Shares in Revolution Bars (RGB:AIM) jumped 8% to 22.7p after a strong trading update ahead of its year end on 3 July 2021.
The company said that trading since 17 May, when indoor trading was permitted, has continued to be strong despite ‘significant’ restrictions, such as seated table service and the requirement for customers to wear face coverings when not seated.
Pre-Covid-19 the company was able pack more customers into its venues, over and above the table capacity, so the current restrictions have reduced overall capacity to around 28% of normal trading.
ABOVE EXPECTATIONS
Despite this the firm reported that it was trading at 86% of pre-pandemic levels in 2019 which means that full-year revenues are expected to be above management’s expectations.
Continued support from third parties and ongoing ‘excellent’ cost control means that EBITDA (earnings before interest, taxes, depreciation, and amortisation) will also be above prior expectations with an anticipated loss of around £12.5 million.
Strong trading and the recent share placing at 20p which raised £20 million after expenses means that net debt has improved ‘significantly’ to around £5 million.
Increased financial headroom means the group is well positioned to accelerate its site refurbishment programme and take advantage of favourable conditions to expand the number of sites.
‘HUGE’ PENT-UP DEMAND
Chief executive Rob Pitcher commented, ‘as predicted we have continued to see huge pent up demand and a rapid recovery across the nation in our bars following indoors reopening.’
‘Whilst we anticipate strong demand for our late-night offering, we continue to be cautious about possible restrictions on our business during the winter period.’
It’s been a rocky ride for shareholders with the shares down 71% over the last 18 months while the number of shares have increased from 50 million before the pandemic to the current 230 million, but the group now looks well positioned financially and operationally to profit from pent-up demand.
