TIDMRBG
RNS Number : 4768G
Revolution Bars Group
02 March 2018
2 March 2018
Revolution Bars Group plc (LSE: RBG)
Interim results for the 26 weeks ended 30 December 2017
Revolution Bars Group plc ("the Group"), a leading UK operator
of 72 premium bars, trading under the Revolution and Revolución de
Cuba brands, today announces its interim results for the 26 weeks
ended 30 December 2017.
Overview
Sales for the 26 week period were GBP73.8m (FY17: GBP66.7m) with
like-for-like** sales up +0.4%. The reporting period comparison was
distorted by the absence of New Year's Eve, one of the most
significant trading days in the current period, whereas it was the
last day of the comparative period. By extending the reporting
period by one week (27 weeks) to include New Year's Eve increases
like-for-like** sales growth to 1.9%, a more meaningful comparable
presentation of the Group's first half underlying performance can
be made. The incremental sales and profit benefit from New Year's
Eve on 31 December 2016 was GBP1.0m and GBP0.5m respectively.
Four new sites were opened during the period. A Revolución de
Cuba was opened in Belfast in July, achieving the highest level of
sales over its first 24 weeks of all venues which have opened in
the last two years and the third highest of all the Group's venues
in December. Three new Revolution bars also opened just before
Christmas in Solihull, Inverness and Putney with each surpassing
their initial sales targets. Currently, the Group trades from 58
Revolution and 14 Revolución de Cuba venues.
With a further Revolución de Cuba opening towards the end of
March 2018 in Birmingham and another Revolución de Cuba expected to
open in Newcastle-upon-Tyne just before the end of the financial
year, our opening programme is on track to meet the planned six new
sites in the financial year, taking the estate footprint to 74
venues.
A further three new sites are expected to open early in the new
financial year with the pipeline for further sites remaining
strong.
Financial highlights
Performance as reported in the financial statements (excludes
New Year's Eve in the current period);
-- Sales of GBP73.8m (FY17: GBP66.7m), up 10.6%
-- Like-for-like sales** growth for 26 weeks to 30 December up 0.4%
-- Operating loss GBP3.7m (FY17 Restated*: Operating profit
GBP5.1m) impacted by GBP9.6m exceptional costs
-- Adjusted*** Operating profit GBP6.0m (FY17 Restated*: GBP6.0m)
-- Adjusted*** EBITDA GBP8.9m (FY17 Restated*: GBP8.7m)
-- Basic Loss per share 6.8p (FY17 Restated*: Earnings per share 8.5p)
-- Adjusted*** EPS 9.4p (FY17 Restated*: 10.0p)
-- Interim dividend declared at 1.65p per share (FY17: 1.65p per share)
Alternative measures (comparatives adjusted to remove the
benefit of New Year's Eve trading):
-- Sales of GBP73.8m, up 12.3%
-- Like-for-like sales** growth for 27 weeks to 6 January 2018 up 1.9%
-- Operating loss GBP3.7m (FY17 Restated*: Operating profit GBP4.6m)
-- Adjusted*** Operating profit GBP6.0m (FY17: Restated*: GBP5.5m), up 9.1%
-- Adjusted*** EBITDA GBP8.9m (FY17 Restated*GBP8.2m), up 8.5%
* Results for the 52 weeks ended 1 July 2017 and for the 26
weeks ended 30 December 2017 both included changes to accounting
policies and practices that resulted in prior year adjustments.
Further details on the impact of these prior period restatements on
the interim statement are given in the Financial Review from page
7.
** Like-for-like sales are defined as total retail sales from
bars that have been trading continuously for at least 12 months
*** Adjusted measures exclude exceptional items, bar pre-opening
costs and share based payment charges/(credits).
Sales, operating profit and EBITDA comparatives adjusted to
remove 2016 New Year's Eve trading of GBP1.0m sales and GBP0.5m
profit for 'Alternative measures'.
Future Prospects
The Board is confident in the strength of the Group's brands and
its ability to operate and grow, particularly given the scale and
strength of its pipeline of new venues and the strong returns
achieved from new openings within the last two years. The Board
believes that, given its clear and focused strategy, the quality of
Revolution's sites and customer proposition, and the talent within
the business, it is well placed for further growth. That talent
will be further enhanced when Rob Pitcher, our new CEO joins the
business, bringing significant sector experience and insight and a
personal determination to drive the next phase of growth.
Commenting on the results, Keith Edelman, Executive Chairman,
said:
"I am delighted with our sales performance in the second quarter
and over the Christmas period which shows the clear underlying
strength of our business and continues to demonstrate the appeal
and potential of our brands. New openings are performing
particularly strongly, and site refurbishments are delivering
healthy returns, meaning the group can pursue its strategy of
profitable growth and drive like-for-like sales in its core estate.
The business is well set for the arrival of Rob Pitcher in the
coming months."
The information contained within this announcement is deemed to
constitute inside information under the Market Abuse Regulation
(EU) No. 596/2014. Upon the publication of this announcement, this
inside information is now considered to be in the public
domain.
Enquiries:
Revolution Bars Group plc 0161 330 3876
Keith Edelman, Executive Chairman
Mike Foster, CFO
Instinctif Partners 020 7457 2020
Matthew Smallwood
Tom Berger
A presentation for analysts will be held today and the
presentation will be made available on the Group's corporate
website at www.revolutionbarsgroup.com.
EXECUTIVE CHAIRMAN'S STATEMENT
Our business and strategy
Our business comprises two strong leisure brands; Revolution,
which is focused on young adults and Revolución de Cuba, which is
focused on a broader age range. Whilst both businesses are wet-led,
food is an important element of our proposition especially as the
market continues to evolve, with eating-out becoming an ever more
important element of the consumer's expectations. Our strategy is
customer focused, continually striving to provide a better
experience both in terms of product quality and value, ambience and
facilities resulting in repeat visits and driving like-for-like**
sales. The Group is additionally focused on expanding its
geographical footprint and number of premium bars by seeking
further sites in good locations, and investing capital to deliver
high returns.
Merger and Acquisition Activity
On 17 October 2017, shareholders voted against the Offer by
Stonegate Pub Company Limited to acquire the Group and accordingly,
the cash offer lapsed. The Board also engaged with Deltic Group plc
("Deltic") who indicatively proposed a share-based merger with the
Group. Deltic also indicated that a cash offer for the Group was
possible, although this was never forthcoming.
Performance
Sales for the 26 week period were GBP73.8m (FY17: GBP66.7m) with
like-for-like** sales up 0.4%. The reporting period comparison is
distorted by the absence of New Year's Eve, one of the most
significant trading days of the year, in the current period,
whereas it was the last day of the comparative period. Extending
the reporting period by one week (for the 27 weeks to 6 January
2018) to include New Year's Eve increases like-for-like** sales
growth to 1.9%, which the directors believe is a more comparable
presentation of the Group's underlying performance in the first
half. The incremental sales and profit benefit from New Year's Eve
in 2016 was GBP1.0m and GBP0.5m respectively.
