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7
Creating the
world’s greatest
food community
Annual Report & Accounts 2017
Delivering more choice
and convenience to create
the world’s greatest food
community
Introduction
Our vision is to create the
world’s greatest food community
For our Customers, it is about offering them
the widest choice – whatever, whenever
and wherever they want to eat.
For our Restaurant Partners, we help them
to reach more Customers, support their
businesses and improve standards in
the industry.
For our People, it is being part of an
amazing global team, helping to connect
21.5 million Active Customers with our
82,300 Restaurant Partners.
>> Read more about our
Customers on page 7
>> Read more about our
Restaurant Partners on
page 21
>> Read more about our
People on page 37
Corporate governance
44 Corporate governance report
46 Our Board
48 Report of the Board
56 Report of the Audit Committee
61
65
Report of the Nomination Committee
Report of the Remuneration
Committee
Annual report on remuneration
67
Strategic report
Highlights
2
At a glance
4
Chairman’s statement
8
10
Chief Executive Officer’s review
14 Our business model
16 Our markets
18 Our strategy
19 Our key performance indicators
22
Principal risks and uncertainties
28 Chief Financial Officer’s review
38 Our People
42 Corporate social responsibility
Front cover
Golden Dragon Chinese Takeaway & Off Licence,
established in Port Tennant, Swansea in 2005, serves
a new generation of Chinese food with restaurant
quality cuisine at takeaway prices.
Financial statements
84
90 Consolidated income statement
91
Independent auditor’s report
Consolidated statement of other
comprehensive income
Consolidated balance sheet
Consolidated statement of changes
in equity
92
93
94 Consolidated cash flow statement
95
Notes to the consolidated financial
statements
138 Company balance sheet
139
Company statement of changes
in equity
139 Company cash flow statement
140
Notes to the Company financial
statements
142 Directors’ report
146 Glossary of terms
148 Company information
149 Five-year summary
www.justeatplc.com
1
Highlights
A year of strong execution
Financial highlights
Orders1
+26%
Revenue1
+45%
Underlying EBITDA1,2
+42%
17
16
15
172.4m
136.4m
17
16
£546.3m
£375.7m
17
16
£163.5m
£115.3m
96.2m
15 £247.6m
15 £59.7m
Operating (loss)/profit
Net operating cash flow
Underlying EBITDA margin2
-200%
17
£(72.5)m
16
15
£72.5m
£35.5m
+72%
17
16
15
£97.0m
£74.2m
£166.7m
-3%
17
16
15
29.9%
30.7%
24.1%
(Loss)/profit before tax
Adjusted basic earnings per share2
Basic earnings per share
-183%
17 £(76.0)m
16
15
£91.3m
£34.6m
+38%
17
16
15
6.6p
12.2p
-242%
16.8p
17
(15.2)p
16
15
10.7p
3.8p
1. Highlights that are key performance indicators are detailed further on page 19.
2. Refer to Note 2e of the financial statements on page 97 for full definition of adjusted measures. Refer to the reconciliation of uEBITDA on page 29 and of Adjusted EPS
on page 34.
2
Annual Report & Accounts 2017
Summary
• Excellent Group performance
underpinned by strong execution
across our markets.
• UK business continues to excel and is
further strengthened by the acquisition
of Hungryhouse.
• Continued strong momentum
internationally.
• Strong cash flow leaves us in a position
of great strength, enabling investment
in significant new opportunities.
“The bedrock of our business model
is offering Customers the widest
possible range of restaurants
and the best possible ordering
experience in every market where
we operate.”
Peter Plumb
Chief Executive Officer
>> Read more about our key performance indicators on page 19
www.justeatplc.com
3
Strategic report At a glance
Creating the world’s
greatest food community
Restaurant Partners
Our network starts here. Restaurant supply is crucial.
Our success is linked to the breadth and depth of the
cuisine we offer as well as the commitment and coverage
of our estate.
Restaurants will want to join the platform if they feel
it will create value for their businesses – both top line
and bottom line. Our scale, technology and marketing
programmes all contribute to that value creation.
Customers
Greater convenience, choice and increasingly, quality
of service has resulted in Customers embracing delivered
food as a feature of their daily lives.
Of our key 18–34 year-old Customers, the largest single
group are young families who typically place orders of
higher value.
Number of restaurants
at the end of 2017
82,300 +20%
Number of Active Customers
at the end of 2017
21.5m +22%
The Customer journey
Choose restaurant
Customers can then make
an informed choice
by reading Customer
reviews and examining
the menu. Once placed,
details of the order are
sent to the restaurant via
our proprietary technology.
Delivery method
Once processed through
an Orderpad, the Customer
receives a notification when
the delivery is on its way,
unless they have chosen
to collect their order.
Payment method
The Customer can choose
either to pay securely
online or by cash. The
Customer receives a
notification once the
restaurant has accepted
the order.
Postcode
The Just Eat apps and
websites enable Customers
to search for restaurants
on our network in their
neighbourhood using a
variety of criteria, such
as by cuisine choice and
preference for delivery
or collection.
4
Annual Report & Accounts 2017
Why invest in Just Eat?
• Large and growing market
• Ongoing technology innovation
• Known and loved brands
• Low average market penetration
• Scale drives leverage and
long-term profitability
• Sustainable double-digit growth
• Highly cash-generative
• Strong operational execution
operating model
>> Read more about
the marketplace in
which we operate on
pages 16 and 17
Our global coverage
Canada
Mexico
Profitable territory
Investment territory
No presence
Norway
Denmark
UK
Ireland
France
Switzerland
Spain
Italy
Brazil
Outside of the UK and Australia & New Zealand, our segments are:
Established Markets
Canada
Denmark
France
Ireland
Norway
Switzerland
Developing Markets
Italy
Mexico
Spain
Australia
New Zealand
The Group’s associate in Latin America, iFood,
also has a presence in Colombia and Argentina.
In addition, our Canadian business, SkipTheDishes
has a small operation in the USA.
www.justeatplc.com
5
Strategic report Delivering more
food choice for
our Customers
6
Annual Report & Accounts 2017
People love takeaway food. We offer
a vast choice of restaurants and
cuisines, and a convenient and easy
to use digital platform.
Just Eat has built its business by having the widest choice
of traditional foods available on our platforms, from great
local restaurants, imaginative pop-ups and renowned
international branded chains. This exciting variety is what
continues to drive Customer loyalty.
13,800
Net restaurants added during the year
Over 100
Number of different cuisine types available
on Just Eat
www.justeatplc.com
7
Strategic report Chairman’s statement
A year of strong
execution
A year of strong operational progress
In 2017, Just Eat achieved another year of strong
trading, whilst our industry continues to benefit
from rapid change. Advancements in technology,
compounded by notable societal shifts, are
changing consumer buying habits. Technology is
also having a positive impact on the restaurants
we serve, helping to enlarge their customer base
and provide the tools to operate more efficiently
and dynamically.
Against this backdrop, I am pleased with the
Group’s excellent results for the year ended
31 December 2017.
During the year, we enjoyed strong organic
growth and continued to make progress with the
integration of the acquired Canadian business,
SkipTheDishes. We also received regulatory
approval for our acquisition of Hungryhouse
in the UK, which we subsequently completed
on 31 January 2018.
Our strategy is based on providing an unbeatable
takeaway experience for both our Customers and
Restaurant Partners. As a technology business,
we will continue to invest in innovation and to
partner with others in order to enhance our
Customers’ experience and create additional
value for our Restaurant Partners.
The restaurants with whom we work are primarily
small independent businesses that form part of
a rapidly growing industry. In the UK alone, the
takeaway industry was worth more than £10 billion
in 2017 and employed more than 230,000 local
people. We are proud to work closely with our
partners to support their growth and the service
that they offer to people throughout the
country every day.
For our shareholders, between being admitted
to trading on the London Stock Exchange in
April 2014 and the end of December 2017, the
Company’s share price increased by more than
200%. As a consequence, the Company joined
the FTSE 100 Index during the year, allowing
shareholders to benefit from the additional
liquidity and enhanced profile which this confers.
8
Annual Report & Accounts 2017
>> Read more about
corporate governance
on page 44
An outstanding team
The results we have reported for the year are a
reflection of the Company’s leadership and also
the strength of the wider Executive Team – all
achieved against what can only be described
as a difficult set of circumstances.
In February 2017, David Buttress announced
that he was stepping down from his role as
Chief Executive Officer. Our then Chairman,
John Hughes, assumed the temporary role of
Executive Chairman only to step down shortly
thereafter due to ill health. John subsequently
passed away on 12 June 2017, following a short
period of medical treatment. John had been
Chairman since December 2011 and played a
fundamental role in the successful development
of Just Eat as first a private and then a public
company for five and a half years.
Following John Hughes stepping down, the Board
and I asked Paul Harrison to act as Interim Chief
Executive Officer and I would like to thank Paul
for his outstanding management of the business
during a period of significant uncertainty.
We were pleased to appoint Peter Plumb
as Chief Executive Officer with effect from
18 September 2017. Peter has a successful
track record of running customer-focused,
high-growth technology companies, and this
experience will prove invaluable as we continue
to build our business in the coming years.
As is evident, the Group has been through an
exceptional amount of change this year and
I would like to thank my fellow Directors and
the entire Just Eat team for their hard work and
professionalism, which have contributed to our
continued success over the period. Just Eat’s
ambitious culture is one of the Group’s key
strengths and it is pleasing that this has been
maintained through this period of transition.
Corporate governance and other Board developments
The Board seeks to operate the highest standards of
corporate governance. In a business enjoying strong growth
in a fast-moving sector, we seek to implement a governance
structure that encourages growth and appropriate risk
taking, while ensuring appropriate controls are in place.
We believe that we have once again struck the right
balance for this in 2017.
Alistair Cox joined the Board as an Independent Non-executive
Director on 2 May 2017. As Chief Executive Officer of
recruitment specialist Hays plc, Alistair brings extensive
experience in both technology and talent management
within the UK listed sector.
On 2 March 2018, we announced that Mike Evans will
join the Board on 6 March 2018 as an Independent
Non-executive Director and Chairman elect. His appointment
as Non-executive Chairman will be effective from the
conclusion of the Company’s Annual General Meeting on
26 April 2018. Effective from the same date, David Buttress
will retire from the Board as a Non-executive Director.
Whilst our entry into the FTSE 100 generated headlines,
we were also pleased to have become a constituent of the
FTSE4Good Index Series, which measures the performance
of companies demonstrating strong environmental, social
and governance ("ESG") practices.
Looking ahead
We will continue to build our business in the current year,
striking the right balance between investment and risk.
In doing so, we are confident of continuing to drive
sustainable, profitable growth and creating lasting value
for all our stakeholders. The Group is strongly positioned
for the future.
Andrew Griffith
Interim Non-executive Chairman
5 March 2018
Dr. John Hughes, 1952–2017
For more than thirty years, John was a leading
figure in the international business and technology
communities. He held senior executive positions
at many of the world's foremost technology
businesses and since 2008 had focused on
advising and steering several of the UK's most
successful growth companies. As we saw in
his work for a number of businesses and
initiatives both public and private, commercial
and not-for-profit – he passionately believed in the
UK as a place to found, scale and list companies
and he inspired a host of entrepreneurs to fulfil
their own ambitions. We would like to pay
tribute to his extraordinary talents, his many
accomplishments, and his outstanding
contribution to the business landscape.
We were proud to recognise John's legacy in
2017 by sponsoring an award in his name at the
UK tech awards, reflecting John's passion for
supporting entrepreneurs in the technology
sector and championing the UK as a home for
thriving technology businesses. Within Just Eat,
we presented the John Hughes Award, to reflect
John's commitment to high standards and an
infectious passion for Just Eat. The first recipient
being Amanda Roche-Kelly, Ireland Country
Manager, who was recognised for the way in
which she inspires her team and goes above
and beyond to make a difference every day.
www.justeatplc.com
9
Chief Executive Officer’s review
Connecting Customers
to the restaurants
they want
>> Read our financial
statements on
pages 90 to 94
I was delighted to join the
Just Eat team in September.
It is a real privilege to lead such
a high growth, global company
at an exciting time both for
the business and our sector.
Since joining Just Eat, I have spent time with
our energised colleagues and met many of our
Customers and Restaurant Partners, listening
closely to their views on what the Group is doing
right and how we can improve. I have learned a
huge amount through this process and been
inspired by what I have heard.
Having grown and led a marketplace business
before, my initial focus has been to fully understand
the value we are able to offer our different
consumers, being Customers who buy their food
through us and Restaurant Partners who rely
on our service to grow orders and run a better,
more profitable business. A winning marketplace
demands that our value proposition to these
important constituencies remains a restless
ambition for everyone at Just Eat. As well-financed,
new operators enter the market with innovative
services and platforms, and as Customer
behaviour and restaurant expectations
evolve, this is truer than ever before.
Key highlights and learnings from 2017
2017 was a year of great change and achievement
for Just Eat. There were significant changes in
the Company’s leadership, with David Buttress
stepping back from the position of Chief Executive
Officer and the sad loss of our long-standing
Chairman, John Hughes.
However, the extraordinary culture of Just Eat,
the quality and resilience of the team and
outstanding stewardship of Chief Financial
Officer, Paul Harrison, throughout this period
meant that Just Eat continued to thrive.
Over the period, the business processed
172.4 million orders, up 26% from 21.5 million
Active Customers, via 82,300 Restaurant Partners
around the world. This resulted in total revenue
of £546.3 million, up 45% and Underlying EBITDA
("uEBITDA") of £163.5 million, up 42%. However,
a loss before tax of £76.0 million was due to a
non-cash impairment charge relating to our
Australia & New Zealand businesses, which
were acquired in 2015. The primary causes of
the impairment were: the instability of the two
legacy platforms; being behind plan with the
platform migration and brand consolidation; and
the impact on the business from a new competitor
that rapidly launched delivery services in key
cities such as Sydney and Melbourne.
Just Eat’s global footprint is a key strength
The bedrock of our business model is offering
Customers the widest possible range of
restaurants and the best possible ordering
experience in every market where we operate.
Each country has different characteristics,
providing significant opportunities to apply
learnings across the Group.
We grew our restaurant estate by 20% during
the year, and it was pleasing to see particular
growth in countries such as Italy, where Just Eat
is now available in over 700 towns and cities
from Sicily to the Alps.
Our Customer base also grew strongly, with an
additional 3.9 million people using the platform
in 2017, bringing the total to 21.5 million Active
Customers. Spain, France and Italy, in particular,
attracted an impressive number of new
Customers to their high growth businesses.
10
Annual Report & Accounts 2017
Our marketing strategy
In 2017, the global marketing strategy continued
to drive brand fame and targeted those consumer
segments who still order their takeaway using the
telephone. Our brand spend of £23 million was
supported by our entrepreneurial country teams
investing in local high profile projects including
Dublin bikes and the Geneva and Milan trams.
In the UK, we were proud sponsors of The X Factor,
helping drive up our awareness levels to new
highs. Our sponsorship activity featured many
of our Restaurant Partners, the true local heroes
of our business.
We finished the year with nine markets featuring
our new brand identity, driving an increase in
brand awareness. In January 2018, we renamed
our French business to Just Eat from Allo Resto
to better reflect our app- focused strategy.
Increased brand investment continued
to build Customer awareness
Just Eat has enviable brand power, particularly
in its home market of the UK. With an increased
brand investment in 2017 to £23 million, the
team rolled out Just Eat’s new high impact
identity ‘colour ray’ across the majority of our
countries, increasing awareness amongst the
mass market customer base.
2017 was not only about global brand power
but also local connections and engagement.
In Ireland, the Just Eat team pioneered the
sponsorship of the Dublin bike scheme and in
Switzerland we sponsored the Geneva tramway
service – just two examples of the creativity
of our local country teams.
In the UK, we proudly sponsored The X Factor,
which caught the imagination of our Customers
and brilliantly captured the talent of our local
restaurant owners and staff, some of whom
were featured in the show's advertising breaks.
Our brands need to be loved and the nature
of the service is that we are available and used
pretty much everywhere our Customers go.
These innovative marketing initiatives help
us be just that, part of everyone’s daily lives
when and where they need us.
Just Eat provides an easy, convenient way
to enjoy a much loved takeaway
Our Customers have different reasons for
ordering a takeaway, but I hear a number of
themes being repeated. “We call it treat night”,
“I just don’t want to worry about the shopping
and cooking”, “It’s a chance for us to bond after
a really busy week” and “I’m home alone with
nobody around – it’s nice to have a takeaway”.
People love their takeaway. The majority of
these Customers are 18–34-year olds who live
their lives on their smartphone.
One of the most vital services we provide to our
small, family run Restaurant Partners is digital
expertise. Our value-add to these entrepreneurs
is to give every one of them a high impact online
presence at a scale they couldn’t possibly do on
their own. This is the true power of the Just Eat
marketplace, connecting the right restaurants
to the right customers, at the right time, on the
right device.
www.justeatplc.com
11
Strategic report >> Read more about
our People on
page 38
Chief Executive Officer’s review continued
Just Eat provides an easy, convenient way
to enjoy a much loved takeaway continued
The opportunity to make more of these
connections is significant. In the markets where
we operate today, we estimate that there are
still more than 30 million people who are yet
to order a takeaway online with us. For those
who already use Just Eat, we want to continue
improving their experience by personalising our
service, which will build brand loyalty. We have
already had some success here; last year, we
applied learnings from Ireland to grow order
frequency in Switzerland by 25%. Whilst such
improvements are gratifying, I believe there is
more we can do.
Our People are special and the team is growing fast
I had high expectations of the Just Eat culture
when I joined the business. Having now settled
in to my role and experienced my first World Party,
attended by 1,100 Just Eaters from around the
world, I have not been disappointed. The passion
and energy in this Company is inspiring.
Last year, more than 900 talented people joined
Just Eat, building our team to over 2,900, and
we have made great efforts to ensure Just Eat
is an even better place to work, with refurbished
offices, new online training and development
tools, and a more balanced benefits package
for our colleagues.
SkipTheDishes, the Canadian business we
acquired in late 2016, is already a sophisticated
delivery business, harnessing machine learning
technology to predict demand for both couriers
and restaurants with increasing accuracy across
Canada. The results so far are impressive and, as
a result, Canada has become the second largest
business in the Group by revenue.
We have been undertaking further trials with
third parties in other markets, where we have
been varying the nature of the model to take
into account local characteristics. We have
learned a significant amount through this period
as we seek to adopt the most sustainable and
profitable route to use delivery to complement
our core marketplace model of connecting local
restaurants to their local communities.
Our strategy in 2018 and beyond
As a new CEO, what excites me most is where we
are heading.
The global takeaway market is worth £540 billion;
those markets in which we operate are alone
worth £23 billion. This is testament to people’s
love of takeaway and the vast choice of restaurants
and cuisines available to them. It is clearly an
exciting industry.
But with our success, competitors have of course
followed and are starting to change the game.
These investments are clearly resonating with
our team.
Therefore, three key themes are front of mind as
we lay down our plans for the next three years:
1.
2.
3.
Marketplace: Digest our acquisitions and
innovate to go faster.
Delivery: Engineered to complement not
replace the marketplace.
Organisation: A world-class digitally led
global team, supporting extraordinary local
Customer experts.
Marketplace: We have 21.5 million Active
Customers who love our marketplace service.
There are certainly many geographies, regions
and most importantly Customers for whom our
existing marketplace model is the perfect
service and will remain so for years to come.
However, we know we can make our current
service so much better. We are in the early days
of integrating our businesses into one high
performing, efficient Group.
Delivery trials are investments in our future
Just Eat has been the pioneering company in
our sector, effectively creating the market for
restaurants to connect with Customers online
and then growing it for nearly two decades.
However, as the industry evolves, and shifts in
society and technology change how people live
their lives, 2017 was a year when we started to
‘test and learn’ new concepts. We began trials
to extend our model to provide delivery services
to certain Quick Service Restaurant ("QSR")
chains, offering a three-sided marketplace
where we believe there is real economic value to
be derived.
Denmark, our most mature business, expanded
the Just Delivery service to six key cities,
adding seven new restaurant chains to our
portfolio. It now represents around 6% of orders
in the country and is proving to be both highly
popular with Customers and profitable for our
Danish business.
12
Annual Report & Accounts 2017
Our technology and data investment programmes are in
their first phases and our brands have much further to
climb if we are to become a loved part of each and every
one of our Customer’s lives. Apps, data, customer service
and Restaurant Services will certainly be on my list for
continued investment and innovation in the years ahead.
Delivery: From what we have seen, we believe it is possible
to establish delivery models that can be both viable and
profitable in the longer term. In order to meet the needs
of certain Customers, they are necessary. Engineering
such a service we estimate would open up an additional
£18 billion market of QSR chains to the Group. Clearly
it is a market we would be foolish to ignore in our strategic
planning. The expertise of our SkipTheDishes team will be
invaluable as we explore taking their model to new markets
around the world.
Organisation: We have a great team with an extraordinary
culture. Our local teams have close relationships with
Customers and Restaurant Partners that make all the
difference between ourselves and our competitors. To
continue to add value to our Restaurant Partners we need
to be world class in the digital market and forensically
focused on Customers both in our service offering and our
marketing tools. This will open more exciting career paths
for all who work for us.
So, our mission is to lead the industry by pioneering a unique
and engaging hybrid offering for our Customers in the
geographies where delivery will complement our successful
marketplace model and not just replace it. We will think hard
before going head-first into pure delivery-only territories
and redouble our efforts to ensure our heartland marketplace
service both sets the standards and exceeds the expectations
of our Customers and Restaurant Partners.
Strategic investment will therefore need to increase. It will
be focused on driving long-term order growth and earning
Customer loyalty for the Group across our markets, based
on what our core mass market of takeaway Customers
around the world tell us they want and need.
I look forward to sharing more of what I have learned and
the growth plans we have developed.
Pages 2 to 43 of the Annual Report form the
Strategic Report.
On behalf of the Board
Peter Plumb
Chief Executive Officer
5 March 2018
Pull out to be supplied
Our restaurant technology
Orderpad is our exclusive restaurant technology
platform that enables our Restaurant Partners to
receive Just Eat orders, to manage their online
presence and communicate with Customers
regarding their order status. It also provides the
restaurant with order management and driver
tracking functionality.
In 2017 we continued the international rollout of
Orderpad, finishing the year with 23,300 devices
deployed in the UK, Canada, Denmark, Ireland, Italy
and Spain. At the end of the year, 69% of orders in
those markets were being processed through an
Orderpad and 67% of those had ‘order on its way’
messages sent to the Customer.
We will accelerate the rollout of Orderpads in 2018.
www.justeatplc.com
13
Our business model
Creating value for our stakeholders
Just Eat operates a highly scalable business
model with a beneficial cash flow cycle,
creating value for our Customers, Restaurant
Partners, People and Shareholders, by
increasing revenue and profits over time.
The strength of our core marketplace
business supports investment into our
brand and technology. It also enables
the development of delivery models
to expand the size of our
addressable market.
Our key strengths
Our revenue split
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Trusted br a n d s
Order-driven
Accounted for 92% of Group revenue
(2016: 92%). Commission paid by
Restaurant Partners on successful
orders, service charges and delivery fees.
Commission revenue is driven by the
number of orders placed, average order
value (“AOV”) and commission rates,
agreed with each restaurant.
Top-placement revenue
Eligible Restaurant Partners may also
pay for promotional top-placement on the
Just Eat platform and are listed in a clearly
labelled sponsored slot at the top of
search results in a particular postcode for
a period of up to 12 weeks. The number of
slots are limited and the restaurant must
meet certain quality and performance
standards. Such payments constituted
6% of the Group’s revenue (2016: 5%).
Connection fees and other revenue
One-off connection fees to join the Just
Eat network and other services such as
branded commodity products accounted
for 2% of the Group’s revenue (2016: 3%).
Connection fees range globally from £nil
to £750, depending on geography and
market maturity.
These fees are charged to cover the cost
of hardware installed into the restaurant
and the sales and on-boarding process.
92%
of total revenue
6%
of total revenue
2%
of total revenue
14
Annual Report & Accounts 2017
Restaurant Partners
• Access to Just Eat gives our Restaurant Partners
increased orders of higher value
• Access to a global brand and leading-edge digital
technology to maximise their business reach
• More efficient order processing by reducing time
and communication errors
• Restaurant Services programme, providing exclusive
deals and discounts to our restaurant estate
• Provision of operational data through our
partner centre
Total order value
processed in 2017
£3.3bn
Average orders per
restaurant in 2017
2,300
Customers
• A simple ordering process enabling Customers to
select from favourite local restaurants or repeat
orders and pay with securely stored payment card
details or cash
• Convenience of placing an order via apps, gaming
platforms, smart TVs and social media platforms
• Huge choice, including many popular QSR chains,
supported by millions of relevant Customer reviews
• Reassurance of ordering from a well-known brand
and having access to customer service through
Just Eat’s online or offline support
Our People
• Just Eat’s corporate culture embodies
our entrepreneurial spirit
• The growth of the business has provided many
opportunities for existing and new colleagues and
we continue to invest in developing and retaining
our People and strengthening the team
• We continue to develop the passion, diversity and
skills of 2,900 employees as this is key to ours and
their success
Reviews on our platform
32.2m
Net new Active Customers
in 2017
3.9m
Employees who are proud to
say they work at Just Eat
82%
Employees who understand
how their role contributes
to Just Eat's success
85%
Shareholders
• Driving long-term value for our shareholders by
building sustainable brands and resilient businesses
• High growth sector supported by secular trends
Increase in share price
since IPO1
200%
• Strong organic growth and investing for
future opportunities
Average market penetration
14%
>> Read more about how we do business
responsibly on pages 42 to 43
1. 260 pence to 787 pence (closing price as at 31 December 2017).
www.justeatplc.com
15
Strategic report Our markets
We operate in markets of scale with
significant structural growth drivers
Our marketplace is exciting, fast growing and rapidly evolving,
driven by broad, long-term consumer trends as people seek
greater food convenience and choice.
>> Read more about
our global coverage
on page 5
>> Read more about
our strategy on
page 18
The optimal market for Just Eat is one with
a strong culture of delivered takeaway food,
with a highly fragmented supply side and
where the consumer is comfortable transacting
online. This has been key in choosing those
territories in which we invest. Just Eat now
operates the leading marketplace platform
in each country we operate, together worth
£23.1 billion1 of delivered takeaway food. The
UK is the largest single market at £6.1 billion1.
Since the first Just Eat website was launched
in Denmark in 2001, we have expanded
globally and now operate in the UK, Australia,
Brazil, Canada, France, Ireland, Italy, Mexico,
New Zealand, Norway, Spain and Switzerland.
Whilst the UK is the largest of Just Eat’s
operations, our international markets now
represent 44% of Group revenue.
In the UK, online ordering has grown faster than
GDP, driven by the factors listed above2. This
channel shift is similar to the migration towards
the use of the internet by Customers in other
highly fragmented markets, such as travel,
financial products, entertainment tickets,
classified advertising and restaurant bookings.
In our markets, around half1 of takeaway orders
for delivery are still placed on the telephone,
demonstrating the opportunity for Just Eat
to convert those Customers to ordering
on our platform.
Whilst the UK is one of the most developed
markets in the world, the £3.3 billion of
order value processed through Just Eat
globally represented only 14% of our total
addressable market.
Growth
Whilst we continue to focus on driving strong
organic growth, we will consider M&A to
compliment our operations, whilst remaining
financially disciplined.
We made no acquisitions in 2017, instead
we focused on making progress with the
integration of our acquired Canadian business,
SkipTheDishes. We also gained UK regulatory
approval for our acquisition of Hungryhouse,
which occurred in December 2017 and which
we completed on 31 January 2018. Lastly, we
are migrating our Australian business onto
our core platform and then consolidating the
market into a single brand.
What is the future?
We remain focused on the significant
potential for Just Eat to increase its orders,
revenue and operating profits within our
current markets based on the relatively low
Customer penetration in most countries.
1. Source: management estimate based on research performed.
2. Source: “Consumer Foodservice in the UK” by Euromonitor and EIU.
3. On a 100% ownership basis.
16
Annual Report & Accounts 2017
However, as consumers evolve, particularly with
respect to QSR chains, we believe there are significant
opportunities to develop our delivery capabilities
further into a hybrid marketplace model, offering
restaurant delivery supplemented by third-party
delivery from certain QSR chains and to also develop
non-dinner offerings to drive frequency. There is also
significant potential to utilise our scale and significant
data resources for the benefit of both our Restaurant
Partners and Customers.
A single brand
We operate under the Just Eat brand in the majority
of our markets. The remainder operate under the strong
local brands they traded under at the time the businesses
were acquired. Over the medium-term we intend to convert
our wholly owned marketplaces to the Just Eat brand.
Our total market opportunity
£23.1bn1
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The UK takeaway sector is a
thriving engine of growth
In July 2017, Just Eat spearheaded the founding
of the British Takeaway Campaign (“BTC”).
The campaign provides a platform for the industry
to showcase its growing contribution to the UK
economy as well as to lobby government on industry
issues. The BTC is backed by major industry bodies
representing fish and chip shops, kebab and curry
houses, pizzerias and many more independent
takeaway restaurants across the country.
The BTC published the "Takeaway Economy
Report" to highlight the economic contribution
of the industry. As the report shows, the sector
continues to grow well above the rate of the rest
of the economy. Total UK spending on takeaways
reached £9.9 billion in 2016 – a 34% increase on
2009. In the same period, the sector created
41,000 new jobs and now employs more than
230,000 people across the UK.
For more information about the BTC, visit:
www.britishtakeawaycampaign.co.uk.
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www.justeatplc.com
17
Our strategy
Our strategic initiatives
Our strategy is focused on three interlinking pillars that work individually
and collectively to drive future growth and provide an unbeatable takeaway
experience for both our Customers and Restaurant Partners.
What we're doing
Why it’s important
1
Improving
Customer
experience
• In 2017 we invested £12.6 million primarily on improving
our service reliability around the world, particularly
with many of our newly acquired businesses, and
simplifying the restaurant sign-up process.
• Stability, security and scalability of
our platforms are key to ensuring that
Customer orders get through to our
Restaurant Partners.
• Over 77% of UK orders were processed via Orderpad,
enabling the "order on its way" notification, which
helps to drive Customer loyalty. We continue our
international rollout of this technology.
• As our Customers’ expectations evolve
over time, the design and Customer
experience of our platform must
keep pace.
• Reviews can only be placed following a completed
order, offering valuable insight. At 31 December 2017,
we had 32.2 million reviews across all our platforms.
2
Bringing
greater
choice
3
Building
our brand
to drive
channel
shift
• A rapidly emerging secondary market for Just Eat
are QSRs, who see the valuable growth potential
offered by home delivery and aggregator exposure.
In 2017, apart from expanding SkipTheDishes into
more than 50 additional Canadian markets, we
conducted a number of pilots in different
geographies to develop a hybrid model that allows
us to continue to work with restaurants that do
their own delivery, as well as those that require
logistics expertise.
• Increasing the number of restaurants from which
our Customers can order drives demand and
increases dining opportunities. We finished the
year with 82,300 Restaurant Partners
(2016: 68,500).
• Over time, offering greater choice and
having restaurants that also trade at
breakfast and lunchtime is expected to
drive Customer order frequency.
• Working with selective and relevant
non-delivery restaurants significantly
increases the addressable market in
which we operate, which increases the
opportunity to scale the business.
• Following the launch of our new brand identity in
the UK in September 2016, we rebranded a further
seven international markets in 2017, and in January
2018 we renamed our French business Just Eat.
• In the UK we were proud to sponsor The X Factor,
showcasing the talents of many of our Restaurant
Partners, whilst we expanded our reach in Dublin,
Geneva and Milan by sponsoring high visibility
public mass transit systems.
• In the majority of our markets, the shift
from telephone to online ordering is still
in its early stages, which offers significant
opportunity for future growth. App
adoption also varies by market and is still
growing, with 50% of Group orders placed
via apps (2016: 44%).
• Brand investment increases awareness
amongst our mass market Customer base,
and contributes to Customer loyalty.
18
Annual Report & Accounts 2017
Our key performance indicators
Measuring our success
The success of our strategy is measured through a select set of
key performance indicators (“KPIs”). These ensure we focus our
resources appropriately.
Orders
+26%
Revenue
+45%
Underlying EBITDA
+42%
17
16
15
172.4m
136.4m
17
16
£546.3m
£375.7m
17
16
£163.5m
£115.3m
96.2m
15 £247.6m
15 £59.7m
Definition and calculation
Number of successful orders placed.
Purpose
The number of orders the Group
processes for our Restaurants Partners is
a direct measure of performance.
Link to strategy
1
2
3
Definition and calculation
Total of all revenue generated by
the Group.
Purpose
Revenue enables the Group to measure
top-line growth, resource levels,
investment needs and ultimately
determine the viability of the business.
Link to strategy
1
2
3
Definition and calculation
Earnings before interest, tax, depreciation and
amortisation, additionally adjusted as disclosed
in Note 2e of the financial statements.
Purpose
This measure enables the Group’s
operational and segmental performance
to be understood, accurately reflecting
key drivers for long-term profitability.
Refer to Note 2e of the financial
statements on page 97 for a full
definition of adjusted measures.
Link to strategy
1
2
3
Average revenue per order (“ARPO”)
Active Customers
Number of restaurants
+13%
17
16
15
+22%
+20%
£2.92
£2.59
£2.35
17
16
15
21.5m
17.6m
13.4m
17
16
15
82,300
68,500
61,500
Definition and calculation
Total of commission revenue, service
charges and delivery fees, divided by
total orders.
Definition and calculation
Number of Customers who have placed at
least one order within the last 12 months
at the reporting date.
Definition and calculation
The number of Restaurant Partners
capable of taking orders across all
Just Eat platforms at the reporting date.
Purpose
ARPO is a key driver of revenue, along
with the number of orders processed.
Link to strategy
2
Purpose
Increasing the number of Active Customers
is one outcome the Group uses to
measure the successful level of channel
shift from offline to digital ordering.
Purpose
One element of providing greater choice
to Customers is to enable access onto
our platforms to a growing number of
restaurants and cuisine types.
Link to strategy
Link to strategy
1
2
3
1
2
3
www.justeatplc.com
19
Strategic report Delivering more
benefits for
our Restaurant
Partners
20
Annual Report & Accounts 2017
Delivering more
benefits for
our Restaurant
Partners
Our Restaurant Partners are typically
owned and run by entrepreneurial
families who both cook and deliver
the food to our Customers. Input cost
inflation and shortages of skilled
labour, particularly chefs, is making life
tougher for many of these important
local businesses.
Apart from supporting their top-line growth through our
unrivalled digital marketplace, we use our scale to partner
with key suppliers in the restaurant industry to provide
exclusive deals that offer valuable support to their bottom
line via our Restaurant Services programme.
We will continue to invest in developing better technology
to help our partners offer a better Customer experience
and operate more efficiently.
2,300
Average orders per Restaurant Partner in 2017
£3.3bn
Total order value processed in 2017
www.justeatplc.com
21
Strategic report Principal risks and uncertainties
Rigorous risk management is a
key driver to sustainable success
Our values extend into our attitude
towards identifying, understanding
and responding to the principal risks
we face.
Global economic and political headwinds – There is a trend
towards greater global uncertainty and risk, and as Just Eat
serves consumers and conducts its operations across
several markets and countries, it requires representation
as a principal risk.
The Board carries out robust assessments of the principal
risks facing the Group. These include those that would
threaten its business model, future performance, solvency
or liquidity to ensure the principal risks and uncertainties
are properly identified, evaluated, prioritised and addressed.
During the course of the year, the Board defined the
Group’s risk appetite and monitored the management of
significant risks to ensure that the nature and extent of
those significant risks did not compromise the Group’s
overall goals and strategic objectives.
The Group’s risk appetite influences the culture of our
business and how we operate, and this is reflected in our
risk management framework as detailed below.
New risks were identified and existing risks assessed over
the course of the year as the Group’s overall risk profile
continued to evolve. Through our strategic review process
in 2017, the Executive Team and the Board ensured that risk
management was fully embedded to balance opportunities
with a clear understanding of the risks faced and any
mitigation required to align to the Group's risk appetite.
In presenting the principal risks on the following pages,
the Board has sought to enhance disclosures, providing
greater detail around strategic context, mitigation, key risk
indicators, categorisation and ownership. Further, certain
risks have been disaggregated to provide greater focus
and clarity, whilst additional risks have been added to
augment the view of our principal risk universe. No risks
from 2016 were removed. A summary of additional risks
is provided below:
Service experience – Online technology is driving significant
changes in Customer and Restaurant Partner behaviour.
This risk addresses the uncertainty related to introducing
new, innovative service features whilst our competitors
do the same.
Brand – Following the Group's significant growth in recent
years, this inherent risk, whilst stable, has proportionately
grown to now be included as a principal risk. This is supported
through significant marketing budgets and Just Eat's public
profile as a leading food-related marketplace business.
Certain business risks we face, such as those disclosed
within Note 33, are generally faced by other comparable
online businesses. There are also additional risks that the
Group is exposed to that are not considered principal risks
but may have an adverse impact if they occur.
Risk management framework
The exposure to risk is an inherent part of running a business
and the Board recognises that rigorous safeguards and a
sound risk management process are required to mitigate
such risks. Risk is an agenda item at Board meetings and
the overall process for identifying and assessing business
risks and managing their impact on the Group is
continually under Board review.
The risk management process follows a sequence of risk
identification and assessment of probability and impact.
An owner is then assigned to each risk to manage
mitigation activities.
The Executive Team supports the Board in monitoring our
risk exposure through regular reviews and a register is kept
of all corporate risks. The risk register and the methodology
applied are the subject of continuous review by senior
management and are updated to reflect new and developing
risks that might impact the business. Where exposure is
outside of our risk appetite, the issue is communicated to
the Board alongside proposed actions to mitigate the risk.
This approach to risk management helps to facilitate top-down
and bottom-up perspectives across business units within the
organisation. The corporate risk register is presented to, and
reviewed by, the Audit Committee on a regular basis.
Strategic objectives
Monitor
dit Co m
u
A
I
n
t
e
r
n
a
l a
u
dit
t e e
m i t
B
o
a
r
d
Risk appetite
Communicate
effectively
n a ge ment
M a
Identify and
assess risks
People and culture – Following significant changes in the
leadership team, there is greater risk of change across the
Group's management layers, which can create uncertainty
and has the potential to be disruptive.
Implement
22
Annual Report & Accounts 2017
Design and plan mitigations
Viability statement
In accordance with provision C.2.2 of the 2014 revision of the
Code, the Board assessed the prospects of the Company over
a longer period than the 12 months required by the ‘Going
Concern’ provision. This assessment involved a robust review
of the principal risks facing the Company and Group, particularly
those which could impact solvency, performance or the Group’s
business model. The Board conducted this review for a period
of three years, which was selected for the following reasons:
• the Group’s strategic plan covers a three-year period; and
• the significant growth profile anticipated for the Group
both organically and by acquisition means that forecasting
beyond three years is more subjective; hence, the Board
believes a three-year period is the most appropriate.
The three-year strategic plan considers the Group’s cash
flows, uEBITDA, investment in areas such as marketing and
technology and other key financial ratios over the period.
These metrics are subject to sensitivity analysis, which
involves flexing a number of the main assumptions underlying
the forecast both individually and in unison to ensure the
business is still viable in a stressed environment and any
additional financing requirements are identified.
The sensitised scenarios model the impact of the Group’s
principal risks materialising. For example, this includes a fall in
orders due to a total outage from an unmitigated technology
failure (Technology Resilience), an unexpected change in
legislation (Regulation and Legislation) and a sudden and
sustained inability to process card payments (Service Experience),
as well as downside impacts that may result from competition,
brand and global headwinds. Mitigating factors to address
these risks, which would include a reduction in marketing
spend, delaying/removing discretionary payments and a
headcount freeze, have not been modelled. The risks, together
with a lack of mitigation, have been combined to form a
“reasonable worst case” scenario.
The three-year strategic plan does not include cash flows
in respect of future mergers and acquisitions that have not
completed by the date of signing. The Board has assumed that
any decisions on future acquisitions will have regard to the
Company’s financial position and future cash flows at that
time, and that funds will be raised if needed in order for the
Company to be able to continue in operation and meet its
liabilities as they fall due.
The loss recognised in the current year is caused by the
non-cash impairment charge taken against the carrying value
of goodwill in the Australia & New Zealand cash-generating
unit. It has not had an impact on cash generation.
Based on the results of this analysis, the Board has a
reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due
over the three-year period of their assessment and are pleased
with how the Company is positioned for its longer-term future.
Going concern
In adopting a going concern basis for preparing the financial
statements, the Directors have made appropriate enquiries
and have considered the Group’s cash flows, liquidity position,
borrowing facilities and business activities as set out on page
97, in Note 33 to the Group’s financial statements on pages
130 to 134, and the Group’s principal risks and uncertainties as
set out on pages 22 to 27.
Based on the Group’s forecasts, the Directors are satisfied
that the Company, and the Group as a whole, have adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, the financial statements have been
prepared on the going concern basis.
Key to principal risks table on pages 24 to 27
Category – We categorise risks to better understand the spectrum, and scale
of risks that fall into certain groupings.
Owner – The primary Executive Team member accountable for the risk.
Risk movement – Considered on a net basis, recognising changes in both gross
risk measurement and the offset of any advancements or regression in mitigation.
Key risk indicators – Metrics and criteria used by management to understand both
risk exposure and effectiveness of mitigation.
EU referendum (“Brexit”) update
The Group has continued to monitor
developments and potential impacts that
Brexit may have on our performance and results.
We also reference our work with the British
Takeaway Campaign, which seeks to represent
the views of the industry, and which has driven
dialogue and a greater understanding of the
potential risks and implications that Brexit
may bring. It also represents the industry in
discussions with political stakeholders as
post-Brexit policy is developed.
Whilst there is still macroeconomic uncertainty
as negotiations continue, we have concluded
that Brexit risks continue to fall below our
criteria for inclusion as a principal risk. We
provide a summary of the potential direct and
indirect impacts we have considered in arriving
at this conclusion:
Potential direct implications
Currency risk
A further weakening of sterling would serve to
increase our reported revenue. Our growing
international business now accounts for 44% of
total Group revenue. However, certain
investments and expenditure are non-sterling,
which would have the impact of reducing profit.
Consumer spending
Adverse economic conditions arising out of
increased inflation or interest rates, could
impact consumers. However, our experience is
that the takeaway industry is resilient and that
consumers may exchange takeaways as an
alternative to more expensive out-of-home dining.
Potential indirect implications
Skills shortages
Restrictive changes to UK migration policy
has the potential to add further burden to an
existing skills shortage within the restaurant
and takeaway industry. This could impact
short-term industry performance but perhaps
more importantly could impact the longer-term
growth of our industry.
Cost of food
Changes in tariffs and potential adoption of
WTO rules could have a material impact on the
cost of imported food for the industry. Uncertainty
regarding EU farming subsidies and the UK food
manufacturing industry’s dependency on migrant
workers increases the risk further. This knock-on
impact to our Restaurant Partners may adversely
impact our commercial terms with them.
www.justeatplc.com
23
Strategic report Principal risks and uncertainties continued
What is the risk and impact?
What is the strategic context?
Competition
Category: Strategic
Owner:
Chief Executive Officer
An inability to offer compelling service
propositions to Customers and Restaurant
Partners allows competitors to threaten our
position in our markets.
This could adversely impact market share, growth,
revenue, margin and overall profitability.
Service
experience
Category: Technology
Owner:
Chief Technology Officer
The user experience on our platforms fails to meet
the evolving expectations of either our Customers
or Restaurant Partners and is not a positive
differentiator against competitors.
This could impact our brand, Customer and
Restaurant Partner experience and loyalty and
ultimately market share, revenue and profitability.
Regulation
and legislation
Category: Regulatory
Owner:
Chief Executive Officer
New, changed or reinterpreted laws and regulations
adversely impact the business, or we fail to obtain
required regulatory approvals or licences.
Impacts include compromised revenue streams
and/or increased cost of operations. Additionally,
instances of non-compliance or adverse judgements
could result in brand and reputational loss, along
with litigation, fines, revocation of licences and
financial loss.
Brand
Category: Reputational
Owner:
Chief Marketing Officer
A single event inflicts considerable harm to our
brand, or an ineffectual brand strategy weakens
our brand or its authenticity over the longer term.
A significant decline in brand value would result in
the loss of new and existing Customers and
Restaurant Partners, impacting orders, revenue
and overall profitability.
Cyber security
and data
protection
Category: Operational
Owner:
Chief Technology Officer
We sustain a major cyber security breach.
A major cyber security breach has the potential to
cause significant operational disruption, data theft or
destruction, malicious damage and/or theft of assets.
Following such an incident, it is probable that the
reputational and operational impacts would weaken
orders, revenue and underlying profitability.
Leadership in each of our markets is
important to achieving scale. Extending
our position through providing a wider
choice to our Customers, including offering
delivery for selected QSR chains, is
central to our strategic growth plan.
This risk has increased as we consider the
growing scale and funding of logistics
providers and the marketplace/margin
impacts of the consequential entry of
QSR chains into the delivery market.
Greater confidence with technology and
information is revolutionising consumer
behaviour and the way businesses are
partnering with each other to leverage
market opportunities.
Offering a compelling online experience
to meet the increasing demands of both
Customers and our Restaurant Partners is
critical to brand loyalty and driving growth.
Our role within the food industry across
several markets exposes us to a
spectrum of laws and regulations,
increasing the inherent risks.
Food safety and payment services
regulations are examples of applicable
areas, but more broadly competition
(anti-trust), bribery, modern slavery,
money laundering, consumer protection
and taxation (including EC State Aid
investigations and ongoing tax disputes).
This risk increases as changes such as
GDPR and PSD2 are brought into law
across European markets.
Eating is a fundamental human pleasure
in our Customers’ lives and it is therefore
essential that they, along with our
Restaurant Partners, value, endorse
and associate with us, what we do and
what we represent in society.
In response to this, our brand and what
we do to promote and protect it is
central to our strategic plans.
It is critical to maintaining our Customers’
and Restaurant Partners’ experience and
trust that we provide secure systems on
which they can transact.
Our platforms are pivotal to the
enablement of our services. Therefore
it is essential that we develop a strong
cyber security capability and that we
continue to invest in enhancing systems
to meet the changing nature of this risk.
In so doing, we also need to ensure that
we retain a balance between robust
security and ease of use and that it does
not impact the speed to market of any
key online service features.
Key
1
Improving Customer
experience
2
Bringing greater choice
3
Building brand to
drive channel shift
24
Annual Report & Accounts 2017
growth trends.
• Net new customers.
• Customer satisfaction and
loyalty levels.
• Restaurant satisfaction
and loyalty levels.
• Delivery revenue.
• Driver cost per order.
• Overall order margins.
• Restaurant satisfaction
and loyalty levels.
1
2
3
Rigorous business modelling and pilots – We rigorously model and
• Order volumes/
pilot new propositions to market.
Business intelligence – We closely monitor territory performance
through advanced analytics.
Dedicated delivery initiatives – We are investing in and
accelerating rollout of our delivery propositions.
1
2
3
Consumer and partner product development teams – We have
• Customer satisfaction and
dedicated teams continuously innovating and developing new
loyalty levels.
features for our services.
Service platform consolidation – We are undertaking discrete
initiatives to bring further markets onto a single platform to focus
development and enhance our agility in bringing features to market.
