Revolution Bars - Interim Results
07/03/2023 07:00
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RNS Number : 0735S Revolution Bars Group 07 March 2023
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7 March 2023
Revolution Bars Group plc (LSE: RBG)
Unaudited Interim results for the 26 weeks ended 31 December 2022
An exciting acquisition during a challenging trading period
On track to achieve FY23 market expectations
Revolution Bars Group plc ("the Group"), a leading UK operator of 69 premium
bars and 21 gastro pubs, trading predominantly under the Revolution,
Revolución de Cuba and Peach Pubs brands, today announces its unaudited
interim results for the 26 weeks ended 31 December 2022.
Results to 31 December 2022
H1 FY23 H1 FY22 H1 FY23 H1 FY22
(IFRS 16) (IFRS 16) (IAS 17) (IAS 17)
£m £m £m £m
Total Sales 76.0 74.1 76.0 74.1
Operating Profit 3.1 6.7 0.9 4.1
Adjusted(1) EBITDA 9.8 12.2 5.1 7.6
(Loss)/Profit Before Tax (0.1) 4.3 0.0 3.7
Net Cash/(Net Bank Debt) (18.5) 4.2 (18.5) 4.2
Key points
· The Group faced continuous and varied external headwinds impacting
profitability during FY23 H1 including transport strikes, downturn in consumer
confidence as a result of the cost-of-living crisis, record hot weather, as
well as cost inflation. However, early indications show that the trading
environment should improve with consumer confidence having bottomed out and
energy prices trending in the right direction;
· There is evidence our brands are resonating with guests following record
breaking like-for-like(2) ("LFL") pre-booked party revenue over the festive
period, refurbishments performing well, and the latest new bars performing in
line with expectations;
· Significant strategic progress was made during the period with the material
acquisition of The Peach Pub Company (Holdings) Limited and its subsidiaries
("Peach"), in order to diversify the Group's earnings away from a late-night
and city centre focus. Synergies are on track and additional growth
opportunities being identified;
· The Group had net debt of £23.1 million as at 6 March 2023, made up of £27.0
million drawn down revolving credit facility and £3.9 million cash, with
£6.9 million headroom available on the facilities. Covenants have been reset
to reflect current trading and market conditions; and
· FY23 H2 Group LFL(2) sales have been (6.8)% to date, an improvement of
+2.6%pts on the first half of the year. All brands are trading in line with
Board expectations, with Peach continuing its strong LFL(2) performance. The
Board remains confident of achieved APM(3) adjusted(1) EBITDA in line with
market expectations for FY23.
(1) Adjusted performance measures exclude exceptional items, share-based
payment charges and bar opening costs
(2) Like-for-like (LFL) sales are same site sales defined as sales at only
those venues that traded in the same week in both the current year and most
recent non-COVID-19 affected comparative period
(3) APM refers to Alternative Performance Measure being measures reported on
an IAS 17 basis
Rob Pitcher, Chief Executive Officer, said:
"We have faced well documented macroeconomic challenges which impacted
profitability in the half year. The team have done everything they can to
mitigate the cost headwinds and other factors outside of our control, and I am
immensely proud of our people for delivering an amazing Christmas to our
Corporate guests, delivering an all-time record of pre-booked sales for the
Group. Walk-in custom was hampered by industrial action, reduced consumer
confidence and the hot summer, and we look forward to increased guest
confidence in the coming months as energy prices continue to fall from their
previous peak and inflation abates.
We were delighted to announce the acquisition of Peach Pubs in October 2022
which has diversified our offering and guest base. We have continued to see
pleasing performance, delivering excellent Christmas trading. We continue to
develop synergies between the businesses, and identify new and exciting
opportunities.
Management continues their focus on navigating the current macroeconomic
situation, developing our business, and putting in place further building
blocks for future growth. The Board remains confident that the business is on
track to achieve market expectations for FY23, and we anticipate some sales
recovery in 2024."
Enquiries:
Revolution Bars Group plc Tel: 0161 330 3876
Rob Pitcher, CEO
Danielle Davies, CFO
finnCap, NOMAD and Joint Broker Tel: 020 7220 0500
Matt Goode / Simon Hicks / Teddy Whiley (Corporate Finance)
Tim Redfern / Charlotte Sutcliffe (ECM)
Peel Hunt LLP, Joint Broker Tel: 020 7418 8900
George Sellar / Andrew Clark / Lalit Bose
Instinctif (Financial PR) Tel: 07831 379122
Matt Smallwood
A presentation will be shared with analysts today and the presentation will be
made available on the Group's corporate website at www.revolutionbarsgroup.com
(http://www.revolutionbarsgroup.com) .
Chairman's Statement
After an exciting period of pent-up demand during FY22, FY23 is seeing a
multitude of external factors impacting on consumer confidence and costs both
within the hospitality industry and across the wider economy.
Despite this, I am very proud of the Christmas trade delivered by our amazing
colleagues. Management had hoped that this would be the first winter period of
normal trade in three years; however, industrial action had a significant
impact on walk-in trade. We were very pleased to see our corporate guests
joining us in our bars for their festive celebrations, with most venues
exceeding party expectations. Pre-booked party revenue during the five weeks
to 31 December 2022 was +10.3% compared to 2019, representing an all-time
like-for-like(2) ("LFL") record for the Group.
On 18 October 2022 we were pleased to announce the acquisition of The Peach
Pub Company (Holdings) Limited and its subsidiaries ("Peach"), the operator of
a collection of 21 award-winning pubs. Peach offers an exciting addition to
the Group portfolio and provides a more balanced and diversified business with
scale and compelling growth potential across multiple trading segments of
drinks, food and accommodation.
Two new bars were opened at the end of FY22, being Revolution bars in Preston
and Exeter. Both have had excellent guest reception and are trading in line
with expectations. Following the acquisition of Peach, the Group has reduced
investment plans, and will now complete five refurbishments in FY23 with all
of these having been completed to date.
Our business
At the end of the reporting period the Group operated 90 venues consisting of
the following brands: Revolution (48 bars), focused on young adults;
Revolución de Cuba (18 bars), which attracts a broader age range; Playhouse
(two bars), a competitive socialising offering; Founders & Co. (one bar),
an artisanal market-place experience; and the newly acquired Peach Pubs (21
pubs) offering high quality food and drink in the heart of England.
In FY22 and FY23, we were excited to return to our pre-COVID-19 strategy of
expansion and refurbishment of the estate, and in the year to date spent £3.5
million of capital expenditure across five refurbishments, converting a second
bar into a Playhouse, sustainability, IT and other key investments.
Our results
Sales for the 26-week period of £76.0 million (FY22 H1: £74.1 million) were
2.6% higher; the previous year experienced a combination of pent-up demand
alongside a hampered Christmas due to Omicron, whereas the current year was
significantly harmed by macroeconomic factors and factors outside of our
control. Neither periods represent the true Christmas trading that the Group
can deliver when not disrupted by external factors.
Our statutory loss before tax for the year of (£0.1) million (FY22 H1: profit
before tax of £4.3 million) reflects the significant impact of high
inflationary costs as a result of the cost-of-living impact. Adjusted(1)
EBITDA, our preferred KPI, is significantly influenced by IFRS 16 and thus the
Directors believe that business progress is best measured by the directly
comparable IAS 17 Alternative Performance Measures(3) ("APM") of adjusted(1)
EBITDA profit of £5.1 million (FY22 H1: profit of £10.2 million). The
reduction in APM(3) adjusted(1) EBITDA is a direct result of heightened costs
and low growth in sales due to external factors.
During FY23 H1, the Group refinanced its banking facilities resulting in full
repayment of all existing Coronavirus Large Business Interruption Loan Scheme
("CLBILS") term loans, and the previous Revolving Credit Facility ("RCF")
being replaced with a new £30.0 million RCF. This was utilised for repayment
of existing debts and to fund the acquisition of Peach Pubs. As at 6 March
2023, the Group had net debt of £23.1 million.
Our People
The Group is led by an experienced and committed Executive Management team
with proven credentials who continue to navigate the challenging trading
conditions the industry faces, supported by the Board. Our young, ambitious
workforce create amazing experiences in all our pubs and bars, and I would
like to extend my thanks to them for continuing to demonstrate remarkable
resilience and enthusiasm, and delivering excellent service to our guests.
