So we will make a start. Firstly, just to say good morning. I like to think that Richard and I have brought the sunshine to London, so you can tell us if we have or not. Agenda today will be in the usual format. I will outline the results we've announced today, and I will then hand over to Richard to take us through the financial performance in more detail. And after that, I will then take you through our strategic progress and finish with the outlook for the year. So it's great to be able to stand here and report that we continue to make good progress. So, as you can see on the slide, total sales are up almost 14%, and on a like-for-like basis, that is 7.4%, while underlying pre-tax profits are increasing by just over 16% to GBP 74.1 million.
Very pleasingly, we've announced an interim dividend of GBP 0.19, which is up just shy of 19%. In terms of our strategic progress, we are continuing to grow and improve our shopping estate. So far this year, we have opened 99 new shops that include 30 relocations, and we have closed 18 excluding the relocations. This gives us 51 net new shops openings in the first half, and therefore we had 2,524 shops trading as at the 1st of July. As I'll talk quite a bit later in the presentation, menu innovation is a key driver of our like-for-like progress, and I'll take you through some of the products that are supporting our multi-channel strategy. Pleasing to say, the supply chain investment is on track, supporting the next phase of our growth plans.
So pleased to be able to stand here and report continued good progress, and I will now hand you over to Richard to take you through the financial performance.
Yeah, thank you, Roisin. Good morning, everybody. Yeah, it's nice to be presenting a good, strong set of results and good to be beyond that phase, I think, where we've had so much sort of volatility and input cost inflation over recent years. We're into a more steady sort of scenario now, which does have an impact on the numbers and margins, which I'll just try and take you through. So just with the headlines first on page five, so we have sales up almost 14% and an underlying profit before tax up 16%. So you can see there's a small amount of margin improvement overall, which we will come to in a moment. We had an exceptional gain last year in the first half, which was the settlement of an insurance claim following the COVID pandemic.
Nothing in the first half of this year, although there may be something in the second half, which I will come to in a few slides' time, leaving that little teaser with you. Then the income tax charge slightly up, and that's simply the result in percentage terms at least of the annualization of the increase in the tax rate from April 2023. A slightly higher average tax rate, which means that the underlying earnings per share are up 15% for the first half. Looking first at sales, you can see the two key segments in the business are sales from the shops that we manage ourselves, which is the vast majority of the estate, and then the business-to-business sales. Now, business-to-business is a combination of the wholesale business that we have with Iceland Foods and also the franchised shops within the estate.
So we have 524, I think, franchised shops in the estate now, so just over a fifth of the estate. And the revenue from both selling materials into franchise partners and the commission that we take on the franchise arrangement goes through that line. You can see on the company managed line, a combination there of 7.4% like-for-like, which includes some nice growth from the extension of our delivery service with Uber Eats. So we now have both Just Eat and Uber Eats as delivery partners. And then the impact of estate change. So that's the growth in the estate, but also importantly, the reinvestment in relocating shops throughout the estate, which Roisin will talk a little bit more about later, which is an important part of the story in terms of increasing the quality of the Greggs estate.
So those two factors combining to give us 12.5% on the company managed line. Then you can see the percentage growth on the B2B line is much stronger, and that's because we're coming from a lower base in terms of the size of the franchise estate. So the relative additions on the franchise shop numbers are proportionally greater on that line. And that will continue to be the case for a few years because we're opening about a third of our net shops on a franchise basis, and it's about 20% of the base in terms of shop numbers. Moving on to margins then on slide 7, you can see the ratios. Gross margin has obviously moved ahead nicely, and that reflects the fact that we've had much lower food and packaging inflation.
In fact, we've had slight deflation on food and packaging costs in the first half, which are a big proportion of the gross margin impact. The opposite was true last year. We had very high input inflation in the first half and a much lower level in the second half, but we had relatively steady price recovery across the year. So you've got this sort of skewing effect on the P&L where it was a bigger burden and subdued the first half result last year. It was more beneficial in the second half. We've got a much more even rate of recovery this year, which is one of the factors when thinking about the full year as well. But there was still some net benefit from that in the first half. There are a few moving parts behind there as well.
