Egg-free cakes franchiser Cake Box (CAKE:AIM) served up sweet growth in the first half to 30 September, reporting a 6% revenue rise to £8.8m.

Shareholders have been starved over the last few months as the shares drifted down by 20%, so today’s morsel was well received and the shares bounced 8% higher to 150p.

TASTY GROWTH POTENTIAL

Chief executive Sukh Chamdal enthused that ‘trading during the first eight weeks of the second half has been encouraging and we have already opened five new stores, including our first in Wales.’

The often reported gloom on the high street was absent at Cake Box as its franchisees recorded almost 7% growth in like-for-like sales, which included a 32% increase in online sales to £2.6m. Total franchisee revenues were up 26% to £17.8m.

SECOND HALF WEIGHTING

Nine new stores were opened in the half compared with 15 last year which takes the total estate to 122 stores. Five new stores have been opened in the second half and the company is on track to hit its target of 24 for the full year to 31 March 2020.

Fewer first half openings and increased investment in the business such as a new sponge production facility in Bradford impacted earnings before interest, tax, depreciation and amortisation (EBITDA), which fell 10% to £1.97m.

However gross margins improved to 45% (44.3%) and the business generated strong cash flow from operations of £1.9m, up 26%, prompting the board to hike the interim dividend by 33% to 1.6p.

READ MORE ABOUT CAKE BOX HERE

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Issue Date: 25 Nov 2019