21 May 2024

Comptoir Group Plc

("Comptoir", the "Group" or the "Company")

 

FY 2023 Results - A year of positive growth and expansion

 

 

Comptoir Group Plc (AIM: COM), the owner and/or operator of Lebanese, Middle Eastern and North African inspired restaurants announces its audited annual results for the 52 week period ended 31 December 2023.

 

 

Highlights:

 

·      Group revenue of £31.5m, up by 1.4% (2022: £31.0m), up by 1.3% like for like

·      Total system sales* of £42.4m, an increase of 6.7% (2022:£39.8m), with a like for like system sales growth of 3%

·      Gross profit of £24.7m, ahead on last year by £0.3m (2022: £24.4m)

·      Adjusted EBITDA** before highlighted items of £0.1m (2022: £2.8m)

·      IFRS profit after tax of £1.6m loss (2022: £0.6m)

·      Net cash and cash equivalents at the end of year of £7.0m (2022: £9.9m)

·      Basic earnings per share of 1.30p loss (2022: 0.48p)

·      Portfolio expansion with new openings at Ealing (2023) and Southbank (2024), as well as switching Cheshire Oaks from a franchised to equity model and opening a new Shawa franchise in Abu Dhabi in 2024

·      Currently trading in 28 stores: 22 managed and 6 franchised

 

 

Beatrice Lafon, Non-Executive Chair, commented:

"FY 2023 results reflect the continued effects of the consolidation strategy the board put in place in August 2022 to rebuild the teams after the pandemic, manage the headwinds created by the inflationary pressures on wages, ingredients and utility costs in particular whilst establishing a strong foundation for growth.

Full year EBITDA at £0.1m was in line with management expectations. Sales grew by 1.4% to £31.5m, GP grew 1.1% last year to £24.7m, colleague retention improved, over 90% of our teams were trained in our new 'Generous Hospitality' training, all brands benefited from a total revamp of our menus to increase the mixof plant based options, whilst offering ever more new and authentic recipes. Growth in NPS, now at over 74% on a rolling 12 months basis and continued reduction in staff turnover, give us confidence in the value of our plan for the medium term.

In 2023, the board also chose to invest in our infrastructure, to create a resilient supply base and to take steps to progress with our ESG roadmap. We have started to invest in green technology, updated both our sourcing policies and partners, and designed menus more coherent with our carbon neutral goals.

At publication of this report, we are trading with 28 stores (22 managed, 6 franchised), having closed Leeds in January 2023 and opened Ealing in October 2023.

So far in 2024, we have opened a new franchised Shawa in Abu Dhabi, a new directly managed Comptoir Flagship in Southbank, closed Yalla Yalla Soho and brought Cheshire Oaks into the managed portfolio.

We started a refurbishment program, with Duke of York Sq Chelsea reopening mid May with London Bridge and Westfield London to follow later this year. All our terraces have been refurbished, well ahead of the start of the season.

Our investments in tech continue, for instance our first labour productivity tool is now in place. A new digital strategy came into force in March 24, with the launch of new websites, online booking systems and new online partnerships.

By Summer 2024, a brand-new senior leadership team will be in place, to allow the Group to scale to new heights.

On behalf of the board, I would like to thank all our colleagues who worked tirelessly to transport our guests to a happy place, every time. We are proud of how well our colleagues are adapting to new ways of working, placing our famous hospitality and amazing food at the core of all they do. I would also like to thank our senior executive team, our old and new partners and shareholders for enabling all the changes to land successfully.

We remain optimistic and cautious about 2024 as costs and prices continue to rise in high single and double digits and footfall remains both challenged and erratic. We are focussed on executing our Plan well, to be in a strong position to capitalise on any demand recovery.

The business enters 2024 with renewed energy and a new team, a balanced portfolio of brands and locations and a strong cash position."

*System sales are defined as total sales for equity and franchise restaurants.

** Adjusted EBITDA was calculated from the (loss)/profit before taxation adding back net interest cost, depreciation, share-based payments and non-recurring costs (note 3).

Annual Report and Notice of AGM

The Company confirms that it has posted its 2023 Annual Report and Accounts to shareholders together with the 2024 Notice of AGM and forms of proxy. The AGM will be held at 9.00am on 26 June 2024 at 6th Floor, Winchester House, 259-269 Old Marylebone Road, London, NW1 5RA.

The 2023 Annual Report and Accounts and Notice of AGM 2024 are available on the Company's website.

 

Enquiries:

 

Comptoir Group plc                                                     via Camarco

Beatrice Lafon, Non-Executive Chair

Nick Ayerst, CEO

Peter Harvey, Interim FD

 

Cavendish Capital Market Limited (Nominated Adviser and Broker)

Simon Hicks                                                                 0207 220 0500

           

Camarco (press enquiries)

Jennifer Renwick                                                           [email protected]

Letaba Rimell

 

 

 

 

 

Notes to Editors

  

Comptoir Group PLC owns and operates 28 Lebanese restaurants, six of which are franchised, based predominately in the UK. The flagship brand of the group, Comptoir Libanais, is a collection of 22 restaurants located across London, nationwide and international Travel Hubs, including cities such as Manchester, Bath, Birmingham, Oxford and Dubai.

 

The name Comptoir Libanais means Lebanese Counter and is a place where guests can eat casually and enjoy Middle Eastern and North African food, served with warm and friendly hospitality and a bright vibrant environment.

 

The Group also operates Shawa, serving traditional shawarma through a counter service model in Westfield and Bluewater shopping centres [as well as Zayed International Airport]. Yalla-Yalla near Oxford Circus, and a live entertainment venue Kenza, located in Devonshire Square, London.

