Good evening/morning, it's Paul here.

Revolution Bars

Here are my overdue notes from a recent meeting with management of Revolution Bars (LON:RBG) (in which I hold a long position). The meeting covered the points in the recent interim statement, with a bit more detail, and also some Q&A. It was also a get-to-know-you session with the new CEO, Rob Pitcher, who started in late June 2018.

The original reason I invested in RBG, several years ago, was that it was a self-funding roll-out of highly cash-generative bars, combined with takeover potential. Sure enough, we got a 203p cash bid in 2017 from Stonegate, which bizarrely for a recommended offer, was turned down by shareholders at the last minute. I can't remember that ever happening before, so it was actually a rational (but ultimately incorrect) opinion to wait for either the 203p cash bid to finalise, or a higher competing bid to come in. Sometimes things don't pan out as we hope.

Since then, the share price has collapsed, to only 63p - suggesting that the stock market thinks that the business is going down the pan. Therefore, in assessing this share today, it is a given that performance has disappointed. The question now is simply whether the share price has overshot on the downside, and what upside there might be from here if a turnaround takes place?

Revolution Bars (LON:RBG)

Share price: 63.5p
No. shares: 50.0m
Market cap: £31.8m

Interim results 

Oh no, what's gone wrong now? As management admitted, "we've just hit the market with 4 negatives";

1) Dividends suspended - widely expected (I suggested that it might be wise to suspend the divis, here in Oct 2018). Also, broker notes had floated the idea that divis might be suspended, due to heavy expansionary capex on new sites.

So for anyone paying attention, the divis being suspended should not have come as a surprise at all. My only complaint here is that management could have been more savvy, and slashed the divis to something nominal, say 0.1p per share. That would have suited some institutions, which are mandated to only hold dividend-paying shares.

Management are clear that the company will return to the dividend list in the not-too-distant future - so this should be…

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