26 weeks ended makers of the party spirit since 1996 28 … · 2020-05-05 · revolution glasgow...

Revolution Bars Group PLC

26 weeks ended

28 December 2019Makers of the party spirit since 1996

Contents

Headlines

Financial Review

Strategy Update

Summary

Makers of the party spirit since 1996

3Headlines

Adjusted EBITDA (IAS 17) £7.6m, in line with market expectations, up +10.6% on prior year

Like-for-Like sales +1.2% with Q1 LFL growth of +0.7% and +1.7% in Q2

Seventh consecutive record Christmas* sales - LFL +4.0% (weekly sales per venue over £65k)

Savings assist mitigation of on-going cost headwinds

Continued strong cash generation

Financial

Performance

Trading

Overview

Strategy

Revolución de Cuba achieving strong LFL sales growth

Much improved LFL sales trend at Revolution

Macro environment remains tough – costs still rising with 2020 NLW +6.2%

Bank debt, net of cash, substantially reduced and on target to be below one times adjusted

EBITDA (IAS 17)

Invest in our team

Invest in our brands / guest experience

Invest in our core estate

Subject to market conditions, site expansion expected to resume end of FY21 and be largely

self-funded

Revolution Bars Group plc

Interim Results – 26 weeks ended

28 December 2019

* Measured over 4 weeks of Christmas (to 31 December)

(4.6%)(5.1%)

(4.8%)

(7.6%)

(5.5%)

(4.3%)

1.7%

(6.1%)

(3.6%)

0.0%(1.8%)

1.2%

(0.6%)

1.9%

0.6% 0.3%

1.9%

3.3%

2.7%

6.5%

0.7%

2.3%

1.0%

2.0%

2.6%

(1.1%)

2.6%

4.0%

2.0%

(1.1%) 1.1% (0.1%)

1.1% (0.9%) (0.2%)

2.8%

3.9%

0.9%

(10%)

(5%)

-

5%

10%

July August September October November December January February March April May June July August September October November December January

LFL Sales YoY% - RBG vs Bars

RBG restated

month

High Street

Bars**

Linear (RBG

restated

month)

Linear (High

Street Bars**)

NYE*BarsWet-Led Pubs

4LFL SalesTrading back in line with Pubs & Bars Market (Peach)

LFL YoY% - RBG v Wet-Led Pubs / Bars

Source: CGA Peach Business Tracker

LFL Sales is Wet & Food sales combined and excludes Misc revenue

* NYE falls into W27 FY19, compared with W26 FY18

** Bars data provided from April 2019, prior to this RBG classed as a "Wet-Led Pub"



28 December 2019

(0.3)%

+1.7%

(2.6)%

(0.1)%

+3.8%

+6.0%

FY19

Q1FY19

Q2FY19

Q3FY19

Q4FY20

Q1FY20

Q2

(1.3)%+0.8% +5.0%

(6.5)%

(4.8)% (4.6)%

(2.3)%

(0.6)% (0.3)%

FY19

Q1

FY19

Q2

FY19

Q3

FY19

Q4

FY20

Q1

FY20

Q2

(3.4)%(5.6)% (0.4)%

(5.0)%

(3.1)%(4.1)%

(1.8)%

+0.7% +1.7%

FY19

Q1

FY19

Q2

FY19

Q3

FY19

Q4

FY20

Q1

FY20

Q2

(2.9)%(4.0)% +1.2%

5LFL SalesRevolution stabilised and Revolucion De Cuba strong

Sales

Improving trend from FY19 Q4

continued through to FY20 Q2

Revolution close to growth

Revolución de Cuba performing

strongly



28 December 2019

Financial Review

CFO Mike Foster Makers of the party spirit since 1996

IFRS 16* IAS 17 IAS 17

Sales 81.2 81.2 78.5 3.5%

Gross profit 61.8 61.8 59.5 3.8%

Gross profit % 76.1% 76.1% 75.9% 0.2%pt

Adjusted EBITDA 12.8 7.6 6.9 10.6%

Adjusted EBITDA % 15.8% 9.4% 8.8% 0.6%pt

Adjusted PBT 2.9 3.5 2.9 20.7%

Adjusted PBT % 3.6% 4.3% 3.7% 0.6%pt

Adjusted EPS 4.4p 4.5p 4.2p 0.3p

Dividend per share - - - -

FY20 H1

£m

FY19 H1

£m

YoY

%

FY20 H1

£m

7FY20 H1 ReviewAdjusted EBITDA up +£0.7m in line with guidance

Total Sales +3.5% with LFL +1.2%

Gross margin up +0.2%pts mainly driven by food

menu changes (Mar 19), more focused offers and

new App (Sept 19) allowing direct customer

interaction

Adjusted EBITDA* margin improved by 60bp due to

improved operational leverage and benefit of cost

savings

Adjusted EBITDA* and Adjusted PBT in line with

guidance

Summary Income Statement



28 December 2019

* The Group adopted IFRS 16 in FY20. IFRS 16 changes the accounting treatment of

leases. Prior year comparatives have not been restated. The current period is also

shown under IAS17 to provide comparability with prior year. Adjusted EBITDA

referenced in the notes refers to IAS 17.

