Annual Report
2021
A whole
world of more.
The new home of
Hostmore • Annual Report 2021
Contents
Strategic report Page
At a glance 2
Business model 4
Business strategy 6
Chair’s statement 10
Chief Executive Officer’s statement 12
Sustainability 14
Stakeholder engagement 20
How we create value 26
Chief Financial Officer’s review 30
Risk management 34
Non-financial information statement 42
Governance report
Board of Directors 46
Chair’s Governance Introduction 50
Corporate Governance Report 51
Report of the Audit and Risk Committee 61
Report of the Nominations Committee 65
Annual Statement from the Chair
of the Remuneration Committee 67
Hostmore Remuneration Policy 70
Annual Report on Remuneration 83
Directors’ Report 91
Statement of Directors’ Responsibilities
in respect of the Financial Statements 98
Financial statements
Calculation of key performance
indicators and alternative
performance measures 102
Independent Auditor’s Report 105
Consolidated Statement of
Comprehensive Income 114
Consolidated Statement of
Financial Position 115
Consolidated Statement of
Changes in Equity 117
Consolidated Statement of Cash Flows 118
Notes to the Consolidated Financial
Statements for the period ended
2 January 2022 119
Company Balance Sheet 161
Company Statement of Changes
in Equity 162
Notes to the Company Financial Statements
for the period ended 2 January 2022 163
2 Hostmore • Annual Report 2021
At a
glance
Our vision and strategic focus
Our vision is to make every customer experience engaging and relevant,
celebrating the unique heritage and character of our brands, creating
environments where our customers feel welcomed, relaxed and
enlivened by their experience.
Providing a platform for the development of hospitality brands, our
strategic focus is to optimise their performance through focused
alignment. Meeting evolving customer demands and delivering
personalised customer engagement are key to achieving this, supported
by a redesigned and innovative digital platform.
Who are we?
A whole world of more.
3Hostmore • Annual Report 2021
Strategic report
Our restaurants and bars
Our portfolio features a balanced and diversified estate across regions and location types.
3%
Stadium
35%
Retail park
31%
Shopping centre
17%
City centre
14%
Standalone
Financial highlights
Operational highlights
The introduction of the Hostmore
brand to act as a platform for
development and build-out of
hospitality brands has delivered
operationally in 2021.
A refreshed brand strategy for
Fridays has created an integrated,
multi-channel offering. Improving
our relevance to our customers
and bringing back “That Fridays
Feeling” has enabled growth of the
Fridays brand across important
channels, such as our dine-in,
takeaway and delivery offerings.
In addition, Fridays has launched
its branded retail drinks range
and has opened a key new venue
in Lincoln.
We have also launched our
63rd+1st brand, with new venue
openings in Cobham, Glasgow
and Harrogate, matching our
strategic focus on affluent and
high footfall areas.
Wales
4%
South
West 8%
London
14%
Midlands
19%
North
28%
Scotland
11%
South East
16%
EBITDA
0 10000 20000 30000 40000 50000
YE Dec 2019
YE Dec 2020
£45.5m
£23.4m
YE Dec 2021
£35.4m
Free cash flow
0 10000 20000 30000 40000 50000
YE Dec 2019
YE Dec 2020
YE Dec 2021
£44.5m
£20.0m
£31.0m
4 Hostmore • Annual Report 2021
Business
model
Our inputs
• Our iconic brands which are
synonymous with quality, fun
and flair
• Our passion for providing a
unique customer experience
with a genuine personal touch
• Our heritage and expertise in
creating authentic American
food & legendary drinks
The value we create
• Maximising revenue
returns for our shareholders
• Memorable and unique
experiences for our customers
• Employment and
advancement opportunities
for our people
‘A whole lot
more’
We build on/use our
knowledge of our
markets and how we
position ourselves/
consumer research
We invest in
our people,
locations and our
offering (menu,
marketing etc)
We use these
three elements
to create
memorable
experiences for
our customers
We use our buying
power to maximise our
ROI gained through
consumer spending on
memorable experiences
We reinvest our
ROI on further
opportunities and
to build a safe
and sustainable
business
Our business model
• Opportunities through
partnerships in the
communities we serve
and operate
• Investment back into the
brand, its reputation and
its future
• The unique look and feel to
our dining environments in
strategically chosen locations
• High energy and dynamic
environments with a wide
demographic appeal
• Our highly engaged and
talented people
5Hostmore • Annual Report 2021
Strategic report
Quality Relevance Simplification
Pillar 1
Pillar 2
Our 4D strategy is underpinned by three
key pillars, providing a critical assessment
basis for their performance.
Our 4D strategy will re-energise the Fridays
offering and brings a relevant engagement
approach to our customer relationships.
Dine in
Delivery
Digital to home
Drive to
1
2
3
4
Pillar 3
Bringing back that Fridays feeling
For more information on our 4D strategy, please go to page 6.
6 Hostmore • Annual Report 2021
Business
strategy
Our 4D approach
Delivery Digital to Home Drive toDine in
Service offeringRewards
Core brand estate
American themed,
drinks-led restaurants
with dedicated cocktail
bars, providing a fun
and quality experience
in a casual dining
environment.
Prepared food and
drinks delivered by
Fridays or through
third party aggregators,
such as Just Eat and
Deliveroo.
Launched in Q1 2021
Fridays getting fit for the
future. High quality ‘to
home’ comfort offering
for pre packaged food
and branded drinks.
Implemented via Click
& Collect and delivery
of Cocktails at Home,
Butcher’s Pack and DIY
Meal Kits.
New fast casual concept
on a ‘grab and go’ basis,
using click and collect
ordering.
First site opened
in Dundee on
16 March 2022, the first
Fridays in the world with
this offering.
If successful, longer-
term strategy to roll out
up to 30 venues over the
next three years.
Loyalty programme for customers through the Fridays App, which provides loyalty rewards,
exclusive offers and birthday offers
Opportunity for listed business platform to expand: A restaurant business with Fridays at its centre,
looking for smart, disruptive brands ready to go with founders in place.
Hostmore: A Development Platform
Strategic report
7Hostmore • Annual Report 2021
Key targets
9
new Fridays
by the end of 2024
1
business/brand
acquisition – target
activity for 2022
?
8 Hostmore • Annual Report 2021
Strategy
Our city-based cocktail bar which delivers a more sophisticated view of
the Fridays personality.
Returning to our bar heritage offering a large selection of iconic
cocktails, spirits, beers and wines.
An all day bar and dining experience serving light breakfast, coffee,
through to lunch and dinner. With an emphasis on an ambient
atmosphere in culturally sophisticated decor and furnishings.
Music, both live and recorded, features across the venues.
The 63rd+1st brand targets affluent young professionals and
university students with a more sophisticated tone than the
Fridays restaurants.
Edinburgh
Glasgow
Harrogate
Cambridge
Cobham
Oxford
Bath
Secured sites and target destinations
Target destinations are university towns and secondary affluent cities.
Three open stores with scope for 20 to 25 sites by the end of 2025.
St Andrews
Open
Secured
Target
Strategic report
9Hostmore • Annual Report 2021
10
sites to open or
to be acquired
by the end of 2022
Key targets
Broaden
the Group’s
demographic
appeal
10 Hostmore • Annual Report 2021
Having had responsibility for
the stewardship of the TGI
Fridays brand over the last five
years as Chairman of Electra
Private Equity PLC, I am now
delighted to present the inaugural
Chair’s Statement of Hostmore
plc as an independent listed
business. In any circumstances
the listing process is not one
to be undertaken lightly and
it is to the great credit of the
Hostmore leadership team that
this was accomplished as we
emerged from what we hope
will prove to be the worst phases
of the coronavirus pandemic
whilst delivering the trading
performance reported today.
The successful demerger of
Hostmore in November 2021
marked a pivotal moment in
the long and successful history
of the Fridays brand in the UK.
Having initially transformed
the UK casual dining market
following its launch in 1986, the
TGI Fridays brand has now traded
successfully in the UK for over
35 years, consistently growing
whilst generating profit and cash.
Evolving consumer requirements
led to a relaunch of the brand
under the leadership of our new
CEO Robert B. Cook in 2020. With
the brand simplified to Fridays,
and with a renewed mantra of
quality, relevance and simplicity
through all aspects of customer
experience and operations, the
core Fridays proposition is in good
health and well positioned for
growth in a market that has seen a
significant and much needed reset
driven by the COVID-19 pandemic.
Chair’s
statement
Prior to joining the company
in December 2019, Robert
worked with the Electra team to
conduct a thorough review of the
Fridays business and the market
opportunity. This work formed
the foundation of the Fridays
‘4D strategy’ for growth (further
explained on pages 5 and 6), and
demonstrated the scale of the
opportunity not only for Fridays
but for other well managed and
focused brands that may be
added in the future. Whilst the
emergence of the pandemic
produced many challenges, Robert
and the evolving leadership team
performed exceptionally well.
The transformation of the Fridays
brand, the development of the
‘63rd+1st’ brand and proposition
and the definition of what is now
the Hostmore strategy were all
accomplished whilst managing the
business through the pandemic
and outperforming the market
at every stage. Robert and the
team worked, and continue to
work, closely with our landlords,
our suppliers and our superb
people to ensure that Fridays
emerged from the pandemic much
stronger than it went in, with a
strong foundation for growth and
now accentuated by the exciting
new ‘63rd+1st’ business.
The results for
2021 reported
today demonstrate
clearly that
Hostmore is a
profitable and cash
generative business
delivering industry
leading returns
“
”
Neil Johnson
Chair
11Hostmore • Annual Report 2021
Strategic report
Prior to the emergence of
the pandemic the casual
dining market was suffering
from significant oversupply
characterised by discounting and
widespread brand erosion. With
the combination of the permanent
closure of somewhere between
15-20% of restaurants as a result
of the pandemic and a growing
acceptance from consumers
that pricing has to reflect value,
there is an opportunity for well
managed businesses in the
hospitality industry to generate
sustainable value. The results for
2021 reported today demonstrate
clearly that Hostmore is a
profitable and cash generative
business delivering industry
leading returns. Our strategy for
growth is robust and with Robert,
Alan Clark and their team in place
the Board is confident in the
ability of the Group to successfully
navigate the undoubted challenges
ahead and generate value through
building a truly attractive and
sustainable business.
With a robust balance sheet and a
strongly cash generative business,
it is the intention of the Board that
Hostmore will instigate a dividend
policy when it is prudent to do so
after taking account of exceptional
and material pandemic, macro-
economic or geopolitical market
disruption.
As indicated in the listing
documents, my role as Chair
of Hostmore was to ensure
the successful transition to an
independent listed business. It
is therefore my intention to step
down as planned at the Annual
General Meeting in May. As a
newly listed business, the Board
believes continuity of stewardship
is particularly important and I am
therefore delighted that, subject
to his election as a Director of
the Company, Gavin Manson will
succeed me as Chair. I would like
to thank the Board, Robert and
his management team and all
the Fridays and 63rd+1st teams
for their efforts and dedication
in getting to where we are now,
and look forward to the continued
successful development of
Hostmore with great confidence.
Neil Johnson
Chair
5 April 2022
A Peacock Welcome
Our ‘family pride’ dates back to 1965 New York. We
still share the belief that the experience we offer and
the service we provide is the best there is. Present in
every Fridays, the peacock symbolises pride in our
brand and is a reminder to our teams to put the best
of Fridays on ‘show’. From our classic red and white
stripes to our traditional memorabilia, Fridays is an
authentic and unique place to share fun, enjoyment
and great times together.
12 Hostmore • Annual Report 2021
Chief
Executive
Officer’s
statement
After a year of constant challenge
and difficulties for our business,
our venues and the wider
hospitality sector as a whole, I
must open with a statement of
thanks to our entire team and
community; a community which
is the lifeblood of the business,
within a culture of engagement
and reward. These are the USPs
of the Fridays’ brand and have
been since its inception in 1965.
Similarly, the support from our
stakeholders in the early stages of
plc life has been invaluable. Our
in-store teams and in particular
our General Managers, on a daily
basis at the sharp end of the
COVID-19 disruptions, have been
professional and hardworking
throughout. On behalf of the
Hostmore Board, we are truly
grateful to the entire team for
their resilience and efforts in
this very difficult period.
In the early part of 2021 our
focus was on reopening whilst
preserving cash, halting our
capital programme and managing
our outgoings as effectively as
possible. We worked closely
with our landlords on pandemic
related rent concessions and our
supply chain, who all collaborated
with us in achieving a positive
trading outcome for the year,
for which we are grateful.
Our customers have remained
loyal and came back in droves
as we moved out of lockdown
and welcomed “Freedom Day”
with open doors. Trading since
mid-May has been strong and
the evident pent-up demand
for friends and families to
get out and socialise came
back to near normality.
As we entered the final quarter
of the year, we could see the
gathering storm of the Omicron
variant and inflationary
headwinds approaching. Whilst
trading was challenging in the
fourth quarter due to Omicron,
we were able to successfully
mitigate these pressures and
restored our balance sheet to a
healthy level as we entered 2022.
Robert B. Cook
Chief Executive Officer
Despite the challenges faced
by our sector, our business is
in a position of strength and
we have positive momentum.
I share this positivity for our
near-term future and beyond.
Our loyal customers remain,
new customers are joining and
we have a healthy pipeline of
growth for both the Fridays and
63rd+1st brands. Demand for our
well-loved brands continued with
like-for-like revenue growth of 4%,
when compared to FY19, since
restrictions were lifted in May to
the end of the reporting period.
Regardless of the pandemic and
its challenges, we have been
developing our sustainability
strategy and have set ourselves
ambitious goals as we move
towards Net Zero with regards
to carbon neutrality. The focus
has also been on our wider ESG
strategy, with particular attention
on our supply chain compliance,
energy consumption through our
“Fridays Green Mission”, and on
our new menu and nutritional
objectives to reduce the calorie
count across both our brands. We
have made good progress on these
key focus areas within our ESG
strategy and are maintaining good
momentum as we go forward.
Whilst we recognise the
significance of the evolving
impact that the Ukraine crisis may
have on consumer demand and
inflation, our stronger balance
sheet and liquidity nevertheless
place us in the enviable position
of looking forward to the
opportunities ahead, including
building our brands and
optimising their potential and
presence in the UK market.
We continue to work towards
and beyond this ambition.
Robert B. Cook
Chief Executive Officer
5 April 2022
Our loyal
customers
remain, new
customers are
joining and we
have a healthy
pipeline
of growth
“
”
13Hostmore • Annual Report 2021
Strategic report
Chief Executive Q&A
After the unprecedented trading
period that has been the COVID-19
pandemic, what key opportunities
lie ahead for Hostmore’s brands in
2022/23?
We’re looking ahead at the coming
year with an optimism built on
financial strength. Significantly,
the existing moratorium for
rent arrears expired in March
2022. Hostmore has engaged
constructively with its landlords
and the vast majority of its sites
are either fully paid up with no
rent arrears or are the subject of
a rent concession agreement with
the relevant landlord – which we
suspect is not the case for much of
our sector.
Market casualties may offer
up site or business acquisition
opportunities.
Excitingly, our full strategic
transition to our 4D model
(see pages 5 and 6 for more
information) will consolidate our
brands’ offerings into a relevant,
forward looking experience for
our customers, providing growth
through multi-channel revenue
generation.
Fridays is a brand and
experience that has certain
characteristics connected to it.
What’s changing and what’s
staying in 2022 and beyond?
It’s impossible to ignore the iconic
nature of the Friday’s brand,
synonymous with quality, fun
and flair. Many brands can only
dream of this level of recognition,
so we are of course very proud
of it. These values remain at the
heart of what our customers will
experience. We want to recapture
the sense of “that Fridays feeling”,
where our bars are a go-to choice
for our customers.
And we’re achieving this. Our
per head spend has increased
in 2021 and we sit very
comfortably in the UK’s casual
dining marketplace which is
only growing post COVID-19.
Our growth will be underpinned
by a diverse demographic of
customers. We remain strongly
identified with the young
adult market, whilst our menu
development and delivery
products are also bringing the
family and older adult market to
our brand.
Let’s also not ignore our venue
portfolio, the breadth and spread
of which is a vital feature of
our brand’s penetration and
reach. Wehave 88 venues
nationally, with supply chains
well established to serve our 4D
strategy across all regions. With
almost 600 casual dining sector
site closures anticipated in the
post COVID-19 fallout, our ability
to augment our presence in new
towns and locations is very real.
And we’re carefully plotting our
new site openings for 63rd+1st
across the UK, as we focus on
affluent, university-led urban
markets to grow the business for
this exciting and differentiated
casual dining and bar experience.
As Hostmore likes to state “a
whole lot more” indeed...
What is your assessment of the
casual dining market in the UK
and how will Fridays stand out
from the pack?
Well, let’s look at some numbers
and metrics to paint a picture here.
The UK casual dining market
size in 2019 was £10.7 billion.
The average weekly customer
spend across the market was
£25,000 per venue. At Fridays
it was £49,000 per venue. We’re
already spend generative and, as
previously stated, this is growing
on a per head basis.
Yet it’s no longer only about
in-store spend. The takeaway
and delivery market has seen
51% of the UK’s consumers
actively starting to use these
services, or continuing to do so
more frequently. Venues now
understand that their brand has
to be digitally active and their
products physically transportable.
We’re no different and in fact,
we’re taking a lead in delivery
partnerships, digital consumer
loyalty programmes and online
retails sales of some of our most
iconic products such as our drinks
and menu favourites.
This is how the sector is evolving.
Our brands, notably Fridays, are
at the heart of this change.
I must close with reference to
what underpins our success,
past and future.
Our three key pillars of quality,
relevance and simplification,
applied by an outstanding
management and executive team
supporting all our venues and
staff, will ensure the passion
and brand pride that has been
so hard earned in the UK since
1986, means our restaurants
are the go-to venue for quality.
We continue to work towards and
beyond this ambition.
£25,000
UK average
weekly spend
per venue
£49,000
Fridays average
weekly spend
per venue
51%
of UK consumers using
takeaway and delivery services
on a frequent basis
£10.7
billion
value of UK casual
dining market
14 Hostmore • Annual Report 2021
Sustainability
The journey so far... at Hostmore
we are committed to embracing
our environmental, social and
governance responsibilities, with
a particular focus on our brands
becoming leaders in sourcing
responsibly, and developing
and maintaining supply chains
founded on sustainability. In
2021 we have delivered a step
change in the commitment from
our suppliers with 91% of our
suppliers becoming members of
the Supplier Ethical Data Exchange
(SEDEX) which facilitates the
measurement and improvement
in ethical business practices
across the supply chain.
Environmental, Social and Governance (ESG)
To protect our teams and our
guests we have reviewed and
updated all our policies and
procedures to mitigate risk
and ensured compliance with
COVID-19 Government legislation
and guidance. We have worked
hard throughout the year to
achieve by year end 100% 5* food
hygiene ratings in England and
Wales or pass ratings in Scotland.
We continue to invest significant
time and resources in health and
safety matters across the Group
to ensure and further enhance a
clean and safe environment for
our guests and team members.
What are the key sustainability
issues for Hostmore and its
Fridays and 63rd+1st brands?
If we were to identify three specific
issues, our focus is especially
sharp on nutritional standards
and ingredient provenance, key
supplier sustainability in the
supply chain and our green activity
and emission commitments.
Operating volume casual dining
venues as we do means that, quite
rightly, scrutiny will always be
on our food standards and our
sourcing ethics. We welcome this
as it forms a critical aspect of our
ESG behaviour and reporting.
How are nutritional standards
and provenance expectations
changing for the sector and
what implications do they have
on sourcing ingredients?
From 2022, clear labelling and
signposting of nutritional values
will be required on our customer
facing materials, such as menus,
by new legislation. Our offering
must be balanced and nutritious
for today’s marketplace. We are
Sustainability Q&A
taking a lead in aligning our menus
with the National Food Strategy,
Childhood Obesity Strategy and
Public Health England guidance.
Provenance is key. Where and how
we source our ingredients must
be researched, consistent and
of the highest possible standard
for our marketplace. An example
of this is our beef suppliers now
all supplying Quality Assured
British and/or Irish beef. We’ve
moved away from cheaper, lower
quality international suppliers,
which has had a positive impact
on our carbon footprint, and
underpins our commitment
in this area and demonstrates
that sustainability is core to our
business model. We have applied
the same approach to our chicken
sourcing and signed up to the
Better Chicken Commitment
in 2021, as well as working
with independently approved
fisheries. Fridays achieved the
Good Egg Award in 2019 for
removing all caged hen eggs from
all Fridays produced products.
Claire Hussey
Risk & Compliance Director
Please note that Claire Hussey
is an operational director
(rather than a statutory
director).
15Hostmore • Annual Report 2021
Strategic report
Our ESG focus
Environmental
• Net zero roadmap
• Energy consumption
• Waste reduction & recycling
• Plastics & packaging
reduction
• Water consumption
• Sustainability in
supply chain
• Animal welfare
Social
• Fridays values and culture
• Employee engagement /
wellbeing
• Labour standards / H&S
• Community engagement
• Charity contribution
• Health & nutrition
Governance
• Business ethics & conduct
• Risk management
• Remuneration /
gender pay gap
• Equality & diversity
• Anti bribery & corruption
• GDPR
• Tax transparency
• Certifications /
accreditations
Supplier and supply chain
sustainability challenges every
B2C and high street operator.
How are Hostmore and its brands
making a difference on this issue?
As you can imagine, our supply
chains are multi-channel and
complex. Our sustainability
programme looks at every angle
of procurement and delivery.
From staff uniforms (produced
from recycled plastic), waste
cooking oil (recycled into bio
diesel) to transportation carbon
footprint (reduced dramatically
by committing to British-only
food suppliers where possible), we
are always vigilant and proactive
where improving our supply
chains’ impact is concerned.
In addition, we have a rigorous
supplier onboarding process
and our suppliers are actively
engaged with our policies, with
agreement and adherence to
them a mandatory requirement.
Our alignment with the Supplier
Ethical Data Exchange (SEDEX)
is a key factor in ensuring that
we have a recognised barometer
against which to measure our
ethical compliance across the
supply chain. SEDEX is a virtual
platform for companies to share
their ethical data including
audit results against legislation
requirements on modern slavery,
human trafficking, labour
standards, health and safety and
business ethics. We also have
regular and continued engagement
with our suppliers, including
site visits where appropriate.
Ultimately, we are a food and
beverage operator and this means
some ingredients and products
being sourced internationally.
Those such as palm oil, soy,
cocoa and sugar meet the same
‘responsibly sourced’ criteria as
our other food and drink products.
And how are your venues
going “green”, or should
that be even “greener”?
Yes, indeed, as a participant in
a sector with significant energy
and resource requirements,
this is vitally important to us.
We work only with accredited
green energy suppliers. What this
means for us is the launch of our
Green Mission, a programme of
“green” initiatives to be rolled out
across our estate. We have kick
started this project with education
and support at site-level to reduce
energy usage in the first instance
and reduce our carbon emissions
by over 600 tonnes per year.
In our newer restaurants we
have converted from neon to LED
signage, with all other restaurants’
signage also being converted as
they are refurbished. Internal
lights in new stores are all LED and
we have plans in place to update
the rest of our restaurants to LED
too. We also have timers on all
internal and external lighting – to
ensure we are conserving power
through using only what we need.
Significantly, we have joined
the hospitality sector’s Carbon
Zero Forum to help support our
emissions roadmap through
to 2050. In terms of other
key green activity, our water
consumption is planned to
reduce by 10% through the use
of sensor taps and our 100% zero
waste to landfill achievement is
a result of anaerobic digesters
processing all of our food waste.
Our work is never complete in
reducing impact and augmenting
our green credentials, but we
are in an excellent position as
an operator in this sector. We
continue to strive for better.
16 Hostmore • Annual Report 2021
Our Green Mission
We have been actively engaging
our teams to change the culture
and behaviour in our restaurants
to drive down our energy usage
across the board. This has positive
effects for the environment and
financially, particularly given the
high utility prices.
To date we have introduced three
campaigns:
• Save while you sleep – turning
off equipment that does not
need to be left on overnight.
• A perfect set up – ensuring
equipment is only turned on as
and when it is required.
• Trading slow, keep it low –
turning off equipment that
is not being used in slower
periods.
We have developed
comprehensive start-up/close
down checklists which we are
using on our online tool to support
this and monitor compliance.
This has resulted in a reduction
in our carbon emissions during
non-trading periods. We have
utilised our consumption data
to highlight anomalies and we
are working with our restaurant
teams to target compliance.
Using the data for our Brighton
restaurant from 2021 we
were able to identify that not
all equipment was turned off
correctly during non-trading
hours. By working with the local
team to ensure all equipment
is turned off overnight and not
turned on until needed during
the day, this year they should
manage to save £3,432 and
approximately six tonnes of
carbon from being emitted.
With this targeted approach,
wehave been able to deliver
some significant savings across
the estate.
Our ecolayer polo shirts for the front of house team are made
from recycled plastics.
599,591kg
*
2021
All used cooking oil at Fridays is
recycled and as a result we saved a
further 599,591kg of CO2 in 2021.
Case study
17Hostmore • Annual Report 2021
Strategic report
Per week Per year
**
Week 30
(kW)
Week 30
(£)
Week 5
(kW)
Week 5
(£)
Financial
Difference
(£)
Carbon
Difference
(tonnes)
Financial
Difference
(£)
Carbon
Difference
(tonnes)
Overall* 590,465 88,570 498,773 74,816 -13,754 -21.3 -715,208 -1,107.6
Trading 358,430 53,765 308,494 46,274 -7,491 -11.6 -389,532 -603.2
Non-trading 232,035 34,805 190,279 28,542 -6,263 -9.7 -325,676 -504.4
*Overall comprises the Trading and Non-trading hours.
Energy usage/saving and cost in week 30 of 2021 compared to week 5 of 2022
• From week 30 in 2021 (which was the week the Group launched the Green Mission campaign) to week 5
in 2022, our weekly electricity usage has reduced by £13,754 a week and will amount to a saving of 1,108
tonnes of carbon a year if we continue the way we are going. This is a 15% reduction in electricity usage.
• The key driver has come in non-trading hours, where energy usage has come down by £6,263 per week in
the period, of which £3,468 per week was from the overnight “Save While You Sleep (SWYS)” hours. This
also indicates the “perfect set up” campaign has delivered a saving of £2,795 per week within preparatory
hours. A lot of this is down to extraction systems and equipment being turned on later.
Food & Drink
Allergens – We have categorised
the 14 allergens as detailed
in legislation and have
comprehensive allergen processes
in place to manage this key food
safety issue. Allergen information
is available in our restaurants
and online allowing guests to
view dishes that are suitable
for them, based on individual
allergies and intolerances.
Suppliers – The Supplier
Ethical Data Exchange (SEDEX)
facilitates the measurement
and improvement in ethical
business practices across our
supply chain. Since September
2020, we have been working with
our food and drink suppliers to
ensure that they are registered
and risk assessed with SEDEX.
We have improved the SEDEX
compliance rate of our food and
drink suppliers (by number of
suppliers) from circa 20% in
February 2021 to over 90% by
January 2022. We are targeting
all of our food and drink suppliers
being SEDEX compliant by the
end of April 2022.
In addition to our suppliers being
SEDEX compliant, all suppliers
must meet the requirements
of over 15 of our policies and
procedures as outlined in our
supplier onboarding pack. Our
food and drink suppliers must
also be accredited to British
Retail Consortium standard or
an equivalent Global Food Safety
Initiative standard.
Animal welfare requirements
– Hostmore is committed to
adopting high animal welfare
standards and practices and will
only source meat from suppliers
who share our commitment. As
such, we require suppliers to
demonstrate management of
animal welfare from farm to fork
and at any given time be able to
provide the relevant information
on request. As a minimum, we
require our suppliers to ensure
that their farmers and producers
comply with all UK and, if
applicable, EU animal welfare
legislation for each species. We
support the “Five Freedoms”
principle proposed by the Farm
Animal Welfare Council on the
protection of animals kept for
farming purposes.
The five freedoms are: freedom
from hunger and thirst; freedom
from discomfort; freedom from
pain, injury and disease; freedom
to express normal behaviours and
freedom from fear and distress.
Best aquaculture practices – We
fully support responsible fishing
and the long-term sustainability
of our global fish stocks. Our
suppliers are required to source
from sustainable fisheries, which
are independently approved by
universally recognised certification
bodies, such as the Marine
Stewardship Council for wild caught
fish and the Global Aquaculture
Alliance, Best Aquaculture Practice
or Aquaculture Stewardship
Council for farmed fish and seafood.
Waste – We sent zero waste
to landfill and, of the waste
managed for us by Circom (which
is approximately 65% of the
Group’s waste), over 55% of total
waste was recycled last year. The
remaining c.45% of our waste
managed by Circom was used in
energy recovery processes. We are
actively working with our teams to
increase this further this year.
** Assumes the saving in the relevant week is replicated across the year. This data is based on 79 of our restaurants.
18 Hostmore • Annual Report 2021
Streamlined Energy and Carbon Reporting
As a “large” company, as defined
by Companies Act 2006, the
Group is required to report on its
energy usage and related carbon
information. Consumption in
kWh and emissions in tonnes of
CO2e for the calendar year ended
31December 2021 are provided.
For the calendar year ended
31December 2021, the Group
has purchased Renewable Energy
Guarantees of Origin (REGO)
certified renewable electricity for
100% of its physical estate.
Furthermore, the Company
notes the recommendations of
the Taskforce on Climate-related
Financial Disclosures (TCFD)
and intends to expand disclosure
against the TCFD framework in
future annual reports from its
effective date.
Carbon Emissions and Energy Consumption
Current reporting
year Benchmark year
1st January 2021
- 31st December
2021
1st January 2020
- 31st December
2020
Energy consumption used to
calculate emissions (kWh)
Gas -
25,684,068kWh
Electricity -
23,116,898 kWh
Gas -
28,966,126kWh
Electricity -
23,202,946 kWh
i) Emissions from combustion
of Gas (Scope1, location
based) (tCO2e) 4,704 5,326
ii) Emissions from combustion
of vehicle fuels (Scope 1)
(tCO2e) 41 123
iii) Emissions from purchased
Electricity (Scope 2, location
based) (tCO2e) 4,908 5,410
iv) Emissions from business
travel in rental cars or
employee-owned vehicles
where company is
responsible for purchasing
for fuel (Scope 3) (tCO2e)
Not Recorded for
Reporting Period
Not Recorded for
Reporting Period
Total gross CO2e based on
above (tCO2e)
9,653 10,859
v) Intensity ratio: tCO2e
gross figure based
from mandatory fields
(tCO2e/£million gross
revenue) 59.524 82.106
19Hostmore • Annual Report 2021
Strategic report
The Group calculates its intensive
ratio with reference to tonnes of
CO2e per £1,000,000 of Revenue
Sales. The intensity ratio for the
calendar year ended 31December
2021 was 59.524 tCO2e/£million
Revenue.
BEIS Conversion Factors 2021
have been used to convert
electricity and gas consumption in
kWh to tonnes CO2e.
Methodology
Methodology
i) Emissions from combustion of
gas tCO2e (Scope 1)
tCO2e calculated from the invoiced
gas consumption in kWh during
the reporting period converted
using the 2021 UK Government
GHG Conversion Factors for
Company Reporting (version 1.0)
for ‘Natural Gas’ at Gross CV.
tCO2e calculated from the invoiced
gas consumption in kWh during
the reporting period converted
using the 2020 UK Government
GHG Conversion Factors for
Company Reporting (version 1.0)
for ‘Natural Gas’ at Gross CV.
ii) Emissions from combustion of
vehicle fuels (Scope 1) (tCO2e)
Emissions are based on pro-rated
contract mileage for the 2021
year. Vehicles are all owned and
operated by the Group. The fuel
type was identified for each vehicle
and the mileage converted using
UKGov CO2e for 2021 to give
tonnes of CO2e.
Emissions are based on pro-rated
contract mileage for the 2020
year. Vehicles are all owned and
operated by the Group. The fuel
type was identified for each vehicle
and the mileage converted using
UKGov CO2e for 2020 to give
tonnes of CO2e.
iii) Emissions from purchased
electricity tCO2e (Scope 2,
location based)
tCO2e calculated from the product
of the above stated electricity
consumption in kWh during the
reporting period and the 2021
UK Government GHG Conversion
Factors for Company Reporting
(version 1.0) for 'Electricity
Generated/Electricity: UK'
tCO2e calculated from the product
of the above stated electricity
consumption in kWh during the
reporting period and the 2020
UK Government GHG Conversion
Factors for Company Reporting
(version 1.0) for ̀Electricity
Generated/Electricity: UK'
iv) Emissions from business
travel in rental cars or
employee-owned vehicles
where company is responsible
for purchasing for fuel tCO2e
(Scope 3)
Not Recorded for 2021 Reporting
Period
Not Recorded for 2020 Reporting
Period
v) Intensity ratio: tCO2e gross
figure based from mandatory
fields
The intensity ratio stated above
has been calculated as tonnes
of CO2e per £million revenue
(£162.19 million), provided by the
Company’s Finance Team
The intensity ratio stated above
has been calculated as tonnes
of CO2e per £million revenue
(£132.24million), provided by the
Company’s Finance Team
20 Hostmore • Annual Report 2021
Stakeholder
engagement
Compliance with s.172
of the Companies Act 2006
In compliance with our duties
under s.172 of the Companies
Act 2006, we take the interests
of all our stakeholders into
consideration when making
decisions about our strategy and
operations. Engaging with our
stakeholders is integral to how we
succeed as a business – actively
seeking to understand what
matters to them and ensuring
that we take their interests into
account to promote the success of
the company as a whole.
The table below sets out our
key stakeholder groups, how
we engage with each, what’s
important to them, and how
we’ve responded during the year.
Further information on each can
be found in the Strategic and
Governance reports as itemised
on the pages shown.
Key stakeholder How do we engage with the
stakeholder?
What’s important to the stakeholder? Key metrics for 2021
Shareholders
We rely on the continued
support of our shareholders,
so we work hard to ensure
they understand our strategy
and goals and can monitor our
performance via our thorough
corporate governance processes.
Our intended principal means of
engaging with our shareholders
are through:
• Investor roadshows
• Capital markets days
• One-to-one meetings
• Shareholder general meetings
• Annual report and financial
statements
• Half year and full year trading
and results announcements
• Financial performance
• Dividends
• Share price appreciation
• Strategy
• Business Model
• ESG
• The demerger of the Company and listing of its
shares.
• Taking actions to grow the Group’s business
in line with its strategy and taking measures to
mitigate costs, such as utility costs.
• Continuing to implement the Group’s ESG
strategy, with particular attention on supply
chain compliance, energy consumption through
the “Fridays Green Mission”, and on the Group’s
new menu and nutritional objectives to reduce
the calorie count across both our brands.
Employees
We recognise our employees
as our greatest assets: they
work hard to provide a unique
experience for the customer and
our continued growth can only be
achieved through their hard work
and dedication.
We engage with all our employees
on a regular basis, through regular
employee forums, appraisal
processes, annual performance
and development reviews and
employee surveys, and more
informally through a variety of
social and team building events.
We measure employee
engagement through our annual
employee engagement survey, the
results of which are shared with
and acted on by the Board.
• An engaging and rewarding culture
and work environment
• Opportunity to share in the Group’s success
• Competitive remuneration and benefits package
• Opportunities for learning and
career development
• 100% of tips provided to the employees in our
restaurants.
• A bonus scheme was implemented for the
restaurant general managers which rewarded
success in the relevant general manager’s
restaurant.
• The introduction of the Company’s long-term
incentive plan which employees in the Group
down to and including restaurant manager level
are entitled to participate in.
• Over 111,660 hours of training provided to
employees in our stores.
21Hostmore • Annual Report 2021
Strategic report
Key stakeholder How do we engage with the
stakeholder?
What’s important to the stakeholder? Key metrics for 2021
Shareholders
We rely on the continued
support of our shareholders,
so we work hard to ensure
they understand our strategy
and goals and can monitor our
performance via our thorough
corporate governance processes.
Our intended principal means of
engaging with our shareholders
are through:
• Investor roadshows
• Capital markets days
• One-to-one meetings
• Shareholder general meetings
• Annual report and financial
statements
• Half year and full year trading
and results announcements
• Financial performance
• Dividends
• Share price appreciation
• Strategy
• Business Model
• ESG
• The demerger of the Company and listing of its
shares.
• Taking actions to grow the Group’s business
in line with its strategy and taking measures to
mitigate costs, such as utility costs.
• Continuing to implement the Group’s ESG
strategy, with particular attention on supply
chain compliance, energy consumption through
the “Fridays Green Mission”, and on the Group’s
new menu and nutritional objectives to reduce
the calorie count across both our brands.
Employees
We recognise our employees
as our greatest assets: they
work hard to provide a unique
experience for the customer and
our continued growth can only be
achieved through their hard work
and dedication.
We engage with all our employees
on a regular basis, through regular
employee forums, appraisal
processes, annual performance
and development reviews and
employee surveys, and more
informally through a variety of
social and team building events.
We measure employee
engagement through our annual
employee engagement survey, the
results of which are shared with
and acted on by the Board.
• An engaging and rewarding culture
and work environment
• Opportunity to share in the Group’s success
• Competitive remuneration and benefits package
• Opportunities for learning and
career development
• 100% of tips provided to the employees in our
restaurants.
• A bonus scheme was implemented for the
restaurant general managers which rewarded
success in the relevant general manager’s
restaurant.
• The introduction of the Company’s long-term
incentive plan which employees in the Group
down to and including restaurant manager level
are entitled to participate in.
• Over 111,660 hours of training provided to
employees in our stores.
The Propeller
The propeller at the bar reminds us that the bar
was the start-up of the Fridays® engine. It was what
made us famous and propelled us to success. On
the opening day of a Fridays store any visiting VIPs
will sign a dollar bill and tape it to the propeller as a
sign of good luck. There is one in every restaurant.
22 Hostmore • Annual Report 2021
Key stakeholder How do we engage with the
stakeholder?
What’s important to the stakeholder? Key metrics for 2021
Customers
Our customers are paramount to
the success of our business and
our continuing growth.
We engage with our customers
when they visit our restaurants;
via digital channels including
the Group’s websites and social
media channels; and advertising
across multiple media, including
social media, print media,
sponsorship deals and in-
restaurant promotions.
We also undertake surveys
and market-research to
better understand our
customers’ needs.
• To have an enjoyable and memorable
dining experience
• Quality and relevance
• Value for money
• Health and safety
• ESG
• As at 31 December 2021, a Net Promoter Score
(measured from -100 to 100) of 45 for 63rd+1st
(which is classified as “Great”) and of 18 for
Fridays (which is classified as “Good”).
• Our Guest Option Score for Fridays, which is
an aggregated score using net promoter score,
Facebook ratings, Google ratings, Trip Advisor
ratings and in-house guest, appears to be on a
general upward trend for all our regions.
• We received 136k pieces of feedback from
guests during 2021. Of those:
• The majority of our customer feedback
comes from our post dining survey
programme managed in collaboration with
FeedItBack, and directly via our website and
call centre.
• These direct feedback channels accounted
for 86% of feedback received and we
received an average rating of 77%.
• By year end, all of the Group’s restaurants
had achieved either a 5* food hygiene rating
in England and Wales or a pass food hygiene
rating in Scotland.
Franchiser
We rely on the Franchiser to permit
us to use the Fridays and 63rd+1st
brands, and certain trademarks,
designs and other intellectual
property relating to the brands.
The Group’s continued success and
ability to compete depends on the
strength of its brands. The Group
relies on the intellectual property
rights owned by the Franchiser and
relies on it to protect such rights.
We work with the Franchiser
to ensure that the brands and
associated intellectual property
rights are used in a mutually
beneficial manner so that our
business can continue to grow
and thrive.
We have entered into new
franchise arrangements with
the Franchiser which reflect
the Group’s requirements
in relation to the Fridays
and 63rd+1st brands.
We participate in regular
dialogue with the Franchiser
to discuss key developments
and ways in which the
Franchiser may be able
to assist us (for example,
where we are encountering
supply chain issues).
• Mutually beneficial partnership
• Growth of our business
• Collaborative approach
• Fair payment terms
• All of the Group’s sales channels operate under
the Fridays or 63rd+1st brand.
• Four new restaurants opened by the Group
(three 63rd+1st restaurants and one Fridays
restaurant). Taking into account restaurant
closures, this resulted in a net increase in the
number of restaurants operated by the Group.
23Hostmore • Annual Report 2021
Strategic report
Key stakeholder How do we engage with the
stakeholder?
What’s important to the stakeholder? Key metrics for 2021
Customers
Our customers are paramount to
the success of our business and
our continuing growth.
We engage with our customers
when they visit our restaurants;
via digital channels including
the Group’s websites and social
media channels; and advertising
across multiple media, including
social media, print media,
sponsorship deals and in-
restaurant promotions.
We also undertake surveys
and market-research to
better understand our
customers’ needs.
