Propel Info 3rd October 2017: Tahola Customer Revolution Bars Group, reports sales increase in full year results

Revolution Bars Group has reported sales were £130.5m (2016: £119.5m) in the 52 weeks ended 1 July 2017 – like-for-like sales increased 1.5% (52 weeks). Six new sites opened during the period – four Revolución de Cubas during the first half in Harrogate, Aberdeen, Reading and Glasgow, and two Revolutions towards the end of the second half in Southend and Torquay. In addition, major refurbishment projects were undertaken during the last quarter at the Revolutions in Blackpool and Cardiff. The company stated: “Based on trading levels achieved to date, the new bars are on track to deliver excellent returns on capital, consistent with the five new openings in the prior period, which achieved returns on capital of 32% in their first full financial year. Profit before tax was £3.6m (2016 Restated: £5.1m) Following the group’s trading update in May 2017 updating investors on lower than anticipated profitability for the 52 weeks ended 1 July 2017, and the resulting drop in share price, Stonegate Pub Company made an approach to acquire the group. On 24 August 2017, the board recommended Stonegate’s cash offer of 203 pence per share, which represented a 62.4% premium to the share price prior to the commencement of the offer period on 31 July 2017. It is expected that the group’s shareholders will vote on the recommended cash offer by Stonegate on 17 October 2017. The board is also engaged with Deltic Group as a possible offeror for the group. Deltic has outlined a merger proposal, which the board has rejected due to significant concerns regarding both value and deliverability. Deltic has indicated that, in order to put forward its merger proposal and discuss it with the group’s shareholders, it will in due course publish its own profit forecast and a quantified financial benefits statement in respect of a merger. In parallel, Deltic has also stated that it continues to evaluate a possible cash offer for the group. The Takeover Panel announced on 21 September 2017 that Deltic must either announce a firm intention to make an offer for the group under Rule 2.7 of the City Code on Takeovers and Mergers, or announce that it does not intend to make an offer, by 5.00pm on 10 October 2017. Deltic is continuing to perform due diligence on the group, and the board is committed to ensuring that the interests of shareholders are best served. Like-for-like sales in the first quarter of the current period are at +0.3%. July and August returned to a more normal trading pattern following the terrorist incident in Manchester in May, whilst September trading, for the sector as whole, has been disappointing, largely due to this year’s very wet and cool weather compared to record temperatures in September last year. The first of six new sites planned for the new financial period opened in Belfast in the third week of July. Belfast Revolución de Cuba has achieved the highest sales levels of all venues opened in the last two years and has averaged £80,000 per week over the first nine full weeks of trading. Three further Revolutions are scheduled to open in Solihull, Inverness and Putney before Christmas and two new Revolución de Cubas will open in the second half. The pipeline of new venues is building very strongly and contracts have already been exchanged on a further two sites that are due to open in the next financial period. The board is confident in the current strategy, the underlying financial strength of the group, its brands and strong customer propositions, which have underpinned three years of consistent like-for-like growth.”