Annual Report

2023

The home of

About us

Who we are

Hostmore is a UK hospitality business with its current operations focused on the

American-themed casual dining brand, “TGI Fridays”, including the fast casual dining

brand “Fridays and Go”.

Our restaurants and bars

Our portfolio features a balanced and diversified estate of 89 restaurants across regions and location types.

Stadium

34%

Retail park

31%

Shopping centre

19%

City centre

13%

Standalone

Wales

South West

London

14%

Midlands

19%

North

28%

Scotland

12%

South East

15%

Our vision and strategic focus

Our vision is to make every guest experience engaging

and relevant, celebrating the unique heritage and

character of our brands. We want our guests to

feel relaxed and enlivened by their experience in an

inclusive and welcoming environment. We work hard

to meet evolving guest requirements and to deliver

personalised guest engagement, supported by our

innovative digital platform.

While TGI Fridays has been trading for over three

decades in the UK, the Group was established in

2021 with a core strategy of providing a platform for

the development and growth of attractive hospitality

brands, defined by their iconic brand experience

and vibrant heritage. Hostmore is currently focused

on the organic growth of its existing brands.

The Group operates under the leadership of an

experienced management team that has a track

record of building businesses in the hospitality and

leisure sectors.

Strategic report

At a glance 2

Chair’s statement 4

Our Business model 6

Business strategy 8

Chief Executive Officer’s statement 12

Chief Financial Officer’s review 16

Key performance indicators 22

Environmental, Social and Governance 24

Stakeholder engagement 42

Risk management 46

Non-financial information statement 50

Governance report

Board of Directors 54

Chair’s Governance Introduction 58

Corporate Governance Report 59

Report of the Audit and Risk Committee 69

Report of the Nominations Committee 74

Annual Statement from the Chair of the 76

Remuneration Committee

Hostmore Remuneration Policy 81

Hostmore Annual Report on Remuneration 94

Directors’ Report 106

Statement of Directors’ responsibilities in respect 114

of the financial statements

Financial statements

Calculation of key financial performance indicators 118

and alternative performance measures

Independent Auditor’s Report 121

Consolidated Statement of Comprehensive Income 129

Consolidated Statement of Financial Position 130

Consolidated Statement of Changes in Equity 132

Consolidated Statement of Cash Flows 133

Notes to the Consolidated Financial Statements 134

Statement of Financial Position 168

Company Statement of Changes in Equity 169

Notes to the Company Financial Statements 170

Definitions 177

Contents

Hostmore plc • Annual Report 2023

Quality

Guest

opinion

score

45 delegates

enrolled on leadership

development

programmes.

132 internal

promotions

advancing talent to

more senior roles.

At a glance

Our three pillars

Hostmore’s three key pillars of Quality, Relevance and Simplicity provide a critical assessment basis for all

areas of the business’ performance. Our hospitality offering enhances the experience of our guests and the

wellbeing of our team members, across all aspects of our operations.

Net promoter score

2023

2022

2021

Relevance

1.8m emailable

guests

charity wishes granted.

No of team members

4,400

Staff currently on

apprenticeship schemes.

48%

Male

52%

Female

Group team members

1.4m

app

downloads

119

Hostmore plc • Annual Report 2023

Strategic report

Reduced electricity

usage in 2023 by

211 tonnes

of carbon

Simplicity

saved by recycling

used cooking oil.

Current venues

restaurants

781,000

Kg CO

Digital

friendly Wi-Fi

in every restaurant

Life-saving

defibrillators

in every restaurant

£15.8m

EBITDA 2023

Net debt* YE 2023

reduced by

£12.4m

£6.4m

* Restated

Hostmore plc • Annual Report 2023

Chair’s statement

It is a pleasure to write my first annual Chair’s statement to you

following my appointment as Chair at the Company’s annual

general meeting in June 2023. I joined the Company as a Non-

Executive Director in August 2022 and became Chair-designate

in January 2023 at the time of my predecessor’s announced

retirement. I would like to extend my personal thanks to my

predecessor, Gavin Manson, for his professionalism and guidance

during his time as Chair and I wish him well on the new projects he

undertook following his retirement from Hostmore.

Summary

During 2023 Hostmore completed a comprehensive

turnaround, which resulted in the appointment of new

senior management, a reduced level of overhead

expenses, a renewed focus on the daily operations

of the business, and a revised Capital Allocation

Policy that prioritises repayment of debt and returns

to shareholders over expansionary growth. As a

consequence, 2023 was a transitional year during

which the first half was negatively impacted by

legacy issues and the second half began to benefit

from the turnaround actions implemented during the

latter part of the first half. The Board is pleased that

the Company is now well-positioned for 2024 and

beyond.

Background

From Hostmore’s listing in 2021 until the beginning

of 2023, the Company pursued a strategy of rapid

store growth and the launch of internally-generated

new brands. The new stores opened were typically

loss-making, Group profits were negatively impacted

from increased overhead expenses, and the Group’s

cash resources were significantly depleted. During this

period, inflationary pressures and rising interest rates

also impacted consumer confidence and discretionary

incomes. The result was an increased level of

indebtedness and a share price which declined more

than 90% from the time of the Company’s listing just

14 months prior.

My personal shareholding in Hostmore is

approximately 3.6% of the Company’s issued share

capital. Seeing the decline in the business following

its listing, I joined the Company as a Non-Executive

Director in August 2022, having previously served as

a Non-Executive Director under prior ownership of the

business. I became Chair-designate in January 2023

with the mandate to undertake a turnaround of the

business.

The new management team, led by Chief Executive

Officer Julie McEwan and Chief Financial Officer

Matthew Bibby, have steered the business through

these challenging times with agility and creativity

to adapt to the changing landscape. The Board

Stephen Welker

Chair

thanks them and their colleagues, both in store and at

executive levels, for their persistence and dedication.

The Board

During the turnaround we also broadened the Non-

Executive Director base within the Board. In Q2 2023,

the Company conducted a search to identify and

appoint two new independent Non-Executive Directors.

This culminated with the appointment of Helena

Feltham and Célia Pronto with effect from 7 June

2023 and 20 June 2023, respectively. The Company

has benefitted meaningfully from Helena’s and Célia’s

immediate contributions to the Board.

Revised Capital Allocation Policy

In May 2023 the Company announced a revised Capital

Allocation Policy that is consistent with value creation

and sets the primary objectives for Hostmore against

which all major decisions are weighed. The policy sets

out the following:

1. Anticipate no new store openings until at least 2025

2. Manage the cost base more proactively against

current trading levels

3. Focus on high ROI organic growth initiatives

4. Dedicate all free cash flow towards repayment of

borrowings

5. Evaluate shareholder distributions after borrowings

have been repaid

I am pleased to report that we are following through

on all of these objectives, which places Hostmore in a

stronger position for 2024 and beyond.

Having completed the turnaround, we are now turning

to evaluate areas of responsible organic growth. The

growth areas under investigation are a departure from

the standard “rollout” strategy many of the Company’s

competitors routinely employ, which consumes

2023 was a transitional year during which the

first half was negatively impacted by legacy

issues and the second half began to benefit

from the turnaround actions implemented during

the latter part of the first half.

Hostmore plc • Annual Report 2023

Strategic report

significant cash resources and, although may result

in an increase in profits, often do not contribute to an

increase in shareholder value. In contrast, the Company

is actively devising and trialing high ROI initiatives which

require minimal cash investment and, therefore, do

not distract from the Company’s objective of reducing

borrowings as quickly as possible.

We are also beginning to look further ahead at strategic

initiatives for the period after our borrowings are

repaid. These initiatives will be judged on their ability

to increase the market capitalisation of Hostmore, not

simply its profits, and therefore if an activity does not

meet such criteria we would instead return the cash to

shareholders.

Proposed Acquisition of TGI

Fridays, Inc.

Subsequent to the year end, on 16 April 2024,

the Company announced that it was in advanced

discussions to acquire TGI Fridays, Inc. (“TGI

Fridays”) in an all-share transaction (the “Proposed

Transaction”). TGI Fridays is the global hospitality

business that owns the American-themed casual

dining brand “TGI Fridays” which is the Company’s

franchisor. If the Proposed Transaction completes,

Hostmore shareholders would own 36% of the

combined business (the “Combined Group”).

The Proposed Transaction would benefit Hostmore

shareholders by providing them with a material

shareholding in the capital-light franchise and licensing

fee business of the Combined Group, which achieves

high margins and strong cash flow conversion,

and is typically valued at attractive multiples by the

market. The Combined Group would have significantly

increased scale, as well as improved strategic,

operational, and financial flexibility. Shareholders

should also benefit from increased stability of earnings

and cash flow of the Combined Group resulting from

diversified business channels and geographies.

The Combined Group is expected to be renamed “TGI

Fridays plc”, with its shares admitted to trading on

the London Stock Exchange’s Main Market under the

share ticker “TGIF”. Completion is presently expected

by the end of Q3 2024.

More details will be forthcoming in the combined

prospectus and shareholder circular which is currently

expected to be published in Q3 2024.

Conclusion

2023 has been an active transitional year for Hostmore,

but we are now beginning to see the benefits of all the

changes that have been implemented. I look forward to

reporting our progress on these during 2024.

Stephen Welker

Chair

2 May 2024

Hostmore plc • Annual Report 2023

The unique

look and feel

to our dining

environments

in strategically

chosen locations.

High energy

and dynamic

environments

with a wide

demographic

appeal.

Our iconic brand

which is

synonymous

with quality, fun

and flair.

Our heritage

and expertise in

creating authentic

American food

and legendary

drinks.

Our inputs

Our passion

for providing a

unique guest

experience with a

genuine personal

touch, embracing

inclusivity, diversity

and a spirit of

personal self-

expression.

Our business model

We build

on our brand

equity and

heritage.

We invest

in our people, locations

and our offering.

We use

these three elements

to create memorable

experiences for

our guests.

We leverage

our buying power.

We reinvest

our ROI in

building our

business.

Employment

and advancement

opportunities

for our teams.

Partnerships in the

communities that we

serve and operate.

Aiming to enhance returns

for our shareholders.

Drive guest

growth through

brand enhancement

and amplification.

Memorable

and unique

experiences

for our guests.

The value we create

Hostmore plc • Annual Report 2023

Our 4D strategy is underpinned by three key pillars:

Quality, Relevance, Simplicity.

Business strategy

Our 4D approach

American cocktail bar

and restaurant famous for

everyday celebrations.

Prepared high-quality

food and drinks delivered

through click and collect and

third party aggregators.

We have rebuilt our digital

infrastructure so that our guests have

a personalised and relevant online

experience, together with a loyalty

programme that offers exclusive rewards.

Our fast casual dining

concept which enables

guests to ‘grab & go’ using

click and collect ordering.

Digital Transformation

Pillar 1

Quality

Pillar 2

Relevance

Pillar 3

Simplicity

Dine in Delivery Drive to

Hostmore plc • Annual Report 2023

Digital transformation

Our digital strategy remains a key focus for Hostmore’s brands and our offerings.

Making digital connections between our brand and our guests

Our guests are the at the heart of our brand experience. TGI Fridays remains, first and foremost, a dining and

cocktails experience in iconic venues with team members that create a fun and welcoming atmosphere.

Reflecting our venue-led experience in our digital strategy means that we use data and digital contact points

across our website, app and social media activity to amplify the TGI Friday’s brand experience. Our digital

presence continues to be a core driver in increasing footfall and guest loyalty, whilst also presenting our core

values to inspire new guests to visit our venues.

Our guests’ digital journey

Receive an offer

to redeem at venue

where rewards and offers

can be accessed

Visit the TGI website to browse

information, view menus, venue

locations and make a booking

1.4m

app

downloads.

Business strategy continued

Hostmore plc • Annual Report 2023

Strategic report

Implementation and success

Our digital transformation journey is effective. In essence, we are rebuilding our digital infrastructure so that our

guests have a personalised and relevant online experience with the brand. Using web and mobile-first platforms, a

data-led approach to understanding guests’ needs and therefore responding to them, is vitally important and one

that we are continually refining.

In May 2023 our new guest website was launched, a key step in the digital process towards creating a ‘single

guest view’. Our online platform provides an easier and more intuitive guest journey via venue information,

selection and booking through to rewards, promoting loyalty and feedback collection.

Aligning TGI Fridays’ personality with an online audience creates a digital touch point with our guests who remain

at the heart of the TGI Fridays experience.

Fulfil the booking as a guest

in a TGI venue – enjoy the

full TGI experience with team

members ensuring friendly

and fun hospitality.

Scan receipt codes and

earn Stripes rewards

Leave guest feedback and

make another booking

2023 digital revenue increased by 10%

on 2022 and there is a target increase

in 2024 of 13% on 2023.

Revenue tracked from

digital sources ranges

between 60-67% of total

weekly business revenue.

AI optimised content

delivering 48% open

rate for emails, vs 24%

for the sector

Hostmore plc • Annual Report 2023

Chief Executive Officer’s statement

Julie McEwan

Chief Executive Officer

2023 was a year in which the whole Hostmore team demonstrated

remarkable resilience with the macro-economic uncertainty and

fluctuating consumer behaviour, as headwinds continued.

The year was one of two halves for Hostmore. Half year one

(H1) was a transitional period focusing on senior leadership

changes, including me joining the board as CEO. It also saw the

implementation of a full operating turnaround, after a drop in

revenue, supported by a revised capital allocation policy.

Half year two (H2) saw revenue flat vs 2022, representing a significant improvement

vs H1, with H1 2023 revenue of £93.6m and H2 2023 revenue of £97.0m. Our

positive 2023 Christmas trading period was a further improvement on this trend with

like-for-like revenue +4% compared to December 2022. This was the best Christmas

trading for Hostmore since 2019.

Strategy

Our strategic business measures are yielding promising

results, with each month of H2 FY23 producing positive

EBITDA returns. We have consolidated our approach,

building on the evolution of our journey outlined in the

FY22 results. The progress includes organic growth

and cost reduction initiatives, menu price increases

and revised capital allocation strategies, all contributing

to our improved performance across the TGI estate.

Our Dine-In experience was our primary focus for

2023 and is continuing to be so in 2024. This has

produced further menu evolution, underpinned by

quality, relevance and simplicity. 2023 saw the iconic

“TGI” put back into Fridays, regaining our brand equity.

TGI Fridays has always been associated as a place of

fun and celebrations where delicious food and drinks

can be enjoyed. It is pleasing that these elements of

investment in our menus and service improvements

have delivered a positive impact on the overall guest

experience as evidenced by our guests’ feedback.

We have sought to achieve this by maintaining pricing

discipline, as demonstrated by the roll out of our value

proposition ‘Kids Eat Free’ which acknowledges the

pressures on our core family disposable income. This

has been received extremely positively and continues

to be a component of our offering. To complement this

and widen our appeal to new audiences, we continue

to embed our ‘Raising the Bar’ strategy. This has been

a headline initiative for TGI Fridays as we seek to build

on Fridays’ heritage and values. This has included

introducing fun and innovative offers and concepts,

such as TGI Fridays Bottomless Brunches, Cocktail

Masterclasses, and new celebration packages,

showcasing the very best of our brand. This has

attracted many new guests.

Dine out remains an important channel to our

consumers. As consumer spending tightened during

2023, we maintained our market share of delivery by

partnering with three delivery companies: Deliveroo,

Just Eat and Uber Eats. The alignment of our dine out

platform during 2023 has enabled us to acquire new

guests through a strategic approach. Our delivery

metrics have significantly improved, meaning we now

have more of our restaurants being able to advertise on

our aggregators’ main carousel, meaning our exposure

has increased in the delivery market.

Our brand vision is to regain our position in the UK

as the Original American cocktail bar and restaurant

famous for everyday celebrations.

Our brand objective is to grow this perception with our

core target of families aged 25-44. We are working on

engaging with a new younger audience of 18-24s to

underpin our long term sales growth. We leverage our

guest touchpoints through digital, store, social and

PR to market our brand externally and engage with

existing and new audiences.

We believe in putting the guest at the heart of our

brand experience. Our loyalty strategy is embedded

in our marketing and guest experience. Our ‘Rewards

Stripes’ programme delivers exclusivity to our guests

through valuable offers and experiences. We see high

guest engagement and continue to see significant

growth.

In 2023 we launched a new website experience

which significantly improved the quality of the guest

journey. Our digital platforms via online, social media

and the rewards app gives guests the opportunity

to interact with us across multiple platforms before,

during and after their visit to our restaurants. In

2024 we are continuing to develop this experience

with the aim of a seamless end-to-end journey and

giving us a single customer view of our guests.

This has included a focus on trialed, scalable, low-

risk organic growth initiatives with promotional

activities, upselling efforts, with strategic

partnerships to enhance bookings. The success

of initiatives such as our 2-for-1 cocktail offer

under the ‘Raising the Bar’ project highlights our

commitment to providing a compelling guest

experience and driving revenue and margin growth.

Digital transformation

Considering the existing UK economic pressures,

securing consumer spend is increasingly challenging

across the casual dining sector. TGI Fridays is no

exception to this. By taking a data-led approach,

we are seeking to enhance the guest experience

by leveraging the power of digital to establish a

competitive advantage. This is part of our strategy

to head towards a single guest view that informs,

enhances, and grows our guest proposition. I look

forward to reporting further during this year on the

progress of this digital transformation programme,

accompanied by highly focused marketing activity

around our refreshed TGI Friday’s brand. This is

leveraging our existing heritage and loyalty with

guests, all of which consolidates the brand and the TGI

Friday’s experience more effectively.

Guest feedback

While trading during 2023 remained challenging, our

guest sentiment continued to improve with engaged

and motivated restaurant teams, fully committed

to delivering those truly memorable TGI Fridays

experiences. Guest scores for TGI Fridays progressed

throughout the year and ended extremely positively.

We were consistently ranked within the top two casual

dining brands in the UK for food and drink quality,

coupled with outstanding service (Source: CGA

research and insights company). Our Net Promoter

Score continued this and ended the year at 48 – a

significant increase from the 2022 score of 30. This is a

superb result.

We also finished the 2023 year with a Trip Advisor

score for TGI Fridays of 4.5, maintaining our 2022

rating, with guests notably scoring TGI Fridays highly

Hostmore plc • Annual Report 2023

Strategic report

End 2023End 2022End 2021

Net Promoter Score

Guest Opinion Score

Tripadvisor Rating

18 30 48

74 80

4.5 4.5

3.6

0.9

on ‘value for money’. This was as we also achieved

significant improvements around speed of service, food

quality and guest interaction, as well as confirming that

our promotions were well received. We recognised

throughout 2023 that our guests were looking for more

experiential occasions, as well as personalisation, while

they keep an eye on costs as they continued to expect

value for their money.

People and Culture

Improving as an employer of choice, the Hostmore

business continues to be significantly underpinned by

a strong family culture where every team member plays

a part in our recipe for success. Again, I pay tribute

to all our team members, in both our support centre

and every one of our restaurants. Being an employer

of choice in the hospitality sector is vitally important to

us and we offer every team member the opportunity to

grow and develop.

Chief Executive

Officer’s statement continued

Hostmore plc • Annual Report 2023

Strategic report

Our refreshed career pathway provides team members

structured development opportunities at every level,

from apprenticeships, Head Chef certifications,

through to our General Manager ‘Aspire’ development

programme. In 2023, 45 team members enrolled on

our development programmes and a further 42 team

members started apprenticeship schemes. The focus

on further intensive bar training to certify Master

Bartenders continues to support our “Raising the Bar”

strategy. Also, our Deputy General Manager ‘Inspire’

development programme has a cohort of 14. This

ensures that succession planning is a key part of our

culture of retaining and motivating the best people

within our business and rewarding by promoting from

within.

We remain committed to building a leaner and more

focused organisation. Cost base efficiencies have been

achieved throughout 2023, with both our operations

teams and support centre being restructured during the

year. We are continuing to progress this during 2024.

Supply Chain

With food supply improving during 2023, we worked

closely with our business partners to ensure we

secured quality products whilst proactively managing

inflationary factors. Our multiple sourcing strategies

proved to be very successful, as we limited our

supply chain risk. As a result, we incurred food

inflation of just 3% over the year to December 2023,

when our sector saw food inflation of 13.8% by

December (Prestige Purchasing 2023 Foodservice

Inflation, published December 2023). The value

of these mitigation strategies against the market

norm delivered a saving of £3.5m to the Group.

Inflation in the beverage category increased

significantly over 2023 and resulted in our costs

increasing by 9%, against a sector forecast of 12%.

Half of our increases occurred in our soft drinks, with

significant increases due to soaring prices on energy,

glass, sugar, fruit juices and commodities. We also

experienced increases in the price of spirits and beers,

as the industry grappled with increased costs for

packaging, transport, glass and CO2 management.

The Group’s procurement team progressed our 2022

strategy to reduce complexity across the Group.

Significant cost pressures in the logistics market saw

our logistics spend increase by 30% from September

2023. These increased costs were in line with market

rates, confirming that we had benefited from rates

significantly below market norms for 2022 and the

majority of 2023.

New restaurant openings and the

creation of Fridays and Go

We set a clear strategy for 2023 to focus on delivering

improved performance across the existing TGI Fridays

estate, following a previous management focus on

expansion during 2022. As a management team we

committed to deferring new site openings until 2026.

This strategy remains as we continue with a more

sustainable approach of organically growing the

existing business. In H1 2023 and extended in

H1 2024, in contrast to prior year requirements, our

Franchisor agreed for Hostmore to not increase its

restaurant portfolio for 2024 and 2025. Our ‘Fridays

& Go’ quick service restaurant (QSR) offering is an

exciting proposition still in trial stage, with the potential

to offer valuable diversification for future growth.

Conclusion

I am confident in our ability to drive growth and

profitability. This will be achieved by accelerating

the many strategic initiatives that have underpinned

Hostmore’s resilience, fuelled by a strong leadership

team and a relentless focus on delivering value for our

guests. As we navigate challenges and capitalise on

opportunities, we remain committed to achieving long-

term success and creating value for all stakeholders in

2024 and beyond.

Julie McEwan

Chief Executive Officer

2 May 2024

Our focus on Dine-In experience, innovative

offerings, and digital transformation has yielded

promising results, propelling us toward regaining

our position as the Original American Cocktail Bar

of choice in the UK.

Hostmore plc • Annual Report 2023

The Group showed resilient progress in line with business

objectives despite a challenging industry-wide backdrop, with an

inflexion point being reached in half year two (H2) FY23. Changes

in the senior management team, including me becoming CFO and

joining the Board, have led to a change of the business strategy to

focus on cash generation and repayment of Group debt.

An improvement in like-for-like Revenue in H2, along with

improved operational delivery, an easing of inflationary pressures

and proactive responses, has ensured that the Group returned

to positive EBITDA FRS102 returns in the second half of the year. This, together with

our successful cost efficiency and revised capital allocation policy delivered a further

reduction in net debt in-line with plan. Overall, this resulted in Group EBITDA of £22.2m

in comparison to £31.1m in the previous year.

The Group’s business plan for 2024 is focused on a continuation of this turnaround

in performance, with focus on top-line growth initiatives, cash generation and debt

repayment, building on the foundations that have been set and achievements to date.

Trading Results

The Group’s trading results for the 52 week period ended and at 31 December 2023 are summarised below.

52 weeks ended / and at

31 December 2023

* Restated

52 weeks ended /and at

1 January 2023

Total revenue £190.7m £195.7m

Gross profit £147.7m £150.6m

Loss from operations (£11.1m) (£95.8m)

Group EBITDA

(1)

£22.2m £31.1m

Group EBITDA FRS102 £1.6m £11.3m

Basic loss per share (22.0p) (81.0p)

Adjusted basic (loss)/earnings per share

(2)

(7.7p) 3.4p

Net debt IFRS16 (£166.0m) (£178.4m)

Net bank debt FRS102

(3)

(£25.1m) (£27.7m)

Cashflows from operating activities £22.2m £28.8m

Notes

1. Group EBITDA reflects the underlying trade of the overall business. It is calculated as statutory operating

profit/(loss) adjusted for net interest and bank arrangement fees, tax, depreciation, net impairments,

dilapidations, gain on disposal of property, plant and equipment and right of use assets and share based

charges. Refer to page 119 for further details of Group EBITDA and Group EBITDA FRS102.

2. Adjusted basic (loss)/earnings per share represents the net (loss)/profit after tax before net impairments and

exceptional items, divided by the number of shares in issue.

3. Net bank debt FRS102 is borrowings from bank facilities, excluding the unamortised portion of loan

arrangement fees and leases, less cash and cash equivalents.

* As referred to in note 6 of the financial statements, in the 52 week period ended 1 January 2023, basic loss per share has been increased by

3.2p from previously reported 77.8p to 81.0p, adjusted basic earnings per share has been decreased by 0.2p from previously reported 3.6p

to 3.4p. At 1 January 2023, total liabilities have increased by £4.0m from previously reported £209.8m to £213.8m, and net debt has increased

by £2.1m from previously reported £176.3m to £178.4m.

Matthew Bibby

Chief Financial Officer

Chief Financial Officer’s review

Hostmore plc • Annual Report 2023

Strategic report

Financial results to 31 December 2023

The results reflect a challenging industry-wide backdrop throughout the reporting period, which management

responded to positively. These included:

• Weak consumer demand, partly driven by the inflationary effect that households face through the cost of living

crisis, higher utility bills and increased interest rates.

• Government & creditor support in Q1 2022, including a reduction in VAT for hospitality from 20% to 12.5%,

business rates reductions and rent reductions. These were favorable to 2022 and therefore resulted in lower

results in 2023 in comparison to the prior year.

• During the second half of 2023, external events such as severe storms, reduced cinema releases, retail closures

and sustained train strikes, negatively impacted consumer confidence and demand.

• Inflationary pressures on utilities, labour and food and drink prices, increased our costs.

The Group took action to mitigate the market factors affecting revenue through top-line initiatives such as pricing

reviews, our ‘raising the bar’ programme and our cost efficiency programme. These were created in the first half and

largely took effect in the second half of the year.

For internal management purposes the Group prepares results in accordance with FRS 102, which is the basis

adopted in the Groups’ bank facilities and its’ related covenants

Capital allocation policy

A cost efficiency programme, comprising a series of cost reduction initiatives, was completed across the first two

quarters of 2023. This programme produced £8.4m of annualised cost reductions, £6.2m of which were secured

in H2 2023 and the full amount crediting in 2024. The main focus of these was corporate overheads, procurement

negotiations and improved staffing of restaurants, whilst ensuring that the guest experience was not affected. The

Board continues to review all opportunities to improve the Group’s financial results. Further efficiencies have been

identified and are being implemented in 2024.

The Board also focused on mitigation of inflationary pressures through procurement negotiations of input costs and

hedging the Group’s utilities at a near optimum time. The decision to delay entering the hedging market benefited

the business with the locked-in rates being 9%, or £1m per annum, lower for FY23 than was prevailing at the time of

announcement of our 2022 results in April 2023.

New electricity and gas supply contracts have been entered into for a two year period with effect from 1 January

2024. The Group has hedged 70% of its expected electricity and gas for the financial year ending December 2024.

By completing these forward purchases in January 2024, rather than in Q4 2023, this proactive action has saved the

Group a further £2m.

The Group exited its loss-making TGI Fridays restaurant at Manchester Piccadilly in June 2023 and its loss making

63rd+1st restaurant in Edinburgh in September 2023. Post period end, the Group has signed documentation to exit

two further loss-making restaurants. In addition, initiatives continue to be implemented to improve the performance of

our remaining 24 loss-making restaurants. These initiatives have produced a significant improvement in results.

Following a focus by the previous management team on expansion through new site openings in 2021 and 2022, the

new management team has prioritised a more sustainable approach of growing the business organically. The Group

has obtained the agreement of the Franchisor to no longer be contractually obligated to open new restaurants during

2024 and 2025, which has strongly improved the cash position of the Group.

The above actions and capital allocation policy have supported the objective of repaying bank borrowings over the

short and medium term.

Impairments recorded for 52 weeks ended 31 December 2023

The Board has assessed the carrying value of the Group’s property, plant and equipment (“PPE”) and right of use

assets (“RoU assets”) at the period end by reference to the Group’s updated business plan. This exercise has

resulted in Hostmore recording a net impairment charge of £17.8m (2022: £30.6m) against PPE and RoU assets. This

impairment charge has no impact on the operational cash performance of the Group. In accordance with the Group’s

accounting policy, when trading conditions improve in subsequent years with resultant increases in profitability, PPE

and RoU assets impairments can reverse and be credited to Group earnings. In FY23 £5.6m (FY22 £5.7m) of prior

period PPE and RoU asset impairments were reversed due to increases in profitability at two restaurants. This arose

from strong management focus, with resultant stabilisation of trading performance.

Hostmore plc • Annual Report 2023

EBITDA for 52-week period ended 31 December 2023

For the 52-week period ended 31 December 2023, the Group delivered EBITDA of £22.2m (2022: £31.1m). This

included the impact of lower performance in the first half year of FY23 (H1), which was before the bulk of the

performance improvement measures and changed capital allocation policy referred to above were enacted. Group

EBITDA arose as follows:

Group EBITDA

52 weeks ended

31 December 2023

£’000

* Restated

52 weeks ended

1 January 2023

£’000

Loss before tax (25,529) (108,346)

Net interest and bank arrangement fees 14,396 12,584

Depreciation 17,964 20,504

Net impairment of property, plant and

equipment and right of use assets 17,768 30,601

Impairment of goodwill – 75,166

Release of dilapidations provision (465) –

Gain on disposal of property, plant and equipment (133) –

Gain on lease modification (1,951) –

Share based payment charge 141 581

EBITDA for the period 22,191 31,090

* Refer to note 6 to the financial statements. In the prior period to 1 January 2023 there were IFRS 16 lease modifications that were not

accounted for. As a result, in the 52 week period ended 1 January 2023 loss before tax has been increased by £4,001k from previously

reported £104,345k to £108,346k, net interest payable and bank arrangement fees have been increased by £106k from previously reported

£12,478k to £12,584k, depreciation has been increased by £165k from previously reported £20,339k to £20,504k, net impairment of property,

plant and equipment and right of use assets has been decreased by £578k from previously reported £31,179k to £30,601k and impairment

of goodwill has been increased by £4,308k from previously reported £70,858k to £75,166k. This has had no net effect on EBITDA for the 52

weeks ended 1 January 2023 as previously reported of £31,090k.

In accordance with prior years, the Group also measures its business performance on the FRS 102 approach to

lease accounting. On this basis, the Group delivered EBITDA of £1.6m (2022: £11.3m) as set out below.

Group EBITDA FRS 102

52 weeks ended

31 December 2023

£’000

52 weeks ended

1 January 2023

£’000

EBITDA under IFRS16 for the period 22,191 31,090

Less rent payable (20,644) (19,931)

Add sublease income

receivable 37 101

EBITDA under FRS102

for the period 1,584 11,260

Earnings per share

The basic loss per share, reflecting the impact of the impairments referred to above is a loss of 22.0p (2022

restated: loss 81.0p), while the adjusted basic loss per share (being the loss after tax before impairment and

exceptional items) is a loss of 7.7p (2022 restated: earnings of 3.4p).

The basic and adjusted basic loss per share for the 52-weeks ended 31 December 2023 reflect the factors

affecting 2023 referred to above. These included the cost of living crisis in the UK, higher utility bills and increased

interest rates. In addition, reduced Government support from that available in 2022 and during the second half

Chief Financial

Officer’s review continued

Hostmore plc • Annual Report 2023

Strategic report

of 2023 external events such as severe storms, retail closures and sustained train strikes negatively impacted

demand. The Group took proactive action to mitigate these market factors through top-line initiatives. These

included menu pricing increases whilst maintaining increasing guest opinion scores, the Group’s ‘raising the bar’

programme resulting in increased revenue, together with major cost efficiency programmes. These were created

in the first half and largely took effect in the second half of the year. These initiatives are continuing to drive

improved financial performance in 2024.

Cash Flow and Net Debt

The consolidated statement of cash flows and movement in net bank debt for the 52 weeks ended 31 December

2023 is summarised below.

52 weeks ended

31 December 2023

£’000

52 weeks ended

1 January 2023

£’000

Net cash from operating activities 31,507 19,978

Net cash used in investing activities (4,400) (10,241)

Net cash used in financing activities (25,209) (32,726)

Net increase/(decrease) in cash during period 1,898 (22,989)

Net cash at start of period 9,091 32,080

Net cash at end of period 10,989 9,091

Gross bank debt at start of period (36,800) (44,300)

Loans drawn (26,400) (10,500)

Loans repaid 27,100 (18,000)

Gross bank debt at end of period (36,100) (36,800)

Net bank debt (25,111) (27,709)

The reduction in net bank debt between 1 January 2023 and 31 December 2023 of £2.6m reflects the new capital

allocation policy of restricting capital expenditure to essential maintenance. In line with the revised franchise

agreement, there were no new restaurant openings during 2023.

Exceptional Items

Exceptional costs are those items that, by virtue of their unusual nature or size, warrant separate disclosure in the

financial statements to fairly assess the performance of the Group.

The Board has assessed the carrying value of the Group’s goodwill at the period end by reference to the Group’s

updated business plan. This exercise has confirmed that no impairment charge is required for the 52-week period

ended 31 December 2023.

52 weeks ended

31 December 2023

£’000

* Restated 52 weeks ended

1 January 2023

£’000

Impairment of Goodwill – 75,166

* Refer to note 6 to the financial statements. In the 52 week period ended 1 January 2023 impairment of goodwill has been increased by

£4,308k from previously reported £70,858k to £75,166k.

Hostmore plc • Annual Report 2023

Tax

For the 52-week period ended 31 December 2023 the Group recorded a corporation tax credit of £0.9m and a

deferred tax charge of £2.8m, making an overall tax charge of £1.9m for the year.

Refinancing

On 28 April 2023, the Group signed a bank facility amendment agreement with its lending banks, which

was subsequently amended on 28 September 2023 and the term of the facility extended to 1 January 2025.

On 26 April 2024 a further amendment to the facility was agreed, extending the maturity a further year to

1 January 2026. Under this amended facility, there are no cumulative EBITDA covenants for Q2 and Q3 of FY24,

with new covenants set for Q4 FY24 and FY25 in line with the Group’s updated forecasts for FY24 and FY25.

The covenants measure cumulative EBITDA and the ratio of EBITDA to net debt. There is also a minimum liquidity

requirement of £1.5m which remains unchanged. The loan repayments of £1.5m per quarter has remained the

same during each facility amendment.

Going Concern

In considering the going concern basis of preparation of the financial statements, the Directors took account

of significant elements across the business including the success of the cost saving initiatives in H2 FY23,

the amendment and restatement of the banking facilities referred to above and the removal of the contractual

requirement to open new stores in FY24 and FY25.

The Directors reviewed the Group’s forecast scenarios of expected cashflows up to 31 December 2025. The base

case scenario, excluding the impact of the proposed business combination referred to below, meets the revised

covenants throughout the going concern assessment period. A severe but plausible downside scenario, which

models a trading downturn, suggests that covenant breaches could ensue which would make the loans repayable

on demand, should the Directors not undertake appropriate corrective action.

On 16 April 2024 it was announced that Heads of Terms had been agreed for a proposed combination of the

Group with TGI Fridays with a potential completion in Q3 2024. For the purposes of conducting the going concern

assessment, the Directors have assumed that an appropriate funding structure will be put in place by both parties

to allow ongoing trading and meeting liabilities as they fall due.

If the proposed combination referred to above does not proceed, the Group would be required, on 7 March 2025,

to make a part repayment of the bank facility. This would be the lower of, the lowest amount of liquidity that

the Group is forecasting for 12 months forward from 28 February 2025 that exceeds £2.5m, and £5m. There is

also the requirement for the Directors to commence a sale process and to appoint an additional Non-Executive

Director acceptable to them and to the banks.

The Board maintains a tight focus on the Group capital allocation policy and would take mitigating steps if trading

is reduced to the levels inferred in the severe but plausible downside scenario.

The Directors are confident that the business will continue to trade for a period of at least fifteen months following

the signing of these financial statements and therefore that it is appropriate to prepare these financial statements

on a going concern basis. The conditions referred to above indicate the existence of a material uncertainty which

may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern. Further

details relating to the going concern basis of preparation of the financial statements in set out in note 4.2 to the

financial statements.

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 two-year period to December 2025. The Directors consider that two years is

the appropriate period over which to evaluate the medium-term viability. It also gives greater emphasis to the

medium term trading conditions faced by the wider UK hospitality sector.

The Company’s business plan for the 2024 financial period is focused on development of the Group’s existing

hospitality brands, underpinned by quality, relevance, and simplicity. At the heart of this is a guest-centric

approach, enhanced by harnessing digital journeys and the data these provide as a key enabler across all of our

guest-facing channels. This is underpinned by an omnichannel approach heading towards a single guest view that

informs, enhances and grows our guest proposition.

Chief Financial

Officer’s review continued

Hostmore plc • Annual Report 2023

Strategic report

The Group’s business plan for the 2024 and 2025 financial periods has been prepared by reference to the current

economic environment in the UK. It also assesses the effects of the risks facing the Group and the management

of those risks as referred to on pages 46 to 49.

Strategically, the business plan reflects the forecast financial performance of all 89 restaurants in the Group on an

individual monthly and annual basis as well as on a consolidated monthly and annual basis. In 2023, the Group

obtained agreement from the Franchisor to no longer be contractually obliged to open new restaurants during

the two financial years ending 31 December 2023 and 31 December 2024. In Q1 2024 the franchisor agreement

was further revised, resulting in the Group no longer being contractually obliged to open new restaurants in the

financial year ending 31 December 2025. The Board’s focus on the existing business and not having to commit

capital and incur initial losses from new restaurant openings has had a positive impact on overall financial

performance of the Group. This is reflected in the business plan.

The business plan reflects the 4D strategy referred to in detail in the Chief Executive Officer’s Statement on

pages 12 to 15. At the heart of this is the Group’s ‘Dine-in’, ‘Delivery’ and ‘Drive to’ operations, enhanced by its

‘Digital’ underpin. The business plan also includes the cost reduction programme that has been completed in

2023, reducing costs in 2024 by an annualised £8.4m.

As referred to above, on 26 April 2024, the Group completed an amendment to the covenants in the Group’s

banking facility and extended the facility to 1 January 2026. These revisions are all reflected in the business plan.

On 16 April 2024, also as referred to above, it was announced that Heads of Terms had been agreed by both

parties for a proposed combination of the Group with TGI Fridays with a potential completion in Q3 2024. If the

combination succeeds the Directors assume that an appropriate funding structure will be put in place such that

the Company and the Combined Group will continue to trade and to meet their liabilities as they fall due.

Under the banking facility extension, if the proposed combination referred to above does not proceed, a £5m

part repayment of the facility will become due on 7 March 2025.There is also the requirement for the Directors to

commence a sale process and to appoint an additional Non-Executive Director acceptable to them and to the

banks.

The business plan does not reflect the impact of the proposed combination outlined above, due to the early

stages of those negotiations. In Q1 2024, the Group obtained agreement from the Franchisor to no longer be

contractually obliged to open new restaurants during the three financial years ending 31 December 2025. Not

having to commit capital and incur initial losses from new restaurant openings has had a positive impact on cash

availability in the Group. This cashflow is being retained in the business, such that if the combination does not

proceed, the £5m part repayment of bank facilities due in March 2025 is proposed to be financed from internal

resources and other corrective actions.

The business plan includes forecasts of expected operating performance and cash availability for the two years

ending 31 December 2025 and subsequent years’ forecast performance. It also considers severe but plausible

downside scenarios of trading which assesses the cashflows in a depressed trading environment with reduced

recovery in H2 2024 and the whole of FY 2025. Under the severe but plausible scenario, covenant breaches

could ensue which would make the loans repayable on demand, should the Directors not undertake appropriate

corrective actions.

After careful consideration of the forecasts and the risks and opportunities facing the business, including those

presented within the severe but plausible downside scenario of trading together with mitigating actions that could

be taken by the Group to offset the impact of such risks, the Board confirms that it has a reasonable expectation

that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of

assessment.

Conclusion

It has been another challenging year faced by all those trading in the hospitality sector. The macro-economic

conditions that materially impacted the sector in 2022 continued to prevail into 2023 and the start of 2024.

We continue to adhere closely to our capital allocation policy to reduce net debt, helped by the reduction in the

opening of new stores under the revised franchisor agreement and so enhance value for shareholders.

Matthew Bibby

Chief Financial Officer

2 May 2024

Hostmore plc • Annual Report 2023

Key performance indicators

The Hostmore Board monitors the Group’s progress on a regular basis against

its strategic objectives and the financial performance of the Group’s operations.

Financial performance is assessed against strategy, budgets and forecasts, while

non-financial metrics are also used to assist the Board in measuring the Group’s

overall performance.

Like-for-like sales

Like-for-like sales enables the performance of the Group to be measured on a consistent year-on-year basis. The

figures below includes sites that were open for the entirety of the years under consideration for comparability.

0 50 100 150 200

Year ended 31 December 2023

£186.0m

Year ended 31 December 2022

£189.6m

EBITDA

EBITDA is the Group’s earnings before interest, tax, depreciation and impairment.

0 5 10 15 20 25 30 35

Year ended 31 December 2023

£22.2m

Year ended 31 December 2022

£31.1m

Net debt

Net debt is the Group’s long-term borrowings and finance lease obligations less cash and cash equivalents.

0 50 100 150 200

Year ended 31 December 2023

(£166.0m)

Year ended 31 December 2022

(£178.4m)

Hostmore plc • Annual Report 2023

Strategic report

Net Promoter Score

Net Promoter Score is an external measure of the Group’s appeal to its customers guests. This measures how

our guests value their experiences with us and helps us manage our year-on-year performance and deliver

brand growth.