• To have an enjoyable and memorable
dining experience
• Quality and relevance
• Value for money
• Health and safety
• ESG
• As at 31 December 2021, a Net Promoter Score
(measured from -100 to 100) of 45 for 63rd+1st
(which is classified as “Great”) and of 18 for
Fridays (which is classified as “Good”).
• Our Guest Option Score for Fridays, which is
an aggregated score using net promoter score,
Facebook ratings, Google ratings, Trip Advisor
ratings and in-house guest, appears to be on a
general upward trend for all our regions.
• We received 136k pieces of feedback from
guests during 2021. Of those:
• The majority of our customer feedback
comes from our post dining survey
programme managed in collaboration with
FeedItBack, and directly via our website and
call centre.
• These direct feedback channels accounted
for 86% of feedback received and we
received an average rating of 77%.
• By year end, all of the Group’s restaurants
had achieved either a 5* food hygiene rating
in England and Wales or a pass food hygiene
rating in Scotland.
Franchiser
We rely on the Franchiser to permit
us to use the Fridays and 63rd+1st
brands, and certain trademarks,
designs and other intellectual
property relating to the brands.
The Group’s continued success and
ability to compete depends on the
strength of its brands. The Group
relies on the intellectual property
rights owned by the Franchiser and
relies on it to protect such rights.
We work with the Franchiser
to ensure that the brands and
associated intellectual property
rights are used in a mutually
beneficial manner so that our
business can continue to grow
and thrive.
We have entered into new
franchise arrangements with
the Franchiser which reflect
the Group’s requirements
in relation to the Fridays
and 63rd+1st brands.
We participate in regular
dialogue with the Franchiser
to discuss key developments
and ways in which the
Franchiser may be able
to assist us (for example,
where we are encountering
supply chain issues).
• Mutually beneficial partnership
• Growth of our business
• Collaborative approach
• Fair payment terms
• All of the Group’s sales channels operate under
the Fridays or 63rd+1st brand.
• Four new restaurants opened by the Group
(three 63rd+1st restaurants and one Fridays
restaurant). Taking into account restaurant
closures, this resulted in a net increase in the
number of restaurants operated by the Group.
24 Hostmore • Annual Report 2021
Founded in 1965
in New York City
Debuts in London,
with a site in
Covent Garden
Opens its first
international site in
Birmingham (UK)
Reaches 12 sites
in Britain
1965
Fridays offers authentic American food and legendary drinks, served
with genuine personal service. Bringing people together to socialise and
celebrate the liberating spirit of ‘Friday’.
History and key milestones of Fridays
1986
1987
1993
Key stakeholder How do we engage with the
stakeholder?
What’s important to the stakeholder? Key metrics for 2021
Suppliers
We rely on our suppliers,
distributors and outsourcing
partners to provide critical
supplies and services, in
areas such as food and drink,
IT and marketing.
We work with them to ensure
mutually beneficial, sustainable
partnerships so that our business
can continue to grow and thrive.
We hold regular meetings
with key suppliers throughout
the year, to review their
performance and address
any issues or concerns we
and/or they may have.
We are committed to paying
our suppliers in line with
agreed payment terms.
• Mutually beneficial partnerships
• Collaborative approach
• Balanced contractual terms
• Fair payment terms
• Growth of our business
• £31.3m cost of sales spend.
• £50.2m spend with suppliers, in aggregate
Local communities
We aim to ensure that as
many people as possible can
benefit both from employment
opportunities and from our desire
to make a difference in our sector
and local communities.
We provide support for our sector
and local communities through
a variety of initiatives, from
fundraising to providing time
and expertise.
• Employment opportunities
• Contributions to Hospitality Action, a charity
• Participation as an active member of the local
business community
• Employment opportunities
• Charitable donations to Hospitality Action by
participating in the “invisible chips” campaign
• Hosting a local business networking event for
Birmingham City Football Club as part of our
partnership with the women’s team
25Hostmore • Annual Report 2021
Strategic report
Key stakeholder How do we engage with the
stakeholder?
What’s important to the stakeholder? Key metrics for 2021
Suppliers
We rely on our suppliers,
distributors and outsourcing
partners to provide critical
supplies and services, in
areas such as food and drink,
IT and marketing.
We work with them to ensure
mutually beneficial, sustainable
partnerships so that our business
can continue to grow and thrive.
We hold regular meetings
with key suppliers throughout
the year, to review their
performance and address
any issues or concerns we
and/or they may have.
We are committed to paying
our suppliers in line with
agreed payment terms.
• Mutually beneficial partnerships
• Collaborative approach
• Balanced contractual terms
• Fair payment terms
• Growth of our business
• £31.3m cost of sales spend.
• £50.2m spend with suppliers, in aggregate
Local communities
We aim to ensure that as
many people as possible can
benefit both from employment
opportunities and from our desire
to make a difference in our sector
and local communities.
We provide support for our sector
and local communities through
a variety of initiatives, from
fundraising to providing time
and expertise.
• Employment opportunities
• Contributions to Hospitality Action, a charity
• Participation as an active member of the local
business community
• Employment opportunities
• Charitable donations to Hospitality Action by
participating in the “invisible chips” campaign
• Hosting a local business networking event for
Birmingham City Football Club as part of our
partnership with the women’s team
Grows to 41
outlets in the UK
Electra Private
Equity invests
in Fridays UK;
reaches 66 sites
Celebrating 35th
anniversary in the
UK, new opening
in Lincoln and first
63rd+1st launched
in Cobham
Carlson Restaurants
Worldwide and ABN
AMRO Capital acquire
TGI Friday’s UK
2004 2014 2021
2007
New management:
Robert B. Cook (CEO)
and Alan Clark (CFO)
2019/20
Hostmore plc lists
on the London
Stock Exchange
2021
26 Hostmore • Annual Report 2021
How we
create value
The Hostmore Board of Directors monitors the Group’s progress against
its strategic objectives and the financial performance of the Group’s
operations on a regular basis. Financial performance is assessed against
strategy, budgets and forecasts, while non-financial metrics help us to
measure our overall performance.
Key performance indicators
0 10000 20000 30000 40000 50000
YE Dec 2019
YE Dec 2020
£46.7m
£23.5m
YE Dec 2021
£43.0m
Adjusted EBITDA
Adjusted EBITDA is calculated as earnings before interest, tax,
depreciation, amortisation impairment and exceptional items.
0 50 100 150 200 250
YE Dec 2019
YE Dec 2020
£201.7m
£120.3m
YE Dec 2021
£146.6m
Like-for-like sales
Like-for-like sales enables the performance of the Group to be
measured on a consistent year-on-year basis and is an important
metric to understand customer engagement; This only includes sites
that were open for all of 2019 for comparability and doesn’t include any
sites opened since or disposed of.
0 10000 20000 30000 40000 50000
YE Dec 2019
YE Dec 2020
£45.5m
£23.4m
YE Dec 2021
£35.4m
EBITDA
EBITDA is calculated as earnings before interest, tax, depreciation,
amortisation and impairment.
27Hostmore • Annual Report 2021
Strategic report
0 10000 20000 30000 40000 50000
YE Dec 2019
YE Dec 2020
£44.5m
£20.0m
YE Dec 2021
£31.0m
Free cash flow
Free cash flow is calculated as the profit/(loss) for the period
adjusted for depreciation, non-cash items, changes in working
capital, tax paid and maintenance capex, and excludes cash used in
financing activities.
0 50000 100000 150000 200000
YE Dec 2019
YE Dec 2020
(£188.8m)
YE Dec 2021
(£163.2m)
Net debt
Net debt is calculated as the net of the Group’s long-term borrowings
and finance lease obligations less cash and cash equivalents.
(£197.2m)
0 20 40 60 80 100
YE Dec 2019
YE Dec 2020
85.2%
YE Dec 2021
87.4%
Per cent cash conversion
Per cent cash conversion is calculated as free cash flow divided
by EBITDA
97.9%
28 Hostmore • Annual Report 2021
YE Dec 2019
YE Dec 2020
22.7%
13.5%
YE Dec 2021
12.1%
Return on capital employed (ROCE)
Return on capital employed is calculated as EBITDA divided by
total assets less current liabilities.
0 5 10 15 20 25
YE Dec 2019
YE Dec 2020
23.3%
13.5%
YE Dec 2021
14.6%
Adjusted ROCE
Adjusted ROCE is calculated as adjusted EBITDA divided by total
assets less current liabilities.
29Hostmore • Annual Report 2021
Strategic report
-100 - 0
Needs improvement
50
60
70
80
Central
Central (West Midlands)
North
Scotland and North East
South
Guest opinion score (GOS) by region
Guest opinion score by region, with all regions on a general upward trend.
Fridays offers authentic American
food, an innovative cocktail list and
a high level of personal service.
The GOS is an aggregated score using net promoter score, Facebook
ratings, Google ratings, Trip Advisor ratings and in-house guest
feedback forms.
0 - 30
Good
30 - 70
Great
70 - 100
Excellent
63rd+1
st
: 45 (FY20: N/A)
Fridays: 18 (FY20: 17)
Aug Sep Oct Nov Dec
Net promoter score (YTD)
Measuring how our customers value their experiences with us helps us
to compare our year-on-year performance and deliver brand growth.
Performance on 31 December 2021
30 Hostmore • Annual Report 2021
Chief
Financial
Officer’s
review
Introduction
The financial year under review included a number of substantial
events that are exceptional to a normal reporting period:
• The formation of Hostmore plc, and its subsequent demerger from
Electra Private Equity PLC (“Electra”) and the listing of its shares on
the London Stock Exchange on 2 November 2021;
• Refinancing of the lending bank facilities in advance of the listing,
completed on 8 July 2021;
• Transition of our consolidated reporting to meet IFRS guidelines,
including the restatement of the prior years for 2018, 2019 and
2020; and
• A strong financial result relative to the trading challenges and
restrictions arising from the enduring COVID-19 pandemic.
Alan Clark
Chief Financial Officer
Formation and Listing
The creation of Hostmore plc had
the primary purpose for Electra,
its parent, of enabling Electra to
realise value for its shareholders
by disposing of its casual dining
business, whilst creating a
platform for the development
of hospitality brands under the
leadership of an experienced
management team that has a track
record of building businesses in
the hospitality and leisure sectors.
For Hostmore plc, this was finally
completed by the listing of the
Company’s shares on the London
Stock Exchange on 2 November
2021 with existing shareholders
of Electra each receiving three
Hostmore plc shares for every
Electra share held immediately
prior to the demerger.
The effect of the demerger
resulted in the Fridays and
63rd+1st group of companies,
now the major operating division
of the Group, becoming wholly
independent of Electra.
Hostmore plc is now well
positioned to undertake a strategic
process of expansion through both
organic means as well as via the
acquisition or creation of fledgling
brands that operate within the
wider hospitality sector.
Refinancing
On 8 July 2021 a subsidiary of the
Group signed a new debt package
with its principal borrowing banks
to replace the existing term loan
facility with a more appropriate
combination of a £40m term
loan and a £25m revolving credit
facility (“RCF”).
Both the term loan and the RCF
were subsequently fully drawn
down on 8 July 2021 to settle the
expiring facility obligations.
The new agreement, using FRS102
reporting standards as a guide,
includes financial covenants which
are tested on a quarterly basis,
including among others, that the
Group total net debt to adjusted
EBITDA, calculated according
to FRS 102 guidelines, shall not
exceed (i) 3.0 times between
September 2022 and December
2022 and (ii) 2.5 times from
March2023.
The remaining debt is repayable
in quarterly instalments of £500k
for March 2022, increasing to
£1.5m from June 2022. The
balance is repayable in full on
the termination date of 1 October
2023, subject to there being no
further extension by another
12months to 1 October 2024 by
agreement with the lenders.
31Hostmore • Annual Report 2021
Strategic report
Cash Flow and Net Debt
Cash generated from operations was very strong at
£31.6m, which also included the partial unwinding
of trade creditors and HMRC obligations which
had been deferred because of pandemic trading
conditions.
To protect the business, capital expenditure was
reduced throughout the year as the Group focused on
rebuilding its balance sheet and cash reserves. New
stores were limited to the development and opening
of the 63rd+1st stores at Cobham, Glasgow and
Harrogate and the Fridays store in Lincoln.
In advance of the listing date an amount of £13.1m
was raised by way of an issuance of ordinary shares
to Electra to fund costs incurred, both absolute
and contingent, because of the listing process. The
financial advisers’ performance fee, due to the
contingent nature of its value computation, has
neither been accrued for nor paid at the reporting
date and will not be payable due to the criteria for
payment not being met.
The combination of strong trading and cash on hand
at the beginning of the reporting period, enabled
£20m of the previously drawn RCF facility to be
repaid by the reporting date to reduce the gross
interest cost to the Group.
Net debt (being cash and cash equivalents less
borrowings from bank facilities excluding the
unamortised portion of loan arrangement fees) has
reduced from £28.6m to £12.2m which represents
a Net Debt/Adjusted EBITDA ratio of 0.3 times.
The Group has a target leverage range of between
0.75xand 1.50x Adjusted EBITDA.
Under the terms of the facility agreement the Group
had available cash and undrawn facilities of £42.2m
at the year-end which was more than the minimum
liquidity requirement of £10.0m.
The increase in liquidity headroom is intended
to provide the Group with the ability to pursue
opportunistic acquisitions which may become
available in the year ahead.
Trading Results
The revenue generation of the Group for the
financial year was significantly affected by the
impact of the COVID-19 pandemic and the legislative
measures taken to restrict its spread. This resulted
in a material reduction in revenues compared to
financial year 2019 as the stores in England were
reduced to dine-out and collection operations, and
other online revenue channels, until 12 April when
outdoor dining was again permitted. From 17 May
restrictions were further eased to allow for dine-in
operations with social distancing requirements, with
all restrictions finally being discontinued from 19
July. Varying levels of trading restrictions were also
introduced in Scotland, Wales and Jersey, where
the regional governments also acted to contain the
spread of the virus.
However, whilst the revenues for the full year
therefore remained substantially lower than normal,
I was pleased with the trading performance during
the period post-reopening with revenues being ahead
of the comparable financial year 2019. This had a
consequential positive impact on cash flow.
The Group also took action to mitigate the reduction
in revenue through a program of Government
support measures, and cost and efficiency actions.
These included, amongst others, the following:
• Government support: This included benefits
from the introduction of a combination of
schemes made available to the hospitality sector
by the Government:
— The Coronavirus Job Retention Scheme
(CJRS). This was available until 30 September
albeit the Group substantially reduced its
reliance on the Scheme from May onwards
as full employment again became possible
with the opening of restaurants for dine-
in. This program also ensured the ongoing
employment of many valuable colleagues
during the lockdown trading periods;
— Reduced VAT rates. The reduction in the
output VAT rates from 20% to 5% until
30September 2021 provided an important
opportunity for hospitality sector businesses
to rebuild their balance sheets and settle
accrued liabilities. A reduced level of 12.5%
was in effect from 1 October 2021 until
31March 2022 at which time it reverted to
20%; and
— Reduced business rates and grants. The
waiver of business rates until the end of
the first quarter of 2021, followed by a
reduced level from then until March 2022,
also contributed to improving the financial
standing of the Group.
• Landlord concessions: Ongoing from the prior
financial period, the Group has continued to
engage in a proactive manner with its landlords
to determine a fair treatment of any arrear
obligations. The value of concessions contracted
have been accounted for in the current period
unless they are enduring by nature which has
resulted in such concessions being recognised
over the term of the benefit.
The return of more normalised trading demand
from June brought with it supply chain challenges in
logistics as well as staffing. I am very appreciative of
the teams at both the restaurant level and our central
support centre who worked tirelessly to address these
32 Hostmore • Annual Report 2021
in a manner that resulted in our restaurants being
materially unaffected for any significant periods.
Cost mitigation measures included successfully
hedging our gas and electricity demand for the
duration of the period at prices determined
in September 2020 when retail prices were
substantially lower than current levels. Such hedging,
based on financial year 2019 volumes has recently
been increased to reflect the following:
• Gas – 100% until December 2022;
• Electricity – 100% until March 2022, then 80%
until September 2022, then 70% until March
2023, and then 35% until December 2023.
The costs of the demerger from Electra and
subsequent listing of the Company’s shares on the
London Stock Exchange have been accounted for as
an exceptional item.
The Group measured its business performance in
2021 on the FRS 102 approach to lease accounting
which is consistent with prior years but does not
include the impact of IFRS 16. On this basis, an
Adjusted EBITDA of £21.5m (2020: £1.5m profit) is
reported which includes the impact of the pandemic
measures highlighted above.
By including the impact of IFRS 16, the Adjusted
EBITDA was £43.0m (2020: £23.5m profit). The
basic loss per share is (0.5p) (2020: (14.8p)), and the
adjusted basic earnings per share (being the loss
after tax plus exceptional items) is 6.4p (2020: loss
of(14.8p)).
Going Concern
The directors have adopted the going concern basis
in preparing the Annual Report after assessing the
Group’s principal risks, primarily those attributable
to the enduring COVID-19 virus which has had
a significant impact on the hospitality sector.
Consideration has been given to the possibility of
future restrictions again being imposed, the impact
that such restrictions may have on revenues using
historical evidence, the more recent macro-economic
and geopolitical factors that may change consumer
demand, and the financing arrangements in place to
mitigate negative cash flows.
The consideration by the directors included
the assumptions made for the preparation
of the underlying annual budget, as well as a
more challenging stress case which assumes
a reduction in consumer demand arising
from the combination of events highlighted
above and/or the social consequences on
consumer demand arising therefrom.
In both the budget and the stress case, the Group has
sufficient liquidity via its existing facilities to finance
its operations for the next twelve months to the end
of March 2023, including the requisite compliance of
the Group with the banking covenants and the debt
amortisation as they come due. Both models, beyond
the period of assessment for going concern purposes,
anticipate either the extension of the current facility
agreement, as provided therein, beyond its current
scheduled repayment date of 1 October 2023, or by
concluding the refinancing of the debt prior to that
date.
Accordingly, as the directors continue to adopt the
going concern basis in preparing these financial
statements, they do not include any adjustments to
the carrying amounts or classification of assets and
liabilities that would result if the Group was unable to
continue as a going concern.
Viability Statement
In accordance with provision 31 of the UK Corporate
Governance Code (July 2018), the directors have
assessed the viability of the Group over a three-year
period to December 2024.
The directors believe that three years is the
appropriate period over which to evaluate the
medium-term viability and is not dissimilar to the
period used for purposes of the preparation of the
audit and viability assessments undertaken to enable
the listing of the Company’s shares. An internal
model is extended for a further 24 months to provide
additional clarity on strategic options available to the
Group should trading and economic events not be
materially different to the assumptions therein.
The board has considered two scenarios for purposes
of viability:
• A ‘base case’ is represented by the budget for
the 2022 financial period. The projections
therein were initially approved by the board in
December 2021 and were considered the main
economic factors reasonably known at that time.
Specifically, it considers that consumer demand,
particularly in the first two quarters of the year,
are likely to be behind the financial year 2019
comparable period with a strengthening in
demand only occurring towards the second half
of the financial period. It considers that business
support measures already enacted, including
the reduced rate of output VAT at 12.5% and the
reduced level of business rates, will continue until
31 March 2022.
• A ‘stress case’, considered as including the
application of a severe but plausible sensitivity
to the cash flow projections based on experience,
then adjusts the trading assumptions more
conservatively by assuming that the financial
year 2022 trading revenues are reduced by
almost 10%, with an emphasis on the near term.
A further 25% of the economic value expected
33Hostmore • Annual Report 2021
Strategic report
from the opening of new restaurants during
the year is also factored in. Mitigating actions
to address the impact of these assumptions
include a change in the ratio of payroll to a more
flexible cost base, and a deferral of non-critical
expenditures, which would not be expected to
negatively impact on the customer experience.
The budget already includes measures undertaken
prior to the reporting date to protect the business and
restrict the quantum of negative cash outflows. These
include the hedging of the utility pricing, mentioned
above, and improvements in the measurement of
payroll to improve the efficiency of the team at the
restaurant level.
The new bank lending facility also recognises the
medium-term risk of the pandemic by waiving both
the leverage and the fixed cost cover ratio covenants
until September 2022. Instead, a minimum liquidity
cash equivalence, comprising cash on hand plus
the value of any undrawn RCF balance, is required
which was set at £11.5m until 31 March 2022, and is
set at £13.0m until 30 June 2022, and £15.0m until
31August 2022.
After careful consideration of the forecasts and the
risks facing the business, including those presented
within the stress case, and the various mitigating
actions that could be taken by the Group to offset
the impact of such risks, the board has a reasonable
expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over
the three-year period of assessment.
Tax
The Tax credit for the year was £1.0m (2020: tax
credit of £2.9m), summarised as follows:
2021 2020
Corporation tax (689) 710
Deferred tax 1,706 2,168
Total 1,017 2,878
The loss in the year has resulted in a tax credit, in
addition to an adjustment to the tax charge in respect
of prior years which relates to carrying back 2020
losses against the tax paid in relation to 2019 profits.
The deferred tax credit in FY21 includes
recognition of the change in the corporation tax
rate from 19% to 25% from 1 April 2023.
The amount of tax carried forward is lower than the
UK corporation tax rate of 19% due to restrictions
in the amount of interest that can be deducted and
other costs not deductible for tax purposes.
IFRS 16
The Group has adopted IFRS 16 in its accounts in line
with the format of presentation of its restated historic
accounts for purposes of the listing of the Company’s
shares on the London Stock Exchange. The Group, at
that time, decided to adopt the standard with effect
from 1 January 2019 to enable an appropriate level of
comparability of the financial data presented within
this report.
The impact of IFRS 16 is two-fold:
• Firstly, to create a lease liability for rental costs
and corresponding right of use asset in the
balance sheet; and
• Secondly, to remove the rental charge from
the income statement and replace it with a
depreciation charge in respect of the right of
use asset and a finance charge in respect of the
unwinding of the lease liability.
Conclusion
During the year ended 2 January 2022, the Group
delivered strong business operations and greatly
enhanced its financial results. Macro-economic
concerns continue to exist, including the risk of
variations to the COVID-19 virus and changes to
consumer demand from pressures on household
incomes. Nevertheless, the Group has used the
past two years productively and is prepared for any
negative factors whilst being ready to take advantage
of expansionary opportunities which may come to
the fore.
Alan Clark
Chief Financial Officer
5 April 2022
34 Hostmore • Annual Report 2021
Risk
management
Risk
The Board carries out, on an ongoing basis, robust assessments of the
principal risks facing the Group, including emerging risks, and those
that may threaten its business model, future performance, solvency
and/or liquidity.
The impact of the COVID-19 crisis
The COVID-19 crisis has impacted the Group’s performance and
strategy in the year and so has been looked at and addressed through all
areas including our strategy and risk management processes.
The following table outlines the principal risks faced by the Group,
including the impact of the COVID-19 pandemic, and outlines what the
impact of each may mean for the Group and steps the Board has taken
to mitigate each risk.
Change during year:
No change in risk
Decrease in risk
Increase in risk
Risk summary Impact Our response
Brand usage Change during year:
• Loss of ability to use the Fridays and/or 63rd+1st brands
• Brand perception and reputational risk
>> Impact on our business and ability to deliver our growth plans thus
potentially affecting some or all of our financial and non-financial KPIs
The continued success of the Fridays business
is dependent on the Group’s ability to use the
Fridays and 63rd+1st brands, which it uses
pursuant to the Franchise Agreements (in the
case of the Fridays brand) and the 63rd+1st
Licence Agreement (in the case of the 63rd+1st
brand) entered into with the Franchiser. The
Group’s continued success and ability to
compete depends on the strength of its brands.
The Group relies on the intellectual property
rights owned by the Franchiser and relies on it
to protect such rights.
The Group’s reputation and the quality of the
Fridays and 63rd+1st brands are critical to its
business and success and the Group’s business
could be materially and adversely affected if
the perception of the brands is damaged.
The Board has signed the Franchise Agreements
and the 63rd+1st Licence Agreement with the
Franchiser and seeks to maintain a strong
relationship with the Franchiser.
The Franchiser’s business model depends on the
strength of its brands and it, therefore, operates and
adheres to, and requires its franchisees to operate
and adhere to, systems and standards which seek
to safeguard its brands. The Group adopts and
maintains these systems and standards, and, in certain
circumstances, goes beyond these standards.
35Hostmore • Annual Report 2021
Strategic report
Risk summary Impact Our response
Brand usage Change during year:
• Loss of ability to use the Fridays and/or 63rd+1st brands
• Brand perception and reputational risk
>> Impact on our business and ability to deliver our growth plans thus
potentially affecting some or all of our financial and non-financial KPIs
The continued success of the Fridays business
is dependent on the Group’s ability to use the
Fridays and 63rd+1st brands, which it uses
pursuant to the Franchise Agreements (in the
case of the Fridays brand) and the 63rd+1st
Licence Agreement (in the case of the 63rd+1st
brand) entered into with the Franchiser. The
Group’s continued success and ability to
compete depends on the strength of its brands.
The Group relies on the intellectual property
rights owned by the Franchiser and relies on it
to protect such rights.
The Group’s reputation and the quality of the
Fridays and 63rd+1st brands are critical to its
business and success and the Group’s business
could be materially and adversely affected if
the perception of the brands is damaged.
The Board has signed the Franchise Agreements
and the 63rd+1st Licence Agreement with the
Franchiser and seeks to maintain a strong
relationship with the Franchiser.
The Franchiser’s business model depends on the
strength of its brands and it, therefore, operates and
adheres to, and requires its franchisees to operate
and adhere to, systems and standards which seek
to safeguard its brands. The Group adopts and
maintains these systems and standards, and, in certain
circumstances, goes beyond these standards.
Fridays ‘Flip It’ campaign with Charlotte
Worthington, Olympic gold medalist
36 Hostmore • Annual Report 2021
Risk summary Impact Our response
COVID-19
Change during year:
• The COVID-19 virus has had and is likely to continue to have
a significant impact on the Group, its staff and its customers,
restricting the Group’s ability to trade, decreasing customer
demand and increasing costs in the supply chain, as well as
affecting the wider economy.
>> Impact on sales, costs, availability of staff and supplies
Another lockdown or pandemic could
have a material effect on the business if
the UK Government forced restaurants
to close again or if the UK Government
introduced or reintroduced safety
measures (such as social distancing).
The Group is focussed on ensuring the safety and
wellbeing of the Group’s customers and employees.
The Group took measures to reduce costs.
The Group took measures/actions to access Government
support, and address debts (such as landlord rent arrears)
and working capital issues.
The Group ensured it was in a position to reopen
rapidly where the operational environment enabled the
Group do so.
The Group’s strategy has been adapted to ensure the Group
was in the strongest position it could be. For example,
promoting delivery and click and collect services and
seeking to maximise the Group’ external dining capacity.
The Group has sought to take advantage of the
COVID-19 pandemic by seeking to secure new sites on
advantageous terms.
Operational risk Change during year:
• Deterioration of assets over time
• Loss of key personnel/an inability to attract appropriate personnel
>> Impact on sales, costs and customer experience
The Group’s restaurants have high footfall and
high usage, in particular at peak times.
There is a risk that without the right level of
ongoing investment or if the Group ceased to be
able to attract sufficient appropriately skilled
staff the quality of the customer experience
would decline, impacting the customer
experience and likelihood of return visits.
The Group ensures that it reinvests in an ongoing
maintenance and refurbishment programme across its
restaurants.
The Group is committed to fairness in the way that it
pays all employees in relation to their skills, experience
and performance. Additionally, the Group has a training
programme in place to develop its staff and to promote
staff retention.
37Hostmore • Annual Report 2021
Strategic report
Risk summary Impact Our response
COVID-19
Change during year:
• The COVID-19 virus has had and is likely to continue to have
a significant impact on the Group, its staff and its customers,
restricting the Group’s ability to trade, decreasing customer
demand and increasing costs in the supply chain, as well as
affecting the wider economy.
>> Impact on sales, costs, availability of staff and supplies
Another lockdown or pandemic could
have a material effect on the business if
the UK Government forced restaurants
to close again or if the UK Government
introduced or reintroduced safety
measures (such as social distancing).
The Group is focussed on ensuring the safety and
wellbeing of the Group’s customers and employees.
The Group took measures to reduce costs.
The Group took measures/actions to access Government
support, and address debts (such as landlord rent arrears)
and working capital issues.
The Group ensured it was in a position to reopen
rapidly where the operational environment enabled the
Group do so.
The Group’s strategy has been adapted to ensure the Group
was in the strongest position it could be. For example,
promoting delivery and click and collect services and
seeking to maximise the Group’ external dining capacity.
The Group has sought to take advantage of the
COVID-19 pandemic by seeking to secure new sites on
advantageous terms.
Operational risk Change during year:
• Deterioration of assets over time
• Loss of key personnel/an inability to attract appropriate personnel
>> Impact on sales, costs and customer experience
The Group’s restaurants have high footfall and
high usage, in particular at peak times.
There is a risk that without the right level of
ongoing investment or if the Group ceased to be
able to attract sufficient appropriately skilled
staff the quality of the customer experience
would decline, impacting the customer
experience and likelihood of return visits.
The Group ensures that it reinvests in an ongoing
maintenance and refurbishment programme across its
restaurants.
The Group is committed to fairness in the way that it
pays all employees in relation to their skills, experience
and performance. Additionally, the Group has a training
programme in place to develop its staff and to promote
staff retention.
The Rowing Scull
Every Fridays® has a rowing scull. It is there to signify
teamwork and the importance of working together to
accomplish goals. Sometimes the rowing scull is bigger
than the space within the restaurant and therefore walls
are removed to get the boat in – it takes precedence!
Each rowing scull has a name too. It is named by the
team who open the restaurant.
38 Hostmore • Annual Report 2021
Risk summary Impact Our response
Economic climate
Change during year:
• Change in economic conditions, in particular due to COVID-19
and/or Brexit
• Increases in interest rates/inflation
• Food inflation, and rising transport and energy costs
• A decrease in the availability of staff
• A decrease in consumer disposable income and/or spending
• A prolonged period of uncertainty due to the COVID-19 pandemic
and/or Brexit
>> Impact on sales and ability to deliver our growth plans thus
affecting some or all of our financial and non-financial KPIs
The Group’s business is based exclusively
in the UK, save for one restaurant in
Jersey, and so is almost exclusively
exposed to UK economic conditions
and consumer confidence.
Leisure activities may be affected by the
performance of the economy, the level
of consumer disposable income and
customer confidence to meet in social
settings. These factors have been and may
continue to be impacted upon by COVID-19
and Brexit, as well as other matters.
As long as our restaurants are able to open, the
Board believes that dining out should withstand any
short-term economic downturn.
The Board is in the process of implementing a strategy that
has seen the Group adopt a multi-channel offering, which
enables the Group to earn revenue from various sources.
The Group continually reviews its offering including its
value proposition and the quality of its venues to improve
the customer experience.
A wide range of measures were implemented across the
restaurants to make them COVID secure and to provide
a safe environment for all stakeholders. These measures
have been regularly reviewed and revised as the landscape
in relation to COVID-19 has evolved.
Regulatory changes Change during year:
• The introduction of new laws and/or regulations could adversely
impact the Group’s business
• The Group could fail to obtain required regulatory approvals
or licences.
>> Impact on sales, costs and reputation
The introduction of new laws or regulations
could have a significant impact on our strategic
objectives and result in damage to our brands,
reputational loss, litigation, revocation of
licences, inability to acquire or build sites and
fines leading to financial loss.
The Board regularly considers legal, risk and compliance
issues affecting the Group, including horizon scanning for
changes in the legal and/or regulatory environment. Where
required, the Group obtains external specialist advice to
assess, scope and plan our responses to changes in laws
or regulations. In addition to complying with applicable
laws and regulations, consideration is taken to ensure that
the Group is behaving in a socially responsible manner.
Business interruption Change during year:
• Risk of cyber-attack/terrorism
• Failure or unavailability of operational and/or IT infrastructure
• GDPR risk
>> Impact on sales, costs and reputation
A major incident could impact the Group’s
ability to keep trading. More bookings are
being taken online increasing risk and
there has been an increase in the level of
high-profile cyber-attacks in recent years,
including on providers of IT services which
increases the risk that business information
could be accessed via these providers.
The Board manages this risk by maintaining and testing
business continuity plans and establishing remote IT
disaster recovery capabilities. Cyber-security is of great
importance to the Group given the level of customer data
it holds. The Group adopts a multi-faceted approach
to protection through internal and external sources
that regularly review the level of monitoring and threat
protection systems that are in place.
The providers of IT solutions are vetted and
reviewed regularly.
39Hostmore • Annual Report 2021
Strategic report
Risk summary Impact Our response
Economic climate
Change during year:
• Change in economic conditions, in particular due to COVID-19
and/or Brexit
• Increases in interest rates/inflation
• Food inflation, and rising transport and energy costs
• A decrease in the availability of staff
• A decrease in consumer disposable income and/or spending
• A prolonged period of uncertainty due to the COVID-19 pandemic
and/or Brexit
>> Impact on sales and ability to deliver our growth plans thus
affecting some or all of our financial and non-financial KPIs
The Group’s business is based exclusively
in the UK, save for one restaurant in
Jersey, and so is almost exclusively
exposed to UK economic conditions
and consumer confidence.
Leisure activities may be affected by the
performance of the economy, the level
of consumer disposable income and
customer confidence to meet in social
settings. These factors have been and may
continue to be impacted upon by COVID-19
and Brexit, as well as other matters.
As long as our restaurants are able to open, the
Board believes that dining out should withstand any
short-term economic downturn.
The Board is in the process of implementing a strategy that
has seen the Group adopt a multi-channel offering, which
enables the Group to earn revenue from various sources.
The Group continually reviews its offering including its
value proposition and the quality of its venues to improve
the customer experience.
A wide range of measures were implemented across the
restaurants to make them COVID secure and to provide
a safe environment for all stakeholders. These measures
have been regularly reviewed and revised as the landscape
in relation to COVID-19 has evolved.
Regulatory changes Change during year:
• The introduction of new laws and/or regulations could adversely
impact the Group’s business
• The Group could fail to obtain required regulatory approvals
or licences.
>> Impact on sales, costs and reputation
The introduction of new laws or regulations
could have a significant impact on our strategic
objectives and result in damage to our brands,
reputational loss, litigation, revocation of
licences, inability to acquire or build sites and
fines leading to financial loss.
The Board regularly considers legal, risk and compliance
issues affecting the Group, including horizon scanning for
changes in the legal and/or regulatory environment. Where
required, the Group obtains external specialist advice to
assess, scope and plan our responses to changes in laws
or regulations. In addition to complying with applicable
laws and regulations, consideration is taken to ensure that
the Group is behaving in a socially responsible manner.
Business interruption Change during year:
• Risk of cyber-attack/terrorism
• Failure or unavailability of operational and/or IT infrastructure
• GDPR risk
>> Impact on sales, costs and reputation
A major incident could impact the Group’s
ability to keep trading. More bookings are
being taken online increasing risk and
there has been an increase in the level of
high-profile cyber-attacks in recent years,
including on providers of IT services which
increases the risk that business information
could be accessed via these providers.
The Board manages this risk by maintaining and testing
business continuity plans and establishing remote IT
disaster recovery capabilities. Cyber-security is of great
importance to the Group given the level of customer data
it holds. The Group adopts a multi-faceted approach
to protection through internal and external sources
that regularly review the level of monitoring and threat
protection systems that are in place.
The providers of IT solutions are vetted and
reviewed regularly.
40 Hostmore • Annual Report 2021
Risk summary Impact Our response
Key supplier issues
Change during year:
Limitations and/or issues faced by the Group’s key suppliers, including
supplier failure.
>> Impact on sales, costs and customer experience
The Group has a number of key suppliers
that provide its food and beverage products
and limitations and/or issues faced by
these suppliers, such as driver, employee,
goods or fuel shortages, escalating costs
and/or capacity constraints, could impact
the Group’s ability to offer its customers
the level of experience they expect.
Regular meetings are held between the Group and
its key suppliers to discuss operational issues and
mitigating actions. The Group requires certain of its food
and beverage suppliers to adhere to KPIs and, whilst
failure may lead to short-term disruption, alternative
suppliers could be introduced at short notice.
The Group also seeks to take mitigating actions, itself,
such as ensuring that it has adequate stock levels and
transferring stock between restaurants.
Operational – allergens
Change during year:
Incidents related to allergies to food products offered, especially when
there are changes to the menu.
>> Impact on sales, costs and reputation
There have been a number of high-profile
incidents across the restaurant sector related
to allergens in food products. The incidents
have arisen due to inadequate awareness,
training, communication and flagging
of allergen items included in menus.
The Group reviews all menus and menu changes for
allergen-related products and wording is included on the
menus to reflect these items.
We have robust assured advice from our primary authority
partner in place for allergen management process and
procedures which translates into comprehensive operating
practices in our restaurants to manage this risk and ensure
we serve our guests safely.
Allergen awareness is part of the staff training
programme and an online allergen tool is available on
the Fridays and 63rd+1st websites so that customers can
ascertain which items on the relevant menu they are able
to safely consume.
41Hostmore • Annual Report 2021
Strategic report
Risk summary Impact Our response
Key supplier issues
Change during year:
Limitations and/or issues faced by the Group’s key suppliers, including
supplier failure.
>> Impact on sales, costs and customer experience
The Group has a number of key suppliers
that provide its food and beverage products
and limitations and/or issues faced by
these suppliers, such as driver, employee,
goods or fuel shortages, escalating costs
and/or capacity constraints, could impact
the Group’s ability to offer its customers
the level of experience they expect.
Regular meetings are held between the Group and
its key suppliers to discuss operational issues and
mitigating actions. The Group requires certain of its food
and beverage suppliers to adhere to KPIs and, whilst
failure may lead to short-term disruption, alternative
suppliers could be introduced at short notice.
The Group also seeks to take mitigating actions, itself,
such as ensuring that it has adequate stock levels and
transferring stock between restaurants.
Operational – allergens
Change during year:
Incidents related to allergies to food products offered, especially when
there are changes to the menu.
>> Impact on sales, costs and reputation
There have been a number of high-profile
incidents across the restaurant sector related
to allergens in food products. The incidents
have arisen due to inadequate awareness,
training, communication and flagging
of allergen items included in menus.
The Group reviews all menus and menu changes for
allergen-related products and wording is included on the
menus to reflect these items.
We have robust assured advice from our primary authority
partner in place for allergen management process and
procedures which translates into comprehensive operating
practices in our restaurants to manage this risk and ensure
we serve our guests safely.
Allergen awareness is part of the staff training
programme and an online allergen tool is available on
the Fridays and 63rd+1st websites so that customers can
ascertain which items on the relevant menu they are able
to safely consume.
42 Hostmore • Annual Report 2021
Non-financial
information
statement
The Group complies with the Non-Financial Reporting requirements
contained in sections 414CA and 414CB of the Companies Act 2006. The
below table outlines the Group’s position on non-financial matters and
provides signposts to where the information required is included in the
report.
Reporting requirement Policies and standards which govern
the Group’s approach
Additional information and risk
management
Description of business model • N/A • See the Business Model section of
the Strategic Report (see page 4)
Non-financial KPIs • N/A • See the Non-Financial KPIs in the
Strategic Report (see page 29)
Stakeholders • Data Protection Policy • See:
• the stakeholder engagement
section of the Strategic Report
(see pages 20 to 25);
• the environmental, social and
governance disclosure in the
Sustainability section of the
Strategic Report (see page 15);
• the Board activities in the
Corporate Governance Report
(see page 55); and
• the Audit and Risk Committee
report in the Corporate
Governance Report (see pages
61 to 64).
Environmental • N/A • See the Sustainability section of
the Strategic Report (see pages 14
to 17)
Employees • Equal Opportunities Policy
• Flexible Working Policy
• Whistleblowing Policy
• See:
• the environmental, social and
governance disclosure in the
Sustainability section of the
Strategic Report (see page 15);
and
• the section 172 statement in
the Strategic Report (see pages
20 to 25)
Human rights • Modern Slavery and Human
Trafficking Policy
• See the environmental, social
and governance disclosure in
the Sustainability section of the
Strategic Report (see page 15)
Social matters • Modern Slavery and Human
Trafficking Policy
• See the environmental, social
and governance disclosure in
the Sustainability section of the
Strategic Report (see page 15)
Anti-corruption and bribery • Anti-Bribery and Corruption Policy
(which includes hospitality and
gifts provisions)
• Conflicts of Interest Policy
• See the Chair’s governance
introduction in the Corporate
Governance Report (see page 50)
Principal risks and impact • N/A • See the risk management section of
the Strategic Report (see pages 34
to 41)
43Hostmore • Annual Report 2021
Strategic report
Across the Group, policies are in place to ensure consistent governance on a range of issues. For the purposes
of the Non-Financial Reporting requirements, these include, but are not limited to:
People
The Group understands that
its behaviour, operations and
how it treats employees all have
an impact on the environment
and society. It recognises the
importance of health and safety
and the positive benefits to
the Group. The Group has a
commitment to:
• behave ethically;
• comply with relevant laws and
regulations; and
• do the right thing.
