Shares in Revolution Bars (RBG:AIM) shot 13.6% higher to 23p on Thursday after the late night bars operator said it was positioned to emerge stronger from the pandemic.
EMERGING STRONGER
The company has shown that when allowed to trade the business prospers, with positive like-for-like revenue growth and strong returns on investment in the refurbished sites.
During the last few months management has improved efficiencies and the client proposition by introducing a table ordering app and online booking system, while social media engagement is up 40%.
Peel Hunt commented, ‘with supportive shareholders and bankers, Revolution Bars should emerge strongly from Covid-19 in a position to take advantage of opportunities to expand. In our view, the company is the greatest beneficiary of a working vaccine.’
CURRENT TRADING
In the four weeks of August comparable sales reached 82.2% of prior year levels but the imposition of the 10pm curfew in September and regional tier system reduced sales. For the 24 weeks of the new financial year sales were only 41.4% of the prior year.
From 2 December, the company had one bar in the first tier, 32 bars in tier two and 34 in tier three, effectively unable to trade.
At 16 December, Revolution Bars had net debt of £19.5 million and committed banking facilities of £37.1 million which matures between June 2022 and July 2023. On a fully closed basis the weekly cash burn rate including government support is around £0.4 million.
COVID IMPACT
Today’s delayed preliminary results for the 53 weeks to 27 June reported revenues down 27% to £110 million, impacted by 14 weeks of closure under lockdown. Adjusted earnings before interest, taxes, depreciation and amortisation fell to £0.1 million from £11.1 million last year.
During the 36 weeks of uninterrupted trading the company refurbished 11 bars and subsequently delivered growth 7.1% higher than the rest of the estate, earning an improved return on capital of 58% up from 45% on sites refurbished in 2019.
