REG - Revolution Bars - Interim Results
10/04/2024 18:15
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240410:nRSJ1039Ka&default-theme=true
RNS Number : 1039K Revolution Bars Group 10 April 2024
10 April 2024
Revolution Bars Group plc (LSE: RBG)
Unaudited Interim results for the 26 weeks ended 30 December 2023
Making the right decisions on our portfolio to secure the future profitability
of our businesses
Revolution Bars Group plc ("the Group"), a leading UK operator of 58 premium
bars and 22 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 30 December 2023. These results should
be read in conjunction with a separate announcement regarding a Proposed
Restructuring plan, Placing, Open Offer and simultaneously the launch of a
Formal Sale Process.
With the announcement of its unaudited interim results for the 26 weeks ended
30 December 2023, which are now available on the Company's website, the
Company has requested that trading in its ordinary shares on AIM be restored
with effect from 7.30 a.m. on 11 April 2024.
Results to 30 December 2023
H1 FY24 H1 FY23 H1 FY24 H1 FY23
(IFRS 16) (IFRS 16) (IAS 17) (IAS 17)
£m £m £m £m
Total Sales 82.3 76.0 82.3 76.0
Operating Profit 7.2 3.1 (0.7) 0.9
Adjusted(1) EBITDA 8.9 9.8 3.2 5.1
Profit/(Loss) Before Tax 3.1 (0.1) (2.1) 0.0
Net Bank Debt (20.0) (18.5) (20.0) (18.5)
Key points
With ongoing challenges to the Hospitality sector, the Group was pleased to
have traded positively over the important festive season. The Group achieved
sales growth year-on-year of 8.3%, and a profit before tax of £3.1 million,
after an exceptional gain on disposal of £3.9 million relating to the exit
from certain leasehold properties.
Group like-for-like(2) ("LFL") sales for the four weeks from 4 to 31 December
2023 were +9.0%, the best festive period since 2019. LFL(2) sales for FY24 H1,
including New Year's Eve, continued to demonstrate an improving trend at
-2.8%.
§ Peach Pubs, following the opening of our 22(nd) Peach pub in November 2023,
the brand delivered its best ever Christmas trading period, and continues to
trade well.
§ Revolución de Cuba has also seen a pleasing performance across FY24 H1.
Corporate guests return to Christmas parties in full this year, and our
refreshed brand proposition delighted party-goers who recorded excellent guest
feedback scores.
§ Revolution continues to experience challenged trading as a result of its
younger guests who are disproportionately impacted by the cost-of-living
crisis pressurising their discretionary income.
§ Founders & Co. continues to go from strength to strength, delivering
double-digit LFL(2) growth every month in FY24 H1 as it continues to build on
its status as a community hub for likeminded guests. This concept is now well
positioned for growth and is an exciting prospect for the Group.
Despite a strong festive trading period, the macroeconomic trading environment
continued to provide a challenging trading environment. The prospect of the
statutory blended 11% increase in the national living wage in April 2024 will
add further cost pressure. Accordingly, eight site closures were announced in
January 2024 to reduce expected future losses.
The Board remains confident of achieving Alternative Performance Measures
("APM") adjusted(1) EBITDA in line with its previous expectations. Net Bank
Debt is £21.8 million at 10 April 2024.
Following an ongoing period of softer trade post-Christmas, coupled with
significant cost pressures on the Group and industry, today we have announced
that the Board has concluded that it is in the best interests of the Group for
Revolution Bars Limited to propose a Restructuring Plan, alongside a number of
additional measures to be implemented across the Group to re-shape the
business, as well as exploring, in parallel, a Formal Sale Process in order to
deliver the best outcome for stakeholders.
In order to fund a potential Restructuring Plan and provide working capital
for the Group, the Board has concluded that the Group needs to raise
additional equity capital from new and existing investors through a
Fundraising. Further details of the proposed Fundraising, Restructuring Plan
and Formal Sale Process are contained in a separate announcement, released
this morning.
(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 and prior year
(3) APM refers to Alternative Performance Measure being measures reported on
an IAS 17 basis
Rob Pitcher, Chief Executive Officer, said:
"The first half of FY24 has seen continued challenges with the cost-of-living
crisis disproportionately impacting particularly the discretionary expenditure
of our young Revolution brand guests. Revolución de Cuba and Peach have been
less impacted as the guest profile is more affluent, and both brands enjoyed
very strong festive trading, and Revolución de Cuba, in particular, has shown
excellent trading when compared against the wider Bars market.
I would like to take this opportunity to thank our brilliant teams for always
bringing a smile to our guests, and their continued resilience and hard work
in the face of these challenging times. They have delivered another brilliant
Christmas, continue to delight and thrill our guests, and I appreciate their
continued professionalism."
Enquiries:
Revolution Bars Group plc Tel: 0161 330 3876
Rob Pitcher, CEO
Danielle Davies, CFO
Cavendish (Nominated Adviser and Broker) Tel: 020 7220 0500
Matt Goode / Simon Hicks / Teddy Whiley / Hamish Waller (Corporate Finance)
Tim Redfern / Harriet Ward (ECM)
Instinctif (Financial PR)
Matt Smallwood Tel: 020 7457 2005
Justine Warren Tel: 020 7457 2010
Chairman's Statement
After three frustrating festive trading periods, hampered by the pandemic,
strikes, and other external factors, it was good to see the Group's best
festive trading period since 2019. Corporate guests returned in force, and
with fewer train strikes impacting consumer confidence, we were pleased to see
improved walk-in custom also. The Group delivered like-for-like(2) ("LFL")
sales of +9.0% during the key December weeks, as well as an improving trend in
LFL(2) sales overall in the first half of the year.
Peach experienced its best ever Christmas trading period, hitting new records
in three consecutive weeks. Revolución de Cuba also saw double-digit LFL(2)
growth and continued to outperform the bars market for the past 13 of the last
13 months to December 2023. Founders & Co. continues to go from strength
to strength, also delivering double-digit LFL(2) growth.
These three brands provide a strong backbone to the business, with plenty of
opportunity for growth and expansion.
Revolution had a strong Christmas but was again disproportionately impacted by
the limited discretionary spending of its younger guest base. We are pleased
to see excellent guest feedback when our young guest base do join us, but the
challenging cost-of-living crisis continues to impact their ability to go out
on a frequent basis. Accordingly, we have had to take action by closing
certain sites to secure the future of the wider Group, and by exploring a more
formal turnaround strategy for this part of the Group. We look forward to the
day that our young guest base can return with more frequency to our Revolution
branded sites.
Our business
At the end of the reporting period the Group operated 88 venues consisting of
the following brands: Revolution (46 bars), focused on young adults;
Revolución de Cuba (17 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 Peach Pubs (22 pubs) offering
high quality food and drink in the heart of England.
One new Peach Pub, being The Three Horseshoes, was opened late FY24 H1 and is
performing in line with expectations.
In January 2024 we took the difficult decision to close eight unprofitable
bars in total, across the Revolution, Revolución de Cuba, and Playhouse
brands, which takes the Group portfolio to 58 bars and 22 pubs. Since June
2023, we have closed 10 bars and currently retain the leases on seven of these
with negotiations continuing to exit the leases.
We continue to monitor our portfolio of sites to ensure that management focus
is appropriately focused on the brands and sites where genuine strong
performance and growth can be achieved. It has been necessary to complete the
above closures to mitigate future site losses and allow our key sites to
thrive.
