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Thu 17th Dec 2020 - Update: Revolution and SSP results, Wetherspoon, Inn Collection Group
Revolution Bars Group ‘well positioned to emerge strongly’ as boss says government actions towards industry ‘nothing short of scandalous’: Revolution Bars Group, the operator of premium bars trading across the UK under the Revolution and Revolución de Cuba brands, has said the business is well positioned to emerge strongly from the coronavirus crisis. Meanwhile, chief executive Rob Pitcher said the UK government’s actions towards wet-led bars and late-night hospitality are “nothing short of scandalous”. The group’s bank NatWest has this week provided further support by postponing loan facility amortisation payments of £8.5m that were originally scheduled by the end of June 2021. The company, which saw its company voluntary arrangement approved last month, stated: “Overall revenue generated in the first 24 weeks of FY21 is £20.6m, down significantly on the same weeks in FY20 (£72.1m) due to the cautious and phased reopening of our bars from 6 July 2020 and as a result of the severe and constantly evolving operating restrictions including further national and local lockdowns, table service only and the 10pm curfew. However, the board is encouraged by the recent announcements of the covid vaccine and currently expects the business will gradually recover to its previous performance levels over the course of the six months from April 2021, being the date the UK government expect restrictions to materially ease. Since the end of FY20, the business has taken steps to substantially increase its liquidity including increasing its committed bank facilities, completing a £15.0m equity fundraising, which was used to pay down debt, negotiating further rental support from landlords and undertaking a company voluntary arrangement. The company has a streamlined estate to ensure the group is ready to bounce back once restrictions ease through lease surrenders since period end of two further loss-making bars and five sites exited through the CVA. The CVA also delivered rent savings at a further eight bars. When free to trade without the imposed covid-19 restrictions, we are a highly cash generative business and excellent progress was made on reducing gross bank debt to £11.5m as at the end of the first-half of FY20, down £6.0m in six months from the end of FY19. However, by the end of FY20, due to covid, gross bank debt had risen back to £24.5m (FY19: £17.5m).” The company reported total revenue for the 52 weeks ended 27 June 2020 fell to £110.1m, compared with £151.4m the previous year with the group’s bars closed for the last 14 weeks of the trading period. Adjusted Ebitda was down to £9.8m, compared with £11.1m the year before. Adjusted loss before tax was £3.9m, compared with a profit of £3.0m in FY19 Like-for-like sales in the first half were up 1.2% and for the 36 weeks to the end of February 2020, before covid started to impact sales performance, were up 1.3%. It saw “strong” results seen from its refurbishment programme with a return on investment of 58% on refurbishments carried out in FY20, an increase from the 45% achieved on sites refurbished in FY19. The company now operates 67 sites having exited seven properties following its company voluntary arrangement. Pitcher said: “2020 has been an immensely challenging year but I am incredibly proud of the dedication shown by our team to steer us through this period. Prior to the onset of the pandemic we were reaping the rewards of the workstreams we introduced last year to improve performance with both brands in like-for-like sales growth, out-performing our high street bars peer group. We also continued to see strong results from our refurbishment programme. This work, combined with our focus on the customer experience through the development of our app, order and pay at table, and our on-line booking systems, and the additional financial strength and flexibility we have secured through the actions taken since the covid pandemic hit the UK gives me great confidence that we are well placed to recover and return to growth once trading restrictions are removed. 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. The recent grants of £1,000 per pub as compensation for being deprived of our most important trading period is derisory and insulting, and underlines a complete lack of understanding of the costs associated with businesses of this nature (even when they are shut) or any sympathy for the consequences of their inept decisions. The next few months will continue to be challenging and entirely dependent on imposed operating restrictions. Further meaningful government support will be required to help safeguard the industry and avoid further job losses, particularly for young people. However, given the actions we have taken to secure the future of the business, I am confident Revolution will emerge from this crisis as a more focused business, and in a strong position relative to our competition, ready to seize any opportunities that arise.”