So the development of obviously the delivery business comes at a slightly lower gross margin once you've taken commission costs into account. So that's a kind of working against the ratio. But overall, a positive move forward on gross margin. Distribution and selling, relatively stable, a small increase in that really results from the fact that wage inflation obviously running higher than the average cost inflation overall. And then in admin costs, we've had a bit of a step up as we've reinvested in some of our technology infrastructure, which had become fully depreciated. So we had a little bit of a gap over the last couple of years, and we've reinvested in new technology there in the background. So overall, a small increase of 20 basis points in the underlying operating profit and PBT. Slide 8 shows you the cost inflation in the normal manner.
The biggest elements being people and food and packaging costs. On food and packaging costs, we've had some marginal deflation in the first half of the year, and we don't expect any material inflation over the year as a whole. We could be back into a degree of inflation in Q4. So that's one sort of word of caution in terms of just the balance of inflation on food and packaging over the year as a whole, but it's a relatively benign picture. And we've got pretty good forward cover. We're about four months covered. So we do have some exposure in Q4 as we stand here today, but not overly exposed. And on the energy complex, which is about 5% of the overall cost base, we are expecting some reasonable deflation across the year, and we're very well covered there.
So we're covered right through two-thirds of next year and the whole of this year. People costs, we've obviously talked about, pushed up significantly by the increase in National Living Wage. And when you add that together with some enhancement of pension benefits, which is something we've felt is the right thing to do to be competitive in the employment market, then overall wage inflation in the first half was 9.5%. And shop occupancy costs continue to be positive for Greggs as we leverage the covenant of the business to get better terms and better premises. So overall, I think our guidance of 4%-5% continues to be right for the year as a whole. We saw 4% overall in the first half, and we may see slightly more than that in the second half.
In terms of capital expenditure on slide 9, this is quite a big year for CapEx for Greggs. We're expanding the shop estate at a fair rate, and you can see that in the first half we moved ahead strongly with that, opening 74 gross new shops, which includes the shops that we've relocated up from 61 last year. So more spent on new shops and relocations, a relatively stable amount on shop refurbishment where we aim to slightly increase the number for the full year year on year. And the big numbers obviously going through supply chain where we've been completing the work on our 2 distribution centre extensions, Amesbury and Birmingham.
They're ready to go in Q4 this year and starting work on the first of the two big new sites in the Midlands that will create the capacity that we need for the future growth potential of Greggs. The site in Derby is being built by our landlord, and the box at the bottom of this slide describes what impact that has because what happens is the landlord builds the shell of the building. They then lease it to us, and we should take ownership of that in Q4. At that point, we capitalize the shell of the building on our balance sheet at a sort of right of use asset of about GBP 60 million. We don't then start to depreciate it until we finish sort of fitting it out ourselves, which will be late 2026. We take it on. We then fit out the rest of it.
It then comes into use at the end of 2026. So it puts more on the balance sheet, but it doesn't necessarily affect the P&L until it comes into use. And we do start to depreciate that lease, but it gets rolled up into the new asset, which will go live, as I say, at the end of 2026. So lots going on there. We're still in line with the guidance that we gave you that said we expect to spend about GBP 280 million this year. That also assumes that we complete the acquisition of the land at Kettering. So we've been talking about Corby Kettering as the second site. We can now confirm that it's at a site called Symmetry Park in Kettering. That land purchase is about GBP 30 million.