Current trading
Transport strikes have continued into 2023, albeit with less impact due to the
normal lower trade seen in January and February. The Group saw LFL(2) sales in
the second half of FY23 of (6.8)% to date, an improvement of +2.6%pts on the
first half of the year.
The Group continues to navigate the macroeconomic factors impacting on the
industry, particularly city centre and late-night trade.
We continue to see pleasing advancements in our brand offerings and guest
journey, and the Board remains confident of achieving APM(3) adjusted(1)
EBITDA in line with market expectations for FY23 and anticipates, assuming a
more benign trading environment, some sales recovery in 2024.
Keith Edelman
Non-Executive Chairman
6 March 2023
(1) Adjusted performance measures exclude exceptional items, share-based
payment charges and bar opening costs
(2) Like-for-like (LFL) sales are same site sales defined as sales at only
those venues that traded in the same week in both the current year and most
recent non-COVID-19 affected comparative period
(3) APM refers to Alternative Performance Measure being measures reported on
an IAS 17 basis
Chief Executive Officer's statement
Business review
We began FY23 on a very different note to that of FY22. The summer of 2021 saw
guests holidaying in the UK due to tight travel restrictions for the second
year in a row, which delivered a real benefit to our bars. In comparison, the
summer of 2022 felt like the first real time people could travel abroad almost
restriction-free, and we saw our guests really taking advantage of this,
taking multiple trips abroad, meaning they were not able to visit our bars as
frequently as in previous years.
Furthermore, with restrictions fully lifted, we saw the return of large
festivals, events and gatherings such as Glastonbury and others, which had
been cancelled for the prior two years. Our typically young guest base has
flocked back to multiple large-scale events after not attending them since
2019 and this, coupled with a large number of international artists completing
postponed stadium tours, has impacted the number of our guests in city centres
during key weekend trading days over the summer.
The year also began with a record-breaking heatwave, including the hottest day
in history for England. The Revolution and Revolución de Cuba brands trade
with very little outside space and have historically underperformed in high
temperatures.
The war in Ukraine has driven utility costs up and fuelled the cost-of-living
crisis, which is very much in the consumer psyche. The rise in food and
utilities inflation has seen a huge impact on consumer spending. Our guest
base is not immune to this, albeit employment levels have remained high, and
recent positive news of energy prices starting to fall is hoped to result in
increased guest confidence. January also saw foodservice inflation fall for
the first time since September 2021.
Industrial action has been damaging trade since June 2022, with train strikes
particularly impactful due to our locations being predominantly in city
centres. The strikes affect the days either side of the planned strike date,
with people not wanting to get stranded. Unions planned these strikes to
achieve maximum disruption, with our busiest trading week of the year, in
mid-December, targeted with multiple strike days. Strikes were also targeted
at the end of the month focussing on the weekends when most people are being
paid, being the busiest weekends for retail and hospitality sales. This has
had a material impact on our ability to trade to our full potential.
On a more positive note, we were very excited to see the return of our
Corporate guests at Christmas functions, setting a new record for pre-booked
party revenue of +10.3% versus our previous record year in 2019. The strikes
continued to impact here too unfortunately, with guest confidence in the
reliability of train services affecting their decision to attend Christmas
parties, but even more so on walk-in trade which was significantly reduced.
Without this, we would have experienced a much more buoyant festive trading
period.
Our exciting new concepts did well over the festive trading period, instilling
our confidence in their continued roll-out. Founders & Co. delivered three
record sales weeks, hosting an array of immersive events to entice guests, and
is now enjoying a more established position in the city. The second Playhouse
site was opened in November 2022 and has traded well since opening, and the
Playhouse brand is seeing a positive new avenue for growth through corporate
bookings whilst gaining traction with family celebrations. Peach has seen
pleasing performance since acquisition, performing very well over the festive
period.
Acquisition of Peach
We were delighted to announce in October 2022 the completion of the
acquisition of The Peach Pub Company (Holdings) Limited and its subsidiaries
("Peach"), a collection of 21 award-winning gastro pubs. Working closely with
Peach in advance of the acquisition, we identified that Peach has a strong
focus on its colleagues and guests and has great synergies both operationally
and from a people perspective. The Group and Peach are focused on our people
and the planet, and both are award-winning in these areas.
Our existing Executive Management team already holds strong food-led pub
experience, and we were pleased to add Chris Stagg, the existing Operations
Director of Peach, to the Group Management team. The Peach brand offers an
exciting new avenue for growth, with good levels of new pub availability in
affluent market towns located in aspirational counties.
The Peach Pubs brand trades well throughout the week and is mainly focussed on
daytime and early-evening trade which offers a great diversification for the
Group, allowing it to become less reliant on weekend and late-night trading.
The affluent guest base and locations also offer mitigation against recent
macroeconomic factors. Some of the pubs offer high-margin accommodation for
guests with over 80 letting bedrooms, providing a new revenue stream for the
Group.
Following some of the hottest summers on record, the previously existing
brands of the Group have been negatively affected by hot weather due to a lack
of outdoor space and the impact on late-night trading. The Peach estate offers
extensive, attractive outdoor spaces with a proven track record of increased
sales during good weather. Furthermore, the post-pandemic impact of working
from home has seen an impact on city centre trading on Fridays as commuters
choose to stay home; Peach has benefitted from this change as guests now stay
local on a Friday and visit their pubs for either lunch meetings or a
post-work drink.
Peach Pub have delivered +9.9% like-for-like sales in FY23 H1 since
acquisition, compared to 2019, clearly demonstrating the additional resilience
and diversity that the acquisition has brought to the Group.
Group strategic objectives
Our focus is and has been on getting back to our value-creating workstreams to
further develop the business under our strategic priorities. In the year we
have taken the opportunity to refine our focus and strategy, identifying
synergies between our previous strategic objectives and our new pillars for
growth:
· Maximising Revenue & Profit:
o Acquisition of 21 premium gastro pubs through Peach Pubs, predominantly
located in affluent towns and villages in Warwickshire, Oxfordshire,
Bedfordshire, Hertfordshire and Surrey, offering a differentiation in guest
offering;
o Five refurbishments completed in FY23 H1, with the venues performing in line
with expectations and ahead of the main estate. The refurbishment programme
has been paused until the macroeconomic trading environment improves;
o New Customer Relationship Management ("CRM") platform is being implemented,
allowing us to optimise the 3.7 million guest database by gaining a complete
view of the way our guests interact with and across our brands. This will
allow real-time communication with them, integrating social media content and
audience management features;
o Established monthly competitor price reviews to ensure we are optimally priced
in the current ever-changing environment;
o Spirits tender has been completed, with a new range being implemented in
April, delivering cost savings in an inflationary environment as well as a
fresh, fantastic range for our guests; and
o New draught product range fully rolled out across the Group, delivering
+0.8%pt margin improvement in this category and driving 0.9%pt mix into this
category.
· Brand Awareness and ESG including Sustainability and EVP:
o We were thrilled to win or be nominated for a variety of awards in the last
year, including winning On-trade Company of the Year at the Footprint Drinks
Sustainability Awards, and being a finalist for the EDIE Net Zero Strategy of
the Year award;
o Installed cellar energy reduction equipment across 80% of the estate. This
equipment has undergone extensive trials and produces an eight-month return on
investment;
o Continued partnership with So Let's Talk, holding general wellbeing and health
sessions for all colleagues. Supporting 21 of our colleagues through exciting
apprenticeship journeys;
o Excellent success of our people: our first General Manager to complete the
WiHTL Ethnic Future Leaders Programme was subsequently selected to join the
WiHTL advisory board; and two internal promotions of our high-performance
General Managers to Area Manager and General Manager of one of our flagship
bars;
o Instigated a trial of energy-efficient kitchen extract controls in our bar in
Wigan, with a view to roll-out following a successful trial; and
o Retained our B score in our FY23 CDP submission, which is in the Management
band, demonstrating that we are taking coordinated action on climate issues.
