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Annual Report 2016

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Company Registration Number 07741283 (England and Wales) COMPTOIR GROUP PLC (PREVIOUSLY LEVANT RESTAURANTS GROUP LIMITED) ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2016 Comptoir Group PLC Annual Report 2016 Company information Directors C Hanna J Kaye A Kitous R Kleiner Chief Executive Non-Executive Director Creative and Founding Director Non-Executive Chairman Secretary AIS Secretarial Services Limited Company number 07741283 Registered office Business address Nominated Advisor and Broker Auditors Solicitors Registrars Suite 4 Strata House 34a Waterloo Road London NW2 7UH 2nd Floor Instone House Instone Road Dartford Kent DA1 2AG Cenkos Securities plc 6.7.8 Tokenhouse Yard London EC2R 7AS UHY Hacker Young Quadrant House 4 Thomas More Square London E1W 1YW Howard Kennedy LLP No.1 London Bridge London SE1 9BG Capita Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Comptoir Group PLC Annual Report 2016 Contents Financial highlights Chairman’s statement Chief Executive’s review Strategic report Statement of corporate governance Report of the directors Statement of directors’ responsibilities Independent auditors’ report Consolidated statement of comprehensive income Consolidated balance sheet Consolidated statement of changes in equity Consolidated statement of cash flows Principal accounting policies for the consolidated financial statements Notes to the consolidated financial statements Parent company accounts Notice of annual general meeting Page 1 1 3 6 9 11 13 14 16 17 19 20 21 31 55 63 Financial highlights For the year ended 31 December 2016 Comptoir Group PLC Annual Report 2016 • Group revenue increased 21% to £21.5m (2015 - £17.7m) • Gross profit increased 21% to £15.7m (2015 - £13.0m) • Adjusted* EBITDA up 7% to £2.7m (2015 - £2.5m) • Adjusted* pre-tax profit was 4% lower at £1.6m (2015 - £1.6m) • • • Earnings per share from adjusted* profit of 2.57p (2015: 2.31p) • • Twenty-two restaurants trading as at 31 December 2016 Six new restaurants opened and three acquired. IFRS loss before tax of £1.0m (2016 - £1.3m profit) (Loss)/earnings per share from IFRS loss of (1.70)p (2015: 1.79p earnings per share) *excluding the impact of £1.2m (2015 – Nil) non-trading costs and £1.4m opening costs Chairman’s statement For the year ended 31 December 2016 I am pleased to present the Group’s results for the year ended 31 December 2016, being our first set of full- year results since successfully listing on AIM. I am also pleased to report considerable progress with our strategy to grow our operations and extend the presence of our brands to new locations both in and outside of London. Results Group revenue increased by £3.8m or 21% from £17.7m to £21.5m and adjusted* EBITDA was 7% higher at £2.7m (2015 - £2.5m). Given that we opened six new restaurants in the period, off a base of only 13 restaurants, the one-off costs incurred in connection with these openings rose sharply to £1.4m (2015 £0.3m), with a commensurate impact on reported profits. For this reason, we add back these opening costs in calculating adjusted* EBITDA, as the Board believes this gives the most useful measure of the underlying performance of the business. After the inclusion of restaurant opening costs and £1.2m non-trading items, which comprises £0.5m (2015 – Nil) on impairment of property, plant and equipment, £0.5m share option charge (2015 – Nil) and £0.2m (2015 – Nil) of AIM listing fees, the Income Statement shows a pre-tax loss of £1.0m (2015 - £1.3m profit). The Board does not recommend the payment of any dividend at this time, as it is anticipated that all available funds will be required for investment in new restaurants or the existing estate for the foreseeable future. P a g e 1 | 67 Comptoir Group PLC Annual Report 2016 Growth in operations The Group has delivered on its plan to step up its rate of expansion in the second half of the year, following the successful IPO, increasing the number of restaurants trading from 14 to 22 at the close of the year. We have invested £7.5m in the fit-out of these new openings, the acquisition of Yalla Yalla and the purchase of the freehold of our Central Processing Unit (CPU). Taken together with one further additional opening in London in January, this has been funded by the proceeds of our AIM flotation and at the end of the year we had retained cash and cash equivalents of £0.8m (2015 - £0.7m). People The friendliness, dedication and passion of our people is at the heart of our success as a business. The busy opening programme that we embarked on over the second half of 2016 has presented new challenges for our management team, who have risen to the task magnificently. I would like to thank them particularly and also our new recruits who are delivering our delicious food with great service and enthusiasm in our new restaurants, for all their efforts. Current trading The Board is pleased that the financial outcome for 2016 was in line with expectations. The Group ended the year with 22 restaurants and 2 franchise operations, ahead of expectations and is currently trading from 23 restaurants. Due to the Group’s opening programme being ahead of the schedule anticipated at the time of IPO, the Group expects to only open a further three restaurants during the current year. 2017 will therefore be focused on bedding in new openings, promoting the Comptoir brand to consumers in new locations and delivering on anticipated returns. During the first quarter of 2017 we have experienced the UK consumer being cautious. Trading in January and February, traditionally the Company’s quietest months, was below expectations, however, we saw improved trading in March. The Group expects further positive trading in April (which includes Easter) and into the summer months. The Board has made the decision to reduce its opening schedule for 2018 to 4 restaurants (4 in 2017), which will impact the financial performance in 2018. The Board will increase the number of openings ahead of this revised 2018 target if suitably attractive locations become available and dependent on market conditions. Richard Kleiner Chairman 11 April 2017 P a g e 2 | 67 Comptoir Group PLC Annual Report 2016 Chief Executive’s review For the year ended 31 December 2016 I am delighted to report on what has been an exciting period of development for the Group. We have had an extremely busy and productive second half of the year, in which we have opened six new restaurants, before acquiring three additional restaurants under the Yalla Yalla brand, taking our portfolio up to twenty-two units at the end of the year. As a result, we have grown our annual sales to £21.5m (2015 - £17.7m) and adjusted EBITDA (excluding one- off costs incurred in opening new restaurants and other highlighted items) rose 7% to £2.7m (2015 - £2.5m). Review of operations The existing estate delivered a solid performance, with further growth from the restaurants that were opened late in 2016. Despite, cost pressures in the supply chain in the wake of Brexit and the introduction of the National Living Wage for employees over the age of 25 in April 2016, our teams worked hard to control costs and I am pleased to report that overall margins have been maintained. As anticipated, much of the focus over the second half of the year has been on opening and bedding in our new restaurants. We have recruited and trained 237 new staff over this period and this has provided the opportunity for existing members of the team to take on greater responsibility in the General Manager and Assistant Manager roles. Opening costs Opening costs during the period were £1.4m (2015 - £0.3m) and are added back in adjusted* EBITDA. There are a number of aspects of our particular operations that are important to fully understand. • While Lebanese food is growing in popularity, it is not familiar to all our potential customers and for this reason we have to educate the local population and our sales tend to build towards maturity over a number of years rather than maturing after several months. • With all but two items on our menu, being freshly prepared either in our central processing unit (CPU) or in our own restaurant kitchens, this means that we have to hire skilled chefs and sous chefs and our wage costs will always be higher in the initial months following opening compared to other casual dining concepts. • With our current small scale, the costs incurred on recruiting, training and supporting the teams put in place in our restaurants, particularly those out in more isolated regional locations, are necessarily higher than they would likely be in a much larger chain which already enjoys national coverage. For these reasons, it takes us a few months after opening a new restaurant to bring our wage costs fully into line with our model and for this reason our policy in respect of Opening costs is to include not only the costs of overheads (rent, rates, insurance) and wage costs up to the date of opening, but we also include an element of wages, training and marketing costs incurred over the first three months of trading only so that the level of costs included in the site profit & loss account are “normalised”. P a g e 3 | 67 Comptoir Group PLC Annual Report 2016 We believe this approach is both appropriate for our offering and is consistent with the policy we have always applied. We also feel it is appropriate for our stage of development. Estate development In the second half of the year, we opened new restaurants in Bath, Exeter and Leeds to augment our existing regional presence in Manchester which was opened in 2015. At the same time, we also extended our operations in London. Firstly, we relocated our Soho branch of Comptoir Libanais to larger premises on Poland Street and then we also opened a Comptoir Libanais within the John Lewis store on Oxford Street. In addition, we also launched our first Shawa branch which is not in a shopping centre, on Haymarket. In December, we announced that we had acquired three operations (located in Soho, Fitzrovia and Greenwich) trading as Yalla Yalla. With a distinct offering, billed as Beirut street food, we believe that there may be potential to extend the presence of Yalla Yalla strategically to additional London locations. Importantly, Yalla Yalla, while a distinct brand, is also able to use the Group’s Central Production Unit (CPU) and food skills within the business, enabling its integration into the Group to be seamless. We opened a further Comptoir Libanais restaurant directly opposite Gloucester Road tube station in January, where sales are building steadily week to week and so we are now trading from 23 restaurants and two franchise operations. We continue to develop our property pipeline. Further openings are anticipated in Reading and Oxford, come summer and autumn, respectively, and a number of other site opportunities are being evaluated, both for 2018 and beyond. As set out earlier, however, the Board is adopting a cautious approach to new openings in 2018. Cashflows and financing Cash generated from operations was £0.4m (2015 - £2.0m), once again impacted by a relatively high level of one-off costs in connection with the opening of new restaurants. Capital expenditure, principally incurred on the fitting-out of new restaurants totalled £6.0m (2015 - £3.0m), but also including the purchase of three Yalla Yalla restaurants. A further £1.6m was incurred in the purchase of the Group’s Central Production Unit (CPU) towards the end of the year, taking the total level of investment up to £7.6m. With an additional £0.8m of bank loans advanced during the year and £7.4m proceeds from the AIM flotation, this resulted in an overall cash inflow of £0.2m (2015 - £1.1m outflow) and at the end of the year the Group had cash balances of £0.8m (2015 - £0.7m). The three further anticipated openings for 2017 can be funded from internally generated cash and we are currently in discussions with our bank regarding additional funding which will enable us to continue the roll- out in 2018. Depending on the outcome, the freehold of the CPU (which has been independently valued at £1.8m) also provides a means to raise additional funds if required. P a g e 4 | 67 Comptoir Group PLC Annual Report 2016 Outlook As set out in the Chairman’s statement trading in the first two months of the year was below expectations, however we saw a marked improvement in March and we anticipate strong sales in April, particularly over the Easter holiday period. Sales at the new restaurants are gradually building towards the levels anticipated at maturity and the Company is putting in place a number of marketing initiatives, including a new menu, ahead of the critical summer trading period to promote sales at both existing and new restaurants. The Company is also heavily focused on cost control. The Directors believe the Group’s current Comptoir Libanais restaurant estate has significant potential for organic growth which will continue to provide attractive returns for shareholders. Chaker Hanna Chief Executive Officer 11 April 2017 P a g e 5 | 67 Comptoir Group PLC Annual Report 2016 Strategic Report For the year ended 31 December 2016 The Directors present their strategic report for the year ended 31 December 2016. Business model The Group’s principal brand is Comptoir Libanais, which offers a fresh and healthy all-day dining experience based on Lebanese and Eastern Mediterranean cuisine. This type of food is growing steadily in popularity due to its flavoursome, healthy, low fat and vegetarian friendly ingredients, as well as the ability to share many of the (Mezze) dishes across the table with a group of friends. We seek to design each restaurant with a bold and fresh design and give it a Middle Eastern café culture feel, which is welcoming to all age groups and types of consumer. This is further enhanced by an in-store retail offering that offers Arabic products including colourful embroidered bags, harissa tins, and assorted pastries and sweets. Shawa is a Lebanese grill concept serving lean grilled meats, rotisserie chicken, homemade falafel, halloumi and fresh salads, through a counter service operation located in high footfall locations. The estimated average spend per head at Comptoir Libanais is c. £14 and the average spend at Shawa is lower than this, so our offering is positioned in the affordable or value for money segment of the UK casual dining market. In addition, our offering is well-differentiated and faces only limited direct competition, in marked contrast to other areas of the market. Strategy for growth Our strategy is to grow our owned operations under both the Comptoir Libanais and Shawa brands. While Comptoir Libanais is likely to remain the main 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 also 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. Review of the business and key performance indicators (KPIs) Group revenue increased by 21% to £21.5m (2015 - £17.7m) and the Income Statement shows a pre-tax loss of £1.0m (2015 - £1.3m). 