0 10 20 30 40 50

Year ended 31 December 2023

48 (Great)

Year ended 31 December 2022

30 (Good)

Guest Opinion Score

Guest Opinion Score is a monthly aggregated score using Net Promoter Score, Facebook ratings, Google ratings,

Trip Advisor ratings and data from in-house guest feedback forms.

0 10 20 30 40 50 60 70 80

Year ended 31 December 2023

Year ended 31 December 2022

Return on capital employed

Return on capital employed is the Group’s EBITDA for the year divided by total assets less current liabilities at

the year end.

0 5 10 15 20

Year ended 31 December 2023

16%

Year ended 31 December 2022

17%

Hostmore plc • Annual Report 2023

Environmental, Social and Governance

At Hostmore we are committed to embracing our environmental,

social and governance responsibilities. We also have a particular

focus on our brands becoming leaders in sourcing responsibly,

whilst developing and maintaining supply chains founded on

sustainability.

This report sets out our principal areas of focus and activity

relating to our food and drink offering, our people, our

communities and the environment. We continue to invest

significant time and resources into health and safety matters

across the Group to ensure and further enhance a clean and

safe environment for our guests and team members.

Claire Hussey*

Risk & Compliance Director

Our focus has remained steadfastly on aligning our

guest experience with the best environmental and

social practices.

As a food and beverage operator, our product sourcing

and menu composition remain key to meeting the

high expectations of our guests and stakeholders. We

continue to:

• Comply with nutritional labelling requirements to

provide calorie data on all of our menus.

• Diversify our menus, notably in relation to kids’

menu choices to provide a balanced offering

with no additives which could otherwise cause

hyperactivity in children.

• Limit genetically modified foods from our menu.

• Use only RSPO (Roundtable on Sustainable Palm

Oil) certified products

Animal welfare

Hostmore is committed to operating high animal

welfare standards and practices, only sourcing meat

from suppliers who share our commitment.

We require suppliers to demonstrate management of

animal welfare from farm to fork and at any given time

be able to provide supporting information on request.

We require our suppliers to ensure that their farmers

and producers comply with UK and, if applicable, EU

animal welfare legislation for the relevant 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: (i) freedom from hunger and

thirst; (ii) freedom from discomfort; (iii) freedom from

pain, injury and disease; (iv) freedom to express normal

behaviours; and (v) freedom from fear and distress.

We have established a partnership with Red Tractor,

an assurance scheme ensuring the beef we use in

our burgers is of a high standard and responsibly

sourced with assured standards of animal welfare and

full supply chain traceability. It also has the additional

benefit of supporting British farmers.

The Better Chicken Commitment

At TGI Fridays, we are known for our chicken

and especially our famous sesame chicken

strips covered in our secret legendary glaze. TGI

Fridays is committed to improving chicken welfare

standards and has signed up to the Better Chicken

Commitment (BCC). We are committed to meet or

exceed the standards set out in the BCC by 2026

for 100% of the chicken in our supply chain.

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. These

include the Marine Stewardship Council for wild

caught fish, the Global Aquaculture Alliance,

Best Aquaculture Practice, and the Aquaculture

Stewardship Council for farmed fish and seafood.

Certificate of carbon saving

All used cooking oil across the Group is recycled. As

a result we saved a further 781,000kg of CO2 from

being released during the 52 week period ended

31 December 2023.



781,000 kg



2023

*Claire Hussey is an operational

director (rather than a statutory

director of Hostmore plc)

Hostmore plc • Annual Report 2023

Strategic report

Reduction in the use of plastics

From 1 October 2023, all single use plastic items within

our sector have been banned by the UK Government.

Prior to this, we had already removed all these

items from the supply chain and replaced them with

birchwood, bamboo, paper or other reusable products.

Our ESG focus

££

• Net zero roadmap

• Energy consumption

• Waste reduction

and recycling

• Plastics and

packaging reduction

• Water consumption

• Sustainability in

supply chain

• Animal welfare

• TGI Fridays values

and culture

• Team member

engagement / wellbeing

• Labour standards /

Health & Safety

• Community

engagement

• Charity contributions

• Health and nutrition

• Business ethics

and conduct

• Risk management

• Remuneration /

gender pay gap

• Equality and diversity

• Anti-bribery

and corruption

• GDPR

• Tax transparency

• Certifications /

accreditations

Environmental Social Governance

Allergens

We have categorised the 14 allergens detailed in UK

legislation and we follow comprehensive allergen

processes 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.

Hostmore plc • Annual Report 2023

Serving alcohol responsibly

We operate the Challenge 25 ID scheme in Scotland

and Challenge 21 scheme in England and Wales to

play our part in preventing the purchase of alcohol by

underage individuals.

Health and safety

The health and safety of our guests and team members

is of paramount importance to us. We have a Primary

Authority partnership relating to health & safety, food

safety and fire safety that covers the whole of the

Group’s estate. We have extensive procedures to

ensure we mitigate risks as far as possible and we

have clear procedures and operating standards with

assured advice from our Primary Authority. We have

robust standards in place to ensure we manage fire

safety effectively and protect our teams and guests.

We also employ external auditors to perform a rolling

programme of independent safety audits covering

food safety, fire safety and health and safety standards

across all our restaurants, in line with UK legislation.

A total of 10 (16 in 2022) incidents were recorded

on our internal accident reporting systems and

logged as required by the reporting of injuries,

disease and dangerous occurrence regulations

during the period ended 31 December 2023.

. These were all satisfactorily resolved.

Safe dining environment

We are proactive in

providing a safe dining

environment for our

guests. The Group

continues to be ‘Friendly

Wi-Fi’ accredited,

ensuring that we provide

a safer online experience

for our visitors. We display the above ‘Friendly Wi-Fi’

symbol in our restaurants to show our visitors our Wi-Fi

service has been approved and is safe to use.

Make-A-Wish UK

Every year thousands of children’s lives are changed

forever when they are diagnosed with a critical or life-

limiting condition. For these children and their families,

it can be a dark and scary place filled with treatment

plans, isolation, sleepless

nights and constant worry

about their future.

Make-A-Wish UK exists to grant life-changing wishes

for critically ill children across the UK, at a time when

they and their families need it the most. TGI Fridays

granted 119 wishes to children and their families

throughout 2023.

IT, cyber and data privacy

The Board is very aware that there are increasing

cyber security and data privacy risks in the UK.

Hostmore recognises more than ever the importance

of having a secure IT infrastructure, managing and

securing the Group’s and our stakeholders’ data.

The Group follows the National Cyber Security

Centre recommendation framework in all areas

relevant to its business. During the 52 week period

ended 31 December 2023, the Group also carried

out a significant number of projects to upgrade its

infrastructure and safeguard its systems. The Group

also carries out due diligence, onboarding and

monitoring of its IT suppliers, requiring corrective

action to be implemented without delay when

weaknesses are apparent.

As part of their induction process all team members

are given IT and data privacy training, with more

advanced cyber security training provided to

senior team members. In addition, the Group has

maintained its Payment Card Industry Data Security

Standard Attestation of Compliance in 2023. This is a

cybersecurity standard backed by all the major credit

card and payment processing companies that aims to

keep credit and debit card numbers safe.

Training

The new learning management system platform

introduced in 2022 for all of our team members,

providing refresher training in aspects of site and venue

safety, is well embedded in the business. First aid

and defibrillator training continues to be given to our

restaurant management teams across the business.

Defibrillators are installed in each of the Group’s sites

and were used successfully to support life in two

scenarios in 2023 (four in 2022).

Environmental, Social

and Governance continued

Hostmore plc • Annual Report 2023

Strategic report

Our environment

Key initiatives during the 52-week period ended 31

December 2023 included:

• Updating our comprehensive checklists for daily

opening and closing of our restaurants, which are

completed via our online due diligence systems.

• Continuing to promote our Green Mission to

increase team awareness in restaurant activity to

support our green initiatives.

• Using data / meter readings to review anomalies on

a weekly basis, working with our Operations team

to improve energy usage behaviour at every one of

our restaurants.

• The use of our ESG internal audit to support

the above initiatives. Also, review and promote

compliance with required daily checks and

activities in our restaurants.

• Waste – Of the waste managed for us by our

third-party manager Circom (approximately 55%

of the Group’s waste (FY22: 55%), no waste

was sent to landfill. 61% of the total waste

managed for us by Circom was recycled during

the year (FY22: 60%). The remaining 39% of

our waste managed by Circom was used in

energy recovery processes. The disposal of

our remaining waste (approximately 45% of the

Group’s waste) is controlled by our landlords. We

continue to work with our landlords to encourage

them to operate to our high standards.

We are continuing to work with Nella, a plastics-free

kitchen equipment supplier, to collect, repurpose and

recycle chopping boards in our kitchens. During 2023

as a business, we have exchanged 14,566 chopping

boards. If these boards were disposed of to landfill

their total carbon footprint would have totalled

115,325 kgCO2e. By repurposing we have saved

102,537 kgCO2e in 2023.

Our Green Mission

The Group measures its electricity usage in

relation to the Group’s restaurants that have

electricity usage meters installed. At 31 December

2023, 75 of the 89 restaurants in the Group’s

estate (84% of our estate) had electricity meters

installed. The data provided below and on the

following pages relates to the Group’s restaurants

that have electricity usage meters installed.

In addition to our ‘Save While You Sleep’ campaign, we

launched ‘Save it for Friday’, a campaign concentrating

on not turning on specific equipment on forecasted

low-sales days. Our sites also received coaching on

energy use during preparation hours which we will be

focusing on further in 2024.

Hostmore plc • Annual Report 2023

CO2 emissions saving in 2023

151tCO

Electricity cost saving in 2023

£185,000

Save While you Sleep campaign – Overnight use

Since July 2021 we have saved £382,000 and 435 tonnes of carbon, £185,000 of this in 2023.

Active tracking of the Group’s electricity consumption commenced in July 2021. In 2023 we focused on two

key campaigns to drive savings: save while you sleep and food preparation. The results of these campaigns are

outlined below.

Preparation cost reduction

As an additional effect of coaching teams and driving engagement, we have also reduced our energy use during

preparation hours through extraction and similar equipment being turned on at later times in the service periods.

Food preparation time and realignment of when our teams turn on equipment during the day has saved the Group

a further £210,000 and 293 tonnes of carbon in 2023.

CO2 emissions saving

293tCO

Electricity cost saving

£210,000

200

400

600

800

1000

1,000

800

600

400

200

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

20232022

Average total daily electricity use (kWh)

kWh (daily)

Group electricity usage comparison

Total energy usage in metered sites in 2023 was 25.0 million kWh; an important reduction from 25.95 million kWh

in 2022. Average daily site use has reduced from 902kWh per day, to 874kWh per day.

The graph below shows total energy use, month by month, comparing 2022 and 2023.

Environmental, Social

and Governance continued

Hostmore plc • Annual Report 2023

Strategic report

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 (carbon

dioxide equivalent (which includes CO2 and other

greenhouse gases)) is provided below for the

calendar year ended 31 December 2023. We have

also included comparisons to the prior years ended

31 December 2022 and 31 December 2021.

For the calendar year ended 31 December 2023, the

Group has purchased Renewable Energy Guarantees

of Origin (REGO) certified renewable electricity for

100% of its physical estate where it has direct control.

The Group has followed the recommendations of the

Taskforce on Climate-related Financial Disclosures

(TCFD) and has included disclosure in accordance with

the TCFD framework on pages 32 to 40.

Table 1 below relates to the Group’s restaurants

and shows an overall increase in the Group’s carbon

emissions between 2021 and 2023. Whilst the

Group is focused on reducing carbon emissions,

this increase emanates from: (i) there being lengthier

closures in 2021 of the Group’s restaurants due

to the Covid-19 pandemic, and therefore lower

carbon emissions and energy consumption in

2021; and (ii) the net growth in the number of

the Group’s restaurants in 2022 and 2023.

Streamlined Energy and Carbon Reporting (“SECR”)

Current

reporting year

Immediately

preceding year

Baseline

year

1 January 2023 –

31 December 2023

1 January 2022 –

31 December 2022

1 January 2021 –

31 December 2021

Energy consumption used

to calculate emissions

Gas –

28,614,263 kWh

Electricity –

31,054,562 kWh

Gas –

31,100,057 kWh

Electricity –

30,838,703 kWh

Gas –

25,684,068 kWh

Electricity –

23,116,898 kWh

i) Emissions from

combustion of Gas (Scope 1,

location based)

5,234 tCO2e 5,696 tCO2e 4,704 tCO2e

ii) Emissions from combustion

of vehicle fuels (Scope 1)

Immaterial 25 tCO2e 41 tCO2e

iii) Emissions from

purchased Electricity (Scope

2, location based)

6,431 tCO2e 6,548 tCO2e 4,908 tCO2e

iv) Emissions from business

travel in rental cars or team

member-owned vehicles where

the Company is responsible for

purchasing for fuel (Scope 3)

Immaterial Immaterial Immaterial

Total gross CO2e above 11,631 tCO2e 12,269 tCO2e 9,653 tCO2e

v) Intensity ratio: tCO2e gross

figure based from mandatory fields

57.921 (tCO2e/£million

gross revenue)

60.167 (tCO2e/£million

gross revenue)

59.524 (tCO2e/£million

gross revenue)

Table 1: Carbon Emissions and Energy Consumption

1. As part of calculating our scope 1, 2 & 3 emissions for 2023 the Group has updated its emissions factors to widen its carbon reporting.

Hostmore plc • Annual Report 2023

Methodology

The Group calculates its intensity ratio with reference to tonnes of CO2e per £1,000,000 of revenue. The intensity

ratio for the calendar year ended 31 December 2023 for Scope 1 and 2 was 57.921 tCO2e/£million revenue, when

using market-based emissions factors.

BEIS Conversion Factors for the corresponding reporting year have been used to convert electricity, gas and

other fuels from primary activity data to tonnes CO2e, as set out in table 2 below.

Methodology 2023 2022 2021

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 2023 UK Government

GHG Conversion Factors

for Company reporting

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 2022 UK Government

GHG Conversion Factors

for Company reporting

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 2021

UK Government GHG

for Company reporting

Conversion Factors for

Company Reporting

(version 1.0) for ‘Natural

Gas’ at Gross CV.

ii) Emissions from

combustion of vehicle

fuels (Scope 1) (tCO2e)

This year we’ve

excluded emissions

from combustion of

vehicle fuels as they

represent less than 5%

of Hostmore’s total

emissions. Hostmore

currently operates

one Company car that

is used infrequently

during the year.

Emissions are based

on pro-rated contract

mileage for the 2022

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 2022

to give tonnes of CO2e.

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.

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 2023

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 2022

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 2021

UK Government GHG

Conversion Factors for

Company Reporting

(version 1.0) for ‘Electricity

Generated/Electricity: UK’

Table 2: Carbon Emissions Methodology

Environmental, Social

and Governance continued

Hostmore plc • Annual Report 2023

Strategic report

Methodology 2023 2022 2021

iv) Emissions from business

travel in rental cars or

team member-owned

vehicles where company is

responsible for purchasing

for fuel tCO2e (Scope 3)

Not recorded for 2023

reporting period and

known to be immaterial

Not recorded for 2022

reporting period and

known to be immaterial

Not recorded for 2021

reporting period and

known to be immaterial

v) Intensity ratio: tCO2e

gross figure based from

mandatory fields

The intensity ratio has

been calculated as tonnes

of CO2e per £million of

gross revenue (£201.6

million)

, calculated by the

Group’s Finance Team

The intensity ratio has

been calculated as tonnes

of CO2e per £million of

gross revenue (£203.9

million)

, calculated by the

Group’s Finance Team

The intensity ratio has

been calculated as tonnes

of CO2e per £million of

gross revenue (£162.2

million)

, calculated by the

Group’s Finance Team

2. Hostmore measures gross revenue excluding VAT inclusive of discounts.

Hostmore plc • Annual Report 2023

Task Force on Climate-Related Financial Disclosures

Metrics

and Targets

The metrics and

targets used to assess

and manage relevant

climate-related risks and

opportunities.

Risk Management

The processes used by the

organisation to identify, assess, and

manage climate-related risks.

Strategy

The actual and potential impacts of

climate-related risks and opportunities on the

organisation’s businesses, strategy,

and financial planning.

Governance

The organisation’s governance around

climate-related risks and opportunities.

Reviewing our business against these four pillars and eleven underlying recommendations has been an insightful

process for Hostmore. The process has helped the Group to continue identifying ways in which climate change

might affect our business in the short, medium, and long term. Our aim for this year’s report is to build on the

success of last year, creating incremental improvements over time that increase the resilience of our business.

Table 3 below sets out our compliance by TCFD pillars together with consistency with the TCFD

recommendations and recommended disclosures, with references where we are not yet fully consistent whilst still

on our journey.

This is our second year of reporting in line with

the recommendations made by the Task Force on

Climate-Related Financial Disclosures (TCFD). The

TCFD was set up in December 2015 by the Financial

Stability Board, and since then has been widely

adopted as the leading framework for reporting the

financial impacts of climate change. Reporting against

the TCFD requires companies to consider how their

business operates according to four key pillars as

shown below:

Environmental, Social

and Governance continued

Hostmore plc • Annual Report 2023

Strategic report

TCFD Recommendation by pillar Disclosure provided

Governance

Describe the Board’s oversight of climate-

related risks and opportunities.

The Board maintains oversight of climate-related risks and

opportunities (CRROs) directly, as well as through the Audit &

Risk Committee as further described in the Governance section

on page 34.

Describe management’s role in assessing

and managing climate-related risks and

opportunities.

Our functional area leaders and Risk and Compliance Forum

have responsibility for the day-to-day consideration of CRROs,

with the Group’s Executive Team maintaining oversight. The

Governance section on page 34 provides more details.

Strategy

Describe the climate-related risks and

opportunities the organisation has identified

over the short, medium, and long term.

This year we have identified five material CRROs that could have

a strategic or financial impact over the short, medium and long

term. We continuously identify and assess CRROs as described

in the Strategy section on page 35.

Describe the impact of climate-related risks

and opportunities on the organisation’s

businesses, strategy, and financial planning.

The Board and the Executive Team consider how the

Group impacts the climate and how the climate impacts the

Group. The Group has initiatives in place as part of its ESG

Roadmap for 2023 to 2025 that cover these aspects. Further

details are set out in the Strategy section on page 35.

Describe the resilience of the organisation’s

strategy, taking into consideration

different climate- related scenarios,

including a 2°C or lower scenario.

This year we have selected a combination of physical and

transition risk scenarios as part of climate analysis scenario

modelling. The resilience of our business remains paramount

and currently forms part of our crisis management and disaster

recovery processes. Further details are set out in the Strategy

section on page 35.

Risk Management

Describe the organisation’s processes for

identifying and assessing climate-related risks.

The Board and the Executive Team have set out their processes

for identifying and assessing climate-related risks (CRRs) in the

Risk Management section on page 39.

Describe the organisation’s processes

for managing climate-related risks.

The Board has set out the Group’s process for managing CRRs

in the Risk Management section on page 39.

Describe how processes for identifying,

assessing, and managing climate-

related risks are integrated into the

organisation’s overall risk management.

The Group’s risk management process for CRRs is integrated

with the Group’s overall risk management process as amplified

further in the Risk Management section on page 39.

Table 3: Summary of Hostmore’s actions against the TCFD’s four pillars

Hostmore plc • Annual Report 2023

TCFD Recommendation by pillar Disclosure provided

Metrics and Targets

Disclose the metrics used by the

organisation to assess climate-related

risks and opportunities in line with its

strategy and risk management process.

We have set out the climate-related metrics used in the process

of assessing the Group’s performance against specific CRROs

on page 36.

Disclose Scope 1, Scope 2 and, if

appropriate, Scope 3 greenhouse gas

(GHG) emissions and the related risks.

Scope 1 and Scope 2 GHGs are disclosed in the Streamlined

Energy and Carbon Reporting on page 29. Refer to the Metrics

and Targets section for details regarding Scope 1, 2 & 3 GHGs

on page 39.

Describe the targets used by the organisation

to manage climate-related risks and

opportunities and performance against targets.

The Group has internal CRRO targets for the Operations Teams

to deliver against but given the stage of our journey, these are

not yet sufficiently advanced across the business for then to be

in a position to be reported externally. The Group is continually

driving towards performance improvements as part of our ESG

programme and are working towards establishing formal targets

for 2024. Further details of our plans are included in the Metrics

and Targets section on page 39.

Governance

Board of Directors oversight

Hostmore’s governance approach to climate-

related issues is in the early years of its maturity. Its

development is being led by the Group’s Executive

Team and the Board. The Group’s Executive Team take

responsibility for managing CRROs as these are an

important area for both our colleagues and our guests.

The Board maintains visibility of key CRROs using

Hostmore’s risk register, which is reviewed and tested at

meetings of the Audit & Risk Committee. The risk register

is reviewed regularly throughout the year.

At these meetings the Committee considers CRROs

as part of Hostmore’s wider business strategy. This

includes major plans of action, risk management policies,

annual budgets, and business plans as well as setting

the organisation’s performance objectives, monitoring

implementation and performance, and overseeing major

capital expenditures, acquisitions, and divestitures.

The Executive Team and Board receive presentations

form Management to ensure that they stay informed

on climate-related matters. Key CRROs assessed

during 2023 at Executive Team and Board level include

methods adopted to reduce the Group’s carbon

footprint arising from the energy crisis, which have been

extensive, the ongoing LED lighting roll-out and the

transition activities summarised on pages 33 to 37.

Management oversight

The day-to-day consideration of climate-related matters

is handled by the Group’s functional area leaders (safety,

training, maintenance, internal financial auditors) and

the Risk and Compliance Forum (led by the Group CEO,

CFO and Risk & Compliance director), with oversight

and responsibility provided by the Group’s Executive

Team. The ‘Risk Management’ section on pages 46 to

49 summarises this process. The interactions between

the functional area leaders, the Executive Team, the Risk

and Compliance Forum, the risk register, and the Board,

complete this process.

The successful implementation of each strategy to

manage and respond to identified CRROs is ultimately

dependent on all stakeholders in the Group. As a result,

the Group provides training initiatives to team members

to raise awareness of the Group’s responsibilities and

how all team members can contribute. In addition,

the Group provides regular communication through

channels, such as electronic updates, due diligence

checklists, weekly feedback and regular newsletters.

The Aspire leadership programme is a fast-track

promotion programme for exceptional General Managers

at Hostmore. This year, members of Aspire have been

challenged with delivering Hostmore’s Green Mission.

The Green Mission is a Group-wide resource efficiency

programme that encourages restaurants to reduce

energy, waste and water consumption. This involves a

continuing programme of improvement and also offers

performance incentives to successful stores. The Green

Mission has had positive results across the entire estate.

Management remain informed on climate-related issues

affecting the business by being an active part of the UK

Hospitality sector and through targeted staff training.

Environmental, Social

and Governance continued

Hostmore plc • Annual Report 2023

Strategic report

Strategy

This year’s TCFD report forms the basis of Hostmore’s

ongoing climate strategy. Developing this strategy

was a collaborative process led by the Group’s

advisers Zero Carbon Forum. They commenced their

assignment by conducting a series of interviews

with Management. Out of these, Hostmore identified

five key opportunities and risks (summarised in the

table on page 38) associated with climate change that

are most likely to affect the operational and financial

performance of the business. These key opportunities

and risks were selected from a longer list of potential

impacts; with all being held on record for further

analysis. Hostmore continues to review the potential

opportunities and impacts presented by climate

change. All opportunities and risks that were deemed a

priority were reviewed against Hostmore’s chosen time

frames and climate scenarios.

Timeframes

The opportunities and risks below have been set

against three different timeframes short, medium and

long. The definitions for these different timeframes is

as follows:

• Short – Expected to have a financial impact in the

next five years

• Medium – Expected to have a financial impact in

the next ten years

• Long – Expected to have a financial impact in the

next thirty years

Climate scenarios

When discussing and analysing Hostmore’s priority

risks and opportunities, the Executive Team has

considered how the business will perform under two

different climate scenarios for both physical and

transition climate-related opportunities and risks.

The estimated outcomes from these scenarios is

summarised below.

Physical climate impacts

Physical climate risk is the direct impact of climate

change on a company’s facilities, infrastructure,

operations and supply chain. Physical impacts can

be either acute or chronic. Acute physical impacts are

those that are event driven such as a storm or flood,

while chronic risks describe long-term changes in the

climate such as sustained higher temperatures or sea

level rise.

Transition climate impacts

Transition impacts are those that are created by

the gradual shift to a low-carbon economy. Typical

transition impacts include policy, legal, technological

and market risks. As each of these key sub-categories

of transition impact over time, they may have either a

positive or negative impact on a company’s operations.

Table 4 below is an overview of Hostmore’s selected

climate scenarios, the source for the scenario and the

rationale for its use when analysing climate-related

risks and opportunities. We have used these to set the

baseline for Hostmore’s future reporting. Under these

we will report on how Hostmore’s positioning might

change based on the descriptions that are issued by

the Intergovernmental Panel on Climate Change and

Net Zero Emissions to assess climate change.

Hostmore plc • Annual Report 2023

Climate scenario Scenario, source Rationale

1.5-degree transition scenario

Rapid changes are made, beyond current UK and

global pledges, to limit warming to 1.5℃ by 2100.

Advanced economies reach net zero emissions in

advance of others. Substantial international co-

ordination, including comprehensive changes to

policy, regulation, technology and markets by 2030.

Net Zero Emissions

by 2050 Scenario

International Energy

Agency (“NZE”)

Stress test rapid

transition risks

Meets TCFD guidance for

2℃ or lower scenario

Aligned to Paris Agreement

2-3-degree transition scenario

The Stated Policies Scenario (STEPS) provides

a more conservative benchmark for the future,

because it does not take it for granted that

governments will reach all announced goals.

Instead, it takes a more granular, sector-by-sector

look at what has actually been put in place to reach

these and other energy-related objectives, taking

account not just of existing policies and measures

but also of those that are under development.

STEPS, International

Energy Agency

Stress test business

as usual

‘Mid-level’ of physical impacts scenario

Low ambition or effectiveness of global action to

mitigate climate change results in 2-3℃ warming

by 2100. Acute and chronic physical impacts of

climate change are more pronounced by 2030

and continue to increase beyond this time.

Representative

Concentration

Pathway (RCP) 4.5,

Intergovernmental

Panel on Climate

Change (IPCC)

Stress test mid-level

physical climate risks

‘Low-level’ of physical impacts scenario

High ambition or effectiveness of global action to

mitigate climate change results in <2℃ warming

by 2100. Acute and chronic physical impacts of

climate change are also more pronounced by 2030,

due to lag in climate systems and GHG emissions,

and then remain limited beyond this time.

RCP2.6, IPCC Stress test low-level

physical climate risks

Table 4: Summary of Hostmore's selected climate scenarios

Environmental, Social

and Governance continued

Hostmore plc • Annual Report 2023

Strategic report

Priority risks and Opportunities

Carbon tax (risk)

In the event that a carbon tax is implemented,

Hostmore would be expected to pay a tax for every

tonne of carbon it produces. Under a 1.5-degree

NZE (Net Zero Emissions) scenario, as modelled by

the International Energy Agency (IEA), the IEA has

calculated that companies would be expected to pay

£113 /tCO2e in 2030, £166 /tCO2e in 2040, and £194 /

tCO2e in 2050.

Similarly, under a 2-3-degree STEPS (Stated

Policies Scenario) scenario, as modelled by

the IEA, it is expected that companies would

be expected to pay £73 /tCO2e in 2030, £79 /

tCO2e in 2040, and £92 /tCO2e in 2050.

An implemented carbon tax could pose a significant

annual expenditure for the Group. As a result, the

Executive Team is focused on continuing to reduce

the Group’s Scope 1, 2 & 3 emissions to help minimize

exposure to a carbon tax and other transition risks that

develop in the medium to long-term.

Supply chain disruption (risk)

As the impacts of climate change, both physical and

transition progress, additional strain will be placed on

global supply chains, potentially disrupting the arrival

of products to our sites. The transition and physical

climate-related risks that affect our supply chain will

be more limited in a 1.5 degree centigrade increase

scenario and increased more in a 2-3 degree increase

scenario. To help reduce the likelihood and impact

that climate impacts could have on the Group’s supply

chain, the Executive Team is collaborating with our

suppliers to improve resilience in these scenarios.

Energy efficiency (opportunity)

The Executive Team regularly looks for new ways

to reduce the Group’s energy consumption and for

the Group to use energy more efficiently. In 2023,

alongside the Zero Carbon Forum, the Group has

been running a series of energy campaigns that have

achieved significant energy and cost savings. We

believe the Group can still generate further savings

in energy usage in 2024. Group campaigns such as

our Save Whilst You Sleep, an initiative encouraging

staff to turn off more equipment over night is expected

to reduce annual energy costs by approximately

£400,000. Our second most effective initiative is our 4

step fire up, a phased approach to firing up kitchens

before service, with initial estimates suggesting this will

save a further £200,000 per year.

Coastal / River flooding (risk)

Hostmore operates restaurants across the UK and in

some cases these restaurants are at risk of flooding,

from rivers, sea or surface water. It is expected that

as climate change takes place flooding events will

become more commonplace in these areas under both

a 1.5 degree and 2-3 degree scenario

To help model how flooding could impact the business

in the future, the Executive Team has assumed that

flooding at Hostmore sites results in closures and a

resulting loss in revenue. Using data from Government

databases we have identified 17 sites that are at “High

risk” of flooding and 10 sites that are at “Medium risk”.

According to UK Government data all “High risk” sites

are expected to flood twice over a thirty-year period

(long term), while all “Medium risk” sites are expected

to flood once during that same period.

To mitigate against the financial risk of flooding, all of

our sites are insured for loss or damage to our property

as a result of flood. We also procure insurance for

business interruption and loss of profits at each of our

restaurants should they suffer a flood, either at the

restaurant or the vicinity which disrupts our ability to

trade. To help minimise the impact of flooding we have

business continuity plans in place that help to reduce

any downtime should a site be affected by floods.

Public perception (risk)

As the impacts of climate change become more

pronounced, public scrutiny of brands and products is

expected to increase. This could mean that brands that

do not demonstrate their commitment to supporting

the climate transition are likely to see a gradual

reduction in guest footfall and revenue. Similarly,

demand for particular products could also fall over time

if they are perceived to have a significant impact on the

climate. At Hostmore we are continually strengthening

our approach to CRROs as part of our broader

ESG strategy. CRRO management is integral to our

business as we embed its importance for long-term

business success. By creating a resilient, low-impact

business we aim to play an important and positive role

in society, underpinning that Hostmore’s restaurants

are desirable destinations during this climate transition.

Hostmore plc • Annual Report 2023

Risks and opportunities summary

Summarised below is a table of Hostmore’s key climate-related risks and opportunities.

Risk /

opportunity

Impact

title

Impact comments Likelihood Impact Time

frame

Financial

impact

Risk Carbon

tax

As the UK speeds up its transition

towards Net Zero it introduces a carbon

tax (£/tCO2e). It's estimated that a tonne

of carbon could cost anywhere between

£73 and £194 between 2030 and 2050.

High High Medium High

Risk Supply

chain

disruption

Due to unforeseen impacts Hostmore's

supply chain is negatively impacted,

disrupting the supply of incoming

goods to Hostmore's restaurants.

Medium Medium Medium Medium

Opportunity Energy

efficiency

By improving energy efficiency

at Hostmore's sites, the overall

consumption of energy by the

Group falls, reducing energy costs

and increasing profitability.

Medium Medium Short High

Risk Coastal

/ river

flooding

Due to coastal / river flooding, some

restaurants might be unable to open

and need repairs, impacting revenue

during the closure of the site.

Low Medium Long Medium

Risk Public

perception

Due to a possible public perception

of the Group’s unclear positioning

on climate change, guests choose to

dine at Hostmore's competitors.

Low Medium Medium Medium

Opportunity Changes

to growing

regions

Warming conditions in the UK mean that

crops used in fermenting drinks, such as

grapes are more readily grown in the UK.

These changes could reduce transport

costs in Hostmore's supply chain.

Low Medium Immaterial – Not

selected at this stage

for further analysis

Risk Poor

working

conditions

Rising temperatures in the UK mean that

during the summer months there could

be an increased level of absenteeism

amongst Hostmore staff as working

conditions become less acceptable.

Low Medium Immaterial – Not

selected for

further analysis

Opportunity Low

emissions

products

Hostmore chooses to substitute

high emissions products for lower

emissions alternatives. This change

comes at an additional cost to

Hostmore but significantly reduces

the Group’s carbon footprint.

Low Low Immaterial – Not

selected for

further analysis

Risk Customer

choices

As the transition to a Net Zero future

occurs and generations become more

discerning with their product choices,

particularly concerning the carbon

footprint of particular products, sales

of carbon intensive products fall.

Low Low Immaterial – Not

selected for

further analysis

Environmental, Social

and Governance continued

Hostmore plc • Annual Report 2023

Strategic report

Transitioning to a

low-carbon economy

During 2023, as part of our drive to improve efficiencies

and reduce our carbon footprint, we have undertaken

a series of activities as part of our ESG 2023 – 2025

roadmap to support our movement towards a low

carbon economy.

Key emissions reduction activities by the Group during

2023 and continuing include:

• The launch of our Green Mission, an engagement

campaign aimed at reducing energy

• Using smart meters to increase store level

engagement, reducing carbon footprint and

increasing financial accountability

• Procuring Renewable Energy Guarantees of

Origin (REGO) backed renewable energy at all our

stores where we are able to source our energy

independently under our leases.

• The roll out of LED lighting and occupancy sensors

across our portfolio

• Training our own internal carbon coaches to

educate store managers

• The removal of single-use plastics from our supply

chain

Risk Management

We have incorporated risk management processes for

CRRs into our overall risk management process. The

Group’s functional leaders are required to identify risks,

including CRRs, and populate their sections of the

risk register with how the risk may impact the Group

and the remedial actions that are being put in place.

All risks are ranked using a matrix approach, focusing

on the likelihood and magnitude of impact. The risk

manage, and monitor each risk, its evolution, its actual

and potential impacts on the business, and our ability

to address any negative impacts.

This approach ensures the identification of relevant

CRRs for each of our functional areas by those closest

to the relevant CRR. The Group is also exploring

additional ways to advance this.

The risk register is considered on a regular basis at

Executive Team meetings and at the quarterly Risk

and Compliance Forum. The attendees at these Risk

and Compliance Forum meetings include the CEO and

CFO, as well as Senior Members of our management

team, ensuring senior level oversight.

The Board also reviews the risk register on a scheduled

basis throughout the year. The Board and the Executive

Team ensures that necessary focus is maintained on

the most significant risks, through the Group’s risk

management ranking process referred to above.

Metrics and Targets

Throughout the year ended 31 December 2023, the

Executive Team has focused on sourcing the Group’s

Scope 1, 2 & 3 carbon emissions for the first time.

This data collection and calculation exercise has been

extensive and a good starting point for the Group. Our

reported Scope 1 and 2 emissions reflect 2023 and

prior year results. However, Scope 3 emissions have so

far only been able to be compiled up to 31 December

2022. In subsequent reporting years we expect to be

able to report carbon data that aligns with our financial

reporting year. This will mean that in our 2024 annual

report we will report both 2023 and 2024 scope 3

emissions data. This year’s Streamlined Energy and

Carbon Reporting (“SECR”) report therefore presents

2023 values for Scope 1 & 2 emissions and 2022

values for Scope 3 emissions.

To help track our own progress as well as our

progress in relation to the wider hospitality industry

we are using intensity metrics such as tCO2e / £m

revenue and tCO2e / number of outlets. Our intensity

metrics are set out in tables 5 & 6 below. Moving

forwards, we expect to assess how sustainably

the business is performing by augmenting this

with absolute and intensity carbon metrics

Table 5: Carbon intensity by turnover for 2022

Intensity metric (2022) (Scope 1, 2 & 3) Value

Intensity Measure, Revenue (£m) 204

Location based tCO2e

101,983

Market based tCO2e

105,578

tCO2e/Intensity Measure (Location) 500

tCO2e/Intensity Measure (Market) 518

3. Hostmore measures gross revenue excluding VAT inclusive of discounts.

4. Location-based figures are a reflection of the UK National Grid as a whole.

5. Market -based figures are a true reflection of Hostmore’s actual tariffs.

Table 6: Carbon intensity by number of

outlets for 2022

Intensity metric (2022) (Scope 1, 2 & 3) Value

Intensity Measure, Number of outlets (#) 89

Location based tCO2e 101,983

Market based tCO2e 105,578

tCO2e/Intensity Measure (Location) 1,146

tCO2e/Intensity Measure (Market) 1,186

Hostmore plc • Annual Report 2023

We calculate our carbon footprint using Zero Carbon Forum’s expertise. This enables us to use this data to inform

our decision making by analysing historical performance to build assumptions about how our carbon footprint

may develop in the future. Shown below in table 7 is Hostmore’s carbon footprint for 2022, calculated according

to the WRI GHG Protocol Corporate Standard.

Table 7: Carbon footprint for 2022

Scope Category 2022 (tCO2e)

% of total

(Market-based)

Scope 1

Refrigerant Gas (F-Gas) 947 0.9%

Fuels 5,566 5.3%

Scope 2

Electricity (Location-Based) 6,065 N/A

Electricity (Market-Based) 9,660 9.1%

Scope 3

Purchased goods & services 80,439 76.2%

Capital goods 3,233 3.1%

Fuel and energy related activities 3,086 2.9%

Upstream transmission & distribution 175 0.2%

Waste 133 0.1%

Business travel 242 0.2%

Commuting 1,848 1.8%

Downstream transport & distribution 124 0.1%

Downstream leased assets 65 0.1%

Investments 61 0.1%

Total

Hostmore’s emissions (Location-Based) 101,983 N/A

Hostmore’s emissions (Market-Based) 105,578 100%

6. As part of calculating our scope 1, 2 & 3 emissions for 2022 we have updated our emissions factors to increase the accuracy of our carbon

reporting.

7. Location-based figures are a reflection of the UK National Grid as a whole; Market -based figures are a true reflection of Hostmore’s actual

tariffs.

Environmental, Social

and Governance continued

Hostmore plc • Annual Report 2023

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 a wide set of our

stakeholders into consideration when making decisions about our strategy and operations.

The table below sets out our key stakeholder groups, how we engage with each, what we believe is important to

them, and how we have responded during the year. Further information on each can be found in the Strategic and

Governance Reports itemised on the pages shown.

Key stakeholder How do we engage

with them?

What we believe is

important to them

Key metrics for 2023

Shareholders

We rely on the

support of our

shareholders, so we

work to ensure

they understand our

strategy and goals

and can monitor

our performance

thorough our

corporate

governance

processes.

Our principal means of

engaging with shareholders

are:

• One-to-one meetings

• Annual report and financial

statements

• Half year and full year trading

and results announcements

• General meetings

• Financial

performance

• Share price

appreciation

• Strategy

• Business model

• Dividends

• ESG

• Taking actions to stabilise the

Group’s business in line with

stated strategy, taking measures

to mitigate costs and repayment

of debt.

• The appointment of Julie

McEwan, as the new Chief

Executive Officer and Matt

Bibby as the new Chief Financial

Officer.

• The appointment of Helena

Feltham and Célia Pronto as new

Non-Executive Directors of the

Company.

• Delivery of EBITDA of £22.2m

despite very challenging market

conditions during FY23.

• Continuing to implement the

Group’s ESG strategy, with

particular attention on supply

chain compliance and energy

consumption through the “TGI

Fridays Green Mission”.

Team members

We recognise our

team members as

our greatest asset:

they work hard to

provide a unique

experience for our

guests and our

success is achieved

through their hard

work and dedication.

We engage with our team

members on a regular basis,

through team member forums,

learning and development

opportunities, career

development programmes,

team member surveys, annual

performance and development

reviews and appraisal

processes. In addition, more

informally we operate social

and team building events.

Further details on how we

engage with our team members

is set out in the Directors’

Report on page 106.

• An engaging

and rewarding

culture and work

environment

• Competitive

remuneration and

benefits package

• Opportunities for

learning and career

development

• 100% of tips are shared

between team members in our

restaurants.

• A bonus scheme implemented

for restaurant general managers

to reward success in their own

restaurant.

• Over 101,000 hours of annual

training provided to team

members in our stores.

• Enrolment on development

programmes such as the Aspire

programme for potential future

leaders, Ignite programme for our

Deputy General Managers, Sparx

programme for our Chefs, and

Master Bar Tenders programmes

for upskilling our bar teams.

Hostmore plc • Annual Report 2023

Strategic report

Key stakeholder How do we engage

with them?

What we believe is

important to them

Key metrics for 2023

Guests

Our guests are

paramount to

the success of

our business and

our growth.

We engage with our guests

when they visit our restaurants;

via the Group’s website, apps

and social media channels;

and advertising, including

social media, print media,

sponsorship deals and in-

restaurant promotions.

We also undertake surveys

and market research to better

understand our guests’ needs.

• To have an

enjoyable and

memorable dining

experience

• Quality and

relevance

• Value for money

• Health and safety

• ESG

• At 31 December 2023, our

Net Promoter Score was 48, a

year on year improvement. TGI

Fridays is in line with the Casual

Dining segment and industry

average.

• Guest Opinion Score (GOS) for

TGI Fridays improved for all our

regions over the course of the

year ended 31 December 2023,

up from 74 at the end of 2022 to

80 at the end of 2023.

• GOS is an aggregated score

using Net Promoter Score

(Facebook ratings: 3.12 down

from 3.53; Google ratings:

3.80 up from 3.63; Trip Advisor

ratings: 4.49 up from 4.46)

and data from in-house guest

feedback forms.