Cost KPIs % of Sales FY19 H1 LFL New1

Closed2 FY20 H1

Gross profit % 75.8% 76.2% 75.4% n/a 76.0%

Venue payroll 26.1% 26.0% 29.0% n/a 26.3%

Other venue costs 35.1% 34.0% 37.6% n/a 34.3%

Venue EBITDA 14.6% 16.2% 8.8% n/a 15.4%

IAS 17 Basis FY19 H1

£m

LFL

£m

New1

£m

Closed2

£m

FY20 H1

£m

Sales 78.5 0.9 2.5 (0.6) 81.3

Gross profit 59.5 0.8 1.9 (0.4) 61.8

Venue payroll (20.5) (0.4) (0.7) 0.2 (21.4)

Other venue costs (18.3) 0.5 (0.6) 0.2 (18.2)

Venue rates (3.7) (0.1) (0.2) - (4.0)

Venue EBITDAR 17.0 0.8 0.4 - 18.2

Venue rent (5.5) - (0.2) - (5.7)

Venue EBITDA 11.5 0.8 0.2 - 12.5

8FY20 H1 ReviewMitigation of cost headwinds

Trading P&L Bridge – H1 v LY (IAS 17 basis)

Payroll

NLW and pension increases inflate rate per

hour +4.6% +£0.9m

£0.5m payroll cost mitigation from labour

scheduling and Work-smart initiatives

NLW increase in April 2020 +6.2%!

Other costs

Other venue costs LFL £0.5m lower

Savings in local marketing, cleaning, network

communications, cash collection and card

payment charges

Venue EBITDA

15.4% of sales, up from 14.6%

Returns from FY19 openings expected to

improve as they mature



28 December 2019

1. New sites are 5 openings from FY19

2. Closed sites: Swansea, Wood Street in Liverpool, and Macclesfield, all closed in period under review

'Like for Like' Estate EBITDA 68 12.2 11.4 0.8

FY19 openings (prior year) 5 0.5 0.3 0.2

FY20 H1 closures 3 (0.2) (0.2) -

Venue EBITDA 76 12.5 11.5 1.0

Support Centre costs (4.9) (4.6) (0.3)

Adjusted EBITDA 7.6 6.9 0.7

Adjusted EBITDA % of Sales 9.4% 8.8% 0.6%pt

Number

of

Venues

FY20

H1

£m

FY19

H1

£m

YoY

£m

9FY20 H1 ReviewEBITDA margin

LFL sales +1.2%

‒ LFL includes pre-IPO venues +£0.1m

‒ FY16 and FY17 +£0.2m

‒ FY18 +£0.5m

New space contributes incremental £0.2m

Support centre increased by £0.3m but at

5.9% sales is better than FY19 H1: 6.0%

Adjusted EBITDA margin improved by 60bp

Improved operational leverage

Adjusted EBITDA by segment



28 December 2019

Cash generative business

Capex – existing estate made up of:

£6.9m capex – expansion last year includes £1.2m

of bar opening costs

Bar closures and lease surrenders relate to 3

Revolution closures in first half (Wood St, Liverpool,

Swansea and Macclesfield)

Suspension of expansion Capex and dividends has

allowed £6.0m repayment of RCF facility

10FY20 H1 ReviewCash generative business

Summary Cash Flow



28 December 2019

Adjusted EBITDA 7.6 6.9

Release of onerous lease provision (0.6) (0.5)

Working capital movement 2.1 1.8

Capex - existing estate (2.9) (2.6)

Cash generated - existing business 6.2 5.6

Capex - expansion - (6.9)

Bar closures and lease surrenders (0.4) -

Tax 0.1 -

Financing - dividends & interest (0.4) (2.0)

Net cash flow 5.5 (3.3)

Bank loan (repayment) / draw down (6.0) 3.0

Net cash movement (0.5) (0.3)

Cash flow FY20

H1

£m

FY19

H1

£m

FY20

H1

FY19

H1

Refurbishments 1.4 0.6

Equipment Replacement 1.0 1.4

IT - Other Central 0.5 0.6

Capex - existing 2.9 2.6

FY20

H1

FY19

H1

FY19

H2

RCF Facility (11.5) (18.5) (17.5)