Our product focus – Our product development is the fastest growing
technology area as we prioritise spend in our strategic plan.
2
3
Monitoring – Our in-house legal, finance, tax and compliance
functions monitor new and evolving risks.
• Internal operational
compliance reporting.
• Internal audit findings.
Evaluation – Where required, external specialists supplement our
teams to assess, scope and plan responses to changes in the
regulatory landscape.
Compliance projects – We create multi-discipline project teams to
address larger compliance needs such as GDPR and PSD2 legislation.
1
2
3
Brand ownership and strategy – Senior accountability, strategies
• Customer satisfaction and
and plans exist to enhance and protect our brand.
loyalty levels.
Crisis management – Management and communication plans are
established to minimise brand damage following an adverse event.
Proactive initiatives – We live our brand values, we are involved in
initiatives such as the BTC, Sustainable Restaurant Association
and the Better Fast Food Network.
Protocols and organisation – Skilled teams operate within
established brand policies and guidelines.
• Restaurant satisfaction
and loyalty levels.
• Ongoing market
research metrics.
1
2
Security and data teams – We continue to invest in building our
security and data teams to support systems design and development,
• Volumes/trends of
prevented attacks.
and the monitoring of operations.
Attack management systems – We have dedicated solutions
in operation.
Penetration testing and vulnerability management – Our teams
perform ongoing work to identify and resolve network vulnerabilities.
Identity management – We continue to invest in advancing our
identity management capabilities, which significantly reduces
vulnerability across user and systems accounts.
Incident and event management – We continue to enhance our
incident and event management systems and have specialist
teams that manage responses to cyber incidents.
• Cyber response incident
levels and root causes.
• Network health and status
of critical updates.
• Levels of obsolete/vendor
unsupported systems
in use.
• Internal audit findings.
Competition
Category: Strategic
Owner:
Chief Executive Officer
An inability to offer compelling service
propositions to Customers and Restaurant
Partners allows competitors to threaten our
position in our markets.
This could adversely impact market share, growth,
revenue, margin and overall profitability.
Leadership in each of our markets is
important to achieving scale. Extending
our position through providing a wider
choice to our Customers, including offering
delivery for selected QSR chains, is
central to our strategic growth plan.
This risk has increased as we consider the
growing scale and funding of logistics
providers and the marketplace/margin
impacts of the consequential entry of
QSR chains into the delivery market.
Change
Links to strategic
focus areas
How is the risk managed?
Key risk indicators?
1
2
3
Rigorous business modelling and pilots – We rigorously model and
pilot new propositions to market.
• Order volumes/
growth trends.
Business intelligence – We closely monitor territory performance
through advanced analytics.
Dedicated delivery initiatives – We are investing in and
accelerating rollout of our delivery propositions.
Service
experience
Category: Technology
Owner:
Chief Technology Officer
The user experience on our platforms fails to meet
Greater confidence with technology and
the evolving expectations of either our Customers
information is revolutionising consumer
or Restaurant Partners and is not a positive
differentiator against competitors.
This could impact our brand, Customer and
Restaurant Partner experience and loyalty and
ultimately market share, revenue and profitability.
behaviour and the way businesses are
partnering with each other to leverage
market opportunities.
Offering a compelling online experience
to meet the increasing demands of both
Customers and our Restaurant Partners is
critical to brand loyalty and driving growth.
1
2
3
Consumer and partner product development teams – We have
dedicated teams continuously innovating and developing new
features for our services.
Service platform consolidation – We are undertaking discrete
initiatives to bring further markets onto a single platform to focus
development and enhance our agility in bringing features to market.
Our product focus – Our product development is the fastest growing
technology area as we prioritise spend in our strategic plan.
• Net new customers.
• Customer satisfaction and
loyalty levels.
• Restaurant satisfaction
and loyalty levels.
• Delivery revenue.
• Driver cost per order.
• Overall order margins.
• Customer satisfaction and
loyalty levels.
• Restaurant satisfaction
and loyalty levels.
Regulation
and legislation
Category: Regulatory
Owner:
Chief Executive Officer
New, changed or reinterpreted laws and regulations
Our role within the food industry across
adversely impact the business, or we fail to obtain
several markets exposes us to a
required regulatory approvals or licences.
Impacts include compromised revenue streams
spectrum of laws and regulations,
increasing the inherent risks.
and/or increased cost of operations. Additionally,
Food safety and payment services
instances of non-compliance or adverse judgements
regulations are examples of applicable
could result in brand and reputational loss, along
with litigation, fines, revocation of licences and
areas, but more broadly competition
(anti-trust), bribery, modern slavery,
financial loss.
2
3
Monitoring – Our in-house legal, finance, tax and compliance
functions monitor new and evolving risks.
Evaluation – Where required, external specialists supplement our
teams to assess, scope and plan responses to changes in the
regulatory landscape.
Compliance projects – We create multi-discipline project teams to
address larger compliance needs such as GDPR and PSD2 legislation.
• Internal operational
compliance reporting.
• Internal audit findings.
1
2
3
Brand ownership and strategy – Senior accountability, strategies
and plans exist to enhance and protect our brand.
• Customer satisfaction and
loyalty levels.
Crisis management – Management and communication plans are
established to minimise brand damage following an adverse event.
Proactive initiatives – We live our brand values, we are involved in
initiatives such as the BTC, Sustainable Restaurant Association
and the Better Fast Food Network.
Protocols and organisation – Skilled teams operate within
established brand policies and guidelines.
• Restaurant satisfaction
and loyalty levels.
• Ongoing market
research metrics.
1
2
Security and data teams – We continue to invest in building our
security and data teams to support systems design and development,
and the monitoring of operations.
Attack management systems – We have dedicated solutions
in operation.
Penetration testing and vulnerability management – Our teams
perform ongoing work to identify and resolve network vulnerabilities.
Identity management – We continue to invest in advancing our
identity management capabilities, which significantly reduces
vulnerability across user and systems accounts.
Incident and event management – We continue to enhance our
incident and event management systems and have specialist
teams that manage responses to cyber incidents.
• Volumes/trends of
prevented attacks.
• Cyber response incident
levels and root causes.
• Network health and status
of critical updates.
• Levels of obsolete/vendor
unsupported systems
in use.
• Internal audit findings.
Risk stable
Risk increased
Risk decreased
www.justeatplc.com
25
Brand
Category: Reputational
Owner:
Chief Marketing Officer
Cyber security
and data
protection
Category: Operational
Owner:
Chief Technology Officer
A single event inflicts considerable harm to our
brand, or an ineffectual brand strategy weakens
Eating is a fundamental human pleasure
in our Customers’ lives and it is therefore
our brand or its authenticity over the longer term.
essential that they, along with our
A significant decline in brand value would result in
the loss of new and existing Customers and
Restaurant Partners, impacting orders, revenue
and overall profitability.
We sustain a major cyber security breach.
A major cyber security breach has the potential to
cause significant operational disruption, data theft or
destruction, malicious damage and/or theft of assets.
Following such an incident, it is probable that the
reputational and operational impacts would weaken
orders, revenue and underlying profitability.
money laundering, consumer protection
and taxation (including EC State Aid
investigations and ongoing tax disputes).
This risk increases as changes such as
GDPR and PSD2 are brought into law
across European markets.
Restaurant Partners, value, endorse
and associate with us, what we do and
what we represent in society.
In response to this, our brand and what
we do to promote and protect it is
central to our strategic plans.
It is critical to maintaining our Customers’
and Restaurant Partners’ experience and
trust that we provide secure systems on
which they can transact.
Our platforms are pivotal to the
enablement of our services. Therefore
it is essential that we develop a strong
cyber security capability and that we
continue to invest in enhancing systems
to meet the changing nature of this risk.
In so doing, we also need to ensure that
we retain a balance between robust
security and ease of use and that it does
not impact the speed to market of any
key online service features.
Strategic report Principal risks and uncertainties continued
What is the risk and impact?
What is the strategic context?
Technology
resilience
Category: Infrastructure
Owner:
Chief Technology Officer
Widespread and/or prolonged outage of critical
platforms and infrastructure that support our
services to Customers and Restaurant Partners.
Due to the online nature of our businesses,
large-scale outages would have an immediate
impact on orders and revenue as Customers would
be unable to transact with us. Thereafter, the
impact to our brand could deepen if we were
unable to pass collected revenue back to our
partners or pay our suppliers.
Growth
and scalability
Category: Organisational
Owners:
Chief Executive Officer and
Chief People Officer
In response to our continued growth and change
in corporate profile, we encounter challenges
in adapting our operating model to successfully
balance innovation and agility against maturing
our operations and enterprise-wide governance.
This could impact the execution of our strategic
initiatives, as well as impact our ability to leverage
operational cost efficiencies.
Offering services that are available and
robust is critical to our Customers’ and
Restaurant Partners’ experience.
Consequently, if we are to enjoy their
trust, it is imperative that we innovate
and operate with a resilience mindset.
We have progressed well in improving
our resilience capability during 2017.
Our technology profile includes large
data-processing platforms enabled
through cloud infrastructure, which
offers the resilience and scalability of
highly redundant architecture, but
inherently brings with it cyber,
networking and computing risks.
Our larger corporate profile brings
with it inherent structural, process
and governance challenges that require
us to evolve to remain effective in
exploiting market opportunities and
be efficient with our resources.
As we execute our strategic plan, it is
essential that we concurrently focus
on organising ourselves for success.
1
2
3
Architecture – Our platforms are all hosted on Amazon Web Services
• Systems availability/
on a 'three site basis' to provide multi-site resilience and failovers to
percent uptime levels.
reduce the risk of major outages and to enable rapid restoration
of services.
Monitoring – Our specialist technology teams provide 24/7
monitoring of our platforms and respond to outages.
Business recovery – We have implemented recovery plans to
minimise disruptions and facilitate the resumption of services.
• Backup success metrics.
• Outage root cause and
problem management
metrics.
• Results of business
recovery exercises.
1
2
3
The right leadership – We have recruited a number of senior leaders
• Operational costs per order.
who bring with them experience and thought leadership, which will
enable us to accelerate organisational change and to address skill
set, process and technology gaps in our operational capability.
Organisational design – We have a set of organisational design
initiatives within our strategy to minimise this risk.
• Status of organisational
design initiatives.
The integration of newly acquired businesses and
our reorganisation of existing businesses is met
with significant challenges and delays.
The adverse impacts may include greater resource
utilisation and costs to complete such projects, as
well as the opportunity costs of operating fragmented
or sub-optimal organisational structures.
Newly acquired businesses, such as
SkipTheDishes and Hungryhouse, require
integration into the Group. Integrations
are inherently complex and therefore form
discrete initiatives within our strategy.
As we grow, certain existing businesses
also require reorganising to leverage our
global scale. These exercises also form
part of our strategy.
1
2
Project management – We manage integrations and
• Order levels and trends for
reorganisations from concept to execution as projects to ensure
specific businesses.
appropriate governance, structure and accountability is wrapped
around them.
any obstacles.
Executive sponsorship – Our Executive Team members act
in a steering and decision-making role to help the projects overcome
• Project progress reporting.
• Project governance
compliance levels.
Business
integration and
reorganisation
Category: Organisational
Owners:
Chief Executive Officer and
Chief Financial Officer
People
and culture
Category: Organisational
Owner: Chief People Officer
Key talent leaves the business and/or our talent
acquisition strategy is ineffective in filling
strategic roles.
The loss of key talent has the potential to be
disruptive, particularly for positions of leadership.
Together with acquisition risk, this can delay and
therefore jeopardise the execution and
achievement of strategic objectives.
Global economic
and political
headwinds
Category: Financial
Owner:
Chief Financial Officer
Significant economic or political events weaken order
volumes and/or growth projections in one or more
of our markets, or threaten to disrupt our operations.
Economic and political factors have the potential
to represent both opportunities and risks. For example,
UK consumers’ “trade down” behaviour was seen to
benefit takeaways during the 2007-2012 global
recession. Nonetheless, a particularly deep and
prolonged event has the potential to change
behaviours, which could adversely impact
revenue and underlying profitability.
Key
1
Improving Customer
experience
2
Bringing greater choice
3
Building brand to
drive channel shift
26
Annual Report & Accounts 2017
We have had significant changes across
our senior leadership team over the past
18 months. As this also brings about
cultural change, we can expect a degree
of attrition from existing talent. This risk
is a new addition to the principal risks
for 2017.
Talent management forms a key pillar
of our People strategy to ensure both
retention and timely acquisition of
talent meets the needs of our
growing organisation.
It is widely accepted that the world has
entered a more volatile state in recent
years with increased economic and
political uncertainty. Due to the
wide-reaching and systemic nature of
this risk, it is strategically important for
us to understand that we have taken all
necessary steps within our control to
mitigate it.
This risk has the potential to impact
performance in one or more markets,
disrupt operations and potentially
threaten the safety of personnel
working for us, or on our behalf.
1
2
Talent board – Provides leadership and decision making on
• Levels of existing talent.
investing, succession planning and managing our talent pipeline.
Capability management – Mapping of existing capabilities to
• Number of critical
vacancies.
defined talent standards allows a view on strengths, development
• Capability trend analysis.
• Ageing of unfulfilled roles.
areas and risks.
Organisational design – Ongoing progress in enhancing our
organisation to be efficient and forward looking in planning
for human resources.
1
2
3
Impact assessments – When events such as the referendum on
• Net new customers.
"Brexit" occur, we conduct analysis to understand possible
impacts and to mobilise action plans as necessary.
Cash investments – We restrict investments of liquid resources to
AAA-rated money market funds and lodge deposits with approved
counterparties.
Diversification across the globe – In recent years we have
diversified our global footprint, with the consequent advantage
of reducing our reliance on primary markets.
Financial planning – We conduct rigorous financial planning
to manage and monitor cost versus revenue performance.
• Order growth.
• Reorder frequencies.
• Acquisition cost of
new customers.
• Restaurant churn rates.
Widespread and/or prolonged outage of critical
platforms and infrastructure that support our
Offering services that are available and
robust is critical to our Customers’ and
services to Customers and Restaurant Partners.
Restaurant Partners’ experience.
1
2
3
Technology
resilience
Category: Infrastructure
Owner:
Chief Technology Officer
Due to the online nature of our businesses,
large-scale outages would have an immediate
impact on orders and revenue as Customers would
be unable to transact with us. Thereafter, the
impact to our brand could deepen if we were
unable to pass collected revenue back to our
partners or pay our suppliers.
Architecture – Our platforms are all hosted on Amazon Web Services
on a 'three site basis' to provide multi-site resilience and failovers to
reduce the risk of major outages and to enable rapid restoration
of services.
Monitoring – Our specialist technology teams provide 24/7
monitoring of our platforms and respond to outages.
Business recovery – We have implemented recovery plans to
minimise disruptions and facilitate the resumption of services.
Change
Links to strategic
focus areas
How is the risk managed?
Key risk indicators?
• Systems availability/
percent uptime levels.
• Backup success metrics.
• Outage root cause and
problem management
metrics.
• Results of business
recovery exercises.
Consequently, if we are to enjoy their
trust, it is imperative that we innovate
and operate with a resilience mindset.
We have progressed well in improving
our resilience capability during 2017.
Our technology profile includes large
data-processing platforms enabled
through cloud infrastructure, which
offers the resilience and scalability of
highly redundant architecture, but
inherently brings with it cyber,
networking and computing risks.
Growth
and scalability
Category: Organisational
Owners:
Chief Executive Officer and
Chief People Officer
In response to our continued growth and change
in corporate profile, we encounter challenges
in adapting our operating model to successfully
balance innovation and agility against maturing
Our larger corporate profile brings
with it inherent structural, process
and governance challenges that require
us to evolve to remain effective in
our operations and enterprise-wide governance.
exploiting market opportunities and
This could impact the execution of our strategic
be efficient with our resources.
initiatives, as well as impact our ability to leverage
As we execute our strategic plan, it is
operational cost efficiencies.
essential that we concurrently focus
on organising ourselves for success.
Business
integration and
reorganisation
The integration of newly acquired businesses and
Newly acquired businesses, such as
our reorganisation of existing businesses is met
with significant challenges and delays.
The adverse impacts may include greater resource
utilisation and costs to complete such projects, as
SkipTheDishes and Hungryhouse, require
integration into the Group. Integrations
are inherently complex and therefore form
discrete initiatives within our strategy.
well as the opportunity costs of operating fragmented
As we grow, certain existing businesses
Category: Organisational
or sub-optimal organisational structures.
also require reorganising to leverage our
global scale. These exercises also form
part of our strategy.
Owners:
Chief Executive Officer and
Chief Financial Officer
People
and culture
Category: Organisational
Owner: Chief People Officer
Global economic
and political
headwinds
Category: Financial
Owner:
Chief Financial Officer
Key talent leaves the business and/or our talent
acquisition strategy is ineffective in filling
strategic roles.
The loss of key talent has the potential to be
disruptive, particularly for positions of leadership.
Together with acquisition risk, this can delay and
therefore jeopardise the execution and
achievement of strategic objectives.
Economic and political factors have the potential
to represent both opportunities and risks. For example,
UK consumers’ “trade down” behaviour was seen to
benefit takeaways during the 2007-2012 global
recession. Nonetheless, a particularly deep and
prolonged event has the potential to change
behaviours, which could adversely impact
revenue and underlying profitability.
We have had significant changes across
our senior leadership team over the past
18 months. As this also brings about
cultural change, we can expect a degree
of attrition from existing talent. This risk
is a new addition to the principal risks
for 2017.
Talent management forms a key pillar
of our People strategy to ensure both
retention and timely acquisition of
talent meets the needs of our
growing organisation.
political uncertainty. Due to the
wide-reaching and systemic nature of
this risk, it is strategically important for
us to understand that we have taken all
necessary steps within our control to
mitigate it.
This risk has the potential to impact
performance in one or more markets,
disrupt operations and potentially
threaten the safety of personnel
working for us, or on our behalf.
1
2
3
The right leadership – We have recruited a number of senior leaders
who bring with them experience and thought leadership, which will
enable us to accelerate organisational change and to address skill
set, process and technology gaps in our operational capability.
• Operational costs per order.
• Status of organisational
design initiatives.
Organisational design – We have a set of organisational design
initiatives within our strategy to minimise this risk.
1
2
Project management – We manage integrations and
reorganisations from concept to execution as projects to ensure
appropriate governance, structure and accountability is wrapped
around them.
Executive sponsorship – Our Executive Team members act
in a steering and decision-making role to help the projects overcome
any obstacles.
• Order levels and trends for
specific businesses.
• Project progress reporting.
• Project governance
compliance levels.
1
2
Talent board – Provides leadership and decision making on
investing, succession planning and managing our talent pipeline.
Capability management – Mapping of existing capabilities to
defined talent standards allows a view on strengths, development
areas and risks.
Organisational design – Ongoing progress in enhancing our
organisation to be efficient and forward looking in planning
for human resources.
• Levels of existing talent.
• Number of critical
vacancies.
• Capability trend analysis.
• Ageing of unfulfilled roles.
Significant economic or political events weaken order
It is widely accepted that the world has
volumes and/or growth projections in one or more
entered a more volatile state in recent
of our markets, or threaten to disrupt our operations.
years with increased economic and
1
2
3
Impact assessments – When events such as the referendum on
"Brexit" occur, we conduct analysis to understand possible
impacts and to mobilise action plans as necessary.
Cash investments – We restrict investments of liquid resources to
AAA-rated money market funds and lodge deposits with approved
counterparties.
Diversification across the globe – In recent years we have
diversified our global footprint, with the consequent advantage
of reducing our reliance on primary markets.
Financial planning – We conduct rigorous financial planning
to manage and monitor cost versus revenue performance.
• Net new customers.
• Order growth.
• Reorder frequencies.
• Acquisition cost of
new customers.
• Restaurant churn rates.
Risk stable
Risk increased
Risk decreased
www.justeatplc.com
27
Strategic report Chief Financial Officer’s review
Continuing our track
record of strong
operational performance
Overview
Group revenue grew 45% year-on-year to £546.3 million
(2016: £375.7 million). The Group generated a loss before
tax of £76.0 million (2016: £91.3 million profit) after
incurring a non-cash impairment charge against goodwill
of £180.4 million in relation to the carrying value of the
Australia & New Zealand businesses. uEBITDA grew 42%
to £163.5 million (2016: £115.3 million) with a margin of 30%
(2016: 31%) demonstrating continued profitable growth.
Cash flows continue to be strong, with uEBITDA converting
to operating cash flows (excluding amounts owing to
restaurants) at 91% (2016: 93%).
“The Group’s revenue growth
continued to be strong. This was
driven by order growth, increasing
average revenue per order and
ancillary revenues.”
Paul Harrison
Chief Financial Officer
Continuing operations
Revenue
Cost of sales
Gross profit
Long-term employee incentive costs
Exceptional items1
Other administrative expenses
Total administrative expenses
Share of results of associates
Operating (loss)/profit
Other gains and losses
Finance income
Finance costs
(Loss)/profit before tax
Taxation
(Loss)/profit for the year
Basic EPS (pence per share)
Adjusted basic EPS (pence per share)2
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
546.3
(96.0)
450.3
(6.6)
(191.1)
(324.5)
(522.2)
(0.6)
(72.5)
(2.0)
0.7
(2.2)
(76.0)
(27.5)
(103.5)
(15.2)
16.8
375.7
(35.2)
340.5
(3.1)
(14.6)
(250.2)
(267.9)
(0.1)
72.5
18.8
0.6
(0.6)
91.3
(19.9)
71.4
10.7
12.2
1. Includes impairment charges of £180.4 million.
2. Refer to Note 2e of the financial statements on page 97 for a full definition of
adjusted measures. Refer to the reconciliation of uEBITDA on page 29 and
of Adjusted EPS on page 34.
3. Applying the foreign exchange rates used in the current year to the results of
the prior period.
Revenue
Group revenue was driven by order growth, increasing
revenue per order and an increase in ancillary revenue.
Orders grew by 26% year-on-year, with a strong performance
across the Group. The UK achieved 19% year-on-year order
growth, which was at the top end of our stated expectations.
The international businesses grew orders 40% year-on-year
and now generate 39% of Group orders (2016: 35%) as they
continue to drive scale in their underpenetrated markets.
Group average revenue per order (“ARPO”) increased by
13% to £2.92 from £2.59, principally driven by a larger
proportion of delivery orders, a higher average order value
("AOV") and an increase in the average restaurant commission
rate. Ancillary revenue now represents 8% of Group revenue.
Top-placement, the main contributor to this revenue stream,
grew 60% year-on-year and now represents 6% of Group
revenue (2016: 5%). The Group’s revenue also benefited
from the movement in foreign exchange rates, contributing
£10.0 million in the year3.
Underlying EBITDA2
The Group’s uEBITDA was up 42% to £163.5 million
(2016: £115.3 million). Operating expenditure such as
marketing, overheads and people costs all continued to
be leveraged as the business continued to grow. In 2017,
these costs grew 27% and now represent 52% of revenue
(2016: 60%). This significant operational leverage was used
to fund investments in further developing our logistics
capabilities, notably in Canada through SkipTheDishes
and in the UK through delivery trials.
28
Annual Report & Accounts 2017
The income statement includes some significant
fluctuations that are not considered part of normal
business operations. These are removed from operating
profit to arrive at uEBITDA. We believe this measure more
accurately reflects the key drivers of long-term profitability
for the Group and removes those items (both positive and
negative) which are mainly non-cash or one-off in nature
and that do not impact the Group’s underlying trading
performance. A reconciliation between operating profit
and uEBITDA is shown below:
Operating (loss)/profit
Depreciation and amortisation
Long-term employee incentive costs
Exceptional items1
Net foreign exchange (gains)/losses
Share of results from associates
below uEBITDA
uEBITDA2
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
(72.5)
38.4
6.6
191.1
(0.5)
0.4
163.5
72.5
24.3
3.1
14.6
0.2
0.6
115.3
The uEBITDA measure converts strongly to net operating
cash flow due to the beneficial working capital cycle of
the Group’s business model. In the calculation of cash
conversion, we have excluded cash due to be remitted
to our Restaurant Partners as we do not consider this
as part of our day-to-day operating cash balance.
In 2017, 91% of uEBITDA converted to cash (2016: 93%).
The close relationship between uEBITDA and cash
demonstrates why management continue to use uEBITDA
to assess operational and segmental performance.
Conclusion and integration of acquisitions
Following the announcement, in December 2016, of the
intention to acquire Hungryhouse in the UK, the business
obtained regulatory approval from the Competition and
Markets Authority ("CMA") to conclude the transaction.
The positive decision was announced in November 2017,
and the transaction completed on 31 January 2018. As with
other in-market acquisitions, we plan to integrate this
company into the Group to generate additional scale and
realise operational synergies.
SkipTheDishes was acquired in December 2016. It has had
a very successful year, growing orders 264% year-on-year
and assisted Canada to become the third country in the
Group to pass the one million orders a month milestone.
It has meaningfully contributed to the revenue
performance of the Group and, accordingly, we will
continue to invest into the Canadian market to deliver
strong order growth. The business has demonstrated that,
should the conditions be suitable, logistics providers can
generate positive, albeit smaller, uEBITDA margins after
an initial investment phase.
Goodwill in Australia & New Zealand
At the beginning of 2017, the Group announced its
objectives for the Australian business. These included the
consolidation of the two operating brands (Menulog and
Eat Now) as well as moving the business from two legacy
operating systems onto the core Just Eat platform. The
platform migration is now complete and the transition to
one brand has begun. The change in the platform also
necessitated changes to the operating and finance systems.
The Australian market is unique in the Just Eat portfolio with
a substantial part of the population living in Sydney and
Melbourne. This characteristic makes Australia an attractive
market for competitors with the consequence that Australia
is today one of our most competitive markets. Furthermore,
success is partly dependent on our ability to add delivery
capability to complement our marketplace business.
The change in platform offers the businesses in Australia
& New Zealand ("ANZ") the potential to integrate with the
SkipTheDishes platform. Along with the additional security,
scalability and stability that the new platform brings, this
integration will be crucial to ensure the continued growth
in the ANZ market through the addition of the logistics
capability. The technology built by SkipTheDishes allows
forecasting of consumer demand, driver allocation and
delivery times with very high levels of accuracy. Whilst it
will take time to deploy, it is this technology, when launched
in Australia, that will place the business in a good position
for solid future growth.
Whilst these initiatives are intended to create a much
stronger business in Australia, International Financial
Reporting Standards require the Group to book a non-cash
impairment charge against the goodwill included in the
carrying value of the ANZ businesses. This £180.4 million
charge reduces the carrying value to £302.2 million.
Loss/profit before tax
The loss before tax for the year was £76.0 million (2016:
profit of £91.3 million). This was principally the result of
the £180.4 million non-cash impairment charge. Adjusting
for this, the result would have been a profit before tax of
£104.4 million.
www.justeatplc.com
29
Strategic report Developing Markets comprise Italy, Mexico and Spain.
The countries in this segment are our earlier-stage markets
and are much less penetrated than the other segments.
These countries are experiencing high rates of growth,
and profitability will only follow once further share of the
online takeaway delivery market is achieved.
The result of each segment includes its fully allocated
share of central technology, product and head office costs.
United Kingdom
It has been another year of success in the UK business.
Several operational records were broken, a new flagship
television sponsorship was announced, a new industry
body to support our restaurant community was formed
and the business began working closely with a number
of international QSR chains.
Revenue was up 28% to £303.8 million (2016: £237.1 million),
whilst uEBITDA grew 28% to £155.4 million (2016: £121.8 million).
This success has been achieved through a combination of
strategies, focused on improving both Customer demand
and restaurant supply. The key achievements that
contributed to success in the year include:
• increasing the number of UK Active Customers at
31 December 2017 to 10.5 million, up 14% (2016: 9.2 million);
• the number of UK orders from mobile devices increasing
to 85% (2016: 80%), including 50% from app (2016: 46%).
This shift helps increase Customer loyalty and frequency;
• an increase of 6% in ARPO helped by the full year effect
of the 100 bps increase in the standard commission rate
in April 2016;
• securing and activating sponsorship of The X Factor
television show, which helped improve brand awareness
and recognition. The show finale was a record order
night for the UK business;
• growing the number of restaurants on the platform to
28,400 by adding both independent and QSR chains to
the supply. The increase in logistical capability has
helped supplement the amount of choice available to our
Customers, which has helped increase the number of
dining occasions available; and
• continuing to deepen relationships with our Restaurant
Partners through ancillary service offerings, data
analytics, partner centre and marketing campaigns such
as "Local Legends", which highlights and promotes those
restaurants that demonstrate great customer service.
Chief Financial Officer’s review continued
Segmental review
Segment orders
United Kingdom
Australia & New Zealand
Established Markets
Developing Markets
Year ended
31 December
2017
million
Year ended
31 December
2016
million
105.0
15.2
33.0
19.2
88.1
13.8
21.6
12.9
Total orders
172.4
136.4
Net revenue
United Kingdom
Australia & New Zealand
Established Markets
Developing Markets
Total segment revenue
Head office
Total revenue
uEBITDA (See Note 2e)
United Kingdom
Australia & New Zealand
Established Markets
Developing Markets
Total segment uEBITDA
Share of uEBITDA from associates
Head office
Total uEBITDA
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
303.8
49.8
148.3
44.4
546.3
—
546.3
237.1
36.8
75.5
26.2
375.6
0.1
375.7
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
155.4
17.3
11.7
(3.7)
180.7
(0.2)
(17.0)
163.5
121.8
7.6
13.3
(13.7)
129.0
0.5
(14.2)
115.3
The Group has continued to report four operating
segments, these being the UK, Australia & New Zealand,
Established Markets and Developing Markets.
Established Markets comprise Canada, Denmark, France,
Ireland, Norway and Switzerland. The countries in this
segment are mostly further advanced towards maturity.
With the exception of Canada, the countries in this
segment are profitable with increasing scale expected
to drive further profitability over the mid term.
SkipTheDishes has been included in the Established
Markets segment as it was a Canadian in-market
acquisition. This has helped the growth rates of this
segment, but had a detrimental impact on margins as we
have invested in establishing a presence in several new
cities and towns in Canada.
30
Annual Report & Accounts 2017
All of these factors contributed to orders increasing by 19%
to 105.0 million (2016: 88.1 million). Whilst order growth
remains strong, as expected, it has slowed and will continue
to slow given the scale of the UK business. This year's
order growth is at the top end of our stated expectations.
Broadening the reach of our platform to QSR chains is
one of the ways we continue to drive order growth.
This initiative accelerated during the year such that
logistics revenue comprised 1.6% of total UK revenue
(2016: 0.2%). In tandem with order growth, we continue
to focus on maximising revenue by offering a growing
selection of mutually beneficial ancillary services to our
Restaurant Partners.
The strength and operational leverage of our core
marketplace business resulted in uEBITDA margin being
maintained at 51%, despite the incremental investment
into delivery logistics. Spend in the three major cost
categories of people, marketing and overheads reduced
as a percentage of revenue by 400bps. This was offset
by the increased expenditure associated with logistics.
In the year, the UK business invested £12.2 million into the
delivery pilots and trials with QSR chains.
International segments
The success of the UK business continues to demonstrate
the long-term value of the positions we have built across
the remainder of our portfolio. Whilst other markets have
not yet achieved the same relative scale as the UK, several
markets have already shown profitable growth and
significant uEBITDA margins. This reinforces our belief in
scaling to maximise the strength of our business model.
International segment revenue grew by 75% to £242.5 million
(2016: £138.5 million). On a constant currency basis, this
was year-on-year growth of 63%.
Australia & New Zealand
In March 2017, we set out the agenda that lay ahead for
our Australia and New Zealand businesses. There has been
significant focus from both the local and UK based technology,
operational and finance teams. The technology teams have
been focused on upgrading both countries onto the Just Eat
core platform. A key reason is that the legacy platforms
could not accommodate the increasing peak order volumes
nor the addition of delivery services which we see as essential
in order to compete in this market. Along with the new
logistics capabilities, these changes will bring additional
security, scalability and stability to the business.
Our team is now working on combining the two legacy
brands under the better-known Menulog name. During
the migration, marketing spend was scaled back pending
deployment when the transformation was complete.
Consequently, in 2017 revenue reached £49.8 million
(2016: £36.8 million) growing 35% year-on-year or 25%
on a constant currency basis. Operating leverage in the
business, together with the reduction in marketing spend
noted above, resulted in a significant increase in uEBITDA,
which was up 128% to £17.3 million (2016: £7.6 million).
We continue to work on reducing the dependence of the
business on the two major cities. This has helped mitigate
some of the impact of logistics providers, who are typically
concentrated in those locations and has better positioned
us as a national business that can deliver sustainable
growth in the future.
Established Markets
This segment combines six countries with a range of growth
rates that represent similar relative maturity and market
positions. The impact of SkipTheDishes in this segment helped
accelerate growth such that the Established markets segment
grew revenue by 96% to £148.3 million (2016: £75.5 million)
and generated uEBITDA of £11.7 million (2016: £13.3 million).
The SkipTheDishes business has had a phenomenal year
and its results have had a significant impact on this segment’s
results. Whilst in aggregate, the other markets in this
segment (excluding Benelux) experienced year-on-year
order growth of 22%, SkipTheDishes enjoyed pro forma
order growth1 of 264%, making it our fastest growing
business. It has continued its expansion across Canada,
successfully activating supply, creating demand and
building the necessary courier network to service orders.
It is funding this expansion, into 57 new towns and cities in
2017, that required investment. In summary, SkipTheDishes
generated revenue of £50.4 million and an uEBITDA loss of
£8.5 million in 2017.
Our French, Irish, Norwegian and Swiss businesses all
performed to plan, and our Danish business delivered its
17th successive year of order growth and has again achieved
double-digit revenue growth on a constant currency basis.
The other businesses each had record years for revenue
and uEBITDA.
Combined, the segment grew orders by 53% and revenue
by 96% year-on-year. The constant currency growth was
84%, or 26% excluding the impact of SkipTheDishes and
Benelux. As with the UK, the three major cost categories
have all leveraged with this growth such that they reduced
as a percentage of revenue by 900bps. It is the impact
of logistics, and their naturally lower margins, that has
caused the year-on-year uEBITDA margin to contract
to 8% (2016: 18%). The net impact of this on uEBITDA
is a contraction of £1.6 million to £11.7 million
(2016: £13.3 million).
1. Pro forma order growth compares 2017 orders with full year 2016 orders,
including those processed pre-acquisition.
www.justeatplc.com
31
Strategic report We increased spend on innovation to enhance future growth
rates and profitability. When these costs meet the relevant
requirements they are capitalised. Specific, identifiable
development costs totalling £18.8 million were capitalised
in the year (2016: £10.5 million). Projects where we have
invested include the Australia migration, combining the
core Just Eat platforms into one global base, building a
‘fail-over’ site and integrating logistics in order to begin
the UK trials with QSR chains.
Items outside of uEBITDA
Amortisation –
Acquired intangible assets
Depreciation and amortisation –
Other assets
Long-term employee incentive costs
Exceptional items
Net foreign exchange (gains)/losses
Share of results from
associates below uEBITDA
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
24.4
14.0
6.6
191.1
(0.5)
0.4
15.5
8.8
3.1
14.6
0.2
0.6
Amortisation – acquired intangible assets
The amortisation charge principally related to the intangibles
gained as a result of acquisitions completed by the Group over
recent years. The total charge for 2017 was £24.4 million
(2016: £15.5 million). The increase reflects the full year
impact of acquisitions completed in 2016.
Depreciation and amortisation – other assets
The depreciation charges principally related to JCT and
Orderpad terminals that are operated in the majority of
the restaurants on the Just Eat network. The amortisation
charges principally related to the internal development
of the Group’s platforms. The year-on-year increase in
this charge reflects the higher levels of coverage of the
Orderpad terminals in restaurants and the increased levels
of capitalised technology development costs incurred.
Long-term employee incentive costs
Long-term employee incentive costs of £6.6 million
(2016: £3.1 million) primarily related to share awards
granted to employees, recognised over the vesting
period of the awards.
Chief Financial Officer’s review continued
Developing Markets
This segment consists of the high potential, but earlier-stage
markets of Spain, Italy and Mexico.
Revenue from these countries was up 69% to £44.4 million
(2016: £26.2 million), or 59% on a constant currency basis.
This led to a 73% reduction in uEBITDA losses to £3.7 million
(2016: £13.7 million). Together, Spain and Italy accounted
for 98% of segmental revenue.
Both sides of the marketplace continue to thrive. Orders
grew 49% year-on-year assisted by the continuing expansion
into new towns and cities on the supply side and increased
app adoption and successful marketing campaigns increasing
the number of Active Customers on the demand side.
Currently, 59% orders are now placed via the app (2016: 53%).
In total, Active Customers increased 36% to 3.0 million
(2016: 2.2 million).
Whilst these markets remain considerably underpenetrated,
our focus is to continue adding significant numbers of new
Customers and Restaurant Partners to drive channel shift
and increase market share.
Share of results from associates
The Group’s associate, iFood, remains the clear market leader
in Brazil, delivering an excellent performance in 2017.
It generated revenue of £76.2 million (2016: £28.8 million).
This 165% increase (130% increase on a constant currency
basis) was driven by a 124% increase in orders to
54.3 million (2016: 24.2 million).
Brazil has significant long-term potential and the success
of the local team in capturing this potential has resulted in
the creation of a very valuable asset in Brazil, which is not
reflected in the Group’s headline numbers. As shares in this
business become available, we have continued to purchase
our full allocation. As a result, we now own 32% of the
iFood operation (2016: 30%).
Head office costs
Head office costs were £17.0 million (2016: £14.2 million),
reflecting the increase in headcount required to build a
great technology company and run an international group.
These include both the ongoing central costs of operating
the Group as a whole and those functions required for
efficiency of shared expertise, such as finance, legal,
marketing, people and the operational data teams. Those
head office costs that can be reasonably attributed to
individual segments are allocated on a consistent basis
and, therefore, the reported head office costs are those
costs that remain after such allocations.
We invested £78.8 million (2016: £47.0 million) into our
central product and technology team, which is either
capitalised or allocated to the businesses that use the
core technology. This includes the full cost of support and
development including all hosting, maintenance, innovation
and engineering. The size of the team was maintained at
345 people (2016: 360 people) and continues to be an area
of significant investment as we seek to improve both the
Customer and restaurant experience.
32
Annual Report & Accounts 2017
Exceptional items
Exceptional items of £191.1 million in the current year
primarily consisted of the £180.4 million ANZ impairment
charge. A further £9.0 million related to accrued consideration,
separate to the acquisition consideration, for SkipTheDishes
management providing certain services to the Group
post-completion, including knowledge sharing regarding
operating a delivery function at scale. The remaining costs
predominantly related to M&A transaction costs incurred
in relation to the acquisition of Hungryhouse.
Costs incurred in the prior year consisted of M&A transaction
costs and acquisition costs relating to ANZ and the
businesses acquired in Spain, Italy, Brazil and Mexico.
Foreign exchange
A net foreign exchange gain of £0.5 million (2016: £0.2 million
loss) arose due to retranslating monetary assets and
liabilities not in the functional currency of the subsidiary.
Items below operating profit
Other gains and losses
The business has recorded a mix of non-operational gains and
losses on several items during the current and prior years.
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
Gain on disposal of Benelux businesses
—
18.7
Movement in minority shareholders’
buy-out provision
Loss on derivative financial
instruments
Fair value loss on contingent
consideration
Fair value gains on
available-for-sale investments
Other gains/(losses)
Net other (losses)/gains
(0.5)
(0.4)
(1.1)
—
—
(2.0)
—
—
—
0.5
(0.4)
18.8
In 2016, the Group recognised a gain of £18.7 million on the
sale of its Benelux business.
Net finance costs
The net finance costs of £1.5 million (2016: £nil) results
from interests on deposits held worth £0.7 million
(2016: £0.6 million) less finance costs of £2.2 million
(2016: £0.6 million). In 2017, the costs increased due
to the release of capitalised fees incurred in setting
up the Group's previous £200 million revolving credit
facility, as it was replaced in the current year by the
£350 million facility.
Taxation
The Group’s total income tax charge, which is comprised
of current and deferred tax, increased to £27.5 million
(2016: £19.9 million), resulting in an effective tax rate
(“ETR”) of -36.2% (2016: +21.8%). The negative ETR is a result
of the non-cash, IFRS-based impairment charge against
the carrying value of goodwill, which is a non-deductible
expense for tax purposes. The ETR on underlying profits
after adjusting for the impact of long-term employee
incentive costs, exceptional items (including impairment
charges), other gains and losses, foreign exchange gains
and losses, and amortisation in respect of acquired intangible
assets was +23.7% (2016: +23.4%), which is reflective of the
significant current tax on profits generated in the UK,
Denmark, France, Switzerland and Ireland.
As a result of the Group’s growing global footprint, the
changing global tax environment and income taxes arising
in numerous jurisdictions, there are some transactions for
which the ultimate tax determination is uncertain during
the ordinary course of business. The calculation of the
Group’s total tax charge involves estimation and judgement
in respect of certain matters where the tax impact is
uncertain until a conclusion is reached with the relevant
tax authority or through a legal process. Resolving tax
issues can take several years and it is not always within the
control of the Group. Current tax liabilities are recognised for
uncertain tax positions when the Group has a present
obligation as a result of a past event and it is probable that
there will be a future outflow of funds to a tax authority.
These may be, for example, in respect of enquires raised
and additional tax assessments issued. The provision held
in relation to uncertain tax items totals £17.4 million at the
year ended 31 December 2017 (2016: £9.8 million). Included
within the uncertain tax provision, is an amount relating to
an ongoing transfer pricing audit in Denmark, which has
been appealed to the UK and Danish Competent Authorities
through a Mutual Agreement Procedure.
“Brazil has significant long-term
potential and the success of the
local team in capturing this
potential has resulted in the
creation of a very valuable asset.”
Paul Harrison
Chief Financial Officer
www.justeatplc.com
33
Strategic report Chief Financial Officer’s review continued
Earnings per share
Adjusted basic EPS was 16.8 pence (2016: 12.2 pence), an
increase of 38%. Adjusted basic EPS is calculated using the
adjusted profit attributable to the equity shareholders as
set out in the table below. The adjusted EPS has increased
year-on-year due to higher adjusted profits, partially offset
by an increase in the weighted average number of
Ordinary shares.
Balance sheet
Due to the relatively low operational capital expenditure
requirements of our business model and the cash collected
in advance of net settling with our Restaurant Partners, the
balance sheets of the operating companies are relatively
straightforward. The complexity is added upon consolidation
due to the impact of business combinations and the
associated judgements.
Basic EPS declined by 242% to a loss per share of 15.2 pence
(2016: 10.7 pence profit). The loss followed the non-cash
impairment charge required under International Financial
Reporting Standards.
(Loss)/profit attributable
to equity shareholders
Long-term employee incentive costs
Exceptional items
Other gains and losses
Net foreign exchange (gains)/losses
Amortisation in respect of acquired
intangible assets
Share of results from associates
below uEBITDA
Tax impact of the adjusting items
Adjusted profit attributable to
equity shareholders
Weighted average number of
Ordinary shares for basic earnings
per share (‘000)
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
(102.7)
6.6
191.1
2.0
(0.5)
24.4
0.4
(7.6)
71.7
3.1
14.6
(18.8)
0.2
15.5
0.3
(5.0)
113.7
81.6
676,844
669,462
Adjusted basic EPS (pence per share)1
Basic EPS (pence per share)
16.8
(15.2)
12.2
10.7
“Strong cash flow leaves
us in a position of strength,
enabling investment in
significant new opportunities”
Paul Harrison
Chief Financial Officer
1. See Note 2e of the financial statements on page 97 for a full definition of
adjusted measures. Refer to the reconciliation of uEBITDA on page 29 and
of Adjusted EPS on page 34.
34
Annual Report & Accounts 2017
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Other non-current assets
Current assets
Operating cash
Cash to be paid to Restaurant Partners
Cash and cash equivalents
Other current assets
Current liabilities
Net current assets
Non-current liabilities
Total liabilities
Net assets
Equity
Share capital and share premium
Other reserves
Retained earnings
Equity attributable to shareholders
of the Company
Non-controlling interests
Total equity
As at
31 December
2017
£m
As at
31 December
2016
£m
544.9
94.5
19.0
63.7
722.1
213.6
51.5
265.1
27.5
292.6
725.2
103.4
12.4
48.2
889.2
96.8
33.8
130.6
28.6
159.2
(248.5)
(151.9)
44.1
7.3
(39.5)
(70.8)
(288.0)
(222.7)
726.7
825.7
569.5
83.1
65.9
718.5
8.2
726.7
569.0
88.3
160.7
818.0
7.7
825.7
In 2017, non-current assets reduced by £167.1 million to
£722.1 million (2016: £889.2 million), primarily as a result
of the £180.4 million non-cash impairment charge booked
in relation to the carrying value of goodwill recognised on
the acquisition of the Australia & New Zealand businesses.
Over the course of 2017, £18.8 million (2016: £6.6 million)
invested on specific technology projects was capitalised
where the project met the qualifying criteria of IAS 38
Intangible Assets.
The carrying value of property, plant and equipment has
increased as the Group continues to expand its restaurant
estate, it has increased the coverage of Orderpads within the
estate and has completed a refit of several offices.
Cash flow statement
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
Cash generated from operating activities
Cash used in investing activities
Cash generated from financing activities
Net increase/(decrease) in cash and
cash equivalents
Cash equivalents at beginning of year
Effect of changes in foreign
exchange rates
Cash equivalents at end of year1
166.7
(35.7)
2.7
133.7
130.6
0.8
265.1
97.0
(167.5)
2.3
(68.2)
192.7
6.1
130.6
1. Includes £51.5 million (2016: £33.8 million) of Restaurant Partner cash.
The Group spent £35.7 million in investing activities during
the year (2016: £167.5 million), which predominantly related
to cash used in developing our platforms and the purchase
of other equipment. The prior year included £160.2 million
spent acquiring subsidiaries and associates.
At the balance sheet date, the Group had cash balances of
£265.1 million (2016: £130.6 million). The Group has access
to a £350 million revolving credit facility (2016: £200 million),
which was undrawn at the balance sheet date. Subsequent
to the year end, £100 million was drawn down from this
facility to fund the acquisition of Hungryhouse. This is
discussed further in Note 30 of the financial statements.
Outlook
Just Eat is in a strong position both operationally and
financially. Our successful marketplace business remains
the core driver of growth and is on course to deliver uEBITDA
of £215–235 million in 2018. We will expand our investments
in brand, Developing Markets and delivery services, resulting
in Group revenue of between £660–700 million and uEBITDA
of £165–185 million in 2018.
The Board has not recommended a dividend since the IPO
as, in order to deliver longer-term value, the Group intends
to retain any earnings to invest in development and
expansion as opportunities arise.
Other non-current assets includes the Group’s £41.4 million
investment in our associates iFood and IF-JE Holdings B.V.
(2016: £29.7 million). The Group’s holding in iFood has now
increased to 32% (2016: 30%).
Current assets increased by £133.4 million to £292.6 million
(2016: £159.2 million), due to the growth in the closing
cash balance.
The cash balance of £265.1 million (2016: £130.6 million)
includes £51.5 million (2016: £33.8 million) of cash payable
to our Restaurant Partners shortly after the period end.
