Caffe Nero remains the coffee retailer par excellance. The group, the third biggest coffee operator in the UK - and easily the fastest growing - delivered a superlative set of interim results for the six months to November. Sales steamed up 22% to £23.5m, pre-tax profits surged from £155,000 to £653,000 and earnings per share poured out at 0.94p (0.76p last time). Speaking to Growth Company Investor, chief executive Gerry Ford confirmed that, come May, the group will be on course to open 35 new stores each year and, much more importantly, would be able to fund this growth from internally generated cashflow. Said Ford, 'we are highly operationally geared and we are at the stage were profits from new stores are dropping immediately to the bottom line - which is why profits have jumped so much compared to turnover growth.' At present, Caffe Nero currently has 145 stores in 47 UK towns. In the main, competition comes from the likes of Starbucks and Costa Coffee and a host of smaller operators. But the group's choice of locations, the quality of its coffee and its design-led interiors are clearly differentiating it from its rivals. As well as its strong cash generation, Caffe Nero can call upon £5.2m of cash reserves and a £3m line of credit to facilitate its expansion plans. It also owns around 6% of Coffee Republic, the erstwhile coffee retailer now moving into the delicatessen market. For the full year broker Collins Stewart expects profits of around £1.9m (before amortisation) on sales of £50m. Worth buying.