Corporate governance

The Board have elected to adopt the Quoted Companies Alliance (QCA) corporate governance code in line with the changes under the new rule 26 of the AIM Rules for Companies requiring all companies that are traded on AIM to adopt and comply with a recognised corporate governance code. The code revolves around ten principles and the following sets out how the business currently complies with this code.

 

Principle 1: Establish a strategy and business model which promotes long-term value for shareholders

Comptoir Group plc owns and operates Lebanese and Eastern Mediterranean restaurants based predominantly in England. The core restaurant brand of the Comptoir Group is Comptoir Libanais, which offers an all-day dining experience based around healthy and fresh food in a friendly, colourful and vibrant environment. Comptoir also generates franchise revenue by franchising the Comptoir Libanais brand to other restaurant operators, and operates smaller Lebanese and Eastern Mediterranean outlets under the Shawa brand, serving traditional shawarmas through a service counter. In addition, the Group owns a further two standalone high-end restaurants, called Levant and Kenza.

The Company’s strategy is to create a sustainable, growing business through the focus on increasing customer awareness of the unique offering, continued selective investment in new sites and further expansion of its franchised operations, offering a complimentary and relatively low risk route to extend the presence of the brands, Comptoir Libanais and Shawa, both within the UK and overseas.

It is the Board’s role to ensure that the Comptoir Group is managed for the long term benefit of all shareholders. Corporate governance is a key part of this, in terms of seeking to reduce risk and add value to the business.

Further detail on the Group’s strategy and business model, as well as the key challenges faced by the Company in achieving its goals, can be found in the 2017 Annual Report and Accounts (“2017 Accounts”) and in the Company’s Admission Document which was published in June 2016 (the “Admission Document”), both of which can be found in the Comptoir Group’s corporate website (www.investors.comptoirlibanais.com).

 

Principle 2: Seek to understand and meet shareholder needs and expectations

 The Company communicates openly with and listens to its shareholders to ensure that its strategy, business model and performance are clearly understood. We actively seek to understand what analysts and investors think about us as this is a key part of driving our business forward. We approach this via investor roadshows and meetings with investors (whether on a group or an individual basis).

Comptoir engages with shareholders in the following ways:

  • There is a regular dialogue with institutional investors including presentations after the year end and interim 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.
  • In addition to announcements that the Company makes to the market, the Board uses the Annual General Meeting as a forum to communicate with shareholders and welcomes their participation.

Corporate information (including all Company announcements) is available to shareholders, investors and the public on the Comptoir Group’s corporate website, www.investors.comptoirlibanais.com.

Comptoir’s Chief Financial Officer, Mark Carrick, is primarily responsible for shareholder liaison. If shareholders wish to discuss any matters with him or Comptoir’s Chairman, Richard Kleiner, they can be contacted by email at investor.relations@comptoirgroup.co.uk

 

Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success

The Board recognises that long-term success relies upon good relations with its stakeholder groups, both internal (workforce) and external (suppliers, customers, regulators and others). As part of Comptoir’s annual planning and budgeting process, the Company seeks to identify its stakeholders and their respective needs, interests and expectations. In addition, the strategy for engaging with these stakeholder groups is formulated and implemented.

We are committed to a culture of respect and a positive, productive working environment, which is free from any form of discrimination. We are an equal opportunities employer and are committed to treating all current and potential new recruits equally.

Comptoir values feedback from its stakeholders and the mechanisms in place include:

  • Direct feedback from customers, which the site teams report back centrally to senior management on a daily basis to act upon where appropriate.
  • The Company also operates a formal external ‘Mystery diner’ Net Promoter Score scheme, with every site visited each month with a formal structured feedback mechanism to ensure the customer experience attains the highest level of standards, quality and service expectations. The Company places high value on this vital feedback channel and ensures actions are taken where appropriate to ensure the customer experiences the greatest possible experience.
  • Comptoir proactively engages and seeks feedback from its customers through a Wi-Fi medium being trialled in a number of the restaurants known as ‘Wireless Social’. This GDPR compliant medium enables direct engagement with our guests and includes an email based platform which submits valuable reviews on to TripAdvisor.
  • Comptoir values feedback from its employees and this includes daily communication of management feedback through the daily issue of a Trading Update report to Senior Management and the Operations Team and through the monthly publication of the internal employee magazine, Levantine Times.