• We received 291k pieces of

feedback from TGI Fridays

guests during 2023. Of these,

direct feedback channels

accounted for 86% of feedback

where we received an average

rating of 82%, and increase of

2% over the previous year.

• The continued promotion of

inclusivity through the TGI

Friday’s Show Your Stripes

media campaign

Hostmore plc • Annual Report 2023

Key stakeholder How do we engage

with them?

What we believe is

important to them

Key metrics for 2023

Franchisor

Our Franchisor

permits us to

use the Fridays

and TGI Fridays

and Go brands,

together with related

trademarks, designs

and intellectual

property relating

to the brands.

The Group’s

continued success

and ability to

compete depends

on the strength

of our brands.

We work with the

Franchisor to ensure

that the brands

and associated

intellectual property

rights are used in a

beneficial manner.

The Group has franchise

arrangements with the

Franchisor which reflect the

Group’s requirements in

relation to the TGI Fridays and

TGI Fridays and Go brands.

We participate in dialogue with

the Franchisor to discuss key

developments and ways in

which the Franchisor may be

able to assist the Group.

• Mutually beneficial

partnership

• Growth of our

business

• Collaborative

approach

• Fair payment terms

• All of the Group’s sales channels

operate under the TGI Fridays, or

TGI Fridays and Go brands.

• Contractually agreed with the

Franchisor that there was no

requirement for new openings in

2024 or 2025.

Suppliers

We rely on

our suppliers,

distributors and

outsourcing partners

to provide critical

supplies and

services, in areas

such as food and

drink, maintenance,

marketing and IT.

We work with

our suppliers to

ensure beneficial,

sustainable

partnerships so that

our business can

continue to thrive.

We hold meetings with key

suppliers throughout the year,

to review their performance

and to address issues or

concerns.

We are committed to paying

our suppliers in line with agreed

payment terms.

• Beneficial

partnerships

• Collaborative

approach

• Balanced

contractual terms

• Fair payment terms

• Continuance of our

business

• £43.0m total cost of sales spend

• £74.2m total spend with

suppliers

Stakeholder engagement continued

Hostmore plc • Annual Report 2023

Strategic report

Key stakeholder How do we engage

with them?

What we believe is

important to them

Key metrics for 2023

Local communities

We aim to ensure

that as many people

as possible can

benefit both from

our employment

opportunities and

making a difference

in our sector and

local communities.

We provide support for our

sector and local communities

through a variety of initiatives,

including fundraising,

sponsorship and voluntarily

providing our time and

expertise.

• Employment

opportunities

• Facilitating

contributions to the

charity Hospitality

Action

• Participation as an

active member of

the local community

• Employment opportunities

• Facilitating charitable donations

to Hospitality Action

• Continued support and work with

Make a Wish Charity, 119 wishes

granted in 2023.

• Continued sponsorship of Pride

in London.

Hostmore plc • Annual Report 2023

Risk management

Risk

The Board carries out robust assessments of the principal risks facing the Group, including emerging risks, and

those that may adversely affect its business model, future performance and liquidity.

The following table outlines the principal risks faced by the Group, including the impact of the adverse effects of

the UK economic climate. It also outlines the impact of each risk on the Group and steps that 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 the year:

• Loss of ability to use the

TGI Fridays or Fridays and

Go brands

• Brand perception and

reputational risk

>> Impact on our business

and ability to deliver

our growth plans thus

potentially affecting some

of our financial and non-

financial KPIs

The Group’s business is dependent

on its ability to use the TGI Fridays

or Fridays and Go brands, which

it uses under long term Franchise

Agreements (in the case of the TGI

Fridays and Fridays and Go brands)

entered into with the Franchisor.

The Group relies on the intellectual

property rights owned by

the Franchisor and relies on

it to protect such rights.

The Group’s reputation and the

quality of the TGI Fridays, and

Fridays and Go 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 seeks to maintain a strong

business relationship with the Franchisor.

The Franchisor’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 areas goes

beyond these contractual standards.

On 16 April 2024, the Company

announced that it had reached agreement

on a non-binding basis for a proposed

all-share acquisition of TGI Fridays,

Inc. This is subject to, among other

things, completion of confirmatory

due diligence, the parties entering into

binding transaction documentation and

approval by Hostmore shareholders.

Borrowing Covenants/ Risk New:

There are risks that

borrowing covenants are

breached because of

circumstances such as

changes in the economic

climate leading to reduced

cash inflows.

Under the terms of the loan

facility breaches could lead to the

restriction of access to funds and the

requirement for the existing facilities

to be repaid with immediate effect.

The group monitors and maintains sufficient

headroom against the covenants. The

finance team conduct daily cash forecasting

with bi-weekly updates to lenders and

monthly updates to the Board. The regular

monitoring and forecasting in place

will allow any covenant breaches to be

anticipated such that tangible actions can

be undertaken to avoid any such breaches

from taking place.

Hostmore plc • Annual Report 2023

Strategic report

Risk summary Impact Our response

UK economic climate Change during the year:

• Change in economic

conditions, in particular

the cost of living crisis and

Brexit related restrictions.

• Increases in interest rates/

inflation.

• Food inflation and rising

transport and energy

costs.

• A decrease in the

availability of team

members

• A decrease in consumer

disposable income and

spending

• A prolonged period of

uncertainty due to the

cost of living crisis and

Brexit related restrictions

>> Impact on sales and

ability to deliver our growth

plans thus affecting some

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 UK economy,

the level of consumer disposable

income and guest confidence to meet

in social settings. These factors may

continue to be impacted upon by the

cost of living crisis and Brexit related

restrictions, as well as other matters.

As long as our restaurants are able to open,

the Board believes that dining out should

withstand a short-term economic downturn.

The Group is adopting a multi-channel

offering, which enables the Group to

earn revenue through additional routes.

The Group regularly reviews its

offering including its value proposition

and the quality of its venues to

enhance the guest experience.

A variety of measures have been taken in

relation to the adverse economic climate

to try and ensure that cost increases

are mitigated, whilst continuing to offer

an attractive proposition to guests.

Competition Risk Change during the year:

• Loss of sales

• A decrease in profitability

>> Impact on sales

and profit

The Group faces competition

from other market participants.

The competition may result in

the Group losing custom to other

participants or needing to reduce

its prices to maintain competitive

standing. A loss of custom or

reduction in prices impacts on the

Group’s revenues and profitability.

The Group has ensured that it has a

compelling offering, which is attractive and

value for money relative to its competitor

set. The offering is refreshed periodically

and backed up by appropriate marketing

to ensure that it retains its appeal.

The Group operates a loyalty programme

to ensure that repeat custom is rewarded.

Hostmore plc • Annual Report 2023

Risk summary Impact Our response

Operational Risk Change during the year:

• Deterioration of assets

over time

• Loss of key personnel

or an inability to attract

appropriate personnel.

>> Impact on sales, costs

and guest experience

The Group’s restaurants

have high footfall and high

usage, 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 skilled team

members that the quality of the

guest experience would decline,

impacting the guest experience

and likelihood of return visits.

The Group ensures that it has an ongoing

maintenance and refurbishment programme

across its restaurants. The Board also

has the ability to reduce maintenance

expenditure if trading levels fall.

The Group is committed to promoting

its values and fairness in the way that it

pays all team members in relation to their

skills, experience and performance.

The Group has learning and development

programmes in place to enhance team

members capabilities and to promote the

Group’s values and team member retention.

Regulatory Risk Change during the 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 which run contrary to

the Group’s strategy could have a

significant impact on our strategic

objectives. This might result in

damage to our brands, reputational

loss, and revocation of licences.

The Board regularly considers legal,

risk and compliance issues affecting

the Group. 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 continues to

behave in a socially responsible manner.

Business interruption Change during the year:

• Risk of cyber- attack

• Failure or unavailability

of operational or IT

infrastructure

• GDPR risk

>> Impact on sales, costs

and reputation

A major IT incident could impact

the Group’s ability to keep trading.

Changing preferences mean that

increasingly guests book online,

which increases this risk. There has

also been an increase in the level of

high-profile cyber-attacks in recent

years, including on providers of IT

services. This increases the risk

that business information could

be accessed by third parties.

The Executive Team manages these risks by

maintaining and testing business continuity

plans and establishing remote IT disaster

recovery capabilities. Cyber-security is

of great importance to the Group. The

Group adopts a multi-faceted approach

to protection through internal and external

sources. The Executive Team also reviews

the level of monitoring and threat protection

systems that are in place and enhances

these when increases might be warranted.

The providers of IT solutions to the

Group are vetted and the Group

carries out penetration testing and

vulnerability scans on a regular basis.

Risk management continued

Hostmore plc • Annual Report 2023

Strategic report

Risk summary Impact Our response

Key supplier issues Change during the year:

• Limitations and/or issues

faced by the Group’s

key suppliers, including

supplier failure

>>Impact on sales, costs

and guest experience

The Group has several key

distributors and suppliers that provide

its food and beverage products.

Limitations and/or issues faced by

these distributors and suppliers, such

as driver, employee, goods or fuel

shortages, escalating costs, union

activity and/or capacity constraints,

could impact the Group’s profitability

and its ability to offer its guests the

level of experience they would wish.

A number of these risks materialised

in the period ended 31 December

2023, including, the effects of the

war in Ukraine, the cost of living

crisis and industrial action.

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 specific 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 the 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

its 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 team

members training programme. In addition,

an online allergen tool is available on the

TGI Fridays website so that guests can

ascertain which items on the relevant

menu they are able to safely consume.

Hostmore plc • Annual Report 2023

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 non-financial matters and shows where the

information is included in this report.

Reporting requirement

Policies and standards which

govern the Group’s approach

Additional information and

risk management

Description of business

model

• Transparent disclosures of

business operations and model

• Business Model section of the Strategic Report

(page 6)

• Non-Financial KPIs in the Strategic Report

(page 50)

• Stakeholder Engagement section of Strategic

Report (pages 42 to 45);

• Environmental, Social and Governance section of

the Strategic Report (page 24);

• Board activities in Corporate Governance Report

(pages 59 and 68); and

• Audit and Risk Committee report in Corporate

Governance Report (pages 69 to 73).

Environmental • Supplier Information Pack

provided to all food and drinks

suppliers, which contains

multiple Group policies

which the relevant supplier is

expected to comply with

• Environmental, Social and Governance section

of the Strategic Report (pages 24 to 41)

Team members • Equal Opportunities Policy

• Flexible Working Policy

• Whistleblowing Policy

• Environmental, Social and Governance

section of Strategic Report (page 24); and

• Section 172 Statement in the Strategic

Report (pages 42 to 45)

• Non-Financial Information Statement (page 50)

• Further details on how we engage with

our team members can be found on

page 106 of the Directors’ Report.

Human rights • Modern Slavery and Human

Trafficking Policy

• Environmental, Social and Governance

section of Strategic Report (page 24)

Social matters • Modern Slavery and Human

Trafficking Policy

• Environmental, Social and Governance

section of Strategic Report (page 24)

Anti-corruption

and bribery

• Anti-Bribery and Corruption

Policy (which includes

hospitality and gifts provisions)

• Conflicts of Interest Policy

• Chair’s governance introduction in the

Corporate Governance Report (page 58)

Principal risks

and impact

• Policies and procedures at

Board, management and

operational level controlling and

managing risk

• Risk Management section of Strategic

Report (pages 46 to 49)

Hostmore plc • Annual Report 2023

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 team members 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

• Create a diverse and inclusive environment.

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, team members of the Group who have become

disabled persons during the period they are employed

by the Group. Training, development and promotion

opportunities are provided for all team members.

Further details are included in the Team member/

Disabled Person section in the Directors’ Report on

page 106.

Human rights

The Group has a Modern Slavery and Human

Trafficking Policy which applies to both suppliers and

team members. The Group implements and enforces

effective systems and controls which are intended 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 be registered with SEDEX. SEDEX is a virtual

platform for companies to share their ethical data

including audit results on 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.hostmoregroup.com/modern-slavery- statement.

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 guests,

team members 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

incorporate the Group’s key principles and standards

that govern business conduct towards key stakeholder

groups. The Anti-Bribery and Anti-Corruption Policy

includes clear restrictions and processes on giving

and accepting gifts and hospitality from third parties.

Annual training on this policy is provided for all leaders

of the business including the Board.

Whistleblowing

The Group’s Whistleblowing Policy is supported by an

external, confidential reporting hotline which enables

team members to raise concerns in confidence. A

member of the Executive Team is the appointed

Whistleblowing Officer. Any reported issues are

escalated to the full Board and handled in the first

instance by the Audit and Risk Committee. Where

appropriate, remedial action is taken.

Environmental policy

The Group has multiple initiatives which it has

implemented across its entire estate, aimed at reducing

the Group’s environmental footprint. See pages 24

to 41 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 management only where it supports genuine

commercial activity and in doing so is committed to

remaining compliant with all relevant tax laws and

practices. Where appropriate, the Group seeks external

professional advice on tax matters.

Dividend policy

The Company’s current dividend policy is to invest free

cashflow into the business and so enhance shareholder

value. It is the intention of the Board that Hostmore

will commence dividend payments once the Group’s

debt has been repaid and after taking account of

macro-economic and geopolitical matters.

The Strategic Report on pages 2 to 51 was approved

by the Board of Directors and signed on its behalf by:

Stephen Welker

Chair

2 May 2024

Governance

report

Board of Directors 54

Chair’s Governance Introduction 58

Corporate Governance Report 59

Report of the Audit and Risk Committee 69

Report of the Nominations Committee 74

Annual Statement from the Chair of the Remuneration

Committee 76

Hostmore Remuneration Policy 81

Hostmore Annual Report on Remuneration 94

Directors’ Report 106

Statement of Directors’ Responsibilities in respect of the

Financial Statements 114

Hostmore plc • Annual Report 2023

Board of Directors

Hostmore plc • Annual Report 2023

Stephen Welker

(Chair)

Date joined Hostmore Board: 15 August 2022

Career and experience:

Stephen was appointed a Non-Executive Director in August 2022 and

as Chair in June 2023. He is currently a Partner in Sherborne Investors

Management LP and leads the firm’s research function as the Director of

Research. Stephen was previously a Non-Executive Director of Electra

Private Equity PLC from July 2019 to November 2021 and was a Director

of Mondays (Topco) Limited, the then-holding company of the TGI Fridays

trading business, from June 2017 to November 2021. He was an advisor to

F&C Asset Management plc from 2011 to 2013. Prior to joining Sherborne

Investors Management LP, Stephen worked at Morgan Stanley on both

real estate investment banking and principal investment transactions.

At Hostmore, Stephen is also Chair of the Nominations

Committee and Chair of the Disclosure Committee.

External Appointments:

• Partner in Sherborne Investors Management LP

Julie McEwan

(Chief Executive Officer)

Date joined Hostmore Board: 7 June 2023

Career and experience:

Julie was appointed as Chief Executive Officer in May 2023. Prior to

this appointment Julie held the role of interim Chief Executive Officer

from January 2023 having joined TGI Fridays as Chief Operating Officer

in March 2022. Julie has held several senior roles within the hospitality

industry, starting her career at Whitbread as Operations Manager for

Premier Inn. Her previous roles have also included leading the Flaming

Grill brand. Julie’s last role prior to joining the Hostmore group was at

The Big Table Group, where she was Brand Director of Las Iguanas, the

Latin American brand for over 5 years. Julie was also voted one of the top

100 Women to Watch and Advocates for Change in Hospitality 2020.

At Hostmore, Julie is also a member of the Disclosure Committee.

External appointments:

None.

Julie McEwan was appointed as the interim CEO of Hostmore plc on 10 January 2023. On 2 May 2023, Julie was appointed the permanent

CEO of Hostmore plc and, on 7 June 2023, Julie was appointed a Director of Hostmore plc.

Governance report

Hostmore plc • Annual Report 2023

Matthew Bibby

(Chief Financial Officer)

Date joined Hostmore Board: 6 December 2023

Career and experience:

Matthew was appointed Chief Financial Officer in December 2023. Prior

to being appointed as the Chief Financial Officer, Matthew held the

role of interim Chief Financial Officer from September 2023. Matthew

joined Thursdays (UK) Limited (trading as TGI Fridays) in 2019 as Head

of Finance and in 2022 became the Group’s Finance Director. Prior to

this, he spent the majority of his career at Whitbread Plc the FTSE 100

business, where he was for fourteen years in a variety of Finance roles.

At Hostmore, Matthew is also a member of the Disclosure Committee.

External appointments:

None.

David Lis

(Senior Independent Director)

Date joined Hostmore Board: 18 August 2021

Career and experience:

David was appointed Senior Independent Director of the Company in 2021.

David was the Senior Independent Director of Electra Private Equity plc

from 2018 to 2021, after joining the company as a Director in May 2016.

David is the Chair of Windar Photonics plc, the Chair of Wild Life Group

Limited, the Senior Non-Executive Director of Melrose Industries plc and

a Non-Executive Director of Dowgate Capital Limited, and has previously

held non-executive director positions at 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 few 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.

At Hostmore, David is also a member of the Audit and

Risk Committee, a member of the Nominations Committee

and a member of the Remuneration Committee.

External appointments:

• Chair of Windar Photonics plc

• Chair of Wild Life Group Limited

• Senior Independent Non-Executive Director of Melrose Industries plc

• Non-Executive Director of Dowgate Capital Limited

• Director of York Minster Fund Limited

• Member of the Finance Committee York Minster Fund Limited.

Matthew Bibby was appointed as the interim CFO of Hostmore plc on 7 September 2023. On 6 December 2023, Matthew was appointed the

permanent CFO of Hostmore plc and a Director of Hostmore plc.

Board of Directors continued

Hostmore plc • Annual Report 2023

Andrew Blurton

(Non-Executive Director)

Date joined Hostmore Board: 17 August 2021

Career and experience:

Andrew was appointed an independent Non-Executive Director of the

Company in 2021. Andrew is currently the Finance Director of Advanced

Living Limited. Andrew also holds positions as Chair of the Governing Body of

Longacre School in Surrey, as well as the Chair of the Liberty Retail Defined

Benefit Pension Scheme. Previously, Andrew was the Finance Director of MWB

Group Holdings Plc, the Chief Financial Officer of Landmark Limited and the

Chair of Manroy Plc. Andrew has been a Fellow of the Institute of Chartered

Accountants in England & Wales for over 40 years, having qualified as a

Chartered Accountant in 1975.

At Hostmore, Andrew is also Chair of the Audit and Risk Committee, a member

of the Nominations Committee, a member of the Remuneration Committee and

a member of the Disclosure Committee.

External appointments:

• Director of each of Advanced Living Limited, Advanced Living (Kingston)

Limited, Andrew Blurton Consultancy Limited and RG Property Asset

Management Limited

• Chair of Liberty Retail Defined Benefit Pension Scheme

• Chair of the Governing Body of Longacre School.

Helena Feltham

(Non-Executive Director)

Date joined Hostmore Board: 7 June 2023

Career and experience:

Helena was appointed an Independent Non-Executive Director in 2023. She

has over 30 years’ experience in consumer facing and people leadership roles.

Prior to her appointment she recently served as the interim Non-Executive

Chair of Ted Baker Plc, where she had also been Senior Independent Director

and Chair of the Nominations Committee. She has also served as a Non-

Executive Director of the IT managed services provider, Redcentric plc,

where she Chaired the Remuneration Committee. Helena has previously held

non-executive roles in the NHS and at the Retail Trust and has served as an

independent adviser to the Assembly of Wales. She held executive roles as a

Director at B&Q plc and as the People Director at Woolworths South Africa and

Marks and Spencer.

At Hostmore, Helena is also Chair of the Remuneration Committee a

member of the Nominations Committee and a member of the Audit and Risk

Committee. She is also the Non-Executive Director that is responsible for team

member engagement in the Group.

External appointments:

• Director of Dogwoof Ltd

Governance report

Hostmore plc • Annual Report 2023

Célia Pronto

(Non-Executive Director)

Date joined Hostmore Board: 20 June 2023

Career and experience:

Célia was appointed an Independent Non-Executive Director in 2023. She

has over 25 years’ experience in blue chip listed companies, private equity

and venture capital backed start-ups and family-owned businesses. She has

worked in subscription model businesses, as well as the food manufacturing,

restaurants, logistics, travel, hospitality, leisure, fast moving consumer goods,

e-commerce, automotive retail and utility sectors. In addition, she has specific

expertise in developing digital transformation, innovation and growth strategies

in consumer and multi-channel businesses. She is currently a Director of South

East Water Limited, Samworth Brothers (Holdings) Limited, Campden BRI,

Impact Ventures Group Limited and The Digital Success Co Ltd (trading as the

Digital Advisor). She is also a Director of Everest UK Bidco Limited (a Jersey

registered company). Célia has previously held roles as the Managing Director

of Love Home Swap, as the Chief Customer and Digital Officer of Casual

Dining Group, and as the Group Marketing and E-Commerce Director and

Board member of the Ford Retail Group.

At Hostmore, Célia is also 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 South East Water Limited, Samworth Brothers (Holdings)

Limited, Campden BRI, The Digital Success Co Ltd and Impact Ventures

Group Limited.

• Director of Everest UK Bidco Limited (a Jersey registered company).

Chair’s Governance Introduction

Hostmore plc • Annual Report 2023

Dear Shareholder,

On behalf of the Board, I am pleased to present our

Corporate Governance Report for the 52-week period

ended 31 December 2023.

The Hostmore Board sees corporate governance as

an integral part of its business strategy. By having an

appropriate governance framework, the Board has set

out clearly the standards that it expects, which provide

a foundation for building shareholder and stakeholder

confidence in the Company.

Hostmore’s compliance with good corporate

governance is overseen by the Board, with main areas

delegated to its three Board Committees. Between

them all, they provide positive stewardship of the

Company.

During 2023 and continuing in 2024, the Board has

maintained its commitment to the highest standards

of corporate governance. It has complied with the UK

Corporate Governance Code, other than in certain

isolated instances as outlined on page 59 in the

Corporate Governance Report.

Hostmore’s governance framework principally

comprises the Board and the Board Committees,

together with the Group’s policies and procedures.

This extends to the promotion and adoption of a

culture of accountability, transparency and ‘speaking

up’, communications, training provided to all team

members, whistleblowing channels and related

reporting.

Three areas of key focus are addressed within the

Company’s governance framework as follows:

1. Business Ethics and Conduct – Hostmore’s moral

and ethical beliefs guide the values, behaviours and

decisions and encompass the individuals working

within the business.

2. Risk Management – Hostmore’s business

has defined management systems within each

department, which are reviewed and updated

as appropriate throughout each year to ensure

integrity and legal compliance.

3. Anti-Bribery and Corruption – Hostmore

operates a zero-tolerance approach to bribery and

corruption. Hostmore’s governance framework,

including its Anti-Bribery and Corruption Policy,

is structured to minimise the risk of bribery and

corruption occurring within the business.

I hope you find the Company’s Governance Reports

useful. I would like to encourage you to attend our

Annual General Meeting (“AGM”) which will be held on

3 June 2024. It is intended that the meeting will be held

in person at the offices of Herbert Smith Freehills LLP,

Exchange House, Primrose Street, London EC2A 2EG.

Further details are set out in the Notice of Annual

General Meeting which is distributed to shareholders

and made available on the Company’s website.

In the meantime, the Board would like to thank our

shareholders for their continued support. The Non-

Executive Directors and I remain available to engage

with shareholders as we continue our journey as a

listed company.

Stephen Welker

Chair

2 May 2024

Governance report

Corporate Governance Report

Hostmore plc • Annual Report 2023

UK Corporate Governance Code 2018 – Compliance Statement

The Board continues to be committed to the highest standards of corporate governance through its application

of the FRC’s UK Corporate Governance Code 2018 (the “Code”) which applied to the Company for the 52-week

period ended 31 December 2023. A copy of the Code can be found at www.frc.org.uk. The Company has

complied with the Code, except in relation to the following provisions, the reasons for which are explained in this

report:

(i) Provisions 9 and 20 relating to the independence and appointment process for the Chair of the Board, and the

open advertising and/or external search consultants for chair and non-executive appointments, respectively;

and

(ii) Provision 11 relating to the composition of the Board having at least half of its members, excluding the chair,

being independent non-executives.

Corporate

Governance

Provision Explanation for non-compliance

9 & 20 Provision 9 recommends that the chair on appointment should be independent within the meaning of the Code.

Gavin Manson was Chair of the Board from the end of the 2022 AGM until he retired as Chair and a

Non-Executive Director at the end of the Company’s Annual General Meeting on 7 June 2023 (the “2023 AGM”).

He was succeeded by Stephen Welker, who was elected as a Director at the 2023 AGM, and stepped up into the

role of Chair on the same date.

Gavin and Stephen are both deemed to be non-independent, within the meaning of the Code, due to their

previous connections to Electra Private Equity PLC (now known as Unbound Group PLC) from which the

Companywasdemergedin2021,wheretheypreviouslyheldtheroleofChiefFinancialandOperatingOfficer

andNon-ExecutiveDirector,respectively.Additionally,StephenisasignificantshareholderintheCompanyand

also a Partner in Sherborne Investors Management LP which held an interest in the Company until 20 April 2024.

The Board saw continuity of stewardship as being a particularly important factor with each appointment, as

well as the wide experience and knowledge of the Company that both Gavin and Stephen possessed. In

addition, Stephen has brought specialist strategic insight and leadership to the business. This, combined with

hisfinancial,commercialandinvestorrelationsexpertise,hasbeeninvaluableastheBoardre-settheGroup’s

operations during 2023, as a result this strengthened the business.

Although recommended by Provision 20 of the Code for the reasons outlined above, neither open advertising nor

an external search consultancy were used for the appointment of the role of Gavin Manson or Stephen Welker.

11 Provision 11 recommends that at least half of the board of directors, 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.

In the short period between 2 January 2023 to 9 January 2023, the Company did not comply with this provision

asonlytwooutoffivedirectorsnotincludingtheChairweredeemedindependent.Since9January2023,when

Robert B. Cook resigned from the Board of Directors, and further enhanced by the appointment of Helena

Feltham and Célia Pronto in June 2023, the Company has complied with this provision.

Atthedateofthisreport,theBoardconsistsoffiveNon-ExecutiveDirectors(includingthenon-executiveChair)

and two Executive Directors. The Company regards David Lis, Andrew Blurton, Helena Feltham and Célia Pronto

as independent non-executive directors within the meaning of the Code and free from any circumstances that

could materially interfere with the exercise of their independent judgement.

David Lis is the Senior Independent Director of the Company. In assembling the Board, an assessment of David

Lis’s independence was performed. It was determined that David was independent with a particular emphasis on

providing insight as an experienced institutional investor.

Corporate Governance Report continued

Hostmore plc • Annual Report 2023

Governance structure

Board

In accordance with the Code, the role of the Board

is to promote the long-term sustainable success of

the Company, generate value for shareholders and

contribute to the 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, values 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

the Board’s functions with the culture and purpose of

Hostmore plc.

The Board had seven formally scheduled meetings per

year. Its activity at each meeting is planned at the start

of each year and is set out in a formal Annual Board

Activity Calendar which is approved by the Board.

In addition, the Board meets regularly in less formal

meetings, to consider and make decisions on key

matters for the benefit of the Group. The Board and

Committee meetings are planned around key events in

the corporate calendar, which ensures that the Board

receives appropriate information at the appropriate

time, and that all key operational, financial reporting

and governance matters are discussed during the year.

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

Company Secretary also prepares a report for each

Board meeting covering matters including latest

governance, material contracts and legal updates.

Roles and responsibilities

The 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 at Admission in 2021 and last reviewed

and approved by the Board on 22 December 2023. A

copy is available on the Company’s website.

The Board agrees with the approach set out in

the Code, but it recognises that overly prescribing

the responsibilities of the Chair and the Chief

Executive Officer may reduce their flexibility to act in

unforeseen circumstances. Accordingly, the Division

of Responsibilities 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 Chief Executive Officer

The Chair 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. At

appropriate intervals during the year, the Chair holds

meetings with the Non-Executive Directors without the

Executive Directors present.

The Chief Executive Officer leads the Executive Team

which has executive responsibility for running the

businesses of the Group. The CEO reports to the

Board and is responsible for all executive management

matters of the Group.

Non-Executive Directors

The Non-Executive Directors (Stephen Welker, David

Lis, Andrew Blurton, Helena Feltham and Célia Pronto)

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, Andrew, Helena and Célia are all independent.

Stephen is not considered to be independent due

to his previous connections to Electra Private Equity

PLC (now known as Unbound Group PLC) from

which the Company was demerged in 2021, where

he held the position of Non-Executive Director. He

is also a significant shareholder in Hostmore. The

Board considers Stephen continues to be beneficial

to Hostmore and its shareholders as he brings a deep

knowledge and understanding of the Group’s business,

and has wide expertise of the City, investment banking

and investor relations.

Senior Independent Director

The Code 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. David Lis is the Senior Independent Director

of the Company. In that role David acts as a sounding

board for the Chair, serves as an intermediary for the

other Directors and shareholders and is available to

shareholders if the normal channels of the CEO, the

Chair or the other Executive Director have failed to

resolve any concerns that they have.

Company Secretary

Throughout the year until 27 December 2023, Robert

Henry was Company Secretary of the Company. Since

27 December 2023, Prism Cosec Limited (trading as

Prism Cosec) has been the Company Secretary of

the Company. The Company Secretary attends all

meetings and supports the Board and each of the four

Governance report

Hostmore plc • Annual Report 2023

Board Committees. All Directors have access to the

services of the Company Secretary who is available

to advise on company law, governance and best

practice. The Company Secretary also assists 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 2023

From 2 January 2023 to 9 January 2023, the Board

comprised six Directors (including the Chair). At that

point it reduced to five Directors as a result of Robert

B. Cook retiring from the Board. On 7 June 2023,

the Board increased to six Directors as a result of

Helena Feltham and Julie McEwan being appointed

as Directors and Gavin Manson stepping down as

a Director and the Chair. The Board then increased

to seven Directors on 20 June 2023 following the

appointment of Célia Pronto to the Board. On

7 September 2023, the Board decreased to six

Directors following the resignation of Alan Clark, before

returning to seven Directors on 6 December 2023 as

a result of the appointment of Matthew Bibby as a

Director.

Details on the independence of the Non-Executive

Directors are referred to at the start of this report.

From the start of the year until 9 January 2023, the

Company did not comply with Provision 11 of the

Code relating to at least half of the Board (excluding

the chair) comprising independent Non-Executive

Directors. In that 8-day period, the Company had

three Directors who were deemed to be non-

independent and two Directors who were deemed to

be independent. On 9 January 2023, Robert B. Cook

resigned as a Director and, from that point onwards the

Company complied with Provision 11 of the Code.

Diversity statement

The Listing Rules were updated during 2023 to include

specific diversity targets to ensure that at least 40%

of the Board are women; at least one of the senior

Board positions (Chair, CEO, CFO and SID) is a

woman and that at least one Director is from a minority

ethnic background, requiring companies to report

on a ‘comply or explain’ basis. As of 31 December

2023 and at the date of publication of this report and

excluding Gavin Manson, Robert Cook and Alan Clark

who resigned during the year, the Company has met

two of these targets following new appointments and

the Board now has 42.85% female representation

and the Board position of CEO is held by a woman.

Diversity is an important factor for the Nomination

Committee to consider when shaping future Board

recruitment. 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. Details of the ethnic

background of the Group’s team members is set out in

the table below. Records supporting this information

are maintained by the People and Culture department.

Building on the Group’s existing policies, the Group

has launched an updated equality, diversity and

inclusion programme, together with a Diversity and

Inclusion Committee, underpinned by a Diversity and

Inclusion policy.

The table below sets out the gender composition of the Group at 31 December 2023:

Male Female

Main Board

4 (57%) 3 (43%)

Group Executive Team

3 (43%) 4 (57%)

Direct reports to Executive Directors

15 (48%) 16 (52%)

Group team members

2,103 (48%) 2,277 (52%)

Notes:

The number of senior positions on the Board (Chair, CEO, CFO and SID) comprise 75% men and 25% woman.

The Group Executive Team includes the two Executive Directors.

The Direct Reports to Executive Directors includes: (i) direct reports into Julie McEwan, the Chief Executive Officer, and Matthew Bibby,

the Chief Financial Officer; and (ii) Matthew Bibby, the Chief Financial Officer, reporting into Julie McEwan, the Chief Executive Officer.

30% of the Group team members are from an ethnic minority background.

Corporate Governance Report continued

Hostmore plc • Annual Report 2023

The Board considers that each Director is able to

allocate sufficient time to the Company to discharge

their responsibilities effectively.

The Board and its Committees hold regular, scheduled

meetings throughout the year. When issues requiring

the attention of the Board or one of its Committees

arise outside the regular schedule, additional meetings

are arranged as necessary. A Board update pack is

circulated to all members of the Board in each month

where there is not a formally scheduled Board meeting.

Where Directors are unable to attend a meeting,

they submit to the Chair of the meeting comments

on papers or matters to be discussed in advance to

ensure that their views are taken into account. Formal

Board Meetings are held in person with additional

meetings and calls convened in person or via video

conference to allow flexibility.

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 scheduled

meetings of the Board and Committees of which they

were eligible to attend during 2023. The additional

unscheduled meetings have therefore not been

included in the table below. Given the nature of

the matters it considers, the Disclosure Committee

does not have formally scheduled meetings and,

consequently, attendance figures have not been

included for that Committee in the table below.

Director

Board meetings

attended/held

Audit and Risk

Committee

meetings

attended/held

Nominations

Committee

meetings

attended/held

Remuneration

Committee

meetings

attended/held

Independent

David Lis 7/7 4/4 2/2 2/2

Andrew Blurton 7/7 4/4 2/2 2/2

Helena Feltham

4/4 2/2 1/1 1/1

Célia Pronto

2/3 1/2 0/1 1/1

Non-Independent

Gavin Manson

3/3 N/A N/A N/A

Stephen Welker 7/7 N/A 2/2 N/A

Robert B. Cook

N/A N/A N/A N/A

Alan Clark

5/5 N/A N/A N/A

Julie McEwan

3/4 N/A N/A N/A

Matthew Bibby

N/A N/A N/A N/A

Notes:

Helena Feltham was appointed a Director with effect from 7 June 2023.

Célia Pronto was appointed a Director with effect from 20 June 2023. Due to an external commitment that had been arranged prior to Célia

being appointed a Director, she was unable to attend a meeting of each of the Board, the Audit and Risk Committee and the Nominations

Committee meeting, all of which were held on the same day.

Gavin Manson resigned as a Director with effect from 7 June 2023.

Robert B. Cook resigned as CEO and as a Director with effect from 9 January 2023, which was before the first formally scheduled meeting of

the Board and its Committees in the period under review.

Alan Clark resigned as CFO and a Director with effect from 7 September 2023, therefore was only eligible to attend meetings prior to that

date during the period under review.

Julie McEwan was formally appointed a Director with effect from 7 June 2023. Due to an external commitment that had been arranged prior

to Julie being appointed a Director, she was unable to attend one Board meeting.

Matthew Bibby was appointed a Director with effect from 6 December 2023. There were no formally scheduled meeting of the Board and its

Committees between that date and 31 December 2023.

The Board also held eleven unscheduled Board

meetings during the year to consider specific matters.

There were also two additional Audit & Risk Committee

meetings and four additional Remuneration Committee

meetings. All Directors who were able to attend these

meetings, attended them.

Key activities of the Board during

the year

The annual Board Activity Calendar setting out agenda

items for each scheduled Board meeting in the relevant

financial year is approved by the Board at the start

of each year. The calendar takes into account key

points in the regulatory and financial cycle, including,

Governance report

Hostmore plc • Annual Report 2023

amongst other things, updates from the CEO on

Company performance, the CFO on financial results

and forecasts, investor relations updates and updates

from the Company Secretary.

In addition to the full content of the CEO and CFO

operational and financial reports, as part of its annual

governance programme during 2023 the Board

undertook the following:

• Considered the resignations of Robert B. Cook,

the Chief Executive Officer of the Company and

an Executive Director, and Alan Clark, the Chief

Financial Officer of the Company and an Executive

Director, from the Board.

• Considered the appointment of a new Chief

Executive Officer and Executive Director, resulting

in the appointment of Julie McEwan as Chief

Executive Officer and as an Executive Director.

• Considered the appointment of two new

Non-Executive Directors, resulting in the

appointment of Helena Feltham and Célia Pronto

each as a Non-Executive Director.

• Considered the appointment of a new Chief

Financial Officer and Executive Director, resulting

in the appointment of Matthew Bibby as Chief

Financial Officer and as an Executive Director.

• Considered the appointment of a new Company

Secretary, resulting in the appointment of Prism

Cosec as the Company Secretary with effect from

27 December 2023.

• Reviewed and approved the FY24 strategy and the

FY24 budget.

• Reviewed and amended the Schedule of Matters

Reserved to the Board and reviewed the Terms of

Reference of the Board Committees.

• Reviewed various governance documents,

including the policy setting out Division of

Responsibilities between the Chair and CEO.

• Received legal and governance updates.

• Received people updates and updates on

workforce engagement.

• Received risk and compliance updates including

health and safety, ESG advancement and TCFD

actions.

• Received business solutions updates covering

areas such as cyber security and guest experience.

• Reviewed reports from the Executive Directors on

organic growth initiatives.

• Reviewed reports from the Executive Directors on

cost saving implementations.

• Reviewed reports from the Executive Team to

dispose of loss-making restaurants.

Training and development

A full, formal and tailored induction programme is

provided for any new Director joining the Board. The

Company Secretary provides updates to the Board

and its Committees on regulatory and corporate

governance matters. The Directors keep themselves

appraised of developments relevant to the Company’s

business.

Performance evaluation and

effectiveness

A formal internal performance evaluation was

conducted for the Board and each of its Committees in

Q4 2023.

The performance evaluation consisted of a

questionnaire which covered the following topics: (i)

processes that underpinned the Board’s effectiveness;

(ii) Board and Committee constitution and commitment;

(iii) Board dynamics; (iv) culture, stakeholder

oversight and strategy; (v) questions for the individual

committees; and (vi) an individual director self-

evaluation. Each Board member was also asked to

complete a separate Board skills matrix survey to self-

assess their skill set. This had the objective, amongst

other things, of establishing if there were any skill gaps

on the Board and how these would be remedied.

Following completion of the questionnaire, the Chair

invited each of the Directors to meet with him to give

the relevant Director the opportunity to expand on

their responses should they wish to. An anonymised

report was then drawn up and presented to the Board

in 2024.

Information and support

An agenda and accompanying papers are distributed

to the Board and Committee members in advance of

each Board and Committee meeting. Where necessary,

separate papers are prepared to support specific

matters requiring a Board decision or approval. The

Non-Executive Directors provide ongoing feedback to

the CEO, CFO and Company Secretary on the content

of papers and they provide effective debate and

decision-making by the Board.

Minutes of all Board and Committee meetings are

taken by the Company Secretary and circulated to the

Board or the relevant Committee members for approval

as soon as practicable following the meetings. Specific

actions arising from meetings are recorded in the

minutes and circulated to those delegated to undertake

the necessary follow up actions. Where these have not

been able to be completed by the next Board meeting,

they are carried forward as an action at that next

meeting. This facilitates the effective communication of

Corporate Governance Report continued

Hostmore plc • Annual Report 2023

actions to those responsible and allows the Board and

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 ended

31 December 2023.

Appointment and election

In accordance with the Company’s articles of

association and best practice, each of Stephen Welker,

David Lis and Andrew Blurton have offered themselves

for re-election at the Company’s Annual General

Meeting on 3 June 2024. In addition, each of Julie

McEwan, Matthew Bibby, Helena Feltham and Célia

Pronto will stand for election at the AGM on 3 June

2024, having been appointed Directors during the year.

The Directors have service agreements or letters of

appointment, details of which are set out below.

Executive Director service

agreements

Name Position

Date of service

agreement

Notice period by

Company (months)

Notice period by

Director (months)

Julie McEwan ChiefExecutiveOfficer 1 May 2023 6 6

Matthew Bibby ChiefFinancialOfficer 5 December 2023 6 6

The Non-Executive Directors (including the Chair) are appointed by letters of appointment. Each of the

Non-Executive Directors including the Chair were appointed for an initial three-year term, which may be extended

for a further term by mutual consent, subject to their annual re-appointment by shareholders. The initial terms

of David Lis and Andrew Blurton will end in August 2024 and, having indicated their willingness to continue, the

Board has agreed to extend their tenure for a further three-year term if they are re-appointed by shareholders at

the 2024 AGM. Non-Executive Directors’ appointments may be terminated at any time by giving three months’

written notice by either party.

Non-Executive Director appointment

Name Date of appointment

Commencement date

of current term

Unexpired term at

31 December 2023

Stephen Welker 15 August 2022 15 August 2022 1 years 8 months

David Lis 18 August 2021 18 August 2021 8 months

Andrew Blurton 17 August 2021 17 August 2021 8 months

Helena Feltham 7 June 2023 7 June 2023 2 years 5 months

Célia Pronto 20 June 2023 20 June 2023 2 years 6 months

Conflicts of interest

Rules concerning Directors’ conflicts of interests are

set out in the Company’s Articles of Association and

the Company’s Conflicts of Interest Policy. At the

beginning of each Board meeting, Directors advise the

Board in accordance with sections 175, 177 and 182 of

the Companies Act 2006 of any conflicts of interest on

matters to be considered at the meeting. Where such

a conflict exists or may exist, the Director concerned

does not take part in any decision making by the Board

in respect of the matter concerned.

