Revolution Bars : Interim results announcement FY24

10 April 2024

Revolution Bars Group plc (LSE: RBG)

Unaudited Interim results for the 26 weeks ended 30 December 2023

Making the right decisions on our portfolio to secure the future profitability of our businesses

Revolution Bars Group plc ("the Group"), a leading UK operator of 58 premium bars and 22 gastro pubs, trading predominantly under the Revolution, Revolución de Cuba and Peach Pubs brands, today announces its unaudited interim results for the 26 weeks ended 30 December 2023. These results should be read in conjunction with a separate announcement regarding a Proposed Restructuring plan, Placing, Open Offer and simultaneously the launch of a Formal Sale Process.

With the announcement of its unaudited interim results for the 26 weeks ended 30 December 2023, which are now available on the Company's website, the Company has requested that trading in its ordinary shares on AIM be restored with effect from 7.30 a.m. on 11 April 2024.

Results to 30 December 2023

	H1 FY24	H1 FY23	H1 FY24	H1 FY23
	(IFRS 16)	(IFRS 16)	(IAS 17)	(IAS 17)
	£m	£m	£m	£m
Total Sales	82.3	76.0	82.3	76.0
Operating Profit	7.2	3.1	(0.7)	0.9
Adjusted1 EBITDA	8.9	9.8	3.2	5.1
Profit/(Loss) Before Tax	3.1	(0.1)	(2.1)	0.0

Net Bank Debt

(20.0)

(18.5)

(20.0)

(18.5)

Key points

With ongoing challenges to the Hospitality sector, the Group was pleased to have traded positively over the important festive season. The Group achieved sales growth year-on-year of 8.3%, and a profit before tax of £3.1 million, after an exceptional gain on disposal of £3.9 million relating to the exit from certain leasehold properties.

Group like-for-like2 ("LFL") sales for the four weeks from 4 to 31 December 2023 were +9.0%, the best festive period since 2019. LFL2 sales for FY24 H1, including New Year's Eve, continued to demonstrate an improving trend at -2.8%.

• Peach Pubs, following the opening of our 22nd Peach pub in November 2023, the

brand delivered its best ever Christmas trading period, and continues to trade well.

▪

• Revolución de Cuba has also seen a pleasing performance across FY24 H1. Corporate guests return to Christmas parties in full this year, and our refreshed brand

proposition delighted party-goers who recorded excellent guest feedback scores.

▪

• Revolution continues to experience challenged trading as a result of its younger guests who are disproportionately impacted by the cost-of-living crisis pressurising

their discretionary income.

▪

• Founders & Co. continues to go from strength to strength, delivering double-digit LFL2 growth every month in FY24 H1 as it continues to build on its status as a community hub for likeminded guests. This concept is now well positioned for growth and is an exciting prospect for the Group.

Despite a strong festive trading period, the macroeconomic trading environment continued to provide a challenging trading environment. The prospect of the statutory blended 11%

increase in the national living wage in April 2024 will add further cost pressure. Accordingly, eight site closures were announced in January 2024 to reduce expected future losses.

The Board remains confident of achieving Alternative Performance Measures ("APM") adjusted1 EBITDA in line with its previous expectations. Net Bank Debt is £21.8 million at 10 April 2024.

Following an ongoing period of softer trade post-Christmas, coupled with significant cost pressures on the Group and industry, today we have announced that the Board has concluded that it is in the best interests of the Group for Revolution Bars Limited to propose a Restructuring Plan, alongside a number of additional measures to be implemented across the Group to re-shape the business, as well as exploring, in parallel, a Formal Sale Process in order to deliver the best outcome for stakeholders.

In order to fund a potential Restructuring Plan and provide working capital for the Group, the Board has concluded that the Group needs to raise additional equity capital from new and existing investors through a Fundraising. Further details of the proposed Fundraising, Restructuring Plan and Formal Sale Process are contained in a separate announcement, released this morning.

1. Adjusted performance measures exclude exceptional items, share-based payment charges and bar opening costs
2. Like-for-like("LFL") sales are same site sales defined as sales at only those venues that traded in the same week in both the current and prior year
3. APM refers to Alternative Performance Measure being measures reported on an IAS 17 basis

Rob Pitcher, Chief Executive Officer, said:

"The first half of FY24 has seen continued challenges with the cost-of-living crisis disproportionately impacting particularly the discretionary expenditure of our young Revolution brand guests. Revolución de Cuba and Peach have been less impacted as the guest profile is more affluent, and both brands enjoyed very strong festive trading, and Revolución de Cuba, in particular, has shown excellent trading when compared against the wider Bars market.