Our results
Sales for the 26-week period of £82.3 million (FY23 H1: £76.0 million) were
8.3% higher, reflecting a strong festive trading period in FY24, where we
welcomed the full return of corporate guests. The heightened sales also
include Peach for the full half year in FY24, whereas the prior year only
included Peach post-acquisition from October 2022. Despite a good Christmas,
there is still room for growth in our business and we hope to continue
outperforming the key Christmas trading period in years to come, when the
Group is not disrupted by continued external factors.
Our statutory profit before tax for the period of £3.1 million (FY23 H1: loss
before tax of (£0.1) million) reflects the increase in sales and non-cash
gains from disposing of two leases. Adjusted(1) EBITDA, our preferred KPI, is
significantly influenced by IFRS 16 and thus the Directors believe that
business performance is best measured by the directly comparable IAS 17
Alternative Performance Measures(3) ("APM") of adjusted(1) EBITDA profit of
£3.2 million (FY23 H1: profit of £5.1 million). The reduction in APM(3)
adjusted(1) EBITDA is a direct result of reduced LFL(2) sales as well as
heightened costs.
The Group continues to operate a £30.0 million Revolving Credit Facility
("RCF" and had net bank debt of £20.0 million at FY24 H1 end. As at 10 April
2024, the Group had net bank debt of £21.8 million.
Our People
I would like to take this opportunity to thank all our colleagues in the
Group; whether you are based in one of our bars or pubs, or in the Support
Centre, our people have shown real resilience and enthusiasm in overcoming and
navigating our way through the challenges facing Hospitality. Our enthusiastic
and ambitious workforce create amazing experiences in all our pubs and bars by
delivering excellent service to our guests.
Current trading
After a strong Christmas, trading has been challenging in January and February
with the ongoing strain on consumer finances. Revolución de Cuba and Peach
Pubs continue to see much better performance than the Revolution brand, whose
guests remain more heavily impacted by the cost-of-living crisis. With
improvements to the guest proposition in both main bar brands and an array of
exciting events and guest experiences launching in the coming months, we
anticipate seeing growth in performance.
We are pleased to see an improvement in economic data, with inflation and
interest rates stabilising. Despite the cost impact of National Minimum Wage
increases on the business, this does also constitute a significant pay
increase for many of our teams and guests.
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 set in January 2024 for FY24.
Fundraising, Restructuring Plan, Formal Sale Process and M&A Process and
Fundraising
Following an ongoing period of softer trade, coupled with significant cost
pressures on the Group, today we have announced a Fundraising to fund a
potential Restructuring Plan, and provide working capital support for the
Group. At the same time as the Fundraising, we have also announced our
intention to propose a Restructuring Plan for Revolution Bars Limited together
with a number of additional measures to be implemented across the Group to
re-shape its business, as well as exploring, in parallel, a Formal Sale
Process in accordance with the City Code on Takeovers and Mergers and an
M&A Process, in order to deliver the best, outcome for the stakeholders.
The Group has already implemented many actions to mitigate the impact on the
Group, including driving operational efficiencies, reducing costs and cash
outflows throughout the business, which has included redundancies and
reductions in overhead costs, in addition to also reducing capital
expenditure.
The impact of such strategies has demonstrated improved performance in the
Group, particularly in Revolución de Cuba and Peach. However, the Board has
decided it is necessary to propose a Restructuring Plan to enable improved
performance from the Group, at the same time as commencing a Formal Sale
Process.
Further details of the proposed Fundraising, Restructuring Plan, Formal Sale
Process and the M&A Process are contained in a separate announcement,
released this morning.
Keith Edelman
Non-Executive Chairman
10 April 2024
(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 and prior year
(3) APM refers to Alternative Performance Measure being measures reported on
an IAS 17 basis
Chief Executive Officer's statement
Business review
Festive trading across all brands was very strong, seeing +9.0% like-for-like
sales across the four key trading weeks, being the best festive period since
2019. When there is a reason to come out and celebrate, we are pleased to see
that our guests choose our venues. Bars saw the return of corporate Christmas
parties, with Revolución de Cuba in particular experiencing pre-booked party
revenue over the festive period grow significantly by 26% versus the prior
year. Likewise, pubs traded very strongly benefiting from family festive
celebrations, some of whom have only felt comfortable in large groups this
year following the pandemic.
We are also seeing a benefit where companies are increasing their team welfare
budgets as a counterbalance to working remotely. We are encouraged to receive
very positive guest feedback on such events.
Trading in the first half of the year has reflected the patterns seen in the
wider industry. The cost-of-living crisis continues to have a higher impact on
our younger guests in particular and hampers our progress. Performance across
our brands is very much based on age and socio-economic groupings. Bars sit
within a challenged market, with Revolution particularly impacted by the
cost-of-living issues of younger guests. Revolución de Cuba performs better
due to a slightly older guest base, further progressed in their careers with
more stable income and therefore less impacted by rises in the cost-of-living.
Pubs are performing well in part as a result of the more affluent
socio-economic status of these guests, and we are pleased with performance
over the first half. We are confident that once the cost-of-living crisis has
run its course that younger guests will return to our venues as they did
immediately post-pandemic.
The sector in general is experiencing a divergence in performance, which is in
line with the trends we experience, with pubs and restaurants performing more
strongly than bars and late-night venues. The bar market has been down 8-10%
throughout 2023.
The bar market has also been impacted by a reduction in commuters and the
ongoing regular rail strikes which have targeted weekend trade. We continue to
see the impact of working from home, particularly on Fridays, which is our
second busiest trading day of the week. Train journeys have remained
approximately 20% lower than pre-pandemic levels throughout the reporting
period, with seven of the weekends in the reporting period affected by
strikes. Working from home on a Friday also continues to negatively impact
trading in our bars.
In addition, the industry and ourselves have seen an ever-increasing cost base
fueled by inflation, increases in minimum wage, and business rates continue to
rise well above inflationary levels. Other cost pressures started to ease
during the reporting period, and it was pleasing to see utilities prices in
particular reduce. The general cost of goods has also started to stabilise,
but the prospect of a blended 11% increase in national living wage impacts the
business by approximately £3 million for a full year, so remains an
additional burden.
We were very pleased to open our first new Peach Pub, The Three Horseshoes,
since acquiring the business in October 2022. The pub is now well established
in the community, and we are excited to further expand this brand when the
opportunity arises.
In order to fund such future growth, coupled with the ongoing and increasing
cost challenges, the business made the difficult decision to close eight of
its least profitable bars as part of Management's constant review of the Group
estate.
Our Brand family
Revolution's 41 bars (after eight closures in January 2024) are aimed at 18 to
30-year-old guests, who have been disproportionately impacted by the ongoing
cost-of-living crisis. A night out is now seen as a treat occasion, and
accordingly we have continued to support those guests with excellent value for
money through offers such as £2.99 food and drink deals and extended 2-4-1
cocktail happy hours. We continue to focus on creating occasions for guests to
enjoy through themed brunches, engaging entertainment, and events such as
Bangers Bingo. We are pleased to see the Revolution brand still perform well
on big occasions such as pay-day weekends, bank holiday weekends and
Christmas.
Revolución de Cuba's 15 bars are aimed at a slightly older target market who
are further into their careers and have more disposable income and are
therefore more protected from the cost-of-living crisis. Guests continue to
demonstrate resilience, with the return of corporate guests during the festive
period resulting in very strong trade. Our live music and entertainment
offering engages our guests, and we are pleased to have outperformed the bars
market for 13 out of the last 13 months to December 2023.