· Guest Experience:
o Brand proposition review now completed in Revolución de Cuba, looking at all
aspects of our guest experience, and enabling us to further refine our guest
offering to drive increased awareness and usage of the brand;
o Head Bartender role created in all bars to drive product quality, average
spend and speed of service; and
o Entertainment and atmosphere creation remain core to the product offering, and
we are continually innovating to ensure that it remains fresh and exciting to
our young guests.
· Cost Control:
o Utilities remain an area of real focus for the Group, with our fixed prices
expiring at the end of March 2023, with Peach remaining fixed until at least
October 2023. We continue to drive down consumption with a decrease versus our
2017 baseline of 34.6%, which is a further 2.6% improvement from the start of
FY23, partially achieved through the new cellar cooling technology;
o A new broker has been instructed to assist with our energy purchasing
strategy. We are pleased to note wholesale energy costs reducing recently;
o Integration of the newly acquired Peach Pubs is on track, and cost synergies
are starting to be realised. It is expected that the larger Group will attract
bigger buying power and secure further cost savings;
o Synergies from the acquisition with Peach Pubs will be at least £1.5 million
when fully delivered in FY25, taking proforma EBITDA to approximately £3.0
million'
o A full review of our non-consumable spend has been conducted, with new
contracts being signed at reduced rates across many areas of spend despite the
current inflationary environment; and
o Water consumption monitoring equipment is now on trial in seven bars, with
good opportunities to reduce usage being highlighted. The trial continues, and
if successful will be fully rolled out.
· Diversification of Sales:
o New revenue streams in the business through introduction of accommodation
sales with Peach Pubs; and
o Our two Playhouse bars are seeing up to 28% of their revenue coming from game
machine sales, something that we have not previously had in the Group, and we
are now looking to trial some of the most popular machines in our Revolution
brand.
Our People
I am immensely proud of our teams who continue to provide excellent guest
service, reflected in our industry-leading guest Net Promoter Score. The whole
nation has experienced very difficult times of late, and our guests choose to
come to us to forget about their daily concerns - our teams do a brilliant job
of creating fun and long-lasting memorable experiences for them.
Train strikes impacted on our team's ability to earn their all-important tips
and gain extra hours during the busy festive period, but they remained
positive and guest-focused to ensure our Christmas party guests had a great
experience. The brilliant guest feedback is a true reflection of the hard work
and determination seen at all levels across the business, and I would like to
extend my thanks to all our colleagues for their positive attitudes and hard
work during the continuing challenges.
Market outlook
Inflation continues to drive the cost-of-living crisis which has a
dual-pronged impact of heightening costs for the Group whilst affecting guest
confidence. Energy prices are trending in the right direction which is helpful
for the business, but also hopefully for our guests in order to ease the
inflationary pressures that currently exist.
The newly acquired Peach Pubs continues to trade strongly, experiencing a very
strong Christmas trading period. We are pleased with the acquisition's
performance so far and confident in its ability for growth as well as
expansion to further sites in the future.
Our new, more affluent, guest base at Peach Pubs are somewhat shielded from
the impacts of the macroeconomic environment, whilst our young guest base has
been more severely impacted with the industry seeing less regular visits from
these guests. Young people still want to come out and have a good time, and
bars and pubs are a key part of their socialising repertoire.
Early indications show that the trading environment for the entire Group
should improve as we head towards spring. Energy prices are headed in the
right direction allowing for greater consumer spending to return, whilst the
Group should start to see the impact of the easing of input cost increases
alongside the positive impact of Peach Pubs.
Industrial action continues to severely impact our ability to trade to full
capability, especially during train strikes which continue to impact us at the
start of 2023 with more planned during the Cheltenham Festival and March pay
weekend, having already severely impacted our festive trade.
Current Trading and Outlook
The first half of the year was hampered with macroeconomic factors including
strikes and the cost-of-living crisis, all of which affect consumer
confidence, and all of which have continued in to the second half of the year.
We are pleased to have navigated January through active cost management to
start the second half of the year.
We also remain hopeful of continued positive news including improving energy
prices and a stronger economy, which are expected to improve guest confidence
in the coming months. As we enter spring with improved weather, the Group is
excited to see the benefits of the outstanding outdoors spaces at Peach Pubs
to capitalise on trade typically missed with our original brands.
Peach Pubs continues to demonstrate strong, resilient trade under these
difficult conditions and Management are very pleased with the acquisition.
Both new brands, Founders & Co. and Playhouse are performing well and
continue to develop.
We continue to see pleasing advancements in our brand offerings and guest
journey, supported by the new CRM platform, as well as further progress in
D&I and sustainability.
The Board expects, assuming industrial action subsides, and energy prices hold
at current levels, that the Group will deliver adjusted EBITDA (on an IAS 17
basis) in line with current market expectations.
Rob Pitcher
Chief Executive Officer
6 March 2023
Financial Review
Introduction
· The "H1 FY23" accounting period represents trading for the 26 weeks to 31
December 2022 ("the period"). The comparative period "H1 FY22" represents
trading for the 26 weeks to 1 January 2022 ("the prior period");
· The Group continues to offer comparative Alternative Performance Measures(3)
("APM") of the numbers converted to IAS 17 following the implementation of
IFRS 16 in FY20. APM(3) for the current period are given equal prominence in
this review because, in the opinion of the Directors, these provide a better
guide to the underlying performance of the business;
· The results information therefore gives FY23 H1 IFRS 16 statutory numbers,
followed by APM(3) under IAS 17. A reconciliation between statutory and APM(3)
figures is provided in note 19.
H1 FY23 H1 FY22 H1 FY23 H1 FY22
(IFRS 16) (IFRS 16) (IAS 17) (IAS 17)
£m £m £m £m
Total Sales 76.0 74.1 76.0 74.1
Operating Profit 3.1 6.7 0.9 4.1
Adjusted(1) EBITDA 9.8 12.2 5.1 7.6
(Loss)/Profit Before Tax (0.1) 4.3 0.0 3.7
Non-cash Exceptionals 0.0 0.0 - 0.1
Cash Exceptionals 1.5 0.0 1.5 0.0
Net Cash/(Net Bank Debt) (18.5) 4.2 (18.5) 4.2
Results
With both the current and prior periods facing significant external factors,
sales ended broadly similar to the prior period. However, FY23 H1 was
particularly impacted by macroeconomic factors including the cost-of-living
crisis, strikes and hot weather which have impacted on the adjusted(1) EBITDA
position on both a statutory and APM(3) EBITDA perspective, whilst Management
has focused on effective cost mitigations and reductions wherever possible.
FY23 H1 benefitted from the addition of two new Revolution bars and the
acquisition of Peach Pubs in October 2022.
The underlying result, as measured by our preferred APM(3) adjusted(1) EBITDA,
was £2.5 million lower than the equivalent prior year period, at a profit of
£5.1 million (FY22 H1: profit of £7.6) million). This is our preferred
metric as it is a proxy for the underlying cash available, in a normal trading
period, for investment, loan servicing and repayment, and for distributing to
shareholders in the form of dividends.
Gross profit in the half year amounted to £58.6m (FY22 H1: £57.8 million)
which amounted to a gross margin of 77.1% comparable to 78.0% in the
equivalent prior period. The Group experienced strong margins since the
pandemic due to product mix, and improved discounting and trade agreements.
However, this has slightly reduced in the last year due to higher input prices
and a reduction in late-night trading due to changing consumer spend.
Underlying profitability
The Board's preferred profit measures are APM(3) adjusted(1) EBITDA and APM(3)
adjusted(1) pre-tax profit/(loss) as shown in the tables below. The APM(3)
adjusted(1) measures exclude exceptional items, bar opening costs and charges
arising from long-term incentive plans ("LTIPs).