Tim Martin – more than 50 million registered visits to JD Wetherspoon pubs and no virus outbreaks reported, 70% of premises closed: JD Wetherspoon chairman Tim Martin has said more than 50 million pub visits have been registered at its premises, using the track and trace system, and there have been no outbreaks of the virus reported to the company. He said 70% of its pubs, “despite expenditure of many millions in compliance with health regulations”. Speaking ahead of today’s (Thursday, 17 December) annual general meeting, he said: “2020 has been an extraordinarily difficult year for many businesses. As the famous investor Ray Dalio has said, ‘truth is the essential foundation for good outcomes’. Yet the government has relied on information that has often turned out to be untrue. For example, Imperial College research in March, which precipitated a lockdown in more than 100 countries, including the first major pub closure in history in the UK, was deeply flawed. Indeed, lockdowns, the core of the UK’s current strategy, have been shown by many studies to be ineffective, and often counterproductive. David Nabarro, of the World Health Organisation, has recently emphasised their destructive effects, especially for the least well-off. In Sweden, a country which didn’t lock down, relying mainly on social distancing and hygiene measures, the mortalities from covid-19 were 8% of those predicted by the Imperial model. Some UK press stories have deprecated Swedish efforts, but the facts are often misrepresented. In fact, in Sweden, the mortality rate from all causes in 2020 is the same as for four out of the last five years. In October, the prediction of Sir Patrick Vallance, chief scientific adviser, of 4,000 deaths per day, upon which the government instigated a second lockdown, proved to be wildly inaccurate. It seems certain that the biggest flaw in these predictions has been an overestimation of the fatality rate of covid-19. John Ioannidis, often regarded as the foremost expert in the area, has estimated covid-19 has half the fatality rate of flu for those under 70 – although this estimate is disputed in some quarters. Professors Johan Giesecke, Carl Heneghan, Sunetra Gupta and hundreds of others have also criticised Imperial, SAGE and government policies, as have many health professionals. The predictions that have turned out to be true in 2020 relate to the effects of lockdowns and government actions on the economy and health. More than 800,000 jobs have been lost so far, approximately equivalent to the combined working populations of the cities of Manchester and Birmingham. These job losses are bound to rise sharply in the coming months, without a radical change in government policy. Screenings and treatments for many serious illnesses have been drastically reduced, as, for example, the charity Macmillan recently reported. The situation for pubs is dire. All pubs in the UK (as at 16 December), apart from a handful in remote areas, are effectively shut. Less than half are able to open as restaurants, only serving alcoholic drinks with a meal – but that is not what pubs were designed for, and is not usually profitable. Since the government often relies on false information, rather than truth, its outcomes will inevitably be poor. The sources of government information, especially SAGE, in which academics predominate, have often been faulty. Due to the conscientious efforts of its employees, bankers and shareholders, and to the loyalty of millions of customers, Wetherspoon may be in a better position than some companies and individuals. However, 70% of our premises are shut today, despite expenditure of many millions in compliance with health regulations. In addition, more than 50 million pub visits have been registered, using the track and trace system, and there have been no outbreaks of the virus reported to the company.”

FY like-for-like sales down 50.8% at SSP: UK transport hub foodservice company SSP Group has reported its like-for-like sales for the year to the end of September 2020 fell 50.8%, as it was heavily impacted by covid-19 and the closure of most of the global travel markets since March. The company reported its revenue stood at £1.43bn, down 47.9% at constant currency, while its underlying loss before tax was £239.6m (2019: £203.2m profit). It said it had seen a good first half performance prior to the outbreak of covid-19, with strong net new space growth at 5.7% and further progress on its strategic initiatives. The company said it had carried out a “rapid and effective response to covid-19” to protect its people and the business, with “significant liquidity created, business ‘hibernated’ and units closed”. The company said its liquidity position remains strong, with cash and undrawn available facilities of around £520m at the end of September. The business said: “From very low sales in the third quarter of the year (93% lower year on year), passenger numbers increased gradually over the final quarter of the year and by the end of September were 76% lower year-on-year (averaging 80% lower year-on-year during the fourth quarter). In response to the recovery of the travel sector over the summer, we were able to open over one third of our units globally. Since the end of the year, the re-emergence of the virus and further lockdowns, notably in the UK and continental Europe, have resulted in further volatility in passenger numbers. As a result we expect sales during the first quarter of the 2021 financial year to remain broadly in line with the final quarter of the year, approximately 80% lower year-on-year. This volatility is expected to continue through the second quarter of the new financial year.” Simon Smith, chief executive of SSP Group, said: “Covid-19 continues to have an unprecedented impact on the travel industry and on SSP’s businesses in all geographies. We have taken rapid and decisive action to reduce costs, preserve cash and to substantially strengthen the group’s financial position. By renegotiating rents, rationalising our menus and reducing our unit overheads, we’ve created a new, more flexible operating model. This has allowed us to respond rapidly to passenger demand, successfully re-opening more than a third of our units by the end of September and delivering an important service to the travelling public. While we expect passenger numbers to remain subdued over the winter, we are optimistic that, alongside good progress with the vaccination programme, we will see a significant upturn in both domestic and international travel from the spring. We are ready to respond quickly.”