Peach Pubs's 22 beautiful gastropubs have continued to perform well since
acquisition, with full integration into the business almost complete. Festive
trading was especially strong, with record-breaking weeks. Whilst the
unseasonably wet July and August challenged trade, the brand continues to
perform well with its more-affluent guests remaining resilient to external
challenges. We were excited to open our first new Peach Pub, since
acquisition, in FY24 H1.
Founders & Co., our market hall concept in Swansea, has performed well
over the last 12 months, building an exceptional reputation in its local
market, and continues to develop towards maturity, having now been open for
two years. We are very excited by the brand and see this concept primed for
expansion.
Playhouse, our competitive socialising concept, saw the closure of its second
site in Newcastle-under-Lyme in the year due to lack of footfall. The original
venue, in Northampton, continues to trade well and shows good signs of
progress in a difficult location. We were very proud to see the brand's Slice
Shop Pizza offering, once again, make the final of the National Pizza Awards
in 2023.
Group strategic priorities
We continue to focus on our five key strategic priorities, which we believe
are key to driving performance and navigating the ongoing challenging
environment. Below is some of our progress made across FY24 H1:
· Maximising Revenue & Profit:
o We opened our first new Peach Pub in FY24 H1, welcoming The Three
Horseshoes to the brand portfolio;
o Peach synergies are progressing well, with the Spirits tender and range
rollout completed. The Draught beer tender was also completed with the new
range implemented in early 2024;
o A "value for money" focus saw the £2.99 summer meal deal extended until
the festive menu period, and then relaunched in January 2024. We continue to
explore value for money offerings to help our guests enjoy themselves at a
price they can afford;
o Following a review of the profitability of the Group's portfolio, the
least profitable bars have seen 10 closures in FY24 to date, and various
partial closures were seen across bars in January and February; and
o A huge focus on pre-booked revenue has seen significant growth in weekly
brunch events in both of our main bar brands. Key dates and Christmas
performed extremely well, with growth in pre-booked revenue over the festive
period of 15.8% across bars, and across the first half of the year of 14.8%.
Third party gifting agencies also performed very well based on strengthening
relationships with brands such as Virgin Experience, doubling in growth in the
trading period.
· Guest Experience:
o Revolución de Cuba brand proposition has been trained into all team
members, with initial great feedback from guests. Key guest experience
improvements have been trialled and successfully rolled out across the brand,
with the focus on delivering a fiesta every day;
o A current focus in Revolution on consistently delivering brand basics
every day, whilst delivering outstanding value for money for our guests whilst
they are struggling financially;
o Revolution brand proposition research phase was completed during FY24 H1;
creation and refinement phase is ongoing with trials due to be implemented in
the Spring;
o Brand collaboration with Red Bull for the student return, which delivered
some outstanding results through our joint House Parties campaign, which will
be built upon for 2024;
o Brand collaboration with Barratt Sweets has led to the creation of three
new Revolution Flavour vodka which will launch into the brand over the Easter
weekend, and will be a feature of the Spring 2024 campaign; and
o A Music and Events manager was recruited, and a full overhaul of the
Revolution background music system has been completed. A full programme of
events will be launched into the Revolution brand in the Spring, with a focus
on Weekend Day parties to capture a slightly older target market who have
higher disposable income.
· Cost Control:
o A reduction in energy consumption across our bars of 35% on the 2017
baseline has helped mitigate periods of heightened utilities costs.
Pleasingly, wholesale prices continue to fall. Our dynamic purchasing
agreement for forward buying is working well;
o New technology continues to be trialled or rolled out across our sites
including intelligent extract and heat recovery technology;
o At the half year we have delivered annualised £1.1 million in synergies
from the acquisition of Peach through a reduction in people costs, food costs,
other goods not for resale, and drink purchasing synergies now flowing through
the completion of the Spirits and Beer tenders; and
o An updated labour management system has been rolled out to all bars
brands, with projected annual efficiency savings of £1.1 million.
· Diversification of Sales:
o Finalisation of a brand partnership with "The Jockey Club" will see the
launch of a Revolution branded bar at the Grand National horseracing meet at
Aintree in April 2024. We are hopeful that this will develop into a wider
partnership; and
o Brand collaboration with Barratt Sweets has been established for the sale
of Revolution Flavour vodka shots in our bars, and we will look to develop
this relationship over time if the launch proves successful.
· Brand Awareness and ESG including Sustainability and EVP:
o We were incredibly proud to have improved our Carbon Disclosure Project
score from a B to an A- this year, moving the Group into the leadership band.
Our score is now higher than the Europe regional average, and higher than the
Bars, hotels & restaurants sector average;
o Further reduction in energy usage across our bars' estate of 35% on a
like-for-like basis, compared to our 2017 baseline, through best practice
initiatives including rolling out cellar cooling energy efficient tech to all
bars;
o Half-hourly meters are being rolled out to all Peach Pubs to enable the
same energy reduction plan to take place in pubs. Peach waste collection has
moved to Biffa, allowing better analysis of recycling rates. Our Planet Heroes
in the pubs maintain a focus on these two key areas and other energy saving
methods;
o Extending our twice-yearly Quality of Life survey to our Peach colleagues,
we were pleased to still deliver exceptional survey results for the Group
despite difficult trading conditions. Ongoing development of training and
development maintains a focus in delivering an incredible place to work for
our people; and
o Strengthened our commitment to suicide prevention within the industry by
introducing a safeguarding tool, R;PPLE, to automatically and discretely
intercept content from harmful searches. We are the first in the hospitality
industry to have implemented this.
Our People
The challenges faced by our young guests are also reflective of what our
younger team members are facing. We employ a significant number of students
and other young people, and we are aware of their struggles on a daily basis
and look to ways to support them. We welcome the National Living Wage
increases for our teams to help them combat the cost-of-living crisis.
Due to current trading, we have had to make the difficult decision to make
some redundancies in the support centre also, resulting in a reduction in
people costs of approximately 10%. Our focus has been on clear and open
communication to all colleagues across this challenging time. Our latest
Quality of Life colleague survey, in the Autumn, reflected a drop in our
employee Net Promotor Score ("NPS"); however, the results were still towards
the top end of historical surveys.
I am very proud of the consistent high-quality service our teams provide to
our guests, that is reflected in the continued high levels of guest NPS
feedback.
Market outlook
Whilst we remain cautious of the macro-economic climate, we are pleased to see
some positive indications for the consumer.
Inflation has come down from peak levels and continues to see a downward
trend. Likewise, interest rates look to have peaked and are forecast to fall
during 2024. Household disposable income, in January 2024, was at its highest
level since March 2022, and the energy price cap is set to fall in April 2024.
Consumer confidence is at its highest point since January 2022, with the
National Living Wage increase set to deliver approximately £45 per week more
to younger workers in full time employment. Whilst all the above should
provide a big step forward for consumer facing businesses such as ours, some
concerns do remain.
Tube and rail strikes in response to the cost-of-living crisis have had
devastating impacts on Hospitality businesses since 2022; however, several
unions have agreed deals to prevent further strike action, reducing the
potential impact of strike action in 2024.
The cost of delivering the increases in National Minimum Wage and National
Living Wage are significant for any employee-led businesses. Business rates
are being increased in April 2024 by 6.9%, which was the inflation rate back
in September 2023 and not reflective of current market conditions.