Although the Group controls these cash balances, it does
not include this cash as part of its day-to-day available
operational cash as it is reimbursed to our Restaurant
Partners predominantly on a weekly basis and on-time
payment to restaurants is critical.
Current liabilities increased by £96.6 million to £248.5 million
(2016: £151.9 million), primarily due to growth in our operations.
Within this balance, trade and other payables increased by
£73.1 million, the largest movement being the recognition
of a liability transferred from provisions of £24.6 million.
This primarily represents the first earn-out payment due to
the SkipTheDishes vendors. This liability crystallised when
the business achieved its 2017 performance targets as
agreed under the SPA, signed in December 2016.
Cash flow
The Group continued its high level of cash conversion,
benefiting from collecting the gross value of orders
made by payment card ahead of making net payments
to restaurants. In 2017, net cash generated from operating
activities was £166.7 million (2016: £97.0 million).
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
163.5
115.3
19.6
(22.0)
(3.0)
1.6
14.3
(12.7)
(1.1)
0.3
159.7
116.1
(10.7)
(9.1)
uEBITDA
Net change in working capital (excluding
movement in restaurant payables)
Income taxes paid
Interest cash outflow
(including facility fees)
Other non-cash items
Cash flow before exceptional items
Cash outflow in respect of
exceptional items
Net cash flow before movement
in restaurant payables
Movement in restaurant payables
Net cash flow from operating activities
149.0
17.7
166.7
107.0
(10.0)
97.0
Paul Harrison
Chief Financial Officer
5 March 2018
Our uEBITDA measure also converts strongly to net
operating cash flow due to the beneficial working capital
cycle of our business model. In 2017, 91% of uEBITDA
converted to cash excluding those amounts held for
restaurants (2016: 93%). If exceptional items were excluded,
the cash conversion would be circa 100% in both the
current and prior years.
www.justeatplc.com
35
Strategic report Delivering more
opportunities for
our People
36
Annual Report & Accounts 2017
It is our People that make Just Eat
the great company it is. We will
continue to bring emerging talent into
our business, as well as developing
our existing colleagues, to nurture
tomorrow's leaders of Just Eat.
We are passionate about supporting our growing teams,
empowering them to focus on providing excellent service
to our Customers and Restaurant Partners. We invest
significantly in developing the talent we already have
across our global business, offering numerous development
opportunities to all employees based on key trends
identified in individuals’ personal development plans.
This includes opportunities such as training courses run
by external experts, coaching, mentoring, webinars, access
to online learning resources and professional sponsorship.
We have also provided extensive support for all of our
managers, ensuring they are well placed to drive and lead
high performing, successful teams; from new manager
development programmes all the way through to executive
leadership development.
900
New employees joined Just Eat in 2017
810
Employees completed a world record
Just Eat now holds the Guinness World Record for
creating the world's largest human pizza.
www.justeatplc.com
37
Strategic report Our People
The People behind
our business
>> Read more about
our succession
planning on page 61
We want our People to be
proud to work for Just Eat and
feel engaged by our business,
and to provide an environment
that enables them to be the
best that they can be every day.
Our People
There are more than 2,900 Just Eaters across
12 markets, with 896 based in the UK. As a
global business, we now have an evolved
approach to global mobility and a shared system
which enables all our People to view vacancies
in each of our markets.
We are proud to offer great opportunities to
help our People develop their careers. Just Eat
has made over 10 acquisitions since its IPO
in April 2014. As a result we have worked to
ensure that those brought into the business via
acquisition get the same world-class employee
experience as all other employees, and can
share in the unique culture that Just Eat has
created. Our world party is an example of this
– in November we welcomed 1,100 Just Eaters
from around the world to London for our annual
event where we celebrated our successes,
ambitions and our inclusive culture.
At the heart of our culture are our values – they are
the essence of Just Eat’s culture and guide us as
we create the world’s greatest food community.
Our values
Make
Happy
Razor
Sharp
Big
Hearted
We live for the joy side of life. The right
food for every moment. We cherish
the love our Restaurant Partners put
into their cooking. We are all about the
enjoyment our Customers get from
eating. It is the smiles that make
it worthwhile. What drives us is
building more excitement, quality,
fun and laughs into everyday food
occasions, because food makes
people happy.
Everything can be made better. With
clear direction, a relentless attitude
and non-stop innovation, we impact the
things that matter most – more choice,
fresh experiences and new
connections. We focus on getting
things done, at pace, and with a
laser-like focus. All so that people and
restaurants discover more of each
other, and the bar is constantly raised
for everyone.
Just Eat is built on relationships with
people. The many, the few, the you.
Every individual matters and we use
every opportunity to make things
personal and fair for everyone. We
listen to understand, not just to reply.
Respect comes as standard – for our
Customers, Restaurant Partners and
each other – and that is how we build
positivity in all our relationships and
create new ones.
38
Annual Report & Accounts 2017
Hiring great talent
In September, we welcomed Peter Plumb into the business
as Chief Executive Officer. This followed on from David
Buttress stepping down from the role of CEO and moving
into a Non-executive Board role. This year we also hired
a Commercial Finance Director, Group Brand Director,
UK Sales Director, Chief Data Officer, Chief Information
Security Officer, Director of Internal Audit and Risk and
Director of Platform Reliability.
In aggregate we welcomed 256 new Just Eaters into our
UK team, and more than 900 globally.
To support our growth plans, this year we launched two
new global websites for professional careers and graduates.
The key feature of both sites is our People, who provide an
insight into what makes Just Eat a great place to work.
These websites are:
careers.just-eat.com
careers.just-eat.com/graduates
In 2017, the talent acquisition team launched global
manager capability training to ensure that Just Eat’s
approach to hiring remains consistent around the world.
In addition, we have rolled out the use of candidate
experience surveys, which have provided invaluable
insights to ensure we provide the best experience
for all candidates.
Early careers
This year we formed a centralised and dedicated team to
manage our early careers initiatives with the aim of developing
an internal talent pipeline which will grow and develop
with our business. We built on the success of our 2016
graduate programme by hiring a further 20 graduates
across our engineering, data and AI, product management,
finance, commercial and marketing teams. In addition, we
hired four apprentices into the business who are now
studying on the job to gain a formal qualification.
Learning opportunities anytime, anywhere
Our employees all over the world now have access to
Workday Learning, our online learning hub, as well as an
individual LinkedIn Learning licence giving them access to
thousands of resources to support both their professional
and personal development. During the year, more than
2,000 pieces of online learning content have been accessed.
This investment in online learning has helped support
144 job changes in the UK this year; these include
promotions, secondments and lateral moves.
Management development
Our People managers play a crucial role in creating high
performing, motivated and engaged teams. Whether a new
manager to Just Eat or newly promoted into a managerial
role, we want to ensure our managers have access to tools
and resources they will need to be successful. In July we
launched a 90-day modular management development
programme that is available globally through our online
learning hub. The programme is supported with bitesize
videos, infographics, virtual classrooms and self-evaluations.
In 2017, 91 managers completed this new programme
across our markets.
Leadership development
In order to meet our business growth ambitions, we need
to build on our strengths, identify our areas for improvement
and invest in the right people for the future. We ran a
comprehensive talent profiling exercise with the top 50
leaders in our global business, benchmarking them against
what great leadership looks like. Tailored and actionable
development plans were built for each individual and the
outputs will inform our Group-wide talent management
initiatives for 2018.
Gender breakdown of our Board, senior management and all permanent employees at 31 December 2017:
Board membership
22% female
Senior management1
15% female
All permanent employees
36% female
2
2
17
16
15
1
7
6
8
17
16
15
6
6
5
33
33
30
17
16
15
1,061
1,858
823
1,550
708
1,096
Female
Male
1. Senior management includes the top two grading levels for roles within the global business. This is predominantly our Executive Team and their direct reports.
www.justeatplc.com
39
Strategic report
Our People continued
Reward and benefits
Reward linked to performance
This year we evolved our annual performance-
related bonus scheme. The changes enable
greater manager discretion, and reinforces the
link between reward and performance.
Bonuses for business leaders are determined
through a combination of business and personal
performance – which ensures that our leaders are
all invested in our future success. In addition, we
regularly review our compensation packages to
ensure they are competitive when compared to
other technology companies.
Key employees are eligible to receive share awards,
which align their interests with those of shareholders
in linking reward to business performance.
Benefits
We support our People through a range of benefits,
which are segmented into the following categories:
protecting the future, health and wellbeing, and
leisure and lifestyle. Employee interest in our
benefits grew this year with greater uptake
on our core benefits and the successful launch
of a much-valued flexible approach to holiday
allowance, allowing employees to buy or sell a
certain number of days a year.
The Sharesave Plan enables employees to
contribute to a regular savings plan to purchase
Company shares. Since its launch in 2015, this
has proved to be a hugely popular benefit –
this year a further 213 employees signed up to
the scheme.
Employee Experience
Making Just Eat a great place to work
We want to provide a working environment that
supports innovation and collaboration across
all of our teams. This year we completed the
refurbishment of our London office, and also
expanded our space in Bristol.
Creating a diverse and inclusive environment
Just Eat is committed to a culture of respect and
a positive, productive working environment, free
from any form of discrimination. We are an equal
opportunities employer and are committed to
treating all individuals, including job applicants,
equally. This information can be found within
our Equal Opportunities Policy. This year we
launched our "Women at Just Eat" group, which
aims to encourage greater dialogue around the
experience of women who work at Just Eat.
Sponsored by our Chief Product and Technology
Officer, Fernando Fanton and Chief Marketing
Officer, Barnaby Dawe, this group has created a
range of initiatives that aim to reinforce Just Eat
as an inclusive and diverse employer.
We have undertaken focus groups and listening
tours within our technology team to help
understand how we can close the gender divide
within the industry. Although the predominance
of men in technology is a greater market issue,
we are committed to addressing this internally
through an overhaul of our recruiting practices,
manager training and promotion processes. In
addition we have 24 STEM (science, technology,
engineering and mathematics) ambassadors
(92% female) who volunteer with local schools
to promote careers in technology.
Engaging our People
This year we evolved our approach to employee
engagement with a new survey, which focused
additionally on our culture and the experience
of working for Just Eat.
We have also developed our approach to
communicating the results and supporting
action planning throughout the business.
We keep our People up to date on business
matters through monthly "all hands" presentations
led by our CEO, Peter Plumb and supported by
members of the Executive Team. This is accessible
globally and is recorded for on-demand access.
In addition, we use our internal intranet to drive
cross-departmental communication and social
media to give all employees a platform to share
success and cultural stories.
Lisa Hillier
Chief People Officer
40
Annual Report & Accounts 2017
Our new offices
This year we undertook a total
refurbishment of our London office
space – the SKA Gold certification
environment providing a variety of
working zones to encourage better
collaboration between our 896
London-based team members and
offering more meeting space and
better downtime areas full of natural
light and great views of the City.
41
Corporate social responsibility
At Just Eat we believe in
doing business responsibly
Our approach to corporate social
responsibility is built around our
vision of creating the world’s greatest
food community and embedded
across our business.
Driving up food hygiene standards in the takeaway industry
Just Eat works closely with the Food Standards Agency
("FSA") in the UK to drive up standards in the takeaway
industry. In 2017, we helped shape the direction of
the FSA's post-Brexit strategy, “Regulating our Future”,
ensuring that our Restaurant Partners have a voice in
the future of food hygiene and safety regulation.
Our new Local Legends programme ensures that only
those restaurants with the highest food hygiene ratings
are eligible for top-placement in our search engine
results page, incentivising those with lower ratings
to improve standards.
Sustainable Restaurant Association partnership
In 2017, Just Eat partnered with the Sustainable Restaurant
Association ("SRA") in the UK on the first ever “Good to Go”
award for the takeaway sector at the SRA’s Food Made
Good 2017 awards. We have also funded membership of the
SRA for six of our most engaged restaurants. The SRA is
now consulting with them to improve their practices even
further across the pillars of responsible sourcing,
environment and society and subsequently share the
lessons learned with our wider restaurant estate.
Influencing ethical and sustainable sourcing
through Restaurant Services
All the suppliers who supply goods which are sold to our
Restaurant Partners via our online shop or via Restaurant
Services must sign up to the Just Eat Social and Ethical
Compliance policy which has been built around the Ethical
Trade Initiative base code. We ask manufacturing partners
to submit proof of ethical and quality compliance from
third-party test houses or globally recognised industry bodies.
All the pizza boxes sold via our online shop in the UK are
made from FSC recyclable material. From March 2018, all
single-use plastics were removed from our shops and we
started trialling a pre-ticked box on our app and website
to encourage Customers to opt out of receiving plastic
items that they do not need like cutlery, straws and sauce
sachets. We are also partnering with Skipping Rocks Lab
to trial edible and decomposable sauce sachets.
Fundraising across our markets
In Italy, we launched the Ristorante Solidale project to
raise awareness of and help tackle food waste. After an
initial launch in Milan in January 2017, the project, which
collects surplus food from our Restaurant Partners and
delivers it to local communities in need, was expanded to
Turin in October. Ristorante Solidale has delivered more than
1,300 hot meals to over 1,000 people in need in its first year.
Just Eat Ireland has partnered with the Peter McVerry Trust,
a charity which aims to eradicate long-term homelessness.
Each year on National Takeaway Tuesday, 10% of the value
of every order is donated to the Trust and this has seen
over €40,000 donated over the past two years. Just Eat
also delivered pizzas to the Trust’s homeless hostels in
Dublin city centre on the day.
Our food community is made up of Restaurant Partners,
Customers, suppliers, partners and our People. We
acknowledge that each of these groups has a role to
play in ensuring Just Eat has a positive impact on the
communities in which it operates.
We believe in:
• helping our Restaurant Partners grow, thrive and ultimately
become better businesses, making a significant contribution
to their local community and economy;
• delivering a great experience for Customers, using
leading-edge technology to deliver more food choices
across our markets; and
• being a business that cares about its People, our impact
on the planet and the communities in which we live
and work.
As a digital business, the impact of our owned operations
on society and the environment is small in comparison
to that of other businesses of our scale and profile.
Whilst we are proud of the progress we have made in our
environmental reporting (see page 144), we know that
many of our stakeholders expect us to do more. This is why
we have chosen to broaden the scope of our responsible
business activities to our wider ecosystem – for example,
exploring where it would be appropriate to influence
aspects of our Restaurant Partners’ operations to drive
positive behaviour change.
In 2017, we are proud to have commenced the
following initiatives:
Better Fast Food Network
Just Eat has joined forces with Shift, a charity which uses
research and design techniques to create products and
services which help address social problems.
Alongside six other organisations (Esmée Fairbairn
Foundation, Guy's and St Thomas' Charity, Mark Leonard
Trust, Tower Hamlets Council, Hackney Council and
Birmingham City Council), we have created the Better Fast
Food Network to understand the challenges faced by
independent fast food outlets and support them to
improve gradually and sustainably the healthiness of
the meals they serve.
Shift will be undertaking work with and on behalf of these
organisations over a period of two years to develop financially
sustainable ways to improve the healthiness of UK fast
food before setting up a stand-alone organisation that will
oversee this work into the future.
42
Annual Report & Accounts 2017
FoodCycle: a strategic
charity partnership
In 2017, we deepened our partnership with
FoodCycle to supplement our fundraising
activities with the donation of employee time
and expertise to support the charity with its
growth and development.
FoodCycle is a UK charity that combines surplus
food, volunteers and spare kitchen capacity to
create tasty, nutritious meals for people at risk
of food poverty and social isolation. In 2017,
we supported FoodCycle with strategic and
creative advice related to its social media
activities and its business intelligence and data
analysis. In both these areas, Just Eat employees
donated their time and knowledge to help
FoodCycle make better decisions to influence
its operations and fundraising. For example,
12 members of the Just Eat data team created
a “Data for Good” initiative which saw them
spending a day working with FoodCycle to
analyse the charity’s data and revert with
findings and recommendations. These included
how and where to open or expand FoodCycle hubs
and how to incentivise and reward volunteers.
" We at FoodCycle were absolutely blown
away by the skills and expertise at the
"Data for Good Day". The team involved
achieved more in one day than would
be possible in six months at FoodCycle.
The final presentations have led to
tangible information and data sets
that will really help FoodCycle grow
and develop. We can’t thank
Just Eat enough!”
Marketing Manager
FoodCycle
Modern Slavery Act 2015
Just Eat is opposed to slavery, servitude, compulsory or forced
labour and human trafficking (together, "Modern Slavery").
Just Eat is committed to ensuring that no Modern Slavery
takes place in any part of the business which Just Eat controls,
or within its supply chain.
During the year, we published a Modern Slavery Act Transparency
Statement in compliance with section 54 of the Act, which is
available to view on the Company’s website.
Code of conduct
We have a comprehensive employee Code of Conduct, governing
subjects such as conflicts of interest, fraud, money laundering,
bribery and corruption and maintaining a professional yet fun
work environment.
It is our policy to conduct all of our business in an honest and
ethical manner. Specifically we take a zero-tolerance approach
to bribery and corruption. We are committed to acting fairly
and with integrity. Effective measures and systems are in
place to counter bribery.
We will uphold all laws relevant to countering bribery and
corruption in all the jurisdictions in which we operate. We
remain bound by the laws of the UK, including the Bribery Act
2010, in respect of our conduct both at home and globally.
Human rights
Whilst the Group has no specific policy in place regarding
human rights, all employment policies and practices are
equally applied to all employees, officers, consultants,
volunteers, interns, and casual and agency workers. Details
of the employee code of conduct are discussed above.
Our office environment
In 2017, we completed a total refurbishment of our London
head office. Following completion, Just Eat was awarded a Gold
SKA rating – the highest accolade for a sustainable fit-out. SKA
is a best practice environmental assessment method developed
by the Royal Institution of Chartered Surveyors ("RICS").
We are one of only a handful of companies to have achieved
SKA Gold certification, having designed a contemporary office
which surpasses the standards required by regulations and
incorporates innovative solutions to minimise the
environmental impact of the office.
Highlights include:
• waste – 96.9% of waste generated during the refurbishment
was diverted from landfill;
• energy & CO2 – reducing energy usage through the
implementation of energy-efficient lighting, lighting
controls in offices and meeting rooms and the reduction
in associated CO2 emissions; and
• material usage – Just Eat used a number of environmentally
sustainable materials including A+ rated flooring such
as Interface & Milliken carpets, Havwood FSC certified
engineered wooden flooring and Kvadrat fabric sustainable
panels which soften acoustics.
FTSE4Good
Just Eat has been independently assessed
according to the FTSE4Good criteria, and
has satisfied the requirements to become a
constituent of the FTSE4Good Index Series,
created by FTSE Russell. This is designed to
measure the performance of companies
demonstrating strong Environmental, Social
and Governance ("ESG") practices.
www.justeatplc.com
43
Strategic report Corporate governance report
Corporate governance
introduction
Good corporate governance
always has been, and always
will be, important to us at
Just Eat.
It provides the structure and processes within
which the Group’s entrepreneurial spirit continues
to thrive. It enables the Group’s ongoing strategy
and growth to be achieved in an environment
that is both supportive and controlled. It allows
the realisation of our aim to maximise shareholder
value and stakeholder interests over the long term.
This structured approach provided the basis of
our handling of the exceptional amount of change
during the past year that I referred to in my
Chairman’s Statement earlier in this Annual Report.
Clearly the passing away of John Hughes in June
was both sad and significant. It is, though, a
testament to John that under his leadership in the
previous years we had assembled a Board well able
to navigate the events of the year successfully.
Key corporate governance developments in the
year are discussed below:
• Appointment of Executive Chairman
In February, David Buttress, our then CEO,
notified the Board that he was to step down
from that role at the end of March to deal with
urgent family matters. David agreed to remain
on the Board as a Non-executive Director
following a four-month leave of absence.
After careful deliberation by both the
Nomination Committee and the Board, we
appointed John Hughes, then Non-executive
Chairman, as Executive Chairman until a new
CEO was appointed. This was to maximise the
benefit of John’s knowledge of the business
and the management team, and to leverage his
proven track record of running technology
companies. Although we would not normally
combine the roles of Chairman and CEO, we
believed this to be the appropriate solution in
the context of David’s leave of absence and
John’s unique talent.
At the same time, we commenced the search
for the new CEO.
44
Annual Report & Accounts 2017
“Our commitments to high standards of
corporate governance have helped guide
our Board and its Committees as they
steered the Group successfully through
a year of exceptional change.”
Andrew Griffith
Interim Non-executive Chairman
• Appointment of Non-executive Director
In April, we announced the appointment of
Alistair Cox as an additional Independent
Non-executive Director. Alistair’s successful
track record in the technology, talent and
listed sectors added significant value to the
Board through the year.
• Appointment of Interim Chairman and
Interim CEO
When John Hughes took a leave of absence for
medical treatment in April, the Board carefully
considered the appropriate response in
consultation with John himself. At the Board’s
request, I, as Senior Independent Director,
took on the role of Chairman on an interim
basis, and Paul Harrison took on the role of
CEO on an interim basis, in addition to his role
as CFO. With the support of the rest of the
management team, Paul’s performance in this
interim role was outstanding. I would also like
to recognise the support we both received
from our other Board colleagues, particularly
during this exceptional period.
• Appointment of CEO
After a thorough and successful recruitment
process, in June the Board was delighted to
appoint Peter Plumb as CEO commencing
in September. This appointment was on the
recommendation of the Nomination Committee,
and on terms approved by the Remuneration
Committee. Peter’s excellent track record of
creating value for shareholders in high growth
consumer digital businesses made him our
preferred choice for the role.
• Board meeting in Madrid
In September, we held our first Board meeting
in Madrid. As well as the normal Board agenda,
we received presentations from our local
management team and were able to interact
with them on an informal basis. In addition to
learning more about the local operations, it
was great to see their enthusiasm for the
business as is typical of our People in Just Eat.
• Appointment of Chairman
Having completed the appointment of
Peter Plumb as CEO, we commenced in
earnest the search for a new permanent
Chairman. As with Peter, this is a critically
important appointment. After a thorough
recruitment process we are pleased to have
announced the appointment of Mike Evans.
Mike Evans will join the Board on 6 March 2018
as an Independent Non-executive Director
and Chairman elect. His appointment as
Non-executive Chairman will be effective
from the conclusion of the Company's
Annual General Meeting on 26 April 2018.
UK Corporate Governance Code 2016
(“the Code”) compliance
This Corporate Governance Report, including
the sections that follow, sets out how the
Group has applied the main principles of good
governance contained in the Code. The Board
considers that the Group was in full compliance
with the Code provisions that applied during
the year, with one exception during April.
During that period of approximately one month,
John Hughes fulfilled the roles of both Chairman
and CEO. Whilst that dual role was not consistent
with the recommendation of Code provision
A.2.1., for the reasons explained earlier, we
considered this to be appropriate in the specific
circumstances at the time. The Group was
compliant with this provision throughout the
remainder of the year.
>> The UK Corporate
Governance Code
2016 can be accessed
at www.frc.org.uk
Future developments
I look forward to our new Chairman reporting
to you in next year’s Annual Report on the
coming year. I expect this will include ongoing
succession planning for the Board. It will also
include updates on how we are addressing the
new corporate governance provisions being
introduced over the next year. We consider
this process of continual development to be
as important to our governance as it is to our
business as we view good governance as a key
element of the ongoing success of Just Eat.
Andrew Griffith
Interim Non-executive Chairman
5 March 2018
Later in this Corporate Governance Report:
1.
An introduction to our Board is given in the biographies
of our Directors on the next pages.
2.
3.
More detail on the role and activities of the Board starts
on page 51.
Andrew Griffith, the Chairman of our Audit Committee,
reports on its work commencing on page 56.
4. Andrew Griffith reports, in his role as Interim Chairman of
the Nomination Committee, on that Committee’s activities
commencing on page 61.
5.
Gwyn Burr reports on the remuneration of our Directors in
her capacity as Chairman of our Remuneration Committee,
commencing on page 65.
www.justeatplc.com
45
Corporate governance Our Board
An experienced and
effective leadership team
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.
Andrew Griffith A N R I
Interim Non-executive Chairman, Senior Independent Director
(Chairman of the Audit Committee)
Andrew was appointed as a Director in March 2014 and serves as Senior
Independent Director. In addition, since 28 April 2017, Andrew has acted as
Interim Chairman. Andrew is the Group Chief Operating Officer of Sky plc,
Europe’s largest entertainment and communications company with 23 million
customers and turnover of $16 billion. Andrew was appointed Chief Financial
Officer and a member of the Sky plc board in April 2008. Andrew joined
Sky in 1999 from Rothschild Group, the investment banking organisation,
where he provided financial and strategic advice to corporate clients
across the technology, media and telecommunications sectors. Andrew
holds a degree in Law from the University of Nottingham and is a qualified
Chartered Accountant.
Peter Plumb
Chief Executive Officer
Peter was appointed Chief Executive Officer with effect from
18 September 2017. Peter's most recent role was Chief Executive Officer
of Moneysupermarket.com Group PLC, a position he held from February 2009
until he stepped down in May 2017. In his eight years as Chief Executive
Officer, Peter guided the business to a market leadership position, led the
acquisition of MoneySavingExpert.com, and oversaw a six-fold increase in
its share price. Prior to Moneysupermarket.com, Peter was UK Managing
Director of Dunnhumby Limited, General Manager Europe of Disney Consumer
Products, and International Director of Dyson Appliances Limited. Peter
is also a Non-executive Director of The Co-operative Group Limited. Peter
graduated with a first class honours degree in Civil Engineering at the
University of Birmingham and holds an MBA from IMD in Switzerland.
Alistair
Cox
Independent
Non-executive
Director
Gwyn
Burr
Independent
Non-executive
Director
Frederic
Coorevits
Non-executive
Director
Peter
Plumb
Chief Executive
Officer
Paul
Harrison
Chief Financial
Officer
Andrew
Griffith
Interim
Non-executive
Chairman
46
Annual Report & Accounts 2017
Paul Harrison
Chief Financial Officer
Paul was appointed as Chief Financial Officer in September 2016. Prior to
joining the Board, Paul served as Chief Financial Officer for WANdisco plc
from 2013 to 2016. Previously, Paul served as Group Finance Director of
FTSE 100 international software company The Sage Group plc for 13 years,
having first been Sage’s Group Financial Controller for three years. Prior to
that, Paul held a number of senior positions at PricewaterhouseCoopers.
Paul is also a Non-executive Director at media company Ascential plc
and was, until November 2017, a Non-executive Director of recruitment
consultancy firm Hays plc. Paul holds a BA (Hons) in Business Studies
from Manchester Metropolitan University and is a Fellow of the Institute
of Chartered Accountants in England and Wales (FCA).
David Buttress
Non-executive Director
David joined Just Eat UK in early 2006 and was appointed Chief Executive
Officer of Just Eat in January 2013, a position he held until 31 March 2017.
He was appointed as a Non-executive Director in August 2017. Beginning
his career in 1998 with Coca-Cola Enterprises, David enjoyed a variety of
senior sales and management roles. In 2014, David was named Entrepreneur
of the Year at the Investor Allstars Awards, and was listed as one of the
London Evening Standard’s top 1,000 influential people. In 2015, 2016 and
2017 he was also named as one of Britain’s most influential people in the
Debrett’s 500. David is a partner at 83North – a global venture capital firm
– and is Non-executive Chairman of the professional Pro14 Dragons rugby
team. David holds a BA (Hons) in Law and Business from Middlesex University
Business School and was awarded an Honorary Doctorate in 2017 for his
services to UK business and entrepreneurship.
Roisin
Donnelly
Independent
Non-executive
Director
Diego
Oliva
Independent
Non-executive
Director
David
Buttress
Non-executive
Director
Frederic Coorevits S
Non-executive Director
Fred was appointed as a Director in July 2009. Fred is an adviser
for SM Trust, for which he has been working for more than 15 years.
He manages SM Trust’s portfolio of investments, which focuses on the
areas of eCommerce, software and cloud computing. Prior to this, Fred
worked as a Finance Director for i-spire plc and as a Senior Manager for
PricewaterhouseCoopers' transaction services in London. Fred holds an
MBA and an MSc in Organic Chemistry from Louvain (Belgium).
Gwyn Burr A N R I
Independent Non-executive Director
(Chairman of the Remuneration Committee)
Gwyn was appointed as a Director in March 2014. Gwyn is also Non-executive
Director of Sainsbury’s Bank plc, Hammerson plc, Metro AG, Ingleby Farms
& Forests ApS and Taylor Wimpey plc. From May 2005 to March 2013,
Gwyn was Customer Director and a member of the operating board for
J Sainsbury plc, with responsibility for brand, own brand customer service,
corporate communications and corporate and social responsibility and
also, from 2010, human resources. Gwyn holds a BSc in Economics and
History from the University of Bradford.
Alistair Cox I
Independent Non-executive Director
Alistair was appointed as a Director in May 2017. He began his career at
British Aerospace, subsequently moving to Schlumberger in 1982, where
he held roles in field engineering, management and research science based
in Europe and the USA. He was a manager at McKinsey & Company from
1991, before joining Blue Circle Industries plc (latterly Lafarge) initially as
Group Strategy Director and latterly as Regional Director for Asia. In 2002
he was appointed Chief Executive at Xansa plc, the IT outsourcing organisation.
He also served as a Non-executive Director at 3i Group plc from 2009–2015.
Alistair is currently Chief Executive of Hays plc, the global recruitment
agency, and has held that position since 2007. Alistair is a Chartered Engineer,
having graduated with a first class honours degree in Aeronautical
Engineering from the University of Salford and holds an MBA from
Stanford Graduate School of Business.
Roisin Donnelly N I
Independent Non-executive Director
Roisin was appointed as a Director in October 2016. Roisin has had a
30-year career building market-leading brands with Procter & Gamble in
the UK, EMEA, the US and globally. Most recently, she was CMO for Northern
Europe, leading six countries. Roisin is an experienced digital leader. She
has experience in acquisitions, divestitures and business turnaround. She
is a Non-executive Director of Bourne Leisure and Holland & Barrett and a
council member of the Advertising Standards Authority. She has received
awards including Marketer of the Year and Advertising Age's Woman to
Watch. Roisin graduated from the University of Glasgow with a MA (Hons)
and is an Honorary Fellow of the Marketing Society.
Diego Oliva A N R I
Independent Non-executive Director
Diego was appointed as a Director in September 2015. Diego has extensive
experience in global leadership roles in the technology sector, having spent
six years as Regional Director of EMEA at Facebook. He is currently co-founder
and Executive Chairman of Glue, a smart home company. Diego also serves
as limited partner and adviser at Earlybird Venture Capital, White Star Capital
and Wamda Capital, VC funds. Diego holds postgraduate degrees from
Harvard Business School, Stockholm University and IE Business School
and received a BSc in Economics from Tec de Monterrey.
A Audit Committee
N Nomination Committee
R Remuneration Committee
I Independent Non-executive Director
S Nominee of a major shareholder
www.justeatplc.com
47
Corporate governance Report of the Board
Our Board provides leadership
in the development,
implementation and promotion
of the Group’s strategy and,
monitoring its implementation
on an ongoing basis. The Board
ensures that the Company’s
culture and values are aligned
with this strategy so that
consistency can be achieved at
all levels within the organisation.
A key part of our role is ensuring that the Group
has the appropriate people, financial and other
resources to achieve these aims. With our
standing Committees, we also oversee controls,
risk management and senior remuneration. We
set the framework to develop the cultural tone
for the Group – the Group-wide enthusiasm
which has always been a fundamental part of
our success. Our aim in this is to maximise value
for shareholders and other stakeholders over
the long-term. This section of the Corporate
Governance Report summarises the role and
activities of our Board and is followed by
specific reports from our Nomination, Audit
and Remuneration Committees.
Board and Committee meetings
The Board meets regularly throughout the year,
both at meetings scheduled as part of its annual
corporate calendar and other meetings as
required for specific matters. At these meetings,
it reviews:
• business performance;
• operational matters of particular note for
the Board;
• strategic considerations;
• activities in the Group’s industry;
• potential acquisition opportunities;
• shareholder communications and feedback;
• reports of proceedings of Board Committees; and
• progress against previously agreed actions.
48
Annual Report & Accounts 2017
“Our Board leads the Group at the highest
level. Our principal aim is to continue to
build and preserve long-term value for the
Group’s shareholders and other stakeholders
while having regard for the interests of
our workforce, the community and
environment in which we operate.”
Andrew Griffith
Interim Non-executive Chairman
>> Further details of
our current Directors
are provided on pages
46 to 47
In addition to our Executive Directors, members
of senior management are regularly invited to
present relevant matters to the Board. Executive
Directors and members of management may also
attend and present at Committee meetings,
where appropriate, at the invitation of the
respective Committee Chairman.
Directors have the right to request that any
concerns they may have are recorded in the
appropriate Board or Committee minutes (although
no such requests were made in 2017). Minutes
are circulated for comment by all Directors
before being formally approved at the next
relevant meeting.
Board composition
Non-independent
Non-executive
Directors
Executive
Directors
Total Board
members
9
Independent
Non-executive
Directors (female)
Independent
Non-executive
Directors (male)
Key matters considered at each main meeting
of the Board during the year included:
February (two meetings)
Consideration of Board changes and decision to
appoint John Hughes as Executive Chairman.
April1
2017
Review and approval of 2016 annual results,
including announcement and Annual Report.
Approval and finalisation of the notice of AGM,
including reappointment of Directors as
recommended by the Nomination Committee.
Reviews of post-acquisition performance of
acquired businesses including SkipTheDishes.
Review of project and technology
planning presented by Chief Product
and Technology Officer.
Review and revision of Non-executive
Director fees.
July
Review of forecast for the second half of the year.
Review and approval of half year results.
Strategy review by Board with presentation from
the Executive Team.
December
Presentation of first impressions of the business
by Peter Plumb as new CEO.
Review of ongoing technology roadmap.
Review of market developments and M&A
opportunities.
Review of draft Group budget for 2018.
Review and approval of the Tax Strategy for
publication on our website.
Review of current Board membership, including
noting of John Hughes’ medical condition;
appointment of Andrew Griffith as Interim
Chairman; and appointment of Paul Harrison
as Interim CEO.
Review of UK business – detailed presentation
on this by UK Managing Director.
1. Andrew Griffith and Paul Harrison did not participate
in the Board discussions nor decisions regarding their
own appointments.
June (two meetings)
Market and competitor overview from
external advisers.
Strategy meeting with management.
Technology platform update presented by
Chief Product and Technology Officer.
Approval for the appointment of Peter Plumb
as CEO.
September (in Spain)
Meeting with and presentations from
Spanish management team.
M&A review in context of previous
strategy discussions.
At every main meeting, the Board also reviews:
Report from the CEO, including key developments
in the Group’s businesses.
Report from the CFO, including performance of the
Group’s businesses.
Investor relations update.
Minutes and actions from previous meetings.
Confirmation there are no Director conflicts.
Reports from the Board Committees.
>> Board evaluation commentary on page 63
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49
Corporate governance Report of the Board continued
Membership of the Board
At the time of writing, the Board has nine members:
• myself, Andrew Griffith, currently Interim Chairman
as well as Senior Independent Director;
• two Executive Directors, Peter Plumb (Chief Executive
Officer) and Paul Harrison (Chief Financial Officer);
• four other Independent Non-executive Directors,
Gwyn Burr, Alistair Cox, Roisin Donnelly and
Diego Oliva; and
• two Non-independent Non-executive Directors,
Frederic Coorevits, who is nominated by a major shareholder
and has served since before the Company’s IPO, and
David Buttress, who previously served as CEO of the
Company until 31 March 2017.
For the purposes of assessing compliance with the
Code, the Board considers that Gwyn Burr, Alistair Cox,
Roisin Donnelly, Diego Oliva and myself, Andrew Griffith,
are independent of management and free from any business
or other relationship that could materially interfere with the
exercise of their judgement. Our newly appointed Chairman
elect, Mike Evans, is also considered by the Board to
be independent.
The diversity of our Directors provides great value to
the Board with a depth and wide range of experience of
both the Group’s businesses and of other international
businesses, including other publicly listed companies.
They bring significant industry expertise which enables
them to make high quality, diverse and relevant contributions
to Board discussions. This enriches debates and allows
carefully considered judgements to be reached, consensus
to be arrived at, and informed decisions then taken.
We provide both support and constructive challenge to
management in the review of proposals. We then monitor
performance in the achievement of the aims being
targeted over both the shorter and longer terms.
All our Directors have a deep interest in ensuring the Group
achieves its long-term objectives and are collectively
responsible as a Board for this. They each devote sufficient
time and focus to their Board duties and responsibilities, and
have a shared role in ensuring the successful performance
of the Board. A proper balance of influence has been
established to ensure no one individual, or separate groups
of people, have unfettered decision-making powers. All
the Non-executive Directors bring valuable insight to the
Board’s deliberations and have the opportunity to
challenge assumptions and raise concerns at any stage
in the decision-making process.
This ensures the final conclusions are reached with the
support of the Board as a whole. We believe there is an
excellent balance of skills and experience represented on
the Board, enabling the effective and successful management
of the Company and its business. This included the
appointment of a new CEO and new Independent
Non-executive Director in 2017. More recently it also
included the appointment of our new Chairman elect.
The Board is confident that its membership is appropriate
for this stage in the Group’s development and is proactively
continuing to pursue Board development, which will be
crucial to the future prosperity and direction of the business.
We believe this forward-looking approach is fundamental
to achieving our long-term strategic goals in the interests
of our shareholders, people and other stakeholders.
Support to Directors
The Directors have unrestricted access to the Group’s
management and advisers. They also have the opportunity
to visit the Company’s operations. When new Directors
are appointed, they receive a comprehensive induction
facilitated by the Company Secretary. This induction
includes meetings with key members of management,
together with briefings on the Group’s business, its
industry and public company duties generally. The
Directors have continuous access to the knowledge and
expertise of senior management and regularly receive
their input at Board meetings. These regular interactions
develop their depth of knowledge of the business and
also strengthen and enhance the relationships between
the Board and management. Access to ongoing training
is also available to Directors as required for professional
development to refresh their key skills and knowledge,
ensuring they are well placed to discharge their duties.
All Directors also have access to the advice and services
of the Company Secretary, who acts as Secretary to the
Board and each of its Committees. The Company Secretary
reports to and advises the Board and Committees directly
through their Chairman on compliance relevant procedures
and laws and regulations on governance matters. The
Company Secretary is also responsible for ensuring there
is good communication between the Board and its
Committees, senior management and the Non-executive
Directors, ensuring that the relevant level of information
flows within the organisation. Directors are also able to
take external advice at the expense of the Company, should
they feel this is necessary.
50
Annual Report & Accounts 2017
Role of the Board
Key activities of our Board include the following:
Agreeing the Group’s strategic
aims after considering
recommendations from the
Executive Directors.
The Board reviews matters of strategic
importance at each of its main meetings.
This is usually done in the context of a
presentation on a specific matter of
strategic interest by a member of senior
management. During 2017, the Board
held an informal strategy meeting with
management and then a more formal
strategy review with the Executive Team.
In the past year, matters considered
have included:
• the Group’s ongoing vision internationally;
• the ongoing development of both the
customer and restaurant experience;
• development of the Group’s ongoing
brand strategy;
• the Group’s technology and product
planning; and
• new business opportunities such as the
Hungryhouse acquisition.
Non-executive Directors constructively
challenge matters when they feel
appropriate as part of the Board as a
whole reaching an overall consensus in
its decision-making process. As a key part
of its debates, the Board reviews and
seeks to identify risks at a strategic level.
Aiming to ensure that the Group
has the necessary financial strength
and human resources in place
to pursue the agreed strategy.
This includes regular reviews of the
financial performance and requirements
of the Group, presented by the CFO, along
with regular updates from the CEO.
Periodically, it also includes presentations
from the Chief People Officer on plans
for the ongoing development of the
management team in the context of
the growth of the Group.
The Group’s Chief People Officer also
gives regular presentations to the
Remuneration Committee.
Reviews of the performance of executive
management is led by the Nomination
Committee with the CEO.
Reviewing Group performance
against the agreed strategy and
considering any variations that
may become appropriate to
this strategy.
The Board reviews the operational
development of the Group and its
markets to ensure its strategy remains
appropriate. It then considers and decides
upon any adjustments that may
improve this.
Setting the tone as well as
oversees implementation of the
Group’s values and standards.
The Board leads the Group in a way that
is intended to maximise business
integrity. This enables the Group’s People
and other stakeholders to operate in a
transparent, ethical, as well as
entrepreneurial, manner.
This is an important part of ensuring
the long-term success of the Group.
It is supplemented by more detailed
reviews of specific areas by the Board’s
standing Committees.
Where appropriate, working with
the operating management to
assist in the achievement of
the strategy.
Directors have open and constructive
relationships with members of senior
management who can draw on their
wide business experience outside of,
as well as within, Board meetings.
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51
Corporate governance A global leadership team
The Board receives regular reports from key
management on the Group’s businesses, and in
September, the entire Board visited the Group's
Spanish operations. This included all Directors meeting
and receiving presentations from each member of the
local senior management team. It also included
consideration of how the experience being gained in
Spain could be more widely applied across the Group.
Report of the Board continued
New Director induction
Overview
The Chairman, supported by the Company Secretary,
is responsible for ensuring that new Directors have
a thorough and appropriate induction.
Each newly appointed Director has participated in a
structured induction programme and has received a
comprehensive suite of resources providing detailed
information on the Group.
Each induction has been based on the individual Director’s
requirements and included meetings with relevant Directors,
senior management and external advisers to ensure that
each new Director understands the Company’s business,
strategy and governance structure.
Objective
To provide our new Directors with the resources they
need in order to be able to maximise their effectiveness
in the shortest time practicable.
Process
Provision of resources including papers and minutes
from previous Board meetings and key corporate
governance policies.
Business briefings with the Executive Directors
and the Chairman.
Meetings with members of the Executive Team
and senior management.
Meetings with external advisers, as appropriate
to the role.
Opportunity to visit different Group sites and attend
Company events.
52
Annual Report & Accounts 2017
Governance calendar for 2017
The overall calendar of meetings of the Board and its Committees for 2017 is shown below:
Full report
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Board (main meetings)
Board (conference calls)
Audit Committee
Nomination Committee
Remuneration Committee
AGM
p49
p49
p57
p62
p66
Specific calendars for the Board and its Committees are shown in their individual reports within this review.
Attendance at Board meetings
The attendance of current Board and Committee members at meetings and calls, as compared with the number
of meetings held:
Board
attendance
100%
100%
100%
100%
100%
100%
100%
100%
88%
100%
Andrew Griffith
Peter Plumb2
Paul Harrison
Gwyn Burr
David Buttress3
Frederic Coorevits
Alistair Cox4
Roisin Donnelly
Diego Oliva
Dr. John Hughes5
Key:
Board (eight meetings)
Board
Audit
Remuneration
Nomination
1
1
1
1
Remuneration Committee
(six meetings)6
Board or Committee member
not present
Director was not invited to attend this
meeting as it related to his own position
Audit Committee
(three meetings)
Nomination Committee
(seven meetings)
Non-Committee member invited to attend some or all of a meeting
(although not any part of a Remuneration Committee meeting
at which their own remuneration was decided)
1. Denotes Chairman status.
2. Appointed to the Board on 18 September 2017.
3. David Buttress was on leave of absence from 1 April 2017–9 August 2017.
4. Appointed to the Board on 2 May 2017.
5. Passed away on 11 June 2017, but was previously Chairman of the Board and Nomination Committee.
Directors do not attend meetings of the Remuneration Committee when the Committee is deciding matters in relation
to such Directors’ remuneration.
Where a Director is unable to attend a particular meeting, full documentation for the meeting is issued to them, their
views are sought in advance and briefings are provided subsequent to the meeting as appropriate.
All Directors on the Board at that time attended the AGM except:
• John Hughes who was on a medical leave of absence; and
• David Buttress who was on a leave of absence due to urgent family matters.
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53
Corporate governance
Report of the Board continued
Division of responsibilities
Whilst the Directors take collective responsibility for the management of the Group, the effective operation of the Board
benefits from a clarity of responsibilities. Key elements of this are set out below:
The Board
The Board has a formal schedule of matters specifically reserved for its or its Committees’ decisions
which include:
• Group strategy, which is
• internal controls and risk
• Board structure, composition
reviewed by the Board and
management regularly during
the year;
• the Group’s business plan and
annual operating budget;
• major investments, acquisitions
and capital projects, and
the monitoring of their
subsequent performance;
management, which are reviewed
regularly by the Audit Committee;
• accounting policies, which
are reviewed in detail by the
Audit Committee;
• shareholder communications,
such as announcements of
results, this Annual Report and
the accompanying notice of
AGM to shareholders;
and succession planning, which
are handled in more detail by
the Nomination Committee;
• Executive remuneration policy
and the remuneration of the
Chairman, which are determined
by the Remuneration
Committee; and
• the remuneration of the
Non-executive Directors.
Subject to such reserved matters, and any other matters which the Board determines are appropriate for its
specific decision as they arise, authority for the operation of the Group is delegated to executive and other
management within a system of defined authority limits. The matters reserved for the Board’s decision are
reviewed periodically and updated as considered appropriate as they were in the past year.
Another important aspect of the division of responsibilities in any listed company is between the roles of
the Chairman and the CEO. In Just Eat, these roles are separate and distinct (except as noted in exceptional
circumstances during the past year), with a clear division of responsibilities at the head of the Company
established, agreed and set out in writing:
Chairman
Chief Executive Officer
Senior Independent Director
The Chairman is primarily
responsible for managing the
Board, facilitating the effective
contribution of all Directors,
ensuring satisfactory dialogue
with shareholders and that all
Board members are aware of the
views of major shareholders.
The CEO, together with the CFO,
has been delegated appropriate
responsibilities and authorities
for the effective leadership of
the senior management team, the
day-to-day running of the
business, carrying out the agreed
strategy and for implementing
specific Board decisions relating
to the Group’s operations.
Standing Board Committees
The Senior Independent Director is
available to the other Non-executive
Directors and shareholders, either
individually or collectively, should
they wish to discuss matters of
concern in an alternative forum.
In addition, certain matters have been delegated to three principal Board Committees within clearly defined
terms of reference. These remits, together with the composition of each Committee, are reviewed periodically
as they have been in the past year.
The current terms of reference for the Audit, Remuneration and Nomination Committees are available on the
Company’s website at www.justeatplc.com.
Audit Committee
Nomination Committee
Remuneration Committee
>> A summary of the role of the Audit
Committee is included on page 56
>> The work of the Nomination
Committee is summarised on page 61
>> A summary of the key matters the
Remuneration Committee consider
is included on page 66
54
Annual Report & Accounts 2017
Directors tenure as at 5 March 2018
Appointment date
IPO April 2014
2015
2016
2017
2018 Tenure
3–4 years (since IPO)
0–1 years
1–2 years
3–4 years (since IPO)
4 years (since IPO)
4 years (since IPO)
0–1 years
1–2 years
2–3 years
Annual General Meeting
All shareholders are encouraged to attend and have the
opportunity to ask questions at the Company’s AGM and
at any other times by contacting the Company. As well
as the Chairman, the CEO and the CFO, the Chairmen of
the Audit, Nomination and Remuneration Committees
attend the AGM to answer questions relating to the
responsibilities of those Committees.