Business performance in first three months of the period was
adversely impacted by the uncertainty brought about by corporate
activity. During the first quarter, like-for-like** sales were up
0.3%. With management's focus restored, performance during the
second quarter was significantly improved with strong like-for-like
sales growth during the key Christmas trading period assisted by
good growth in pre-booked sales. Sales in the key 4 week period
from 4 December to 31 December were up 5.9%. For a 14 week period
which includes New Year's Eve in both years, like-for like** sales
were up 3.1%. We were particularly pleased with trading performance
over Christmas given the even stronger comparative like-for-like**
sales growth over the same period in the prior year. Christmas 2017
was the fifth successive year of like-for-like** sales growth.
Operating loss for the 26 week period was GBP3.7m (FY17
Restated*: Operating profit GBP5.1m). However, the directors
believe that Adjusted*** EBITDA provides the best representation of
performance as it excludes exceptional items, share-based payment
charges or credits (non-cash) and pre-opening expenses which are
influenced by the extent and timing of the opening of new venues,
none of which items are related to the underlying trading of the
business. For the 26 week period, Adjusted*** EBITDA was GBP8.9m
(FY17 Restated*: GBP8.7m). The change in the reporting calendar for
New Year's Eve has also adversely impacted both pre-tax profit and
EBITDA measures by GBP0.5m and therefore the underlying increase in
Adjusted*** EBITDA is GBP0.7m (underlying decrease in Adjusted***
Operating profit GBP0.9m).
Operating (loss)/profit performance has decreased due to
significant exceptional charges GBP9.6m (FY17 Restated*: GBPnil)
principally associated with (i) the costs incurred in managing the
corporate activity as mentioned above, (ii) making provision for
onerous lease costs on venues where rental costs exceed the bar
contribution, (iii) asset impairment charges, and (iv) the change
of CEO.
Development of Estate
At the beginning of the period, the Group operated 67 venues (54
Revolution and 13 Revolución de Cuba). During the reporting period
there were four new openings. Revolution in Macclesfield, which had
been temporarily closed in May 2017, reopened in September 2017 and
therefore the Group currently operates from 72 venues.
Of the four new sites that were opened during the period, our
Revolución de Cuba opened in Belfast in July, achieving the highest
sales levels over its first 24 weeks of all venues opening in the
last two years and the third highest of all the Group's venues in
December. Three new Revolution bars also opened just before
Christmas in Solihull, Inverness and Putney with each surpassing
their initial sales targets. Currently, the Group trades from 58
Revolution and 14 Revolución de Cuba venues.
Two further Revolución de Cuba bars are expected to open, in
Birmingham, towards the end of March 2018 and in
Newcastle-upon-Tyne just before the end of the financial year, and
so delivering the planned six new sites during the financial year,
and taking the estate's footprint to 74 venues.
Ensuring that our existing estate remains well maintained is
essential to running a premium business, and we continue to find
investment opportunities to improve and protect the estate's
financial performance. During the period, there were significant
refurbishments at the Revolutions in Edinburgh, Glasgow and
Nottingham Cornerhouse as well as the Revolución de Cubas in
Sheffield and Derby. In April, we plan to undertake a significant
refurbishment of Revolution in York which we are confident will
deliver a rapid return on investment.
Our property team continues to drive significant value through
its site selection and development activities. Contracts have
already been exchanged for a new Revolution in Glasgow (Tunnel
development) and two new Revolución de Cubas in Southampton and
Bristol. All are expected to open very early in the next financial
year. The new site pipeline continues to grow with many other good
prospects giving the Board confidence that at least six new sites
will be opened in the next financial year.
Our Board and management team
On 18 October 2017, Mark McQuater, Chief Executive Officer
("CEO"), resigned from the Board with immediate effect. The Board
wishes Mark well for the future.
We undertook a search for a new CEO with extensive and relevant
experience to take the Company through its next stage of growth
and, on 8 February 2018 we announced the appointment of Rob
Pitcher. Rob has over 25 years' experience within the hospitality
sector, most recently as a member of the Executive Committee of
Mitchells & Butlers ("M&B") as Divisional Director
Restaurants responsible for the Harvester, Toby Carvery and
Stonehouse brands. Prior to joining M&B, Rob held senior
positions at many other leading hospitality companies including
Bramwell, Stonegate, Town & City, Laurel, Spirit and Scottish
& Newcastle Retail. Rob Pitcher's proven operational experience
and leadership qualities will enhance the ongoing development of
the Revolution and Revolución de Cuba brands. The Board is looking
forward to working with Rob when he joins the Group.
Other changes have been made to the senior team. Jimmy del
Giudice, Chief Operating Officer ("COO"), left the business in
January. This allowed the senior operator of the Revolution and
Revolución de Cuba brands to step up to the senior management team.
At the same time, responsibility for Marketing, which previously
reported to the COO, has been realigned to Kate Eastwood, who is
now responsible for both Sales and Marketing.
Food remains a significant growth opportunity particularly
across its day time and early evening business and therefore we
recruited Simon Dobson as Food Director in January. Simon was
previously managing director of Delaware North and achieved much
success in growing and operating very large restaurant businesses.
His initial focus will be to revitalise the food offer in the
Revolution bars, improving its quality, delivery and service
standards and aiming to ensure that customers rate Revolution food
as highly as its cocktails.
Change of auditor and further prior period adjustment
Shortly after the completion of the audit for the 52 weeks ended
1 July 2017, the Board conducted a tender process. As a result, PwC
was appointed as the new independent auditor to the Group. The
tender process, which included prospective auditors undertaking a
thorough review of the Group's accounting policies and practices,
highlighted improvements that should be made in the Group's
methodology for the identification and calculation of asset
impairments. This has resulted in a further prior period
adjustment, further details of which are given in the Financial
review.
Other business developments
The Group has had a strategic partnership with Matthew Clark who
supply and provide distribution services for a substantial
proportion of the Group's drink products. The current supply
agreement, which was signed in 2015, was due to expire in early
2019 but we have secured improved terms effective from January 2018
to cover a new four-year period. This deal should enable us to
continue to achieve market-leading gross margins.
Our staff
The Group has a skilled workforce as well as experienced senior
and regional management teams with proven credentials in the
industry. Strong cohesive teams have been built across our
businesses with a focus on staff training and development to
continuously improve individual capabilities and trading
performance. I would like to recognise the commitment and the
substantial effort of all our employees and thank them for their
contribution to the Group's performance. It is their continued
dedication and commitment to the business together with a clear
strategic plan that is integral to our success.
Our dividend
The Board's previously stated policy has been to pay a dividend
that reflects the cash flow generation and the long-term earnings
potential of the Group while retaining sufficient capital to fund
investment to grow the business. Whilst the Group has continued to
make progress in growing Adjusted*** EBITDA, the reduction in
underlying profitability caused by the prior period adjustments in
the accounts for the 52 weeks ended 1 July 2017, the additional
cash outflows associated with the exceptional items in the current
interim period and the significant capital expenditure outflows
associated with three large venues planned to open early in the new
financial year, has resulted in a decision by the Board to maintain
the interim dividend at the same level as last year. Accordingly,
the Company will pay an interim dividend of 1.65 pence per share in
respect of the 26 weeks to 30 December 2017. This will be paid on
12 April 2018 to shareholders on the register on 23 March 2018. The
dividend policy of the Company remains progressive and will reflect
the future growth of the business.