The Government needs to recognise these challenges, which are not unique to
our business, and reduce the burden of business tax increase. In order for the
sector to deliver economic growth and employment, further support should be
offered to Hospitality through reduced VAT for a fixed period of time and
business rates support measures for companies of all sizes.
Current Trading and Outlook
Following a strong festive period, trading since the turn of the year has
remained challenging. The post-Christmas January hangover lasted into
February, with this impact being seen across the wider industry and many
businesses having to extend their January offerings into February to maintain
guest footfall.
The divergence in performance across the brands remains consistent with
Revolución de Cuba and Peach performing more strongly than the Revolution
brand, which is reliant on the younger generation who we know are still
suffering with the cost-of-living crisis. We are expectant that the planned
above inflation increase in National Minimum Wage will provide a meaningful
boost to this generation's spending power, allowing them to return to nights
out on a more frequent basis. Economic data also looks more positive for the
Revolución de Cuba and Peach guest.
Whilst we anticipate some economic improvement from which we will benefit, the
markets in which we operate are expected to remain challenging in the near
term. However, the Board remains confident in achieving trading performance in
line with its previous expectations.
Rob Pitcher
Chief Executive Officer
10 April 2024
Financial Review
Introduction
· The "H1 FY24" accounting period represents trading for the 26 weeks to 30
December 2023 ("the period"). The comparative period "H1 FY23" represents
trading for the 26 weeks to 31 December 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 FY24 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 FY24 H1 FY23 H1 FY24(IAS 17) H1 FY23
(IFRS 16) (IFRS 16) £m (IAS 17)
£m £m £m
Total Sales 82.3 76.0 82.3 76.0
Operating Profit 7.2 3.1 (0.7) 0.9
Adjusted(1) EBITDA 8.9 9.8 3.2 5.1
Profit/(Loss) Before Tax 3.1 (0.1) (2.1) 0.0
Non-cash Exceptionals 4.0 0.0 (0.8) -
Cash Exceptionals (0.1) (1.5) (0.1) (1.5)
Net Bank Debt (20.0) (18.5) (20.0) (18.5)
Results
We are pleased to see an increase in total sales for the Group from £76.0
million to £82.3 million a result of the strong festive trading period, as
well as the impact of having Peach for the full half-year, offset by softer
like-for-like(2) ("LFL") sales. Continued heightened inflationary pressures
impact 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.
The underlying result, as measured by our preferred APM(3) adjusted(1) EBITDA,
was £1.9 million lower than the equivalent prior year period, at a profit of
£3.2 million (FY23 H1: profit of £5.1 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. Softer like-for-like(2) sales and
heighted costs in the business have driven this reduction.
Gross profit in the half year was £63.0 million (FY23 H1: £58.6 million)
which amounted to a gross margin of 76.5% comparable to 77.1% in the
equivalent prior period. The Group has experienced strong margins in recent
years due to product mix, and improved discounting and trade agreements.
However, this has reduced slightly as a result of the impact of Peach's
higher-food participation driving a lower margin on the full 26-week period.
Bars margins continue to improve.
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
30 December 31 December 1 30 December 2023 31 December 2022 1
2023
2022
July
July
2023 APM(3) APM(3)
2023
IAS 17 IAS 17
IFRS 16 IFRS 16
£m
£m APM(3)
£m
£m IFRS 16
£m IAS 17
£m
Pre-tax profit/(loss) 3.1 (0.1) (22.2) (2.1) 0.0 (9.1)
Add back Exceptional items (3.9) 1.5 20.2 0.9 1.5 7.7
Add back charge/(credit) arising from LTIPs 0.1 (0.2) 0.1 0.1 (0.2) 0.1
Add back Bar opening costs - - - - - -
Adjusted(1) pre-tax (loss)/profit (0.7) 1.2 (2.1) (1.2) 1.4 (1.5)
Add back Depreciation 5.6 5.4 12.1 3.0 2.8 6.0
Add back Amortisation 0.0 0.0 0.0 0.0 0.0 0.0
Add back Finance costs 4.1 3.2 7.1 1.4 0.8 2.1
Adjusted(1) EBITDA 8.9 9.8 17.1 3.2 5.1 6.6
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 credit
of £3.9 million (FY23 H1: charge of £1.5 million). This predominantly
related to exceptional gain on disposals as a result of exited leases, some
lease modifications arising on regeared leases, offset by some exceptional
costs associated with exiting the sites. The prior year charge predominantly
relates 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 charge of £0.1 million (FY23 H1: credit of £0.2 million) on long-term
incentive schemes arose as a result of the restricted share award schemes,
with the prior year credit arising on the forfeiture on previous schemes.
Finance costs
Finance costs of £4.1 million (FY23 H1: £3.2 million) are made up of £1.3
million of bank interest paid on borrowings (FY23 H1: £0.8 million) and £2.8
million of lease interest (FY23 H1: £2.4 million).
Liquidity
At the start of FY24 the Group held a £30.0 million Revolving Credit Facility
"RCF", expiring October 2025. 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.
In March 2023, an amendment was made to the facility to hold a £1.35 million
Energy Guarantee for the purposes of signing a new energy contract. A further
amendment was made in October 2023 such that all originally agreed reductions
in total facility level be deferred to 30 June 2025, meaning at that date the
£30.0 million facility will reduce by £5.0 million to a £25.0 million
facility. In November 2023, the Energy Guarantee was reduced to £1.1 million
in reflection of reduced energy prices and buying patterns.
In accordance with the updated amendments, the Group will therefore have
committed funding facilities available during the going concern assessment
period as shown in the table below:
Energy Guarantee RCF Total Facility
£m £m
£m
31 December 2023 1.1 28.9 30.0
30 June 2024 1.1 28.9 30.0
31 December 2024 1.1 28.9 30.0
30 June 2025 1.1 23.9 25.0
With reference to the Going Concern statement in the Financial Review, the
Group has agreed in principle, subject to final and legally binding
documentation being entered into, and subject to the Restructuring Plan of
Revolution Bars Limited being sanctioned, a number of support measures with
National Westminster Bank plc (the "Lender"). This additional support would be
documented through the Restructuring Plan of Revolution Bars Limited. However,
the Lender wants to understand the outcome of the Formal Sale Process, and
whether a more optimal outcome could be achieved through the Formal Sale
Process or the Restructuring Plan of Revolution Bars Limited. The Lender has
also agreed to waive certain anticipated covenant breaches to enable the Group
to allow the Plan Company to explore the implementation of a Restructuring
Plan and progress the Formal Sale Process.
Taxation
There is no tax payable in respect of the current period due to previous
losses made.
Earnings/(loss) per share
Basic earnings per share for the period was 1.3 pence (FY23 H1: earnings of
0.1 pence). Adjusting for exceptional items, non-recurring opening costs and
charges arising from long-term incentive plans resulted in an adjusted(1)
basic loss per share for the period of (0.6) pence (FY23 H1: earnings of 0.7
pence).
Operating cash flow and net bank debt
The Group generated net cash flow from operating activities in the period of
£10.1 million (FY23 H1: generated 3.3 million), whilst capital expenditure
payments of £1.2 million, bank loan interest £1.3 million, and loan
repayments of £6.8 million (offset by drawdowns of £5.8 million), and lease
rental payments of £6.0 million contributed to a net cash inflow in the
period of £0.6 million decreasing net bank debt of £(21.6) million as at 1
July 2023 to a net bank debt closing position of £(20.0) million as at 30
December 2023.
