Good morning, it's Paul here.

Timing - as you've probably gathered, I've settled into a routine of writing in the afternoons, which works best for me. I'm trying to persuade the boss to change the timing of the daily SCVR email to something like 5pm, so that it doesn't go out half empty or blank.

Estimated time of completion today is 6pm. So by all means check in before that, as sections are added, but the finished article will be done by 6pm, as I have no meetings or other distractions today. Update at 17:33 - today's report is now finished.


I've noticed one or two investors & commentators are getting into a panic about IFRS 16.

From the enquiries I've made so far, institutions & banks are taking as much notice of it as I am - i.e. seeing it as a nuisance, and wanting numbers to be presented to them in the old way.

I've also been assured that banking covenants, facilities, etc, will continue to be based on the old numbers. The idea that IFRS 16 adjustments will "wipe out" companies, is as daft as thinking that Brexit is going to wipe out cross channel trade!

When I met management of Revolution Bars (LON:RBG) earlier this week, of course I wanted to talk to them about IFRS 16, as the notes to the accounts showed that it's going to involve some big new entries on future accounts. The CFO ran through all the details, leaving me none the wiser, as it's all so complicated. So I thought for a moment, then asked this question;

How much cash losses do your problem leases cause you, compared with if you could theoretically just ditch them all? 

The CFO replied that it's about £1m p.a..

That's easily affordable, in the context of c. £12m p.a. EBITDA, so I was happy with that issue addressed. The problem leases are a bit of a drag on profitability, which was a known factor before IFRS 16 anyway. Most multi-site retail/hospitality operations have a tail of loss-making sites, which they exit when they can (when leases expire, or can be assigned on commercially viable terms).

A good follow-up question would be to ask what the break clauses or lease expiry dates are for each site - or an…

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