Risk management and internal

controls

The Board determines and manages the nature and

extent of the risks the Group is willing to incur in order

to achieve its strategic objectives. The Board 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 in pages 69 to 73 and in the Risk Management

section of the Strategic Report on pages 46 to 49.

The Group’s risk management and internal control

systems have been in place throughout the 52 week

period ended 31 December 2013. The financial risk

management systems were enhanced during the

period as outlined in the Audit and Risk Committee

report on page 70. These risk management and internal

control systems have continued to the date of approval

of this annual report and financial statements. The

Group insures against certain risks and reviews on an

annual basis the type and amount of external insurance

that it carries. Where certain business risks are difficult

to effectively insure against, the Group identifies the

risk and seeks to ensure it has management processes

in place to protect the Group.

Governance report

Hostmore plc • Annual Report 2023

Whistleblowing

The Company has a Whistleblowing Policy which

enables team members to raise concerns in confidence

relating to suspected wrongdoing and/or dangers

at work. These include, 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.

Claire Hussey, the Company’s Risk and Compliance

director (not a Statutory Director of Hostmore plc)

is the Whistleblowing Officer of the Company. The

Company also provides a confidential whistleblowing

helpline run by an independent third party so that

team members are able to report a concern using an

external forum. The Board reviews the Whistleblowing

Policy on an annual basis and reviews reports which

have been received during the year. An additional

communications programme was launched in October

2022 to team members across the Group to raise

awareness of the whistleblowing helpline and its

purpose. The communications under this programme

were continued and expanded during 2023.

Stakeholder engagement

The Board places a strong emphasis on standards

of good corporate governance and maintaining

effective engagement with its shareholders and key

stakeholders. The Board recognises its duty under

Section 172 of the Companies Act 2006 to consider

the interests of stakeholders and it considers this 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 51 and, in particular, the Section 172 statement

and the engagement with stakeholders on pages 42 to

45. The nature of the Group’s business means that the

interests of its shareholders, team members, guests,

Franchisor, suppliers and local communities feature in

the Board’s decision-making process.

At the Company’s Annual General Meeting held on

7 June 2023, resolution 10, which sought authorisation

to make political donations and incur political

expenditure (the “Political Donations Resolution”),

was passed, although 30.0% of the votes cast were

against. Due to the votes against being greater than

20%, in line with provision 4 of the Code the Board

has directly engaged with the large shareholders who

voted against the Political Donations Resolution to

understand their views. As noted to those shareholders

in the 2022 Annual Report and again in this Report, the

Group has not made political donations nor incurred

political expenditure since its listing in November 2021,

and has no intention of doing so.

It is customary for listed UK companies, including the

Company, to seek approval of the Political Donations

Resolution as a precautionary measure to avoid any

inadvertent breaches of UK company law given the

breadth of the applicable provisions within the Act. The

Board’s discussions with the shareholders concerned

were productive and it will continue to engage with

them between the date of this report and the 2024

Annual General Meeting.

Engagement with the workforce

The Board engages with the Group’s colleagues on a

regular basis, through team member forums, learning

and development opportunities, appraisal processes,

annual performance and development reviews, and a

variety of social and team building events. Colleague

engagement is also measured through engagement

surveys. In Q4 of the 52-week period ended 1 January

2023, Thursdays (UK) Limited, the company in the

Group that employs almost all the Group’s workforce,

partnered with Great Place to Work on an engagement

survey. The response rate was in line with industry

standards. The key findings from the survey were that

team members felt they were treated fairly at work, that

TGI Fridays was a physically safe place to work and

that new team members were made to feel welcome.

There were a number of areas for development

relating to engagement, wellbeing and leadership, and

actions were put in place in January 2023 to advance

these. In 2023 the benefits offered to colleagues were

reviewed and the benefits were increased. A wellbeing

and culture forum was introduced to look at how the

Group can further improve culture and engagement at

TGI Fridays.

During 2023, the Group also launched the Fridays

Forum, the Social and Wellbeing committee, and the

Culture committee. Collectively these give colleagues

the opportunity to discuss key activities in the

operations of the Group. The Group’s annual appraisal

process was also relaunched in 2023, ensuring that all

colleagues received two reviews per annum linked to

annual objectives.

Further details on how we engage with our colleagues

can be found in pages 14 to 15 of the Strategic Report.

Relationship with shareholders

Continued support from the Company’s shareholders

is important, so the Board looks to ensure that

shareholders understand the Group’s strategy and

goals and can monitor its performance. The Board

engages with the Company’s shareholders through

one-to-one meetings, investor roadshows, and

shareholder meetings, as well as through the Group’s

Half Year and Full Year financial reports.

The Board welcomes feedback from shareholders and

has a continuing dialogue with its shareholders.

Corporate Governance Report continued

Hostmore plc • Annual Report 2023

The Company’s AGM will be held at 10.30 a.m.

on 3 June 2024 at the offices of Herbert Smith

Freehills LLP, Exchange House, Primrose Street,

London EC2A 2EG. The Annual Report and Financial

Statements and Notice of the AGM is made available

to shareholders in accordance with the required notice

periods.

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 the Company’s

website, www.hostmoregroup.com These are reviewed

and updated annually by the Board and Committees

to ensure that they remain appropriate to support

the effective governance of the Group. Details of the

role, composition and activities of each Committee

during the 52-week period ended 31 December 2023

are summarised in their respective reports and in the

following paragraphs of this report.

The members of each Committee during the year were

as follows:

Committee Chair Other Members

Audit and Risk

•AndrewBlurton

•DavidLis

•HelenaFeltham(from7June2023)

•CéliaPronto(from20June2023)

Nominations

•GavinManson(until25January2023)

•StephenWelker(from25January2023)

•DavidLis

•AndrewBlurton

•HelenaFeltham(from7June2023)

•CéliaPronto(from20June2023)

Remuneration

•DavidLis(until1October2023)

•HelenaFeltham(from1October2023)

•AndrewBlurton

•DavidLis(from1October2023,whenhe

retired as Chair)

•HelenaFeltham(from7June2023until

1 October 2023, when she became Chair)

•CéliaPronto(from20June2023)

Disclosure

•RobertB.Cook(until9January2023)

•GavinManson(from9January2023

until 7 June 2023)

•StephenWelker(from7June2023)

•GavinManson(until9January2023,

when he became Chair)

•RobertHenry(until25January2023)

•AlanClark(until7September2023)

•StephenWelker(from25January2023

until 7 June 2023, when he became

Chair)

•AndrewBlurton(from25January2023)

•JulieMcEwan(from25January2023)

•MatthewBibby(from7September2023)

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 ensures that the Group complies

with appropriate laws and regulations, the provisions

of the Code, the requirements of the Listing Rules

and the requirements of the Disclosure Guidance and

Transparency Rules. The Committee also prepares the

statement of the Committee’s activities in the Annual

Report and Financial Statements.

The Audit and Risk Committee is also 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.

The Chair of the Audit and Risk Committee is available

at annual general meetings of the Company to respond

to questions from shareholders on the activities of the

Audit and Risk Committee.

The 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.

The Code also recommends a minimum membership

of three or, in the case of smaller companies, two, and

Governance report

Hostmore plc • Annual Report 2023

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 independent Non-Executive Directors, chaired by

Andrew Blurton who has recent and relevant financial

experience with competence in accounting and

auditing. It also includes David Lis, Helena Feltham

and Célia Pronto. Helena Feltham and Célia Pronto

were appointed as members of the Committee when

they joined the Board on 7 June 2023 and 20 June

2023, respectively. All members of the Committee

are considered to be independent in line with the

recommendation of the Code.

The Audit and Risk Committee met six times during the

year ended 31 December 2023 (four formal meetings

and two additional meetings). These included meetings

without the Executive Directors being present.

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, the Chief Financial

Officer and other senior executives. The Chair of the

Nominations Committee is available at annual general

meetings of the Company to respond to questions

from shareholders on the activities of the Nominations

Committee.

The Code recommends that a majority of the members

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. The Code also recommends 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 Stephen

Welker and its other members are David Lis, Andrew

Blurton, Helena Feltham and Célia Pronto. Gavin

Manson was the Chair of the Nominations Committee

until 25 January 2023 when he stepped down from

the Committee and Stephen Welker became the Chair

of the Committee. Helena Feltham and Célia Pronto

were appointed as members of the Committee when

they joined the Board on 7 June 2023 and 20 June

2023, respectively. Other than Stephen Welker, all

current members of the Committee are considered to

be independent in line with the recommendation of the

Code.

The Nominations Committee met formally four times

during the year ended 31 December 2023 (two

formal meetings and two additional meetings). These

considered the resignation of certain Directors; the

appointment of four new Directors; bonus targets for

Executive Directors and members of the Executive

Team; senior management succession plans; the

annual Board evaluation; Directors who are subject

to annual re-election; and review of 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 the

Chair, each of the Executive Directors and (on the

recommendation of the Chief Executive Officer) each

other member of the Group’s Executive Team. It also

prepares an annual remuneration report for approval

by the Company’s shareholders at the annual general

meeting. The Chair of the Remuneration Committee is

available at annual general meetings of the Company

to respond to questions from shareholders on the

activities of the Remuneration Committee.

The 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 judgement.

The Code also recommends that a minimum

membership of a remuneration committee is three

or, in the case of smaller companies, two. The 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 Helena

Feltham (who had previously served on a remuneration

committee at Redcentric plc between July 2021

and July 2023) and includes David Lis, Andrew Blurton

and Célia Pronto. Helena Feltham and Célia Pronto

were appointed as members of the Committee when

they joined the Board on 7 June 2023 and 20 June

2023, respectively. From his appointment to the

Committee in December 2022 until 1 October 2023, the

Remuneration Committee was chaired by David Lis, on

which date Helena Feltham was appointed Chair of the

Committee.

All members of the Committee are considered to be

independent in line with the recommendation of the

Code.

The Code requires that appropriate arrangements

are in place for engagement with the Company’s

workforce. As Chair of the Remuneration Committee,

David Lis performed this role from his appointment

in December 2022 until 25 January 2023 when it was

decided that the Company would engage with its

workforce using a formal workforce advisory panel.

Since Helena Feltham’s appointment as Chair of

the Remuneration Committee on 1 October 2023,

Corporate Governance Report continued

Hostmore plc • Annual Report 2023

Helena has performed the role of designated Non-

Executive Director for engagement with the Company’s

workforce.

The Remuneration Committee met formally six times

during the year ended 31 December 2023 (two formal

meetings and four additional meetings). The Committee

considered the salaries and related Director packages

for the Executive Directors on their appointment, the

fees payable to the two new Non-Executive Directors

and the Directors’ remuneration policy. The Committee

also considered the statement of the Committee’s

activities in the Annual Report and Financial

Statements and the Directors’ Remuneration Report

prior to submission for shareholder approval at the

Company’s 2024 annual general meeting.

Disclosure Committee

The Disclosure Committee assists and informs the

decisions of the Board concerning inside information.

It also 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, prior to

publication, reviewing for completeness and accuracy

the Company’s public disclosures, and monitoring

the outcome of announcements. The Disclosure

Committee meets as required when necessary to fulfil

its responsibilities and to consider public disclosures.

The Disclosure Committee is chaired by Stephen

Welker. Its other members are Julie McEwan, Matthew

Bibby and Andrew Blurton. Gavin Manson was a

member of the Disclosure Committee until 9 January

2023, at which point he was appointed Chair of the

Committee. Gavin Manson remained as Chair of

the Committee until he retired from the Board at the

2023 AGM, at which point he stepped down from the

Committee.

Julie McEwan, Andrew Blurton and Stephen Welker

were appointed members of the Committee on

25 January 2023, at which date Robert Henry stepped

down from the Committee. Stephen Welker was

appointed Chair of the Committee upon Gavin Manson

retiring from the Board at the 2023 AGM. Matthew

Bibby was appointed a member of the Committee on

7 September 2023.

Hostmore plc • Annual Report 2023

Report of the Audit and Risk

Committee

Governance report

Chair Introduction

Dear Shareholders,

The Audit and Risk Committee had four formally

scheduled meetings and two additional meetings

in 52-week period ended 31 December 2023 to

enable the Committee to undertake its roles and

responsibilities on behalf of the Board. It also held

additional detailed discussions throughout the year.

I am pleased to outline what the Committee has been

focused on during the year.

Committee Members and Meeting

Frequency

The current members of the Committee are Andrew

Blurton (Chair), David Lis, Helena Feltham and Célia

Pronto (full biographical details can be found on pages

54 to 57). Helena Feltham and Célia Pronto were

appointed as members of the Committee when they

joined the Board on 7 June 2023 and 20 June 2023,

respectively.

Provision 24 of the Code provides that the Committee

must comprise of at least three members or, in the

case of smaller companies, two 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 Company constitutes

a “smaller company” for the purposes of the Code. The

Committee complied with this requirement throughout

the 52-week period ended 31 December 2023. In

addition, as the Chair of the Audit and Risk Committee,

I have recent and very relevant financial experience

with competence in accounting and auditing in my

prior roles as CFO of a number of listed and privately

owned companies.

Under the Committee’s terms of reference, meetings

are held at least three times a year at appropriate

times in the financial reporting and audit cycle.

Additional meetings are held as required. In

addition to the Committee members, other regular

attendees are representatives of the external auditor,

PricewaterhouseCoopers LLP. In addition, the Chair of

the Committee met with representatives of the external

auditor before and during their audit of the Group’s

results for the year ended 31 December 2023.

Role and Responsibilities

The role of the Audit and Risk Committee is set out in

its terms of reference which were originally approved

by the Committee and the Board on 5 October 2021.

The terms of reference were last reviewed and

approved by the Committee and by the Board of the

Company on 14 September 2023 and are available on

the Company’s website.

Duties of the Committee

The duties of the Committee include, amongst other

things:

• To critically review the appropriateness of the

Group’s significant accounting policies, financial

reporting issues and areas of judgment and report

to the Board accordingly.

• To critically review the integrity of the internal

management accounts and the publicly issued

financial statements of the Group.

• 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.

• Review and approve the annual audit plan.

• Oversee the relationship with the external auditor

and make recommendations to the Board

regarding the appointment, re-appointment or

replacement of the external auditor.

• Assess the external auditor’s independence and

objectivity and the effectiveness of the external

audit process, taking into consideration relevant UK

professional and regulatory requirements.

• Assist the Board with the definition and execution

of its risk management strategy, risk policies

internal control system and to assess the current

risk exposure.

• 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 Committee meeting

on all matters within the Committee’s duties and

responsibilities.

Committee Key Activities and

Focus in 2023

During 2023, PricewaterhouseCoopers LLP’ (“PwC”)

audit of the Group’s financial statements for the 52

week period ended 1 January 2023 was reviewed

by the FRC’s Audit Quality Review team (the “AQR

team”). The AQR team routinely monitors the quality

of audit work of certain UK audit firms through

inspections of sample audits and related procedures at

individual audit firms. The key finding of the AQR team

of PwC’s audit of the Group’s financial statements

for the 52 week period ended 1 January 2023 was

for an improvement to the audit approach for the

Hostmore plc • Annual Report 2023

Report of the Audit and Risk

Committee continued

recoverability of the parent company’s investment

in its subsidiary undertakings. There were also

some additional findings. All of these matters were

considered by the Committee. The Audit & Risk

Committee discussed the review findings with PwC

and reviewed their proposed actions to address the

AQR team’s findings. The Committee is satisfied that

these changes were implemented by PwC for their

2023 audit.

Other key activities in addition to the duties of the

Committee referred to above included the following:

• Review of financial statements and reports,

including the Half Year and Full Year financial

reports

• Review of risk management and operational

internal controls

• External audit – Receive the output of the external

audit effectiveness review regarding the 2023 audit

process and consider the external auditor’s re-

appointment.

• Financial Reporting Council review – Responding

to the feedback received from the FRC in relation

to its review of the Company’s annual report and

financial statements for the 52-week period ended

1 January 2023.

• Internal Audit – Keep under review plans and

progress around internal controls framework and

whether there is need for additional internal audit

functions.

• Consideration of External Audit Tender Process.

• Review of financing and refinancing measures,

including bank facilities and covenant terms.

• Review of the Committee’s Terms of Reference.

The above key activities are commented on in further

detail below.

Composition, Skills and Experience

An annual review of the Committee’s composition, the

independence of Non-Executive Directors and their

time commitment was conducted in Q4 2023.

Reporting

Financial Reporting

The Committee reviews on an ongoing basis the

Group’s corporate reporting, including critical

accounting policies, areas of judgment and estimation,

major accounting transactions, short-term trading

risks, business continuity, fraud environment and

management overrides.

Significant Issues considered in relation

to the Financial Statements

Significant issues and accounting judgements are

identified by the Chair, by the Group’s Finance Team

and by the external auditor. These are reviewed by the

Committee prior to the preparation of Half Year and

Full Year financial statements.

The key audit matters identified in preparing and

subsequently auditing the Group’s financial statements

for the 52-week period ended 31 December 2023

included:

• the appropriateness of the going concern basis of

preparation of the financial statements;

• the results of the FRC review of the audit by PwC

of the Company’s annual report for the 52 weeks

ended 1 January 2023;

• the restatement of the Company’s investment in its

subsidiary undertakings and certain other matters

at 1 January 2023;

• the impairment of the Company’s investment in its

subsidiary undertakings at 31 December 2023;

• the restatement of the Group’s impairment charge

and resultant impact on goodwill for the 52 week

period ended 1 January 2023; the team members

and systems used for assessing impairments have

been significantly changed during the period ended

31 December 2023. Additional functionality has

also been put in place on lease renewals and cost

accrual processes;

• the calculation of adjusted measures of earnings

per share;

• additional disclosures in the financial statements

for the 52-week period ended 31 December 2023

to enhance the information provided;

• the impairment of PPE and RoU assets for the

52-week period ended 31 December 2023;

• the calculation of Alternative Performance

Measures;

• the valuation of goodwill at 31 December 2023.

With reference to the appropriateness of the

going concern basis of preparation of the financial

statements and the related viability assessment, the

Committee took account of the following significant

aspects of the business.

• EBITDA FRS102 of £1.6m;

• FY23 year-end net debt FRS102 of £25.1m;

• the cost reduction exercise completed in 2023

which reduced fixed overheads on an annualised

basis by £8.4m;

Hostmore plc • Annual Report 2023

Governance report

• banking facilities recently refinanced with existing

lending banks extending the term of the facilities to

1 January 2026 and a relaxation of the covenants

relating to those facilities;

• the agreement with the TGI Fridays Franchisor to

defer all new restaurant opening obligations until

the end of FY25;

• the Group’s forecasts for the financial years ending

31 December 2024 and 31 December 2025;

• The Group’s capital allocation policy which was re-

set at the beginning of 2023. This focuses primarily

on delivering improved performance from the

core TGI Fridays estate, and for 2023 to 2025 not

expanding the operating estate of the business.

These actions all resulted in an improvement in net

cash generation by the Group.

The Committee reviewed the results of the Executive

Team’s forecasts of expected operating performance

and cash availability for the 15 months ending 31 July

2025. These also 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 Team and with the external auditor. The

Group’s base case forecasts showed that the Group

would continue to have headroom above the minimum

covenant levels in the updated Group banking facilities

and continued compliance with covenant tests.

The Executive Team also prepared severe but plausible

downside scenarios which assessed the position in a

severely depressed trading environment and worsening

of performance by the Group’s restaurants, with limited

recovery in the second half of 2023 from the factors

that affected performance in the first quarter of 2023.

The Board maintains a tight focus on the Group capital

allocation policy and expenses, such that both can

be reduced further if trading is reduced to the levels

inferred in the severe but plausible downside scenario.

In that scenario, if there was no corrective action by the

Board, the Group has forecast potential for a restricted

liquidity position in the first quarter of 2024.

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.

With reference to the valuation of property, PPE and

RoU assets, the Committee reviewed in detail the

impairment assessment of these assets performed by

the Executive Team at 31 December 2023. For this

purpose, each restaurant in 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 RoU assets of

the CGU. The recoverable amount is based on value-

in-use calculations, using forecast cashflows and

each restaurant’s ability to cover its costs, including

an allocation of central overheads, marketing and

maintenance. The Committee assessed the carrying

value of PPE and RoU assets by reference to the

Group’s updated business plan. This exercise resulted

in a net impairment charge of £10.1m against these

assets. The Committee discussed these projections in

detail with the Executive Team and with the external

auditor and concluded that an impairment charge of

£10.1m was warranted. Accordingly, this has been

reflected in the financial statements for the period

ended 31 December 2023.

Goodwill relates to the TGI Fridays brand and

is considered at an operating segment level.

The Executive Team took account of the market

capitalisation of the Company by reference to its

share price at year end to consider whether a goodwill

impairment trigger was present. With reference to the

valuation of goodwill and the Company’s investment

is its subsidiary undertakings, the Executive Team

performed an impairment assessment of goodwill in

accordance with IAS 36 on the Group’s consolidated

statement of financial position. As a result of this

assessment, the Committee concluded that a prior year

adjustment was necessary in respect of the valuation

of goodwill and of the related Company’s investment

in its subsidiary undertakings at 1 January 2023. At

31 December 2023, the recoverable amount of all the

Group’s CGUs was assessed to be significantly higher

than the combined carrying amount of the CGUs and

goodwill after reflecting the prior year adjustment. The

Committee discussed this assessment in detail with

the Executive Team and with the external auditor.

Thereafter, the Committee concluded that no further

impairment charge was necessary at 31 December

2023. The above prior year adjustment and no

requirement for a further impairment in the 52 week

period ended 31 December 2023 have been reflected

in the financial statements.

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

provided detailed feedback throughout the process to

the Finance Team. The Annual Report and Financial

Statements was also shared with the external auditor

at an early stage to obtain feedback.

The Committee has concluded that the Annual

Report and Financial Statements is fair, balanced and

understandable.

Hostmore plc • Annual Report 2023

Report of the Audit and Risk

Committee continued

Risk Management and Internal

Controls

Risk Management

The Committee, along with the Board, reviews the

Group’s monthly 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 received from the Group’s

Executive Team.

The Committee considers possible changes in risk

appetite that might occur during the year. It also

considers the impact of short term operational and

financial risks and the methods by which resilience is

built into the business to protect it from these risks.

Internal Audit

The Group does not have a financial internal audit

function though separate internal audit functions

exist in the operational aspects of the business. 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

complement the work of the external auditor.

As referred to in note 6 to the financial statements, the

IFRS 16 lease modifications for a number of stores

at 1 January 2023 had been contractually agreed but

had not been actioned at that period end. In addition,

as referred to in note 38 to the financial statements,

the value-in-use for testing of the Group’s non-current

assets at 1 January 2023 did not include the debt

in the Company’s subsidiaries. The systems and

related models used for these assessments have

been upgraded during the 52-week period ended

31 December 2023. Following that upgrade, the

Committee has concluded that the financial processes

and internal controls in operation in the Group are

sufficient for a Group of Hostmore’s size to operate

effectively without a financial internal audit function.

Internal assurance is achieved through three distinct lines:

First line:

Operational and management controls

Second line:

Risk and compliance monitoring

Third line:

Independent and external review

•Appropriate team structure and

reporting lines.

•Visible, championed values and

expected behaviours.

•Application of Group policies and

procedures.

•Team member induction, training and

ongoing support.

•Executive and leadership oversight.

•Operational internal audit activity.

•Risk management framework,

including review levels.

•External specialists engaged to

monitor and report on compliance

operations.

•External advisors engaged to review

first and second lines of assurance.

•Open culture of challenge to existing

processes and whistleblowing hotline.

Going Concern

As referred to above, the Committee considered the

going concern basis of preparation of the Company’s

financial statements for the 52-week period ended

31 December 2023 which is set out in further detail

in note 4.2 to the financial statements on page 135

and 136 and in the Chief Financial Officer’s Review

on page 20. The Committee reviewed the basis of

preparation of the financial statements on the going

concern basis. This included a review of forecasts

prepared on a severe but plausible downside

scenario. Those forecasts include a depressed trading

environment and reduced recovery in H2 2024 and

for the whole of FY 2025. These scenarios also model

the impact that they would have on the amended

covenants in the Group’s financing facility. The

Committee considered the detail provided in the Chief

Financial Officer’s Review on going concern. Based

on the above, the Committee has concluded that it

was appropriate for the Group’s financial statements

for the 52-week period ended 31 December 2023

to be prepared on a going concern basis and has

recommended this to the Board.

Viability Assessment

The Committee reviewed the bases of calculation used

in the Viability Statement set out in the Chief Financial

Officer’s Review on pages 20 and 21. The Committee

confirmed their agreement to the Viability Statement

and has recommended this to the Board.

External Audit

External Auditor

PricewaterhouseCoopers LLP have been the

Company’s external auditors since its incorporation

in April 2021. The current audit partner, David Beer,

has been the Company’s external auditor’s audit

partner since admission on 2 November 2021 of the

Company’s shares to the premium listing segment of

Hostmore plc • Annual Report 2023

Governance report

the Official List of the Financial Conduct Authority and

to trading on the London Stock Exchange plc’s main

market for listed securities.

External Audit Tender Process

The Committee recommends the re-appointment of

PricewaterhouseCoopers LLP as auditor at the AGM

to be held on 3 June 2024, ahead of the audit tender

process in the second and third quarters of 2024. The

Committee will make recommendations to the Board

about the appointment of a proposed new external

auditor. The Committee would also consider, and

once agreed approve the remuneration and terms of

engagement of the new external auditor. Following

completion of this process, PricewaterhouseCoopers

LLP will resign.

Independence, Objectivity and

Effectiveness

The Committee assesses the independence, objectivity

and effectiveness of the auditor on an annual basis.

The Chair of the Committee meets with the auditor

throughout the year to discuss new accounting

standards, current best practice, matters to be

considered by the Committee and if there are any

matters of concern. The auditor also periodically meets

with the Committee without the Executive Directors

being present which ensures that there is always a

forum for open discussion.

Non-Audit Services Policy

During the 52-week period ended 31 December 2023,

the Group’s auditor did not provide any non-audit

services to the Group. The Committee reviews this

position on a half-yearly basis and has no plans to

authorise the provision of any non-audit services by the

auditor.

Appointment of External Auditor

The Committee recommends the re-appointment

of PricewaterhouseCoopers LLP as auditor at the

AGM to be held on 3 June 2024, ahead of the audit

tender process in Q2 and Q3 of 2024, referred

to above. Following completion of this process,

PricewaterhouseCoopers LLP will resign.

External Auditor Fee

Details of the fees payable to PricewaterhouseCoopers

LLP during the 52-week period ended 31 December

2023 are shown in note 12 to the financial statements.

Compliance, Speaking-up and

Fraud

The Committee undertakes an annual review of the

Company’s Anti-Bribery and Corruption Policy and the

Whistleblowing Policy and makes recommendations to

the Board. These procedures are set out on page 51.

The Company has a communications programme that

promotes awareness of the whistleblowing helpline and

its purpose to its team members across the Group.

This programme was continued and expanded in 2023

and 2024.

Committee Evaluation

Provision 21 of the Code requires that the Board

should undertake a formal and rigorous annual

evaluation of the performance of the Board, its

Committees, the Chair and individual directors.

An internal Board and Committee evaluation was

conducted in Q4 2023 where directors were asked to

complete a questionnaire and update a board skills

matrix. Further details of the evaluation process can

be found on page 63 of the Corporate Governance

Report. The performance of the Committee was rated

positively.

Andrew Blurton

Chair of the Audit and Risk Committee

2 May 2024

Hostmore plc • Annual Report 2023

Report of the Nominations

Committee

Chair Introduction

Dear Shareholders,

The Nominations Committee had two formally

scheduled meetings and a number of additional

meetings during the 52-week period ended

31 December 2023. I am pleased to outline what the

Committee focused on during the year.

Committee Members and Meeting

Frequency

Stephen Welker, David Lis, Andrew Blurton, Helena

Feltham and Célia Pronto are the current members of

the Nominations Committee (full biographical details can

be found on pages 54 to 57). Gavin Manson was the

Chair of the Committee until he stepped down from the

Committee on 25 January 2023, at which point Stephen

Welker replaced him as Chair of the Committee. Helena

Feltham and Célia Pronto were appointed as members

of the Committee when they joined the Board on 7 June

2023 and 20 June 2023, respectively.

The Code requires that the Committee must comprise

of not less than three members, the majority of whom

are to be independent Non-Executive Directors of the

Company. David Lis, Andrew Blurton, Helena Feltham

and Célia Pronto are independent Non-Executive

Directors and accordingly the Committee complies with

this requirement. Gavin Manson and Stephen Welker

who separately served on the Committee during the year

are not independent Non-Executive Directors. Stephen

Welker and Gavin Manson were not considered to be

independent due to their previous board positions on

Electra Private Equity PLC (now known as Unbound

Group PLC) from which the Company was demerged

in 2021, and Stephen’s significant shareholding in the

Company. The Board considers Stephen to be beneficial

to the Company and its shareholders as he brings a

knowledge and understanding of the Group’s business,

and has wide expertise of the City, investment banking

and investor relations.

Roles and Responsibilities

The role of the Nominations Committee is set out

in its terms of reference, which were approved by

the Committee and the Board on 5 October 2021.

The Committee’s terms of reference were reviewed

and approved by the Committee and the Board

on 14 September 2023. The Committee’s terms of

reference are available on the Company’s website.

Duties of the Committee

The Nominations Committee is responsible for the

following key activities:

• Reviewing the structure, size and composition of the

Board

• Putting in place Board and other senior management

succession plans and keeping them under review

• Reviewing and monitoring the effectiveness of the

Group’s policies preventing discrimination, together

with the People team’s proposals to advance an

equality, diversity and inclusion policy, and linking

this with Group objectives

• 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

• Reviewing annually the time required from the

Non-Executive Directors

• Reviewing the results of the Board and Committee

evaluation process and reviewing its own

performance

• Ensuring that new Directors receive a full, formal and

tailored induction

• Making recommendations to the Board on any area

within its remit where action or improvement is

considered to be required

• Reporting to the Board after each meeting of the

Committee on all matters within the Committee’s

duties and responsibilities

Focus for 2023

The Committee’s key areas of focus for 2023 included:

• Considering and thereafter approving the

appointment of Stephen Welker as Chair of the

Board as a result of Gavin Manson stepping down

as Chair in June 2023

• Initiating a candidate search for two independent

Non-Executive Directors

• Initiating a candidate search for a new CEO

• Considering and thereafter approving the

appointment of Julie McEwan as the Company’s

Interim Chief Executive Officer on 10 January 2023

as a result of Robert B. Cook stepping down as

Chief Executive Officer. Subsequently considering

and thereafter appointing Julie McEwan as

permanent Chief Executive Officer on 1 May 2023

and as a Director of the Company on 7 June 2023

• Considering and thereafter approving the

appointment of each of Helena Feltham and Célia

Pronto as a Director of the Company

Hostmore plc • Annual Report 2023

Governance report

• Agreeing letters of engagement and related

arrangements for Helena Feltham and Célia Pronto

to be appointed Non-Executive Directors

• Considering and thereafter approving the

appointment of Matthew Bibby as the Company’s

Interim Chief Financial Officer on 8 September 2023

as a result of Alan Clark stepping down as Chief

Financial Officer in September 2023. Subsequently

considering and thereafter appointing Matthew

Bibby as permanent Chief Financial Officer and as

a Director of the Company on 6 December 2023

• Board and management team updates

• Reviewing the Committee’s terms of reference

• Reviewing the membership of the Board and its

Committees and the Board succession plan

• Approving the Committee’s programme for 2024

• Reviewing the time commitment from Non-

Executive Directors

• Completion of the internal Committee evaluation

process

• Reviewing the Board induction programme

• Monitoring the effectiveness of the Group’s policies

preventing discrimination and the linkage of these

policies to Group strategy.

Board Changes and Succession

Planning

As referred to above, Gavin Manson stepped down

from the Board at the 2023 AGM, and Stephen Welker

succeeded him as Chair of the Board. Stephen had

previously been appointed to the Board on 15 August

2022.

Stephen was previously a Non-Executive Director of

Electra Private Equity PLC (from which the Company

was demerged in 2021). He is a significant shareholder

in the Company and also a Partner in Sherborne

Investors Management LP which used to hold an

interest in the Company. Stephen is therefore not

considered to be independent within the meaning of

the Code. In selecting Stephen as Chair, the Board

saw continuity of stewardship as being particularly

important. In addition, the Board values his knowledge

and understanding of the Group’s business, alongside

his broad insight of the City, investment banking and

investor relations. These have been of significant value

as the Group has progressed its business plan during

the year ended 31 December 2023 and since the year

end. Consequently, although recommended by the

Code, neither open advertising nor an external search

consultancy were used for the appointment of Stephen

to the role of the Chair.

Robert B. Cook stepped down as CEO of the Company

and from the Board on 9 January 2023. The Board

was committed to ensuring that the new permanent

CEO had the qualities necessary to enable the future

success of the business. Julie McEwan was appointed

Interim CEO whilst an external search was conducted.

After an impressive period as Interim CEO, the Board

resolved on 7 June 2023 to appoint Julie McEwan as

permanent CEO and as a Director of the Company.

Alan Clark stepped down as CFO of the Company

and from the Board on 7 September 2023. Again,

the Board was committed to ensuring that the new

permanent CFO had the qualities necessary to enable

the future success of the business. Matthew Bibby

was appointed as Interim CFO. Matthew impressed

the Board in this role and the Board resolved on

6 December 2023 to appoint Matthew Bibby as

permanent CFO and as a Director of the Company.

In Q2 2023, the Committee conducted a search to

identify and appoint two new independent Non-

Executive Directors to the Board. This culminated

with the appointment of Helena Feltham and Célia

Pronto with effect from 7 June 2023 and 20 June 2023,

respectively.

In line with best practice each of Stephen Welker,

David Lis and Andrew Blurton will stand for re-election

at the AGM on 3 June 2024. In addition, each of Julie

McEwan, Matthew Bibby, Helena Feltham and Célia

Pronto will stand for election at the AGM on 3 June

2024, being their first AGM since appointment.

The Committee received and considered the

Company’s succession plan in 2023. The Board

members also completed a Board skills matrix to

identify any potential skills shortages on the Board.

Committee Evaluation

Provision 21 of the Code requires that the Board

should undertake a formal and rigorous annual

evaluation of the performance of the Board, its

Committees, the Chair and individual directors.

An internal Board and Committee evaluation was

conducted in Q4 2023 where directors were asked to

complete a questionnaire and update a board skills

matrix. Further details of the evaluation process can be

found on page 63 of the Corporate Governance Report.

The performance of the Committee was rated

positively. The Committee agreed that its functions

would be improved further by extending the Executive

Team’s succession planning.

Stephen Welker

Chair of the Nominations Committee

2 May 2024

Hostmore plc • Annual Report 2023

Annual Statement from the

Chair of the Remuneration Committee

Annual Statement from the Chair of the Remuneration Committee

Dear Shareholders,

As the Chair of the Remuneration Committee, I am

pleased to present, on behalf of the Board, our

Directors’ Remuneration Report for the 52-week period

ended 31 December 2023.

This report is set out in three sections:

1. This Annual Statement, which summarises the key

activities and work of the Committee during the

52-week period ended 31 December 2023.

2. The Hostmore Directors’ Remuneration Policy (the

“Remuneration Policy”) – this sets out the proposed

remuneration framework for the Directors which will

apply if approved by shareholder vote at the AGM

on 3 June 2024 (the “2024 AGM”)

3. The Annual Report on Remuneration – this sets out

in detail the remuneration received by Directors

for the 52-week period ended 31 December 2023

and how the Remuneration Policy will be applied in

2024.

The Annual Report on Remuneration, along with this

statement, will be subject to an advisory shareholder

vote at the 2024 AGM.

Remuneration in context

2023 was a challenging year for our sector, with

the cost-of-living crisis and significant inflationary

pressures continuing to affect the UK economy.

During the year ended 31 December 2023, the newly

constituted management team has responded well

to the prevailing challenges faced by the Hospitality

Sector, including but not limited to the various cost of

living impacts. The team has been transforming the

guest experience to ensure there is increased value

for money, streamlining operational costs and where

possible closing non-viable operations. Innovation has

been key to the transformation, together with ongoing

delivery of this strategy.

Remuneration for the period under

review

The single figure of remuneration for 52-week period

ended 31 December 2023 reflects base salary, pension

and awards of shares to Julie McEwan and Matthew

Bibby on being appointed Interim and permanent

CEO and Interim and permanent CFO respectively.

The Committee determined that it was appropriate to

pay Julie McEwan a bonus of £40,000 in respect of

her period as Interim CEO. No bonus was payable to

the Directors in respect of the 52-week period ended

31 December 2023.

Alan Clark resigned from the Board on 7 September

2023. The Remuneration Committee and the Board

resolved to categorise him as a “Good Leaver” for

the purposes of his long-term incentive awards. Alan

Clark’s Performance Share Awards are subject to

the Group achieving the relative TSR, EPS and ROIC

performance measures, and if so, they will vest three

years after their date of grant in June 2022. These

awards will also be pro-rata to reflect the period of

time Alan was employed by the Company relative to

three-year vesting period. They are also subject to

a two-year post-vesting holding period. Malus and

clawback provisions also apply.

No long-term incentive awards were made in the

52-week period ended 31 December 2023.

Julie McEwan, the Chief Executive Officer, received a

share award of 185,000 ordinary shares for accepting

the role of Interim CEO and a further 185,000 ordinary

shares for accepting the role of permanent CEO.

These shares were transferred to her by Intertrust

Employee Benefit Trustee Limited, the trustee of the

Hostmore plc 2021 Team member Benefit Trust,

from shares held by the Trust and therefore did not

involve the issue of new shares. Matthew Bibby was

awarded 126,190 ordinary shares for accepting the

role of permanent CFO which were transferred to him

by Intertrust Employee Benefit Trustee Limited shortly

after the year end. The Company paid the tax and

national insurance contributions which arose on the

initial award to Julie and the award to Matthew (but not

on the subsequent award made to Julie on accepting

the role of permanent CEO).

Remuneration Policy and

implementation in FY23

The current Remuneration Policy was approved by

the Company’s shareholders at the 2023 AGM. The

Remuneration Policy is structured to align executive

remuneration with the shareholder experience and to

support the strategy of the Company, and its continued

growth and success. The Remuneration Policy also

recognises the importance of attracting and retaining

high-quality talent. In developing the Remuneration

Policy, account was taken of the prevailing market and

best practices.

Implementation in FY23:

• Robert B. Cook resigned as a Director of the

Company on 9 January 2023. Details of the

payments made to Robert in connection with his

departure are summarised in the Annual Report on

Remuneration (see page 99).

• Alan Clark resigned as a Director of the Company

on 7 September 2023 and continued to be

employed by the Company up to and including

6 March 2024. The Remuneration Committee and

Hostmore plc • Annual Report 2023

Governance report

the Board exercised its discretion to categorise him

as a “Good Leaver” for the purposes of his long-

term incentive awards. Details of the payments

by the Group to Alan in connection with his

departure are summarised in the Annual Report on

Remuneration (on page 99).

• The base salary of Julie McEwan, the CEO,

remained unchanged from her appointment on

2 May 2023 to 31 December 2023 at £400,000

per annum having been increased from £200,000

when she was Interim CEO. The base salary of

Matthew Bibby, the CFO, remained unchanged

from his appointment on 6 December 2023 to

31 December 2023 at £210,000.

• Executive Directors receive a pension contribution

of 3% of their base salary in line with the

contribution percentage available to the majority of

the Group’s workforce.

• The maximum annual bonus payable during the

year ended 31 December 2023 in the case of Julie

McEwan as CEO was 125% of her salary; and in

the case of Matthew Bibby as CFO was 100%

of his salary. At least one third of any Executive

Director’s annual bonus earned has to be deferred

into the Company’s shares which are required to

be held for three years if the Executive Director

has not met the shareholding requirement of 300%

of salary. For the period ended 31 December

2023, the bonus was assessed against a number

of strategic measures set for H1, Q3 and Q4,

which were all subject to an EBITDA underpin

– see Annual Statement form the Chair of the

Remuneration Committee on pages 76 and 77

for more details. These metrics are aligned to

the Company’s 4D strategy which is detailed on

page 8. The purposes of these metrics are detailed

under the heading “Performance measures” on

page 79. The EBITDA for the 52- week period

ending 31 December 2023 was less than the target

underpin in the bonus scheme and accordingly no

annual bonus was payable.

• No awards were made under the Company’s long-

term incentive plan in the 52-week period ended

31 December 2023.

New Directors’ Remuneration

Policy (subject to approval at the

2024 AGM)

To address the challenges being handled by the

Company, the Committee is submitting an amended

remuneration policy for shareholder approval at the

2024 AGM.

This new policy will:

• Allow for retention awards of up to 100% of salary

of Executive Directors to be made.

• Provide for slightly more flexibility when setting

targets for the annual bonus.

The reasons for making these changes to the

Remuneration Policy are as follows:

Retention

The Committee was concerned that there were

insufficient arrangements in place to ensure the

retention of the two Executive Directors at what it

seen as a critical period for the future success of the

Company, given the combination of:

• The recently proposed all-share acquisition

of TGI Fridays, Inc, announced on 16 April

2024.The additional workload imposed on the

Company’s two Executive Directors during this

period of uncertainty until the circular relating to

the proposed acquisition of TGI Fridays, Inc, and

related prospectus of the enlarged Group is issued.

• The fact that the Company’s two Executive

Directors currently have very limited share awards

that have been granted in the past under the

Company’s long-term incentive plan, combined

with the fact that the Committee does not consider

it would be appropriate to make additional awards

at this time.

• The fact that there will be a requirement for the

Executive Directors to be required to be retained to

ensure a successful transition to the new combined

business.

