Debt-laden convenience stores group Alldays today pledged to find a way to free more cash for improving its portfolio of high street shops.

Alldays said it was shackled by its debt burden as interest payments left the Hampshire-based firm with little money for store modernisation.

The company's borrowing levels spiralled last year after completing the buyback of stores from franchisees.

Chairman Alan Cole said the restructuring of Alldays was now complete, although further work on its financial position was critical.

He added: "The level of borrowings is undermining our ability to improve our profits by investing in the business.

"After paying our interest bill, there is only a limited amount of cash available for modernising our stores."

He said banks had extended credit facilities worth £193 million until April 2003, although a financial reconstruction to lower the debt was still needed.

At an operational level, Alldays said it had "taken a positive first step on the road to recovery" after introducing a new management team.

Alldays posted operating profits before exceptional items of £2.8 million in the year to October 29, compared with a loss of £700,000 a year earlier.

Like-for-like sales were also ahead 4.5%, although turnover fell by £1.8 million to £524.9 million after a number of stores were sold.

The sales performance improved towards the end of the financial year as Alldays ditched an earlier low pricing initiative after failing to generate sufficient sales to cover its lower margins.

Mr Cole said the management team was now "entirely focused" on increasing profits in all of its 637 stores.

Staff wages are being improved and more comprehensive training schemes introduced: "This will enable us to attract and retain better quality staff in our stores which in turn will lead to more sales."

Shares in the company surged 6% following the update. Pre-tax losses narrowed to £7.3 million from £64.1 million a year earlier when figures included a raft of one-off items.