 

The group has expanded internationally with its franchise partners HMSHost, with restaurants in the UK, the Netherlands and the Middle East.

 

Chief Executive's Review

 

The Group started 2023 with good momentum, despite the economic headwinds affecting the industry as a whole.

 

Our strategy to grow through organic sales, new openings and franchising is bearing fruit and I am pleased to report that each strand of these strategic pillars grew in the last year. Whilst our group revenue grew, our costs increased as a result of food cost inflation, a further increase in the minimum wage and, for a period, energy bills that were three times that of years previous. We were also significantly impacted by 30 days of strikes on rail and the London underground in 2023, which we estimate represents lost income of c. £300,000.

 

With the support of the Board, we have strengthened our senior leadership team, bringing in highly experienced colleagues who will help shape our culture and build on our operational excellence and financial performance. We successfully opened a new Comptoir Libanais in Ealing during the period, which is trading in line with expectations, and we opened a prominent site on London's Southbank in April 2024.

 

Total like for like system sales grew +3.0% in 2023 over 2022. Within this, our equity restaurants delivered like for like growth of +1.3%. Despite this growth, increasing covers proved a challenge during the year, against a backdrop of increasing mortgage rates and rent rises, but we are pleased that cover performance trend has improved in Q1 of 2024.

 

Despite facing pricing challenges, we have effectively managed price increases for guests through strategic menu engineering and leveraging benefits from our supply chain efficiencies. As a result of our recent consolidation of distribution and our strong relationships with suppliers, we have been able to minimise the impact of margin erosion to 0.2%.

 

While energy costs remained high for the majority of the year, particularly after the government's support was withdrawn, in the fourth quarter of the year we transitioned to a two year flexible pricing model, delivering the best unit costs currently available.

 

People, Values and Culture

We continually strive to create a culture and work environment that attracts motivated employees who feel recognised and rewarded for their efforts.

 

We are proud of the progress we have made in our gender pay gap and we now have a Median Pay Gap in favour of our female colleagues, together with strong representation in our senior leadership team. We have had a fair tronc scheme to distribute our service charge for a number of years with only small changes required to comply with the new legislation. It is clear that to succeed in difficult times you need to not only be great at fantastic food and brilliant environments, but deliver on hospitality as well and our people and our culture are a huge asset.

 

Technology

Investing in technology has been crucial for enhancing guest service and supporting ongoing projects to streamline labour efficiency. Our successful trial and ongoing rollout of Kitchen Display Screens (KDS) have improved service speed and reduced guest complaints. The majority of our restaurants have adopted tablet ordering for our teams and we have integrated our payment systems which has increased efficiency of taking orders and expediates table turnover during peak times. We continue to work with our digital ordering platform to improve functionality for our guests.

 

Guest Satisfaction

In 2023, we made significant investments to improve our guest service scores. Historically our guests have always appreciated our fresh, healthy and delicious food offerings, and bright, bold and eclectic interiors but felt our hospitality fell short compared to leaders in the sector. To address this, we have implemented a 'Generous Hospitality' programme, retraining each team member to understand what it takes to make a positive impact on our guest's experience. As a result of these efforts, our Net Promoter Score (NPS) has increased to 74% and our social score has also improved throughout the year.

 

Guest understanding

As a result of a variety of qualitative and quantitative research we now have a far better understanding of Comptoir Libanais' guests, what they think of us, how often they visit and how we best communicate with them to increase frequency of visit and spend.

 

To facilitate these improvements, we have made changes to our website, CRM partners, booking platform and digital agency and can track return on marketing investment much better than previously through use of personalised communication.

 

Franchising

Franchising is an integral part of the Group's strategy. In 2023 Comptoir Libanais system sales totalled £35m, with 65% originating from our equity estate and 35% from franchisees. In early 2024, we took back the Avolta franchised site in Cheshire Oaks as they refocus on travel hub operations. Simultaneously, we opened a new Shawa restaurant in Zayad International Airport, our first restaurant in Abu Dhabi and first franchised Shawa restaurant.

 

During the year we signed a new partnership with AREAS, a global travel hub food operator, and are on track to open in Milan airport this summer. With the robust performance of existing sites and recent openings trading well we will be looking to grow the number of our franchise partnerships and restaurants.

 

Delivery platforms

The enhancement of our delivery services including delivery menu, dish presentation, packaging and working with our delivery partners on strong ROI promotional activity has led to delivery performing well in 2023, particularly within Comptoir Libanais. As part of the Group's growing commitment to its responsibilities across all areas of ESG, we have ensured all of our delivery packaging is recyclable.

 

Outlook

The hospitality industry has been significantly impacted by a maelstrom of economic factors which have influenced guests spending habits and led to higher operational costs. I expect it will take a further 2-3 years before we can adjust pricing sufficiently to fully return to pre-Covid EBITDA margins. Nonetheless, we made progress with cost reductions in the latter part of 2023, particularly in energy management, and have continued this momentum into 2024.

 

I am particularly excited by the work we have done to better understand our guests and our market position in Comptoir Libanais which together with our focus on consistency in food quality and hospitality has delivered like for like sales growth in Q1 and increasing guest satisfaction.

 

In order to focus management's time on growth brands we have streamlined Yalla Yalla's operations by closing a location that doesn't align with our future business ambitions at its lease end and aligning back of house systems in the remaining restaurant to gain operational efficiencies.

 

Shawa continues to present a significant growth opportunity, with existing sites performing well and encouraging early results from our franchise location in Abu Dhabi.

 

The focus for the rest of 2024 and into 2025 remains on growing covers both through our improved understanding and connection with existing guests increasing their frequency of return and encouraging trial by new guests. Across the group we continue to work on menus, labour efficiencies and cost management to improve the Groups EBITDA delivery to compelling numbers. We have confidence that our strategy will deliver top line growth, improved margins and improved profitability that will enable us to continue our new opening plans.