Cash & equivalents * 3.1 3.7 2.6

Bank debt net of cash (8.4) (14.8) (14.9)



28 December 2019

11FY20 H1 ReviewPost balance sheet event

Lease Surrenders

Shortly after the end of the

reporting period, the Group

exchanged contracts to

surrender leases at five loss-

making sites at cost of £3.6m

This brings the total number of

lease surrenders this financial

year to six for a cost

consideration of £3.9m that will

bring an annualised cash

benefit to the Group of £1.3m

We continue to manage our

estate to optimise value

creation for our stakeholders

Notes

Macclesfield lease surrendered at end of November 2019 (completed)

Aprirose lease surrenders exchanged and expected to complete at March 20 rent quarter day

Under IFRS 16, EBITDA does not include rent charges and the onerous lease is retired on transition

Closure

date

Lease

surrender

Run rate

EBITDA

losses

(cash)

Onerous

lease

provision

release

Reported

profit

impact

IAS 17

Lease exit

cost

£m £m £m £m

Macclesfield Nov-19 Nov-19 0.2 (0.1) 0.1 0.3

Aprirose - 5 leases Mar-20 1.1 (0.8) 0.3 3.6

Wood St, Liverpool Aug-19

Lincoln Jan-20

Fallowfield, Manchester Jan-20

Wolverhampton FY15

Lancaster FY15

Full year impact (IAS 17) 1.3 (0.9) 0.4 3.9

IFRS 16 measurement 0.4 nil 0.4

Lease Surrenders

Southampton de Cuba

12FY20 H1 ReviewInvestment returns on new sites

Returns from new sites targeted to payback over four

years

FY16 – FY18 mature venues delivering a blended

return of 22.8% and projected payback over 4.6 years

FY19 openings include:

- two Revolutions trading strongly and ahead of

expectations

- three Revolución de Cubas slow to mature due to

individual site issues – mitigating actions underway

Investment returns on new sites

Note: ROCE % based on Last Twelve Months (LTM) EBITDA up to end of

FY20 H1

Revolution Glasgow Revolution Durham Bristol de Cuba Huddersfield de Cuba



28 December 2019

Number of Openings 17 5

Average months traded 35 14

Capital Invested £m 23.2 7.6

Venue EBITDA (LTM) £m 5.3 0.8

Returns on Capital

Invested% 22.8% 10.1%

FY19FY16 -

FY18

(10%)

-

10%

20%

30%

40%

50%

- 2% 4% 6% 8% 10% 12%

Sale

s Yo

Y %

ach

ieve

d

Sales YoY % required

13Invest in EstateInvestment in refurbishment producing strong returns

FY19 Refurbishments

3

-

3

Q3

1

1

2

Q4

6

2

8

FY19

-

1

1

Q2

2

-

2

Q1

+5.6%

+2.4%

+5.5%

Actual

achieved

2.2

3.3

2.2

Payback

years

45%

31%

46%

ROI

+4.1%

+2.6%

+4.0%

Sales

uplift

required

1.Required increase based on a 3 year payback

2.Benefit calculated by comparing the change in YoY sales trend from

refurbishment versus pre-refurbishment relative to brand average

performance

FY20 Refurbishment Returns

4 out of 7 sites performing ahead of target return

Defensive spend to combat competitor intrusion

FY20 Refurbishments

1

-

1

Q2

4

-

4

Q3

2

-

2

Q4

11

2

13

FY20

4

2

6

Q1



28 December 2019

Actual

achieved

Payback

yearsROI

Sales uplift

required

+11.1% 1.8 56%+6.6%

14Financial Summary

Improving LFL sales trend – delivering LFL growth

Cost mitigation initiatives helping to manage continuing cost headwinds

Investment in existing estate delivering good returns

Operational gearing now improving

Debt reducing significantly and on track to 1 x Adjusted EBITDA (IAS 17) target at