The notice convening the 2018 AGM, to be held on
26 April 2018, will be issued along with this Annual
Report to the shareholders at least 20 working days in
advance of the meeting. This will provide shareholders
with the appropriate time, as set out in the Code, to
consider matters. Separate resolutions will be proposed
on each substantially separate matter. The results of the
proxy votes on each resolution will be collated independently
by the Company’s registrar and will be published on the
Company’s website after the meeting.
Andrew Griffith
Interim Non-executive Chairman
5 March 2018
Andrew Griffith
12/03/2014
Peter Plumb
18/09/2017
Paul Harrison
26/09/2016
Gwyn Burr
12/03/2014
David Buttress
09/07/2013
Frederic Coorevits
10/07/2009
Alistair Cox
02/05/2017
Roisin Donnelly
17/10/2016
Diego Oliva
24/09/2015
Key:
Executive Directors
Non-executive Directors
Shareholder relations
The Board is committed to ensuring that we maintain
continual dialogue with existing and potential shareholders
based on the mutual understanding of the Company’s
strategic objectives. A comprehensive investor relations
programme underpins this commitment. The Board
identifies key shareholders to ensure an appropriate level
of contact is established. The Chief Executive Officer,
the Chief Financial Officer and I, in my role as Interim
Chairman, regularly engage with institutional investors
in order to develop an understanding of their views.
This feedback is communicated back to, and discussed
with, the Board. The Non-executive Directors use
this information to ensure any concerns or issues are
understood and, if necessary, addressed appropriately.
Presentations given to analysts and investors covering
the preliminary and interim results, along with all results
and other regulatory announcements as well as further
information for investors, are included in the investor
relations section of the Company’s website at
www.justeatplc.com/investors. Additional shareholder
information is also set out on page 148.
Shareholders are able to contact the Company through the
Company Secretary or Head of Investor Relations at the
Company’s registered office, listed at the end of this report.
Once Mike Evans takes up his role as Chairman, I will again
serve as an additional point of contact for shareholders should
they feel that any concerns are not being addressed properly
and will be contactable through the Company Secretary.
Disclosures in respect of the DTR requirements under
DTR 7.2.6 are given in the Directors’ Report on pages 142 to
145 and are included in this section of the report by reference.
www.justeatplc.com
55
Corporate governance “The Audit Committee’s primary
responsibility is to assist the Board in its
oversight and monitoring of financial
reporting, internal control and risk
management of the Group.”
Andrew Griffith
Chairman, Audit Committee
>> Further biographic
details are set out on
pages 46 to 47
• the Group’s accounting policies, significant
judgements and estimates, including those
set out on pages 95 to 141;
• the Group’s system of risk management;
• oversight of Group tax activities and review
of the Group’s tax strategy statement prior
to publication;
• the Group’s material legal matters;
• new regulatory reporting requirements;
• key internal policies including data protection,
anti-bribery and related policies and
whistleblowing arrangements;
• the continued development of the Group’s
internal audit function, which reports directly
to the Committee, and establishing control
and risk management procedures;
• the disclosures regarding risk, going concern
and the viability statement; and
• whether this Annual Report, taken as a whole,
provides a fair, balanced and understandable
assessment of the Group’s position and
prospects and whether it provides the
necessary information to assess the Group’s
performance, business model and strategy,
the ultimate decision on which is taken by the
Board. Prior to approval of the Annual Report,
the Committee receives a paper detailing
those steps taken by management to ensure
the report meets the fair, balanced and
understandable requirement.
Report of the Audit Committee
I am pleased to present the
Report of the Audit Committee,
which provides a summary of
the Committee’s role and
activities during the 2017
financial year.
We reviewed those areas under our remit with
management and internal and external auditors,
as appropriate. Our activities help ensure the
interests of shareholders are protected and
the Group’s reporting is fair, balanced
and understandable.
Membership
The Committee comprises three Independent
Non-executive Directors; Gwyn Burr, Diego Oliva
and myself (Andrew Griffith) as its Chairman. All
our members have relevant sector competence
to fulfil their roles, as set out in their biographies
on pages 46 to 47. Through my background as a
Chartered Accountant and as COO and CFO of
another FTSE 100 company, I have relevant
financial knowledge and extensive experience.
Role and activities
We met three times as a Committee during
the year. The CFO and senior representatives
of the financial management team also attend
meetings, as do representatives of both the
external and internal auditors. The Committee
also meets privately with the external auditor
at least once per year. Key matters handled by
the Committee include review of:
• the independence, objectivity and
effectiveness of the external auditor;
• the remuneration and proposed
reappointment of the external auditor;
• the plans for and outcome of the preparation
and review of the Group’s half year results
and audit of the full year accounts including
presentations from both management and
the external auditor;
• the integrity of the financial statements of the
Company and any formal announcements
relating to the Company’s financial performance;
56
Annual Report & Accounts 2017
Key matters considered at each main meeting of the
Audit Committee during the year included:
2017
February (two meetings)
Analysis of 2016 full year results.
Review of 2016 full year results by the
external auditor.
Discussion with the external auditor in the
absence of management.
July
Review of the Group’s Annual Report for 2016
and recommendation to the Board (a draft of the
Annual Report is received in sufficient time ahead
of signing, to enable the Committee to challenge
the narrative and disclosures where required).
Assessment of performance and effectiveness
of 2016 audit against the audit plan.
Review of performance of the external
auditor and recommendation to the Board
for its reappointment.
Analysis of 2017 half year results.
Review of half-year results by the external auditor.
Review of 2017 half year results announcement and
recommendation to the Board.
Discussion and examination of 2017 audit plan with
the external auditor.
Review of assessment for indicators of impairment.
Update on technology and information security
within the Group presented by the Chief
Information Security Officer.
November
Review and approval of 2018 internal audit plan.
Commencement of the annual impairment review.
Review of the Group’s tax strategy statement
before presentation to the Board for approval
and publication.
Update on the external audit including
independence of the external auditor.
Plans for future external audit partner rotation
and discussion of audit fees.
Assessment of risk management including in
relation to Brexit.
Review and agreement to recommend the
Committee’s updated terms of reference to the
Board for approval.
Update on refresh of the Group's
whistleblowing policy.
At every main meeting, the Audit Committee also reviews:
Report of the CFO.
Report of internal auditor.
Report of the external auditor.
Minutes and actions from previous meetings.
Review of risk management and internal controls.
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57
Corporate governance Report of the Audit Committee continued
Significant issues
Prior to each meeting of the Audit Committee at which it is to be considered, management produces a paper providing
details of any significant accounting, tax, compliance and legal matters. Members of management are also invited to
attend these meetings where further guidance is required. The Group’s critical accounting judgements in applying the
Group's accounting policies and key sources of estimation uncertainty are included within Note 2 to the financial
statements. The risks the Audit Committee considers to be significant for the 2017 Annual Report are disclosed below.
Significant issues the Committee has considered
How the issue was addressed
The Committee received detailed reporting from management and challenged the
appropriateness of the assumptions made, including:
• the consistent application of management’s methodology;
• the achievability of the business plans;
• assumptions in relation to terminal growth in the businesses at the end of the
plan period;
• discount rates; and
• sensitivity testing.
This remains an area of audit focus and external valuation experts assisted
management in determining valuations required to complete the fair value less costs to
dispose of the Australia & New Zealand businesses.
The Committee was satisfied with both the appropriateness of the analysis performed
by management that indicated a goodwill impairment charge of £180.4 million in
relation to the Australia & New Zealand businesses, and the impairment-related
disclosures set out in Notes 5 and 13 to the financial statements.
The Committee reviewed the Group’s approach to taxation and the Group Tax Strategy.
Management continually monitors the status of tax risks and relevant legislative
changes and engages with external taxation experts as appropriate. At each Committee
meeting, management present updates on such matters.
Taxation issues were discussed with senior management and a report prepared by the
Group's in-house tax team outlining key tax risks and relevant legislative changes
was reviewed.
The tax positions and key judgements made within the Group were reviewed and
challenged by the Committee to ensure that the Group’s effective tax rate, tax
provisions (in particular in relation to the ongoing transfer pricing audit in Denmark)
and the recognition of deferred tax assets and liabilities were appropriate.
The Committee considered the Group’s enhanced disclosures, recognising that the
Financial Reporting Council ("FRC") has been undertaking a thematic review in
this area.
The Committee was satisfied with the Group’s approach to tax, the amounts reported
(as set out in Note 10 in the financial statements) and that Group tax issues were being
efficiently monitored and dealt with appropriately. It notes that changes in the global
tax landscape mean that the Group must continue to work on its ability to respond
quickly to the enhanced global reporting requirements over the next few years.
Impairment of goodwill
At December 2017, the Group had goodwill
balances totalling £544.9 million
(2016: £725.2 million). This is an area
of focus for the Committee given the
materiality of the Group’s goodwill
balances and the inherent subjectivity
in impairment testing.
The judgements in relation to goodwill
impairment continue to relate primarily to
the assumptions underlying the calculation
of the value in use of the business, being
the achievability of the long-term
business plan and the macroeconomic
and related modelling assumptions
underlying the valuation process.
See Note 13 for further detail on our
impairment review.
Global tax environment
Just Eat aims to responsibly manage all
taxes and tax risks that arise across the
Group, in order to provide a competitive,
responsible and sustainable outcome in
the interests of all stakeholders. Just Eat
aims to pay the right amount of tax, in the
right place at the right time, by complying
with all relevant tax legislation in all
Group entities.
However, given the geographical spread
of the Group’s operations, the varied
complex nature of local and global tax
rules (e.g. OECD's BEPS Actions, EU
Commission reforms and State Aid
investigations) and the ongoing tax
disputes and investigations around the
Group, there is significant uncertainty
around the interpretation of such tax law
and we recognise there is risk and
uncertainty around judgements made by
management in the reporting of tax in
the ordinary course of business, which
may be subject to final decisions taken
by various tax authorities.
See Note 10 for further detail on our
global tax environment.
Internal controls and risk management environment
The Board is ultimately responsible for the operation of an effective system of internal control and risk management
appropriate to the business.
A review of the Group’s principal risks and how it manages them is presented on pages 22 to 27.
The Company has complied with the FRC Guidance on Risk Management, Internal Control and Related Financial and
Business Reporting, as applicable, throughout the period and up to the date on which these financial statements were
approved. Day-to-day operating and financial responsibility rests with senior management and performance is closely
monitored on a monthly basis.
58
Annual Report & Accounts 2017
Internal controls and risk management environment continued
The following key elements comprise
the internal control environment,
which has been designed to identify,
evaluate and manage, rather than
eliminate, the risks faced by the Group
in seeking to achieve its business
objectives and ensure accurate and
timely reporting of financial data for
the Company and the Group:
• an appropriate organisational structure with clear lines of responsibility;
• a comprehensive annual strategic and business planning process;
• systems of control procedures and delegated authorities which operate within defined
guidelines and approval limits for capital and operating expenditure and other key
business transactions and decisions;
• defined segregation of duties across key financial processes, which continue to be made
more robust as the Microsoft D365 ERP system is rolled out across the Group;
• defined month-end and quarter-end procedures and controls, designed to assess the
ongoing integrity of financial records (e.g. reconciliations) and to produce management
information for regular financial monitoring and review purposes;
• an established whistleblowing process through which employees may report cases of fraud,
impropriety or behaviour contrary to our code of ethics and/or in contravention of policies;
• established operational processes and controls which support the integrity, security and
availability of our online services as well as the quality and continuity of Just Eat’s operations;
• a robust financial control, budgeting and rolling forecast system, which includes regular
monitoring, variance analysis, key performance indicator reviews and risk and opportunity
assessments at Board level;
• procedures by which the Group’s consolidated financial statements are prepared, which
are monitored and maintained through the use of internal control frameworks addressing
key financial reporting risks arising from changes in the business or accounting standards;
• an experienced and commercially focused legal function that supports the Group’s
operational and technical functions;
• established policies and procedures setting out expected standards of integrity and
ethical standards which reinforce the need for all employees to adhere to all legal and
regulatory requirements; and
• experienced finance and risk functions that regularly report to the Executive Team to
facilitate ongoing assessment and monitoring of key risks and associated potential
impacts facing the Group.
Internal audit plan
The Committee agreed the internal audit plan to be
undertaken prior to the commencement of the year. At
each Committee meeting, the progress of, as well as results
from, the internal audit plan is reviewed to ensure that it is
in line with the Committee’s expectations. The plan was
approved to ensure that there was appropriate coverage of
the internal control environment, strategic priorities and
key risks identified by the Board.
During the year, the audit plan was amended so that
additional areas were added to the plan based on the
changes that gave rise to increased levels of assessed risk.
These changes to the previously agreed audit plan were
approved by the Committee.
The Director of Internal Audit provides updates to the
Committee at each meeting, summarising the internal
audit findings and the progress made against agreed
actions from previous audits. Detailed updates on specific
audits are provided at the request of the Committee.
PricewaterhouseCoopers LLP (“PwC”) has continued to be
engaged to support our internal audit work.
How we manage risk
The Company has a robust risk management process that
follows a sequence of risk identification, assessment of
probability and impact, and assigns an owner to manage
mitigation activities. A register is kept of all corporate risks
and is monitored by senior management and reported to
the Audit Committee. Throughout the period of review, the
risk register and the methodology applied is the subject
of continuous review by senior management and is
updated to reflect new and developing areas which might
impact business strategy.
The Audit Committee actively reviews the risk register and
assesses the actions being taken by senior management
to monitor and mitigate the risks. Those risks which are
considered to be the principal risks of the Group are
presented on pages 22 to 27.
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Corporate governance Report of the Audit Committee continued
Review of effectiveness
The Audit Committee, on behalf of the Board, reviews the
effectiveness of the internal control systems and the risk
management processes on an ongoing basis. This process
was in place throughout the year and post-year end to include
the date of approval of the Annual Report. At each meeting,
the Audit Committee receives a paper from management
detailing any whistleblowing activity, any fraud identified
and any other issue deemed to be significant. An internal
audit update is also presented, detailing the scope of work
performed and findings, along with implementation of
any previous recommendations. The Committee has not
identified, nor been advised of, any failings or weaknesses
that it has determined to be significant.
Independence and performance of the auditor
The Audit Committee has set a policy which is intended to
maintain the independence and integrity of the Company’s
external auditor when acting as auditor of the Group’s
accounts. The policy governs the provision of audit,
audit-related assurance and non-audit services provided
by the auditor and, in summary, requires approval by the
Committee for all projects with an expected cost in excess
of £50,000.
During the year, other audit-related assurance services
provided by the auditor relate to the half year reporting,
audit of the special purpose financial statements in France,
and taxation compliance.
The fees paid for the non-audit services during the year
represented 8% of the fees paid for the statutory audit
and audit-related assurance services together. Further
details of these amounts are included in Note 6 of the
financial statements.
The Company complies with applicable rules in relation
to non-audit fees to the auditor.
The external auditor is not permitted to provide internal
audit services to the Group.
Before any former employee of the external or internal audit
team may be employed by the Group, careful consideration
must be given as to whether the independence of the
auditor will be adversely affected, and approval of the
Audit Committee is required. This particular circumstance
has not arisen in the past year. The auditor is required regularly
to report on and confirm its independence in its role.
Deloitte was appointed as the Group’s auditor in 2009
and the most recent partner rotation took place in 2013.
The Committee confirms compliance with the provisions
of the Statutory Audit Services for Large Companies
Market Investigation (Mandatory Use of Competitive Tender
Processes and Audit Committee Responsibilities) Order 2014,
as published by the UK Competition and Markets Authority
("CMA"). A tender is not currently proposed in relation to the
current financial year as it continues to be a period of
significant growth in which the Company benefits from
continuity. However, the Group will put the external audit
out to tender to meet the CMA requirements in due course,
and the Audit Committee will keep this timing under review.
To comply with the Auditing Practices Board’s Ethical
Standard and to maintain objectivity and independence
of the auditor, the current lead audit partner, Anna Marks,
is due to rotate after the 2017 year end.
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Annual Report & Accounts 2017
Assessing the performance and effectiveness
of the external audit
The Audit Committee has assessed the performance and
effectiveness of the 2017 external audit process in the past year.
Process
Primarily through dialogue with the senior members of the
finance and company secretarial teams.
Follow-up
A detailed follow-up was performed where additional feedback
was sought from senior managers around the business
(not limited to the finance team) through the use of audit
quality questionnaires.
Results and appointment
The initial results of the assessment were discussed with the
Group finance team, before being presented to the Committee,
to inform our recommendation to the Board for the annual
reappointment of the external auditor.
Objectivity and independence
The Committee believes that the Group’s procedures as
summarised above safeguard the objectivity and independence
of the auditor.
Committee evaluation
The Audit Committee undertakes an annual evaluation of
its performance and effectiveness. For 2017, an internal
questionnaire was used to evaluate the work of the
Committee as part of the Board evaluation process (please
see page 63 for further details of the process). The review
concluded that the Committee had performed effectively.
During the year the Committee also conducted a review of
its terms of reference. These were updated to reflect
changes to the Code and other guidance published during
the period.
Coming year
During the coming year, we will continue in our reviews of the
financial reporting process, internal controls and enterprise
risk management. In addition, we will monitor the financial
integration of Hungryhouse.
On behalf of the Audit Committee
Andrew Griffith
Chairman, Audit Committee
5 March 2018
Report of the Nomination Committee
We assist the Board in determining
the succession planning for senior
management. This report summarises
our membership and activities
during 2017.
As in prior years, the Committee continued to seek diversity,
including with regard to gender, as part of the overall selection
of the highest calibre candidates for appointment to the
Board, based on merit and objective criteria.
Membership
The Nomination Committee comprises four Independent
Non-executive Directors, Gwyn Burr, Roisin Donnelly,
Diego Oliva and myself (Andrew Griffith) as Interim Chairman.
Role and activities
2017 was a busy year for the Committee. We met seven
times during the year, which we considered necessary
to discharge our duties efficiently as a Committee. The
Committee is responsible for evaluating the balance of
skills, knowledge and experience of the Directors. It also
reviews the composition and structure of the Board,
makes recommendations to the Board on retirements and
appointments of additional and replacement Directors,
and has a continuous and proactive approach to succession
planning. The Committee’s succession planning not only
takes into consideration the long-term needs and natural
evolution of the Board in the mid term, but that of the
short term for unforeseen departures and contingency
for unexpected changes.
Appointments
The appointments of both our most recently recruited
Independent Non-executive Director, Alistair Cox, and our
new Chief Executive Officer, Peter Plumb, followed formal,
rigorous and transparent recruitment processes. They
were undertaken with the assistance of The Zygos Partnership
and Russell Reynolds, respectively, both leading external
recruitment firms. Neither of these firms have any other
connection with the Company.
The process followed is summarised below:
Selection process for the appointment
of new Board members
Selection of recruitment consultants
Appropriate external executive search consultants are
selected for the role.
For the Non-executive role in 2017 this was The Zygos
Partnership and for the CEO role this was Russell Reynolds.
Candidate specification
A specification for candidates is prepared setting out the
agreed key skills and character profile being sought to fit with
the current balance, membership and dynamic of the Board.
Potential candidates
A long list of candidates meeting the specification is identified
from a specific search as well as the search firm’s own database.
This would include candidates from a diverse range of
backgrounds and be gender neutral.
Interviews and selection
A shortlist of candidates is then selected by the Nomination
Committee and interviewed.
Recommendations and confirmation of appointment
The preferred candidates are recommended to the Board
by the Nomination Committee.
Candidates meet with other Directors on the Board as
appropriate prior to Board approval for the appointment
to be made.
“The Nomination Committee keeps
the composition of the Board under
review, ensures an appropriate
balance of skills and experience is
maintained and, as in this year,
ensures Board succession planning
is in place and implemented.”
Andrew Griffith
Interim Chairman, Nomination Committee
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Corporate governance Report of the Nomination Committee continued
Key matters considered at each main meeting of
the Nomination Committee during the year included:
2017
April
Update on CEO recruitment.
Agreement to recommend the appointment
of Paul Harrison as Interim CEO.
June (two meetings) and July (one meeting)
Update on CEO recruitment and selection from final
two candidates for recommendation for appointment.
Consideration of shortlist of recruitment firms
to assist in search for Chairman.
February (two meetings)
Recommendation to the Board for interim
appointment of John Hughes as Executive Chairman.
Proposed recruitment of CEO after David Buttress
stepped down from this role.
Selection of recruitment firm to assist with
recruitment of CEO.
Review of progress in selection of additional
Non-executive Director.
September1
Agreement to the continuation of Andrew Griffith as
Interim Chairman until a new Chairman is appointed.
Confirmation of recruitment firm selected
to assist with recruitment of Chairman.
1. Andrew Griffith did not participate in the Board discussions
nor decisions regarding his own appointment.
At every main meeting, the Nomination Committee also reviews:
Minutes and actions from previous meetings.
Diversity
One of the pivotal considerations on any appointment to
the Board relates to diversity. The Nomination Committee
takes an active role in setting and meeting diversity
objectives and strategies for the Company as a whole.
The Board’s policy is to continue to seek and encourage
diversity within long and short lists, including with regard
to gender, as part of the overall selection process for
Non-executive Director roles. In addition, the appointment
of Peter Plumb was made within the Group’s diversity
policies for the appointment of employees, as will any
future appointments of Executive Directors.
Further information on diversity in the Group is included on
page 38.
Reappointment
In accordance with the provisions of the Code, each Director
retires at the AGM of the Company and, if decided appropriate
by the Board, may be proposed for reappointment. In reaching
its decision, the Board acts on the advice of the Nomination
Committee. Following evaluation of their performance
I, as Interim Chairman, confirm that the performance
of each of the Non-executive Directors being proposed
for reappointment continues to be effective and
demonstrates ample commitment to their duties.
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Annual Report & Accounts 2017
We consider that they each provide distinct and important
contributions to the overall operation and function of
the Board.
This review of the performance of the Non-executive
Directors included an assessment of their:
• attendance at meetings;
• continued independence (where applicable); and
• ability to devote ample time to the Company
outside meetings.
All the Directors being proposed for reappointment attended
all meetings they were scheduled to attend unless unavoidably
prevented from doing so. They all devote sufficient time to
their duties. The evaluation also confirmed that the roles
of the Directors in other companies in no way impede their
roles within the Company. Indeed, each demonstrates great
enthusiasm as well as commitment to their roles. David
Buttress will not be seeking re-election and accordingly
will retire at the AGM.
Board evaluation
Performance reviews
During 2017, the Board undertook an internally facilitated evaluation of the effectiveness of its own performance and that of its
three standing Committees, the individual Directors and the Chairman. The process undertaken is summarised below along with
the conclusions and actions to be taken. This process took into account the actions and specific areas of interest arising from
the previous year’s externally facilitated evaluation. We plan that a follow-up on this will again be internally facilitated during
the current year and will be reported on in next year’s Annual Report.
Comprehensive questionnaire
All Directors completed a comprehensive questionnaire, with open questions designed to encourage narrative answers, focused on
the following areas:
• Strategy
• Risk appetite
Full Board discussion
• Succession planning and
• Chairman’s effectiveness
• Skills, knowledge and
talent development
• Board dynamics
• Audit, Remuneration and
Nomination Committees'
effectiveness
experience of Directors
The results of the evaluation were reported to the Board in a confidential and non-attributable manner which ensured that
these responses were as open, frank and informative as possible. The review of the Chairman’s performance was led by the
Senior Independent Director and the responses to the section on the Chairman’s effectiveness were shared only with the
Senior Independent Director.
Having considered and discussed these results, the Board agreed to follow up with specific actions as part of the continuous
enhancement of its governance processes.
Conclusions and actions
Conclusions were within three main areas, summarised below with key actions taken:
Strategy
Refine the vision for Just Eat for the next five years, including:
• the future purpose of Just Eat; and
• what its aims should be and how its strategy is best aligned with these.
Marketing strategy, including:
• ongoing conversion of telephone-based Customer sales to website transactions; and
• monitoring the developing competitive landscape and ensuring the Company’s strategy aligns with this.
The business
Focus on building value in the business over different time horizons, with particular emphasis on the
long term.
Development and enhancement of the succession planning processes.
Recognising the benefits of ongoing cultural change in line with continued development of the business.
The Board
Continue to develop a cohesive Board whose collective vision underpins the Company’s strong core
belief of “who we are”.
Consider the diversity of thought on the Board, including:
• independence of mind, ensuring fresh input in establishing strategy and having a positive impact on
the quality of decision making;
• reinforcement by senior management of the Non-executive Director knowledge of the business
including sharing specific details of challenges faced; and
• increased interaction between the Board and members of senior management who bring specific
expertise to introduce a fresh perspective, encourage new ways of thinking and facilitate robust
debate within the Board.
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Corporate governance Report of the Nomination Committee continued
Governance meetings
In line with the Code, during the past year separate meetings took place amongst the Non-executive Directors and the
Chairman without the Executive Directors present to assess the performance of the Executive Directors on an ongoing basis; and
the Non-executive Directors only (although taking account of the views of the Executive Directors) to discuss the performance of
the Interim Chairman including review of:
• the time he dedicates to the Company’s business; and
• his contributions, both at and outside formal meetings.
The Non-executive Directors concluded that the Interim Chairman is well able to, and indeed does, devote ample time and attention
to the Company’s affairs and that his broad past and current experience provide considerable benefit to his role in the Group. They
also confirmed that his external role has no negative impact on the Company. The Board is greatly appreciative of Andrew Griffith
stepping into the Chairman role on an interim basis and recognises his enormous contribution in its performance.
Succession planning
We commenced, with the assistance of The Zygos Partnership
Limited, the search for a new Chairman following the sad
news that John Hughes had passed away in June 2017. This
resulted in the appointment of Mike Evans. I will continue in
the role as Interim Chairman until Mike Evans takes up his
role on 26 April 2018.
The Committee recognises that our People are critical to
our continued success and we remain focused on maintaining
a high performing, entrepreneurial culture to attract and
retain the highest calibre individuals. The Committee oversees
matters in relation to the succession planning for the
senior leadership team as well as the Board. It considers
key new appointments as they arise from external sources.
It also oversees the development and management of
existing resource within the organisation.
Coming year
We will report to you again next year on the results of our
ongoing succession planning and other activities we
intend to carry out during 2018.
Andrew Griffith
Interim Chairman
5 March 2018
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Annual Report & Accounts 2017
Report of the Remuneration Committee
I am pleased to present our Directors’
Remuneration Report for the year
ended 31 December 2017.
Company performance
2017 was a year of continued strong growth for Just Eat:
• revenue grew by 45% to £546.3 million;
• uEBITDA grew by 42% to £163.5 million;
• Total Shareholder Return ("TSR") in the year was 33.8%,
outperforming the FTSE 250 Index; and
• on 18 December 2017 Just Eat joined the FTSE 100 Index.
The 2017 Directors’ Annual Bonus Plan was based around
strong financial performance reflecting growth in revenue
and uEBITDA, as well as strategic Customer-focused
objectives and personal objectives.
The out-turn of the 2017 annual bonus for Peter Plumb, the
CEO, and for Paul Harrison, the CFO, is confirmed at 80%
of the maximum level, representing 120% and 96% of 2017
paid salaries respectively. The financial measures for our
Annual Bonus Plan are revenue and uEBITDA and these
were met in full. In line with best practice, we are committed
to transparency in reporting and have, therefore, provided
details of the performance targets for the annual bonus'
financial and strategic metrics on page 69.
Our first post-IPO long-term incentives granted under our
Performance Share Plan (“PSP”) in April 2015 will vest by
reference to performance measured to the end of our 2017
financial year. Whilst neither of our current Executive Directors
were participants in these 2015 PSP awards, I am pleased
to confirm that the performance criteria for full vesting of
these awards was achieved, with an adjusted diluted EPS
of 16.6 pence for 2017 (10.5 pence was required for full
vesting); and an upper quintile or better TSR ranking
against the FTSE 250 (ex IT) over the period of three
years to 31 December 2017.
The Remuneration Committee considered that the outcomes
for both annual bonus and PSP represented a fair reflection
of the performance of the Company and its management
team and can be applied without adjustment.
Remuneration policy for 2018
2017 was also a year of significant change in our senior
leadership team as explained earlier in this annual report
on page 44.
In the context of these changes, the Remuneration Committee
concluded that 2017 was not an appropriate time to undertake
any material review of our Directors’ remuneration policy,
which, having first been approved at our 2015 AGM, must be
resubmitted to our shareholders for approval at our 2018 AGM.
Accordingly, the Directors’ remuneration policy which will
be submitted for approval by our shareholders at the 2018
AGM is largely a renewal of our existing policy, and only a
limited number of changes have been proposed.
The main changes to the policy are:
• The previous 20% discount to market levels for base
salaries will no longer be applied. For Peter Plumb, it was
considered appropriate and necessary to provide Peter
with a market level salary of £695,000 in order to secure
his appointment. We have also increased Paul Harrison’s
base salary to £450,000 from September 2017 to
position it at a level consistent with his experience and
performance, as demonstrated through Paul acting up
outstandingly as Interim CEO. The new salary levels for
our Executive Directors place them at a broadly median
level of salary for similarly sized FTSE companies.
• For 2018's Annual Bonus we are introducing a deferral
element to the plan.
• The maximum participation level for our CFO in our
Annual Bonus Plan will be increased to 150% of base
salary (from 120% of base salary).
• At the same time, within our existing policy limits for
long-term incentive plans ("LTIPs"), the CFO’s annual PSP
award will be increased to 200% of base salary (from 160%).
These changes for our CFO for both annual bonus and PSP
will, from 2018, give the CFO the same participation levels
as our CEO in our incentive plans (annual bonus 150% of
base salary; PSP 200% of base salary).
As a Committee, we are confident that the changes
detailed above are both necessary and appropriate in the
context of the growing size and complexity of Just Eat as a
business and its strong performance. The changes to our
Directors’ remuneration policy which are being proposed
at the 2018 AGM are, however, limited and a fuller review
of our policy may be appropriate during 2018 as our new
senior management team becomes more established.
“This has been a strong year for
Just Eat, driven by disciplined
implementation of the
Group’s strategy.”
Gwyn Burr
Chairman, Remuneration Committee
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Corporate governance Report of the Remuneration Committee continued
Key matters considered at each main meeting of
the Remuneration Committee during the year included:
2017
February (two meetings)
Confirmation of Executive remuneration for the
coming year, including proposal of remuneration
for Interim Executive Chairman role.
Review of arrangements for David Buttress.
Review and approval of 2016 annual bonus
out-turn.
Confirmation of Executive Director 2017 annual
bonus structure and targets.
Review of proposed 2017 long-term
incentive grants.
Review of Executive Team remuneration packages
and wider remuneration across the Group.
Review and approval of the Directors’
Remuneration Report.
Review and approval of plans for Sharesave offer
during the year.
June and July (three meetings)
Review and approval of new CEO remuneration
package and contract.
Mid-year review of progress on 2017 annual bonus.
Approval of changes to CFO remuneration package
in the context of his appointment as Interim CEO.
Update on gender pay gap analysis.
Market comparison of Group pay/conditions.
Initial review of the Group’s Directors’ remuneration
policy in advance of renewal at 2018 AGM.
December (one meeting)
Update on 2017 annual bonus progress.
Review of proposals for 2018 annual bonus
and long-term incentives.
Remuneration plans for role of new Chairman.
Review of proposed updated Group Directors’
remuneration policy.
Update on gender pay gap reporting.
Update of share award plans for GDPR implications.
Review of Committee terms of reference.
At every main meeting, the Remuneration Committee also reviews:
Minutes and actions from previous meetings.
One other matter to highlight for 2018 is that our annual
grant of PSP awards is being delayed until later in the year.
This additional period of time before making 2018’s PSP
awards will enable us to further consider the performance
measures for these awards, and to consult with our leading
shareholders as appropriate. It is necessary to undertake
a review of performance measures for 2018’s PSP awards
as the Company is now a member of the FTSE 100 (our
previous TSR comparator group was the FTSE 250 (ex IT)),
but delaying the grant will also enable us to fully consider
the views of the new CEO and, in due course, the views of
Mike Evans, as our new Chairman, with regards to our
remuneration policy.
Finally, whilst not a matter for the Remuneration Committee,
the Board raised the fee levels for Non-executive Directors
for 2018; the new fee levels are detailed on page 77.
Shareholder approval
At the AGM, to be held on 26 April 2018, shareholders will
be asked to approve three resolutions related to Directors'
remuneration matters:
• to approve the Directors’ remuneration policy as set out
in Part A of this Directors’ Remuneration Report;
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Annual Report & Accounts 2017
• to approve the Implementation Report sections of this
Directors’ Remuneration Report (excluding the Directors’
remuneration policy); and
• to approve a new Deferred Bonus Share Plan under
which elements of annual bonus will be deferred.
The vote on the Implementation Report is our normal
annual advisory vote on such matters. If approved by our
shareholders, the Directors’ remuneration policy will apply
for a maximum of three years from the 2018 AGM and the
policy will replace the Directors’ remuneration policy
previously approved at the 2015 AGM.
I hope that we can continue to rely on the support of our
shareholders for the resolutions which will be proposed at
the 2018 AGM.
Gwyn Burr
Chairman, Remuneration Committee
5 March 2018
Annual report on remuneration
Introduction
We present this Directors’ Remuneration Report to reflect the UK’s Large and Medium-sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2013 (the “DRR regulations”). The Directors’ Remuneration Report also
describes how the Board has complied with the provisions set out in the UK Corporate Governance Code ("the Code")
relating to remuneration matters.
Part A is the Directors’ remuneration policy, which will take effect immediately after the 2018 AGM, subject to
shareholder approval.
Part B is the Implementation Report.
The Group’s auditor has reported on certain parts of the Directors’ Remuneration Report and stated whether, in their
opinion, those parts of the Directors’ Remuneration Report have been properly prepared in accordance with the Companies
Act 2006. Those sections of the Directors’ Remuneration Report that have been subject to audit are clearly indicated.
Part A: Directors’ remuneration policy
The Directors’ remuneration policy as set out in this section of the Directors’ Remuneration Report applies to the roles of
Chairman, Executive Director and Non-executive Director.
The Directors’ remuneration policy has been developed mindful of the requirements of the Code and is felt to be appropriate
to support the long-term success of the Company whilst ensuring that it does not promote inappropriate risk taking. The
policy is consistent with the Company’s broader outlook on environmental, social and governance issues.
If approved by the shareholders in a binding vote at the 2018 AGM, the Directors’ remuneration policy will apply for a
maximum of three years from the 2018 AGM. It will replace the Directors’ remuneration policy previously approved at the
2015 AGM.
Summary of changes from previous policy (unaudited)
As detailed in the "changes from previous policy" sections in the Remuneration Policy table, the key changes to the
Directors' Remuneration policy are as follows:
Element
Change from previous policy
Base salary
Base salary cap is re-expressed. For base salaries, we are no longer applying the previous 20% discount to market
data in setting the appropriate market levels for Executive Directors’ salaries.
Benefits
Commuting cost allowances for Executive Directors are removed.
Annual
Bonus Plan
Introducing bonus deferral for any outcomes above 75% of base salary. Deferral is made into an award of deferred
shares vesting over three years, with one-third of the deferred shares vesting each year.
Maximum annual bonus potential for the CFO to be the same level as that of the CEO at 150% of base salary
per annum (previously 120% of base salary).
Confirming that no material changes will be made to the performance measures nor to the relative weightings
for such measures for the Annual Bonus Plan without consulting major shareholders.
Long-term
incentive plan
Confirming that no material changes will be made to the performance measures nor to the relative weightings
for such measures for the PSP without consulting major shareholders.
Removal of previous scope to make awards of market-priced share options (not used in practice during the previous
policy period).
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Corporate governance Annual report on remuneration continued
Remuneration Policy table (unaudited)
Element and purpose
Base salary
This is the core element of pay and reflects the individual’s role and responsibilities within the Group with some adjustment to reflect
their capability and contribution.
Policy and
operation
Maximum
Base salaries will be reviewed each year by the Committee.
Salary levels are reviewed by reference to FTSE listed companies of a similar size and complexity. The Committee
generally views pan-sector data from companies ±30 in market capitalisation of the Company as an appropriate
reference point. The Committee also has regard to other relevant factors including corporate and individual
performance and any changes in an individual’s role and responsibilities.
Base salary is paid monthly in cash.
Changes to base salaries normally take effect from 1 January.
The Remuneration Committee will apply the factors set out in the section above in considering any salary
adjustments during the duration of this policy. Increases in base salaries for Executive Directors will be generally
guided by any increases for the broader employee population, but on occasion may need to recognise, for example,
an increase in the scale, scope or responsibility of the role. No increase will be made if it would take an Executive
Director’s salary above £788,000 (being the median level of salaries for CEOs in the FTSE 31–100), provided that
this figure will be increased in line with UK retail price index inflation for the duration of this policy.
Performance
measures
N/A
Changes from
previous policy
Cap for base salaries is re-expressed, and relative positioning is confirmed with removal of the application of the
previous 20% discount to market data.
Benefits
To provide benefits valued by recipients.
Policy and
operation
The Group provides market-competitive benefits in kind. Details of the benefits provided in each year will be set
out in the Implementation Report. The Executive Directors receive a car allowance, private medical cover and
insurance benefits. The Remuneration Committee reserves discretion to introduce new benefits where it concludes
that it is in the interests of Just Eat to do so, having regard to the particular circumstances and market practice.
Where appropriate, the Company may meet certain costs relating to Executive Director relocations and
(if necessary) expatriate benefits.
Maximum
It is not possible to prescribe the likely change in the cost of insured benefits or the cost of some of the other
reported benefits year to year, but the provision of benefits will operate within an annual limit of £100,000
(plus a further 100% of base salary in the case of relocations and expatriate benefits provided that relocation
benefits may be paid only in the year of appointment and for a further two financial years).
The Remuneration Committee will monitor such costs in practice and ensure that the overall costs do not increase
by more than the Remuneration Committee considers to be appropriate in all the circumstances.
Performance
measures
N/A
Changes from
previous policy
Commuting costs allowances for Executive Directors have been removed.
Pension
To provide retirement benefits.
Policy and
operation
Maximum
Executive Directors can receive pension contributions to personal pension arrangements or the equivalent amount
can be paid as a cash supplement in lieu of pension contributions (reduced for the impact of employers' NICs).
The maximum employer’s contribution is limited to 10% of base salary per annum, although it is not currently
anticipated that contributions will increase above the current 5% level for the duration of this policy.
Performance
measures
N/A
Changes from
previous policy
No material changes.
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Annual Report & Accounts 2017
Element and purpose
Annual Bonus Plan
To motivate employees and incentivise delivery of performance over a one-year operating cycle, focusing on the short/medium-term
elements of our strategic aims.
Policy and
operation
Annual Bonus Plan levels and the appropriateness of measures are reviewed annually at the commencement of each
financial year to ensure they continue to support our strategy.
Annual Bonus Plan outcomes will be calculated following the determination of achievement against performance
measures and targets.
For the financial year 2018 onwards, the Annual Bonus Plan outcomes will be delivered partly in cash and partly
as a deferred award of Just Eat shares.
Any Annual Bonus Plan outcomes achieved above 75% of base salary will be delivered as a deferred award of shares,
and with the period of deferral being three years with one-third of the amounts deferred vesting and being capable
of release at each annual anniversary of the making of the deferred award.
Deferred awards will be a right to receive shares for nil cost with the shares either being delivered automatically at
vesting or being delivered at a time following vesting at the individual’s choice. If appropriate, dividend entitlements
for deferred shares will accrue over the deferral period and be delivered as additional vesting shares. Malus/clawback
provisions apply to the Annual Bonus Plan, and to amounts deferred in Just Eat shares, as explained in the notes to
this table.
Maximum
The maximum level of Annual Bonus Plan outcome for an Executive Director is 150% of base salary per annum for
the duration of this policy.
Performance
measures
The performance measures applied may be financial or non-financial, corporate, divisional or individual and in such
proportions as the Remuneration Committee considers appropriate. The Remuneration Committee would, however,
expect to consult with its major shareholders if it proposed changing materially the current performance measures
applied for the Annual Bonus Plan (or the relative weightings between such measures) in subsequent financial years.
Once set, performance measures and targets will generally remain unchanged for the year, except to reflect
events such as corporate acquisitions or other major transactions where the Committee considers it necessary
in its judgement to make appropriate adjustments.
Attaining the threshold level of performance for any measure will not produce a payout of more than 25% of the
maximum portion of overall annual bonus attributable to that measure, with a sliding scale to full payout for
maximum performance.
The Annual Bonus Plan remains a discretionary arrangement and the Remuneration Committee retains a standard
power to apply its judgement to adjust the outcome of the Annual Bonus Plan for any performance measure (from
zero to any cap) should it consider that to be appropriate.
Changes from
previous policy
Introduces a deferral of any Annual Bonus Plan outcome of over 75% of base salary into shares.
Increases the maximum annual bonus potential for the CFO to the same level as that of the CEO at 150% of base
salary per annum from 120%.
Confirms that no material changes will be made to the performance measures or the relative weightings for such
measures for Annual Bonus without consulting major shareholders.
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Corporate governance Annual report on remuneration continued
Remuneration Policy table (unaudited) continued
Element and purpose
Long-term incentives
To motivate and incentivise delivery of sustained performance over the long-term, and to promote alignment with shareholders’
interests, the Group operates the PSP.
Policy and
operation
Awards under the PSP may be granted as nil-cost options, conditional awards or forfeitable shares which vest
to the extent that performance conditions are satisfied over a period of at least three years.
Under the PSP rules, vested awards may also be settled in cash (although this will typically be the case only
if required to comply with non-UK legal constraints).
Vested awards for Executive Directors will be subject to a further two-year holding period during which time
awards may not normally be exercised or released but are no longer contingent on performance conditions
nor future employment.
If appropriate, dividend entitlements will accrue until the end of the holding period in respect of performance-vested
shares and be delivered as additional vesting shares.
Malus/clawback provisions apply to the PSP as explained in the notes to this table.
Maximum
The formal limit under the PSP allows awards over shares worth 200% of base salary in a financial year
(and 300% in exceptional circumstances). This excludes any dividend equivalent accruals.
The Remuneration Committee expressly reserves discretion to make such awards as it considers appropriate
within these limits.
Performance
measures
The Remuneration Committee may set such performance measures on PSP awards as it considers appropriate
(whether financial or non-financial, and whether corporate, divisional or individual). The Remuneration Committee
would, however, expect to consult with its major shareholders if it proposed changing materially the current
performance measures applied for PSP awards made to Executive Directors (or the relative weightings between
such measures) in subsequent financial years.
Once set, performance measures and targets will generally remain unaltered unless events occur which, in the
Remuneration Committee’s opinion, make it appropriate to alter the performance conditions in such manner as
the Committee thinks fit.
Performance may be measured over such periods as the Remuneration Committee selects at grant, which will not
be less than, but may be more than, three financial years.
Changes from
previous policy
No more than 20% of awards vest for attaining the threshold level of performance conditions.
Removes previously unused facility to grant market-priced share options to Executive Directors.
Confirms that no material changes will be made to the performance measures or the relative weightings for such
measures for PSP without consulting major shareholders.
All employee share plans
To encourage share ownership by employees, thereby allowing them to participate in the long-term success of the Group and align
their interests with those of the shareholders.
Policy and
operation
Executive Directors are able to participate in all employee share plans on the same terms as other Group employees
as required by HMRC legislation.
The Sharesave Plan and Share Incentive Plan ("SIP") are all employee share plans established under HMRC
tax-advantaged regimes and follow the usual form for such plans.
Maximum
The maximum participation levels for all employee share plans will be the limits for such plans set by HMRC
from time to time.
Performance
measures
Changes from
previous policy
Consistent with normal practice, such awards are not subject to performance conditions.
No material changes.
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Annual Report & Accounts 2017
Element and purpose
Shareholding guidelines
To further align the interest of Executive Directors with those of shareholders.
Policy and
operation
Executive Directors are expected to retain 50% of the shares vesting under all share plans (after any disposals for
the payment of applicable taxes) until such time as they hold a minimum of 400% of their base salary in shares.
Only beneficially owned shares and performance vested share awards (discounted for anticipated tax liabilities)
may be counted for the purposes of the guidelines (and this includes performance-vested shares subject to a
continued holding period). Share awards do not count prior to vesting.
Once shareholding guidelines have been met, individuals are expected to retain these levels as a minimum.
The Remuneration Committee will review shareholdings annually in the context of this policy.
Maximum
Performance
measures
Changes from
previous policy
N/A
N/A
No material changes.
Chairman and Non-executive Director fees
To enable the Company to recruit and retain a Chairman and Non-executive Directors of the highest calibre, at the appropriate cost.
Policy and
operation
The fees paid to the Chairman and the fees of the other Non-executive Directors aim to be competitive with other
listed companies of equivalent size and complexity.
The fees payable to the Non-executive Directors are determined by the Board. The fees payable to the Chairman are
determined by the Remuneration Committee.
All fees will be subject to periodic review. For Non-executive Directors, the fee structures may involve separate fees
for chairing or for membership of Board Committees or for acting as Senior Independent Director.
No benefits are envisaged for the Non-executive Directors (including the Chairman) but the Company reserves the
right to provide benefits (including travel and office support) within the prescribed limits.
Fees are paid monthly in cash.
Maximum
The aggregate fees (and any benefits) of the Chairman and Non-executive Directors will not exceed the limit from
time to time prescribed within the Company’s Articles of Association for such fees (currently £2 million per annum).
Any increases actually made will be appropriately disclosed.
The Company reserves the right to vary the structure of fees within this limit including, for example, introducing
time-based fees or reflecting the establishment of new Board Committees.
Performance
measures
N/A
Changes from
previous policy
No material changes.
Notes to the Remuneration Policy table
1. Travel and hospitality
Whilst the Committee does not consider travel and hospitality to form part of benefits, it has been advised that corporate
hospitality (whether paid by the Company or another) and certain instances of business travel (including any related tax
liabilities settled by the Company or the Group) for Executive Directors, Non-executive Directors and the Chairman
(including their family members) may technically be considered as benefits. The Remuneration Committee expressly
reserves the right to authorise such activities and reimbursement of associated expenses within its agreed policies.
2. Deemed benefits from JSOP participation
Payments to any Director in respect of the deemed cost of interest on loans relating to participation in the JSOP and, if
relevant, the writing off of any such loans are benefits within the scope of the Directors’ remuneration policy. The value
of any such amounts is in addition to the maximum amounts stated in the table above for benefits for Executive Directors
and for Chairman and Non-executive Directors’ fees.
3. Stating maximum amounts for the remuneration policy table
The DRR regulations and related investor guidance encourages companies to disclose a cap within which each element
of remuneration policy will operate. Where maximum amounts for elements of remuneration have been set within the
Remuneration Policy table, these will operate simply as caps and are not indicative of any aspiration.
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Corporate governance Annual report on remuneration continued
Notes to the Remuneration Policy table continued
4. Malus and clawback
Malus (being the forfeiture of unvested awards) and clawback (being the ability of the Company to claim repayment
of paid amounts as a debt) provisions apply to the PSP and Annual Bonus Plan (including any future deferred amounts).
These provisions may be applied where the Remuneration Committee considers it appropriate to do so following:
• a misstatement of accounts;
• a miscalculation of vesting/payouts;
• an act/omission that justifies summary dismissal for misconduct (which has no time limit); and
• in respect of malus only, circumstances where the Committee believes there is a risk of serious reputational damage
to the Group.
