Revolution Bars Group PLC (LON:RBG) said it expects a quick rebound in trading when lockdown restrictions ease, while it welcomed the new measures announced by the Chancellor in Wednesday’s Budget.
The bar operator plans to reopen 20 bars next month, moving onto the whole 66-strong estate in May when indoor service will be allowed.
It said that April 12, the earliest date allowed by the government, “is later than we had hoped” but it expects “significant pent-up demand” when lockdown is lifted.
Rishi Sunak unveiled measures benefitting the hospitality sector such as restart grants, continued reduction in business rates and the low VAT on food and non-alcoholic drinks.
As of Wednesday, the AIM-listed group had net debt of £27.1mln with available liquidity resources of £9.8mln.
The weekly cash burn has been between £400,000 and £450,000, so the firm said it has enough resources to make it through May 17, when its whole portfolio is expected to resume trading.
“Previous experience has demonstrated that when the company is able to trade without restriction, targeted for 21 June 2021 in the reopening roadmap, it is highly cash generative and profitable,” it noted in a release.
Analysts at house broker Peel Hunt said that the business rates holiday is worth £1.5mln this year, the business grant should be £1mln and the VAT saving should be minor due to the timing of its financial year-end, which is in June, and the company’s low orientation to food and soft drinks.
Underlying loss is expected to come in at £8mln from £9mln previously estimated, the broker added.
The forecast for the year to June 2022 remained unchanged at £18mln underlying earnings (EBITDA) as analysts expect little impact from the business rates holiday beyond June, and any benefit from the extended VAT cut is upside that it is not assuming at this stage.
Shares dipped 1% to 28p early on Thursday.