 

Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation.

The Company operates a risk assessment process, which is embedded in normal management and governance processes. As part of the annual planning and budgeting process, Comptoir management document the significant risks identified, the probability of those risks occurring, their potential impact and the plans for managing and mitigating each of those risks.

The Board reviews the annual risk assessment including an annual assessment of the effectiveness of the Company’s internal control system, comprising financial, operational and compliance controls, to ensure that the Company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver the Company’s strategy. This review considers issues included in reports received during the year, how the risks have changed during the year and reviews any reports prepared on internal controls by management and any issues identified by external auditors.

The Board is responsible for the Company’s system of internal control and for reviewing its effectiveness, whilst the role of executive management is to implement policies on risk management and control. The Company’s system of internal control is designed to mitigate, rather than eliminate, the risk of failure to achieve the Company’s business objectives and can only provide reasonable, and not absolute, assurance against material misstatement or loss.

The Company operates a series of controls to meet its needs. These controls include, but are not limited to, the annual strategic planning and budgeting process, a clearly defined organisational structure with authorisation limits, reviews by senior management of monthly financial and operating information including comparisons with budgets, and cash flow reports and forecasts to the Board.

The Audit Committee (“AC”) reviews the effectiveness of internal controls. The AC receives reports from management and observations from the external auditors concerning internal control systems and any material control weaknesses. Significant risk issues, if any, are referred to the Board of Directors for consideration.

The Board of Directors does not believe it is currently appropriate to establish a separate, independent internal audit function, given the size of the Company.

Further detail on the key risks faced by the Group can be found in the 2017 Accounts and the Admission Document.

 

Principle 5: Maintain the board as a well-functioning, balanced team led by the chair

The Board sets Comptoir’s overall strategic direction, reviews management performance and seeks to ensure that the Company has the necessary financial and human resources in place to meet its objectives. The Board is satisfied that the necessary controls and resources exist within the Company to enable these responsibilities to be met.

The Chairman is responsible for running the business of the Board and for ensuring strategic focus and direction. The Chief Executive Officer proposes the strategic focus to the Board, implementing it once approved and oversees the management of the Company through the Executive Team.

The Board of Directors comprises the Non-Executive Chairman, three Executive Directors and one Non-Executive Director (to be appointed); the Board and Committee responsibilities are set out below:

 

Non-Executive / Executive Director Board Audit Committee Remuneration Committee
Richard Kleiner Non-Executive Chairman Member Member
To Be Appointed Non-Executive Member Member Member
Chaker Hanna Executive Member
Tony Kitous Executive Member
Mark Carrick Executive Member

 

The composition of the Board of Directors is reviewed regularly. Appropriate training, briefings, and inductions are available to all Directors on appointment and subsequently as necessary, taking into account existing qualifications and experience.

The Comptoir Board currently includes one independent non-executive director, Richard Kleiner. The Board is in the process of appointing an additional independent non-executive director to meet the QCA Corporate Governance Code requirement of having at least two independent non-executive directors, and has commenced a search process for this appointment.

The Directors’ employment and service contracts are summarised below:

  • Chaker Hanna has an employment agreement which provides for the payment of twelve months’ base salary if the agreement is terminated by the Company without cause.
  • Tony Kitous has an employment agreement which provides for the payment of twelve months’ base salary if the agreement is terminated by the Company without cause.
  • Mark Carrick has an employment agreement which provides for the payment of three months’ base salary if the agreement is terminated by the Company without cause.
  • The Non-Executive Directors letters of appointment are for 12-month terms and provide that the appointment may be terminated by either party giving to the other not less than three months’ notice.