5. Discretions reserved in operating incentive plans
The Remuneration Committee will operate the Annual Bonus Plan and PSP according to their respective rules and the
above Remuneration Policy table. The Remuneration Committee retains certain discretions, consistent with market
practice, in relation to the operation and administration of these plans including:
• (as described in the Remuneration Policy table) the determination of performance measures and targets and resultant
vesting and payout levels;
• (as described in the Remuneration Policy table) the ability to adjust performance measures and targets to reflect
events and/or to ensure the performance measures and targets operate as originally intended;
• (as described in the Termination Policy section below) the determination of the treatment of individuals who leave
employment, based on the rules of the incentive plans, and the treatment of the incentive plans on exceptional events,
such as a change of control of the Company; and
• the ability to make adjustments to existing awards made under the incentive plans in certain circumstances (e.g. rights
issues, corporate restructurings or special dividends).
6. Differences between the policy on remuneration for Directors and the policy on remuneration of other employees
When determining Executive Directors’ remuneration, the Committee takes into account pay throughout the Group
to ensure that the arrangements in place remain appropriate. This is more fully discussed on page 74.
7. Commitments under previous policies
Subject to the achievement of any applicable performance conditions, Directors are eligible to receive payment from any
commitments or awards made prior to the approval and implementation of the Directors’ remuneration policy detailed in
this report.
Service contracts (unaudited)
Executive Directors
The Committee’s policy is that each Executive Director’s service agreement should be of indefinite duration, subject
to termination by the Company or the individual on 12 months’ notice. The service agreements of all Executive Directors
comply with that policy.
The service agreements reserve the right for the Company to make a payment in lieu of notice to an Executive Director
for the base salary for the duration of the notice period (and for the CEO only, car allowance and pension contributions).
Contracts do not contain change of control provisions but do contain provisions allowing for summary termination.
The date of each Executive Director’s contract is:
Name
Peter Plumb
Paul Harrison
Date of service contract
6 July 2017
14 November 2017
The service agreements of the Executive Directors are available for inspection at the Company’s registered office during
normal business hours and at the Company’s AGM, including the 15 minutes preceding the meeting.
Chairman and Non-executive Directors
Each Non-executive Director and the Chairman is engaged for an initial period, subject to annual renewal at the AGM.
For Non-executive Directors, other than the Chairman, these engagements can be terminated by either party on three
months’ notice.
The Non-executive Directors are not entitled to any pension benefits and are not entitled to any payment in
compensation for early termination of their appointment beyond the three months’ notice referred to above.
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Annual Report & Accounts 2017
Service contracts (unaudited) continued
Chairman and Non-executive Directors continued
For each Non-executive Director the effective date of their latest letter of appointment is:
Name
Frederic Coorevits
Andrew Griffith
Gwyn Burr
Diego Oliva
Roisin Donnelly
Alistair Cox
David Buttress1
Date of appointment
10 July 2009
12 March 2014
12 March 2014
24 September 2015
17 October 2016
2 May 2017
9 August 2017
Term
Annual reappointment
Annual reappointment
Annual reappointment
Annual reappointment
Annual reappointment
Initial engagement (first annual reappointment at 2018 AGM)
Retiring from the Board effective 26 April 2018
1. David Buttress was an Executive Director from 8 April 2014 to 8th August 2017.
The letters of appointment of the Non-executive Directors are available for inspection at the Company’s registered office
during normal business hours and at the Company’s AGM, including the 15 minutes preceding the meeting.
Recruitment remuneration policy (unaudited)
The Company’s recruitment remuneration policy aims to give the Committee sufficient flexibility to secure the
appointment and promotion of high calibre executives to strengthen the management team and secure the skill sets
necessary to deliver the Group’s strategic aims.
In terms of the principles for setting a package for a new Executive Director, the starting point for the Committee will be
to apply the general policy for Executive Directors as set out on the previous pages and structure a package in accordance
with that policy. Consistent with the DRR regulations, the caps contained within the policy for fixed pay do not apply to
new recruits, although the Committee would not envisage exceeding these caps in practice.
The Annual Bonus Plan and PSP will operate (including the maximum award levels) as detailed in the remuneration policy
table in relation to any newly appointed Executive Director.
For an internal appointment, any variable pay element awarded in respect of the prior role may either continue on its
original terms or be adjusted to reflect the new appointment as appropriate.
For external and internal appointments, the Committee may agree that the Company will meet certain relocation
expenses as it considers appropriate in the year of appointment and for a further two financial years.
For external candidates, it may be necessary to make additional awards in connection with the recruitment to buy out
awards forfeited by the individual on leaving a previous employer. For the avoidance of doubt, buy-out awards are not
subject to a formal cap.
For any buy-outs, the Company will not pay more than is, in the view of the Committee, necessary and will in all cases
seek, in the first instance, to deliver any such awards under the terms of the existing Annual Bonus Plan and PSP. It may,
however, be necessary in some cases to make buy-out awards on terms that are more bespoke than the existing Annual
Bonus Plan and PSP (for example, specific arrangements under Listing Rule 9.4.2).
All buy-outs, whether under the Annual Bonus Plan, PSP or otherwise, will take account of the service obligations and
performance requirements for any remuneration relinquished by the individual when leaving a previous employer.
The Committee will seek to make buy-outs subject to what are, in its opinion, comparable requirements in respect
of service and performance.
However, the Committee may choose to relax this requirement in certain cases (such as where the service and/or
performance requirements are materially completed, or where such factors are, in the view of the Committee, reflected
in some other way, such as a significant discount to the face value of the awards forfeited) and where the Committee
considers it to be in the interests of shareholders. Exceptionally, where necessary, such buy-outs may include a
guaranteed or non-prorated annual bonus in the year of joining.
A new Non-executive Director would be recruited on the terms explained above in respect of the main policy for
such Directors.
Termination policy summary (unaudited)
It is appropriate for the Committee to consider treatment on a termination having regard for all of the relevant facts and
circumstances available at that time. This policy applies both to any negotiations linked to notice periods on a termination
(see "Service contracts" on page 72) and any treatments that the Committee may choose to apply under the discretions
available to it under the terms of the Annual Bonus Plan, the proposed new Deferred Share Bonus Plan and the PSP.
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Corporate governance Annual report on remuneration continued
Termination policy summary (unaudited) continued
The potential treatments on termination under these plans are summarised in the table below.
Incentives
Annual Bonus
Plan
If a leaver is deemed to be a “good leaver”,
e.g. leaving through disability or otherwise
at the discretion of the Committee
The Committee has the discretion to
determine the annual bonus which will
typically be limited to the period
actually worked.
If a leaver is leaving for other reasons
Other exceptional cases, e.g. change in control
No awards made.
The Committee has the discretion
to determine the annual bonus.
Deferred Share
Bonus Plan
Awards normally preserved in all
leaver cases, but release is not
typically accelerated, except in the
case of death in service.
Awards will lapse on termination
for cause; otherwise awards are
retained but release is not
accelerated.
Awards received early unless the
Committee determines otherwise.
PSP
The Committee has the ability to
release a good leaver’s awards early.
Receive a prorated award subject to
the application of the performance
conditions at the end of the normal
vesting period.
The Committee retains standard
discretions to vary time prorating,
release any holding period, or
accelerate vesting to the date
of cessation (determining the
performance conditions at that
time) for a good leaver.
All awards will normally lapse.
Receive a prorated award subject
to the application of the
performance conditions at the
date of the event, subject to
standard Committee discretions
to vary time prorating.
SIP and the Sharesave Plan provide treatments for leavers in line with HMRC rules for such plans.
The Company has the power to enter into settlement agreements with Directors and to pay compensation to settle potential
legal claims. In addition, and consistent with market practice, in the event of the termination of an Executive Director, the
Company may pay a contribution towards that individual’s legal fees and fees for outplacement services as part of a negotiated
settlement. Any such fees will be disclosed as part of the detail of termination arrangements. For the avoidance of doubt,
the policy does not include an explicit cap on the cost of termination payments.
External appointments
The Company’s policy is to permit an Executive Director to serve as a Non-executive Director elsewhere when this does
not conflict with the individual’s duties to the Company and, where an Executive Director takes such a role, they will be
entitled to retain any fees which they earn from that appointment.
Statement of consideration of employment conditions elsewhere in the Group
Pay and employment conditions generally in the Group are taken into account when setting Executive Directors’
remuneration.
The Committee receives regular updates on overall pay and conditions in the Group.
The same reward principles guide reward decisions for all Group employees, including Executive Directors, although
remuneration packages differ to take into account appropriate factors in different areas of the business:
Annual bonus – the majority of Group employees participate in an annual bonus plan, although the quantum and balance
of corporate to individual objectives varies by level.
PSP – key Group employees participate in the PSP currently based on the same performance conditions as those for
Executive Directors, although the Committee reserves the discretion to vary the performance conditions for awards
made to employees below Board level.
All employee share plans – the Committee considers it is important for all employees to have the opportunity to become
shareholders in the Company. The Company offers a Sharesave Plan across eight countries.
Reflecting standard practice, the Company did not consult with employees in preparing this Remuneration Report.
The Remuneration Committee is cognisant of requests from, amongst others, the Investment Association for companies
to publish ratios comparing CEO to employee pay. The Remuneration Committee has not, however, published this data in
the Directors’ Remuneration Report given the absence of a common methodology for these comparisons; the Company’s
expectation is that it will publish ratios showing comparisons in future years when, as can be expected, UK regulations
develop a common methodology.
74
Annual Report & Accounts 2017
Statement of consideration of employment conditions elsewhere in the Group continued
Potential rewards under various scenarios
The potential total rewards available to the Executive Directors, ignoring any change in share price and dividend
equivalent accruals, are shown below:
Illustrations of application of remuneration policy
£3,500
£3,000
£2,500
£2,000
0
0
0
£
’
£1,500
£1,000
£500
£0
£3,190
43%
33%
£1,557
18%
33%
£758
100%
49%
24%
£2,076
43%
33%
24%
£1,018
18%
33%
49%
£501
100%
25%
Minimum
Target
Maximum
Minimum
Target
Maximum
Chief Executive Officer
Chief Financial Officer
Total fixed remuneration
Annual bonus
PSP
The above chart aims to show how the remuneration policy set out above for Executive Directors is applied using the
following assumptions.
Minimum
Consists of base salary, benefits and pension.
Base salary is the salary to be paid in 2018.
Benefits measured on the basis of assumptions regarding the cost of car allowances and insurance benefits.
Pension measured as the 5% of base salary receivable either as a pension contribution or as cash, and ignoring any
reduction to payments made in cash for employer's NICs.
Name
Chief Executive Officer
Chief Financial Officer
Base salary
£’000
Benefits
£’000
Pension
£’000
Total fixed
£’000
695
450
28
28
35
23
758
501
On target
Based on what the Executive Director would receive if performance was on target:
Annual Bonus Plan: consists of the on-target annual bonus (75% of base salary, 50% of maximum).
PSP: consists of the threshold level of vesting (40% of base salary, 20% of maximum).
Maximum
Based on the maximum remuneration receivable:
Annual Bonus Plan: consists of the maximum annual bonus (150% of base salary).
PSP: assumes maximum vesting of awards and valued as on the date of grant (normal award 200% of base salary).
Consideration of shareholders’ views
Each year the Remuneration Committee takes into account the approval levels of remuneration-related matters at our
AGM in determining that the current Directors' remuneration policy remains appropriate for the Company, and considers
any specific representations made by our shareholders on pay matters.
The Remuneration Committee also seeks to build an active and productive dialogue with investors on developments on
the remuneration aspects of corporate governance generally and any changes to the Company’s Executive pay
arrangements in particular.
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Corporate governance
Annual report on remuneration continued
Part B: Implementation Report
Summary of implementation of Directors’ remuneration policy in 2018 (unaudited)
Element of
remuneration policy
Detail of implementation of policy for 2018
Base salary
Base salaries for Executive Directors in 2018 are as follows: (with the next review envisaged in January 2019):
Peter Plumb – £695,000.
Paul Harrison – £450,000.
Benefits
Provision of car allowance and any other changes to the benefits offered to the Executive Directors in 2018 will
be in line with changes for all employees, specifically non-taxable insurance coverage for all employee groups.
Pension
No changes to the pension arrangements for Executive Directors are anticipated for 2018.
Pension contributions of 5% of base salary are paid into the Group’s defined contribution pension plan. If impacted
by HMRC limits on contributions, amounts can be paid as a cash supplement in lieu of pension contributions
(reduced for the impact of employer's NICs).
Annual Bonus
Plan
Subject to the approval of the Directors’ remuneration policy at the 2018 AGM, it is proposed that the Annual
Bonus Plan for 2018 will operate as described in this section.
The proposed Annual Bonus Plan maximum potential levels for 2018 are to be as follows:
Peter Plumb – 150% of base salary.
Paul Harrison – 150% of base salary.
The performance measures for the Annual Bonus Plan in 2018 will be a mix of revenue (35% weighting), uEBITDA
(35% weighting) and personal/strategic objectives (30% weighting).
Given the competitive nature of the Company’s sector, the specific performance targets for the 2018 Annual
Bonus Plan are considered to be commercially sensitive and accordingly are not disclosed.
The Committee currently intends to disclose the financial performance targets for the year ended 31 December 2018
on a retrospective basis in the 2018 Directors’ Remuneration Report. Additionally, so far as commercial sensitivity
will allow, details of the personal/strategic objectives for 2018 will also be disclosed.
Annual Bonus Plan outcomes for 2018 will be settled following the determination of achievement against
performance measures and targets and will be delivered in cash for outcomes up to 75% of base salary and above
this level of attainment in an award of deferred shares. The deferred shares will vest over three years from the
making of the award, with one-third of the award vesting and capable of being released at each annual
anniversary of the making of the award.
Subject to the approval of the Directors’ remuneration policy at the 2018 AGM, it is proposed that the PSP award
levels for Executive Directors for 2018 are to be as follows:
Peter Plumb – 200% of base salary.
Paul Harrison – 200% of base salary.
A holding period applies so that any PSP awards for which the performance vesting requirements are satisfied will
not be released for a further two years from the third anniversary of the original award date.
The performance conditions for PSP awards to be made in 2018 remain to be finalised at the current time. It is the
Remuneration Committee’s intention to consult with its major shareholders before the performance conditions for
2018’s PSP awards are settled and the awards are made. As the Company has joined the FTSE 100 it is necessary for
the Committee to revisit the performance measures for new PSP awards in 2018 (the previous comparator group
for the TSR performance conditions for PSP was the FTSE 250 (ex IT)).
Long-term
incentives
provided under
the Just Eat
Performance
Share Plan
(”PSP”)
All employee
share plans
Shareholding
guidelines
Executive Directors have the opportunity to participate in the Company’s HMRC tax-advantaged share plans on
the same basis as all other UK employees.
Guideline levels are 400% of base salary level for all Executive Directors.
Executive Directors are expected to retain 50% of the Ordinary shares vesting under all share plans, after any
disposals for the payment of applicable taxes, until they have achieved the required level of shareholding.
76
Annual Report & Accounts 2017
Summary of implementation of Directors’ remuneration policy in 2018 (unaudited) continued
Chairman and
Non-executive
Directors’ fees
A breakdown of Non-executive Directors’ current annual fees is provided below.
Andrew Griffith1
Gwyn Burr
Diego Oliva
Roisin Donnelly
Alistair Cox
David Buttress
Base fee
£
62,500
62,500
62,500
62,500
62,500
62,500
Committee
Chairman fee
£
15,000
15,000
—
—
—
—
Senior
Independent
Director fee
£
12,500
—
—
—
—
—
Committee
membership
fees
£
5,000
5,000
10,000
—
—
—
Total
£
95,000
82,500
72,500
62,500
62,500
62,500
1. For the period during which he is fulfilling the role of Interim Chairman, Andrew Griffith has not been paid any additional fees.
2. Frederic Coorevits acts as a Non-executive Director but receives no fee.
Single total figure table (audited)
The remuneration for the Executive and Non-executive Directors of the Company who performed qualifying services
during the year is detailed below.
For the year ended 31 December 2017:
Dr. John Hughes1
Andrew Griffith
Peter Plumb2
Paul Harrison3
David Buttress4
Alistair Cox9
Gwyn Burr
Diego Oliva
Roisin Donnelly
Salary
and fees
£
129,474
82,500
200,481
452,500
323,986
39,769
70,500
60,000
60,000
Taxable
benefits
£
10,666
—
Bonus
scheme 5
£
—
—
7,212
240,576
19,264
434,400
41,606
—
—
—
—
—
—
—
—
—
Long-term
incentives 6,7
£
—
—
—
5,763
548,277
—
—
—
—
Pension
£
Other 8
£
Total
£
—
—
10,024
24,446
14,099
—
—
—
—
—
—
—
140,140
82,500
458,293
52,830
989,203
—
—
—
—
—
927,968
39,769
70,500
60,000
60,000
1. Dr. John Hughes was paid fees at his normal Chairman’s fee rate of £220,000 for the period he served as Chairman. For the period he served as Executive Chairman,
he was paid an annual rate of £465,000, on a per diem basis, being a rate equivalent to David Buttress’ 2016 base salary.
2. Peter Plumb joined on 18 September 2017 and received his salary of £695,000 per annum for the portion of the year worked.
3. Paul Harrison was paid a base salary of £400,000 per annum, for the period he was CFO prior to becoming Interim CEO. As Interim CEO, he was paid an acting up
allowance of £100,000 per annum on a per diem basis. For the part of the year in which Paul Harrison was CFO after having acted as Interim CEO, Paul Harrison was
paid a base salary at the rate of £450,000 per annum.
4. David Buttress was paid a base salary of £465,000 per annum for the period he was CEO and until the end of his notice period. For the period he was a Non–executive
Director he was paid a Non-executive Director’s base fee of £60,000 per annum. Untaken holiday at the end of his notice period was paid to David and is included in
the salary figure.
5. More details regarding the annual bonus for 2017 are set out on page 69.
6. The value of the PSP award for David Buttress was calculated using a three month average share price to 31 December 2017 of 765.13 pence applied to 71,658 shares.
This number of shares represented a pro rata reduction of his 2015 PSP award to which the original performance conditions were applied as set out on pages 78 and 81.
7. The LTIP value for Paul Harrison represents the intrinsic gain of his Sharesave option when it was granted on 20 September 2017, being the difference between the
option price (520 pence) and the then market value of Just Eat shares (686.5 pence), multiplied by the number of option shares (3,461 shares).
8. The other column includes the amounts paid to Paul Harrison in relation to his relocation.
9. Non-executive Director appointed with effect from 2 May 2017.
For the year ended 31 December 2016:
Dr. John Hughes
David Buttress
Paul Harrison1
Andrew Griffith
Gwyn Burr
Diego Oliva
Roisin Donnelly2
Salary
and fees
£
180,000
465,000
107,692
62,500
57,500
50,000
10,448
Taxable
benefits
£
26,685
127,881
485
—
986
—
—
Bonus
scheme
£
Long-term
incentives
£
—
657,743
121,184
—
—
—
—
—
—
—
—
—
—
—
Pension
£
—
23,250
5,385
Other 3
£
Total
£
206,685
—
— 1,273,874
489,662
254,916
—
—
—
—
—
—
—
—
62,500
58,486
50,000
10,448
1. CFO appointed with effect from 26 September 2016.
2. Non-executive Director appointed with effect from 17 October 2016.
3. The other column includes amounts paid to Paul Harrison in relation to his recruitment.
www.justeatplc.com
77
Corporate governance Annual report on remuneration continued
Single total figure table (audited) continued
The three non-independent Non-executive Directors (Frederic Coorevits, Benjamin Holmes and Michael Risman) who
served during 2017 and 2016 (part of 2016 only for Benjamin Holmes and Michael Risman), received no remuneration during
these years.
Taxable benefits (audited)
Until the Joint Ownership awards are sold, the Company makes annual payments to participants, the net amount of which
will reimburse the participants for the annual income tax charge that arises on such proportion of the outstanding beneficial
loan amount as is attributable to the remaining jointly owned shares. The annual payment made to the relevant Directors
and the taxable benefit arising on the outstanding loan amount are included within the taxable benefits column in the
single total figure table. The taxable benefit arising on the outstanding loan amounts is detailed below:
Taxable benefit arising
on the JSOP loans
Dr. John Hughes
David Buttress
2017
£
10,666
15,923
2016
£
12,514
21,931
Further detail on the Joint Ownership Awards is provided on page 80.
Paul Harrison was reimbursed for commuting costs whilst interim CEO of £11,199. Peter Plumb receives a car allowance
of £25,000 and Paul Harrison also receives a car allowance of £25,000 since 18 September 2017.
The Executive Directors are non-contributory members of the Company’s private health scheme which provides cover
for them and their immediate family, currently defined as their spouse/partner and dependant children aged under 25.
Although not a taxable benefit, the Executive Directors participate in the Company’s life assurance scheme which pays
their dependants a sum equal to four times their salary if they die during their term of employment by the Company.
Summary of David Buttress' departure terms (audited)
David Buttress’ stepping down as CEO was announced on 10 February 2017. David served as our CEO until 31 March 2017
and became a Non-executive Director on the expiry of a six-month notice period on 9 August 2017.
David’s transition terms can be summarised as follows:
• David was paid his base salary, benefits and pension for the duration of his notice period to 9 August 2017.
• David did not participate in the 2017 Annual Bonus Plan.
• David did not receive a PSP award for 2017, but retains his 2015 and 2016 PSP awards. However, at the vesting of these
awards: (1) the original performance conditions will be applied; (2) time prorating will be applied (on the basis of David
ceasing to be employed in an executive capacity at 9 August 2017); and (3) the originally specified two-year post-
performance vesting holding periods for these awards will continue to apply.
• David retains his JSOP awards. In accordance with their original terms, these awards will continue to vest in monthly
increments. The final vesting date for any part of the JSOP awards is 1 January 2019. The performance conditions for
these awards have already been met in full. There has been no acceleration of vesting for these awards.
Summary of Peter Plumb's recruitment terms (audited)
Peter’s appointment terms are similar to the terms of his 2018 remuneration (see pages 77 to 78). For 2017:
• Peter was entitled to participate in the 2017 Annual Bonus Plan on a pro rata basis considering the period for which
Peter has been in post from 18 September 2017 to 31 December 2017.
• Peter was granted a 2017 PSP award on 18 September 2017 over 58,364 shares, being a time prorated award for 2017
at Peter’s normal annual PSP participation level (200% of base salary) for that part of the 2017 financial year for which
Peter was employed. This award is subject to the same performance conditions as the 2017 PSP award to the CFO (see
pages 80 to 81).
Summary of Paul Harrison Interim Chief Executive Officer terms (audited)
Paul served as the Interim CEO of Just Eat from 28 April 2017 until Peter came into post as CEO on 18 September 2017.
During this period, Paul was paid an incremental annual salary of £100,000 beyond his CFO salary for the period, with the
actual amount paid calculated on a per diem basis. For this period, Paul also received a travel allowance which covered
taxable travel expenditure.
78
Annual Report & Accounts 2017
External appointments (unaudited)
Paul was a Non-executive Director of Hays plc until 15 November 2017 and currently is a Non-executive Director for
Ascential plc. During 2017, Paul was paid £130,080 in aggregate as Non-executive Directors’ fees in relation to these roles.
Peter is a Non-executive Director of Co-operative Group. For the period from 18 September 2017 to 31 December 2017,
Peter received £17,732 for this role. In accordance with the Company’s Directors’ remuneration policy, Peter and Paul are
entitled to retain these fees.
Short-term incentives (audited)
Annual Bonus Plan
For 2017, bonuses were payable based on certain personal/strategic and financial performance targets which had been
agreed at the start of the year.
Personal/strategic measures
Financial measures:
Revenue targets
uEBITDA targets
Total bonus achieved
Peter Plumb
Paul Harrison
Weighting as
% of bonus
% achieved
in 2017
Total bonus
earned
£
% achieved
in 2017
Total bonus
earned
£
30%
35%
35%
10%
30,072
10%
54,300
35%
35%
105,252
105,252
35%
35%
190,050
190,050
100%
80%
240,576
80%
434,400
Against the specific financial measures (each weighted with 35% of total annual bonus potential), out-turns were as follows:
Performance measure
Revenue targets
uEBITDA targets
Threshold performance
level for the
2017 annual bonus
(25% of each element)
On-target performance
level for the
2017 annual bonus
(50% of each element)
Maximum performance
level for
2017 annual bonus
(100% of each element)
Performance level
attained for
2017 annual bonus
% of the maximum
potential achieved
£485m
£139m
£511m
£146m
£537m
£161m
£546m
£164m
100%
100%
In calculating the outcomes against financial measures, the Remuneration Committee has, consistent with how it applied
the Directors’ remuneration policy for the annual bonus in past years, used its judgement to exclude the impacts of acquisitions
and disposals in the year. The adjustments removed both the positive and negative impacts of these actions so as to
ensure the integrity of measuring performance against the initially set targets, within which these actions were not
envisaged. Likewise, the targets and related outcomes were calculated on a constant currency basis.
The strategic measures (20% of total bonus opportunity) related to customer-based metrics and were particularly
stretching. Although progress was made the targets were not achieved and no payments were earned under these
elements of the 2017 annual bonus where both Restaurant Partners' and Customers' experiences were considered.
For Peter Plumb and Paul Harrison, personal measures (10% total weighting) for the 2017 annual bonus were achieved
in full. As Peter Plumb joined part-way through the year, the personal element of his 2017 annual bonus was determined
on the basis of the Interim Chairman’s assessment of his personal performance since coming into post. For Paul Harrison,
the personal element of his 2017 annual bonus was determined on the basis of outstanding performance whilst Interim
CEO and performance against specific objectives set at the commencement of the 2017 financial year. These included:
• a complete review and strengthening of the senior financial team and associated functions;
• managing UK and international implementation of a revised ERP system; and
• overseeing the remodelling of Fleet Place House to deliver an outstanding employee experience.
Long-term incentives (audited)
Awards granted under long-term incentive plans with performance conditions attached are included in the single total
figure table within the long-term incentive column in the year for which performance conditions are measured.
The April 2015 award under the PSP vests in 2018 and therefore David Buttress is eligible to receive a pro rated award in
accordance with his departure terms. The performance conditions of this award (summarised on page 81) have been met
in full.
Adjusted diluted EPS for 2017: 10.5 pence required for full vesting (16.6 pence actual).
Upper quintile or better TSR ranking against the FTSE 250 (ex IT) over the period to 31 December 2017 required for full
vesting: upper quintile ranking was percentile 80 (Just Eat at percentile 92).
www.justeatplc.com
79
Corporate governance Annual report on remuneration continued
Long-term incentives (audited) continued
Joint Share Ownership Plan (“JSOP”)
JSOP awards were made under the JSOP to selected individuals including John Hughes and David Buttress prior to the
Company’s admission to the London Stock Exchange in 2014.
JSOP awards have been structured involving a loan to participants, which is repaid when JSOP shares are sold. As detailed
in the taxable benefits section on page 78, the Company makes annual payments to reimburse participants for the
income tax charge that arises on the outstanding loan amount each year.
The JSOP awards vest over time, with 25% on the specified date established on grant and then equally on a quarterly or
monthly basis until becoming fully vesting on the fourth anniversary of the vest start date. Performance conditions which
applied to the JSOP awards have already been met in full as reported in prior Directors’ Remuneration Reports.
The following table summarises the shares over which the Chairman and Executive Directors had an interest under the
JSOP and those interests that have vested and been sold during the year:
Scheme
Dr. John Hughes1
JSOP 2011
JSOP 2013
2014 JSOP tranche 1
2014 JSOP tranche 2
2014 JSOP tranche 3
David Buttress
2014 JSOP tranche 1
2014 JSOP tranche 2
2014 JSOP tranche 3
Number granted
Number vested
Number sold
Hurdle price
pence
Prior to
2017
During
2017
Prior to
2017
During
2017
Prior to
2017
During
2017
12.0
34.0
57.7
66.3
76.3
57.7
66.3
76.3
1,620,000
540,000
352,350
352,350
352,350
1,839,375
919,674
919,701
— 1,620,000
—
472,500
— 1,387,097
—
67,500
—
—
—
300,965
212,878
124,790
51,385
139,472
227,560
154,153
—
—
232,903
540,000
198,197
352,350
352,350
— 1,801,054
—
670,595
—
440,690
38,321
229,919
229,925
1,456,171
498,156
268,246
383,204
325,718
325,727
Number of
shares over
which interest
is held at
31 December
2017 2
—
—
—
—
—
—
95,800
325,728
1. Dr. John Hughes' estate elected to exercise his JSOPs and sell his shares after he passed away.
2. Total of unvested and vested interests (excluding those sold).
JSOP interests were sold by David Buttress on 24 August 2017 for 635.60 pence per share resulting in a total gain on sale
of £4,987,198. A further 250,000 shares were transferred out of the JSOP on this date.
Performance Share Plan (“PSP”)
Details of the PSP awards held by Directors are detailed in the table below:
As at
1 January
2017
(number)
David Buttress
330,642
Paul Harrison
Peter Plumb
111,537
—
Awards
granted
(number)
—
111,343
58,364
Awards
vested
(number)
Awards
exercised
(number)
Awards
lapsed 2
(number)
As at
31 December
2017
(number)
Face value
of awards
granted
in 2017 1
(£)
Earliest
exercise date
of awards
granted
in 2017
Latest
exercise date
of awards
granted
in 2017
—
—
—
— 154,497
176,145
—
—
—
—
—
—
—
222,880
640,000
15-Mar-22
15-Mar-27
58,364
400,320
18-Sep-22
18-Sep-27
1. The face values for the PSP awards made in 2017 have been calculated using the grant price in accordance with the plan rules. For the awards granted on 15 March 2017,
the grant share price was 574.80 pence which is the average share price over five days immediately preceding the grant date. For the awards made on 18 September 2017
the grant share price was 685.90 pence which is the average share price over five days immediately preceding the grant date. Details of the performance measures for
the PSP awards are on page 81.
The minimum closing share price in 2017 was 496 pence and the maximum closing share price in 2017 was 824 pence. The closing share price on 31 December 2017 was
781 pence.
2. Refer to page 78 for David Buttress' departure terms.
80
Annual Report & Accounts 2017
Long-term incentives (audited) continued
Performance Share Plan (“PSP”) continued
The performance measures and targets for the PSP awards made in 2015, 2016 and 2017 were based on adjusted EPS and
relative TSR performance as summarised below:
2015 award
(50% growth in
adjusted EPS and 50% TSR)
2016 award
(50% growth in
adjusted EPS and 50% TSR)
2017 award
(50% growth in
adjusted EPS and 50% TSR)
Target range between
8.5 pence and 10.5 pence
for 2017.
Target range between
11.0 pence and 13.8 pence
for 2018.
Target range between
18.5 pence and 23.9 pence
for 2019.
Performance measure
Adjusted EPS growth
20% of this part vests at threshold
performance rising on a pro rata basis
until 100% vests.
Measured over three financial years
commencing with the year of award.
TSR
20% of this part vests at threshold
performance rising on a pro rata basis
until 100% vests.
Measured over three financial years
commencing with the year of award.
Target range between median
performance against the
constituents of the FTSE 250
(excluding investment trusts)
rising on a pro rata basis until
full vesting for upper quintile
performance.
Detail
Target range as for 2015.
Target range as for 2015.
The EPS condition applies to the EPS achieved in the final year only of the three financial year performance period, based on the
reported fully diluted EPS (subject to such adjustments as the Committee considers appropriate).
The TSR condition compares the TSR over the three months prior to the start of the financial year in which the grant is made with
the three months prior to the end of the third financial year. The comparator group is the constituents of the FTSE 250 (ex IT) as at
the start of the relevant performance period.
The Committee selected these performance conditions as they provide a suitable balance between absolute growth
(through EPS) and relative out-performance (through TSR).
Sharesave Plan
David Buttress
Paul Harrison
As at
1 January
2017
(number)
5,521
—
Awards
granted
(number)
—
3,461
Exercise
price
(pence)
326.0
520.0
Awards
vested
(number)
Awards
exercised
(number)
Awards
lapsed
(number)
As at
31 December
2017
(number)
Earliest
exercise date
Latest
exercise date
—
—
—
—
—
—
5,521
3,461
01-Nov-18
30-Apr-19
01-Nov-20
30-Apr-21
Statement of Directors’ shareholding and share interests (audited)
The tables below detail the total number of Directors’ interests in shares for the Chairman, any Non-executive Directors
with shares and each Executive Director at 31 December 2017:
David Buttress
Paul Harrison
Peter Plumb
Unvested JSOP
Vested
but unsold JSOP
Total JSOP
PSP
Total interest
in shares
268,246
153,282
421,528
176,145
597,673
—
—
—
—
—
—
222,880
222,880
58,364
58,364
www.justeatplc.com
81
Corporate governance Annual report on remuneration continued
Statement of Directors’ shareholding and share interests (audited) continued
David Buttress
Paul Harrison
Peter Plumb
Unvested JSOP
Vested
but unsold JSOP
Total JSOP
Sharesave
Shares
held
Total interest
in shares
—
—
—
—
—
—
—
—
—
5,521
3,461
—
750,000
14,622
—
755,521
18,083
—
The shareholdings and awards set out above include those held by any Non-executive Directors with shares and the
Executive Directors and their respective connected persons. Following John Hughes’ passing away in June 2017, his
estate disposed of all interests in Just Eat shares so that no such interests were held by 31 December 2017.
There have been no changes in the interests in shares detailed above between 31 December 2017 and the date of this report.
Under the shareholding guidelines implemented by the Remuneration Committee, Executive Directors are required to build
and then maintain a shareholding (excluding shares held conditionally under any incentive arrangements but including
the number of shares to the value of any vested and exercisable interest under the Company’s JSOP) equivalent to at least
400% of base salary. At the 2017 year end, Paul Harrison (having commenced work on 26 September 2016) and Peter Plumb
(having commenced work on 18 September 2017) did not comply with this requirement. In accordance with the Company’s
shareholding guidelines, Paul Harrison and Peter Plumb will be expected to retain 50% of the Ordinary shares vesting under
all share plans, after any disposals for the payment of applicable taxes, until they attain the required level of shareholding.
Performance graph and CEO remuneration table (unaudited)
The following graph shows the TSR performance of an investment of £100 in Just Eat plc shares from its listing in April 2014
to the end of the 2017 financial year compared with a £100 investment in the FTSE 250 Index (ex IT), over the same period.
The FTSE 250 Index (ex IT) was chosen as a comparator because it represents a broad equity market index of which the
Company was a constituent for the majority of 2017 (although the Company joined the FTSE 100 on 18 December 2017).
Just Eat
FTSE 250 (ex IT)
£350
£300
£250
£200
£150
£100
£50
£0
Source: Thomson Reuters
25%
04/2014
12/2014
12/2015
12/2016
12/2017
The table below details the CEO remuneration over the same period as presented in the TSR graph:
2017 Peter Plumb1
2017 David Buttress1
2016 David Buttress
2015 David Buttress
2014 David Buttress
Single total
figure of
remuneration
£
458,293
903,814
1,273,874
5,025,550
3,857,963
Annual bonus
payout
against
maximum
%
80%
N/A
94%
100%
100%
Long-term
incentive
vesting rates
against
maximum
opportunity
%
N/A
100%
N/A
100%
100%
1. In 2017 both David Buttress and Peter Plumb held the role of CEO, and hence two lines are shown. For David Buttress the figure excludes any amount of Non-executive
Directors’ fees paid for 2017.
As the Company listed in April 2014, part of the 2014 remuneration relates to when Just Eat was a privately owned group.
82
Annual Report & Accounts 2017
Percentage change in remuneration of the Director undertaking the role of CEO (unaudited)
The table below presents the year-on-year percentage change in remuneration received by the Chief Executive Officer,
compared with the change in average remuneration received by all UK employees. This was chosen as a suitable comparator
group as it includes UK contact centre employees but excludes senior management and international employees who are
on different pay structures.
Percentage increase in remuneration between 2016 and 2017
Salary
Short-term incentives
All taxable benefits
CEO
18%
56%
35%
All UK
employees
15%
40%
604%
The data for the CEO in 2016 and 2017 is shown on the basis of a comparison between data for David Buttress in 2016 and
a blended position for 2017, reflecting the amounts paid to each of David Buttress, John Hughes, Paul Harrison and Peter Plumb
for the part of the year in which each held the role of CEO (or Executive Chairman). The increases in the average salaries
and short-term incentives for all UK employees was impacted by the outsourcing of call centre employees in 2017.
Relative importance of spend on pay (unaudited)
The table below details the change in total employee pay between 2016 and 2017, as detailed in Note 7 of the financial
statements. In line with our strategic plans, earnings have been retained for growth and development of the business and
therefore no dividends have been paid since in April 2014, prior to the IPO as part of a capital restructuring. uEBITDA and
revenue have been used as a comparative measure as these KPIs are used by the Directors to measure performance.
These measures have been calculated in line with those in the audited financial statements.
Total gross employee pay
Revenue
uEBITDA
% change
29%
45%
42%
2017
£m
114.0
546.3
163.5
2016
£m
88.4
375.7
115.3
Consideration by the Directors of matters relating to Directors’ remuneration (unaudited)
The following Non-executive Directors were members of the Remuneration Committee during the year:
• Gwyn Burr, Chairman;
• Andrew Griffith; and
• Diego Oliva.
FIT Remuneration Consultants LLP (“FIT”) was selected by the Committee in 2014 as its remuneration adviser, after a tender
and presentation process involving four leading firms. FIT exclusively advises the Committee and does not provide any
other advice to the Group, nor does it advise management. This has, the Committee believes, ensured its objectivity and
independence. FIT is a member of the Remuneration Consultants Group and complies with its voluntary code of conduct
in relation to Executive remuneration consulting in the UK. FIT’s professional fees for 2017 were £133,826 plus VAT and
were charged on the basis of the firm’s standard terms of business for advice provided.
The Remuneration Committee also consulted with the Chief Financial Officer, Chief People Officer and the Company Secretary
who attended, by invitation, various Remuneration Committee meetings during the year, although no Executive is permitted
to participate in discussions or decisions regarding his or her own remuneration.
Statement of voting at the Annual General Meeting (unaudited)
On 27 April 2017, the shareholders approved the 2016 Directors’ Remuneration Report as detailed in the table below.
2016 Directors’ Remuneration Report
Votes for
(% of votes cast)
Votes against
(% of votes cast)
Votes
withheld
508,206,654 54,452,744
525,787
(90.3%)
(9.7%)
The Directors’ remuneration policy was last approved at the 2015 AGM held on 13 May 2015.
Directors’ remuneration policy
Votes for
(% of votes cast)
Votes against
(% of votes cast)
Votes
withheld
422,824,523
1,839,119
141,000
(99.6%)
(0.4%)
www.justeatplc.com
83
Corporate governance
Independent auditor’s report
to the members of Just Eat plc
Report on the audit of the financial statements
Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current
year were:
• The impairment review of goodwill and intangible assets at
the Australia & New Zealand (“ANZ”) and Mexican (“MEX”)
cash-generating units (“CGUs”) and the subsequent
impairment of goodwill at the ANZ CGU; and
• Tax uncertainties in relation to the ongoing Danish
transfer pricing investigation.
The key audit matter in respect of business combinations
which was reported in the prior year is no longer assessed
as a key audit matter for the year ended 31 December 2017
as there were no similar combinations.
Materiality
The materiality that we used for the Group financial
statements was £5.4 million which represents 5.2% of
the Group’s pre-tax loss of £76.0 million adjusted for
impairment charges of £180.4 million.
Scoping
The most significant component of the Group is the UK
operation which accounts for 56% of revenue, 144% of
pre-tax profit (before impairment charges) and 1% of net
assets. The Group audit team directly performs the audit
of the UK business.
Full scope audits were also performed for the French, Danish,
Australia & New Zealand and SkipTheDishes operations for
the year ended 31 December 2017 by component teams.
These locations, along with consolidation adjustments and
the UK holding companies, represent the principal business
units and account for 83% out of the £546.3 million of the
Group’s revenue, 96% out of £726.7 million of the Group’s net
assets and 101% out of £104.4 million of the Group’s pre-tax
profit (before impairment).
Significant changes in our approach
A full scope audit was performed by a component team on
the SkipTheDishes operations for the first time in 2017
following the acquisition in 2016.
Opinion
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 2017 and of the Group’s loss for the
year then ended;
• the Group financial statements have been properly prepared
in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union;
• the Parent Company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the European Union 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 and, as
regards the Group financial statements, Article 4 of the
IAS Regulation.
We have audited the financial statements of Just Eat plc
(the ‘Parent Company’) and its subsidiaries (the ‘Group’)
which comprise:
• the consolidated income statement;
• the consolidated statement of other comprehensive
income;
• the consolidated and Parent Company balance sheets;
• the consolidated and Parent Company statements of
changes in equity;
• the consolidated and Parent Company cash flow
statements; and
• the related Notes 1 to 42, including the accounting policies.
The financial reporting framework that has been applied in
their preparation is applicable law and IFRSs as adopted by
the European Union and, as regards the Parent Company
financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under those standards are further
described in the auditor’s responsibilities for the audit
of the financial statements section of our report.
We are independent of the Group and the Parent Company
in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed
public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We
confirm that the non-audit services prohibited by the FRC’s
Ethical Standard were not provided to the Group or the
Parent Company.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
84
Annual Report & Accounts 2017
Conclusions relating to going concern, principal risks and viability statement
Going concern
We have reviewed the Directors’ statement in Note 2 to the financial statements
about whether they considered it appropriate to adopt the going concern basis of
accounting in preparing them and their identification of any material uncertainties
to the Group’s and Company’s ability to continue to do so over a period of at least
twelve months from the date of approval of the financial statements.
We confirm that we have nothing
material to report, add or draw
attention to in respect of
these matters.
We confirm that we have nothing
material to report, add or draw
attention to in respect of
these matters.
We are required to state whether we have anything material to add or draw attention
to in relation to that statement required by Listing Rule 9.8.6R(3) and report if the
statement is materially inconsistent with our knowledge obtained in the audit.
Principal risks and viability statement
Based solely on reading the Directors’ statements and considering whether they
were consistent with the knowledge we obtained in the course of the audit,
including the knowledge obtained in the evaluation of the Directors’ assessment
of the Group’s and the Company’s ability to continue as a going concern, we are
required to state whether we have anything material to add or draw attention
to in relation to:
• the disclosures on pages 22–27 that describe the principal risks and explain how
they are being managed or mitigated;
• the Directors’ confirmation on page 22 that they have carried out a robust
assessment of the principal risks facing the Group, including those that would
threaten its business model, future performance, solvency or liquidity; or
• the Directors’ explanation on page 23 as to how they have assessed the prospects
of the Group, over what period they have done so and why they consider that
period to be appropriate, and their statement as to whether they have a reasonable
expectation that the Group will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.
We are also required to report whether the Directors’ statement relating to the
prospects of the Group required by Listing Rule 9.8.6R(3) is materially inconsistent
with our knowledge obtained in the audit.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion
on these matters.
The impairment review of goodwill and intangible assets at
the Australia & New Zealand and Mexican cash generating
units and the subsequent impairment of goodwill at the
Australia & New Zealand Cash Generating Unit
Key audit matter description
As described in the Report of the Audit Committee on page 58,
and Notes 12 and 13 to the consolidated financial statements,
determining whether the carrying value of goodwill and
intangible assets is recoverable remains a key judgement.
As at 31 December 2017, the Group recognised goodwill of
£544.9 million (2016: £725.2 million) and intangible assets
of £94.5 million (2016: £103.4 million).
In 2017, an impairment of £180.4 million to goodwill has been
recognised at the ANZ CGU as a result of challenges with
the operating platform, the operation of the two brands
(which are being merged) and increased competition in the
marketplace. Goodwill allocated to this CGU (prior to impairment)
was £451.6 million and intangible assets were £40.8 million.
Consistent with prior periods, the Mexico CGU has been
identified as having a potential risk of future impairment, due
to the significant growth required in the short-term forecasts
before a long-term growth rate is applied, being eight years.
We note that there is a high degree of judgement in the
position and therefore potential for management bias as the
forecasts are sensitive to change. Goodwill allocated to this
CGU is £19.6 million and intangible assets of £1.2 million.
The key assumptions applied by the Directors in the
impairment reviews are:
• short and medium-term growth rates which are based
on management budgets;
• the terminal growth rate which is based on long term
inflation forecasts; and
• country specific discount rates.
www.justeatplc.com
85
Financial statements Independent auditor’s report continued
How the scope of our audit responded to the key audit matter
In order to address this key audit matter we audited the
assumptions used in the ANZ and MEX impairment models.
As part of our work, we:
• checked the mechanical accuracy of the underlying
valuation models;
• agreed the key assumptions to the Board approved budgets;
• understood and challenged whether the cash flows are
compliant with IAS 36 requirements by comparing the
individual components to this standard, in particular the
exclusion of any new revenue streams;
• challenged sensitivity analysis run by management
through comparison to recent performance in that CGU
(and over the last three years) and other CGUs with
similar characteristics;
• sought input from our valuation specialists to assess the
country-specific WACC rate calculations and long-term
growth rates, by testing the inputs to the calculation to
external sources and macro-economic data;
The Group has assessed the relevant legislation, regulations
and compliance obligations and disagrees with the assessment
issued and has made a local appeal against it. In addition, the
Group has filed a Mutual Agreement Procedure (“MAP”)
application through which the UK and Danish tax authorities
will negotiate an agreement. Determination of the tax provision
is subject to inherent judgement and therefore also potential
bias by management, in assessing the probable outflow of
taxes that will be borne by the entity relating to this matter
where the appeal process is ongoing.
The Group’s accounting policy on taxation is on page 105
and the critical accounting judgements and key sources of
estimation uncertainty on page 95.
How the scope of our audit responded to the key
audit matter
We have performed the following procedures to address this
key audit matter:
• inspected the latest correspondence between the Group
and the Danish tax authorities;
• assessed and challenged management’s forecasting
• read and assessed the opinions management has obtained
through comparison against other markets, growth pattern
of established markets and external data on the wider
market (e.g. competition); and
in relation to uncertain tax positions, in order to verify
whether the position reached in challenging the
assessment is consistent;
• for the ANZ impairment, sought input from our valuation
specialists to assess the fair value less costs of disposal
(“FVLCD”) calculation and understood and challenged
the differences between the value in use (“VIU”) and
FVLCD models.
We also considered the adequacy of the Group’s disclosures
in respect of the impairment at ANZ and whether the
sensitivity disclosures provided for both ANZ and MEX,
represent reasonably possible changes in key assumptions.
Key observations
We have assessed the impairment calculations for goodwill
and intangible assets for ANZ and MEX and are satisfied that
the assumptions applied within the models are reasonable.
We consider that the disclosures appropriately reflect the
impairment charge for ANZ and the sensitivities for both
ANZ and MEX.
Tax uncertainties in relation to the ongoing Danish transfer
pricing investigation
Key audit matter description
The total provision against uncertain tax positions in the
current year is £17.4 million (2016: £9.8 million).
Our key audit matter is focused on the element of the
provision relating to an ongoing transfer pricing investigation
by the Danish tax authorities, where there is significant
judgement and potential exposure of up to £126.0 million.
As set out in Note 10 and the Report of the Audit Committee
on page 58, a local transfer pricing audit was performed by
the Danish Tax Authorities, resulting in a formal notice of
assessment being issued in January 2018.