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, we were ahead by 7% at £2.7m (2015 - £2.5m). 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, gross and operating profit margins percentages and these are appraised against budgeted, forecast and last year’s achieved levels. P a g e 6 | 67 Comptoir Group PLC Annual Report 2016 In terms of non-financial KPI’s, the standard of service provided to customers is monitored via the scores from a programme of regular monthly “mystery diner” audits carried out at each store and we use feedback from health and safety audits conducted by an external consultant to ensure that critical operating procedures are being adhered to. Further explanation of the performance of the business over the year is provided in the Chairman’s Statement on page 1 and the Chief Executive’s Review on page 3. Principal risks and uncertainties The Board of Directors (“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 Company has policies and procedures to address other risks facing the business. Consumer demand 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. Any weakness in consumer confidence could have an adverse effect on footfall and customer spend in our restaurants. As indicated above, the core brands which the Group is rolling out 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 customer footfall is more subdued. Input cost inflation The Group’s key input variables are the cost of food and drink and associated ingredients and the progressive increases in the UK National Living Wage and Minimum Wage rates present a challenge we must face up to alongside our peers and competitors. 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. Strategic 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 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 has secured the services of an experienced property consultant and having raised its profile as a consequence of its successful AIM flotation, is developing stronger contacts with potential landlords and their agents and advisers. However, there will always be competition for the best sites and the Board will continue P a g e 7 | 67 Comptoir Group PLC Annual Report 2016 to be highly selective in its evaluation of new sites in order to ensure that target levels of return on investment are achieved. Future developments The Group will continue with its plans to roll out its Comptoir Libanais and Shawa brands to further new sites across the UK and to explore further opportunities to grow the Comptoir Libanais brand via franchising with suitable partners. On behalf of the Board Chaker Hanna Chief Executive Officer 11 April 2017 P a g e 8 | 67 Comptoir Group PLC Annual Report 2016 Statement of corporate governance Compliance with the 2014 UK Corporate Governance Code The company is not required to comply with the 2014 UK Corporate Governance. Set out below are the corporate procedures that have been adopted. 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 C Hanna and A Kitous as executive directors and J Kaye and R Kleiner as non-executive directors. Each of the non-executive Directors 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 has eleven board meetings during the year. The two independent directors sit on both the audit and the remuneration committees, namely Richard Kleiner and Jonathan Kaye. R Kleiner is the chairman of both the audit committee and the remuneration committee. The terms of reference of both 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, which is chaired by director, R Kleiner, 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 particular 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. P a g e 9 | 67 Comptoir Group PLC Annual Report 2016 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 institutional investors including presentations after the company's year-end and half year results announcements. Feedback from major institutional 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 company makes periodically to the market, the Board uses the annual general meeting to communicate with shareholders and welcomes their participation. Going concern On the basis of the current financial projections, the directors have a reasonable expectation that the company and the group have adequate financial resources to continue in operational existence for the foreseeable future. The directors accordingly have adopted the going concern basis in the preparation of the group's accounts. See page 21 for further details on going concern. P a g e 10 | 67 Comptoir Group PLC Annual Report 2016 Report of the directors The Directors present their report together with the audited financial statements for the year ended 31 December 2016. Results and dividends The consolidated statement of comprehensive income is set out on page 16 and shows the loss for the year. The Directors recommended the payment of a dividend in the year amounting to £78,375 (2015: £669,675). Principal activities The Company and Group's principal activity continues to be that of the casual dining sector of restaurants with Lebanese/Middle Eastern offering. Directors The Directors of the Group, during the year, and their shareholding, at the yearend date, were as follows: Executive A Kitous C Hanna Non-Executive R Kleiner J Kaye Appointed on 25 May 2016 Substantial shareholders Number of ordinary shares Percentage of shareholding (%) 50,000,000 14,000,000 60,000 2,666,666 52.1% 14.6% 0.1% 2.8% Besides the directors, the only other substantial shareholder at the year-end date is Schroders plc, whom have a 5.2% shareholding (5,000,000 ordinary shares). Directors’ remuneration The remuneration of the directors for the year ended 31 December 2016 was as follows: A Kitous C Hanna R Kleiner J Kaye Year ended 31 December 2016 Remuneration £ 119,013 119,013 28,917 13,269 280,212 Pension £ Total £ 564 569 - 31 1,164 119,577 119,582 28,917 13,300 281,376 Year ended 31 December 2015 Total £ 37,733 37,745 25,000 - 100,478 P a g e 11 | 67 Comptoir Group PLC Annual Report 2016 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. Donations The Group made charitable donations of £1,337 (2015: £nil) in the year. Financial Instruments Details of the use of financial instruments and the principal risks faced by the Group are contained in note 26 to the financial statements. Future developments Details of future developments are contained in the Strategic report (page 6). Auditors All of 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 Chaker Hanna Chief Executive Officer 11 April 2017 P a g e 12 | 67 Comptoir Group PLC Annual Report 2016 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 year. Under that law, and as required by the AIM rules, the directors have elected to prepare group financial statements under International Financial Reporting Standards (IFRSs), as adopted by the European Union, 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 IFRSs as adopted by the European Union 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 • state whether the group and parent company financial statements have been prepared in accordance with IFRSs as adopted by the European Union 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. P a g e 13 | 67 Comptoir Group PLC Annual Report 2016 Independent auditors’ report To the members of Comptoir Group Plc We have audited the financial statements of Comptoir Group plc for the year ended 31 December 2016 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Balance Sheets, the Consolidated Statement of Changes in Equity, the Consolidated Statements of Cash Flows and the related notes to the Consolidated and Parent Company accounts. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union for the consolidated financial statements and, as regards the parent company financial statements, United Kingdom Accounting Standards including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice) and in accordance with the provisions of the Companies Act 2006. This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As explained more fully in the Statement of Directors’ Responsibilities, set out on page 13, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the FRC's website at www.frc.org.uk/auditscopeukprivate. Opinion on financial statements In our opinion: • • • • the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2016 and of the Group's loss for the year then ended; the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. P a g e 14 | 67 Comptoir Group PLC Annual Report 2016 Opinion on other matters prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: • • adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or the Parent Company financial statements are not in agreement with the accounting records and returns; or • certain disclosures of Directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Colin Wright (Senior Statutory Auditor) For and on behalf of UHY Hacker Young Chartered Accountants and Statutory Auditor UHY Hacker Young Quadrant House 4 Thomas More Square London E1W 1YW 11 April 2017 P a g e 15 | 67 Consolidated statement of comprehensive income For the year ended 31 December 2016 Comptoir Group PLC Annual Report 2016 Revenue Cost of sales Gross profit Distribution expenses Administrative expenses Other income Operating (loss)/profit Finance costs (Loss)/profit before tax Taxation credit/(charge) (Loss)/profit for the year Other comprehensive income Total comprehensive (loss)/income for the year Basic (loss)/earnings per share (pence) Diluted (loss)/earnings per share (pence) Adjusted EBITDA: Operating (loss)/profit – as above Add back: Depreciation and amortisation Non-trading items Restaurant opening costs Adjusted EBITDA Notes 2 2 3 7 8 9 9 3 3 Year ended 31 December 2016 £ Year ended 31 December 2015 (Restated) £ 21,513,813 17,727,212 (5,818,647) (4,755,920) 15,695,166 12,971,292 (5,551,084) (4,459,684) (11,025,955) (7,146,583) 2,114 50,000 (879,759) 1,415,323 (125,237) (127,810) (1,004,996) 1,287,513 86,883 (317,706) (918,113) 969,807 - - (918,113) 969,807 (1.70) (1.66) 1.79 1.79 (879,759) 1,415,323 979,583 1,183,592 1,401,546 2,684,962 755,533 - 348,130 2,518,986 All of the above results are derived from continuing operations. (Loss)/profit for the year and total comprehensive (loss)/income for the year is entirely attributable to the equity shareholders of the company. P a g e 16 | 67 Comptoir Group PLC Annual Report 2016 Consolidated balance sheet At 31 December 2016 Notes 31 December 2016 £ 31 December 2015 (Restated) £ Assets Non-current assets Property, plant and equipment Intangible assets Deferred tax asset Current asset Inventories Trade and other receivables Cash and cash equivalents Total assets Liabilities Current liabilities Borrowings Trade and other payables Current tax liabilities Non-current liabilities Borrowings Provisions for liabilities Deferred tax liability Total liabilities Net assets Equity Share capital Share premium Other reserves Retained earnings Total equity – attributable to equity shareholders of the company 12 11 19 14 15 17 16 17 18 19 20 21 11,114,999 1,121,021 304,995 12,541,015 479,830 2,197,315 813,207 3,490,352 7,638,406 - 82,573 7,720,979 304,199 1,637,140 667,247 2,608,586 16,031,367 10,329,565 (632,041) (3,557,649) (94,024) (4,283,714) (1,380,407) (35,050) (287,287) (1,702,744) (2,050,986) (3,433,163) (273,341) (5,757,490) (1,236,258) (27,388) (171,829) (1,435,475) (5,986,458) (7,192,965) 10,044,909 3,136,600 960,000 6,465,687 479,210 2,140,012 100 - - 3,136,500 10,044,909 3,136,600 P a g e 17 | 67 The financial statements of Comptoir Group PLC (company registration number 07741283) were approved by the Board of Directors and authorised for issue on 11 April 2017 and were signed on its behalf by: Comptoir Group PLC Annual Report 2016 Chaker Hanna Chief Executive Officer P a g e 18 | 67 Comptoir Group PLC Annual Report 2016 Consolidated statement of changes in equity For the year ended 31 December 2016 Share capital £ Share premium £ Other reserves £ Retained earnings £ Total equity £ Notes Year ended 31 December 2015 At 1 January 2015 (restated) 100 Profit for the year Prior year adjustment Total comprehensive income 29 Transactions with owners Equity dividends Total transactions with owners At 31 December 2015 Year ended 31 December 2016 At 1 January 2016 Loss for the year Total comprehensive income - - - - 100 100 - - - - - - - - - - - - - - - - 2,836,368 2,836,468 998,651 (28,844) 969,807 998,651 (28,884) 969,807 (669,675) (669,675) (669,675) (669,675) 3,136,500 3,136,600 3,136,500 3,136,600 (918,113) (918,113) (918,113) (918,113) Transactions with owners Equity dividends Share-based payments Issue of shares Total transactions with owners 10 23 20 - - 959,900 959,900 - - 6,465,687 6,465,687 - 479,210 - 479,210 (78,375) - - (78,375) (78,375) 479,210 7,425,587 7,826,422 At 31 December 2016 960,000 6,465,687 479,210 2,140,012 10,044,909 P a g e 19 | 67 Comptoir Group PLC Annual Report 2016 Consolidated statement of cash flows For the year ended 31 December 2016 Operating activities Cash inflow from operations Interest paid Tax paid Notes 24 Year ended 31 December 2016 £ Year ended 31 December 2015 (Restated) £ 370,022 (125,237) (199,397) 2,512,281 (127,810) (218,547) Net cash from operating activities 45,388 2,165,924 Investing activities Purchase of property, plant & equipment Payments for lease premiums Purchase of business 12 11 11 (4,496,844) (1,075,000) (400,000) (3,012,283) - - Net cash used in investing activities (5,971,844) (3,012,283) Financing activities Proceeds from issue of shares, net of issue costs Dividends paid to equity shareholders Capital element of finance leases paid New bank loans Bank loan repayments 7,425,587 (78,375) (1,549,651) 825,000 (537,729) (100) (669,675) (124,204) 1,000,000 (468,891) Net cash inflow/(outflow) from financing activities 6,084,832 (262,870) Increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Cash and cash equivalents: Cash at bank and in hand Bank overdrafts included in creditors payable within one year 158,376 654,831 (1,109,229) 1,764,060 813,207 654,831 813,207 - 667,247 (12,416) P a g e 20 | 67 Comptoir Group PLC Annual Report 2016 Principal accounting policies for the consolidated financial statements For the year ended 31 December 2016 Reporting entity Comptoir Group Plc (the Company) is a company incorporated and registered in England and Wales, with a company registration number of 07741283. The Company was formerly called Levant Restaurants Group Limited and on 8 June 2016 it re-registered as a public limited company and changed its name to Comptoir Group Plc. The address of the Company’s registered office is Suite 4, Strata House, 34A Waterloo Road, London, NW2 7UH. The consolidated financial statements of the Company for the year ended 31 December 2016 comprise of the Company and its subsidiaries (together referred to as the “Group”). Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and its interpretations adopted by the International Accounting Standards Board (IASB), as adopted by the European Union. The parent company financial statements have been prepared using United Kingdom Accounting Standards including FRS 102 ‘The financial reporting standard applicable in the UK and Republic of Ireland’ and are set out on pages 55 to 62. Going concern basis The consolidated financial statements have been prepared on the going concern basis as, after making appropriate enquires, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of approving these financial statements. The principal risks and uncertainties facing the Group and further comments on going concern are set out in the report of the Directors. Basis of preparation These consolidated financial statements for the year ended 31 December 2016 are the first financial statements of the Company prepared in accordance with IFRS. The date of transition to IFRS was 1 January 2015. IFRS 1 'First-time Adoption of International Financial Reporting Standards' permits companies adopting IFRS for the first time to take certain optional exemptions from the full retrospective application of IFRS. The Group and parent company previously adopted FRS 102 'The financial reporting standard applicable in the UK and Republic of Ireland' (UK GAAP) in their financial statements for the year ended 31 December 2015 which is materially consistent with IFRS. No further transitional adjustments or disclosures are required from the conversion of the Group's UK GAAP financial statements to these IFRS consolidated financial statements. The financial statements are presented in Pound Sterling (£), which is both the functional and presentational currency of the Group and Company. All amounts are rounded to the nearest pound, except where otherwise indicated. P a g e 21 | 67 Comptoir Group PLC Annual Report 2016 Principal accounting policies for the consolidated financial statements (continued) The Group and parent company financial statements have been prepared on the historical cost convention as modified for certain financial instruments, which are stated at fair value. Non-current assets are stated at the lower of carrying amount and fair value less costs to sell. Significant accounting judgments and estimates The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. The resulting accounting estimates may differ from the related actual results. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. In the process of applying the Group's accounting policies, management has made a number of judgments and estimations of which the following are the most significant. The estimates and assumptions that have a risk of causing material adjustment to the carrying amounts of assets and liabilities within the future financial years are as follows: Depreciation, useful lives and residual values of property, plant & equipment The Directors estimate the useful lives and residual values of property, plant & equipment in order to calculate the depreciation charges. Changes in these estimates could result in changes being required to the annual depreciation charges in the statement of comprehensive income and the carrying values of the property, plant & equipment in the balance sheet. Impairment of assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value of money and the risks specific to the asset. Impairment losses of continuing operations are recognized in the profit or loss in those expense categories consistent with the function of the impaired asset. An impairment of assets of £471,796 was required in the year ended 31 December 2016. P a g e 22 | 67 Comptoir Group PLC Annual Report 2016 Principal accounting policies for the consolidated financial statements (continued) Lease classification The Group has a substantial number of leases and therefore their classification as either finance or operating leases is critical to the financial statements. The accounting for leases involves the exercise of judgment, particularly in determining whether the leases meet the definition of an operating or a finance lease. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of the ownership to the lessee. All other leases are classified as operating leases. Deferred tax liability The Group estimates future profitability in arriving at the fair value of the deferred tax assets and liabilities. If the final tax outcome is different to the estimated deferred tax amount the resulting changes will be reflected in the statement of comprehensive income, unless the tax relates to an item charged to equity in which case the changes in tax estimates will also be reflected in equity. Future accounting policies At the date of authorisation of these financial statements, the following new and revised IFRS Standards and Interpretations have been adopted in the current year, where applicable to the Group. Their adoption has not had any significant impact on the amounts reported in the financial statements. (Amended) IFRS 11 IAS 16 & IAS 38 (Amended) (Amended) IAS 1 (Issued) IFRS 14 IFRS 2012 – 2014 Cycle Accounting for Acquisitions of Interests in Joint Operations Clarification of Acceptable Methods of Depreciation and Amortisation Disclosure Initiative Regulatory Deferral Accounts At the date of authorisation of these financial statements, the following IFRS Standards and Interpretations, which have not been applied in these financial statements, were in issue but not yet effective: (Amended) (Revised) (Revised) IAS 7 IFRS 2 IFRS 9 IFRS 15 IFRS 16 IFRS 2014 – 2016 Cycle Disclosure Initiative Classification and measurement of Share-based Payment Transactions Financial Instruments Revenue from Contracts with Customers Leases The Directors have assessed the impact and timing of application of the Standards and Interpretations listed above and do not expect that their adoption will have a material impact on the financial statements of the Group in future periods. Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed. P a g e 23 | 67 Comptoir Group PLC Annual Report 2016 Principal accounting policies for the consolidated financial statements (continued) Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in the historical consolidated financial statements, unless otherwise indicated. (a) Comparative data The comparative figures for the year ended 31 December 2015 have been extracted from the consolidated financial statements, which were prepared in accordance with FRS102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (“FRS102”) and the requirements of Companies Act 2016. FRS102, also known as the new UK Generally Accepted Accounting Practice (“new UK GAAP”) is materially consistent with IFRS for the Group. No further transitional adjustments and disclosures are required from the conversion of the Group’s UK GAAP financial statements to IFRS. (b) Basis of consolidation These financial statements consolidate the financial statements of the Company and all of its subsidiary undertakings drawn up to 31 December 2016. Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account, regardless of management's intention to exercise that option or warrant. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the identifiable net assets acquired is recorded as goodwill. All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions are eliminated fully on consolidation. The gain or loss on disposal of a subsidiary company is the difference between net disposals proceeds and the Group's share of its net assets together with any goodwill and exchange differences. (c) Foreign currency translation Functional and presentational currency Items included in the financial results of each of the Group entities are measured using the currency of the primary economic environment in which the entities operate (the functional currency). The consolidated financial statements are presented in Pounds Sterling (“£”) which is the Company’s functional and operational currency. P a g e 24 | 67 Comptoir Group PLC Annual Report 2016 Principal accounting policies for the consolidated financial statements (continued) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and financial liabilities denominated in foreign currencies are recognised in the statement of comprehensive income. (d) Financial instruments Financial assets and financial liabilities are measured initially at fair value plus transactions costs. Financial assets and financial liabilities are measured subsequently as described below. Financial assets The Group classifies its financial assets as ‘loans and receivables’. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. Loans and receivables are non-derivative financial assets with fixed and determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the statement of financial position date, which are classified as non-current assets. Loans and receivables are classified as ‘trade and other receivables’ in the statement of financial position. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. After initial recognition loans and receivables are carried at amortised cost using the effective interest rate method less any allowance for impairment. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulty, high probability of bankruptcy or a financial reorganisation and default are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. The loss is recognised in the income statement. When a trade receivable is uncollectable, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited to the statement of comprehensive income. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. Financial liabilities The Group’s financial liabilities include trade and other payables. Trade payables are recognised initially at fair value less transaction costs and subsequently measured at amortised cost using the effective interest method (“EIR” method). P a g e 25 | 67 Comptoir Group PLC Annual Report 2016 Principal accounting policies for the consolidated financial statements (continued) Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the statement of comprehensive Income. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. (e) Property, plant and equipment Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Leases in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. The owner-occupied properties (excluding land element) acquired by way of finance lease are stated at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment. Lease payments are accounted for as described in accounting policy (o). Subsequent costs The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the statement of comprehensive income as an expense as incurred. Depreciation Depreciation is charged to the income statement on a reducing balance basis and on a straight-line basis over the estimated useful lives of corresponding items of property, plant and equipment: Land and buildings Leasehold Land and buildings Freehold Plant and machinery Fixture, fittings and equipment Over the length of the lease 4% straight line basis 15% on reducing balance 10% on reducing balance The carrying values of property, plant and equipment are reviewed at each reporting date to determine whether there are any indications of impairment. If any such indication exists, the assets are tested for impairment to estimate the assets' recoverable amounts. Any impairment losses are recognized in the statement of comprehensive income. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within the Statement of Comprehensive Income. P a g e 26 | 67 Comptoir Group PLC Annual Report 2016 Principal accounting policies for the consolidated financial statements (continued) (f) Intangible assets – Goodwill All business combinations are accounted for by applying the acquisition method. Goodwill represents amounts arising on acquisition of subsidiaries, associates and joint ventures. Goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units and is formally tested for impairment annually, thus is not amortised. Any excess of fair value of net assets over consideration on acquisition are recognised directly in the income statement. (g) Intangible assets – lease premiums Lease premiums paid to previous tenants are recognised within the Balance Sheet as an intangible asset and amortised over the length of the lease. The amortisation is charged to the statement of comprehensive income on a straight-line basis. (h) Inventories Inventories are stated at the lower of costs and net realisable value. Cost comprises direct materials, and those direct overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. (i) Cash and cash equivalents Cash and cash equivalents comprise cash in hand, cash at bank, deposits held at call with banks and other short- term highly liquid investments with original maturities of three months or less. Bank overdrafts that are repayable on demand are included within borrowings in current liabilities on the balance sheet. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (j) Share-based payments The Group’s share option programme allows Group employees to acquire shares of the Company and all options are equity-settled. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using the Black- Scholes model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest. P a g e 27 | 67 Comptoir Group PLC Annual Report 2016 Principal accounting policies for the consolidated financial statements (continued) (k) Provisions for liabilities A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value using a pre-tax discount rate. The unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises. Provisions for leasehold property dilapidation repairs are recognised when the Group has a present obligation to carry out dilapidation work on the leasehold premises before the property is vacated. The amount recognised as a provision is the best estimate of the costs required to carry out the dilapidations work and is spread over the expected period of the tenancy. (l) Deferred tax and current tax Income tax assets and liabilities for the current period are measured at the amount expected to be recovered or paid to the taxation authorities. A provision is made for corporation tax for the reporting period using the tax rates that have been substantially enacted for the company at the reporting date. Current income tax relating to items recognised directly in equity is recognised in equity and not in the Statement of Comprehensive Income. Deferred income tax is provided in full on a non-discounted basis, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. (m) Employee benefits Short term employee benefits Wages, salaries, paid annual leave, paid sick leave and bonuses are recognised as an expense in the period in which the associated services are rendered by employees. The Group recognises an accrual for annual holiday pay accrued by employees as a result of services rendered in the current period, and which employees are entitled to carry forward and use within 12 months. The accrual is measured at the salary cost payable for the period of absence. P a g e 28 | 67 Comptoir Group PLC Annual Report 2016 Principal accounting policies for the consolidated financial statements (continued) Pensions and other post-employment benefits The Group pays monthly contributions to defined contribution pension plans. The legal or constructive obligation of the Group is limited to the amount that they agree to contribute to the plan. The contributions to the plan are charged to the Statement of Comprehensive Income in the period to which they relate. Termination benefits are recognised immediately as an expense when the Group is demonstrably committed to terminate the employment of an employee or to provide termination benefits. (n) Revenue Revenue represents amounts received and receivable for services and goods provided (excluding value added tax) and is recognised at the point of sale. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and their value can be reliably measured. (o) Expenses Operating lease payments Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are recognised in the comprehensive income statement on a straight-line basis over the term of the lease. Incentives to enter into an operating lease are also spread on a straight-line basis over the lease term as a reduction in rental expense. Finance lease payments Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the leased asset to the Group. All other leases are classified as operating leases. Assets held under finance leases are recognised initially at the fair value of the leased asset (or, if lower, the present value of minimum lease payments) at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Finance charges are deducted in measuring profit or loss. Assets held under finance leases are included in tangible fixed assets and depreciated and assessed for impairment losses in the same way as owned assets. Opening expenses Property rentals and related costs incurred up to the date of opening of a new restaurant are written off to the income statement in the period in which they are incurred. Promotional and training costs are written off to the income statement in the period in which they are incurred. P a g e 29 | 67 Comptoir Group PLC Annual Report 2016 Principal accounting policies for the consolidated financial statements (continued) Financial expenses Financial expenses comprise of interest payable on bank loans, hire purchase liabilities and other financial costs and charges. Interest payable is recognised on an accruals basis. (p) Ordinary share capital Ordinary shares are classified as equity. Costs directly attributable to the increase of new shares or options are shown in equity as a deduction from the proceeds. (q) Dividend policy In accordance with IAS 10 'Events after the Balance Sheet Date', dividends declared after the balance sheet date are not recognised as a liability at that balance sheet date, and are recognised in the financial statements when they have received approval by shareholders. Unpaid dividends that are not approved are disclosed in the notes to the consolidated financial statements. (r) Commercial discount policy Commercial discounts represent a reduction in cost of goods and services in accordance with negotiated supplier contracts, the majority of which are based on purchase volumes. Commercial discounts are recognised in the period in which they are earned and to the extent that any variable targets have been achieved in that financial period. Costs associated with commercial discounts are recognised in the period in which they are incurred. (s) Operating segments An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenue and expenses related to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity’s Chief Operating Decision Maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Chief Operating Decision Maker has been identified as the Board of Executive Directors, at which level strategic decisions are made. P a g e 30 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements For the year ended 31 December 2016 1. Segmental analysis The Group has only one operating segment being: the operation of restaurants with Lebanese and Middle Eastern Offerings and one geographical segment being the United Kingdom. The Group’s brands meet the aggregation criteria set out in paragraph 22 of IFRS 8 ‘Operating Segments’ and as such the Group reports the business as one reportable segment. None of the Group’s customers individually contribute over 10% of the total revenues. 2. Revenue Income for the year consists of the following: Revenue from continuing operations Year ended 31 December 2016 £ Year ended 31 December 2015 £ 21,513,813 17,727,212 Other income not included within revenue in the income statement: Other income Total income for the year 2,114 50,000 21,515,927 17,777,212 3. Group operating (loss)/profit This is stated after charging/(crediting): AIM admission costs (see note 4) Operating lease charges Impairment of assets (see note 12) Share based payments (see note 23) Opening costs (see below) Amortisation of intangible assets (see note 11) Depreciation of property, plant and equipment (see note 12) Exchange losses Audit fees (see note 5) Year ended 31 December 2016 £ Year ended 31 December 2015 £ 232,586 2,194,804 471,796 479,210 1,401,546 28,958 950,625 - 90,000 - 1,839,372 - - 348,130 - 755,533 159 38,500 Non-trading items shown on the consolidated statement of comprehensive income totalling £1,183,592 comprises AIM admission costs (£232,586), share-based payments (£479,210) and impairment of assets (£471,796). P a g e 31 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) For the initial trading period following opening of a new restaurant, the performance of that restaurant will be lower than that achieved by other, similar mature restaurants. The difference in this performance, which is calculated by reference to gross profit margins amongst other key metrics is quantified and included within opening costs. The breakdown of opening costs, between pre-opening costs and post-opening costs is shown below: Pre-opening costs Post-opening costs 4. AIM admission costs Year ended 31 December 2016 £ 907,045 494,501 1,401,546 Year ended 31 December 2015 £ 225,870 122,260 348,130 During the year ended 31 December 2016, the Company carried out an initial public offering (“IPO”) of its ordinary shares and on 21 June 2016 the ordinary shares of the Company were admitted to trading on London’s Alternative Investment Market (“AIM”). At the time of the IPO the Company issued 16,000,000 new shares to the public at an IPO price of £0.50 each, raising £8,000,000 of new capital for the Group, before issue costs. The expenses of £574,413 incurred directly on the issue of the new shares have been debited to the share premium account, whilst the costs incurred relating to the admission of the Company’s existing shares to trading on AIM, which totalled £232,586, have been included within AIM admission costs and are shown separately on the face of the statement of comprehensive income. 5. Auditors’ remuneration Auditors’ remuneration: Fees payable to Company’s auditor for the audit of its annual accounts 15,000 15,000 Year ended 31 December 2016 £ Year ended 31 December 2015 £ Other fees to auditors The audit of Company’s subsidiaries Total audit fees Reporting accountant services Tax services Total non-audit fees Total auditors’ remuneration 20,000 35,000 20,000 35,000 55,000 - 55,000 90,000 - 3,500 3,500 38,500 P a g e 32 | 67 Notes to the consolidated financial statements (continued) 6. Staff costs and numbers Comptoir Group PLC Annual Report 2016 (a) Staff costs (including directors): Wages and salaries: Kitchen, floor and management wages Other costs: Social security costs Share-based payments (note 23) Pension costs Total staff costs Year ended 31 December 2016 £ Year ended 31 December 2015 £ 6,594,374 5,397,157 549,430 479,210 39,907 7,662,921 352,309 - 28,051 5,777,517 (b) Staff numbers (including directors): Number Number Kitchen and floor staff Managements staff Total number of staff (c) Directors’ remuneration: Emoluments Money purchase (and other) pension contributions Non-Executive directors fees Total directors’ costs 566 86 652 349 60 409 251,295 1,164 28,917 281,376 74,736 742 25,000 100,478 Director’s remuneration disclosed above include the following amounts paid to the highest paid director: Emoluments Money purchase (and other) pension contributions 119,013 569 37,368 377 Further details on Directors’ emoluments and the executive pension schemes are given in the Directors’ remuneration report. 