The Committee is therefore focused on the proposed

changes above to the current policy to assist with the

retention of the Group’s two Executive Directors.

As a result, the proposed new remuneration policy

will give the Committee the ability to make one-off

cash retention awards of up to 100% of salary to

both of the Executive Directors immediately following

the 2024 AGM. These will normally only be payable

if the Executive Director remains in employment with

the Group for 12 months after the proposed all-share

acquisition of TGI Fridays, Inc has completed.

Annual bonus

The Committee believes that the change made to

the annual bonus plan last year, to allow for quarterly

targets to be set was helpful in ensuring that targets

could remain relevant throughout the year. However,

the Committee considers that the restriction in the

current remuneration policy that at least 70% of the

annual bonus will be based on financial performance

targets is too restrictive at this time. The new

remuneration policy will allow for a greater part of the

Hostmore plc • Annual Report 2023

Annual Statement from the

Chair of the Remuneration Committee continued

bonus to be paid for non-financial performance targets

(currently limited to 30%), providing always that 100%

of the bonus is subject to a financial underpin. This will

enable more strategic and other non-financial targets

to be included whilst ensuring that no bonus is payable

unless the financial underpin is met.

No other changes are proposed to the current

Remuneration Policy. Assuming the proposed

acquisition of TGI Fridays, Inc proceeds, the

Committee expects that it will be necessary to submit

a new Remuneration Policy to shareholders at the

General Meeting to be held to approve the proposed

acquisition of TGI Fridays, Inc. This will be to reflect

the substantial changes expected to leadership and

operational structure of the enlarged Group as a result

of the proposed all-share acquisition.

Implementation of the

Remuneration Policy in FY24

The implementation of the Remuneration Policy

for FY24 is set out below, details of how the policy

supports the short and long-term strategic objectives

of the Group and how each component operates is

included in the Remuneration Policy on pages 82 to 87:

• The base salary of Julie McEwan, the CEO, will

remain unchanged, noting that she was appointed

as CEO in May 2023.

• The base salary of Matthew Bibby, the CFO, will be

increased to £275,000 with effect from 1 April 2024

to reflect the fact that he is already performing

very strongly in the role and his starting salary of

£210,000 was considerably below market rates.

• Pension contributions for Executive Directors to

remain at 3% of salary in line with the contribution

percentage available to the majority of the Group’s

workforce.

• The maximum annual bonus payable to remain

unchanged at 125% of the CEO’s salary and

100% of the CFO’s salary. Targets have been set

for the annual bonus for the first quarter of 2024,

comprising a mixture of financial and strategic

measures including number of covers, an analysis

of growth opportunities, managing consolidated

net debt, internal reporting, achieving targeted

guest feedback scores, progression of the Group’s

refinancing process and approval of a revised

IT architecture for the Group. The Committee

envisages setting quarterly targets on a similar

basis for the remaining two quarters of the year.

Bonuses will be payable, or agreed to not be

payable, following determination of the outcomes

of each quarter. The Remuneration Committee is

keeping ESG metrics under review in the line with

the ESG strategy on (pages 24 to 28).

Given the focus on achieving short term targets

for the benefit of the Group and its shareholders,

the current share price of the Company, and the

proposed acquisition of TGI Fridays, Inc, there

are currently no plans for the Committee to make

annual awards under the Company’s long-term

incentive plan during 2024.

Providing the new Remuneration Policy is approved by

the Company’s shareholders at the 2024 AGM

• retention awards will be made to the two Executive

Directors under which each of them would

receive one times annual salary (subject to normal

deductions for tax, National Insurance etc) in cash

providing they are still employed by the Group

(and have not given notice to leave) 12 months

following completion of the proposed acquisition

of TGI Fridays, Inc, or, if earlier, on cessation of

employment with the Group if they are given notice

by the Group following completion of the proposed

acquisition.

• The requirement for Executive Directors to build

their shareholdings to an in-employment level of

200% of base salary has been suspended. The

requirement to defer one third of any annual bonus

if a 300% of base salary shareholding requirement

had not been met, was also suspended in FY23.

This latter requirement has been reinstated for

FY24.

Pay and benefits of the Group

The Group operates a fair and equal pay structure

that enables it to attract, retain and incentivise high

performing individuals to deliver the Board’s strategy.

We also champion a fair and transparent service

charge / TRONC / gratuities system. The Board

believes that the Group implements a progressive pay

structure to reflect career development.

The Group also operates a Team member Forum which

acted as the formal channel to discuss a wide range of

colleague related topics. In addition to representation

by colleagues from the workforce, the Team member

Forum was attended by the CEO and Karen Barnard

the then People and Culture Director of the Group,

and thereafter by the CEO and Stephanie Williams,

the current People and Culture Director of the Group.

Feedback was provided from the Team member Forum

to the Remuneration Committee and its Chair. Helena

Feltham became Chair of the Remuneration Committee

on 1 October 2023 and at that time she also became

the designated NED for the wider workforce.

Note: Karen Barnard was not a statutory director of Hostmore plc

or its subsidiaries. In October 2023, Stephanie Williams succeeded

Karen Barnard as People and Culture Director of the Group.

Stephanie Williams is also not a statutory director of Hostmore plc

or its subsidiaries.

Hostmore plc • Annual Report 2023

Governance report

Equality, Diversity and Inclusion

Policy

Building on the Group’s existing policies preventing

discrimination, the Group has launched a new equality,

diversity and inclusion programme, together with a

Diversity and Inclusion Committee, underpinned by

a Diversity and inclusion policy. The Diversity and

Inclusion strategy is focused on three key areas in

2024 to drive inclusion and diversity in all areas of the

Group; LGBTQ+, Women in Business and Disability.

Detailed reporting on Equality, Diversity and inclusion is

provided to the Remuneration Committee on a biannual

basis.

In addition, in 2024 the Group is revisiting its online

Equality and Diversity training, which each new and

existing team member required to complete this as part

of their induction.

Further details on Equality, Diversity and Inclusion are

included in the Equality, Diversity and Inclusion section

on page 110 of the Directors’ Report.

Team Member Engagement

The Group receives, and acts upon, team members

feedback. It also conducted a colleague engagement

survey in 2022 which included diversity and inclusion

questions. These were in support of the launch of

diversity and inclusion activities in 2023 and our

broader diversity and inclusion agenda for 2024.

The Group conducted a colleague engagement survey

in Q1 2024, with the results being considered by the

Committee on 11 April 2024. A further engagement

survey is planned for H2 2024 which includes Diversity

and Inclusion, two way communication and a revised

Recognition Strategy.

The Committee’s key activities

The Committee’s additional activities during the

52-week period ended 31 December 2023 were as

follows:

• reviewing the Committee’s terms of reference;

• negotiating the settlement agreements with the

previous CEO and the previous CFO;

• agreeing remuneration packages and arrangements

for the interim CEO and interim CFO;

• agreeing remuneration packages and arrangements

for the permanent CEO and CFO;

• agreeing remuneration packages and arrangements

for senior employees;

• devising and implementing a bonus plan for

Executive Directors and members of the Executive

Team for FY23 and Q1 FY24; and

• considering to not make potential awards under the

Company’s long term incentive plan in FY24 at the

present time.

Subsequent to the period end, the Committee has

been involved in the following key activities:

• considering how best to ensure that the Executive

Directors are fairly rewarded, incentivised and

retained for the benefit of the Group in light of the

proposed acquisition of TGI Fridays, Inc; and

• considering and thereafter proposing related

amendments to the Remuneration Policy for the

remuneration packages and arrangements for the

Executive Directors of the Company.

Performance measures

Performance measures are used to determine the

extent to which awards made under the variable

elements of the Group’s annual bonus and long-term

incentive plan (the “LTIP”) in Executive Directors’

remuneration, will vest. For 2023, as no LTIP awards

were made, performance measures were only set

for the Group’s annual bonus plan. The performance

measures are selected to align to the Group’s strategy,

they are useful as Key Performance Indicators to

assess the Group performance and they align the

interests of the Directors to those of the Company’s

shareholders.

Hostmore plc • Annual Report 2023

Annual Statement from the

Chair of the Remuneration Committee continued

The measures used for the annual bonus for Q1 2024 fulfil the purposes set out below.

Measure Used in* Purpose

EBITDA FRS 102 Annual bonus Keystrategicfinancialunderpin

Covers Annual bonus Strategic imperative to improve performance

Analysis of growth opportunities Annual bonus Strategic imperative to evaluate growth opportunities

Consolidated net debt Annual bonus Keystrategicfinancialmeasure

Internal reporting

Annual bonus

Increased speed and quality of internal reporting to

assist the Board in managing the business through the

turnaround phase

Guest feedback Annual bonus Improved guest experience to drive covers growth

Refinancingprocessprogression Annual bonus Key strategic imperative

Information technology architecture Annual bonus Key strategic imperative

For internal management purposes the Group prepares results in accordance with FRS 102, which is the basis

adopted in the Groups’ bank facilities and its’ related covenants. This basis is therefore the basis that is used for

setting the targets of the annual bonus scheme.

* At the date of this report, only the annual bonus measures for Q1 2024 have been set and, consequently, only those are detailed in the table

above.

Conclusion

As Chair of the Remuneration Committee, I would welcome any feedback or comments on the Remuneration

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.

Helena Feltham

Chair of the Remuneration Committee

2 May 2024

Hostmore plc • Annual Report 2023

Hostmore

Remuneration Policy

Governance report

This Directors’ Remuneration Policy (the

“Remuneration Policy”) 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. The Remuneration Policy takes into account the

accompanying Directors’ Reporting Guidance and the

relevant guidelines of the shareholder representative

bodies.

The Remuneration Policy will be submitted to

shareholders for approval at the AGM on 3 June 2024.

The Committee intends that the Remuneration Policy

will operate for three years, effective from 3 June 2024.

However, if the proposed all-share acquisition of TGI

Fridays, Inc, announced on 16 April 2024 proceeds, the

Committee expects that it will be appropriate to submit

an updated Remuneration Policy to shareholders at the

General Meeting to be held to approve the proposed

acquisition of TGI Fridays, Inc to reflect the substantial

changes expected to the Group as a result of the

proposed acquisition of TGI Fridays, Inc. The existing

Remuneration Policy was approved by shareholders

at the AGM on 7 June 2023 and can be found in the

2022 Annual Report and financial statements on the

Company’s website.

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

requirements and delivering personalised customer

engagement. The Remuneration Policy is aligned to the

values and philosophies of the Group and is intended

to incentivise and reward long-term sustainable growth

of the Group. It is also aligned to market best practice.

The Group is committed to fairness in the way that it

pays all colleagues in relation to their skills, experience

and performance. The Remuneration Policy takes

into account the way the wider workforce is paid in

setting executive pay. The Remuneration Policy for

Executive Directors is more weighted towards variable

pay than for other team members, with a greater part

of their pay therefore at risk to them and conditional

on the successful delivery of the Company’s business

strategy.

Key principles of the Remuneration 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 risks from potentially

excessiverewardsareeasilyidentifiedandmitigated.TheRemuneration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 are

included 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. The

Committee has discretion over variable pay and can adjust any pay outcomes that the Committee deems

are inconsistent with the performance of the Group.

Proportionality

The Committee seeks to provide a competitive remuneration package which attracts and retains high

calibreexecutives,aswellasstructuring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. The Committee also ensures that they do not drive

behaviours that are inconsistent with the Company’s strategy and values. It ensures that such behaviours

are properly aligned with personal performance, the performance of the Group, and the interests of

shareholders.

Hostmore plc • Annual Report 2023

Hostmore

Remuneration Policy continued

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 other than appointments

actioned during a year,

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 team

member population;

• marketdataforsimilar

roles and comparable

companies; and

• theoveralleconomic

environment, including

therateofinflationandits

potentialeffectonGroup

performance.

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 Group 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.

Hostmore plc • Annual Report 2023

Governance report

Benefits

Purpose and

link to strategy

Operation

Maximum

Opportunity

Performance metrics

and assessment

To provide market

competitivelevelofbenefits

to support 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

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

newbenefitsintroduced

to a wider set of Group

colleagues.

Thevalueofeachbenefit

is not predetermined and

is based on the cost to the

Group.

The Committee aims to

reviewthelevelofbenefits

provided and the overall cost

ofthebenefits.

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 majority of the Group’s

workforce (currently 3% of

base salary).

Not performance related.

Hostmore plc • Annual Report 2023

Hostmore

Remuneration Policy continued

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, deferral 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for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 able 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 on

page 88).

The maximum bonus

opportunity is 125% of base

salary for the Chief Executive

Officerand100%forthe

ChiefFinancialOfficer.

The pay-out is determined

basedonarangeoffinancial

and strategic and/or personal

objectives.

At least 70% of the annual

bonus will be based on

financialperformancetargets,

unless 100% of the bonus is

subjecttoafinancialunderpin

(such as an EBITDA target)

in which case there would

be no minimum percentage

that needed to 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

payout 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.

Hostmore plc • Annual Report 2023

Governance report

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

shareholders’ interests.

Thefirstawardwasgranted

shortly after Admission. The

performance period for the

EPS and ROIC measures

used for these awards was

measured to the end of

thefinancialyearending

31 December 2023. Normally,

awards will be made under

the Company’s LTIP annually

following the announcement

of the annual results.

Discretionary annual awards

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 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 on page 88). 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.

Hostmore plc • Annual Report 2023

Hostmore

Remuneration Policy continued

Retention award

Purpose and

link to strategy

Operation

Maximum

Opportunity

Performance metrics

and assessment

To retain the services of the

Executive Directors in the

run up to and following the

proposed acquisition of TGI

Fridays, Inc.

The award will be payable in

cashoverafixedpercentage

of salary provided an

Executive Director is still

employed by the Group

(and has not given notice to

leave) 12 months following

completion of the proposed

acquisition of TGI Fridays, Inc

or, if earlier, on cessation of

employment with the Group,

other than for cause, if an

Executive Director is given

notice by the Group following

completion of the proposed

acquisition of TGI Fridays,

Inc.

100% of base salary Not performance related.

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.

Hostmore plc • Annual Report 2023

Governance report

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 or her 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

ThebenefittoaDirectoris

dependent on the nature of

the claim and the limitations

of the D&O insurance policy.

Not applicable.

Chair and Non-Executive Directors

Fees

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

Remuneration 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 levels 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.

Hostmore plc • Annual Report 2023

Hostmore

Remuneration Policy continued

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 or her 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

ThebenefittoaDirectoris

dependent on the nature of

the claim and the limitations

of the D&O insurance policy.

Not applicable.

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.

As outlined in the 2022 Annual Report when the Policy

was proposed to shareholders, the Policy allows

for the temporary suspension of the in-employment

shareholding requirements in exceptional

circumstances when the satisfaction of the requirement

is unreasonable, for example, due to a significant fall

in share price. On 9 February 2023, the Committee

decided to suspend the shareholding requirement

of Executive Directors in the Policy. Whilst the

requirement is suspended, the requirement to defer

part of bonus into shares if an Executive Director has

not met a 300% of salary shareholding requirement is

also suspended.

The Committee sets stretching but achievable targets

for both financial and non-financial measures. Details

are included in the Company’s annual report and

financial statements each year, subject to limitations

with regards to commercial sensitivity for the annual

bonus (where general terms will be provided). The

full details are also disclosed following the end of the

financial year in the Company’s next annual report and

financial statements subject if appropriate to limitations

with regards to commercial sensitivity for the annual

bonus.

Malus and Clawback

Malus and clawback can be applied at the discretion

of the Committee within three years of an LTIP award

vesting or annual bonus payment. These provisions

may be applied by the Company in the following

circumstances by the participant:

(i) material financial misstatement;

(ii) significant reputational damage to the Group;

(iii) negligence or gross misconduct by the participant;

(iv) fraud effected by or with the knowledge of the

participant;

(v) breach of anti-bribery or anti-corruption laws by the

participant;

(vi) material corporate failure in the Group; or

(vii) where awards were granted or vested based on

erroneous or misleading data.

Committee Discretions

The Committee operates under the powers that have

been delegated to it by the Board. The Committee

operates the variable incentive plans in accordance

with the relevant plan rules, the Listing Rules and

applicable legislation. Within the plan rules, the

Committee retains a number of discretions to ensure

effective operation of the plans. The majority of 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

Remuneration Policy and rules of each plan);

Hostmore plc • Annual Report 2023

Governance report

• Determining the choice of (and adjustment of)

performance measures and targets for each

incentive plan in accordance with the Remuneration

Policy and rules of each plan;

• Determining whether to set targets at the start of

the year for the annual bonus, or to set targets

during the financial year, such as six monthly or

quarterly targets in which case bonus payments

could be made following determination of the

outcome of each period;

• 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 Group performance;

• Determining whether and to what extent dividend

equivalents should apply to awards;

• Determining whether malus and clawback

should be applied to any award in the relevant

circumstances and, if so, the extent to which they

should be applied;

• Making appropriate adjustments required in certain

circumstances, for instance for changes in the

capital structure of the Company (or any similar

corporate event);

• Application of the holding period;

• Determining “good leaver” or “bad leaver” status

for incentive plan purposes and applying the

appropriate treatment;

• Undertaking the annual review of weighting of

performance measures and setting targets for the

annual bonus plan and LTIP awards from year to

year; and

• Temporarily suspending the in-employment

shareholding requirement in exceptional

circumstances in which case the requirement to

defer one third of the annual bonus into shares if a

300% of salary shareholding requirement was not

met would also be suspended.

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, such as a

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 Remuneration Policy outlined

above may be honoured, even if they are not consistent

with the Remuneration 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.

Hostmore plc • Annual Report 2023

Hostmore

Remuneration Policy continued

Illustration of the Remuneration Policy

The chart below sets out the potential values (£’000) of the remuneration package of the Executive Directors for

FY24 under various performance scenarios.

100% 81% 68%

19%

32%

862

1,112

681

1,362

811

200

400

600

800

1000

1200

1400

1600

200

400

600

800

1000

1200

1400

1600

Minimum Target Maximum Minimum Target Maximum

Chief Executive Officer

Remuneration (£000s)

Chief Financial Officer

Fixed pay Annual bonus

100% 81% 68%

19%

32%

552

Fixed pay Annual bonus

Notes:

• Salary represents annual salary for FY24.

• Benefits have been included based on the anticipated value of benefits in FY24.

• Pension represents the value of the annual pension of 3% of salary contributed by the Company.

• Retention award represents the full value of the proposed retention awards (100% of base salary at date of

award).

• Minimum: Fixed pay only (salary, benefits, pension and retention award).

• Target performance: Fixed pay and annual bonus at 50% of maximum (62.5% of salary for the CEO and 50% of

salary for the CFO). No LTIP as currently there is no intention to make an LTIP award in 2024.

• Maximum performance: Fixed pay and maximum annual bonus (125% of salary for the CEO and 100% of salary

for the CFO). No LTIP as currently there is no intention to make an LTIP award in 2024.

• No maximum with share price growth as no current intention to make an LTIP award in 2024.

Service contracts and loss of office arrangements

The Executive Directors who served during the 52-week period ended 31 December 2023 had service contracts

summarised as follows:

Executive Director Date of service contract Notice period

Robert B. Cook

15 October 2021 6 months

Alan Clark

15 October 2021 6 months

Julie McEwan 1 May 2023 6 months

Matthew Bibby 5 December 2023 6 months

1 Robert B. Cook stepped down as CEO and as a Director with effect from 9 January 2023. Details of his settlement on termination and

termination of his LTIP awards are set out on page 99. There will be no further payments in respect of his exit.

2 Alan Clark stepped down as CFO and as a Director with effect from 7 September 2023. He remained an employee until 6 March 2024.

Details of his settlement on termination are set out on page 99. Other than payments for being an employee up until 6 March 2024 and him

retaining LTIP awards on a pro rata basis that could vest depending on achievement of performance criteria, there have been and will be no

further payments in respect of his exit.

Hostmore plc • Annual Report 2023

Governance report

The Committee can exercise discretion in the manner

referred to below. 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 appointments, the initial notice period may be

up to 12 months, reducing to no more than 6 months

after not more than 12 months.

The Group’s policy on remuneration for Executive

Directors who leave the Group is set out below. This

policy is consistent with general market practice.

The Group does not reward 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 leaver or bad leaver. This is summarised in the

following table.

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 the outcome will be calculated on a time pro-rata basis to the 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 in shares.

Annual bonus (unvested

deferred shares)

For bad leavers, awards will lapse. For good leavers, shares will ordinarily vest on the normal

vesting date.

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). 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 of shares vesting if it is considered appropriate given the

particular circumstances.

Retention award

Unvested retention awards will lapse on the giving of notice by the Executive Director or if the

Executive Director ceases employment as a result of being dismissed for misconduct or cause. In

other circumstances, the Executive Director would be treated as a good leaver and any unvested

retention award would vest in full on cessation of employment provided that the proposed

acquisition of TGI Fridays, Inc has completed.

In the event of a change of control or similar event,

awards may vest early subject to performance.

In addition, any bonus or LTIP would normally 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 this

appropriate. Following an internal reorganisation which

results in a change of control, awards may be rolled

over into awards in the acquiring company.

Hostmore plc • Annual Report 2023

Hostmore

Remuneration Policy continued

Non-Executive Directors 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, unless waived by the Board. 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 initial

terms of David Lis and Andrew Blurton will end in

August 2024 and, having indicated their willingness

to continue, the Board has agreed to extend their

tenure for a further three-year term if they are re-

appointed by shareholders at the 2024 AGM. 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.

During the 52-week period ended 31 December 2023,

the Board reviewed and increased the fee payable to

the Chair of the Audit and Risk Committee. The dates

of appointment of each of the Non-Executive Directors

serving at 31 December 2023 are summarised in the

table below.

Non-Executive Director Date of appointment

Stephen Welker 15 August 2022

David Lis 18 August 2021

Andrew Blurton 17 August 2021

Helena Feltham 7 June 2023

Célia Pronto 20 June 2023

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 Remuneration 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 on page 83. In addition, 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components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 on page 84,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 on page 85. 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, although the

CommitteemayalsousetheflexibilityprovidedundertheListingRulestomakeawardswithout

prior shareholder approval.

Hostmore plc • Annual Report 2023

Governance report

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. In addition,

the Committee recognises that it may sometimes be

appropriate to provide an award of cash and/or shares

on an internal appointment. Such awards would be

limited to a combined value of no more than £50,000.

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

on page 87.

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 will consider the views of shareholders

and proxy agents when reviewing the remuneration

of Executive Directors and other senior executives

and will take into account published remuneration

guidelines. The Committee will consult with the

Company’s key shareholders when considering

significant changes to the implementation of the

Remuneration Policy and when the Policy is being

reviewed (typically ahead of an AGM binding vote

on the Remuneration 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.

Broader team member 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

Committee considers executive remuneration in the

context of the wider team member population and aims

to provide a market competitive package to all team

members of the Group. 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 team members, with a greater part of their

pay therefore at risk to them and conditional on

the successful delivery of the Company’s business

strategy. A significant number of the Group’s annual

salaried team members participate in the annual bonus

and the LTIP is operated for a significant number of

team members below the Executive Directors. A lower

aggregate level of incentive payment applies below

Executive Director level, by reference to the potential

impact of the role, internal relativities, and market

comparatives.

Whilst team members are not directly consulted

on matters of remuneration policy, the Committee

ensures there is an appropriate forum to discuss any

remuneration matters which should be considered as

part of its annual cycle. The Group operates a Team

Member Forum which has been attended by the

Remuneration Committee Chair in their capacity as

the independent Non-Executive Director for workforce

engagement on behalf of the Company, and the CEO.

This ensures that the team member voice is heard

directly by the Committee. Team member engagement

scores and other internal surveys are also considered

by the Committee.

Minor amendments

The Committee may make minor amendments to the

Remuneration Policy set out above (for regulatory,

exchange control, tax or administrative purposes, to

take account of a change in legislation, or to reflect the

passing of time) without obtaining shareholder approval

for such minor amendments.

Hostmore plc • Annual Report 2023

Hostmore

Annual Report on Remuneration

This is the annual report which explains the

remuneration arrangements for the 52-week period

ended 31 December 2023, and how the Directors’

Remuneration Policy (the “Remuneration Policy”) will

be implemented for the year ahead. The sections of

this part of the report that are subject to audit have

been shown as audited.

Role and responsibility

The Remuneration Committee is formally constituted

and operates on written terms of reference, which were

reviewed and approved by the Board in October 2021.

The terms of reference were last reviewed and

approved by the Board on 20 November 2023 and 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 Board,

each Executive Director and (on recommendation of

the Chief Executive Officer) each other member of

the Group’s Executive Team. The remuneration of the

Non-Executive Directors is determined by the Chair

and the Executive Directors. When determining these

arrangements, the Committee will take into account all

factors which it deems necessary, including workforce

remuneration, related policies and the alignment of

incentives and rewards with culture.

The Committee seeks to ensure alignment of the

Remuneration Policy to the Company’s purpose

and values, and its link to the successful delivery of

the Company’s long-term strategy and 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 consists entirely of independent Non-

Executive Directors. The Committee members are as

follows:

• Helena Feltham (Chair)

• David Lis

• Andrew Blurton

• Célia Pronto

Helena Feltham was appointed as a member of

the Committee on 7 June 2023 and as Chair of the

Committee on 1 October 2023. David Lis was Chair of

the Committee until he stepped down as Chair of the

Committee (but remained a member of the Committee)

on 1 October 2023.

The Committee met formally twice during the 52-week

period ended 31 December 2023, with all members

in attendance. The Committee also held additional

meetings on a number of occasions during the

52-week period ended 31 December 2023.

Advice to the Committee

Wholly independent and objective advice on executive

remuneration and share schemes is received by

the Committee from the Executive Compensation

practice of Alvarez & Marsal Tax LLP (A&M). A&M

was appointed by the Company in 2021 following a

competitive tendering process. The Company selected

A&M on the basis of their skill set, pricing and fit. A&M

is a member of the Remuneration Consultants’ Group

and is a signatory to its Code of Conduct. During

the year, A&M only provided services in relation to

senior management remuneration matters and share

plans and did not provide any other services to the

Company. Fees charged by A&M for advice provided

to the Committee during the 52-week period ended

31 December 2023 amounted to £64k (excluding VAT)

charged on a time and materials basis.

In addition, during the period ended 31 December

2023, the Committee consulted with the CEO with

regard to the remuneration and benefits provided to

the Group’s Executive Team (other than in relation to

the CEO’s own remuneration). The Committee also

received input from Karen Barnard, the People &

Culture Director of the Group until her departure

from the Group and thereafter from her successor,

Stephanie Williams.*

Single figure of remuneration for

the period from 2 January 2023 to

31 December 2023 (audited)

The following table sets out the single figure

remuneration receivable by each Director during the

52-week period from 2 January 2023 to 31 December

2023 (“2023”) and includes prior year comparatives for

the 52-week period from 3 January 2022 to 1 January

2023 (“2022”).

* Note: Neither Karen Barnard nor Stephanie Williams are statutory

directors of Hostmore plc or its subsidiaries.

Hostmore plc • Annual Report 2023

Governance report

(£’000) Year

Salary

and

fees Benefits

Pensions

Annual

bonus LTIP Other

Total

fixed

remuneration

Total

variable

remuneration

Total

remuneration

Executive Directors

Robert B. Cook

2023 19 0 0 0 0 0 19 0 19

2022 483 2 14 0 0 0 499 0 499

Alan Clark

2023 247 1 7 0 0 0 255 0 255

2022 341 1 10 0 0 0 352 0 352

Julie McEwan

5 & 6

2023 327 1 1 40 0 119 329 159 488

2022 N/A N/A N/A N/A N/A N/A N/A N/A N/A

Matthew Bibby

7 & 8

2023 15 0 0 0 0 50 15 50 65

2022 N/A N/A N/A N/A N/A N/A N/A N/A N/A

Non-Executive Directors

Gavin Manson

2023 65 0 0 0 0 0 65 0 65

2022 102 0 0 0 0 0 102 0 102

Stephen Welker

2023 0 93 0 0 0 0 93 0 93

2022 0 1 0 0 0 0 1 0 1

David Lis 2023 78 0 0 0 0 0 78 0 78

2022 68 0 0 0 0 0 68 0 68

Andrew Blurton 2023 67 0 0 0 0 0 67 0 67

2022 59 0 0 0 0 0 59 0 59

Helena Feltham

2023 31 0 0 0 0 0 31 0 31

2022 N/A N/A N/A N/A N/A N/A N/A N/A N/A

Célia Pronto

2023 27 0 0 0 0 0 27 0 27

2022 N/A N/A N/A N/A N/A N/A N/A N/A N/A

Notes:

1 The Benefits included in the table above are the taxable value of benefits, typically relating to life assurance and disability and medical

insurance.

2 Executive Directors are entitled to receive a pension allowance of 3% of salary. In the case of Robert B. Cook and Alan Clark, the pension

figures represent the cash amount of the pension allowance taken in lieu of contributions to the Group’s pension plan.

3 Robert B. Cook stepped down as an Executive Director with effect from 9 January 2023. The figure for salary and fees reflects the

remuneration received as an Executive Director including £7k. in lieu of holiday pay.

4 Alan Clark stepped down as an Executive Director with effect from 7 September 2023.

5 Julie McEwan was appointed as Interim CEO with effect from 10 January 2023 and an Executive Director and permanent CEO with effect

from 7 June 2023. The figures included in the table above cover the period from 10 January 2023 to 31 December 2023 while she was

Interim CEO and permanent CEO. The bonus of £40k was paid in respect of her role as Interim CEO.

6 Julie McEwan received a share award of 185,000 ordinary shares for accepting the role of Interim CEO and a further award of 185,000

ordinary shares for accepting the role of permanent CEO. The market value of these shares at the date of grant is included in Other

remuneration in the table above. The Company met the income tax and National Insurance Contributions arising from making the initial

award for accepting the role of Interim CEO which is also included in Other remuneration in the table above.

7 Matthew Bibby was appointed as Interim CFO with effect from 7 September 2023 and an Executive Director and permanent CFO with

effect from 6 December 2023. The figures included in the table above cover the period from 6 December 2023 to 31 December 2023 while

he was permanent CFO.

8 With effect from 6 December 2023, the Company committed to award Matthew Bibby 126,190 ordinary shares for accepting the role of

permanent CFO. These shares were transferred to Matthew Bibby in January 2024. The market value of these shares at the date of grant

is included in Other remuneration in the table above. The Company met the income tax and National Insurance Contributions arising from

making these awards which is also included in Other remuneration in the table above.

9 Gavin Manson was appointed as Non-Executive Chairman with effect from 27 May 2022. Gavin stepped down as Non-Executive Chairman

with effect from 7 June 2023.

10 Stephen Welker was appointed as Non-Executive Chairman with effect from 7 June 2023. Stephen waived his Director’s fee for both 2022

and 2023 and his Chair’s fee for 2023.

11 Helena Feltham was appointed as a Non-Executive Director with effect from 7 June 2023.

12 Célia Pronto was appointed as a Non-Executive Director with effect from 20 June 2023.

Hostmore plc • Annual Report 2023

Hostmore

Annual Report on Remuneration continued

Annual bonus (audited)*

The Executive Directors were eligible for a bonus

in relation to performance over the financial period

ended 31 December 2023. The Committee measured

performance at the end of H1, Q3 and Q4 based on

targets set at the start of each period in the year. The

Committee resolved that no annual bonus payments

would be made in respect of this period. Further detail

is set out below.

The annual bonus for the 52-week period ended

31 December 2023 was based 70% on financial

performance and 30% on strategic targets for each

of H1, Q3 and Q4, with the weighting for each period

being 33.33%. EBITDA FRS102 for the financial year of

£1.6m was below the threshold target which resulted

in no payment of annual bonus. Targets for the Annual

Bonus for EBITDA FRS102 are set out below:

Measure

Threshold

target

(33% of

award

payable)

Maximum

target

(100% of

award

payable)

Actual

outcome

Amount

payable

(% of

element)

EBITDA FRS102 £18.5m £21.5m £1.6m 0%

* All figures in this “Annual bonus (audited)” section are calculated on an FRS102 basis in accordance with the targets set for the annual

bonus.

Strategic measures account for 30% of the bonus.

For the CEO, these were based on expanding the

business in line with the 4D strategy, underpinned by

development, as set out in the Prospectus through the

organic growth of the then two existing brands, and

through M&A. For the CFO, these strategic measures

were based on banking measures and management

of energy costs. The strategic element of the bonus is

only payable if the threshold EBITDA target is met. As

this underpin was not met in the year, no amount was

payable in relation to this element.

In Q2 2023, the Committee resolved to pay Julie

McEwan a bonus of £40k to reflect the work she

undertook in navigating the Company through the

period following Robert B. Cook’s departure. This also

reflected Julie McEwan ensuring that the Company

made meaningful progress in relation to its Recovery

Plan.

LTIP awards vesting during the year

(audited)

No LTIP awards vested during the 52-week period

ended 31 December 2023.

LTIP awards granted during the

year (audited)

No LTIP awards were granted during the 52-week

period ended 31 December 2023.

Pensions

Directors receive pension contributions at 3% of

salary in line with the rate applicable for majority of the

Group’s workforce. The Group has no defined benefit

pension scheme and no contributions to defined

benefit pension schemes were made for Directors

during the 52 week period ended 31 December 2023 or

the previous year.

Hostmore plc • Annual Report 2023

Governance report

LTIP awards previously made to Executive Directors

Director Type of award Date of grant

Number

of options

awarded

Basis of

award %

of salary

Share price

used to

determine

level of

award

Face value

% that

vests at

threshold

Vesting

date

Robert B. Cook

LTIP –

Performance

Share Award

9 June 2022

496,080

42%

40.7p

£201,905

25%

9 June 2025

LTIP – Initial

Performance

Share Award

17 Nov 2021

639,136

150%

113.8p

£737,337

25%

17 Nov 2024

Alan Clark

LTIP –

Performance

Share Award

9 June 2022

347,767

42%

40.7p

£141,541

25%

9 June 2025

LTIP – Initial

Performance

Share Award

17 Nov 2021

448,054

150%

113.8p

£509,885

25%

17 Nov 2024

Julie McEwan

LTIP –

Performance

Share Award

9 June 2022

162,074

100%

98.7p

£65,964

25%

9 June 2025

Matthew Bibby

LTIP –

Performance

Share Award

9 June 2022

63,927

75%

40.7p

£26,018

25%

9 June 2025

LTIP –

Restricted

Share Award

17 Nov 2021

57,104

72%

113.8p

£64,984

N/A

17 Nov 2024

LTIP – Initial

Performance

Share Award

17 Nov 2021

39,534

50%

113.8p

£44,990

25%

17 Nov 2024

1 Following vesting, the awards are subject to a two-year holding period.

2 Robert B. Cook stepped down as an Executive Director with effect from 9 January 2023. As a result, his awards over a total of 1,135,216

ordinary shares in the Company lapsed with immediate effect. He is included in the table above as he was a Director of the Company for the

first nine days of the 52-week period ended 31 December 2023.

3 Alan Clark stepped down as an Executive Director with effect from 7 September 2023. The Board resolved to categorise him as a “Good

Leaver” for the purposes of his long-term incentive awards. His Performance Share Awards over 795,821 ordinary shares are subject to the

Group achieving the relative TSR, EPS and ROIC performance measures. Any awards will be pro-rata to reflect the period of time Alan Clark

was employed by the Company relative to the three-year vesting period in the awards. They are also subject to a two-year post-vesting

holding period. Malus and clawback provisions also apply in line with the Remuneration Policy.

4 Based on the Company’s average closing share price for the five business days to the dealing date prior to the date of grant. The share

price on the date of grant was 39.8p.

5 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.

6 Based on the Company’s average closing share price for the five business days to the dealing date prior to 1 March 2022 being the date

that Julie McEwan became an employee of the Group. The share price on the date of grant was 39.8p.

7 Julie McEwan was appointed Interim CEO with effect from 10 January 2023 and appointed permanent CEO with effect from 2 May 2023.

8 Matthew Bibby was appointed Interim CFO with effect from 8 September 2023 and appointed permanent CFO with effect from 6 December

2023.

Hostmore plc • Annual Report 2023

Hostmore

Annual Report on Remuneration continued

The Performance Share Awards granted on 9 June 2022 are subject to the following performance conditions to

be measured over three financial years to FY 2024. The awards are subject to a two-year post-vesting holding

period. Malus and clawback provisions apply in line with the Remuneration Policy.

Measure

Measurement basis

Proportion of

total award

Threshold

(25% vests)

Maximum

(100% vests)

Relative TSR

Company TSR vs FTSE

SmallCap (excluding Investment

Trusts) from date of grant to 3

anniversary of date of grant

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%

Other Awards to Executive Directors

Director

Type of award

Date of grant

Number

of shares

awarded

Share price

used to

determine

level of

award

Face value

of shares

Vesting

date

Julie McEwan

One-offRestrictedShare

Award for becoming permanent

CEO

31 May 2023

185,000

21.2p

£39,220

7 June 2023

One-offaward of shares for

becoming interim CEO on

10 January 2023

12 May 2023

185,000

22.9p

£42,365

12 May 2023

Matthew Bibby

One-off award of shares for

becoming permanent

CFO

6 December

2023

126,190

21.0p

£26,500

6 December 2023

1. A two-year holding period applies to this award.

2. A two-year holding period applies to this award. The Company met the income tax and National Insurance Contributions arising from

making this award, resulting in the award totaling £80k.

3. A two-year holding period applies to this award. The Company met the income tax and National Insurance Contributions arising from

making this award, resulting in the award totaling £50k.

4. The Committee determined the level of awards made to Julie McEwan as a number of shares rather than by reference to a particular share

price. For the award made to Matthew Bibby, the Committee determined that the award (including grossing up for income tax and NIC

would be worth £50K and used the closing share price on the date of award to determine the number of shares. The face value of shares

subject to awards are in all cases calculated using the closing share price on the date of award.

Governance report

Hostmore plc • Annual Report 2023

Payments made for loss of office

and payments to past Directors

(audited)

On termination of their appointments as Directors,

payments were made to each of Robert Cook, Alan

Clark and Gavin Manson in accordance with their

contracts of employment or letter of appointment.

Further details are set out below. There were no other

payments made for loss of office or other payments

to past Directors during the 52-week period ended

31 December 2023.

On 9 January 2023 Robert B. Cook resigned as

a Director of the Company. In addition to the

remuneration paid to him as a Director (as disclosed

in the single figure table on page 95, Robert received

a payment in lieu of his six month notice period equal

to his basic salary for this period plus the cost of

providing his pension and car allowance benefits for

such period, amounting to a total of £255k.

There were no payments to Robert B. Cook under

the Company’s annual bonus plan for 2022 or 2023.

His long-term incentive plan awards over 1,135,216

ordinary shares in the Company lapsed on 9 January

2023. Save as detailed above there were no payments,

and there will be no further payments, made by the

Group in respect of Robert Cook’s resignation.

Gavin Manson resigned as a Director of the Company

on 7 June 2023. In connection with his departure,

Gavin received fees for the period up to and including

his final date of service of 7 June 2023.

Alan Clark resigned and immediately stood down

as a Director of the Company on 7 September

2023. He worked his notice period as part of the

handover to the new CFO. Alan Clark received no

additional payments as a result of standing down as

a Director but continued to receive base salary and

contractual benefits up to and including his final date of

employment of 6 March 2024. There were no payments

to Alan Clark under the Company’s annual bonus plan

for 2022 or 2023. The Board resolved to categorise him

as a “Good Leaver” for the purposes of his long-term

incentive awards. His Performance Share Awards are

subject to the Group achieving the relative TSR, EPS

and ROIC performance measures referred to above.

Any awards will be pro-rata to reflect the period of time

Alan Clark was employed by the Company relative

to three-year vesting period. They are also subject

to a two-year post-vesting holding period. Malus

and clawback provisions also apply in line with the

Remuneration Policy. Save as detailed above there

were no payments to Alan Clark, and other than him

retaining LTIP awards on a pro-rata basis that could

vest depending on achievement of their performance

criteria, there will be no further payments, made by the

Group in respect of Alan Clark’s resignation.

Directors’ shareholdings and share

interests (audited)

Details of the interests in shares of the Company at

31 December 2023 by persons who were Directors

at any time during the 52-week period ended

31 December 2023 are shown in the following table.

Executive Directors are normally required to build and

retain a holding of the Company’s shares equivalent to

at least 200% of their base salary. However, given the

relatively low share price and the impact that this would

have on the percentage of the Company’s shares that

the Executive Directors would need to hold to satisfy

the requirement, the Committee has suspended the

shareholding requirement for the 2023 financial year

and this continues at the date of this report. However,

the shareholding requirement will continue to apply for

a period of two years after cessation of employment,

with Executive Directors being required to retain the

lower of: (i) the shareholding requirement (i.e. the 200%

requirement); and (ii) the shares held at cessation of

employment.

100

Hostmore plc • Annual Report 2023

Hostmore

Annual Report on Remuneration continued

Directors as at 31 December 2023

Beneficially

owned at

31 Dec 2023

Subject to

continued

employment

Unvested

options subject

to performance

conditions

Vested but

not exercised

options

Julie McEwan

560,655 – 162,074 –

Matthew Bibby

126,190 57,104 103,461 –

David Lis

871,608 N/A – –

Andrew Blurton

104,000 N/A – –

Stephen Welker

4,526,556 N/A – –

Helena Feltham 100,000 N/A – –

Célia Pronto – N/A N/A N/A

Total 6,289,009 (5.0% of issued share capital)

Previous Executive Directors Shareholdings as

at 31 December 2023

Robert B. Cook

3,360,662 – – –

Alan Clark

2,721,518 – 795,821 –

Total 6,082,180 (4.8% of issued share capital)

Notes:

1 The Executive Director’s Shareholding Requirement Policy has been suspended in 2023.

2 Since 31 December 2023 and up to 22 April 2024, Julie McEwan’s shareholding has increased to an aggregate holding of 639,960

shares, as a result of the acquisition of 79,305 shares pursuant to the irrevocable instruction letter dated 5 June 2023 issued by Julie to

Numis Securities Limited and the Company under which, from 5 June 2023 to 31 May 2024 (inclusive), Julie irrevocably instructs Numis to

purchase ordinary shares in the Company on her behalf on a monthly basis.