26 weeks ended 26 weeks ended 52 weeks ended 26 weeks ended 26 weeks ended 52 weeks ended
31 December 1 January 2022 2 July 31 December 2022 1 January 2022 2 July
2022
2022
APM(3) APM(3) 2022
IFRS 16
IAS 17 IAS 17 APM(3)
IFRS 16
£m IFRS 16
£m
£m
£m
£m IAS 17
£m
Pre-tax (loss)/profit (0.1) 4.3 2.1 0.0 3.7 3.9
Add back Exceptional items 1.5 (0.0) 0.6 1.5 0.1 0.2
Add back (credit)/charge arising from LTIPs (0.2) (0.0) 0.1 (0.2) (0.0) 0.1
Add back Bar opening costs - - 0.3 - - 0.3
Adjusted(1) pre-tax profit 1.2 4.3 3.1 1.4 3.8 4.5
Add back Depreciation 5.4 5.6 11.1 2.8 3.4 4.9
Add back Amortisation 0.0 0.0 0.0 0.0 0.0 0.0
Add back Finance costs 3.2 2.3 5.3 0.8 0.4 0.9
Adjusted(1) EBITDA 9.8 12.2 19.4 5.1 7.6 10.2
Exceptional items and accounting for long-term incentive plans
Exceptional items, by virtue of their size, incidence or nature, are disclosed
separately in order to allow a better understanding of the underlying trading
performance of the Group. Exceptional expenses for the half-year were £1.5
million (FY22 H1: £0.0 million), and predominantly relate to a charge of
£1.5 million made up of the expenses incurred during the acquisition of
Peach.
Credit/charge relating to long-term incentive schemes
A credit of £0.2 million (FY22 H1: £0.0 million) on long-term incentive
schemes arose predominantly due to the forfeiture on previous schemes, netted
with a small charge as a result of the impact of share price.
Finance costs
Finance costs of £3.2 million (FY22 H1: £2.3 million) are made up of £0.8
million of bank interest paid on borrowings (FY22 H1: £0.4 million) and £2.4
million of lease interest (FY22 H1: £1.9 million).
Liquidity
On 10 October 2022, the previous facility which consisted a Revolving Credit
Facility "RCF" and Coronavirus Large Business Interruption Loan Scheme
("CLBILS") terms was refinanced. As part of this a new RCF was committed at a
total facility level of £30.0 million, expiring October 2025. All outstanding
CLBILS loans were repaid on 13 October 2022. Interest is charged on the
utilised RCF at a margin determined by leveraging plus SONIA, with unutilised
RCF values having interest charged at 40% of margin.
The RCF will amortise by £1.0 million on 30 June 2023, £2.0 million on 30
June 2024, and £2.0 million 30 June 2025. In accordance with these
arrangements and subject to compliance with financial covenants, which have
been reset to reflect current trading and market conditions, the Group will
therefore have committed funding facilities available during the going concern
assessment period as follows:
RCF
£m
31 December 2022 30.0
30 June 2023 29.0
31 December 2023 29.0
30 June 2024 27.0
Taxation
There is no tax payable in respect of the current period due to previous
losses made. Peach now benefits from Group relief and accordingly the deferred
tax liability is no longer relevant; a tax credit for the Group of £0.3
million therefore arises (FY22 H1: £nil).
Earnings/(loss) per share
Basic earnings per share for the period was 0.1 pence (FY22 H1: earnings of
1.9 pence). Adjusting for exceptional items, non-recurring opening costs and
credits arising from long-term incentive plans resulted in an adjusted(1)
basic earnings per share for the period of 0.7 pence (FY22 H1: earnings of 1.9
pence).
Operating cash flow and net bank debt
The Group generated net cash flow from operating activities in the period of
£3.3 million (FY22 H1: generated 14.5 million), whilst capital expenditure
payments of £4.6 million, bank loan interest £0.8 million, loan repayments
of £27.7 million (offset by a drawdown of £30.0 million), acquisition of
subsidiary costs of £13.9 million offset by cash acquired of £4.7 million,
and £5.9 million of repayment of subsidiary borrowings contributed to a net
cash outflow in the period of £14.3 million decreasing net bank cash of £4.1
million as at 2 July 2022 to a net debt closing position of £(18.5) million
as at 31 December 2022.
Historically, the Group's working capital performance in the first half of the
financial year shows a cash inflow reflecting the build in trade and other
creditor balances associated with peak Christmas trade. More unusually this
year, following a quieter Christmas period than last year, as well as the
pause in the capital expenditure programme, the shape of working capital
movements in FY23 H1 has been very different, creating a working capital
outflow of £5.6 million.
Capital expenditure
The Group made capital investments of £3.5 million (FY22 H1: £2.4 million)
during the period; this was incurred entirely on existing bars, comprising
building renovation works as part of the enhanced refurbishment programme, as
well as equipment replacement and IT investment.
Dividend
As notified previously, the Board has suspended payments of dividends. A
condition of taking on the CLBILS facility was that the Company was unable to
pay a dividend whilst the CLBILS remains outstanding; the CLBILS loans were
repaid during the half-year, and therefore is no longer a condition. As a
result of the CVA, the Company's subsidiary entity, Revolution Bars Limited,
was unable to pay a dividend until cessation of the CVA period, which occurred
in December 2022, so is therefore also no longer a condition. There was no
dividend paid or declared in either the current or prior period.
Going concern
As reported in the Group Annual Report and Accounts 2022, the constantly
changing economic environment, including the cost-of-living crisis, increasing
costs, and impacts on guest confidence, as well as ongoing risk of COVID-19,
indicates the existence of a material uncertainty which may cast significant
doubt over the ability of the Group and Company to continue as a going
concern. Although the Group is hopeful of the continued normality in trading,
it is not clear what level of trade may be possible should the UK Government
impose restrictions again.
It is not currently expected that COVID-19 would result in further significant
impacts on trading, but it remains a key area of review.
Management monitor price inflation carefully and mitigate the impact of rising
costs wherever possible through planning, reviewing, and signing new
beneficial contracts, and where required by adjusting sales prices.
Energy prices have seen a reduction recently, which is hoped to improve
consumer confidence, however the levels of uncertainty in the economic
environment impact the Group's operational performance and in particular the
level of sales and EBITDA generated will in turn determine the Group's
covenant compliance.
As reported in the Group Annual Report and Accounts 2022 and reflected in
these interim financial statements, the Group refinanced its facility in
October 2022 to support the business going forwards and support the
acquisition of Peach Pubs. This saw all remaining Coronavirus Large Business
Interruption Loan Scheme loans repaid, and the previous Revolving Credit
Facility ("RCF") replaced with a new £30.0 million RCF. As at 31 December
2022, committed total facilities were £30.0 million, with net debt of
(£18.5) million which is a reduction from net cash of £4.1 million as at 2
July 2022 following the acquisition of Peach Pubs.
Notwithstanding the material uncertainty, after due consideration the
Directors have a reasonable expectation that the Group has sufficient
resources to continue in operational existence for the period of 12 months
from the date of approval of these condensed financial statements.
Accordingly, the financial statements continue to be prepared on the going
concern basis. However, the circumstances noted above indicate the existence
of a material uncertainty which may cast significant doubt over the ability of
the Group to continue as a going concern. The financial statements do not
contain the adjustments that would arise if the Group were unable to continue
as a going concern.