7. Finance costs Interest payable and similar charges: Interest on finance leases and hire purchase contracts Interest on bank loans and overdraft Other interest Total finance costs for the year Year ended 31 December 2016 £ Year ended 31 December 2015 (Restated) £ 50,831 74,406 - 125,237 68,505 16,848 42,457 127,810 P a g e 33 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) 8. Taxation The major components of income tax for the years ended 31 December 2016 and 2015 are: (a) Analysis of charge in the year: Current tax: UK corporation tax on the (loss)/profit for the year Adjustments in respect of previous years Deferred tax: Origination and reversal of temporary differences Tax losses carried forward Total tax (credit)/charge for the year (b) Factors affecting the tax charge for the year: Year ended 31 December 2016 £ Year ended 31 December 2015 £ 13,995 6,086 273,666 - (114,414) 7,450 44,629 (589) (86,883) 317,706 The tax charged for the year varies from the standard rate of corporation tax in the UK due to the following factors: (Loss)/profit on ordinary activities before tax Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 20% (2015: 20.25%) Effects of: Depreciation on non-qualifying assets Expenses/(income) not deductible for tax purposes Effect of change in corporation tax Adjustments in respect of previous tax years Dividend income Other miscellaneous items Deferred tax adjustments in respect of prior years Losses utilised in the year Total tax (credit)/charge for the year Year ended 31 December 2016 £ (1,004,996) (201,000) Year ended 31 December 2015 £ 1,287,513 260,721 (14,314) 132,445 - 6,086 - 4,084 - (14,184) (86,883) 48,677 17,335 (52) - 36 5,571 (14,582) - 317,706 P a g e 34 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) 9. (Loss)/earnings per share The company had 5,000 ordinary shares of £0.01 each and 5,000 B ordinary shares of £0.01 each in issue as 31 December 2015. In June 2016, the 5,000 B ordinary shares were re-designated as ordinary shares of £0.01 each and 79,990,000 new ordinary shares of £0.01 each were allotted and issued to the existing shareholders as a bonus issue of shares. On the date of the IPO the company issued a further 16,000,000 new shares. The basic and diluted earnings per share figures, based on the weighted average number of shares in issue during the period ended 31 December 2016 and the actual number of shares in issue at 31 December 2015, are set out below. Year ended 31 December 2016 £ Year ended 31 December 2015 £ (Loss)/profit attributable to shareholders Non-trading items Opening costs Estimated tax effect of excluded items Adjusted profit for the year Adjusted EBITDA, calculated by taking the adjusted profit before tax figure shown above and adding back interest, depreciation and amortisation was £2,684,962 (2015: £2,518,986). (918,113) 1,183,592 1,401,546 (280,309) 1,386,716 3 3 969,807 - 348,130 (70,496) 1,247,441 Weighted average number of shares For basic earnings per share Adjustment for options outstanding For diluted earnings per share Earnings per share: Basic (pence) From (loss)/profit for the period From adjusted profit Diluted (pence) From (loss)/profit for the period From adjusted profit Number Number 54,037,158 1,159,276 55,196,434 54,037,158 - 54,037,158 Pence per share Pence per share (1.70) 2.57 (1.66) 2.51 1.79 2.31 1.79 2.31 The loss per share for the comparative year ended 31 December 2015 has been calculated on a comparable basis using the same average weighted average number of ordinary shares in issue as if the shares had been in issue during that period. P a g e 35 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) Diluted earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of shares and ‘in the money’ share options in issue. Share options are classified as ‘in the money’ if their exercise price is lower than the average share price for the period. As required by IAS 33, this calculation assumes that the proceeds receivable from the exercise of ‘in the money’ options would be used to purchase shares in the open market in order to reduce the number of new shares that would need to be issued. 10. Dividends Amounts recognised as distributable to equity holders in the period: Dividend for the year ended 31 December 2015 of £66.97 per share Dividend for the year ending 31 December 2016 of £7.84 per share Year ended 31 December 2016 £ Year ended 31 December 2015 £ - 669,675 78,375 - Prior to the company’s IPO, its Chief Executive, C Hanna, and its Creative and Founding Director, A Kitous, were remunerated by way of dividends in lieu of market rate salaries. Since the company’s IPO, these directors have received market rate salaries instead of such dividends. P a g e 36 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) 11. Intangible assets Group Cost At 1 January 2016 Additions At 31 December 2016 Accumulated amortisation At 1 January 2016 Amortised during the year At 31 December 2016 Net Book Value as at 31 December 2015 Net Book Value as at 31 December 2016 Lease premiums £ Goodwill £ - 1,075,000 1,075,000 - 74,979 74,979 - 28,958 28,958 - - - - - Total £ - 1,149,979 1,149,979 - 28,958 28,958 - 1,046,042 74,979 1,121,021 Acquisition On 14 December 2016, the Group purchased the trade and assets, valued at £400,000, of Agushia Limited, including the Yalla Yalla brand and three restaurants trading under the brand as part of the group’s strategic goal to expand its network of restaurants in London and the rest of the United Kingdom. The goodwill reported in the Balance Sheet arising on the acquisition of this business amounts to £74,979 and represents the amounts paid in excess of the fair value of the net assets acquired. Goodwill arising on business combinations is not amortised but is subject to an impairment review annually, or arising on acquisition is monitored and an impairment test is carried out which compares the value in use to its carrying value. The transaction has been treated as a business combination under IFRS 3 ‘Business Combinations’. Details of the identifiable assets and liabilities, purchase consideration and goodwill are set out below: Intangible assets Fixtures and fittings Property, plant and equipment Liabilities Total net assets acquired Consideration paid: Cash Goodwill arising on acquisition Book value & fair values £ 10,000 59,996 342,177 (87,152) 325,021 400,000 74,979 P a g e 37 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) 12. Property, plant and equipment Group Cost At 1 January 2015 Additions At 31 December 2015 Accumulated depreciation and impairment At 1 January 2015 Depreciation during the year At 31 December 2015 Cost At 1 January 2016 Additions Business combination additions At 31 December 2016 Accumulated depreciation and impairment At 1 January 2016 Depreciation during the year Impairment during the year AT 31 December 2016 Net Book Value as at 31 December 2015 Net Book Value as at 31 December 2016 Freehold land and buildings £ Leasehold Land and buildings £ Plant and machinery £ Fixture, fittings & equipment £ Total (Restated) £ 1,481,879 - 1,481,879 4,009,851 1,646,617 5,656,468 1,419,937 998,736 2,418,673 1,238,456 366,930 1,605,386 8,150,123 3,012,283 11,162,406 9,879 59,275 69,154 1,613,606 410,246 2,023,852 728,045 183,377 911,422 416,937 102,635 519,572 2,768,467 755,533 3,524,000 1,481,879 80,136 - 1,562,015 5,656,468 2,729,476 - 8,385,944 2,418,673 1,212,779 342,177 3,973,629 1,605,386 474,453 59,996 2,139,835 11,162,406 4,496,844 402,173 16,061,423 69,154 49,396 - 118,550 2,023,852 478,025 296,260 2,798,137 911,422 297,872 85,547 1,294,841 519,572 125,335 89,989 734,896 3,524,000 950,628 471,796 4,946,424 1,412,725 3,632,616 1,507,251 1,085,814 7,638,406 1,443,465 5,587,807 2,678,788 1,404,939 11,114,999 P a g e 38 | 67 Notes to the consolidated financial statements (continued) Comptoir Group PLC Annual Report 2016 Assets held under finance leases Cost At 1 January 2016 Additions Legal ownership transferred Cost as at 31 December 2016 Accumulated depreciation At 1 January 2015 Depreciation during the year Impairment Legal ownership transferred At the end of year Net book value at the end of the year Group Year ended 31 December 2016 £ Year ended 31 December 2015 £ 1,853,942 80,136 (1,618,460) 315,618 170,987 84,622 87,600 (139,601) 203,608 112,010 1,853,942 - - 1,853,942 73,445 97,541 - - 170,986 1,682,956 Legal ownership transferred relates to a property held under finance lease that has subsequently been purchased outright during the current year. P a g e 39 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) 13. Subsidiaries The principal subsidiaries of Comptoir Group Plc, all of which have been included in these consolidated financial statements, are as follows: Name Country of incorporation and principal place of business Proportion of ownership interest as at 31 December 2016 2015 Non-Controlling interests Ownership/voting interest at 31 December 2016 2015 Timerest Limited Chabane Limited Comptoir Franchise Limited Shawa Group Limited* Shawa Bluewater Limited Shawa Limited Shawa Rupert Street Limited* Comptoir Stratford Limited* Comptoir South Ken Limited* Comptoir Soho Limited Comptoir Central Production Limited Comptoir Westfield London Limited* Levant Restaurants Group Limited Comptoir Chelsea Limited* Comptoir Bluewater Limited Comptoir Wigmore Limited* Comptoir Kingston Limited Comptoir Broadgate Limited Comptoir Manchester Limited Comptoir Restaurants Limited Comptoir Leeds Limited* Comptoir Oxford Street Limited* Comptoir I.P. Limited* Comptoir Reading Limited* TKCH Limited* Comptoir Bath Limited* Comptoir Exeter Limited* Yalla Yalla Restaurants Limited Shawa Haymarket Ltd Comptoir Oxford Limited* *Dormant companies England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - P a g e 40 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) Changes to subsidiaries during the year ended 31 December 2016: Comptoir Bath Limited changed its name from Comptoir Wardour Street Limited on 20 February 2016. Comptoir Exeter Limited changed its name from Comptoir Strand Limited on 20 February 2016. Shawa Rupert Street Limited and Shawa Haymarket Limited were incorporated on 30 March 2016. Comptoir Reading Limited was incorporated on 22 February 2016. The company changed its name from Comptoir Reading Limited to Shawa Wardour Street on 8 August 2016 and back to Comptoir Reading Limited on 2 September 2016. Yalla Yalla Restaurants Limited, a subsidiary, which was incorporated on 5 September 2016, changed its name from Shawa Wardour Street on 30 November 2016. 14. Inventories Group Year ended 31 December 2016 £ Year ended 31 December 2015 £ Finished goods and goods for resale 479,830 304,199 15. Trade and other receivables Trade debtors Other debtors Prepayments and accrued income Corporation tax recoverable Total trade and other receivables 16. Trade and other payables Trade creditors Accruals Other taxation and social security Other creditors Directors’ loan accounts Total trade and other payables Group Year ended 31 December 2016 £ Year ended 31 December 2015 £ 572,691 499,934 1,124,690 - 2,197,315 323,235 677,780 602,619 33,506 1,637,140 Group Year ended 31 December 2016 £ Year ended 31 December 2015 £ 1,383,209 1,546,108 541,314 87,018 - 3,557,649 828,569 569,701 825,772 636,521 572,600 3,433,163 P a g e 41 | 67 Notes to the consolidated financial statements (continued) Comptoir Group PLC Annual Report 2016 17. Borrowings Bank loans Bank overdrafts Finance lease Hire purchase liabilities Total borrowings Group Year ended 31 December 2016 £ 1,990,527 - - 21,921 2,012,448 Year ended 31 December 2015 (Restated) £ 1,703,256 12,416 1,461,043 110,529 3,287,244 The long-term bank loans are secured by way of fixed charges over the assets of various Group companies. Some of the bank loans are secured by a personal guarantee given by A Kitous, director, amounting to £6,925,000 across all loans. Bank loans of £1,990,527, represent amounts repayable within one year of £610,120 and amounts totalling £1,380,407 which are repayable in more than one year but less than five years. All loans have a five-year term with maturity dates of between 2018 and 2020. All loans attract a rate of interest of 3.25% over the Bank base rate. The liability in respect of the finance lease that was entered into in November 2014 is £nil for the year ended 2016. The comparative relates to a property held under finance least that has subsequently been purchased outright, during the current year. Previously interest was charged at a rate of 4% plus LIBOR. The entire hire purchase liability is due within one year. 18. Provisions for liabilities Provisions for leasehold property dilapidations Total provisions Movements on provisions: At 1 January 2016 Provision in the year (net of releases) Total at 31 December 2016 Group Year ended 31 December 2016 £ Year ended 31 December 2015 £ 35,050 35,050 27,388 27,388 Group £ 27,388 7,662 35,050 Provisions for leasehold property dilapidation repairs are recognised when the Group has a present obligation to carry out dilapidation repair work on the leasehold premises before the property is vacated. The amount recognised as a provision is the best estimate of the costs required to carry out the dilapidations work and is spread over the expected period of the tenancy. P a g e 42 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) 19. Deferred Taxation Deferred tax assets and liabilities are offset where the Group or Company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes: Group Liabilities 2016 £ Liabilities 2015 £ Assets 2016 £ Assets 2015 £ Accelerated capital allowances Tax losses Share-based payment 287,287 - - 287,287 171,829 - - 171,829 44,020 160,978 99,997 304,995 (82,160) 164,733 - 82,573 Movements in the year: Net (liability)/asset at 1 January (Credit)/charge to Statement of Comprehensive Income (note 8) Net asset/(liability) at year end Group 2016 £ Group 2015 £ (89,256) (45,216) 106,964 17,708 (44,040) (89,256) The deferred tax liability set out above is related to accelerated capital allowances and will reverse over the period that the fixed assets to which it relates are depreciated. 20. Share capital Authorised, issued and fully paid Brought forward Issues in the period Carried forward Brought forward Issues in the period Carried forward Number of 1p shares Year ended 31 December 2016 10,000 95,990,000 96,000,000 Year ended 31 December 2015 10,000 - 10,000 Nominal value Year ended 31 December 2016 £ 100 959,900 960,000 Year ended 31 December 2015 £ 100 - 100 The company had 5,000 ordinary shares of £0.01 each and 5,000 B ordinary shares of £0.01 each in issue as 31 December 2015. In June 2016, the 5,000 B ordinary shares were re-designated as ordinary shares of £0.01 each P a g e 43 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) and 79,990,000 new ordinary shares of £0.01 each were allotted and issued to the existing shareholders as a bonus issue of shares. On 21 June 2016, the company issued 16,000,000 new shares to the public as part of the IPO and admission of the shares to the AIM market of the London Stock Exchange, raising £8 million before costs of the share issue. 