Cake Box H1 FY26: Big revenue leap, softer earnings, Ambala bedding in
Cake Box has served up a punchy first half. Group revenue jumped 53.5% to £28.8 million, helped by 18.9% organic growth in the core Cake Box business and the maiden contribution from Ambala. Underlying EBITDA rose 33.3% to £4.6 million, although profit before tax slipped 7.4% to £2.6 million due to higher interest costs from the Ambala acquisition.
The message from management is clear: H2 should be better than H1 thanks to seasonality, new store openings, and key celebration events. Let’s slice into the numbers.
Headline numbers investors should know
| Metric | H1 FY26 | H1 FY25 | Change |
|---|---|---|---|
| Group revenue | £28.8m | £18.7m | +53.5% |
| Gross profit | £15.9m | £10.1m | +58.0% |
| EBITDA | £4.5m | £3.5m | +31.0% |
| Underlying EBITDA | £4.6m | £3.5m | +33.3% |
| Profit before tax | £2.6m | £2.8m | -7.4% |
| Underlying PBT | £2.7m | £2.8m | -4.5% |
| Basic EPS | 4.40p | 5.18p | -15.1% |
| Underlying basic EPS | 4.58p | 5.18p | -11.5% |
| Interim dividend | 3.60p | 3.40p | +5.9% |
Jargon check:
- EBITDA is earnings before interest, tax, depreciation and amortisation – a proxy for cash operating profit.
- “Underlying” excludes exceptional items.
- Like-for-like (LFL) sales compares stores open at least one full year.
What drove the growth: core momentum plus Ambala
Cake Box revenue rose 18.9% to £22.3 million, a solid organic performance for a mature franchise network. Ambala added £6.5 million of revenue and £0.4 million of underlying EBITDA, in line with expectations. The store estate keeps expanding: nine new Cake Box stores opened in the half, four more opened just after period end, and two new Ambala franchise stores opened during the half with another two since. Total stores reached 284 at 28 September 2025.
Franchise metrics were strong. Franchisees’ total sales including kiosks rose 14.6% to £47.6 million, with LFL growth of 6.3% (H1 FY25: 2.0%). The number of multi-site franchisees increased to 53, which usually signals confidence and operational know-how in the network.
Digital engine firing: online now 25% of franchise sales
The digital push is clearly working. Online sales increased 25.9% year on year to £11.3 million and now account for 25.0% of franchise store sales, up from 22.9%. Website visits hit 2.6 million, up 18%, and the subscription database jumped 29% to 990,000. SMS subscribers rose 32% to 390,000 and 134,000 new online customers were added, with returning customers now 54% of online sales.
In plain English: the brand is building a big, addressable audience and converting it at pace. That is valuable leverage for peak trading and new product launches like the “Dubai Chocolate” range, which created a social media buzz.
Margins and mix: higher gross margin, lower EBITDA margin
Group gross margin improved to 55.4% (H1 FY25: 53.8%) helped by a mix benefit as Ambala’s corporate store margins are higher than Cake Box’s product sales margins. However, the Group underlying EBITDA margin eased to 16.0% (H1 FY25: 18.4%) as Ambala absorbed investment and operational improvements. Management expects Ambala contribution margins to improve as efficiencies come through.
Why did earnings fall despite growth? Interest costs rose after taking on debt to buy Ambala. Finance expense was £729,038 versus £129,395 last year. Add in a larger share count after the £7.2 million equity raise in March 2025 and EPS dilution is not a surprise.
Cash, debt and dividends
Cash at period end was £2.7 million after paying the FY25 final dividend of £3.0 million and £1.8 million of repayments and interest on new loans. The Group reported net debt of £11.6 million, compared to net cash of £5.6 million a year ago, reflecting the Ambala acquisition financing.
Free cash flow was positive at £0.8 million. Investment continues: a new Bradford warehouse is planned to support northern and Scottish growth with a total build cost of £5 million over FY26 to FY28, funded from existing cash resources. In the half, capex included £0.4 million on Cake Box IT and e-commerce, £0.2 million on Ambala digital, plus £0.6 million of Ambala equipment and infrastructure.
The interim dividend was raised 5.9% to 3.60p per share, with payment due on 19 December 2025 to shareholders on the register at 5 December.
Ambala integration: progress and priorities
Integration is reported as “progressing well”. Operational efficiencies include streamlined production, new machinery, increased automation and tighter supplier terms. Ambala’s brand refresh, new packaging and a new website with click-and-collect went live in early October. The strategy is to grow Ambala primarily through franchising, with a target of 10 new franchised stores in FY26.
Importantly for H2, Ambala benefits from Diwali and Eid. Management expects higher H2 revenue and profit versus H1, supported by these events and the efficiency investments made.
Outlook: H2 uplift, store openings on track
Guidance is for another year of growth in line with market expectations. H2 is normally stronger seasonally and the early signs are encouraging: in the first month of H2, total Cake Box franchise sales were 13.7% ahead and LFL up 5.0% versus last year. October online sales rose 17.4%. Since period end, six more stores have opened, bringing FY26 openings to date to seventeen. The Group remains on track to open 25 new Cake Box franchise stores and 10 Ambala franchise stores in FY26.
The bear points to keep in mind
- Higher interest costs weighed on PBT and EPS. With net debt at £11.6 million, deleveraging will matter for valuation.
- Group EBITDA margin dipped to 16.0% as Ambala absorbs investment. Delivery of the promised margin improvements is a key watch-out.
- Cash balance is modest at £2.7 million while capex and dividends continue, so cash conversion and working capital discipline need to stay tight.
- There was a prior period restatement linked to Ambala acquisition accounting. It does not change the strategy, but investors will expect clean execution from here.
The bull case in a nutshell
- Compelling top-line momentum: +53.5% revenue, +6.3% LFL, and online now 25.0% of franchise sales.
- Store pipeline is healthy, with multi-site franchisees up to 53 and 284 total stores at period end.
- Gross margin improved to 55.4% amid stable input costs and a favourable mix.
- Ambala offers a second leg of growth with clear seasonal catalysts in H2 and a franchising roll-out model.
My take
This is a strong trading update with a sensible dose of realism. Demand looks robust, digital capability is scaling nicely, and the franchise engine keeps compounding. The drag is financial rather than operational – higher interest and a bigger share count have masked operational progress at the EPS line.
If management delivers the H2 step-up and Ambala’s margins improve as guided, the earnings trajectory should start catching up with the top line. I will be watching debt reduction, H2 LFL momentum, and Ambala’s H2 profitability through Diwali and Eid. For now, the dividend increase and confident guidance suggest management feels firmly in control.