• engaged our tax specialists, both in the UK and Denmark,
to challenge the estimates and judgements used when
calculating the associated provision, based on our
knowledge of tax law;
• reviewed and challenged the reports of management’s
experts, and how these have been utilised in estimating
the provision; and
• assessed and challenged the level of provision, in light
of the final notice of assessment, and the basis of the
provision calculation.
We also considered the adequacy of the Group’s disclosure
of the tax provision both in Note 10 as well as the related
accounting policy and key source of estimation uncertainty.
Key observations
The results of our audit work were satisfactory and we
concur that the total level of provision is within an acceptable
range, based on the information currently available and the
opinions received by management’s experts. We consider the
disclosures made to be reflective of management’s assessment
and in line with appropriate accounting standards.
Our application of materiality
We define materiality as the magnitude of misstatement in
the financial statements that make it probable that the
economic decisions of a reasonably knowledgeable person
would be changed or influenced. We use materiality both in
planning the scope of our audit work and in evaluating the
results of our work.
86
Annual Report & Accounts 2017
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality
£5.4 million (2016: £4.0 million)
£2.2 million (2016: £2.0 million)
Group financial statements
Parent Company financial statements
Materiality was determined on the basis of the
Parent Company’s net assets. This was then
capped at 40% of Group materiality.
This materiality equates to 0.4% of net assets.
Net assets has been chosen as a benchmark as it
is considered the most relevant benchmark for
investors and is a key driver of shareholder value.
Basis for determining
materiality
5.2% of pre-tax profit (before impairment)
of £104.4 million.
Rationale for the
benchmark applied
Pre-tax profit has been adjusted for
impairment to exclude the effect of
non-recurring charges.
The increase in materiality reflects the
increase in the size and scale of the Group.
The benchmark in the prior year was
unadjusted pre-tax profit.
In determining our final materiality based
on our professional judgement, we have
considered a number of benchmarks or
financial indicators including the final loss
before tax figure of £76.0 million, revenue,
the growth history of the business,
exceptional items and other gains or losses.
Profit before tax is a key performance
indicator for users of the financial statements
and key stakeholders to measure the
performance of the Group.
The materiality applied represents 1%
of revenue and 0.7% of equity.
Profit before tax (before impairment charges) £104.4 million
Group materiality £5.4 million
Component materiality range
£0.6 million to £4.3 million
Audit Committee reporting
threshold £0.27 million
■ PBT (before impairment charges)
■ Group materiality
We agreed with the Audit Committee that we would
report to the Committee all audit differences in excess
of £0.27 million (2016: £0.2 million) for the Group and
£0.1 million (2016: £0.1 million) for the Parent Company, as
well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds. We also report
to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the
financial statements.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding
of the Group and its environment, including Group-wide
controls, and assessing the risks of material misstatement
at the Group level.
Full scope audits were also performed for the French, Danish,
Australia & New Zealand and SkipTheDishes operations for
the year ended 31 December 2017 by component teams
under the direction and supervision of the Group audit team.
In addition, Ireland, Canada, Spain and Italy were subject to a
limited scope audit of specific account transactions and
account balances by the Group audit team. They were
selected to provide an appropriate basis for undertaking
audit work to address the risks of material misstatement.
These locations, along with the consolidation adjustments
and UK holding companies represent the principal business
units and account for £530.5 million out of the £546.3 million
of the Group’s revenue, £104.9 million profit out of £104.4 million
of the Group’s pre-tax profit (before impairment charges) and
£717.9 million out of £726.7 million of the Group’s net assets.
The most significant component of the Group is the UK
operation, which accounts for 56% of revenue (2016: 63%),
144% of pre-tax profit (before impairment charges)
(2016: 112%) and 1% of net assets (2016: -2%). The Group
audit team performs the audit of the UK trading business
and holding companies directly.
At the Parent Company level we also tested the consolidation
process and carried out analytical procedures to confirm our
conclusion that there were no significant risks of material
misstatement of the aggregated financial information of the
remaining components not subject to audit or audit of
specified account balances.
www.justeatplc.com
87
Financial statements Independent auditor’s report continued
An overview of the scope of our audit continued
Full audit
Limited scope
procedures
Out of scope
Revenue
£m
455
75
16
Pre-tax profit
(before impairment)
£m
Net assets
£m
105
0
(1)
701
17
9
Our audit work was executed at levels of materiality applicable
to each individual entity which were lower than Group
materiality and ranged from £0.6 million to £4.3 million
(2016: £2.0 million to £3.0 million).
We have maintained close supervision with component
auditors throughout the audit process. Planning meetings
were held with all significant component teams prior to the
commencement of the audit. The purpose of this planning
meeting was to ensure sufficient level of understanding of
the Group’s business and a discussion of the significant risks
and planned audit approach.
We have followed a programme of planned visits that has
been designed so that a senior member of the Group audit
team visits each of the significant locations where the Group
scope was focused at least once every two years, and the
most significant of them at least once a year.
During 2017, we have visited the Australian and SkipTheDishes
operations and performed alternative procedures as set out
above for the French and Danish components. The French,
Danish and Australian components were also visited in 2016.
The audit visits were timed to enable us to be involved in the
completion of detailed audit procedures as well as attending
key meetings with component management and auditors.
In addition to our planned visits, we send detailed instructions
to our component audit teams, include them in our team
briefings and perform detailed reviews of the significant
work papers. We maintain close communication throughout
the audit period and attend component close meetings to
discuss all significant findings raised with financial management
representatives from both Group and the components.
Other information
The Directors are responsible for the other information.
The other information comprises the information included
in the annual report, other than the financial statements and
our auditor’s report thereon.
Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be
materially misstated.
If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether
there is a material misstatement in the financial statements
or a material misstatement of the other information.
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information,
we are required to report that fact.
In this context, matters that we are specifically required to
report to you as uncorrected material misstatements of the
other information include where we conclude that:
• Fair, balanced and understandable – the statement given
by the Directors that they consider the annual report and
financial statements taken as a whole is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Group’s position and
performance, business model and strategy, is materially
inconsistent with our knowledge obtained in the audit; or
• Audit committee reporting – the section describing the
work of the audit committee does not appropriately
address matters communicated by us to the audit
committee; or
• Directors’ statement of compliance with the UK Corporate
Governance Code – the parts of the Directors’ statement
required under the Listing Rules relating to the Company’s
compliance with the UK Corporate Governance Code
containing provisions specified for review by the auditor
in accordance with Listing Rule 9.8.10R(2) do not properly
disclose a departure from a relevant provision of the UK
Corporate Governance Code.
We have nothing to report in respect of these matters.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities
statement, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they
give a true and fair view, and for such internal control as the
Directors determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the Parent Company’s
ability to continue as a going concern, disclosing as applicable,
matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to
liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
88
Annual Report & Accounts 2017
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
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.
Report on other legal and regulatory requirements
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion the part of the Directors’ remuneration report
to be audited has been properly prepared in accordance with
the Companies Act 2006.
In our opinion, based on the work undertaken in the course
of the audit:
• 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; and
• the strategic report and the Directors’ report have been
prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the
Group and the Parent Company and their environment
obtained in the course of the audit, we have not identified
any material misstatements in the strategic report or the
Directors’ report.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
• we have not received all the information and explanations
we require for our audit; or
• 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.
We have nothing to report in respect of these matters.
Directors’ remuneration
Under the Companies Act 2006 we are also required to
report if in our opinion certain disclosures of Directors’
remuneration have not been made or the part of the
Directors’ remuneration report to be audited is not in
agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
Other matters
Auditor tenure
We were appointed by the Directors on 22 January 2010 and
confirmed at the subsequent Board meeting to audit the
financial statements for the year ended 31 December 2009
and subsequent financial periods. The period of total
uninterrupted engagement including previous renewals and
reappointments of the firm is nine years, covering the years
ended 31 December 2009 to 31 December 2017.
Consistency of the audit report with the additional report
to the audit committee
Our audit opinion is consistent with the additional report
to the audit committee we are required to provide in
accordance with ISAs (UK).
Anna Marks FCA (Senior Statutory Auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Reading, United Kingdom
5 March 2018
www.justeatplc.com
89
Financial statements Notes
3
4, 32
5
15
6
8
9
9
10
29
11
11
2, 11
2, 11
6
4, 32
5
6
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
546.3
(96.0)
450.3
(6.6)
(191.1)
(324.5)
(522.2)
(0.6)
(72.5)
(2.0)
0.7
(2.2)
(76.0)
(27.5)
(103.5)
(102.7)
(0.8)
(103.5)
(15.2)
(15.2)
16.8
16.6
(72.5)
38.4
6.6
191.1
(0.5)
0.4
375.7
(35.2)
340.5
(3.1)
(14.6)
(250.2)
(267.9)
(0.1)
72.5
18.8
0.6
(0.6)
91.3
(19.9)
71.4
71.7
(0.3)
71.4
10.7
10.5
12.2
12.0
72.5
24.3
3.1
14.6
0.2
0.6
2, 3
163.5
115.3
Consolidated income statement
Year ended 31 December 2017
Continuing operations
Revenue
Cost of sales
Gross profit
Long-term employee incentive costs
Exceptional items (including impairment charges)
Other administrative expenses
Total administrative expenses
Share of results from associates
Operating (loss)/profit
Other gains and losses
Finance income
Finance costs
(Loss)/profit before tax
Taxation
(Loss)/profit for the year
Attributable to:
Equity shareholders
Non-controlling interests
Earnings per Ordinary share (pence)
Basic
Diluted
Adjusted earnings per Ordinary share1 (pence)
Basic
Diluted
Reconciliation of operating profit to uEBITDA1
Operating (loss)/profit
Depreciation and amortisation
Long-term employee incentive costs
Exceptional items (including impairment charges)
Net foreign exchange (gains)/losses
Share of results from associates below uEBITDA
uEBITDA1
1. Refer to Note 2e for a full definition of uEBITDA and Adjusted EPS.
90
Annual Report & Accounts 2017
Consolidated statement of other comprehensive income
Year ended 31 December 2017
(Loss)/profit for the year
Items that may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations – Group
Exchange differences on translation of foreign operations – associates
Exchange differences on translation of foreign operations reclassified
to the income statement on disposal
Exchange differences on translation of non-controlling interests
Fair value (losses)/gains on cash flow hedges
Fair value gains on available-for-sale investments
Income tax related to fair value gains on cash flow hedges
Net fair value gains on cash flow hedges reclassified to goodwill
Other comprehensive (loss)/income for the year
Total comprehensive (loss)/income for the year
Attributable to:
Equity shareholders
Non-controlling interests
Total comprehensive (loss)/income for the year
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
Notes
(103.5)
71.4
26
26
26
29
27
27
27
27
29
(2.6)
(3.8)
—
(0.1)
(0.1)
0.1
—
—
(6.5)
(110.0)
(109.1)
(0.9)
(110.0)
97.9
7.7
0.1
(0.2)
1.8
—
(0.5)
(1.3)
105.5
176.9
177.4
(0.5)
176.9
www.justeatplc.com
91
Financial statements Consolidated balance sheet
As at 31 December 2017
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments in associates
Available-for-sale investments
Deferred tax assets
Current assets
Operating cash
Cash to be paid to Restaurant Partners
Cash and cash equivalents
Inventories
Trade and other receivables
Derivative financial instruments
Current tax assets
Total assets
Current liabilities
Trade and other payables
Derivative financial instruments
Current tax liabilities
Deferred revenue
Provisions for liabilities
Borrowings
Net current assets
Non-current liabilities
Deferred tax liabilities
Deferred revenue
Provisions for liabilities
Borrowings
Other long-term liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Translation reserve
Other reserves
Retained earnings
Equity attributable to shareholders of the Company
Non-controlling interests
Total equity
As at
31 December
2017
£m
As at
31 December
2016
£m
Notes
12
13
14
15
16
10
33
17
18
20
19
20
21
22
23
10
21
22
23
23
24
25
26
27
28
29
544.9
94.5
19.0
41.4
4.2
18.1
722.1
213.6
51.5
265.1
2.8
24.2
0.1
0.4
292.6
725.2
103.4
12.4
29.7
4.1
14.4
889.2
96.8
33.8
130.6
1.7
26.5
—
0.4
159.2
1,014.7
1,048.4
(185.2)
(0.6)
(36.4)
(3.3)
(22.6)
(0.4)
(112.1)
—
(22.0)
(3.8)
(13.6)
(0.4)
(248.5)
(151.9)
44.1
7.3
(18.2)
(0.8)
(20.2)
(0.3)
—
(39.5)
(288.0)
726.7
6.8
562.7
88.3
(5.2)
65.9
718.5
8.2
726.7
(25.9)
(0.9)
(43.1)
(0.6)
(0.3)
(70.8)
(222.7)
825.7
6.8
562.2
94.7
(6.4)
160.7
818.0
7.7
825.7
The consolidated financial statements on pages 90 to 137 were authorised for issue by the Board of Directors and signed on
its behalf by:
Peter Plumb
Chief Executive Officer Chief Financial Officer
Paul Harrison
Just Eat plc
5 March 2018
Company registration number
06947854 (England and Wales)
92
Annual Report & Accounts 2017
Consolidated statement of changes in equity
Year ended 31 December 2017
Share
capital
£m
Share
premium
account
£m
Notes
Translation
reserve
£m
Other
reserves
£m
Retained
earnings
£m
Non-
controlling
interest
£m
Total
£m
At 1 January 2016
Profit/(loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
Tax on share options
Issue of capital (net of costs)
Exercise of share options
Share based payment charge
Lapse of JSOP awards
Exercise of JSOP awards
Partial disposal of Mexican business
Adjustment to Mexican NCI
At 31 December 2016
Loss for the year
Other comprehensive loss
Total comprehensive loss for the year
Tax on share options
Exercise of share options
Share based payment charge
Exercise of JSOP/SIP awards
Adjustment for cash-settled share options
Adjustment to Mexican NCI
At 31 December 2017
10, 28
24, 25
25
4
27
27
28, 29
29
10, 28
25
4
27
28
29
6.8
555.5
(11.0)
(6.4)
80.6
625.5
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6.2
0.5
—
—
—
—
—
6.8
—
562.2
—
—
—
—
—
—
—
—
—
—
—
—
0.5
—
—
—
—
—
105.7
105.7
—
—
—
—
—
—
—
—
94.7
—
(6.4)
(6.4)
—
—
—
—
—
—
—
—
—
—
—
—
—
(0.5)
0.5
—
—
71.7
—
71.7
0.8
—
—
2.8
—
—
4.8
—
71.7
105.7
177.4
0.8
6.2
0.5
2.8
(0.5)
0.5
4.8
—
(6.4)
160.7
— (102.7)
818.0
(102.7)
—
—
(6.4)
— (102.7)
2.0
—
(109.1)
2.0
—
—
1.2
—
—
—
6.1
—
0.5
6.1
1.2
(0.2)
(0.2)
—
—
6.8
562.7
88.3
(5.2)
65.9
718.5
0.4
(0.3)
(0.2)
(0.5)
—
—
—
—
—
—
7.3
0.5
7.7
(0.8)
(0.1)
(0.9)
—
—
—
—
—
1.4
8.2
Total
equity
£m
625.9
71.4
105.5
176.9
0.8
6.2
0.5
2.8
(0.5)
0.5
12.1
0.5
825.7
(103.5)
(6.5)
(110.0)
2.0
0.5
6.1
1.2
(0.2)
1.4
726.7
www.justeatplc.com
93
Financial statements Consolidated cash flow statement
Year ended 31 December 2017
Operating (loss)/profit
Adjustments for:
Amortisation of intangible assets
Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment and intangible assets
Share of results from associates
Increase in provisions
Non-cash long-term employee incentive costs
Impairment charges
Other non-cash items
Increase in inventories
(Increase)/decrease in receivables
Increase in payables
Decrease in deferred revenue
Net cash generated by operations
Interest paid
Facility fees paid
Income taxes paid
Net cash generated from operating activities
Investing activities
Interest received
Acquisition of subsidiary businesses
Hungryhouse deposit
Acquisition of interests in associates
Acquisition of available-for-sale investments
Disposal of subsidiary businesses
Disposal of minority stake in Mexican business
Funding provided to associates
Funding provided by minority interests
Purchase of intangible assets
Purchase of property, plant and equipment
Other cash (outflows)/inflows
Net cash used in investing activities
Financing activities
Proceeds from exercise of options and awards
Repayment of borrowings
Cash outflow on the acquisition of minority interests
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of changes in foreign exchange rates
Cash and cash equivalents at end of year
94
Annual Report & Accounts 2017
Notes
13
14
6
15
4, 32
5
30
30
15
16
8
29
34
29
13
23
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
(72.5)
72.5
31.1
7.3
0.9
0.6
0.3
6.6
180.4
(0.3)
154.4
(0.2)
(4.6)
42.7
(0.6)
191.7
(0.7)
(2.3)
(22.0)
166.7
0.7
(0.4)
—
(2.6)
—
3.6
1.2
(0.8)
1.4
(24.0)
(14.6)
(0.2)
(35.7)
3.1
(0.4)
—
2.7
133.7
130.6
0.8
265.1
18.1
6.2
0.5
0.1
6.1
3.0
—
—
106.5
(0.5)
3.0
1.9
(0.1)
110.8
(0.4)
(0.7)
(12.7)
97.0
0.6
(154.7)
(6.0)
(7.2)
(3.5)
16.7
9.3
(2.1)
0.5
(11.7)
(9.5)
0.1
(167.5)
2.4
—
(0.1)
2.3
(68.2)
192.7
6.1
130.6
Notes to the consolidated financial statements
Year ended 31 December 2017
1. General information
Just Eat plc (the “Company”) and its subsidiaries (the “Group”) operate a leading digital marketplace for takeaway food
delivery. Further details about the Group’s operations and principal activities are disclosed within the Strategic Report on
pages 2 to 43. The Company is a public limited company listed on the premium listing segment of the Official List of the
Financial Conduct Authority and is incorporated and domiciled in England and Wales. Its registered address is Masters
House, 107 Hammersmith Road, London W14 0QH, United Kingdom.
2. Basis of preparation
This section describes how these financial statements have been prepared, as well as the critical accounting judgements
and key sources of estimation uncertainty that the Group has identified that could potentially have a material impact on
the consolidated financial statements in the next 12 months. This note also sets out the significant accounting policies
that relate to the financial statements as a whole. Where an accounting policy is generally applicable to a specific note
to the financial statements, the policy is described within that note. Where the Group believes any new accounting
standards yet to be adopted could have a material impact, these have also been disclosed in this note.
The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”)
and IFRS Interpretation Committee interpretations as endorsed by the European Union (“EU”), and with those parts of
the Companies Act 2006 applicable to companies reporting under IFRS.
In the application of the Group’s accounting policies, the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical experience and other factors that are considered to
be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on
an ongoing basis. Any 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.
Critical judgements in applying the Group’s accounting policies
Critical judgements are those which management has made in applying the Group’s accounting policies that could potentially
have a material impact on the consolidated financial statements in the next 12 months. In the current year, the only
critical judgement identified by management relates to capitalised development costs.
Revenue derived from connection fees and the fair value measurement of equity-settled transactions with employees, are
no longer considered to be critical judgements, as the risk of significant differences is considered remote. The recognition
of deferred tax assets and liabilities is also no longer considered to be a critical judgement, as there have been no new
acquisitions completed during the year and in turn, no judgements were made in the current year.
Capitalised development costs
Internally developed websites, apps and other software, that together make up the Just Eat ordering platforms are
capitalised as an intangible asset where it is determined by management that the ability to develop the asset is technically
feasible and the project will generate probable economic benefits. The total amount capitalised in the year was £18.8 million
(2016: £10.5 million), see Note 13 for further details.
Key sources of estimation uncertainty
Discussed in this section are the key assumptions regarding the future and other key sources of estimation uncertainty at
the balance sheet date which may have a significant risk of causing a material adjustment to the carrying value of assets
and liabilities within the next financial year.
The Group has identified impairment of goodwill and intangible assets, and taxation to be the key sources of
estimation uncertainty.
As there were no new business combinations that completed during the year, the risk of a significant difference in the carrying
value of acquired intangible assets occurring in the next 12 months is considered remote. Fair value of deferred consideration
is also no longer considered to be a key source of estimation uncertainty as the risk of a material adjustment to the carrying
value of SkipTheDishes Restaurant Partners Inc.’s (“SkipTheDishes”) deferred consideration is considered remote.
Impairment of goodwill and intangible assets
The Group’s balance sheet includes significant carrying values of goodwill and intangible assets. Impairment exists when
the carrying value of an asset or cash-generating unit (“CGU”) exceeds its recoverable amount, which is the higher of its
fair value less costs of disposal (“FVLCD”) and its value in use (“VIU”).
Determining whether an asset is impaired requires an estimation of the VIU of the CGU to which the asset has been
allocated. The VIU calculation is based on a discounted cash flow (“DCF”) model. The cash flows are derived from the
budget for the next five years and do not include restructuring activities that the Group is not yet committed to. In some
instances, the cash flow forecasted period is greater than five years as the CGU is in immature markets that are currently
lacking penetration, and where future investment in the business is expected to result in its long-term growth being
achieved. The VIU is sensitive to the discount rate used as well as the expected future cash inflows.
www.justeatplc.com
95
Financial statements 2. Basis of preparation continued
Key sources of estimation uncertainty continued
Impairment of goodwill and intangible assets continued
Where the VIU calculation indicates a CGU may be impaired, management estimates the CGU’s FVLCD using level 3
measurement techniques. This involves management completing a DCF model using variables a market participant would
likely apply. This DCF is different to the VIU, as cash flows are modelled for 10 years and a higher discount rate is applied
to reflect the additional risk premium a market participant would expect. The FVLCD is also sensitive to the discount rate
and the expected future cash inflows.
The highest risk of impairment resides in the Australia & New Zealand (“ANZ”) CGU and the Mexico CGU. An impairment
charge of £180.4 million was recognised in the current year relating to the ANZ CGU. The key assumptions used to determine
the recoverable amount for ANZ, Mexico and all other CGUs, including a sensitivity analysis, are disclosed and further
explained in Note 12.
Taxation
The Group’s tax charge is the sum of the total current and deferred tax charges arising in each jurisdiction. As a result
of the Group’s growing global footprint and the changing global tax environment and income taxes arising in numerous
jurisdictions, there are some transactions for which the ultimate tax determination is uncertain during the ordinary course
of business. The calculation of the Group’s total tax charge involves estimation and judgement in respect of certain matters
where the tax impact is uncertain until a conclusion is reached with the relevant tax authority or through a legal process.
Resolving tax issues can take several years and is not always within the control of the Group. Current tax liabilities are
recognised for uncertain tax positions when the Group has a present obligation as a result of a past event and it is
probable that there will be a future outflow of funds to a taxing authority. These may be, for example, in respect of
enquiries raised and additional tax assessments issued.
Liabilities in respect of uncertain tax positions are measured based on management’s interpretation of country-specific
tax law and assigning probabilities to the possible likely outcomes and range of taxes payable in order to ascertain a weighted
average probable liability. In-house tax experts, external tax experts and previous experience are used to help assess the
tax risks when determining and recognising such liabilities. See Note 10 for further details of the £17.4 million tax provision
held at 31 December 2017, which includes an amount relating to the ongoing transfer pricing audit in Denmark.
Where the final amounts payable are different to the liabilities recognised in previous periods, the required adjustments
in respect of prior years are recorded in the current period in the income statement, or directly in equity, as appropriate.
Significant accounting policies that relate to the financial statements as a whole
a) Accounting convention
The financial statements have been prepared on the historical cost basis, except for assets and liabilities acquired as
part of a business combination, deferred contingent consideration, provisions, available-for-sale investments, derivative
financial instruments, and other financial assets and liabilities recognised at fair value through profit or loss, which have
been measured at fair value. The policies have been consistently applied to all years presented.
b) Basis of consolidation
The consolidated financial statements of the Group incorporate the financial statements of the Company and entities
controlled by the Company (its “subsidiaries”) made up to 31 December each year.
Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial
and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect
ownership of voting rights, through currently exercisable or convertible potential voting rights, or by way of contractual
agreement. Where necessary, adjustments are made to the financial statements of subsidiaries to align with the Group
accounting policies. All intercompany transactions and balances between Group entities, including unrealised profits
arising from them, are eliminated upon consolidation.
Non-controlling interests represent the equity in a subsidiary not attributable, directly or indirectly, to the Company and are
presented separately within equity in the consolidated balance sheet, separately from equity attributable to shareholders
of the Company. Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance.
c) Foreign currencies
The individual financial statements of each subsidiary are presented in the currency of the primary economic environment
in which it operates (“functional currency”). For the purpose of the consolidated financial statements, the results and
financial position of each subsidiary are expressed in pound sterling, which is the functional currency of the Company,
and also the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional
currency (“foreign currencies”) are recognised at the rates of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the
rates prevailing at that date.
96
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 2. Basis of preparation continued
Significant accounting policies that relate to the financial statements as a whole continued
c) Foreign currencies continued
Non-monetary items carried at fair value, that are denominated in foreign currencies, are translated at the rates prevailing
at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a
foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise, except for exchange differences
on monetary items receivable or payable to a foreign operation where settlement is neither planned nor likely to occur
in the foreseeable future (therefore forming part of the net investment in the foreign operation), which are recognised
initially in other comprehensive income and reclassified to profit or loss on disposal of the net investment.
For the purpose of presenting consolidated financial statements, the monetary assets and liabilities of the Group’s
foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items
are translated at the average exchange rates for the period. Exchange differences arising are recognised in other
comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate).
On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation), all of the accumulated
exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.
d) Going concern
For reasons noted on page 23, the financial information has been prepared on a going concern basis, which assumes that
the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future, being a period of at
least 12 months from the date of signing these financial statements. At the date of approving the financial statements, the
Directors are not aware of any circumstances that could lead to the Group being unable to settle commitments as they
fall due during the 12 months from the date of signing these financial statements.
Although for the year ended 31 December 2017 the Group incurred a loss before tax of £76.0 million, the Group had net
current assets of £44.1 million and cash net of borrowings of £264.4 million. For the year ended 31 December 2017, the
Group generated cash inflows from operating activities of £166.7 million. The Group’s business activities, together with
the factors likely to affect its future development, performance and position, are set out in the Strategic Report on pages 2
to 43. Note 33 describes the Group’s objectives, policies and processes for managing its exposure to market risk, credit risk
and liquidity risk.
e) Non-GAAP information
The Group has provided the readers with additional information in the Annual Report that is regularly reviewed by management.
Certain information presented is derived from amounts calculated in accordance with IFRS but is not itself an expressly
permitted GAAP measure.
Underlying EBITDA (“uEBITDA”)
The main measure of profitability used by management to assess the performance of the Group’s businesses is uEBITDA.
It is defined as earnings before finance income and costs, taxation, depreciation and amortisation (“EBITDA”), and
additionally excludes long-term employee incentive costs, exceptional items, foreign exchange gains and losses, other
gains and losses, and the share of results from associates falling outside this definition.
The Chief Operating Decision Maker (“CODM”) uses uEBITDA to assess internal performance in conjunction with uEBITDA
margin, as management believe it closely correlates to cash generated from operating activities, as it excludes items that
are either non-cash or non-recurring in nature. Management believe it is both useful and necessary to report uEBITDA
as a performance measure as it enhances the comparability of profit or loss across segments. Accordingly, Executive
Team incentives are partially based on uEBITDA results.
A reconciliation of uEBITDA to operating profit is provided in the income statement and in Note 3 on a segmental basis.
Adjusted earnings per share
Adjusted earnings per share is the main measure of earnings per share used by the Group and is calculated using
an underlying profit measure attributable to the equity shareholders. It is defined as profit attributable to the equity
shareholders, before long-term employee incentive costs, exceptional items, other gains and losses, foreign exchange
gains and losses, amortisation in respect of acquired intangible assets, share of results from associates below uEBITDA,
and the tax impact of these adjusting items.
The Directors believe that it is both useful and necessary to report Adjusted EPS, as the measure is:
• used for internal performance rating;
• used in setting the Executive Team remuneration; and
• useful in connection with discussions within the investment analyst community.
A reconciliation of adjusted profit is provided in Note 11.
www.justeatplc.com
97
Financial statements 2. Basis of preparation continued
New and amended standards adopted by the Group
No new standards, amendments or interpretations to standards effective for the first time for the financial year
beginning on 1 January 2017 have had a material impact on the Group’s financial position or performance, nor the
disclosures in these financial statements.
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory at 31 December 2017
and have not been early adopted by the Group. The Group’s assessment of the impact of these new standards and
interpretations on its results, financial position and cash flows is set out below:
IFRS 9 Financial Instruments
This standard is effective for accounting periods commencing on or after 1 January 2018. The standard addresses the
classification and measurement of financial instruments and will require additional disclosures. Further to this, a new
impairment measurement model for financial assets based around expected credit losses has been introduced. There
is no longer a requirement for a credit event to have occurred before a credit loss is recognised.
There is also a new hedge accounting model that aligns with how entities undertake risk management activities when
hedging financial and non-financial risk exposures.
The Group intends to designate equity instruments, such as those in Note 16, as fair value through other comprehensive
income. Fair value movements in this category have not been significant in previous years.
We have considered the impact of the standard to the 2017 financial statements, and the Directors have determined that
the new standard will not have a material impact to the Group.
IFRS 15 Revenue from Contracts with Customers
This standard is effective for accounting periods commencing on or after 1 January 2018.
When IFRS 15 is adopted, it can be applied either on a fully retrospective basis, requiring the restatement of the
comparative periods presented in the financial statements, or with the cumulative impact of IFRS 15 applied as an
adjustment to equity on the date of adoption. When the latter approach is applied, it is necessary to disclose the impact
of IFRS 15 on each line item in the financial statements in the reporting period. The Group has not yet determined which
method will be adopted.
IFRS 15 provides a single, principles-based five-step model to be applied to all contracts with Customers:
1)
2)
3)
4)
identify the contract with the Customer;
identify the performance obligations in the contract, introducing the new concept of “distinct”;
determining the transaction price;
allocating the transaction price to the performance obligations in the contracts, on a relative stand-alone selling price
basis; and
5)
recognise revenue when (or as) the entity satisfies its performance obligation.
IFRS 15 also introduces new guidance on, amongst other areas, combining contracts, discounts, variable consideration
and contract modifications. It requires that certain costs incurred in obtaining and fulfilling customer contracts be
deferred on the balance sheet and amortised over the period an entity expects to benefit from the customer relationship.
Management has conducted a detailed accounting scoping analysis across each of the Group’s operating segments and
their various revenue streams. Management has assessed accounting implementation approaches for each revenue
stream based on the potential materiality, complexity and volatility of the impact.
Qualitatively, management expects no change in the treatment of order-driven revenue, top-placement fees and most of
other revenue. The revenue stream with a change under IFRS 15 is connection fees, which are currently being deferred
between 12 and 36 months. From 2018, the performance obligations relating to connection fees will be deemed to have
been satisfied over the average life of a Restaurant Partner’s relationship, which management has estimated to be 48 months.
Under both of the IFRS 15 transition options available, the impact of this change is not expected to be material to the Group.
IFRS 16 Leases
This standard is effective for accounting periods commencing on or after 1 January 2019, with early adoption permitted.
The Group does not intend to adopt the standard before its effective date.
When IFRS 16 is adopted, the two methods available to apply this standard are the “fully retrospective basis”, or the
“modified retrospective basis”. The fully retrospective basis requires the restatement of the comparative periods presented
in the financial statements, whereas the modified retrospective basis allows the Group to assume the carrying amount of
the initial right-of-use asset to be the same as the lease liability, meaning no restatement of prior years is required in the
first year of adoption. When the latter approach is applied, it is necessary to disclose the impact of IFRS 16 on each line
item in the financial statements in the reporting period. The Group intends to apply the modified retrospective basis
when adopting this standard on 1 January 2019.
98
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 2. Basis of preparation continued
New standards and interpretations not yet adopted continued
IFRS 16 Leases continued
IFRS 16 replaces IAS 17 Leases and will primarily change lease accounting, with lessor accounting under IFRS 16 expected
to be similar to lessor accounting under IAS 17. Lessee accounting under IFRS 16 will be similar in many respects to IAS 17
accounting for finance leases, but is expected to be substantively different to existing accounting for operating leases.
Where a contract meets IFRS 16’s definition of a lease and the Group acts as a lessee, lease agreements will give rise to
the recognition of a non-current asset representing the right to use the leased item, and a loan obligation for future lease
payables on the Group’s balance sheet.
Lease costs will be recognised in the form of depreciation of the right-of-use asset and interest on the lease liability,
which may impact the phasing of operating profit and profit before tax, compared to existing cost profiles and
presentation in the income statement, and will also impact the classification of associated cash flows.
Management is still assessing the appropriate discount rates to be applied to each individual lease liability. However, if
the Group had implemented IFRS 16 on 1 January 2017, using an assumed discount rate of 5% for each lease liability, we
approximate the impact on the 2017 Annual Report, using the modified retrospective basis would be as follows:
Income statement
Other administrative expenses would reduce by £6.7 million, due to the derecognition of the lease expense. Depreciation
expense would increase by £5.5 million to reflect the current year depreciation of the right-of-use asset. Finance costs
would increase by £1.8 million to reflect the current year unwind of the discounted lease liability.
Cumulatively, the above will not result in a material impact to operating profit or profit before tax. The uEBITDA measure
will, however, increase by £6.7 million due to the lease expense being replaced with depreciation and interest expense,
both not being included within uEBITDA.
Balance sheet
At 31 December 2017, a right-of-use asset of £28.6 million would be recognised as a non-current asset, along with a £25.9 million
non-current lease liability and £5.7 million current lease liability. The £3.0 million differential arises due to the current
year impact on profit before tax (£0.6 million), with the remaining balance being attributed to the present value of the
lease liability, and the timing of lease payments with regard to leases incentives.
Cash flow statement
The £6.7 million lease expense is reclassified from operating activities to financing activities. As both uEBITDA and operating
cash increase by the same amount, its uEBITDA will still closely correlate to cash generated from operating activities.
3. Operating segments
The Group’s businesses are managed on a geographical basis. Selected financial data is presented on this basis below.
b Accounting policy
Revenue recognition and deferred revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably
measured. Revenue is measured at the fair value of the consideration net of discounts, VAT and other sales-related taxes.
The following criteria must also be met before revenue is recognised:
Commission
Commission revenue generated from restaurants is earned and recognised at the point of order fulfilment to the restaurant’s Customers.
Commission revenue also include delivery fees, discounts and vouchers.
Payment card and administration fees
Revenue from payment card and administration fees is recognised when the service is completed, in line with the revenue recognised
on commissions. This is the point at which an order is successfully processed and the Group has no remaining transactional obligations.
Top-placement fees
Revenue from top-placement fees is recognised over the period in which the service is rendered.
Connection fees
Restaurant Partners pay a one-off fee to join the Just Eat network, which comprises an equipment fee and a connection fee. The equipment
provided is an order confirmation terminal situated at restaurant sites for the purposes of communicating between end-user Customers
and restaurants via the central Just Eat ordering infrastructure.
Equipment fees are deferred to the balance sheet and recognised on a straight-line basis over 36 months. This is considered to be an
appropriate time period as the fair value of the consideration received or receivable for the equipment. The equipment connection fee
revenue is payable on connection but deferred and recognised on a straight-line basis over 12 months.
In addition, the Danish and French based Restaurant Partners pay an annual subscription fee. Revenue in respect of subscription fees is
recognised on a straight-line basis over the annual subscription period.
www.justeatplc.com
99
Financial statements 3. Operating segments continued
b Accounting policy continued
Other revenue
Other revenue includes the sale of branded merchandise to Restaurant Partners. Merchandise revenue is recognised when the goods are
delivered and the significant risks and rewards of ownership have transferred to the restaurant.
The Group has four reportable segments, which remain unchanged from the comparative year: United Kingdom, Australia
& New Zealand, Established Markets and Developing Markets. Established Markets includes the operations in Canada,
Denmark, France, Ireland, Norway, Switzerland and Benelux (sold August 2016). Developing Markets includes Italy, Mexico
and Spain. Each segment includes businesses with similar operating characteristics and at a similar stage of development.
The principal measure of profit used by the CODM to assess and manage performance is uEBITDA. The CODM is Peter
Plumb, the Group’s Chief Executive Officer.
Segment revenue
United Kingdom
Less inter-segment revenue
United Kingdom
Australia & New Zealand
Established Markets
Developing Markets
Total segment revenue
Head office
Less head office inter-segment revenue
Total revenue
Revenue by source
Commission revenue
Payment card and administration fees
Discounts1
Order-driven revenue
Top-placement fees
Connection fees and other revenue
Ancillary revenue
Total revenue
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
304.1
(0.3)
303.8
49.8
148.3
44.4
546.3
3.3
(3.3)
238.3
(1.2)
237.1
36.8
75.5
26.2
375.6
2.8
(2.7)
546.3
375.7
Year ended
31 December 2017
Year ended
31 December 2016
£m
458.4
60.1
(14.5)
504.0
31.6
10.7
42.3
546.3
%
84
11
(3)
92
6
2
8
£m
305.2
48.5
(7.7)
346.0
19.7
10.0
29.7
375.7
%
81
13
(2)
92
5
3
8
1. In the current year, the impact of discounts and vouchers has been reclassified from other revenue to order-driven revenue. The prior year comparatives have been
adjusted accordingly.
Order-driven revenue by segment was as follows: United Kingdom £283.2 million (2016: £223.4 million), Australia &
New Zealand £47.8 million (2016: £34.2 million), Established Markets £134.9 million (2016: £65.5 million), and Developing
Markets £38.1 million (2016: £22.9 million).
100
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017
3. Operating segments continued
Segment uEBITDA and results
United Kingdom
Australia & New Zealand
Established Markets
Developing Markets
Total segment uEBITDA
Share of uEBITDA from associates1
Head office
uEBITDA
Long-term employee incentive costs
Exceptional items (including impairment charges)2
Net foreign exchange gains/(losses)
EBITDA
Depreciation
Amortisation – acquired intangible assets
Amortisation – other intangible assets
Share of results from associates below uEBITDA1
Operating (loss)/profit
Other gains and losses
Finance income
Finance costs
(Loss)/profit before tax
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
Notes
155.4
17.3
11.7
(3.7)
180.7
(0.2)
(17.0)
163.5
(6.6)
(191.1)
0.5
(33.7)
(7.3)
(24.4)
(6.7)
(0.4)
(72.5)
(2.0)
0.7
(2.2)
(76.0)
121.8
7.6
13.3
(13.7)
129.0
0.5
(14.2)
115.3
(3.1)
(14.6)
(0.2)
97.4
(6.2)
(15.5)
(2.6)
(0.6)
72.5
18.8
0.6
(0.6)
91.3
4
5
14
13
13
8
9
9
1. Respective amounts that fall either inside or outside of the Group’s definition of uEBITDA.
2. The current year includes an impairment charge of £180.4 million which relates to the carrying value of goodwill included within the Australia & New Zealand CGU
(see Note 12).
Segment assets and liabilities
United Kingdom
Australia & New Zealand1
Established Markets
Developing Markets
Total segment assets/(liabilities)
Head office
Associates
Consolidation adjustments:
Elimination of intercompany debtors and creditors
Elimination of investments
Total assets and liabilities
Assets as at 31 December
Liabilities as at 31 December
Notes
15
2017
£m
219.3
354.8
239.3
183.2
996.6
3,276.8
41.4
2016
£m
233.9
545.9
218.4
171.0
1,169.2
3,036.4
29.7
2017
£m
(95.9)
(28.1)
(113.8)
(45.0)
(282.8)
(602.6)
—
2016
£m
(71.0)
(27.7)
(40.6)
(37.1)
(176.4)
(1,360.8)
—
4,314.8
4,235.3
(885.4)
(1,537.2)
(597.4)
(2,702.7)
(1,314.5)
(1,872.4)
597.4
1,314.5
—
—
1,014.7
1,048.4
(288.0)
(222.7)
1. The current year includes a reduction of the goodwill of £180.4 million which relates to the Australia & New Zealand impairment charge (see Note 12).
www.justeatplc.com
101
Financial statements 3. Operating segments continued
Segment net book value of non-current assets
United Kingdom
Australia & New Zealand
Established Markets
Developing Markets
Head office
Associates
Net book value of non-current assets
Property, plant & equipment, and intangible assets
Notes
United Kingdom
Australia & New Zealand
Established Markets
Developing Markets
Head office
Total property, plant & equipment, and intangible assets
13, 14
As at
31 December
2017
£m
As at
31 December
2016
£m
Notes
8.5
313.1
167.8
129.3
618.7
62.0
41.4
722.1
12.4
512.6
176.1
128.0
829.1
30.4
29.7
889.2
15
Additions
Year ended 31 December1
Depreciation and amortisation
Year ended 31 December
2017
£m
2.6
0.2
3.2
1.9
7.9
30.8
38.7
2016
£m
2.9
1.3
113.6
98.2
216.0
12.3
228.3
2017
£m
3.0
15.0
8.9
4.0
30.9
7.5
38.4
2016
£m
3.5
10.2
4.6
3.2
21.5
2.8
24.3
1. Additions include goodwill and other intangible assets acquired as part of business combinations, as well as purchases of tangible and intangible fixed assets.
4. Long-term employee incentive costs
The total expense recorded in relation to the long-term employee incentives was £6.6 million (2016: £3.1 million). This
charge comprises £6.1 million (2016: £2.8 million) in respect of share based payments and £0.5 million (2016: £0.3 million)
in respect of provisions for employer’s social security costs on the exercise of options. See Note 32 for more details on the
Group’s share based payment schemes.
5. Exceptional items
Exceptional items are costs (such as impairment charges, M&A transaction and integration costs) or credits that,
by virtue of their nature and incidence, have been disclosed separately in order to improve a reader’s understanding
of the financial statements.
Impairment charges
M&A transaction costs
Acquisition integration costs
Total exceptional items
Notes
12
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
180.4
1.7
9.0
191.1
—
9.5
5.1
14.6
Impairment charges
During the year ended 31 December 2017, an impairment charge of £180.4 million was recorded in respect of the Group’s
Australia & New Zealand (“ANZ”) businesses. The charge was driven by lower projected cash flows in the business’ plans
resulting in management’s reassessment of expected future business performance in light of the current trading environment.
The Australian market is unique in the Just Eat portfolio with a substantial part of the population living in Sydney and
Melbourne. This characteristic makes Australia an attractive market for competitors with the consequence that Australia
is today one of our most competitive markets. Furthermore, success is partly dependent on our ability to add delivery
capability to complement our marketplace business.
102
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 5. Exceptional items continued
Impairment charges continued
The change in platform offers the businesses in Australia & New Zealand (“ANZ”) the potential to integrate with the
SkipTheDishes platform. Along with the additional security, scalability and stability that the new platform brings, this
integration will be crucial to ensure the continued growth in the ANZ market through the addition of the logistics capability.
The technology built by SkipTheDishes allows forecasting of consumer demand, driver allocation and delivery times with very
high levels of accuracy. Whilst it will take time to deploy, it is this technology, when launched in Australia, that will place the
business in a good position for solid future growth.
Whilst these initiatives are intended to create a much stronger business in Australia, IAS 36 Impairment of Assets
prevents the Group from including these cash flows in the valuation of this business. Consequently, an impairment charge
of £180.4 million against goodwill reduces the carrying value of the ANZ businesses to £302.2 million.
M&A transaction costs
M&A transaction costs relate to legal, due diligence and other costs incurred as a result of the Group’s acquisitions
(see Note 30) and aborted acquisitions. For the year ended 31 December 2017, they include £1.3 million (2016: £6.3 million)
of costs in respect of the acquisition of Hungryhouse Holdings Limited (“Hungryhouse”).
Acquisition integration costs
The acquisition integration costs relate to the integration of recently acquired businesses into the Group. For the year
ended 31 December 2017, £9.0 million relates to accrued consideration (separate to the acquisition consideration) of
SkipTheDishes’ management providing certain services to the Group post-completion.
For the year ended 31 December 2016, the costs relate to the integration of Menulog and the four businesses acquired
during the first half of 2016 (La Nevera Roja/PizzaBo/hellofood Brazil/hellofood Mexico). They include the non-recurring costs
of running two offices and platforms during employee consultation processes, redundancy costs, lease termination costs
and related advisers’ fees. In addition, they include the cost of recruiting a new Menulog senior management team and
advisers’ costs in respect of litigation and other matters that pre-dated the Group’s acquisition of Menulog in June 2015.
6. Operating (loss)/profit
Operating profit or loss is stated after charging for depreciation, amortisation, long-term employee incentive costs,
exceptional items (including impairment charges), foreign exchange gains and losses, and share of results from
associates, but before other gains and losses, finance income and finance costs.
Profit for the year has been arrived at after charging/(crediting):
Total staff costs
Exceptional items (including impairment charges)
Net foreign exchange (gains)/losses
Loss on sale of property, plant and equipment and intangible assets
Operating lease charges
Depreciation
Amortisation – acquired intangible assets
Amortisation – other intangible assets
Research and development
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
Notes
7
5
31
14
13
13
114.0
191.1
(0.5)
0.9
6.7
7.3
24.4
6.7
13.6
88.4
14.6
0.2
0.5
4.2
6.2
15.5
2.6
12.5
Other than exceptional items, all of the above items are included within other administrative expenses in the income
statement. Research and development costs are predominantly staff costs, which are included within staff costs.
www.justeatplc.com
103
Financial statements 6. Operating (loss)/profit continued
Auditor’s remuneration
During the year, the Group obtained the following services from its auditor:
Deloitte LLP and its associates’ audit fees:
Parent Company
Subsidiary undertakings
Total Deloitte LLP and its associates’ audit fees
Deloitte LLP and associates’ non-audit services:
Audit-related assurance services
Taxation compliance and advisory services
Total Deloitte LLP and its associates’ non-audit fees
Total Deloitte LLP and its associates’ fees
Fees paid to other auditors for the audit of the Company’s subsidiary undertakings
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
0.4
0.2
0.6
0.2
—
0.2
0.8
—
0.4
0.2
0.6
0.1
0.1
0.2
0.8
—
Details of the Group’s policy on the use of the auditor for non-audit services and how the auditor’s independence and
objectivity were safeguarded are set out in the Audit Committee Report on page 60. No services were provided pursuant
to contingent fee arrangements.
7. Staff costs
The table below presents staff costs, including those in respect of the Directors, recognised in the income statement.
b Accounting policy
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Staff costs recognised
Wages and salaries
Social security costs
Pension costs
Long-term employee incentive costs
Total staff remuneration
Average number of Group employees
Operations
Technology and product
Sales
Marketing
Management and administration
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
Notes
92.6
11.2
3.6
6.6
114.0
74.4
8.7
2.2
3.1
88.4
4, 32
Year ended
31 December
2017
Year ended
31 December
2016
1,007
440
311
146
212
707
286
247
106
275
Average number of full-time equivalent members of staff
2,116
1,621
Details of the Directors’ remuneration are included in the Annual report on remuneration on pages 67 to 83.