Sales performance since the end of the reporting period
In common with other operators, like-for-like** sales since the
start of 2018 have been slower than previous years. In the eight
weeks to 24 February, like-for-like** sales were up 3.8%, but in
the seven week period to exclude New Year's Eve, like-for-like**
sales were down 2.0%. Wet sales have generally held up well,
particularly at weekends and we have resisted the temptation to
aggressively discount as we do not believe that this is in the best
long term interests for our premium bars. Food sales have been
impacted. January and February is always the quietest time of year
for our business and we have observed a long term trend to a later
but stronger Christmas trading period being followed by a bigger
trough in sales during January.
We believe that like-for-like** sales reduction is temporary and
that growth will return as footfall naturally improves as customers
recover from the Christmas period, with the better weather and in
particular the bank holiday weekends when the business
traditionally see stronger sales.
The Board is confident in the underlying strength of the Group's
brands and its ability to operate and grow as a standalone
business, particularly given the scale and strength of its pipeline
of new venues and the strong returns achieved by new venues opened
in the last two years. The Board considers that its clear and
focused strategy, the quality of Revolution's sites and customer
proposition, and the talent within the business leave it well
placed for further growth.
Keith Edelman
Executive Chairman
FINANCIAL REVIEW
The 26 week Interim period ended on 30 December 2017 whereas the
comparative 26 week period ended on 31 December 2016 and includes
the significant trading benefit relating to New Year's Eve. The
incremental sales and profit benefit from New Year's Eve on 31
December 2016 was GBP1.0m and GBP0.5m respectively. Accordingly,
alternative measures are also given as, in the opinion of the
directors, these provide a better benchmark for the underlying
business performance.
Summary
As reported in the financial statements:
-- Sales in the interim period were GBP73.8m (FY17: GBP66.7m) up 10.6%
-- On a like-for-like** basis, sales were up 0.4%
-- Operating loss GBP3.7m (FY17 Restated*: Operating profit
GBP5.1m) impacted by GBP9.6m Exceptional costs
-- Adjusted*** Operating profit GBP6.0m (FY17 Restated*: GBP6.0m)
-- Adjusted*** EBITDA GBP8.9m (FY17 Restated*: GBP8.7m)
-- Basic Loss per share 6.8p loss (FY Restated*: Earnings per share 8.5p)
-- Adjusted*** EPS 9.4p (FY17 Restated*: 10.0p)
-- Interim dividend declared at 1.65p per share (FY17: 1.65p per share)
Alternative measures (comparatives adjusted to remove the
benefit of New Year's Eve trading):
-- Sales of GBP73.8m, up 12.3%
-- Like-for-like sales** growth for 27 weeks to 6 January 2018 up 1.9%
-- Operating loss GBP3.7m (FY17 Restated*: operating profit
GBP4.6m) impacted by GBP9.6m Exceptional costs
-- Adjusted*** Operating profit GBP6.0m (FY17: Restated*: GBP5.5m), up 9.1%
-- Adjusted*** EBITDA GBP8.9m (FY17 Restated*GBP8.2m), up 8.5%
* Results for the 52 weeks ended 1 July 2017 and for the 26
weeks ended 30 December 2017 both included changes to accounting
policies and practices that resulted in prior year adjustments.
Further details are provided below.
** Like-for-like sales are defined as total retail sales from
bars that have been trading continuously for at least 12 months
*** Adjusted measures exclude exceptional items, bar pre-opening
costs and share based payment charges/(credits).
Sales, operating profit and EBITDA comparatives adjusted to
remove 2016 New Year's Eve trading of GBP1.0m sales and GBP0.5m
profit for 'Alternative measures'
Basis of preparation
Consistent with previous reporting periods, the Group operates a
weekly accounting calendar and as each accounting period can refer
only to complete accounting weeks, the period under review reflects
the results of the twenty-six weeks to 30 December 2017.
There have been no changes to accounting policies relative to
the comparative period other than that referred to below under
prior period adjustments. There has been a change to the reporting
of share-based payment charges/(credits) in so far as these were
previously included in Exceptional items but, consistent with
recent pronouncements of the Financial Reporting Council, these are
no longer categorised as Exceptional items. However, given the
non-cash nature of share-based payment charges/(credits) they
continue to be excluded from Adjusted*** EBITDA.
The directors believe that Adjusted*** EBITDA provides the best
representation of underlying performance as it excludes the effect
of exceptional items, share-based payment charges/credits
(non-cash), and bar opening costs that are influenced by the number
and timing of new venue openings, none of which items directly
relate to the underlying trading performance of the Group.
Prior period adjustments
As previously reported, a number of prior period adjustments
were reflected in the accounts for the 52 weeks ended 1 July 2017
following a review of the Group's accounting policies and
practices. Those adjustments were fully explained and the resulting
corrections made to prior periods were detailed in those accounts.
All of those adjustments were undertaken at the end of the last
accounting period and therefore the comparative numbers for the
interim period have also been adjusted accordingly.
The Executive Chairman's statement accompanying this review
draws attention to the Board's decision to change the Group's
auditor and that the tender process established by the Board, which
required prospective auditors to undertake their own review of the
Group's accounting policies and practices, revealed that the
Group's methodology for identifying and providing for asset
impairments should be improved. As the methodology had been
consistently applied for a number of years, a further prior period
adjustment has been effected, full details of which are given in
note 4 of this interim statement. This adjustment benefits the
earnings of future periods as a result of reducing depreciation
charges and does not affect cash flow. Its effect is to reduce net
assets as at 2 July 2016 by GBP6.2m and to increase profit after
tax for the 52 weeks ended 1 July 2017 by GBP1.5m and for the 26
weeks ended 31 December 2016 by GBP0.1m. The significant impact on
profit after tax for the 52 weeks ended 1 July 2017 is because
impairment charges previously made in that period have been pushed
back to the previous period.
A further adjustment to the comparatives for the interim period
has been included relating to depreciation to correct an imbalance
in last year's charge between the two half years when an extra
month's worth of depreciation was charged in the first half and
corrected in the second half. The impact of all of the adjustments
referred to above on profit and EBITDA measures in the comparative
period (by half year) is set out in note 4.
Throughout this report, the 2017 comparatives are described as
"Restated" which means they are adjusted for all these prior period
adjustments.
Trading performance
Sales for the 26 weeks ended 30 December 2017 rose by 10.6% to
GBP73.8m (FY17: GBP66.7m). Like-for-like** sales growth over the
same period was 0.4%. However, both of these measures are depressed
by the absence of the significant benefit of New Year's Eve in the
current period and therefore, the Directors believe that the 27
weeks to 6 January 2018 provides a better benchmark for the Group's
underlying performance in the first half. Like-for-like** sales
during the 27 weeks to 6 January 2018 were up 1.9%.
