Hostmore to dedicate free cash flow towards becoming debt-free

The operator of one of the UK's largest American restaurant chains has published its latest trading update, reiterating its objective of becoming debt-free and reporting moderate trading improvement for December. 

Hostmore Plc, operator of the TGI Fridays restaurant chain and the bar brand 63rd+1st, has released a financial statement following the end of its financial year on 31 December, also covering the December 2023 period. 

On a like-for-like basis versus H2 2022, revenue during H2 2023 was flat, representing an improvement on H1 2023, which was 2% below the comparative FY22 period (adjusted for differences in VAT). 

The four-week festive period generated further improvement in H2's overall trend, with like-for-like revenue up 4% compared to December 2022. The board finds this result particularly encouraging, with around 65% of the company's estate located in retail parks or shopping centres, many of which were operating on reduced holiday hours, resulting in a 2% impact on the group's like-for-like sales in December. 

Hostmore currently estimates that H2 2023 generated unadjusted EBITDA of £5.4m, with an EBITDA profit being realised in each of the period's six months. This is the first period to benefit from a significant portion of the group's restructuring actions, which were implemented late in H1 2023. 

Tackling debt

As part of its goal of becoming debt-free, the company has stated it will be dedicating all green cash flow towards repayment of borrowings. Consolidated net bank debt at year-end was £25.1m, an improvement in line with the forecast of £31.3m on 2 July 2023. 

The operator is continuing to engage existing and potential new lenders in the refinancing process and expects to publish its 2023 preliminary results in the second half of April. 

Julie McEwan, CEO of Hostmore, comments: "We have continued making good progress in executing our turnaround strategy, through disciplined capital allocation and the delivery of further cost reductions. Our organic growth initiatives, implemented through a strong and motivated operational platform, have improved the financial outlook of the business and continue into 2024."

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