ELTA.L Regulatory News (ELTA)

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Electra Private Equity PLC

Hostmore PLC, announced as the name of the parent company for Electra Private Equity PLC's hospitality brands, TGI Fridays and 63rd+1st, to be demerged in the third quarter of 2021

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Listing Preparation and Trading Update

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Capital Markets Day

Further to the announcement on 21st May 2021 of its intention to demerge TGI Fridays ("Fridays"), Electra Private Equity PLC ("Electra") announces Hostmore PLC as the name of the new parent company for Electra's hospitality brands which is intended to be demerged by Electra and admitted to the Main Market of the London Stock Exchange late in the third quarter of this year. These brands comprise Fridays, the rejuvenated American themed casual dining brand, and the start-up, 63rd+1st, which is a new city-based, cocktail-led bar and restaurant brand.

Hostmore PLC

Hostmore has been created to provide a platform for the development of hospitality brands to supplement the continued growth of Fridays and 63rd+1st. Its management team, to be led by Robert B. Cook as CEO and Alan Clark as CFO, has a successful track record of building and leading businesses in the hospitality and leisure sectors.

Hostmore businesses are, and will be, defined by iconic brand experience, vibrant heritage and sector-leading technology. Its strategic focus will be to optimise its brands, aligning them with evolving consumer demands and delivering personalised customer engagement, optimising experience and efficiency through digital leadership. Its mission is to make every customer experience relevant and engaging, to celebrate the unique heritage and character of its brands, and create environments where people have fun and feel welcomed.

Following the demerger, Hostmore will seek to add rapidly growing, early-stage businesses to its portfolio of complementary brands, exploring opportunities to extend its offering in experience-led hospitality and leisure concepts.

Listing Preparation and Trading Update

As announced at Electra's half year results in May, the Board has decided that the optimal outcome for Electra shareholders in implementing the final stages of its strategy is likely to be achieved through a capital markets solution for both Fridays / Hostmore and Hotter Shoes ("Hotter"). The plans for, and progress towards listing both businesses are in-line with the Board's expectations. As part of the listing processes Electra remains focused on ensuring that both Hostmore and Hotter have the appropriate balance sheets to maximise their future potential and value as standalone publicly listed companies. This includes ensuring that Hostmore is well positioned to benefit from current opportunities for growth. In light of this and of the announcement of the delay to lock down easing to 19 July, Electra will continue to assess the optimal capital structure for both businesses and the potential sources of capital.

Fridays

In the 4 weeks since re-opening for dine-in customers on 17th May 2021, Fridays stores have recorded like-for-like 'LFL' growth vs the equivalent period in 2019 of 12.5%. This LFL growth excludes the contribution from new stores including that of the first 63rd+1st store, which is trading in line with management expectations following its opening on 24th May 2021.

Hotter

On a LFL basis, Hotter's direct channels continued to show strong growth with sales up 15% in the month. Including the contribution from retained retail stores Hotter continues to trade strongly with overall sales in May up 38% on May 2020. The margin impact of Hotter's new strategy and business model are also reflected in a 7 percentage point improvement in year on year gross margin for the first 4 months of Hotter's trading year from February 2021.

Capital Markets Day

Electra announces that it will be holding a Capital Markets Day focused on Hostmore/Fridays for investors and analysts on 29th June 2021. The event, which will be virtual from 9:30am to 12:30pm, will be focused on Hostmore's strategy, business model, performance and outlook with presentations from Hostmore's Chief Executive Officer, Robert B Cook, and Chief Financial Officer, Alan Clark. Electra Chairman, Neil Johnson and Chief Financial and Operating Officer, Gavin Manson will be available for questions in relation to the implementation of Electra's strategy.

Investment Themes

The investment themes which will be highlighted at the Capital Markets Day are:

· The revitalisation of the iconic Fridays brand over the last eighteen months, to provide a strong platform, under the new Hostmore name, to benefit from current market dislocation

· Strong supply/demand dynamic post Covid-19 with scope for selective consolidation

· Refreshed strategy towards an integrated omni-channel offering and strong ESG credentials

· Diversified and well-balanced Fridays estate portfolio across locations, types and regions

· Successful cost management during the pandemic, geared to future growth

· Attractive financial profile focused on cash generation and profitability

· Highly experienced team, transforming the business and accelerating performance

Medium Term Guidance

The Capital Markets Day will provide further details of initiatives that management have embedded over the past 18 months and guidance on the prospects for the business, including medium-term guidance on:

