26 weeks ended Makers of the party spirit since 1996 28 December - - PowerPoint PPT Presentation

Revolution Bars Group PLC

26 weeks ended 28 December 2019 Makers of the party spirit since 1996

Contents

• Headlines
• Financial Review
• Strategy Update
• Summary

Makers of the party spirit since 1996

3

Headlines

• 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*

Bars Wet-Led Pubs

4

LFL Sales Trading 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"

Revolution Bars Group plc Interim Results – 26 weeks ended 28 December 2019

(0.3)% +1.7% (2.6)% (0.1)% +3.8% +6.0% FY19 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY20 Q1 FY20 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%

5

LFL Sales Revolution 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

Revolution Bars Group plc Interim Results – 26 weeks ended 28 December 2019

Financial Review CFO Mi Mike e Fos

• ster

er 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 5.6p 5.6p 4.2p 1.4p Dividend per share

• FY20 H1

£m FY19 H1 £m YoY % FY20 H1 £m

7

FY20 H1 Review Adjusted 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

Revolution Bars Group plc Interim Results – 26 weeks ended 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 New 1 Closed 2 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 New 1 £m Closed 2 £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

8

FY20 H1 Review Mitigation 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

Revolution Bars Group plc Interim Results – 26 weeks ended 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

• f

Venues FY20 H1 £m FY19 H1 £m YoY £m

9

FY20 H1 Review EBITDA 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

Revolution Bars Group plc Interim Results – 26 weeks ended 28 December 2019

• Cash generative business
• Capex – existing estate made up of:
• £6.9m capex – expansion last year includes £1.2m
• f 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

10

FY20 H1 Review Cash generative business

Summary Cash Flow

Revolution Bars Group plc Interim Results – 26 weeks ended 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)

Revolution Bars Group plc Interim Results – 26 weeks ended 28 December 2019

11

FY20 H1 Review Post 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

12

FY20 H1 Review Investment 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

Revolution Bars Group plc Interim Results – 26 weeks ended 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% FY19 FY16 - FY18

(10%)

• 10%

20% 30% 40% 50%

• 2%

4% 6% 8% 10% 12%

Sales YoY % achieved Sales YoY % required

13

Invest in Estate Investment 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

Revolution Bars Group plc Interim Results – 26 weeks ended 28 December 2019

Actual achieved Payback years ROI Sales uplift required

+11.1% 1.8 56% +6.6%

14

Financial 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

Revolution Bars Group plc Interim Results – 26 weeks ended 28 December 2019

• Strong cash generation

Strategy update CEO Rob

• b Pitcher

her Makers of the party spirit since 1996

16

Strategy 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

Revolution Bars Group plc Interim Results – 26 weeks ended 28 December 2019

17

Three Year Plan Stabilise, 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
• penings
• Build team to deliver
• Ensure focus on the

core estate

Revolution Bars Group plc Interim Results – 26 weeks ended 28 December 2019

Key

18

Revitalising Revolution Deliver 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

Revolution Bars Group plc Interim Results – 26 weeks ended 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

RdC RdC 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

19

Revitalising Revolution Deliver 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

Revolution Bars Group plc Interim Results – 26 weeks ended 28 December 2019

Acquisitions Process & Support

RBG

Labour remodel

RBG

Product review

RBG

Storytelling

RdC

Key Planning Underway Live Complete

20

Summary

• 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

Revolution Bars Group plc Interim Results – 26 weeks ended 28 December 2019

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

Appendices

IFRS 16* IAS 17 IAS 17 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)

22

Appendix 1 Adjusted 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

Revolution Bars Group plc Interim Results – 26 weeks ended 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

23

Appendix 2 Exceptional Items

Exceptional Items

Revolution Bars Group plc Interim Results – 26 weeks ended 28 December 2019

• Net release of provisions due to lease surrenders
• ffset 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

IFRS 16* IAS 17 IAS 17 FY20 H1 £m FY20 H1 £m FY19 H1 £m Impairment of property, plant and equipment 1.8 8.4 3.5 Impairment of right-of-use assets 3.0

• Bar closures and lease

surrenders 0.2

• 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
• f right-of-use assets
• Surrender of Macclesfield lease
• Under IAS 17, costs charged against onerous lease

provision