The misalignment of New Year's Eve between the reporting periods
means that the comparative period profit before tax benefitted by
GBP0.5m.
Operating loss was GBP3.7m (FY17 Restated*: Operating profit
GBP5.1m), the reduction on last year being principally due to
exceptional charges as well as the absence of New Year's Eve
relative to the comparative reporting period.
Exceptional charges
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 in the period amounted to GBP9.6m (FY17 Restated*: GBPnil)
and comprised the following:
Audited
26 weeks 52 weeks
26 weeks ended ended
ended 31 December 1 July
30 December restated* restated*
2017 2016 2017
-------------------------------- ------------- ------------- -----------
Professional fees related
to merger and acquisition
activity 2,186 - -
Costs associated with changes
in executive team 705 - 190
Fees incurred relating to
accounting restatements 169 - 239
Impairment of property, plant
and equipment 860 - -
Onerous lease charges
* Charge for vacant sites - - 1,859
* Charge for traded sites 5,637 - -
Total exceptional items 9,557 - 2,288
----------------------------------- ------------- ------------- -----------
The professional fees relating to merger and acquisition
activity are primarily legal and corporate advisory fees, and
registrar and virtual data room services provided in respect of the
Board recommended offer from Stonegate and the merger proposals
from Deltic.
The costs associated with changes in the executive team relate
to compensation payments and legal costs associated with the
resignations of the Chief Executive Officer ("CEO") and Chief
Operating Officer and also fees and expenses relating to the
recruitment of the new CEO.
Fees incurred relating to accounting restatements comprise
additional and temporary third party support costs incurred in
relation to the review of accounting policies and practices and the
restatement of prior period accounts, which work was undertaken
during the reporting period.
Following a more robust analysis of the trading performance of
the Group's bars, a small number have been identified as requiring
an onerous lease provision, based on projected bar contribution and
rental commitments. The adjustment will reduce rental charges in
future periods; it does not affect the Group's cash flows.
The methodology change relating to impairment testing, as
referred to in the section on prior period adjustments, also leads
to an impairment charge in the current 26 week period of GBP0.9m.
These charges do not affect the Group's cash flows.
The Group's underlying performance, as measured by Adjusted***
EBITDA, is set out below:
Alternative
As reported measure
---------------------------- -------------
26 weeks 26 weeks 26 weeks
ended ended ended Change
30 December 31 December 31 December v Alternative
2017 2016 2016 measure
--------------------- ------------- ------------- ------------- ---------------
GBP000 GBP000 GBP000
Sales 73.8 66.7 65.7 12.3%
Adjusted*** EBITDA 8.9 8.7 8.2 8.5%
Adjusted *** margin 12.1% 13.0% 12.5% -0.5 pt
---------------------- ------------- ------------- ------------- ---------------
The adjusted*** margin of 12.1% of sales compared with 13.0% in
the prior period (Restated*), but If the comparative percentage is
adjusted to remove the incremental benefit of New Year's Eve the
comparative adjusted*** margin reduces to 12.5%. The directors
believe that this is a satisfactory performance given that during
the period the company absorbed above inflation increases in the
National Minimum Wage and National Living Wage, the implementation
of a "stealth tax" in the form of the apprenticeship levy effective
from April 2017, and very aggressive increases in Business rates as
a result of the rating revaluation of business properties also
effective April 2017. The charge for Business rates alone in the
reporting period is GBP0.5m higher (+18.2%) on a like-for-like**
basis than the comparative period, which also included the benefit
of a significant rebate in relation to the 2010 revaluation. Whilst
a number of the new valuations will be appealed, any reductions in
the amounts chargeable and the refund of any over-payments are
unlikely to be agreed for several years.
Following a successful trial at four venues, the Group is in the
process of rolling out labour scheduling software across the Group,
which will complete by mid-April. The software drives improved
customer service by encouraging labour schedules that better match
sales patterns and up to date forecasts. This in turn should help
like-for-like** growth as well as boost labour productivity so
helping to mitigate further above inflationary increases in the
National Minimum Wage. The roll-out is several months behind the
original plan as a result of management distractions caused by the
corporate activity in the summer and autumn of last year and the
need avoid disruption and management focus on trading during the
important Christmas period. The Board is confident that this
initiative will yield benefits in the coming months and years as
operational management progressively learns to use the system,
implements best practice and monitors relative productivity.
A reconciliation between Operating profit and Adjusted*** EBITDA
is given below.
(Unaudited) Audited
(Unaudited) 26 weeks 52 weeks
26 weeks ended ended
ended 31 December 1 July
30 December 2016 2017
2017 Restated* Restated*
Reconciliation of Non-GAAP
measure GBP'000 GBP'000 GBP'000
Operating (loss)/ profit (3,720) 5,051 5,480
Exceptional items 9,557 - 2,288
Share based payment (credit)/charge (765) 67 483
Non-recurring new bar opening
costs 936 843 1,393
-------------------------------------------------- ------------- ------------- -------------
Adjusted operating profit 6,008 5,961 9,644
Finance expense (239) (42) (290)
-------------------------------------------------- ------------- ------------- -------------
Adjusted profit before tax 5,769 5,919 9,354
Depreciation 2,880 2,736 5,422
Finance expense 239 42 290
-------------------------------------------------- ------------- ------------- -------------
Adjusted EBIDTA 8,888 8,697 15,066
-------------------------------------------------- ------------- ------------- -------------
An analysis of exceptional items is set out on page 9.
The share based payment credit in the period relates to the
lapse of the CEO's share options, awarded under the terms of the
Group's Long Term Incentive Plan, following his resignation from
office.
Non-recurring new bar opening costs primarily relate to the
fours bars opened in the period as well as other bars opening in
the coming months. Costs comprise overheads during the fit-out
period, recruitment, training and preparing for launch.
The table below shows how Adjusted*** EBITDA has changed in the
constituent parts of the estate.
Adjusted*** EBITDA (Unaudited) (Unaudited) (Unaudited)
by estate segmentation
26 weeks 26 weeks 26 weeks
ended ended ended
30 December 31 December 31 December
2017 2016 2016
Restated* Alternative
measure
Number of GBPm GBPm GBPm
venues
Venues opened pre
July 2016 62 11.6 12.0 11.5
Venues opened in
prior period (FY17) 6 0.8 0.4 0.4
Venues opened in
current period (FY18) 4 0.3 - -
------------------------- ---------- ------------- -------------
Adjusted EBITDA
from venues 72 12.7 12.4 11.9
Central support
costs (3.8) (3.7) (3.7)
------------------------- ---------- ------------- ------------- -------------
Adjusted EBITDA 8.9 8.7 8.2
------------------------- ---------- ------------- ------------- -------------
Venues opened pre July 2016 comprise most of the like-for-like**
venues and therefore virtually all of the reduction in the
comparative EBITDA relating to New Year's Eve (GBP0.5m) for the
alternative measure, as shown in the table. The balance of the
reduction in Adjusted*** EBITDA for this segment mainly relates to
increases in overheads.