· Estate portfolio

o 85 existing sites at the end of December 2020

o c 8 net new site openings per year on average

o Up to c.3 site closures in medium term as leases expire

· Net Sales

o £235m run rate indoor gross sales from existing portfolio

o Incremental sales from net new site openings

o Further changes in both average covers per site from market share, and sales per head, will be incremental to this

· Gross margin

o Medium-term gross margin broadly in line with pre-pandemic level

· EBITDA margin

o Mid-teens EBITDA margin over the medium term and improving with volume growth

· Other / exceptional

o Net non-cash items of c.£1m income per year from unwind of onerous lease provisions and loan arrangement fees

· Capex

o Maintenance capex of c.1.25%-1.75% of sales per year

o New site capex of c.£750k-£1,250k per store

· Working capital

o Negative net working capital of 8-10% of net sales in the near term due to pandemic unwind

Hostmore Capital Allocation Framework

Hostmore's underlying capital strategy will be to maintain a strong balance sheet. This results in a target normalised Net Debt / EBITDA leverage range of 0.75x-1.5x. This strategy reflects a balanced approach to the elements of capital allocation below:

The Capital Markets Day materials will be available on the Investor Relations section of Electra's website immediately before the presentations. Joining details for the virtual event will be announced on 28th June 2021.

A further Capital Markets Day, focused on Hotter, will be held later in the year.

For Further Information

Gavin Manson, Chief Financial and Operating Officer, Electra Private Equity PLC 020 3874 8300

John Sunnucks, Sofia Newitt, Vico Partners Limited 020 3957 5045

Notes to Editors

Electra Private Equity PLC:

Electra is a private equity investment trust which has been listed on the London Stock Exchange since 1976. Electra's investment objective is to follow a realisation strategy, which aims to crystallise value for shareholders, through balancing the timing of returning cash to shareholders with maximisation of value.

The Board has decided that the optimal outcome for shareholders, and for further significant longer term value creation, is likely to be to list Electra's two largest remaining portfolio assets, Fridays and Hotter Shoes ("Hotter") on the LSE's Main Market and AIM, respectively (by way of a demerger of Hostmore and,in the case of Hotter, through reclassification of Electra's listing subsequent to the demerger of Hostmore).

Since 1st October 2016, Electra has distributed over £2 billion to shareholders through ordinary dividends, special dividends and share buybacks.

Hostmore

Hostmore will be a hospitality group, with current operations focused on casual dining brand, Fridays, and cocktail-led bar and restaurant brand, 63rd+1st. To be established on its demerger from Electra in the third quarter of 2021, Hostmore will provide a platform on which to further expand both the Fridays, and the new '63rd and 1st' brand, in the U.K. and in other territories,  under the leadership of an experienced team which has a track record of building businesses in the hospitality and leisure sectors.

Hostmore will seek to add rapidly growing, early-stage businesses to its portfolio of complementary brands, exploring opportunities to extend its offering into other experience-led hospitality and leisure concepts.

Fridays

Fridays is the UK franchise of the American themed restaurant chain acquired by Electra Private Equity in 2014. Fridays trades through 86 restaurants across the UK offering authentic American food, an innovative cocktail list and a high level of service.

The experienced management team appointed in 2019/2020 have transformed the business while navigating the Covid-19 crisis through a range of strategic initiatives including a complete overhaul of brand identity, the development of the 4D strategy to provide customers with greater choice and flexibility, and the identification of three core pillars from extensive customer research - quality, relevance & simplification.

Fridays outperformed the market in 2020 during the period dine-in was open and it is well-positioned to capture maximum upside post-pandemic with a growing rollout of sites and strong opportunities for site acquisition.

63rd+1st

Hostmore's second branded offering in the UK, the city-based, cocktail-led bar and restaurant, 63rd+1st, was launched in Cobham on reopening in May 2021.

Inspired by the site of the first Fridays in Manhattan where 63rd Street and 1st Avenue met, 63rd+1st delivers the personality of Fridays, with greater emphasis on cocktails and upmarket food ingredients. Offering a wide range of premium cocktails, spirits, beers and wine, 63rd+1st provides customers with a sophisticated tone that is still grounded in the same New York heritage and energy.

This brand has been developed in response to growing consumer demand for all-day venues and members clubs and boutique hotel style environments where customers can work, rest and socialise. 63rd+1st is aiming to open seven additional sites in targeted city centres and high streets across the UK by the end of 2022, with scope for 20+ by 2024.

