Throughout the recorded presentation, investors will be in listen-only mode. Questions are encouraged, and they can be submitted at any time via the Q&A tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives in the meeting itself, however, the company can review the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO Sukh Chamdal. Good afternoon, Chief Sir.
Good afternoon, everybody. Thank you for joining us today for our interim results presentation. I'm excited to share some key highlights and show you how our strategic plan is driving growth. After I wrap this up, I'll hand over to Michael, who will dive into the financial details. Strong start. We had a fantastic start to this financial year, with group revenues up by 53.5%. What's driving growth? This incredible growth comes from sustained demand for our diverse cake offerings, the successful opening of nine new Cake Box stores, and significant enhancements to our digital platform. I'll provide more details on these later. The acquisition update. You may remember that we completed the acquisition of Ambala just before the last financial year ended. In the first half, Ambala contributed GBP 6.5 million in revenue and GBP 0.4 million of EBITDA. The franchise sales growth.
We've also seen like-for-like growth in Cake Box franchise sales, and our digital presence is stronger than ever. The store network. We are proud to now have 284 Cake Box and Ambala stores nationwide. On this next slide, let's now talk about our strategic plan and the growth it's delivering, even in challenging market conditions. Since Michael joined us, we've implemented this strategic plan, which has really started to show results. The first half results continue the strong momentum we saw in Q4 of last year. We've achieved significant organic sales growth, mainly due to operational efficiencies, particularly with Cake Box leveraging improved operational gearing. Expanding our footprint. We've expanded our footprint with new store openings, including our first franchise Ambala stores. We've also accelerated digital sales growth through effective marketing and customer engagement strategies.
I'll discuss how our enhanced loyalty program is driving stronger customer engagement and growing our loyal customer database later in the presentation. On Ambala integration, we've made significant progress integrating Ambala, streamlining production processes, and supply chain operations to boost reliability and efficiency. On the next slide, the integration of Ambala into our group is progressing well, aligning with our plans and expectations. We made significant strides across various integration work streams. Operational improvements. We've upgraded production equipment and established partnerships with local suppliers to enhance product freshness, plus we negotiated better commercial terms. Delivery reliability. A major achievement has been enhanced delivery reliability by integrating our supply chain with Cake Box. People and culture. We've implemented new pay structures and benefits and completed recruitments for key roles.
On the brand development, we rolled out our new brand with updated packaging to elevate customer experience, plus our new optimized website launched in October 2025. It is also great to see that two of our Cake Box franchises have opened Ambala stores as well. These efforts have laid a strong foundation for continued growth. Now, let me hand you over to Michael for the financial overview. He'll be on mic only because of IT issues this morning. Michael, all over to you.
All right. Thank you very much, Sukh . Just to reiterate, apologies. I'm just having some technical issues this morning with my video. From a financial highlights point of view, this slide sets out a number of our financial highlights for the year. We've got our group sales growing 53.5%. I'll go into that a little bit more in depth after this. Our Cake Box franchise like-for-like sales grew 6.3%, up from 2% in the prior year. We opened up 11 stores in the half, two of those being Ambala and nine Cake Box versus seven in the prior year. Our net debt is GBP 11.6 million at the end of the half, and it was GBP 5.6 million net cash at the half last year and GBP 9 million net debt at the end of the financial year last year.
Our underlying group EBITDA grew to GBP 4.6 million from GBP 3.5 million in the prior year. Underlying profit before tax was marginally down at GBP 2.7 million versus GBP 2.8 million. Our free cash flow, again, marginally down from GBP 0.89 million to GBP 0.8 million. Our dividend per share is up 5.9% from 3.4 pence per share to 3.6 pence per share. We'll just look a little bit further into how our sales is made up. There we go. Our total Cake Box franchise sales, so this is our sales from our franchisees to customers. That increased by 14.6% year on year to GBP 47.6 million from GBP 41.5 million. That's due to three factors: existing stores that opened up in the prior year, new stores that have opened up this year, as well as our 6.3% like-for-like.
