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Tue 27th Nov 2018 - Turtle Bay reports revenue up 7% to £68.1m, Numis on SSP
Turtle Bay reports revenue up 7% to £68.1m: Caribbean restaurant Turtle Bay has reported revenue increased 7% to £68.1m for the year ending 24 February 2018, compared with £63.7m the previous year. Group Ebitda before exceptional costs was £12.1m, compared with £14.4m the year before, reflecting continued investment in Germany and the effect of rises in the National Minimum Wage, business rates and the impact of exchange rate movements on input costs. There are currently 43 Turtle Bay sites across the UK and two in Germany. During the period, the group opened seven UK restaurants as well as its second in Germany, in the western city of Oberhausen. Turtle Bay was founded in 2011 by Ajith Jayawickrema “to offer guests authentic food and drink inspired by the vibrant culture of the Caribbean”. Jayawickrema previously co-founded the Latin American restaurant chain Las Iguanas. In 2013, consumer brands specialist Piper invested £6m into Turtle Bay to help fund expansion. Jayawickrema said: “We are pleased with the continued growth of Turtle Bay, particularly during such challenging conditions for the industry as a whole. All KPIs for a business in this sector are adversely affected by external factors. Against this backdrop, we remain as focused as ever on putting our guests and our teams first – and look forward to bringing the unique Turtle Bay experience to an even wider audience.”

Numis – SSP showing same strong prospects: Numis Securities analyst Tim Barrett has said UK-based transport hub foodservice specialist SSP is showing the same strong prospects and is a buying opportunity. Issuing an ‘Add’ note on the shares with a target price of 770p, Barrett said: “SSP’s strong performance in FY18 was overshadowed by management change, with Kate Swann, leaving after five years as chief executive. The outstanding performance since initial public offering (IPO) includes a compound annual growth rate of 17% in earnings per share, 330 basis points cumulative margin growth and £357m total dividend payments (35% of starting market cap). Notwithstanding this, we expect shareholders to welcome the appointment of Simon Smith as chief executive given the UK division has been so successful under his management (margin +560 basis points). The culture of efficiency and structural growth seems well established at SSP and we expect the combination to continue. In recent years SSP has signed an impressive range of new contracts across the business, diversifying geographically and resulting in 19% net space growth in North America, 7% in rest of the world. Total signings of 268 units is the highest since IPO and more than 2.7 times the level from 2016. While accepting the variety of operating formats and countries results in a heterogeneous portfolio, we view a deceleration in growth to the guided 3% as highly unlikely. SSP’s margins have increased by 330 basis points over the past five years, with FY18’s increase of 80 basis points showing no slowdown from the average. The labour/sales ratio fell across the board, even in the highly-inflationary UK. As the group invests in automation and spreads best practice from the UK, we see upside from its current guidance of 20 basis points growth in FY19. SSP suggests FY19 has started in line with expectations – it typically provides cautious guidance early in the year and sees subsequent upgrades. We currently assume like-for-like sales growth +2.4%, net new space +3.8% and Ebit margin +20 basis points. Note that each 1% on like-for-likes has a circa 10% earnings per share impact, each 1% on net new space adds 2% and every ten basis points of margin 2%. Therefore while our published forecasts imply a slowdown in earnings per share growth to 11%, a blue sky scenario of 30p would continue the record of more than 20% growth.”

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