3 Matthew Bibby was appointed interim CFO with effect from 8 September 2023 and permanent CFO with effect from 6 December 2023

4 Includes 143,304 ordinary shares in the Company held by Mrs Patricia Lis.

5 Includes 52,000 ordinary shares in the Company held by Mrs Louise Blurton.

6 Stephen Welker holds in aggregate 4,526,556 shares in the Company, of which 249,374 shares are held in his own name and 4,277,182

shares are held by Beechenbrook Holdings LLC, of which Stephen Welker is the sole member.

7 Robert B. Cook stepped down as an Executive Director with effect from 9 January 2023. A two-year holding period from 9 January 2023

applies to these shares.

8 Alan Clark stepped down as an Executive Director with effect from 7 September 2023. A two-year holding period from 7 September 2023

applies to these shares. The Board categorised Alan Clark as a “Good Leaver” for the purposes of his long-term incentive awards over

795,821 ordinary shares. These are subject to the Group achieving relative TSR, EPS and ROIC performance measures and will also be pro-

rata for the period of time Alan Clark was employed by the Company.

9 No options were exercised during the 52 week period ended 31 December 2023.

There were no changes to the Directors’ interests between 31 December 2023 and the date of approval of this

report.

101

Hostmore plc • Annual Report 2023

Governance report

Performance graph and CEO remuneration table

This graph compares the total shareholder return (‘TSR’) of £100 invested in Hostmore plc ordinary shares with

the TSR of £100 invested in the companies of the FTSE Small Cap index (excluding Investment Trusts) since

Admission until 31 December 2023. This index has been selected as it comprises companies of a comparable size

and complexity and provides a good indication of Hostmore plc’s relative performance.

Hostmore FTSE Small Cap Excluding Investment Trusts

100

110

2 November 2021 2 January 2022 1 January 2023 31 December 2023

Total Shareholder Return

Source: Datastream

Value (£) (Rebased)

The data is shown as at the close of trading on the last dealing day of the year, being 30 December 2023.

The total remuneration of the CEO over the same period as the TSR performance graph above is set out in the

following table. This table includes details of the annual bonus received in each year as a percentage of the

maximum opportunity that was available, as well as the long-term incentives which vested in each year as a

percentage of the maximum number of shares that could have been received.

Year

Chief Executive

Officer

CEO single

figure total

remuneration

(£’000)

Annual bonus

(as % of

maximum

opportunity)

Long-term

incentive

plan (as %

of maximum

opportunity)

2023 Julie McEwan

488 0% 0%

2023 Robert B. Cook

19 0% 0%

2022 Robert B. Cook 499 0% 0%

2021 Robert B. Cook 112 N/A N/A

1 In 52-week period ended 2 January 2022 and the 52-week period ended 1 January 2023, Robert B. Cook was CEO.

2 In 52-week period ended 31 December 2023, Robert B. Cook was CEO from 2 January 2023 to 9 January 2023.

3 In 52-week period ended 31 December 2023, Juile McEwan was interim CEO from 10 January 2023 to 6 June 2023 and permanent CEO

and joined the Board from 7 June 2023. In addition, whilst interim CEO, Julie McEwan received a bonus of £40k.

102

Hostmore plc • Annual Report 2023

Hostmore

Annual Report on Remuneration continued

Percentage change in Directors’ and employee remuneration (audited)

The table below shows the percentage change in remuneration of all employees and Directors of the Company

for the 52-week period ended 31 December 2023 relative to the 52-week period ended 1 January 2023, and the

period ended 1 January 2023 relative to the period ended 2 January 2022 (or, in the case of the Directors, the

Relevant Date to 2 January 2022).

For Directors in the subsequent rows, the table covers the 52 week period to 1 January 2023 relative to the period

from the Relevant Date to the year end of 2 January 2022. The “Relevant Date” for these purposes is (i) in the case

of the Robert B. Cook and Alan Clark, 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 other Executive and Non-Executive Directors (other than Stephen Welker*),

the later date upon which the relevant individual was appointed as an Executive or Non-Executive Director of the

Company pursuant to his or her letter of appointment. Therefore, the comparison is not able to be on a like-for-like

basis as the 2021 data is in respect of only part of a year. Due to the resignations of Robert B. Cook, Alan Clark

and Gavin Manson, their remuneration/fees receivable in 2023 were less than in 2022. Due to the appointments of

Julie McEwan and Matthew Bibby in 2023, there is no comparable remuneration for them in 2022.

Year-on-year change (%) 2022 2023

Salary Benefits Bonus Salary Benefits Bonus

All Team members

13% 22% (1%) 15% 49% (29%)

Executive Directors

Julie McEwan – CEO – – – N/A N/A N/A

Matthew Bibby – CFO – – – N/A N/A N/A

Robert B. Cook – Former CEO 351% N/A 0% (96%) (100%) 0%

Alan Clark – Former CFO 349% N/A 0% (28%) 0% 0%

Non-Executive Directors

Stephen Welker – Chair N/A N/A N/A N/A N/A N/A

Gavin Manson – Chair in 2022 and part 2023 1,175% N/A N/A (36%) N/A N/A

Andrew Blurton

157% N/A N/A 14% N/A N/A

David Lis

162% N/A N/A 15% N/A N/A

Helena Feltham – – – N/A N/A N/A

Célia Pronto – – – N/A N/A N/A

1 2021 was the first year of reporting Directors’ remuneration and there was therefore no prior year comparison. The above information

therefore commenced from the 2022 financial year onwards.

2 “Team members” for the purpose of the above table means any employee of the Group other than a director of Hostmore plc.

3 Andrew Blurton and David Lis were appointed Non-Executive Directors of the Company in August 2021. The fees payable in 2021 were for

four months, in comparison to a full year for 2022.

103

Hostmore plc • Annual Report 2023

Governance report

CEO pay ratio (audited)

The following table shows the ratio between the total remuneration of the CEO and the median total remuneration

of the Group’s UK employees. The CEO remuneration is the aggregate remuneration for the former CEO for

the period to 9 January 2023, the remuneration of the Interim CEO from 10 January to 6 June 2023 and the

remuneration of the current CEO from 7 June to 31 December 2023. Employee total remuneration has been

calculated using “Option A” of the Large and Medium-sized Companies and Groups (Accounts and Reports)

Regulations 2008, under which a single total figure of remuneration is derived for each employee and the

quartiles analysed. The total remuneration figure comprises base salary, benefits, pension, bonus and long-term

incentives and any one-off payments. All UK employees were ranked by their total remuneration and from this the

remuneration of the individuals at the 25th, 50th and 75th percentiles were confirmed.

25th

percentile

pay ratio

50th

percentile

pay ratio

75th

percentile

pay ratio

2023 26:1 17:1 12:1

2022 23:1 20:1 17:1

2021 27:1 20:1 19:1

1 In addition to Julie’s McEwan’s salary, Julie received two one-off share awards each of 185,000 ordinary shares in the Company (i) to reflect

the additional responsibilities of being interim CEO and (ii) to reflect the additional responsibilities of being permanent CEO. The Company

met the income tax and National Insurance Contributions arising as a result of the making of the initial award for accepting the role of Interim

CEO. These shares were transferred to Julie by Intertrust Employee Benefit Trustee Limited, the trustee of the Hostmore plc 2021 Employee

Benefit Trust, from shares held by the Trust.

2 In addition to Matthew Bibby’s salary, Matthew received a one-off share award of 126,190 ordinary shares in the Company to reflect the

additional responsibilities of being permanent CFO. The Company met the income tax and National Insurance Contributions arising as a

result of the making this award. These shares were transferred to Matthew by Intertrust Employee Benefit Trustee Limited, the trustee of the

Hostmore plc 2021 Employee Benefit Trust, from shares held by the Trust.

The above ratios have been calculated using the single figure for the CEO and the following statistics for Group

employees:

CEO

25th

percentile

50th

percentile

75th

percentile

Total salary 2023 £346,340 £19,700 £29,262 £41,259

Total remuneration

(Singlefigure) 2023 £507,968 £19,700 £29,262 £41,259

The above table sets out the ratios of the CEO single total figure of remuneration of £507,968 to the equivalent

pay for the lower quartile, median and upper quartile UK employees (calculated on a full-time equivalent basis)

from 2 January 2023 to 31 December 2023.

The median (50th percentile) ratio is consistent with Hostmore’s pay, reward and progression policies for

employees which relate pay levels to performance and market benchmarks. Under the Group’s 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 Group

performance and has the greatest alignment with shareholders. The Committee expects the ratio to vary in future

years, as the single figure for the CEO does not include any variable pay for the period ended 31 December 2023

and includes a period where the Group had an Interim CEO on a lower level of remuneration.

104

Hostmore plc • Annual Report 2023

Hostmore

Annual Report on Remuneration continued

Relative importance of the spend on pay

The table below shows the Company’s expenditure on employee pay compared to distributions to shareholders

from 2 January 2023 to 31 December 2023 compared with the prior period to 1 January 2023.

2023

£’000

2022

£’000

Distributions to shareholders 0 0

Total employee pay

68,418 68,825

1 This number is sourced from Note 13 to the financial statements for the 52-week period ended 31 December 2023, less the remuneration of

the Non-Executive Directors disclosed in Note 40.

External appointments

The Board considers whether it is appropriate for Executive Directors to take on any additional directorships and

whether Executive Directors may retain any remuneration from any external roles. Julie McEwan and Matthew

Bibby do not currently hold any external appointments.

Statement of shareholder voting

The voting results for the last vote on the Remuneration Report for the 52-week period ended 1 January 2023 and

the Remuneration Policy at the Annual General Meeting of the Company held on 7 June 2023 were as follows:

Annual Report Remuneration Policy

Total

number of

votes

% of votes

cast

Total

number of

votes

% of votes

cast

For 68,654,709 99.9% 68,440,949 99.6%

Against 58,991 0.1% 270,711 0.4%

Total votes cast (for and against) 68,713,700 100.0% 68,711,660 100.0%

Votes withheld

7,242 9,282

Total votes cast (including withheld votes) 68,720,942 68,720,942

1. A vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast ‘For’ and ‘Against’ a resolution.

105

Hostmore plc • Annual Report 2023

Governance report

Implementation of Remuneration Policy in FY24

Executive Directors

Implementation of the Remuneration Policy in FY24 is consistent with the Policy as outlined in this report.

Element Operation and salaries at 31 December 2023

Base annual

salary

Base annual salaries:

CEO (Julie McEwan): £400,000 per annum

CFO (Matthew Bibby): £210,000 per annum, increasedto£275,000witheffectfrom1April2024

Benefitsand

pension

A contribution to a pension scheme of 3% of salary in line with the contribution percentage available to the

majority of the Group’s UK workforce.

Otherbenefitsincludeprivatehealthcover,lifeassurancecover,criticalillnesscover,D&Oinsuranceanda

company car or car allowance, together with reimbursement of expenses

Annual bonus

plan

Maximum opportunity for the CEO is 125% of base salary and for the CFO 100% of base salary.

Metricsforthefirstthreemonths of 2024 included:

• FortheCEO:

 • Increasingthenumberofcovers

 • Assessinggrowthopportunities

 • Managingconsolidatednetdebt

 • ImprovingNetPromoterscore

 • Improvingthequalityandtimelinessofinternalreporting

 • With the whole bonus subject to an EBITDA underpin/multiplier.

• FortheCFO:

 • Managingconsolidatednetdebt

 • Advancingrefinancingprogramme

 • AdvancingITprogramme

 • Improvingthequalityandtimelinessofinternalreporting

 •  W ith the whole bonus subject to an EBITDA underpin/multiplier.

Long-term

incentive plan

Given the current low share price and the focus on achieving the Group’s short-term objectives during the

period of recovery, the Committee does not intend to make the normal annual grant of LTIP awards following

announcement of the 2023 annual results.

Directors’ Report

106

Hostmore plc • Annual Report 2023

Principal activities

Hostmore plc is a UK hospitality business with its operations focused on the American-themed casual dining

brand, “TGI Fridays”, including the fast casual dining brand “Fridays and Go”. While TGI Fridays has been trading

in the UK for over three decades, the Group was established in 2021 with a strategy of providing a platform for

the development and growth of attractive hospitality brands, defined by their iconic brand experience. Hostmore

is currently focused on the organic growth of its existing brands. The Group operates under the leadership of

an experienced management team that has a track record of leading businesses in the hospitality and leisure

sectors.

Introduction

The Directors present their report and the audited financial statements of the Group and the Company for the

52-week period ended 31 December 2023. 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

Future business developments Strategic Report – pages 6 to 11

Financial risk management objectives and policies (including

hedgingpolicyanduseoffinancialinstruments)

Note 31 to the Financial Statements – pages 164 to 166

Exposuretopricerisk,creditrisk,liquidityriskandcashflow

risk

Pages 46 to 49 of the Strategic Report and Note 31 to the

Financial Statements pages 164 to 166

Section 172 Statement Strategic Report – page 42

Stakeholder engagement in key decisions Strategic Report – pages 42 to 45

The Company’s statement on corporate governance Corporate Governance Report – pages 59 to 68

Directors’ responsibility statement Pages 114 and 115

Directors’ interests Annual Report on Remuneration– pages 99 and 100

Details of long-term incentive schemes Annual Report on Remuneration– pages 97 and 98

Corporate Governance Arrangements

The Board is committed to the highest standards of corporate governance and those outlined in the UK Corporate

Governance Code. The Company fully complies with the Code, except in relation to the limited instances

explained in the Corporate Governance Report on page 59.

Directors

The Directors of the Company who were in office during the year and up to the date of signing of the financial

statement are stated below, with each Director being in office for the full year unless otherwise stated:

• GavinManson(Non-ExecutiveChairuntilheresignedon7June2023)

• StephenWelker(Non-ExecutiveDirector,appointedNon-ExecutiveChairon7June2023)

• RobertB.Cook(ChiefExecutiveOfficeruntilheresignedon9January2023)

• JulieMcEwan(ChiefExecutiveOfficerappointedon7June2023)

• AlanClark(ChiefFinancialOfficeruntilheresignedon7September2023)

• MatthewBibby(ChiefFinancialOfficerappointedon6December2023)

• DavidLis(SeniorIndependentNon-ExecutiveDirector)

• AndrewBlurton(IndependentNon-ExecutiveDirector)

• HelenFeltham(IndependentNon-ExecutiveDirectorappointedon7June2023)

• CéliaPronto(IndependentNon-ExecutiveDirectorappointedon20June2023)

Governance report

107

Hostmore plc • Annual Report 2023

The biographies of the Directors in office at the date of this Annual Report and financial statements are set out on

pages 54 to 57 of the Corporate Governance Report. There have been no changes to the members of the Board

since 31 December 2023 to the date of this report.

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 of shareholders. 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. Subject to the Articles, the

Directors may delegate any of their powers, authorities and discretions to other people or organisations 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 also

governed by the Code, the Companies Act 2006 and related legislation. Directors may be appointed by ordinary

resolution of shareholders or by the Board. In accordance with best practice, at each AGM all Directors who have

held office since the previous AGM offer themselves for re-election to the Board by shareholders of the Company.

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 re-registration as a public company on 13 October

2021. 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 authorities, 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’ 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 reviews the 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 was executed by the Company in 2021 indemnifying:

(i) the then Directors of the Company and also those individuals who agree from time to time after the date of the

deed 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, has been in force since the 2021 financial year and remains in force.

Compensation for loss of Office on a takeover

The Company does not have any agreements with any Executive Director or team member 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

Directors’ Report continued

108

Hostmore plc • Annual Report 2023

(ii) provisions of the rules of the Company’s annual bonus plan and LTIP which apply to the Executive Directors

and members of the Group’s Executive Team may cause payments to be payable on a takeover. Further

information is provided in the Directors’ Remuneration Policy on page 84 and 85.

Results and Dividends

The results of the Group for the period ended 31 December 2023 are set out in the Consolidated Statement

of Comprehensive Income on page 129. The financial position of the Group is disclosed in the Consolidated

Statement of Financial Position on pages 130 and 131. The financial position of the Company is disclosed in the

Company Statement of Financial Position on page 168. The Directors are not proposing to pay a dividend for the

52-week period ended 31 December 2023.

Review of Business

A review of the business can be found in the Strategic Report on pages 2 to 51.

Going Concern

The basis of preparation of the financial statements on the going concern basis can be found in note 4.2 on pages

135 and 136 of the financial statements. The going concern assessment and viability statement can be found in

the Chief Financial Officer’s Review on pages 20 and 21.

Political Donations

The Company did not make any political donations during the 52-week period ended 31 December 2023.

Research and Development

The Group incurred no expenditure on Research and Development during the 52-week period ended

31 December 2023.

Share Capital Structure

Details of the Company’s share capital are set out in Note 29 to the financial statements. At 31 December 2023,

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 between the period end and the date of this report.

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) has one vote, and on a poll every shareholder who is present in

person or by proxy has 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. The Company has a policy of

proposing all resolutions at a meeting of shareholders, and recording the number of shares voted, by means of a

poll. Results of votes at shareholder meetings are announced by the Company via the Regulated News Service as

soon as possible after the holding of the meeting.

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 Ordinary shares.

No shareholder holds securities carrying any special rights or control over the Company’s share capital.

Authority for Company to purchase its own shares

Subject to prior 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. At the Company’s annual general meeting

held on 7 June 2023, the Company’s shareholders passed a special resolution in accordance with the Companies

Act 2006 to authorise the Company to purchase in the market within normal guidelines up to a maximum number

of 12,612,727 shares in the Company, representing 10% of its issued share capital at 7 June 2023. No market

purchases were made under this authority during the period from the Company’s annual general meeting on

7 June 2023 to the date of approval of this Report.

Governance report

109

Hostmore plc • Annual Report 2023

Significant Interests

At 31 December 2023, 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

At 31 December 2023

Number of Ordinary shares of

20 pence each held

Percentage of total voting

rights held

Witan Investment Trust plc 16,656,417 13.21

Fidelity International 13,866,200 10.99

Harwood Capital LLP

12,750,000 10.11

Armstrong Investments Ltd 8,800,000 6.98

Edward J. Bramson

5,120,185 4.06

Stephen L. Welker

4,526,556 3.59

Crown Sigma UCITS 4,518,000 3.58

Total 66,237,258 52.52

Notes:

1 Of which 7,500,000 are held in the name of Oryx International Growth Fund Limited (5.95%) and 5,250,000 are held in the name of

Rockwood Strategic plc (4.16%)

2 Of which 205,993 are held in his own name and 4,914,192 are held in the name of Wykeham LLC, of which Edward J. Bramson is the sole

member.

3 Of which 249,374 Shares are held in his own name and 4,277,182 Shares are held by Beechenbrook Holdings LLC, of which Stephen L.

Welker is the sole member.

Since 31 December 2023 and up to 22 April 2024, the Company had also been notified that Harwood Capital

LLP increased its interest to 15,500,000 shares (12.29%) of which 7,500,000 were held in the name of Oryx

International Growth Fund Limited (5.95%) and 8,000,000 were held in the name of Rockwood Strategic Plc

(6.34%).

Team Member Engagement

The Group seeks to provide team members with information on matters which may affect them as team members.

The principal means by which this is achieved is via team meetings, operational national and regional meetings,

less formal events (such as the 4th July, Thanksgiving and Christmas celebrations), site visits, webinars, the

Group’s intranet (including through its news feed) and e-mail systems, monthly business updates, the Team

member Forum and through the Group’s online learning platform, The Academy. The Group encourages dialogue

with its team members and consults its team members and their representatives on a quarterly basis via multiple

channels, such as team meetings, the Team member Forum and online polls, so that the views of team members

can be taken into account in making decisions which may affect their interests.

In the 52-week period ended 1 January 2023, the Group company that employs almost the whole of the Group’s

workforce, partnered with Great Place to Work on an engagement survey. The results of this was that the Group

was accredited with being a “Great Place to Work”. The survey consisted of 60 questions that focused on the

team member/manager relationship, culture and values and an overall view of the business performance. The

results were discussed with Managers in Operations and the Support Centre and the Group developed a number

of key initiatives such as Fridays Forum and the Culture group. Four key areas were considered with actions from

the survey which included Leadership, Engagement, Reward and Wellbeing. Forums were introduced to give

colleagues the opportunity to voice concerns and suggest ideas to increase engagement at TGI Fridays.

From a Board perspective, the Executive Directors are primarily responsible for engaging with team members.

This engagement takes many forms, including those highlighted above. The Team member Forum meetings

are attended by the Chief Executive Officer, Helena Feltham in her role as the independent NED for workforce

engagement and Chair of the Remuneration Committee, and Stephanie Williams*, the People & Culture Director

of the Group. Between them, they provide updates on Team member Forum matters to the Remuneration

Committee. As our colleagues are one of the Group’s biggest assets, the Directors seek to ensure the Group

offers an engaging and rewarding culture and work environment to its team members, with an opportunity to

* Note: Stephanie Williams is not a statutory director of Hostmore plc or its subsidiaries.

Directors’ Report continued

110

Hostmore plc • Annual Report 2023

share in the Group’s success. The Group believes it offers a competitive remuneration and benefits package to

its team members, with opportunities for learning and career development via the learning management system,

the “Aspire” future leaders’ programme, Ignite programme for future deputy general managers and the Sparx

programme for future Head Chefs.

Team Member Disabled Persons

The Group aims to provide an inclusive, accessible and safe work environment. The Board acknowledges the

significance of access and equality for people with a disability. The Group does 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) continuing the employment of, and by arranging appropriate training for, team members of the Group who

become disabled; and

(iii) providing career development and promotion opportunities to disabled team members of the Group.

Equality, Diversity and Inclusion

The Group fosters a fully inclusive culture and environment, where diversity is welcomed, encouraged and

celebrated. Inclusivity is one of our Values and Philosophies, with the Group continuing to be accessible, inviting,

collaborate with, and respectful to, guests, team members, shareholders and business partners. In living these

Values and Philosophies, we welcome and celebrate individuals of ‘all stripes’ which aligns with the Group’s

“Show Your Stripes” media campaign.

Building on the Group’s existing policies preventing discrimination, the Group carried out a number of diversity

and inclusion activities in 2023 and is working on the introduction of an extended diversity and inclusion

programme for 2024. In 2023 the Group carried out a number of national awareness and recognition days across

all departments. In addition, our teams shared matters of interest on internal platforms to develop positive

awareness of diversity and differences.

In 2024 the Group has further developed its Diversity and Inclusion strategy to include a committee to look at

four key areas in the business to build and develop awareness. Diversity and inclusion statistics are produced

quarterly along with gender pay gap reporting to highlight keys areas of focus for activity in 2024.

The Group 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 does not have any 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 and bank loan agreements.

The 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

The facilities agreement dated 30 August 2017 between 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 and further amended on each of 5 July 2022,

20 September 2022 and 28 April 2023. On 30 April 2024 an amendment to the bank facility was signed extending

the maturity of the facility to 1 January 2026. This included new covenants set for FY24 and FY25 in line with

the Group’s updated forecasts. The covenants measure cumulative EBITDA and the ratio of EBITDA to net debt.

There is also a minimum liquidity requirement of £1.5m and loan amortisation of £1.5m per quarter that has

remained unchanged.

Governance report

111

Hostmore plc • Annual Report 2023

The existing agreement (as amended) contains some customary change of control / mandatory prepayment

provisions which remain in force following the most recent amendments and which provide 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 for TGI Fridays casual dining restaurants

The development agreement dated 2 November 2021 between TGI Fridays Franchisor, LLC (as Franchisor),

Thursdays (UK) Limited (as Developer) and the Company (as Principal), as amended on 2 March 2023. 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 Franchisor’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 Principal may complete, or allow to be completed, any Transfer that is

not a “Permitted Transfer” without the Franchisor’s prior written consent, which the Franchisor may provide with

conditions or may 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 Franchisor 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.

• Franchise agreements for TGI Fridays casual dining restaurants

TGI Fridays Franchisor, LLC (as Franchisor), 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 TGI 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 Franchisor’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 Franchisor’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.

• Letter agreement for Fridays and Go quick service / fast casual restaurants

The letter agreement dated 27 May 2022 between TGI Fridays Franchisor, LLC (Fridays) and Thursdays (UK)

Limited (as Franchisee). Pursuant to the letter agreement, the Franchisee is granted the exclusive right to develop

Directors’ Report continued

112

Hostmore plc • Annual Report 2023

and operate Fridays and Go 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 letter agreement provides that Fridays will neither develop or operate, nor authorise any other person to

develop or operate, Fridays and Go restaurants (or similar restaurants) in the Territory until the development

agreement (referenced above) expires or is terminated. Consequently, where there is a change of control of

the Company which results in the development agreement being terminated, Fridays could develop or operate,

or authorise any other person to develop or operate, Fridays and Go restaurants (or similar restaurants) in the

Territory.

The letter agreement states that the term of the letter agreement will expire on the last day of the term of the

development agreement, unless (amongst other things) the development agreement is terminated in accordance

with its terms in which case the term of the letter agreement shall expire on such date. Consequently, where

there is a change of control of the Company which results in the development agreement being terminated, the

letter agreement will expire on such date. The termination or expiry of the letter agreement could have various

consequences for the Franchisee, including, without limitation, the Franchisee having no further right to develop

Fridays and Go restaurants in the Territory.

The letter agreement states that Fridays shall be entitled to terminate the letter agreement for any material breach

by the Franchisee if such breach is not remedied within the relevant period set out in the letter agreement. The

termination of any Fridays and Go franchise agreement (as described below) will not constitute a material breach

of the letter agreement, unless, amongst other things, the termination of the relevant Fridays and Go franchise

agreement occurs before the date upon which Franchisee is operating five Fridays and Go restaurants. A change

of control of the Company which constitutes a “Transfer” to a “Non-Permitted Transferee” or which does not

otherwise comply with the “Transfer” requirements detailed in a Fridays and Go franchise agreement could result

in such Fridays and Go franchise agreement being terminated, which could, in turn, lead to the letter agreement

being terminated if, at the relevant time, the Franchisee is operating fewer than five Fridays and Go restaurants.

At the date of this Annual Report and Financial Statements, the Franchisee is operating one Fridays and Go

restaurant.

• Franchise agreements for Fridays and Go quick service / fast casual restaurants

TGI Fridays Franchisor, LLC (as Franchisor), Thursdays (UK) Limited (as Franchisee) and the Company (as

Principal) are, pursuant to the letter agreement described above, required to enter into a separate Fridays and Go

franchise agreement upon the opening of and in respect of carrying on business in each of the Fridays and Go

restaurants in the Territory. Each Fridays and Go franchise agreement is based on the standard Fridays and Go

franchise agreement and places various obligations on the Principal.

Each Fridays and Go franchise agreement states that, provided certain requirements detailed in the development

agreement and the relevant Fridays and Go 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 Franchisor’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 (although this is defined differently from the franchise agreement for

the TGI Fridays restaurants) 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).

In each Fridays and Go franchise agreement the terms relating to the prohibition on Transfers that are not

“Permitted Transfers” without the Franchisor’s consent, the potential consequences of any Transfer that occurs

other than as permitted in accordance with the relevant provisions of the relevant Fridays and Go 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.

External Auditor

PricewaterhouseCoopers LLP were re-appointed at the Annual General Meeting on 7 June 2023 to audit the 2023

financial year. The Committee recommends the re-appointment of PricewaterhouseCoopers LLP as auditor at

Governance report

113

Hostmore plc • Annual Report 2023

the AGM to be held on 3 June 2024, ahead of the audit tender process in the second quarter of 2024, detailed on

page 74, following which PricewaterhouseCoopers LLP will resign.

Statement of disclosure of information to Auditor

Each of the Directors at the date of 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 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.

2024 AGM

The 2024 Annual General Meeting of the Company will be held on 3 June 2024. 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 is also available on the

Company’s website.

Post Balance Sheet Events

On 16 April 2024, the Company announced that it had reached agreement on a non-binding basis for a

proposed all-share acquisition of TGI Fridays, Inc. (“TGI Fridays”) (the “Proposed Transaction”). TGI Fridays is

the Company’s Franchisor and operates primarily through franchising and licensing agreements in the US and

in 43 international markets. It also operates a network of company-owned stores in the US. The parties agreed

that the Proposed Transaction would result in existing Hostmore shareholders holding a 36% shareholding in

the enlarged business upon completion (the “Combined Group”), with TGI Fridays shareholders holding a 64%

shareholding in the Combined Group. The Proposed Transaction is being negotiated on an exclusive basis

and is subject to, among other things, completion of confirmatory due diligence and the parties entering into

binding transaction documentation. The Proposed Transaction would be classified as a Reverse Takeover under

the Listing Rules of the Financial Conduct Authority and therefore would be conditional upon the approval of

an ordinary resolution by existing Hostmore shareholders. Should the parties enter into binding transaction

documentation, a summary of the material terms and conditions of such documentation will be set out in an

announcement to the market.

On 26 April 2024, the parties to the facilities agreement referred to in note 35 on page 167 of the financial

statements signed a bank facility restatement agreement. Under the terms of this agreement, amongst other

matters, certain covenants in the previous facility agreement were amended to align with the Company’s updated

business plan and the term of the facility was extended to 1 January 2026.

Basis of preparation

The Strategic Report on pages 2 to 51 and this Directors’ Report have been drawn up and presented in

accordance with, and in reliance upon, applicable English company law. 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 on 2 May 2024 and signed on its behalf by:

Stephen Welker

Chair

2 May 2024

114

Hostmore plc • Annual Report 2023

Statement of Directors’ responsibilities

in respect of the 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 UK-adopted international accounting

standards 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).

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 UK-adopted international accounting standards 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 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 UK-adopted international

accounting standards, give a true and fair view of the assets, liabilities, financial position and loss 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.

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Hostmore plc • Annual Report 2023

Governance report

In the case of each Director in office at the date the Directors’ Report is approved:

• so far as the Director is aware, there is no relevant audit information of which the Group’s and Company’s

auditors are unaware; and

• they have taken all the steps that they ought to have taken as a Director in order to make themselves aware

of any relevant audit information and to establish that the Group’s and Company’s auditors are aware of that

information.

• The statement of Directors’ responsibilities in respect of the financial statements was approved by the Board

of Directors and signed on its behalf by:

Stephen Welker

Chair

Julie McEwan

Chief Executive Officer

2 May 2024

117

Hostmore plc • Annual Report 2023

Financial

statements

Calculation of key financial performance indicators

and alternative performance measures

Independent auditor’s report

Consolidated Statement of comprehensive income

Consolidated Statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the consolidated financial statements

Company statement of financial position

Company statement of changes in equity

Notes to the Company financial statements

Definitions

118

121

129

130

132

133

134

168

169

170

177

118

Hostmore plc • Annual Report 2023

Consolidated Financial Statements

for the 52 weeks ended 31 December 2023

Calculation of key financial performance indicators and alternative

performance measures

The Board uses several key performance indicators (“KPIs”) to track the financial and operating performance of

its business. 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 reported under IFRS. The following information on KPIs and APMs

includes reconciliations to the nearest IFRS measures where relevant.

Sales

Like-for-like (“LFL”) sales measure the performance of the Group on a consistent year-on-year basis. The table

below includes sites that were open for all of 2022 for comparability and separately includes sites opened since

2022 or subsequently disposed of.

52 weeks

ended

31 December

2023

£’000

52 weeks

ended

1 January

2023

£’000

LFL gross of VAT benefit in 2022 185,989 192,311

Less VAT benefit in 2022 – (2,664)

Net LFL 185,989 189,647

Additions since January 2022 4,294 2,064

Disposals since January 2022 606 1,453

Deferred revenue provisions (227) (108)

Total net of VAT benefit in 2022 190,662 193,056

Add VAT benefit in 2022 – 2,664

Total 190,662 195,720

In Q1 2022 the VAT rate was lowered in restaurants such as those operated by the Group to 12.5% before

returning to 20% in Q2 2022. The VAT benefit adjustment reflects the benefit received in H1 2022 to provide fair

comparability with 2023 LFL sales. This is calculated from the net sales across the period in FY22 when VAT was

12.5% and calculating what the net sales would have been if VAT had been 20%. The difference is shown as the

VAT benefit.

119

Hostmore plc • Annual Report 2023

Financial statements

Calculation of key financial performance indicators and alternative

performance measures continued

EBITDA

EBITDA is the Group’s earnings before net interest and bank arrangement fees, tax, depreciation, and other

non-cash items.

52 weeks

ended

31 December

2023

£’000

*Restated

52 weeks

ended

1 January

2023

£’000

Loss before tax (25,529) (108,346)

Net interest payable and bank arrangement fees 14,396 12,584

Depreciation 17,964 20,504

Net impairment of property, plant and equipment and right of use assets 17,768 30,601

Impairment of goodwill – 75,166

Release of dilapidations provision (465) –

Gain on disposal of property, plant and equipment (133) –

Gain on lease modification (1,951) –

Share based payment charge 141 581

EBITDA 22,191 31,090

* Refer to note 6 to the financial statements. In the 52 week period ended 1 January 2023 loss before tax has been increased by £4,001k from

previously reported £104,345k to £108,346k, net interest payable and bank arrangement fees have been increased by £106k from previously

reported £12,478k to £12,584k, depreciation has been increased by £165k from previously reported £20,339k to £20,504k, net impairment

of property, plant and equipment and right of use assets has been decreased by £578k from previously reported £31,179k to £30,601k and

impairment of goodwill has been increased by £4,308k from previously reported £70,858k to £75,166k. This has had no net effect on EBITDA

for the 52 weeks ended 1 January 2023 as previously reported of £31,090k.

EBITDA FRS102

EBITDA FRS102 is the Group’s EBITDA under IFRS, adjusted for rent paid to lessors and rent received from

subleases.

52 weeks

ended

31 December

2023

£’000

52 weeks

ended

1 January

2023

£’000

EBITDA 22,191 31,090

Less rent paid to lessors (20,644) (19,931)

Add rent received from subleases 37 101

EBITDA FRS102 1,584 11,260

Free cash flow

In the prior period, a table of Free cash flow was included in key performance indicators and alternative

performance measures calculations. A more detailed KPI analysis of movement in Cashflow and Net debt is

included in the Chief Financial Officer’s Review and therefore the Free cash flow table has not been included here.

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Hostmore plc • Annual Report 2023

Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

Calculation of key financial performance indicators and alternative

performance measures continued

Net debt

Net debt is the Group’s long-term borrowings (excluding issue costs) and lease liabilities less cash and cash

equivalents at each period end.

31 December

2023

£’000

*Restated

1 January

2023

£’000

Gross bank loans and borrowings (36,100) (36,800)

Lease liabilities (140,925) (150,658)

Cash & cash equivalents 10,989 9,091

Net debt (166,036) (178,367)

* Refer to note 6 to the financial statements. In the 52 week period ended 1 January 2023 lease liabilities have been increased by £2,103k from

previously reported £148,555k to £150,658k and net debt has been increased by £2,103k from previously reported £176,264k to £178,367k.

Net debt FRS102

Net debt calculated in accordance with FRS102, is the Group’s long-term borrowings (excluding issue costs) less

cash and cash equivalents at each period end.

31 December

2023

£’000

1 January

2023

£’000

Gross bank loans and borrowings (36,100) (36,800)

Cash & cash equivalents 10,989 9,091

Net debt (25,111) (27,709)

% Cash conversion

In the prior period, a table of % Cash conversion was included in key performance indicators and alternative

performance measures calculations. A more detailed analysis of movements in Cashflow and Net debt is included

in the Chief Financial Officer’s Review and therefore the % Cash conversion table has not been included here.

Return on capital employed (ROCE)

ROCE is calculated as EBITDA divided by total assets less current liabilities.

31 December

2023

£’000

*Restated

1 January

2023

£’000

EBITDA 22,191 31,090

Total assets less current liabilities 140,112 186,064

ROCE 16% 17%

* Refer to note 6 to the financial statements. In the 52 week period ended 1 January 2023 total assets less current liabilities have been

decreased by £2,049k from previously reported £188,113k to £186,064k.

121

Hostmore plc • Annual Report 2023

Financial statements

Independent auditors’ report

to the members of Hostmore plc

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 31 December 2023 and of

the group’s loss and the group’s cash flows for the 52 week period then ended;

• the group financial statements have been properly prepared in accordance with UK-adopted international

accounting standards as applied in accordance with the provisions 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, including 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: Consolidated

statement of financial position and company statement of financial position as at 31 December 2023; 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 of the company.

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.

We have provided no non-audit services to the company or its controlled undertakings in the period under audit.

Material uncertainty related to going concern

In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of

the disclosure made in note 4.2 to the financial statements concerning the group’s and the company’s ability to

continue as a going concern. Based on the directors’ forecasts, under a severe but plausible downside scenario, the

group would breach the quarterly cumulative EBITDA covenant and the Net debt to EBITDA covenants in Quarter

4 FY 2024, which would make the loans repayable on demand. In addition, in the severe but plausible model, there

is uncertainty over the adequacy of liquidity in Quarter 1 FY 2025. On 16 April 2024 the company announced the

proposed combination of the group with TGI Fridays, Inc (the ”Combined Group”) with Heads of Terms agreed

by both parties. Funding of the Combined Group has not been finalised at the date of approval of these financial

statements, however, for the purposes of conducting the going concern assessment, the directors have assumed

that an appropriate funding structure will be put in place by both parties, such that the company and the Combined

Group will continue to trade and to meet their liabilities as they fall due from when the combination is effected which

is envisaged to be in Quarter 3 FY 2024. These conditions, along with the other matters explained in note 4.2 to

the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about

the group’s and the company’s ability to continue as a going concern. The financial statements do not include the

adjustments that would result if the group and the company were unable to continue as a going concern.

122

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Independent auditors’ report

to the members of Hostmore plc continued

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.

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 board approved plan and ensuring

that the base case scenario indicates that the group generates sufficient cash flows to meets its long and

short term obligations while complying with covenant arrangements;

• engaging with our Capital Market specialists to assess the reasonableness of assumptions used in the base

case scenario, by obtaining supporting evidence and using third party information;

• obtaining and inspecting the bank facility agreement and subsequent revised terms agreed to ensure the

latest terms and covenants were fully reflected in management’s assessment;

• obtaining and inspecting the amendment to the franchisor agreement to allow the group to not open any new

restaurants in the period;

• considering the extent to which the group’s and company’s future cash flows might be adversely affected by

economic environment and geo-political impacts; reviewing management’s cash flow forecasts, assessing the

existing sources of finance, and considering the overall impact of liquidity;

• verifying 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;

• observing that climate change is expected to have a limited impact during the period of the going concern

assessment;

• considering the adequacy of the disclosures in the financial statements.

In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, other than

the material uncertainty identified in note 4.2 to the financial statements, 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, or in respect of the directors’ identification in the

financial statements of any other material uncertainties to the group’s and the 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.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the

relevant sections of this report.

Our audit approach

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

• Material uncertainty related to going concern

• Valuation of property, plant and equipment and right of use assets (group)

• Valuation of goodwill (group)

• Recoverability of the parent company’s investments in subsidiary undertakings (parent)

Materiality

• Overall group materiality: £1,363,000 (FY22: £1,210,000) based on 0.75% of three year average of total

consolidated revenues.

• Overall company materiality: £677,000 (FY22: £1,210,000) based on 1% of total company assets.

• Performance materiality: £1,022,000 (FY22: £907,500) (group) and £508,000 (FY22: £1,359,000) (company).

123

Hostmore plc • Annual Report 2023

Financial statements

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.

In addition to going concern, described in the Material uncertainty related to going concern section above, we

determined the matters described below to be the key audit matters to be communicated in our report. This is not

a complete list of all risks identified by our audit.

The key audit matters below are consistent with last year.

Key audit matter How our audit addressed the key audit matter

Valuation of property, plant and equipment and right of use

assets (group)

The group has non-current assets that include:

• Property, plant and equipment – £25.4m (2022: £38.0m)

• Right of use assets – £79.1m (2022: £97.0m)

As set out in Note 4.15, Note 5, Note 18, Note 19, and

Note 20 management have outlined their considerations of

impairment indicators as well as their definitions of a cash

generating unit ("CGU"). As the economic environment

in the current period has had a significant impact on the

performance of the restaurants in the period this represents

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 2024 EBITDA.

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 and the EBITDA for 2024, driven by future

revenue growth and inflation on both revenue and costs.

We have performed sensitivity analysis to identify the key

assumptions in the model. 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, consistent with our procedures

for going concern. We have obtained and inspected third

party industry reports, assessed forecast accuracy and

recent results to determine the validity of the forecasts. We

compared the forecast used for the impairment model to the

latest board approved plans. 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 CGUs is

appropriate after the net impairment charges (including

reversals) recorded of £17.7m.

124

Hostmore plc • Annual Report 2023

Independent auditors’ report

to the members of Hostmore plc continued

Key audit matter How our audit addressed the key audit matter

Valuation of goodwill (group)

The group has goodwill of £70.8m (2022: £70.8m).

As set out in Note 4.3, Note 5, and Note 22 management

have outlined their considerations of impairment indicators

as well as their definition of group CGUs to be assessed.

There is an indicator of impairment in relation to goodwill

given the performance of the business in the current period.

