Revolution Bars : Interim results announcement FY23

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU NO. 596/2014) (AS AMENDED) AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 AND OTHER IMPLEMENTING MEASURES. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN

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
Adjusted1 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-like2 ("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 LFL2 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 LFL2 performance. The Board remains confident of achieved APM3 adjusted1 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: [phone]
Rob Pitcher, CEO
Danielle Davies, CFO
finnCap, NOMAD and Joint Broker	Tel: [phone]
Matt Goode / Simon Hicks / Teddy Whiley (Corporate Finance)
Tim Redfern / Charlotte Sutcliffe (ECM)
Peel Hunt LLP, Joint Broker	Tel: [phone]
George Sellar / Andrew Clark / Lalit Bose
Instinctif (Financial PR)	Tel: [phone]
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.

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-timelike-for-like2 ("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. Adjusted1 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 Measures3 ("APM") of adjusted1 EBITDA profit of £5.1 million (FY22 H1: profit of £10.2 million). The reduction in APM3 adjusted1 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 LFL2 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 APM3 adjusted1 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.