- Annual Report 2016 - 1 Contents Overview The Azzurri Group is a market leader in the Italian casual dining sector, operating ASK Italian, Zizzi and Coco di Mama. Overview 02 2016 highlights The Group employs nearly 6,000 people, serving over 15 million meals a year in our growing estate of over 260 restaurants 03 Azzurri’s brands and shops. 04 Azzurri’s strategy 05 Chairman’s statement Azzurri’s core brands ASK Italian and Zizzi are highly complementary, appealing to a broad customer base and lending Business review themselves to different occasions. Both ASK Italian and Zizzi offer a memorable dining experience and great value 06 ASK Italian for money, with typical spend per head (including value added tax) averaging £19. Brand reviews are included on 10 Zizzi review Business pages 6 to 13. 14 Coco di Mama 16 Financial review Further details are included within the Zizzi review on pages 10 to 13. Governance In April, the Group opened its first international site, opening its first Zizzi in the Republic of Ireland in Dundrum. 18 Board of Directors Early during the period under review, the Azzurri Group further strengthened its estate through the acquisition of 19 Strategic report Coco di Mama, one of London’s fastest growing quick service food brands, offering a range of quality hot and cold Italian 21 Directors’ report grab-and-go food, with a speciality in hot pasta and quality coffee. Further details are provided on page 15. 24 Corporate governance report 26 Independent auditors’ report Financial statements Governance 29 Consolidated statement 28 ofConsolidated comprehensive profit income and loss account 30 Consolidated balance sheet 31 Company balance sheet www.askitalian.co.uk www.zizzi.co.uk www.cocodimama.co.uk 32 Consolidated statement of changes in equity 33 Company statement of changes in equity Financial statements 34 Consolidated cash flow statement 67 Corporate directory 35 Notes to the financial statements Azzurri Group Limited Annual Report and Accounts 2016 2 2016 highlights Overview Financial summary Business highlights £ 233.7m Acquisition review Business Total sales of Coco di Mama +7.3% year on year growth £35.0m 20 Adjusted EBITDA New openings +6.4% growth Governance £22.2m Republic of Ireland Capital investment (including premiums) First international Zizzi opened in Dundrum +£3.9m growth Financial statements £32.1m 27 Transformations and refurbishments +£7.8m growth Operating cashflow Azzurri Group Limited Annual Report and Accounts 2016 3 Azzurri’s brands Overview Overview Business review Business review Business Everything we do here – from classic dishes to We take our passion for simple, delicious At Coco di Mama, everything we do is focused show stopping signatures, warm service to Italian food and add a constant stream of on you. quintessentially Italian interiors – is so that you fresh inspiration to make each dish individual Governance can enjoy eating together as much as the Italians do. and special. Governance delightful dishes, combined with great service – We combine this with our love of art and design to We concentrate on simple, flavoursome and create restaurants with personality and depth of anywhere else. character not seen in any other restaurant chains. we’re confident you won’t find such value Restaurants 112 Restaurants 145 Shops 11 Financial statements New this year 4 New this year 11 New this year 5 Financial statements Employees 2,300 Employees 3,400 Employees 120 Average spend per head £19 Average spend per head £19 Average spend per head £4 To read more about ASK Italian restaurants please go to pages 6-9 To read more about Zizzi restaurants please go to pages 10-13 To read more about Coco di Mama shops please go to pages 14-15 Azzurri Group Limited Annual Report and Accounts 2016 4 Azzurri’s strategy Overview Azzurri’s strengths Our strategy is simple... Outstanding: – to strive to be the leading Italian Food business in the UK, through: • Brands • Quality review Business Running great restaurants Expansion Grow the core business through the roll-out of • Service through: our key brands as well as exploring new and Drive growth in profits from existing restaurants international markets • Value proposition • continual innovation and evolution of the Innovation • People & culture basics’ to deliver quality and value to our Seek to add further incremental business through • improvedcustomers operational focus on ‘restaurant new concepts and other revenue streams • Trading record techniques to engage with our customers and • Growth potential Governance • useencourage of increasingly frequency sophisticated of visit marketing continually improve margins • proactive management of our cost base to Financial statements Azzurri Group Limited Annual Report and Accounts 2016 5 Chairman’s statement Overview Overview The versatility of Zizzi’s brand has enabled it to open a third all fronts for the Azzurri Group. Like-for-like revenue growth, location in Cardiff and a fourth in Manchester, while also Thenew lastopenings 12 months and EBITDA have seen growth further in oursignificant core brands, progress Zizzi on and ASK Italian, have been complemented by the acquisition of the growing fast casual brand, Coco di Mama in July last year securing2003 as well Azzurri’s as openings first site in Taunton,in Westfield Newcastle London. and ASK Harrogate. Italian, with a site at The O2, secured its first opening in London since A cornerstone of the success of ASK Italian and Zizzi over recent and by our very first overseas site, Zizzi, opening in Dundrum, years has been continued reinvestment in sites and the RepublicAgainst a of market Ireland, backdrop in April. of sharp increases in new evolution of the brand and proposition. 