Capital expenditure
The Group made capital investments of £1.2 million (FY23 H1: £4.6 million)
during the period; this was incurred entirely on existing bars, comprising
some minor required refurbishment work and ongoing reinvestment in bars and
pubs, as well as equipment replacement and IT investment.
Dividend
As notified previously, the Board has suspended payments of dividends. There
was no dividend paid or declared in either the current or prior period.
Going concern
Following a period of softer trading, which we have seen directly impact and
reduce headroom on the Group's facilities, the Board has had to consider all
strategic options available to it. The Group has already deployed several
strategies to combat the ongoing significant external challenges including
optimising staffing levels, amending opening hours and introducing temporary
closures during quieter periods. There have been a number of redundancies and
reductions to overhead costs, as well as reducing capital expenditure. The
Group has also performed site rationalisations via consensual landlord
negotiations where possible.
As a result, despite challenging conditions, performance has been encouraging,
particularly across Revolución De Cuba and Peach Pubs. The Revolution branded
bars have demonstrated gradual improvements, culminating in the strongest
Christmas trading period in 2023, since 2019, with Group like-for-like sales
at +9.0%.
Despite this, the Board has concluded that it is in the best interest of the
Group for Revolution Bars Limited, to propose a Restructuring Plan alongside a
number of additional measures to be implemented across the Group to re-shape
its business, as well as exploring, in parallel, a Formal Sale Process and an
M&A Process, in order to deliver the best outcome for stakeholders.
Advisers have been appointed to support the Group through this process.
In order to fund a potential Restructuring Plan, and provide additional
working capital for the Group, the Board has concluded, having undertaken a
detailed review of the Group's financial forecasts and expected trading
performance, that the Company needs to raise additional equity capital from
new and existing investors is required, being the Fundraising, further details
of which are set out in a separate announcement this morning. Without the
additional funding proposed to be raised in connection with the Fundraising,
and without the cost savings delivered through the proposed Restructuring
Plan, the Board anticipates that the Group will face liquidity pressures in Q1
FY25.
As an alternative to the Restructuring Plan, the Group has also announced the
commencement of a Formal Sale Process and the M&A Process to explore
whether a sale of the shares in the Company, a sale of the shares in one or
more of the Company's subsidiaries, or a sale of the business and assets of
either the Company and/or the business and assets of the Company's
subsidiaries, will provide a more beneficial outcome for the stakeholders than
the Restructuring Plan.
The Company's secured creditor, the Lender, has agreed, in principle and
subject to final and legally binding documentation being entered into, and to
the Restructuring Plan being implemented, to provide, in aggregate, c.£6.9
million of additional support to the Group. £6.2 million of this
additional support would be documented through the Restructuring Plan of the
Plan Company by way of a £4.0 million write-off of existing debt and 12
months of payment-in-kind interest estimated, based on the latest company
projections, to total £2.2 million. In addition, the Lender has provided
c.£0.7 million of additional working capital support by allowing the Group to
retain proceeds from the sale of the freehold support office and has also
agreed in principle and subject to final and legally binding documentation
being entered into and subject to the Restructuring Plan being sanctioned, to
extend the term of the facilities, reschedule the amortisation of the
outstanding facility, relax the minimum liquidity covenant until April 2025
and delay the reinstatement of the maintenance covenants for a period of time
to provide the Group with significant flexibility.
However, the Lender wants to understand the outcome of the sale process, and
whether a more optimal outcome could be achieved through the Formal Sale
Process or the Restructuring Plan of Revolution Bars Limited. The Lender has
also agreed to waive certain anticipated covenant breaches to enable the Group
to allow the Plan Company to explore the implementation of a Restructuring
Plan and progress the Formal Sale Process.
A material uncertainty exists due to the risk that rather than improving,
trading and cashflows deteriorate below the downside case considered by the
Board, or that in the event that the Restructuring Plan proceeds, that it is
either delayed beyond the currently anticipated timeline for which the Company
has adequate working capital or not sanctioned by the Court, leading to the
Fundraising and any additional support from the Lender (as outlined above) not
coming into effect. It cannot be guaranteed that the bank would extend their
forbearance to accommodate a further review of options available to the
business.
The Board is taking all necessary actions for the most beneficial outcome for
the stakeholders, as well as ensuring the Group can return to normal levels of
refurbishment and estate expansion. 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
10 April 2024
(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 and prior year
(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 30 December 2023
Note Unaudited Unaudited Audited
26 weeks ended
26 weeks ended
30 December
31 December 52 weeks ended
2023 2022 1 July
2023
£'000 £'000
£'000
Revenue 4 82,300 75,951 152,551
Cost of sales (19,331) (17,378) (35,419)
Gross profit 62,969 58,573 117,132
Operating expenses:
- operating expenses, excluding exceptional items (59,701) (53,988) (112,039)
- exceptional items 5 3,898 (1,501) (20,244)
Total operating expenses (55,803) (55,489) (132,283)
Operating profit/(loss) 7,166 3,084 (15,151)
Finance expense 6 (4,088) (3,175) (7,056)
Profit/(Loss) before taxation 3,078 (91) (22,207)
Income tax 7 - 257 (27)
Profit/(Loss) and total comprehensive income for the period 3,078 166 (22,234)
Earnings/(Loss) per share:
- basic (pence) 9 1.3 0.1 (9.7)
- diluted (pence) (restated* - see note 9) 9 1.3 0.1 (9.7)*
Dividend declared per share (pence) - - -
Revolution Bars Group plc
Condensed Consolidated Statement of Financial Position
at 30 December 2023
Note Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
30 December 31 December 1 July
2023 2022 2023
£'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 10 34,117 46,028 36,161
Right-of-use assets 10 65,708 82,017 67,706
Intangible assets 31 28 30
Goodwill 17,419 12,111 17,419
Other non-current assets 11 646 - -
117,921 140,184 121,316
Current assets
Inventories 4,318 4,043 3,405
Trade and other receivables 11 6,717 7,575 11,448
Tax receivable 38 - -
Cash and cash equivalents 3,980 4,508 3,367
15,053 16,126 18,220
Total assets 132,974 156,310 139,536
Liabilities
Current liabilities
Trade and other payables 12 (29,995) (28,957) (31,720)
Lease liabilities 13 (6,955) (6,615) (7,087)
Provisions 14 (871) (924) (871)
Tax payable - - (27)
(37,821) (36,496) (39,705)
Net current liabilities (22,768) (20,370) (21,485)
Non-current liabilities
Lease liabilities 13 (111,495) (117,829) (118,236)
Interest-bearing loans and borrowings 15 (24,000) (23,000) (25,000)
Provisions 14 (1,875) (2,003) (1,967)
(137,370) (142,832) (145,203)
Total liabilities (175,191) (179,328) (184,908)
Net liabilities (42,217) (23,018) (45,372)
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 (87,886) (68,687) (91,041)
Total equity (42,217) (23,018) (45,372)
Revolution Bars Group plc
Condensed Consolidated Statement of Changes in Equity
for the 26 weeks ended 30 December 2023
Reserves
Share Share Merger (Accumulated losses) / retained earnings Total
capital premium reserve £'000 equity
£'000 £'000 £'000 £'000
At 2 July 2022 230 33,794 11,645 (68,690) (23,021)
Loss and total comprehensive expense for the period - - - (22,234) (22,234)
Credit arising from long-term incentive plans (note 23) - - - (117) (117)
At 1 July 2023 230 33,794 11,645 (91,041) (45,372)
Profit and total comprehensive income for the period - - - 3,078 3,078
Charge arising from long-term incentive plans - - - 77 77
At 30 December 2023 230 33,794 11,645 (87,886) (42,217)
Revolution Bars Group plc