We've paid the deposit, and we expect that we will complete the rest of it in the fourth quarter, and that should go through this year. If it doesn't, then we'll be closer to GBP 250 million CapEx, but it'll just be a timing issue. Moving on to cash flow. You can see there's very strong cash flow from operating activities. Our cash balance is higher than we predicted as well. There's an issue I should just sort of pull out here, which is that we've had an invoicing issue from one of our suppliers who's migrated to a new billing system and been unable to bill us properly. We're sitting on about GBP 30 million that they need to bill us, and we need to pay them. The half-year number for operating cash inflow and cash balance is overstated by GBP 30 million.
That will reverse in the second half as that all gets addressed. But I think if you take GBP 30 million out of the inflow and the cash balance, the numbers start to look much more like what we would have been expecting, but still strong numbers. Then the teaser earlier for would there be another exceptional. It looks like we're at long last going to complete the sale of our legacy bakery site in Twickenham, which those of you who followed us for a number of years will probably cast your mind back to, I think it was 2017 when we actually had pulled out of the Twickenham site. We sold it to a developer subject to planning, and that planning has taken an awfully long time to achieve. There's been sort of a few twists and turns along the way, but it looks like that will go through.
I know it's been a few years since we've actually talked about it, but the last time we talked, we said the value of that to us would be about a GBP 15 million cash inflow, which would result in about a GBP 14 million book gain when it comes through. So we think that will happen in the second half. If it does, we'll book it as an exceptional gain, obviously, because it relates to the restructuring work that we did back at that time. And the only other thing I think on cash is we have renewed our RCF in the first half. It's not something we're drawing on at all, but it's good to have it in reserve.
We've got an extra GBP 100 million of liquidity, which is something we've sort of put in place since the pandemic to make sure that we've got greater facilities to draw on should we need to. Not much to say about tax. I've already flagged that the overall tax rate is just tracking up as we reflect the increase in the corporation tax rate last year. Looking forward, we expect about a 26% effective rate, which is tracking about 1% above the headline rate. We're pleased to announce an interim dividend of GBP 0.19, which is broadly tracking slightly ahead of earnings increase, but it's just roundings on the number of pence we're paying. Very much in line with our normal progressive policy on the dividend. I think that's it from me. Happy to come back with questions later, but for now, I will pass you on to Roisin.
Thanks, Richard. So I will just spend a few minutes updating you on the progress we're making with our ambitious plans to address the many growth opportunities available as we progress to become a multi-channel, a food on the go brand. So this slide really is just to put into context how we are continuing the growth journey and summarizes how we think about the opportunity for Greggs. In simple terms, it's about being more convenient for our customers and serving more of their food and drink needs while they are on the go. So serving them wherever, whenever, and however they want. So the first box on the slide talks about us being more convenient for our customers more often.
So in terms of doing that, we're expanding into new locations with better shops and relocating a proportion of our legacy estate to meet the demand for Greggs as a multi-channel operator. So this often means for us trading longer hours and ensuring that we can provide services such as delivery and click and collect. In the second box, you will see us highlighting our desire to serve more of our customers' food and drink needs. So we remain focused on being the value leader in the market and evolving our menu to respond to the market trends and reach all day parts. We also use our loyalty program to engage customers and understand how we can serve even more of their needs. And this is supported by being a vertically integrated business.
So as we've said, and as Richard's just alluded to, we're investing further in our supply chain capacity to ensure that we can deliver on those future ambitious growth plans. We're doing the same with technology, which is crucial to our continued success. And underpinning it all is our approach to being a responsible business, which for us is the Greggs Pledge, which is our approach to ESG. So that's a quick summary and reminder. Let me just talk you through some of the detail. So if I talk about access to more locations, we continue to drive the opening program at pace and find opportunities for exciting new shop openings in those underrepresented catchments, plus finding bigger and better units, as Richard said, to relocate some of our current constrained shops into.
So far this year, we have opened 99 new shops, which included 30 relocations, and we are on track for our opening program of between 140-160 net new shops with a very similar phasing to last year. Our confidence is underpinned by the continued success in the catchments where Greggs is underrepresented. That's the areas like the retail parks, the supermarkets, the roadside, the railway stations, and they provide us with the clear opportunity for significantly more than 3,000 shops across the U.K. Franchise opportunities continue to expand the reach of the brand, and we know that's really important for our petrol forecourt business, and we now work with 16 corporate partners helping us reach those catchments that we can't access ourselves directly.
