Revolution Bars reports strong liquidity after loss

Revolution Bars shares rose after the bar operator reported strong liquidity following a first-half annual loss.

The group swung to an adjusted pretax loss of £3.9m in the year to the end of June from a £3m profit a year earlier as revenue fell to £110.1m from £151.4m.

Revolution's statutory pretax loss widened to £31.7m, including £27.4m of asset impairments, from a loss of £5.6m a year earlier. The company said in the third quarter, before the Covid-19 shutdown, both its Revolution and Revolución de Cuba brands had like-for-like sales growth for the first time since the second quarter of 2018.

Revolution said net bank debt was £19.5m on 16 December and that it had £17.6m of liquidity. NatWest provided further support on 16 December by postponing loan facility amortisation payments of £8.5m originally due in June 2021, it said.

Rob Pitcher, Revolution's chief executive, said: "Prior to the onset of the pandemic we were reaping the rewards of the workstreams we introduced last year to improve performance. Given the actions we have taken to secure the future of the business, I am confident that Revolution will emerge from this crisis as a more focused business, and in a strong position relative to our competition.''

After rising by 13% in earlier trading Revolution shares were up 7.2% to 21.7p at 10:31 GMT.

Douglas Jack, an analyst at Peel Hunt with a 'buy' rating on Revolution shares, said the company had a "big bounceback opportunity" when the Covid-19 crisis subsides.

"We estimate RBG has at sufficient liquidity for eight months under full closure. RBG should emerge from Covid-19 with a higher quality estate and a more dominant market position," Jack said.

Pitcher said the near-term outlook was uncertain and that more government help was needed to support bars and pubs forced to close during lockdowns. He said the government's strategy was"illogical, misguided and disproportionate" and showed ignorance of how bars operate and their costs.

He said: "The UK government's actions towards wet-led bars and late-night hospitality are nothing short of scandalous. It has little evidence to justify the severe restrictions that have been imposed and it is deliberately sacrificing businesses and people's livelihoods."