Condensed Consolidated Statement of Cash Flow
at 30 December 2023
Note Unaudited Unaudited
26 weeks 26 weeks Audited
ended ended 52 weeks ended
30 December 31 December 1 July
2023 2022 2023
£'000 £'000 £'000
Cash flow from operating activities
Profit/(Loss) after tax from operations 3,078 166 (22,207)
Adjustments for:
Net finance expense 6 4,088 3,175 7,056
Depreciation of property, plant and equipment 10 3,207 2,992 6,634
Depreciation of right-of-use assets 10 2,349 2,411 5,423
Impairment of property, plant and equipment 10 - - 6,096
Impairment of right-of-use assets 10 - - 12,642
Lease modification 5 (287) (30) (50)
Gain on disposal 5 (3,867) - -
Acquisition costs 5 - - 1,499
Amortisation of intangibles 2 3 5
Taxation charge - - 27
Charge/(Credit) arising from long-term incentive plans 8 77 (163) (117)
Operating cash flows before movement in working capital 8,647 8,554 17,008
(Increase)/decrease in inventories (913) (208) 584
Decrease/(increase) in trade and other receivables 4,182 3,378 (543)
(Decrease)/increase in trade and other payables (1,823) (8,066) (6,936)
(Decrease)/increase in provisions - (390) (443)
Net cash flow generated from operating activities 10,093 3,268 9,670
Cash flow from investing activities
Cost of acquisition of subsidiaries, net of cash acquired - (9,190) (10,689)
Purchase of intangible assets - (3) (7)
Purchase of property, plant and equipment 10 (1,163) (4,617) (5,533)
Net cash flow used in investing activities (1,163) (13,810) (16,229)
Cash flow from financing activities
Interest paid 6 (1,302) (754) (1,895)
Principal element of lease payments 13 (2,789) (2,236) (6,432)
Interest element of lease payments 13 (3,226) (3,098) (4,885)
Repayment of subsidiary borrowings - (5,926) (5,926)
Repayment of borrowings 15 (6,800) (21,751) (25,751)
Drawdown of borrowings 15 5,800 30,000 36,000
Net cash flow used in financing activities (8,317) (3,765) (8,889)
Net increase/(decrease) in cash and cash equivalents 613 (14,307) (15,448)
Opening cash and cash equivalents 3,367 18,815 18,815
Closing cash and cash equivalents 3,980 4,508 3,367
Reconciliation of net bank debt
Net increase/(decrease) in cash and cash equivalents 613 (14,307) (15,448)
Cash inflow from increase in borrowings (5,800) (30,000) (36,000)
Cash outflow from repayment of borrowings 6,800 21,751 25,751
Opening (net bank debt)/net bank cash (21,633) 4,064 4,064
Closing net bank debt (20,020) (18,492) (21,633)
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 in the
United Kingdom and registered in England and Wales. 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 30 December 2023 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
UK-adopted International Accounting Standards ("IAS") and with the
requirements of the Companies Act 2006 applicable to companies reporting under
those standards, and they apply to the half-yearly Financial Report for the 26
weeks ended 30 December 2023 (prior period 26 weeks ended 31 December 2022).
The condensed consolidated interim financial statements of the Group for the
26 weeks ended 30 December 2023 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 1 July 2023.
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 1 July 2023.
The comparative figures for the 52 weeks ended 1 July 2023 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 notified previously, the Board has suspended payments of dividends. There
was no dividend paid or declared in either the current or prior period.
Going concern
Following a period of softer trading, which we have seen directly impact and
reduce headroom on the Group's facilities, the Board has had to consider all
strategic options available to it. The Group has already deployed several
strategies to combat the ongoing significant external challenges including
optimising staffing levels, amending opening hours and introducing temporary
closures during quieter periods. There have been a number of redundancies and
reductions to overhead costs, as well as reducing capital expenditure. The
Group has also performed site rationalisations via consensual landlord
negotiations where possible.
As a result, despite challenging conditions, performance has been encouraging,
particularly across Revolución De Cuba and Peach Pubs. The Revolution branded
bars have demonstrated gradual improvements, culminating in the strongest
Christmas trading period in 2023, since 2019, with Group like-for-like sales
at +9.0%.
Despite this, the Board has concluded that it is in the best interest of the
Group for Revolution Bars Limited, to propose a Restructuring Plan alongside a
number of additional measures to be implemented across the Group to re-shape
its business, as well as exploring, in parallel, a Formal Sale Process and an
M&A Process, in order to deliver the best outcome for stakeholders.
Advisers have been appointed to support the Group through this process.
In order to fund a potential Restructuring Plan, and provide additional
working capital for the Group, the Board has concluded, having undertaken a
detailed review of the Group's financial forecasts and expected trading
performance, that the Company needs to raise additional equity capital from
new and existing investors is required, being the Fundraising, further details
of which are set out in a separate announcement this morning. Without the
additional funding proposed to be raised in connection with the Fundraising,
and without the cost savings delivered through the proposed Restructuring
Plan, the Board anticipates that the Group will face liquidity pressures in Q1
FY25.
As an alternative to the Restructuring Plan, the Group has also announced the
commencement of a Formal Sale Process and the M&A Process to explore
whether a sale of the shares in the Company, a sale of the shares in one or
more of the Company's subsidiaries, or a sale of the business and assets of
either the Company and/or the business and assets of the Company's
subsidiaries, will provide a more beneficial outcome for the stakeholders than
the Restructuring Plan.
The Company's secured creditor, the Lender, has agreed, in principle and
subject to final and legally binding documentation being entered into, and to
the Restructuring Plan being implemented, to provide, in aggregate, c.£6.9
million of additional support to the Group. £6.2 million of this
additional support would be documented through the Restructuring Plan of the
Plan Company by way of a £4.0 million write-off of existing debt and 12
months of payment-in-kind interest estimated, based on the latest company
projections, to total £2.2 million. In addition, the Lender has provided
c.£0.7 million of additional working capital support by allowing the Group to
retain proceeds from the sale of the freehold support office and has also
agreed in principle and subject to final and legally binding documentation
being entered into and subject to the Restructuring Plan being sanctioned, to
extend the term of the facilities, reschedule the amortisation of the
outstanding facility, relax the minimum liquidity covenant until April 2025
and delay the reinstatement of the maintenance covenants for a period of time
to provide the Group with significant flexibility.
However, the Lender wants to understand the outcome of the sale process, and
whether a more optimal outcome could be achieved through the Formal Sale
Process or the Restructuring Plan of Revolution Bars Limited. The Lender has
also agreed to waive certain anticipated covenant breaches to enable the Group
to allow the Plan Company to explore the implementation of a Restructuring
Plan and progress the Formal Sale Process.
A material uncertainty exists due to the risk that rather than improving,
trading and cashflows deteriorate below the downside case considered by the
Board, or that in the event that the Restructuring Plan proceeds, that it is
either delayed beyond the currently anticipated timeline for which the Company
has adequate working capital or not sanctioned by the Court, leading to the
Fundraising and any additional support from the Lender (as outlined above) not
coming into effect. It cannot be guaranteed that the bank would extend their
forbearance to accommodate a further review of options available to the
business.
The Board is taking all necessary actions for the most beneficial outcome for
the stakeholders, as well as ensuring the Group can return to normal levels of
refurbishment and estate expansion. 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
1 July 2023. These accounting policies are all expected to be applied for the
52 weeks to 29 June 2024.
