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Revolution Bars pins hopes on pent-up demand

Brits are racing back to pubs and restaurants as lockdown restrictions lift
April 13, 2021
  • Lockdowns have obliterated trading at the cocktail chain 
  • Pent-up demand could revive Revolution Bars this year

Revolution Bars (RBG) shares ticked up 2 per cent on the release of its half-year results, the morning after pubs and restaurants began their gradual reopening in England. Unsurprisingly, the cocktail chain moved to an adjusted cash loss of £1.2m in the six months ending 26 December, compared with a £12.8m profit in the same period in 2019. Meanwhile, operating cash flow moved to a £5.6m outflow, compared with a £16m inflow at the last half-year point. 

Those figures do not account for the damage that lockdown has inflicted from January to mid-April this year. But as the UK reopens, Revolution Bars could conceivably stage a decent recovery. More than 10,000 customers have already booked with the company from 17 May, when it should be able to serve patrons indoors. Peel Hunt is forecasting that Revolution will make an adjusted pre-tax loss of £27m in 2021, but manage to turn a profit of £0.5m by 2023. However, bookings do not automatically translate into cash flows and it is difficult to look past the fact that net debt (including lease liabilities) is equivalent to three times the company's market value. Sell. 

REVOLUTION BARS (RBG)  
ORD PRICE:31pMARKET VALUE:£38.8m
TOUCH:30.5-32p12-MONTH HIGH:37pLOW: 8p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:*NET DEBT:£134m
Half-year to 26 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201981.2-1.58-2.90nil
202021.6-17.7-15.7nil
% change-73---
Ex-div:na   
Payment:na   
*Negative shareholders' equity

Last IC View: Sell, 23p, 18 Dec 2020