 

Finally, I would like to thank all my colleagues for their contributions to re-starting the growth within the Group and their efforts to navigate external pressures. Comptoir Group has strong foundations with its current estate, a robust cash position and an excellent team.

 

I look forward to further growth and success for the business in the years ahead.

 

Nick Ayerst - Chief Executive Office

21^st May 2024

 

 

 

2023 Financial Highlights - Interim FD Review

 

Overview

A solid year for the group, underpinned by sales growth and a proactive response to external cost challenges.

Comptoir Group retains a strong cash position following a transformative year, as we continued to set the business up for future success. We are now in a good position to prosper from new openings, a return to consumer confidence and a softening in the rate of cost base increases.

 

The Group delivered positive adjusted EBITDA, despite the considerable impact of cost increases. By focusing on the things within leaderships control, we were able to generate solid cash from operations. This positions Comptoir Group to be best placed to serve guests, when the macroeconomic uncertainty reduces, and consumers are ready to dine out.

 

The KPIs of the Group's performance are summarised below:

 

		31 December 2023	1 January 2023	Variance
Revenue		£31.5m	£31.0m	1.4%
Gross profit		£24.7m	£24.4m	1.1%
Other Costs		£26.3m	£23.9m	10.3%
(Loss)/profit for the period		-£1.6m	£0.6m	-371.9%
Cash generated from operations		£2.3m	£4.4m	-47.6%
Adjusted EBITDA (Pre IFRS 16) 1		£0.1m	£2.8m	-97.8%
Net Cash2		£5.4m	£7.7m	-29.5%
1  Defined as statutory operating profit before interest, tax, depreciation and amortisation (before application of IFRS16 and excluding exceptional costs) and reflects the underlying trade of the Group.
2  Defined as cash and cash equivalents less loans and borrwings.

 

 

Revenue

Revenue of £31.5m, from £31.0m in 2022 was a growth of +1.4%. This was despite Q1 2022, benefitting from lower VAT rates as one of the final support hangovers put in place through the global pandemic ended at the end of March 2022.

 

The group entered 2023 with 21 equity restaurants, with Leeds closing in January 2023, offset by opening of Ealing in October 2023, taking the equity estate back up to 21. Our franchised estate of 6 restaurants traded consistently throughout 2023.

 

Including franchise and equity restaurants, total system revenues of £42.4m (2022: £39.8m) were delivered through 2023.

 

Gross profit

The team worked very closely with our supply partners through 2023 and made some huge steps forward
in optimising our cost base, yet with cash margin increasing by +1.1%, from revenue growth of +1.4%, the benefit is not instantly obvious until you factor in the significant double digit (up to 20% at its peak) food inflation that has been absorbed within this.

 

These factors manifested the modest downward movement in Gross Margin percentage from 78.7% in 2022 to 78.5%, a 0.2% reduction.

 

However, if 2022 had not benefitted in Q1 from a reduced VAT rate of 12.5%, year on year total Gross Margin percentage in 2023 would have been a +0.1% improvement over 2022, despite the cost base increases.

 

Other costs

It was a turbulent year for all other costs throughout 2023 for the reasons already mentioned earlier in this report, with Comptoir Group not being immune from those external factors.

Most significantly impacting the business was the huge, unprecedented increase in utility costs which more than doubled with a 129% increase versus 2022, a UK wide phenomena, together with the unwinding of business rates relief, which increased costs by 21% versus prior year.

 

Other notable fixed costs also saw increases, with rent growing by 15% as we secured longer term tenures,
and corporate cost increases in Head Office and Plc costs associated with rebuilding and re-establishing a new Board and senior leadership team. All combined our cost base increased by more than +10%.

 

The outlook will see food inflation drop to below double digits in the first quarter of 2024 expecting to settle
at between 7%-8% for the balance of 2024. Whilst proactive action has already been taken to de-risk utility costs by contracting through to Autumn 2025 with options being explored into future years.

 

Adjusted EBITDA

 

 

	Post IFRS 16	Pre  IFRS 16	Post IFRS 16	Pre  IFRS 16
	31 December 2023	31 December 2023	1 January 2023	1 January 2023
	£	£	£	£
Sales	31,480,609	31,480,609	31,046,546	31,046,546
Adjusted EBITDA:
(Loss)/profit before tax	(1,645,105)	(1,410,764)	902,450	578,609
Add back/(deduct):
Depreciation	3,328,567	1,124,210	3,252,841	1,124,243
Finance costs	1,019,154	136,551	1,042,697	94,078
Finance income	(94,147)	(94,147)	-	-
Impairment of assets	107,316	-	78,266	-
EBITDA	2,715,785	(244,150)	5,276,254	1,796,930
Share-based payments expense	30,541	30,541	15,377	15,377
Restaurant opening costs	165,535	165,535	-	-
Loss on disposal of fixed assets	8,940	8,940	8,188	8,188
Exceptional legal and professional fees	101,145	101,145	1,002,054	1,002,054
Adjusted EBITDA	3,021,946	62,011	6,301,873	2,822,549

 

 

 

Cash flow and balance sheet

Cash generated from operations decreased to £2.3m in FY23 (2022: £4.4m). Despite marginal gross profit improvements macroeconomic pressures on utilities, wages, rent and rates squeezed operating profit margins, along with the majority of the UK operating companies. Coupled with additional expenditure on property, plant and equipment increased as the Group invested in the estate and to the improvement of technology.