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 into 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.
When a lease is disposed of, the corresponding remaining lease liability is
removed. If sufficient right-of-use asset remains, the corresponding credit
will be taken there to appropriately remove any remaining asset also. Where
the right-of-use asset has already been written down, either partially or in
full, the remaining balance is taken as a credit to the P&L as an
exceptional gain on disposal. This is in line with the same treatment taken on
lease modifications and regears.
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;
· Consumer demand and Cost-of-living
· COVID-19
· Climate change and Sustainability
· Refurbishment and acquisition of bars
· Supplier concentration and inflationary cost rises
· Consumer trends and PR
· Health and safety
· National minimum/living wage
· Funding and Interest rates
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
30 December 31 December 1 July
2023 2022 2023
£'000 £'000 £'000
Revenue 82,300 75,951 152,551
Cost of sales (19,331) (17,378) (35,419)
Gross profit 62,969 58,573 117,132
Operating expenses:
- operating expenses excluding exceptional items (59,701) (53,988) (112,039)
- exceptional items 3,898 (1,501) (20,244)
Total operating expenses (55,803) (55,489) (132,283)
Operating profit/(loss) 7,166 3,084 (15,151)
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
30 December 31 December 1 July
2023 2022 2023
£'000 £'000 £'000
Bar & Pub Revenue 80,263 74,798 149,742
Other Revenue 2,037 1,153 2,809
Revenue 82,300 75,951 152,551
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
30 December 31 December 1 July
2023 2022 2023
£'000 £'000 £'000
Administrative expenses:
- impairment of right-of-use assets - - 12,642
- impairment of property, plant and equipment - - 6,096
- lease modification (287) (30) (50)
- net gain on disposal (3,867) - -
- acquisition costs - 1,498 1,499
- business restructure 256 33 57
Total exceptional (credit)/charge (3,898) 1,501 20,244
No impairment review is conducted at the half-year, but a full impairment
review is conducted across the entire asset base at year-end. The two exited
sites were already fully impaired.
The prior year exceptional items predominantly related to the legal and
professional costs incurred during the acquisition of Peach.
The exceptional credits in FY24 H1 predominantly relate to the credit that
arises under an IFRS 16 lease modification where a reduction in lease term or
value is recognised, but the asset has already been impaired to a lower value.
In those instances, the corresponding credit is taken as an exceptional
credit.
Exceptional gains on disposal were also recognised on the exit of two leases
through extinguishing IFRS 16 lease liabilities and is net of any surrender
premiums paid or payable to, or received or receivable from, landlords, other
relevant exit costs, and impairment on the exited leases.
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
30 December 31 December 1 July
2023 2022 2023
£'000 £'000 £'000
Gross gain on disposal (3,703) - -
Surrender premiums (received)/paid in period (250) - -
Related surrender costs paid in period 86 - -
Impairment on exited properties - - -
Net gain on disposal (3,867) - -
6. Finance expense
Unaudited Unaudited
26 weeks 26 weeks Audited
ended ended 52 weeks
30 December 31 December ended
2023 2022 1 July
£'000 £'000 2023
£'000
Interest payable on bank loans and overdrafts 1,302 754 1,895
Interest on lease liabilities 2,786 2,421 5,161
Interest payable 4,088 3,175 7,056
7. Income Tax
The taxation charge for the 26 weeks ended 30 December 2023 has been
calculated by applying an estimated effective tax rate for the 52 weeks ending
29 June 2024. Due to brought-forward tax losses, no tax was due for the
half-year period.
8. Share-based payments
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
30 December 31 December 1 July
2023 2022 2023 £'000
£'000 £'000
Charge/(credit) in the period 77 1 (166)
(Credit)/charge relating to forfeitures in period - (164) 49
Total charge/(credit) arising from long-term incentive plans 77 (163) (117)
All remaining historic employee share incentive schemes ceased in the prior
year after all schemes reached the end of their award period. Previous schemes
did not meet the success criteria and have thus ceased to operate with all
outstanding options lapsing.
The Group issued 4,155,290 options under a Restricted Share Award ("RSA")
scheme on 23 November 2021, 5,628,887 options under a RSA scheme on 25 October
2022, and a further 2,961,954 options under a RSA scheme on 26 October 2023.
These are all subject to leavers and forfeits. The 2020 RSA scheme vested in
FY24 H1.
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
30 December 31 December 1 July
2023 2022 2023 £'000
£'000 £'000
Profit/(Loss) for the period (£'000) 3,078 166 (22,234)
Weighted average number of shares - basic ('000) 230,049 230,049 230,049
Basic earnings/(loss) per Ordinary share (pence) 1.3 0.1 (9.7)
Weighted average number of shares - diluted ('000) 242,717 240,534 239,838
Diluted earnings/(loss) per Ordinary share (pence) 1.3 0.1 (9.7)
Diluted shares are calculated making an assumption of outstanding options
expected to be awarded. The associated diluted earnings/(loss) per Ordinary
Share cannot be anti-dilutive and therefore is capped at the same value as
basic earnings/(loss) per Ordinary Share. The diluted loss per Ordinary Share
was capped for the 52 weeks ended 1 July 2023, as it was anti-dilutive;
however, this update wasn't rectified on the face of the Consolidated
Statement of Comprehensive Income which incorrectly showed (9.3p) rather than
(9.7p). This has now been restated.
Profit/(Loss) for the period was impacted by one-off exceptional 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 31 December 1 July
2023 2022 2023 £'000
£'000 £'000
Profit/(Loss) on ordinary activities before taxation 3,078 (91) (22,207)
Exceptional items, share-based payments and bar opening costs 20,127
(3,821) 1,338
Adjusted (loss)/profit on ordinary activities before taxation (743) 1,247 (2,080)
Taxation on ordinary activities - 257 (27)
Taxation on exceptional items and bar opening costs (741) - 3,561
Adjusted (loss)/profit of ordinary activities after taxation (1,484) 1,504 1,454
Basic number of shares ('000) 230,049 230,049 230,049
Adjusted basic (loss)/earnings per share (pence) (0.6) 0.7 0.6
Diluted number of shares ('000) 242,717 240,534 239,838
Adjusted diluted (loss)/earnings per share (pence) (0.6) 0.6 0.6
Exceptional items, share-based payments and bar opening costs did not include
share-based payments in FY23 and have been corrected to include so for the
FY24 Interim Results and will also be corrected for the FY24 Annual Report and
Accounts. By doing so, the adjusted basic and diluted earnings per share is
reduced to 0.6p.
10. 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 1 July 2023 1,652 90,479 69,029 11,033 172,193
Additions - 271 679 213 1,163
At 30 December 2023 1,652 90,750 69,708 11,246 173,356
Accumulated depreciation and impairment
At 1 July 2023 (1,216) (67,030) (57,855) (9,931) (136,032)
Depreciation charges - (1,882) (1,136) (189) (3,207)
At 30 December 2023 (1,216) (68,912) (58,991) (10,120) (139,239)
Net book value
At 30 December 2023 436 21,838 10,717 1,126 34,117
At 1 July 2023 436 23,449 11,174 1,102 36,161
Right-of-use assets - Group Short leasehold premises
£'000
Cost
At 1 July 2023 132,809
Additions 736
Reassessment/modification of assets previously recognised (385)
At 30 December 2023 133,160
Accumulated depreciation and impairment
At 1 July 2023 (65,103)
Depreciation charges (2,349)
Impairment charges -
At 30 December 2023 (67,452)
Net book value
At 30 December 2023 65,708
At 1 July 2023 67,706
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 is
conducted at the half-year, but a full impairment review is conducted across
the entire asset base at year-end.