Disclosure concerning
employment of disabled
persons
We give full and fair consideration
to applications for employment
by the Group made by disabled
persons, having regard to
their particular aptitudes and
abilities. We are also committed
to continuing employment of,
and for arranging appropriate
training for, employees of the
Group who have become disabled
persons during the period for
which they were employed by the
Group. Training, development
and promotion opportunities are
provided for all employees.
Human rights
The Group has a Modern Slavery
and Human Trafficking Policy
which applies to both suppliers
and employees. The Group is
committed to implementing and
enforcing effective systems and
controls to ensure modern slavery
is not taking place anywhere in
its own business or in its supply
chains. The Group’s Procurement
team requires all food and drink
suppliers to become registered
with SEDEX. SEDEX is a virtual
platform for companies to share
their ethical data including
audit results against legislation
requirements on modern slavery,
human trafficking, labour
standards, health and safety
and business ethics. The Group
publishes its Modern Slavery Act
Transparency Statement annually
and this can be viewed at https://
www.tgifridays.co.uk.
Data protection
The Group is committed to
respecting and protecting
privacy and security of personal
information. The Group’s data
protection policies govern how it
collects, handles, stores, shares,
uses and disposes of information
about people, whether they are
customers, employees or people
in the Group’s supply chain. The
data protection policies are a key
element of corporate governance
within the Group.
Anti-corruption and anti-
bribery
The Group has an Anti-Bribery
and Anti-Corruption Policy and
a Conflict of Interest Policy,
each of which incorporates
the Group’s key principles and
standards, governing business
conduct towards key stakeholder
groups. The Anti-Bribery and
Anti-Corruption Policy includes
clear guidelines and processes
for giving and accepting gifts and
hospitality from third parties.
Whistleblowing
The Group’s Whistleblowing
Policy is supported by an external,
confidential reporting hotline
which enables employees to raise
concerns in confidence. Any
reported issues will be reported
to the full Board and handled in
the first instance by the Audit
and Risk Committee and, where
appropriate, remedial actions
taken.
Environmental policy
Whilst the Group does
not have a formal, written
environmental policy, it does
have multiple initiatives which
it has implemented across its
entire estate and which are
aimed at reducing the Group’s
environmental footprint. See
pages 14 to 17 for examples of
these initiatives.
Tax strategy
The Group is committed to acting
with integrity and transparency
in all tax matters. The Group
undertakes tax planning only
where it supports genuine
commercial activity and in doing
so is committed to remaining
compliant with all relevant tax
laws and practices. The Group
seeks external advice on tax
matters, where it is appropriate to
do so.
Dividend policy
As set out in the Prospectus, the
Company’s current dividend
policy is not to pay any dividends.
It is the intention of the Board
that Hostmore will instigate a
dividend policy when it is prudent
to do so after taking account
of exceptional and material
pandemic, macro-economic or
geopolitical market disruption.
The Strategic Report was
approved by the Board of
Directors and signed on its behalf
by:
Robert B. Cook
Chief Executive Officer
5 April 2022
44 Hostmore • Annual Report 2021
45Hostmore • Annual Report 2021
Governance
report
Board of Directors 46
Chair’s Governance Introduction 50
Corporate Governance Report 51
Report of the Audit and Risk Committee 61
Report of the Nominations Committee 65
Annual Statement from the Chair of the
Remuneration Committee
67
Hostmore Remuneration Policy 70
Annual Report on Remuneration 83
Directors’ Report 91
Statement of Directors’ Responsibilities
in respect of the Financial Statements 98
46 Hostmore • Annual Report 2021
Board of Directors
Neil Johnson
Non-Executive Chair
Date joined Hostmore plc: 23 August 2021
Career and experience
Neil Johnson was appointed Chair of the Company on 23 August 2021. Neil
is Chairman of Unbound Group PLC (formerly Electra Private Equity PLC), a
position he was appointed to in March 2018 after joining as Non-Executive
Chairman and Director in May 2016. Neil has extensive experience in
leadership roles and is currently Chairman of QinetiQ Group plc and Deputy
Chair and Senior Independent Director of the Business Growth Fund. After
a career in the British Army, Neil worked at Director level at Lex Service
Group, British Leyland and Jaguar, where he was worldwide Sales and
Marketing Director. He was CEO of the RAC from 1994 to 2000. Neil has
held several non-executive appointments, including as former Chairman
of Synthomer Plc, Motability Operations Group Plc, Tenon Group, Hornby,
Umeco and Centaur Media plc. He was Chairman of Cybit Plc and steered
the business through its IPO and eventual sale to a US private equity firm in
2010.
Neil is Chair of the Nominations Committee and a member of the Disclosure
Committee.
External appointments:
Chairman of each of Unbound Group PLC and QinetiQ Group plc, and
Director of each of BGF Group plc, Electra Investments Limited and Hotter
MIPCO Limited.
Robert B. Cook
Chief Executive Officer
Date joined Hostmore plc: 14 April 2021
Career and experience
Robert B. Cook was appointed Chief Executive Officer of the Company on 14
April 2021 and has been Chief Executive Officer of Thursdays (UK) Limited
(trading as Fridays) since December 2019. Robert has 30 years’ experience
in the hospitality and leisure industries, with expertise in driving brand
value and growth and bringing cross-sector ideas from his 13 years of
hotelier experience to other environments. From 2004 to 2012, Robert
was Chief Executive Officer of Malmaison and Hotel du Vin and spent three
years as Chief Executive Officer of De Vere Hotels and Resorts. He served
as Chief Operating Officer of Macdonald Hotels & Resorts, before moving
away from hotels and becoming Chief Executive Officer of Virgin Active
UK in 2016. Robert is a director of Cookie Jar (Alnwick) Ltd, the principal
activity of which is operating The Cookie Jar, a small luxury boutique hotel
in Alnwick, Northumberland. Robert was awarded the Freedom of the City
of London and is a Master Innholder. He was recognised as Manager of the
Year by The Catey Awards in 2006 and holds an Honorary Doctorate from
Robert Gordon University for his contribution to the hotel industry.
Robert is Chair of the Disclosure Committee.
External appointments:
Director of each of Cookie Jar (Alnwick) Limited, Cookie Jar Hospitality
(Consultancy) Limited and The Cookie Jar (Bailiffgate) Ltd.
47Hostmore • Annual Report 2021
Governance report
Alan Clark
Chief Financial Officer
Date joined Hostmore plc: 8 September 2021
Career and experience
Alan Clark was appointed Chief Financial Officer of the Company on 8
September 2021. Alan joined Thursdays (UK) Limited (trading as Fridays)
as Chief Financial Officer in March 2020. Alan has spent the majority of his
career in the hotel industry in financial leadership roles, with national and
international exposure across boutique and all-inclusive luxury brands,
and experience in driving customer engagement from a financial and
operational perspective. Alan joined Fridays from his previous role as Chief
Financial Officer at D&D London. Alan spent several years abroad, serving
as Chief Financial Officer at the publicly listed Hongkong and Shanghai
Hotels from 2014 to 2015, and then at Sandals Resorts in Jamaica from
2015 to 2018. Prior to that, he was Finance Director at Rocco Forte Hotels
and Malmaison and Hotel du Vin for four years each respectively, and
Deputy VP Finance, Europe, at Le Méridien Hotels & Resorts.
Alan is a member of the Disclosure Committee.
External appointments:
None.
David Lis
Senior Independent Director
Date joined Hostmore plc: 18 August 2021
Career and experience
David Lis was appointed Senior Independent Director of the Company on
18 August 2021. David is a Non-Executive Director of Melrose Industries
PLC and Dowgate Capital Limited and has previously held Non-Executive
Director positions at Electra Private Equity PLC (where he was the Senior
Independent Director), BCA Marketplace plc and the Multifamily Housing
REIT plc. David has held several senior executive roles at Aviva Investors,
including Chief Investment Officer of Equities and Multi Assets. Prior to
Aviva, David spent a number of years as Head of Investor Relations at
Ludgate Communications. Earlier in his career, he co-founded Windsor
Investment Management, and spent a number of years as a fund manager at
both Morgan Grenfell and J Rothschild Investment Management.
David is a member of the Audit and Risk Committee and a member of the
Nominations Committee.
External appointments:
Director of each of Melrose Industries PLC, Dowgate Capital Limited and
York Minster Fund Limited, and Member of Finance Committee York
Minster Fund.
48 Hostmore • Annual Report 2021
Board of Directors continued
Gavin Manson
Non-Executive Director
Date joined Hostmore plc: 14 April 2021
Career and experience
Gavin Manson was appointed as a Non-Executive Director of the Company
on 14 April 2021. Gavin is currently a Non-Executive Director of Unbound
Group PLC (formerly Electra Private Equity PLC) and became a Director
of Mondays (Topco) Limited, the then holding company of Thursdays
(UK) Limited, in March 2017. Prior to Electra Private Equity PLC being
renamed as Unbound Group PLC, Gavin held the role of Chief Financial and
Operating Officer at Electra, which Gavin joined in 2016. Prior to Electra,
Gavin was the Finance Director of Thomas Cook Group’s tour operator and
hotels and resorts division for three years. He was the Finance Director
at Premier Farnell Plc, the FTSE 250 international electronic component
distribution and software business, for five years. Prior to that, Gavin
worked at Merck GmbH group as the Finance Director for Seven Seas Ltd
before becoming Finance Director of the Merck Consumer Healthcare
division in UK and Ireland, and latterly leading the consolidation of the
back-office activities of Merck’s four operating divisions across the UK and
Ireland. Gavin began his career with KPMG and is a chartered accountant.
Gavin is a member of the Audit and Risk Committee and a member of the
Remuneration Committee.
External appointments
Director of each of Electra Investments Limited, Hotter MIPCO Limited,
Larbeg Limited, Mondays (Topco) Limited, Tuesdays (Midco) Limited,
Unbound Group PLC and Unbound Holdco Limited.
Andrew Blurton
Non-Executive Director
Date joined Hostmore plc: 17 August 2021
Career and experience
Andrew Blurton was appointed as an Independent Non-Executive Director
of the Company on 17 August 2021. Andrew is currently the Finance
Director of Advanced Living Limited. Andrew also holds positions as the
Chair of the Governing Body of Longacre School in Surrey and as the Chair
of the Liberty Defined Benefit Pension Scheme. Previously, Andrew has held
positions as Finance Director of MWB Group Plc, the Chief Financial Officer
of Landmark Limited and as the Chairman of Manroy Plc. Andrew has been
a Fellow of the Institute of Chartered Accountants in England & Wales for
over 38 years, having previously qualified as a Chartered Accountant in
1975.
Andrew is Chair of the Audit and Risk Committee, a member of the
Nominations Committee and a member of the Remuneration Committee.
External appointments:
Director of each of Advanced Living Limited, Advanced Living (Kingston)
Limited, Andrew Blurton Consultancy Limited and RG Property Asset
Management Limited, Trustee of Liberty Retail Pension Scheme, and Chair
of the Governing Body of Longacre School.
49Hostmore • Annual Report 2021
Governance report
Louise Stonier
Non-Executive Director
Date joined Hostmore plc: 20 August 2021
Career and experience
Louise Stonier was appointed as an Independent Non-Executive Director
of the Company on 20 August 2021. Louise is currently Chief People and
Culture Officer of the Pets at Home Group. Louise joined Pets at Home in
2004 as Group Legal Director and Company Secretary, and also held the
role of Chief People and Legal Officer and Company Secretary from 2017 to
2019. During her time with the Pets at Home Group, Louise has been being
extensively involved with the Remuneration Committee. Louise is also the
Chair and a Trustee of the charity, the Pets at Home Foundation. Louise is
a qualified solicitor having graduated from Nottingham University with an
LLB (Hons) Law and started her legal career at CMS Cameron McKenna as
a trainee solicitor in 1997. After qualifying as a Corporate solicitor in 1999,
Louise later moved to DLA Piper LLP and held the role of associate in the
Corporate Team.
Louise is Chair of the Remuneration Committee, a member of the Audit and
Risk Committee and a member of the Nominations Committee.
External appointments:
Director of each of Companion Care Management Services Limited,
Companion Care (Services) Limited, Pets at Home Vet Group Limited, Pet
City Resources Limited, Pah Financial Services Limited, Pets at Home
Superstores Limited, Pets at Home No.1 Limited, Pets at Home (ESOT)
Limited, Pet City Limited, Pet City Holdings Limited, Pets at Home Holdings
Limited, Pets at Home Ltd, Pet Advisory Services Limited, VetsDirect LTD
and Palfour Holdings Limited.
Jane Bednall
Non-Executive Director
Date joined Hostmore plc: 20 September 2021
Career and experience
Jane Bednall was appointed as an Independent Non-Executive Director of
the Company on 20 September 2021. Jane is currently a Non-Executive
Director of each of DFS Furniture Plc and, pursuant to a consulting role
she holds with AustralianSuper Pty Ltd, King’s Cross Central General
Partnership Limited, and has served previously as a Non-Executive Director
of EI Group, the UK’s largest pub company, and of Smart Energy GB, a
role elected by the Retail Energy Industry. Jane has a strong customer
background spanning marketing, commercial, digital and people leadership
in FTSE 50 companies. During her executive career, Jane spent over 30
years in global positions with British Airways, InterContinental Hotels
Group and Centrica and most recently served as Chief Marketing Officer
for Scottish and Southern Energy (SSE) plc and as a Marketing Advisor in
private equity.
Jane is a member of the Audit and Risk Committee, a member of the
Nominations Committee and a member of the Remuneration Committee.
External Appointments
Director of each of DFS Furniture Plc, CMCO Consulting Ltd and King’s
Cross Central General Partnership Limited.
50 Hostmore • Annual Report 2021
Chair’s Governance Introduction
Dear shareholder,
On behalf of the Board, I am pleased to introduce our first Corporate Governance Report for the 53 week
period ended 2January 2022
The Company was only admitted to the main market of the London Stock Exchange on 2 November 2021
and so the UK Corporate Governance Code has only applied to the Company for a number of weeks during
the 53week period ended 2January 2022. Nevertheless, the Board is committed to the highest standards
of corporate governance and will continue to fully comply with the UK Corporate Governance Code, save in
relation to the Chair of the Board and temporary exceptions concerning the compositions of the Audit and
Risk Committee and Remuneration Committee as detailed further in the Corporate Governance Report below.
From a governance perspective, this year has been one of putting in place governance structures and policies
and gearing up to operating as a listed company, which I cover in more detail on the subsequent pages of my
report.
Hostmore’s governance framework principally comprises of the Board and the Board Committees, policies
and procedures, the promotion and adoption of a culture of accountability, transparency and ‘speaking up’,
communications, training provided to all employees, whistleblowing channels and reporting.
Three areas of key focus are addressed within the governance framework: business ethics and conduct, risk
management and anti-bribery and corruption.
1. Business Ethics & Conduct – Hostmore’s moral and ethical beliefs guide the values, behaviours and
decisions of its businesses – and encompasses the individuals working within the businesses.
2. Risk Management – Hostmore’s businesses have defined management systems within each organisation,
which are reviewed on a regular basis to ensure integrity and legal compliance.
3. Anti-Bribery & Corruption – Hostmore operates a zero-tolerance approach to bribery and corruption.
Hostmore’s governance framework, including its Anti-Bribery & Corruption Policy, seeks to minimise the
risk of bribery and corruption occurring within its businesses.
The Company’s first Annual General Meeting (“AGM”) will be held on 27 May 2022 and it is intended that
the meeting will be held in person at the offices of Numis Securities Limited, 45 Gresham Street, London,
EC2V 7BF. Further details will be set out in the Notice of Annual General Meeting which will be distributed to
shareholders and made available on the Company’s website.
In the meantime, the Board is grateful for the continued support of shareholders, and the Non-Executive
Directors and I are available to engage with shareholders as we progress through our first full year as a listed
company.
Neil Johnson
Chair
5 April 2022
51Hostmore • Annual Report 2021
Corporate Governance Report
Governance report
UK Corporate Governance Code – Compliance Statement
The Board is committed to the highest standards of corporate governance. From 2 November 2021, the UK
Corporate Governance Code applied to the Company. The Company has complied and intends to comply with
the UK Corporate Governance Code, save as set out below in relation to the Chair of the Board and temporary
exemptions in relation to the compositions of the Audit and Risk Committee and the Remuneration
Committee.
The UK Corporate Governance Code recommends, in relation to a company with a premium listing on the
Official List of the FCA, that the chair on appointment should be independent within the meaning of the UK
Corporate Governance Code. Neil Johnson was appointed Chair of the Board on admission of the Company’s
ordinary shares to the premium listing segment of the Financial Conduct Authority and to trading on
the London Stock Exchange plc’s main market for listed securities (“Admission”). Neil was the chairman
of Electra Private Equity PLC (“Electra”) (now renamed Unbound Group PLC), which the Company was
demerged (the “Demerger”) from, and accordingly is not considered independent within the meaning of the
UK Corporate Governance Code. However, the Board considered that appointing Neil would be beneficial to
the Company and its shareholders in the short-term following completion of the Demerger and Admission
given his existing close familiarity with the Group through his role as chairman of Electra. Neil Johnson will
retire at the end of the AGM and, subject to being elected as a director at the AGM, Gavin Manson will step up
into the role of the Chair in his place. Gavin held the role of Chief Financial and Operating Officer of Electra
and, therefore, is also not considered independent within the meaning of the UK Corporate Governance Code.
In selecting Gavin, the Board saw continuity of stewardship as being a particularly important factor. Gavin led
the execution of the Electra strategy and, with the new Fridays team, created Hostmore. The Board believes
that Gavin brings both broad commercial and governance experience, significant knowledge of the Company,
its strategy, management and stakeholders, and, therefore, provides the continuity of leadership that the
Company needs as a newly listed business. Consequently, neither open advertising nor an external search
consultancy were used for the appointment of Gavin to the role of the Chair.
The UK Corporate Governance Code recommends that at least half of the board of directors of a company
with a premium listing on the Official List of the FCA, excluding the chair, should comprise non-executive
directors determined by the board of directors to be independent and free from circumstances which may
impair, or could appear to impair, the director’s independence. As of the date of this report, the Board
consists of six Non-Executive Directors (including the non-executive Chair) and two Executive Directors. The
Company regards David Lis, Andrew Blurton, Louise Stonier and Jane Bednall as “independent non-executive
directors” within the meaning of the UK Corporate Governance Code and free from any circumstances that
could materially interfere with the exercise of their independent judgement and accordingly will comply
with this requirement. While the Board recognises that David Lis, immediately prior to Admission, stepped
down from a position at Electra; the Board considers David to be “independent” within the meaning of the UK
Corporate Governance Code on the basis that his role at Electra as senior independent non-executive director
was also one that was considered “independent” within the meaning of the UK Corporate Governance Code
and therefore should not prejudice his ability to act as an “independent” director for the Company.
In assembling the Board an assessment of David Lis’s independence was performed and it was determined he
was independent. The rationale for this was that David’s role at Electra was, and at the Company is, to act as
the Senior Independent Director of the relevant company with a particular emphasis on providing insight as
an experienced institutional investor and no involvement in the Executive Team or day-to-day activities.
The UK Corporate Governance Code also recommends that the board of directors of a company with a
premium listing on the Official List of the FCA should appoint one of the independent non-executive
directors to be the senior independent director to provide a sounding board for the chair and to serve as an
intermediary for the other directors and shareholders when necessary. The senior independent director
should be available to shareholders if they have concerns for which contact through the normal channels of
the chief executive officer, chair or other executive directors has failed to resolve or for which such contact is
inappropriate. David Lis has been appointed Senior Independent Director of the Company.
In addition, the UK Corporate Governance Code recommends that the board of directors of a company with
a premium listing on the Official List of the FCA should establish an audit committee of independent non-
executive directors with a minimum membership of three. The committee as a whole should also have
competence relevant to the sector in which the Company operates. Gavin Manson, despite not being an
52 Hostmore • Annual Report 2021
Corporate Governance Report continued
independent Non-Executive Director, sits on the Company’s Audit and Risk Committee. Whilst the inclusion
of Gavin Manson is not consistent with the recommendations of the UK Corporate Governance Code (i.e.
that all members of the Audit and Risk Committee be independent), the board of directors considers that the
financial experience that Gavin brings, including in the hospitality and travel sectors, as well as his general
knowledge of the Group and its history, merits his inclusion on the Audit and Risk Committee. The UK
Corporate Governance Code states that the chair of the board should not be a member of the audit committee.
In line with the UK Corporate Governance Code, Gavin intends to step down as a member of the Audit and
Risk Committee when he becomes Chair of the Board. This will also bring the Company into line with the
recommendation of the UK Corporate Governance Code that all members of the Audit and Risk Committee be
independent.
Further, the UK Corporate Governance Code recommends that the board of directors of a company with a
premium listing on the Official List of the FCA should establish a remuneration committee of independent
non-executive directors with a minimum membership of three. The chair of such committee should have
previously served on a remuneration committee for at least 12 months. Louise Stonier is the chair of the
Remuneration Committee, notwithstanding that Louise has not previously served on a remuneration
committee for a period of at least 12 months. Louise has previously been extensively involved with the
remuneration committee of Pets at Home Group PLC as Chief People and Culture Officer and previously as
Group Legal Director and Company Secretary and hence the Company believes she has sufficient relevant
experience to perform this role. Gavin Manson, despite not being an independent Non-Executive Director,
sits on the Company’s Remuneration Committee. Whilst the inclusion of Gavin Manson is not consistent
with the recommendations of the UK Corporate Governance Code (i.e. that all members of the Remuneration
Committee be independent), the board of directors considers that, as with his role on the Audit and Risk
Committee, the financial experience that Gavin brings, including in the hospitality and travel sectors, as well
as his general knowledge of the Group and its history, merits his inclusion on the Remuneration Committee.
The UK Corporate Governance Code also provides that the chair of the board can only be a member of the
remuneration committee if they were independent on appointment. Gavin Manson will not be independent on
appointment as Chair of the Board and, accordingly, intends to step down as a member of the Remuneration
Committee upon assuming the role of Chair of the Board. This will also bring the Company into line with the
recommendation of the UK Corporate Governance Code that all members of the Remuneration Committee be
independent.
Finally, the UK Corporate Governance Code recommends that the board of directors of a company with a
premium listing on the Official List of the FCA should also utilise one, or a combination of, the following
methods to engage with the Company’s workforce: (i) a director appointed from the workforce; (ii) a formal
workforce advisory panel; or (iii) a designated non-executive director. As such, to meet this requirement the
chair of the Remuneration Committee also acts as the designated non-executive director for engagement with
the Company’s workforce.
Governance structure
Board
In accordance with the UK Corporate Governance Code, the role of the Board is to promote the long-term
sustainable success of the Company, generate value for shareholders and contribute to wider society.
Role of the Board and how it operates
The Board’s role is to provide overall leadership, setting the Group’s strategy, purpose, value and culture, and
supporting the Executive Directors in the delivery of that strategy. The Board’s role is to promote the long-
term sustainable success of the Company, and it does so by establishing and aligning itself with the culture
and purpose of Hostmore plc.
The Board will meet at least nine times per year, and its activity at each meeting is planned at the end of
each year and set out in a formal Annual Board Activity Calendar which is approved by the Board. The Board
and Committee meetings are planned around key events in the corporate calendar, which ensures that the
Board then receives appropriate information at the appropriate time, and that all key operational, financial
reporting and governance matters are discussed during the year.
53Hostmore • Annual Report 2021
Governance report
A detailed pack is prepared and circulated in advance of each meeting which includes updates from the CEO,
CFO and other Executive Team members. The General Counsel and Company Secretary also prepares a report
for each Board meeting covering matters such as the latest governance and litigation updates.
Roles and responsibilities
The UK Corporate Governance Code requires there to be a clear division of responsibilities between the
Chair and the Chief Executive Officer set out in writing and agreed by the Board. This document, ‘Division of
Responsibilities’ was approved by the Board on 5 October 2021 and is available on the Company’s website.
The Board feels that it is important to highlight that although they agree with the approach set out in the
UK Corporate Governance Code, they recognise that overly prescribing the responsibilities of the Chair and
the Chief Executive Officer may reduce their flexibility to act in unforeseen circumstances. Accordingly, the
document sets out a clear division of responsibilities, but does not intend to provide a definitive list of the
individual responsibilities of the Chair or the Chief Executive Officer.
Chair and CEO
The Chair (Neil Johnson) is responsible for leadership of the Board and for ensuring its effectiveness in
directing the Company and promoting the highest standards of integrity, probity and corporate governance.
Throughout the year, at appropriate intervals, the Chair holds meetings with the Non-Executive Directors
without the Executive Directors present. Neil Johnson will retire at the end of the AGM and, subject to being
elected as a Director at the AGM, Gavin Manson will step up into the role of the Chair in his place.
The Chief Executive Officer (Robert B. Cook) leads the team with executive responsibility for running the
businesses of the Company and any other subsidiaries the Company may have from time to time. The CEO
reports to the Board and is responsible for all executive management matters of the Group.
Non-Executives
The Non-Executive Directors (Neil Johnson, David Lis, Jane Bednall, Andrew Blurton, Gavin Manson and
Louise Stonier) provide constructive challenge to management, helping to develop proposals on strategy, and
providing advice and support based on their experience in both executive and non-executive roles throughout
their careers. David Lis, Jane Bednall, Andrew Blurton and Louise Stonier are considered to be independent.
Neil Johnson and Gavin Manson are not considered to be independent, however the Board considers Neil to
be beneficial to the Company and its shareholders in the short term given his existing familiarity with the
Group through his role as chairman of Electra, whereas Gavin brings financial experience, including in the
hospitality and travel sectors.
Senior Independent Director
David Lis has been appointed as Senior Independent Director, and in that role acts as a sounding board for
the Chair, serves as an intermediary for the other directors and shareholders and is available to shareholders
if they have concerns which contact through the normal channels of the CEO, Chair or the other Executive
Director has failed to resolve.
54 Hostmore • Annual Report 2021
Corporate Governance Report continued
Company Secretary
Robert Henry was appointed General Counsel and Company Secretary of the Company in 2021. The Company
Secretary supports the Board and each of the four Board Committees, and is in attendance at all meetings. All
Directors have access to the services of the Company Secretary who is available to advise on company law,
governance and best practice, whilst assisting the Board in ensuring that the correct policies, processes and
information are tabled for discussion, noting or approval at the correct point in time throughout the year. The
Company Secretary works with the Chair to ensure that Board meeting packs are circulated to Directors in a
timely manner and that the information contained in them is clear and accurate.
Composition, independence and attendance in 2021
During the year, the Board comprised eight directors (including the Chair). Having considered circumstances
which are likely to impair a Non-Executive Directors’ independence, it has been determined that not all of
the Non-Executive Directors can be considered to be independent. Nevertheless, the Company has complied
with Provision 11 of the UK Corporate Governance Code throughout the year, with at least half of the Board
(excluding the Chair) comprising independent Non-Executive Directors.
It is the Board’s policy that appointments to the Board will always be based solely on merit without any
discrimination relating to age, gender or any other matter that has no bearing on an individual’s ability to
fulfil the role of Director. This principle of Board diversity is strongly supported by the Board, recognising that
diversity of thought, approach and experience is an important consideration as part of the selection criteria
used to assess candidates to achieve a balanced Board.
The table below sets out the position of the Group on a gender basis as at 2 January 2022:
Male Female
Main Board
6 (75%) 2 (25%)
Group Executive Team
6 (60%) 4 (40%)
Direct reports to Executive Directors
7 (64%) 4 (36%)
Group employees 2,281 (47%) 2,573 (53%)
Notes:
1. The Group Executive Team figures include the two Executive Directors.
2. The Group employee figures include all employees of the Group.
The Board considers that each Director is able to allocate sufficient time to the Company to discharge their
responsibilities effectively.
55Hostmore • Annual Report 2021
Governance report
The Board has at least nine formally scheduled meetings per year, with ad hoc meetings or calls convened
to deal with various matters in between. Meetings are held in person or, where COVID-19 restrictions
are in place, via video conference calls. The Audit and Risk Committee, the Nominations Committee, the
Remuneration Committee and the Disclosure Committee were each formally established on 5 October 2021.
The table below shows the attendance of each Director at the formally scheduled meetings of the Board and
Committees of which they are a member since Admission:
Director
Board meetings
held/attended
Audit and Risk
Committee
meetings
held/attended
Nominations
Committee
meetings
held/attended
Remuneration
Committee
meetings
held/attended
Disclosure
Committee
meetings
held/attended
Independent
David Lis
2/2 0/0 0/0 N/A N/A
Jane Bednall
2/2 0/0 0/0 1/1 N/A
Andrew Blurton
2/2 0/0 0/0 1/1 N/A
Louise Stonier 2/2 0/0 0/0 1/1 N/A
Non-Independent
Neil Johnson
2/2 N/A 0/0 N/A 1/0
Robert B. Cook
2/2 N/A N/A N/A 1/1
Alan Clark
2/2 N/A N/A N/A 1/1
Gavin Manson 2/2 0/0 N/A 1/1 N/A
Where Directors are unable to attend a meeting, they are encouraged to submit any comments on papers or
matters to be discussed to the Chair in advance to ensure that their views are recorded and taken into account
during the meeting. A strategy session will also be held once a year to which all Directors will attend.
Key activities during the year
The annual Board Activity Calendar setting out agenda items for each scheduled Board meeting will
be drafted and approved by the Board each year. The calendar will take into account key points in the
regulatory and financial cycle, including, amongst other things, updates from the CEO, the CFO on financial
performance, investor relations updates and updates from the Company Secretary.
During the year, the Board has, as part of its annual governance programme (and noting that some of these
activities took place before Admission to prepare the Company for listing):
• Reviewed and approved the FY22 budget and FY22 strategy.
• Reviewed its Schedule of Matters Reserved and the Terms of Reference of the Board Committees.
• Reviewed various governance documents, including the Division of Responsibilities between the Chair
and CEO.
• Received people updates and an update on workforce engagement.
• Received risk and compliance updates covering areas such as health and safety and ESG matters.
• Received business solutions updates covering areas such as cyber security and guest experience.
Training and development
A full, formal and tailored induction programme is provided for any new Directors joining the Board. The
Company Secretary provides regular updates to the Board and Committees on regulatory and corporate
governance matters. The Directors are expected to keep themselves appraised of developments relevant to
the Company’s business.
56 Hostmore • Annual Report 2021
Corporate Governance Report continued
Performance Evaluation and effectiveness
A formal internal performance evaluation will be conducted for the Board and each of its Committees towards
the end of 2022 and will be reported on in the 2022 Annual Report and Financial Statements.
Information and support
An agenda and accompanying papers are distributed to the Board or Committee members in advance of each
Board or Committee meeting. Where necessary, separate papers are prepared to support specific matters
requiring Board decision or approval and the Non-Executive Directors provide ongoing feedback to the CEO,
CFO and Company Secretary on the content of papers to ensure they continue to support effective debate and
decision-making by the Board.
Minutes of all Board and Committee meetings are taken by a delegate of the Company Secretary and
circulated to the Board or the relevant Committee for approval as soon as practicable following the meetings.
Specific actions arising from meetings are recorded both in the minutes and, from 2022, on a separate action
log, thereby facilitating the effective communication of actions to those responsible and allowing the Board or
the relevant Committee to monitor progress.
Any Director may instigate an agreed procedure whereby independent professional advice may be sought at
the Company’s expense. No such advice was sought by any Director during the year.
Appointment and election
In accordance with the Company’s articles of association, all members of the Board will be offering
themselves for election at the Company’s Annual General Meeting (AGM) on 27 May 2022, this being the first
AGM since their appointment, apart from Neil Johnson, who will be standing down at the AGM.
All of the Directors have service agreements or letters of appointment and the details of their terms are set out
below.
Executive Director service agreements
Name Position
Date of
service
agreement
Notice period
by
Company
(months)
Notice period
by
Director
(months)
Robert B. Cook CEO 15 October 2021 6 6
Alan Clark CFO 15 October 2021 6 6
The Non-Executive Directors (including the Chair) do not have service agreements but are instead appointed
by letters of appointment. Each of the Non-Executive Directors and the Chair were appointed for a three-year
term, subject to their annual reappointment by shareholders.
Non-Executive Director appointment
Name
Date of
appointment
Commencement date
of current term
Unexpired term at
2January 2022
Neil Johnson
23 August 2021 23 August 2021 2 years 8 months
David Lis
18 August 2021 18 August 2021 2 years 8 months
Jane Bednall
20 September 2021 20 September 2021 2 years 9 months
Andrew Blurton
17 August 2021 17 August 2021 2 years 8 months
Gavin Manson
14 April 2021 17 August 2021 2 years 8 months
Louise Stonier 20 August 2021 20 August 2021 2 years 8 months
57Hostmore • Annual Report 2021
Governance report
Conflicts of interest
Rules concerning Directors’ conflicts of interests are set out in the Company’s Articles of Association and
Conflicts of Interest Policy. Directors are reminded at the beginning of each Board meeting to notify the Board
of any further conflicts of interest in accordance with sections 175, 177 and 182 of the Companies Act 2006.
All Directors have confirmed that they did not have any conflicts of interest during the reporting period.
Risk management and internal controls
The Board accepts responsibility for determining the nature and extent of the significant risks it is willing to
take in achieving its strategic objectives and monitors and reviews the effectiveness of the Company’s risk
management and internal control systems. Further details can be found in the Audit and Risk Committee
Report and in the Risk Management section of the Strategic Report. The Group insures against risks, but
certain risks remain difficult to insure, due to the breadth and cost of cover. In some cases, external insurance
is not available at all, or not at an economical price. In such cases the Group identifies and agrees to accept
such risk. The Group regularly reviews both the type and amount of external insurance that it buys.
Whistleblowing
The Company has a Whistleblowing Policy which enables employees to raise concerns in confidence
relating to suspected wrongdoing and/or dangers at work, including, without limitation, financial fraud or
mismanagement, failure to comply with any legal or professional obligation and breach of the Company’s
internal policies and procedures. The Company also provides a confidential whistleblowing helpline run by
an independent third party so employees are able to report a concern using an external forum. The Board will
review the Whistleblowing Policy on an annual basis and will review any reports which have been received on
a quarterly basis.
Stakeholder engagement
The Board places a strong emphasis on the standards of good corporate governance and maintaining
effective engagement with its shareholders and key stakeholders, which it considers to be integral to the
Company’s longer term growth and success. Further information on how we engage with stakeholders is set
out in the Strategic Report on pages 2 to 43 and, in particular, the Section 172 statement on pages 20 to 25.
The Directors recognise their duty under Section 172 of the Companies Act 2006 to consider the interests
of stakeholders, and the nature of our business means that the interests of our shareholders, employees,
customers, franchiser, suppliers and local communities are at the front of mind in the Board’s decision-
making process.
Engagement with the workforce
We engage with our employees on a regular basis, through employee forums, appraisal processes, annual
performance and development reviews and a variety of social and team building events. We will also measure
employee engagement through an annual employee engagement survey, which we will launch in 2022 and
report on in our next Annual Report and Financial Statements. Further details about our Employees can be
found in the Strategic Report on pages 2 to 43.
Relations with shareholders
Continued support of our shareholders is key so we work hard to ensure they understand our strategy
and goals and can monitor our performance. We intend to engage with our shareholders through investor
roadshows, capital market days, shareholder meetings and our half and full year financial reports.
The Board also welcomes any feedback from shareholders and is keen to establish a dialogue with its
shareholders.
The Company’s first AGM will take place at 11.00am on 27 May 2022 at the offices of Numis Securities
Limited, 45 Gresham Street, London, EC2V 7BF. The Annual Report and Financial Statements and Notice of
the AGM will be made available to shareholders in accordance with the required notice periods.
58 Hostmore • Annual Report 2021
Corporate Governance Report continued
The Board has delegated a number of its responsibilities to the Audit and Risk Committee, Nominations
Committee, Remuneration Committee and Disclosure Committee. The terms of reference of each of its
Committees are available from www.hostmoregroup.com. These are reviewed annually by the Board and
Committees to ensure that they remain appropriate to support effective governance. Details of the role,
composition and activities of each Committee during the year are set out in their respective reports on the
following pages within this report.
The members of each Committee are as follows:
Committee Chair Other Members
Audit and Risk Andrew Blurton David Lis
Jane Bednall
Gavin Manson
Louise Stonier
Nominations Neil Johnson David Lis
Jane Bednall
Andrew Blurton
Louise Stonier
Remuneration Louise Stonier Jane Bednall
Andrew Blurton
Gavin Manson
Disclosure Robert B. Cook Neil Johnson
Alan Clark
Robert Henry
Audit and Risk Committee
The Audit and Risk Committee’s role is to assist the Board with the discharge of its responsibilities in relation
to financial reporting, including reviewing the Group’s financial statements and accounting policies, internal
and external audits and controls, reviewing and monitoring the scope of the annual audit and the extent of
the non-audit work undertaken by external auditors, advising on the appointment of external auditors and
reviewing the effectiveness of the Group’s internal controls, whistleblowing and fraud systems. The Audit
and Risk Committee will give due consideration to laws and regulations, the provisions of the UK Corporate
Governance Code and the requirements of the Listing Rules and the Disclosure Guidance and Transparency
Rules. The Audit and Risk Committee will also be responsible for (i) advising the Board on the Company’s
risk strategy, risk policies and current risk exposures; (ii) overseeing the implementation and maintenance
of the overall risk management framework and systems; and (iii) reviewing the Company’s risk assessment
processes and capability to identify and manage new risks. From Admission, the Chair of the Audit and
Risk Committee will be available at annual general meetings of the Company to respond to questions from
shareholders on the activities of the Audit and Risk Committee.
The UK Corporate Governance Code recommends that all members of the Audit and Risk Committee be non-
executive directors, independent in character and judgment and free from any relationship or circumstance
which may, could or would be likely to, or appear to, affect their judgment, with a minimum membership of
three, and that one such member has recent and relevant financial experience. The committee as a whole
should have competence relevant to the sector.
The Audit and Risk Committee is comprised solely of Non-Executive Directors, chaired by Andrew Blurton
and also includes David Lis, Jane Bednall, Gavin Manson and Louise Stonier. All members of the Committee
are considered to be independent except for Gavin Manson. Whilst the inclusion of Gavin Manson is not
consistent with the recommendations of the UK Corporate Governance Code (i.e. that all members of the
Audit and Risk Committee be independent) the Board considers that the financial experience that Gavin
brings, including in the hospitality and travel sectors, as well as his general knowledge of the Group and its
history, merits his inclusion on the Committee. The UK Corporate Governance Code states that the chair of
the board should not be a member of the audit committee. In line with the UK Corporate Governance Code,
Gavin intends to step down as a member of the Audit and Risk Committee when he becomes Chair of the
Board. This will also bring the Company into line with the recommendation of the UK Corporate Governance
Code that all members of the Audit and Risk Committee be independent.
59Hostmore • Annual Report 2021
Governance report
The Audit and Risk Committee will meet as often as it deems necessary but in any case at least three times
per year in line with the relevant dates within the financial reporting and audit calendar, at least one of which
will be without management present. The instances where the Audit and Risk Committee shall meet will be
at times when relevant documents, such as audit plans (be they internal or external), interim statements,
preliminary announcements and the full Annual Report and Financial Statements are near to completion and
available for review.
Nominations Committee
The Nominations Committee assists the Board in reviewing the structure, size and composition of the
Board. It is also responsible for reviewing succession plans for the Company’s Directors, including the Chair,
the Chief Executive Officer, and other senior executives. It is intended that the Chair of the Nominations
Committee will be available at annual general meetings of the Company to respond to questions from
shareholders on the activities of the Nominations Committee.
The UK Corporate Governance Code recommends that a majority of the nomination committee be non-
executive directors, independent in character and judgment and free from any relationship or circumstance
which may, could or would be likely to, or appear to, affect their judgment and that the chair of the board
should not chair the committee when it is dealing with the appointment of their successor.
The Nominations Committee is chaired by the Company’s Chair, Neil Johnson, and its other members are
David Lis, Jane Bednall, Andrew Blurton and Louise Stonier, all of whom, save for Neil, are independent Non-
Executive Directors. Neil Johnson will retire as the Chair of the Nominations Committee at the AGM and be
replaced by Gavin Manson, who, like Neil, is not viewed as being an independent Non-Executive Director.
The Nominations Committee will meet as often as it deems necessary but in any case at least twice per year
to provide for the review of elements forming part of an annual cycle, such as directors who are subject to
annual re-election or retiring by rotation; senior management succession; and to review the statement of the
Committee’s activities in the Annual Report and Financial Statements.
Remuneration Committee
The Remuneration Committee assists the Board in determining the Group’s policy on executive
remuneration, the levels of remuneration for Executive Directors, the Chair, the Company Secretary and
members of the Company’s senior management and prepares an annual remuneration report for approval
by the Hostmore Shareholders at the annual general meeting. From Admission, it is intended that the Chair
of the Remuneration Committee will be available at annual general meetings of the Company to respond to
questions from shareholders on the activities of the Remuneration Committee.