I would like to take this opportunity to thank our brilliant teams for always bringing a smile to our guests, and their continued resilience and hard work in the face of these challenging times. They have delivered another brilliant Christmas, continue to delight and thrill our guests, and I appreciate their continued professionalism."

Enquiries:
Revolution Bars Group plc	Tel: [phone]
Rob Pitcher, CEO
Danielle Davies, CFO
Cavendish (Nominated Adviser and Broker)	Tel: [phone]
Matt Goode / Simon Hicks / Teddy Whiley / Hamish Waller
(Corporate Finance)
Tim Redfern / Harriet Ward (ECM)
Instinctif (Financial PR)
Matt Smallwood	Tel: [phone]
Justine Warren	Tel: [phone]

Chairman's Statement

After three frustrating festive trading periods, hampered by the pandemic, strikes, and other external factors, it was good to see the Group's best festive trading period since 2019. Corporate guests returned in force, and with fewer train strikes impacting consumer confidence, we were pleased to see improved walk-in custom also. The Group delivered like-for-like2 ("LFL") sales of +9.0% during the key December weeks, as well as an improving trend in LFL2 sales overall in the first half of the year.

Peach experienced its best ever Christmas trading period, hitting new records in three consecutive weeks. Revolución de Cuba also saw double-digit LFL2 growth and continued to outperform the bars market for the past 13 of the last 13 months to December 2023. Founders & Co. continues to go from strength to strength, also delivering double-digit LFL2 growth.

These three brands provide a strong backbone to the business, with plenty of opportunity for growth and expansion.

Revolution had a strong Christmas but was again disproportionately impacted by the limited discretionary spending of its younger guest base. We are pleased to see excellent guest feedback when our young guest base do join us, but the challenging cost-of-living crisis continues to impact their ability to go out on a frequent basis. Accordingly, we have had to take action by closing certain sites to secure the future of the wider Group, and by exploring a more formal turnaround strategy for this part of the Group. We look forward to the day that our young guest base can return with more frequency to our Revolution branded sites.

Our business

At the end of the reporting period the Group operated 88 venues consisting of the following brands: Revolution (46 bars), focused on young adults; Revolución de Cuba (17 bars), which attracts a broader age range; Playhouse (two bars), a competitive socialising offering; Founders & Co. (one bar), an artisanal market-place experience; and the Peach Pubs (22 pubs) offering high quality food and drink in the heart of England.

One new Peach Pub, being The Three Horseshoes, was opened late FY24 H1 and is performing in line with expectations.

In January 2024 we took the difficult decision to close eight unprofitable bars in total, across the Revolution, Revolución de Cuba, and Playhouse brands, which takes the Group portfolio to 58 bars and 22 pubs. Since June 2023, we have closed 10 bars and currently retain the leases on seven of these with negotiations continuing to exit the leases.

We continue to monitor our portfolio of sites to ensure that management focus is appropriately focused on the brands and sites where genuine strong performance and growth can be achieved. It has been necessary to complete the above closures to mitigate future site losses and allow our key sites to thrive.

Our results

Sales for the 26-week period of £82.3 million (FY23 H1: £76.0 million) were 8.3% higher, reflecting a strong festive trading period in FY24, where we welcomed the full return of corporate guests. The heightened sales also include Peach for the full half year in FY24, whereas the prior year only included Peach post-acquisition from October 2022. Despite a good Christmas, there is still room for growth in our business and we hope to continue outperforming the key Christmas trading period in years to come, when the Group is not disrupted by continued external factors.

Our statutory profit before tax for the period of £3.1 million (FY23 H1: loss before tax of (£0.1) million) reflects the increase in sales and non-cash gains from disposing of two leases. Adjusted1 EBITDA, our preferred KPI, is significantly influenced by IFRS 16 and thus the Directors believe that business performance is best measured by the directly comparable IAS 17 Alternative Performance Measures3 ("APM") of adjusted1 EBITDA profit of £3.2 million (FY23 H1: profit of £5.1 million). The reduction in APM3 adjusted1 EBITDA is a direct result of reduced LFL2 sales as well as heightened costs.

