Revolution Bars Share Discussion Threads

[someuwin] 16/5/2017 13:42

Revolution Bars‏ @RevolutionBars · 4 hours ago

Get this bad boy in 15 minutes until '3pm or it's on us! That's how awesome our 15-minute lunch promise is! T&Cs apply (on back of the menu)

[themaker] 15/5/2017 16:37

hxxp://barmagazine.co.uk/revolution-creates-role-sales-director-increase-bookings/

[toptrump1] 11/5/2017 19:30

Someuwin, by banning posts you don't get a balanced view. If you don't want to read an alternative view you shouldn't use this site or you can filter. Otherwise you may be preventing someone else from making an informed choice. Or do you intend prevention so that you can sell before others?

[greenknight1] 11/5/2017 16:28

Speaking of CAKE panic investor...RBG is in a similar sector and only slightly less revenue and EBITA, however CAKE is worth x3! Arguably RGB targeting more aggressive growth too. Translate those metrics and RGB should be around 630p!!

[greenknight1] 11/5/2017 12:29

I think 260p is still conservative. This will be closer to 300p as we build towards the end of the year.

[someuwin] 11/5/2017 10:12

Peel Hunt today reiterates BUY RBG with a target of 260p

[panic investor] 11/5/2017 07:11

I think people get frustrated when they see other stocks flying and this just sitting there. The same is happening with CAKE at the moment too - both great companies

[someuwin] 10/5/2017 16:24

Added a few today.

[boonkoh] 10/5/2017 15:08

Bid ask is ridiculously wide. 206 to 217. It looks like someone is drip feeding shares to sell over the past week or two.

[martywidget] 06/4/2017 10:59

National chain gets nod for Solihull bar
6 Apr 2017
...Solihull Metropolitan Borough Council planners gave the application the green light earlier this week (4 April 2017) subject to a number of conditions, including work beginning within three years...

[113mike] 01/4/2017 09:06

Yes, good post and analysis. Thats my take too. Been in a little while now and about 20% up on my modest outlay. It's just the beginning with RBG but I'm in for the long term as this is in my drawdown SIPP so the progressive div policy will be useful as well as the gradual share rerate! AIMHO, no ramp intended!

[zho] 01/4/2017 08:14

Yes, it's Paul

[geheimnis2] 01/4/2017 08:02

Great post Paul Scott?

[paulypilot] 01/4/2017 00:41

Oakley is completely missing the point. RBG is a roll-out. They are being offered absolutely amazing deals on new sites, many of which are former HMV sites which have been closed for years. RBG applies for planning permission change to use as bars, which is difficult & takes a long time. Once granted, they sign a new lease on amazingly competitive rents. So the new sites hit the ground running, on a 38% ROI. So payback period less than 3 years.

Clearly there would be little maintenance capex in the first 3 years, as everything is new. So new sites pay for themselves quickly. Overall maintenance capex is c.£5m, mainly on the older sites.

So the company should make about £17m EBITDA this year, which is enough to fund the maintenance capex, pay a bit of tax (not much), there's little to no debt interest (as it has no net debt), then the remaining cashflow is enough to pay a 2.6% divi, and fund 6 new £1m sites per annum - which raise EBITDA by about £2m per annum.

It's a fantastic business model. Investors just have to sit back & do nothing, and in 5 years time we should be significantly richer from this share.

Over-analysing historic numbers is completely missing the point!

But that, and an aversion many investors have to investing in bars, is what creates the buying opportunity here. I've no idea when the share price will re-rate, but I am certain it will, eventually, once more investors grasp the investing rationale here.

Regards, Paul.

[bestace] 01/4/2017 00:15

I think Phil is to an extent missing the point, same as with his last post on RBG. From his writing he comes across as someone who has spent their life looking at financial ratios and annual reports, but has no experience of working in an actual business.

To point out one error in his latest comments on RBG - he claims, based on the comments in the auditor's report, that the fixtures and fittings assets were under-depreciated, implying that profits were therefore overstated.

That claim is a misunderstanding on Phil's part; what the auditors actually said is that they considered the estimates of the assets' recoverable amounts to be 'mildly optimistic'. But the carrying value of the assets in the books is based not on their recoverable amounts but on their depreciated net book value, which is a lower figure.

In fact it's a lot lower, as disclosed in the fixed assets note: "The recoverable
amounts... are predominantly based on value in use... The result of the value-in-use calculations determines that there is a significant amount of headroom over the PPE balance".