Responsibility statement of the directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge:
· the condensed consolidated interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting, and
· the interim management report includes a fair review of the information
required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being
an indication of important events that have occurred during the first 26 weeks
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining 26 weeks of the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first 26 weeks of the
current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
Danielle Davies
Chief Financial Officer
6 March 2023
(1) Adjusted performance measures exclude exceptional items and share-based
payment charges and bar opening costs
(2) Like-for-like (LFL) sales are same site sales defined as sales at only
those venues that traded in the same week in both the current year and
comparative reporting periods
(3) APM refers to Alternative Performance Measure being measures reported on
an IAS 17 basis
Revolution Bars Group plc
Condensed Consolidated Statement of Comprehensive Income
for the 26 weeks ended 31 December 2022
Note Unaudited Unaudited Audited
26 weeks ended
26 weeks ended
31 December
1 January 52 weeks ended
2022 2022 2 July
2022
£'000 £'000
£'000
Revenue 4 75,951 74,134 140,821
Cost of sales (17,378) (16,289) (30,695)
Gross profit 58,573 57,845 110,126
Operating expenses:
- operating expenses, excluding exceptional items (53,988) (51,246) (102,721)
- exceptional items 5 (1,501) 20 (561)
- grant income - 51 568
Total operating expenses (55,489) (51,175) (102,714)
Operating profit 3,084 6,670 7,412
Finance expense 6 (3,175) (2,324) (5,280)
(Loss)/profit before taxation (91) 4,346 2,132
Income tax 7 257 - -
Profit and total comprehensive income for the period 166 4,346 2,132
Earnings per share:
- basic (pence) 9 0.1 1.9 0.9
- diluted (pence) 9 0.1 1.9 0.9
Dividend declared per share (pence) - - -
Revolution Bars Group plc
Condensed Consolidated Statement of Financial Position
at 31 December 2022
Note Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
31 December 1 January 2 July
2022 2022 2022
£'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 11 46,028 33,455 36,375
Right-of-use assets 11 82,017 61,952 62,744
Intangible assets 28 28 28
Goodwill 10 12,111 - -
140,184 95,435 99,147
Current assets
Inventories 4,043 3,616 3,487
Trade and other receivables 12 7,575 6,794 8,777
Cash and cash equivalents 4,508 19,446 18,815
16,126 29,856 31,079
Total assets 156,310 125,291 130,226
Liabilities
Current liabilities
Trade and other payables 13 (28,957) (25,296) (30,618)
Lease liabilities 14 (6,615) (5,666) (5,437)
Provisions 15 (924) (1,101) (1,314)
(36,496) (32,063) (37,369)
Net current liabilities (20,370) (2,207) (6,290)
Non-current liabilities
Lease liabilities 14 (117,829) (97,425) (99,545)
Interest-bearing loans and borrowings 16 (23,000) (15,251) (14,751)
Provisions 15 (2,003) (1,444) (1,582)
(142,832) (114,120) (115,878)
Total liabilities (179,328) (146,183) (153,247)
Net liabilities (23,018) (20,892) (23,021)
Equity attributable to equity holders of the parent
Share capital 230 230 230
Share premium 33,794 33,794 33,794
Merger reserve 11,645 11,645 11,645
Accumulated losses (68,687) (66,561) (68,690)
Total equity (23,018) (20,892) (23,021)
Revolution Bars Group plc
Condensed Consolidated Statement of Changes in Equity
for the 26 weeks ended 31 December 2022
Reserves
Share Share Merger (Accumulated losses) / retained earnings Total
capital premium reserve £'000 equity
£'000 £'000 £'000 £'000
At 3 July 2021 230 33,794 11,645 (70,899) (25,230)
Profit and total comprehensive income for the period - - - 2,132 2,132
Charge arising from long-term incentive plans - - - 77 77
At 2 July 2022 230 33,794 11,645 (68,690) (23,021)
Profit and total comprehensive income for the period - - - 166 166
Credit arising from long-term incentive plans - - - (163) (163)
At 31 December 2022 230 33,794 11,645 (68,687) (23,018)
Revolution Bars Group plc
Condensed Consolidated Statement of Cash Flow
at 31 December 2022
Note Unaudited Unaudited
26 weeks 26 weeks Audited
ended ended 52 weeks ended
31 December 1 January 2 July
2022 2021 2022
£'000 £'000 £'000
Cash flow from operating activities
Profit before tax from operations 166 4,346 2,132
Adjustments for:
Net finance expense 6 3,175 2,324 5,280
Depreciation of property, plant and equipment 11 2,992 2,843 5,630
Depreciation of right-of-use assets 11 2,411 2,716 5,437
Impairment of property, plant and equipment 11 - 56 261
Impairment of right-of-use assets 11 - - 376
Lease modification 14 (30) (76) (76)
Amortisation of intangibles 3 1 3
(Credits)/charges arising from long-term incentive plans 8 (163) (8) 77
Operating cash flows before movement in working capital 8,554 12,202 19,120
(Increase)/decrease in inventories (208) (661) (532)
Decrease/(increase) in trade and other receivables 3,378 (1,576) (3,559)
(Decrease)/increase in trade and other payables (8,066) 4,220 10,170
(Decrease)/increase in provisions (390) 299 650
Net cash flow generated from operating activities 3,268 14,484 25,849
Cash flow from investing activities
Acquisition of subsidiaries, net of cash acquired 10 (9,190) - -
Purchase of intangible assets (3) (5) (7)
Purchase of property, plant and equipment 11 (4,617) (2,409) (8,321)
Net cash flow used in investing activities (13,810) (2,414) (8,328)
Cash flow from financing activities
Interest paid 6 (754) (411) (917)
Principal element of lease payments 14 (2,236) (1,918) (4,544)
Interest element of lease payments 14 (3,098) (1,913) (4,363)
Repayment of subsidiary borrowings (5,926) - -
Repayment of borrowings 16 (21,751) (500) (1,000)
Drawdown of borrowings 16 30,000 - -
Net cash flow used in financing activities (3,765) (4,742) (10,824)
Net (decrease)/increase in cash and cash equivalents (14,307) 7,328 6,697
Opening cash and cash equivalents 18,815 12,118 12,118
Closing cash and cash equivalents 4,508 19,446 18,815
Reconciliation of net bank debt
Net (decrease)/increase in cash and cash equivalents (14,307) 7,328 6,697
Cash inflow from increase in borrowings (30,000) - -
Cash outflow from repayment of borrowings 21,751 500 1,000
Opening net bank cash/(net bank debt) 4,064 (3,633) (3,633)
Closing (net bank debt)/net cash (18,492) 4,195 4,064
Notes to the Half-yearly Financial Report
1. General information and basis of preparation
(a) General Information
Revolution Bars Group plc (the 'Company') is a company incorporated and
domiciled in the United Kingdom. Its Registered Office is at 21 Old Street,
Ashton-under-Lyne, OL6 6LA, United Kingdom. The Company's shares were admitted
to trading on the AIM market of the London Stock Exchange on 27 July 2020.
This half-yearly Financial Report is an interim management report as required
by DTR 4.2.3 of the Disclosure Guidance and Transparency Rules of the UK
Financial Conduct Authority (the 'FCA').
These condensed consolidated interim financial statements as at and for the 26
weeks ended 31 December 2022 comprises the Company and its subsidiaries
(together referred to as the "Group").
(b) Basis of preparation
The annual financial statements of the Group are prepared in accordance with
International Accounting Standards in conformity with the requirements of the
Companies Act 2006 ("IFRS").
The condensed consolidated interim financial statements of the Group for the
26 weeks ended 31 December 2022 have been prepared in accordance with IAS 34
Interim Financial Reporting. The condensed consolidated interim financial
statements do not include all the information and disclosures required in the
annual financial statements and should be read in conjunction with the Group's
financial statements for the 52 weeks ended 2 July 2022.
As required by the Disclosure Guidance and Transparency Rules of the FCA, the
condensed set of financial statements has been prepared applying the
accounting policies and presentation that were applied in the preparation of
the company's published consolidated financial statements for the 52 weeks
ended 2 July 2022.
The comparative figures for the 52 weeks ended 2 July 2022 are extracted from
the Company's statutory accounts for that period. Those accounts have been
reported on by the Company's auditor, filed with the Registrar of Companies
and are available on request from the Company's Registered Office or to
download from www.revolutionbarsgroup.com (http://www.revolutionbarsgroup.com)
. The auditor's report on those accounts was unqualified, did include a
reference to any matters to which the auditor drew attention by way of
emphasis without qualifying their report, did include a reference to a
material uncertainty relating to going concern, and did not contain any
statement under sections 498 (2) or (3) of the Companies Act 2006.
New and amended standards adopted by the Group
A number of new or amended standards became applicable for the current
reporting period. The Group did not have to change its accounting policies or
make retrospective adjustments as a result of adopting these standards.
(c) Going concern
As reported in the Group Annual Report and Accounts 2022, the constantly
changing economic environment, including the cost-of-living crisis, increasing
costs, and impacts on guest confidence, indicates the existence of a material
uncertainty which may cast significant doubt over the ability of the Group and
Company to continue as a going concern.
It is not currently expected that COVID-19 would result in further significant
impacts on trading, but it remains a key area of review.
Management monitor price inflation carefully and mitigate the impact of rising
costs wherever possible through planning, reviewing, and signing new
beneficial contracts, and where required by adjusting sales prices.