21. Other reserves The other reserves account in the balance sheet reflects the credit to equity made in respect of the charge for share-based payments made through the income statement and the purchase of shares in the market in order to satisfy the vesting of existing and future share awards under the Long-Term Incentive Plan. 22. Retirement benefit schemes Defined contribution schemes Charge to profit and loss 31 December 2016 £ 31 December 2015 £ 39,907 28,051 A defined contribution scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund. 23. Share-based payments scheme Equity-settled share-based payments On 14 June 2016 the Company established an Enterprise Management Incentive (“EMI”) share option scheme and on the same day granted 2,970,000 EMI share options to certain key employees. On exercise the scheme provides for eligible employees to be allotted ordinary shares in Comptoir Group PLC. The scheme includes all subsidiary companies headed by Comptoir Group PLC. The exercise price of all of the options is £0.50, the term to expiration is 10 years and all of the options have the same vesting conditions attached to them. The total share-based payment charge for the year was £479,210 (2015: £Nil). This is included within non-trading items on the face of the statement of comprehensive income. On the same day, 14 June 2016, the Company also granted 1,440,000 unapproved share options to family members of directors, in relation to their capacity as shareholders investing in the company. The exercise price of these options is £0.50, the term to expiration is 10 years and all of the unapproved options have the same vesting conditions attached to them. If options remain unexercised after a period of 10 years from the date of grant, the options expire. Unvested options are forfeited if the employee leaves the group before the options vest, vested options are forfeited if the employee leaves the group before the options are exercised. P a g e 44 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) On 21 June 2016, as a result of the company’s IPO, all 2,970,000 of the EMI options in issue vested, resulting in a charge to the income statement equal to the fair value of the options on the date of grant. Since vesting and to the date of approval of the financial statements none of the options had been exercised and 200,000 options cancelled. Year ended 31 December 2016 Average Exercise price £ - 0.50 0.50 0.50 0.50 Shares No. - 2,970,000 (200,000) 2,770,000 2,770,000 Shares No. Year ended 31 December 2015 Average Exercise price £ - - - - - - - - - - Options outstanding, beginning of year Granted Cancelled Options outstanding, end of year Options exercisable, end of year The Black-Scholes option pricing model is used to estimate the fair value of options granted under the group’s share-based compensation plan. The range of assumptions used and the resulting weighted average fair value of options granted at the date of grant for the group were as follows: Risk free rate of return Expected term Estimated volatility Expected dividend yield Weighted average fair value of options granted Risk free interest rate The risk-free interest rate is based on the UK 2-year Gilt yield. Year ended 31 December 2016 Year ended 31 December 2015 0.10% 10 years 28% 0% £0.173 - - - - - Expected term The expected term represents the maximum term that the group’s share options in relation to employees of the group are expected to be outstanding. The expected term is based on expectations using information available. Estimated volatility The estimated volatility is the amount by which the price is expected to fluctuate during the period. The standard deviation of share price fluctuations of similar businesses was used to quantify the amount of estimated dispersion as there has been less than 6 months of trade for the group. Expected dividends Comptoir’s board of directors may from time to time declare dividends on its outstanding shares. Any determination to declare and pay dividends will be made by Comptoir Group PLC’s board of directors and will depend upon the group’s results, earnings, capital requirements, financial condition, business prospects, contractual restrictions and other factors deemed relevant by the board of directors. In the event that a dividend P a g e 45 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) is declared, there is no assurance with respect to the amount, timing or frequency of any such dividends. Based on this uncertainty and unknown frequency, for the year ended 31 December 2016 no dividend rate was used in the assumptions to calculate the share based compensation expense. 24. Reconciliation of (loss)/profit to cash generated from operations (Loss)/profit for the year Income tax (credit)/expense Finance costs Depreciation Amortisation of intangible assets Impairment of assets Share-based payment charge Movements in working capital Increase in inventories Increase in trade and other receivables Increase in trade and other payables and provisions Cash from operations Year ended 31 December 2016 £ Year ended 31 December 2015 £ (918,113) (86,883) 125,237 950,628 28,958 471,796 479,210 (175,631) (560,175) 54,995 370,022 969,807 317,706 127,810 755,533 - - - (130,821) (536,884) 1,009,130 2,512,281 P a g e 46 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) 25. Reconciliation of changes in cash to the movement in net debt Net debt: Year ended 31 December 2016 £ Year ended 31 December 2015 £ At the beginning of the year (2,619,998) (1,103,863) Movements in the year: Repayment of loan borrowings New loans advances Finance lease payments Hire purchase lease payments Non-cash movements in the year Cash inflow/(outflow) At the end of the year Represented by: Cash and cash equivalents Overdraft Bank loans Other loans Finance leases Hire purchase liabilities Cash and cash equivalents Overdraft Bank loans Finance leases Hire purchase liabilities 613,346 (825,000) 1,508,978 91,710 (126,653) 158,375 (1,199,242) At 31 December 2014 £ Cash flow movements in the year £ Non- cash flow movements in the year £ 1,764,060 - (1,122,147) (50,000) (1,491,475) (204,301) (1,103,863) (1,096,813) (12,416) (522,976) 50,000 90,000 101,725 (1,390,480) - - (58,133) - (59,569) (7,953) (125,655) At 31 December 2015 £ 667,247 (12,416) (1,703,256) (1,461,044) (110,529) (2,619,998) Cash flow movements in the year £ 145,959 12,416 (211,654) 1,508,978 91,710 1,547,409 Non- cash flow movements in the year £ - - (75,617) (47,934) (3,102) (126,653) 527,022 (1,000,000) 90,000 101,723 (125,655) (1,109,229) (2,619,998) At 31 December 2015 £ 667,247 (12,416) (1,703,256) - (1,461,044) (110,529) (2,619,998) At 31 December 2016 £ 813,206 - (1,990,527) - (21,921) (1,199,242) P a g e 47 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) 26. Financial instruments The Group finances its operations through equity and borrowings, with the borrowing interest typically subject to 3.25% per annum over base rate. Management pay rigorous attention to treasury management requirements and continue to: · · ensure sufficient committed loan facilities are in place to support anticipated business requirements; ensure the Group's debt service will be supported by anticipated cash flows and that covenants will be complied with; and · manage interest rate exposure with a combination of floating rate debt and interest rate swaps when deemed appropriate. The Board closely monitors the Group's treasury strategy and the management of treasury risk. Further details of the Group's capital risk management can be found in the report of the Directors. Further details on the business risk factors that are considered to affect the Group are included in the strategic report and more specific financial risk management (including sensitivity to increases in interest rates) are included in the Report of the Directors. Further details on market and economic risk and headroom against covenants are included in the Strategic Report. Financial assets and liabilities Group financial assets: Cash and cash equivalents Trade and other receivables Total financial assets Group financial liabilities: 31 December 2016 £ 31 December 2015 £ 813,207 2,197,315 3,010,522 667,247 1,637,140 2,304,387 31 December 2016 £ 31 December 2015 £ Overdraft Trade and other payables excl. corporation tax Directors’ loans Hire purchase lease debt Finance lease debt Bank loan Short-term financial liabilities Bank loan Finance lease debt Long-term financial liabilities Total financial liabilities *The loans held in the subsidiaries typically have the interest rate of 3.25%p.a. over base rate. At 31 December 2016, the Group has £Nil of committed borrowing facilities in excess of gross borrowings (2015: £Nil) and £Nil of undrawn overdraft (2015: £Nil). - 3,557,649 - 21,921 - 610,120 4,189,690 1,380,407 - 1,380,407 5,570,097 12,416 2,860,563 572,600 88,606 1,461,043 437,501 5,432,729 1,265,755 21,923 1,287,678 6,720,407 P a g e 48 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) The maturity profile of anticipated gross future cash flows, including interest, relating to the Group's non- derivative financial liabilities, on an undiscounted basis, are set out below: Trade and other payables * £ 3,557,649 - - - 3,557,649 Overdraft £ - - - - - Directors’ loans £ Bank loans £ Finance lease debt £ Hire purchase lease liability £ - - - - - 674,484 1,449,311 - (133,268) 1,990,527 - - - - - 12,416 - - 2,860,563 - - 572,600 - - 493,991 1,336,755 - 1,508,978 - - - 12,416 - 2,860,563 - 572,600 (127,490) 1,703,256 (47,935) 1,461,043 (3,262) 110,529 22,081 - - (160) 21,921 91,708 22,083 - As at 31 December 2016 Within one year Within two to five years After five years Less future interest payments Total As at 31 December 2015 Within one year Within two to five years After five years Less future interest payments Total *excluding corporation tax Fair value of financial assets and liabilities All financial assets and liabilities are accounted for at cost and the Directors consider the carrying value to approximate their fair value. P a g e 49 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) 27. Financial risk management The Group’s and Company’s financial instruments comprise investments, cash and liquid resources, and various items, such as trade receivables and trade payables that arise directly from its operations. The vast majority of the Group’s and Company’s financial investments are denominated in sterling. Neither the Group nor the Company enter into derivatives or hedging transactions. It is, and has been throughout the period under review, the Group’s and Company’s policy that no trading in financial instruments shall be undertaken. The main risks arising from the Group’s and Company’s financial instruments are credit risk, liquidity risk, foreign currency risk, interest rate risk and investment risk. The Group does not have a material exposure to foreign currency risk. The board reviews policies for managing each of these risks, and they are summarised as follows: Credit Risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial losses to the Group. Counterparties for cash balances are with large established financial institutions. The Group is exposed to credit related losses in the event of non-performance by the financial institutions but does not expect them to fail to meet their obligations. As a retail business with trading receipts settled either by cash or credit and debit cards, there is very limited exposure from customer transactions. The Group is exposed to credit risk in respect of commercial discounts receivable from suppliers but the Directors believe adequate provision has been made in respect of doubtful debts and there are no material amounts past due that have not been provided against. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group's maximum exposure to credit risk Liquidity risk The Group has built an appropriate mechanism to manage liquidity risk of the short, medium and long-term funding and liquidity management requirements. Liquidity risk is managed through the maintenance of adequate cash reserves and bank facilities by monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The Group's loan facilities (as set out in note 17), ensure continuity of funding, provided the Group continues to meet its covenant requirements. Foreign currency risk The Group is not materially exposed to changes in foreign currency rates and does not use foreign exchange forward contracts. P a g e 50 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) Interest rate risk Exposure to interest rate movements has been controlled historically through the use of floating rate debt to achieve a balanced interest rate profile. The Group does not currently have any interest rate swaps in place as the continued reduction in the level of debt combined with current market conditions results in a low level of exposure. The Group's exposure will continue to be monitored and the use of interest rate swaps may be considered in the future. Investment risk Investment risk includes investing in companies that may not perform as expected. The group’s investment criteria focus on the quality of the business and the management team of the target company, market potential and the ability of the investment to attain the returns required within the time horizon set for the investment. Due diligence is undertaken on each investment. The group regularly reviews the investments in order to monitor the level of risk and mitigate exposure where appropriate. 