Non-executive directors, per their letters of appointment, have a time commitment to the Company of which includes the attendance of eleven board meetings and the Company’s AGM.  In addition, non-executive directors are expected to devote appropriate preparation time ahead of each meeting.

One third of all Directors are subject to annual reappointment by shareholders as well as any Director appointed by the Board in the period since the last AGM. Richard Kleiner will be offering himself for re-election at the forthcoming AGM.

The Board of Directors meets every month with additional meetings or conference calls held as required. Each Director is provided with sufficient information to enable them to consider matters in good time for meetings to enable them to discharge their duties properly.

The Board receives monthly briefings on the Company’s performance (including detailed commentary and analysis), key issues and risks affecting the Company’s business.

There is a documented schedule of matters reserved for the Board, the most significant of which are:

  • responsibility for the overall strategy and management of the Company;
  • approval of strategic plans and budgets and any material changes to them;
  • approval of the acquisition or disposal of subsidiaries and major investments, projects and
  • contracts;
  • oversight of the Company’s operations ensuring competent and prudent management, sound planning and management of adequate accounting and other records;
  • changes relating to the Company’s capital structure;
  • final approval of the annual and interim financial statements and accounting policies;
  • review and approval of the Company’s dividend policy;
  • ensuring an appropriate system of internal control and risk management is in place;
  • approval of changes to the structure, size and composition of the Board;
  • review of the management structure and senior management responsibilities;
  • with the assistance of the Remuneration Committee, approval of remuneration policies;
  • delegation of the Board’s powers and authorities;
  • consideration of the independence of the Non-Executive Directors; and
  • receiving reports on the views of the Company’s shareholders.

All Directors have access to the advice and services of the Company Secretary. In addition, any Director may take independent professional advice if necessary, at the Company’s expense.

The Company maintains liability insurance for its Directors and Officers. The Company has also entered into indemnity agreements with the Directors, in terms of which the Company has indemnified its Directors, subject to the Companies Act limitations, against any liability arising out of the exercise of the Directors’ powers, duties and responsibilities as a Director or Officer.

 

Principle 6: Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

Each of our directors brings a wide range of skills and depth of knowledge that collectively contribute to the effectiveness of the Board as a whole.

The Board of Comptoir has a strong mix of operational, commercial and financial skills and experience, with the Board having extensive experience across the multi-site restaurant sector.

  • Governance experience is provided by Richard Kleiner who is non-executive Chairman
  • Strategic operational, commercial and creative experience is provided by Chaker Hannah (CEO) and Tony Kitous (Founding Director).
  • Financial management experience is provided by Mark Carrick (CFO).

As noted in the Chairman’s Governance statement, the Board intends to appoint an additional independent non-executive director.

The Company also receives advice from its external advisers, specifically Gerald Edelman (Technical Accounting and Taxation Services), Cenkos Securities Plc (Nominated Advisor and Broker), Howard Kennedy LLP (Lawyers to the Company) and UHY Hacker Young LLP (Auditors to the Company).

Richard Kleiner

Non-Executive Chairman

Age: 59

Appointed: 1st March 2014

Mr Kleiner is a chartered accountant by profession with many years’ experience in corporate finance, public markets and mergers and acquisitions. In addition to being the chief executive officer of Gerald Edelman, a London-based firm of Chartered Accountants, Mr Kleiner is also a director of Avanti Capital Plc, the AIM-quoted investment company, and has a number of other private company non-executive directorships. Mr Kleiner brings substantial experience in guiding companies through their various phases of corporate development and growth, including flotations and trade sales.

Mr Kleiner keeps his skills up to date through exposure to multiple businesses in his leadership role at Gerald Edelman and non-executive directorships in various other businesses, as well as by regularly attending relevant training courses and seminars in order to maintain his membership of the Institute of Chartered Accountants in England and Wales.