Energy prices have seen a reduction recently, which is hoped to improve
consumer confidence, however the levels of uncertainty in the economic
environment impact the Group's operational performance and in particular the
level of sales and EBITDA generated will in turn determine the Group's
covenant compliance.
As reported in the Group Annual Report and Accounts 2022 and reflected in
these interim financial statements, the Group refinanced its facility in
October 2022 to support the business going forwards and support the
acquisition of Peach Pubs. This saw all remaining Coronavirus Large Business
Interruption Loan Scheme loans repaid, and the previous Revolving Credit
Facility ("RCF") replaced with a new £30.0 million RCF. As at 31 December
2022, committed total facilities were £30.0 million, with net debt of
(£18.5) million which is a reduction from net cash of £4.1 million as at 2
July 2022 following the acquisition of Peach Pubs.
Notwithstanding the material uncertainty, after due consideration the
Directors have a reasonable expectation that the Group has sufficient
resources to continue in operational existence for the period of 12 months
from the date of approval of these condensed financial statements.
Accordingly, the financial statements continue to be prepared on the going
concern basis. However, the circumstances noted above indicate the existence
of a material uncertainty which may cast significant doubt over the ability of
the Group to continue as a going concern. The financial statements do not
contain the adjustments that would arise if the Group were unable to continue
as a going concern.
2. Significant accounting policies
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are consistent with those followed in the
preparation of the Group's annual financial statements for the 52 weeks ended
2 July 2022. These accounting policies are all expected to be applied for the
52 weeks to 1 July 2023.
Leases
Where the Company is a lessee, a right-of-use asset and lease liability are
both recognised at the outset of the lease. Each lease liability is initially
measured at the present value of the remaining lease payment obligations
taking account of the likelihood of lease extension or break options being
exercised. Each lease liability is subsequently adjusted to reflect imputed
interest, payments made to the lessor and any modifications to the lease. The
right-of-use asset is initially measured at cost, which comprises the amount
of the lease liability, plus lease payments made at or before the commencement
date adjusted by the amount of any prepaid or accrued lease payments, less any
incentives received to enter in to the lease, plus any initial direct costs
incurred by the Group to execute the lease, and less any onerous lease
provision. The right-of-use asset is depreciated in accordance with the
Group's accounting policy on property, plant and equipment. The amount charged
to the income statement comprises the depreciation of the right-of-use asset
and the imputed interest on the lease liability.
Items impacting Alternative Performance Measures
Exceptional items
Items that are unusual or infrequent in nature and material in size are
disclosed separately in the income statement. The separate reporting of these
items helps provide a more accurate indication of the Group's underlying
business performance, which the Directors believe would otherwise be
distorted. Exceptional items typically include impairments of property, plant
and equipment and right-of-use assets, significant contract termination costs
and costs associated with major one-off projects.
Share based payments
Charges relating to share-based payment arrangements, while not treated as an
exceptional item, are adjusted for when arriving at adjusted EBITDA on the
basis that such amounts are non-cash, can be material and often fluctuate
significantly from period to period, dependent on factors unrelated to the
Group's underlying trading performance.
Bar opening costs
Bar opening costs relate to costs incurred in getting new bars fully operation
and primarily include costs incurred before the opening and preparing for
launch, even if the bars do not open in the period. Although not treated as an
exceptional item, these are adjusted for when arriving at adjusted EBITDA on
the basis that such amounts are non-cash, can be material and often fluctuate
significantly from period to period, dependent on factors unrelated to the
Group's underlying trading performance.
3. Key Risks
The directors believe that the principal risks and uncertainties faced by the
business are as set out below. Occurrence of any of these risks or a
combination of them may significantly impact the achievement of the Group's
strategic goals;
· COVID-19
· Climate change and Sustainability
· Supply chain and supplier concentration
· Refurbishment and acquisition of bars
· Consumer demand and PR
· Health and safety
· National minimum/living wage
· Funding
4. Segmental reporting
The Group's continuing operating businesses are organised and managed as
reportable business segments according to the information used by the Group's
Chief Operating Decision Maker ("CODM") in its decision making and reporting
structure.
The Group's internal management reporting is focused predominantly on revenue
and APM IAS 17 adjusted EBITDA, as these are the principal performance
measures and drives the allocation of resources. The CODM receives information
by trading venue, each of which is considered to be an operating segment. All
operating segments have similar characteristics and, in accordance with IFRS
8, are aggregated to form an "Ongoing business" reportable segment. Within the
ongoing business, assets and liabilities cannot be allocated to individual
operating segments and are not used by the CODM for making operating and
resource allocation decisions.
The Group performs all its activities in the United Kingdom. All the Group's
non-current assets are located in the United Kingdom. Revenue is earned from
the sale of drink and food with a small amount of admission and other income.
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
31 December 1 January 2 July
2022 2022 2022
£'000 £'000 £'000
Revenue 75,951 74,134 140,821
Cost of sales (17,378) (16,289) (30,695)
Gross profit 58,573 57,845 110,126
Operating expenses:
- operating expenses excluding exceptional items (53,988) (51,246) (102,721)
- exceptional items (1,501) 20 (561)
- grant income - 51 568
Total operating expenses (55,489) (51,175) (102,714)
Operating profit 3,084 6,670 7,412
Bar & Pub Revenue relates to food, drink and admission sales from the
Group's bars and pubs. Other Revenue includes photobooth income, as well as
other smaller revenue streams including rental, commission, accommodation,
gaming and online revenue.
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
31 December 1 January 2 July
2022 2022 2022
£'000 £'000 £'000
Bar & Pub Revenue 74,798 73,589 139,581
Other Revenue 1,153 545 1,240
Revenue 75,951 74,134 140,821
5. Exceptional items
Exceptional items, by virtue of their size, incidence or nature, are disclosed
separately in order to allow a better understanding of the underlying trading
performance of the Group. Exceptional charges/(credits) comprised the
following:
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
31 December 1 January 2 July
2022 2022 2022
£'000 £'000 £'000
Administrative expenses:
- impairment of right-of-use assets - - 376
- impairment of property, plant and equipment - 56 261
- lease modification (30) (76) (76)
- acquisition costs 1,498 - -
- property restructure 33 - -
Total exceptional items 1,501 (20) 561
Exceptional items predominantly relate to the legal and professional costs
incurred during the acquisition of Peach.
Property Restructure relates to the final costs involved in closing out the
Company Voluntary Arrangement ("CVA") period which ended in December 2022.
An exceptional lease modification was recognised where right-of-use assets
were already at nil value, and the credit was thus taken to the income
statement.
No impairment review was conducted at the half-year, but a full impairment
review will be conducted across the entire asset base at year-end.
6. Finance expense
Unaudited Unaudited
26 weeks 26 weeks Audited
ended ended 52 weeks
31 December 1 January ended
2022 2022 2 July
£'000 £'000 2022
£'000
Interest payable on bank loans and overdrafts 754 411 917
Interest on lease liabilities 2,421 1,913 4,363
Interest payable 3,175 2,324 5,280
7. Income Tax
The taxation charge for the 26 weeks ended 31 December 2022 has been
calculated by applying an estimated effective tax rate for the 52 weeks ending
1 July 2023. Due to brought-forwards tax losses, no tax was due for the
half-year period, and a tax credit of £0.3 million arose due to the reversal
of a deferred tax liability in Peach due to it now taking advantage of Group
relief. Due to the continued uncertainty in the economy, there was no deferred
tax assets created.
8. Share-based payments
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
31 December 1 January 2 July
2022 2022 2022 £'000
£'000 £'000
Charge/(credit) in the period 1 (8) 171
Credit relating to forfeitures in period (164) - (94)
Total (credit)/charge arising from long-term incentive plans (163) (8) 77
All remaining historic employee share incentive schemes ceased in the year
after all schemes reached the end of their award period. Previous schemes did
not meet success criteria, and have thus ceased to operate with all
outstanding options lapsing.
The Group issued 1,311,528 options under a Restricted Share Award ("RSA")
scheme on 24 December 2020, 4,155,290 options under a RSA scheme on 23
November 2021, and a further 5,628,887 options under a RSA scheme on 25
October 2022. These are monitored for leavers and forfeitures.