The UK Corporate Governance Code recommends that all members of the Remuneration Committee be non-
executive directors, independent in character and judgment and free from any relationship or circumstance
which may, could or would be likely to, or appear to, affect their judgment, with a minimum membership
of three. The UK Corporate Governance Code also recommends that before appointment as chair of the
remuneration committee, the appointee should have served on a remuneration committee for at least 12
months.
The Remuneration Committee is chaired by Louise Stonier, who is a Non-Executive Director. Whilst Louise
Stonier has not previously served on a remuneration committee for at least 12 months, she has been
extensively involved with the Remuneration Committee of Pets at Home Group PLC as Chief People and
Culture Officer and previously as Group Legal Officer and Company Secretary and hence the Company
believes she has sufficient relevant experience to perform this role. The other Non-Executive Directors
on the Committee are Jane Bednall, Andrew Blurton and Gavin Manson. All members of the Committee
are considered to be independent except for Gavin Manson. Whilst the inclusion of Gavin Manson is not
consistent with the recommendations of the UK Corporate Governance Code (i.e. that all members of the
Remuneration Committee be independent), as with his role on the Audit and Risk Committee, the Board
considers that the financial experience that Gavin brings, including in the hospitality and travel sectors,
as well as his general knowledge of the Group and its history, merits his inclusion on the Committee. The
UK Corporate Governance Code also provides that the chair of the board can only be a member of the
remuneration committee if they were independent on appointment. Gavin Manson will not be independent on
appointment as Chair of the Board and, accordingly, intends to step down as a member of the Remuneration
60 Hostmore • Annual Report 2021
Corporate Governance Report continued
Committee upon assuming the role of Chair of the Board. This will also bring the Company into line with the
recommendation of the UK Corporate Governance Code that all members of the Remuneration Committee
be independent. The Chair of the Remuneration Committee shall also act as the designated non-executive
director for engagement with the Company’s workforce, in line with the requirements of the UK Corporate
Governance Code that a designated non-executive director perform this role.
The Remuneration Committee will meet as often as it deems necessary but in any case at least twice per year,
with the second meeting of the year to take place when relevant documents, such as the executive directors’
remuneration policy and the directors’ remuneration report, are available for review prior to submission for
shareholder approval at the Company’s annual general meeting.
Disclosure Committee
The Disclosure Committee assists and informs the decisions of the Board concerning the identification of
inside information and makes recommendations about how and when the Company should disclose inside
information in accordance with the Company’s Inside Information and Disclosure Policy. The Disclosure
Committee is responsible for, among other things, maintaining a record of the Company’s public disclosures,
and preparing and monitoring announcements. The Disclosure Committee will meet on an ad-hoc basis
where necessary or appropriate to fulfil its responsibilities.
The Disclosure Committee is chaired by Robert B. Cook, and its other members are Neil Johnson, Alan Clark
and Robert Henry.
61Hostmore • Annual Report 2021
Report of the Audit and Risk Committee
Governance report
Chair Introduction
Dear Shareholders
Hostmore completed its listing on the Main Market of the London Stock Exchange on 2 November 2021 and
all the directors were involved in this process. There were no meetings of the Audit and Risk Committee
in the short period between listing and the Company’s financial year end but there have been two formally
scheduled meetings since the financial year end to enable the Committee to undertake its roles and
responsibilities on behalf of the Board.
Whilst the Audit and Risk Committee did not meet in the 53week period ended 2 January 2022, I am pleased
to outline what the Committee will be focusing on during the current financial year.
Committee Members and Meeting Frequency
Andrew Blurton, David Lis, Jane Bednall, Gavin Manson and Louise Stonier were members of the Audit
and Risk Committee from 5October 2021 (full biographical details can be found on pages 47 to 49). The
Committee must comprise of at least three members and, unless the Board approves otherwise, all members
must be independent, Non-Executive Directors of the Company, at least one of whom must have recent and
relevant financial experience with competence in accounting and/or auditing. The Committee has complied
with this requirement, save that Gavin Manson, despite not being an independent Non-Executive Director,
sits on the Company’s Audit and Risk Committee. Whilst the inclusion of Gavin Manson is not consistent
with the recommendations of the UK Corporate Governance Code (i.e. that all members of the Audit and
Risk Committee be independent), the board of directors considers that the financial experience that Gavin
brings, including in the hospitality and travel sectors, as well as his general knowledge of the Group and its
history, merits his inclusion on the Audit and Risk Committee. The UK Corporate Governance Code states
that the chair of the board should not be a member of the audit committee. In line with the UK Corporate
Governance Code, Gavin intends to step down as a member of the Audit and Risk Committee when he
becomes Chair of the Board. This will also bring the Company into line with the recommendation of the UK
Corporate Governance Code that all members of the Audit and Risk Committee be independent. Both Andrew
Blurton and Gavin Manson have recent and relevant financial experience with competence in accounting and
auditing.
Meetings will be held at least three times a year at appropriate times in the financial reporting and audit
cycle, and otherwise as required. The Committee did not meet during 2021 with the first meeting being held
in January 2022. In addition to the Committee members, other regular attendees are expected to include the
external auditor, PricewaterhouseCoopers LLP.
Role and Responsibilities
The role of the Audit and Risk Committee is set out in its terms of reference, which were approved by the
Board of the Company on 5 October 2021 and are available on the Company’s website.
Duties of the Committee
The duties of the Committee include, amongst other things:
— To monitor the integrity of the financial statements of the Company and report to the Board on
significant financial reporting issues and judgements
— Where requested by the Board, to review the content of the annual report and financial statements and
advise the Board on whether, taken as a whole, it is fair, balanced and understandable
— Oversee the relationship with the external auditor and make recommendations to the Board regarding
the appointment, re-appointment and removal of the external auditor
— Review and approve the annual audit plan
— Assess the external auditor’s independence and objectivity
— Assist the Board with the definition and execution of a risk management strategy, risk policies and
current risk exposure
62 Hostmore • Annual Report 2021
Report of the Audit and Risk Committee continued
— Review the adequacy and effectiveness of the Group’s risk management and internal control system
— Review the adequacy and security of the Company’s whistleblowing arrangements, and procedures
related to fraud, bribery and money laundering
— Report to the Board after each meeting on all matters within the Committee’s duties and
responsibilities
Committee key activities and focus in 2022
Key activities in addition to the duties of the Committee referred to above:
— Review of Financial Statements and reports
— Review of risk management and internal controls
— External Audit – Receive the output of the external audit effectiveness review regarding the 2021 audit
process and consider the external auditor’s reappointment
— Internal Audit – Keep under review plans and progress around internal controls framework and
whether there is need for an internal audit function.
The above key activities are commented on in further detail below.
Composition, Skills and Experience
An annual review of Board and Committee compositions, the independence of Non-Executive Directors and
their time commitment, will take place in 2022.
Reporting
Financial Reporting
The Committee will review on an ongoing basis the Group’s corporate reporting, including critical accounting
policies, accounting transactions, short-term trading risks, reporting risks, fraud and management overrides
and business continuity.
Significant Issues considered in relation to the financial statements
Significant issues and accounting judgements are identified by the Finance Team and the external auditor
and are reviewed by the Committee. The key audit matters identified in auditing the Group’s financial
statements for the 53 week period 2January 2022 included:
• the appropriateness of the going concern basis of preparation;
• the valuation of property, plant and equipment (“PP&E”), and right-of use (“RoU”) assets; and
• the valuation of goodwill.
With regards to the appropriateness of the going concern basis of preparation of the financial statements, the
Committee considered the degree to which the Group’s Management can successfully operate its business
and control its financial risks. In considering this, the Committee took into account the fact that over the
two years ended 2 January 2022, the Group’s business had been adversely disrupted by the effects of the
COVID-19 pandemic. As part of this assessment, the Committee reviewed the results of Management’s
forecasts of expected operating performance and cash availability for the 18 months ending 30 September
2023. They considered possible adverse effects, including severe but plausible downside sensitivities of
trading and a worsening rate of profit conversion. The Committee discussed these projections in detail with
the Executive Directors and with the external auditor. The Committee noted that the severe but plausible
downside sensitivities showed that there would continue to be headroom above the minimum covenant
levels in the Group banking facilities and that there would be no breach of the covenant tests. The Committee
combined this assessment with all other elements of its work and concluded that it was appropriate for the
financial statements to be prepared on a going concern basis.
63Hostmore • Annual Report 2021
Governance report
Each restaurant is considered as separate cash generating unit. Management, therefore, performed an
assessment to consider whether there are impairments required over the PP&E and RoU assets at restaurant
level. As agreed with the auditor, Management posted a further £545,000 impairment charge. Management
provided further rationales for why no further impairment charge has been provided. The auditor agreed with
Management that the relevant restaurants require close monitoring over the next 12 months.
In line with IAS 36, Management performed an impairment assessment of the goodwill held on the Group’s
consolidated statement of financial position. The goodwill is considered to be at an operating segment level
and relates to the Fridays brand. Management compared the market capitalisation of the Company at year
end to consider whether a goodwill impairment trigger was present. In addition, Management considered
the future cash flows to ensure the carrying value of goodwill, PP&E and RoU assets. The auditor agreed with
Management’s assessment that there was no impairment required to the carrying value of goodwill.
After consideration, the Committee concluded that the final impairment charge posted was appropriate.
Fair, Balanced and Understandable
The Audit and Risk Committee supports the Board in ensuring that the Annual Report and Financial
Statements is fair, balanced and understandable.
The Committee reviewed the Annual Report and Financial Statements as it was being written and updated,
and provided detailed feedback throughout the process to the Finance Team. The Annual Report and
Financial Statements is also shared with the external auditor at an early stage to obtain feedback.
Risk Management and Internal Controls
Risk Management
The Committee, along with the Board, review the Group consolidated management accounts, including the
statement of comprehensive income, statement of financial position and cash flows. Results are compared
to the latest budget and forecast, with narrative for variances from the Group’s Executive Team, and actions
agreed.
The Committee will assess the changes in corporate culture and risk appetite to the extent it has changed
since listing and consider the impact of recent short term operational and financial risks and the methods by
which resilience is built into the business.
Internal Audit
The Group does not currently have an internal audit function. The Committee reviews this position on an
annual basis and provides an overview of the separate levels of assurance that are already in place and how
these compliment the work of the external auditor.
Internal assurance is achieved through three distinct lines:
First line Second line: Third line:
Operational and management controls
• An appropriate team structure and
reporting lines.
• Visible, championed values and
expected behaviours.
• Application of Group policies and
procedures.
• Employee induction, training and
ongoing support.
• Executive and leadership team
oversight.
Risk and compliance monitoring
• Operational internal audit activity.
• Risk management framework,
including multiple review levels.
• External specialists engaged to
monitor and report on compliance
operations.
Independent and external review
• External advisors engaged
to review 1
st
and 2
nd
lines of
assurance.
• Open culture of challenge
to existing processes and
whistleblowing hotline.
64 Hostmore • Annual Report 2021
Report of the Audit and Risk Committee continued
Going Concern
The Committee considered the going concern basis of preparation for the Company’s financial statements for
the period ended 2 January 2022 and whether it was appropriate for the Company’s financial statements to be
prepared on a going concern basis.
Viability Assessment
The Committee considered the Company’s viability assessment and the basis of calculation used in the
viability statement.
External Audit
External Auditor Effectiveness
The current audit partner David Beer has been the Company’s external auditor’s audit partner since
Admission on 2 November 2021. PricewaterhouseCoopers LLP have been the Company’s auditors since its
incorporation in April 2021.
Independence and Objectivity
The Committee will assess the independence and objectivity of the auditor on an annual basis. The Chair
of the Committee will meet with the auditor in advance of Committee meetings to discuss if there are
any matters of concern. The auditor will also periodically meet with the Committee without members of
management present to ensure there is a forum for open discussion.
Non-Audit Services Policy
The auditor did provide certain non-audit services to the Group relating to the Company’s listing process
and theGroup’s bank facility agreement covenant reporting. Since the Company’s ordinary shares have been
listed, the auditor has not provided any non-audit services to the Group other than in relation to the Group’s
bank facility agreement covenant reporting which is a requirement of the facility. This is not expected to
change. The Committee will regularly review this position.
Appointment of External Auditor
The Committee plans to recommend the appointment of PricewaterhouseCoopers LLP as auditor at the AGM
to be held on 27 May 2022, this being the first AGM since Admission.
External Auditor Fee
Details of the fees paid to PricewaterhouseCoopers LLP during the year are shown in note11 to the Financial
Statements.
Compliance, speaking-up and fraud
The Committee will undertake an annual review of the Company’s Anti-Bribery and Corruption Policy and the
Whistleblowing Policy and make recommendations.
Committee Evaluation
An internal Board and Committee Evaluation will take place towards the end of 2022 and will be reported on
in the 2022 Annual Report and Financial Statements
Andrew Blurton
Chair of the Audit and Risk Committee
5 April 2022
65Hostmore • Annual Report 2021
Report of the Nominations Committee
Governance report
Chair Introduction
Dear Shareholders
Hostmore completed its listing on the Main Market of the London Stock Exchange on 2November 2021
and all the directors were involved in this process. There were no meetings of the Nominations Committee
in the short period between listing and the Company’s financial year end but there have been two formally
scheduled meetings since the financial year end to enable the Committee to undertake its roles and
responsibilities on behalf of the Board, including to approve, subject to his being elected as a Director at the
AGM, the appointment of Gavin Manson as a successor to Neil Johnson when he steps down from the Board at
the end of the AGM on 27 May 2022.
Whilst the Nominations Committee did not meet in the 53 week period ended 2 January 2022, I am pleased to
outline what the Committee will be focusing on during the current financial year.
Committee Members and Meeting Frequency
Neil Johnson, David Lis, Jane Bednall, Andrew Blurton and Louise Stonier were members of the Nominations
Committee as at 2 January 2022 (full biographical details can be found on pages 46 to 49). The Committee
must comprise of not less than three members, the majority of whom are to be chosen from amongst the
independent Non-Executive Directors of the Company. Since Admission in November, the Committee has
complied with this requirement. Neil Johnson will retire as the Chair of the Nominations Committee at the
AGM and be replaced by Gavin Manson, who, like Neil, is not an independent Non-Executive Director.
Meetings will be held at least twice a year at appropriate times and otherwise as required.
Roles and Responsibilities
The role of the Nominations Committee is set out in its terms of reference, which were approved by the Board
on 5 October 2021 and are available on the Company’s website.
Duties of the Committee
The Nominations Committee is responsible for the following key activities:
— Regularly reviewing the structure, size and composition of the Board
— Putting in place and keeping Board and other senior management positions succession plans under
review
— Reviewing the Company’s policy on diversity and inclusion and its objectives and linkage to Company
strategy
— Ensuring that appointments and succession plans are based on merit and objective criteria
— Making recommendations on the structure, size and composition of the Board Committees
— Review annually the time required from Non-Executive Directors
— Review the results of the Board evaluation process and review its own performance
— Ensure that new Directors receive a full, formal and tailored induction
— Make recommendations to the Board on any area within its remit where action or improvement is
needed
— Report to the Board after each meeting on all matters within the Committee’s duties and
responsibilities
66 Hostmore • Annual Report 2021
Report of the Nominations Committee continued
Focus for 2022
The Committee’s key areas of focus for 2022 include:
— Board and management team updates
— Review of the Committee’s terms of reference
— Review of the membership of the Board and its Committees and the Board succession plan
— Approval of the Committee’s programme for 2022
— Review of time commitment from Non-Executive Directors
— Completion of internal Committee evaluation process
— Consideration of the Board induction programme
Diversity and Inclusion Policy
The Company is working on the introduction of a diversity and inclusion programme, including an
appropriate policy. The Company has online Equality and Diversity training, which each new starter is
required to complete as part of their induction.
Board Changes and Succession Planning
There have been no changes to the Board since Admission. Having agreed to Chair the Board through the
demerger and transition of Hostmore, and as indicated in the Prospectus, I will be stepping down from the
Board at the end of the AGM and will hand over the Chair to my successor, Gavin Manson, subject to Gavin
being elected as a Director at the AGM.
Whilst Gavin is not considered to be independent, the Board saw continuity of stewardship as being a
particularly important factor. Gavin led the execution of the Electra strategy and, with the new Fridays team,
created Hostmore. The Board believes that Gavin brings both broad commercial and governance experience,
significant knowledge of the Company, its strategy, management and stakeholders, and, therefore, provides
the continuity of leadership that the Company needs as a newly listed business. Consequently, neither open
advertising nor an external search consultancy were used for the appointment of Gavin to the role of the
Chair.
All directors, excluding myself, will stand for election at the AGM in May, this being the first AGM since their
appointment.
The Committee will receive and consider the Company’s succession plan for the first time in 2022. It is
anticipated that the plan will enable the Committee to identify any skills shortages on the Board and will
consider diversity and the plans to develop talent internally to create a pipeline to the Board.
Committee Evaluation
An internal Board and Committee evaluation will take place towards the end of 2022 and will be reported on
in the 2022 Annual Report and Financial Statements.
Neil Johnson
Chair of the Nominations Committee
5 April 2022
67Hostmore • Annual Report 2021
Chair of the Remuneration Committee
Annual Statement from the
Governance report
Dear Shareholder,
As the Chair of the Remuneration Committee, I am pleased to present, on behalf of the Board, our first
Directors’ Remuneration Report covering the period from 14April 2021 (being the date of the Company’s
incorporation) to 2January 2022.
This report is split into three sections:
1. This Annual Statement, which summarises the key activities and work of the Committee during the period
under review.
2. Directors’ Remuneration Policy (the “Policy”) – this sets out the remuneration framework for the
Directors. It is consistent with that set out in the Prospectus and will be put to a binding shareholder vote
at the forthcoming AGM.
3. Annual Report on Remuneration – this sets out in detail the remuneration received by Directors for the
period under review and how the Policy will be applied in 2022. The Annual Report on Remuneration,
along with this statement, will be subject to an advisory shareholder vote at the AGM.
Remuneration in context
Hostmore was admitted to the official list of the London Stock Exchange shortly before the FY21 year end.
Prior to Admission, we undertook a detailed review of our remuneration framework to ensure that post
listing, it was aligned with best practice whilst at the same time preserving the core values of our business.
2021 was a challenging year for our sector, with the continued impact of COVID-19. The Company has
delivered well in a challenging set of circumstances with an encouraging EBITDA performance in the period.
Over the year, the management team has responded dynamically to the challenges presented, including
but not limited to the various restrictions in place throughout the year. The management team has worked
to ensure the continued operations of the business. Ensuring our customers’ and our colleagues’ safety
and well-being has been critical to the Group and remains a key priority over this difficult time. Despite the
challenges presented, the management team has continued to drive innovation and make strong progress in
the delivery of the Company’s strategy.
Remuneration for the period under review
The Remuneration Committee was established on 5 October 2021, shortly prior to Admission. The single
figure of remuneration for the period under review reflects base salary and pension. As disclosed in the
Prospectus (see pages 149 and 167 to 168 of the Prospectus), an annual bonus plan and a management
incentive plan operated prior to Admission. The annual bonus plan for the 53 week period ended 2 January
2022 terminated on Admission with bonuses payable by reference to performance up to Admission. The
management incentive plan crystallised upon the Company being demerged from Electra Private Equity PLC
which ultimately resulted in certain members of management subscribing for shares in the Company.
The implementation and operation of the annual bonus plan was determined by the board of directors of
Wednesdays (Bidco) Limited (a company that became a subsidiary of the Company as part of the Demerger
process) and the management incentive plan was determined by the board of directors of Mondays (Topco)
Limited, in each case in advance of Admission, rather than by the Remuneration Committee. Consequently,
whilst the annual bonus plan and the management incentive plan fall under the period of review, neither are
included for any purpose in the Directors’ Remuneration Report as they do not form part of the Policy and the
Remuneration Committee had no decision making or discretion in relation to these matters. No bonus was
received by the Directors in the period from Admission to the year end date of 2January 2022.
Shortly after Admission, long-term incentive awards in the form of Performance Shares Awards were granted
to the CEO and CFO. These Initial Performance Share Awards will vest three years after grant and are subject
to relative TSR, EPS and ROIC performance measures. These awards are subject to a two-year post-vesting
holding period. Malus and clawback provisions also apply. The transition of Hostmore to a listed company
has enabled us to broaden our colleague share ownership with awards under the scheme also granted to a
significant number of other employees down to restaurant manager level with, in general terms, awards at
executive management level being in the form of Performance Share Awards, awards at regional director level
68 Hostmore • Annual Report 2021
Chair of the Remuneration Committee continued
Annual Statement from the
being in the form of a combination of Performance Share Awards and Restricted Share Awards and awards at
heads of functional areas and other managers level generally being in the form of Restricted Share Awards.
Remuneration Policy and implementation for FY22
Our proposed Remuneration Policy (the “Policy”) is based on information detailed in the Company’s
Prospectus. The Policy is structured to align executive remuneration with the shareholder experience and
support the strategy of the Company, and its continued growth and success. It also recognises the importance
of attracting and retaining high-quality talent. In developing the Policy, account was taken of prevailing
market and best practices.
Implementation for FY22:
• The base salaries for the Executive Directors were set at Admission at £485,000 for the CEO and £340,000
for the CFO and will remain unchanged for the year ahead.
• Executive Directors receive a pension contribution of 3% of salary in line with the contribution percentage
available to the majority of the UK workforce.
• The maximum annual bonus payable is 125% of the relevant Executive Director’s salary. At least one-
third of any Executive Director’s annual bonus earned will be deferred into the Company’s shares and
must be held for three years if the Executive Director has not met a shareholding requirement of 300% of
salary. This year, the bonus will be assessed against: EBITDA performance (70%) and strategic measures
(30%) – see Annual Report on Remuneration for more details. The purposes of these metrics are detailed
under the heading “Our performance measures” below on page 69 and they are aligned to our 4D strategy
which is detailed on page 6. The Remuneration Committee has decided not to introduce a specific ESG
metric at this time, however, the Committee will keep this under review and consider the introduction of
such a metric for future years as the ESG strategy of the Company develops.
• Awards will be granted under the long-term incentive plan at 150% of salary, with three performance
metrics equally weighted – relative TSR, EPS and ROIC. The purposes of these metrics are detailed under
the heading “Our performance measures” below on page 69 and they are aligned to our 4D strategy which
is detailed on page 6. A two-year post-vesting holding period applies.
Pay and benefits of the wider Company
We promote a fair and equal pay structure that enables us to attract, retain and incentivise high performing
individuals to deliver our strategy. We also support the ambition to end low pay and champion a fair and
transparent service charge / TRONC / gratuities system. The Company believes it implements a progressive
pay structure to reflect career development.
During the period under review, the Committee did not directly consult shareholders on matters of
remuneration. In advance of Admission, details of the Policy were included in the Prospectus. The Committee
values feedback from its shareholders and looks forward to seeking a continued and open dialogue. Since
Admission, I have been appointed as the designated NED for the wider workforce. The Group operates an
Employee Forum which will be attended by myself (and the CEO) throughout 2022, where a range of topics
will be discussed. The Company also listens to its employees’ feedback and intends to conduct a colleague
engagement survey in 2022. The results of this survey and the discussions at the Employee Forum will be
considered by the Committee on a regular basis. The Company has also recently established a Diversity &
Inclusion Committee as part of its ongoing commitment to provide a supportive environment for colleagues
of all backgrounds.
The Committee’s key activities
The Committee’s key activities since formulation:
• agreement of the Committee’s terms of reference;
• agreeing remuneration packages and arrangements for senior employees;
• formulation of the Company’s first Remuneration Policy as a listed company; and
• implementing and making awards under the Company’s new share plans.
69Hostmore • Annual Report 2021
Governance report
Our performance measures
Performance measures are used to determine the extent of any awards made under the variable elements of
the executive directors’ remuneration, both annual bonus and LTIP. The performance measures are selected
because of their alignment to our strategy, their use as Key Performance Indicators (KPIs) to assess the
Company performance and to align the interests of the directors to those of the shareholders.
The measures currently used each fulfil a distinct purpose as set out below.
Measure Used in Purpose
EBITDA Annual bonus Maintain focus on annual profits and the Company’s
cash-generating ability
Expanding the business in line with the 4D
business strategy through organic growth
and M&A
Annual bonus Maintain focus on growing and broadening the Group’s
business and revenue
Banking facility covenant compliance Annual bonus Maintain focus on financial discipline
Utility cost mitigation Annual bonus Maintain discipline on managing utility costs
Relative total shareholder return (TSR) LTIP Directly measures shareholder returns in the Company
relative to the FTSE SmallCap (excluding Investment
Trusts). It provides alignment between executives and
shareholders
Adjusted earnings per share (EPS) LTIP Adjusted EPS is a key indicator of profitability growth
Return on Capital Employed (ROCE) LTIP ROCE is a key measure for assessing the Company’s
efficiency at allocating the capital under its control to
profitable investments
Conclusion
I would welcome any feedback or comments on the Policy and the Annual Report on Remuneration more
generally. I hope that you find the information in this report helpful and I look forward to your support at the
Company’s AGM.
Louise Stonier
Chair of the Remuneration Committee
5April2022
70 Hostmore • Annual Report 2021
Hostmore Remuneration Policy
This Directors’ Remuneration Policy (the “Policy”) will be submitted for approval at the 2022 Annual General
Meeting (“AGM”). It has been prepared by the Remuneration Committee (the “Committee”) in accordance
with the provisions of the Companies Act 2006 and Schedule 8 of the Large and Medium – sized Companies
and Groups (Accounts and Reports) (Amendment) Regulations 2008 as amended (the “Regulations”), the
UK Corporate Governance Code 2018 and the Financial Conduct Authority’s Listing Rules and takes into
account the accompanying Directors’ Reporting Guidance and the relevant guidelines of the shareholder
representative bodies. The Committee intends that the Policy will operate for three years, effective from the
date of the AGM.
The remuneration strategy of the Group is to provide remuneration packages that attract, retain and motivate
high-calibre talent to help ensure the Group’s continued growth and success, incorporating incentives that
align with and support the Group’s business strategy of optimising the Group’s brands, aligning those brands
with evolving consumer demands and delivering personalised customer engagement. The Policy is aligned to
the values and philosophies of the Company and is intended to incentivise and reward long-term sustainable
growth of the Company and is aligned to market best practice. The Company is committed to fairness in the
way that it pays all employees in relation to their skills, experience and performance and takes into account
the way the wider workforce is paid in setting executive pay. The Policy is consistent with the information
set out in the Company’s prospectus issued in connection with the admission of the Company’s ordinary
shares to the premium listing segment of the Financial Conduct Authority and to trading on the London Stock
Exchange plc’s main market for listed securities (“Admission”).
The Committee adopted the Policy taking into account the size of the Group (based on market capitalisation)
and practice in the hospitality sector. Whilst the Committee considers a peer group of FTSE SmallCap
companies of relevant size to be a suitable peer group, it recognises the importance of using benchmark data
as a useful reference point and not to rely solely on this to provide the answer.
Key principles of the Policy:
Principle How addressed
Clarity The Company operates a simple and transparent remuneration structure which allows clear
understanding by Executive Directors and external stakeholders.
Simplicity Remuneration for Executive Directors is comprised of distinct elements, with clear purposes and
links to the Group strategy.
Risk The Committee endeavours to structure remuneration arrangements to ensure that the risks
from excessive rewards are easily identified and mitigated. The Policy is designed to discourage
inappropriate risk taking through the weighting on long-term incentives.
Risk is taken account of by the Committee in the targets that are set, malus and clawback provisions,
and requirements for the Executive Directors to hold shares both in and after employment.
Predictability The Committee seeks to ensure that annual salary increases and changes to the operation of plans
are clearly disclosed and that the potential value of each year’s remuneration is also clearly disclosed
through the use of charts. The Committee has discretion over variable pay and can adjust any pay
outcomes that the Committee deems are inconsistent with the performance of the Company.
Proportionality The Committee seeks to provide a competitive remuneration package which will attract and retain the
highest calibre of executive and structure packages so that a significant proportion is performance
related and does not reward poor performance.
Alignment to
culture
The Committee sets the Executive Directors’ pay packages having had due regard to pay and
employment conditions in the wider workforce and so that they do not drive behaviours that are
inconsistent with the Company’s strategy and values. It also ensures that such behaviours are
properly aligned with personal performance, the performance of the Group, and the interests of
shareholders.
71Hostmore • Annual Report 2021
Governance report
Executive remuneration comprises a number of distinct elements, which are structured as follows:
Base salary
Purpose and link to strategy Operation Maximum Opportunity
Performance metrics and
assessment
To recruit and retain
Executive Directors of the
right calibre who are capable
of developing and delivering
the Group’s strategy, by
providing a competitive and
appropriate level of fixed pay.
Base salaries are reviewed
annually by the Committee
and any changes are normally
effective from 1st April each
year.
The review takes into account
several factors including (but
not limited to):
• business performance;
• size and scope of the
individual’s responsibilities;
• skills and experience of the
individual over time;
• pay and conditions
elsewhere in the Group -
including salary increases
awarded to the overall
employee population;
• market data for similar roles
and comparable companies;
and
• the overall economic
environment (including the
rate of inflation)
Whilst there are no
maximum salary
increases, the rate of
any salary increase
(in percentage terms)
will be broadly in line
with that of the wider
workforce.
Higher increases
may be made under
certain circumstances
at the Committee’s
discretion. For example,
this may include
significant changes in
responsibility, a change
of scope in a role, a
material sustained
change in the size and/
or complexity of the
Company or very strong
performance, meriting
base salary increases at
greater levels than that
of the wider workforce.
If pay is set at a discount
to the Company’s
normal policy on
appointment, it may be
appropriate to phase an
individual towards an
appropriate rate using
increases above those
of the wider workforce
based on performance
and experience.
No formal metrics, although
increases will take account of
Group performance.
72 Hostmore • Annual Report 2021
Hostmore Remuneration Policy continued
Benefits
Purpose and link to strategy Operation Maximum Opportunity
Performance metrics and
assessment
To provide market
competitive level of
benefits to support with the
recruitment and retention of
Executive Directors.
The Executive Directors receive
benefits which include, but are
not limited to, family private
health cover, life assurance
cover, critical illness cover and
a car allowance, together with
reimbursement of expenses
reasonably and properly
incurred in the performance of
their duties which are claimed in
accordance with the Company’s
expense reporting procedure.
These benefits are not
pensionable.
Travel and/or relocation or
the temporary provision of
accommodation may be offered
where the Company requires an
Executive Director to relocate.
Expatriate allowances may be
offered where required.
The Company may reimburse
any tax payable (on a grossed up
basis) on any business expense
which is determined to be a
taxable benefit.
Executive Directors may become
eligible for any new benefits
introduced to a wider set of
other Group employees, which
may include any tax approved
all-employee share plans.
The value of each benefit
is not predetermined
and is based upon the
cost to the Group.
The Committee aims to
review both the level of
benefits provided and
the overall cost of the
benefits on a periodic
basis.
Not performance related.
Pension
Purpose and link to strategy Operation Maximum Opportunity
Performance metrics and
assessment
To provide retirement
benefits in line with those
offered to the majority of the
workforce.
Contribution towards a
Group pension scheme and/
or a cash allowance in lieu of
Company pension contributions,
or a combination of both.
Pension contribution
rate in line with rate
applicable for the
majority of the UK
workforce (currently
3% of base salary).
Not performance related.
73Hostmore • Annual Report 2021
Governance report
Annual bonus
Purpose and link to strategy Operation Maximum Opportunity
Performance metrics and
assessment
To incentivise the
achievement of stretching
objectives that support the
Group’s corporate goals and
delivery of the strategy.
For any Executive Director
that has not met a
shareholding requirement
of 300% of salary, delivery
of a proportion of any
bonus into the Company’s
shares provides additional
alignment with the
Company’s shareholders.
The Committee sets
performance measures and
targets at the start of each
financial year and determines
the payment level after year-end
by reference to the measures
and targets.
At least one-third of any
Executive Director’s annual
bonus earned will be deferred
into the Company’s shares
and must be held for three
years if the Executive Director
has not met a shareholding
requirement of 300% of salary
(i.e. 150% of the in-employment
shareholding requirement
which is summarised below).
The remainder will be paid
in cash. Participants may be
entitled to receive dividend
equivalents which have accrued
during the period from grant to
the date the award vests (or if
there is a holding period to the
earlier of the date of exercise
and the end of the holding
period) on vested shares,
normally delivered in shares.
Malus and clawback provisions
apply (see notes).
The maximum bonus
opportunity is 125%
of base salary for each
Executive Director.
The pay-out under the annual
bonus will be determined
based on a range of: (i)
financial; and (ii) strategic
and/or personal objectives.
At least 70% of the annual
bonus will be based on
financial performance targets.
The Committee retains
the flexibility to vary the
performance measures and/or
weightings for future years.
Up to one-third of the
maximum is payable at
threshold performance
against each measure.
The Committee has the
discretion to adjust the pay-
out that would otherwise
result by reference to the
formulaic outcome alone,
taking into account corporate
and/or personal performance,
to ensure the pay-out is
consistent with the Group’s
overall performance during
the year and / or shareholder
experience over the period
or the performance of the
Executive Director in delivery
of the business strategy and
results.
74 Hostmore • Annual Report 2021
Hostmore Remuneration Policy continued
Long-Term Incentive Plan (“LTIP”)
Purpose and link to strategy Operation Maximum Opportunity
Performance metrics and
assessment
To incentivise the
achievement of long-term
sustainable growth and to
align Executive Directors
and senior employees with
the Company’s shareholders’
interests.
Normally, awards will be
made under the Company’s
LTIP annually following the
announcement of the annual
results apart from the first
award which was granted
shortly after Admission.
Discretionary annual award
which may be granted in the
form of nil-cost options or
conditional shares, and which
normally vest after three
years subject to performance
conditions and continued
service.
Performance is normally
measured over a period of
at least three financial years
(although the performance
period for two of the three
measures used for the awards
made shortly after Admission
(the EPS and ROIC measures)
will be measured to the end of
the financial year ending 31
December 2023).
Awards for Executive Directors
are subject to a two year post
vesting holding period in respect
of vested shares (net of sales for
tax and national insurance). The
two year holding requirement
will normally continue if they
leave employment during the
holding period.
Participants may also be entitled
to receive dividend equivalents
which have accrued during the
period from grant to the earlier
of the date of exercise and
the end of the holding period
on vested shares, normally
delivered in shares.
Malus and clawback provisions
apply (see notes).
Awards are subject to the
discretions contained in the
LTIP rules.
The normal maximum
grant level for an
Executive Director is
150% of base salary per
annum (based on the
closing market value of
the Company’s shares
on the day prior to grant
or an average of the
closing prices for a short
period prior to grant).
Awards are normally subject
to a combination of measures
which may include financial
and/or strategic measures
and/or total shareholder
return relative to the
constituents of a relevant
comparator index or peer
group.
25% of the maximum
award vests at the threshold
performance.
The Committee retains
the flexibility to vary the
performance measures and/or
weightings for current and/or
future awards.
75Hostmore • Annual Report 2021
Governance report
Shareholding requirements
Purpose and link to strategy Operation Maximum Opportunity
Performance metrics and
assessment
Share ownership
requirements for Executive
Directors are designed to
strengthen the alignment
between the interests of the
Executive Directors with
those of the Company’s
shareholders.
During employment
Executive Directors are required
to build and retain a holding
of the Company’s shares
equivalent to at least 200% of
their base salary.
Executive Directors will be
required to retain 50% of all
vesting Company shares that
they receive under the LTIP (net
of sales for tax and national
insurance) until the requirement
is achieved.
For the purposes of the share
ownership requirements,
deferred bonus shares and
shares under the LTIP which
have vested but are subject
to a holding period will count
towards these requirements, on
a net value basis.
After employment
The shareholding requirement
will continue to apply for
a period of two years after
cessation of employment, with
Executive Directors expected
to retain the lower of: (i) the
shareholding requirement (i.e.
the 200% requirement); and (ii)
the shares held at cessation of
employment.
200% of base salary. Not performance related.
Directors’ and officers’ liability insurance (“D&O Insurance”)
Purpose and link to strategy Operation Maximum Opportunity
Performance metrics and
assessment
Maintaining D&O Insurance
for Executive Directors is
designed to cover the cost of
defending civil and criminal
proceedings brought against
an individual acting in
their capacity as a Director
or Officer of the Company.
It, therefore, protects an
individual from claims which
result from that individual
carrying out his duties as a
Director.
The Company maintains D&O
Insurance to cover the cost of
defending civil and criminal
proceedings brought against
an individual acting in their
capacity as a Director or Officer
of the Company (including
those who served as Executive
Directors during 2021).
The benefit to a Director
is dependent on the
nature of the claim and
the limitations of the
D&O insurance policy.
Not applicable.
76 Hostmore • Annual Report 2021
Hostmore Remuneration Policy continued
Chair and Non-Executive Directors
Purpose and link to strategy Operation Maximum Opportunity
Performance metrics and
assessment
To attract and retain a high-
calibre Non-Executive Chair
and Non-Executive Directors
who have a broad range
of skills and experience to
oversee the implementation
of the Group’s strategy, by
providing a competitive fee
level.
The Non-Executive Chair
receives an all-inclusive fee.
Non-Executive Directors are
paid a base fee, with additional
fees paid to the Chairs of the
permanent Board Committees
and the Senior Independent
Director to reflect their extra
responsibilities.
An additional fee may also
be payable to reflect other
additional responsibilities.
Fees are reviewed annually by
the Committee for the Chair,
and by the Board for the Non-
Executive Directors.
The Chair and the Non-
Executive Directors do not
participate in any performance-
related incentive schemes, nor
do they receive pension or other
benefits from the Company.
The Company may reimburse
any tax payable (on a grossed up
basis) on any business expense
which is determined to be a
taxable benefit.
When reviewing
fee levels, account
is taken of market
movements in the fees
of the Non-Executive
Chair and Non-
Executive Directors,
Board Committee
responsibilities
and ongoing time
commitments.
The total amount of
the fees paid to all of
the Non-Executive
Directors (excluding
any remuneration for
special or additional
services) must not
exceed any amount
decided by the Company
by ordinary resolution.
Not performance related.
D&O Insurance
Purpose and link to strategy Operation Maximum Opportunity
Performance metrics and
assessment
Maintaining D&O Insurance
for Non-Executive Directors
is designed to cover the
cost of defending civil
and criminal proceedings
brought against an individual
acting in their capacity as
a Director or Officer of the
Company. It, therefore,
protects an individual from
claims which result from that
individual carrying out his
duties as a Director.
The Company maintains D&O
Insurance to cover the cost of
defending civil and criminal
proceedings brought against
an individual acting in their
capacity as a Director or Officer
of the Company (including those
who served as Non-Executive
Directors during 2021).
The benefit to a Director
is dependent on the
nature of the claim and
the limitations of the
D&O insurance policy.
Not applicable.
77Hostmore • Annual Report 2021
Governance report
Notes to the Policy table
Performance conditions
The Committee aims to ensure that the performance measures for the annual bonus and LTIP represent
an appropriate balance between the short-term and long-term performance of the Group, with measures
aligned to the Company strategy and key performance indicators. At the beginning of each award cycle, the
Committee reviews and selects the most appropriate performance measures, considering the key priorities
of the Group at the time over both the short and long-term. The Committee sets stretching but achievable
targets for both financial and non-financial measures. Details are included in the Company’s annual report
and accounts each year, subject to limitations with regards to commercial sensitivity for the annual bonus
(where general terms will be provided), and the full details disclosed following the end of the financial year
in the Company’s next annual report and accounts, again, subject to limitations with regards to commercial
sensitivity for the annual bonus (if appropriate).
Malus and Clawback
Malus and clawback can be applied within three years of an LTIP award vesting or annual bonus payment
as determined at the discretion of the Committee. These provisions may be applied in the following
circumstances:
(i) material financial misstatement;
(ii) significant reputational damage;
(iii) negligence or gross misconduct by a participant;
(iv) fraud effected by or with the knowledge of a participant;
(v) breach of anti-bribery or anti-corruption laws by a participant;
(vi) material corporate failure; or
(vii) where awards were granted or vested based on erroneous or misleading data.
Committee Discretions
The Committee operates under the powers it has been delegated by the Board. The Committee operates
the variable incentive plans in accordance with the relevant plan rules, the Listing Rules and applicable
legislation where relevant. Within the plan rules, the Committee retains a number of discretions to ensure
effective operation of the plans. These discretions are standard market practice and include (but are not
limited to) the following:
• Selecting the participants in the incentive plans;
• Determining the timing of grants of awards and/or payments;
• Determining the quantum of awards and/or payments (within the limits set out in the Policy and rules of
each plan);
• Determining the choice of (and adjustment of) performance measures and targets for each incentive plan
in accordance with the Policy and rules of each plan;
• Determining the extent of vesting based on the assessment of performance;
• Overriding formulaic annual bonus outcomes, and LTIP vesting outcomes, taking account of overall or
underlying Company performance;
• Determining whether and to what extent dividend equivalents should apply to awards;
• Determining whether malus and clawback shall be applied to any award in the relevant circumstances
and, if so, the extent to which they shall be applied;
78 Hostmore • Annual Report 2021
Hostmore Remuneration Policy continued
• Making appropriate adjustments required in certain circumstances, for instance for changes in capital
structure (or any similar corporate event);
• Application of the holding period;
• Determining “good leaver” status for incentive plan purposes and applying the appropriate treatment; and
• Undertaking the annual review of weighting of performance measures and setting targets for the annual
bonus plan and LTIP awards from year to year.