Chaker Hanna

Chief Executive Officer

Age: 58

Appointed: 16th August 2011

Chaker was born and educated in Lebanon and joined Tony Kitous as a partner in the business in 2010. Chaker has wide experience within the restaurant industry including both nationally and internationally renowned brands such as Chili’s, Pizza Hut, Bella Italia, Maggiano’s and Romano’s Macaroni Grill. Chaker was a key member of the team responsible for the launch of the first Bella Italia and assisting in the roll-out of the brand. Chaker is responsible for the overall management and strategic direction of the Group and maintains his skillset through continual business networking and keeping abreast of the wide spectrum of industry related issues.

Tony Kitous

Founding Director

Age: 48

Appointed: 16th August 2011

Tony opened his first restaurant 23 years ago and has been widely recognised for making Lebanese and Middle Eastern food accessible on the high street within the UK. Tony has featured on various television shows explaining and demonstrating his passion for Lebanese and Middle Eastern food and has released three cookbooks in the UK and internationally. Tony is responsible for all design and creative aspects of the Group and maintains his skillset through networking within the industry, both domestically and internationally, and in his hands-on involvement in driving the continual evolution of the Comptoir offering.

Mark Carrick

Chief Financial Officer

Age: 50

Appointed: 16th July 2018

Mark joined the Group in April 2018 as Chief Financial Officer and was appointed executive director in July 2018. He was formerly Director of Operational Finance with the Ten Entertainment Group. Mark started his career in hospitality at JD Wetherspoon in 1999 and has since held several senior roles within a diverse range of multi-site leisure businesses over the past 19 years providing finance, commercial and operational expertise. Mark is a qualified Chartered Management Accountant (ACMA) and maintains his skillset through business networking, research and continuing professional development.

 

Principle 7: Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

The Board provides leadership in the development, implementation and promotion of the Group’s strategy.  The Board ensures that the Company’s culture and values are aligned with this strategy.

The Board meet as a minimum each month, with the exception of December, to review:

  • the Group’s operational performance;
  • business performance;
  • sales, marketing and IT development opportunities;
  • property matters including potential new site opportunities;
  • strategic considerations; and
  • the progress of previously agreed actions.

Comptoir has established a Board effectiveness review to enable the Board to stand back and assess its strengths and areas for development. This review will initially be conducted internally and will be performed annually.

  • The criteria for the assessment of board and individual director performance shall be based on the other 9 principles of the QCA code. The Questionnaire will be completed annually following the financial year end.
  • All members of the Board will be required to complete the Questionnaire.
  • The results of the Questionnaires will be collated by the Company Secretary and the Board will at the following Board meeting review: (i) the average score in each of the 9 sections, (ii) the top 3 scores, and (iii) the lowest 3 scores, in order to identify areas of strength and areas for additional focus and development.
  • The Board will consider those questions where there is a significant range of responses, especially where executive Board members and independent NEDs have divergent views, and explore the reasons for them.
  • Following the Questionnaire review, the Board will prepare an action plan, with an implementation timetable.

The effectiveness of the Board is also measured on the achievements of the Company’s annual budget and strategic plan.

Given Comptoir’s size, the Company does not have internal succession candidates for the Executive Directors. Comptoir’s approach would therefore be, in the event an Executive Director replacement is required, to seek to recruit though a recruitment search process.  The Board are satisfied that the Company’s middle management will ensure the Company’s business is not adversely impacted in the period between an Executive Director leaving and a replacement being recruited.

The Comptoir Remuneration Committee reviews and recommends nominees as new directors to the Board.  Senior management appointments are required to be approved by the Comptoir Remuneration Committee.

 

Principle 8: Promote a corporate culture that is based on ethical values and behaviours

Successful companies have a strong culture and deeply rooted shared values. In common with most restaurant operators, at Comptoir, we know that the skills, experiences and passion of our employees are genuinely what enable our customers to experience the highest level of quality, standards and service.