Management has performed a value in use calculation

to assess the recoverability of the goodwill based on the

entire group. This involves key estimates in relation to

management’s assumptions used, including the EBITDA for

2024 and the discount rate.

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, and the EBITDA for 2024, driven by future revenue

growth and inflation of revenue and costs. We obtained

supporting evidence for those assumptions. We compared

the forecast used for the impairment test to the latest

board approved plans, consistent with our procedures

for going concern. We have obtained and inspected third

party industry reports, assessed forecast accuracy and

recent results to determine the validity of the forecasts. We

performed stand back assessments including comparing

the enterprise value to the value in use. 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 goodwill is

appropriate and no impairment charge is required.

Recoverability of the parent company’s investments in

subsidiary undertakings (parent)

As set out in note 39 to the parent company financial

statements, investments in subsidiaries are £38.3m (2022:

£45.9m) after management recorded an impairment of

£7.5m. Management has used the value in use calculation

used to assess the recoverability of the goodwill as a

starting point for their assessment for the recoverability of

the investments in subsidiaries.

Management have considered the equity interest in each

subsidiary to take account of obligations owed to third

parties in accordance with IAS 36 paragraph 78 and IAS 28,

‘Investments in Associates and Joint Ventures’, paragraph

42.

The investments relate to the TGI Friday’s brand, owned by

the subsidiary Thursdays (UK) Limited.

The carrying value of the investment is supported by the

recoverable amount which is calculated using the value

in use basis. As detailed in Note 38, the impairment

assessment in the prior year did not adjust the cash flows

used in testing those assets to reflect the impact of external

debt on the cash flows available. The directors determined

that the debt in the parent company’s subsidiaries should

have been deducted in the impairment assessment at 1

January 2023. Accordingly, the directors have recorded a

prior year adjustment impairment of £130.9m against the

carrying value of the parent company’s investment in its

subsidiary undertakings at 1 January 2023. Consequently,

the comparative carrying value of the parent company’s

investment in subsidiary undertakings at 1 January 2023

in the parent company’s statement of financial position

has been restated from previously reported £176.7m by an

impairment of £130.9m, to £45.9m.

The recoverability of the company's investments is initially

based on the impairment assessment performed for the

group's goodwill and the work performed is set out in the

"valuation of goodwill" key audit matter. We have obtained

the rationale and calculations for the company's investments

and tested the adjustments to the goodwill model on a

sample basis.

We have also assessed the directors’ calculation of the prior

period adjustment in respect of the investment impairment,

obtaining the rationale and calculations for the company’s

investments and tested the adjustments to the prior period

goodwill model on a sample basis. We considered the

adequacy of management’s disclosure in respect of the prior

period restatements and description of the restatements in

accordance with the requirements of IAS 8.

Based on the work performed, as summarised above, we

concluded that the carrying value of the Investments in

subsidiary undertakings is appropriate after recording an

impairment charge in the period of £7.5m.

125

Hostmore plc • Annual Report 2023

Financial statements

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.

The impact of climate risk on our audit

As part of our audit we made enquiries of management to understand the extent of the potential impact of climate

risk on the group’s and company’s financial statements, and we remained alert when performing our audit

procedures for any indicators of the impact of climate risk. Our procedures did not identify any material impact as

a result of climate risk on the group’s and company’s financial statements.

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

£1,363,000 (FY22: £1,210,000). £677,000 (FY22: £1,210,000).

How we determined

0.75% of three year average of total consolidated

revenues

1% of total company assets

Rationale for

benchmark applied

A revenue benchmark has been considered an

appropriate measure due to a relatively high fixed cost

base of the business and the focus of the group to

increase footfall into the sites. 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% (FY22: 75%) of overall materiality, amounting to £1,022,000 (FY22: £907,500) for the group financial

statements and £508,000 (FY22: £1,359,000) 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 of the company that we would report to them misstatements

identified during our audit above £68,000 (group audit) (FY22: £61,000) and £68,000 (company audit) (FY22:

£61,000) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative

reasons.

126

Hostmore plc • Annual Report 2023

Independent auditors’ report

to the members of Hostmore plc continued

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 31 December 2023 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 Report on Remuneration 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 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, except for the matters reported in the section headed ‘Material uncertainty related

to going concern’, 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 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 and company 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

127

Hostmore plc • Annual Report 2023

Financial statements

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 of the company.

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 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 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 company 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 a sample of journal entries, in particular certain journal entries posted with unusual

account combinations which result in an increase in revenue; and

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Hostmore plc • Annual Report 2023

Independent auditors’ report

to the members of Hostmore plc continued

• Challenging estimates and judgements made by management in determining significant accounting estimates,

in particular in relation to impairment of certain non-current assets.

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 members 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.

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 Report on Remuneration to be audited are not in

agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment

Following the recommendation of the Audit and Risk Committee of the company, we were appointed by the

members on 6 October 2021 to audit the financial statements for the year ended 2 January 2022 and subsequent

financial periods. The period of total uninterrupted engagement is three years, covering the years ended

2 January 2022 to 31 December 2023.

Other matter

As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these

financial statements form part of the ESEF-prepared annual financial report filed on the National Storage

Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard

(‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual financial report has been

prepared using the single electronic format specified in the ESEF RTS.

David Beer (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

Watford

2 May 2024

129

Hostmore plc • Annual Report 2023

Financial statements

Consolidated Financial Statements

for the 52 week period ended 31December 2023

Consolidated statement of comprehensive income for the 52 week period

ended 31 December 2023

Note

			*Restated
		52 weeks	52 weeks
		ended	ended
		31 December	1 January
		2023	2023
		£’000	£’000
Revenue	7	190,662	195,720
Cost of sales		(42,959)	(45,103)
Gross profit		147,703	150,617
Underlying administrative expenses*		(141,173)	(141,317)
Exceptional items – impairment of goodwill*	11	–	(75,166)
Administrative expenses	6	(141,173)	(216,483)
Impairment reversal of property, plant and equipment
and right of use assets	18,19	5,570	5,712
Impairment of property, plant and equipment
and right of use assets*	6, 18,19	(23,338)	(36,313)
Other operating income	9	105	705
Loss from operations	10	(11,133)	(95,762)
Finance income	15	219	78
Finance expense*	6, 15	(14,615)	(12,662)
Loss before tax		(25,529)	(108,346)
Tax (charge)/credit	16.1	(1,893)	6,801
Loss for the period		(27,422)	(101,545)
Total comprehensive expense		(27,422)	(101,545)
* Refer to note 6 for further details.
All operations are continuing operations.
There are no amounts recognised within other comprehensive income in the current or prior period.			*Restated
		52 weeks	52 weeks
		ended	ended
		31 December	1 January
(Loss) /ear nings per share in pence	Note	2023	2023
Basic loss per share*	17	(22.0)	(81.0)
Diluted loss per share*	17	(22.0)	(81.0)
Adjusted basic (loss) /ear nings per share*	17	(7.7)	3.4
Adjusted diluted (loss) /ear nings per share*	17	(7.7)	3.3

* Refer to note 6 for further details.

Adjusted basic and diluted loss per share excludes impairments and exceptional items.

130

Hostmore plc • Annual Report 2023

Consolidated Financial Statements

for the 52 week period ended 31December 2023 continued

Consolidated statement of financial position at 31 December 2023

Note

			*Restated
		31 December	1 January
		2023	2023
		£’000	£’000
Assets
Non-current assets
Property, plant and equipment*	6, 18	25,432	37,973
Right of use assets*	6, 19	79,138	97,043
Goodwill*	6, 22	70,813	70,813
Net investment in subleases	21.2	735	95
Deferred tax assets	16.2	9,981	12,801
Total non-current assets		186,099	218,725
Current assets
Inventories	23	1,390	1,464
Trade and other receivables	24	3,355	6,285
Current tax assets		918	740
Net investment in subleases	21.2	61	12
Cash and cash equivalents		10,989	9,091
Total current assets		16,713	17,592
Total assets		202,812	236,317
Liabilities
Non-current liabilities
Loans and borrowings	27	15,414	23,146
Lease liabilities*	6, 21.1	124,442	135,213
Provisions	28	4,975	5,143
Total non-current liabilities		144,831	163,502
Current liabilities
Trade and other payables*	6, 25	24,991	20,034
Contract liabilities	26	1,075	1,004
Loans and borrowings	27	20,019	13,295
Lease liabilities*	6, 21.1	16,483	15,445
Provisions	28	132	475
Total current liabilities		62,700	50,253
Total liabilities		207,531	213,755
Net current liabilities		(45,987)	(32,661)
Net (liabilities)/assets		(4,719)	22,562

* Refer to note 6 for further details.

131

Hostmore plc • Annual Report 2023

Financial statements

Consolidated statement of financial position at 31 December 2023

continued

Note

			*Restated
		31 December	1 January
		2023	2023
		£’000	£’000
Issued capital and reserves attributable to owners of the Company
Share capital	29	25,225	25,225
Share premium reserve		14,583	14,583
Merger reserve		(181,180)	(181,180)
Share based payment reserve		775	634
Retained earnings*		135,878	163,300
Total (accumulated losses)/equity		(4,719)	22,562

* Refer to note 6 for further details.

The notes on pages 134 to 167 form part of these financial statements.

The financial statements on pages 129 to 167 were approved and authorised for issue by the Board of Directors

on 2 May 2024 and were signed on its behalf by:

Julie McEwan

Chief Executive Officer

Matthew Bibby

Chief Financial Officer

132

Hostmore plc • Annual Report 2023

Consolidated Financial Statements

for the 52 week period ended 31December 2023 continued

Consolidated statement of changes in equity for the 52 week period ended

31 December 2023

		Share		Share based
	Share	premium	Merger	payment	Retained	Total
	capital	reserve	reserve	reserve	earnings	equity
	£’000	£’000	£’000	£’000	£’000	£’000
At 3 January 2022	25,225	14,583	(181,180)	53	265,345	124,026
Comprehensive expense
for the 52 week period ended
1 January 2023
Loss for the period	–	–	–	–	(97,544)	(97,544)
Total comprehensive
expense for the 52 week period
ended 1 January 2023	–	–	–	–	(97,544)	(97,544)
Correction of error*	–	–	–	–	(4,001)	(4,001)
Total comprehensive expense for the 52 week period ended 1 January 2023
(restated)	–	–	–	–	(101,545)	(101,545)
Contributions by and distributions to owners
Share purchases by Employee Benefit
Trust	–	–	–	–	(500)	(500)
Share based payment charge	–	–	–	581	–	581
Total contributions by and distributions to owners	–	–	–	581	(500)	81
At 1 January 2023	25,225	14,583	(181,180)	634	163,300	22,562
* Refer to note 6 for further details.		Share		Share based		Total
	Share	premium	Merger	payment	Retained	accumulated
	capital	reserve	reserve	reserve	earnings	losses
	£’000	£’000	£’000	£’000	£’000	£’000
At 2 January 2023	25,225	14,583	(181,180)	634	163,300	22,562
Comprehensive expense
for the 52 week period ended
31 December 2023
Loss for the period	–	–	–	–	(27,422)	(27,422)
Total comprehensive expense for the 52 week period ended 31 December
2023	–	–	–	–	(27,422)	(27,422)
Contributions by and distributions to owners
Share based payment charge	–	–	–	141	–	141
Total contributions by and distributions to owners	–	–	–	141	–	141
At 31 December 2023	25,225	14,583	(181,180)	775	135,878	(4,719)

133

Hostmore plc • Annual Report 2023

Financial statements

Consolidated statement of cash flows for the 52 week period ended

31 December 2023

Note

		52 weeks	52 weeks
		ended	ended
		31 December	1 January
		2023	2023
		£’000	£’000
Cash flows from operating activities	32	22,191	28,800
Movements in working capital:
Decrease/(increase) in trade and other receivables	24	2,961	(2,415)
Decrease in inventories	23	75	25
Increase/(decrease) in trade and other payables	25	5,561	(8,071)
(Decrease) /increase in provisions		(49)	2,391
Cash generated from operations		30,739	20,730
Corporation taxes recovered/(paid)		748	(857)
Rental income from subleases	21.2	20	105
Net cash from operating activities		31,507	19,978
Cash flows from investing activities
Purchases of property, plant and equipment		(4,721)	(10,311)
Proceeds from sale of property, plant and equipment		121	–
Interest received		200	70
Net cash used in investing activities		(4,400)	(10,241)
Cash flows from financing activities
Repayment of bank borrowings		(27,100)	(18,000)
Payment of loan arrangement fees		(954)	–
Receipt of bank borrowings		26,400	10,500
Interest paid on bank borrowings		(3,297)	(2,291)
Share purchases by Employee Benefit Trust		–	(500)
Payment of lease liabilities		(20,258)	(22,435)
Net cash used in financing activities		(25,209)	(32,726)
Net cash increase/(decrease) in cash and cash equivalents		1,898	(22,989)
Cash and cash equivalents at the beginning of period		9,091	32,080
Cash and cash equivalents at the end of the period		10,989	9,091

134

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023

1. Reporting entity

Hostmore plc (the ‘Company’) is a public limited company incorporated and domiciled in the United Kingdom. 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 UK-adopted International

Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies

reporting under those standards.

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 of the Group transitioned to UK-adopted international accounting

standards with effect from 3 January 2022.

The Group reports its results for the 52 week or 53 week period ending on the nearest Sunday to 31 December.

The results for 2023 are for the 52 weeks that ended 31 December 2023 and those for the comparative period are

for the 52 weeks ended 1 January 2023.

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 material 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 under the historical cost convention and in accordance with IFRS.

2.2 New standards, amendments and interpretations

The following standards, amendments to accounting standards and International Financial Reporting

Interpretations Committee interpretations apply for the first time to financial reporting periods commencing on or

after 1 January 2023. They have all been adopted in these financial statements:

(i) Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2

(ii) Definition of Accounting Estimates – Amendments to IAS 8

(iii) Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12

(iv) OECD Pillar Two Rules

The above standards, amendments to accounting standards and International Financial Reporting Interpretations

Committee interpretations that were affective for the period ended 31 December 2023 have had no material

impact on the Group’s financial statements.

2.3 New standards, amendments and interpretations not yet adopted

Certain amendments to accounting standards have been published that are not mandatory for 31 December 2023

reporting period and have not been early adopted by the Group. These amendments are not expected to have a

material impact on the Group in the current or future reporting periods or on foreseeable future transactions.

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 (“£’000”), unless otherwise indicated.

135

Hostmore plc • Annual Report 2023

Financial statements

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.

Accounting policies have been applied consistently throughout the 52 week period ended 31 December 2023 and

for the comparative period after taking into account the prior period adjustments disclosed in note 6.

The consolidated financial statements include the financial statements of the Company and its subsidiary

undertakings. The results of subsidiary undertakings are included in the consolidated statement of comprehensive

income from the date that control commences until the date that control ceases. The Company controls

its subsidiary undertakings when it is exposed, or has rights, to variable returns from its involvement with

the subsidiary undertakings and has the ability to affect those returns through its power over the subsidiary

undertakings.

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 for the 52 weeks ended 31 December 2023 have been prepared on a going concern

basis.

The banking facilities available to the Group were amended and restated on 28 April 2023, amended on

28 September 2023 and further amended on 26 April 2024. The latest amendments included, amongst other

elements, the waiver of the cumulative EBITDA covenant and the Adjusted Leverage covenant for Q2 and Q3

2024 and a revision of subsequent covenant levels to 1 January 2026 in line with the Group’s business plan. The

maturity of the facility was also extended from 1 January 2025 to 1 January 2026. In addition, if the proposed

combination referred to below does not proceed, the Group would be required, on 7 March 2025, to make a

part repayment of the bank facility. This would be the lower of, the lowest amount of liquidity that the Group is

forecasting for 12 months forward from 28 February 2025 that exceeds £2.5m, and £5m. In that scenario, there

is also the requirement for the Directors to commence a sale process and to appoint an additional Non-Executive

Director acceptable to them and to the banks. The Liquidity covenant requiring a minimum liquidity level of £1.5m

remains in place. These amendments are referred to in more detail in note 27 to the financial statements.

The Group has prepared forecasts of the expected cash flows up to 31 December 2025, which includes a severe

but plausible downside scenario. The base case scenario broadly assumes that the trading performance in the

second half of 2023 continues throughout 2024, with moderate growth in 2025. It is based on the position before

taking account of the proposed combination referred to below, given its early stage of negotiation. Under the

base case scenario, the revised covenants are met and the Group has adequate liquidity throughout the going

concern assessment period. This scenario assumes that if the proposed combination referred to below does not

proceed, the part repayment of the facility due on 7 March 2025 would be financed by pausing expansion capital

expenditure.

The severe but plausible downside scenario assesses the cash flows in a depressed trading environment

with reduced recovery in H2 2024 and the whole of FY 2025, despite the cost saving initiatives that saw an

improvement in EBITDA in the second half of 2023. The model calculates the impact that this scenario would have

on the amended covenants of the Group. Under this severe but plausible scenario, the Group would breach the

quarterly cumulative EBITDA covenant and the Net debt to EBITDA covenants in Q4 FY 2024 and the monthly

minimum liquidity covenant of £1.5m in Q1 FY 2025, which would make the loans repayable on demand. In

addition, in the severe but plausible scenario, there is uncertainty over the adequacy of liquidity in Q1 FY 2025. In

this scenario, management would take steps to manage the Group’s liquidity position.

On 16 April 2024 the Company announced the proposed combination of the Group with TGI Fridays, Inc (the

”Combined Group”) with Heads of Terms having been agreed by both parties. Funding of the Combined Group

has not been finalised at the date of approval of these financial statements. In addition, the proposal to create

the Combined Group will require the approval of shareholders. For the purposes of conducting the going concern

assessment, the Directors have made the assumption that an appropriate funding structure will be put in place

by both parties before the proposed prospectus and related circular to shareholders are issued, such that the

136

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

Company and the Combined Group will continue to trade and to meet their liabilities as they fall due from when

the combination is effected which is envisaged to be in Q3 2024.

The Directors are confident that the business will continue to trade for a period of at least fifteen months following

the signing of these financial statements and therefore that it is appropriate to prepare these financial statements

on a going concern basis. The conditions referred to above indicate the existence of a material uncertainty which

may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern. The financial

statements do not include adjustments to the carrying amounts or classification of assets and liabilities that would

result if the Company and Group were unable to continue as a going concern.

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 any accumulated impairment losses.

Goodwill does not generate cash flows independently of other assets or groups of assets and is normally 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 represents the ongoing value of the

existing business and brand and it cannot be allocated to individual restaurants on a non-arbitrary basis. The

goodwill is therefore allocated to all CGUs as a group. The recoverable amount represents the value-in-use, using

discounted forecasted cashflows and each restaurant’s ability to cover its costs, including an allocation of central

overheads, marketing and maintenance standards of assets. The Group tests all CGUs for impairment at each

reporting date on a value-in-use basis. Where a CGU is considered to be 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 of the group of all CGUs, the residual

impairment losses are allocated to goodwill.

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 of a product or service

to a customer.

The Group primarily derives revenue from four streams, dine-in, delivery, drive to and other revenue.

(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 TGI Fridays brand – sales are recognised when control of the product

has transferred. This is the point at which the products are consumed by the customers in the restaurant.

For customers enrolled in the Group loyalty scheme, an additional performance obligation is the promise to

redeem loyalty points for these purchases which entitle customers to discounts on future purchases.

2. Sales receipts are made fully in cash and/or credit card at the time of sale of food and drink. A contract liability

for the loyalty points is recognised at the point of issue. Revenue for the loyalty points is recognised when the

points are redeemed or when they expire 12 months after initial sale.

(ii) Delivery revenue

The Group has a single performance obligation which is the sale of food and drinks through third-party delivery

partners. Sales are recognised when 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. The

receivable is usually settled within 30 days by the delivery partners. Commissions paid to the delivery partners are

recognised as an expense in the consolidated statement of comprehensive income when the sales receivable is

received.

(iii) Drive to revenue

The Group has a single performance obligation which is the sale of food and drinks through click and collect

where customers place their orders directly with TGI Fridays and Fridays and Go. The sale of food and drinks is

recognised at the point at which customers collect their orders.

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Hostmore plc • Annual Report 2023

Financial statements

(iv) Other revenue

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 from gift card vouchers is recognised when the gift

vouchers are redeemed or expire 18 months after their sale. Commission paid to third parties on sale of gift

cards is recognised as a deferred asset and charged in the consolidated statement of comprehensive income as

an expense when the gift card is redeemed. If the gift card expires, the commission is charged at expiry in the

consolidated statement of comprehensive income. If customers fail to cancel or honour their restaurant bookings,

their deposits are recognised as other revenue on the date that the booking relates to.

4.5 Cost of sales

Cost of sales comprises the cost of food and drink sold by the Group. The cost of labour is included in the

administrative expenses.

4.6 Leases

(i) The Group as a lessee

The principal leasing activity of the Group is the leasing of property for the operation of restaurants.

• A lease liability is measured at its present value, discounted using an appropriate incremental borrowing rate

for each lease depending on the lease term at the date of inception. This ranges from 3.1% for leases with

shorter terms to 7.5% for leases with longer terms. Payments included in initial measurement are all fixed

payments. Any variable payments that are based on an index or a rate, are initially measured using the index

or rate at the commencement date.

• A right-of-use (RoU) asset is measured at an amount equal to the lease liability, adjusted by any prepaid or

accrued lease payments, and inclusive of any dilapidations and onerous lease provisions.

• The Group does not recognise leases with a term of 12 months or less or where the underlying asset is

considered of low value.

Subsequent to initial measurement, lease liabilities are reduced for lease payments made and increased as a

result of interest charged at a constant rate on the balance outstanding. Where lease payments depend on an

index of an extended lease, 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. RoU 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 RoU asset, with the revised carrying amount being

amortised over the remaining revised lease term.

(ii) Rent concessions

The Group 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

were 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.

(iii) 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 in respect of these 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.

138

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

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.

4.7 Borrowing costs

Borrowing costs comprise interest payable on bank borrowings expensed in the period in which is incurred, and

loan arrangement fees amortised over the term of the facility.

4.8 Government grants

The Group recognises Government grants at fair value when there is reasonable assurance that the Group

will comply with the conditions attached to them and that the grant will be received. Government grants are

recognised in the consolidated statement of comprehensive income on a systematic basis over the period in

which the Group recognises as an 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 Group with no future related costs, is recognised in the

consolidated statement of comprehensive income in the period in which it becomes receivable.

4.9 Employee benefits

A liability is recognised for short-term and long-term employee 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.

4.10 Pensions

The Group makes contributions for eligible employees 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 consolidated statement of

financial position. The assets of the plans are held separately from the Group in independently administered

funds.

4.11 Share based payments

Equity-settled share based payment charges 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 payments are set out in

note 30.

The fair value determined at the grant date of equity-settled share based payments is expensed on a straight-line

basis over the vesting period, based on Management’s estimate of equity instruments that will eventually vest,

with a corresponding increase in equity. At the end of each reporting period, the Group assesses and thereafter

revises its estimate of the amount of equity expected to vest. The impact of the revision of the original estimates,

is recognised in the consolidated statement of comprehensive income such that the cumulative expense reflects

the revised estimate, with a corresponding adjustment to the share based payment reserve.

4.12 Tax

Income tax expense represents current 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 different 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.

139

Hostmore plc • Annual Report 2023

Financial statements

(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. Deferred tax assets are not discounted.

Deferred tax liabilities and assets are measured at the tax rates that will apply in the period in which the liability

is expected to be settled or the asset realised, based on tax rates and tax laws that have been enacted or

substantively enacted at 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 each reporting period, to recover or settle the carrying amount.

(iii) Current and deferred tax for the period

Current and deferred tax are recognised in the consolidated statement of comprehensive income, 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.

4.13 Earnings per share

The Group complies with the IAS 33 requirement of a publicly listed company in presenting earnings per share

(“EPS”) in the financial statements. These financial statements contain basic EPS, adjusted EPS, diluted EPS and

adjusted diluted EPS, in-line with accounting standards. Adjusted EPS and adjusted diluted EPS are calculated

using profit before tax adjusted for exceptional items and impairments. As the Group is currently in a loss-making

position, the calculation of diluted EPS and adjusted diluted EPS does not assume conversion, exercise or other

issue of potential ordinary shares that would have an anti-dilutive effect on EPS.

4.14 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, they are accounted for

as separate major components of property, plant and equipment. Any gain or loss on disposal of property, plant

and equipment is recognised in the consolidated statement of comprehensive income. Subsequent expenditure

is capitalised only if it is probable that 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. Depreciation is provided at the following annual

rates:

Leasehold property improvements Leasehold term

Plant and machinery 3 – 8 years depending on nature of asset

Fixtures and fittings 4 – 20 years depending on nature of asset

140

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

4.15 Impairment of tangible assets

At each reporting date, the Group assesses whether an item of property, plant and equipment and RoU asset is

impaired. Each restaurant is considered to be a separate CGU of property, plant and equipment and RoU asset.

The Group tests all CGUs for impairment on a value-in-use basis. Where a CGU is considered impaired, its

carrying value is reduced to its recoverable amount. The recoverable amount represents the value-in-use, using

discounted forecasted cashflows and each restaurant’s ability to cover its costs, including an allocation of central

overheads, marketing and maintenance standards of assets. The impairment loss is allocated pro-rata between

the assets of the CGU on the basis of the carrying amount of each asset.

Where there is an indication that an impairment loss recognised in prior periods no longer exists, the relevant part

of the impairment loss is reversed and credited to the consolidated statement of comprehensive income. The

reversal is allocated to the CGU’s assets on a pro-rata basis. The carrying amount of an individual asset is not

increased above the lower of its recoverable amount and its historical depreciated cost.

4.16 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.

4.17 Provisions

Dilapidations provisions are recognised in the consolidated statement of financial position when the Group has

a present legal or constructive obligation to dismantle and restore 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.

These estimates of cost to settle are reviewed throughout the year and are based on readily available information

and past transactions of this nature. The evaluation is based on current lease end dates and Management’s

estimation of a proportion of leases that will be extended based on forecast profitability of those leases.

4.18 Financial instruments

On initial recognition, the Group classifies the component parts of financial instruments as 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 are measured at amortised cost.

4.19 Impairment of financial assets

The Group has two 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 subleases

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime

expected loss allowance. To measure the expected credit losses, trade and other receivables and net investment

in subleases have been grouped based on shared credit risk characteristics and the days past due date.

The majority of trade and other receivables are current and not past due date. There is also no history of material

non-payments by debtors or sublessees.

4.20 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. The right to dividend income on ordinary shares held by the Employee Benefit Trust has been waived.

4.21 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.

141

Hostmore plc • Annual Report 2023

Financial statements

4.22 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.

5. Critical accounting judgements, estimates and assumptions

In applying the Group’s accounting policies described above, the Directors are required to make judgements

(other than those involving estimates) that have a significant impact on the amounts recognised, and to make

estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Due to

the inherent uncertainty in making these critical judgements, estimates and assumptions, the actual outcomes

could prove different. The most significant of these are set out below.

5.1 Judgements

Goodwill

The Group does not allocate goodwill to individual CGUs. This is because it represents the ongoing value of

the existing business and brand and it cannot be allocated to individual restaurants on a non-arbitrary basis.

Therefore, in accordance with IAS 36, the goodwill is allocated to all CGUs as a group as it is considered that they

all benefit equally from the brand value. This includes TGI Fridays and Fridays and Go.

Lease term

Several leases of restaurant properties contain extension options or break clauses. The non-cancellable period

and enforceable period are both considered to be the lease term in the contract in place at the period end,

including leases which have been extended.

In determining the lease term, management considers all facts and circumstances that create an economic

incentive to exercise an extension option, or to not exercise a termination option. Extension options or periods

after termination options are only included in the lease term if the lease is reasonably certain to be extended or not

terminated.

Deferred tax asset

The Group assesses the recoverability of deferred tax assets recognised, on the basis that they will be utilised as

part of the taxation charge against profits of future years. The Group has projected taxable profits, including the

application of risk factors in future years, for this assessment, consistent with the projections used for impairment

assessment, which reflect deferred tax assets being utilised as the underlying leases unwind for taxation

purposes.

5.2 Estimates and assumptions

Goodwill

The Group tests all CGUs for impairment at each reporting date on a value-in-use basis. Where a CGU is

considered impaired, its carrying value is reduced to its recoverable amount. The value-in-use calculations are

based on the Group’s base case business plan for 2024 and 2025, sensitised down from the 2024 budget,

applying a long-term annual growth rate of 2%. This produces the future projected cashflows of the operating

business over the lease term of each restaurant, assuming profitable stores’ leases will be extended, discounted

back using a pre-tax discount rate of 13.3% (2022: 15.8%).

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 of the group of all CGUs, the residual impairment losses are

allocated to goodwill.

142

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

Impairment

The Group performs an impairment assessment at the end of each reporting period. For this purpose, each

restaurant in the Group is considered a separate CGU. An impairment charge is recognised where the recoverable

amount is less than the carrying value of the RoU assets of the CGU. An impairment charge is not recognised

where the assets have been trading for less than 12 months at the reporting date.

The recoverable amount is based on value-in-use calculations, using discounted forecasted cashflows and each

restaurant’s ability to cover its costs, including an allocation of central overheads, marketing and maintenance

standards of assets.

The value-in-use calculations are based on the Group’s base case business plan for 2024 and 2025, sensitised

down from the 2024 budget, with cash flow projections over the lease term of each restaurant, applying a

long-term annual growth rate of 2%.

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. A pre-tax discount rate of 10.5%

(2022: 14.2%) has been applied in the value-in-use calculations.

Deferred tax asset

The Group has recognised deferred tax assets of £9,981k (2022: £12,801k) based on deductible temporary

differences. Deferred tax assets are measured at the tax rates that will apply in the period in which the asset

is realised, based on tax rates and tax laws that have been enacted or substantively enacted at the end of the

reporting period. Discounted forecasted cashflows used in this assessment were aligned with those used in

calculating the above impairments.

6. Prior period restatement

In the prior period to 1 January 2023 there were IFRS 16 lease modifications that were not accounted for. As

a result of the prior period IFRS 16 lease modifications, property, plant and equipment and right of use asset

balances were primarily affected. The tables in this note set this out in more detail. This restatement also resulted

in a further goodwill impairment charge of £845k.

A further prior period restatement, related to an error identified in the prior period impairment model for one store,

which resulted in the property, plant and equipment and right of use assets impairment charge being overstated

by £1,923k and property, plant and equipment and right of use assets balances being understated by £293k

and £1,630k respectively. As a result, the overall goodwill impairment charge was understated by £1,923k and a

goodwill balance was overstated by the same amount which has been corrected in the prior period adjustment.

An additional prior period restatement has been made to additions to property, plant and equipment which had

not been accrued at the prior period end. This has resulted in property, plant and equipment, and trade and other

payables, both being increased by £1,540k in the prior period adjustment. As a result of this restatement, the

impairment charge of goodwill has been increased by £1,540k and goodwill has decreased by the same amount.

143

Hostmore plc • Annual Report 2023

Financial statements

The IFRS 16 lease modifications, impairment model error and under-accrual of additions to property, plant and

equipment have been corrected by restating each of the relevant financial statement line items for the prior period

as follows:

Consolidated statement of

comprehensive income (extract)

Previously

reported

52 weeks

ended

1 January

2023

£’000

IFRS 16 lease

modifications

£’000

Impairment

model

£’000

Property, plant

and equipment

additions

£’000

*Restated

52 weeks

ended

1 January

2023

£’000

Underlying administrative expenses (141,152) (165) – – (141,317)

Exceptional items – impairment of

goodwill (70,858) (845) (1,923) (1,540) (75,166)

Administrative expenses (212,010) (1,010) (1,923) (1,540) (216,483)

Impairment of property, plant and

equipment and right of use assets (36,891) (1,345) 1,923 – (36,313)

Loss from operations (91,867) (2,355) – (1,540) (95,762)

Finance expense (12,556) (106) – – (12,662)

Loss before tax (104,345) (2,461) – (1,540) (108,346)

Loss for the period (97,544) (2,461) – (1,540) (101,545)

Total comprehensive expense (97,544) (2,461) – (1,540) (101,545)

Basic loss per share (pence) (77.8) (2.0) – (1.2) (81.0)

Diluted loss per share (pence) (77.8) (2.0) – (1.2) (81.0)

Adjusted basic earnings per share

(pence) 3.6 (0.1) – (0.1) 3.4

Adjusted basic diluted earnings per

share (pence) 3.6 (0.2) – (0.1) 3.3

Consolidated statement of

financial position (extract)

Previously

reported

1 January

2023

£’000

IFRS 16 lease

modification

£’000

Impairment

model

£’000

Property,

plant and

equipment

additions

£’000

*Restated

1 January

2023

£’000

Property, plant and equipment 36,140 – 293 1,540 37,973

Right of use assets 94,568 845 1,630 – 97,043

Goodwill 75,121 (845) (1,923) (1,540) 70,813

Non-current lease liabilities 133,261 1,952 – – 135,213

Total non-current liabilities 161,550 1,952 – – 163,502

Trade and other payables 18,136 358 – 1,540 20,034

Current lease liabilities 15,294 151 – – 15,445

Total current liabilities 48,204 509 – 1,540 50,253

Total liabilities 209,754 2,461 – 1,540 213,755

Net current liabilities (30,612) (509) – (1,540) (32,661)

Net assets 26,563 (2,461) – (1,540) 22,562

Retained earnings 167,301 (2,461) – (1,540) 163,300

Total equity 26,563 (2,461) – (1,540) 22,562

144

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

7. Revenue

The Group’s revenue for the 52 week period ended 31 December 2023 arose as follows:

52 weeks

ended

31 December

2023

£’000

52 weeks

ended

1 January

2023

£’000

Dine-in revenue 182,810 187,190

Delivery revenue 6,545 6,610

Drive to revenue 1,122 1,834

Other revenue 185 86

Total revenue 190,662 195,720

Delivery revenue includes revenue where customers place their orders through third party delivery service.

Drive to revenue includes revenue from click and collect takeaway service where customers place their orders

directly with TGI Fridays and Fridays and Go.

All revenue was generated in the UK and Jersey (2023: £1.1m, 2022: £0.9m).

8. Segment information

The Group’s reportable segments are all under the TGI Fridays brand. 63rd+1st and Fridays and Go is aggregated

with TGI Fridays within internal reporting and is therefore not a separate reportable segment under IFRS 8

(Operating Segments). 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 Group and site-by-site level. These sites share

similar economic characteristics and are corporately under the TGI Fridays licensed branding and meet the

aggregation criteria under IFRS 8 paragraph 12.

9. Other operating income

Included within other operating income is rental income from subleasing of properties under operating leases and

Government grants received and in previous years receipts under the Coronavirus Job Retention Scheme. There

are no unfulfilled conditions or contingencies relating to these Government grant receipts.

52 weeks

ended

31 December

2023

£’000

52 weeks

ended

1 January

2023

£’000

Covid-19 related Government grants – 552

Net rents receivable 105 153

Total other operating income 105 705

145

Hostmore plc • Annual Report 2023

Financial statements

10. Loss from operations

The loss from operations is stated after charging:

52 weeks

ended

31 December

2023

£’000

*Restated

52 weeks

ended

1 January

2023

£’000

Share based payment charges (141) (581)

Rent payable on leases of low value assets, not capitalised (571) (711)

Variable lease payments not included in the measurement of lease liabilities (707) (629)

Depreciation of property, plant and equipment and right of use assets (17,964 ) (20,504)

Impairment of property, plant and equipment and right of use assets (23,338) (36,313)

Exceptional items – impairment of goodwill (see note 11) – (75,166)

* Refer to note 6. In the 52 week period ended 1 January 2023, depreciation of property, plant and equipment and right of use assets have

been increased by £165k from previously reported £20,339k to £20,504k, impairment of property, plant and equipment and right of use

assets have been decreased by £578k from previously reported £36,891k to £36,313k, impairment of goodwill have been increased by

£4,308k from previously reported £70,858k to £75,166k.

The loss from operations is stated after crediting:

52 weeks

ended

31 December

2023

£’000

52 weeks

ended

1 January

2023

£’000

Covid-19 related rent concessions – 2,290

Impairment reversal of property, plant and equipment and right of use assets 5,570 5,712

Gain on disposal of property, plant and equipment 133 –

Gain on lease modification 1,951 –

Release of dilapidations provision 465 –

Finance income on the net investment in finance leases 19 8

11. Exceptional items – impairment of goodwill

Exceptional items are those items that, by virtue of their unusual nature or size, warrant separate, additional

disclosure in the financial statements to fairly assess the underlying performance of the Group.

Included within the loss from operations for the 52 week period ended 1 January 2023 were items which were

considered to be exceptional in nature. These are as follows:

52 weeks

ended

31 December

2023

£’000

*Restated

52 weeks

ended

1 January

2023

£’000

Impairment of goodwill – 75,166

* Refer to note 6. In the 52 week period ended 1 January 2023, impairment of goodwill has been increased by £4,308k from previously

reported £70,858k to £75,166k.

146

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

12. Auditors’ remuneration

During the 52 week period ended 31 December 2023, the amount payable by the Group to its auditors was as

follows:

52 weeks

ended

31 December

2023

£’000

52 weeks

ended

1 January

2023

£’000

Fees payable to the Group’s auditors for the audit of the Group’s and subsidiaries’

financial statements 625 253

Assurance related services – 49

During the 52 week period ended 31 December 2023, the auditors did not provide any non-audit services to the

Group. In the 52 week period ended 1 January 2023, £45k of non-audit services were provided for a review of the

Company’s half year report required under the Disclosure and Transparency Rules and £4k for covenant reporting

required under the Group’s bank facilities. No other non-audit services have been provided by the auditors to the

Group during the current or previous period.

13. Employee benefit expense

Employee benefit expense, including Directors, comprises:

52 weeks

ended

31 December

2023

£’000

52 weeks

ended

1 January

2023

£’000

Wages and salaries 63,579 63,356

Social security costs 4,108 4,370

Other pension costs 890 948

Share based payment charge 141 581

Total employee benefit expense 68,718 69,255

Key management personnel compensation

Key management personnel are those persons having authority and responsibility for planning, directing and

controlling the activities of the Group. These comprise the Directors of the Company listed on pages 54 to 57 and

the Executive Team of the Group.

52 weeks

ended

31 December

2023

£’000

52 weeks

ended

1 January

2023

£’000

Wages and salaries 2,241 2,344

Social security costs 304 417

Other pension costs 43 69

Share based payment charge 69 118

Total key management personnel compensation 2,657 2,948

147

Hostmore plc • Annual Report 2023

Financial statements

The monthly average number of full time equivalent employees, including Directors, employed by the Group

during the 52 week period ended 31 December 2023 was as follows:

52 weeks

ended

31 December

2023

52 weeks

ended

1 January

2023

Sales 2,641 2,747

Administration 354 378

Total full time equivalent number of employees 2,995 3,125

14. Directors’ remuneration

52 weeks

ended

31 December

2023

£’000

52 weeks

ended

1 January

2023

£’000

Directors’ salaries 1,287 1,335

Pensions costs 17 24

Share based payment charge 32 66

Total Directors’ remuneration 1,336 1,425

The Group has no defined benefit pension scheme and no contributions to defined benefit pension schemes were

made during the 52 week period ended 31 December 2023 (2022: none).

During the 52 week period ended 31 December 2023, the highest paid Director received total remuneration,

inclusive of a share based payments charge of £378k (2022: £529k).

During the 52 week period ended 31 December 2023, the Directors did not exercise any share options (2022: none).

15. Finance income and expense

52 weeks

ended

31 December

2023

£’000

52 weeks

ended

1 January

2023

£’000

Finance income

Other interest receivable 219 78

52 weeks

ended

31 December

2023

£’000

*Restated

52 weeks

ended

1 January

2023

£’000

Finance expense

Bank interest payable 4,256 2,393

Amortisation of loan arrangement fees 721 209

Interest on lease liabilities 9,406 9,832

Unwinding of discount on provisions 87 52

Other interest payable 145 176

Total finance expense 14,615 12,662

* Refer to note 6. In the 52 week period ended 1 January 2023, interest on lease liabilities has been increased by £106k from previously

reported £9,726k to £9,832k.

148

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

In the 52 week period ended 1 January 2023, other interest of £176k which was not related to bank interest

payable has been reallocated to other interest payable to provide increased analysis.

16. Tax (charge)/credit

16.1 Tax (charge)/credit recognised in consolidated statement of comprehensive

income

52 weeks

ended

31 December

2023

£’000

52 weeks

ended

1 January

2023

£’000

Corporation tax credit

Adjustments in respect of prior periods 927 192

Total corporation tax credit 927 192

Deferred tax (charge)/credit

Origination and reversal of temporary timing differences (1,248) 4,842

Adjustments in respect of prior periods (1,572) 27

Change in future tax rate – 1,740

Total deferred tax (charge)/credit (2,820) 6,609

Tax (charge)/credit for the period (1,893) 6,801

From 1 April 2023, the main UK rate of corporation tax was increased from 19% to 25% with an average rate of

23.5% applying for the 52 weeks ended 31 December 2023. The amount of tax credit for the 52 weeks ended

31 December 2023 is lower than the UK corporation tax rate of 23.5% on the results for the period. 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:

52 weeks

ended

31 December

2023

£’000

*Restated

52 weeks

ended

1 January

2023

£’000

Loss before tax for the period (25,529) (108,346)

Tax credit on Group’s loss at tax rate of 23.5% (2022: 19%) 6,011 20,586

Expenses not deductible for tax purposes (679) (891)

Goodwill impairment charges not deductible for tax purpose – (13,464)

Depreciation on assets not eligible for tax relief (281) (1,408)

Adjustments to corporation tax and deferred tax in respect of prior periods (645) 219

Impact of difference between corporation tax and deferred tax rate 329 1,740

Movement in deferred tax not recognised (6,628) 16

Deferred tax credited straight to equity – 3

Tax (charge)/credit for the period (1,893) 6,801

* Refer to note 6. In the 52 week period ended 1 January 2023, loss before tax for the period have been increased by £4,001k from previously

reported £104,345k to £108,346k. As a result of this adjustment, tax credit on Group’s loss have risen by £760k from previously reported

£19,826k to £20,586k.