 

Financing and net debt

The Group had a cash and cash equivalents balance of £7.0m on 31 December 2023 and a net cash position of £5.4m (2022: £7.7m). The Group debt consists of a CBIL loan attracting no covenants, of which £0.6m was paid down through 2023. This has a six-year term with a maturity date in 2026. The loan had an initial interest-free period of 12 months followed by a rate of interest of 2.5% over the Bank base rate.

 

Throughout 2023, the group started to proactively manage its positive cash balances to generate interest earned and reduce interest paid, compared to prior years.

 

Impairments

Impairment cost in the period related to the lease exit of Yalla Yalla in Soho.

 

Dividend

The Directors do not recommend the payment of a dividend, believing it more beneficial to use cash resources to invest in the Group in line with our strategy.

 

Going concern

Upon consideration of this analysis and the principal risks faced by the Group, the Directors are satisfied that the Group has adequate resources to continue in operation for the foreseeable future, a period of at least twelve months from the date of this report. Accordingly, the Directors have concluded that it is appropriate to prepare these financial statements on a going concern basis.

 

Peter Harvey - Interim Finance Director

21^st May 2024

 

 

 

Strategic Report

For the period ended 31 December 2023

 

At a glance

 

Comptoir Group is a dynamic, bold and innovative hospitality company committed to delivering exceptional hospitality experiences that celebrate the rich cultural heritage of Lebanon, the wider Middle East, and North Africa.

 

With a passion for our food and a focus on quality ingredients our restaurants offer an authentic taste
of the regions diverse and vibrant cuisine. We are dedicated to providing outstanding guest hospitality by creating a unique welcoming and inviting atmosphere that not only transports our guests to a happy place it also encourages our guests to want to come back time and time again.

 

Our Vision is that one day Lebanese food and culture will be as widely understood and enjoyed as Italian is today by sharing our love of the regions food and culture with the wider world. We do this through our Mission of spreading the Lebanese joy of sharing one plate at our time all under pinned by living our Values,
of Togetherness, Freshness, Happiness and Generosity.

 

We operate a collection of complementary brands, the largest of which is Comptoir Libanais, founded 15 years ago by Tony Kitous, a serial restaurant entrepreneur within our chosen marketplace.

 

The Directors present their strategic report for the period ended 31 December 2023.

 

Business model

The Group's principal brand is Comptoir Libanais, a Lebanese, Middle Eastern and North African focused casual dining brand. The restaurants offer an all-day dining experience based around healthy and fresh food in a friendly, colourful and vibrant environment, which delivers value for money to a broad demographic of guests. Lebanese and Eastern Mediterranean food is a popular food trend due to its flavoursome, healthy, low fat and vegetarian-friendly ingredients as well as the ability to easily share the food with friends.

 

We seek to design each Comptoir Libanais restaurant with a bold and fresh design that is welcoming to all age groups and types of consumers. Each Comptoir Libanais restaurant has posters and menus showing an artist's impression of Sirine Jamal al Dine, an iconic Arabian actress, providing a Middle Eastern café-culture feel.

 

Shawa is a Lebanese shawarma grill concept-serving lean, grilled meats, rotisserie chicken, homemade falafel, halloumi and fresh salad, through a service counter offering, located in high footfall locations, such as shopping centres.

 

The average net spend per head over 2023 at Comptoir Libanais was £20.21 (2022: £19.22) and the average spend at Shawa is lower at £14.32 (2022: £13.61), positioning our offering in the affordable or 'value for money' segment of the UK fast casual dining market. In addition, our offering is well-differentiated and faces limited direct competition, in marked contrast to other areas of the market.

 

Strategy for growth and future developments

Our strategy is to continue to grow through organic sales increase and increasing our owned-site operations under both the Comptoir Libanais and Shawa brands. While Comptoir Libanais is likely to remain the principal focus of our operations, Shawa provides the opportunity to offer our Lebanese food from a smaller footprint and therefore create greater flexibility to our roll-out plans.

 

We continue to believe that there is considerable potential to grow the Group's franchised operations
and we see this as a complimentary and relatively low-risk route to extend the presence of our brands, both within the UK and in overseas territories. We saw the opening of another site with our franchise partner Avolta in Abu Dhabi in Q1 2024 and with our new partner AREAS a new Comptoir Libanais site Milan is expected to open in H2 2024, evidencing our belief in this route to market.

 

We seek to maximise the dining experience in all our restaurants with alfresco and dine-in experiences as well as the UK delivery market. This is combined with the use of technology to ensure we deliver the speed, service and hospitality that guest require.

 

Review of the business and key performance indicators (KPIs)

The continuing macro-economic pressures, high inflation, cost of living crisis and loss of government support versus 2022 at the end of the first quarter continued to challenge the performance of the Group and was reflected in the comparison to the 'supported' 2022 outturn. As a result, Group revenue showed moderate growth of 1.4% at £31.5m (2022: £31.0m) and the Consolidated Statement of Comprehensive Income shows a post-tax loss of £1.6m (2022: £0.6m profit). However, as stated above, at this stage in the development of the business the Board believes that it is more helpful to focus on adjusted EBITDA, which excludes non-recurring items and costs incurred in connection with the opening of new restaurants and on this measure, the underlying earnings of the group were £0.1m profit (2022: £2.8m), despite the economic and global uncertainties, and sector specific pressures described elsewhere in this report.

 

The Board and management team use a range of performance indicators to monitor and measure
the performance of the business. However, in common with most businesses, the critical KPI's are focused on growth in sales and EBITDA, and these are appraised against budget, forecast and the levels achieved last year.

 

In terms of non-financial KPIs, the standard of service provided to customers is monitored via the scores from a programme of regular monthly "mystery diner" visits to our restaurants carried out by HGem, providing a Q4 Net Promotor Score (NPS) of 74% (Q1 2023 was 32%).

