17/10/2023 - Revolution Bars Group plc: Preliminary announcement for the year ended 1 July 2023

16 October 2023

Revolution Bars Group plc (LSE: RBG)

Preliminary results for the 52 weeks ended 1 July 2023

Peach acquisition delivering against a challenging trading environment

Overall result in line with expectations

Revolution Bars Group plc ("the Group"), a leading UK operator of 67 premium bars and 22 gastro pubs, trading predominantly under the Revolution, Revolución de Cuba and Peach Pubs brands, today announces its preliminary results for the 52 weeks ended 1 July 2023.

We are pleased to report that Peach Pubs has performed well since acquiring the business in October 2022, with significant opportunity for expansion in the future. On a macroeconomic basis, late-night hospitality, in particular, is facing very challenging times impacted by the cost-of-living crisis which followed the period affected by trading restrictions under the pandemic. In addition, the working from home trend, especially on Fridays, historically our second largest night, has affected our sales. Against this backdrop, our initiatives to drive sales, support our guests, and manage costs are making progress.

Results to 1 July 2023

	FY23	FY22	FY23	FY22
	(IFRS 16)	(IFRS 16)	(IAS 17)	(IAS 17)
	£m	£m	£m	£m
Total Sales	152.6	140.8	152.6	140.8
Adjusted1 EBITDA	17.0	19.4	6.6	10.2
Operating (Loss)/Profit	(15.2)	7.4	(7.0)	4.8
(Net Bank Debt)/Net Cash	(21.6)	4.1	(21.6)	4.1

Key points

Despite the challenges faced in the year, we are proud to deliver the FY23 EBITDA expectation set in January 2023.

Total revenue for the year was up £11.8 million to £152.6 million. However, the Group faced continuous and varied external headwinds, particularly impacting bars, during FY23, all combining to deliver -8.7%like-for-like2 ("LFL") sales in the full year FY23.

Peach Pubs, part of the Group for a year as of October 2023, has delivered +14.1% LFL sales in FY23 since acquisition, compared to 2019, demonstrating that the acquisition of Peach has already delivered much needed diversification of sales and guests. We have been very pleased with performance since acquisition, especially when the sun is shining, and guests are enjoying the high-quality outdoor spaces. We were very excited to open our first new Peach pub since acquisition in October 2023, with further significant opportunities to expand as capital becomes available.

Revolución de Cuba brand has performed well versus other bar brands under current conditions. Corporate bookings continue to be strong as we look forward to what should be a return to a normal Christmas trading period.

Revolution has been most impacted by the cost-of-living crisis with guests seeing a direct impact on their disposable income. We continue to implement tactical initiatives and monitor pricing carefully to support the return of this young and young professional guest base.

New market hall and competitive socialising concepts Founders & Co. and Playhouse continue to mature into exciting new brands. Founders & Co. in particular has experienced very strong performance as it has become a go-to destination in Swansea. There is excellent opportunity to expand this brand when funding allows.

We have delivered significant cost savings in the business, with energy usage now down 35% since 2017, seen significant reduction in consumable spend in our bars, and have recently implemented an enhanced labour management system to further increase efficiency.

LFL pre-booked party revenue for Christmas FY24 of +17.7% versus FY23 gives evidence of a potentially normal festive season, and our new CRM system, recently used in its first major campaign as students returned, is proving to be a significant asset driving sales.

FY24 has started with a continuation of the challenges as above with year-to-date LFLs at -5.5% compared to FY23, though pleasingly this has improved in the last three weeks to -3.5% as a result of the return of students and corporates in bars and continued strong performance in pubs. The Board remains confident in achieving FY24 expectations, which have been prepared on the assumption that the important Christmas trading period is not interrupted by train strikes.

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:

"Peach Pubs has seen continued strong trading since acquisition, especially during periods of good weather. We are very excited to open our first new Peach Pub since the acquisition and see this brand as having significant expansion opportunities across the United Kingdom when we have the necessary available funds.

The Group now offers a well-rounded, diversified offering through our bars and pubs to navigate the ongoing challenges our guests face with the cost-of-living crisis. The macroeconomic challenges facing the industry impact on both our guests' available spending as well as profitability of the business. This is a key area of focus for our management teams, and we are pleased to see the impact of our sales- driving initiatives coming to fruition, alongside active cost management.

With pre-booked revenues at record-highs for the upcoming festive period, we look forward to our bars and pubs hosting our fabulous corporate guests, as well as anticipating improved walk-in custom following the challenges of industrial action on the railways in recent years.

We join UK Hospitality in calling for the crucial festive season to be protected and for an urgent resolution to the ongoing rail dispute. Not only do the strikes have a significant impact on sales and profitability, but most importantly they affect our colleagues' earning potential through lost shifts and tips which the teams rely on to see them through the quieter trading months of January and February.

I am immensely proud of the resilience and positive attitude our colleagues continue to show and look forward to entering our busiest trading period of the year, which we hope to be the first normal Christmas since 2019."

Enquiries:
Revolution Bars Group plc	Tel: 0161 330 3876
Rob Pitcher, CEO
Danielle Davies, CFO
Cavendish (Nominated Adviser and Broker)	Tel: 020 7220 0500
Matt Goode / Simon Hicks / Teddy Whiley (Corporate Finance)
Tim Redfern / Charlotte Sutcliffe (ECM)
Instinctif (Financial PR)	Tel: 020 7457 2020
Matt Smallwood
Justine Warren

Guy Scarborough

Change of Name of Nominated Adviser and Broker

The Company also announces that its Nominated Adviser and Broker, finnCap Ltd, has now changed its name to Cavendish Capital Markets Ltd.