The Group continues to operate a £30.0 million Revolving Credit Facility ("RCF" and had net bank debt of £20.0 million at FY24 H1 end. As at 10 April 2024, the Group had net bank debt of £21.8 million.

Our People

I would like to take this opportunity to thank all our colleagues in the Group; whether you are based in one of our bars or pubs, or in the Support Centre, our people have shown real resilience and enthusiasm in overcoming and navigating our way through the challenges facing Hospitality. Our enthusiastic and ambitious workforce create amazing experiences in all our pubs and bars by delivering excellent service to our guests.

Current trading

After a strong Christmas, trading has been challenging in January and February with the ongoing strain on consumer finances. Revolución de Cuba and Peach Pubs continue to see much better performance than the Revolution brand, whose guests remain more heavily impacted by the cost-of-living crisis. With improvements to the guest proposition in both main bar brands and an array of exciting events and guest experiences launching in the coming months, we anticipate seeing growth in performance.

We are pleased to see an improvement in economic data, with inflation and interest rates stabilising. Despite the cost impact of National Minimum Wage increases on the business, this does also constitute a significant pay increase for many of our teams and guests.

We continue to see pleasing advancements in our brand offerings and guest journey, and the Board remains confident of achieving APM3 adjusted1 EBITDA in line with market expectations set in January 2024 for FY24.

Fundraising, Restructuring Plan, Formal Sale Process and M&A Process and Fundraising

Following an ongoing period of softer trade, coupled with significant cost pressures on the Group, today we have announced a Fundraising to fund a potential Restructuring Plan, and provide working capital support for the Group. At the same time as the Fundraising, we have also announced our intention to propose a Restructuring Plan for Revolution Bars Limited together with a number of additional measures to be implemented across the Group to reshape its business, as well as exploring, in parallel, a Formal Sale Process in accordance with the City Code on Takeovers and Mergers and an M&A Process, in order to deliver the best, outcome for the stakeholders.

The Group has already implemented many actions to mitigate the impact on the Group, including driving operational efficiencies, reducing costs and cash outflows throughout the business, which has included redundancies and reductions in overhead costs, in addition to also reducing capital expenditure.

The impact of such strategies has demonstrated improved performance in the Group, particularly in Revolución de Cuba and Peach. However, the Board has decided it is necessary to propose a Restructuring Plan to enable improved performance from the Group, at the same time as commencing a Formal Sale Process.

Further details of the proposed Fundraising, Restructuring Plan, Formal Sale Process and the M&A Process are contained in a separate announcement, released this morning.

Keith Edelman

Non-Executive Chairman

10 April 2024

1. Adjusted performance measures exclude exceptional items, share-based payment charges and bar opening costs
2. Like-for-like("LFL") sales are same site sales defined as sales at only those venues that traded in the same week in both the current and prior year
3. APM refers to Alternative Performance Measure being measures reported on an IAS 17 basis

Chief Executive Officer's statement

Business review

Festive trading across all brands was very strong, seeing +9.0% like-for-like sales across the four key trading weeks, being the best festive period since 2019. When there is a reason to come out and celebrate, we are pleased to see that our guests choose our venues. Bars saw the return of corporate Christmas parties, with Revolución de Cuba in particular experiencing pre-booked party revenue over the festive period grow significantly by 26% versus the prior year. Likewise, pubs traded very strongly benefiting from family festive celebrations, some of whom have only felt comfortable in large groups this year following the pandemic.

We are also seeing a benefit where companies are increasing their team welfare budgets as a counterbalance to working remotely. We are encouraged to receive very positive guest feedback on such events.

Trading in the first half of the year has reflected the patterns seen in the wider industry. The cost-of-living crisis continues to have a higher impact on our younger guests in particular and hampers our progress. Performance across our brands is very much based on age and socio-economic groupings. Bars sit within a challenged market, with Revolution particularly impacted by the cost-of-living issues of younger guests. Revolución de Cuba performs better due to a slightly older guest base, further progressed in their careers with more stable income and therefore less impacted by rises in the cost-of-living.

Pubs are performing well in part as a result of the more affluent socio-economic status of these guests, and we are pleased with performance over the first half. We are confident that once the cost-of-living crisis has run its course that younger guests will return to our venues as they did immediately post-pandemic.

The sector in general is experiencing a divergence in performance, which is in line with the trends we experience, with pubs and restaurants performing more strongly than bars and late-night venues. The bar market has been down 8-10% throughout 2023.