With a growing business, the level of team diversity and multi-site operations, we have recognised the importance of our culture and values.  Our culture and values are underpinned by the strategy which promotes a Lebanese canteen that is accessible to everyone in terms of affordability and atmosphere, but most of all a place that will celebrate the warmth and tastes of Lebanese culture with the aim of making Lebanese food as accessible as Italian food.

It is really important that our customers feel like they are walking into a family environment every time they enter a Comptoir restaurant. Our teams are chosen carefully, we want people who share the same passion and drive that we have for our customers.

We have a code of conduct which all team members sign up to when they begin their employment with Comptoir. This includes subjects covering conflicts of interest, fraud, bribery and corruption. We take a zero-tolerance approach to bribery and corruption and are committed to act professionally, fairly and with integrity in all business dealings and relationships.

We operate an internal ‘care card’ process whereby the Operations Team (including individual restaurant managers) make unannounced visits to sites and carry out a comprehensive review culminating with the completion of a detailed report which includes evaluation that all team members are working to the highest operational and ethical standards.

The Board undertakes informal enquiries of employees to ensure these values are upheld and promoted to ensure a healthy corporate culture. Feedback from all stakeholders in the business, as set out in Principle 3, allows the Board to assess the state of its corporate culture, as well as performance against the Company’s internal targets.

 

Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the board.

Descriptions of the roles and responsibilities of the Chair and CEO are set out above in relation to principle 5, along with matters reserved for the Board.

Comptoir recognises its responsibility to provide entrepreneurial and responsible leadership to the Group within a framework of prudent and effective controls (described below) allowing assessment and management of the key issues and risks impacting the business.

The Board sets Comptoir’s overall strategic direction, reviews management performance and ensures that the Company has the necessary financial and human resources in place to meet its objectives. The Board is satisfied that the necessary controls and resources exist within the Company to enable these responsibilities to be met.

The Board also ensures that the principal goal of the Company is to create shareholder value, while having regard to other stakeholder interests and takes responsibility for setting the Company’s values and standards.

 

Board Committees

The Company has an Audit Committee and a Remuneration Committee, details of which are set out below.

Audit Committee (“AC”)

The AC comprises Richard Kleiner, who is the Committee Chairman, and will also include the other non-executive director (once appointed), and meets at least twice a year. The Company’s Chief Financial Officer and the Company’s external auditors attend the meetings. The AC reviews the scope and results of the external audit, its cost effectiveness and the objectivity of the auditors. It also reviews, prior to publication, the interim financial statements, preliminary results announcement, the annual financial statements and the other information included in the Annual Report. In addition, the AC considers the regulatory, technical and operational risks of the Company and ensures these risks are properly assessed, monitored and reported on and the appropriate policies and procedures are in place

Remuneration Committee (“RC”)

The RC comprises Richard Kleiner, who is the Committee Chairman, and will also include the other non-executive director (once appointed). The RC meets at least twice a year.

The RC reviews and recommends nominees as new directors to the Board, reviews the performance of the Executive Directors and sets the remuneration of the Executive Directors.  In addition, the RC determines the payment of bonuses to Executive Directors and approves the Company’s bonus and incentive arrangements for employees.

The remuneration of the Chairman and Non-Executive Directors is decided upon by the Board of Directors.

The RC is also responsible for ensuring the Company’s share option schemes are operated properly and approves the share option grants to Executive Directors and employees.

Evolution of the Company’s governance framework

The Board will, as the Company’s business develops and grows, review the appropriateness of the governance framework on an ongoing basis, including the composition of the Board and the requirement for an internal audit function, to ensure the Company delivers on its strategy and goals whilst maintaining appropriate governance structures.

 

Principle 10: Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.

The Company communicates with shareholders through the Annual Report, interim and annual announcements, the AGM, investor roadshows and meetings with individual existing or potential new investors.

Corporate information (including all Company announcements and notices of general meetings) is available to all shareholders, investors and members of the public on the Comptoir Group’s corporate website, www.investors.comptoirlibanais.com. The Company’s latest independent auditors’ and directors’ reports can also be viewed as part of its most recent annual report.