If we just look at our group sales, we have these two segments now that we report on: Cake Box and Ambala. If we look at Cake Box on its own, Cake Box sales, the segment sales, our group sales has increased 18.9% from GBP 18.7 million to GBP 22.3 million. The difference within that between the 18.9% growth and the actual franchisees, 14.6% growth, is that within our sales, we have what we call franchise packages. This is where we invoice franchisees for store openings. We had a total of GBP 2 million income in this half versus GBP 800,000 in the prior year in the half. In our group sales, if we include Ambala, GBP 6.5 million, the maiden contribution is where we get to a 53.5% year-on-year increase.
This slide just gives us a bit of a waterfall graph in terms of how our Cake Box franchise sales have grown. We can see going from GBP 41.5 million, we got GBP 5.6 million in the half from existing stores. This is mature stores and stores that opened up in the prior year. GBP 0.5 million from new stores, which got us to our GBP 47.6 million, which was 14.6% up year-on-year. Our like-for-like sales performance, we can see the 6.3% in this half versus 2% in the prior half. Just as a recap for the full year in FY 2025, we did 3%. We did 2% in the first half, then 3.8% in the second half. We actually exited the year, the quarter four in 2025, with a like-for-like of 6.7%.
It's pleasing that we've actually continued that like-for-like going forward from the back end of the prior financial year. Our online sales performance, again, has been a really good performer throughout the half for us, where we are just shy of 26% up year on year. We went from GBP 9 million in the prior year in the first half to GBP 11.3 million now, which was 25% of our overall franchisee sales. In the prior year, that was 22.9%. In the second half, it was 24.1%. We can actually see the progression through last year into this year. If we just then turn ourselves to our underlying EBITDA, we can see our gross profit grew in line with the franchisee sales at 14.6%.
Our overheads and depreciation grew at a lesser rate than our sales and gross profit, which meant that Cake Box, the segment's underlying EBITDA, grew 23.2% in the half from just shy of GBP 3.5 million to GBP 4.25 million. Umbala's first and maiden contribution on an EBITDA level was just shy of GBP 400,000, which meant we ended the half as a group with GBP 4.6 million EBITDA, which is 33.3% up on the prior year. How that then rolls forward to underlying profit after tax. We can see from a Cake Box point of view, the segment, our underlying EBITDA, which grew at 23.2%. We can see the big increase in our net finance costs. This is due to the acquisition, the additional leverage that we had taken out, the GBP 15.2 million loan. That is the interest on that loan.
That means that we moved to an underlying profit before tax position of GBP 2.9 million, which is 5.2% up year on year. Cake Box, the underlying segment's profit after tax was up 7.1%. Ambala had a small loss at GBP 0.2 million, which meant overall our group profit after tax was just shy of GBP 2 million, which was 2.7% down on the prior year. Our underlying basic EPS was 11.5% down, and that's due to the full impact now of the 4 million shares that was issued as part of the acquisition. We now have 44 million shares in issue versus 40 million before the acquisition, so a 10% increase there. In terms of our cash generation, we can see that our net cash generated from operating activities was up GBP 1.1 million, which was due to our underlying EBITDA going from GBP 3.5 million to GBP 4.6 million.
Following that, we have a net interest charge of GBP 0.7 million, which means that we are in line or just slightly ahead of our gross cash flow the year before of GBP 2.6 million versus GBP 2.5 million. Our CapEx was up a couple of hundred thousand on the prior year, which meant the free cash flow then ends up just slightly below the prior year at GBP 0.8 million versus GBP 0.9 million. This is just a graphical representation of how our opening net debt from the year-end has moved from GBP 9 million. We had the GBP 2.5 million of operating cash flow after tax and interest, GBP 1.8 million of CapEx, GBP 3 million of dividends, the final dividend for the FY 2025 year, which was paid. The finance leases being repaid and GBP 0.3 million, which meant we ended the half at GBP 11.6 million of net debt.
If we look at our capital allocation policy, from a CapEx point of view, we have spent GBP 300,000 in Cake Box and GBP 700,000 in Ambala. Ambala's CapEx was really front-loaded in this year due to us ordering most of the production equipment we need for automation within the production facility. All that equipment we have now received and is being commissioned, ready to be implemented for the second half. We spent a further GBP 200,000 on the new Bradford warehouse and then GBP 400,000 in terms of our intangibles, our website, ePOS, and ERP. GBP 3 million was the final dividend payment for the FY 2025 year. In terms of new growth opportunities, Ambala is our focus now, integrating Ambala and ensuring that we start to get the benefits that we have seen in the business.