The bar market has also been impacted by a reduction in commuters and the ongoing regular rail strikes which have targeted weekend trade. We continue to see the impact of working from home, particularly on Fridays, which is our second busiest trading day of the week. Train journeys have remained approximately 20% lower than pre- pandemic levels throughout the reporting period, with seven of the weekends in the reporting period affected by strikes. Working from home on a Friday also continues to negatively impact trading in our bars.

In addition, the industry and ourselves have seen an ever-increasing cost base fueled by inflation, increases in minimum wage, and business rates continue to rise well above inflationary levels. Other cost pressures started to ease during the reporting period, and it was pleasing to see utilities prices in particular reduce. The general cost of goods has also started to stabilise, but the prospect of a blended 11% increase in national living wage impacts the business by approximately £3 million for a full year, so remains an additional burden.

We were very pleased to open our first new Peach Pub, The Three Horseshoes, since acquiring the business in October 2022. The pub is now well established in the community, and we are excited to further expand this brand when the opportunity arises.

In order to fund such future growth, coupled with the ongoing and increasing cost challenges, the business made the difficult decision to close eight of its least profitable bars as part of Management's constant review of the Group estate.

Our Brand family

Revolution's 41 bars (after eight closures in January 2024) are aimed at 18 to 30-year-old guests, who have been disproportionately impacted by the ongoing cost-of-living crisis. A night out is now seen as a treat occasion, and accordingly we have continued to support those guests with excellent value for money through offers such as £2.99 food and drink deals and extended 2-4-1 cocktail happy hours. We continue to focus on creating occasions for guests to enjoy through themed brunches, engaging entertainment, and events such as Bangers Bingo. We are pleased to see the Revolution brand still perform well on big occasions such as pay-day weekends, bank holiday weekends and Christmas.

Revolución de Cuba's 15 bars are aimed at a slightly older target market who are further into their careers and have more disposable income and are therefore more protected from the cost-of-living crisis. Guests continue to demonstrate resilience, with the return of corporate guests during the festive period resulting in very strong trade. Our live music and entertainment offering engages our guests, and we are pleased to have outperformed the bars market for 13 out of the last 13 months to December 2023.

Peach Pubs's 22 beautiful gastropubs have continued to perform well since acquisition, with full integration into the business almost complete. Festive trading was especially strong, with record-breaking weeks. Whilst the

unseasonably wet July and August challenged trade, the brand continues to perform well with its more-affluent guests remaining resilient to external challenges. We were excited to open our first new Peach Pub, since acquisition, in FY24 H1.

Founders & Co., our market hall concept in Swansea, has performed well over the last 12 months, building an exceptional reputation in its local market, and continues to develop towards maturity, having now been open for two years. We are very excited by the brand and see this concept primed for expansion.

Playhouse, our competitive socialising concept, saw the closure of its second site in Newcastle-under-Lyme in the year due to lack of footfall. The original venue, in Northampton, continues to trade well and shows good signs of progress in a difficult location. We were very proud to see the brand's Slice Shop Pizza offering, once again, make the final of the National Pizza Awards in 2023.

Group strategic priorities

We continue to focus on our five key strategic priorities, which we believe are key to driving performance and navigating the ongoing challenging environment. Below is some of our progress made across FY24 H1:

• Maximising Revenue & Profit:

• 1. We opened our first new Peach Pub in FY24 H1, welcoming The Three Horseshoes to the brand portfolio;
  1. Peach synergies are progressing well, with the Spirits tender and range rollout completed. The Draught beer tender was also completed with the new range implemented in early 2024;
  1. A "value for money" focus saw the £2.99 summer meal deal extended until the festive menu period, and then relaunched in January 2024. We continue to explore value for money offerings to help our guests enjoy themselves at a price they can afford;
  1. Following a review of the profitability of the Group's portfolio, the least profitable bars have seen 10 closures in FY24 to date, and various partial closures were seen across bars in January and February; and
  1. A huge focus on pre-booked revenue has seen significant growth in weekly brunch events in both of our main bar brands. Key dates and Christmas performed extremely well, with growth in pre-booked revenue over the festive period of 15.8% across bars, and across the first half of the year of 14.8%. Third party gifting agencies also performed very well based on strengthening relationships with brands such as Virgin Experience, doubling in growth in the trading period.
• Guest Experience:
• 1. Revolución de Cuba brand proposition has been trained into all team members, with initial great feedback

from guests. Key guest experience improvements have been trialled and successfully rolled out across the brand, with the focus on delivering a fiesta every day;

