Revolution Bars : Interim results announcement FY22

1 March 2022

Revolution Bars Group plc (LSE: RBG)

Unaudited Interim results for the 26 weeks ended 1 January 2022

Positive outlook following continued investment in all brands

Revolution Bars Group plc ("the Group"), a leading UK operator of 67 premium bars, trading predominantly under the Revolution and Revolución de Cuba brands, today announces its unaudited interim results for the 26 weeks ended 1 January 2022.

Results to 1 January 2022

	H1 FY22	H1 FY21	H1 FY20	H1 FY22	H1 FY21	H1 FY20
	(IFRS 16)	(IFRS 16)	(IFRS 16)	(IAS17)	(IAS17)	(IAS17)
	£m	£m	£m	£m	£m	£m
Total Sales	74.1	21.6	81.2	74.1	21.6	81.2
Operating Profit/(Loss)	6.7	(14.4)	1.0	4.1	(14.2)	(3.5)
Adjusted1 EBITDA	12.2	(1.2)	12.8	7.6	(5.8)	7.6
Profit/(Loss) Before Tax	4.3	(17.7)	(1.6)	3.7	(14.7)	(3.9)
Basic Profit/(Loss) Per Share	1.9p	(15.7)p	(2.9)p	1.6p	(13.0)p	(7.9)p
Net Cash/(Net Bank Debt)*	4.2	(21.0)	(8.4)	4.2	(21.0)	(8.4)

• "Net cash"/net bank debt is cash in bank less all drawings on the Revolving Credit Facility ("RCF") and Coronavirus Large Business Interruption Loan Scheme ("CLBILS") term loan

Key points

Encouraging trading when restriction free

• After restrictions were released on 19 July 2021, two weeks into FY22, the Group enjoyed strong trading. Life-for-like2 ("LFL") sales between then and 13 November 2021 were very strong at +14% ahead of the comparable period in FY20 aided by the return of students, the return of office workers, staycations and investment in our guest propositions;
• Overall, comparable LFL2 sales versus FY20 for the period from 19 July 2021 to 1 January 2022 remained positive at +1.4% despite the additional restrictions imposed on our guests in the Christmas period, which was reflected in LFL2 sales for the 6-week period ending 1 January 2022 of -23%;
• Despite the disappointing messaging by the Government around Omicron, our bars performed admirably, and our sales teams have worked tirelessly to rebook our corporate guests' Christmas parties into the next few months; and
• Since "Plan B" restrictions ended, we have seen positive LFL2 sales versus FY20 of 6% in February, notwithstanding some ongoing restricted trading in Scotland, Northern Ireland and Wales, taking the year to date LFL2 sales since Freedom Day on 19 July 2021 to 0.5%.

Robust results and stable financial position

• The Group has maintained a net cash position from 25 August 2021 through to the end of FY22 H1 due to positive cash generation from strong sales;
• Adjusted1 EBITDA, as measured under IAS 17 inclusive of rental charges, was £7.6 million, matching the £7.6 million adjusted1 EBITDA we achieved in FY20 H1, the last period unaffected by COVID-19;
• We delivered profit before tax of £4.3 million in FY22 H1, versus a loss of (£17.7) million in the comparative FY21 period, and a loss of (£1.6) million in the comparative FY20 period;
• Successful net proceeds of £34.0 million from the FY21 equity fundraisings, as well as positive cash generation from trade, have allowed the enhanced refurbishment programme to begin in FY22, whilst also commencing new site acquisitions;

• Capex of £2.4 million was spent in line with expectations in FY22 H1 across four refurbishments, the new concepts, and other planned capital expenditure. An additional five refurbishments have been completed in FY22 so far, with 19 in total expected to be completed in FY22;
• We are pleased with current performance of the sites refurbished so far, and confident they will achieve the two-year payback target we set for refurbishments;
• The Hospitality industry has been significantly affected by inflationary cost increases in areas such as employment, food, transportation and energy, and as all meaningful Government support comes to an end in the coming months we continue to monitor these cost pressures closely and take action to mitigate wherever possible; and
• Net bank debt reduced from £21.0 million at the end of FY21 H1 to net cash of £4.2 million at the end of FY22 H1.

