Revolution Bars doubles dividend but recent sales slow

Rolling out new sites and expanding margins allowed Revolution Bars Group to serve up strong annual profits and double its dividend, though trading has slowed since the year end amid a tough market.

The group, which floated in March 2015 and operates through the Revolution and Revolucion de Cuba 'premium bar-restaurants' bar chains, grew sales 7% to £119.5m in the year to 30 June, of which two thirds was from new openings.

Revolucion de Cuba was the main focus, with four bars opened to take the total to nine branches by the year end, with one new Revolution bar to bring the group's total up to 62.

Like-for-like sales grew 2.3%, which although is a slowdown from the 3% in the previous year, it is well ahead of the wider market, which the Coffer Peach tracker shows to have grown only 0.4% in the same 12-month period.

Revolution's LFL sales growth in the first three months of the new financial year has slowed to 1.8%, though this is a slight improvement on the 1.5% growth in the fourth quarter.

However, management continued to push gross profit margins, improving them a further 40 basis points to 76.1% so that adjusted profits before tax grew almost 11% to £9.2m.

Adjusted earnings per share grew 14% to 14.6p and a final dividend of 3.3p per share was declared.

Management reiterated plans to open five new sites in the new financial year, with three new Revolucion de Cuba bars in Harrogate, Reading and Aberdeen expected to open before Christmas, with a pipeline of 21 sites agreed or under offer.

"We are delighted to have delivered excellent growth in revenue, margin and profit in our first full year as a listed company," said chief executive Mark McQuater.

He said improving earnings was through continual improvements to the performance of the existing estate and through the five openings performing well.

Broker FinnCap said the numbers were ahead of analysts' expectations, but that as "current trading appears to have moderated" upgrades to its 2017 forecasts "unlikely".