28. Lease commitments Finance lease commitments Future lease payments in respect of finance leases are due as follows: Within one year Within two and five years After five years Less future interest payments Present value of lease obligations Minimum lease payments Year ended 31 December 2016 £ Year ended 31 December 2015 £ 22,081 - - (160) 21,921 1,600,686 22,083 - (51,197) 1,571,572 All finance lease commitments at the year-end date 31 December 2016 are due to be paid within one year. Analysed as: Amounts due for settlement within one year Amounts due for settlement after one year Present value of lease obligations 21,921 1,552,751 - 18,821 21,921 1,571,572 P a g e 51 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) Lease commitments are in respect of rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of lease periods and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent lease payments. There are no finance leases where the Group itself is the lessor. The interest rate applied in calculating the present value of the payments is the incremental borrowing cost of the Group in relation to each lease, however the time value of money is considered by the Directors to be insignificant in the context of discounting the minimum lease payments and accordingly the present value of the minimum lease payments is considered to be not materially different from the absolute value. The fair value of the lease payments is estimated as £21,921 (2015: £103,994). Operating lease commitments The Group has entered into a number of property leases on standard commercial terms as lessee. There are no restrictions imposed by the Group's operating lease arrangements, either in the current or prior year. At the reporting date the total future minimum rentals payable under non-cancellable operating leases over the remaining lives of the leases are: Within one year Within two and five years After five years Total 31 December 2016 £ 31 December 2015 £ 2,247,070 5,637,967 6,125,427 14,010,464 1,209,422 3,724,313 3,611,945 8,545,680 P a g e 52 | 67 Notes to the consolidated financial statements (continued) Comptoir Group PLC Annual Report 2016 29. Prior year adjustment Changes to the balance sheet – Group As previously reported Adjustment at 1 January 2015 £ £ Adjustment at 31 December 2015 £ As restated £ Balances as restated before IFRS transition adjustments: Non-current assets Property, plant & equipment Current liabilities Finance lease liabilities 6,225,681 1,472,000 (59,275) 7,638,406 - (1,491,475) 30,431 (1,461,043) 6,225,681 (19,475) (28,844) 6,177,363 Capital and reserves Retained earnings 3,184,819 (19,475) (28,844) 3,136,500 Changes to statement of comprehensive income – Group Balances as restated before IFRS transition adjustments: As previously reported £ Adjustment As restated £ £ Total comprehensive income for the year 998,651 (28,844) 969,807 A prior year adjustment has been made to reflect a change in treatment of a leasehold interest held by the Group throughout the prior year. Previously, the lease had been treated as an operating lease and rental payments were recognised within the income statement of a subsidiary entity. Following a review of the facts, the lease is now considered to have more closely met the definitions of a finance lease rather than that of an operating lease and as such the carrying value of the property has been retrospectively recognised in the accounts from the date the lease was entered, being September 2014. The comparative figures shown in these accounts have been adjusted to include the leasehold investment at its fair value of £1,472,000 brought forward as at 1 January 2015 and carried forward as at 31 December 2015, as well as a finance lease liability outstanding at 31 December 2015 of £1,461,043. The impact on brought forward reserves is reflected in the table above. P a g e 53 | 67 Comptoir Group PLC Annual Report 2016 Notes to the consolidated financial statements (continued) 30. Contingent liabilities The Group had no contingent liabilities at 31 December 2016 or 31 December 2015. 31. Capital commitments The Group had no capital commitments at 31 December 2016 or 31 December 2015. 32. Directors’ transactions During the year Comptoir Group PLC paid a dividend of £39,188 (2015: £352,425) to C Hanna, who is a director and shareholder of Comptoir Group PLC. Comptoir Group PLC paid a dividend of £39,188 (2015: £317,250) to A Kitous, who is a director and shareholder of Comptoir Group PLC. Included within trade and other payables at the reporting date is £Nil (2015: £340,850) which is owed to the director, A Kitous and £Nil (2015: £231,750) which is owed to director, C Hanna 33. Related party transactions Remuneration in respect of key management personnel, defined as the Directors for this purpose, is disclosed in note 6. Further information concerning the Directors' remuneration is provided in the Directors' remuneration report. 70,000 and 150,000 of the EMI options that were issued on the 14 June 2016 and are detailed in note 23, were granted to M Kitous, brother of Director, A Kitous and P Hanna, son of Director, C Hanna, respectively. All of the unapproved share options that were issued on the 14 June 2016 and are detailed in note 23, were issued to family members of J Kaye, a director of the company. The exercise price of these options is £0.50, the term to expiration is 10 years and all of the unapproved options have the same vesting conditions as the approved options attached to them. During the year, the Group paid fees of £10,417 (2015: £25,000) to Messrs Gerald Edelman, a firm in which director R Kleiner is a partner, in respect of part of his non-executive director fees. Also during the year, the Group paid further amounts totalling £33,433 to Messrs Gerald Edelman, in respect of accountancy and corporate finance services provided to the Group. 34. Ultimate controlling party The ultimate controlling party is A Kitous, one of the Group’s directors due to his ownership of 52.1% of the share capital at the year end. 35. Subsequent events There were no significant subsequent events which the directors consider require disclosure within these financial statements. P a g e 54 | 67 Comptoir Group PLC Annual Report 2016 Parent Company financial statements (under UK GAAP) Company balance sheet as at 31 December 2016 Notes 31 December 2016 £ 31 December 2015 (Restated) £ Fixed assets Property, plant and equipment Investment property Intangible assets Investments in subsidiaries Current assets Debtors Cash and cash equivalents Total assets Liabilities Current liabilities Creditors Provisions for liabilities Total liabilities Net assets Equity Share capital Share premium Other reserves Retained earnings Total equity – attributable to equity shareholders of the company iii iv v vi vii ix viii x x x x 28,356 1,680,136 72,896 480,590 2,261,978 8,746,986 105,779 8,852,765 34,299 1,600,000 - 1,380 1,635,679 2,162,059 23,605 2,185,664 11,114,743 3,821,343 (2,272,010) (2,272,010) (2,867,781) (2,867,781) (23,624) - (2,295,634) (2,867,781) 8,819,109 953,562 960,000 6,465,687 479,210 914,212 8,919,109 100 - - 953,462 953,562 The financial statements of Comptoir Group Plc (company registration number 07741283) were approved by the Board of Directors and authorised for issue on 11 April 2017 and were signed on its behalf by: Chaker Hanna Chief Executive Director P a g e 55 | 67 Comptoir Group PLC Annual Report 2016 Company financial statements – under UK GAAP Accounting policies and basis of preparation Basis of accounting The accounts for the Company have been prepared under FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (FRS 102”) and the requirements of the Companies Act 2006. The Group accounts have been prepared under IFRS and are shown separately. The Company accounts have been prepared under the historical cost convention in accordance with applicable UK accounting standards and on the going concern basis. Going concern The Board of Directors have, at the time of approving the financial statements, a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus, the Board continues to adopt the going concern basis of accounting in preparing the financial statements. Dividends Equity dividends are recognised when they become legally payable. Interim dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting. Investments in subsidiaries Investments are valued at cost less any provision for impairment. Intangible assets – Goodwill Goodwill is the difference between amounts paid on the acquisition of a business and the fair value of the identifiable assets and liabilities. It is amortised to the income statement over its economic life, which is estimated to be ten years from the date of acquisition. Share-based payment transactions The share options have been accounted for as an expense in the company in which the employees are employed, using a valuation based on the Black-Scholes model. An increase in the investment held by the Company in the subsidiary in which the employees are employed, with a corresponding increase in equity, is recognised in the accounts of the Company. Information in respect of the Company's share-based payment schemes is provided in note 23 to the consolidated financial statements. The value is accounted for as a capital contribution in relevant Group subsidiaries that employ the staff members to whom awards of share options have been made. P a g e 56 | 67 Comptoir Group PLC Annual Report 2016 Company financial statements – under UK GAAP Accounting policies and basis of preparation (continued) Reserves The Company’s reserves are as follows: • Called up share capital reserve represents the nominal value of the shares issued. • Share premium represents amounts paid in excess of the nominal value of shares. • Other reserves represent share-based payment charges recognised in equity, and; • Profit and loss accounts represents cumulative profits or losses, net of dividends paid and other adjustments. Investment property In accordance with FRS 102, property leased to subsidiary entities is classified as Investment Property. Investment property is carried at fair value and revaluation surpluses or losses are recognised in the Statement of Comprehensive Income. Deferred tax is provided on the gains at the rate expected to apply when the property is sold. P a g e 57 | 67 Comptoir Group PLC Annual Report 2016 Company financial statements – under UK GAAP Notes to the accounts i) Profit attributable to members of the holding company As permitted by section 408 of the Companies Act 2006, a separate profit and loss account has not been presented for the holding company. During the year, the Company recorded a loss of £39,125. Remuneration of the auditor is borne by a subsidiary undertaking, Timerest Limited. ii) Employee costs and numbers The company has no employees. All Group employees and Directors’ remuneration are disclosed within the Group’s consolidated financial statements. iii) Property, plant and equipment Leasehold Land and buildings £ Plant and machinery £ Fixture, fittings & equipment £ Total £ 11,290 - 26,655 - 5,555 - 43,500 - 11,290 26,655 5,555 43,500 3,126 2,258 5,384 5,256 3,210 8,466 819 475 1,294 9,201 5,943 15,144 8,164 21,399 4,736 34,299 5,906 18,189 4,261 28,356 Cost At 1 January 2016 Additions At 31 December 2016 Accumulated depreciation and impairment At 1 January 2016 Depreciation during the year AT 31 December 2016 Net Book Value as at 31 December 2015 Net Book Value as at 31 December 2016 P a g e 58 | 67 Company financial statements – under UK GAAP Notes to the accounts (continued) Comptoir Group PLC Annual Report 2016 iv) Investment property Fair value at 1 January 2016 Additions Revaluations At 31 December 2016 £ 1,600,000 80,136 - 1,680,136 The property is held at Directors’ valuation. The Board consider that, during the year, there have been no indicators, which they believe would lead to a material change in the value from the prior year, and as a result there have been no changes to the valuation previously recorded. v) Intangible assets Goodwill Cost At 1 January 2016 Acquisition during the year At 31 December 2016 Accumulated amortisation and impairment At 1 January 2016 Amortisation during the year At 31 December 2016 Net book value as at 31 December 2015 Net book value as at 31 December 2016 Total £ - 74,979 74,979 - 2,083 2,083 - 72,896 In accordance with FRS 102, goodwill arising on business combinations is amortised over the expected life of the asset and is subject to an impairment review annually if the life of the assets is indefinite or expected to be greater than 20 years, or more frequently if events or changes in circumstances indicate that it might be impaired. Therefore, goodwill arising on acquisition is monitored to compare the value in use to its carrying value. The intangible assets reported on the statement of financial position include goodwill arising on the acquisition on 14 December 2016 of the trade and assets of Agushia Limited. The transaction is described in more detail in note 11 to the consolidated financial statements. P a g e 59 | 67 Company financial statements – under UK GAAP Comptoir Group PLC Annual Report 2016 Notes to the accounts (continued) vi) Investments in subsidiary undertakings Cost At 31 December 2015 Additions – share-based payments re-charged At 31 December 2016 Amounts written off At 31 December 2015 and 31 December 2016 Net book value at 31 December 2015 Net book value at 31 December 2016 vii) Debtors Trade debtors Other debtors Amounts receivable from group undertakings Total viii) Deferred tax liabilities Deferred tax recognised in balance sheet: Deferred tax liabilities: Brought forward Liability incurred on revaluation of investment property Total deferred tax Shares £ 1,380 - 1,380 - 1,380 1,380 Loans and other £ - 479,210 479,210 - - 479,210 Total £ 1,380 479,210 480,590 - 1,380 480,590 Year ended 31 December 2016 £ Year ended 31 December 2015 £ - 49,561 8,697,425 12,804 14,786 2,134,469 8,746,986 2,162,059 - 23,624 23,624 P a g e 60 | 67 Company financial