27 restaurants were restaurant openings, Azzurri has successfully continued to refurbished during the year, meaning that every site in the Business review Business grow. This has been achieved through the strength of our estate has received investment within the last 6 years. Both review Business brands, further investment in our restaurants and people, and Zizzi and ASK Italian evolved their designs further this year, innovation in our menus. Our partnership with Deliveroo, which launching a new look-and-feel with outstanding results. started in June 2015, has enabled us to reach customers through the growing home delivery market. We will continue to invest in new and existing sites across all of our brands in the coming year. Additionally, we are Since the majority acquisition of Coco di Mama, we have developing plans to launch an additional restaurant brand, worked with the Founders to develop one of the most exciting up-and-coming brands in the grab-and-go sector. The business to open in November 2016 – a high quality, fast casual pizzeria, has doubled in size during Azzurri’s ownership with ambitious fromwhich start-up, will further in the strengthen next few months. our portfolio “Radio of Alice” businesses. is planned plans to continue that journey. None of this could have been achieved without the dedicated leadership of the Founders, It has been another year of huge progress for Azzurri and its who have remained with the business, and who have managed component businesses. Looking forward, the referendum result to preserve Coco di Mama’s unique culture while at the same has created uncertainty in the economy, although this has not Governance time embarking on a period of such ambitious growth. impacted our performance to date. We have resilient businesses Governance and strong brands, which, together with the capability and dedication of our teams, leave us well positioned for the future. Azzurri opened 11 new Zizzi sites and 4 new ASK Italian Includingrestaurants, our alongside first site 5in new the RepublicCoco di Mama of Ireland, stores. this year Harvey Smyth Chairman Financial statements “ We have resilient businesses Financial statements and strong brands, which, together with the capability and dedication of our teams, leave us well positioned for the future.” Azzurri Group Limited Annual Report and Accounts 2016 6 Overview www.askitalian.co.uk Business review Business 112 Restaurants Governance 4 Financial statements New openings Azzurri Group Limited Annual Report and Accounts 2016 7 A transformed estate and a stronger brand Growing the estate Italian food to remember This year was another highly successful year for the ASK Italian With an additional 4 new openings, we now have 112 Our menu innovation continues to be driven by our passion for Overview brand and saw the completion of our major repositioning ASK Italian restaurants trading across the UK. Our latest Overview programme that commenced in 2010. Our estate now fully new restaurants have introduced the ASK Italian brand in previously unrepresented locations. We opened in authentic Italian food made with the finest quality ingredients, continue to deliver the same excellent returns. the Metrocentre shopping centre in Gateshead, the exciting andCapalbo. influenced by the knowledge of our expert friends, reflects this modernised design, and the latest refurbishments entertainment destination of The O2 Arena in London, including acclaimed chef Theo Randall and Italy expert Carla Building on the success of our prior year new openings in high and the busy towns of Taunton and Harrogate. established, food development in the year was focused on a further 4 new restaurants all in similarly prime locations. This year also saw the transformation of 11 restaurants and Withdeveloping our menu distinctive, of outstanding tempting classic and memorable Italian dishes dishes firmly to profile sites such as Manchester and Edinburgh, we opened marks the end of the transformation programme, leaving the engage our customers. Our look has continued to evolve and we have enhanced our estate fully invested and aligned in a fresh, contemporary Italian aesthetic. A focus on starters and desserts as a way to create interest, of major transformations that will replicate the key food, excitement and showcase our great ingredients led to the Business review Business Business review Business designservice giving and design us the elements confidence and to fuel commence our future a new growth.