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

I was delighted that the Group managed to complete the exciting acquisition of Peach Pubs in October 2022. I am immensely proud of the management team's ability in both managing the integration of Peach Pubs whilst at the same time having to operate in the most difficult of trading environments with a cost-of-living crisis, compounded by high inflation, train strikes and permanent change post COVID-19 of the office workforce working from home.

We have nearly completed our integration of the Pubs, with the only synergies still to be delivered being contracts and systems which will provide added benefits to our strong brand of pubs. We remain confident in delivering the £1.5 million of annual synergies we identified at the time of making the acquisition in FY25. This acquisition has already delivered much needed diversification of sales and guests to tackle the changing environment and consumer trends seen post-pandemic. When the sun shines, we now get to benefit from our guests flocking to the lovely outside spaces at our pubs.

Our Revolution brand has however been particularly impacted by the reduced footfall as a result of the well- publicised challenges faced by our young guest base. Revolución de Cuba has performed well, particularly in the second half of the year, as we see the results of the initial actions taken as a result of our review of the brand proposition. Given the fundamental changes in the market, management is undertaking key strategic brand proposition work on our main bar brands to ensure we remain our guests' first choice when they're able to enjoy out-of-home experiences. Christmas was, yet again, impacted by external factors, this time by train strikes after the two previous years of COVID-19 restrictions. Th train strikes particularly impacted our walk-in trade, whilst corporate party bookings remained strong. We are very excited by the current level of bookings made for Christmas 2023.

It is pleasing to see our guests' inclination to recommend Revolution bars through our feedback tracking, which has never been higher and gives us confidence that once our guests can afford to do so, we will see visit frequency improve.

Whilst performance and our brands remain a key focus, we of course maintain our focus on offering a rewarding workplace to our teams, ensuring we retain key partnerships with our wellbeing partners and continuing to drive progress in our Diversity & Inclusion, Wellbeing and Sustainability journeys.

Our business

At the end of the reporting period the Group operated 89 venues (2022: 69 not including Peach Pubs) consisting

of the following brands: Revolution (47 bars), focused on young adults; Revolución de Cuba (18 bars), which attracts a broader age range; Peach Pubs (21 pubs), attracting a more affluent guest base, Playhouse (two bars), a competitive socialising offering; and Founders & Co. (one bar), an artisanal market place experience. After year- end we closed one Revolution bar and opened one new Peach Pub.

In FY23, we refurbished five bars in the first half of the year as well as converting a second bar into a Playhouse, and investing in sustainability, IT and other key investments. Our refurbishment strategy was paused in January 2023 whilst we manage the cost-of-living cost impacts on our guests and our business, and we intend to resume progress when appropriate.

Our results

Sales of £152.6 million (2022: £140.8 million) were 8.4% higher than the previous year as a result of the acquisition of Peach Pubs and the associated increased sales from pubs in the last eight months of the year. This offset the impact of the cost-of-living crisis and resulting lack of consumer confidence particularly felt by our young guest base in bars. The current year was significantly affected by macroeconomic factors outside of our control, with none of the last three years representing the true Christmas trading that the Group can deliver when not disrupted by external factors.

Our statutory loss before tax for the year of £(22.2) million (2022: profit before tax of £2.1 million) is significantly impacted by non-cash exceptional impairment charges. Adjusted1 EBITDA, our preferred KPI, removes the impact of non-cash and non-recurring elements to show a true reflection of performance. Though this measure is also 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 £6.6 million (2022: profit of £10.2 million). The reduction in APM3 adjusted1 EBITDA is a direct result of heightened costs and the challenging sales environment.

During FY23, 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 15 October 2023, the Group had net debt of £23.2 million.

Our Board

There have been no changes to the Board in the year. With COVID-19 firmly behind us, the Board has been able to return to in-person meetings and has continued its focus on strategy, performance improvement of the business, and Governance matters.

The Board and Executive Management group continue to work closely together, with the Board providing challenge, a sounding board and support to Management decisions.

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 bars and pubs, and I would like to extend my thanks to the whole team for continuing to demonstrate remarkable resilience and enthusiasm, and delivering excellent service to our guests.

Our Future

Year-to-datelike-for-like2 ("LFL") revenue, compared to FY23, has been -5.5%. However, in the past three weeks this has improved to -3.5% as a result of improved performance in Revolution bars following the return of students, continued positive momentum in Revolución de Cuba bars, and a continuation of the strong performance seen at Peach Pubs. We have confidence in the Peach Pub brand's ability to expand across the United Kingdom, when funding allows.

The Financial Review provides information on liquidity and going concern, and also the full going concern disclosures, which include references to material uncertainty, can be found in note 1.

I am confident that the strong leadership, cost focus, and delivery of synergies will continue to drive performance and navigate us through the continued challenging environment.

I would like to take this opportunity to thank all our colleagues for their hard work, amazing attitudes, and delivery of fun and memorable experiences to our guests, as well as our stakeholders with particular thanks to the continued support of our suppliers.

Keith Edelman

Non-Executive Chairman

16 October 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