If an event occurs which results in the annual bonus plan or the LTIP performance conditions and/or the
targets being deemed no longer appropriate (e.g. material acquisition or divestment), the Committee will have
the ability to adjust appropriately the measures and/or targets and alter weightings, provided that the revised
conditions are not materially less challenging than the original conditions. In addition, the Committee may
exercise its discretion in order to make such other non-material decisions affecting the Executive Directors’
awards in order to facilitate the plans. Any use of the above discretion would, where relevant, be explained in
the Company’s annual report on remuneration of Directors.
Legacy Arrangements
Any commitments entered into by the Group on pay and bonus arrangements prior to the approval and
implementation of the Policy outlined above may be honoured, even if they are not consistent with the
Policy prevailing at the time the commitment is fulfilled. This may include commitments to future Executive
Directors where the terms were agreed prior to (and not in contemplation of) promotion to Executive Director,
which includes satisfying awards of variable remuneration based on the terms agreed at the time the award
was originally granted.
Illustration of the Policy
The chart below sets out the potential values (£’000) of the remuneration package of the Executive Directors
for FY22 under various performance scenarios.
100% 43% 27% 23%
100% 43% 27% 23%
26%
33% 28%
26%
33% 28%
31%
40%
49%
31%
40%
49%
£502
£1,168
£1,835
£2,199
£351
£819
£1,286
£1,541
£0
£500
£1,000
£1,500
£2,000
£2,500
Minimum Target Maximum Max with
50% share
price growth
for LTI
Minimum Target Maximum Max with
50% share
price growth
for LTI
Chief Executive Officer Chief Financial Officer
Remuneration (£000s)
Fixed pay Annual bonus Long-term incentives
Notes
• Salary represents annual salary for FY22
• Benefits have been included based on the anticipated value of benefits in FY22
79Hostmore • Annual Report 2021
Governance report
• Pension represents the value of the annual pension of 3% of salary contributed by the Company
• Minimum: Fixed pay only (salary, benefits and pension)
• Target performance: Fixed pay, annual bonus at 50% of maximum (62.5% of salary) and LTIP of 50% of
face value (75% of salary)
• Maximum performance: Fixed pay, maximum annual bonus (125% of salary) and maximum face value of
LTIP (150% of salary)
• Maximum with share price growth: as above plus an assumed increase of 50% in the value of the LTIP
award to take account of potential share price appreciation.
Service contracts and loss of office arrangements
The Executive Directors have a service contract requiring 6 months’ notice on termination from either party:
Executive Director Date of service contract Notice period
Robert B. Cook 15 October 2021 6 months
Alan Clark 15 October 2021 6 months
New Executive Directors appointed internally will be appointed on service contracts that have a notice period
of not more than six months for both the Company and the individual. In cases of external hires, the initial
notice period may be up to 12 months, reducing to no more than 6 months after not more than 12 months.
Under the terms of his contract, the CEO will be reimbursed for all weekly travel expenses between
Northumberland and London, all travel expenses between Northumberland and Edinburgh and hotel
expenses for up to four nights’ accommodation in London per week and up to two nights’ accommodation
in Edinburgh per week on average (measured in each case over a calendar year) at pre-agreed rates and/or
hotels.
The Group’s policy on remuneration for Executive Directors who leave the Group is set out below and is
consistent with general market practice. The Group does not tolerate reward for failure. The Committee’s
policy for Executive Directors’ termination payments is to provide only what would normally be due to
Executive Directors had they remained in employment in respect of the relevant notice period, and not to
go beyond their normal contractual entitlements. The rules of the annual bonus plan and the LTIP contain
provisions setting out the treatment of awards where a participant ceases to be employed by the Group. For
both annual bonus and LTIP awards, the Committee has the discretion to determine whether an Executive is a
good or bad leaver.
Remuneration element Approach
Fixed pay (salary,
benefits and pension)
Paid for the proportion of notice period worked.
The Company may at its discretion terminate the contract immediately, at any time after
notice is served, by making a payment in lieu of notice equivalent to salary, benefits (insurance
benefits and car allowance) and pension. Any such payments will normally be paid in
monthly instalments over the remaining notice period and be reduced by earnings from other
employment.
For summary dismissal, no notice will be given and no payment in lieu of notice is payable.
Annual bonus (in year) Bad leavers (typically due to resignation or summary dismissal) will not be eligible to receive a
pay-out under the annual bonus scheme.
Good leavers may receive an annual bonus payment, which will normally be subject to the
satisfaction of the relevant performance criteria tested at the normal date and, ordinarily, the
outcome will be calculated on a time pro-rata basis to date of departure. The Committee retains
discretion on whether the whole bonus payable is paid in cash, or whether part of it is deferred
either in cash or shares.
Annual bonus (unvested
deferred shares)
For bad leavers, awards will lapse.
For good leavers, shares will ordinarily vest on the normal vesting date.
80 Hostmore • Annual Report 2021
Hostmore Remuneration Policy continued
LTIP For bad leavers, unvested awards will lapse.
For good leavers, awards will normally be retained by the Executive Director and remain
subject to the relevant performance conditions (normally over the full performance period).
Ordinarily, the outcome will be calculated on a time pro-rata basis and vest at the normal
vesting date.
The Committee may, at its discretion, allow unvested awards to vest at an earlier date,
having regard to the achievement of performance conditions to that date and the period of
time that has passed since the date of grant. The Committee may choose to apply no, or a
reduced, reduction in the amount vesting if it is considered appropriate given the particular
circumstances.
Other payments The Committee may pay reasonable outplacement and legal fees where considered
appropriate. The Committee may also pay any statutory entitlements or settle or compromise
claims in connection with a termination of employment, where considered in the best interests
of the Company.
In the event of a change of control or similar event, awards may vest early subject to performance and,
normally, any bonus or LTIP would be subject to pro-rating on a time apportioned basis. The Committee may
at its discretion determine that Awards shall not be subject to time pro-rating or be subject to pro-rating
to a lesser extent if it considers it appropriate in the circumstances. Alternatively, following an internal
reorganisation which results in a change of control, awards may be rolled over into awards in the acquiring
company.
Non-Executive Director terms of appointment
Each Non-Executive Director has specific terms of engagement which are terminable on not less than three
months’ notice by either party, including the Chair. Each Non-Executive Director’s appointment will continue
for an initial three-year term, subject to annual re-election at each AGM. The appointment letters state that
Non-Executive Directors are typically expected to serve two three-year terms but may be invited by the
Board to serve for an additional period. The remuneration of Non-Executive Directors is determined by the
Board within the limits set by the Articles of Association and based on a review of fees paid to Non-Executive
Directors of similar sized companies. The dates of appointment of each of the Non-Executive Directors
serving at 31 December 2021 are summarised in the table below.
Non-Executive Director Date of appointment
Neil Johnson 23 August 2021
David Lis 18 August 2021
Gavin Manson 17 August 2021
Jane Bednall 20 September 2021
Andrew Blurton 17 August 2021
Louise Stonier 20 August 2021
81Hostmore • Annual Report 2021
Governance report
Recruitment of Directors – approach to remuneration
Consistent with market practice, remuneration packages for any new appointments to the Board (including
those promoted internally) will be set in line with the Policy.
Remuneration
element
Approach
Base salary In setting base salaries for new Executive Directors, the Committee will consider the individual’s level
of skills and experience. Where it is appropriate to offer a below market salary on initial appointment,
the Committee will have the discretion to allow phased salary increases over a period of time for a
newly appointed Executive Director up to an appropriate salary for the appointment, even though this
may involve increases in excess of those awarded to the wider workforce.
Benefits In line with the Policy table above. For both external and internal appointments, the Committee may
consider it appropriate to pay reasonable relocation or incidental expenses, including payment of
reasonable legal expenses. This will ordinarily be for a reasonable but fixed period of time and will be
disclosed on appointment. Tax equalisation may be considered if an Executive Director is adversely
affected by taxation due to their new employment with the Group.
Pension In line with the wider workforce.
Annual Bonus In line with the Policy table and will be pro-rated in the year of joining to reflect the period of service.
In setting the annual bonus, the Committee may set different performance metrics (to those of other
Executive Directors) in the first year of appointment.
LTIP Grants in line with the Policy table. Subject to the absence of inside information and the Company not
being in a closed period, an award may be made shortly after Appointment.
Buyout awards For external appointments, the Committee recognises that it may need to provide compensation for
forfeited awards from the individual’s previous employer. To the extent possible, the design of any
buyout will be made on a broadly like-for-like basis and shall be no more generous than the terms
of the incentives they are replacing, taking into account the performance conditions attached to the
vesting of the forfeited incentives, the timing of vesting and the likelihood of vesting. Share-based
awards would be made using the existing share plans, where possible, although the Committee may
also use the flexibility provided under the Listing Rules to make awards without prior shareholder
approval.
For an internal appointment, any variable pay element or benefit awarded in respect of their prior role may
be allowed to continue on its original terms.
The terms of appointment for a new Non-Executive Director will be in accordance with the Policy for Non-
Executive Directors as set out in the Policy table.
Executive Directors’ external appointments
Executive Directors may accept external appointments as Non-Executive Directors of other companies, as
long as the companies concerned are not competitors of the Group, the appointment will not adversely affect
the performance of the Executive Director for the Company, and with the specific prior approval of the Board
in each case. Any fees receivable may be retained by the Executive Director concerned.
How shareholders’ views are taken into account
The Committee considers the views of shareholders when reviewing the remuneration of Executive Directors
and other senior executives and takes into account published remuneration guidelines and the specific views
of shareholders and proxy agencies. The Committee will consult with the Company’s key shareholders when
considering significant changes to the implementation of the Policy and when the Policy is being reviewed
(typically ahead of an AGM binding vote on the Policy). The Committee will consider shareholder feedback
received before and after an AGM. The Committee values feedback from its shareholders and seeks to
maintain a continued, open dialogue.
82 Hostmore • Annual Report 2021
Hostmore Remuneration Policy continued
Broader employee context – consideration of employment conditions
elsewhere in the Group
In accordance with the Committee’s terms of reference, the Committee reviews the pay and conditions below
the Executive Director level. The Company aims to provide a market competitive package to all employees
and the Committee considers executive remuneration in the context of the wider employee population. As
part of the annual salary review, the Company takes into account current and future requirements (including
the National Minimum Wage and the National Living Wage).
The Remuneration Policy for Executive Directors is more weighted towards variable pay than for other
employees, with a greater part of their pay therefore at risk to them and conditional on the successful delivery
of the Company’s business strategy. The LTIP is operated for a significant number of employees below the
Executive Directors and a significant number of the Group’s salaried employees participate in the annual
bonus. A lower aggregate level of incentive payment applies below Executive Director level, driven by market
comparatives, internal relativities and the potential impact of the role.
Whilst employees are not directly consulted on matters of remuneration policy, the Committee will ensure
there is appropriate forum to discuss any remuneration matters which should be taken into account as part of
its annual cycle. The Group operates an Employee Forum which is attended by Louise Stonier in her capacity
as the independent Non-Executive Director for workforce engagement on behalf of the Company, and the
CEO. This ensures that the employee voice is heard directly by the Committee. Employee engagement scores
and other internal surveys are also considered by the Committee.
Minor amendments
The Committee may make minor amendments to the Policy set out above (for regulatory, exchange control,
tax or administrative purposes or to take account of a change in legislation) without obtaining shareholder
approval for that amendment.
83Hostmore • Annual Report 2021
Annual Report on Remuneration
Governance report
This is the annual report which explains the remuneration arrangements for the period under review, and
how the Directors’ Remuneration Policy (the “Policy”) will be implemented for the year ahead. The sections of
this part of the report which are subject to audit have been highlighted.
Role and responsibility
The Committee is formally constituted and operates on written terms of reference, which are available on
the Company’s website. The role of the Committee is to determine the remuneration policy and individual
packages for the Chair of the Company, Executive Directors and other designated members of senior
management including the General Counsel and Company Secretary. The remuneration of the Non-Executive
Directors is determined by the Board Chair and Executive Directors. When determining these arrangements,
the Committee will take into account all factors which it deems necessary including workforce remuneration
and related policies and the alignment of incentives and rewards with culture. The Committee seeks to ensure
alignment to the Company’s purpose and values and the link to the successful delivery of the Company’s long-
term strategy and long-term shareholder interests. The Committee is also responsible for reviewing overall
workforce remuneration and related policies including gender pay gap, the CEO pay ratio and minimum
wage.
Remuneration Committee membership
The Committee was formed shortly before Admission and, save for Gavin Manson (who is considered to be a
non-independent Non-Executive Directors), consists entirely of independent Non-Executive Directors. The
Committee members are as follows:
• Louise Stonier (Chair)
• Jane Bednall
• Andrew Blurton
• Gavin Manson
The Committee must comprise of at least three members and, unless the Board approves otherwise, all
members must be independent, Non-Executive Directors of the Company. The chair of such committee
should have previously served on a remuneration committee for at least 12 months. Louise Stonier is
the chair of the Remuneration Committee, notwithstanding that Louise has not previously served on
a remuneration committee for a period of at least 12 months. Louise has previously been extensively
involved with the remuneration committee of Pets at Home Group PLC as Chief People and Culture Officer
and previously as Group Legal Director and Company Secretary and hence the Company believes she has
sufficient relevant experience to perform this role. Gavin Manson, despite not being an independent Non-
Executive Director, sits on the Company’s Remuneration Committee. Whilst the inclusion of Gavin Manson is
not consistent with the recommendations of the UK Corporate Governance Code (i.e. that all members of the
Remuneration Committee be independent), the board of directors considers that the financial experience that
Gavin brings, including in the hospitality and travel sectors, as well as his general knowledge of the Group
and its history, merits his inclusion on the Remuneration Committee. The UK Corporate Governance Code
also provides that the chair of the board can only be a member of the remuneration committee if they were
independent on appointment. Assuming that he is elected as a Director at the AGM, Gavin Manson will not be
independent on appointment as Chair of the Board and, accordingly, intends to step down as a member of the
Remuneration Committee upon assuming the role of Chair of the Board. This will also bring the Company into
line with the recommendation of the UK Corporate Governance Code that all members of the Remuneration
Committee be independent.
The Committee met once from Admission to year end, with all members in attendance.
Advice to the Committee
Wholly independent and objective advice on executive remuneration and share schemes is received from
the Executive Compensation practice of Alvarez & Marsal (A&M) who were appointed by the Company shortly
prior to Admission following a competitive tendering process. The Company selected A&M on the basis of
their skill set, pricing and fit. The decision to appoint A&M was ratified by the Remuneration Committee in
advance of Admission. A&M is a member of the Remuneration Consultants’ Group and is a signatory to its
84 Hostmore • Annual Report 2021
Annual Report on Remuneration continued
Code of Conduct. During the year, A&M did not provide any other services to the Company except in relation
to senior management remuneration matters and share plans. Fees charged by A&M for advice provided to
the Committee amounted to £145,888 (excluding VAT) charged on a time and materials basis. This includes
work prior to Admission, including the design of the Policy, implementation of the long-term incentive plan
and the establishment of the Employee Benefit Trust.
In addition, the Committee consults the CEO with regard to the remuneration and benefits offered to the
Group’s Executive Team (other than in relation to his own remuneration) and also receives input from Karen
Barnard, the People & Culture Director.*
* Please note that Karen Barnard is not a statutory director of Hostmore plc.
Single figure of remuneration for the period from 14 April 2021 to 2 January
2022 (audited)
The table covers the period from 14 April 2021 (being the date of the Company’s incorporation) to 2 January
2022. No prior year comparison is included as the Company was not listed at that time. Whilst the table
covers the aforementioned detailed period, it only details remuneration from the Relevant Date to 2 January
2022. The “Relevant Date” for these purposes is: (i) in the case of the Executive Directors, 5 October 2021
(being the date upon which the Company’s subsidiary, Hostmore Group Limited, acquired the beneficial
interest in the issued, voting share capital of Wednesdays (Bidco) Limited); and (ii) in the case of the Non-
Executive Directors, the date upon which the relevant individual was appointed as a Non-Executive Director
of the Company pursuant to his or her letter of appointment (as detailed in the table below).
As explained in note 2.12 to the financial statements, the Company undertook a corporate reorganisation
during the 53week period ended 2January 2022. The corporate reorganisation has been accounted for using
the principles of predecessor accounting which means that although the Group as currently comprised did
not exist before the date of its implementation, the consolidated financial statements have been presented
as if the Group had been in existence for the two full years concerned. The effect of this on disclosure of
Directors’ remuneration is that the information detailed below covers the remuneration received by Directors
from the Relevant Date (as defined above), whereas Directors’ remuneration in the financial statements
includes the remuneration received in each of the two financial years ended 2January 2022.
£000s Relevant Date
Salary
and fees Benefits
1
Pension
2
Annual
bonus
3
LTIP
4
Total
fixed
remuner-
ation
Total
variable
remuner-
ation
Total
remuner-
ation
Executive Directors
Robert B. Cook 5 October 2021 107 0 5 0 0 112 0 112
Alan Clark 5 October 2021 76 0 3 0 0 79 0 79
Non-Executive Directors
Neil Johnson
5
23 August 2021 25 0 0 0 0 25 0 25
Jane Bednall
20 September
2021 14 0 0 0 0 14 0 14
Andrew
Blurton 17 August 2021 23 0 0 0 0 23 0 23
David Lis 18 August 2021 26 0 0 0 0 26 0 26
Gavin Manson
5
17 August 2021 8 0 0 0 0 8 0 8
Louise Stonier 20 August 2021 22 0 0 0 0 22 0 22
1 This is the taxable value of benefits paid or payable in respect of the period from the Relevant Date to 2 January 2022. These benefits
typically relate to death, disability and medical insurance.
2 Executive Directors are entitled to receive a pension allowance of 3% of salary. The pension figures represent the cash amount of the
pension allowance taken in lieu of contributions to the Group’s pension plan.
85Hostmore • Annual Report 2021
Governance report
3 Legacy pre-Admission bonus – As explained in the Committee Chair’s statement, the legacy bonus arrangements were agreed by
the then board of directors of Wednesdays (Bidco) Limited pre-Admission and do not form part of the Policy. As disclosed in the
Prospectus (see page 149 of the Prospectus), the annual bonus plan for the 53week period ended 2 January 2022 terminated on
Admission with bonuses payable by reference to performance up to Admission. Robert B. Cook and Alan Clark received a gross bonus
of £180,000 and £86,250, respectively, under the then annual bonus plan. The legacy pre-Admission bonus is not included in any of
the figures given in this Directors’ Remuneration Report.
4 Legacy pre-Admission LTIP – As explained in the Committee Chair’s statement, the legacy LTIP arrangements were agreed by the
board of directors of Mondays (Topco) Limited pre-Admission and do not form part of the Policy. As disclosed in the Prospectus (see
pages 167 to 168 of the Prospectus), a management incentive plan operated prior to Admission. The management incentive plan
crystallised upon the Company being demerged from Electra Private Equity PLC which ultimately resulted in all plan participants,
including the Executive Directors, utilising the full proceeds of the award crystallisation to subscribe for shares in the Company. All
plan participants subscribed for shares in the Company at a price of 178p per share. In terms of the Executive Directors, this resulted
in Robert B. Cook and Alan Clark subscribing for 3,360,662 and 2,421,518 ordinary shares in the Company, respectively. The legacy
pre-Admission LTIP is not included in any of the figures given in this Directors’ Remuneration Report.
5 Fees payable to Neil Johnson and Gavin Manson were paid to Electra Private Equity PLC in the period under review and until they
stepped down from their executive roles with that company on 31 January 2022.
Annual bonus (audited)
As disclosed in the Prospectus (see page 149 of the Prospectus), the then annual bonus plan terminated on
Admission with bonuses payable by reference to performance up to Admission.
LTIP awards vesting during the year (audited)
As disclosed in the Prospectus (see pages 167 to 168 of the Prospectus), the management incentive plan
agreed by the board of directors of Mondays (Topco) Limited and operated by Wednesdays (Bidco) Limited
crystallised on the occurrence of a “Parent Company Exit Event” (i.e. when Hostmore plc was demerged
from Electra Private Equity PLC on 1 November 2021, the day before Admission). Details of the plan can be
found in the Prospectus. The value of the loan notes received by the CEO and CFO in return for their shares in
Wednesdays (Bidco) Limited which were then used to subscribe for shares in the Company is shown in Note 4
to the single figure table.
LTIP awards granted during the year (audited)
Shortly after Admission, the Executive Directors were granted Initial Performance Share Awards under the
LTIP scheme (which was approved by Electra Private Equity PLC shareholders on 1 November 2021).
Director
Type of
award Date of grant
Number
of options
awarded
Basis of the
award
% of salary
Share price
used to
determine
level of
award
pence per
share
1
Face value
£
% that vests
at threshold Vesting date
Robert B. Cook LTIP - Initial
Performance
Share Award
17 November
2021 639,136 150% 113.83p £727,500 25%
17 November
2024
2
Alan Clark LTIP - Initial
Performance
Share Award
17 November
2021 448,054 150% 113.83p £510,000 25%
17 November
2024
2
1 Based on the Company’s average closing share price from the date of listing to the dealing date prior to the date of grant. The share
price on the date of grant was 109.5p.
2 Following vesting, the awards are subject to a two-year holding period.
The Initial Performance Share Awards are subject to the following performance conditions. As the awards
were granted shortly after Admission, the measurement period for the performance conditions varies.
For awards granted at the normal time each year following the announcement of the annual results, the
Committee expects performance conditions to be measured over three financial years.
86 Hostmore • Annual Report 2021
Annual Report on Remuneration continued
Measure Measurement basis
Proportion of
total award
Threshold
(25% vests)
Maximum
(100% vests)
Relative TSR Company TSR v’s FTSE SmallCap (excluding
Investment Trusts) from date of grant to 3rd
anniversary of date of grant One-third Median Upper quartile
EPS Underlying fully diluted EPS for FY 2023 One-third 12.63p 15.43p
ROIC Average ROIC for FY 2022 and FY 2023 One-third 4.5% 5.5%
Payments made for loss of office and payments to past Directors (audited)
No payments for loss of office or payments to past Directors were made during the period under review.
Directors’ shareholdings and share interests (audited)
Details of the Directors’ interests in shares are shown in the following table. Executive Directors are required
to build and retain a holding of the Company’s shares equivalent to at least 200% of their base salary. Vested
but unexercised Performance Share Awards and unvested deferred bonus awards will count towards the
shareholding requirement on a net of tax basis. The shareholding requirement will continue to apply for
a period of two years after cessation of employment, with Executive Directors expected to retain the lower
of: (i) the shareholding requirement (i.e. the 200% requirement) and; (ii) the shares held at cessation of
employment.
Beneficially
owned as at
2 Jan 2022
Subject to
continued
employment
Unvested
options
subject to
performance
conditions
Vested but
not
exercised
options
Shareholding
requirement
Shareholding
as a
percentage
of salary
Shareholding
requirement
met?
Robert B. Cook 3,360,662 − 639,136 − 200% 806% YES
Alan Clark 2,421,518 − 448,054 − 200% 828% YES
Neil Johnson 769,671 N/A N/A N/A N/A N/A N/A
Jane Bednall 0 N/A N/A N/A N/A N/A N/A
Andrew Blurton 0 N/A N/A N/A N/A N/A N/A
David Lis
1
130,500 N/A N/A N/A N/A N/A N/A
Gavin Manson 1,465,758 N/A N/A N/A N/A N/A N/A
Louise Stonier 0 N/A N/A N/A N/A N/A N/A
1 Includes 15,000 shares held by Mrs P.M. Lis
There were no changes to the Directors’ interests between 2 January 2022 and 5April 2022.
87Hostmore • Annual Report 2021
Governance report
Performance graph and table
This graph shows the value of £100 invested in Hostmore compared with the value of FTSE Small Cap
(excluding Investment Trusts) since Admission until 2 January 2022. This index has been selected as it
comprises companies of a comparable size and complexity and provides a good indication of Hostmore’s
relative performance.
0
20
40
60
80
100
120
02/11/2021 02/12/2021 02/01/202
2
Hostmore FTSE Small Cap Excluding Investment Trusts
Total shareholder return
As 2 January 2022 was a non-trading day, data is shown as at the last close (i.e. 31 December 2021).
2021
CEO single figure total remuneration (£000) 112
Annual bonus (as % of maximum opportunity) N/A
Long-term incentive plan (as % of maximum opportunity)
1
N/A
1 There was no maximum value to the management incentive plan in place prior to Admission
Percentage change in Directors’ and employee remuneration (audited)
As this is the first year of reporting Directors’ remuneration, there is no prior year comparison to disclose.
Such disclosure will be included in next year’s report.
CEO pay ratio (audited)
The following table shows the ratio between the total remuneration of the CEO and the median total
remuneration of our UK employees. Employee total remuneration has been calculated using “Option A” of the
regulations.
Method
25th
percentile
pay ratio
50th
percentile
pay ratio
75th
percentile
pay ratio
2021 Option A 27:1 20:1 19:1
88 Hostmore • Annual Report 2021
Annual Report on Remuneration continued
The above ratio has been calculated using the single figure for the CEO and the following statistics for our UK
employees:
CEO
25th
percentile
50th
percentile
75th
percentile
Total salary £106,958 £4,105 £5,500 £5,758
Total remuneration (single figure) £112,204 £4,105 £5,500 £5,851
The above table sets out the ratios of the CEO single total figure of remuneration to the equivalent pay for the
lower quartile, median and upper quartile UK employees (calculated on a full time equivalent basis) from the
Relevant Date (being, in the case of the CEO, 5 October 2021) to 2 January 2022.
The ratio has been calculated using Option A under which a single total figure of remuneration is derived for
each employee and the quartiles analysed. The total remuneration figure; comprising base salary, benefits,
pension, bonus and long-term incentives and any one-off payments. All UK employees were ranked by their
total remuneration. From this the three individuals at the 25th, 50th and 75th percentiles were identified. The
median ratio is consistent with Hostmore’s pay, reward and progression policies for employees which relate
pay levels to performance and market benchmarks. Under our policy, in-line with practice in our sector the
extent to which total pay is dependent on performance is linked to seniority, with more senior roles having
higher levels of variable remuneration ensuring their pay is more dependent on company performance and
has the greatest alignment with shareholders. As such, we expect the ratio to vary significantly in future
years, as the single figure for the CEO does not include any variable pay this year.
Relative importance of the spend on pay (unaudited)
The table below shows the Company’s expenditure on employee pay compared to distributions to
shareholders from 5 October 2021 (being the date upon which the employees became part of Hostmore’s
group) to 2 January 2022. As this is the first year of reporting Directors’ remuneration, there is no prior year
comparison to disclose. Such disclosure will be included in next year’s report.
2021
£m
Distributions to shareholders 0
Total employee pay 18.927
External appointments
Robert B. Cook is a Director of three family run companies. He is entitled to retain fees in respect of these
company directorships however no fees were payable for the period under review.
Statement of shareholding voting
This is the first Policy and Directors’ Remuneration Report submitted to shareholders. The voting results
at the forthcoming AGM will be announced shortly after the AGM and presented in the Annual Report on
Remuneration for FY22.
89Hostmore • Annual Report 2021
Governance report
Implementation of Policy in FY22
Executive Directors
Implementation for FY22 is consistent with the Policy as outlined earlier in this report.
Element Operation
Base salary • Base salaries remain unchanged:
º CEO: £485,000
º CFO: £340,000
Benefits and pension • Executive Directors will receive a cash allowance in lieu of pension contribution of
3% of salary in line with the contribution percentage available to the majority of the
UK workforce.
• Other benefits include private health cover, life assurance cover, critical illness
cover, D&O insurance and a car allowance, together with reimbursement of
expenses (including travel and accommodation expenses for the CEO)
Annual bonus plan • Maximum opportunity is 125% of the relevant Executive Director’s base salary
• At least one-third of any Executive Director’s annual bonus earned will be deferred
into the Company’s shares and must be held for three years if the Executive Director
has not met a shareholding requirement of 300% of salary
• Metrics and weightings are as follows:
º EBITDA - 70%. EBITDA is to be measured vs the Company’s budget with:
Threshold (at which 33.3% of this element is payable) set at 95% of budget
Maximum (at which 100% of this element is payable) set at 105% of budget
The bonus is payable on a straight-line basis between threshold and maximum
as a result of which 66.7% would be payable for achieving budget.
º Strategic measures - 30%
For the CEO, these comprise key objectives relating to organic growth and
M&A activities.
For the CFO, these comprise key banking measures and energy negotiation
objectives.
An EBITDA underpin applies such that nothing is payable under the
strategic measures if the threshold EBITDA target is not met
• The specific targets are considered to be commercially sensitive and will be
retrospectively disclosed in next year’s Annual Report.
• Malus and clawback provisions apply in line with the Policy
90 Hostmore • Annual Report 2021
Annual Report on Remuneration continued
Long-term incentive plan • The Committee intends to grant awards immediately following the annual results of
150% of base salary for each of the Executive Directors
• Metrics and weightings are as follows:
Measure Measurement basis
Proportion
of total
award
Threshold
(25% vests)
Maximum
(100% vests)
Relative TSR Company TSR v’s FTSE
SmallCap (excluding
Investment Trusts)
One-third Median Upper
quartile
EPS Underlying fully diluted EPS
for FY 2024
One-third 11.90p 14.54p
ROIC Average ROIC for FY 2022,
FY 2023 and FY 2024
One-third 4.4% 5.4%
• Performance will be measured over three financial years to FY24
• The awards will be subject to a two-year post-vesting holding period
• Malus and clawback provisions apply in line with the Policy
Non-Executive Director fees
The fees for the Non-Executive Directors remain unchanged from Admission:
Fee
Chair of the Board £150,000
Non-Executive Director base fee £50,000
Senior Independent Director £20,000
1
Chair of Board Committee (other than the Chair of the Board) £10,000
1 This will be reduced to £10,000 once a Chair is appointed who is considered to be Independent under the UK Corporate Governance
Code.
This report was approved on behalf of the Board of Directors.
Louise Stonier
Chair of the Remuneration Committee
5April2022
91Hostmore • Annual Report 2021
Directors’ Report
Governance report
Introduction
The Directors present their report and audited financial statements for the 53 week period ended 2 January
2022. Information required to be part of the Directors’ Report either by statute, by Listing Rule 9.8.4R or by
the Disclosure and Transparency Rules can be found either in this section or elsewhere in this document,
as indicated in the table below. All information located elsewhere in this document is incorporated into this
Directors’ Report by reference:
Disclosure Location
Environmental impact Strategic Report – pages 14 to 17
Greenhouse gas emissions Strategic Report – pages 18 to 19
Future business developments Strategic Report – pages 6 to 9
Financial risk management objectives and policies
(including hedging policy and use of financial instruments)
Note 29 to the Financial Statements – pages 147 to 149
Exposure to price risk, credit risk, liquidity risk and cash
flow risk
Details can be found on pages 38 to 39 of the Strategic
Report and Note 29 to the Financial Statements
Section 172 Statement Strategic Report – pages 20 to 25
Stakeholder engagement in key decisions Strategic Report – pages 20 to 25
Directors’ responsibility statement Page 98
Directors’ interests Directors’ Remuneration Report – page 86
Details of long-term incentive schemes Directors’ Remuneration Report – pages 69, 74 to 75, 77 to
80 and 85
Corporate Governance Arrangements
The Board is committed to the highest standards of corporate governance. Since Admission on 2 November
2021, the UK Corporate Governance Code has applied to the Company. The Company intends to comply, and
will continue to fully comply with the UK Corporate Governance Code apart from in relation to the Chair of
the Board and temporary exemptions in relation to the compositions of the Audit and Risk Committee and
Remuneration Committee as detailed further in the Governance Report on pages 51 to 52.
Directors
The Directors of the Company who were in office during the year are:
Neil Johnson (Non-Executive Chair)
Robert B. Cook (Chief Executive Officer)
Alan Clark (Chief Financial Officer)
David Lis (Senior Independent Non-Executive Director)
Gavin Manson (Non-Executive Director)
Jane Bednall (Independent Non-Executive Director)
Andrew Blurton (Independent Non-Executive Director)
Louise Stonier (Independent Non- Executive Director)
The biographies of the Directors in office as at the date of this Annual Report and Financial Statements are set
out on pages 46 to 49 of the Corporate Governance Report. Between 2 January 2022 to the date of the financial
statements there have been no changes to the members of the Board.
Directors’ Report
92 Hostmore • Annual Report 2021
Directors’ Report continued
The Powers of the Company’s Directors
The powers of the Directors are set out in the Company’s articles of association (the “Articles”) and the
Companies Act 2006 and are subject to any directions given by special resolution. The Directors are
responsible for the management of the Company’s business, for which purpose they may exercise all the
powers of the Company whether relating to the management of the business or not. The Directors may also,
subject to the Articles, delegate any of their powers, authorities and discretions as they see fit.
The Board is required by the Articles to consist of no fewer than two Directors and is not subject to any
maximum number.
Appointment and replacement of Directors
The rules governing the appointment and replacement of Directors are set out in the Articles and are
governed by the UK Corporate Governance Code, the Companies Act 2006 and related legislation. Directors
may be appointed by ordinary resolution of the shareholders or by the Board. At each AGM, all Directors who
have held office since the last AGM will offer themselves for re-election by the members to the Company’s
Board.
Articles of Association
The Articles may be amended by a special resolution of the Company’s shareholders. They were adopted by
special resolution on 7 October 2021 and took effect from the date of re-registration as a public company
limited by shares. As well as setting out the rules governing the appointment and replacement of Directors,
the Articles also set out, amongst other matters, the Directors’ general authority, rules on decision-making
by the Directors, as well as the powers of the Directors in relation to issuing shares and buying back the
Company’s own shares.
Directors Interests
The number of Ordinary shares of the Company in which the Directors were beneficially interested as at
2January 2022 are set out in the Directors’ Remuneration Report on page 86.
Directors’ Insurance and Indemnities
Directors’ and Officers’ liability insurance cover is maintained by the Company and is in place in respect of all
the Company’s Directors at the date of this Annual Report and Financial Statements. The Company will review
its level of cover on an annual basis.
The Company’s Articles provide, subject to the provisions of UK legislation, that the Company may indemnify
each Director and Officer of the Company and the Group in respect of liabilities they may incur in the
discharge of their duties or in the exercise of their powers. A deed poll was executed in 2021 indemnifying:
(i)the then current Directors of the Company and also those individuals who agree from time to time after the
date of the deed poll to serve as Directors of the Company; (ii) any Director of the Company in their capacity as
a director of a subsidiary of the Company from time to time; and (iii) any person who acts in their capacity as
the company secretary of the Company or any subsidiary of the Company from time to time. The indemnity,
which constitutes a qualifying third-party indemnity provision as defined by section 234 of the Companies
Act 2006, was in force during the 2021 financial year and remains in force for the aforementioned individuals
from 2021.
Compensation for loss of Office
The Company does not have any agreements with any Executive Director or employee that would provide
compensation for loss of office or employment resulting from a takeover except that: (i) provisions of the
Company’s long-term incentive plan may cause options and awards outstanding under such schemes to vest
on a takeover; and (ii) provisions of the Company’s bonus plan rules which apply to the Executive Directors
and the members of the Group’s Executive Team may cause bonus payments to be payable on a takeover.
Further information is provided in the Directors’ Remuneration Report on page 80.
93Hostmore • Annual Report 2021
Governance report
Results and Dividends
The results of the Group for the period are set out in the Consolidated Statement of Comprehensive Income on
page 114. The position of the Group has been disclosed on pages 115 to 116 in the Consolidated Statement of
Financial Position and the position of the Company has been disclosed on page 161 in the Company Balance
Sheet. The Directors are not proposing a dividend for the 53 week period ended 2 January 2022.
Review of Business
A review of the business can be found in the Strategic Report on pages 2 to 9.
Going Concern
The going concern statement and viability statement can be found in the Strategic Report on pages 32 to 33.
Political Donations
The Company did not make any political donations during the year.
Research and Development
There was no expenditure on Research and Development in the reporting year.
Share Capital Structure
Details of the Company’s share capital, including changes during the year, are set out in Note 26 to the
Financial Statements. As at 2 January 2022, the Company’s issued share capital consisted of 126,127,279
Ordinary shares of 20 pence each. There have been no changes to the Company’s issued share capital since
the financial period end.
Ordinary shareholders are entitled to receive notice of, and to attend and speak at, any general meeting of
the Company. On a show of hands every shareholder present in person or by proxy (or being a corporation
represented by a duly authorised representative) shall have one vote, and on a poll every shareholder who
is present in person or by proxy shall have one vote for every share of which he is the holder. The Notice of
Annual General Meeting specifies deadlines for exercising voting rights and appointing a proxy or proxies.
Other than the general provisions of the Articles (and prevailing legislation) there are no specific restrictions
of the size of a holding or on the transfer of the Ordinary shares.
On 15 October 2021, seven members of the Group’s management each signed a lock up deed which means
the relevant person cannot sell any of their shareholding in the Company prior to the first anniversary
of Admission, save in certain limited pre-defined circumstances. One of the exceptions to the general
prohibition is a sale on one single occasion prior to the first anniversary of Admission of up to 33% of the
shares held by the relevant person on Admission, with such sale needing to take place pursuant to a block
trade agreement. No shareholder holds securities carrying any special rights or control over the Company’s
share capital.
Authority for Company to Purchase own Shares
Subject to authorisation by shareholder resolution, the Company may purchase its own shares in accordance
with the Companies Act 2006. Any shares which have been bought back may be held as treasury shares or
cancelled immediately upon completion of the purchase.
94 Hostmore • Annual Report 2021
Directors’ Report continued
Significant Interests
As at 2 January 2022, the Company had been notified of the following interests of 3% or more in the issued
share capital of the Company under the UK Disclosure and Transparency Rules:
Name of shareholder
As at 2 January 2022
Number of
Ordinary
shares of
20 pence
each held
Percentage of
total voting rights
held
Witan Investment Trust plc 16,656,417 13.2%
Fidelity International 13,914,492 11.0%
Aviva PLC 5,291,409 4.2%
Crown Sigma UCITS 4,518,000 3.6%
As at 25 March 2022, the Company had been notified of the following interests of 3% or more in the issued
share capital of the Company under the UK Disclosure and Transparency Rules:
Name of shareholder
As at 25March 2022
Number of
Ordinary
shares of
20 pence
each held
Percentage of
total voting rights
held
Witan Investment Trust plc 16,656,417 13.2%
Fidelity International 13,914,492 11.0%
Aviva PLC 5,291,409 4.2%
Crown Sigma UCITS 4,518,000 3.6%
Employee Engagement
The Group seeks to provide employees with information on matters which are of concern to them as
employees. The principal means by which this is achieved is via team meetings, operational national and
regional meetings, site visits, webinars, the Group’s intranet (including through its news feed) and e-mail
systems, fortnightly business updates from the Chief Executive Officer, the Employee Forum and through
the Group’s online learning platform, The Academy. The Group encourages dialogue with its employees
and consults its employees and their representatives on a regular basis via multiple channels, such as team
meetings, the Employee Forum and online polls, so that the views of employees can be taken into account
in making decisions which are likely to affect their interests. The Group intends to conduct a colleague
engagement survey in 2022. The Company has implemented a long-term incentive plan which employees
in the Group at restaurant general manager level and above are invited to participate in. This scheme has a
number of objectives, including promoting employee retention, ensuring a common awareness on the part
of employees of the financial and economic factors affecting the performance of the Group and encouraging
employees to be aligned in ensuring that the Group achieves its targets.
The Executive Directors are primarily responsible for engaging with employees. This engagement takes
many forms, such as those highlighted above. The Chief Executive Officer and, from 2022, the Chair of the
Remuneration Committee, in her role as the independent NED for workforce engagement, attend Employee
Forum meetings. As the Group’s biggest asset, the Directors seek to ensure the Group offers an engaging
and rewarding culture and work environment to its employees, with an opportunity to share in the Group’s
success. The Group believes it offers a competitive remuneration and benefits package to its employees, with
opportunities for learning and career development.
95Hostmore • Annual Report 2021
Governance report
Employees/Disabled Persons
We aim to provide an inclusive, accessible and safe work environment and we acknowledge the significance
of access and equality for people with a disability. We do this by: (i) giving full and fair consideration to
applications for employment made by disabled persons, having regard to their particular aptitudes and
abilities; (ii) by continuing the employment of, and by arranging appropriate training for, employees of the
Group who have become disabled; and (iii) by providing career development and promotion opportunities to
disabled employees of the Group.