Hotter Shoes

Hotter Shoes is the UK's largest shoe manufacturer with a strong focus on comfort and service. Coinciding with the implementation of its new operating model, in October 2020 Hotter launched its "freesole", "cushion +" and "stability +" product ranges which incorporate differentiating technology to meet customers' needs beyond the core brand promise of uncompromising comfort and fit.

Hotter's product has continued to develop in 2021 with further focus on differentiating technology in the spring/summer range launched in late February, to be expanded further in future product collections.

The optimisation of its operating model in 2020 improves Hotter's situation and gives it the opportunity for growth as a digital direct to consumer business serving its existing UK and US markets, supported by a small, strategic UK retail estate. Whilst Hotter is relatively early in the demonstration of sustained growth and profitability in its new model, the resilience and performance to date give Electra grounds for confidence in its development as an increasingly profitable digital business serving its target demographic of over-55-year-olds in the UK, the US and beyond.

-Ends-

Important Information

The contents of this announcement have been prepared by and are the sole responsibility of Electra Private Equity PLC ("Electra").

This announcement is being made for information purposes only in connection with the proposed demerger by Electra of Hostmore and the admission of the entire issued and to be issued share capital of Hostmore to the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of the London Stock Exchange plc ("Admission") and does not purport to be full or complete.

This announcement does not constitute an offer or invitation to sell or issue, or a solicitation of an offer or invitation to purchase or subscribe for any securities in any jurisdiction nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with any contract therefor.

In particular, this announcement does not constitute an offer or invitation to sell or issue, or a solicitation of an offer or invitation to purchase or subscribe for, any securities in the United States. The shares of Hostmore have not been, and will not be, registered under the US Securities Act of 1933, as amended (the "US Securities Act"), and may not be offered or sold in the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act, and in compliance with any applicable State or local securities laws.

This announcement may not be relied upon for the purpose of entering into any transaction and should not be construed as, nor be relied on in connection with, any offer, invitation or inducement to purchase or subscribe for, or otherwise acquire, hold or dispose of any securities of Electra and/or Hostmore and shall not be regarded as a recommendation in relation to any such transaction whatsoever.

HSBC Bank plc ("HSBC"), which is authorised by the Prudential Regulation Authority (the "PRA") and regulated in the UK by the Financial Conduct Authority (the "FCA") and the PRA, and Numis Securities Limited ("Numis"), which is authorised and regulated in the UK by the FCA, are acting as financial advisers exclusively for Electra and Numis is acting exclusively as sponsor for Hostmore and in each case for no one else in connection with the demerger, Admission or any other matters described in this announcement and will not regard any other person as a client in connection with the demerger, Admission or any other matters described in this announcement or be responsible to anyone other than Electra and Hostmore for providing the protections afforded to clients of HSBC or Numis (as applicable) nor for providing advice in connection with the demerger, Admission, or any other matters referred to in this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on HSBC or Numis by the Financial Services and Markets Act 2000 or the regulatory regime established thereunder, neither HSBC or Numis nor any of their respective affiliates, directors, officers or employees owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, consequential, whether in contract, in tort, in delict, under statute or otherwise) to any person who is not a client of HSBC or Numis (as applicable) for the contents of this announcement or its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, or by any other person(s) in connection with the demerger, Admission, this announcement, any statement contained herein, or otherwise.

Certain statements made in this announcement are forward-looking statements and by their nature, all such forward-looking statements involve risk and uncertainty. Forward-looking statements include all matters that are not historical facts and often use words such as "expects", "may", "will", "could", "should", "intends", "plans", "predicts", "envisages" or "anticipates" or other words of similar meaning. These forward-looking statements are based on current beliefs and expectations based on information that is known to Electra at the date of this announcement. Actual results of the Electra Group (being Electra and its subsidiary undertakings from time to time), the Hostmore Group (being Hostmore and its subsidiary undertakings from time to time) and/or their respective industries may differ from those expressed or implied in the forward-looking statements as a result of any number of known and unknown risks, uncertainties and other factors, including, but not limited to, the effects of the COVID-19 pandemic and uncertainties about its impact and duration, many of which are difficult to predict and are generally beyond the control of Electra and/or Hostmore. Persons receiving this announcement should not place undue reliance on any forward-looking statements. Unless otherwise required by applicable law or regulation, each of Electra, Hostmore and their advisers (including HSBC and Numis) disclaims any obligation or undertaking to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.