Investing in our brands, people and propositions

• Successful launch of two new concepts: Founders & Co., an artisanal market-place experience now well established, and Playhouse, a competitive socialising concept launched in November 2021 which continues to deliver extremely encouraging results;
• First new bar lease signed since 2018, with two new openings targeted this year and six next year, with a strong pipeline to achieve this;
• We launched the "Rev U" training academy, including new career pathways for all operational roles. We also launched our first ever high potential programme for General Managers, our Area Manager Development programme and the "leading and inspiring teams" programme for our support centre managers. In addition, we implemented a mentoring programme;
• The Group became an above-minimum wage paying employer to enable us to attract and retain the best talent in the industry; and
• Our cocktail menu is now carbon neutral aided by the removal of passionfruit which saves approximately 100 tonnes of carbon and provides a significant reduction in waste, alongside our other industry-leading initiatives.

Outlook

• After the release of trading restrictions under "Plan B" and the positive news of the removal of COVID-passports in England, we are delighted to have seen a return to strong LFL2 sales growth in February 2022;
• We are excited to see the confidence of our corporate guests to rebook their postponed Christmas parties over the next few months, and look forward to welcoming them back;
• Consumer confidence in visiting pubs, bars and restaurants is also returning and is highest in our young guest base;
• Our strong approach to cost control is mitigating the impact of inflationary pressures wherever possible;
• We believe that we are well positioned to continue to capitalise on the favourable rental market;
• We continue to monitor the developing situation in Ukraine however we expect any impact on our business to be limited; and
• Taking into account the above, despite the Government's response to Omicron, which in our view was overly cautious and caused a substantial loss of trade during the important festive season, the Board is now confident of delivering adjusted1 EBITDA (on an IAS 17 basis) towards the top end of the range of market expectations, which is currently between £8.0 and £10.0 million, assuming that the COVID-19 landscape does not significantly deteriorate.

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

comparative reporting periods

3 APM refers to Alternative Performance Measure being measures reported on an IAS 17 basis

Rob Pitcher, Chief Executive Officer, said:

"We are hugely encouraged by the performance in FY22 H1 and are excited about the future as we all now "learn to live" with COVID-19. We are emerging strongly following a period of severe disruption and now believe that, assuming no further variants, we can look forward to a sustained period of growth.

We continue to urge the Government to support the recovery and rebuilding of the hospitality industry by leaving VAT at 12.5% for food and non-alcoholic beverages and retaining business rates relief at current levels, in-particular maintaining the cap at £2.0 million, not reducing it to £110,000.

Demonstrating our renewed confidence, we have signed our first new lease since 2018, have a pipeline of opportunities, and several amazing refurbishments taking place. There's never been a more exciting time for the Group."

Enquiries:
Revolution Bars Group plc	Tel: [phone]
Rob Pitcher, CEO
Danielle Davies, CFO
FinnCap, NOMAD and Joint Broker	Tel: [phone]
Matt Goode / Simon Hicks / Teddy Whiley (Corporate Finance)
Tim Redfern / Richard Chambers (ECM)
Peel Hunt LLP, Joint Broker	Tel: [phone]
George Sellar / Andrew Clark
Instinctif (Financial PR)	Tel: [phone]
Matt Smallwood

A presentation will be shared with analysts today and the presentation will be made available on the Group's corporate website at www.revolutionbarsgroup.com.

Chairman's Statement

Our business

At the end of the reporting period, the Group operated 67 premium bars with a strong presence throughout the UK for its two original high-quality retail brands: Revolution (47 bars), focused on young adults; and Revolución de Cuba (18 bars), which attracts a broader age range, as well as our two new exciting concepts, Founders & Co. (one bar) which welcomes families and adults alike, and Playhouse (one bar) focused on fun-loving individuals. Most of the Group's sales are derived from drink and food with some late-night admission receipts driven by entertainment completing the sales mix, with further diversification into other revenue streams via the new concepts.