Diversity and Inclusion
We foster a fully inclusive culture and environment where all diversity is welcomed, encouraged and
celebrated. Inclusivity is one of our Values and Philosophies as we continue to be accessible, inviting,
collaborate with, and respectful to, guests, employees, shareholders and business partners. We are working
on the introduction of a diversity and inclusion programme, including an appropriate policy in 2022, to add
to the online Equality and Diversity training which each new starter is required to complete as part of their
induction.
Hostmore is committed to having a diverse and inclusive team and providing equal opportunities to all team
members. We do not tolerate discrimination based on race, religion, nationality, culture, gender, gender
identity, disability, sexual orientation or age.
Branches outside of the UK
The Company has no branches outside the UK.
Change of Control – Significant Agreements
There are a number of agreements that may take effect after, or terminate upon, a change of control of the
Company, such as commercial contracts, bank loan agreements and property lease arrangements.
The only significant agreements to which a member of the Group is a party that could take effect, alter or
terminate upon a change of control of the Company following a successful takeover bid, without agreement
from the relevant parties to those agreements, are as follows:
• the facilities agreement dated 30 August 2017 amongst Wednesdays (Bidco) Limited (as Borrower),
Thursdays (UK) Limited and Thursdays (Holdings) Limited (each as Guarantors), HSBC Bank plc (as
Agent), HSBC Corporate Trustee Company (UK) Limited (as Security Agent), and HSBC UK Bank plc and
National Westminster Bank plc (each as Lenders), as amended and restated on 7 July 2021. Pursuant to
the agreement, the Lenders make certain banking facilities available to Wednesdays (Bidco) Limited. The
agreement contains a change of control provision which provides that, in the event of a (direct or indirect)
change of control of Wednesdays (Bidco) Limited, the Lenders may cancel their commitments and require
repayment of all outstanding amounts;
• the development agreement dated 2 November 2021 amongst TGI Fridays Franchisor, LLC (as
Franchiser), Thursdays (UK) Limited (as Developer) and the Company (as Principal). Pursuant to the
development agreement, the Developer is granted the exclusive right to develop and operate TGI Fridays
restaurants in the “Territory” (being England, Scotland, Wales, the Channel Islands, and the Isle of Man,
as geographically constituted on the date of the development agreement excluding United States military
bases). The development agreement places various obligations on the Principal. The development
agreement states that, provided certain requirements detailed in the development agreement are met,
the Developer and/or the Principal may complete a “Transfer” (which includes, amongst other things,
a sale or transfer, whether direct or indirect, of any equity interests in the Developer or its parent
undertakings where such transfer or sale would result in a person other than the person who was the
Principal immediately before the transfer or sale having ultimate control of the Developer) without the
Franchiser’s consent, provided that such Transfer is not made to a “Non-Permitted Transferee“. A Non-
Permitted Transferee includes, amongst other categories or persons, a person that owns or operates
any directly competing business or is an affiliate of any such person (unless such affiliate is a portfolio
company of a person that is a private equity fund, company or similar). Neither the Developer nor the
96 Hostmore • Annual Report 2021
Directors’ Report continued
Principal may complete, or allow to be completed, any Transfer that is not a “Permitted Transfer” without
the Franchiser’s prior written consent, which the Franchiser may condition or withhold at its sole
discretion. Any Transfer that occurs other than as permitted in accordance with the relevant provisions
of the development agreement shall constitute an “Event of Default” under the development agreement.
Upon the occurrence of an Event of Default which is continuing and has not been cured, the Franchiser
may exercise one or more of various remedies. These include the right to terminate the development
agreement. If, as a result of the Transfer, the Principal no longer has ultimate control of the Developer,
the Principal’s rights and obligations under the development agreement (and any covenant given by the
outgoing Principal in the form attached to the development agreement) are required to be novated to the
person(s) which, following the Transfer, has ultimate control of the Developer (as the case may be), and
that person shall be the new “Principal”. The new Principal will enter into a deed of adherence in respect
of the development agreement as the Principal, and the outgoing Principal will cease to have any further
rights, obligations or liability in connection with the development agreement after the Transfer and after
entry into the deed of adherence by the new Principal.
• TGI Fridays Franchisor, LLC (as Franchiser), Thursdays (UK) Limited (as Franchisee) and the Company (as
Principal) are, pursuant to the development agreement described above, required to enter into a separate
franchise agreement upon the opening of and in respect of carrying on business in each of the Fridays
restaurants in the Territory. Each franchise agreement is based on the standard franchise agreement
and places various obligations on the Principal. Each franchise agreement states that, provided certain
requirements detailed in the development agreement and the relevant franchise agreement are met, the
Franchisee and/or the Principal may complete a “Transfer” (which includes, amongst other things, a sale
or transfer, whether direct or indirect, of any equity interests in the Franchisee or its parent undertakings
where such transfer or sale would result in a person other than the person who was the Principal
immediately before the transfer or sale having ultimate control of the Developer), without the Franchiser’s
consent, provided that such Transfer is not made to a “Non-Permitted Transferee“. In each franchise
agreement the terms relating to who constitutes a Non-Permitted Transferee, the prohibition on Transfers
that are not “Permitted Transfers” without the Franchiser’s consent, the potential consequences of any
Transfer that occurs other than as permitted in accordance with the relevant provisions of the relevant
franchise agreement and the consequences if, as a result of the Transfer, the Principal no longer has
ultimate control of the Franchisee are essentially the same as those described for the development
agreement above.
Corporate governance
The Company’s statement on corporate governance can be found in the Corporate Governance Report on
pages 51 to 52. The Corporate Governance Report forms part of this Directors’ Report and is incorporated into
it by cross-reference.
External Auditor
PricewaterhouseCoopers LLP have indicated their willingness to continue in office and a resolution seeking to
reappoint them will be proposed at the forthcoming Annual General Meeting.
Statement of disclosure of information to Auditor
Each of the Directors at the date of the approval of this report confirms that:
• So far as the Director is aware, there is no relevant audit information of which the Company’s auditors are
unaware; and
• The Director has taken all the reasonable steps that he/she ought to have taken as a Director to make
himself/herself aware of any relevant audit information and to establish that the Company’s auditors are
aware of the information.
The confirmation is given and should be interpreted in accordance with the provisions of section 418 of the
Companies Act 2006.
97Hostmore • Annual Report 2021
Governance report
2022 AGM
The Annual General Meeting will be held on 27 May 2022. The Notice of Annual General Meeting is contained
in a separate letter from the Chair accompanying this report together with details of the business to be
considered and explanatory notes for each resolution. A copy of the Notice will also be available on the
Company’s website.
Post Balance Sheet Events
There have been no material post balance sheet events involving the Company or any of the Company’s
subsidiaries as at the date of this report.
The Strategic Report on pages 2 to 43 and this Directors’ Report have been drawn up and presented in
accordance with, and in reliance upon, applicable English company law and any liability of the Directors in
connection with these reports shall be subject to the limitations and restrictions provided by such law.
The Directors’ report was approved by the Board of Directors and signed on its behalf by:
Robert B. Cook
Chief Executive Officer
5 April 2022
98 Hostmore • Annual Report 2021
Directors’ Report continued
98 Hostmore • Annual Report 2021
Statement of Directors’ responsibilities in respect of financial statements
The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with
applicable law and regulation.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, they
are required to prepare the Group financial statements in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and the Company financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising
FRS 101 “Reduced Disclosure Framework”, and applicable law). Additionally, the Financial Conduct Authority’s
Disclosure Guidance and Transparency Rules require the Directors to prepare the Group financial statements in
accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as
it applies in the European Union.
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that
period. In preparing the financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable international accounting standards in conformity with the requirements of the
Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union have been followed for the Group financial statements and United
Kingdom Accounting Standards, comprising FRS 101 have been followed for the Company financial statements,
subject to any material departures disclosed and explained in the financial statements;
• make judgements and accounting estimates that are reasonable and prudent;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Group and Company will continue in business.
The Directors are responsible for safeguarding the assets of the Group and Company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are also
responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and
the Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report
comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United
Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report and Financial Statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Group’s and Company’s
position and performance, business model and strategy.
Each of the Directors, whose names and functions are listed in the Corporate Governance Report, confirms that, to
the best of their knowledge:
• the Group financial statements, which have been prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006 and international financial reporting
standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, give a true
and fair view of the assets, liabilities, financial position and profit of the Group;
• the Company financial statements, which have been prepared in accordance with United Kingdom Accounting
Standards, comprising FRS 101, give a true and fair view of the assets, liabilities and financial position of the
Company; and
• the Strategic Report includes a fair review of the development and performance of the business and the position
of the Group and Company, together with a description of the principal risks and uncertainties that it faces.
The statement of Directors’ responsibilities in respect of the financial statements was approved by the Board of
Directors and signed on its behalf by
Robert B. Cook
Chief Executive Officer
5April2022
100 Hostmore • Annual Report 2021
101Hostmore • Annual Report 2021
Financial
statements
Calculation of key performance
indicators and alternative performance
measures
102
Independent Auditor’s Report 105
Consolidated Statement of
Comprehensive Income
114
Consolidated Statement of Financial
Position
115
Consolidated Statement of Changes in
Equity
117
Consolidated Statement of Cash Flows 118
Notes to the Consolidated Financial
Statements for the period ended
2January 2022
119
Company Balance Sheet 161
Company Statement of Changes in
Equity
162
Notes to the Company Financial
Statements for the period ended
2January 2022
163
102 Hostmore • Annual Report 2021
Calculation of key performance indicators
and alternative performance measures
The Group uses several key performance indicators (“KPIs”) to track the financial and operating performance
of its business, which are presented on pages 3 and 26 to 28 of this annual report. These measures are
derived from the Group’s internal systems. Some of the KPIs are alternative performance measures (“APMs”)
that are not defined or recognised under IFRS. They may not be comparable to similarly titled measures used
by other companies and should not be considered in isolation or as a substitute for analysis of the Group’s
operating results as reported under IFRS. The following information on the KPIs includes reconciliations to
the nearest IFRS measures where relevant.
LFL Sales
Like-for-like sales enables the performance of the Group to be measured on a consistent year-on-year basis
and is an important metric to understand customer engagement. The table below includes sites that were
open for all of 2019 for comparability and separately includes any sites opened since 2019 or subsequently
disposed of.
2021
£’000
2020
£’000
2019
£’000
LFL
146,565 120,318 201,748
Additions since Jan 2019
11,651 7,331 6,178
Disposals since Jan 2019
415 1,383 7,328
Other 363 56 (416)
Total 158,994 129,088 214,838
EBITDA and Adjusted EBITDA
EBITDA is calculated as earnings before interest, tax, depreciation, amortisation and impairment.
Adjusted EBITDA is calculated as earnings before interest, tax, depreciation, amortisation, impairment and
exceptional items (as described in note 10) .
2021
£’000
2020
£’000
2019
£’000
(Loss) /profit before tax
(1,584) (20,192) 8,955
Depreciation
22,339 23,273 24,968
Net interest and bank charges
13,597 12,389 13,206
Impairment
1,019 7,975 4,043
Impairment reversal
– – (5,683)
Share-based payment expenses 78 – –
EBITDA
35,449 23,445 45,489
Lease exit cost/(income)
(616) 30 –
Exceptional items 8,121 – 1,214
Adjusted EBITDA 42,954 23,475 46,703
103Hostmore • Annual Report 2021
Financial statements
Free Cash Flow
Free cash flow is calculated as the profit/(loss) for the period adjusted for depreciation, non-cash items,
changes in working capital, tax paid and maintenance capex, and excludes cash used in financing activities.
2021
£’000
2020
£’000
2019
£’000
Cashflow from operating activities
30,623 21,971 47,396
Change in working capital
966 2,756 2,508
Rental income from sub-leases
337 8 184
Corporation taxes recovered/(paid) 978 (970) (1,608)
Cash generated from operations
32,904 23,765 48,480
Maintenance capex (1,929) (3,785) (3,944)
Free cash flow 30,975 19,980 44,536
Net Debt
Net debt is calculated as the net of the Group’s long-term borrowings (excluding issue costs) and finance lease
obligations less cash and cash equivalents at each period end.
2021
£’000
2020
£’000
2019
£’000
Gross bank debt
(44,299) (65,800) (66,850)
Lease liabilities
(150,994) (160,165) (157,456)
Cash & cash equivalents 32,080 37,201 27,121
Net Debt (163,213) (188,764) (197,185)
% Cash conversion
% Cash conversion is calculated as free cash flow divided by EBITDA.
2021
£’000
2020
£’000
2019
£’000
Free cash flow
30,975 19,980 44,536
EBITDA
35,449 23,445 45,489
% Cash conversion 87.4% 85.2% 97.9%
Return on capital employed (ROCE)
ROCE is calculated as EBITDA divided by total assets less current liabilities.
2021
£’000
2020
£’000
2019
£’000
EBITDA
35,449 23,445 45,489
Total assets less current liabilities
293,332 173,837 200,411
ROCE 12.1% 13.5% 22.7%
104 Hostmore • Annual Report 2021
Calculation of key performance indicators
and alternative performance measures continued
Adjusted ROCE
Adjusted ROCE is calculated as adjusted EBITDA divided by total assets less current liabilities.
2021
£’000
2020
£’000
2019
£’000
Adjusted EBITDA
42,954 23,475 46,703
Total assets less current liabilities
293,332 173,837 200,411
Adjusted ROCE 14.6% 13.5% 23.3%
105Hostmore • Annual Report 2021
Financial statements
Independent Auditor’s Report
Report on the audit of the financial statements
Opinion
In our opinion:
• Hostmore plc’s group financial statements and company financial statements (the “financial statements”)
give a true and fair view of the state of the group’s and of the company’s affairs as at 2January2022 and of
the group’s loss and the group’s cash flows for the 53 week period then ended;
• the group financial statements have been properly prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006;
• the company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101
“Reduced Disclosure Framework”, and applicable law); and
• the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
We have audited the financial statements, included within the Annual Report, which comprise: the
consolidated statement of financial position and company balance sheet as at 2January2022; the
consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated
statement of cash flows and company statement of changes in equity for the period then ended; and the notes
to the financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit and Risk Committee.
Separate opinion in relation to international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union
As explained in note 2 to the financial statements, the group, in addition to applying international accounting
standards in conformity with the requirements of the Companies Act 2006, has also applied international
financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European
Union.
In our opinion, the group financial statements have been properly prepared in accordance with international
financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European
Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and
applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities
for the audit of the financial statements section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to
listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical
Standard were not provided.
Other than those disclosed in note 11, we have provided no non-audit services to the company or its
controlled undertakings in the period under audit.
106 Hostmore • Annual Report 2021
Independent Auditor’s Report
Our audit approach
Context
Admission of Hostmore plc’s ordinary shares to the premium listing segment of the Financial Conduct
Authority and to trading on the London Stock Exchange main market for listed securities took place on
2November 2021. This is the Group’s first Annual Report since admission. The parent entity Hostmore plc
was incorporated on 14 April 2021 and became the parent company of the Group on 5 October 2021. Prior to
this date, the Group headed by Hostmore plc was not in existence in its current form. The basis of preparation
of the Group financial statements is as described in note 2 to the financial statements. The historical financial
information for the period ended 27 December 2020, presented in the Prospectus issued by Hostmore plc as
part of the listing process, forms the corresponding figures of the Group financial statements for the period
ended 2 January 2022, and has not been subject to a statutory audit in accordance with the United Kingdom
Companies Act 2006. However, an accountant’s report, undertaken in accordance with the Standards for
Investment Reporting 2000 issued by the Financial Reporting Council in the United Kingdom, was issued on
the historical financial information included in the Prospectus. The accountant’s report, dated 15 October
2021, included an unqualified opinion on the historical financial information presented.
Overview
Audit scope
• We performed full scope audit procedures over the Group. This provided coverage of 100% of external
consolidated revenue and 100% of the consolidated loss before tax.
Key audit matters
• Ability of the Group and company to continue as a going concern (Group and parent)
• Valuation of certain non-current assets (Group)
• Recoverability of the company’s investments in subsidiary undertakings (parent)
Materiality
• Overall Group materiality: £1,260,000 based on 0.75% of 3-year average of total consolidated revenues.
• Overall company materiality: £1,955,000 based on 1% of total company assets (capped at 90% of Group
materiality for the purposes of our Group audit).
• Performance materiality: £945,000 (Group) and £1,466,000 (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in
the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance
in the audit of the financial statements of the current period and include the most significant assessed risks
of material misstatement (whether or not due to fraud) identified by the auditors, including those which had
the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters, and any comments we make on the results of our procedures
thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
As a result of the listing the ordinary shares of Hostmore plc, key audit matters have been included for the
first time this year.
107Hostmore • Annual Report 2021
Financial statements
This is not a complete list of all risks identified by our audit.
Key audit matter How our audit addressed the key audit matter
Ability of the Group and Company to continue as a going
concern (Group and parent)
The restrictions put in place in relation to COVID-19
have had a significant impact on the performance of
the group. These restrictions included lockdowns,
social distancing and the required closure of
restaurants. On 8 July 2021 the group refinanced
their existing debt, agreeing a £40m loan and £25m
revolving credit facility. Revised covenants were
agreed as part of this refinancing. With restrictions
having eased the Directors have determined the key
risk to the performance of the business in the future
relates to the macro-economic and geopolitical
factors that may change consumer demand. The
Directors have concluded that there is sufficient
liquidity available for at least the period of its going
concern assessment to September 2023. As the going
concern assessment is dependent on management’s
future cash flow forecasts there is significant
judgement involved in determining these and
concluding that there is not a material uncertainty.
Refer to the Going Concern Statement on page 121.
Refer to the Audit Committee report on page 61 for
a description of its assessment of this significant
judgement.
Our procedures and conclusions in respect of
going concern are set out below in the ‘Conclusions
relating to going concern’ section on page 109.
Valuation of certain non-current assets (Group)
The Group has non-current assets that include:
• Goodwill - £146m
• PP&E - £42.8m
• ROU assets - £116.4m.
As set out in Note 17.2, Note 18, and Note 19
management have outlined their considerations of
impairment indicators as well as their definitions
of a CGU. As COVID-19 has had a significant impact
on the performance of the stores in the period
this is considered to be an impairment indicator.
Management have performed a value in use
calculation to assess the recoverability of the assets
at a CGU level. This involves several key estimates
in relation to management's assumptions used in
the valuation, including the discount rate and future
cash flows.
We obtained management’s impairment assessment
and ensured the calculations were mathematically
accurate. We challenged the key assumptions
used within the model to which the value was most
sensitive, including the discount rate, the cash flows
for 2022, future revenue growth and inflation. We
obtained supporting evidence for those assumptions
that could be supported and where no evidence
could be provided we obtained a revised model
from management with supportable assumptions
which increased the impairment charge. We
compared the forecast used for the impairment
test to the latest Board-approved plans. We have
performed sensitivity analysis to identify what the
key assumptions are and to ensure sufficient audit
evidence was obtained for those assumptions.
We considered the adequacy of management's
disclosure in respect of the impairment recorded
and the key sensitivities in their estimates. Based
on the work performed, as summarised above,
we concluded that the carrying value of the
individual store assets is materially correct after the
impairment charges recorded. We also concluded
that the carrying value of goodwill is appropriate
based on the value in use model produced.
108 Hostmore • Annual Report 2021
Independent Auditor’s Report
Our audit approach continued
Key audit matter How our audit addressed the key audit matter
Recoverability of the company’s investments in
subsidiary undertakings (parent)
As set out in note 35 to the Company financial
statements, investments in subsidiaries are
£176.7m. These are accounted for at cost less
provision for impairment in the Company balance
sheet as at 2 January 2022. Investments are tested
for impairment if impairment indicators exist. If
such indicators exist, the recoverable amounts of
the investments in subsidiaries are estimated in
order to determine the extent of any impairment
loss. Judgement is required in this area, particularly
in assessing whether the carrying value of an asset
can be supported by the recoverable value, being
the higher of fair value less cost of disposal or the
net present value of future cash flows which are
estimated based on the continued use of the asset
in the business. The investments relate to the
Fridays brand, owned by the subsidiary Thursday
(UK) Limited. The carrying value of the investment
is supported by the recoverable amount which is
calculated using the value in use basis.
We evaluated management’s determination of
whether any indicators of impairment existed by
comparing the carrying value of investments in
subsidiary undertakings to the market capitalisation
of the group at 2 January 2022. With the inclusion
of net debt however there were no impairment
indicators and the carrying value was supported
by the fair value less costs to sell. Management
also used the total value in use for all stores that
was performed for the group assessment. We have
concluded that there is no impairment required.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion
on the financial statements as a whole, taking into account the structure of the group and the company, the
accounting processes and controls, and the industry in which they operate.
The group consists of four holding companies and one trading company. Following our assessment of the
risk of material misstatement we selected all entities within the group structure for full scope audits. Taken
together, these reporting entities where we performed audit work accounted for 100% of group revenue and
100% of group loss before tax.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds
for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit
and the nature, timing and extent of our audit procedures on the individual financial statement line items and
disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as
follows:
Financial statements – group Financial statements –
company
Overall
materiality
£1,260,000. £1,955,000.
How we
determined it
0.75% of 3 year average of total consolidated revenues 1% of total company assets
(capped at 90% of group
materiality for the purposes
of our group audit)
109Hostmore • Annual Report 2021
Financial statements
Financial statements – group Financial statements –
company
Rationale for
benchmark
applied
A revenue benchmark has been considered an appropriate
measure due to the impact of COVID-19 temporarily
reducing profits, but not reducing the size and scale of
the business. A three year average of total consolidated
revenues is considered to be the appropriate benchmark
due to the circumstances of the past two years causing
large fluctuations in revenue over an individual year.
The entity is a holding
company of the rest of the
Group and is not a trading
entity. Therefore an asset
based measure is considered
appropriate.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall
group materiality. The range of materiality allocated across components was below the group materiality
detailed above. Certain components were audited to a local statutory audit materiality that was also less than
our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance
materiality in determining the scope of our audit and the nature and extent of our testing of account
balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance
materiality was 75% of overall materiality, amounting to £945,000 for the group financial statements and
£1,466,000 for the company financial statements.
In determining the performance materiality, we considered a number of factors - the history of
misstatements, risk assessment and aggregation risk and the effectiveness of controls – and concluded that
an amount at the upper end of our normal range was appropriate.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during
our audit above £63,000 (group audit) and £63,000 (company audit) as well as misstatements below those
amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the
going concern basis of accounting included:
• obtaining and agreeing management’s going concern assessment to the business’s board approved plan
and ensuring that the base case scenario, indicates that the business generates sufficient cash flows to
meet its long and short term obligations while complying with covenant arrangements;
• obtaining and inspecting the loan agreement to ensure the terms and covenants were fully reflected in
management’s assessment;
• considering the extent to which the Group’s and Company’s future cash flows might be adversely affected
by COVID-19 or geo-political impacts; reviewing management’s cash flow forecasts, assessing the existing
sources of finance, and considering the overall impact on liquidity;
• ensuring the mathematical accuracy of management’s models;
• evaluating management’s severe but plausible downside scenario of reduced demand continuing into the
future and ensuring this is appropriately modelled through the cash flows;
• considering the risk of breach of the covenant arrangements in place for external borrowings under the
severe but plausible scenario;
• observing that climate change is expected to have a limited impact during the period of the going concern
assessment;
• performing further sensitivity analysis on the severe but plausible scenario and considering mitigating
actions; and
• considering the adequacy of the disclosures in the financial statements.
110 Hostmore • Annual Report 2021
Independent Auditor’s Report
Our audit approach continued
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the Group’s and the Company’s
ability to continue as a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to
the Group’s and the Company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the directors’ statement in the financial statements
about whether the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in
the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial
statements and our auditors’ report thereon. The directors are responsible for the other information. Our
opinion on the financial statements does not cover the other information and, accordingly, we do not express
an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we
identify an apparent material inconsistency or material misstatement, we are required to perform procedures
to conclude whether there is a material misstatement of the financial statements or a material misstatement
of the other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
With respect to the Strategic report and Directors’ report, we also considered whether the disclosures
required by the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report
certain opinions and matters as described below.
Strategic report and Directors’ report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic
report and Directors’ report for the period ended 2January2022 is consistent with the financial statements
and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in
the course of the audit, we did not identify any material misstatements in the Strategic report and Directors’
report.
Directors’ Remuneration
In our opinion, the part of the Annual Statement from the Chair of the Remuneration Committee to be audited
has been properly prepared in accordance with the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term
viability and that part of the corporate governance statement relating to the Company’s compliance with the
provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with
111Hostmore • Annual Report 2021
Financial statements
respect to the corporate governance statement as other information are described in the Reporting on other
information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of
the corporate governance statement is materially consistent with the financial statements and our knowledge
obtained during the audit, and we have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal
risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to
identify emerging risks and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to
adopt the going concern basis of accounting in preparing them, and their identification of any material
uncertainties to the Group’s and Company’s ability to continue to do so over a period of at least twelve
months from the date of approval of the financial statements;
• The directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this
assessment covers and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the Group and Company
will be able to continue in operation and meet its liabilities as they fall due over the period of its
assessment, including any related disclosures drawing attention to any necessary qualifications or
assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group was substantially
less in scope than an audit and only consisted of making inquiries and considering the directors’ process
supporting their statement; checking that the statement is in alignment with the relevant provisions of the
UK Corporate Governance Code; and considering whether the statement is consistent with the financial
statements and our knowledge and understanding of the Group and Company and their environment
obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the corporate governance statement is materially consistent with the financial statements and
our knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced, and
understandable, and provides the information necessary for the members to assess the Group’s and
Company’s position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and
internal control systems; and
• The section of the Annual Report describing the work of the Audit and Risk Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to
the Company’s compliance with the Code does not properly disclose a departure from a relevant provision of
the Code specified under the Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors responsibilities in respect of financial statements, the
directors are responsible for the preparation of the financial statements in accordance with the applicable
framework and for being satisfied that they give a true and fair view. The directors are also responsible for
such internal control as they determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
112 Hostmore • Annual Report 2021
Independent Auditor’s Report
Our audit approach continued
and using the going concern basis of accounting unless the directors either intend to liquidate the Group or
the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-
compliance with laws and regulations related to Health & Safety and food hygiene laws, Minimum Wage
regulations and other employment laws, and Money Laundering regulations, and we considered the extent
to which non-compliance might have a material effect on the financial statements. We also considered those
laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006
and UK tax legislation. We evaluated management’s incentives and opportunities for fraudulent manipulation
of the financial statements (including the risk of override of controls), and determined that the principal
risks were related to posting inappropriate journal entries to increase revenue and management bias within
accounting estimates. Audit procedures performed by the engagement team included:
• Enquiries with the Directors, the Audit and Risk Committee and Group General Counsel, including review
of board meeting minutes and consideration of known or suspected instances of non-compliance with
laws, regulations, and fraud;
• Identifying and testing journal entries, in particular certain journal entries posted with unusual account
combinations which result in an increase in revenue; and
• Challenging estimates and judgements made by management in determining significant accounting
estimates, in particular in relation to impairment of certain non-current assets and going concern.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that are not closely related to events and transactions
reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment
by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly
using data auditing techniques. However, it typically involves selecting a limited number of items for testing,
rather than testing complete populations. We will often seek to target particular items for testing based on
their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion
about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s directors as a body
in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in
giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where expressly agreed by our prior consent in
writing.
113Hostmore • Annual Report 2021
Financial statements
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit have
not been received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the company financial statements and the part of the Annual Statement from the Chair of the
Remuneration Committee to be audited are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
We were appointed by the directors on 6October2021 to audit the financial statements for the period ended
2January2022 and subsequent financial periods. The period of total uninterrupted engagement is 1 period,
covering the 53 week period ended 2January2022.
David Beer (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Watford
5 April2022
114 Hostmore • Annual Report 2021
Consolidated Statement of Comprehensive Income
For the 53 week period ended 2January 2022
Note
53 weeks
ended
2January
2022
£’000
52 weeks
ended
27December
2020
£’000
Revenue
6 158,994 129,088
Cost of sales (31,256 ) (26,183 )
Gross profit
Other operating income
8 15,188 20,628
Administrative expenses (130,913 ) (131,368 )
Profit/(loss) from operations
9 12,013 (7,835 )
Finance income
14 6 129
Finance expense 14 (13,603 ) (12,486 )
Loss before tax
(1,584 ) (20,192 )
Tax credit 15 1,017 2,878
Loss for the period (567 ) (17,314 )
Total comprehensive expense (567 ) (17,314 )
All operations are continuing operations.
There are no amounts recognised within other comprehensive income in the current or prior periods.
Earnings/(loss) per share (pence)
Basic loss per share
16 (0.5 ) (14.8 )
Adjusted basic earnings per share
16 6.4 (14.8 )
Adjusted diluted earnings per share
16 6.4 (14.8 )
115Hostmore • Annual Report 2021
Financial statements
Consolidated Statement of Financial Position
As at 2January 2022
Note
2January
2022
£’000
27December
2020
£’000
Assets
Non-current assets
Property, plant and equipment
17 42,781 48,919
Right of use assets
17 116,388 121,219
Goodwill
19 145,979 145,979
Net investment in sublease
18 106 620
Deferred tax assets
15 6,192 4,486
Long term prepayment – 60
Total non-current assets 311,446 321,283
Current assets
Inventories
20 1,489 703
Trade and other receivables
21 5,579 6,521
Net investment in sublease
18 98 359
Current tax assets
Cash and cash equivalents 32,080 37,201
Total current assets 39,246 46,097
Total assets 350,692 367,380
Liabilities
Non-current liabilities
Loans and borrowings
24 33,931 63,834
Lease liabilities
18 131,980 133,774
Provisions 25 2,430 2,821
Total non-current liabilities 168,341 200,429
Current liabilities
Trade and other payables
22 26,777 164,118
Contract liabilities
23 1,024 1,099
Current tax liabilities
Loans and borrowings
24 9,491 1,426
Lease liabilities
18 19,014 26,391
Provisions 25 745 509
Total current liabilities 57,360 193,543
Total liabilities 225,701 393,972
Net current liabilities
(18,114 ) (147,446 )
Net assets/(liabilities) 124,991 (26,592 )
116 Hostmore • Annual Report 2021
Consolidated Statement of Financial Position
As at 2January 2022 continued
Note
2January
2022
£’000
27December
2020
£’000
Issued capital and reserves attributable to owners of the parent
Share capital 26 25,225 –
Share premium reserve
Merger reserve
(181,180 ) –
Share based payment reserve
27 53 4,054
Retained earnings/(accumulated losses) 28 266,310 (30,646 )
Total equity/(deficit) 124,991 (26,592 )
The notes on pages 119 to 160 form part of these financial statements.
The financial statements on pages 114 to 160 were approved and authorised for issue by the Board of
Directors on 5April 2022 and were signed on its behalf by:
Robert B. Cook
Alan Clark
Chief Executive Officer
Chief Financial Officer
117Hostmore • Annual Report 2021
Financial statements
Consolidated Statement of Changes in Equity
For the period ended 2January 2022
Share
capital
£’000
Share
premium
reserve
£’000
Merger
reserve
£’000
Share based
payment
reserve
£’000
Retained
earnings/
(accumulated
losses)
£’000
Total
equity/
deficit)
£’000
At 30 December 2019
Comprehensive expense for the period
Loss for the period – – – – (17,314 ) (17,314 )
Total comprehensive expense for
theperiod – – – – (17,314 ) (17,314 )
At 27 December 2020
Comprehensive expense for the period
Loss for the period – – – – (567 ) (567 )
Total comprehensive expense for
theperiod – – – – (567 ) (567 )
Contributions by and distributions to
owners
Issue of share capital
Acquisition of subsidiaries by Hostmore
Transfer of share capital of a subsidiary
to Hostmore
Capital reduction in a subsidiary
(137,541 ) – – – 137,541 –
Share issue proceeds extinguish of
shareholder loan
Cancellation of share premium
Reclassification of share based reserve
to retained earnings on lapse of share
incentive – – –
(4,079 ) 4,079 –
Share based payment charge – – – 78 – 78
Total contributions by and
distributions to owners 25,225 14,583 (181,180 ) (4,001 ) 297,523 152,150
At 2 January 2022 25,225 14,583 (181,180 ) 53 266,310 124,991
118 Hostmore • Annual Report 2021
Consolidated Statement of Cash Flows
For the period ended 2January 2022
Note
53 weeks
ended
2January
2022
£’000
52 weeks
ended
27December
2020
£’000
Cash flows from operating activities
30 30,623 21,971
Movements in working capital:
(Increase)/decrease in trade and other receivables
21 1,002 1,116
(Increase)/decrease in inventories
20 (787 ) 546
Increase in trade and other payables
22 907 (2,236 )
(Decrease)/increase in provisions and employee benefits (156 ) 3,330
Cash generated from operations
Corporation taxes recovered/(paid)
Rental income from finance subleases 18 337 8
Net cash from operating activities 32,904 23,765
Cash flows from investing activities
Purchases of property, plant and equipment
(4,075 ) (3,666 )
Initial direct costs incurred on new leases
Interest received – 75
Net cash used in investing activities (4,075 ) (3,602 )
Cash flows from financing activities
Repayment of bank borrowings
(26,500 ) (1,050 )
Payment of loan arrangement fees
(816 ) –
Receipt of bank borrowings
Interest paid on bank borrowings
(1,751 ) (2,146 )
Proceeds from share issue
Payment of lease liabilities (22,977 ) (6,887 ))
Net cash used in financing activities (33,950 ) (10,083 )
Net cash (decrease)/increase in cash and cash equivalents
(5,121 ) 10,080
Cash and cash equivalents at the beginning of period 37,201 27,121
Cash and cash equivalents at the end of the period 32,080 37,201
Financial statements
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022
119Hostmore • Annual Report 2021
1. Reporting entity
The Company’s registered office is at Highdown House, Yeoman Way, Worthing, West Sussex, BN99 3HH
and the Company’s registered number is 13334853. These consolidated financial statements comprise the
Company and its subsidiaries (collectively the ‘Group’ and individually ‘Group companies’). The Group is
primarily involved in the development and operation of branded restaurants and bars and ancillary activities.
2. Basis of preparation
The Group’s consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards, pursuant to Regulation (EC) No 1606/2002 as it applies in the European
Union, International Accounting Standards and Interpretations in conformity with the requirements of the
Companies Act 2006 (collectively IFRSs).
On 31 December 2020 EU-adopted IFRS was brought into UK law and became UK-adopted international
accounting standards, with future changes to IFRS being subject to endorsement by the UK Endorsement
Board. The consolidated financial statements will transition to UK-adopted international accounting
standards for financial periods beginning 3 January 2022.
The Group reports its results for the 52- or 53-week period ending on the nearest Sunday to 31 December.
The results for 2021 are for the 53 weeks that ended 2 January 2022 and those for 2020 are for 52 weeks
ended 27December 2020. The results for 2021 also include results for Hostmore plc and Hostmore Group
Limited from incorporation, on 14 April 2021 and 12 April 2021 respectively, to 2 January 2022.
Details of the Group’s accounting policies are included in note 4.
In preparing these financial statements, management has made judgements, estimates and assumptions that
affect the application of the Group accounting policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are
recognised prospectively.
The areas where judgements and estimates have been made in preparing the consolidated financial
statements and their effects are disclosed in note 5.
2.1 Basis of measurement
The financial statements have been prepared on the historical cost basis.
2.2 Capital Reorganisation
The Company was incorporated on 14 April 2021, and it listed its shares on the London Stock Exchange on
2 November 2021. In order to put in place the necessary Group structure and complete a de-merger from its
previous holding company, Electra, the Company acquired its subsidiaries, as listed in note 35, in exchange
for shares (the “Capital Reorganisation”). A merger reserve of £181.2m was created on creation of the new
Group from consolidation of the entities which were included in the Capital Reorganisation.
Although the Group, as it is currently comprised, did not exist before the Capital Reorganisation took place,
the consolidated financial statements have been presented as if the Group had been in existence for the
periods presented. The Capital Reorganisation falls outside the scope of IFRS 3 Business Combinations and
has been accounted for using the principles of predecessor accounting using the carrying amounts of assets
and liabilities included in the financial statements of the subsidiary entities.
After the Capital Reorganisation, the Group undertook a capital reduction and as a result the entire balance
on the share premium account of £155.9m was credited to retained earnings.
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
120 Hostmore • Annual Report 2021
2.3 New standards, amendments and interpretations
There were no new standards, no amendments to accounting standards, or IFRIC interpretations that
are effective for the period ended 2 January 2022 that have had material impact on the Group’s financial
statements.
2.4 New standards, amendments and interpretations not yet adopted
There were no new standards that have been early adopted in the financial statements ended 2 January 2022
and there is no material impact on the Group in relation to new standards, amendments and interpretations
for the current and future reporting periods.
2.5 Adoption of IFRS
Prior to the Capital Reorganisation described above, the statutory accounts of the subsidiaries that now
constitute the Group, were prepared in accordance with Financial Reporting Standard (“FRS 102”) and the
Companies Act 2006.
The Company and the Group first adopted IFRS as part of the listing process and note33 to the financial
statements details the adjustments between the publicly available financial statements for 2018, 2019 and
2020 financial periods, to the equivalent IFRS financial statements.
These annual financial statements are prepared as if the Group was in existence for the whole period
presented and in-line with and in adoption of IFRS, with the main impacts and judgements, including IFRS 16
leases, described in these notes.
3. Functional and presentation currency
These consolidated financial statements are presented in pounds sterling, which is the Group’s functional
currency. All amounts have been rounded to the nearest thousand pounds, unless otherwise indicated.
4. Accounting policies
4.1 Basis of consolidation
The Company was incorporated on 14 April 2021 for the purpose of acting as parent undertaking for the
Group. On 5October 2021, the Company acquired investments from Electra, which comprised 100%
of the issued share capital of Hostmore Group Limited, and indirectly 100% of the issued share capital
of Wednesdays (Bidco) Limited and its respective subsidiaries following implementation of a group
reorganisation.
The financial information is prepared in accordance with IFRS under the historical cost convention, as
modified for the revaluation of certain financial instruments. The consolidated financial statements are
presented in thousands of pounds (“£’000”) except when otherwise indicated.
The consolidated financial statements include the financial statements of the Company and its subsidiary
undertakings. 2021 numbers are for 53 weeks that ended 2 January 2022 and 2020 numbers are for 52 weeks
ended 27 December 2020. Where an entity has been incorporated in the year the 2021 results have included
the results from incorporation to 2 January 2022. A subsidiary is an entity that is controlled by the parent.
The results of subsidiary undertakings are included in the consolidated statement of profit or loss from the
date that control commences until the date that control ceases. Control is established when the Company has
the power to govern the operating and financial policies of an entity so as to obtain benefits from its activities.
In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.
The Company, Hostmore plc, and subsidiary incorporated in the year, Hostmore Group Limited, are included
in the consolidation, from the date of incorporation above, whereas all other subsidiary companies are
included for the 53 week period.
Financial statements
121Hostmore • Annual Report 2021
In accordance with section 479A of the Companies Act 2006 relating to audit exemption of subsidiary
companies, Hostmore plc has provided guarantees to its subsidiaries Hostmore Group Limited and
Thursdays (Holdings) Limited so that they are entitled to exemption from audit of their individual financial
statements.
4.2 Going concern
The financial statements have been prepared on a going concern basis. Whilst the Group is in a net current
liability position, the strong positive EBITDA, net assets and the positive operating cash flow supports
the directors’ belief that the Group is well placed to manage its business and financial risks successfully,
as described in the Risk Committee Report. For this reason they have adopted the going concern basis in
preparing the annual report and financial statements.
The Group operates a casual dining business with restaurants throughout the UK. Since March 2020, the
trade of the Group has been materially disrupted by the effects of the COVID-19 pandemic. The imposition of
material COVID-19 related trading restrictions and related support by the UK Government is unprecedented,
as is the flexibility and support of other stakeholders such as landlords and banks, who, each acting in their
own commercial interests, have been supportive of the Group to date in finding a mutual path through the
period of material COVID-19 disruption. The Directors firmly believe that stakeholders will continue to work
together to ensure that viable businesses come through this period of uncertainty in order to continue to
generate value for stakeholders in the future.
The Group completed a refinancing of its Bank facilities in July 2021, details of which are summarised in
note24 to the financial statements. The new facilities contained agreed new covenants measured at operating
subsidiary level. These covenants include a minimum liquidity covenant measured monthly until August
2022. Quarterly covenant tests of the adjusted leverage ratio and fixed charge cover are then measured
quarterly on a previous twelve months basis from the quarter ending September 2022, together with a
capex covenant measured annually from December 2022. The Group has prepared forecasts of the expected
position for the next 24 months from the date of approval of these financial statements, including severe but
plausible downside sensitivities.
The severe but plausible downsides include a severely depressed trading environment and significant
worsening of the performance of the restaurants, and the subsequent impact on the profitability and cash
generation of the Group. This scenario is based on the business plan of the Group and applies a downturn in
trading of its restaurants in 2022 including proposed new openings, with a worsening profit conversion. As a
result it models the impact this would have on the cash position and covenants calculations of the Group.