 

We also use feedback from health and safety audits conducted by an external company (Food Alert) to ensure that critical operating procedures are being adhered to.

 

Further explanation of the performance of the business over the period is provided in the Chair's Statement and the Chief Executive's Review.

 

 

Principal risks and uncertainties

The Board has overall responsibility for identifying the most significant risks faced by the business and for developing appropriate policies to ensure that those risks are adequately managed. The following have been identified as the most significant risks faced by the Group, however, it should be noted that this is not an exhaustive list and the Group has policies and procedures to address other risks facing the business.

 

Consumer demand

Any weakness in consumer confidence could have an adverse effect on footfall and guest spend in our restaurants. The previously reported impact of Covid-19 virus demonstrated the significant impact on the hospitality sector and the wider UK and global economy, on the devastating impact all in the industry felt, and whilst we were looking forward to a period of normality and return to business as usual, nobody anticipated the macroeconomic downturn and its impact on customer confidences through uncertain times.

Frequent or regular participation in the eating-out market is afforded by the consumer out of household disposable income. Macroeconomic factors such as employment levels, interest rates and inflation can impact disposable income and consumer confidence can dictate their willingness to spend.

 

Through such times the Board focussed on setting the business up to maximise profitable revenue when the confidence returns for consumers. As indicated above, the core brands within the Group are positioned in the affordable segment of the casual dining market. A strong focus on superior and attentive service together with value-added marketing initiatives can help to drive sales when guest footfall is more subdued. This, together with the strategic location of each of our restaurants helps to mitigate the risk of consumer demand to the business.

 

Input cost inflation

The Group's key input variables are the cost of food and drink, associated ingredients and the sizable and progressive increases in the UK National Living Wage and Minimum Wage rates continue to present a challenge which we face into alongside our peers and competitors, as we strive to help our team deal with recent years cost of living crisis. We aim to maintain an appropriate level of flexibility in our supplier base so we can work to mitigate the impact of input cost inflation. Our teams work hard on predictive and responsive labour scheduling so that our costs are well controlled.

 

Economic conditions

The war in the Ukraine has direct consequences on the cost of fuel and will also impact various
food staples over the next 12 months that continues to require proactive management.

 

The pressure of the cost-of-living crisis on living standards and subsequent deterioration in consumer confidence due to future economic conditions have a detrimental impact on the Group in terms of footfall and sales. This risk is mitigated by the positioning of the Group's brands, within the affordable segment of the casual dining market. Continued focus on customer relations and targeted and adaptable marketing initiatives help the Group retain and drive sales where footfall declines.

 

Labour cost inflation

Labour cost pressures that are outside of the control of the Group, such as auto-enrolment pension costs, National Minimum Wage and Living Wage increases, Employee and Employer NI increases, and the apprenticeship levy, are endured by the Group and its competitors. Labour costs continue to be regularly monitored and ongoing initiatives are used to reduce the impact of such pressures.

 

Strategy and execution

The Group's central strategy is to open additional new outlets under its core Comptoir Libanais and Shawa brands. Despite making every effort, there is no guarantee that the Group will be able to secure a sufficient number of appropriate, economically affordable sites to meet its growth and financial targets and it is possible that new openings may take time to reach the anticipated levels of mature profitability or to match historical financial returns.

 

The Group utilises the services of external property consultants and continues to develop stronger contacts and relationships with potential landlords as well as their agents and advisers. However, there will always be competition for the best sites and the Board will continue to approach any potential new site with caution and be highly selective in its evaluation of new sites to ensure that target levels of return on investment are achieved.

 

 

On behalf of the Board

Nick Ayerst - Chief Executive Office

21^st May 2024

 

 

 

Strategic Report

Climate Related Financial Disclosure

 

Energy Consumption and Carbon Emissions

Comptoir Group PLC have included the recommendations set out by the Task Force on Climate change (TCFD) in this year's report. These recommendations help businesses to focus on the likely direct and indirect impacts of climate change for individual organisations, their operations, services and customer base.

 

The TCFD framework utilises four key pillars which have been adopted by Comptoir Group as the key areas of focus. Aligned to these four pillars are 11 recommendations, which provide guidance as to how to ensure that management processes, analyses and business planning give sufficient consideration to the impact of climate change on the operation.

 

Greenhouse gas emissions and energy use data for the period ended 31 December:

 

Annual Energy Consumption (KWh)	Current Reporting Year, 01/01/2023 - 31/12/2023	Comparison Year, 01/01/2022-31/12/2022
	£	£
Scope 1	2,381,158	2,682,126
Stationary Combustion	2,317,934	2,617,319
Mobile Combustion	63,224	64,807
Process Emissions	N/A	N/A
Fugitive Emissions	N/A	N/A
Scope 2	2,514,088	2,734,638
Purchased Electricity	2,514,088	2,734,638
Purcahsed Steam, Heat, Cooling	0	0
Scope 3 (Grey Fleet)	19,230	56,636
Grey Fleet	19,230	56,636
Total	4,914,477	5,473,397

 

 

Governance

The CEO has ultimate responsibility for ESG. Comptoir Group PLC has appointed an ESG Committee, which meets quarterly to assess climate risk and opportunities and to set strategy and targets to address said risks and opportunities. The Chair, non-Exec Director, CFO and CEO sit on the ESG committee.

 

The ESG committee prioritises the response to potential climate related risks & opportunities, depending on the potential magnitude, likely financial impact and opportunities to adopt mitigation practices. Detailed updates on ESG are included in the monthly report to the board.

 

To deliver our targets, 8 cross functional working groups meet quarterly. They are tasked with ensuring ESG goals are embedded into all aspects of our business.