104
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 8. Other gains and losses
Other gains and losses are excluded from uEBITDA because they result from non-cash activities (such as the fair valuing
of financial instruments) or are not derived in the ordinary course of business (such as the disposal of a subsidiary).
b Accounting policy
Other gains and losses comprises profits or losses arising on the disposal or deemed disposal of operations, gains and losses on financial
assets classified as fair value through profit or loss, gains and losses on derivative financial instruments, and movements in provisions
for deferred consideration or obligations to acquire minority interests. They have been disclosed separately in order to improve a reader’s
understanding of the financial statements and are not disclosed within operating profit as they are non-trading in nature.
Gain on disposal of Benelux businesses
Movement in minority shareholders’ buy-out provision
Loss on derivative financial instruments
Fair value loss on contingent consideration
Fair value gains on available-for-sale investments
Other losses
Net other (losses)/gains
Notes
22
33
22
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
—
(0.5)
(0.4)
(1.1)
—
—
(2.0)
18.7
—
—
—
0.5
(0.4)
18.8
On 2 August 2016, the Group disposed of its Benelux operations (Belgium and Netherlands) to Takeaway.com for £19.3 million
in total consideration, which resulted in a gain on disposal of £18.7 million. A cash inflow of £14.6 million was received in the
year ended 31 December 2016, and the balance of £3.6 million was received in the year ended 31 December 2017.
9. Finance income and finance costs
Finance income comprises interest received from bank deposits. Finance costs predominantly arise from the amortisation
of costs incurred in setting up the Group’s revolving credit facility, which remains undrawn at the end of the year ended
31 December 2017.
Interest received
Total finance income
Bank interest and facility fees
Total finance costs
10. Taxation
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
0.7
0.7
2.2
2.2
0.6
0.6
0.6
0.6
This note explains how the Group tax charge arises. The deferred tax section also provides information on expected
future tax charges and sets out the tax assets held across the Group, together with management’s view on whether
or not they are expected to be utilised in the future. Taxation is a key source of estimation uncertainty (see Note 2).
b Accounting policy
The income tax expense comprises both current and deferred tax. Income tax is recognised in the income statement, except to the
extent that it relates to items recognised directly in other comprehensive income, in which case the income tax is recognised in other
comprehensive income.
Current tax
Current tax is the expected tax payable on the taxable profit for the year, using tax rates prevailing in each respective jurisdiction and any
adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is recognised using the balance sheet liability method, providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax recognised is
based on the expected manner of realisation or settlement of the carrying amounts of assets and liabilities, using tax rates that are
expected to apply when the temporary differences reverse, based on rates enacted or substantively enacted at the balance sheet date.
Deferred tax is not recognised for temporary differences arising from the initial recognition of goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except
where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse
in the foreseeable future.
www.justeatplc.com
105
Financial statements 10. Taxation continued
b Accounting policy continued
Deferred tax continued
Deferred tax liabilities are recognised for all temporary differences. Deferred tax assets are recognised only to the extent that it is probable
that future taxable profits will be available against which the assets can be utilised. Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer probable that the related deferred tax benefit will be realised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets
and liabilities on a net basis.
Tax deductions on the exercise of share options
Under IAS 12 Income Taxes, to the extent that the tax deduction available on the exercise of share options is equal to, or is less than, the
cumulative share based payment charge calculated under IFRS 2, current and deferred tax is recognised through the income statement.
However, when the tax deduction is greater than the cumulative expense, the incremental current tax deduction and deferred tax
recognition are recognised in equity.
Income tax expense
Current taxation
Current year
Adjustment for prior years
Deferred taxation
Temporary timing differences
Adjustment for prior years
Effect of tax rate change
Total tax charge for the year
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
38.0
(0.3)
37.7
(10.0)
(0.2)
—
(10.2)
27.5
29.0
0.1
29.1
(8.6)
(0.7)
0.1
(9.2)
19.9
UK corporation tax was calculated at 19.25% (2016: 20%) of the taxable profit for the year. The UK government announced in
the summer 2015 budget a reduction in the standard rate of corporation tax from 20% to 19%, effective from 1 April 2017.
The Finance Bill 2016 subsequently reduced the main rate of corporation tax to 17%, effective from 1 April 2020.
Taxation for territories outside of the UK was calculated at the rates prevailing in the respective jurisdictions.
Taxation on items taken directly to equity in respect of share options was a net credit of £2.0 million (2016: £0.8 million
credit), which comprised of £0.9 million relating to current tax and £1.1 million relating to deferred tax.
In the prior year, taxation on items taken directly to other comprehensive income (£0.5 million debit) relates to fair value
gains on cash flow hedges which have been reclassified to goodwill.
106
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 10. Taxation continued
Factors affecting the tax expense for the year
The total tax charge for the year can be reconciled to the (loss)/profit per the income statement as follows:
(Loss)/profit before tax
UK rate of 19.25% (2016: 20%)
Adjusted for the effects of:
Non-deductible expenditure
Non-taxable income
Share based payments
Impairment charges
Profit on deemed disposals of businesses
Prior year adjustments
Unrecognised deferred tax asset changes
Overseas tax rates
Other overseas taxes
Associates results
Reduction in UK tax rate
Total tax charge for the year
Effective tax rate
Year ended
31 December 2017
Before
adjusting
items
£m
Adjusting
items
£m
148.0
(224.0)
28.5
(43.1)
0.6
(5.9)
—
—
—
(0.5)
2.3
(0.3)
10.4
—
—
35.1
23.7%
2.5
—
0.3
34.7
—
—
(0.7)
(1.4)
—
0.1
—
(7.6)
Year ended
31 December 2016
Before
adjusting
items
£m
106.2
21.2
Adjusting
items
£m
(14.9)
(2.9)
1.0
(5.3)
—
—
—
(0.7)
1.5
(1.1)
8.2
—
0.1
2.0
—
0.1
—
(3.8)
0.1
0.9
(1.4)
—
—
—
24.9
(5.0)
Total
£m
(76.0)
(14.6)
3.1
(5.9)
0.3
34.7
—
(0.5)
1.6
(1.7)
10.4
0.1
—
27.5
(36.2%)
23.4%
Total
£m
91.3
18.3
3.0
(5.3)
0.1
—
(3.8)
(0.6)
2.4
(2.5)
8.2
—
0.1
19.9
21.8%
The effective tax rate on underlying profits (“Underlying ETR”) is 23.7% (2016: 23.4%). Underlying profit is defined as profit
before tax before long-term employee incentive costs, exceptional items, other gains and losses, foreign exchange gains
and losses, amortisation in respect of acquired intangible assets and share of results from associates below uEBITDA.
The total tax charge of £27.5 million (2016: £19.9 million) is made up of: a current tax charge of £37.7 million (2016: £29.1 million),
primarily consisting of corporate tax arising in the UK, Denmark, France, Ireland and Switzerland; and a deferred tax credit
of £10.2 million (2016: £9.2 million) resulting from the recognition of a deferred tax asset on tax losses arising in Australia
and the unwinding of deferred tax liabilities arising on acquired intangibles.
As a result of the geographical spread of the Group’s operations and the varied, increasingly complex nature of local
and global tax law, there are some transactions for which the ultimate tax determination is uncertain during the ordinary
course of business. The provision held in relation to uncertain tax items totalled £17.4 million at 31 December 2017
(2016: £9.8 million).
Included within the total uncertain tax provision is an amount held in relation to an ongoing transfer pricing audit in
Denmark. In 2012, the transfer pricing arrangements of the Group were updated, in line with the OECD Transfer Pricing
Guidelines, to reflect the commercial and economic reality of the Group’s Headquarters being established in the UK. An
Advanced Pricing Agreement (“APA”) was submitted by the Group to the Danish and UK Competent Authorities to obtain
certainty over the position taken. The Danish Tax Authorities subsequently opened a local transfer pricing audit into the
periods covered by the APA and in January 2018 issued a formal notice of assessment from their findings, making a claim
that the taxable income for financial year 2013 should be increased, equalling an additional tax payment of £126 million,
including interest and surcharges. The Company strongly disagrees with the claim made by the Danish Tax Authorities
and have appealed the assessment through a Mutual Agreement Procedure (“MAP”) between the UK and Danish Competent
Authorities. During the MAP, the two tax authorities enter into discussions with the intention of resolving the transfer
pricing dispute. Management believes that this issue will be resolved through the MAP, with the outcome being full
elimination of the potential double taxation. Such an outcome may result in a reallocation of income between the UK
and Denmark with different tax rates applying over different time periods and net interest charges. An amount has been
provided in respect of this uncertain tax position. This is a key source of estimation uncertainty as outlined in Note 2.
Underlying ETR is expected to trend towards the UK prevailing corporation tax rate. However, the Group’s future tax
charge and actual underlying ETR will be driven by a few factors including: the timing of the recognition of tax losses,
changes in the mix of business profits, local or international tax reform (for example any arising from the implementation
of the OECD’s BEPS actions and EU state aid investigations), new challenges by the tax authorities or the resolution of
ongoing enquiries raised by tax authorities and the impact of any acquisitions, disposals or restructurings.
www.justeatplc.com
107
Financial statements 10. Taxation continued
Deferred tax
At 1 January 2016
Foreign exchange movements
Credit to the income statement
Effect of rate change
Debit to equity
Prior year adjustment
Arising on acquisition
At 31 December 2016
Foreign exchange movements
Credit to the income statement
Credit to equity
Prior year adjustment
Arising on acquisition
At 31 December 2017
Analysed as:
Deferred tax liabilities
Deferred tax assets
Net deferred tax liability
Losses
(assets)
£m
Share based
payment
(assets)
£m
Short-term
temporary
differences
(assets)
£m
3.4
1.0
3.7
—
—
0.3
2.4
10.8
(0.4)
1.8
—
0.3
—
12.5
2.4
—
0.3
—
(0.4)
—
—
2.3
—
0.7
1.1
—
—
4.1
0.6
—
0.3
(0.1)
—
0.4
—
1.2
—
0.2
—
—
—
1.4
Short-term
temporary
differences
(liabilities)
£m
(0.2)
—
—
—
—
—
—
(0.2)
(0.1)
0.1
—
(0.1)
—
(0.3)
Acquired
intangibles
(assets)
£m
Acquired
intangibles
(liabilities)
£m
0.1
—
—
—
—
—
—
0.1
—
—
—
—
—
0.1
(19.7)
(3.4)
4.3
—
—
—
(6.9)
(25.7)
0.1
7.2
—
—
0.5
(17.9)
Total
£m
(13.4)
(2.4)
8.6
(0.1)
(0.4)
0.7
(4.5)
(11.5)
(0.4)
10.0
1.1
0.2
0.5
(0.1)
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
(18.2)
18.1
(0.1)
(25.9)
14.4
(11.5)
Deferred tax is provided in respect of temporary differences that have originated but not reversed at the balance sheet
date and is determined using the tax rates that are expected to apply when the temporary differences reverse. Deferred
tax assets are recognised only to the extent that it is probable that they will be recovered.
Deferred tax assets arising from temporary differences have not been recognised in tax jurisdictions where there is
insufficient evidence that the asset will be recovered. The amount of the asset not recognised at 31 December 2017 was
£20.4 million (2016: £18.0 million). The asset would be recognised if sufficient suitable taxable profits were made in the
future and the recovery of the asset became probable.
Deferred tax assets not recognised
Accelerated capital allowances
Short-term timing differences
Unrelieved tax losses1
Unrelieved tax losses in associates
Total
As at
31 December
2017
£m
As at
31 December
2016
£m
1.5
0.4
18.5
—
20.4
1.2
0.2
15.6
1.0
18.0
1. The majority of the Group’s tax losses for which no deferred tax has been recognised do not expire. A total of £10.7 million of gross losses (unrecognised deferred tax
asset of £3.2 million) expire in five to ten years’ time and a £13.1 million of gross losses (unrecognised deferred tax asset of £3.6 million) expire in 10 to 20 years’ time.
108
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 11. Earnings per share
The Group uses earnings per share to incentivise management. The principal measure used is adjusted earnings
per share. See the Report of the Remuneration Committee for further details.
Basic earnings per share was calculated by dividing the profit for the year attributable to equity shareholders by the
weighted average number of shares outstanding during the year, excluding unvested shares held pursuant to the Group’s
Joint Share Ownership Plan (“JSOP”) and Share Incentive Plan (“SIP”).
Diluted earnings per share was calculated by adjusting the weighted average number of shares outstanding to assume
conversion of all potentially dilutive shares. The Group has potentially dilutive shares in the form of share options and
unvested shares held pursuant to the Group’s JSOP and SIP (see Note 32).
Adjusted earnings per share is the main measure of earnings per share used by the Group and is calculated using an
underlying profit measure attributable to equity shareholders, which is defined as profit attributable to equity shareholders,
before long-term employee incentive costs, exceptional items, other gains and losses, foreign exchange gains and losses,
amortisation of acquired intangible assets, share of results from associates below uEBITDA, and the tax impact of these
adjusting items (see Note 2e).
Basic and diluted earnings per share
(Loss)/profit attributable to equity shareholders
Long-term employee incentive costs
Exceptional items (including impairment charges)
Other gains and losses
Net foreign exchange (gains)/losses
Amortisation in respect of acquired intangible assets
Share of results from associates below uEBITDA
Tax impact of these adjusting items
Adjusted profit attributable to equity shareholders
Weighted average number of Ordinary shares for basic earnings per share
Effect of dilution:
Share options and awards
Unvested JSOP shares
Shares held in escrow
Notes
4, 32
5
8
13
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
(102.7)
6.6
191.1
2.0
(0.5)
24.4
0.4
(7.6)
113.7
71.7
3.1
14.6
(18.8)
0.2
15.5
0.3
(5.0)
81.6
Number of shares (‘000)
Year ended
31 December
2017
Year ended
31 December
2016
676,844
669,462
5,159
943
—
6,420
3,547
48
Weighted average number of Ordinary shares adjusted for the effect of dilution
682,946
679,477
Earnings per Ordinary share
Basic
Diluted1
Adjusted earnings per Ordinary share
Basic
Diluted
Year ended
31 December
2017
(pence)
Year ended
31 December
2016
(pence)
(15.2)
(15.2)
16.8
16.6
10.7
10.5
12.2
12.0
1. Ordinary shares are only treated as dilutive when their conversion would decrease earnings per Ordinary share or increase loss per Ordinary share from
continuing operations.
www.justeatplc.com
109
Financial statements 12. Goodwill
The consolidated balance sheet contains a significant goodwill carrying value which arises when the Group acquires a
business and pays a higher amount than the fair value of its net assets, primarily due to synergies expected to materialise.
Goodwill is not amortised but is subject to annual impairment reviews. Impairment of goodwill is a key source of
estimation uncertainty (see Note 2).
b Accounting policies
Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is obtained (“acquisition date”). Goodwill is
measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
fair value of the acquirer’s previously held equity interest (if any) in the entity, over the net of the acquisition date amounts of the
identifiable assets acquired and the liabilities assumed.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated
to each of the Group’s CGUs expected to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication that the CGU may be impaired. If the recoverable amount
of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill
allocated to the CGU and then to the other assets of the CGU pro rata on the basis of the carrying amount of each asset in the CGU.
An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Impairment of assets
Under IFRS, the Group is required to test annually for indicators of impairment. When an indication of impairment exists, the Group
reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable
amount of the CGU to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment at least annually
and whenever there is an indication that the asset may be impaired.
Recoverable amount is determined as the higher of FVLCD and VIU. In assessing VIU, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash flows have not been adjusted.
In assessing FVLCD, management apply an appropriate valuation method to determine fair value as if the asset (or CGU) were to be sold
in an orderly manner to a market participant.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU)
is reduced to its recoverable amount. An impairment charge is recognised immediately in profit or loss and included within exceptional items.
Carrying value of goodwill
At 1 January
Arising on acquisition
SkipTheDishes acquisition adjustment1
Impairment charges2
Foreign exchange movements
At 31 December
Notes
2017
£m
725.2
—
1.5
5
(180.4)
(1.4)
544.9
2016
£m
457.1
181.2
—
—
86.9
725.2
1. Due to timing constraints between the acquisition of SkipTheDishes on 14 December 2016 and the publication of the 2016 Annual Report, the prior year acquisition
accounting was provisional. The prior year valuation of the acquired intangible assets was based on estimated inputs. In the current year, the valuation models and
acquisition accounting have been finalised, resulting in an increase in goodwill of £1.5 million (see Note 30).
2. Impairment charges at 31 December 2017 relate to the Group’s ANZ business. Accumulated impairment charges were £180.4 million (2016: £nil).
Goodwill has arisen on the acquisition of businesses and is attributable to the future growth of the acquired businesses,
through expansion of their networks of Restaurant Partners and the number of orders per restaurant, anticipated future
operating synergies, and the ability to leverage the Group’s existing intellectual property in new markets around the world.
In addition, the goodwill balances represented the value of the businesses’ active Customer bases and assembled
workforce, which do not meet the recognition criteria of an intangible asset.
110
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 12. Goodwill continued
Goodwill allocated by CGU
Goodwill acquired in a business combination is allocated on acquisition to the CGUs that are expected to benefit from
that business combination. The carrying amount of goodwill has been allocated as follows:
CGU
ANZ
SkipTheDishes
Spain (“ES”)
Italy (“IT”)
France (“FR”)
Mexico (“MX”)
Other CGUs1
Total goodwill
Acquisitions
Menulog Group Limited (“MGL”)
SkipTheDishes Restaurant Services Inc.
SinDelantal Internet, S.L., La Nevera Roja
Click Eat, Jeb S.r.l, Clicca e Mangia, PizzaBo
FBA Invest SaS
SinDelantal Mexico SA de C.V., hellofood Mexico
As at
31 December
2017
£m
As at
31 December
2016
£m
271.2
91.8
58.4
42.4
44.0
19.6
17.5
456.0
92.5
56.0
40.8
42.3
20.3
17.3
544.9
725.2
1. Other CGUs include Canada, Denmark, Ireland, Switzerland and United Kingdom. The individual amount of goodwill assigned to these CGUs is not considered
significant in comparison with the Group’s carrying value of goodwill.
Impairment review
The Group tests goodwill annually for indicators of impairment. When an indication of impairment exists, the Group
reviews the carrying amount and recoverable amount of the investment.
The recoverable amount is the higher of FVLCD and VIU. However, in line with IAS 36, FVLCD is only determined where VIU
would result in an impairment.
The key assumptions used in the VIU calculations are the discount rate and the anticipated future cash flows (which is
a function of increases in both revenue and in costs, along with other factors). The key assumptions used in the FVLCD
are similar to the VIU. However, the assumptions are based on a likely market participant’s perspective when completing
a DCF model.
In both the VIU and FVLCD calculations, management uses discount rates that reflect current market assessments of the
time value of money and the risks specific to the particular CGU. The assumptions on growth in future cash flows are
based on past experience, recent results and management’s future expectations.
The main drivers for future order growth are the continued investment in marketing, which helps drive brand awareness
and drive Customer traffic to the Group’s platforms, and the investment in technology, which ensures the platforms are
stable, secure, efficient and scalable. This investment ensures that both the relevant overall market as well as the CGU’s
market share increases over the medium to long-term.
The Group prepares cash flow forecasts based on the most recent financial budgets approved by the Board. Management
expects that some markets will enjoy a period of sustained high growth continuing from the end of the current budgetary
cycle to maturity (the medium-term). A suitable medium-term growth rate, based on previous experience of growth rates
(including historical growth rates of all CGUs), has been applied individually to reflect each CGU’s activity in this period.
After this, a long-term growth rate is applied.
For the VIU, management typically forecast cash flows for periods up to five years, but there are some CGUs that are
forecasted for longer periods. These CGUs are located in immature markets which are currently lacking penetration, and
where future investment in the business is expected to result in its long-term growth being achieved outside of five
years. For these CGUs, management believe it is appropriate to use forecasts extending beyond five years as they
correlate with our experience in similar markets.
For the FVLCD, management typically forecasts cash flows up to 10 years, in line with what a market participant would
likely model. Management believe this to be appropriate as it is unlikely for a growing business’ cash flows to immediately
drop to the long-term growth rate after year five.
www.justeatplc.com
111
Financial statements 12. Goodwill continued
Impairment review continued
VIU assumptions
Pre-tax discount rate1
Terminal growth rate2
Number of years forecasted
before terminal growth rate applied
FVLCD assumptions
Post-tax discount rate
Terminal growth rate2
Estimated costs of disposal (% of sale price)
ANZ
Skip
ES
IT
FR
MX
Other
12.2%
2.5%
10.7%
2.0%
14.0%
14.9%
1.9%
1.4%
11.5%
1.8%
12.7%
3.0%
8.4–10.3%
1.0–2.0%
5
5
5
5
5
8
5
13.5%
2.5%
1.0%
1. Pre-tax discount rates have been calculated using the Capital Asset Pricing Model, the inputs of which include a country risk-free rate, equity risk premium, Group size
premium and a risk adjustment (beta).
2. Terminal growth rate is based on long-term inflationary rates in the country of operation.
During the year ended 31 December 2017, a non-cash impairment charge solely relating to goodwill of £180.4 million was
recorded in respect of the Group’s ANZ subsidiaries. The recoverable amount of the ANZ CGU is £302.2 million, which was
determined using the VIU method. The charge was driven by lower projected cash flows within the business plans resulting
in management’s reassessment of expected future business performance in light of the current trading environment
(see Note 5).
For all other CGUs, the VIU exceeds the carrying value of the CGU. As a result, no impairment charges were required either
in the current or prior year.
Sensitivity analysis
For all CGUs, the recoverable amount was determined by measuring their VIU. The Group has conducted a sensitivity
analysis on each CGU’s VIU which included reducing the anticipated future cash flows and increasing the discount rates.
With the exception of the ANZ and MX CGUs, no reasonably expected change in the key assumptions used in the VIU
calculations would give rise to an impairment charge.
Sensitivity assumptions
Sensitised discount rate applied
Sensitised cash flows1
ANZ
Skip
ES
IT
FR
MX
Other
14.2%
39.2%
12.7%
56.4%
16.5%
52.3%
16.9%
46.1%
13.5%
56.5%
14.7%
10.4–12.3%
89.7%
32.6–41.2%
1. When sensitising each CGU’s cash flows, a downside cash flow forecast is prepared by reducing the cash flows in each year of the forecast, rather than reducing the
cash flows by a set percentage. The above disclosure shows the decline of the forecasted cash flows in the final year of the forecast, before long-term growth rates
are applied.
The sensitised discount rate (of 14.2%) if applied to the ANZ CGU would result in an additional impairment charge of
£66.9 million. The sensitised discount rate (of 14.7%) if applied to the MX CGU does not result in an impairment charge.
The sensitised cash flows applied in the ANZ and MX CGUs would result in additional impairment charges of £116.8 million and
£21.8 million respectively. In order for an impairment not to occur in Mexico, the sensitised cash flows in year eight would need
not to fall below 61.9%.
112
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 13. Other intangible assets
Other intangible assets predominantly arise on acquisition of subsidiaries or are internally developed. Capitalised
development costs is a critical judgement in applying the Group’s accounting policies (see Note 2). Other intangible
assets are amortised as well as being tested at least annually for impairment.
b Accounting policy
Intangible assets are recorded at cost, net of amortisation and any provision for impairment. Amortisation is calculated on a straight-line
basis over the assets’ useful economic lives. The cost of intangible assets arising from a business combination or associate is determined
at their fair value on the date of initial recognition.
The Group has four classes of intangible asset: patents, licences and intellectual property (“IP”), restaurant contracts, brands, and
development costs. Due to both the absence of a contractual arrangement and a practice of establishing such contracts with Customers,
acquired Customer/user lists are not classified as an intangible asset and remain as part of goodwill.
Patents, licences and IP
Patents, licences and IP are generally acquired as part of a business combination, and predominantly relate to acquired operating
platforms such as websites and apps. Software licences are also included in this category.
The useful economic life is typically between three and five years, depending on the period over which benefits are expected to be
realised from the asset.
The initial fair values are established as the estimated costs to replace the acquired platforms.
Restaurant contracts
Restaurant contracts are generally the primary revenue-generating assets of a business combination and relate to the acquired
contractual agreements between the business and the restaurants.
The useful economic life is determined as the period over which the acquired restaurant contracts are reasonably expected to transfer
economic benefits to the Group, which is usually between three and ten years.
The initial fair values are established with reference to the present value of their post-tax cash flows projected over their remaining
useful lives. The cash flows and discount rates used in the valuations are risk adjusted to the extent deemed necessary to accurately
reflect local risks and uncertainties associated with the asset.
Brands
Brands are acquired as part of a business combination.
The useful economic life is determined as the period of time over which the acquired brand is reasonably expected to transfer economic
benefits to the Group, which is usually between three and ten years.
The initial fair values are established using the relief from royalty valuation method. The cash flows and discount rates used in the relief
from royalty valuation model are risk adjusted to the extent deemed necessary to accurately reflect local risks and uncertainties
associated with the asset.
Development costs
Internally developed websites, apps and other software, that together comprise the Just Eat ordering platforms, are capitalised to the
extent that incremental costs can be separately identified, the product is technically feasible, expenditure can be measured reliably, and
sufficient resources are available to complete the project. Where these conditions are not met the amounts are expensed as incurred.
The useful economic life is typically three years, from the date the developed asset is available for use.
www.justeatplc.com
113
Financial statements 13. Other intangible assets continued
Carrying value of other intangible assets
Cost
At 1 January 2016
Additions
Arising on acquisition
Arising on disposal of Benelux
Foreign exchange movements
At 31 December 2016
Additions
SkipTheDishes acquisition adjustment1
Transfers
Disposals
Foreign exchange movements
At 31 December 2017
Amortisation
At 1 January 2016
Charge for the year
Arising on disposal of Benelux
Foreign exchange movements
At 31 December 2016
Charge for the year
Transfers
Disposals
Foreign exchange movements
At 31 December 2017
Carrying amount
At 31 December 2017
At 31 December 2016
Patents, licences
and IP
£m
Notes
Restaurant
contracts
£m
Brands
£m
Development
costs
£m
30
12.3
0.6
3.9
—
0.9
17.7
5.6
(0.8)
4.6
(3.9)
(0.1)
23.1
5.4
3.7
—
0.3
9.4
6.3
0.3
(3.9)
—
12.1
11.0
8.3
54.0
—
14.5
(1.6)
10.2
77.1
—
4.0
—
(0.8)
(0.3)
80.0
8.0
10.4
(1.6)
1.9
18.7
13.0
—
(0.8)
(0.3)
30.6
49.4
58.4
19.1
—
7.9
—
3.1
30.1
—
(5.0)
—
(1.0)
—
24.1
2.0
2.9
—
0.5
5.4
9.0
—
(1.0)
(0.1)
13.3
10.8
24.7
2.7
10.5
—
—
—
13.2
18.8
—
(4.6)
(0.5)
—
26.9
0.1
1.1
—
—
1.2
2.8
(0.3)
(0.1)
—
3.6
23.3
12.0
Total
£m
88.1
11.1
26.3
(1.6)
14.2
138.1
24.4
(1.8)
—
(6.2)
(0.4)
154.1
15.5
18.1
(1.6)
2.7
34.7
31.1
—
(5.8)
(0.4)
59.6
94.5
103.4
1. Due to timing constraints between the acquisition of SkipTheDishes on 14 December 2016 and the publication of the 2016 Annual Report, the prior year acquisition
accounting was provisional, as permitted under IFRS 3 Business Combinations. The prior year valuation of the acquired intangible assets was based on estimated inputs.
In the current year, the valuation models and acquisition accounting have been finalised, resulting in an increase in intangible assets of £1.8 million (see Note 30).
The cash outflow in respect of additions of intangible assets was £24.0 million (2016: £11.7 million). Of the amortisation
charge for the year ended 31 December 2017, £24.4 million (2016: £15.5 million) related to acquired intangible assets and
£6.7 million (2016: £2.6 million) related to other intangible assets.
At 31 December 2017, other than through the acquisition of Hungryhouse (see Note 30), the Group did not enter into any
significant contractual commitments for the acquisition of intangible assets (2016: £nil).
Patents, licences and IP
As at 31 December 2017, the patents, licences and IP carrying amount was £11.0 million (2016: £8.3 million). The weighted
average remaining amortisation period for this category is 3.2 years.
Restaurant contracts
As at 31 December 2017, the restaurant contracts carrying amount of £49.4 million (2016: £58.4 million) included £33.0 million
(2016: £40.7 million) in respect of the restaurant contracts acquired as part of the June 2015 acquisition of Menulog and
£9.5 million (2016: £7.5 million) in respect of the restaurant contracts acquired as part of the December 2016 acquisition
of SkipTheDishes.
The weighted average remaining amortisation period for restaurant contracts is 4.5 years.
Brands
As at 31 December 2017, the brands carrying amount of £10.8 million (2016: £24.7 million) included £7.9 million (2016: £12.9 million)
in respect of the brands acquired as part of the June 2015 acquisition of Menulog and £2.0 million (2016: £6.1 million)
in respect of the brand acquired as part of the December 2016 acquisition of SkipTheDishes.
The weighted average remaining amortisation period for brands is 6.4 years.
114
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 13. Other intangible assets continued
Development costs
Development costs of £11.1 million were not available for use at 31 December 2017 (2016: £6.5 million), and therefore, have
not been amortised.
The weighted average remaining amortisation period for development costs (excluding work in progress) is 0.4 years.
14. Property, plant and equipment
The Group maintains fixtures and fittings, equipment and leasehold improvements, which are depreciated over their
useful economic lives.
b Accounting policy
Property, plant and equipment are stated at cost, net of depreciation and any provision for impairment. Depreciation is provided on all
property, plant and equipment at rates calculated to write off the cost, less estimated residual value, of each asset on a straight-line
basis over its expected useful life, as follows:
Fixtures and fittings
Equipment
Leasehold improvements
33% per annum
33% per annum
20% per annum, or the period of the lease if shorter
Carrying value of property, plant and equipment
Cost
At 1 January 2016
Additions
Arising on acquisition
Disposals
Foreign exchange movements
At 31 December 2016
Transfers
Additions
Disposals
Foreign exchange movements
At 31 December 2017
Accumulated depreciation
At 1 January 2016
Charge for the year
Disposals
Foreign exchange movements
At 31 December 2016
Charge for the year
Transfers
Disposals
Foreign exchange movements
At 31 December 2017
Carrying amount
At 31 December 2017
At 31 December 2016
Fixtures and
fittings
£m
Equipment
£m
Leasehold
improvements
£m
4.7
1.3
—
(0.1)
0.2
6.1
(0.5)
1.1
(0.5)
—
6.2
2.8
1.5
(0.3)
0.1
4.1
1.1
(0.5)
(0.4)
—
4.3
1.9
2.0
12.0
7.2
0.2
(5.7)
1.5
15.2
0.5
7.3
(2.8)
0.1
20.3
6.7
4.1
(4.7)
0.6
6.7
5.1
0.5
(2.4)
0.1
10.0
10.3
8.5
2.8
1.0
—
—
0.1
3.9
—
5.9
—
—
9.8
1.4
0.6
—
—
2.0
1.1
—
—
(0.1)
3.0
6.8
1.9
Total
£m
19.5
9.5
0.2
(5.8)
1.8
25.2
—
14.3
(3.3)
0.1
36.3
10.9
6.2
(5.0)
0.7
12.8
7.3
—
(2.8)
—
17.3
19.0
12.4
At 31 December 2017, the Group did not enter into any significant contractual commitments for the acquisition of
property, plant and equipment (2016: £nil).
www.justeatplc.com
115
Financial statements 15. Investments in associates
The Group holds an interest in associates where it has significant influence, with the most significant associate being
IF-JE Participações S.A. (“IF-JE”).
b Accounting policy
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial
and operating policy decisions of the investee, but does not control or have joint control over those policies. The considerations made in
determining significant influence are similar to those necessary to determine control over subsidiaries.
The results, assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting,
except for when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current
Assets Held for Sale and Discontinued Operations.
The investment in an associate is initially recognised at cost. At the acquisition date, any excess of the cost of acquisition over the
Group’s share of the net fair value of the identifiable assets and liabilities of the associate is recognised as goodwill. Goodwill is included
within the carrying amount of the investment. Under the equity method, the carrying amount of the investment is adjusted to recognise
changes in the Group’s share of net assets of the associate since the acquisition date.
The consolidated income statement reflects the Group’s share of the results of operations of the associate. Any change in other
comprehensive income of those investees is presented as part of the Group’s other comprehensive income. In addition, when there has
been a change recognised directly in the equity of the associate, the Group recognises its share of any changes, when applicable, in the
consolidated statement of changes in equity.
Profits and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.
Carrying value of investments in associates
Carrying value of associates under equity accounting method:
At 1 January
Investment in IF-JE NL
Increase in investment in IF-JE
Share of IF-JE NL results
Share of IF-JE results
Foreign exchange movements
At 31 December
Notes
22, 34
26
2017
£m
29.7
—
16.1
—
(0.6)
(3.8)
41.4
2016
£m
16.6
3.4
2.1
(0.1)
—
7.7
29.7
During the year, no dividends have been received from associated undertakings (2016: £nil).
Increase in investment in IF-JE Participações S.A. (“IF-JE”)
On 2 May 2017, the Group acquired a further 1.5% stake in its associated undertaking IF-JE (see Note 22 for further details).
The Group also provided working capital funding of £0.8 million (see Note 34 for further details).
IF-JE Holdings B.V. (“IF-JE NL”)
On 20 July 2016, the Company’s subsidiary Just Eat Holding Limited acquired a 33% stake in IF-JE NL for a total consideration
of £3.4 million. This associate is 67% owned by Movile Internet Movel S.A. (“Movile”). On 2 August 2016, the Group sold a
49% stake in its enlarged Mexican business to IF-JE NL.
Cash outflow on acquisition of interests in associates
During the year ended 31 December 2017, the cash outflow on acquisition of interests in associates was £2.6 million
in respect of the acquisition of a further 1.5% interest in the associated undertaking IF-JE (see Note 22).
IF-JE
The only material associate held by the Group is IF-JE, in which it has a 31.9% stake (2016: 30.4%). Summarised
consolidated financial information is set out below:
Revenue
uEBITDA
(Loss)/profit after tax
Group’s share of uEBITDA
Group’s share of losses after tax1, 2
Group’s share of total comprehensive loss1, 2
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
76.2
(0.7)
(1.1)
(0.2)
(0.6)
(0.6)
28.8
1.9
0.1
0.6
—
—
1. The Group’s share of losses after tax and total comprehensive loss include amortisation of acquired intangibles recognised by the Group, but not by IF-JE.
2. The (loss)/profit after tax and total comprehensive loss were entirely derived from continuing activities.
116
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 15. Investments in associates continued
IF-JE continued
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets and total equity
Group’s share of interest in associated undertaking’s net assets
Carrying value of interest in associated undertaking
16. Available-for-sale investments
As at
31 December
2017
£m
As at
31 December
2016
£m
41.6
33.4
(4.3)
(37.3)
33.4
10.7
38.0
34.3
18.5
(5.3)
(17.3)
30.2
9.2
26.4
The Group holds an interest in other unlisted investments where it does not have significant influence. This predominantly
comprises the investment in Flypay Limited (“Flypay”), acquired in September 2016.
b Accounting policy
Available-for-sale investments are initially measured at cost, and then revalued to fair value. Gains and losses arising from valuation are
taken to other comprehensive income, and then recycled through the income statement on realisation. If there is objective evidence that
the asset is impaired, any cumulative loss recognised in other comprehensive income is reclassified to the income statement within
other gains and losses.
Carrying value of available-for-sale investments
At 1 January
Investment in Flypay
Fair value movement – other comprehensive income
Fair value movement – profit or loss
At 31 December
2017
£m
4.1
—
0.1
—
4.2
2016
£m
0.1
3.5
—
0.5
4.1
On 28 September 2016, the Group acquired an 8% shareholding in Flypay for £3.5 million. The level 3 measurement
techniques and inputs applied in fair valuing Flypay included a comparison to valuations used by other comparable
companies that have recently raised capital.
17. Inventories
The Group’s inventory comprises packaging materials and consumable items sold to restaurants, as well as JCTs and
Orderpads held in the United Kingdom prior to their sale to other Group companies.
b Accounting policy
Inventories are stated at the lower of cost and net realisable value. Cost comprises of direct materials. Cost is calculated using the
first-in first-out method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs
to be incurred in marketing, selling and distribution.
Carrying value of inventories
Finished goods
As at
31 December
2017
£m
As at
31 December
2016
£m
2.8
1.7
There is no material difference between the carrying value of inventories and its fair value or replacement cost. The cost of
inventories recognised as an expense in the income statement during the year was £1.6 million (2016: £1.2 million).
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117
Financial statements 18. Trade and other receivables
The Group’s trade and other receivables predominantly consist of the deposit paid to acquire Hungryhouse and other
prepaid costs. Trade receivables are shown net of an allowance for bad or doubtful debts.
b Accounting policy
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method. An impairment provision is created for receivables where there is objective evidence the Group will not be able to
collect in full.
Carrying value of trade and other receivables
Trade receivables
Other receivables
Hungryhouse deposit
Prepayments
Total trade and other receivables
Notes
30
As at
31 December
2017
£m
As at
31 December
2016
£m
2.1
4.4
6.0
11.7
24.2
2.1
11.7
6.0
6.7
26.5
Trade receivables
Trade receivables are net of provisions for bad or doubtful debts of £1.1 million (2016: £0.9 million).
Trade receivables are recognised and carried at the lower of their original invoiced value and their recoverable amount.
The average age of the trade receivables as at 31 December 2017 was 76 days (2016: 74 days). As at 31 December 2017,
31% (2016: 33%) of the trade receivables were less than 30 days old, 18% (2016: 15%) were between 30 and 60 days old,
7% (2016: 7%) were between 60 and 90 days old and 44% (2016: 45%) were over 90 days old.
The Group has reviewed all balances and has made an allowance for debts which are considered unlikely to be collectable
based on past default experience and an analysis of the counterparty’s current financial position. Allowances for bad or
doubtful debts are recognised against trade receivables.
Trade receivables disclosed above include amounts which are past due at the reporting date but against which the Group
has not recognised an allowance for doubtful receivables because there has not been a significant change in credit
quality and the amounts are still considered recoverable.
The Group does not hold any collateral or other credit enhancements over these balances.
Movement in the allowance for bad or doubtful debts
At 1 January
Foreign exchange movements
Bad debts recognised
Amounts written off during the year
Amounts recovered during the year
At 31 December
2017
£m
0.9
—
0.9
(0.6)
(0.1)
1.1
2016
£m
1.0
0.1
0.7
(0.9)
—
0.9
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade
receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited
due to the Customer base being large and unrelated. The Directors consider that the carrying amount of trade and other
receivables, after taking into account the allowance for bad or doubtful debts, is approximately equal to their fair value.
At 31 December 2017, £1.1 million (2016: £0.9 million) of the allowance for bad or doubtful debts was in respect of
receivables more than 120 days old.
118
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 19. Trade and other payables
The Group’s trade and other payables predominantly consist of amounts owed to Restaurant Partners and suppliers that
have been invoiced or accrued. They also include taxes and social security amounts due in relation to its role as an
employer, and consideration payable to the vendors of SkipTheDishes and IF-JE.
b Accounting policy
Trade and other payables are initially measured at fair value, net of transaction costs, and subsequently measured at amortised costs
using the effective interest method.
Carrying value of trade and other payables
Trade payables
Deferred consideration payable
Other payables and accruals
Other taxes and social security
Total trade and other payables
Notes
22
As at
31 December
2017
£m
As at
31 December
2016
£m
64.1
24.6
80.8
15.7
185.2
52.7
—
49.1
10.3
112.1
Included in trade payables are amounts owed to Restaurant Partners of £51.5 million (2016: £33.8 million) which are
typically settled on a weekly basis. The average period for which amounts were due to Restaurant Partners was six days
(2016: four days). For most suppliers no interest is charged on the trade payables for at least the first 30 days from the
date of the invoice.
Deferred consideration payable consists of £20.6 million due to the vendors of SkipTheDishes and £4.0 million due to the
vendor of the increased stake in IF-JE (see Note 22).
The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed
credit terms. The Directors consider that the carrying amount of trade payables approximates to their fair value.
20. Derivative financial instruments
The Group’s derivative financial instruments consist of forward foreign exchange contracts. See Note 33 for specific
details of the nature of the forward foreign exchange contracts entered into by the Group.
b Accounting policy
Derivative financial instruments are held at fair value, with revaluation gains or losses taken to the income statement within “other gains
and losses”. The exception is for derivatives that are designated as cash flow hedges, when the treatment of the gain or loss depends on the
hedged item (see Note 27 for the Group’s cash flow hedge policy).
Carrying value of derivative financial instruments
Financial assets carried at fair value through profit or loss
Forward foreign exchange contracts
Financial liabilities carried at fair value through profit or loss
Forward foreign exchange contracts
Total derivative financial instruments
As at
31 December
2017
£m
As at
31 December
2016
£m
0.1
(0.6)
(0.5)
—
—
—
www.justeatplc.com
119
Financial statements 21. Deferred revenue
Equipment supplied to restaurants is invoiced upon installation and is deferred over 36 months. Connection fees and
annual subscription fees are deferred over 12 months.
b Accounting policy
See Note 3 for the revenue recognition and deferred revenue accounting policies.
Carrying value of deferred revenue
Analysed as:
Current deferred revenue
Non-current deferred revenue
Total deferred revenue
22. Provisions for liabilities
As at
31 December
2017
£m
As at
31 December
2016
£m
3.3
0.8
4.1
3.8
0.9
4.7
A provision is a liability recorded in the Consolidated Balance Sheet where there is uncertainty over the timing or
amount. At 31 December 2017, the principal provisions held are in relation to contingent consideration on acquisition
of subsidiaries or associates.
b Accounting policy
Provisions are recognised when the Group has a present, legal or constructive obligation as a result of a past event, for which it is probable
that an outflow of economic benefit will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance
sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash
flows estimated to settle the obligation, its carrying amount is the present value of those cash flows. The unwinding of any discount
is recognised in the income statement within other gains and losses.
Carrying value of provisions for liabilities
At 1 January
Arising on acquisition
Additional provisions in the year
Utilised in the year
Released to the income statement
Transferred to trade and other payables
Unwinding of discount
Foreign exchange movements
At 31 December
Current
Non-current
Total provisions for liabilities
Notes
30
Contingent
consideration
£m
Other
provisions
£m
41.1
—
16.4
(2.7)
—
(24.6)
0.7
(0.9)
30.0
15.6
—
2.5
(2.6)
(0.2)
(3.2)
0.2
0.5
12.8
Total
2017
£m
56.7
—
18.9
(5.3)
(0.2)
(27.8)
0.9
(0.4)
42.8
Total
2016
£m
9.6
40.8
7.2
(0.9)
(1.5)
(0.2)
0.2
1.5
56.7
As at
31 December
2017
£m
As at
31 December
2016
£m
22.6
20.2
42.8
13.6
43.1
56.7
Contingent consideration in respect of the SkipTheDishes acquisition
The consideration for SkipTheDishes included £40.8 million of contingent consideration. The consideration is payable in
2018 and 2019 and is contingent upon the performance of SkipTheDishes in 2017 and 2018. As at 31 December 2017, only
£20.2 million remains contingent, with £20.6 million reclassified within trade and other payables (see Note 19).
The consideration is recorded at fair value, which is the present value of the expected cash outflows of the obligation
(level 3 measurement techniques). It has been assumed that the business will perform in line with its current business plans.
The discount rate applied to the obligation was 1.73%.
120
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 22. Provisions for liabilities continued
Contingent consideration in respect of the SkipTheDishes acquisition continued
A 10% increase in revenue would have no impact on the provision, as the contingent consideration is capped. A 10% decrease in
revenue would also have no impact, due to budgeted revenue expected to significantly exceed the earn-out target.
A 0.5% increase or decrease in the discount rate would decrease or increase the liability by £0.2 million. Changes in the
discount rate do not impact the Group’s estimate of the final consideration payable.
Movements in the provision are recognised within other gains and losses.
Buy-out of FBA Invest SaS minority shareholder
At 31 December 2017, other provisions included £9.6 million (2016: £9.1 million) in respect of the Group’s commitment to
buy out the minority shareholder of FBA Invest SaS and associated legal costs. The amount payable is dependent on the
result of the Group’s French businesses for 2016 and 2017. Movements in the provision, other than its utilisation, are charged/
credited to other gains and losses.
Increased stake in IF-JE
On 2 May 2017, the Group acquired a further 1.5% stake in its associated undertaking IF-JE. The initial consideration payable
calculated to be £15.3 million is contingent upon the performance of IF-JE and is payable in instalments over the current
and following financial years. At 31 December 2017, a fair value loss of £1.1 million was recognised within other gains and
losses upon the remeasurement of the liability payable. The cash outflow during the year ended 31 December 2017 was
£2.6 million, with £4.0 million included within trade and other payables and £9.8 million contingent consideration included
within current provisions. The contingent consideration is a level 3 measurement recorded at fair value, which is the
present value of the expected cash outflows of the obligation. It has been assumed that the business will perform in
line with its current business plans. The discount rate applied to the obligation was 1.17%.
23. Reconciliation of liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and
non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows
will be, classified in the Group’s consolidated cash flow statement as cash flows from financing activities.
Other long-term liabilities
Borrowings
24. Share capital
As at
31 December
2016
£m
0.3
1.0
Financing
cash flows
£m
—
(0.4)
Foreign
exchange
movements
£m
—
0.1
Transferred
to trade
and other
payables
£m
As at
31 December
2017
£m
(0.3)
—
—
0.7
Share capital is the number of shares in issue at their nominal value. In the current year, this increased due to the
exercise of employee share options.
b Accounting policy
Equity instruments issued by the Group are recorded at the amount of the proceeds received, net of direct issuance costs.
At 1 January
Issue of shares – SkipTheDishes
Arising on the exercise of share options
At 31 December
2017
2016
Ordinary
shares
(millions)
678.5
—
1.5
680.0
Total
£m
6.8
—
—
6.8
Ordinary
shares
(millions)
675.4
1.0
2.1
678.5
Total
£m
6.8
—
—
6.8
On 20 December 2016, the Company issued 1.0 million new one pence Ordinary shares which formed £6.2 million of the
SkipTheDishes acquisition consideration. These shares were held in escrow until 14 December 2017.
Ordinary shares
Ordinary shares have a nominal value of £0.01 each, are fully paid and entitle the holders to receive notice, attend, speak and
vote at general meetings. Holders of Ordinary shares are entitled to distributions of available profits pro rata to their respective
holdings of shares.
www.justeatplc.com
121
Financial statements 25. Share premium account
Share premium is the amount received by a company for a share issue which exceeds the nominal value. In the current
year, this increased due to the exercise of employee share options.
At 1 January
Arising on the issue of shares – SkipTheDishes
Arising on the exercise of share options
At 31 December
Notes
24
2017
£m
2016
£m
562.2
555.5
—
0.5
6.2
0.5
562.7
562.2
26. Translation reserve
Exchange differences relating to the translation of the net assets, income and expenses of the Group’s foreign
operations, from their functional currency into the Group’s reporting currency, being pound sterling, are recognised
directly in the translation reserve.
