an absolutely brilliant report on this, must have taken him a huge amount of time, pretty damning information he found in the audit report in the annual report that the market seemed to have just overlooked. So it’s a really good lesson from Maynard here that we all need to be carefully scrutinising audit reports. I went through it all in a fair bit of depth and I have come away feeling pretty uneasy about Cake Box and I have to say it has previously been a share I have liked a lot. But the auditors really are, well, people can read the audit report for themselves. It is not impressive.”

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CBOX’s 2021 annual report was updated on 7 February 2022:

Not checked the whole report, but various accounting entries have been corrected from the original annual report. I spotted the erroneous tax and £2m cash flow entries, but I missed a few others. All entries were correct within the original results RNS:

The related-party transaction note has been revised, too, with entries for S & S Cakes and Cake Box (Maidstone) reinstated for the comparable 2020 (these two entries had been removed in the original 2021 annual report and 2021 results RNS):

Companies House lists:

  • Cake Box (Maidstone) sole director Shelinder Bhurji
  • Cake Box (Gravesend) sole director Shelinder Bhurji after Cerina Bhurji (CEO’s daughter) resigned 31 March 2021
  • Cake Box (Strood) directors Shelinder Bhurji and Cerina Bhurji (CEO’s daughter)

I get the impression Shelinder Bhurji and Cerina Bhurji are married, and I am therefore not sure whether a son-in-law counts as a related party with regards to Cake Box (Maidstone). Even so, Cake Box (Maidstone) appeared as a related party for 2020 but not 2021?!

A news story featuring Shelinder Bhurji in the local paper:





Going back to the flotation document, CBOX did report the ageing profile of its receivables:

So a deliberate decision not to continue with such reporting within the annual reports as a quoted company.

(For 2018, I don’t understand how overdue receivables can be negative, but I am not an accountant.)

I note some receivables shown in the flotation document are ‘non-current’, i.e. due to be collected more than a year after the balance sheet date. Such long-term receivables are entirely legitimate, and I presume must relate to money owed for starting a franchise rather than money owed for buying the sponge.

CBOX’s receivables for 2020 have been disclosed inconsistently. The 2020 report reported receivables as such:

But the 2021 report restated certain entries:

The 2020 restated entries now have different totals.


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Generally receivables can be negative if the client double pays or overpays an invoice. Happens quite alot. You aren’t required to refund the client because you are in account with them, so the money is held ‘on account’, but it is good practice to send the client statements periodically.


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However, the payments are coming rather slowly

Paul Hill still positive (video published 18 Feb 2022). From 12m30s:

"Even good stocks, I mean unless somebody can tell me something is fundamentally wrong, and I just don’t believe it because I have tested the product and they are great, just look at Cake Box’s shares. I mean, they are down to like 170 from over four pounds, and that business is absolutely flying.

I just don’t understand. They have got plenty of cash, the franchises are doing really well and we talked about that sort of like bear market report from Maynard Paton from ShareScope last time. There was a storm in a teacup, because there was nothing in it in my view. Nothing told me anything new anyway.

So unless there is a fundamental issue there which I mean, who knows, but I just don’t believe there is. Because I have spoken to the guys and they seem really good chaps."

CRUX Asset Management also positive, with a 4% holding disclosed on 24 Feb:

Trades suggest the purchase price was c150p.

CRUX fund manager Roland Grender has tweeted CBOX could be a 10-bagger:

And this Youtuber looks at the SharePad article and has bought more:

Very pleased to see some investors have, as I wrote in the article, doubled-checked what I had written and then made up their own minds.


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Some good work here. A fellow investment blogger has spoken to CBOX’s management:

In fact, the first thing Mr Chamdal said was, ‘‘ why don’t these people just talk to us, we’ve got nothing to hide and we’re happy to answer any questions”.

Well, management deliberately hid the website breach from the auditor, customers and the stock market for at least twelve months!


The FD has decided to leave CBOX:

After more than ten years at Cake Box, Pardip Dass, co-founder and CFO, will be stepping down from his role in order to pursue other interests. The Board has appointed David Forth as Interim Chief Financial Officer, with effect from 14 March 2022. Pardip will work alongside David to ensure an orderly handover before stepping down from the Board on 31 March 2022.

David brings over twenty years’ experience in senior finance roles across the consumer, retail and logistics industries, including most recently as Interim Finance Director at AB Sugar (2020), Deputy CFO of Eddie Stobart Logistics (2018-2020), Interim Transformation Finance Director at Wincanton plc (2017-2018) and Interim CFO at Airwair Dr Martens (2015-2016). He qualified as a Chartered Accountant in 1981 with KPMG Peat Marwick.

Neil Sachdev, Non-Executive Chairman of Cake Box, commented:

"I would like to personally thank Pardip for his immense contribution over the last decade and the significant role he has played in the Cake Box growth story, including the Group’s IPO on AIM in 2018.

“We are delighted to welcome David, Richard and Chay to the Cake Box Family, and look forward to working with them as we continue to evolve, improve and further professionalise the business, bringing in the experience and capabilities to fulfil our growth ambitions and build on the strong trading in the second half to date.”