The Group forecasts for the next 24 months from the date of approval of these financial statements, and the
severe but plausible downside sensitivities of those forecasts, show that there will be no breach of the Group’s
covenant tests and have headroom above the minimum covenant levels.
The Directors are confident that the business will continue to trade and develop profitably beyond the
period of COVID-19 disruption, and for a period of at least 12 months following the signing of these financial
statements. They are therefore confident that it is appropriate to prepare these financial statements on a
going concern basis.
4.3 Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of
the business less accumulated impairment losses, if any.
Goodwill does not generate cash flows independently of other assets or groups of assets and is required to
be allocated to each CGU or group of CGUs that benefits from the business combination that gave rise to the
goodwill. The Group does not allocate goodwill to individual CGUs as it is deemed to represent the ongoing
value of the existing business and brand and it cannot be allocated to individual restaurants on a non-
arbitrary basis. Therefore, the goodwill is allocated to all CGUs as a group. Consequently, the Group tests all
CGUs for impairment at each reporting date on a value in use basis and where a CGU is considered impaired,
its carrying value is reduced to its recoverable amount. The impairment loss is allocated pro-rata between the
assets of the CGU on the basis of the carrying amount of each asset. After this initial allocation of impairment
losses, if the combined carrying amount of the CGUs and goodwill is higher than the recoverable amount
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
122 Hostmore • Annual Report 2021
of the group of all CGUs, the residual impairment losses are allocated to goodwill. At present, sufficient
headroom exists and no impairment losses have been allocated to the goodwill.
Where there is an indication that an impairment loss recognised in prior periods for an asset other than
goodwill no longer exists, the impairment loss is reversed. The reversal is allocated to the CGU’s assets on a
pro-rata basis. However, the carrying amount of an individual asset is not increased above the higher of its
recoverable amount or its historical depreciated cost.
4.4 Revenue
Revenue is measured based on the consideration specified in a contract with a customer and excludes
amounts collected on behalf of third parties. The Group recognises revenue when it transfers control over a
product or service to a customer.
The Group primarily derives revenue from two streams: Dine-in and Dine-out.
(i) Dine-in revenue
The Group has the following performance obligations in its contracts with customers:
1. The sale of food and drinks under the Fridays brand: Sales are recognised when the control of the product
has transferred. This is the point at which the products are consumed by the customers in the restaurant.
2. For customers enrolled in the loyalty scheme, an additional performance obligation is the promise to
award loyalty points for these purchases which entitle customers to discounts on future purchases.
Payments are made fully in cash at the time of the sale of food and drink and a contract liability for the loyalty
points is recognised. Revenue for the loyalty points is recognised when the points are redeemed or when they
expire 12 months after the initial sale.
(ii) Dine-out and other revenue
The Group has a single performance obligation which is the sale of food and drinks through third-party
delivery partners, click and collect, cocktails at home and drive-up cinema. Sales are recognised when the
control of the product has transferred being the point at which products are delivered to the customers.
A receivable is recognised for the value of food and drinks at the point of sale. Payment terms are usually
settlement within 30 days by the delivery partners. Commissions paid to the delivery partners are recognised
as an expense in the statement of comprehensive income.
Gift cards
The Group sells gift vouchers for use in its restaurants both directly and via third parties.
A contract liability is recognised at the point of sale of gift cards. Revenue is recognised when the vouchers are
redeemed or when they expire 18 months after the initial sale.
Any commission paid to third parties on sale of gift cards is recognised as an asset and recognised in the
statement of comprehensive income when the gift card is redeemed or expires (18 months from the date of
issue).
4.5 Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
(i) The Group as a lessor
Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group’s
net investment in the leases. Finance lease income is allocated to accounting periods to reflect a constant
periodic rate of return on the Group’s net investment outstanding in respect of the leases.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount
of the leased asset and recognised on a straight-line basis over the lease term.
Financial statements
123Hostmore • Annual Report 2021
When the Group is an intermediate lessor, it accounts for the head lease and the sublease as two separate
contracts. The sublease is classified as a finance or operating lease by reference to the right-of-use asset
arising from the head lease.
(ii) The Group as a lessee
The principal leasing activity of the Group is the leasing of property for the operation of restaurants. On
transition to IFRS, the Group has applied IFRS 16 using the modified retrospective approach:
• A lease liability has been measured at the date of transition to IFRS (01 January 2018) at the present value
of the remaining lease payments discounted using an appropriate incremental borrowing rate for each
lease depending on the remaining lease term ranging from 2.55% for leases with shorter terms to 7.5%
for leases with longer terms. Payments included in initial measurement are all fixed payments and any
variable payments linked to an index are initially measured at the index or rate at the transition date.
• A right-of-use (RoU) asset has been measured at the date of transition to IFRS at an amount equal to the
lease liability, adjusted by the amount of any prepaid or accrued lease payments as well as dilapidations
and onerous lease provisions relating to that lease recognised in the statement of financial position
immediately before the date of transition to IFRS.
• Assessed the RoU assets for impairment applying IAS 36.
The following practical expedients have been adopted on the date of transition to IFRS:
• Majority of the leases on transition to IFRS relate to property. A single discount rate has been used for
portfolios of leases with similar remaining lease terms.
• Elected not to recognise leases where the remaining term on transition is 12 months or less.
• Elected not to recognise leases where the underlying asset is considered low value.
• Initial direct costs have not been included in the measurement of right of use assets.
• Elected to use hindsight in certain cases, such as, for determining the lease term where the contract
contains options to extend or terminate the lease.
Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate
on the balance outstanding and are reduced for lease payments made. Where lease payments depend on an
index, any changes in future lease payments resulting from a change in the index lead to a re-assessment of
the lease liability using a revised discount rate. Right-of-use assets are amortised on a straight-line basis over
the remaining term of the lease.
When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the
probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of
the lease liability to reflect the payments to be made over the revised term, which are discounted at a revised
discount rate. An equivalent adjustment is made to the carrying value of the right-of-use asset, with the
revised carrying amount being amortised over the remaining (revised) lease term.
(iii) Rent concessions
The Group has elected to apply the practical expedient issued in response to the coronavirus pandemic to all
eligible rent concessions. Therefore, the Group has not accounted for rent concessions as lease modifications
if they are a direct consequence of COVID-19 and the following conditions are met:
• The revised consideration is substantially the same or less than the original consideration;
• The reduction in lease payments relates to payments originally due on or before 30 June 2022; and
• No other substantive changes are made to the terms of the lease.
4.6 Borrowing costs
Borrowing costs are recognised in profit or loss in the period in which they are incurred.
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
124 Hostmore • Annual Report 2021
4.7 Government grants
The Group recognises Government grants at fair value when there is reasonable assurance that the entity
will comply with the conditions attached to them and that the grant will be received. Government grants are
recognised in the statement of comprehensive income on a systematic basis over the period in which the
entity recognises as expense the related costs for which the grants are intended to compensate. A government
grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose
of giving immediate financial support to the entity with no future related costs shall be recognised in the
statement of comprehensive income of the period in which it becomes receivable.
The Group has elected to present Government grants as “Other operating income” in the statement of
comprehensive income.
4.8 Employee benefits
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave
and sick leave in the period that the related service is rendered at the undiscounted amount of the benefits
expected to be paid in exchange for that service.
Liabilities recognised in respect of long term employee benefits are measured at the present value of
the estimated future cash outflows expected to be made by the Group in respect of services provided by
employees up to the reporting date.
4.9 Pensions
The Group makes contributions for eligible workers into defined contribution pension plans. Once the
contributions have been paid, the Company has no further payment obligations. The contributions are
recognised as an expense when they fall due. Amounts not paid are included in accruals in the Statement of
Financial Position. The assets of the plans are held separately from the Group in independently administered
funds.
4.10 Share-based payments
Share-based payment transactions
Equity-settled share-based payments to employees and others providing similar services are measured at the
fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of
equity-settled share-based transactions are set out in note 27.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will
eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group
revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the
original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair
value of the goods or services received, except where that fair value cannot be estimated reliably, in which
case they are measured at the fair value of the equity instruments granted, measured at the date the entity
obtains the goods or the counterparty renders the service.
Financial statements
125Hostmore • Annual Report 2021
For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured
initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at
the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised
in profit or loss for the period.
4.11 Tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
(i) Current tax
The tax currently payable is based on taxable profit for the period. Taxable profit differs from ‘profit before
tax’ as reported in the Consolidated Statement of comprehensive income because of items of income or
expense that are taxable or deductible in other periods and items that are never taxable or deductible. The
Group’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of
the reporting period.
(ii) Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities
in the consolidated financial statements and the corresponding tax bases used in the computation of taxable
profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax
assets are generally recognised for all deductible temporary differences to the extent that it is probable
that taxable profits will be available against which those deductible temporary differences can be utilised.
Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial
recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither
the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the
temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered. These assets are not discounted.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from
the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.
(iii) Current and deferred tax for the period
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised
in other comprehensive income or directly in equity, in which case, the current and deferred tax are also
recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred
tax arises from the initial accounting for a business combination, the tax effect is included in the accounting
for the business combination.
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
126 Hostmore • Annual Report 2021
4.12 Earnings per share
The Group complies with the IAS 33 requirement of a publicly listed company to present earnings per share
(“EPS”) in the financial statements. These financial statements contain basic EPS, adjusted EPS and adjusted
diluted EPS, in-line with accounting standards. Adjusted EPS is calculated using adjusted profit before
exceptional items and impairment while diluted EPS accounts for options issued that could be exercised. The
calculation of adjusted diluted EPS does not assume conversion, exercise or other issue of potential ordinary
shares that would have an anti-dilutive effect on earnings per share as the Group is in a loss-making position.
4.13 Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and any
accumulated impairment losses.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for as separate items (major components) of property, plant and equipment. Any gain or loss on
disposal of an item of property, plant and equipment is recognised in profit or loss. Subsequent expenditure
is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow
to the Group.
Depreciation is provided on a straight-line basis for all items of property, plant and equipment so as to write
off their carrying value over their expected useful economic lives. It is provided at the following range:
Leasehold property improvements
Leasehold term
Plant and machinery
3 – 8 years
Fixtures and fittings
4 – 20 years
4.14 Impairment of tangible and intangible assets other than goodwill
The Group assesses at each reporting date whether an item of property, plant and equipment is impaired.
Each restaurant is considered to be a separate cash generating unit (CGU) for property, plant and equipment.
The Group tests all CGUs for impairment at each reporting date on a value-in-use basis and where a CGU is
considered impaired, its carrying value is reduced to its recoverable amount. The impairment loss is allocated
pro-rata between the assets of the CGU on the basis of the carrying amount of each asset.
4.15 Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on
a weighted average basis. Net realisable value represents the estimated selling price for inventories less all
estimated costs of completion and costs necessary to make the sale.
4.16 Provisions
A dilapidations provision has been recognised in the statement of financial position when the entity has a
present legal or constructive obligation to dismantle and restore the RoU assets to the condition required
by the terms and conditions of the lease at the end of the lease term. Provisions are recognised at the best
estimate of the amount required to settle the obligation at the reporting date, discounted to reflect the time
value of money.
Financial statements
127Hostmore • Annual Report 2021
4.17 Financial instruments
The Group classifies financial instruments, or their component parts, on initial recognition as a financial
asset, a financial liability or an equity instrument in accordance with the substance of the contractual
arrangement. Financial assets and financial liabilities are recognised when a Group entity becomes a party to
the contractual provisions of the instruments. All financial instruments held are measured at amortised cost.
(i) Impairment of financial assets
The Group has two material types of financial assets that are subject to the expected credit loss model for
assessing impairment of financial assets:
• trade and other receivables
• net investments in sub-leases.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade and other receivables and net investments in sub-leases. To measure
the expected credit losses, trade and other receivables and net investment in sub-leases have been grouped
based on shared credit risk characteristics and the days past due.
The majority of trade and other receivables are current and not past due date. There is also no history of non-
payments by the debtors or sub-lessees. Therefore, no material expected credit losses have been identified.
4.18 Dividends
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised
when they are paid. Final equity dividends are recognised when approved by the shareholders at an Annual
General Meeting.
4.19 Cash and cash equivalents
Cash is represented by cash on hand and demand bank balances. Cash equivalents are highly liquid
investments that are readily convertible to known amounts of cash without significant risk of change in value.
4.20 Exceptional items
Exceptional items are those items that, by virtue of their unusual nature or size, warrant separate, additional
disclosure in the financial statements in order to fully assess the performance of the Group. Subsequent to
transition to IFRS, the Group no longer recognises impairment charges as exceptional.
5. Accounting estimates and judgements
Estimates and judgements are evaluated at each reporting date and are based on historical experience as
adjusted for current market conditions and other factors. Estimates and assumptions have been made in
respect of the following:
5.1 Judgement
Goodwill
The Group does not allocate goodwill to individual CGUs as it is deemed to represent the ongoing value of the
existing business and brand and it cannot be allocated to individual restaurants on a non-arbitrary basis.
Therefore, the goodwill is allocated to all CGUs as a group as it is considered that they all benefit equally from
the brand value.
Lease term
Several leases of restaurant properties contain extension options or break clauses.
No options to extend or terminate a lease have been included in the assessment of the lease term. The
non-cancellable period and enforceable period are both considered to be the initial lease term laid out in the
contract in place at the date of period end for which leases have already been extended.
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
128 Hostmore • Annual Report 2021
Leases for restaurant properties are generally long-term and due to the nature of the business, decisions to
extend or terminate are based on evolving market dynamics that may create an economic incentive to do
so. Therefore, at the date of period end there is no reasonable certainty of whether an option to extend or
terminate will be exercised except where hindsight has been used.
5.2 Estimates and assumptions
Impairment
The Group performs an annual impairment assessment at the end of each reporting period. Each restaurant
within the Group is considered a separate cash generating unit (CGU). An impairment charge is recognised
where the recoverable amount is less than the carrying value of the right of use assets of the CGU. The
recoverable amount is based on value in use calculations, using forecasted cashflows and each restaurant’s
ability to cover its costs, including an allocation of central overheads, marketing and maintenance of
standards of assets.
When trading data and forecasts indicate that an impairment no longer exists, any previously recognised
impairments are reversed up to the recoverable amount, without exceeding the previous carrying value less
depreciation. This impairment reversal is recognised in the statement of comprehensive income.
The recoverable amount is based on value in use calculations with cash flow projections over the lease term of
each restaurant, using the Group’s forecast performance for 2022 and the business plan for the next 2 years,
with a long-term growth rate of 2% applied. The discount rate applied in the value-in-use calculations has
been calculated with reference to the Group’s weighted average cost of capital and similar benchmarks in the
industry. As a publicly listed entity, the Group has re-calculated the discount rate for 2021 using the “capital
asset pricing model” and with reference to market comparatives. The pre-tax discount rate of 11.7% (2020:
7.9%) has been applied in the value-in-use calculations.
6. Revenue
The following is an analysis of the Group’s revenue for the period from continuing operations:
53 weeks
ended
2 January
2022
£’000
52 weeks
ended
27 December
2020
£’000
Dine-in revenue
139,497 114,581
Dine-out revenue
19,134 14,104
Other revenue 363 403
158,994 129,088
In 2020, click and collect was introduced by the Group allowing customers to place dine-out orders directly
with Fridays for collection. A number of additional revenue streams were also introduced in 2020 including
cocktails at home and drive-up cinema. Revenue generated from these is shown as “Other”.
All revenue was generated in the UK and Jersey.
Financial statements
129Hostmore • Annual Report 2021
7. Segment information
The Group’s reportable segments constituting revenue, profit, assets and liabilities are all under the
Fridays Brand. ‘63rd + 1st’ was launched within the period ended 2 January 2022 as a trading brand and
is aggregated within internal reporting and is therefore not a separate reportable segment under IFRS 8
“Operating Segments”. For these purposes, the Group’s Chief Executive Officer and all other Board members
are considered to be the Chief Operating Decision Maker, who receive information at a consolidated Group
and site-by-site level. These sites share similar economic characteristics and are corporately under the TGI
Fridays licensed branding, so as such, meet the aggregation criteria under IFRS 8 paragraph 12.
8. Other operating income
Included within other income is rental income from the sub-lease of properties under operating leases.
Government grants received under coronavirus support programmes are also shown as other income. These
pertain to the Coronavirus Job Retention Scheme as well as various hospitality related grants. There are no
unfulfilled conditions or contingencies relating to the Government grant scheme.
53 weeks
ended
2 January
2022
£’000
52 weeks
ended
27 December
2020
£’000
COVID-19 related Government grants
14,941 20,464
Net rents receivable 247 164
15,188 20,628
9. Profit/(loss) from operations
Profit/(loss) from operations is stated at after charging:
53 weeks
ended
2January
2022
£’000
52 weeks
ended
27 December
2020
£’000
Share based payment charges
(78) –
Rent on leases of low value assets
(661) (687)
Variable lease payments not included in the measurement of lease liabilities
(320) (19)
Depreciation
(22,339) (23,273)
Impairment of property, plant and equipment and ROU assets
(1,019) (7,975)
Exceptional items (see note 10) (8,121) –
Profit/(loss) from operations is stated after crediting:
53 weeks
ended
2January
2022
£’000
52 weeks
ended
27 December
2020
£’000
Covid-19 related rent concessions
4,210 1,475
Finance income on the net investment in finance leases 28 49
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
130 Hostmore • Annual Report 2021
10. Exceptional items
Included within the profit/(loss) from operations are items which are considered to be exceptional in nature.
These are as follows:.
53 weeks
ended
2 January
2022
£’000
52 weeks
ended
27 December
2020
£’000
Costs associated with Hostmore plc listing 8,121 –
Exceptional items are those items that, by virtue of their unusual nature or size, warrant separate, additional
disclosure in the financial statements in order to fully assess the performance of the Group. For the period
ended 2 January 2022, these related to costs associated with the listing of the Company’s ordinary shares
on the London Stock Exchange. These costs principally comprised fees related to financial, legal, tax and
accounting advice, consultancy fees, listing fees and separate audit costs relating to the listing.
11. Auditors’ remuneration
During the period, the Group paid for the following services from the Group’s auditors
53 weeks
ended
2 January
2022
£’000
52 weeks
ended
27 December
2020
£’000
Fees payable to the Group’s auditors for the audit of the Group’s and subsidiaries financial
statements
200 188
Fees payable to the Group’s auditors and their associates in respect of:
Non audit services
Assurance related services
4 –
Reporting accountant for listing process 607 –
Financial statements
131Hostmore • Annual Report 2021
12. Employee benefit expenses
53 weeks
ended
2 January
2022
£’000
52 weeks
ended
27 December
2020
£’000
Employee benefit expenses (including Directors) comprise:
Wages and salaries
61,622 60,478
Social security costs
4,072 3,626
Other pension costs
921 1,031
Share based payment charge 78 –
66,693 65,135
Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing
and controlling the activities of the Group, including the Directors of the Company listed on page 46. Key
management personnel are the Executive Team of the Group.
53 weeks
ended
2 January
2022
£’000
52 weeks
ended
27 December
2020
£’000
Aggregate emoluments including short-term employee benefits
2,639 2,219
Post-retirement benefits
119 33
Share based payment charge 31 –
2,789 2,252
The monthly average number of persons, including the Directors, employed by the Group during the period
was as follows:
53 weeks
ended
2 January
2022
£’000
52 weeks
ended
27 December
2020
£’000
Sales
2,432 2,705
Administration 356 470
2,788 3,175
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
132 Hostmore • Annual Report 2021
13. Directors’ remuneration
53 weeks
ended
2 January
2022
£’000
52 weeks
ended
27 December
2020
£’000
Directors’ emoluments
1,247 961
Share based payment charge 18 –
1,265 961
During the 53 week period ended 2 January 2022, no contributions (2020: none) were made or accrued by the
Group in respect of Directors’ defined benefit pension schemes.
As disclosed in the Prospectus, an annual bonus plan and a management incentive plan operated prior
to Admission. The annual bonus plan for the year ended 2January 2022 terminated on Admission with
bonuses payable by reference to performance up to Admission. This bonus is included in the Directors’
emoluments. The management incentive plan crystallised upon the Company being demerged from Electra
prior to Admission which ultimately resulted in the Executive Directors and certain members of management
subscribing for shares in the Company at 178p per share.
The highest paid Director’s emoluments were as follows:
53 weeks
ended
2 January
2022
£’000
52 weeks
ended
27 December
2020
£’000
Total emoluments receivable
576 399
Share based payment charge 8 –
584 399
The highest paid director did not exercise any share options during the 53 week period ended 2January 2022.
14. Finance income and expense
53 weeks
ended
2 January
2022
£’000
52 weeks
ended
27 December
2020
£’000
Finance income
Other interest receivable 6 129
Total finance income 6 129
Finance expense
Bank interest payable
2,576 2,106
Amortisation of loan arrangement fees
804 324
Interest on lease liabilities
10,165 10,042
Unwinding of discount on provisions 58 14
Total finance expense 13,603 12,486
Financial statements
133Hostmore • Annual Report 2021
15. Tax expense
15.1 Income tax recognised in profit or loss
53 weeks
ended
2 January
2022
£’000
52 weeks
ended
27 December
2020
£’000
Current tax
Current tax on profits for the period
(1,217) 683
Adjustments in respect of prior periods 528 27
Total current tax (689) 710
Deferred tax credit
Origination and reversal of timing differences
(142) 1,881
Adjustments in respect of prior periods
328 13
Change in future tax rate 1,520 274
Total deferred tax 1,706 2,168
Tax credit for the period 1,017 2,878
The amount of tax credit is higher (2020: lower) than the UK corporation tax rate of 19% on the results for the
period. This is principally due to the remeasurement of the deferred tax arising from the increase in rate of
corporation tax in future periods. The reasons for the difference between the actual tax charge for the period
and the standard rate of corporation tax in the United Kingdom applied to losses for the period are as follows:
53 weeks
ended
2 January
2022
£’000
52 weeks
ended
27 December
2020
£’000
Loss for the period before tax (1,584) (20,192)
Tax credit on Group’s loss at tax rate of 19%
301 3,836
Expenses not deductible for tax purposes
(1,832) (552)
Depreciation on assets not eligible for tax relief
(704) (720)
Adjustments to tax charge in respect of prior periods
856 40
Non-taxable income
108 –
Temporary differences not recognised in the computation
5 –
Remeasurement of deferred tax for future changes in tax rate
1,520 274
Movement in deferred tax not recognised
(15) –
Deferred tax credited straight to equity
(3) –
Loss relief 781 –
Total tax credit 1,017 2,878
The Directors consider that adjustments similar to those above are likely to be relevant in calculating the Group’s
tax charge in future periods. In addition, the corporation tax rate will increase from 19% to 25% from 1April
2023, which will increase the tax charge in future periods. The deferred tax recognised in the period ended
2January 2022 has been calculated at this increased rate to reflect the expected rate at which it will be realised.
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
134 Hostmore • Annual Report 2021
15.2 Deferred tax balances
The following is the analysis of deferred tax assets/(liabilities) in the consolidated statement of financial
position:
Opening
balance
£’000
Recognised
in profit
and loss
£’000
Closing
balance
£’000
Deferred tax (liabilities)/assets in relation to:
Accelerated capital allowances on Property, plant and equipment
1,318 652 1,970
Short term timing differences
44 27 71
Trading losses utilised
410 (410) –
Deferred tax arising from GAAP differences 2,714 1,437 4,151
2 January 2022 4,486 1,706 6,192
Opening
balance
£’000
Recognised
in profit
and loss
£’000
Closing
balance
£’000
Deferred tax (liabilities)/assets in relation to:
Accelerated capital allowances on Property, plant and equipment
703 615 1,318
Short term timing differences
26 18 44
Trading losses utilised
– 410 410
Deferred tax arising from GAAP differences 1,589 1,125 2,714
27 December 2020 2,318 2,168 4,486
Deferred tax unwinding within the 12 months from 2 January 2022 is expected to be immaterial.
Financial statements
135Hostmore • Annual Report 2021
16. (Loss)/earnings per share
53 weeks
ended
2 January
2022
52 weeks
ended
27 December
2020
Basic earnings per share
Weighted average outstanding shares (‘000)
118,463 116,920
Loss after tax for the period (£’000) (567) (17,314)
Basic EPS (pence) (0.5) (14.8)
Adjusted earnings per share
Loss after tax for the period (£’000)
(567) (17,314)
Exceptional items (£’000) (note 10) 8,121 –
Adjusted profit for the period (£’000) 7,554 (17,314)
Adjusted EPS (pence) 6.4 (14.8)
Adjusted diluted earnings per share
Weighted average outstanding shares (‘000)
118,463 116,920
Dilutive shares (‘000) – –
118,463 116,920
Adjusted diluted EPS (pence) 6.4 (14.8)
The calculation of diluted earnings per share does not assume conversion, exercise or other issue of potential
ordinary shares that would have an anti-dilutive effect on earnings per share, as the Group is in a loss-making
position.
Comparative (loss)/earnings per share is calculated using the current capital structure, excluding shares
issued immediately prior to the listing date.
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
136 Hostmore • Annual Report 2021
17. Property, plant and equipment
Right of
use assets
£’000
Leasehold
property
improve-
ments
£’000
Plant and
machinery
£’000
Fixtures
and fittings
£’000
Total
£’000
Cost or valuation
At 27 December 2020
150,151 9,874 48,899 88,087 297,011
Additions/modifications
8,632 – 1,791 1,988 12,411
Disposals – – (25) (17) (42)
At 2 January 2022 158,783 9,874 50,665 90,058 309,380
Accumulated depreciation and impairment
At 27 December 2020
28,932 9,874 39,920 48,147 126,873
Charge for the period on owned assets
– – 3,720 5,805 9,525
Charge for the period on leased assets
12,814 – – – 12,814
Disposals
– – (7) (13) (20)
Impairment charge 649 – 213 157 1,019
At 2 January 2022 42,395 9,874 43,846 54,096 150,211
Net book value
At 27 December 2020 121,219 – 8,979 39,940 170,138
At 2 January 2022 116,388 – 6,819 35,962 159,169
17.1 Assets owned and Right-of-use assets
The net book value of owned and leased assets included as “Property, plant and equipment” in the
Consolidated Statement of Financial Position is as follows:
2 January
2022
£’000
27 December
2020
£’000
Property, plant and equipment owned
42,781 48,919
Right-of-use assets: Property
116,344 121,116
Right-of-use assets: Motor vehicles 44 103
159,169 170,138
Depreciation charge for right-of-use assets:
2021
£’000
2020
£’000
Property
12,734 12,882
Motor vehicles 80 76
12,814 12,958
Financial statements
137Hostmore • Annual Report 2021
Additions/modifications to right-of-use assets
2 January
2022
27 December
2020
£’000 £’000
Additions/modifications to right-of-use assets 8,632 1,040
17.2 Impairment losses recognised in the period
The Group performs an annual impairment assessment at the end of each reporting period. Each restaurant
within the Group is considered a separate cash generating unit (CGU). An impairment charge is recognised
where the recoverable amount is less than the carrying value of the right of use assets of the CGU. The
recoverable amount is based on value-in-use calculations, using forecasted cashflows and each restaurant’s
ability to cover its costs, including an allocation of central overheads, marketing and maintenance of
standards of assets.
When trading data and forecasts indicate that an impairment no longer exists, any previously recognised
impairments are reversed up to the recoverable amount, without exceeding the previous carrying value less
depreciation. This impairment reversal is recognised in the statement of comprehensive income.
The recoverable amount is based on value-in-use calculations with cash flow projections over the lease term
of each restaurant, using the Group’s forecasted performance for 2022 and the business plan for the next two
years, with a long-term growth rate of 2% applied. The discount rate applied in the value-in-use-calculations
reflects the Group’s weighted average cost of capital and similar benchmarks in the industry. As a publicly
listed entity, the Group has calculated the discount rate for 2021 using the “capital asset pricing model” and
with reference to market comparatives. A pre-tax discount rate of 11.7% (2020: 7.9%) has been applied in the
value-in-use calculations.
The Group has recognised an impairment charge of £1,019k for the period ended 2 January 2022 (2020:
£7,975k), including £806k relating to CGUs for the impairment assessment described above and £213k for
separate asset considerations.
The recoverable amounts of the CGUs in respect of which impairment has been recognised are as follows:
2 January
2022
£’000
27 December
2020
£’000
Location
Covent Garden
– 146
Milton Keynes
549 871
Cheshire Oaks
1,032 1,654
Jersey
727 1,140
Eldon Square
2,186 2,130
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
138 Hostmore • Annual Report 2021
Sensitivities to impairment charges
The key assumptions in the impairment calculation are the predicted cashflows of the CGU and the discount
rate applied. The following table shows the effect on impairment of property, plant and equipment and
right of use assets for a 2% absolute change in the discount rate or 10% variation in EBITDA, with all other
variables held constant:
2 January
2022
£’000
27 December
2020
£’000
Discount rate – 2% increase
1,382 266
Discount rate – 2% decrease
(285) –
EBITDA – 10% increase
(457) –
EBITDA – 10% decrease
1,829 1,233
18. Leases
(i) Leases as a lessee
The Group has entered into a number of leases on properties from which it operates its restaurants. It has
also entered into lease arrangements for motor vehicles for use by employees. These have all been recognised
as right-of-use assets in the Consolidated Statement of financial position. The total cash outflow for leases is
£23,978k for the 53 week period ended 2 January 2022 (2020: £7,593k).
Lease liabilities are due as follows:
2January
2022
£’000
27 December
2020
£’000
Contractual undiscounted cash flows due
Not later than one year
21,108
28,238
Between one year and five years
77,591 102,885
Later than five years 111,285 100,892
209,984 232,015
2January
2022
£’000
27 December
2020
£’000
Lease liabilities
Non-current
131,980
133,774
Current 19,014 26,391
150,994 160,165
The following amounts in respect of leases have been recognised in the Consolidated statement of
comprehensive income:
53 weeks
ended
2January
2022
£’000
52 weeks
ended
27December
2020
£’000
Leases of low-value assets, excluding short-term leases of low-value assets
661 687
Variable lease payments not included in the measurement of lease liabilities
320 19
Changes in lease payments that arose from COVID-19-related rent concessions
4,210 1,475
Financial statements
139Hostmore • Annual Report 2021
(ii) Finance leases – lessor
The Group sub-leases some of its properties to third parties for essentially the whole of the remaining term of
the head lease. These are classified as finance leases.
The undiscounted lease payments receivable after the period end are as follows:
2 January
2022
£’000
27 December
2020
£’000
Not later than one year
106 399
Between one and five years
89 399
Later than five years 47 420
Total undiscounted lease payments receivable
242 1,218
Less: unearned finance income (38) (239)
Present value of minimum lease payments receivable 204 979
Lease income from finance lease contracts in which the Group acts as a lessor is as follows:
2 January
2022
£’000
27 December
2020
£’000
Finance income on the net investment in finance leases 28 49
During the period ended 2 January 2022, two sublease agreements were renegotiated which resulted in a
reduction in the carrying value of net investment in sublease.
19. Goodwill
2January
2022
£’000
27December
2020
£’000
Cost 155,284 155,284
Accumulated impairment (9,305) (9,305)
145,979 145,979
The Group continues to assess goodwill for impairment at each reporting date in line with its accounting
policy. No impairment charge has been necessary for the 53 weeks ended 2 January 2022 as the value in use
supports the carrying value of all assets, goodwill, PPE and ROU assets.
The Directors consider that the Fridays brand is the sole cash generating unit of goodwill as it cannot be
allocated to individual restaurants on a non-arbitrary basis.
20. Inventories
2January
2022
£’000
27December
2020
£’000
Food and Beverages 1,489 703
Inventory that is perishable is reviewed by individual restaurants and written off on a weekly basis.
Inventories recognised as an expense during the period ended 2January 2022 amounted to £31,256k (2020 -
£26,183k).
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
140 Hostmore • Annual Report 2021
21. Trade and other receivables
2January
2022
£’000
27December
2020
£’000
Trade receivables
1,375 491
Loans to related parties
– 3,000
Prepayments and accrued income
2,234 1,591
Other receivables 1,970 1,439
Total trade and other receivables 5,579 6,521
All amounts are receivable within one year and are non-interest bearing.
22. Trade and other payables
2January
2022
£’000
27December
2020
£’000
Trade payables
8,746 4,678
Payables to related parties
– 141,935
Other payables
1,746 1,012
Accruals
12,891 10,249
Other payables – tax and social security payments
3,282 5,957
Deferred income 112 287
Total trade and other payables 26,777 164,118
Trade payables and other payables are non-interest bearing and are normally settled monthly.
As part of the Capital Reorganisation referred to in note 2.2 to the financial statements, payables to related
parties, which at 27 December 2020 totalled £141.9m, were capitalised. Full details were set out in the
Prospectus. The Capital Reorganisation also resulted in the Company acquiring its subsidiaries as referred to
in note 35 to the financial statements.
Financial statements
141Hostmore • Annual Report 2021
23. Contract liabilities
The Group has recognised the following assets and liabilities related to contracts with customers.
2January
2022
£’000
27December
2020
£’000
Contract liabilities
Customer loyalty programme
478 594
Gift vouchers 546 505
1,024 1,099
The customer loyalty programme was started in July 2018. In 2020, the validity period of the loyalty points
was extended due to COVID-19 which led to an increase in the associated contract liability. This has since
reverted to a 12 month liability period, resulting in a reduction in liability for the period ended 2 January
2022.
Gift vouchers began to be issued in October 2017 and are valid for 18 months.
(i) Revenue recognised in relation to contract liabilities
Revenue recognised relating to brought forward contract liabilities has been as follows:
2January
2022
£’000
27December
2020
£’000
Customer loyalty programme
423 515
Gift vouchers 99 237
522 752
(ii) Assets recognised from costs to obtain a contract
2January
2022
£’000
27December
2020
£’000
Amortisation recognised 97 96
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
142 Hostmore • Annual Report 2021
24. Loans and borrowings
2January
2022
£’000
27December
2020
£’000
Non-current
Bank loans – secured 33,931 63,834
33,931 63,834
Current
Bank loans – secured 9,491 1,426
9,491 1,426
Total loans and borrowings 43,422 65,260
The Group completed a refinancing of the bank loan facilities in July 2021. The new facility agreement
consists of a £40m term loan and a £25m revolving credit facility. At 2 January 2022, the remaining
£39.3m term loan available had been drawn and £5m had been drawn on the revolving credit facility. The
Group’s loans are denominated in Pounds Sterling. There is no foreign exchange risk on the Group’s debt
arrangements.
The carrying value of loans and borrowings classified as financial liabilities measured at amortised cost
approximate to their fair value.
Loan Facility
Nominal
interest
rate
Year of
maturity
Repayment
schedule
2 January
2022
£’000
27 December
2020
£’000
Secured bank loan Margin plus
SONIA
2023 £500k per quarter,
increasing to £1.5m per
quarter from June 22,
with balance on maturity
44,299 65,800
Unamortised loan
arrangement fees (877) (540)
43,422 65,260
The facility agreement includes the following covenants:
(i) a minimum liquidity covenant which is tested on a monthly basis until August 2022, requiring a cash
balance of no less than £10.0m until 31 December 2021, £11.5m until 31 March 2022, £13.5m until
30June 2022, and £15.0m until 31 August 2022; and
(ii) leverage and fixed cost cover ratio covenants that are tested on a quarterly basis from September 2022.
The leverage ratio covenant requires that the Group’s total net debt to adjusted EBITDA to not exceed
3.0times between 30 September 2022 and 31 December 2022, and 2.5 times from March 2023. The fixed
cost cover ratio covenant requires EBITDA, adjusted for rental payments, to be not less than 1.5 times the
aggregation of such rental payments and bank interest charges.
The Group complied with all covenants within its bank facilities during the 53 week period ended 2January
2022.
Financial statements
143Hostmore • Annual Report 2021
Interest on the Group’s loan facilities is payable at the aggregate of a margin of 4% plus a compound reference
rate based on SONIA. A margin rachet applies from the date on which the adjusted leverage covenant and
the fixed charge cover covenant begin to be tested, with the impact on margin shown below. Any increase or
decrease on the margin as a result of the margin ratchet will apply from the beginning of the next interest
quarter.
Margin %
per annum
Adjusted Leverage
Greater than or equal to 2.0x
4.00
Less than 2.0x but greater than or equal to 1.5x
3.75
Less than 1.5x but greater than or equal to 1.0x
3.50
Less than 1.0x
3.25
The borrowers and guarantors under the Facilities Agreement have provided English law fixed and floating
charges over all of their assets in support of their obligations under the Facilities Agreement. Hostmore
Group Limited has also provided third party security in respect of the shares that it holds in its wholly owned
subsidiary Wednesdays (Bidco) Limited.
The term loan is repayable in quarterly instalments, commencing in September 2021, of £350k, increasing to
£500k in March 2022, and £1.5m from 30June 2022. The remaining balance is due for repayment at the end
of the facility on 1 October 2023. At the period end there was £481k of interest owed to the provider. There is
also an option to extend the facility by one year, provided that this is agreed between Wednesdays (Bidco) Ltd
and the Lenders in the period prior to July 2022.
Undrawn facilities
The Group had committed borrowing floating rate facilities available to be drawn at 2 January 2022 as
follows:
2January
2022
£’000
27December
2020
£’000
Expiring within 1 year
– –
Expiring between 1 and 2 years 20,000 –
20,000 –
Undrawn loan facilities incur a charge at 40% of the interest rate margin on the drawn facilities.
Movement of Loans
2January
2022
£’000
27December
2020
£’000
At the beginning of period
65,260 65,987
Loans drawn down
5,000 –
Loans repaid
(26,500) (1,050)
Amortisation of loan arrangement fees
804 323
Loan arrangement fees incurred in period (1,142) –
Balance at end of period 43,422 65,260
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
144 Hostmore • Annual Report 2021
25. Provisions
Dilapidations provision
2January
2022
£’000
27December
2020
£’000
Opening balance
3,330 –
Increase in provision
– 3,330
Charged to statement of comprehensive income
340 –
Utilised during the period
(43) –
Credited to statement of comprehensive income
(509) –
Unwind of discount 57 –
Closing balance 3,175 3,330
Expected to be utilised within one year or less
745 509
Expected to be utilised after more than one year 2,430 2,821
3,175 3,330
The Dilapidation provision arises from an obligation to return leased sites to their original condition at the
end of their lease term.
26. Share capital
Issued and fully paid
2January
2022
Number
2January
2022
£’000
27December
2020
Number
27December
2020
£’000
Ordinary shares of 20p each 126,127,279 25,225 – –
126,127,279 25,225 – –
The Company has one class of ordinary shares, comprising the entire issued share capital of the Company.
Share issuances during the period
Upon incorporation on 14 April 2021, the Company issued 1 share with a nominal value of £1, which was
settled through an intercompany receivable.
On 8 September 2021, the Company issued 50,000 ordinary shares with a nominal value of £1 to its then
parent company, Electra, which was paid in cash. The 50,001 shares then in issue were split into 250,005
ordinary shares with a nominal value of 20p each.
On 11 October 2021, the Company issued 7,339,374 ordinary shares to its then parent company, Electra,
which were paid for in cash.
On 11 October 2021, the Company issued a further 109,330,608 ordinary shares to its then parent company,
Electra, which was settled through an intercompany receivable.
After approval of shareholders of Electra in General Meeting on 1 November 2021, a distribution in specie
of all the issued share capital of the Company was declared, which resulted in each Electra shareholder
receiving three shares in the Company pro-rata for each Electra share then held.
As disclosed in the Prospectus, the management incentive plan of the Group crystallised upon the
Company being demerged from Electra prior to Admission. This ultimately resulted in certain members of
management subscribing for 9,207,292 shares in the Company (representing 7.3% of the issued share capital
in the Company) at 178p per share.
Financial statements
145Hostmore • Annual Report 2021
Rights attaching to Ordinary Shares
The Company’s shares form a single class for all purposes, including with respect to voting, dividends and
other distributions declared, made or paid on the Company’s share capital. Shareholders are entitled to one
vote per share at shareholder meetings of the Company.
Dividends on ordinary shares
No dividends were declared during the period ended 2January 2022.
Market purchases of ordinary shares
Pursuant to a decision of the then sole member of the Company made on 25 October 2021, the Company
was granted authority to make market purchases of shares in the Company, provided that the maximum
aggregate number of ordinary shares authorised to be purchased was 12,612,727, representing 10% of its
issued share capital immediately following Admission. No market purchases were made under this authority
during the period ended 2 January 2022. It is proposed that a resolution proposing a renewal of this authority
will be considered at the Annual General Meeting of the Company to be held on 27 May 2022. If passed, this
resolution will provide authority to the Company to make market purchases within normal guidelines and will
expire (unless previously revoked, varied or renewed) at the close of business on 30 June 2023 or, if earlier, at
the conclusion of the Company’s annual general meeting to be held in 2023.
Under the existing and proposed authority, purchases can be made at a minimum price of the nominal
value of the relevant share in the Company and a maximum price of the higher of (a) 5% above the average
middle market quotation for a share in the Company for the five dealing days immediately prior to the date
of purchase, and (b) an amount equal to the higher of the price of a share of the Company quoted for the last
independent trade and the highest current independent bid for a share of the Company on the trading venues
where the purchase is carried out.