 

Strategy

To identify actual and potential impacts of climate- related risks and opportunities on the organisation's processes, strategy, and financial planning, Comptoir Group embarked on an audit in conjunction with the Sustainable Restaurant Association (SRA). This took the form of a detailed investigation on all operations which has enabled Comptoir Group to identify potential risks & opportunities and set realistic goals for improvement.

 

We have assumed a climate transition scenario of 2OC, in line with guidance provided by the Department of Business, Energy & Industrial Strategy. A rise in global temperatures of around 2OC will likely increase the number of severe weather events, such as flood and droughts, impacting the world's main food producing regions. Under this climate transition scenarios, we have identified the following potential risks.

 

Short term (less than two years):

·      Supply chain disruption and shortages of impacted crops: we source salad, citrus, chillis, aubergine and pomegranates from regions which are potentially at risk in the case of a temperature increase of 2OC. This would impact around £400k worth of stock (equivalent to 7% of all food spend)

·      Higher energy costs due to increased demand for artificial heating/cooling and irrigation

 

Medium term (two-five years)

·      Potential changes to statutory obligations regarding waste disposal

·      The Department for Business, Energy and Industrial Strategy has calculated that a carbon tax of £80 per tonne would have the desired impact on carbon emissions. The liability for Comptoir Group would be in the region of £80k p.a. based on current emissions levels, if this was introduced

·      Increased competition for new sites which offer public transport accessibility, infrastructure resilience in the light of extreme weather events, and access to renewable energy

 

Long term (more than five years)

·      Infrastructure and buildings will require increased investment to withstand changing weather patterns and an increase in extreme weather events, particularly flooding

·      Weather related travel disruption impacting customers and staff

·      Increased requirement for HVAC in warmer weather reduced use of terraces and outdoor areas due to increased rainfall in UK

 

Comptoir Group have also identified the following opportunities:

·      Comptoir's operations exhibit low wastage methods of production, careful stewardship of specialist producers and natural, unprocessed foods which will increasingly appeal to a growing cohort of eco conscious consumer

·      Our menus have a strong emphasis on plant based food. More than half of the menu items across
all brands are plant based, without any ultra processed ingredients

·      We source specialist ingredients from smaller, low intensity producers who prioritise the preservation of local ecosystems, thus enhancing long term opportunities for sustainable sourcing

·      We are building stronger relationships with suppliers who can switch to lower carbon methods of production and transportation

·      We have allocated capex for investment in technology, such as voltage optimisation and energy monitoring devices to reduce the amount of energy used

 

The consideration of climate related risks & opportunities is integral to all our decision making. ESG considerations are now given priority consideration in all operational decisions, longer term strategy & financial planning as a matter of course. We will continuously strive to ensure that the Group remains adaptable, to anticipate and respond to climate related risks and opportunities.

 

Specifically:

·      Comptoir Group regularly reviews menus and will adapt dishes, ingredients, cooking methods and menus in response to the changing availability of inputs

·      All menus will consist of at least 50% plant-based dishes, anticipating an increase in consumer demand

·      We regularly review the supply markets, with the aim of anticipating potential shortages and supply chain disruption. By adopting creative and flexible sourcing strategies, we can adapt quickly in the short term to ensure long term supply resilience

·      Financial planning allows for investment in equipment, building design, infrastructure and processes to reduce reliance on fossil fuels

·      Budgeting processes and longer term business strategy allow for changes in consumer behaviour
in response to changes in long term weather patterns, such as reduced use of outdoor seating areas

 

Risk Management

We regularly review global supply markets with our suppliers to identify any potential risks to the supply chain, including financial risks. Increasingly, we choose supply partners which prioritise anticipation of and adaptation to climate related risks & opportunities in the medium to long term.

 

In conjunction with the Sustainable Restaurant Association (SRA) and other industry bodies, Comptoir Group keeps abreast of potential changes to the regulatory environment.

 

As well as anticipating and reacting to changes in global supply conditions, supply chain risk is also assessed during the twice yearly menu review process. If required, menus/ dishes/ ingredients can be adapted or alternative supply sources mobilised

 

Physical risks to buildings and infrastructure are assessed during the process of site selection and as part of the capex budgeting process.

 

Financial risks regarding the increased costs of inputs and outputs are assessed during the annual budgeting process and re-evaluated in response to changing market conditions, as required. We also have targets for reducing energy usage and waste, which will minimise any potential cost uplift.

 

Comptoir Group have made it a priority to assess and manage climate related risk. We have a flexible and dynamic approach to menu engineering and ingredient sourcing. Where climate change poses a risk to ingredient availability, we will quickly adapt dishes, ingredients or supply chains to mitigate any risk. We are working hard to lower our carbon emissions and energy usage, which will further increase our resilience in the case of increased taxation or costs associated with energy.

 

Metrics & Targets

Comptoir Group are awaiting the final outcome of the ESOS audit, which will identify Scope 1 emissions and set out targets for reduced Carbon emissions (due June 2024).

 

Comptoir Group has set a target for achieving 2 stars on the 'Food Made Good' rating, awarded by the Sustainable Restaurant Association (SRA), a global industry body established to promote & support organisations who aim to have a more positive impact on the environment and society.