9. Earnings per share
The calculation of loss per ordinary share is based on the results for the
period, as set out below:
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
31 December 1 January 2 July
2022 2022 2022 £'000
£'000 £'000
Profit for the period (£'000) 166 4,346 2,132
Weighted average number of shares - basic ('000) 230,049 230,049 230,049
Basic earnings per Ordinary share (pence) 0.1 1.9 0.9
Weighted average number of shares - diluted ('000) 240,534 230,049 235,139
Diluted earnings per Ordinary share (pence) 0.1 1.9 0.9
Diluted shares are calculated making an assumption of outstanding options
expected to be awarded. Profit/(loss) for the period was impacted by one-off
exceptional costs and bar opening costs. A calculation of adjusted earnings
per ordinary share is set out below:
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
31 December 1 January 2 July
2022 2022 2022 £'000
£'000 £'000
(Loss)/profit on ordinary activities before taxation (91) 4,346 2,132
Exceptional items, share-based payments and bar opening costs (28) 944
1,338
Adjusted profit on ordinary activities before taxation 1,247 4,318 3,076
Taxation on ordinary activities 257 - -
Taxation on exceptional items and bar opening costs - 4 (150)
Adjusted profit of ordinary activities after taxation 1,504 4,322 2,926
Basic number of shares ('000) 230,049 230,049 230,049
Adjusted basic earnings per share (pence) 0.7 1.9 1.3
Diluted number of shares ('000) 240,534 230,049 235,139
Adjusted diluted earnings per share (pence) 0.6 1.9 1.2
10. Business combinations
In the 26-week period ended 31 December 2022, the Group has acquired 100% of
the share capital of 12 companies, between them holding 21 pubs, which form
The Peach Pub Company (Holdings) Limited group ("Peach"). Acquisition of these
shares has led to the control and consolidation of these companies as of the
date of acquisition, being 18 October 2022, leading to control from the date
of acquisition.
As the acquisition occurred mid-accounting period, the Group has taken
advantage of the IFRS 3 "Convenience Date", noting that no material changes in
amounts were recognised between the date of acquisition and date of
consolidation, being 30 October 2022 (the first date of the next period after
acquisition).
Since acquisition to FY23 H1-end, Peach has generated revenue of £6.3 million
and profit before tax of £0.4 million. It is not practical to provide a
proforma as if the acquisition had taken place at the start of the year due to
the following:
· Peach has previously operated a 52-week period on the calendar year, where
Revolution Bars Group plc operates a 52-week period from the end of June.
There would be additional complexity in analysing the information from these
variety of dates as well as the acquisition date;
· The acquisition occurred approximately three months into FY23, and is
therefore not a significant proportion of the full-year trade. It is not
expected that providing analysis as if acquired at the start of the year would
provide a quantitively or qualitatively material impact for the readers;
· Peach was previously accounted for under FRS 102 UK GAAP, and Management has
complete the IFRS conversion as at acquisition. The additional work to convert
the balance sheet as at the start of the year is not expected to provide
significantly different information to that as at acquisition;
· Due to the differing accounting frameworks, as well as differing management of
the business pre-acquisition, there have also been a large number of
accounting policy amendments to bring Peach in line with the Group. Rolling
this to the start of the year is also not expected to provide meaningful
information; and
· It is not believed the level of analysis from Management to produce the above
analysis would provide truly meaningful information for the readers of the
financial statements.
Subsidiaries acquired in the 26-week period ended 31 December 2022
Principal activity Total share capital acquired
Date of acquisition
The Peach Pub Company (Holdings) Limited Management Company 18 October 2022 100%
The Peach Pub Company Limited Pub Trading Company 18 October 2022 100%
The Peach Pub Properties Limited Pub Trading Company 18 October 2022 100%
Pretty as Peach Limited Pub Trading Company 18 October 2022 100%
Pure Peach Limited Pub Trading Company 18 October 2022 100%
100% Peach Limited Pub Trading Company 18 October 2022 100%
Peach Almanack Limited Pub Trading Company 18 October 2022 100%
Giant Peach Pubs Limited Pub Trading Company 18 October 2022 100%
Peach Paddy Club Limited Pub Trading Company 18 October 2022 100%
Peach County Limited Pub Trading Company 18 October 2022 100%
Peach Melba Limited Pub Trading Company 18 October 2022 100%
Peach on the Water Limited Pub Trading Company 18 October 2022 100%
Assets acquired and liabilities recognised at the date of acquisition
The amounts recognised in respect of identifiable assets and liabilities
relating to the acquisition are as follows, as at the consolidation date of 30
October 2022. The acquisition disclosures have been combined as each
acquisition is considered to be individually immaterial to the Group. Assets
and liabilities have been valued at fair value on acquisition.
Book value of assets and liabilities acquired Fair Value Adjustments on acquisition IFRS Conversion Adjustments Fair value of assets and liabilities acquired
£'000 £'000
£'000 £'000
Non-current assets
Property, plant and equipment 9,145 51 - 9,196
Right-of-use assets - - 20,645 20,645
Goodwill 96 (96) - -
Current assets
Inventories 367 (20) - 347
Trade and other receivables 2,265 (82) (4) 2,179
Cash and cash equivalents 4,738 - - 4,738
Non-current Liabilities
Lease liabilities - - (20,606) (20,606)
Dilapidations provision - (332) - (332)
Current Liabilities
Trade and other payables (6,693) (664) - (7,357)
Loans (5,755) - - (5,755)
Lease liabilities - - (957) (957)
Tax payable (280) - - (280)
Net assets 3,883 (1,143) (922) 1,818
The Group has 12 months from acquisition to review the acquired balance sheet
for appropriate fair value adjustments, such as those required to align
accounting policies and standards. The above represents Management's current
expectations of the acquired balance sheet and resulting Goodwill.
Goodwill arising on acquisition
The Enterprise Value of £16.5 million was adjusted by a number of balance
sheet adjustments resulting in an equity value at completion of £13.4 million
plus £0.5 million of contingent consideration based on performance that is
expected to be fully achieved, but this has not yet been paid out. This gives
rise to the investment value below of £13.9 million.
The cashflow shows the £13.4 million payment, plus £0.5 million paid out in
relation to another contingent consideration that is not expected to be
realised and thus does not attribute to the investment figure, less cash
received on acquisition of £4.7 million.
Goodwill
£'000
Consideration 13,929
Less: Fair value of assets acquired (1,818)
Goodwill arising on acquisition 12,111
The consideration shown within the table above relates to £13.4 million cash
consideration for the purchase of the 100% share capital of The Peach Pub
Company (Holdings) Limited and its subsidiaries, and £0.5 million of
contingent consideration due dependent on the future performance of Peach,
which is expected to be achieved fully.
In line with IFRS 3, the right-of-use assets have been brought on at a value
equal to lease liability, adjusted for any known market conditions. These
leases relate to the standalone pub leases.
11. Property, plant and equipment and right-of-use assets
Property, plant and equipment Freehold land and buildings Short leasehold premises Fixtures and fittings IT equipment and office furniture Total
£'000 £'000 £'000 £'000 £'000
Cost
At 2 July 2022 1,426 86,675 61,834 9,742 159,677
Additions 280 3,836 7,379 1,150 12,645
At 31 December 2022 1,706 90,511 69,213 10,892 172,322
Accumulated depreciation and impairment
At 2 July 2022 (1,216) (59,380) (53,703) (9,003) (123,302)
Depreciation charges - (1,169) (1,477) (346) (2,992)
At 31 December 2022 (1,216) (60,549) (55,180) (9,349) (126,294)
Net book value
At 31 December 2022 490 29,962 14,033 1,543 46,028
At 2 July 2022 210 27,295 8,131 739 36,375
Additions above include £9.1 million relating to the acquisition of the fair
value of Property, Plant and Equipment of Peach Pubs.
