Revolution Bars Share Discussion Threads

[david gruen] 29/4/2022 13:37

These guys know this game inside out:

[idriveajag] 29/4/2022 13:19

May Bank Holiday weekend. RBG bars will be packed and the revenues will be flowing in.

[david gruen] 29/4/2022 11:21

Agreed. As a few others have noted, the bars are busy. Only a matter of time.

[tell sid] 29/4/2022 10:49

Just buy and hold. It's on the up.

[elsa7878] 29/4/2022 09:38

Nightcap - strong results this morning. All bar stocks doing well apart from this....

[idriveajag] 29/4/2022 09:11

RBG should be back above 100p pretty quickly, with the resumption of such good trading, elimination of debt, cash on the books, exit from loss making sites, and new sites opening this year and next year.

[sharetalk] 27/4/2022 10:00

City Pubs Group to resume a dividend in the Autumn, which bodes well for the sector outlook.

[tell sid] 22/4/2022 09:16

I expect RBG to have really strong summer 2022 trading. Time to buy.

[sharetalk] 22/4/2022 08:47

In view of the excellent Interim Results and managers recently buying shares, it should be a lot higher. At some point it will rerate.

[useless23] 21/4/2022 14:13

Why the mark up? Does anyone know?

[qs99] 21/4/2022 14:07

Life in the old dog yet

[elsa7878] 12/4/2022 09:15

FWIW I have been to 3 of these in the last 2 weeks (as and when I pass one - and not intended research). All 3 said they were trading really well. I might try to contact the management post-Easter. With all the incremental costs and uncertainties I'm not sure additional sites is sensible.

[idriveajag] 30/3/2022 11:31

RBG should be back above 100p pretty quickly, with the resumption of such good trading, exit from the loss making sites and new sites opening this year and next year.

[napoleon 14th] 29/3/2022 14:12

Took the hit & sold. Chart is ugly...

[glavey] 14/3/2022 09:15

Lemmings and mushrooms not on the menu.

But slugs and french fries... Yum!

[greenknight1] 11/3/2022 22:49

It's was a tongue in cheek example. Things are getting expensive and also when companies need to "rationalise" is always the younger workers that get laid off first. Non-essential businesses will struggle. The outlook here is grim I fear.

[tell sid] 10/3/2022 08:26

Now would be a good time for one of the large breweries or other chains like Wetherspoons to make a bid for RBG, after that good set of Interim Results.

[sharetalk] 09/3/2022 13:32

Looking better today and Directors were buying last year.

[napoleon 14th] 04/3/2022 16:42

"I reserve all comments and judgement on its' views."

I have to say I thought it was exceptionally agressive.

[puzzler2] 04/3/2022 16:13

I think that the above analysis comes across as a little disingenuous and it prompted me to go back to and have another read of the 1 March RNS. What I think RBG has genuinely tried to do is to compare H1 FY20 (before Covid) with H1 FY21 and H1 FY22, the latter two of which were affected by Covid to varying degrees. What comes across to me is that despite the turnover shown not quite coming back yet to pre-Covid levels, both EBITDA and PBT is ahead of the pre-Covid period results. Yes, it's a little complicated and sure, there are some headwinds, but RBG seem to be controlling costs as best they can, having already disposed of (via their CVA) the unprofitable venues. I'm not sure that I have any problem with what management are saying or doing?

[napoleon 14th] 04/3/2022 15:07

I hesitated to sell at 22.5p before the UKR war & resulting general market fallout.
Regrets, obviously... However, I still hold.

Have just read this sanguine analysis of RBG that pulls no punches.
It's here for information only. I reserve all comments and judgement on its' views.


Small Caps Live Weekly Summary, 040322.

Revolution Bars Group (RBG.L) - H1 Resulst

The on-the-ground evidence locally is that UK bars are currently trading exceptionally well for the time of year. Upstairs in Leo’s local Revolution de Cuba (Birmingham) is a really exceptional space with the previous less upmarket Revolution Bar on Broad Street closed down. So he has become more positive about the company recently.

This week Revolution issues its H1 results to 1st January, but given that a trading update has already been issued, the focus will be on the current trading.

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 LFL sales growth in February 2022;

LFL has been defined as being versus "comparative reporting periods". Elsewhere in the statement, they have given figures since both the previous year and the one prior to that. The decision to provide no numbers and not state the comparable period for the last two months of trading demonstrates a completely unacceptable attitude problem by the management and makes the shares utterly uninvestable in Leo’ss view.

Ukraine is mentioned:

We continue to monitor the developing situation in Ukraine however we expect any impact on our business to be limited; and

I am at a loss to why anybody would expect any first-order effects from Ukraine! However, a cost of living impact is certain.

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 adjusted 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.

Because they have refused to provide any trading figures it is impossible to know whether this is a premature, an optimistic or a pessimistic forecast. For Leo, this makes it worthless. Total equity remains at negative £21m, with no intangibles on the balance sheet. This is due to lease liabilities exceeding right of use assets. Non-current lease liabilities are massive compared to current ones, suggesting long leases.

At the time of the annual report, the vast majority of lease payments were due in five years or more, even on a present value basis. I cannot see disclosure of average lease length, but it appears to be in excess of 10 years. So this is at least half a property company investing in medium length leases and risking that economic values rise or at least stay constant.

Trade payables also seem to be very high compared to receivables. This may partly, or solely, down to normal bar economics, but it is not rational for suppliers to give Revolution this kind of credit in the long term given their negative assets and poor historical performance, even pre-covid. Furthermore, they still have very considerable debt in the form of a CBILS loan. Although cash is in excess of this, it is not clear that it is sufficient to cover monthly and annual cash cycles.

So Leo calculates Enterprise Value as follows: £46m (market cap) + £41m (onerous leases) + £10m (excess payables) = £97m. So an EV/EBITDA of 10x.

On the positive side, the EBITDA they use does include lease payments. But an EV/EBITDA of 10x is an insane valuation for a high maintenance capex business like a bar. 5x is closer to the mark, which gives them a negative valuation, in line with the balance sheet.

Another way of looking at the company is via accounting profits. This includes depreciation, but of course, whether this is representative depends on the recent profile of investment and the accounting assumptions. A quick check is the cash flow statement. Here we see Depreciation of PP&E is slightly in excess of purchase of PP&E, suggesting the P&L will be a reasonable representation. 6 months is really too short to tell though, and historical figures may not be representative.

Here's the depreciation policy:


Fixtures and fittings seem on the long side for a nightclub type environment. Clearly, some fixtures will be closer to 2 years, though I don't doubt 10 is reasonable for others. Apparently, very long lease lengths will flatter leasehold improvement depreciation.

So, with these caveats, adjusted EPS forecasts are 0.2p for the full year. Given that they reported 1.9p in H1, that implies a large loss for H2, meaning this cannot be extrapolated forward for a positive valuation. And anyway, management has chosen to be evasive on current trading so we have no way of verifying how achievable this is. For FY 2023 forecasts are for 1p EPS, but they have a history of missing forecasts going back before covid.

So to remind you where we are, the company is worth less than zero on three metrics (balance sheet, EV/EBITDA, post-covid H2 EPS). But a limited company cannot be worth less than zero to shareholders. And it cannot be zero as there is always option value. Really crudely, the option value from something unexpectedly good happening has some relationship to sales with £150m seeming to be a reasonable run rate. So I'm going to value it at £1.5m.

Just to end, I'd like to point out that had it not been for covid reducing opportunities for other tenants, the landlords would have long put the company out of its misery.