 

The 'Food Made Good' rating uses a framework of questions, which are derived from the 10 key areas
of the UN's Sustainable Development Goals to audit all operational processes and systems. Performance against these criteria is then assessed and awarded an overall rating. In 2023 Comptoir Group was awarded
1 out of 3 stars. We have implemented a roadmap which will address all areas and ultimately improve our rating by one star by August 2025. In addition, we have set ourselves the following targets:

 

·      Reduce energy usage by 10% LFL by the end of 2024 - measured by Cap Energy monitoring devices and Amber (energy brokers)

·      Reduce food wastage by 20% LFL by the end of 2024

·      Reduce carbon footprint on meat by 5% by end 2024

·      Increase UK sourced product lines

 

On behalf of the Board

Nick Ayerst - Chief Executive Office

21^st May 2024

 

 

Strategic Report

Section 172 Statement

This is the second year that the Directors are required to provide a section 172 statement as part of the Strategic report. Below we explain the background to the section 172 statement.

 

Background

Section 172 of the Companies Act 2006 ('Act') requires the Directors to act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, having regard to various factors, including the matters listed below in section.

 

172 (1)(a) to (f):

a. the likely consequences of any decisions in the long-term;

b. the interests of the Company's employees;

c. the need to foster the Company's business relationships with suppliers, customers and others;

d. the impact of the Company's operations on the community and environment;

e. the desirability of the Company maintaining a reputation for high standards of business conduct and

f. the need to act fairly as between members of the Company.

 

This statement is aimed at helping shareholders better understand how Directors discharged their duty
to promote the success of companies under Section 172 of the Companies Act 2006 ("S172 Matters"). Throughout the year, in performance of its duties, the Board has had regard to the interests of the Group's key stakeholders and has taken account of any potential impact on these stakeholders of the decisions it has made. Details of how the Board had regard to the following S172 matters are as per the below.

 

 

S172 Matters	Example
·      The likely consequences of any decisions in the long-term.	·      Communication with shareholders through the Comptoir Investor website, AGM, investor meeting and circulars ·      Through the corporate governance framework described in this annual report
·      The interests of the Company's employees	·      Ongoing training and development at all levels ·      Engagement through the company engagement application, newsletters, emails and other communications tools
·      The need to foster the Company's business relationships with suppliers, customers and others.	·      Maintenance of regular contact with all suppliers. ·      The Comptoir loyalty scheme through the Comptoir application ·      Responding to feedback from the customer. ·      Use of a mystery guest programme to ensure standards are visible and maintained.
·      The impact of the Company's operations on the community and environment.	·      Local recruitment of staff ·      Flexible working to reduce travel where applicable ·      Ongoing focus on environmentally friendly processes and procedures
·      The desirability of the Company maintaining a reputation for high standards of business conduct.	·      Regular restaurant visits and audit processes ·      Mystery guest programme ·      Food standards programme ·      Compliance updates at Board meetings ·      Ongoing training for all staff
·      The need to act fairly as between members of the Company.	·      We maintain an open dialogue with our shareholders ·      Engagement with stakeholders

 

 

On behalf of the Board

Nick Ayerst - Chief Executive Office

21^st May 2024

 

 

Corporate Governance

Statement of Corporate Governance

 

The Board have elected to adopt the Quoted Companies Alliance (QCA) Corporate Governance Code in line with the changes under Rule 26 of the AIM Rules for Companies requiring all companies that are traded on AIM to adopt and comply with a recognised corporate governance code. Full details of our adoption to the code can be found at https://investors.comptoirlibanais.com/corporate-governance/  

 

The Board

The Board of Comptoir Group PLC is the body responsible for the Group's objectives, its policies and the stewardship of its resources. At the balance sheet date, the Board comprised four Directors being Ahmed Kitous and Nicholas Ayerst as executive Directors and Beatrice Lafon and Jean-Michel Orieux as non-executive directors.

 

Beatrice Lafon and Jean-Michel Orieux are considered by the Board to be independent. Each Director demonstrates a range of experience and sufficient calibre to bring independent judgment on issues of strategy, risk management, performance, resources and standards of conduct which are vital for the success of the Group.

 

The Board had twelve Board meetings during the year. Beatrice Lafon is Chair of the ESG committee, Audit and the Remuneration Committees. The terms of reference of these committees have been approved by the Board.

 

Remuneration Committee

The Remuneration Committee's responsibilities include the determination of the remuneration and options of Directors and senior executives of the Group and the administration of the Company's option schemes and arrangements. The Committee takes appropriate advice, where necessary, to fulfil this remit.

 

Audit Committee

The Audit Committee meets twice a year including a meeting with the auditors shortly before the signing of the accounts. The terms of reference of the Audit Committee include: any matters relating to the appointment, resignation or dismissal of the external auditors and their fees; discussion with the auditors on the nature, scope and findings of the audit; consideration of issues of accounting policy and presentation; monitoring. The work of the review function carried out to ensure the adequacy of accounting controls and procedures.

 

Nomination Committee

The Company does not have a Nomination Committee. Any Board appointments are dealt with by the Board itself.

 

Internal control

The Board is responsible for the Group's system of internal control and for reviewing the effectiveness of the system of internal control. Internal control systems are designed to meet the needs of a business and manage the risks but not to eliminate the risk of failure to achieve the business objectives. By its nature, any system of internal control can only provide reasonable, and not absolute, assurance against material misstatement or loss.

 

Internal audit

Given the size of the Group, the Board does not believe it is appropriate to have a separate internal audit function. The Group's systems are designed to provide the Directors with reasonable assurance that problems are identified on a timely basis and are dealt with appropriately.

 

Relations with shareholders

There is a regular dialogue with investors, including presentations after the Group's year-end and half year results announcements. Feedback from shareholders is provided to the Board on a regular basis and, where appropriate, the Board will take steps to address their concerns and recommendations. Aside from announcements that the Group makes periodically to the market, the Board uses the Annual General Meeting to communicate with shareholders and welcomes their participation.