Of the six venues opened in the prior period, four opened in the
first half and two towards the end of the second half. As
Adjusted*** EBITDA excludes bar opening costs, the improvement is
due to a combination of sales annualisation, sales growth post
anniversary of opening (included in like-for-like** sales increase)
and maturing EBITDA conversion. Average weekly sales per venue for
these six venues in the period was GBP38,000, with adjusted**
EBITDA equating to 14.6% of sales. Further improvements in EBITDA
conversion are anticipated in the second half as more of the sites
trade through their anniversaries of opening and operate as mature
businesses for a full twelve months.
Four venues opened in the current period but only one, Belfast
de Cuba, traded for most of the period, the other three (all
Revolution bars) opened just before Christmas. Whilst all four
sites have performed ahead of their budgeted sales expectations,
there is insufficient trading history to make meaningful reference
to their profit conversion or returns on investment at this
time.
Central costs represent 5.1% of sales compared to 5.5% in the
prior period.
Capital expenditure
The Group spent GBP6.6m on capital expenditure during the period
(FY17: GBP6.9m). Of this, GBP4.3m (FY17: GBP4.4m) was related to
new openings. GBP2.3m was incurred on the existing estate (FY17:
GBP2.5m) and comprised several significant refurbishments, building
renovation works, equipment replacement and IT investments and
equipment replacements.
Operating cash flow and net debt
The Group continued to be cash generative in the period with
operating cash inflow of GBP7.1m, an increase of GBP0.9m over the
prior period (Restated*). This increase was driven by favourable
working capital management more than offsetting lower operating
profit significantly impacted by exceptional costs.
The Group had gross borrowings of GBP10.5m (FY17: GBP5.0m) at
the end of the period all relating to drawings on its committed
revolving credit facility of GBP25m. The credit facility runs to
December 2021. Cash and cash equivalents were GBP6.0m at the
balance sheet date (FY17: GBP4.9m) and therefore net-debt is
GBP4.5m at the period end (FY17: GBP0.1m). Net debt has increased
by GBP1.3m during the period but it should be noted that had New
Year's trade fallen in to the current reporting period and
consistent with the comparative period, net debt at the period end
would have been GBP1.2m lower than reported and therefore is
broadly unchanged over the period.
(Loss)/Earnings per share
Basic loss per share 6.8 pence (FY17 Restated*: 8.5 pence per
share) as a result of significant exceptional costs in the period.
Adjusted*** basic earnings per share for the period was 10.6 pence
(FY17 Restated*: 10.5 pence).
Dividend
The Board is declaring an interim dividend of 1.65 pence per
share, (FY17: 1.65 pence per share). This will be paid on 12 April
2018 to shareholders on the register on 23 March 2018.
Current outlook
The first half performance reflects the continued execution of
the Group's operating model. Whilst recent sales trends have been
below the norm, there is reason for optimism on costs given that
labour scheduling software and processes should help to mitigate
the impact of wage increases over the next two years and the step
change cost increases arising from the 2017 rating revaluation of
business properties and the introduction of the apprenticeship levy
will slow appreciably from April 2019. The development of five
large venue openings in major city centres is expected to drive a
significant increase in sales in the next 12 months and will yield
significant profits as these operations move to maturity.
Mike Foster
Chief Financial Officer
2 March 2018
Revolution Bars Group plc
Condensed Consolidated Statement of Comprehensive Income
for the 26 weeks ended 30 December 2017
(Unaudited) (Unaudited)
Audited
26 weeks 52 weeks
26 weeks ended ended
ended 31 December 1 July
30 December 2016 2017
2017 Restated* Restated*
Note GBP'000 GBP'000 GBP'000
-------------------------------------- --------- ----- ------------- ------------- -----------
Revenue 73,848 66,708 130,467
Cost of sales (17,638) (16,113) (31,075)
--------------------------------------------------------- ----- ------------- ------------- -----------
Gross profit 56,210 50,595 99,392
--------------------------------------------------------- ----- ------------- ------------- -----------
Operating expenses
- operating expenses, excluding
exceptional items (50,373) (45,544) (91,624)
- exceptional items 7 (9,557) - (2,288)
--------------------------------------------------------- ----- ------------- ------------- -----------
Total operating expenses (59,930) (45,544) (93,912)
--------------------------------------------------------- ----- ------------- ------------- -----------
Operating (loss)/profit (3,720) 5,051 5,480
Finance expense (239) (42) (290)
--------------------------------------------------------- ----- ------------- ------------- -----------
(Loss)/Profit before taxation (3,959) 5,009 5,190
Tax 8 545 (766) 373
--------------------------------------------------------- ----- ------------- ------------- -----------
(Loss)/profit and total
comprehensive income for
the period (3,414) 4,243 5,563
--------------------------------------------------------- ----- ------------- ------------- -----------
(Loss)/Earnings per share
* Basic and diluted (pence) (6.8p) 8.5p 11.1p
--------------------------------------- --- ------- ----- ------------- ------------- -----------
Non-GAAP alternative performance
measure
Operating (loss)/profit (3,720) 5,051 5,480
Exceptional items 7 9,557 - 2,288
Share based payment (credit)/charge (765) 67 483
Non-recurring new venue pre-opening
costs 936 843 1,393
--------------------------------------- --- ------- ----- ------------- ------------- -----------
Adjusted operating profit 6,008 5,961 9,644
Finance expense (239) (42) (290)
--------------------------------------- --- ------- ----- ------------- ------------- -----------
Adjusted profit before tax 5,769 5,919 9,354
--------------------------------------- --- ------- ----- ------------- ------------- -----------
Depreciation 2,880 2,736 5,422
Finance expense 239 42 290
--------------------------------------- --- ------- ----- ------------- ------------- -----------
Adjusted EBIDTA 8,888 8,697 15,066
--------------------------------------- --- ------- ----- ------------- ------------- -----------
Adjusted Earnings Per Share
* Adjusted Earnings Per Share 9.4p 10.0p 20.0p
--------------------------------------- -------- ----- ----- ------------- ------------- -----------
*See Note 4 for an explanation and analysis of the prior year
restatements included above in respect of the 26 weeks ended 31
December 2016 and the 52 weeks ended 1 July 2017
Revolution Bars Group plc
Condensed Consolidated Statement of Financial Position
at 30 December 2017
(Unaudited) (Unaudited)
Audited
30 December 31 December 1 July
2017 2016 2017
Restated* Restated*
Note GBP'000 GBP'000 GBP'000
------------------------------- ------ ------------ ------------- -----------
Assets
Non-current assets
Deferred tax asset 27 - -
Property, plant and equipment 56,134 50,047 53,353
----------------------------------------- ------------ ------------- -----------
56,161 50,047 53,353
-------------------------------------- ------------ ------------- -----------
Current assets
Inventories 4,394 3,668 3,320
Trade and other receivables 7,323 7,233 9,268
Cash and cash equivalents 5,961 4,939 4,336
----------------------------------------- ------------ ------------- -----------
17,678 15,840 16,924
-------------------------------------- ------------ ------------- -----------
Total assets 73,839 65,887 70,277
----------------------------------------- ------------ ------------- -----------
Liabilities
Current liabilities
Trade and other payables (21,307) (19,736) (20,819)
Tax payable (1,250) (1,750) (843)
----------------------------------------- ------------ ------------- -----------