Right-of-use assets - Group Short leasehold premises Vehicles Total
£'000 £'000 £'000
Cost
At 2 July 2022 109,782 418 110,200
Additions 20,645 - 20,645
Reassessment/modification of assets previously recognised 1,039 - 1,039
At 31 December 2022 131,466 418 131,884
Accumulated depreciation and impairment
At 2 July 2022 (47,042) (414) (47,456)
Depreciation charges (2,407) (4) (2,411)
Impairment charges - - -
At 31 December 2022 (49,449) (418) (49,867)
Net book value
At 31 December 2022 82,017 - 82,017
At 2 July 2022 62,740 4 62,744
Depreciation and impairment of property, plant and equipment and right-of-use
assets are recognised in operating expenses in the consolidated statement of
profit or loss and other comprehensive income. No impairment review was
conducted at the half-year, but a full impairment review will be conducted
across the entire asset base at year-end.
Right-of-use additions above relate entirely to the acquisition of Peach Pubs
and the newly formed IFRS 16 assets following conversion to IFRS 16.
12. Trade and other receivables
Unaudited Unaudited
26 weeks 26 weeks Audited
ended ended 52 weeks
31 December 1 January ended
2022 2022 2 July
£'000 £'000 2022
£'000
Amounts falling due within one year
Trade and other receivables 3,877 2,956 3,707
Accrued rebate income 487 824 501
Prepayments 3,211 3,014 4,427
Other debtors - - 142
7,575 6,794 8,777
13. Trade and other payables
Unaudited Unaudited
26 weeks 26 weeks Audited
ended ended 52 weeks
31 December 1 January ended
2022 2022 2 July
£'000 £'000 2022
£'000
Amounts falling due within one year
Trade payables 13,057 8,183 11,801
Other payables 1,272 254 142
Accruals and deferred income 10,272 13,074 15,434
Other taxes and social security costs 4,356 3,785 3,241
28,957 25,296 30,618
14. Lease liabilities
Short leasehold properties Vehicles Total
£'000 £'000 £'000
At 2 July 2022 104,976 6 104,982
Additions 21,563 - 21,563
Reassessment/modification of liabilities previously recognised 848 - 848
Modifications taken as a credit to administrative expenses (note 5) (30) - (30)
Lease liability payments (5,334) (6) (5,340)
Finance costs 2,421 - 2,421
At 31 December 2022 124,444 - 124,444
Additions relate to new leases acquired as part of the acquisition of The
Peach Pub Company (Holdings) Limited and its subsidiaries. The
reassessment/modification of leases relates to re-gears on existing leases,
where the terms of the lease have been changed such as an extension or change
to rental amount.
The lease liability cash payments in the year comprise interest of £3.1
million and principal of £2.2 million. £6.6 million of the net present value
of lease liabilities are current, and £117.8 million are non-current.
15. Provisions
The dilapidations provision relates to a provision for dilapidations due at
the end of leases. The Group provides for unavoidable costs associated with
lease terminations and expires against all leasehold properties across the
entire estate, built up over the period until exit. Other provisions include
provisions for various COVID-19 related items, which are uncertain of timing
and therefore classified as less than one year. Dilapidations provisions are
expected to be utilised over the next 5-15 years as leases come to an end.
Other provisions Dilapidations Total provisions
provision
£,000 £'000 £'000
At 2 July 2022 1,314 1,582 2,896
Movement on provision (390) 538 148
Utilisation of provision - (117) (117)
At 31 December 2022 924 2,003 2,927
Unaudited Unaudited
26 weeks 26 weeks Audited
ended ended 52 weeks
31 December 1 January ended
2022 2022 2 July
£'000 £'000 2022
£'000
Current 924 1,101 1,314
Non-current 2,003 1,444 1,582
2,927 2,545 2,896
16. Interest-bearing loans and borrowings
Unaudited Unaudited
26 weeks 26 weeks Audited
ended ended 52 weeks
31 December 1 January ended
2022 2022 2 July
£'000 £'000 2022
£'000
Revolving credit facility 23,000 - -
Coronavirus Large Business Interruption Loan Scheme - 15,251 14,751
23,000 15,251 14,751
As at the date of the consolidated financial position, the Group had a total
revolving credit facility (the "Facility") of £30.0 million expiring in
October 2025, of which £23.0 was drawn down. All outstanding Coronavirus
Large Business Interruption Loan Scheme ("CLBILS") loans were repaid as part
of a refinancing in October 2022, which also saw the Facility increased from
£16.3 million to £30.0 million.
The Facility and the CLBILS are secured and supported by a fixed equitable
charge over the assets of Revolution Bars Group plc, Revolución De Cuba
Limited, Revolution Bars Limited, Revolution Bars (Number Two) Limited,
Inventive Service Company Limited, and The Peach Pub Company (Holdings)
Limited and its subsidiaries.
17. Dividends
No dividend in respect of the interim reporting period is being declared. No
interim or final dividend was declared in respect of the 52 weeks ended 2 July
2022.
18. Capital Commitments
There were £nil capital commitments as at 31 December 2022 (at 2 July 2022:
£nil).
19. Alternative Performance Measures - Adjusted EBITDA - Non-IFRS 16 Basis
The Board's preferred profit measures are Alternative Performance Measures
("APM") adjusted EBITDA and APM adjusted pre-tax loss, as shown in the tables
below. The APM adjusted measures exclude exceptional items, bar opening costs
and charges/credits arising from long term incentive plans. Non-GAAP measures
are presented below which encompasses adjusted EBITDA on an IFRS 16 basis:
26 weeks 26 weeks 52 weeks ended
ended 31 December
ended 1 January
2 July
2022 2022
2022
£'000 £'000
£'000
Non-GAAP measures
Revenue 75,951 74,134 140,821
Operating profit 3,084 6,670 7,412
Exceptional items 1,501 (20) 561
Charge/(credit) arising from long-term incentive plans (163) (8) 77
Bar opening costs - - 306
Adjusted operating profit 4,422 6,642 8,356
Finance expense (3,175) (2,324) (5,280)
Adjusted profit before tax 1,247 4,318 3,076
Depreciation 5,403 5,559 11,067
Amortisation 3 1 3
Finance expense 3,175 2,324 5,280
Adjusted EBITDA 9,828 12,202 19,426
The below table reconciles from the statutory non-GAAP adjusted EBITDA to the
APM formats, which translates to a pre-IFRS 16 basis by inputting the rental
charge and other relevant adjustments.
26 weeks ended 31 December 2022 Reduction Reduction Onerous lease provision interest Rent charge 26 weeks ended 31 December 2022
in depreciation in
interest
IFRS 16 IAS 17
£'000 £'000 £'000 £'000 £'000 £'000
Adjusted profit before tax
1,247 2,599 2,421 (92) (4,777) 1,398
Depreciation 5,403 (2,599) - - - 2,804
Amortisation 3 - - - - 3
Finance expense 3,175 - (2,421) 92 - 846
Adjusted EBITDA 9,828 - - - (4,777) 5,051
52 weeks ended 2 July 2022 Reduction Reduction Onerous lease provision interest Rent charge 52 weeks ended 2 July 2022
in depreciation in
interest
IFRS 16 IAS 17
£'000 £'000 £'000 £'000 £'000 £'000
Adjusted profit before tax 3,076 6,218 4,393 (30) (9,189) 4,468
Depreciation 11,067 (6,218) - - - 4,849
Amortisation 3 - - - - 3
Finance expense 5,280 - (4,393) 30 - 917
Adjusted EBITDA 19,426 - - - (9,189) 10,237
The APM profit measures have been prepared using the reported results for the
current period and replacing the accounting entries related to IFRS 16 Leases
with an estimate of the accounting entries that would have arisen when
applying IAS 17 Leases. The effective tax rate has been assumed to be
unaltered by this change. Impairment assumptions have been re-geared for an
IAS 17 perspective, and the onerous lease provision movement has been
included.
The APM profit measures see a large reduction in depreciation due to the
non-inclusion of IFRS 16 depreciation on the right-of-use assets, and
similarly non-inclusion of the finance expense of interest on lease
liabilities. The operating profit/loss is impacted by the inclusion of rent
expenditure from the income statement and inclusion of the onerous lease
provision. Exceptionals are significantly impacted by the change in
impairment, and the classification of certain cash closure exceptionals.
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