statements – under UK GAAP Notes to the accounts (continued) ix) Creditors Comptoir Group PLC Annual Report 2016 Trade creditors Directors’ loans Amounts due to group undertakings Obligations under finance leases - xi Other creditors Total x) Share capital and reserves Year ended 31 December 2016 £ 22,486 - 2,248,054 - 1,470 Year ended 31 December 2015 (Restated) £ 15,231 506,250 883,787 1,461,043 1,470 2,272,010 2,867,781 At 1 January 2016, as previously stated Prior period adjustment - xi At 1 January 2016, as restated Issue of shares Employee shared-based payment schemes Profit for the year Dividends paid Share capital £ 100 - 100 959,900 - - - Share premium £ - - - 6,465,687 - - - Other reserves £ Profit and loss account £ - - - - 814,505 138,957 953,462 - Total £ 814,605 138,957 953,562 7,425,587 479,210 - 479,210 - - 39,125 (78,375) 139,122 (78,375) At 31 December 2016 960,000 6,465,687 479,210 914,212 8,819,109 Details of share issues during the year are given in note 20 of the consolidated accounts and details of the dividends paid and proposed during the year are given in note 10 of the consolidated accounts. P a g e 61 | 67 Comptoir Group PLC Annual Report 2016 Company financial statements – under UK GAAP Notes to the accounts (continued) xi) Prior period adjustment A prior year adjustment has been made to reflect a change in treatment of a leasehold interest held by the Company throughout the prior year. Previously, the lease had been treated as an operating lease and rental payments were recognised within the income statement of a subsidiary entity. Following a review of the facts, the lease is now considered to have more closely met the definitions of a finance lease rather than that of an operating lease and as such the carrying value of the property has been retrospectively recognised in the accounts of the Company from the date the lease was entered into, being September 2014. As the property has been leased to a group company since inception of the lease, the property is classified as an investment property in the Company’s accounts and is carried at its fair value. A finance lease liability has also been brought into the accounts, with interest being charged thereon being taken to the Statement of Comprehensive Income. The comparative figures shown in these accounts have been adjusted to include freehold investment property at its fair value of £1,600,000 brought forward as at 1 January 2015 and carried forward as at 31 December 2015, as well as a finance lease liability outstanding at 31 December 2015 of £1,461,043. The impact on brought forward reserves is a net increase of £138,957, which represents the fair value adjustment of £118,121, plus rental income of £90,000 receivable from one of the Company’s subsidiaries, less finance costs of £69,164. See note 29 of the consolidated accounts for the effect on the group financial statements. xii) Contingent liabilities The company had no contingent liabilities at 31 December 2016 or 31 December 2015. Capital commitments xiii) The company had no capital commitments at 31 December 2016 or 31 December 2015. Related party transactions xiv) The company has taken advantage of the exemption in FRS 102 and has not disclosed transactions entered into between members of the group. xv) Ultimate controlling party The ultimate controlling party is A Kitous, one of the company’s directors. Subsequent events xvi) There were no significant subsequent events which the directors consider require disclosure within these financial statements. P a g e 62 | 67 Comptoir Group PLC Annual Report 2016 Notice of Annual General Meeting Comptoir Group PLC Registered in England and Wales with no. 7741283 Notice is hereby given that the 2017 Annual General Meeting of Comptoir Group Plc will be held at 73, Cornhill, London EC3V 3QQ on 7 June 2017 at 12.00 p.m. for the transaction of the following business: ORDINARY BUSINESS As ordinary business to consider and, if thought fit, to pass the following resolutions, each of which will be proposed as ordinary resolutions: 1. THAT, the Company's annual accounts for the 52 weeks ended 31 December 2016, together with the report of the auditors and the directors thereon, be received and adopted. 2. THAT, Jonathan Kaye, who retires in accordance with the Company's articles of association, be re-elected as a director. 3. THAT, Chaker Hanna, who retires in accordance with the Company's articles of association, be re-elected as a director. 4. THAT, UHY Hacker Young LLP be re-appointed as auditors to the Company until the conclusion of the next Annual General Meeting at which accounts of the Company are presented and the directors be authorised to fix their remuneration. SPECIAL BUSINESS As special business to consider and, if thought fit, to pass the following resolutions, of which resolution 5 will be proposed as an ordinary resolution and resolution 6 as a special resolution: 5. THAT, the directors be and they are generally and unconditionally authorised for the purposes of section 551 of the Companies Act 2006 (the "Act") to exercise all the powers of the Company to allot shares, or to grant rights to subscribe for or to convert any securities into shares, of up to an aggregate nominal amount of £96,000 during the period commencing on the passing of this resolution and expiring on the date of the next annual general meeting of the Company (unless previously revoked, varied or extended by the Company in general meeting), but so that the Company may before such expiry make an offer or agreement which would or might require shares to be allotted, or rights to subscribe for or to convert any securities into shares to be granted, after such expiry and the directors may allot shares, or grant rights to subscribe for or to convert any securities into shares, in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired. This authority is in substitution for all subsisting authorities, to the extent unused. 6. THAT, the directors be and they are empowered during the period commencing on the passing of this resolution and expiring on the date of the next annual general meeting of the Company (unless previously revoked, varied or extended by the Company in general meeting) pursuant to section 570(1) of the Act to allot equity securities (within the meaning of section 560(1) of the Act) wholly for cash pursuant to the authority conferred by resolution 5 above as if section 561(1) of the Act did not apply to any such allotment, provided that this power shall be limited to: (i) (ii) the allotment of equity securities for cash up to an aggregate nominal amount of £96,000; and the allotment of equity securities in connection with an offer of such securities by way of rights to holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings of such shares, but subject to such exclusions or other arrangements as the directors P a g e 63 | 67 Comptoir Group PLC Annual Report 2016 may deem necessary or expedient in relation to fractional entitlements or any legal or practical problems under the laws of any territory, or the requirements of any regulatory body or stock exchange, but so that this authority shall allow the Company to make offers or agreements before the expiry and the directors may allot equity securities in pursuance of such offers or agreements as if the powers conferred hereby had not so expired. By order of the Board AIS Secretarial Services Limited Secretary 11 April 2017 Registered Office: Suite 4, Strata House, 34a Waterloo Road, London, NW2 7UH P a g e 64 | 67 Comptoir Group PLC Annual Report 2016 The following notes explain your general rights as a shareholder and your right to attend and vote at this Meeting or to appoint someone else to vote on your behalf. 1. To be entitled to attend and vote at the Meeting (and for the purpose of the determination by the Company of the number of votes they may cast), shareholders must be registered in the Register of Members of the Company at close of trading on 5 June 2017. Changes to the Register of Members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the Meeting. 3. 2. Shareholders, or their proxies, intending to attend the Meeting in person are requested, if possible, to arrive at the Meeting venue at least 20 minutes prior to the commencement of the Meeting at 12.00 (UK time) on 7 June 2017 so that their shareholding may be checked against the Company’s Register of Members and attendances recorded. Shareholders are entitled to appoint another person as a proxy to exercise all or part of their rights to attend and to speak and vote on their behalf at the Meeting. A shareholder may appoint more than one proxy in relation to the Meeting provided that each proxy is appointed to exercise the rights attached to a different ordinary share or ordinary shares held by that shareholder. A proxy need not be a shareholder of the Company. A form of proxy which may be used to make such appointment and give proxy instructions accompanies this Notice. If you do not have a form of proxy and believe that you should have one, or if you require additional forms, please contact the registrar of the Company whose contact details are provided below. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s Register of Members in respect of the joint holding (the first named being the most senior). 4. 5. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting. 6. To be valid, any form of proxy or other instrument appointing a proxy, must be returned by no later than 12pm on 4 June 2017 through any one of the following methods: by post, courier or (during normal business hours only) hand to the Company’s UK registrar at: Capita Asset Services PXS1 34 Beckenham Road Beckenham BR3 4ZF; electronically through the website of the Company’s UK registrar at www.capitashareportal.com; or in the case of shares held through CREST, via the CREST system (see notes below); 7. If you return more than one proxy appointment, either by paper or electronic communication, the appointment received last by the Registrar before the latest time for the receipt of proxies will take precedence. You are advised to read the terms and conditions of use carefully. Electronic communication facilities are open to all shareholders and those who use them will not be disadvantaged. P a g e 65 | 67 Comptoir Group PLC Annual Report 2016 8. The return of a completed form of proxy, electronic filing or any CREST Proxy Instruction (as described in note 11 below) will not prevent a shareholder from attending the Meeting and voting in person if he/she wishes to do so. 9. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Meeting (and any adjournment of the Meeting) by using the procedures described in the CREST Manual (available from www.euroclear.com/site/public/EUI). CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the issuer’s agent (ID RA10) by 12pm on 5th June 2017. For this purpose, the time of receipt will be taken to mean the time (as determined by the timestamp applied to the message by the CREST application host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a shareholder provided that no more than one corporate representative exercises powers in relation to the same shares. As at 12 April 2017 (being the latest practicable business day prior to the publication of this Notice), the Company’s ordinary issued share capital consists of 96,000,000 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at 12 April 2017 are 96,000,000. Under Section 527 of the Companies Act 2006, shareholders meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company’s financial statements (including the Auditor’s Report and the conduct of the audit) that are to be laid before the Meeting; or (ii) any circumstances connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual financial statements and reports were laid in accordance with Section 437 of the Companies Act 2006 (in each case) that the shareholders propose to raise at the relevant meeting. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with Sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under Section 527 of the Companies Act 2006, it must forward the statement to the Company’s auditor not later than the time when it makes the statement available on the website. The business P a g e 66 | 67 Comptoir Group PLC Annual Report 2016 which may be dealt with at the Meeting for the relevant financial year includes any statement that the Company has been required under Section 527 of the Companies Act 2006 to publish on a website. Any shareholder attending the Meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the Meeting but no such answer need be given if: (a) to do so would interfere unduly with the preparation for the Meeting or involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the Company or the good order of the Meeting that the question be answered. The following documents are available for inspection during normal business hours at the registered office of the Company on any business day from the date of this Notice until the time of the Meeting and may also be inspected at the Meeting venue, as specified in this Notice, from am on the day of the Meeting until the conclusion of the Meeting: Copies of the Directors’ letters of appointment or service contracts. You may not use any electronic address (within the meaning of Section 333(4) of the Companies Act 2006) provided in either this Notice or any related documents (including the form of proxy) to communicate with the Company for any purposes other than those expressly stated. A copy of this Notice, and other information required by Section 311A of the Companies Act 2006, can be found on the Company’s website atwww.comptoirlibanais.com P a g e 67 | 67 

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