(22,557) (21,486) (21,662)
-------------------------------------- ------------ ------------- -----------
Non-current liabilities
Deferred tax liability - (2,005) (925)
Financial liabilities (10,500) (5,000) (7,500)
Other liabilities (11,366) (3,062) (4,945)
----------------------------------------- ------------ ------------- -----------
(21,866) (10,067) (13,370)
-------------------------------------- ------------ ------------- -----------
Total liabilities (44,423) (31,553) (35,032)
----------------------------------------- ------------ ------------- -----------
Net assets 29,416 34,334 35,245
----------------------------------------- ------------ ------------- -----------
Equity attributable to equity
holders of the parent
Issued share capital 50 50 50
Merger reserve 11,645 11,645 11,645
Reserves 17,721 22,639 23,550
----------------------------------------- ------------ ------------- -----------
Total equity 29,416 34,334 35,245
----------------------------------------- ------------ ------------- -----------
*See Note 4 for an explanation and analysis of the prior year
restatements included above in respect of the 26 weeks ended 31
December 2016 and the 52 weeks ended 1 July 2017
Revolution Bars Group plc
Condensed Consolidated Statement of Changes in Equity
for the 26 weeks ended 30 December 2017
Reserves
--------- ----------
Issued Total
Share Merger Retained shareholders'
Capital reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- --------- ---------- ---------------
At 2 July 2016 (Restated*) 50 11,645 19,979 31,674
Total comprehensive
income for the period - - 4,243 4,243
Share based payment - - 67 67
Dividend - - (1,650) (1,650)
------------------------------- --------- --------- ---------- ---------------
At 31 December 2016
(Restated*) 50 11,645 22,639 34,334
Total comprehensive
income for the period - - 1,320 1,320
Share based payment - - 416 416
Dividend - - (825) (825)
------------------------------- --------- --------- ---------- ---------------
At 1 July 2017 (Restated*) 50 11,645 23,550 35,245
Total comprehensive
loss for the period - - (3,414) (3,414)
Share based payment
(credit) - - (765) (765)
Dividend - - (1,650) (1,650)
------------------------------- --------- --------- ---------- ---------------
At 30 December 2017 50 11,645 17,721 29,416
------------------------------- --------- --------- ---------- ---------------
*See Note 4 for an explanation and analysis of the prior year
restatements included above in respect of the 26 weeks ended 31
December 2016 and the 52 weeks ended 1 July 2017
Revolution Bars Group plc
Condensed Consolidated Statement of Cash Flow
for the 26 weeks ended 30 December 2017
(Unaudited) (Unaudited)
Audited
26 weeks 26 weeks 52 weeks
ended ended ended
30 December 31 December 1 July
2017 2016 2017
Restated* Restated*
GBP'000 GBP'000 GBP'000
------------------------------------- ------------- ------------- -----------
Cash flows from operating
activities
(Loss)/profit after tax from
operations (3,414) 4,243 5,563
Adjustments for:
Net finance costs 239 42 290
Depreciation of property,
plant and equipment 2,880 2,736 5,422
Impairment of property, plant
and equipment 860 - -
Tax expense (545) 766 (373)
Share-based payment charge (765) 67 483
---------------------------------------- ------------- ------------- -----------
Operating cash flows before
movement in working capital (745) 7,854 11,385
---------------------------------------- ------------- ------------- -----------
Increase in inventories (1,074) (707) (359)
Decrease / (increase) in trade
and other receivables 1,945 1,070 (965)
Increase / (decrease) in trade
and other payables 1,509 (2,224) (644)
Increase in provisions 5,479 253 1,663
Tax paid - - (1,075)
---------------------------------------- ------------- ------------- -----------
Net cash flows generated from
operating activities 7,114 6,246 10,005
---------------------------------------- ------------- ------------- -----------
Cash flows from investing
activities
Purchase of property, plant
and equipment (6,619) (6,885) (12,779)
Net cash flows used in investing
activities (6,619) (6,885) (12,779)
---------------------------------------- ------------- ------------- -----------
Cash flow from financing activities
Equity dividend paid (1,650) (1,650) (2,475)
Interest paid (220) (42) (185)
Drawdown of borrowings 3,000 4,500 7,000
---------------------------------------- ------------- ------------- -----------
Net cash flows generated from
financing activities 1,130 2,808 4,340
---------------------------------------- ------------- ------------- -----------
Net increase in cash and cash
equivalents 1,625 2,169 1,566
Opening cash and cash equivalents 4,336 2,770 2,770
---------------------------------------- ------------- ------------- -----------
Closing cash and cash equivalents 5,961 4,939 4,336
---------------------------------------- ------------- ------------- -----------
*See Note 4 for an explanation and analysis of the prior year
restatements included above in respect of the 26 weeks ended 31
December 2016 and the 52 weeks ended 1 July 2017
Notes to the Half-yearly Financial Report
1. Reporting entity
Revolution Bars Group plc (the 'Company') is a company
incorporated and domiciled in the United Kingdom. Its Registered
Office is at 21 Old Street, Ashton under Lyne, OL6 6LA, United
Kingdom. The Company's shares are listed on the London Stock
Exchange.
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 2017 comprises the Company
and its subsidiaries (together referred to as the 'Group').
2. Basis of preparation
The annual financial statements of the Group are prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union.
The condensed consolidated financial statements of the Group for
the 26 weeks ended 30 December 2017 have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU. The condensed consolidated 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 annual financial statements as at 1 July 2017.
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
2017, amended as referred to below for i) the prior year
restatements, and ii) the change to share based payment
arrangements no longer charged as exceptional items.
The comparative figures for the 52 weeks ended 1 July 2017 are
extracted from the Company's statutory accounts for that year.
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. The auditor's report on those accounts
was unqualified, did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report and did not contain any statement under
sections 498 (2) or (3) of the Companies Act 2006.
3. Significant accounting policies
The accounting policies adopted in the preparation of the
interim 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 2017, amended as referred
to below for i) the prior year restatements, and ii) the change to
share based payment arrangements no longer charged as exceptional
items. These accounting policies are all expected to be applied for
the 52 weeks to 30 June 2018.
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, venue closure
costs including provisions for onerous leases, significant contract
termination costs including costs associated with making changes to
the Executive team and corporate Mergers and Acquisitions activity.
Previously, exceptional items have also included charges/credits
relating to share based payment arrangements; these are no longer
treated as exceptional. As they are 'non-cash' items they will
continue to be adjusted for when arriving at Adjusted EBITDA.
Bar opening costs
Bar opening costs refer to costs incurred in getting new sites
fully operational and primarily include costs incurred between
becoming liable for the costs of a trading property and
commencement of trading that property. In the opinion of the
directors, the separate reporting of bar opening costs allows a
more accurate indication of the Group's underlying business
performance, which the Directors believe would otherwise be
distorted by the timing and number of new openings.