Then we've put on the bottom of the slide the pie charts that just shows you how the estate has evolved from 2014 to 2024 and really how we've been able to reshape it and move into those new catchment areas, making sure that we're well positioned to be convenient for our customers on the go. When you look at where we're opening new shops, what that does in 2014, 82% of the estate was in cities, towns, and suburbs. When you then move that through to 2024, that's now 52%, making sure that we are across all of those key catchments. But as Richard said, it's not just about opening new shops. A relocation strategy is absolutely critical to our success, and it has many benefits.
It enables constrained shops that we've got, that historical ones, to significantly increase the sales volume and to have capacity for further growth. But we also have an experienced team within that shop, so they just move to the new shop. So they hit the ground running. They serve those customers with that friendly, efficient service from day one. We stay in the catchment for our customers, but we provide them with an extended menu. So we'll provide our hot favorites such as our chicken goujons, our cheese bites, our wedges, and we provide more space in the shop to ensure that we can provide the channels that we service in other shops such as delivery and click and collect. The shop refurbishment program also provides many of these benefits by enabling us to modernize the shop and deliver further like-for-like growth.
So on the slide, you've got a couple of examples just to try and bring it to life. And hopefully, you can see. So we've got Arnold and Nottingham. We've got Exeter, but they just show you how we lift and we reinvigorate the brand in the existing catchment and really bring something new to those customers. But at the heart of Greggs, as we've previously said, is our menu and making sure that we continue to evolve the range to provide the new exciting products, which I know a number of you have trialed this morning in our over-ice drinks, but it also extends our reach into the different day parts, and that's really important for us.
I think it's worth saying, and I think I've said this a few times before, food is at the heart of what we do as a business, and the menu development is what continues to excite all of us. The new over-ice drinks that I've mentioned are proving super popular, and they are now available in 500 of our shops, and by the end of the year, they will be available in another 200 shops. Pizza continues to be a winner, and as well as our six-slice pizza box just last Thursday, we also launched a four-slice pizza box version, and that's really to cope for the sort of smaller groups of friends and families that get together. And our healthier choice range continues to be extended. So we've now got more salads, we've got more flatbreads, and we've got an additional fruit pot out in the shops.
Very excitingly, we continue to develop the made-to-order food trials. So we've now extended that, and we are now trialing fish finger wraps and fish finger sandwiches as well as the chicken options. I have to say, I think the fish finger is a winner. So the constant evolution of the menu is really important because it's really to excite our customers. It's to make sure that we stay relevant, and it's to make sure that we provide those choices across all of the day parts and all of the channels in which we operate. So in terms of the channels and the growing day parts, we continue to make good progress across the channels and the day parts. Evening day part continues to grow ahead of the average Like-for-like rate, continuing to increase its share of mix by day part.
We know this remains a significant long-term opportunity. The evening food-to-go market is dominated by grab-and-go and delivery occasions. Therefore, we are well placed to serve those customers both through walk-in and delivery and continue to grow the evening business. Delivery also remains important. I think, as I've said before, we offer the service both through Just Eat and Uber Eats, and that is now representing 6.7% of company-managed shop sales, up from just over 5% at the same time last year. Then we continue to talk about loyalty, digital, and CRM. We now have more than 18% of our shop visits being spanned by customers using the Greggs app, up from just over 10% at the same time last year.
This is really important as we know that frequency of app increases the customers' visits to our shops, but also allows us to get to know our customers better and make sure that the promotion and the communication with them is relevant and timely and meets their needs. It continues to be a key area of focus for us to ensure that we can further build loyalty. I think of times when customers are looking for value. We know the customer in the market continues to look for value, knowing that for every ninth product you get the 10th one free, continues to be important. We need to continue to invest. So if I take IT first, investment in technology continues, as well as implementing a new CRM platform recently, which allows us to get to know those customers even better.