I'll hand you now back to Sukh for an update on strategic and operations.
Great. Thank you very much, Michael. As you can see, we have a robust platform for growth, both organically and through the Ambala acquisitions. In the next few slides, I'll cover our main operational performance, including our expanding store estate, how we're improving customer penetration across various channels, growing our customer database. Michael has already shared the numbers, and they truly speak for themselves. We're definitely heading in the right direction. On slide 19, now let's have a look at our store network, which continues to grow and strengthen our market presence. During the first half, we successfully opened 11 new Cake Box stores as of September 28. We now have a total of 260 Cake Box stores trading. Following the Ambala acquisition, we opened the first two franchise Ambala stores, marking a significant milestone in leveraging the franchising model for growth.
Feel free to adjust any sections further or let me know. One second. I've just lost my flow there. Hold on one second, please. Where are we right now? Yeah, looking at the store network, it continues to expand, driving growth and strengthening our market presence. During the first half, we successfully opened 11 new Cake Box stores. As of 28 September, we had a total of 260 Cake Box stores trading. Following the Ambala acquisition, we've had the two first franchise stores opened. It's a significant milestone in leveraging the franchising model to support its growth. Moving forward, the Ambala estate will grow exclusively through franchising, bringing it into line with our proven strategy of leveraging franchise partnerships to achieve scalable and sustainable expansion. Over the past few years, we've been making strategic investments in online awareness, customer acquisition, and retention.
Now, as you can see from the pie chart on the left, online sales made up 25% of our total sales in the first half. One of the investments we made was to bring online customer acquisition for click-and-collect orders in-house. This investment is driving click-and-collect growth supported by cost-effective integrated marketing engine. We gained 134,000 new customers through targeted and effective campaigns. We've tried to push through our loyalty program as well. Our cake club reached 138,000 subscriptions, reinforcing customer engagement and repeat sales across the business. This omnichannel approach positions us well for sustainable long-term growth. This slide provides us a visual proof of what I've said in the previous slide. Growth has come through the launch of innovative marketing initiatives alongside effective utilization of our new CRM system.
These enhancements are driving improved customer targeting, engagement, and retention, reinforcing our digital strategy and creating opportunities for sustained growth in the online channel. The growth chart shows how we've succeeded in capturing customer opportunities online, building on a strong performance of H1 last year. A quick word on our customer database. It continues to expand significantly, driven by strong new customer acquisition and the success of our loyalty program. As I said before, this has grown to 138,000. A few more data points that may be of interest to you. You can see from the bar charts, email subscriptions grew by 29% from April to September 2025, reaching a total of almost 1 million subscriptions. SMS subscriptions also increased by 32%, growing to 390,000.
These gains highlight the effectiveness of our strategic focus on customer engagement and retention, further strengthening our ability to drive further growth and deepen brand loyalty. Our new product development efforts have delivered exciting innovations that continue to capture customer interest and drive sales forward. We've launched the Dubai Chocolate pistachio range, which gained phenomenal traction and went viral, creating a significant buzz around the brand. We're also expanding our single-serve range with new offerings, including mini cheesecakes, chilled brownies, and the strawberry and cream sandwich. Additionally, we introduced the first-ever collaborative range between Ambala and Cake Box, further strengthening our product portfolio and broadening our appeal across customer segments. To conclude, the group firmly remains on track to deliver year-on-year growth in line with market expectations, despite headwinds in a consumer environment.
We anticipate stronger performance in the second half of FY 2026, with revenues and profits exceeding H1 performance. As we benefit from typical seasonal trading trends, the success of key celebration events and strategic investments. Our growth strategy is progressing well, with 17 new stores already opened this year, and we're on schedule to meet our target of 25 new Cake Box and 10 Ambala franchisee stores by year-end. Additionally, our digital sales continue to build momentum, with a 17.4% year-on-year increase in online sales for October, reflecting the strength of our integrated online and high-street channels. Trade has been robust, with franchise sales in Cake Box up 13.7% and like-for-like sales rising 5% since the period end, highlighting consistent consumer demand.