4. Prior Year Restatements
As previously reported, a number of prior period adjustments
were reflected in the accounts for the 52 weeks ended 1 July 2017
following a review of the Group's accounting policies and
practices. Those adjustments were fully explained and the resulting
corrections made to prior periods were detailed in those accounts.
All of those adjustments were undertaken at the end of the last
accounting period and therefore the comparative numbers for the
interim period have also been adjusted accordingly.
The Executive Chairman's statement accompanying this review
draws attention to the Board's decision to change the Group's
auditor and that the tender process established by the Board, which
required prospective auditors to undertake their own review of the
Group's accounting policies and practices revealed that the Group's
methodology for identifying and providing for asset should be
improved. Impairment tests did not fully allocate head office costs
to trading venues. As the methodology had been consistently applied
for a number of years, a further prior period adjustment has been
made. This adjustment benefits the earnings of future periods as a
result of reducing depreciation charges and does not affect cash
flow. Its effect is to reduce net assets as at 2 July 2016 by
GBP6.2m and to increase profit after tax for the 52 weeks ended 1
July 2017 by GBP1.5m and for the 26 weeks ended 31 December 2016 by
GBP0.1m. The significant impact in profit after tax for the 52
weeks ended 1 July 2017 is because impairment charges previously
made in that period have been pushed back to the previous
period.
A further adjustment to the comparatives for the interim period
has been included relating to depreciation to correct an imbalance
in last year's charge between the two half years when an extra
period's worth of depreciation was charged in the first half and
corrected in the second half. The impact of all of the adjustments
referred to above on profit and EBITDA measures in the comparative
period (by half year) is set out below.
Whilst the directors are disappointed to have to report a
further change to prior year accounts, they are confident that the
accounts are now drawn up in accordance with the relevant
accounting standards. The disclosures in these interim accounts
describe the nature and impact of the most recent corrections, and
how this has been reflected in the 2017 half year and full year
accounts.
Throughout this report, the 2017 comparatives are described as
"Restated" which means they are adjusted for prior period
adjustments.
Reconciliation of prior year adjustments on H1 FY17 as
previously presented
A summary of the combined impact of the prior year adjustments
on the consolidated statement of profit and loss account for the 26
weeks ended and consolidated statement of financial position as at
31 December 2016 arising from the restatement are as follows.
The prior year adjustment caused an immaterial working capital
adjustment and did not impact the cash position of cash flows of
the Group. Accordingly, while the comparative period cash flow
statements are identified as restated, restated cash flow notes are
not provided.
Restated Consolidated Statement of Comprehensive Income for the
26 weeks ended 31 December 2016
FY17 PYA Other FY18 PYA
------------ --------- --------
31 December
2016 - Under 31 December 31 December
As Short accrual 2016 2016
published life assets of costs Deprec'n Sub-total* Impairments** Restated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ----------- ------------ --------- -------- ----------- ------------- -----------
Operating
profit 4,658 102 (260) 470 4,970 81 5,051
Finance
expense (42) - - - (42) - (42)
Profit before
tax 4,616 102 (260) 470 4,928 81 5,009
Tax (766) - - - (766) - (766)
---------------- ----------- ------------ --------- -------- ----------- ------------- -----------
Profit after
tax 3,850 102 (260) 470 4,162 81 4,243
Adjusted
EBITDA 9,249 (292) (260) - 8,697 - 8,697
---------------- ----------- ------------ --------- -------- ----------- ------------- -------------
*Sub-total represents adjusted position based on restatements
made in the published financial statements of the Group for the 52
weeks ended 1 July 2017, together with the correction of the
allocation of depreciation between first and second halves of
FY17.
**Impairments includes the effect of restatement on depreciation
charge as a result of assets being written down in prior
periods.
Consolidated Statement of Financial Position as at 31 December
2016
31
December Under 31
2016 Short Onerous Share Depreciation accrual December
As Supplier life lease based and of 2016
published rebates assets provision payments Inventory Impairment* costs Restated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-current
assets 56,504 - - - - - (6,457) - 50,047
---------------- ---------- --------- -------- ---------- --------- ---------- ------------- -------- ---------
Inventories 4,211 - - - - (543) - - 3,668
Trade and
other
receivables 8,432 (1,199) - - - - - - 7,233
Cash and cash
equivalents 4,939 - - - - - - - 4,939
---------------- ---------- --------- -------- ---------- --------- ---------- ------------- -------- ---------
Current assets 17,582 (1,199) - - - (543) - - 15,840
Trade and
other payables (17,834) - (292) - - - - (1,610) (19,736)
Tax payable (2,514) 237 - 112 - 107 - 308 (1,750)
---------------- ---------- --------- -------- ---------- --------- ---------- ------------- -------- ---------
Current
liabilities (20,348) 237 (292) 112 - 107 - (1,302) (21,486)
Deferred tax
liabilities (3,006) - - - 202 - 799 - (2,005)
Financial
liabilities (5,000) - - - - - - - (5,000)
Provisions (1,379) - - (571) - - - - (1,950)
Other
liabilities (904) - - - - - - (208) (1,112)
---------------- ---------- --------- -------- ---------- --------- ---------- ------------- -------- ---------
Non-current
liabilities (10,289) - - (571) 202 - 799 (208) (10,067)
---------------- ---------- --------- -------- ---------- --------- ---------- ------------- -------- ---------
Net assets 43,449 (962) (292) (459) 202 (436) (5,658) (1,510) 34,334
---------------- ---------- --------- -------- ---------- --------- ---------- ------------- -------- ---------
*Depreciation and impairment net assets movement includes
(GBP6,927k) related to the FY18 Prior Year Adjustment
Reconciliation of prior year adjustments on FY17 as previously
presented
A summary of the combined impact of the prior year adjustments
on the consolidated statement of profit and loss account for the 52
weeks ended 1 July 2017 and consolidated statement of financial
position as at 1 July 2017 arising from the restatement are as
follows.
The prior year adjustment caused an immaterial working capital
adjustment and did not impact the cash position of cash flows of
the Group. Accordingly, while the comparative period cash flow
statements are identified as restated, restated cash flow notes are
not provided.