1. A current focus in Revolution on consistently delivering brand basics every day, whilst delivering outstanding value for money for our guests whilst they are struggling financially;

1. Revolution brand proposition research phase was completed during FY24 H1; creation and refinement phase is ongoing with trials due to be implemented in the Spring;

1. Brand collaboration with Red Bull for the student return, which delivered some outstanding results through our joint House Parties campaign, which will be built upon for 2024;

1. Brand collaboration with Barratt Sweets has led to the creation of three new Revolution Flavour vodka which will launch into the brand over the Easter weekend, and will be a feature of the Spring 2024 campaign; and

• 1. A Music and Events manager was recruited, and a full overhaul of the Revolution background music system has been completed. A full programme of events will be launched into the Revolution brand in the Spring, with a focus on Weekend Day parties to capture a slightly older target market who have higher disposable income.
• Cost Control:
• 1. A reduction in energy consumption across our bars of 35% on the 2017 baseline has helped mitigate periods of heightened utilities costs. Pleasingly, wholesale prices continue to fall. Our dynamic purchasing agreement for forward buying is working well;

1. New technology continues to be trialled or rolled out across our sites including intelligent extract and heat recovery technology;

1. At the half year we have delivered annualised £1.1 million in synergies from the acquisition of Peach through a reduction in people costs, food costs, other goods not for resale, and drink purchasing synergies now flowing through the completion of the Spirits and Beer tenders; and

• 1. An updated labour management system has been rolled out to all bars brands, with projected annual efficiency savings of £1.1 million.
• Diversification of Sales:
• 1. Finalisation of a brand partnership with "The Jockey Club" will see the launch of a Revolution branded bar at the Grand National horseracing meet at Aintree in April 2024. We are hopeful that this will develop into a wider partnership; and

• 1. Brand collaboration with Barratt Sweets has been established for the sale of Revolution Flavour vodka shots in our bars, and we will look to develop this relationship over time if the launch proves successful.
• Brand Awareness and ESG including Sustainability and EVP:
• 1. We were incredibly proud to have improved our Carbon Disclosure Project score from a B to an A- this year, moving the Group into the leadership band. Our score is now higher than the Europe regional

average, and higher than the Bars, hotels & restaurants sector average;

1. Further reduction in energy usage across our bars' estate of 35% on a like-for-like basis, compared to

our 2017 baseline, through best practice initiatives including rolling out cellar cooling energy efficient tech to all bars;

1. Half-hourlymeters are being rolled out to all Peach Pubs to enable the same energy reduction plan to

take place in pubs. Peach waste collection has moved to Biffa, allowing better analysis of recycling rates. Our Planet Heroes in the pubs maintain a focus on these two key areas and other energy saving methods;

1. Extending our twice-yearly Quality of Life survey to our Peach colleagues, we were pleased to still deliver

exceptional survey results for the Group despite difficult trading conditions. Ongoing development of training and development maintains a focus in delivering an incredible place to work for our people; and

1. Strengthened our commitment to suicide prevention within the industry by introducing a safeguarding tool, R;PPLE, to automatically and discretely intercept content from harmful searches. We are the first in the hospitality industry to have implemented this.

Our People

The challenges faced by our young guests are also reflective of what our younger team members are facing. We employ a significant number of students and other young people, and we are aware of their struggles on a daily basis and look to ways to support them. We welcome the National Living Wage increases for our teams to help them combat the cost-of-living crisis.

Due to current trading, we have had to make the difficult decision to make some redundancies in the support centre also, resulting in a reduction in people costs of approximately 10%. Our focus has been on clear and open communication to all colleagues across this challenging time. Our latest Quality of Life colleague survey, in the Autumn, reflected a drop in our employee Net Promotor Score ("NPS"); however, the results were still towards the top end of historical surveys.

I am very proud of the consistent high-quality service our teams provide to our guests, that is reflected in the continued high levels of guest NPS feedback.

Market outlook

Whilst we remain cautious of the macro-economic climate, we are pleased to see some positive indications for the consumer.

Inflation has come down from peak levels and continues to see a downward trend. Likewise, interest rates look to have peaked and are forecast to fall during 2024. Household disposable income, in January 2024, was at its highest level since March 2022, and the energy price cap is set to fall in April 2024.