year end notwithstanding nearly £4m of lease surrender payments

Summary



28 December 2019

Strong cash generation

Strategy update

CEO Rob Pitcher Makers of the party spirit since 1996

16Strategy Update

Build guest loyalty

Drive sustained profit improvement

Develop our estate

Invest in our people, our brands and our estate

Build on a solid foundation

Prioritise investment in core estate to drive LFL sales

Reduce bank debt net of cash to one times adjusted EBITDA

Continue to strengthen our team

Sales and Profit returned to growth

Cost pressures unrelenting

Management plan gaining traction

Context

Key Strategic Pillars

FY20 Key Strategic Priorities



28 December 2019

17Three Year PlanStabilise, consolidate, expand

Year 1

FY19

Year 2

FY20

Year 3

FY21

STABILISATION CONSOLIDATION EXPANSION

Deliver like-for-like sales

growth

Deliver workstreams

Drive team engagement

Build solid foundation

Pay down debt

Invest in people

Invest in brand

experience

Invest in estate

Listened

Planned

Stabilised the team

Sales recovering

Yield and margin

delivered

Expansion put on hold

Cost base reduced

Commence new

openings

Build team to deliver

Ensure focus on the

core estate



28 December 2019

Key

18Revitalising RevolutionDeliver workstreams to revitalise Revolution

Invest in our brand and guest experience

Competitive socialising

Next Generation Revolution

Project Event Space

Project Atmosphere

Drink Innovation

Cocktail menu – layout / price / content

Bar ergonomics & setup

Pricing trials

Food Strategy

Deliveroo

Food

Cocktails

Digital Journey

Online table bookings

Online reputation management

Revolution website

Social brand engagement

Revolution App

Affiliates

Innovation

New Revenue Streams

Rev

Rev

RBG

Rev

RBG

RBG

RBG

Rev

RBG

RBG

RBG

RBG

Rev

Rev

RBG

Planning Underway Live



28 December 2019

Saturday X & Love Saturdays

Dayparting

Rev

RBG Lifestyle Brand Opportunities RdC

Technology

Revolution Fridays

Vodka

Rum

Brand Heritage

Rev

RdC

Brand Collaborations / Pop ups RdCRdC

RBG

Masterclass Development

Latin Dance Events

Rev

RdC RBG

External Events Business RdC

Operational Excellence

Brand Consistency RBG

Stretch the top RBG

Repositioning

Margin / value / content Rev

Complete

19Revitalising RevolutionDeliver workstreams to revitalise Revolution

Invest in our team

Project create tomorrow – Gen Z

Bartender academy

General Manager stability

Immersive brand induction

Worksmart 2021 – process simplification

Employee welfare – mental health

Diversity & inclusion

Segmentation

Active estate management

5/6 year investment cycle

Utilities consumption reduction

Sustainability & environmental impact

Labour deployment

Venue cost benchmarking

Central support costs

Central supply agreements tendered

Invest in our estate

Building a solid foundation

Rev

RBG

RBG

RBG

RBG

RBG

Rev

Rev

RBG

RBG

RBG

Rev

RBG

RBG

RBG

RBG



28 December 2019

Acquisitions Process & Support RBG

Labour remodel RBG

Product review RBG

Storytelling RdC

Key Planning Underway Live Complete

20Summary

FY20 H1 – Sales in growth

FY20 H1 – Profit in growth

Macro environment remains tough – costs still rising with 2020 NLW +6.2%

Second year of the plan on course to deliver expectations

Return to expansion in due course and will be largely self-funded

Summary

Like-for-like sales momentum maintained in the past 8 weeks at +1.6%

Latest refurbishments performing well



28 December 2019

Debt reduction on target for 1 x Adjusted EBITDA (including Lease Surrenders)

Appendices


FY20

H1

£m

FY20

H1

£m

FY19

H1

£m

Adjusted EBITDA 12.8 7.6 6.9

Depreciation (7.3) (3.7) (3.6)

Exceptional items (4.4) (7.3) (5.2)

Bar opening costs - - (1.2)

Credit / (charge) arising from LTIP (0.1) (0.1) -

Operating profit/(loss) 1.0 (3.5) (3.1)

Finance expense (2.6) (0.4) (0.4)

Loss before taxation (1.6) (3.9) (3.5)

22Appendix 1Adjusted EBITDA to PBT

IFRS 16 requires depreciation of right-of-use assets

Exceptional items - see Appendix 3

No new openings in FY20 in line with stated strategy

Reconciliation of Adjusted EBITDA to PBT



28 December 2019

* The Group adopted IFRS 16 in the period under review, which changes the

accounting treatment of leases. Prior year comparatives have not been restated

IFRS 16 includes financing element of lease liabilities

23Appendix 2Exceptional Items

Exceptional Items



28 December 2019

Net release of provisions due to lease surrenders

offset by new provisions on two FY19 sites

* The Group adopted IFRS 16 in the period under review, which changes the

accounting treatment of leases. Prior year comparatives have not been restated


FY20

H1

£m

FY20

H1

£m

FY19

H1

£m

Impairment of property, plant

and equipment1.8 8.4 3.5

Impairment of right-of-use

assets3.0 - -

Bar closures and lease

surrenders0.2 - -

Gain on disposal (0.6) - -

Onerous lease charges - (1.1) 1.7

Exceptional Items - Total 4.4 7.3 5.2

IFRS 16 requires depreciation and impairment testing

of right-of-use assets

Surrender of Macclesfield lease

Under IAS 17, costs charged against onerous lease

provision

26 weeks ended makers of the party spirit since 1996 28 … · 2020-05-05 · revolution glasgow...

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