 

Going concern

In assessing the going concern position of the Group for the consolidated financial statements for the year ended the 31 December 2023, the Directors have considered the Group's cash flow, liquidity and business activities. Following the Covid-19 pandemic, the economic environment and its impact on guest confidence to spend has been considered as part of the Group's adoption of the going concern basis. Although trading was impacted over this period, the Group's underlying trading remained positive, and we've continued with selective investment to continually be able to embrace market growth.

 

The Group maintains good cash reserves of £7.0m as at the start of the current accounting period, which sets us apart from many other operators in our sector.

 

The Directors have considered the current business model, strategies and principal risks and uncertainties. Based on the Group's cash flow forecasts and projections, the Board is satisfied that the Group will be able to operate for the foreseeable future. In making this assessment, the Directors have made a specific analysis of the impact of current macro-economic uncertainties and global disruption in the middle East as well as the Ukraine.

 

The Group's current cash reserves remains at £7.0m, and the Board believes that the business has the ability to remain trading for a period of at least 12 months from the date of signing of these financial statements. These financial statements have therefore been prepared on the going concern basis.

 

 

Corporate Governance

Report of the Directors

 

The Directors present their report together with the audited financial statements for the period ended 31 December 2023.

 

Results and dividends

The consolidated statement of comprehensive income is set out on page 47 and shows the profit for the year.

The Directors do not recommend the payment of a dividend for the year (2022: £nil).

 

Principal activities

The Company's and Group's principal activity continues to be that of the operating of restaurants with Lebanese/Middle Eastern offering in the UK casual dining sector.

 

 

Directors

The Directors of the Group, who held office during the year, and their shareholding at the year-end date, were as follows:

 

	Number of ordinary shares	Percentage shareholding (%)
Executive
N Ayerst	-	0.00%
A Kitous	58,412,503	47.60%
B Lafon	-	0.00%
JM Orieux	-	0.00%
M Toon	-	0.00%

 

 

Substantial shareholders

Besides the Directors, other substantial shareholders (with a greater than 3% shareholding) at the period-end date were as follows:

 

Substantial shareholdings:
	Number of ordinary shares	Percentage shareholding (%)
C Hanna	22,585,833	18.41%
Dowgate Wealth Limited	11,088,353	9.04%
S Kaye	5,076,666	4.14%
A Kaye	4,873,332	3.97%
J Kaye	4,249,999	3.46%

 

Directors' remuneration

The remuneration of the Directors for the period ended 31 December 2023 was as follows:

 

	Period ended 31 December 2023			Period ended 1 January 2023
	Remuneration	Pension	Total	Total
	£	£	£	£
N Ayerst	240,300	1,321	241,621	50,210
A Kitous	193,125	1,321	194,446	337,993
B Lafon	65,000	-	65,000	27,303
JM Orieux	45,600	-	45,600	19,197
M Toon (Resigned 5 March 2024)	157,727	1,321	159,048	124,007
C Hanna (Resigned 2 August 2022)	-	-	-	997,254
	701,752	3,963	705,715	1,555,964

 

 

 

Creditor payment policy

The Group has a standard code and also agrees specific individual terms with certain suppliers. Payment is normally made in accordance with those terms, subject to the suppliers' own performance.

 

Employees

Applications from disabled persons are given full consideration providing the disability does not seriously affect the performance of their duties. Such persons, once employed, are given appropriate training and equal opportunities.

 

The Group takes a positive view toward employee communication and has established systems for ensuring employees are informed of developments and that they are consulted regularly. These include engagement at office town hall meetings in person and online, induction days for new starters and weekly communications to all staff highlighting key messages for that week. The company also utilises

a company called Fourth which provides a service that acts as a central hub to provide regular updates as well as engage with employees in a more informal environment and share success stories. The company also operates a bonus and share scheme at varying levels to reward performance.

 

Financial instruments

Details of the use of financial instruments and the principal risks faced by the Group are contained in note 25 to the financial statements.

 

Future developments

Details of future developments are contained in the Strategic Report on page 25.

 

Auditors

All the current Directors have taken all reasonable steps necessary to make themselves aware of any information needed by the Group's auditors for the purposes of their audit and to establish that the auditors are aware of that information. The Directors are not aware of any relevant audit information of which the auditors are unaware.

 

UHY Hacker Young have expressed their willingness to continue in office and a resolution to re-appoint them will be proposed at the annual general meeting.

 

On behalf of the Board

Nick Ayerst - Chief Executive Office

21^st May 2024

 

 

 

Corporate Governance

Statement of Directors' responsibilities

 

The Directors are responsible for preparing the Annual Reports and the Group and Parent Company financial statements in accordance with applicable United Kingdom law and regulations. Company law requires the Directors to prepare Group and Parent Company financial statements for each financial period. Under that law, and as required by the AIM rules, the Directors have elected to prepare Group financial statements under UK- adopted International Accounting Standards (IASs), and the Parent Company financial statements under United Kingdom Accounting Standards.

 

Under Company Law the Directors must not approve the Group and Parent Company financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of the profit or loss of the Group for that period. In preparing the Group and Parent Company financial statements the Directors are required to:

 

·      present fairly the financial position, financial performance and cash flows of the Group and Parent Company;

·      select suitable accounting policies in accordance with IAS 8: 'Accounting Policies, Changes in Accounting Estimates and Errors' and then apply them consistently;

·      present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

·      make judgments and estimates that are reasonable;

·      provide additional disclosures when compliance with the specific requirements in UK adopted international accounting standards is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's and the Company's financial position and financial performance; and

·      the Group and Parent Company financial statements have been prepared in accordance with UK adopted international accounting standards or United Kingdom Accounting Standards, subject to any material departures disclosed and explained in the financial statements

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Parent Company and enable them to ensure that the Group and Parent Company financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Parent Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.