Restated Consolidated Statement of Comprehensive Income for the
52 weeks ended 1 July 2017
FY17 PYA Other FY18 PYA
---------------- -------- ----------------------
1 July Under
2017 Short accrual 1 July
As life of 2017 Onerous 1 July 2017
published assets costs Deprec'n Sub-total Impairments** lease Restated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ------ ------------- ------- ------- -------- -------------------- ------------- ------- -------------------------
Operating profit
before
exceptionals 7,605 - - - 7,605 163 - 7,768
Exceptional
charge (3,869) - - - (3,869) 1,476 105 (2,288)
Operating profit
after
exceptionals 3,736 - - - 3,736 1,639 105 5,480
Finance expense (185) - - - (185) - (105) (290)
Profit before
tax 3,551 - - - 3,551 1,639 - 5,190
Tax 560 - - - 560 (187) - 373
---------------- ------------- ------- ------- -------- -------------------- ------------- ------- -------------------------
Profit after
tax 4,111 - - - 4,111 1,452 - 5,563
Adjusted EBITDA 15,066 - - - 15,066 - - 15,066
---------------- ------------- ------- ------- -------- -------------------- ------------- ------- -------------------------
*Impairments includes the effect of restatement on depreciation
charge as a result of assets being written down in prior
periods
Consolidated Statement of Financial Position as at 1 July
2017
1 July
2017 1 July 2017
As published Impairments Restated
GBP'000 GBP'000 GBP'000
Non-current assets 58,722 (5,369) 53,353
------------------------------ ------------- -------------- ------------ ------------
Inventories 3,320 - 3,320
Trade and other
receivables 9,268 - 9,268
Cash and cash equivalents 4,336 - 4,336
------------------------------ ------------- -------------- ------------ ------------
Current assets 16,924 - 16,924
Trade and other
payables (20,819) - (20,819)
Tax payable (843) - (843)
------------------------------ ------------- -------------- ------------ ------------
Current liabilities (21,662) - (21,662)
Deferred tax liabilities (1,537) 612 (925)
Financial liabilities (7,500) - (7,500)
Provisions (3,441) - (3,441)
Other liabilities (1,504) - (1,504)
------------------------------ ------------- -------------- ------------ ------------
Non-current liabilities (13,982) 612 (13,370)
------------------------------ ------------- -------------- ------------ ------------
Net assets 40,002 (4,757) 35,245
------------------------------ ------------- -------------- ------------ ------------
Reconciliation of prior year adjustments on Net Assets at 2 July
2016 as previously presented
Net assets as at 2 July 2016
FY17 PYA FY18 PYA
--------
2 July 2016 2 July
As 2016
published As published
in the 2 in the
July 2016 1 July 2 July
financial 2017 financial Deferred 2016
statements statements Impairments tax Restated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ----- ----------- -------- --------------- ------------------- -------- ---------
Net assets 41,182 (3,299) 37,883 (7,008) 799 31,674
----------------- ----------- -------- --------------- ------------------- -------- ---------
5. Key Risks
The directors set out below the principal risks and
uncertainties that face the business;
-- Dependence on key sites
-- Acquisition of new sites
-- Consumer demand
-- Discounting
-- Health and safety
-- Leasehold rents
-- Supplier concentration
-- National minimum/living wage legislation
The key risks are consistent with those detailed in the Group's
annual financial statements for the 52 weeks ended 1 July 2017.
Further information on the key risks is detailed on page 14 of the
Revolution Bars Group plc Annual Report 2017.
6. Going concern
The Directors have reviewed the Group's trading forecasts. These
forecasts demonstrate that the Group has adequate financial
resources, including its GBP25 million revolving credit facility
which is committed until December 2021, to continue in operational
existence for the foreseeable future.
The Group is forecast to remain compliant with the terms of the
revolving credit facility and the financial covenants attached to
it, which are tested quarterly. The Directors expect to utilise the
revolving credit facility for cash flow management and general
business purposes as required.
7. 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 in the period amounted to GBP9.6m (FY17 Restated*: nil) and
comprised the following:
Audited
26 weeks 52 weeks
26 weeks ended ended
ended 31 December 1 July
30 December restated* restated*
2017 2016 2017
------------------------------- ------------- ------------- -----------
Professional fees related
to merger and acquisition
activity 2,186 - -
Costs associated with changes
in executive team 705 - 190
Fees incurred relating to
accounting restatements 169 - 239
Impairment of property, plant
and equipment 860 - -
Onerous lease charges 5,637 - 1,859
Total exceptional items 9,557 - 2,288
---------------------------------- ------------- ------------- -----------
The professional fees relating to merger and acquisition
activity are primarily legal and corporate advisory fees, and
registrar and virtual data room services provided in respect of the
Board recommended offer from Stonegate and the merger proposals
from Deltic.
The costs associated with changes in the executive team relate
to compensation payments and legal costs associated with the
resignations of the Chief Executive Officer ("CEO") and Chief
Operating Officer and also fees and expenses relating to the
recruitment of the new CEO.
Fees incurred relating to accounting restatements comprise
additional and temporary third party support costs incurred in
relation to the review of accounting policies and practices and the
restatement of prior period accounts, which work was undertaken
during the reporting period.
Following a more robust analysis of the trading performance of
the Group's bars, a small number have been identified as requiring
an onerous lease provision, based on projected bar contribution and
rental commitments. The adjustment will reduce rental charges in
future periods; it does not affect the Group's cash flows.
The methodology change relating to impairment testing, as
referred to in the section on prior period adjustments also leads
to an impairment charge in the current 26 week period of GBP0.9m.
These charges do not affect the Group's cash flows.
8. Income tax
The effective tax rate on the reported loss (2017 interim:
profit) for the half year was 13.8% (2017 interim 15.3%). Legal and
professional fees relating to the merger and acquisition activity
attract no tax relief and are the principal driver in increasing
this above the corporation tax rate of 19%.
9. Share-based payments
26 weeks 26 weeks Audited
ended ended 52 weeks
30 December 31 December ended 1
2017 2016 July 2017
GBP'000s GBP'000s GBP'000s
--------------------------- ------------- ------------- -----------
Charge 358 433 849
Credit relating to lapses
in period (1,123) (366) (366)
Total (765) 67 483
------------------------------ ------------- ------------- -----------
10. Dividends
A final dividend of 3.3p per share totalling GBP1,650,000 was
declared on 2 November 2017 and was paid on 8 December 2017.
An interim dividend of 1.65p per share totalling GBP825,000 was
declared on 2 March 2018 and will be paid on 12 April 2018. This is
not recognised as a liability at 30 December 2017.
Responsibility statement of the directors in respect of the
half-yearly financial report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU
-- 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.
The Directors of Revolution Bars Group plc are detailed on page
24 of the Revolution Bars Group plc Annual Report 2017. Subsequent
to the publication of the Annual Report, Mark McQuater resigned
from the Board with immediate effect on 17 October 2018 and Keith
Edelman became Executive Chairman pending a new Chief Executive
joining the Board.
By order of the Board
Mike Foster
Chief Financial Officer
2 March 2018
INDEPENDENT REVIEW REPORT TO REVOLUTION BARS GROUP PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Revolution Bars Group Plc's condensed
consolidated interim financial statements (the "interim financial
statements") in the half-yearly financial report of Revolution Bars
Group Plc for the 26 week period ended 30 December 2017. Based on
our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in
all material respects, in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the Condensed Consolidated Statement of Financial Position
as at 30 December 2017;
-- the Condensed Consolidated Statement of Comprehensive
Income for the period then ended;
-- the Condensed Consolidated Statement of Cash Flow
for the period then ended;
-- the Condensed Consolidated Statement of Changes in
Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the half-yearly
financial report have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 2 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The half-yearly financial report, including the interim
financial statements, is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the half-yearly financial report based on
our review. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Manchester
2 March 2018
a) The maintenance and integrity of the Revolution Bars
Group Plc website is the responsibility of the directors;
the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the
auditors accept no responsibility for any changes that
may have occurred to the interim financial statements
since they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ
from legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR JTMMTMBMMMMP
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