Consumer confidence is at its highest point since January 2022, with the National Living Wage increase set to deliver approximately £45 per week more to younger workers in full time employment. Whilst all the above should provide a big step forward for consumer facing businesses such as ours, some concerns do remain.

Tube and rail strikes in response to the cost-of-living crisis have had devastating impacts on Hospitality businesses since 2022; however, several unions have agreed deals to prevent further strike action, reducing the potential impact of strike action in 2024.

The cost of delivering the increases in National Minimum Wage and National Living Wage are significant for any employee-led businesses. Business rates are being increased in April 2024 by 6.9%, which was the inflation rate back in September 2023 and not reflective of current market conditions.

The Government needs to recognise these challenges, which are not unique to our business, and reduce the burden of business tax increase. In order for the sector to deliver economic growth and employment, further support should be offered to Hospitality through reduced VAT for a fixed period of time and business rates support measures for companies of all sizes.

Current Trading and Outlook

Following a strong festive period, trading since the turn of the year has remained challenging. The post-Christmas January hangover lasted into February, with this impact being seen across the wider industry and many businesses having to extend their January offerings into February to maintain guest footfall.

The divergence in performance across the brands remains consistent with Revolución de Cuba and Peach performing more strongly than the Revolution brand, which is reliant on the younger generation who we know are still suffering with the cost-of-living crisis. We are expectant that the planned above inflation increase in National Minimum Wage will provide a meaningful boost to this generation's spending power, allowing them to return to nights out on a more frequent basis. Economic data also looks more positive for the Revolución de Cuba and Peach guest.

Whilst we anticipate some economic improvement from which we will benefit, the markets in which we operate are expected to remain challenging in the near term. However, the Board remains confident in achieving trading performance in line with its previous expectations.

Rob Pitcher

Chief Executive Officer

10 April 2024

Financial Review

Introduction

• The "H1 FY24" accounting period represents trading for the 26 weeks to 30 December 2023 ("the period"). The comparative period "H1 FY23" represents trading for the 26 weeks to 31 December 2022 ("the prior period");
• The Group continues to offer comparative Alternative Performance Measures3 ("APM") of the numbers converted to IAS 17 following the implementation of IFRS 16 in FY20. APM3 for the current period are given equal prominence in this review because, in the opinion of the Directors, these provide a better guide to the underlying performance of the business;
• The results information therefore gives FY24 H1 IFRS 16 statutory numbers, followed by APM3 under IAS 17. A reconciliation between statutory and APM3 figures is provided in note 19.

	H1 FY24	H1 FY23	H1 FY24(IAS	H1 FY23
	(IFRS 16)	(IFRS 16)	17)	(IAS 17)
	£m	£m	£m	£m
Total Sales	82.3	76.0	82.3	76.0
Operating Profit	7.2	3.1	(0.7)	0.9
Adjusted1 EBITDA	8.9	9.8	3.2	5.1
Profit/(Loss) Before Tax	3.1	(0.1)	(2.1)	0.0
Non-cash Exceptionals	4.0	0.0	(0.8)	-
Cash Exceptionals	(0.1)	(1.5)	(0.1)	(1.5)
Net Bank Debt	(20.0)	(18.5)	(20.0)	(18.5)

Results

We are pleased to see an increase in total sales for the Group from £76.0 million to £82.3 million a result of the strong festive trading period, as well as the impact of having Peach for the full half-year, offset by softer like-for- like2 ("LFL") sales. Continued heightened inflationary pressures impact on the adjusted1 EBITDA position on both a statutory and APM3 EBITDA perspective, whilst Management has focused on effective cost mitigations and reductions wherever possible.

The underlying result, as measured by our preferred APM3 adjusted1 EBITDA, was £1.9 million lower than the equivalent prior year period, at a profit of £3.2 million (FY23 H1: profit of £5.1 million). This is our preferred metric as it is a proxy for the underlying cash available, in a normal trading period, for investment, loan servicing and repayment, and for distributing to shareholders in the form of dividends. Softer like-for-like2 sales and heighted costs in the business have driven this reduction.

Gross profit in the half year was £63.0 million (FY23 H1: £58.6 million) which amounted to a gross margin of 76.5% comparable to 77.1% in the equivalent prior period. The Group has experienced strong margins in recent years due to product mix, and improved discounting and trade agreements. However, this has reduced slightly as a result of the impact of Peach's higher-food participation driving a lower margin on the full 26-week period. Bars margins continue to improve.

