The Revel Collective Reports Revenue Decline and Ongoing Challenges in Interim Results
Why we think this is bad
The interim results paint a challenging picture for The Revel Collective. Despite some positive aspects, such as strong performance in Peach Pubs and Founders & Co., and a reduction in net bank debt, the overall financial health of the company appears to be deteriorating. Revenue has declined significantly by 22%, partly due to venue closures but also reflecting softer trading conditions. The adjusted EBITDA has decreased, and the company is now reporting an increased adjusted loss before tax. The nighttime economy continues to face headwinds, with consumer confidence remaining subdued. The upcoming government cost increases, particularly in Employers National Insurance, pose additional challenges. While the company has managed to secure some financial breathing room through restructuring and fundraising, the material uncertainty highlighted in the going concern statement is a significant red flag. The outlook remains cautious, with expectations of continued soft trading and the need for further cost-saving measures.
Key Points
- Revenue decreased 22% to £64.2 million due to venue closures and softer trading
- Adjusted EBITDA declined from £8.9 million to £6.1 million
- Adjusted loss before tax increased from £0.7 million to £1.5 million
- Net bank debt reduced to £14.7 million from £24.4 million
- Operating cash flow turned negative, from £10.1 million inflow to £0.7 million outflow
- Peach Pubs and Founders & Co. showed strong performance
- Bar brands continue to face challenges with slower recovery than anticipated
- Positive like-for-like sales during festive period (+1.6%) and record pre-booked corporate bookings (+5.3%)
- Material uncertainty exists due to slower recovery in bar brands
- Management expects adjusted EBITDA of £2.0 - £4.0 million for the full year
- Concerns about upcoming government cost increases, particularly in Employers National Insurance
- Further cost-saving measures being implemented across the Group
Summary
The Revel Collective's interim results reveal a 22% decline in revenue to £64.2 million, primarily due to venue closures and challenging market conditions. While Peach Pubs and Founders & Co. showed strong performance, the bar brands continue to struggle. The company reported an increased adjusted loss before tax of £1.5 million, up from £0.7 million in the previous year. On a positive note, net bank debt decreased to £14.7 million from £24.4 million. However, operating cash flow turned negative, and the company faces significant challenges including subdued consumer confidence and upcoming government cost increases. The outlook remains cautious, with management expecting adjusted EBITDA of £2.0 - £4.0 million for the full year and implementing further cost-saving measures. The going concern statement highlights material uncertainty, reflecting the ongoing risks to the business.