The recoverable amount is only relevant in determining whether any impairment of the assets is required, so if the recoverable amount is 'mildly optimistic', this is irrelevant to the carrying value of the assets because the latter is a much lower figure.

In other words, the fixed assets are not under-depreciated. If anything, it could even be argued they are over-depreciated.

Setting aside the accounting technicalities, he ignores the fact that RBG's whole business model is based on being at the top end of the market. Phrases like 'well invested estate' and 'premium positioning' recur time and again in the annual report. The word 'premium' is used 30 times!

That simply isn't consistent with a narrative of directors who are skimping on capex investment to boost short term returns.

[spoole5] 31/3/2017 00:06

I'm sure JDW shareholders who have seen their shares rise eightfold in the last 15 years will agree with mr oakley that there are better sectors than pubs for your money.

[geheimnis2] 30/3/2017 22:37

I preferred Phil when he was fronting Human League

[yupawiese2010] 30/3/2017 21:34

Phil Oakley latest comments on the sector.

[spoole5] 29/3/2017 11:15

Just a case of tucking them away and waiting for the next update with a share like this.

[mrx001] 29/3/2017 10:34

It's good but like most shares it's slow going at the moment. :0(

[jg88721] 24/3/2017 19:54

Oakley's comments on margins, EIBT margin growth, and ROI over the last ~ 5 years sent me back to review the prospectus to better understand the history.

I'm still digging, no strong conclusions yet, but three interesting snippets from the prospectus:
(1) as noted before, 25 sites produced 86% of the group EBITDA. SO very little from the other ~35 sites.

(2) higher GM on drinks vs food, (~76% v 60%) and higher opex on food too. No surprises there but I wonder what the split of lfl sales increases between food and drinks has been in recent periods. The prospectus highlighted trends in LFL food and drink sales in the 2015 prospectus, with food growing much much faster (between 2012-2014 they got double-digit like-for-like revenue growth in food; with drinks +3.3%, -2.2%, +1.9% YoY)). But this breakdown has not featured in subsequent RNSs, IIRC. Overall gross margin is ticking up, but LFL is slowing, perhaps this reflects that little incremental food growth can be achieved - maxed out (and that drinks maxxed out earlier - witness the slow 2012-2014 LFLs noted above).

(3). larger sites (average customer space of 7750 sq ft) are much more profitable than smaller "standard format" sites (avg customer space of 4595 sq ft): avg development cost: 1.7m v 0.9m; avg rev 3.7 v 1.7; avg EBITDA 0.8 v 0.3; avg ROI 53% v 33%. The ROI calc uses EBITDA, as Oakley notes. (SOurce: page 45 of the prospectus)

But most of the subsequent site openings seem to be smaller sites - eg, the Nov 2016 update describes four standard format (albeit de Cubas, more profitable than the revolution formats). the less profitable smaller-sized formats. This is despite the prospectus stating: "Given the higher average profitability of the Group’s larger format bars, the Group currently plans to target larger sites for its expansion (the optimum size for new sites being, the Directors believe, between 8,000 and 16,000 square feet of gross space)." I wonder why they aren't opening larger sites? (Liverpool was the only larger format site opened in this and last year, and it opened "late in the second half" of FY16, though to be fair mgmt said they were targeting one large site per annum, so not that big a miss). Presumably they can't get suitable sites. Is it that hard? Given the relative greater profits, getting two big formats a year, would be very beneficial to earnings. Worth watching if they can open more larger bars in coming periods.

GLAH (I'm a holder)

[mr_spock] 24/3/2017 12:11

Yes, RBG rent the sites. I guess they could buy the sites but then we probably wouldn't have the debt-free self-funded rollout that we have now. There would be debt.

[spoole5] 24/3/2017 11:59

Bar_to_offer_a_taste_of_what_is_to_come_ahead_of_new___1million_venue_opening

[jg88721] 24/3/2017 08:04

Hi rogash. Yes, saw Paul's comments, but it is interesting to get a counter perspective from Phil, though.

Been doing my own refutation of Phil's analysis, including re-reading the prospectus to better understand the 2012 and 2013 results. A lot of which I had forgotten. One fact that really struck home was that (in 2015 at least) 25 sites produced 86% of the group EBITDA. So the other 35 or so sites at that time were negligible contributors. For the majority of sites, we wouldn't miss if they were gone. An interesting question is whether the new sites are likely to be like the really good ones, or the also-rans.