We are also currently rolling out some new till software that will help our colleagues in the shops. It'll make their jobs easier and better, but it also provides a more flexible platform for us to have future deals and promotions available. And we have also started the migration to the next version of SAP. That'll be a multi-year program, and our first modules will go live in 2025. And then, as Richard's talked about, you know we've been investing for additional capacity. So it's great that Birmingham and Amesbury distribution centers are on track, and that will give us a further 300 shop logistics capacity by quarter four this year. And as Richard said, we've made good progress with the two new Midland sites, so the one in Derby and the one in Kettering.
And these will open through the end of 2026 and into 2027, and they'll provide logistics capacity for a further 700 additional shops. And that enables us to have the future capacity to support around 3,500 shops. So some pictures for you. So to bring it to life with some images. So Derby is on this site. It's massive, absolutely phenomenal site. The lease is in place. Construction is progressing at an almighty speed in terms of the build, which is fantastic. And this site will be very similar to the northern frozen manufacturing logistics site that we have in Newcastle, but it will have the addition of automated picking to shop label. It will provide us with a consolidation point for our southern frozen food network and increase the capacity of our regional distribution centers by supporting them with automated upstream picking.
It does also provide us the ability to expand our manufacturing capacity. We will start with one line, but we'll have the space to develop other lines, and we will do that in line with future demands. Uhm in Kettering, we've recently exchanged contracts for 25 acres of land at Symmetry Park. It's still subject to planning, as Richard says, but we would expect the site to be open the first half of 2027. This will enable us to relocate and expand our current NDC that's at Kettering, and it will be a focal point for storage, picking, and distribution of chilled and ambient goods and supports the objectives of enabling our existing distribution centres to service around 700 more shops as a result of the upstream picking.
Automation and scale should deliver productivity improvements, and we future-proof this site with space for further distribution or manufacturing capacity if it's required. Excuse me. But we continue to pride ourselves on the Greggs Pledge. So that's doing the right thing with significant focus and progress in our commitments. We continue to focus on reducing food waste, supporting local communities, and it's really pleasing to say that we now provide breakfast to school children in 950 schools across the U.K. every single school day. And that was a target that we'd set ourselves for the end of this year, but we've already delivered. But a key part of our Greggs Pledge is also sustainability and to be carbon net zero by 2040. And as part of progressing on that journey, we have moved 60% of our natural gas to a renewable alternative.
We've now recently moved our Enfield Distribution Center fleet from diesel to HVO. So again, a real step forward. So looking forward, we have made good progress in the first half of the year, and we have successfully innovated across our menu while continuing to grow our estate. The many opportunities that are still available to us make us confident that we can continue to realize our ambitious growth targets. Our focus remains on executing our ambitious strategic plan and ensuring we build the capacity required for our future growth. And while uncertainties remain, the board's expectations for the full year outcome are unchanged. So normally I would finish there, but we have got a final slide because it was back in 1984 that Greggs floated on the stock market. And today, later on at the London Stock Exchange, we will celebrate being 40 years as a PLC.
The business has grown and prospered since that time, as have our shareholders. You can see there that actually our share price has increased over 200 times since flotation. Over the past four decades, we've grown from a regional bakery with 261 shops to a leader in the U.K.'s food-on-the-go sector. We like to think of it as delivering four decades full of flavor to the U.K. consumer. So as you know, we've now got more than 2,500 shops. We proudly serve millions of customers every week. However, our continued success would not be possible without our amazing 32,000 colleagues who tirelessly work across our business, making it all possible and doing it all in the unique way that makes Greggs Greggs. So it is a very proud moment for all of us, but we also have very exciting growth opportunities that lie ahead.
Hopefully we have brought the sunshine to you, and Richard and I will now take your questions.