11. Trade and other receivables
Unaudited Unaudited
26 weeks 26 weeks Audited
ended ended 52 weeks
30 December 31 December ended
2023 2022 1 July
£'000 £'000 2023
£'000
Amounts falling due within one year
Trade and other receivables 2,219 3,877 4,429
Accrued rebate income 629 487 721
Prepayments 3,869 3,211 5,809
Other debtors - - 489
6,717 7,575 11,448
There are also £646k of non-current receivables relating to lease deposits
due under lease agreements, predominantly relating to pubs. This was included
within current receivables at FY23-end and have been appropriately disclosed
as long-term debtors from FY24 H1.
12. Trade and other payables
Unaudited Unaudited
26 weeks 26 weeks Audited
ended ended 52 weeks
30 December 31 December ended
2023 2022 1 July
£'000 £'000 2023
£'000
Amounts falling due within one year
Trade payables 13,424 13,057 15,011
Other payables 374 1,272 1,339
Accruals and deferred income 10,553 10,272 11,261
Other taxes and social security costs 5,644 4,356 4,109
29,995 28,957 31,720
13. Lease liabilities
Short leasehold properties
£'000
At 1 July 2023 125,323
Additions 736
Reassessment/modification of liabilities previously recognised (390)
Surrender of leases (note 5) (3,703)
Modifications taken as a credit to administrative expenses (note 5) (287)
Lease liability payments (6,015)
Finance costs 2,786
At 30 December 2023 118,450
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 £3.2
million and principal of £2.8 million. £7.0 million of the net present value
of lease liabilities are current, and £111.5 million are non-current.
14. 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 1 July 2023 871 1,967 2,838
Movement on provision - 63 63
Utilisation of provision - (155) (155)
At 30 December 2023 871 1,875 2,746
Unaudited Unaudited
26 weeks 26 weeks Audited
ended ended 52 weeks
30 December 31 December ended
2023 2022 1 July
£'000 £'000 2023
£'000
Current 871 924 871
Non-current 1,875 2,003 1,967
2,746 2,927 2,838
15. Interest-bearing loans and borrowings
Unaudited Unaudited
26 weeks 26 weeks Audited
ended ended 52 weeks
30 December 31 December ended
2023 2022 1 July
£'000 £'000 2023
£'000
Revolving credit facility 24,000 23,000 25,000
24,000 23,000 25,000
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 £24.0m was drawn down.
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.
16. 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 1 July
2023.
17. Capital Commitments
There were £nil capital commitments as at 30 December 2023 (at 1 July 2023:
£nil).
18. Post Balance Sheet Events
Sale and Leaseback of the registered offices
On 22 February 2024, the Group completed a sale and leaseback on its
registered offices at 21 Old Street, Ashton-under-Lyne, OL6 6LA. The freehold
property was sold for £700,000 plus VAT, and the office space will now be
leased back on an initial three-year term including a break clause.
Fundraising, Restructuring Plan, Formal Sale Process and M&A Process and
Fundraising
Following an ongoing period of softer trade, coupled with significant cost
pressures on the Group, today we have announced a Fundraising to fund a
potential Restructuring Plan, and provide working capital support for the
Group. At the same time as the Fundraising, we have also announced the
intention for Revolution Bars Limited to propose a Restructuring Plan together
with a number of additional measures to be implemented across the Group to
re-shape its business, as well as exploring, in parallel, a Formal Sale
Process in accordance with the City Code on Takeovers and Mergers and an
M&A Process, in order to deliver the best, outcome for the stakeholders.
The Group has already implemented many actions to mitigate the impact on the
Group, including driving operational efficiencies, reducing costs and cash
outflows throughout the business, which has included redundancies and
reductions in overhead costs, in addition to also reducing capital
expenditure.
The impact of such strategies has demonstrated improved performance in the
Group, particularly in Revolución de Cuba and Peach. However, the Board has
decided it is necessary for Revolution Bars Limited to propose a Restructuring
Plan to enable improved performance from the Group, at the same time as
commencing a Formal Sale Process.
Further details of the proposed Fundraising, Restructuring Plan, Formal Sale
Process and the M&A Process are contained in a separate announcement,
released this morning.
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 30 December
ended 31 December 1 July
2023
2022 2023
£'000
£'000 £'000
Non-GAAP measures
Revenue 82,300 75,951 152,551
Operating profit 7,166 3,084 (15,151)
Exceptional items (3,898) 1,501 20,244
Charge/(credit) arising from long-term incentive plans 77 (163) (117)
Adjusted operating profit 3,345 4,422 4,976
Finance expense (4,088) (3,175) (7,056)
Adjusted (loss)/profit before tax (743) 1,247 (2,080)
Depreciation 5,556 5,403 12,057
Amortisation 2 3 5
Finance expense 4,088 3,175 7,056
Adjusted EBITDA 8,903 9,828 17,038
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 30 December 2023 Reduction Reduction Onerous lease provision interest Rent charge IFRS 16 Exceptionals 26 weeks ended 30 December 2023
in depreciation in
interest
IFRS 16 IAS 17
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Operating profit/(loss) 7,166 2,579 - - (5,710) (4,778) (743)
Exceptional items (3,898) - - - - 4,778 880
Charge arising from long-term incentive plans 77 - - - - - 77
Adjusted operating profit 3,345 2,579 - - (5,710) - 214
Finance expense (4,088) - 2,786 (100) - - (1,402)
Adjusted loss before tax (743) 2,579 2,786 (100) (5,710) - (1,188)
Depreciation 5,556 (2,579) - - - - 2,977
Amortisation 2 - - - - - 2
Finance expense 4,088 - (2,786) 100 - - 1,402
Adjusted EBITDA 8,903 - - - (5,710) - 3,193
52 weeks ended 1 July 2023 Reduction Reduction Onerous lease provision interest Rent charge IFRS 16 Exceptionals 52 weeks ended 1 July 2023
in depreciation in
interest
IFRS 16 IAS 17
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Operating loss (15,151) 6,022 - - (10,424) 12,592 (6,961)
Exceptional items 20,244 - - - - (12,592) 7,652
Credit arising from long-term incentive plans (117) - - - - - (117)
Adjusted operating profit 4,976 6,022 - - (10,424) - 574
Finance income - - 16 - - - 16
Finance expense (7,056) - 5,145 (211) - - (2,122)
Adjusted loss before tax (2,080) 6,022 5,161 (211) (10,424) - (1,532)
Depreciation 12,057 (6,022) - - - - 6,035
Amortisation 5 - - - - - 5
Finance income - - (16) - - - (16)
Finance expense 7,056 - (5,145) 211 - - 2,122
Adjusted EBITDA 17,038 - - - (10,424) - 6,614
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.
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 exceptionals.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR IMMFTMTABBRIRecent news on Revolution Bars
See all newsREG - Revolution Bars - Update re General Meeting
AnnouncementREG - Takeover Panel - Disclosure Table
AnnouncementREG - Takeover Panel - Disclosure Table
AnnouncementREG - Nightcap PLC Revolution Bars - Response to announcement by Revolution Bars Group
AnnouncementREG - Revolution Bars Nightcap PLC - Response to press speculation
Announcement