Inn Collection Group acquires Bowness-on-Windermere site: The Inn Collection Group has strengthened its Lake District presence with the acquisition of The Angel Inn in Bowness-on-Windermere. The company has bought the 13-bedroom inn, which has expansive grounds and views overlooking the fells and England’s largest lake, Windermere. The group has also completed on a 12-room bed and breakfast property alongside The Angel Inn. Both sites will continue to trade before a substantial refurbishment is carried out on both sites, which will reopen as the reflagged The Angel Inn. The undisclosed deals brings The Inn Collection Group’s estate of freehold sites to 19 and its number of locations in the Lake District to six. Managing director Sean Donkin said: “The Angel Inn is a unique asset in an outstanding location. We are excited to be adding it to our portfolio, broadening our customer base and enhancing our award-winning offering in Cumbria further with this stunning addition to our collection. The completion on both of these sites is the result of great working relationships with fantastic vendors and marks months – if not years – of searching for landmark sites in superb locations like this, as we continue to grow as a company despite the ongoing challenges of the pandemic.” Liam Salisbury, former owner of The Angel Inn, said: “After creating and running The Angel Inn over the past 15 years I feel it could not be in better hands going forward.” It marks the eighth new site this year for the Alchemy-backed group as it continues to deliver strategic “buy and build” growth plans, supported with banking via OakNorth.

London’s hoteliers warn ‘tourist tax’ will risk thousands of jobs: London hoteliers including Sir Rocco Forte have warned the government’s planned tourist tax would risk thousands of jobs in the industry as high-spending foreign tourists cut short or cancel their trips to the UK. Chancellor Rishi Sunak is planning to scrap the relief on VAT for non-EU tourists, making their shopping in Britain 20% more expensive. Nine of London’s top hotels including Rosewood London, the Connaught and Claridge’s have joined forces to urge him to scrap the plan, which will make Britain the only country in Europe not to offer tourists Duty Free from 1 January. Hoteliers said the move will drive tourists to Paris and Milan, hampering UK employers’ efforts to recover from the impact of covid-19, which worsened this week as the capital moved into tier three. Michael Bonsor, managing director at Rosewood London, told the Evening Standard: “Hitting the tourism industry at a time like this will only hurt the people in it. This industry is facing a struggle for survival, and this decision might just be the step that fast forwards a collapse.” Sir Rocco Forte, chairman of Rocco Forte Hotels, said: “Paris and Milan are our greatest competitors and doing away with the VAT rebate is a huge mistake as many of these tourists will abandon us for these two cities whose cultural offering is as good as London’s. With Brexit taking place and our wish to create a more attractive and competitive trade environment, this is a step in the opposite direction.” UKHospitality chief executive Kate Nicholls added: “The chancellor based this move on tourist numbers from 2019, but the world has changed drastically since then, not least for hotels. We wish we could get back 2019’s tourism numbers but that’s wishful thinking. What we shouldn’t do is put off the shoppers who can visit, spend billions in our economy just when we need them to help us up on our feet.” Other hoteliers joining the push for the move to be scrapped include the Four Seasons, Mandarin Oriental, The Beaumont, The Berkeley and The Athenaeum.

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