The continuing integration of Ambala further strengthens our position and remains confident that the investments made, combined with the group's innovative product offerings and strong franchise model, position us well to deliver sustainable growth going forward. Thank you very much for listening, and we will now go to the Q&A, and we will read out the question and answer it as well. Right, we are at Q&A. The first question is, how success is Cake Box on the French market? It is still a test. In the next couple of weeks, we will be launching the French website. That will enable us to click-and-collect, order online, have a range to all our products, and pay online. That will further enhance the profitability, the turnover, which we will report to you at the next full-year results. Michael, you want to do the next one?
Yeah, so I think perhaps if we look at the segment analysis and the reporting, the Cake Box revenue on its own was GBP 22.3 million. I think I maybe just missed the fact there because I've taken off the 6.3, gives you the 15.8. Actually, it was the Cake Box revenue on its own was GBP 22.3 million versus GBP 18.7 million. That was 18.9% up, and Ambala was GBP 6.5 million on its own. The total group was GBP 28.8 million, not GBP 22.3 million.
In the next question, is interest cost the only thing that has depressed PBT? Any way you can control this, negotiate with your lenders?
Yes, we could see after EBITDA, we have now the new line of the increase in our leverage costs following the GBP 15.2 million additional loans we've taken on. Those loans, the margin is set for the duration of the term of the loans, which is split between seven years and ten years. The interest rate will only move at Sonia plus 2.75% margin. Those will only move if Sonia does come down.
At the moment of acquisition of Ambala in March 2025, you stated that it would be immediate earnings enhanced. The half-year results show a limited EBITDA contribution and net loss for Ambala. Is Ambala performing up to your expectations? Can you give some more information on realized and expected synergies and growth opportunities?
When you say immediately earnings enhancing, it would be for the next financial year. We've added on with the EPS at the moment, it's calculated based on 44 million shares, which we've only had half the year. We need to look at it on an annualized basis. In terms of the synergies, we said there would be GBP 1 million worth of synergies on an annual basis. Actually, in the first half, we've unlocked those synergies, and we'll see a full six months of those synergies coming through for half two. It is very much the profit in Ambala is very much weighted on the second half, driven by the two main celebrations of Diwali and Eid. Actually, Diwali, we have seen that we have generated the returns that we expected for that, as Diwali was in October.
We now have sight of the results from that period. The next big one will be Eid, which is in March, which is probably two, two and a half times bigger than Diwali in terms of sales and profits.
Please can you provide some color on the percentage evolution from revenue, plus 53% to gross profit, plus 58% to EBITDA + 30% to earnings per share of minus 15%? Please can you mention the drivers causing these deteriorations?
In slides 12 to 13, this is where we walked forward the underlying EBITDA. If you look at Cake Box, the 53.5% increase in sales includes this maiden contribution from Ambala for the first six months. If you just look at the Cake Box segment, on slide 12 again, you can see that actually our revenues, as we said, went up 18.9%. Our EBITDA has gone up by 23.2% for the actual Cake Box segment. We can see a good progression in terms of the profitability of the underlying Cake Box business.
Dunkin' Donuts makes good profits with beverages. Why does Cake Box not offer any tea or other beverages? I believe this could increase profits as beverages usually have higher margins and many customers would likely add one to their purchase. We have tried putting coffee and tea in some test stores, and what we found was that it just did not work because customers go to established Costa Coffee or Starbucks or Nero's if they want a coffee. It also detracted the staff from serving a customer, where an eight-inch cake takes five to six minutes to make and ten minutes to serve. It took four minutes to make a coffee, so we found it was detrimental to the overall customer experience. We did not get any much sales uplift with coffee.
What is the progress with the franchising of the corporate stores? The gross profit margin increased, but the operating profit margin decreased by 400 basis points compared to H126. What is the reason behind this, and what is your margin target for the remainder of the fiscal year and the long term?