Founders & Co., an artisanal market-place experience, delivered strong sales over the festive period, showing the great position it has already built in the Swansea community. We have also been very pleased with the launch of Playhouse, our competitive socialising offering, which is attracting great local interest in Northampton. We continue to monitor the new brands carefully and support the teams as they continue to grow.

Following the successful equity fundraisings in FY21 and cash generation in FY22 H1, I'm very pleased to say that we are emerging from the pandemic with a strong balance sheet which allows us to refocus our resources on investing in the existing estate to improve the underlying performance of the business, as well as seeking expansion opportunities. We are in an excellent position to grow the business, whether that is organically, or through acquisition of single or small groups of sites.

We have continued to drive strategies in many key areas, making significant headway in our Diversity and Inclusion ("D&I") agenda, as well as a real focus on Wellbeing as our people faced unprecedented personal challenges throughout the pandemic. We have made significant investments in sustainability; our cocktail menu is now carbon neutral aided by the removal of passionfruit which saves approximately 100 tonnes of carbon and provides a significant reduction in waste.

Our results

Sales for the 26-week period of £74.1 million (FY21: £21.6 million) were 243.1% higher than the corresponding period in the prior year. After the first two weeks of FY22, the Group was allowed to return to unrestricted trading and saw significantly increased levels of trade. This is in comparison to FY21, where the first half of the year was severely impacted by ongoing COVID-19 lockdowns, tiers and social distancing restrictions. We were very pleased to see the performance comparable to FY20 H1, the last normal first-half-year of trading prior to COVID-19, despite a challenging winter period due to Omicron.

Our profit before tax for the 26-week period of £4.3 million reflects a return to more normal trading, whereas the equivalent period for FY21 was a loss before tax of (£17.7) million following months of challenging restrictions, as well as significant non-cash exceptional impairments following the downturn in our trading expectations.

Adjusted1 EBITDA, our preferred KPI, is significantly impacted 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 which was £7.6 million (2021: loss of (£5.8) million), following a return to positive trading conditions and active cost mitigations. This is in line with the adjusted1 EBITDA of £7.6 million achieved in FY20 H1, the last comparable normal trading period.

When free to trade without the imposed COVID-19 restrictions, we are a highly cash generative business. The Group has generated positive cashflows from operating activities of £14.5 million in the 26-week period to 1 January 2022. These funds continue to support the business during periods of uncertainty, and in achieving our enhanced refurbishment programme, with a further focus on new sites and potentially acquisitions. As at FY22 H1-end, the Group had cash in bank less all drawings on the Revolving Credit Facility ("RCF") and Coronavirus Large Business Interruption Loan Scheme ("CLBILS") term loan ("net cash") of £4.2 million.

Current trading

As previously announced, Omicron had a severe impact on corporate guest bookings over the festive period, with the "work from home" guidance continuing the challenge into January. We were very happy to find many of our corporate guests postponed, rather than cancelled, bookings into the new year, and pleasingly many have already rebooked for the coming months and we look forward to welcoming our guests back. We were pleased with the removal of "Plan B" restrictions in late January, coupled with January's payday, where we began to see our guests coming out in full numbers again.

We are of course aware that the risk of COVID-19 has not yet been eradicated, and the Financial Review provides information on liquidity and going concern, and also the full going concern disclosures, which include references to material uncertainty, which can be found in note 1.

We continue to be excited with the return to normal trading; the Government advice to "learn to live" with COVID- 19 is positive, and we look forward to a strong second half of the year. Following the recent announcement to remove "Plan B" measures, we are very positive and confident of the future outlook for the Group.

The market outlook and current trading and outlook are set out in more detail in the Chief Executive Officer's statement.

Our People

The Group is led by an experienced and committed executive management team with proven credentials in the industry, as well as a young, energised workforce who are excited to return to delight guests. Throughout the pandemic our people have shown a remarkable resilience and enthusiasm, delivering excellent service and fun and memorable experiences in our bars for our guests. I pay tribute to them and also to the senior management team and all levels of management who have had to adapt to very different ways of operating and leading.

Keith Edelman

Non-Executive Chairman

28 February 2022

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

comparative reporting periods

3 APM refers to Alternative Performance Measure being measures reported on an IAS 17 basis