Pardip Dass, commented:

“I am extremely proud of what we have achieved at Cake Box, from first beginning to franchise the business model, to listing the business on AIM. After a decade with the business, now is the right time to move on following an orderly handover to David. I remain passionate about Cake Box and a supportive shareholder, and wish my dedicated colleagues all the very best for the future.”

The departure and remark to “further professionalise the business” suggests CBOX’s financial reporting was indeed not up to scratch. Will be interesting to see what changes the new FD makes. The FD’s sale of shares two days before the auditor resigned was very unfortunate in hindsight :point_down:


David Collins runs the TB Howay Equity Fund and has recently doubled his position in Cake Box. His April 2022 factsheet explains the purchase:
Howay April 2022.pdf (196.1 KB)

He refers to my SharePad article:

All the above sounds good, but you would not think so if you looked at the share price performance of Cake Box over the last few months. The shares have sold off dramatically on the back of a publication by a retail share blogger who raised some concerns around the company’s accounting and implied that something dodgy must be going on. The only new points raised within the blog were largely immaterial, transposition errors found within Cake Box’s annual reports or accounting disclosures that the blog author did not seem to be familiar with.

Everyone is entitled to their opinion of course but we think that the blogger has put two and two together and got five and in doing so has put the frighteners into a lot of retail investors many of whom got burned in the Patisserie Valerie accounting fraud and seem to be concluding that companies that sell cake are also cooking the books!

At the end of the day, Cake Box is a simple business to understand. It makes money by selling cake sponge and other supplies to its franchisees at a high profit margin. Accounting profits can be manipulated but cash flow cannot (without outright fraud) and a simple reading of the company’s historic cash flow statements reveals healthy cash generation reflecting the success of a growing and profitable business.

He did not mention the comments made by the company’s former auditor nor remark upon the FD’s recent departure.


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A positive statement from CBOX today. Full text below:

Continued sustainable growth

Trading during the second half has continued to be strong across the Group’s store estate and online delivery channels. Accordingly, the Group expects to report revenues for the year as up c.50% year-on-year, with adjusted profit before tax in line with market expectations.

Revenues for the ten months to 31 March 2022, excluding the impact of the March 2020 lockdown and associated store closures from the comparative period, are expected to have increased c.32%, with total franchisee sales increasing 12% on a like-for-like* basis.

Our online delivery and Click & Collect options continue to expand the Group’s customer base, and franchisee online sales increased c.41% during the year and c.27% on a ten-month basis.

An exceptional year for store openings

The Group opened 11 new franchise stores in the second half (excluding kiosk openings), bringing the total number of stores opened in the full year to 31 (FY 2021: 24), and leaving the total number of Cake Box stores at period end at 185. New locations opened in the second half include Tottenham, Plymouth and Sunderland.

There continues to be a high level of interest in Cake Box’s differentiated franchise proposition, with both strong demand for new stores from existing franchisees and a pipeline of new franchisee applicants representing 53 holding deposits held at the period end.

The successful trial of Cake Box kiosks with Asda has continued to expand, with ten new kiosks opened during the year, taking the total number of Asda kiosks to 15 in addition to the Group’s 20 shopping centre kiosks.

Balance sheet

The Group’s balance sheet remains strong, with a significant increase in the Group’s net cash position, which stands at £5.2m at period end (FY 2021: £3.6m).

Sukh Chamdal, Co-founder and Chief Executive Officer, said:

"We have delivered another record performance for the year, demonstrating the continuing appeal of our customer and franchisee proposition. Our strategy to reach customers across the UK is starting to deliver. This is thanks to the dedication, determination and commitment of the exceptional entrepreneurs in our Cake Box Family, which continues to grow, providing opportunities for entrepreneurs, creating jobs and providing delicious, fresh cream cakes up and down the country.

“With a strengthened team and investment in our operations and processes, we have all the right ingredients to continue to sustainably grow the Cake Box customer base, brand and Family.”

CBOX’s cakes seem to be selling like, well, hot cakes!

The CEO and new interim CFO commendably talked about the statement with Paul Hill:

Adjusted pre-tax profit expectations are apparently £7m. Note the earlier H1 figures did not include adjustments, so CBOX now referring to adjusted profit for the full year implies adjustments were incurred during H2.

Anyway, the text below recounts the part of the interview referring to my SharePad article:

Paul Hill: The recent reporting and management changes that have happened, David, could you just take us through the progress of that internal audit being done by BDO and just… presumably, obviously there was a blogger I think from Sharescope who pointed out some technical inconsistencies between the prelims last year and the audited accounts which made no difference at all in terms of the grand scale of things, but obviously… changed investor sentiment. Can you just walk us through the whole lot, I know you have only been there for a month, what is your first view of it?

David Firth: Well I think it was a very wise move bringing BDO in because it has enabled us to put a floor on these issues. We are working closely with them to test and improve where necessary on our controls and I have worked before, actually several times, with the, not with this specific team, but with BDO in internal audit and its very high quality team. And we are working very well with them and we are not having worries and problems, which perhaps some of the readers of these blogs stories would have expected to find. So it is a very good part of our armoury in building and restoring investor confidence.

The CFO says the results should be published by the end of June. Let’s hope the new auditor provides a more favourable report than the old one!