In terms of the progress of franchising the corporate stores, we did say the corporate stores would look at this over probably a 24-month period. Our first priority now, and with our existing Cake Box franchisees, is to drive the awareness and the increase in the number of franchise Ambala stores, which is why we are looking at 10 this year and 10 next year as well. We will be looking to move on the corporate stores over that sort of 24-month period. We are looking at right now how commercially we will do that. We want our franchisees to be putting their capital into new Ambala stores right now to get that brand awareness and to grow the store estate before we actually move on to the corporate stores.
What is your goal regarding the repayment of borrowings, and do you expect the year-end cash position to be higher? If a new investment opportunity arises in the coming months, would you be willing to take on additional debt, or is your primary objective now to integrate Ambala and pay down debt as quickly as possible?
Our debt pays down at GBP 2 million a year from now on, including this year. We've paid down GBP 1 million already by the half year. That deleverages pretty quickly. Our primary objective right now is to integrate Ambala. We will evaluate. We have had one or two potential opportunities come across our desk, but right now, our main focus is on integrating Ambala, getting the synergies from Ambala, and then as we go along in the next couple of years, we'll deleverage the business and put ourselves in a position to take up any potential opportunities going forward.
Why was the profit before income tax for Ambala negative?
The main reason for that is that their profit is very much second-half weighted. We also had a we took a number of additional costs in the first half relating to restructuring and reorganizing the business, which we will not have in the second half. We will have the benefits of the synergies we have identified for the full six months in half two. The profit is very much half two weighted for this year.
Leopold asks, what's the motivation behind the new look? I'm not sure if you're talking about Cake Box or Ambala, but I'll answer both. For Cake Box, we've now got new branding, new contemporary look because we're expanding out of our Asian homelands into non-Asian homelands. We felt that we needed a new, fresher look. We've had the same look for the last 15 years, and that is working really well. Where we've opened with the new look, we found an increase in sales, and where we refreshed the new look into the new look, we found it increases sales. For Ambala, they've had a very dated, brown-looking image.
We've updated that with classy or midnight blue with amber green inside, and that gives a much classier or much higher look, and it brings it a much fresher look for the new generation to embrace the sweets and be seen as quality and modern. Aria K, can you quantify the amount of OpEx investments you made in Ambala this period? I think you meant CapEx.
I think probably what we can do both. I mean, OpEx, there was an additional of about GBP 250,000 of spend, which included the restructuring of the team at Ambala. In terms of CapEx, there was GBP 700,000, which included improvements. We sold improvements we made to the production facility, as well as the purchase of all the production equipment that we need.
Does Ambala have the same EBITDA margin as Cake Box, and what should that margin be?
At the moment, it doesn't, but it will grow into a similar margin to Cake Box. Our projections are that that should be around the sort of, once we get through this first period, around the 15% and then grow to similar margins that Cake Box has.
Till I want to attend the next general annual meetings, we haven't set a date yet. Please keep an eye on our website, and we will announce it as soon as possible. Holly, hi, can you give me more detail on how the sales and customer feedback has been on the cheesecakes? What are the margins on that product compared to other cakes? The cheesecakes have been growing more and more every week. We're really impressed by how good the product is and how good the sales have been. The margins on the product compared to the other cakes are just as the same. We give a very similar margin. Aria K, what is the long-term EBIT margin for Cake Box?
Is it just Cake Box on its own?
It does. I suppose you can give it for both because it's going to be one group, isn't it?
Yeah. The long term for the group is, sorry, I just got it. The long term for the group is going to be north of 18%. I do not want to, we have got what is in our notes. If you can see the short note, they have got that at, if you have got access to that. It is, yeah, sort of north of 18%.
Yeah, we will upload that to our investor website so you can have a look at that. How is the Cake Box store in France performing? Are you planning on opening up more stores in France? The French store is doing well. We're going to launch the French website in a few weeks' time. That will enhance its earnings. We're going to reevaluate in three months' time on further expansion in France. Similarly, do you have plans to open Cake Box stores in the U.S.? We will eventually hope to go to Canada, to America, and eventually to India as well. Alex F asks, how do you plan to finance the Bradford Depot? Would you use borrowing? If not, would that impact dividend payout?