149

Hostmore plc • Annual Report 2023

Financial statements

The Directors consider that adjustments similar to those above are likely to be relevant in calculating the Group’s

tax charge in future periods.

The Directors have assessed the impact of Pillar 2 Tax Reform. They have confirmed that it is not material to the

tax charge, as the Group only operates one restaurant in Jersey which is outside the UK.

16.2 Deferred tax assets

Deferred tax assets in the consolidated statement of financial position arose as follows:

3 January

2022

£’000

Recognised

in consolidated

statement of

comprehensive

income

£’000

1 January

2023

£’000

Deferred tax assets in relation to:

Property, plant and equipment differences 1,970 1,141 3,111

Other temporary differences 71 5 76

Losses carried forward – 228 228

Deferred tax arising from leases 4,151 5,235 9,386

Total deferred tax assets 6,192 6,609 12,801

2 January

2023

£’000

Recognised

in consolidated

statement of

comprehensive

income

£’000

31 December

2023

£’000

Deferred tax assets in relation to:

Property, plant and equipment differences 3,111 (3,111) –

Other temporary differences 76 18 94

Share based payments – 17 17

Losses carried forward 228 (228) –

Deferred tax arising from leases 9,386 484 9,870

Total deferred tax assets 12,801 (2,820) 9,981

Deferred tax unwinding within 12 months from 31 December 2023 is expected to be immaterial.

Deferred tax not recognised at 31 December 2023 amounted to £7.5m (2022: £nil). This is based on the more

challenging industry-wide backdrop in which the Group operates and reflects the Group’s forecasts of expected

cash flows that have been used in assessing impairments at the period end.

150

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

17. Loss/(earnings) per share

52 weeks

ended

31 December

2023

*Restated

52 weeks

ended

1 January

2023

Basic loss per share

Weighted average outstanding number of shares (‘000) 124,880 125,427

Loss after tax for the period (£’000) (27,422) (101,545)

Basic loss per share (pence) (22.0) (81.0)

Diluted loss per share

Weighted average outstanding number of shares (‘000) 124,880 125,427

Dilutive shares (‘000) – –

124,880 125,427

Loss after tax for the period (£’000) (27,422) (101,545)

Diluted loss per share (pence) (22.0) (81.0)

Adjusted basic earnings per share

Weighted average outstanding number of shares (‘000) 124,880 125,427

Loss after tax for the period (£’000) (27,422) (101,545)

Exceptional items – impairment of goodwill (£’000) – 75,166

Net impairment of property, plant and equipment and right of use assets (£’000) 17,768 30,601

Adjusted (loss)/profit for the period (£’000) (9,654) 4,222

Adjusted basic (loss)/earnings per share (pence) (7.7) 3.4

Adjusted diluted earnings per share

Weighted average outstanding number of shares (‘000) 124,880 125,427

Dilutive shares (‘000) – 656

124,880 126,083

Loss after tax for the period (£’000) (27,422) (101,545)

Exceptional items (£’000) – 75,166

Net impairment of property, plant and equipment and right of use assets (£’000) 17,768 30,601

Adjusted (loss)/profit for the period (£’000) (9,654) 4,222

Adjusted diluted (loss)/earnings per share (pence) (7.7) 3.3

* Refer to note 6. In the 52 week period ended 1 January 2023, loss after tax for the period has been increased by £4,001k from previously

reported £97,544k to £101,545k, basic and diluted loss per share has been increased by 3.2p from previously reported 77.8p to 81.0p,

adjusted basic earnings per share have been decreased by 0.2p from previously reported 3.6p to 3.4p and adjusted diluted earnings per

share have been decreased by 0.3p from previously reported 3.6p to 3.3p.

As referred to in note 35, on 16 April 2024 the Company announced that it had reached agreement on a non-

binding basis for a proposed all-share acquisition of TGI Fridays, Inc. This is subject to, among other things,

completion of confirmatory due diligence, the parties entering into binding transaction documentation and

shareholder approval. It is therefore too early to determine whether this proposed transaction will be undertaken

or what impact it might have on the Earnings per Share of the Group in future periods.

151

Hostmore plc • Annual Report 2023

Financial statements

The calculation of adjusted (loss)/profit and the resultant calculation of adjusted basic (loss)/earnings per share

and adjusted diluted (loss)/earnings per share, excludes the impairment of property, plant and equipment, right

of use assets and exceptional items. The adjusted basic (loss)/earnings per share and adjusted diluted (loss)/

earnings per share figures have not been adjusted for the tax effects of adjusting items. This is because the

goodwill impairment recorded for the 52 week period ended 1 January 2023 is not tax deductible and therefore

had no tax effect on the adjusted earnings per share calculations. The property, plant and equipment and right

of use assets impairments will reverse over time. For the 52 week period ended 31 December 2023, the deferred

tax impact on property, plant and equipment was £1.4m (2022: £1.4m) and right of use assets was £2.3m

(2022: £5.7m). Accordingly, while these are post-tax measures, they have not been adjusted for the tax effect of

adjusting items where there is no current tax impact or where the tax effect will only reverse over time.

18. Property, plant and equipment

Leasehold

property

improvements

£’000

Plant and

machinery

£’000

Fixtures

and fittings

£’000

Total

£’000

Cost

At 3 January 2022 9,874 50,665 90,058 150,597

Additions – 5,138 6,423 11,561

Disposals – (397) (88) (485)

At 1 January 2023 (restated)* 9,874 55,406 96,393 161,673

Accumulated depreciation and impairment

At 3 January 2022 9,874 43,846 54,096 107,816

Depreciation charge for the period – 3,096 5,510 8,606

Impairment reversal for the period – – (757) (757)

Impairment charge for the period – – 8,463 8,463

Disposals – (392) (36) (428)

At 1 January 2023 9,874 46,550 67,276 123,700

Net book value

At 2 January 2022 – 6,819 35,962 42,781

At 1 January 2023 (restated)* – 8,856 29,117 37,973

* Refer to note 6. In the 52 week period ended 1 January 2023, plant and machinery additions have been increased by £816k from previously

reported £4,322k to £5,138k, fixtures and fittings additions have been increased by £724k from previously reported £5,699k to £6,423k,

fixtures and fittings impairment charge has been decreased by £293k from previously reported £8,756k to £8,463k, increasing total net book

value by £1,833k from previously reported £36,140k to £37,973k.

152

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

Leasehold

property

improvements

£’000

Plant and

machinery

£’000

Fixtures

and fittings

£’000

Total

£’000

Cost

At 2 January 2023 9,874 55,406 96,393 161,673

Additions – 2,800 920 3,720

Disposals – (512) (1,147) (1,659)

At 31 December 2023 9,874 57,694 96,166 163,734

Accumulated depreciation and impairment

At 2 January 2023 9,874 46,550 67,276 123,700

Depreciation charge for the period – 2,942 4,579 7,521

Impairment reversal for the period – – (2,107) (2,107)

Impairment charge for the period – – 10,811 10,811

Disposals – (277) (1,346) (1,623)

At 31 December 2023 9,874 49,215 79,213 138,302

Net book value

At 1 January 2023 – 8,856 29,117 37,973

At 31 December 2023 – 8,479 16,953 25,432

19. Right of use assets

Property

£’000

Motor

vehicles

£’000

Total

£’000

Cost

At 3 January 2022 158,521 262 158,783

Additions and modifications 15,448 – 15,448

At 1 January 2023 (restated)* 173,969 262 174,231

Accumulated depreciation and impairment

At 3 January 2022 42,177 218 42,395

Depreciation charge for the period 11,866 32 11,898

Impairment reversal for the period (4,955) – (4,955)

Impairment charge for the period 27,850 – 27,850

At 1 January 2023 (restated)* 76,938 250 77,188

Net book value

At 2 January 2022 116,344 44 116,388

At 1 January 2023 (restated)* 97,031 12 97,043

* Refer to note 6. In the 52 week period ended 1 January 2023, Right of use assets additions have been increased by £2,355k from previously

reported £13,093k to £15,448k, Right of use assets depreciation charge for the period has been increased by £165k from previously

reported £11,733k to £11,898k, Right of use assets impairment charge for the period has been decreased by £285k from previously reported

£28,135k to £27,850k, increasing total net book value by £2,475k from previously reported £94,568k to £97,043k.

153

Hostmore plc • Annual Report 2023

Financial statements

Property

£’000

Motor

vehicles

£’000

Total

£’000

Cost

At 2 January 2023 173,969 262 174,231

Modifications 1,602 – 1,602

Disposals (770) – (770)

At 31 December 2023 174,801 262 175,063

Accumulated depreciation and impairment

At 2 January 2023 76,938 250 77,188

Depreciation charge for the period 10,432 11 10,443

Impairment reversal for the period (3,463) – (3,463)

Impairment charge for the period 12,527 – 12,527

Disposals (770) – (770)

At 31 December 2023 95,664 261 95,925

Net book value

At 1 January 2023 97,031 12 97,043

At 31 December 2023 79,137 1 79,138

20. Impairment losses recognised in property, plant and equipment and

right of use assets

The Group performs an impairment assessment at the end of each reporting period. For the purposes of

impairment of right of use assets, each restaurant in the Group is considered a separate CGU. An impairment

charge is recognised when the recoverable amount is less than the carrying value of the property, plant and

equipment and right of use assets of the CGU. Where there is an indication that an impairment loss recognised

in prior periods no longer exists, the impairment loss is reversed and credited to the consolidated statement of

comprehensive income.

The recoverable amount is based on value-in-use calculations, using discounted forecasted cashflows of

each restaurant and its ability to cover its costs, including an allocation of central overheads, marketing and

maintenance standards of assets.

The value-in-use calculations are based on the Group’s base case business plan for 2024 and 2025, sensitised

down from the 2024 budget with cash flow projections over the lease term of each restaurant, applying a

long-term annual growth rate of 2%.

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. A pre-tax discount rate of 10.5%

(2022: 14.2%) has been applied in the value-in-use calculations.

During the 52-week period ended 31 December 2023, an impairment charge was recognised because the

recoverable amount of the CGUs as calculated above was less than the carrying value of property, plant and

equipment and right of use assets. There was also an indication that an impairment loss recognised in prior

periods in respect of two restaurants now no longer existed. In accordance with the Group’s accounting policy,

the impairment loss in respect of these restaurants in prior periods has been reversed and credited to the

consolidated statement of comprehensive income in the 52-week period ended 31 December 2023.

In this assessment, the recoverable amount of property, plant and equipment at 31 December 2023, was

£48,850k (2022: £56,320k). The above calculations have resulted in an impairment charge of £10,811k for the

period ended 31 December 2023 (2022: £8,463k) and an impairment reversal of £2,107k (2022: £757k) against

property, plant and equipment. The recoverable amount of right of use assets at 31 December 2023, was

£116,251k (2022: £132,461k). The above calculations have also resulted in an impairment charge of £12,527k

for the period ended 31 December 2023 (2022: £27,850k) and an impairment reversal of £3,463k (2022: £4,955k)

154

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

against right of use assets. In the 52 weeks ended 31 December 2023, the Group recorded the total of the above,

being an impairment charge of £23,338k and a reversal of £5,570k, resulting in a net impairment of £17,768k for

the period (2022: net impairment of £30,601k).

Sensitivities to impairment charges

The key assumptions in the calculation of impairment of property, plant and equipment and right of use assets

are the predicted cashflows of the CGUs and the discount rate applied. The Group has conducted a sensitivity

analysis taking into consideration the impact of key impairment test assumptions arising from a range of

reasonably possible trading and economic scenarios. The reasonably possible effect on impairment of property,

plant and equipment and right of use assets for a 2% absolute change in the discount rate or a 10% variation in

EBITDA, with all other variables held constant is as follows:

Increase/(decrease) in impairment provision

31 December

2023

£’000

*Restated

1 January

2023

£’000

Discount rate – 2% increase 2,738 3,266

Discount rate – 2% decrease (2,382) (2,551)

EBITDA – 10% increase (4,211) (3,977)

EBITDA – 10% decrease 5,127 5,264

* Refer to note 6. In the 52 week period ended 1 January 2023, sensitivities to property, plant and equipment and right of use assets

impairment charges have been restated. ‘Discount rate – 2% increase’ has been increased by £153k from previously reported £3,113k

to £3,266k, ‘Discount rate – 2% decrease’ has been decreased by £10k from previously reported (£2,541k) to (£2,551k), ’EBITDA –

10% increase’ has been decreased by £51k from previously reported (£3,926k) to (£3,977k), and ‘EBITDA – 10% decrease’ has been

increased by £526k from previously reported £4,738k to £5,264k.

21. Leases

21.1 Group 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 for the 52 week

period ended 31 December 2023 was £21,536k (2022: £23,775k).

Lease liabilities are due as follows:

31 December

2023

£’000

*Restated

1 January

2023

£’000

Contractual undiscounted cash flows due

Not later than one year 21,149 21,071

Between one year and five years 80,944 81,948

Between five years and ten years 68,385 79,973

Greater than ten years 16,644 23,253

Total contractual undiscounted cash flows 187,122 206,245

* Refer to note 6. As a result of IFRS 16 lease modifications and dilapidation charge exclusion, the prior period amounts within the above

maturity table have been restated. ‘Not later than one year’ balance has increased by £146k from previously reported £20,925k to £21,071k.

‘Between one year and five years’ balance has increased by £1,184k from previously reported £80,764k to £81,948k. The ‘Later than five

years’ category has been further analysed into the above categories of ‘Between five years and ten years’ and ‘Greater than ten years’

to provide greater analysis. Further to the note 6, both categories have been decreased by £1,447k from the previously reported total of

£104,673k to £79,973k and £23,253k respectively.

155

Hostmore plc • Annual Report 2023

Financial statements

31 December

2023

£’000

*Restated

1 January

2023

£’000

Contractual discounted cash flows of lease liabilities

Non-current 124,442 135,213

Current 16,483 15,445

Total lease liabilities 140,925 150,658

* Refer to note 6. At 1 January 2023, non-current lease liabilities have been increased by £1,952k from previously reported £133,261k to

£135,213k and current lease liabilities have been increased by £151k from previously reported £15,294k to £15,445k.

The contractual cash flows of lease liabilities have been discounted by applying an appropriate incremental

borrowing rate for each lease depending on the remaining lease term ranging from 3.1% for leases with shorter

terms to 7.5% for leases with longer terms.

The total lease liability at 31 December 2023 decreased by £9,733k (2022: £336k) from the previous period end.

This relates to the payment of lease liabilities during the year and the exit from the lease of one store during the

period. Following the amendment to the franchise agreement agreed in Q1 2023, no new stores were opened

during the 52 week period ended 31 December 2023.

21.2 Group as a lessor

The Group subleases some of its properties to third parties for essentially the whole of the remaining term of the

Group’s head lease. These are classified as finance leases.

The undiscounted lease payments receivable after the period end are as follows:

1 January

2023

undiscounted

value of

minimum lease

receivables

£’000

Unearned

finance

income

£’000

1 January

2023

discounted

value of

minimum lease

receivables

£’000

Not later than one year 19 (7) 12

Between one year and five years 71 (19) 52

Later than five years 47 (4) 43

Total 137 (30) 107

31 December

2023

Undiscounted

value of

minimum lease

receivables

£’000

Unearned

finance

income

£’000

31 December

2023

discounted value

of minimum

lease receivables

£’000

Not later than one year 114 (53) 61

Between one year and five years 511 (154) 357

Later than five years 423 (45) 378

Total 1,048 (252) 796

156

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

22. Goodwill

*Restated

£’000

Cost

At 3 January 2022 and 1 January 2023 155,284

Accumulated impairment

At 3 January 2022 9,305

Impairment charge for the period 75,166

At 1 January 2023 (restated)* 84,471

Net book value

At 2 January 2022 145,979

At 1 January 2023 (restated)* 70,813

* Refer to note 6. In the 52 week period ended 1 January 2023, goodwill impairment charge have been increased by £4,308k from previously

reported £70,858k to £75,166k, decreasing the net book value by the same amount from previously reported £75,121k to £70,813k.

£’000

Cost

At 2 January 2023 and 31 December 2023 155,284

Accumulated impairment

At 2 January 2023 and 31 December 2023 84,471

Net book value

At 1 January 2023 and 31 December 2023 70,813

The Directors consider that the TGI Fridays brand is the sole CGU of goodwill as it cannot be allocated to

individual restaurants on a non-arbitrary basis. The Group continues to assess goodwill for impairment at each

reporting date.

The value-in-use calculations are based on the Group’s base case business plan for 2024 and 2025, sensitised

down from the 2024 budget, applying a long-term annual growth rate of 2%, producing the future projected

cashflows of the operating business, over the lease term of each restaurant, assuming profitable stores’ leases

will be extended into perpetuity, discounted back using a pre-tax discount rate of 13.3% (2022: 15.8%). In

the comparative period ended 1 January 2023, the net book value of all assets, goodwill, property, plant and

equipment and right of use assets were assessed to be £75,166k higher than the value-in-use calculations and

therefore an impairment charge of £75,166k has been recorded at that date. For the 52 week period ended

31 December 2023, no further impairment charge was required as the value-in-use calculations are significantly

in excess of the net book value of all assets, goodwill, property, plant and equipment and right of use assets

inclusive of the prior year impairment charge.

157

Hostmore plc • Annual Report 2023

Financial statements

Sensitivities to impairment charges

The key assumptions in the impairment calculation of goodwill are the predicted cashflows of the CGU and the

discount rate applied. The Group has conducted a sensitivity analysis taking into consideration the impact of key

impairment test assumptions arising from a range of reasonably possible trading and economic scenarios. The

reasonably possible effect on impairment of goodwill for a 2% absolute change in the discount rate or a 10%

variation in EBITDA, with all other variables held constant is as follows:

Increase/(decrease) in impairment provision

31 December

2023

£’000

1 January

2023

£’000

Discount rate – 2% increase 7,916 23,799

Discount rate – 2% decrease – (32,130)

EBITDA – 10% increase – (20,984)

EBITDA – 10% decrease 6,049 21,154

23. Inventories

31 December

2023

£’000

1 January

2023

£’000

Food and beverage 1,390 1,464

Inventory is reviewed by staff at individual restaurants on a weekly basis and that which is perishable is written

off. Inventories recognised as an expense during the 52 week period ended 31 December 2023 amounted to

£42,959k (2022: £45,103k).

24. Trade and other receivables

31 December

2023

£’000

1 January

2023

£’000

Trade receivables 594 2,040

Prepayments 1,808 3,737

Other receivables 953 508

Total trade and other receivables 3,355 6,285

All amounts are receivable within one year and are non-interest bearing.

25. Trade and other payables

31 December

2023

£’000

*Restated

1 January

2023

£’000

Trade payables 5,019 5,870

Other payables 3,028 1,860

Accruals 9,128 10,980

Tax and social security payments 7,759 1,099

Deferred income 57 225

Total trade and other payables 24,991 20,034

* Refer to note 6. At 1 January 2023, trade payables have been increased by £358k from previously reported £5,512k to £5,870k, and accruals

have been increased by £1,540k from previously reported £9,440k to £10,980k.

158

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

Tax and social security creditors of £7,759k at 31 December 2023 include VAT that was paid on its normal

timeframe in the first week of January 2024. Trade payables, other payables and tax and social security are non-

interest bearing and are normally settled monthly.

26. Contract liabilities

The Group has recognised the following assets and liabilities related to contracts with customers.

31 December

2023

£’000

1 January

2023

£’000

Customer loyalty programme 775 550

Gift vouchers 300 454

Total contract liabilities 1,075 1,004

Revenue recognised in relation to contract liabilities

Revenue recognised during the period relating to contract liabilities recorded at the previous period end, arose as

follows:

52 weeks

ended

31 December

2023

£’000

52 weeks

ended

1 January

2023

£’000

Customer loyalty programme 613 439

Gift vouchers 384 319

Total revenue recognised in consolidated statement of comprehensive income 997 758

Revenue recognised in relation to contract liabilities includes settlement of prior period liabilities.

Costs incurred to secure contract liabilities

52 weeks

ended

31 December

2023

£’000

52 weeks

ended

1 January

2023

£’000

Charge for the period 60 81

159

Hostmore plc • Annual Report 2023

Financial statements

27. Loans and borrowings

31 December

2023

£’000

1 January

2023

£’000

Secured bank loans and borrowings

Non-current 15,414 23,146

Current 20,019 13,295

Total secured bank loans and borrowings 35,433 36,441

Movement of loans

31 December

2023

£’000

1 January

2023

£’000

Opening balance 36,441 43,422

Loans drawn down 26,400 10,500

Loans repaid (27,100) (18,000)

Loan arrangement fees incurred in the period (1,029) (15)

Amortisation of loan arrangement fees 721 209

Loan arrangement fees waived – 325

Closing balance 35,433 36,441

On 28 April 2023, the Group signed a bank facility amendment agreement with its lending banks. This was

subsequently amended on 28 September 2023 and the term facility extended to 1 January 2025. On 26 April 2024

a further amendment to the facility was agreed, extending the facility to 1 January 2026. Under this amended

facility, there are no cumulative EBITDA covenants for Q2 and Q3 of FY24, with amended covenants set for

Q4 FY24 and FY25 in line with the Group’s updated forecasts for FY24 and FY25. The covenants measure

cumulative EBITDA and the ratio of EBITDA to net debt. There is also a minimum liquidity requirement of £1.5m

and loan amortisation of £1.5m per quarter, both of which remain unchanged. In addition, if the proposed

combination referred to in note 35 does not proceed, the Group would be required, on 7 March 2025, to make

a part repayment of the bank facility. This would be the lower of, the lowest amount of liquidity that the Group is

forecasting for 12 months forward from 28 February 2025 that exceeds £2.5m, and £5m. In that scenario, there

is also the requirement for the Directors to commence a sale process and to appoint an additional Non-Executive

Director acceptable to them and to the banks.

The Group’s loans are denominated in pounds sterling. There is no foreign exchange risk on the Group’s loan

arrangements. The carrying value of loans and borrowings classified as financial liabilities are measured at

amortised cost, which approximates to their fair value. The balances at 31 December 2023 are summarised

below:

Loan Facility

Nominal

interest

rate

Date of

maturity

Repayment

schedule

31 December

2023

£’000

1 January

2023

£’000

Secured bank loan Margin plus

compound

reference rate

based on

SONIA

1 January 2026 £1.5m per

quarter, with

balance on

maturity

21,600

29,300

Revolving credit facility Margin plus

compound

reference rate

based on

SONIA

1 January 2026 At end of term

14,500

7,500

Unamortised loan arrangement fees (667) (359)

35,433 36,441

160

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

During the 52 week period ended 31 December 2023 the Group complied with all covenants within its bank

facilities as amended. This has continued to the date of approval of these financial statements.

The amended facility agreement, includes the following covenants:

• Minimum Liquidity covenant tested on a weekly basis, requiring an aggregate of cash and undrawn

commitments under the Revolving Credit Facility of not less than £1.5m tested by reference to quarterly

forward forecasts. At 31 December 2023 the Group complied with the Minimum Liquidity covenant as set out

in the facility agreement in operation for the period ended 31 December 2023 and had liquidity of £12.3m.

• Adjusted Leverage covenant, being Group net debt at the end of each quarter as a percentage of adjusted

EBITDA (calculated in accordance with FRS102 and as adjusted in the manner set out in the facility agreement

as restated from time to time) which is not tested at 30 June 2023 and 30 September 2023 and then tested in

subsequent periods in the amended facility agreement, with each period to not exceed prescribed ratios set

out in the amended facility agreement. At 31 December 2023 the Group complied with this Adjusted Leverage

covenant of EBITDA as adjusted in the manner set out in the facility agreement in operation for the period

ended 31 December 2023.

• Cumulative Monthly EBITDA covenant (calculated in accordance with FRS102) tested monthly between

31 October 2023 and 31 March 2024, not tested at 30 June 2023 and 30 September 2023 and then tested

on a latest twelve months basis each quarter from 31 December 2024 to 31 December 2025. The covenant

requires the Group’s cumulative EBITDA for each period to be not less than prescribed amounts set out in

the amended agreement. For the quarter ended 31 December 2023, the Group complied with this Cumulative

Monthly covenant as set out in the facility agreement in operation for the period ended 31 December 2023 and

had cumulative EBITDA of £4.1m.

• Capital Expenditure covenant that is tested annually on 31 December, requiring the Group to have incurred

capital expenditure of not greater than prescribed values set out in the restated agreement. For the year

ended 31 December 2023 the Group complied with this covenant and incurred Capital Expenditure of £4.7m.

Interest on the Group’s loan facility is payable at the aggregate of a compound reference rate based on SONIA

plus a rachet based on adjusted leverage of the loan, being ratio of total net debt to adjusted EBITDA, calculated

in accordance with FRS102. The amount of rachet is set out in the table below, with any increase or decrease in

the margin as a result of the margin rachet applying from the beginning of the next interest quarter.

Interest rate margin payable in addition to SONIA

Margin %

per annum

Adjusted leverage

Less than 1.0x 3.25

Greater than or equal to 1.0x but less than 1.5x 3.50

Greater than or equal to 1.5x but less than 2.0x 3.75

Greater than or equal to 2.0x 4.00

In addition, a further interest charge accrues at a rate of 5% per annum on the amount of bank debt in excess

of 2.5x adjusted leverage. This additional interest will become payable on the earlier of repayment of the loan,

including under a refinancing, or at maturity of the loan on 1 January 2026.

The borrower subsidiary and guarantor Group companies under the facilities agreement and the Company’s

subsidiary Hostmore Group Limited have provided fixed and floating charges over all of their assets in support of

the obligors’ obligations under the facilities agreement. Hostmore plc has granted a debenture to Hostmore Group

Limited and the obligor companies under the facility.

At 31 December 2023, and in accordance with the terms of the facility agreement, there was £1.5m of interest

owed to the lenders which has been accrued in these financial statements.

161

Hostmore plc • Annual Report 2023

Financial statements

Undrawn facilities

The Group had committed undrawn borrowing facilities at floating rates at 31 December 2023 as follows:

31 December

2023

£’000

1 January

2023

£’000

Expiring between one and two years 5,600 22,500

Undrawn loan facilities incur a charge at 40% of the interest rate margin on the drawn facilities.

28. Provisions

Dilapidations provision

31 December

2023

£’000

1 January

2023

£’000

At 2 January 2023 and at 3 January 2022 5,618 3,175

(Decrease)/increase in provision (110) 2,935

Credited to consolidated statement of comprehensive income (488) (544)

Unwind of discount 87 52

At 31 December 2023 and at 1 January 2023 5,107 5,618

31 December

2023

£’000

1 January

2023

£’000

Expected to be utilised within one year or less 132 475

Expected to be utilised after more than one year 4,975 5,143

At 31 December 2023 and at 1 January 2023 5,107 5,618

The dilapidation provision arises from an obligation to return leased sites to their original condition at the end of

their lease term. A provision has been recognised for the present value of the estimated expenditure required

to remove any leasehold improvements. These costs have been capitalised as part of the cost of leasehold

improvements and are amortised over the shorter of the term of the lease and the useful life of the assets.

29. Share capital

Issued and fully paid

Number £’000

Ordinary shares of 20p each at each of 1 January 2023 and 31 December 2023 126,127,279 25,225

The Company has one class of ordinary shares, comprising the entire issued share capital of the Company.

Share issues during 52 week period ended 31 December 2023

There were no shares issued during the 52 week period ended 31 December 2023.

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 by the Company during the 52 week period ended 31 December 2023.

162

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023 continued

Market purchases of ordinary shares

At the Company’s annual general meeting held on 7 June 2023, the Company’s shareholders passed a special

resolution in accordance with the Companies Act 2006 to authorise the Company to purchase in the market up

to a maximum number of 12,612,727 shares in the Company, representing 10% of its issued share capital at

7 June 2023, within normal market guidelines. No market purchases were made under this authority during the

period from the Company’s annual general meeting on 7 June 2023 to the date of approval by the Board of these

financial statements. The authority granted at the Company’s annual general meeting held on 7 June 2023 will

expire (unless previously revoked, varied or renewed) at the close of business on 30 June 2024 or, if earlier, at the

conclusion of the Company’s annual general meeting to be held in 2024. The Company intends to seek a renewal

of this authority at its annual general meeting to be held in 2024.

Under the existing authority, purchases can be made at a minimum price of the nominal value of the share of 20p

and the higher of (a) 5% above the average of the closing price for a share for the five business days immediately

preceding the date the share is contracted to be purchased, and (b) an amount equal to the higher of the price

of the last independent trade of a share and the highest current independent bid for a share as derived from the

London Stock Exchange Trading System.

Market purchases of ordinary shares by Intertrust Employee Benefit Trustee Limited,

the trustee of the Hostmore plc 2021 Employee Benefit Trust

At 31 December 2023, Intertrust Employee Benefit Trustee Limited, the trustee of the Hostmore plc 2021

Employee Benefit Trust (the “Trust”), held 1,100,036 ordinary shares in the Company, representing approximately

0.87% of the Company’s issued share capital. These shares are held subject to the terms of the Trust and are

expected to be used to help meet future obligations arising under the Company’s long-term incentive plan and for

other employee incentivisation purposes.

Shares in the Company held in the Trust are consolidated in determining the number of shares in the

Company held by the Group. Consequently, after the transfers made or committed during the 52 week period

ended 31 December 2023, the Group held 973,846 ordinary shares in the Company at 31 December 2023

(2022: 1,470,036 ordinary shares in the Company). The right to dividend income on these ordinary shares in the

Company held by the Trust has been waived. The closing middle market quotation for the shares on 31 December

2023, being the last dealing day for the 52 week period ended 31 December 2023, was 22.95p per share. The

market value of the shares held by the Trust based on the closing middle market quotation for the shares on

31 December 2023 was £0.3m (2022: £0.2m).

Authorities to issue share capital

At the Company’s annual general meeting held on 7 June 2023, the Directors were authorised to allot and issue

ordinary shares in the Company within normal market guidelines. No issuances were made under this authority

during the period from the Company’s annual general meeting on 7 June 2023 to the date of approval by the

Board of these financial statements. This authority will expire (unless previously revoked, varied or renewed) at the

close of business on 30 June 2024 or, if earlier, at the conclusion of the Company’s annual general meeting to be

held in 2024.

30. Share based payments

Total share based payment charge for the 52 week period ended 31 December 2023 was £141k (2022: £581k).

Employee share option plan

The Group operates a share based payment scheme for its employees. A long-term incentive scheme was

introduced in November 2021, whereby the Executive Directors and certain employees were awarded share

options in Hostmore plc. These share options are equity settled and comprise of Performance Share Awards

(“PSA”) and Restricted Share Awards (“RSA”), noted below, with a total of 3,184,094 options awarded on

17 November 2021 and a further 3,002,794 options awarded on 9 June 2022. Certain of these awards lapsed in

current and previous year. PSA awards are subject to performance conditions. The share options granted have a

contractual life determined by their expiry date as shown in the table below. No share options were exercisable at

31 December 2023.

163

Hostmore plc • Annual Report 2023

Financial statements

The following share based payment arrangements were in existence during the 52 week period ended

31 December 2023:

options at

2 January

2023

Lapsed

options

31 December

2023 Grant date Expiry date

Exercise

price

(pence)

Fair value

at grant

date

(pence)

1. PSA (with holding

period)

EPS & ROIC part

TSR part

1,087,190 (639,136) 448,054 17 November

2021

16 November

2031

– 101

2. PSA (without holding

period)

EPS & ROIC part

TSR part

677,906 (113,110) 564,796 17 November

2021

16 November

2031

– 101

3. RSA

Nil cost and

one‑off awards

Nominal cost

option

754,580

5,139

(160,969)

–

593,611

5,139

17 November

2021

17 November

2021

16 November

2031

16 November

2031

–

110

4. PSA (with holding

period)

EPS & ROIC part

TSR part

843,847 (496,080) 347,767 9 June 2022 8 June 2032 – 37

5. PSA (without holding

period)

EPS & ROIC part

TSR part

1,037,628 (132,797) 904,831 9 June 2022 8 June 2032 – 40

6. RSA

Nil cost and

one‑off awards

Nominal cost

option

842,023

7,330

(233,838)

–

608,185

7,330

9 June 2022

8 June 2032

–

Total

5,255,643 (1,775,930) 3,479,713

“ROIC” referred to above in assessing the Company’s share options, is the average net operating profit of the

Group after tax, divided by the invested capital of the Company, for each of the financial years that are relevant to

the shares under option.

Fair value of share options granted

The 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

17 November 2021 or 9 June 2022, as applicable.

PSA – TSR: A Monte Carlo Simulation (“MCS”) stochastic model has been used to calculate the fair value of these

nil cost option awards.

PSA – withholding period: For these awards subject to a post-vesting holding period, a discount is applied to

reflect the lack of marketability during the post-vesting holding period. This discount is based on the Finnerty

model.

RSA – nil cost options: The RSA nil cost options and one-off awards are valued using the share price on the date

of issue on 17 November 2021 or 9 June 2022 as applicable.

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 between the listing of the Company’s ordinary shares and the respective dates

of grant in November 2021 and June 2022, 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.

164

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023

Movements in share options:

52 weeks

ended

31 December

2023

Number

52 weeks

ended

1 January

2023

Number

At 2 January 2023 and at 3 January 2022 5,255,643 3,184,094

Share options granted during the period – 3,002,794

Share options lapsed during the period (1,775,930) (931,245)

At 31 December 2023 and at 1 January 2023 3,479,713 5,255,643

31. Financial instruments – carrying values, fair values and

risk management

The Group’s financial instruments are analysed as follows:

Financial assets

31 December

2023

£’000

1 January

2023

£’000

Cash and cash equivalents 10,989 9,091

Trade receivables 594 2,040

Other receivables 953 508

Net investment in subleases 796 107

Total financial assets 13,332 11,746

Financial liabilities

31 December

2023

£’000

*Restated

1 January

2023

£’000

Borrowings 35,433 36,441

Lease liabilities 140,925 150,658

Trade payables 5,019 5,870

Other payables 3,028 1,860

Accruals 9,128 10,980

Total financial liabilities 193,533 205,809

Net financial liabilities 180,201 194,063

* Refer to note 6. At 1 January 2023, lease liabilities have been increased by £2,103k from previously reported £148,555k to £150,658k,

trade payables have been increased by £358k from previously reported £5,512k to £5,870k, accruals have been increased by £1,540k from

previously reported £9,440k to £10,980k, total financial liabilities have been increased by £4,001k from previously reported £201,808k to

£205,809k and net financial liabilities have been increased by £4,001k from previously reported £190,062k to £194,063k.

31.1 Financial risk management objectives

All of the Group’s financial instruments are classified as financial assets and financial liabilities, valued at

amortised cost which represent their fair value. The nature of the Group’s operating activities means that it is

exposed to a variety of financial risks through its use of financial instruments.

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.

165

Hostmore plc • Annual Report 2023

Financial statements

31.2 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. This relates primarily to the Group’s cash at bank and trade and other receivables. No collateral is held

in respect of these assets.

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.

There is also a credit risk for the recoverability of the net investment in subleases. This relates to the sublease

of a number of properties to third parties. The Group manages its exposure to credit risk in respect of these

sublessors 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. At 31 December 2023 this amounted to £13,332k (2022: £11,746k), of which £10,989k

(2022: £9,091k) was held in bank accounts with major UK banks.

31.3 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

• regularly monitoring projected and actual cash flows to ensure the Group maintains an appropriate level of

liquidity; and

• adhering to the liquidity and EBITDA covenant in the bank facility. This includes managing the relationship with

the Group’s lending banks, providing them with regular financial information in accordance with the facility

agreement, meeting with them as required and negotiating revised facility terms. Further information relating

to the bank facility, its covenants and the interaction with the Group’s lending banks is included in note 27.

All amounts due by the Group are due within 12 months except lease liabilities, borrowings and provisions. These

each have known liability terms which have been analysed into the relevant maturity groups in notes 21.1, 27 and

28 respectively.

31.4 Foreign currency risk

The Group operates restaurants in the UK and Jersey. All its financial instruments are denominated in pounds

sterling. In order to manage the Group’s exposure to foreign currency risk with international suppliers, the Group

uses an intermediary company who source and deliver products to its restaurants. These intermediary company

contracts are set in pounds sterling, with in-built hedging provided by the suppliers.

The Group’s principal exposure to foreign currency risk arises from the franchise fee payable to TGI Fridays

Franchisor, LLC which is paid on a monthly basis. This totalled £7.6m for the 52 week period ended 31 December

2023 (2022: £7.8m). Sensitivity on these payments is not significant due to the franchise fee being converted into

US Dollars each month at the rate prevailing at the date of payment. A 10% increase or decrease on the spread of

rates at the date of payment would result in only a nominal increase or decrease in the payment made.

31.5 Interest rate risk

Interest rate risk is the risk that the future cash flows of financial instruments 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, both of which accrue interest at floating rates. A reasonably

possible change in interest rates received on cash would not materially affect interest earned on cash and cash

equivalents.

As set out in note 27, the Group had £35,433k (2022: £36,441k) of total debt outstanding with interest rates linked

to SONIA. During the 52 weeks ended 31 December 2023, SONIA increased from 3.4% at the beginning of the

period to 5.2% at the end of the period. A further 1% increase in SONIA would result in an increase in interest

cost of £386k (2022: £371k) on an annual basis.

166

Hostmore plc • Annual Report 2023

Notes to the Consolidated Financial Statements

for the 52 weeks ended 31 December 2023

31.6 Capital risk management

For the purpose of the Group’s capital management policy, capital includes interest-bearing debt and share

capital. The primary objective of the Group’s capital management policy is to ensure that it maintains as strong

a credit rating commensurate with its business as possible and complies with covenant ratios in line with the

bank facilities available to the Group. The Group includes in its net debt, interest-bearing loans and borrowings

(note 27), lease liabilities (note 21.1), and cash and cash equivalents in its assessment of capital management.

During the 52 week period ended 31 December 2023, the Directors obtained the agreement of the Franchisor, TGI

Fridays Franchisor, LLC, to no longer be contractually obligated to open new restaurants during the financial years

ending 31 December 2023 and 31 December 2024. As a result, capital expenditure during the 52 week period

ended 31 December 2023 has been reduced with consequent reductions in interest-bearing debt. During the

52 week period ended 31 December 2023 and subsequent to the year end, the Group signed an updated bank

facility restatement agreement with its lending banks. The facility was extended to 1 January 2026, and contains

amended covenants in line with the Group’s updated forecasts.

The Directors manage the Group’s capital structure and debt in light of the requirements of the business, changes

in economic conditions, and in line with bank facilities available to the Group. During the 52-week period ended

31 December 2023, the Directors negotiated revisions to the Group’s loans and borrowing as referred to in

note 27 to assist in further managing the capital risk of the Group.

32. Cash flows from operating activities

The Group’s cashflows from operating activities arose as follows:

52 weeks

ended

31 December

2023

£’000

*Restated

52 weeks

ended

1 January

2023

£’000

Loss for the period (27,422) (101,545)

Adjustments for non-cash items and amounts disclosed separately:

Depreciation of property, plant and equipment and right of use assets 17,964 20,504

Impairment reversal of property, plant and equipment and right of use assets (5,570) (5,712)

Impairment of property, plant and equipment and right of use assets 23,338 36,313

Impairment of goodwill – 75,166

Finance income (219) (78)

Finance expense 14,615 12,662

Covid-19 rent concessions – (2,290)

Gain on disposal of property, plant and equipment (133) –

Gain on lease modification (1,951) –

Release of dilapidations provision (465) –

Income tax charge/(credit) 1,893 (6,801)

Share based payment charge 141 581

Cash flows from operating activities 22,191 28,800

* Refer to note 6. In the 52 week period ended 1 January 2023, depreciation of property, plant and equipment and right of use assets have

been increased by £165k from previously reported £20,339k to £20,504k, impairment of property, plant and equipment and right of use

assets have been decreased by £578k from previously reported £36,891k to £36,313k, impairment of goodwill have been increased by

£4,308k from previously reported £70,858k to £75,166k, finance expense has been increased by £106k from previously reported £12,556k

to £12,662k, increasing loss for the period by £4,001k from previously reported £97,544k to £101,545k. This has had no net effect on the

cash flows from operating activities for the 52 weeks ended 1 January 2023 as previously reported of £28,800k.

167

Hostmore plc • Annual Report 2023

Financial statements

33. Related parties

Transactions with key management personnel

Remuneration in respect of key management personnel is set out in note 13.

During the 52 week period ended 31 December 2023, a relative of Julie McEwan, the Group’s Chief Executive

Officer, received £14k (2022: £9k) of Board approved sponsorship in return for advertising the TGI Fridays brand

at sports events. No balances were outstanding to any related party at 31 December 2023.

34. Capital commitments

The Group had no material capital commitments at 31 December 2023 or at the previous period end that had not

been accrued for at each period end.

35. Subsequent events

On 16 April 2024, the Company announced that it had reached agreement on a non-binding basis for a

proposed all-share acquisition of TGI Fridays, Inc. (“TGI Fridays”) (the “Proposed Transaction”). TGI Fridays is

the Company’s franchisor and operates primarily through franchising and licensing agreements in the US and