Authorities to issue share capital
Pursuant to a decision of the then sole member of the Company made on 25 October 2021, the Directors
have been authorised to allot and issue ordinary shares in the Company. No issuances were made under this
authority during the period from Admission to 5April 2022, being the date of approval of these financial
statements. It is proposed that a resolution proposing a renewal of this authority on near identical terms
will be considered at the Annual General Meeting of the Company to be held on 27 May 2022. If passed, this
resolution will provide authority to the Company to issue shares and will expire (unless previously revoked,
varied or renewed) at the close of business on 30June 2023 or, if earlier, at the conclusion of the Company’s
annual general meeting to be held in 2023.
27. Share based payments
Total share based payment charge for the 53 week period ended 2 January 2022 was £78k (2020: £nil).
27.1 Employee share option plan
Details of the employee share option
The Group operates a share based payment scheme for its employees.
A long-term incentive scheme was introduced in November 2021, whereby the Directors and certain
employees were awarded share options in Hostmore plc. This comprises of 6 schemes, noted below, with a
total of 3,184,094 options awarded on 17 November 2021.
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
146 Hostmore • Annual Report 2021
The following share based payment arrangements were in existence during the current period:
Number Grant date Expiry date
Fair value at
grant date
(pence)
1. PSA
(with holding period)
EPS & ROIC part
TSR part
1,087,190 17 November
2021
16 November
2031
101
64
2. PSA
(without holding period)
EPS & ROIC part
TSR part
1,060,505 17 November
2021
16 November
2031
110
69
3. RSA Nil cost and One-off
awards
Nominal Cost Option
1,031,260
5,139
17 November
2021
17 November
2021
16 November
2031
16 November
2031
110
91
Total 3,184,094
Fair value of share options granted in the period
The different share option schemes have been valued as follows:
PSA - ROIC and EPS: These nil cost option awards are valued using the share price on the date of issue on
17November 2021.
PSA – TSR: A Monte Carlo Simulation (“MCS”) stochastic model has been used to calculate the fair value of
these nil cost option awards.
PSA – with holding period: For these awards subject to a post-vesting holding period, there is a discount for
the lack of marketability which accounts for the post-vesting holding period. This discount is based on the
Finnerty model.
RSA - Nil cost options: The RSA nil-cost options (including one-off awards) are valued using the share price on
the date of issue on 17 November 2021.
RSA - Nominal cost options: The Black Scholes Merton option pricing formula has been used to calculate the
fair value.
Volatility: Due to the short time since listing of the Company’s ordinary shares in November 2021, the
volatility is based on the volatility of Electra, over a period commensurate with the projection period, adjusted
to remove any periods of exceptional volatility during lockdowns of 2020.
Dividends: Dividend equivalents are paid on vesting awards. As a result, no assumption for dividend yield is
required.
The weighted average fair value of those options granted during the period at the reporting date was 101p.
The following inputs were used in valuing the share based payment arrangements during the period ended
2January 2022:
Inputs into valuation model
Grant data
share price
(pence) Volatility
Option
life
Risk-free
interest rate
1. PSA EPS & ROIC part
TSR part
110
110
–%
41.46%
3 years
3 years
–%
0.62%
2. RSA Nil cost and one-off awards
Nominal cost option
110
110
–%
31.10%
3 years
3 years
–%
0.71%
Financial statements
147Hostmore • Annual Report 2021
Movements in share options during the period
53 weeks
ended
January
2022
Number of
options
Granted during the 53 week period 3,184,094
Outstanding at 2 January 2022 3,184,094
28. Retained earnings
Retained earnings represent the cumulative retained profits less losses of the Group since incorporation of
the Company.
As part of the Capital Reorganisation, referred to in note 2.2 to the financial statements, £155.9m of the
Company’s share premium was cancelled and recognised in retained earnings.
29. Financial instruments – fair values and risk management
The Group’s financial instruments may be analysed as follows:
2January
2022
£’000
27December
2020
£’000
Financial assets at amortised cost
Cash and cash equivalents
32,080 37,201
Trade receivables 1,375 491
Other receivables
1,970 1,439
Amounts owed by fellow subsidiaries – 3,000
Net investment in a sub-lease
204 979
Accrued income 7 115
35,636 43,225
2January
2022
£’000
27December
2020
£’000
Financial liabilities
Borrowings 43,422 65,260
Lease liabilities
150,994 160,165
Trade payables 8,746 4,678
Amounts owed to fellow subsidiaries
– 141,935
Other payables 1,746 1,012
Accruals 12,891 10,249
217,799 383,299
Net financial liabilities 182,163 340,074
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
148 Hostmore • Annual Report 2021
29.1 Financial risk management objectives
The Group is exposed to a variety of financial risks through its use of financial instruments in its operating
activities. All of the Group’s financial instruments are classified as financial assets and financial liabilities at
amortised cost.
The Group does not actively engage in the trading of financial instruments for speculative purposes. The most
significant financial risks to which the Group is exposed are described below:
29.2 Credit risk management
Credit risk is the risk that a customer or counterparty to a financial instrument will not meet its obligations
under a contract and arises primarily from the Group’s cash at bank as well as trade and other receivables.
No collateral is held in respect of any of these. There is also a credit risk for the recoverability of the net
investment in subleases.
Cash is held at banks with high credit ratings with low associated credit risk. Trade and other receivables
mainly relate to returns to suppliers, amounts owed by voucher houses for TGIF vouchers sold and amounts
owed by delivery partners. The Group has long-standing relationships with its trading partners and there is
no history of default. Net investment in sublease relates to the sublease of a number of properties to third
parties, with historical long standing relationships. The Group manages its exposure to credit risk in respect
of these by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis.
The Group’s maximum exposure to credit risk is limited to the carrying amount of the financial assets
recognised at the reporting date, which at 2 January 2022 amounted to £35.6m.
29.3 Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its obligations associated with its
financial liabilities. The Directors manage this risk by:
• maintaining adequate cash reserves through the use of the Group’s cash from operations and bank
borrowings; and
• continuously monitoring projected and actual cash flows to ensure the Group maintains an appropriate
amount of liquidity.
All amounts are due within 12 months except amounts owed to fellow subsidiaries which are repayable on
demand and lease liabilities and borrowings which have been analysed into the relevant maturity groups in
notes 24 and 18.
29.4 Foreign currency risk
The Group primarily operates restaurants in the UK and all financial instruments are denominated in Pounds
Sterling. The Group’s principal exposure to foreign currency risk arises from the franchise fee owed to TGI
Friday’s Inc which is paid on a monthly basis, totalling £6.1m for the period. Sensitivity on these payments is
not significant due to the franchise fee being converted into USD each month at the rate prevailing at the date
of payment, with a 10% increase or decrease on the spread between the two rates paid resulting in a nominal
increase or decrease in the payment made.
In order to manage our exposure to foreign currency risk with international suppliers, the Group uses an
intermediary company who source and deliver products to its restaurants. These contracts are set in Pounds
Sterling, with in-built hedging on the supplier’s side.
29.5 Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group is subject to this risk exposure as it relates to changes in interest
rates on its variable rate borrowings and cash at bank which earns interest at floating rate. A reasonably
possible change in interest rates would not materially affect interest income earned on cash and cash
equivalents.
Financial statements
149Hostmore • Annual Report 2021
As set out in note 24, the Group had £43,422k (2020: £65,260k) of total debt outstanding with interest
rates linked to SONIA. Sensitivity on the interest rate of SONIA of +10% would increase the annual interest
payable by the Group by £47k. The impact of a change of 10% has been selected as this has been considered
reasonable given the volatility observed both on a historical basis and market expectations for future
movements.
29.6 Capital risk management
For the purpose of the Group’s capital management, capital includes interest-bearing debt. The primary
objective of the Group’s capital management is to ensure that it maintains a strong credit rating and complies
with covenant ratios in order to support its business. No changes were made in the objective, policies or
processes during the 53week period ended 2January 2022.
The Group Directors manage the Group’s capital structure and aim to adjust it in light of changes in economic
conditions and the requirements of the business. The Group includes in its net debt, interest-bearing loans
and borrowings (note 24), lease liabilities (note18), less cash and cash equivalents.
30. Cash flows from operating activities
2January
2022
£’000
27December
2020
£’000
Loss for the period
(567) (17,314)
Adjustments for
Depreciation of property, plant and equipment and ROU assets
22,339 23,273
Impairment of property, plant and equipment and ROU assets
1,019 7,975
Lease exit income
(616) –
Finance income
(6) (129)
Finance expense
13,603 12,519
COVID-19 rent concessions
(4,210) (1,475)
Income tax expense
(1,017) (2,878)
Share based payment charge 78 –
Cash flows from operating activities 30,623 21,971
31. Related parties
Identity of related parties with which the Group has transacted
As described in note 26 to the financial statements, the Group was previously wholly owned by Electra. During
the period ended 2 January 2022, a distribution in specie of all of the issued share capital of the Company was
declared, which resulted in each Electra shareholder receiving three shares in the Company pro-rata for each
Electra share then held. Further details relating to the demerger were set out in the Prospectus.
The Group paid a franchise fee of £4.5m to TGI Fridays Franchisor LLC during the 52 weeks ended
27December 2020. TGI Fridays Franchisor LLC ceased to be a related party of the Group during the 52 weeks
ended 27 December 2020. Franchise fees at similar levels continue to be paid under the Group’s franchise
agreement.
At 27 December 2020 there were loans to related parties of £3.0m and payables of £141.9m, both of which
were capitalised under the Capital reorganisation referred to in note 2.2 to the financial statements. There
were no balances between the Group, to or from any related parties at 2 January 2022.
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
150 Hostmore • Annual Report 2021
Transactions with key management personnel
Remuneration in respect of key management personnel is disclosed in note 12.
32. Capital commitments
The Group has no outstanding capital commitments at 2 January 2022 or at the previous period end.
33. Transition to International Financial Reporting Standards (“IFRSs”)
In transitioning its UK GAAP financial statements to IFRS, the Group has made adjustments in respect of its
accounting for leases, amortisation of goodwill and impairments. These are described below:
a) Reclassification under previous GAAP
The Group has included an additional adjustment where necessary to reclassify the external bank loan
portion that is due in less than 1 year from non-current liability to current liability.
b) IFRS 16 ‘Leases’
IFRS 16 specifies how the Group will recognise, measure, present and disclose leases. The standard provides
a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the
lease term is 12 months or less or the underlying asset has a low value. The recognition and measurement of
any leases considered exempt will continue unchanged.
Details of the transition approach adopted in accordance with the provisions of IFRS 1 are included in note 2
to the financial statements.
Date of transition – 1 January 2018 – Impact on statement of financial position
From 1 January 2018, for each lease, the Group has recognised an asset reflecting the right to use the leased
asset for the remaining lease term and a lease liability reflecting the obligation to make lease payments. Both
the asset and the liability have been recognised on-balance sheet whereas under UK GAAP they were off-
balance sheet.
Periods ended 30 December 2018, 29 December 2019 and 27 December 2020 – Impact on Statement of
financial position
Following the date of transition, any movements in prepayments, accruals and onerous lease provisions
recognised in accordance with FRS 102 have been reversed. Initial direct costs incurred on new leases
entered into have been reclassified from property, plant and equipment and included within the carrying
value of the relevant RoU asset. Where such costs have been incurred prior to the commencement of the lease
they are recognised as a non-current prepayment until the date of commencement. Lease incentives received
from landlords on new leases are reflected as a deduction from the carrying value of the RoU asset.
Where a lease term has changed, the lease liability has been re-assessed and a corresponding adjustment
made to the RoU asset. Where a lease has terminated early, both the lease liability and RoU asset have been
derecognised, and the difference has been recognised as a gain or loss in the statement of comprehensive
income.
Statement of comprehensive income
Previously recognised operating lease charges has been replaced with a depreciation charge on the leased
asset and an interest expense on the lease liability.
The unwinding of the dilapidations provision has been included within interest payable and similar expenses
within the statement of comprehensive income.
Statement of cash flows
There has been no impact on overall cash flow. However, the classification of lease payments within the
cash flow statement has changed from operating activities to financing activities, which is reflected in the
statement of cash flows.
Financial statements
151Hostmore • Annual Report 2021
Sub-leases
The accounting of leases where the Group acts as a lessor remains unchanged except where the sub-lease
is deemed to be a finance lease. For such leases, an appropriate proportion of the RoU asset has been
derecognised and a net investment in sub-lease has been recognised equal to the present value of future
lease payments, discounted at the same discount rate as the associated head lease. Any difference between
the net investment in sub-lease and RoU asset was recognised in the opening retained earnings at the date of
transition.
Rental income is no longer recognised in the statement of comprehensive income. Instead, any receipts are
recognised as a reduction in the net investment in sub-leases. Any movements in deferred income balances
have been reversed. Finance income over the lease term is recognised within interest receivable and similar
income in the statement of comprehensive income.
c) Amortisation of goodwill
In accordance with IFRS, goodwill is subject to an annual impairment assessment instead of being amortised
over an estimated useful life under FRS 102. Consequently, amortisation previously recognised in the periods
ended 30 December 2018, 29 December 2019 and ended 27 December 2020 has been reversed.
d) Impairments
The Group adjusted its value in use calculations for the impact of IFRS 16 referred to above and assessed
goodwill as well as RoU assets for impairments at the date of transition. Any resulting impairment losses
reduced the carrying amount of RoU assets as well as property, plant and equipment on a pro-rata basis.
The Group continues to assess each CGU and goodwill for impairment at each reporting date in line with its
accounting policy in note 1 to the financial statements.
e) Tax
The Group has adjusted the tax charge and deferred tax asset to account for the tax impact of the IFRS
adjustments referred to above.
f) Exceptional items
On transition to IFRS, the Group no longer recognises impairment charges as exceptional.
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
152 Hostmore • Annual Report 2021
Consolidated statement of comprehensive income
52 weeks ended 30 December 2018 Impact of changes in accounting policies
Notes
As previously
reported
£’000
IFRS
adjustments
£’000
As restated
£’000
Revenue
208,823 — 208,823
Cost of sales (45,920) — (45,920)
Gross profit
162,903 — 162,903
Administrative expenses
b, c, d (172,581) 12,387 (160,194)
Other income b 836 (166) 670
Operating profit
(8,842) 12,221 3,379
Interest receivable and similar income
b 56 54 110
Interest payable and similar expenses b (2,810) (11,531) (14,341)
Loss on ordinary activities before taxation
(11,596) 744 (10,852)
Taxation e (735) 2,037 1,302
Loss for the financial period from continuing operations
(12,331) 2,781 (9,550)
Other comprehensive income — — —
Total comprehensive loss for the period (12,331) 2,781 (9,550)
52 weeks ended 29 December 2019 Impact of changes in accounting policies
Notes
As previously
reported
£’000
IFRS
adjustments
£’000
As restated
£’000
Revenue
214,838 — 214,838
Cost of sales (46,708) — (46,708)
Gross profit
168,130 — 168,130
Administrative expenses
b, c, d (172,239) 26,076 (146,163)
Other income b 356 (184) 172
Operating profit
(3,753) 25,892 22,139
Interest receivable and similar income
b 161 55 216
Interest payable and similar expenses b (2,814) (10,586) (13,400)
(Loss)/Profit on ordinary activities before taxation
(6,406) 15,361 8,955
Taxation e (1,466) (448) (1,914)
Loss for the financial period from continuing operations
(7,872) 14,913 7,041
Other comprehensive income — — —
Total comprehensive loss for the period (7,872) 14,913 7,041
Financial statements
153Hostmore • Annual Report 2021
52 weeks ended 27 December 2020 Impact of changes in accounting policies
Notes
As previously
reported
£’000
IFRS
adjustments
£’000
As restated
under IFRS
£’000
Revenue
129,088 – 129,088
Cost of sales (26,183) – (26,183)
Gross profit
102,905 – 102,905
Administrative expenses
b,c,d (149,168) 17,800 (131,368)
Other income b 20,678 (50) 20,628
Operating loss
(25,585) 17,750 (7,835)
Interest receivable and similar income
b 80 49 129
Interest payable and similar expenses b (2,477) (10,009) (12,486)
Loss on ordinary activities before taxation
(27,982) 7,790 (20,192)
Tax credit e 1,753 1,125 2,878
Loss for the financial period from continuing operations
(26,229) 8,915 (17,314)
Other comprehensive income – – –
Total comprehensive loss for the period (26,229) 8,915 (17,314)
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
154 Hostmore • Annual Report 2021
Consolidated statement of financial position
As at 1 January 2018 Impact of changes in accounting policies
As previously
reported
IFRS
adjustments
FRS 102
reclassification As restated
Notes £’000 £’000 £’000 £’000
Non-current assets
Goodwill
145,979 — — 145,979
Property, plant and equipment
b 61,668 (75) — 61,593
Right-of-use assets
b, d — 174,705 — 174,705
Net investment in a sub-lease
b — 60 — 60
Prepayments
b — 617 — 617
Deferred tax asset e — — — —
Total non-current assets 207,647 175,307 — 382,954
Current assets
Inventory
1,185 — — 1,185
Net investment in a sub-lease
b — 127 — 127
Trade and other receivables
b 12,094 (5,184) — 6,910
Cash and cash equivalents 10,984 — — 10,984
Total current assets 24,263 (5,057) — 19,206
Total assets 231,910 170,250 — 402,160
Current liabilities
Borrowings
a — — (1,076) (1,076)
Current tax liabilities
— (1,064) — (1,064)
Trade and other payables
b (169,107) 6,459 — (162,648)
Provisions
— — — —
Lease liabilities b — (11,642) — (11,642)
Total current liabilities (169,107) (6,247) (1,076) (176,430)
Non-current liabilities
Borrowings
a (68,139) — 1,076 (67,063)
Deferred tax liability
(287) — — (287)
Provisions
b (1,938) 1,316 — (622)
Lease liabilities b — (165,317) — (165,317)
Total non-current liabilities (70,364) (164,001) 1,076 (233,289)
Total Liabilities (239,471) (170,248) — (409,719)
Net liabilities (7,561) 2 — (7,559)
Represented by:
Invested capital
— — — —
Share premium
— — — —
Share based payment reserve
3,264 — — 3,264
Retained losses (10,825) 2 — (10,823)
Total deficit (7,561) 2 — (7,559)
Financial statements
155Hostmore • Annual Report 2021
As at 30 December 2018 Impact of changes in accounting policies
Notes
As previously
reported
£’000
IFRS
adjustments
£’000
FRS 102
reclassification
£’000
As restated
£’000
Non-current assets
Goodwill
c 133,253 12,726 — 145,979
Property, plant and equipment
b 57,809 (328) — 57,481
Right-of-use assets
b d — 147,556 — 147,556
Net investment in a sub-lease
b — 934 — 934
Prepayments
b — 40 — 40
Deferred tax asset e 618 2,037 — 2,655
Total non-current assets 191,680 162,965 — 354,645
Current assets
Inventory
1,199 — — 1,199
Net investment in a sub-lease
b — 134 — 134
Trade and other receivables
b 12,282 (5,546) — 6,736
Cash and cash equivalents 17,573 — — 17,573
Total current assets 31,054 (5,412) — 25,642
Total assets 222,734 157,553 — 380,287
Current liabilities
Borrowings
a — — (1,076) (1,076)
Current tax liabilities
e — (353) — (353)
Trade and other payables
b (169,634) 8,690 — (160,944)
Provisions
— — — —
Lease liabilities b — (14,217) — (14,217)
Total current liabilities (169,634) (5,880) (1,076) (176,590)
Non-current liabilities
Borrowings
a (67,063) — 1,076 (65,987)
Provisions
b (5,139) 5,139 — —
Lease liabilities b — (154,029) — (154,029)
Total non-current liabilities (72,202) (148,890) 1,076 (220,016)
Total liabilities (241,836) (154,770) — (396,606)
Net liabilities (19,102) 2,783 — (16,319)
Represented by:
Invested capital
— — — —
Share premium
— — — —
Share based payment reserve
4,054 — 4,054
Retained losses (23,156) 2,783 — (20,373)
Total deficit (19,102) 2,783 — (16,319)
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
156 Hostmore • Annual Report 2021
As at 29 December 2019 Impact of changes in accounting policies
Notes
As previously
reported
£’000
IFRS
adjustments
£’000
FRS 102
reclassification
£’000
As restated
£’000
Non-current assets
Goodwill
c 120,527 25,452 — 145,979
Property, plant and equipment
b 55,931 (333) — 55,598
Right-of-use assets
b, d — 136,717 — 136,717
Net investment in a sub-lease
b — 780 — 780
Prepayments
b — 60 — 60
Deferred tax asset e 729 1,589 — 2,318
Total non-current assets 177,187 164,265 — 341,452
Current assets
Inventory
1,249 — — 1,249
Net investment in a sub-lease
b — 158 — 158
Trade and other receivables
b 13,073 (5,435) — 7,638
Cash and cash equivalents
27,121 — — 27,121
Total current assets
41,443 (5,277) — 36,166
Total assets
218,630 158,988 — 377,618
Current liabilities
Borrowings
a — — (1,076) (1,076)
Current tax liabilities
e — (408) — (408)
Trade and other payables
b (171,056) 8,011 — (163,045)
Provisions
— — — —
Lease liabilities b — (12,678) — (12,678)
Total current liabilities (171,056) (5,075) (1,076) (177,207)
Non-current liabilities
Borrowings
a (65,987) — 1,076 (64,911)
Provisions
b (8,561) 8,561 — —
Lease liabilities b — (144,778) — (144,778)
Total non-current liabilities (74,548) (136,217) 1,076 (209,689)
Total liabilities (245,604) (141,292) — (386,896)
Net liabilities (26,974) 17,696 — (9,278)
Represented by:
Invested capital
— — —
Share premium
— — — —
Share based payment reserve
4,054 — — 4,054
Retained losses (31,028) 17,696 — (13,332)
Total deficit (26,974) 17,696 — (9,278)
Financial statements
157Hostmore • Annual Report 2021
Consolidated statement of financial position
As at 27 December 2020 Impact of changes in accounting policies
Notes
As previously
reported
£’000
IFRS
adjustments
£’000
As restated
under IFRS
£’000
Non-current assets
Goodwill
c 107,802 38,177 145,979
Property, plant and equipment
b 50,341 (1,422) 48,919
Right-of-use assets
b, d – 121,219 121,219
Net investment in a sub-lease
b – 620 620
Prepayments
b – 60 60
Deferred tax asset e 1,772 2,714 4,486
Total non-current assets 159,915 161,368 321,283
Current assets
Inventory
703 – 703
Net investment in a sub-lease
b – 359 359
Current tax assets
b – 1,313 1,313
Trade and other receivables
b 7,226 (705) 6,521
Cash and cash equivalents 37,201 – 37,201
Total current assets 45,130 967 46,097
Total assets 205,045 162,335 367,380
Current liabilities
Borrowings
(1,426) – (1,426)
Trade and other payables
b (180,372) 15,155 (165,217)
Provisions
b – (509) (509)
Lease liabilities b – (26,391) (26,391)
Total current liabilities (181,798) (11,745) (193,543)
Non-current liabilities
Borrowings
(63,834) – (63,834)
Provisions
b (12,616) 9,795 (2,821)
Lease liabilities b – (133,774) (133,774)
Total non-current liabilities (76,450) (123,979) (200,429)
Total liabilities (258,248) (135,724) (393,972)
Net liabilities (53,203) 26,611 (26,592)
Represented by:
Invested capital
– – –
Share premium
– – –
Share based payment reserve
4,054 – 4,054
Retained losses (57,257) 26,611 (30,646)
Total deficit (53,203) 26,611 (26,592)
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
158 Hostmore • Annual Report 2021
Consolidated statements of cash flows
52 weeks ended 30 December 2018 Impact of changes in accounting policies
As previously
reported
£’000
IFRS
adjustments
£’000
As restated
£’000
Cash flows from operating activities
Profit for the financial period
(12,331) 2,781 (9,550)
Adjustments for:
Depreciation, amortisation and impairment
26,450 15,076 41,526
Loss on lease derecognition
— 407 407
Interest receivable and similar income
(56) (54) (110)
Interest payable and similar expenses
2,810 11,559 14,369
Equity settles share-based payment expenses
790 — 790
Taxation 735 (2,037) (1,302)
18,398 27,732 46,130
(Increase)/Decrease in trade and other debtors
(188) 362 174
Increase in inventory
(14) — (14)
Increase/(Decrease) in trade and other payables
1,510 (2,596) (1,086)
Increase in provisions 3,201 (3,823) (622)
Cash used in operations 4,509 (6,057) (1,548)
Rental income from sub-leases
— 177 177
Tax paid (2,350) — (2,350)
Net cash generated from operating activities 20,557 21,852 42,409
Cash flows from investing activities
Interest received
56 — 56
Initial direct costs incurred on new leases
— (209) (209)
Purchase of property, plant and equipment (10,199) 209 (9,990)
Net cash used in investing activities (10,143) — (10,143)
Cash flows from financing activities
Lease payments
— (21,852) (21,852)
Repayment of bank loan
(1,400) — (1,400)
Interest paid on bank loan (2,425) — (2,425)
Net cash used in financing activities (3,825) (21,852) (25,677)
Net increase in cash and cash equivalents 6,589 — 6,589
Cash and cash equivalents at beginning of period 10,984 — 10,984
Cash and cash equivalents at end of period 17,573 — 17,573
Financial statements
159Hostmore • Annual Report 2021
52 weeks ended 29 December 2019 Impact of changes in accounting policies
As previously
reported
£’000
IFRS
adjustments
£’000
As restated
£’000
Cash flows from operating activities
Profit for the financial period
(7,872) 14,913 7,041
Adjustments for:
Depreciation, amortisation and impairment
25,680 (2,352) 23,328
Loss on lease derecognition
— 1,889 1,889
Interest receivable and similar income
(161) (55) (216)
Interest payable and similar expenses
2,814 10,626 13,440
Equity settles share-based payment expenses
— — —
Taxation 1,466 448 1,914
21,927 25,469 47,396
(Increase)/Decrease in trade and other debtors
(791) (110) (901)
Increase in inventory
(50) — (50)
Increase/(Decrease) in trade and other payables
1,847 1,612 3,459
Increase in provisions 3,422 (3,422) —
Cash used in operations 4,428 (1,920) 2,508
Rental income from finance sub-leases
— 184 184
Tax paid (1,608) — (1,608)
Net cash generated from operating activities 24,747 23,733 48,480
Cash flows from investing activities
Interest received
150 — 150
Initial direct costs incurred on new leases
— (82) (82)
Purchase of property, plant and equipment (11,407) 82 (11,325)
Net cash used in investing activities (11,257) — (11,257)
Cash flows from financing activities
Lease payments
— (23,733) (23,733)
Repayment of bank loan
(1,400) — (1,400)
Interest paid on bank loan (2,542) — (2,542)
Net cash used in financing activities (3,942) (23,733) (27,675)
Net increase in cash and cash equivalents 9,548 — 9,548
Cash and cash equivalents at beginning of period 17,573 — 17,573
Cash and cash equivalents at end of period 27,121 — 27,121
Notes to the Consolidated Financial Statements
for the 53 weeks ended 2 January 2022 continued
160 Hostmore • Annual Report 2021
Consolidated statements of cash flows
52 weeks ended 27 December 2020 Impact of changes in accounting policies
As previously
reported
£’000
IFRS
adjustments
£’000
As restated
£’000
Cash flows from operating activities
Loss for the financial period
(26,229) 8,915 (17,314)
Adjustments for:
Depreciation, amortisation and
impairment
26,413 4,835 31,248
COVID-19 concessions
– (1,475) (1,475)
Interest receivable and similar income
(80) (49) (129)
Interest payable and similar expenses
2,477 10,042 12,519
Tax credit (1,753) (1,125) (2,878)
828 21,143 21,971
(Increase)/Decrease in trade and other debtors
5,847 (4,731) 1,116
Increase in inventory
546 – 546
Increase/(Decrease) in trade and other payables
6,572 (8,808) (2,236)
Increase in provisions 4,055 (725) 3,330
Cash used in operations 17,020 (5,601) 2,756
Rental income from sub-leases
– 8 8
Tax paid (970) – (970)
Net cash generated from operating activities 16,878 15,606 23,765
Cash flows from investing activities
Interest received
75 – 75
Initial direct costs incurred on new leases
– (11) (11)
Purchase of property, plant and equipment (3,677) 11 (3,666)
Net cash used in investing activities (3,602) – (3,602)
Cash flows from financing activities
Lease payments
– (6,887) (6,887)
Repayment of bank loan
(1,050) – (1,050)
Interest paid on bank loan (2,146) – (2,146)
Net cash used in financing activities (3,196) (15,606) (10,083)
Net increase in cash and cash equivalents 10,080 – 10,080
Cash and cash equivalents at beginning of period 27,121 – 27,121
Cash and cash equivalents at end of period 37,201 – 37,201
Financial statements
Company Balance Sheet
Hostmore plc
161Hostmore • Annual Report 2021
Note
2 January
2022
£’000
Assets
Non-current assets
Investment in subsidiary undertakings 35 176,737
Current assets
Trade and other receivables
37 16,231
Cash and cash equivalents 2,550
18,781
Total assets 195,518
Liabilities
Current liabilities
Trade and other payables 38 130
130
Total liabilities 130
Net current assets 18,651
Net assets 195,388
Issued capital and reserves attributable to owners of the parent
Share capital
39 25,225
Share premium reserve
14,583
Retained earnings 155,580
Total equity 195,388
In accordance with the exemption permitted under section 408 of the Companies Act, the Company has not
presented its own statement of comprehensive income in these financial statements. The loss after tax of the
Company for the period ended 2 January 2022 was £323k.
The notes on pages 163 to 166 form part of these financial statements.
The financial statements on pages 161 to 166 were approved and authorised for issue by the Board of
Directors on 5April 2022 and were signed on its behalf by:
Robert B. Cook
Chief Executive Officer
Alan Clark
Chief Financial Officer
Company Statement of Changes in Equity
162 Hostmore • Annual Report 2021
Share
capital
£’000
Share
premium
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
Comprehensive expense for the period
Loss for the period – – (323) (323)
Total comprehensive expense for the period – – (323) (323)
Issue of share capital
25,225 170,486 – 195,711
Cancellation of share premium – (155,903) 155,903 –
Total contributions by and distributions to owners 25,225 14,583 155,903 195,711
At 2 January 2022 25,225 14,583 155,580 195,388
Financial statements
Notes to the Company Financial Statements
for the 38 weeks ended 2 January 2022
163Hostmore • Annual Report 2021
34. Accounting policies and basis of preparation
34.1 Basis of preparation
The Company financial statements have been prepared in accordance with the Financial Reporting Standards
101 ‘Reduced Disclosure Framework’ as issued by FRC. As permitted under FRS 101, the Company has taken
advantage of the disclosure exemptions available under that standard in relation to share-based payments,
financial instruments, presentation of a cash flow statement, impairment of assets and related party
disclosures. Where required, equivalent disclosures are given in the consolidated financial statements.
The Company financial statements have been prepared under the historical cost convention. The company’s
accounting policies have been applied on a consistent basis.
The Company’s functional and reporting currency is Pounds Sterling. The following principal accounting
policies have been applied in the preparation of the financial statements.
The Company has taken advantage of the exemption available under section 408 of the Companies Act 2006
and elected not to present its own Statement of Comprehensive Income in these financial statements.
The Company was incorporated on 14 April 2021 and accordingly there are no prior year comparatives. These
financial statements relate to the 38 week period from incorporation to 2 January 2022
34.2 Going concern
The financial statements have been prepared on a going concern basis, with more detail to this assessment
within note 4.2 in the consolidated financial statements.
34.3 Income statement
In accordance with the exemption permitted under section 408 of the Companies Act, the Company has not
presented its own Income Statement in these financial statements.
The loss after tax of the Company for the period ended 2 January 2022 was (£323k).
34.4 Investments
The interest of the Company in shares of subsidiary undertakings is stated at cost less provision for
impairment. The carrying values of fixed asset investments are reviewed for impairment if events or changes
in circumstances indicate the carrying value may not be recoverable. An impairment is calculated by
comparing the carrying amount to the higher of the recoverable amount and value in use.
34.5 Share-based transactions
Equity-settled share-based payments to employees and others providing similar services are measured at the
fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of
equity-settled share-based transactions are set out in note 27 to the financial statements.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will
eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group
revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the
original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair
value of the goods or services received, except where that fair value cannot be estimated reliably, in which
case they are measured at the fair value of the equity instruments granted, measured at the date the entity
obtains the goods or the counterparty renders the service.
Notes to the Company Financial Statements
for the 38 weeks ended 2 January 2022 continued
164 Hostmore • Annual Report 2021
For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured
initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at
the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised
in profit or loss for the period.
34.6 Dividends
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised
when they are paid. Final equity dividends are recognised when approved by the shareholders at an Annual
General Meeting
34.7 Cash and cash equivalents
Cash is represented by cash on hand and demand bank balances. Cash equivalents are highly liquid
investments that are readily convertible to known amounts of cash without significant risk of change in value.
35. Investment in subsidiary undertakings
Movements in carrying value of investments
38 weeks
ended
2January
2022
£’000
Opening Balance
–
Purchase of shares in Hostmore Group Limited 176,737
Balance at 2 January 2022 176,737
At 2 January 2022 the Company had four subsidiary undertakings, Hostmore Group Limited, Wednesdays
(Bidco) Limited, Thursdays (Holdings) Limited and Thursdays (UK) Limited. All subsidiary undertakings are
wholly owned, operate in the restaurant sector, were incorporated in the United Kingdom and are registered
at Grant House, 101 Bourges Boulevard, Peterborough, PE1 1NG.
36. Employees and directors
Employee benefit expenses (including Directors) comprise:
38 weeks
ended
2January
2022
£’000
Wages and salaries
87
National insurance 5
92
The Company had 8 employees, including Directors, during the period. The cost for 4 employees is borne
by a subsidiary company and included in the consolidated financial statements. This note discloses the
remuneration for the 4 Non-executive Directors.
Financial statements
165Hostmore • Annual Report 2021
37. Trade and other receivables
2 January
2022
£’000
Prepayments and accrued income 86
Amounts owed by Group undertakings 16,126
Other receivables 19
16,231
All amounts are receivable within one year and are non-interest bearing. Amounts owed by Group
undertakings are payable on demand.
38. Trade and other payables
2 January
2022
£’000
Trade payables 117
Accruals 13
130
Trade payables and other payables are non-interest bearing and are normally settled monthly.
39. Share Capital
Issued and fully paid
2January
2022
Number
2January
2022
£’000
27 December
2020
Number
27 December
2020
£’000
Ordinary shares of 20p each 126,127,279 25,225 – –
Shares issued 126,127,279 25,225 – –
The Company has one class of ordinary shares, comprising the entire issued share capital of the Company.
Share issuances during the period
Upon incorporation on 14 April 2021, the Group issued 1 share with a nominal value of £1 which was settled
through an intercompany receivable.
On 8 September 2021, the Group issued 50,000 ordinary shares with a nominal value of £1 to its then parent
company, Electra, which was paid in cash. The 50,001 shares then in issue were split into 250,005 ordinary
shares of 20p each.
On 11 October 2021, the Company issued 7,339,374 ordinary shares to its then parent company, Electra,
which were paid for in cash.
On 11 October 2021, the Company issued a further 109,330,608 ordinary shares to its then parent company,
Electra, which were settled through an intercompany receivable.
After approval of shareholders of Electra in General Meeting on 1 November 2021, a distribution in specie
of all of the issued share capital of the Company was declared which resulted in each Electra shareholder
receiving three shares in the Company pro-rata for each Electra share then held.
As disclosed in the Prospectus, the management incentive plan of the Group crystallised upon the Company
being demerged from Electra prior to Admission. This ultimately resulted in certain members of the
Notes to the Company Financial Statements
for the 38 weeks ended 2 January 2022 continued
166 Hostmore • Annual Report 2021
management subscribing for 9,207,292 shares in the Company (representing 7.3% of the issued share capital
in the Company at 178p per share.
Rights attaching to ordinary shares
The Company’s shares form a single class for all purposes, including with respect to voting, dividends and
other distributions declared, made or paid on the Company’s share capital. Shareholders are entitled to one
vote per share at shareholder meetings of the Company.
Dividends on ordinary shares
No dividends were declared during the period ended 2 January 2022.
Market purchases of ordinary shares
Pursuant to a decision of the then sole member of the Company made on 25 October 2021, the Company
was granted authority to make market purchases of shares in the Company, provided that the maximum
aggregate number of ordinary shares authorised to be purchased was 12,612,727, representing 10% of its
issued share capital immediately following Admission. No market purchases were made under this authority
during the period ended 2 January 2022. It is proposed that a resolution proposing a renewal of this authority
will be considered at the Annual General Meeting of the Company to be held on 27 May 2022. If passed, this
resolution will provide authority to the Company to make market purchases within normal guidelines and will
expire (unless previously revoked, varied or renewed) at the close of business on 30 June 2023 or, if earlier, at
the conclusion of the Company’s annual general meeting to be held in 2023.
Under the existing and proposed authority, purchases can be made at a minimum price of the nominal
value of the relevant share in the Company and a maximum price of the higher of (a) 5% above the average
middle market quotation for a share in the Company for the five dealing days immediately prior to the date
of purchase, and (b) an amount equal to the higher of the price of a share of the Company quoted for the last
independent trade and the highest current independent bid for a share of the Company on the trading venues
where the purchase is carried out.
Authorities to issue share capital
Pursuant to a decision of the then sole member of the Company made on 25 October 2021, the Directors
have been authorised to allot and issue ordinary shares in the Company. No issuances were made under this
authority during the period from Admission to 5April 2022, being the date of approval of these financial
statements. It is proposed that a resolution proposing a renewal of this authority on near identical terms
will be considered at the Annual General Meeting of the Company to be held on 27 May 2022. If passed, this
resolution will provide authority to the Company to issue shares and will expire (unless previously revoked,
varied or renewed) at the close of business on 30 June 2023 or, if earlier, at the conclusion of the Company’s
annual general meeting to be held in 2023.
40. Retained earnings
Retained earnings represent the cumulative retained profits less losses of the Company since incorporation.
As part of the Capital Reorganisation referred to in note 2.2 to the financial statements, £155.9m of the
Company’s share premium was cancelled and recognised in retained earnings.
Notes to the Company Financial Statements
for the 38 weeks ended 2 January
2022
Financial statements
Definitions
167Hostmore • Annual Report 2021
The following definitions shall apply throughout this document unless the context requires otherwise:
“Adjusted EBITDA” EBITDA before exceptional items
“Adjusted ROCE” Adjusted EBITDA divided by total assets less current liabilities
“Admission” the admission of the Company’s ordinary shares to the premium listing
segment of the Official List of the Financial Conduct Authority and to
trading on the London Stock Exchange plc’s main market for listed
securities
“Cash Conversion” free cash flow divided by EBITDA
“Company” Hostmore plc, a company registered in England and Wales with company
number 13334853 whose registered office is at Highdown House, Yeoman
Way, Worthing, West Sussex BN99 3HH
“Demerger” the demerger of the Company from Electra
“Directors” the Executive Directors and the Non-Executive Directors of the Company
whose names are set out on pages 46 to 49.
“EBITDA” earnings before interest, tax, depreciation, amortisation and impairment
“Electra” Electra Private Equity PLC (now renamed Unbound Group PLC), a
company registered in England and Wales with company number
00303062 whose registered office is at 17 Old Park Lane, London,
W1K1QT
“Exceptional items” items that, by virtue of their unusual nature or size, warrant separate,
additional disclosure in the financial statements in order to assess the
performance of the Group
“Free cash flow” the profit/(loss) for a period adjusted for depreciation, non-cash items,
changes in working capital, tax paid and maintenance capex, and
excludes cash used in financing activities.
“Group” the Company together with its direct and indirect subsidiaries and
subsidiary undertakings
“GAAP” Generally accepted accounting principles in the UK
“IFRS” International Financial Reporting Standards as adopted by the UK
“Like-for-like (LFL) Sales” the revenue performance of the Group measured on a consistent year-on-
year basis
“Net Debt” the Group’s long-term borrowings and finance lease obligations less cash
and cash equivalents at each period end
“Prospectus” the document issued by the Company dated 15 October 2021 relating to
Admission
“PPE” Property, plant and equipment
“PSA” Performance Share Awards
“ROCE” EBITDA divided by total assets less current liabilities
“RoU asset” Right of Use asset
“RSA” Restricted Share Awards
“TSR” Total Shareholder Returns over a period
Notes
This document is printed on FSC® certified paper and to the EMAS standard and its
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This publication has been manufactured using 100% offshore wind electricity sourced
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Printed by
london@blackandcallow.com
www.blackandcallow.com
020 3794 1720
Hostmore plc
Highdown House
Yeoman Way
Worthing
West Sussex
United Kingdom
BN99 3HH
Tel: +44 330 460 5588
www.hostmoregroup.com
Hostmore • Annual Report 2021