We won't be using borrowing. Excuse me. It's financed over 24 months with the developer. We will have less CapEx in the business now from a maintenance CapEx point of view, and it won't impact on dividend or dividend growth.
Did the team consider interrupting the dividend to reduce the amount of debt required to perform the acquisition?
Sorry, sir, can you just?
Did the team consider interrupting the dividend payments to reduce the amount of debt required to perform the acquisition of Ambala?
No, no, no, we did not. We wanted to continue with our progressive dividend policy for our shareholders.
Are your new Ambala franchisees existing Cake Box franchisees? Yes, they are, but we've also got two new external franchisees, and we've seen a good mix of existing and new franchisees interested in the Ambala and the Cake Box franchise opportunities. Andrew P asks, could you break out the mix of online and delivery sales? What percentage is from Cake Box and what percentage is from the aggregators like Uber Eats and Deliveroo? You previously provided something similar in the 2022 annual report.
In terms of our online sales, Cake Box is 25%. The aggregators is another 6%-8% of sales.
How many of the new Ambala franchise stores will be operated by existing Cake Box franchisees? We've had a lot of interest in our existing franchisees who have taken on the Ambala. Whoever's interested in visiting a viable area, we will allocate that to them. Do you have any plans to convert the corporate Ambala stores to franchise stores in the short term? If so, do you see any interest from current Cake Box or Ambala franchisees to take over these stores?
Not in the short term. Long term, we do foresee that we move on the corporate stores into the franchise market, but not over the short term.
Was Ambala SSSG in H1 negative? Do you expect to turn positive in H2?
Ambala sales, same system, same store sales growth was negative, margin negative in the first half. We saw some really pleasing results following the first half during Diwali, and we're now seeing that gap narrow, and we are looking, forecasting that we'll actually get to positive growth by the year-end.
Holly's asking, did you try putting chairs and tables in those test stores with coffee machines too? In the Cake Box stores, they're too small to have any tables or chairs in. In some of the Ambalas, we have got tables and chairs, and we've got coffee machines, which are not too successful. We're replacing those with tea machines, but in Cake Box, it's not practical to have tables and chairs in. Leopold asks, is there a way to access the Ambala financial number years from previous financial years?
Yes, if you go into Companies House, you should see the previous financial statements have been submitted and lodged on Companies House.
Yeah, if you look for Ambala Foods Limited. Holly H, do you have any medium-term financial goals?
Yes, we do. In terms of our goals, are still very much to drive the Cake Box business and to open 25 stores a year. In terms of an Ambala point of view, is to open up at least 10 stores a year and then drive Ambala's EBITDA to get close to, in percentage terms, what Cake Box is delivering for the group.
Alex F asks, how is franchisee profitability evolving this year compared with last year?
Their profitability is up this year, and that's due to the fact that they are seeing this phenomenal sales increase we've seen at the moment in 6.3%, which last year they had 2% up. All costs are pretty stable. We haven't passed on any material cost increases to the franchisees. Their food, the cost that they were paying for their input in food and boxes and boards, etc., has remained pretty stable, which means that they've been able to take advantage of this increase in sales.
Can you provide an email address for follow-up questions? Please send it to info@cakebox.com with the subject line, Investor Meet Company Questions, please. That's all the questions we've got at the moment. If anybody wants to ask any more, please do so.
That's great. Sukh, Michael, thank you very much for answering all those questions from investors. Of course, the company can review the questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to you both, Sukh, could I just ask you for a few closing comments?
I think we're well positioned for growth, and both in Cake Box and Ambala, we are the number one leaders in Cake Box, and we aim to maintain the number one position of Ambala as well. By opening more stores, we get more coverage, more sales. We've just relaunched the Ambala website. It's easy to navigate, easy to order. We're going to have the choose-your-own-mix facility in the next few weeks as well. Ambala is only doing 3% online. Cake Box is 25%. We're aiming to get to that level in Ambala as well. Thank you very much for listening, and we'll see you at the full year results.
That's great. Thank you once again for updating investors today. Could I please ask investors not to close the session as you will now be automatically redirected to provide your feedback in order for the management team to better understand your views and expectations? On behalf of the management team of Cake Box Holdings plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.
Great. Thank you very much.
Thank you.