Underlying profitability

The Board's preferred profit measures are APM3 adjusted1 EBITDA and APM3 adjusted1 pre-tax profit/(loss) as shown in the tables below. The APM3 adjusted1 measures exclude exceptional items, bar opening costs and charges arising from long-term incentive plans ("LTIPs).

	26 weeks	26 weeks	52 weeks	26 weeks	26 weeks	52 weeks
	ended	ended	ended	ended	ended	ended
	30	31	1	30	31	1
	December	December	July	December	December	July
	2023	2022	2023	2023	2022	2023
				APM3	APM3	APM3
	IFRS 16	IFRS 16	IFRS 16	IAS 17	IAS 17	IAS 17
	£m	£m	£m	£m	£m	£m
Pre-tax profit/(loss)	3.1	(0.1)	(22.2)	(2.1)	0.0	(9.1)
Add back Exceptional items	(3.9)	1.5	20.2	0.9	1.5	7.7
Add back charge/(credit) arising from LTIPs	0.1	(0.2)	0.1	0.1	(0.2)	0.1
Add back Bar opening costs	-	-	-	-	-	-
Adjusted1 pre-tax (loss)/profit	(0.7)	1.2	(2.1)	(1.2)	1.4	(1.5)
Add back Depreciation	5.6	5.4	12.1	3.0	2.8	6.0
Add back Amortisation	0.0	0.0	0.0	0.0	0.0	0.0
Add back Finance costs	4.1	3.2	7.1	1.4	0.8	2.1
Adjusted1 EBITDA	8.9	9.8	17.1	3.2	5.1	6.6

Exceptional items and accounting for long-term incentive plans

Exceptional items, by virtue of their size, incidence or nature, are disclosed separately in order to allow a better understanding of the underlying trading performance of the Group. Exceptional expenses for the half-year were credit of £3.9 million (FY23 H1: charge of £1.5 million). This predominantly related to exceptional gain on disposals as a result of exited leases, some lease modifications arising on regeared leases, offset by some exceptional costs associated with exiting the sites. The prior year charge predominantly relates to a charge of £1.5 million made up of the expenses incurred during the acquisition of Peach.

Credit/charge relating to long-term incentive schemes

A charge of £0.1 million (FY23 H1: credit of £0.2 million) on long-term incentive schemes arose as a result of the restricted share award schemes, with the prior year credit arising on the forfeiture on previous schemes.

Finance costs

Finance costs of £4.1 million (FY23 H1: £3.2 million) are made up of £1.3 million of bank interest paid on borrowings

(FY23 H1: £0.8 million) and £2.8 million of lease interest (FY23 H1: £2.4 million).

Liquidity

At the start of FY24 the Group held a £30.0 million Revolving Credit Facility "RCF", expiring October 2025. Interest is charged on the utilised RCF at a margin determined by leveraging plus SONIA, with unutilised RCF values having interest charged at 40% of margin.

In March 2023, an amendment was made to the facility to hold a £1.35 million Energy Guarantee for the purposes of signing a new energy contract. A further amendment was made in October 2023 such that all originally agreed reductions in total facility level be deferred to 30 June 2025, meaning at that date the £30.0 million facility will reduce by £5.0 million to a £25.0 million facility. In November 2023, the Energy Guarantee was reduced to £1.1 million in reflection of reduced energy prices and buying patterns.

In accordance with the updated amendments, the Group will therefore have committed funding facilities available during the going concern assessment period as shown in the table below:

		Energy	RCF	Total
		Guarantee		Facility
		£m	£m	£m
31	December 2023	1.1	28.9	30.0
30	June 2024	1.1	28.9	30.0
31	December 2024	1.1	28.9	30.0
30	June 2025	1.1	23.9	25.0

With reference to the Going Concern statement in the Financial Review, the Group has agreed in principle, subject to final and legally binding documentation being entered into, and subject to the Restructuring Plan of Revolution Bars Limited being sanctioned, a number of support measures with National Westminster Bank plc (the "Lender"). This additional support would be documented through the Restructuring Plan of Revolution Bars Limited. However, the Lender wants to understand the outcome of the Formal Sale Process, and whether a more optimal outcome could be achieved through the Formal Sale Process or the Restructuring Plan of Revolution Bars Limited. The