At 1 January
Exchange differences on translation of foreign operations – Group
Exchange differences on translation of foreign operations – associates
Transfer to the income statement
At 31 December
27. Other reserves
Notes
15
2017
£m
94.7
(2.6)
(3.8)
—
88.3
2016
£m
(11.0)
97.9
7.7
0.1
94.7
The Group’s other reserves have arisen from a 2009 pre-Initial Public Offering (“IPO”) Group reorganisation, treasury
shares when the Group issued equity under its JSOP and SIP share schemes, and cumulative unrealised fair value gains
on cash flow hedges.
b Accounting policies
Hedge accounting
The Group designates certain hedging instruments, which include derivatives and non-derivatives in respect of foreign currency risk,
as either fair value hedges or cash flow hedges. Hedges of foreign currency exchange risk where there is a firm commitment of a cash
inflow or outflow are accounted for as cash flow hedges.
At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item,
along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of
the hedge and on an ongoing basis, the Group documents whether the hedging instrument is highly effective in offsetting changes in
fair values or cash flows of the hedged item attributable to the hedged risk.
Fair value hedges
The Group did not designate any hedges as fair value hedges during the current or prior years.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in
other comprehensive income and accumulated in the cash flow hedging reserve. The gain or loss relating to the ineffective portion is
recognised immediately in profit or loss, and is included in other gains and losses.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to the income statement
in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item. However, when the hedged
forecast transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously
recognised in other comprehensive income and accumulated in equity are transferred from equity and included in the initial
measurement of the cost of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging instrument expires or is sold,
terminated or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income
and accumulated equity at that time remains in equity and is recognised when the forecasted transaction is ultimately recognised in the
profit or loss. When a forecasted transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised
immediately in the profit or loss and is included in other gains and losses.
122
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 27. Other reserves continued
Carrying value of other reserves
At 1 January 2016
Lapses of JSOP awards
Exercise of JSOP awards
Fair value gains on cash flow hedges
Income tax related to fair value gains on cash flow hedges
Net fair value gains on cash flow hedges reclassified to goodwill
At 31 December 2016
Exercise of JSOP/SIP awards
Fair value losses on cash flow hedges
Fair value gains on available-for-sale investments
At 31 December 2017
Revaluation
reserve
£m
Merger
reserve
£m
Treasury shares
reserve
£m
Cash flow
hedging reserve
£m
—
—
—
—
—
—
—
—
—
0.1
0.1
1.9
—
—
—
—
—
1.9
—
—
—
1.9
(8.3)
(0.5)
0.5
—
—
—
(8.3)
1.2
—
—
(7.1)
—
—
—
1.8
(0.5)
(1.3)
—
—
(0.1)
—
(0.1)
Total
£m
(6.4)
(0.5)
0.5
1.8
(0.5)
(1.3)
(6.4)
1.2
(0.1)
0.1
(5.2)
Revaluation reserve
Gains and losses arising from valuation of available-for-sale investments are taken to the revaluation reserve. When an
available-for-sale investment is realised, the reserve is recycled through the income statement. If there is objective
evidence that the asset is impaired, any cumulative loss recognised in other comprehensive income is reclassified to the
income statement within other gains and losses.
Merger reserve
In July 2009 a Group reorganisation was undertaken. Under this reorganisation, Ordinary shares were issued and cancelled
and Preference A shares were issued. This was treated as a common control transaction under IFRS as the ultimate shareholders
and their relative rights were the same before and afterwards. This reserve represents the difference between the nominal
value of the shares issued and the nominal value of the shares on the Group reorganisation in July 2009. The balance of
this account has not changed and remains at £1.9 million as at 31 December 2017.
Treasury shares reserve
This reserve arose when the Group issued equity share capital under its JSOP and SIP, which are held in trust by the
Trustee of one of the Group’s Employee Benefit Trusts (“EBTs”). At 31 December 2017, the EBTs held 3.5 million shares
(2016: 8.3 million shares), which had a historical cost of £3.9 million (2016: £8.3 million) and a market value of £27.4 million
(2016: £48.4 million). See Note 32 for more information on the JSOP and SIP.
Cash flow hedging reserve
The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in the
fair value of hedging instruments designated as cash flow hedges.
28. Retained earnings
Retained earnings are the net earnings not paid out as dividends, but retained to be reinvested. The distributable
reserves of Just Eat plc approximate to the balance of the Company’s retained earnings of £34.0 million as at
31 December 2017 (see Note 42).
b Accounting policy
Dividends payable to the holders of the Company’s Ordinary shares are recognised when they have been appropriately authorised.
No dividend has been recommended for the year.
At 1 January
(Loss)/profit attributable to equity shareholders
Share based payment charge
Tax on share options
Adjustment for cash-settled share options
Partial disposal of Mexican business
At 31 December
Notes
4, 32
29
2017
£m
160.7
(102.7)
6.1
2.0
(0.2)
—
2016
£m
80.6
71.7
2.8
0.8
—
4.8
65.9
160.7
www.justeatplc.com
123
Financial statements 29. Non-controlling interests
Non-controlling interests are the equity in a subsidiary not attributable, directly or indirectly, to the Group.
At 31 December 2017, the Group has non-controlling interests in its French and Mexican operations.
b Accounting policy
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein.
Non-controlling interests consist of the amount of those interests at the date of the original business combination and the
non-controlling shareholder’s share of changes in equity since the acquisition date of the combination.
Carrying value of non-controlling interests
At 1 January
NCI share of loss after tax
Foreign exchange movements
Adjustment on partial disposal of Mexican business
Adjustment to NCI in respect of funding provided by minority interests
At 31 December
2017
£m
7.7
(0.8)
(0.1)
—
1.4
8.2
2016
£m
0.4
(0.3)
(0.2)
7.3
0.5
7.7
On 2 August 2016, the Group sold 49% of its Mexican business, which includes El Cocinero a Cuerda SL (“ECAC”), and its
subsidiaries, SinDelantal Mexico SA de C.V. and Inversiones Hellofood S. de R.L. de C.V., to IF-JE NL, for consideration of
£12.1 million. The Group retained control of ECAC and its subsidiaries. As the Group also holds 33% of the shares in IF-JE
NL, the Group’s holding in ECAC and its subsidiaries is 67% using the “indirect method”. The Group recognised a net gain
on the disposal of £4.8 million which was recorded in equity. The cash inflow on the partial disposal was £9.3 million, with
the remaining consideration of £1.2 million being received in the year ended 31 December 2017.
The non-controlling interest at 31 December 2017 in FBA Invest SaS was 20% (2016: 20%) and ECAC was 33% (2016: 33%).
The following table sets out the summary consolidated financial information of subsidiaries that have a material
non-controlling interest:
FBA Invest SaS
ECAC
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
28.2
5.8
2.0
0.4
20.8
3.9
1.3
0.3
1.0
(3.4)
(3.7)
(1.2)
0.7
(1.8)
(1.6)
(0.6)
FBA Invest SaS
ECAC
As at
31 December
2017
£m
As at
31 December
2016
£m
As at
31 December
2017
£m
As at
31 December
2016
£m
14.3
2.1
16.4
1.0
17.4
(11.4)
(11.4)
6.0
1.2
9.4
1.7
11.1
2.7
13.8
(9.6)
(9.6)
4.2
0.8
1.0
0.8
1.8
21.1
22.9
(1.4)
(1.4)
21.5
7.0
1.1
0.1
1.2
21.5
22.7
(1.5)
(1.5)
21.2
6.9
Income statement
Revenue
uEBITDA
Profit/(loss) after tax
NCI share of profit/(loss) after tax
Balance sheet
Cash
Other current assets
Total current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Net assets
Non-controlling interests
124
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 30. Acquisitions
In the year ended 31 December 2017, the Group did not complete any acquisitions. The note below provides the known
details of the Hungryhouse acquisition (completed 31 January 2018) and an update on the final acquisition accounting
for SkipTheDishes (completed 14 December 2016).
b Accounting policy
Business combinations are accounted for using the acquisition method. The consideration for each acquisition is measured at the
aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed and equity instruments issued
by the Group in exchange for control of the acquiree. For each business combination, the Group elects whether to measure the
non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets.
The Group’s acquisition-related costs are recognised in profit or loss as incurred and included within exceptional items. Acquisition costs
paid on behalf of the vendor are included in the fair value of consideration transferred.
When the consideration for the acquisition includes an asset or liability resulting from a contingent consideration arrangement, the
contingent consideration is measured at its acquisition-date fair value and is included as part of the consideration transferred in the
business combination. Where the contingent amount is dependent on future employment, it is recognised as an expense over the
relevant period in the income statement. Changes in the fair value of the contingent consideration that qualify as measurement period
adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are
adjustments that arise from additional information obtained during the “measurement period” (which cannot exceed one year from the
acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period
adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not
remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that
is classified as an asset or liability is remeasured at subsequent reporting dates in accordance with IAS 39 Financial Instruments:
Recognition and Measurement or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding
gain or loss being recognised in profit or loss.
When a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair
value at the acquisition date (i.e. the date the Group obtains control) and the resulting gain or loss, if any, is recognised in profit or loss.
Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive
income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Business
Combinations are recognised at their fair value at the acquisition date, except for certain items which are measured in accordance with
the relevant IFRS. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period. Additional assets or liabilities are recognised to reflect new information obtained
about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of
that date.
Acquisition of Hungryhouse
On 15 December 2016, the Group announced that it had agreed to acquire 100% of the share capital of Hungryhouse from
Delivery Hero Holding GmbH. Approval from the Competition and Markets Authority (“CMA”) was obtained on 16 November 2017
and completion of the acquisition occurred on 31 January 2018. Consideration transferred has provisionally been
calculated to be £240.0 million, which includes:
Cash deposit paid in 2016
Cash paid on completion
Estimated deferred consideration payable
Estimated total consideration
£m
6.0
210.0
24.0
240.0
Funding for the acquisition was obtained from both existing cash and a £100.0 million draw down on the Group’s
revolving credit facility. Estimated deferred consideration of £24.0 million with the balance (net of any warranties)
is payable 12 months after completion.
The acquisition is consistent with Just Eat’s strategic ambition to further its growth and increase its market presence
in every geography in which it operates. Hungryhouse is an online food company operating solely in the UK, with a
comparable business model to Just Eat.
The acquisition is expected to generate significant benefits for Just Eat’s Restaurant Partners and Customers. It creates
an enlarged Customer base for Restaurant Partners to access, whilst increasing the breadth of choice on offer to UK
consumers through Just Eat’s platform. The combination of the two businesses also generates compelling economic
benefits of scale, with high operating leverage expected to drive material synergies post integration.
www.justeatplc.com
125
Financial statements 30. Acquisitions continued
Acquisition of Hungryhouse continued
Due to the limited amount of time since the completion of the Hungryhouse acquisition, the initial accounting for the
business combination has not been completed. Disclosures that are not able to be made consist of the acquisition-date
fair value of each major balance sheet item, including contingent liabilities.
Goodwill is attributable to the future growth of the acquired business, through expansion of their networks of Restaurant
Partners, the number of orders per restaurant, and the anticipated future operational synergies. In addition, the goodwill
balance represents the value of the consumer bases and assembled workforce, which do not meet the recognition criteria
of an intangible asset. None of the goodwill is expected to be deductible for tax purposes.
For the year ended 31 December 2017, Hungryhouse generated revenue of £35.3 million and a loss before tax of £14.8 million.
Transaction costs incurred on acquisition, including the CMA process, have been separately recognised as an exceptional
item in Note 5.
On 2 February 2018, management advised Hungryhouse employees of their intention to integrate the Hungryhouse
business with Just Eat, with orders being diverted through the Just Eat platform. Associated integration costs and
capitalisable migration costs cannot yet be reliably estimated.
Acquisition of SkipTheDishes
On 14 December 2016, the Group acquired the entire share capital of SkipTheDishes. At 31 December 2016, the acquisition
accounting was provisional as some of the inputs used in the valuation of the acquired intangible assets were based on
estimates. At 31 December 2017, the acquisition accounting has been finalised with the following measurement period
changes being applied during the current year:
• acquired intangible assets decreased by £1.8 million to £17.6 million;
• the deferred tax liability that directly corresponds to the valuation of the acquired intangible assets decreased by
£0.3 million to £3.7 million; and
• total consideration transferred remains unchanged at £108.4 million, meaning goodwill recognised on acquisition was
£93.4 million. At 31 December 2017, goodwill decreased to £91.8 million as a result of foreign exchange movements.
Net cash outflow on acquisition of businesses
The net cash outflow on acquisition of businesses during the year ended 31 December 2017 was £0.4 million, which
relates to deferred consideration paid during the year in respect of acquisitions made in previous years.
For the year ended 31 December 2016, the net cash outflow of £154.7 million related to the acquisition of La Nevera Roja/
PizzaBo/hellofood Brazil/hellofood Mexico (£97.8 million), SkipTheDishes (£56.2 million) and deferred consideration paid
in respect of acquisitions made in previous years (£0.7 million).
31. Operating lease arrangements
The Group’s operating leases mainly consist of the lease of office buildings and motor vehicles.
b Accounting policy
Leases (as a lessee) are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards of ownership
to the Group. All other leases are classified as operating leases. The Group did not have any finance leases in either 2017 or 2016.
Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease except
where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are
consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
The Group as lessee
Minimum lease payments under operating leases recognised as an expense in the year
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
6.7
4.2
126
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 31. Operating lease arrangements continued
The Group as lessee continued
As at 31 December 2017, the Group had outstanding commitments for future minimum lease payments under non-cancellable
operating leases, which fall due as follows:
Within one year
In the second to fifth years inclusive
Over five years
Total commitments
32. Share based payments
Property
2017
£m
5.2
15.7
8.7
29.6
Plant and
equipment
2017
£m
0.7
0.7
—
1.4
Total
2017
£m
5.9
16.4
8.7
31.0
Property
2016
£m
5.3
16.1
13.9
35.3
Plant and
equipment
2016
£m
0.5
0.5
—
1.0
Total
2016
£m
5.8
16.6
13.9
36.3
The Group operates a number of equity-settled share based compensation plans. In accordance with IFRS 2 Share Based
Payments, the value of the awards are measured at their fair value on the date of the grant. The fair value is expensed on
a straight-line basis over the vesting period, based on management’s estimate of the number of shares that will eventually
vest. With the exception of certain awards under the Performance Share Plan (“PSP”), the fair value of the awards
granted was calculated using the Black-Scholes option pricing model, taking into account the terms and conditions upon
which the options were granted.
b Accounting policy
Equity-settled share based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair
value includes the effect of market based vesting conditions.
The fair value determined at the grant date of the equity-settled share based payments is expensed on a straight-line basis over the
vesting period, based on the Group’s estimate of equity instruments that will eventually vest. At each balance sheet date, the Group revises
its estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions. The
impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to the share based payment reserve.
The total expense recorded in relation to the long-term employee incentives was £6.6 million (2016: £3.1 million),
see Note 4 for a breakdown of this expense.
As at 31 December 2017, the Group had the following equity-settled share based compensation plans in operation:
Just Eat plc Enterprise Management Incentive Scheme (“EMI Scheme”)
Under the terms of the EMI Scheme, the Board granted options to certain employees of the Group to purchase shares
in the Company.
Options are no longer being granted under this scheme.
Just Eat plc Company Share Option Plan (“CSOP”)
Under the terms of the CSOP, the Board may grant options to purchase Ordinary shares in the Company. The CSOP is an
equity-settled share option scheme approved by Her Majesty’s Revenue & Customs (“HMRC”) and was established in 2011.
Under the CSOP, the Board may grant options over Ordinary shares in the Company to eligible employees. The eligible
employees to whom options are granted and the terms of such options are determined by the Board. All employees were
eligible to participate in the CSOP, including employees of the Company’s subsidiaries, but not all grants are approved by
HMRC. Options are not transferable.
The exercise price of options may not be less than the market value of the Company’s shares on the date of grant in order
for the scheme to qualify as an approved HMRC scheme.
Vested options in the CSOP became exercisable on the Company’s IPO in April 2014.
Options are no longer being granted under this scheme.
www.justeatplc.com
127
Financial statements 32. Share based payments continued
EMI Scheme and CSOP
Options are exercisable at a price equal to the estimated fair value of the Company’s shares on the date of grant. Options
vest in stages over a three-year period commencing on a specified date which is typically one year after the date of grant.
Options are forfeited if an employee leaves the Group before the options vest and expire if they remain unexercised ten
years after the date of grant. Details of the share options granted under the EMI Scheme and CSOP are as follows:
Outstanding at 1 January
Forfeited during the year
Exercised during the year
Outstanding at 31 December
Exercisable at 31 December
2017
2016
Number of
share options
(millions)
Weighted
average
exercise price
(pence)
Number of
share options
(millions)
Weighted
average
exercise price
(pence)
2.8
(0.1)
(1.0)
1.7
1.6
37.3
53.7
36.4
37.4
37.1
5.2
(0.3)
(2.1)
2.8
2.2
33.8
40.6
26.9
37.3
35.6
The range of exercise prices for both current and prior year options outstanding was 4.6 to 57.7 pence. During the year
ended 31 December 2017, the weighted average share price at the date of exercise was 658.9 pence (2016: 497.7 pence).
As at 31 December 2017, the weighted average remaining contractual life of the share options was 5.7 years (2016: 6.7 years).
Just Eat Share Incentive Plan (“SIP”)
Under the terms of the SIP, the Board may award Ordinary shares in the Company at no cost to eligible employees. The SIP
is an equity-settled share option scheme approved by HMRC. The shares vest after three years from grant. Shares were
granted under this scheme on the date of the IPO with a fair value of 260.0 pence and all awards outstanding vested on
8 April 2017. Details of the SIP awards granted are as follows:
Outstanding at 1 January
Exercised during the year
Outstanding at 31 December
Exercisable at 31 December
2017
Number of
SIP awards
(millions)
2016
Number of
SIP awards
(millions)
0.3
(0.2)
0.1
0.1
0.3
—
0.3
—
The weighted average share price at the date of exercise was 557.5 pence (2016: none exercised). The SIP awards do not expire.
Just Eat Joint Share Ownership Plan (“JSOP”)
The JSOP is a share ownership scheme under which the employee and Estera Trust (Jersey) Limited, the EBT Trustee, hold
a joint interest in Ordinary shares.
Interests under the JSOP take the form of restricted interests in Ordinary shares in the Company. An interest permits a
participant to benefit from the increase (if any) in the value of a number of Ordinary shares in the Company over specified
threshold amounts. In order to acquire an interest, a participant must enter into a joint share ownership agreement with
the EBT Trustee, under which the participant and the EBT Trustee jointly acquire the shares and agree that when the
shares are sold, the participant has a right to receive the proportion of the sale proceeds that exceed the threshold amount.
The vesting of interests granted to employees is subject to the option holder continuing to be employed by the Group.
Interests vest in stages over a three-year period commencing on a specified date, typically one year after the date of
grant. The fair value of interests awarded under the JSOP was determined using the Black-Scholes option pricing model.
Awards are no longer being granted under this scheme.
128
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 32. Share based payments continued
Just Eat Joint Share Ownership Plan (“JSOP”) continued
Details of the JSOP interests are as follows:
Outstanding at 1 January
Forfeited during the year
Exercised during the year
Outstanding at 31 December
Exercisable at 31 December
2017
2016
Number of
JSOP awards
(millions)
Weighted
average
exercise price
(pence)
Number of
JSOP awards
(millions)
Weighted
average
exercise price
(pence)
6.1
—
(4.7)
1.4
1.0
59.2
—
62.0
49.8
48.5
11.8
(1.1)
(4.6)
6.1
3.7
54.2
70.5
43.7
59.2
55.2
The range of exercise prices for both current and prior year options outstanding was 4.6 to 76.3 pence. During the year
ended 31 December 2017, the weighted average share price at the date of exercise was 681.1 pence (2016: 448.4 pence).
The weighted average remaining contractual life of the JSOP awards was 6.0 years (2016: 6.9 years).
Just Eat plc Performance Share Plan (“PSP”)
During the current and prior year, PSP awards were granted to certain employees to help incentivise sustained performance
over the long-term, and to promote alignment with the shareholders’ interests. Awards under the PSP are granted as
nil-cost options which vest to the extent performance conditions are satisfied, predominantly over a period of three
years. Details of the PSP interests are as follows:
Outstanding at 1 January
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at 31 December
Exercisable at 31 December
2017
Number of
PSP awards
(millions)
2016
Number of
PSP awards
(millions)
2.6
2.1
(0.5)
(0.1)
4.1
0.1
1.2
1.8
(0.4)
—
2.6
—
The weighted average fair value of the PSP awards at date of exercise was 735.9 pence (2016: 364.5 pence). The weighted
average remaining contractual life of the PSP awards was 8.6 years (2016: 8.9 years).
The vesting of interests granted to employees is subject to the option holder continuing to be employed by the Group.
For members of the Executive Team, 50% of the awards granted have Total Shareholder Return (“TSR”) performance criteria
and 50% are based on EPS targets. The fair value of interests awarded under the PSP was determined using the Black-
Scholes option pricing model, with the TSR performance criteria being calculated using the stochastic simulation model.
Sharesave Plan
During the year eligible employees were offered the option to buy shares in the Company after a period of three years,
which was funded from the proceeds of a savings contract to which they contribute on a monthly basis. Details of the
Sharesave Plan are below:
Outstanding at 1 January
Granted during the year
Forfeited during the year
Outstanding at 31 December
Exercisable at 31 December
2017
2016
Number of
shares
(millions)
Weighted
average
exercise price
(pence)
Number of
shares
(millions)
Weighted
average
exercise price
(pence)
0.9
0.3
(0.1)
1.1
—
377.0
520.0
361.0
412.7
—
0.6
0.4
(0.1)
0.9
—
326.0
439.0
328.9
377.0
—
The fair value of the options on the date of grant was 319.0 pence (2016: 216.0 pence). The weighted average remaining
contractual life of the share options is 2.2 years (2016: 2.8 years).
www.justeatplc.com
129
Financial statements 32. Share based payments continued
Assumptions
The following inputs were applied when using the Black-Scholes option pricing model to determine the fair value
of options granted:
Share price
Exercise price
Expected volatility
Expected life (months)
Risk-free rate
Expected dividend yields
2017
2016
PSP awards Sharesave Plan
PSP awards
Sharesave Plan
581–798p
752p
383–555p
—
41.9–44.8%
12–36
0.1%
—
520p
—
42.1% 46.7–48.0%
12–36
36
0.1%
—
0.5%
—
548p
439p
46.0%
36
0.5%
—
The stochastic model applied to the TSR performance criteria element of the PSP scheme was simulated with 100,000 trials.
33. Financial instruments
Financial instruments comprise financial assets and financial liabilities. The fair values and carrying values held at
amortised cost are set out in the table below. Unless otherwise stated, the valuation basis is level 2, comprising financial
instruments where fair value is determined from inputs other than observable quoted prices for the asset or liability, either
directly or indirectly. There were no transfers between fair value measurement categories in the current or prior year.
b Accounting policies
Fair value measurement
The Group measures certain financial instruments at fair value at each balance sheet date.
The Directors consider the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial
statements approximate to their fair values.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value
hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1
Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2
Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly
observable.
Level 3 Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised at fair value in the financial statements on a recurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant
to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature,
characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Derecognition of financial assets and liabilities
The Group derecognises a financial asset or liability only when the contractual right that gives rise to it is settled, sold, cancelled or expires.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand, short-term deposits and credit card cash received on
behalf of Restaurant Partners.
130
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 33. Financial instruments continued
Carrying value of financial instruments1
Financial assets
Current portion
Cash and cash equivalents2
Trade and other receivables (excluding prepayments)
Derivative financial instruments3
Non-current portion
Available-for-sale investments4
Financial liabilities
Current portion
Trade and other payables (excluding other taxes and social security)
Provisions for liabilities (excluding social security)5
Borrowings
Derivative financial instruments3
Non-current portion
Provisions for liabilities (excluding social security)5
Borrowings
Other long-term liabilities
As at
31 December
2017
£m
As at
31 December
2016
£m
Notes
18
16
19
23
22
23
265.1
6.5
0.1
4.2
130.6
19.8
—
4.1
275.9
154.5
169.5
21.6
0.4
0.6
20.2
0.3
—
101.8
13.6
0.4
—
42.6
0.6
0.3
212.6
159.3
1. For all financial assets and liabilities, the Directors approximate the carrying values to equate to their fair values.
2. Cash and cash equivalents are held by the Group on a short-term basis, with all having a maturity of three months or less.
3. Derivative financial instruments include foreign exchange forward contracts which are measured using quoted forward exchange rates that match the maturity of the
contracts.
4. Available-for-sale investments are financial assets which are measured at fair value using level 3 measurements (being valuation techniques that include inputs that
are not based on observable data). See Note 16 for more detail on available-for-sale investments.
5. Provisions for liabilities include contingent consideration of £30.0 million (2016: £40.8 million) in respect of the SkipTheDishes acquisition and the increased 1.5% stake
acquired in IF-JE. Fair value of the consideration is valued using level 3 measurement techniques, which are the present value of the expected cash outflows of the
obligation. It has been assumed that these businesses will perform in line with current business plans. See Note 22 for more detail on contingent consideration provisions.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern. The current
capital structure of the Group consists of cash and cash equivalents and equity attributable to shareholders of the
Company, comprising issued capital, reserves and retained earnings as disclosed in Notes 24 to 28.
At 31 December 2017, the Group has access to a £350 million (2016: £200 million) revolving credit facility (“RCF”) which
remains undrawn and has an interest rate range of 0.75% to 1.35% (2016: 0.95% to 1.55%) above LIBOR.
The Group is not subject to any externally imposed capital requirements.
Financial risk management
The main financial risks faced by the Group are market risk (which includes currency risk and interest rate risk), credit risk
and liquidity risk. The Board regularly reviews these risks and will enter into derivative financial instruments to hedge risk
exposures. The use of financial derivatives is governed by the Group’s treasury policy approved by the Board, which
provides written principles on foreign exchange risk and the use of financial derivatives and non-financial derivative
financial instruments.
www.justeatplc.com
131
Financial statements 33. Financial instruments continued
Financial risk management continued
a) Market risk management
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.
Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies and consequently exposures to exchange rate
fluctuations arise.
The carrying amounts of the Group’s foreign currency-denominated monetary assets and monetary liabilities were as follows:
Australian dollars
Danish kroner
Euros
Canadian dollars
Swiss francs
US dollars
Brazilian reals
Assets as at 31 December
Liabilities as at 31 December
2017
£m
146.0
91.7
60.1
20.9
10.0
2.8
—
2016
£m
320.1
7.2
36.0
12.7
6.4
—
—
2017
£m
169.4
77.5
38.3
78.2
4.6
1.5
15.4
2016
£m
13.0
17.0
32.1
49.3
3.1
—
—
Foreign currency sensitivity analysis
The Group is primarily exposed to the Australian dollar, Danish krone, euro and Canadian dollar.
The following table details the Group’s sensitivity to a 10% depreciation and 10% appreciation in pound sterling against
the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key
management personnel and represents management’s assessment of a reasonably possible change in foreign exchange
rates. The sensitivity analysis includes only outstanding foreign currency-denominated monetary items and adjusts their
translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans
as well as loans to foreign operations within the Group.
Impact on income statement and other comprehensive income
Appreciation in pound sterling
Depreciation in pound sterling
Income
statement
2017
£m
0.1
(0.3)
(1.6)
(0.5)
—
(0.2)
1.4
Equity
2017
£m
1.9
(1.0)
(0.4)
5.7
(0.5)
—
—
Income
statement
2016
£m
—
0.3
(1.6)
(0.5)
—
—
—
Equity
2016
£m
(27.9)
(0.2)
0.9
3.8
(0.3)
—
—
Income
statement
2017
£m
(0.2)
0.4
1.9
0.6
—
0.2
(1.7)
Equity
2017
£m
(2.4)
1.2
0.5
(6.9)
0.6
(0.1)
—
Income
statement
2016
£m
—
(0.3)
2.0
0.6
—
—
—
Equity
2016
£m
34.1
0.2
(1.1)
(4.7)
0.4
—
—
Australian dollars
Danish kroner
Euros
Canadian dollars
Swiss francs
US dollars
Brazilian reals
The Group’s sensitivity to fluctuations in foreign currencies is the result of increased activity in the foreign-owned
subsidiaries which has led to a significant increase in foreign currency-denominated trade payables, trade receivables
and intercompany borrowings.
Interest rate sensitivity analysis
The sensitivity analysis has been determined based on the exposure to interest rates at the balance sheet date. For assets
and floating rate liabilities, the analysis is prepared assuming the amount of asset/liability outstanding at the balance
sheet date was outstanding for the whole year. A 10% increase or decrease in the interest rate is used when reporting
interest rate risk internally to key management personnel and represents management’s assessment of the reasonably
possible change in interest rates.
If interest rates had been 10% higher/lower and all other variables were held constant, there would be no impact on the
Group’s profit before taxation or equity (2016: £nil).
132
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 33. Financial instruments continued
Financial risk management continued
b) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group’s exposure and the credit ratings of its major counterparties are continuously monitored.
Trade receivables consist of a large number of Restaurant Partners, spread across geographical areas. Ongoing credit
evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee
insurance cover is purchased.
The carrying amount of financial assets recorded in the financial statements, which are stated net of impairment
charges, represents the Group’s maximum exposure to credit risk as no collateral or other credit enhancements are held.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by
international credit rating agencies.
c) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board, which has established an appropriate liquidity
risk management framework for the management of the Group’s short, medium and long-term funding and liquidity
management requirements. The Group manages liquidity risk by maintaining adequate cash reserves, by continuously
monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
In November 2017, the Group signed a £350 million RCF which expires in October 2022 (with two separate one-year
extensions). The existing RCF of £200 million was then cancelled. The new facility is unsecured and contains common
financial covenants for the Company and its subsidiaries including: the ratio of total net debt to uEBITDA must not
exceed 3.0, interest cover ratio of uEBITDA to net finance charges must not be less than 4.0, and any new earn-out
deferred consideration must not exceed one times the uEBITDA. The financial covenants are tested on a quarterly basis
and have been complied with at all measurement points in relation to the old and new RCF. At 31 December 2017, the
Group had not drawn down on either facility. The Group, however, drew down £100.0 million from the new RCF to assist in
January 2018 to fund the Hungryhouse acquisition consideration.
Liquidity and interest risk tables
The following table details the Group’s remaining contractual maturity profile for its financial liabilities and has been
prepared based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can
be required to pay. The table includes both interest and principal cash flows. To the extent that interest flows are a floating
rate, the undiscounted amount is derived from interest rate curves at the balance sheet date. The contractual maturity is
based on the earliest date on which the Group may be required to pay.
Expected maturity – financial liabilities
At 31 December 2017
Non-interest bearing
Discount for time value of money
At 31 December 2016
Non-interest bearing
Discount for time value of money
Weighted
average effective
interest rate
%
Less than
1 year
£m
1–2 years
£m
2–5 years
£m
5+ years
£m
Total
£m
—
—
—
—
192.1
—
192.1
115.3
—
115.3
21.0
(0.5)
20.5
23.9
(0.5)
23.4
—
—
—
21.4
(0.8)
20.6
—
—
—
—
—
—
213.1
(0.5)
212.6
160.6
(1.3)
159.3
www.justeatplc.com
133
Financial statements 33. Financial instruments continued
Financial risk management continued
c) Liquidity risk management continued
Liquidity and interest risk tables continued
The following table details the Group’s remaining contractual maturity profile for its financial assets and has been prepared
based on the undiscounted contractual maturities of the financial assets, including interest that will be earned on those assets.
Expected maturity – financial assets
At 31 December 2017
Non-interest bearing
Fixed interest rate instruments
At 31 December 2016
Non-interest bearing
Fixed interest rate instruments
Weighted
average effective
interest rate
%
Less than
1 month
£m
1–3 months
£m
3 months
to 1 year
£m
1–5 years
£m
5+ years
£m
Total
£m
—
0.6
—
0.6
126.2
149.7
275.9
91.0
63.5
154.5
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
126.2
149.7
275.9
91.0
63.5
154.5
The Group expects to meet its obligations from operating cash flows.
Derivative financial instruments and hedging
The Group has entered into the below material derivative financial instrument and hedging transactions.
a) Foreign-denominated operating costs
During the current year, the Group entered into 36 forward contracts totalling US$22.2 million to hedge highly probable
forecasted US dollar-denominated operating costs. The Group designated US$18.2 million of the foreign exchange
forward contracts as cash flow hedges and at 31 December 2017 has recognised the following:
• of the matured US$18.8 million foreign exchange forward contracts, the amount designated as cash flow hedges
resulted in a net loss of £0.2 million which was 100% effective and recognised in the income statement in the same
line as the hedged item; and
• a financial liability of £0.1 million has been recognised to reflect the fair value of the US$3.4 million foreign exchange
forward contracts that had yet to mature. This balance is currently held in other comprehensive income and will be
released to the income statement when the contracts mature, or the hedge becomes ineffective.
b) La Nevera Roja acquisition
During the year ended 31 December 2016, in connection with the prior year acquisition of 100% of the share capital
of La Nevera Roja, the Group entered into a foreign exchange forward contract to mitigate the foreign exchange risk
of the agreed consideration. Hedge accounting was adopted, with both the foreign exchange forward contract and
the euro-denominated funds being jointly held as a cash flow hedge. This hedge was 100% effective, with a net gain
of £1.9 million being basis adjusted to the consideration paid for La Nevera Roja (the non-financial hedged item).
c) SkipTheDishes acquisition
In the prior year, the Group entered into a foreign exchange forward contract to mitigate the foreign exchange risk of the
initial cash consideration of CA$100.0 million. This contract was designated as the hedging instrument as part of a cash
flow hedge. This hedge was 100% effective, with a net loss of £0.1 million being basis adjusted to the consideration paid
for SkipTheDishes (the non-financial hedged item).
d) Non-hedge accounted derivatives
During the current year, the Group entered into a forward contract to sell AU$29.1 million, which was not hedge accounted.
At 31 December 2017, the forward contract has yet to mature and resulted in a loss of £0.5 million being recognised in the
income statement within other gains and losses.
During the current year, the Group entered into a forward contract to buy CA$10.0 million, which was not hedge accounted.
At 31 December 2017, the forward contract has yet to mature, and resulted in a gain of £0.1 million being recognised in the
income statement within other gains and losses.
134
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 34. Related party transactions
During the year, the Group entered into transactions in the ordinary course of business with related parties.
IF-JE
During the year ended 31 December 2017, the Group provided its associate, IF-JE, with working capital funding of £0.8 million
(2016: £2.1 million). The Group received additional shares as consideration for the funding. The majority shareholder
Movile also participated in the funding. As the IF-JE minority shareholders didn’t participate in the funding, the Group’s
holding in IF-JE increased by less than 0.1%.
During the year ended 31 December 2016, the Group disposed of 100% of the shares in hellofood Brazil to IF-JE for £2.1 million
total consideration.
IF-JE has contracted to provide management services to SinDelantal Mexico. The total charge incurred for the year was
£0.6 million (2016: £0.4 million), which was accrued on the balance sheet at 31 December 2017.
IF-JE NL
During the year ended 31 December 2016, the Group, along with Movile, incorporated IF-JE NL, a holding company based
in the Netherlands. The Group contributed £3.4 million in exchange for 33.3% of the shares in the company, which has been
recognised by the Group as an associate. IF-JE NL used these funds along with £6.6 million of funds contributed by Movile
to acquire 49% of the share capital in ECAC (a subsidiary of the Group) for £12.1 million total consideration.
Compensation of key management personnel of the Group
Key management personnel of the Group comprises members of the Board and the Executive Team. Key management
personnel compensation is shown in the table below:
Short-term employee benefits
Post-employment pension
Share based compensation
Total compensation of key management personnel
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
5.4
0.1
2.0
7.5
4.9
0.1
1.1
6.1
The amounts disclosed in the table above are the amounts recognised as an expense during the reporting period related to
key management personnel of the Group, which are disclosed in more detail in Notes 4 and 32. Further information concerning
Directors’ remuneration, shareholdings, pension entitlements, share options and long-term incentives, as required by the
Companies Act 2006, is shown in the Annual report on remuneration on pages 67 to 83.
On 24 March 2014, prior to the IPO, the Company called all the unpaid subscription amounts, totalling £13.2 million, in
respect of certain shares issued under the JSOP. In order to facilitate this, the Company made loans to participants of
the JSOP and Estera Trust (Jersey) Limited totalling £5.3 million and £7.9 million, respectively. The loans provided to
the participants of the JSOP included loans to key management personnel totalling £4.9 million. As at 31 December 2017,
the amount due from key management personnel in respect of these loans was £0.2 million (2016: £1.1 million).
The weighted average subscription price of the JSOP awards was 28 pence. Should the Company’s share price fall below
the subscription price, on exercise by the employee or on the Company calling the loans, the Company has guaranteed to
fund the shortfall.
Amounts owed by or to related parties
With the exception of key management personnel and the £0.6 million accrued IF-JE management services, no amounts
were owed by and to related parties at the balance sheet date.
Key management personnel’s interests in the PSP, the JSOP and the EMI Scheme
The outstanding share options and awards held by key management personnel are summarised below:
Year of issue
2011
2013
2015
2016
2017
31 December
2017
Number
(‘000)
31 December
2016
Number
(‘000)
1
926
321
658
573
250
3,622
343
678
—
2,479
4,893
Vesting date
Up to April 2012
Up to July 2016
Up to May 2018
Up to December 2019
Up to October 2020
Weighted
average
threshold/
exercise price
(pence)
4.6
62.7
—
—
—
Refer to Note 32 for further details about the PSP, JSOP and EMI schemes.
www.justeatplc.com
135
Financial statements
35. Subsidiaries and associated undertakings
A list of the investments in subsidiaries and associated undertakings, including the name, registered address, proportion of
voting rights held and country of incorporation, is given below.
Company name
Directly held subsidiary undertakings
Just Eat Holding Limited
Just Eat Central Holdings Limited1
Indirectly held subsidiary undertakings
Just Eat (Acquisitions) Holding Limited1
Just Eat.co.uk Limited
Orogo Limited1
Nifty Nosh Limited
1Epos Limited
EatStudent Limited
FillMyBelly Limited
Meal 2 Go Limited
Meal 2 Order.com Limited
Urbanbite Holdings Limited
Urbanbite Limited
Just Eat (Acquisitions) Pty Limited
Menulog Group Limited
Menulog Pty Ltd
Eat Now Services Pty Ltd
Just-Eat.ca Management Limited
Power & Power Inc.
Just Eat Canada Inc.
Restaurants on the Go Inc.
SkipTheDishes Restaurant Services Inc. (“SkipTheDishes”)
Just Eat Denmark Holding ApS
Just Eat.dk ApS
Just Eat Host A/S
FBA Invest SaS2
Eat On Line Sa
Just Eat Ireland Limited
Eatcity Limited
Just Eat Italy S.r.l
Jeb S.r.l
Just-Eat.lu S.à.r.l.
Digital Services LII (GP) S.à.r.l.
Food Delivery Holding 31 S.à.r.l.
SinDelantal Mexico SA de C.V. (“SinDelantal Mexico”)
Inversiones Hellofood S. de R.L. de C.V. (“hellofood Mexico”)
Menulog Limited
Just Eat.no As
El Cocinero a Cuerda SL (“ECAC”)
Just Eat Spain SLU
Eat.ch GmbH
Skip the Dishes Corporation
Registered
address
% holding
(if not 100%)
Country of
incorporation
a
a
a
a
a
a
a
a
a
a
a
a
a
b
b
b
b
c
c
c
c
d
e
e
e
f
f
g
g
h
i
j
j
j
k
k
l
m
n
o
p
q
80
80
67
67
67
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Australia
Australia
Australia
Australia
Canada
Canada
Canada
Canada
Canada
Denmark
Denmark
Denmark
France
France
Ireland
Ireland
Italy
Italy
Luxembourg
Luxembourg
Luxembourg
Mexico
Mexico
New Zealand
Norway
Spain
Spain
Switzerland
USA
1. For the year ended 31 December 2017, Orogo Limited (registered number: 08214903), Just Eat Central Holdings Limited (registered number: 09578919) and Just Eat
(Acquisitions) Holding Limited (registered number: 09574725) were entitled to exemption from audit under section 479A of the Companies Act 2006 relating to
subsidiary companies. The members of these companies have not required them to obtain an audit of their financial statements for the year ended 31 December 2017.
2. Share capital consists of 99.6% Ordinary shares and 0.4% shares with no rights (voting or dividends).
136
Annual Report & Accounts 2017
Notes to the consolidated financial statements continuedYear ended 31 December 2017 35. Subsidiaries and associated undertakings continued
Company name
Associated undertakings
IF-JE Participações S.A. (“IF-JE”)
IF-JE Holdings B.V. (“IF-JE NL”)
Subsidiaries of IF-JE
JustEat Holding Participações Ltda.
Movile Serviços em Tecnologia Ltda.
WH Food Participações Ltda
iFood.com Agência de Restaurantes Online S.A.
Just Eat Brasil Serviços Online e Comércio Ltda.
Central do Delivery Ltda.
iCall Serviços de Atendimento Ltda.
Just Eat Intermediação de Negócios Ltda.
Come Ya S.A.s
C&G Inversiones S.A.s
Delivery Santa Fe S.rl.
Address key
Registered
address
% holding
(if not 100%)
Country of
incorporation
r
s
t
r
t
t
t
t
t
u
v
w
x
32
33
32
32
32
32
32
32
32
32
32
32
32
Brazil
Netherlands
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Colombia
Colombia
Argentina
a Masters House, 107 Hammersmith Road, London W14 0QH.
n Calle Río Rosas, 11 3º. 28003 Madrid.
b L23, 227 Elizabeth Street, Sydney, NSW 2000.
o Calle Condesa de Venadito, n°1 Planta 2, 28027 Madrid.
c
379 Adelaide Street West, Toronto, Ontario M5V 1S5.
p Werdstrasse 21, 8004 Zürich.
d 136 Market Avenue, Winnipeg, Manitoba R3B 0P4.
e Lyngbyvej 20, 2100 København Ø.
f 2 ter rue Louis Armand, 75015, Paris.
g Arthur Cox Building, Earlsfort Terrace, Dublin.
h Via Tizano n.32, Milano.
i Via Giuseppe Mercalli 80, 00197 Roma.
j 20 rue des Peupliers L, 2328 Luxembourg.
q
r
The Corporation Trust Company, Corporation Trust Centre, 1209 Orange Street
Wilmington, DE 19801.
Avenida Coronel Silva Teles, N. 977 – 5º andar, Edifício Dahruj Tower, Cambui,
Campinas, São Paulo 13024-001.
s Taurusavenue 105, 2132 LS Hoofddorp.
t
Rua Coronel Boaventura Mendes Pereira, N. 293 – Mezanino B, Centro, Jundiaí,
São Paulo 13201-801.
u Avenida Queiroz, N. 1700, sala 710, Vila Leopoldina, São Paulo 05319-000.
k Rio Lerma 4–6th floor, Cuauhtemoc, 06500 Mexico City.
v Calle 77a, N. 57–103, Edificio Green Tower, Oficina 806, Barranquilla.
l PwC, Level 8, 188 Quay Street, Auckland 1010.
w Calle 55, N. 28–31, apto 1303, Conjunto Residencial Opus, Bucaramanga.
m Sandakerveien 116, 0484 Oslo.
x San Martin 536 – Planta Baja – Buenos Aires.
All entities are incorporated and have the same year-end reporting date, with the exception of the Group’s associates,
IF-JE NL, IF-JE and its subsidiaries, which have a 31 March year end.
For all entities, the proportion of voting rights held equated to the proportion of ownership interests held.
With exception to FBA Invest SaS, the class of shares for all subsidiaries and associated undertakings of the Group
are Ordinary shares.
36. Contingent liabilities
In October 2017, the European Commission announced that it will be conducting a State Aid investigation into the Group
Financing Exemption contained within the UK’s Controlled Foreign Company (“CFC”) legislation. The Group Financing
Exemption (contained within Chapter 9 of Part 9A TIOPA 2010) was introduced in 2013 when the UK CFC rules were revised.
Similar to other UK based international companies, the Group may be impacted by the final outcome of this investigation.
Whilst management notes there is considerable uncertainty in regards to both the final outcome of the investigation and
any corresponding liability, the Group has calculated that the maximum potential liability would be £14.0 million should
the European Commission conclude the Group Financing Exemption is in contravention of the State Aid provisions. At this
stage, it is the Group’s view that no provision is required in respect of this issue and management will continue to monitor
how the investigation develops.
37. Events after the balance sheet date
On 31 January 2018, the Group completed the acquisition of Hungryhouse (see Note 30).
www.justeatplc.com
137
Financial statements Company balance sheet
As at 31 December 2017
Non-current assets
Investments in subsidiaries
Current assets
Cash and cash equivalents
Trade and other receivables
Total assets
Current liabilities
Trade and other payables
Net current assets
Net assets
Equity
Share capital
Share premium account
Retained earnings
Total equity
As at
31 December
2017
£m
As at
31 December
2016
£m
Notes
39
587.5
581.8
40
24
25
42
0.1
16.1
16.2
0.1
21.8
21.9
603.7
603.7
(0.2)
16.0
(0.1)
21.8
603.5
603.6
6.8
562.7
34.0
603.5
6.8
562.2
34.6
603.6
The Company’s reported loss for the year ended 31 December 2017 was £6.6 million (2016: £5.4 million).
The Company’s financial statements on pages 138 to 141 were authorised for issue by the Board of Directors and signed on its
behalf by:
Peter Plumb
Chief Executive Officer Chief Financial Officer
Paul Harrison
Just Eat plc
5 March 2018
Company registration number
06947854 (England and Wales)
138
Annual Report & Accounts 2017
Company statement of changes in equity
Year ended 31 December 2017
At 1 January 2016
Loss for year
Total comprehensive loss for the year
Issue of capital (net of costs)
Exercise of share options
Share based payment charge
At 31 December 2016
Loss for the year
Total comprehensive loss for the year
Exercise of share options
Share based payment charge
Tax on share options
At 31 December 2017
Company cash flow statement
Year ended 31 December 2017
Operating loss for the year
Adjustments for:
Facility fees and interest paid
Non-cash long-term employee incentive costs
Decrease in receivables
Decrease in payables
Net cash generated from operating activities
Investing activities
Interest received
Net cash used in investing activities
Financing activities
Proceeds from exercise of options and awards
Net cash generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Notes
24, 25
25
4
25
4
Share
capital
£m
6.8
—
—
—
—
—
6.8
—
—
—
—
—
Share
premium
account
£m
555.5
—
—
6.2
0.5
—
562.2
—
—
0.5
—
—
Retained
earnings
£m
37.2
(5.4)
(5.4)
—
—
2.8
34.6
(6.6)
(6.6)
—
6.1
(0.1)
Total
equity
£m
599.5
(5.4)
(5.4)
6.2
0.5
2.8
603.6
(6.6)
(6.6)
0.5
6.1
(0.1)
6.8
562.7
34.0
603.5
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
(4.4)
(5.0)
(2.8)
0.3
3.7
(0.1)
(3.3)
0.2
0.2
3.1
3.1
—
0.1
0.1
(0.9)
0.9
5.2
(0.1)
0.1
—
—
—
—
0.1
—
0.1
www.justeatplc.com
139
Financial statements Notes to the Company financial statements
Year ended 31 December 2017
38. Significant accounting policies
Basis of accounting
These separate Company financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) and IFRS Interpretations Committee interpretations as endorsed by the European Union, and with
those parts of the Companies Act 2006 applicable to companies reporting under IFRS, and therefore comply with Article
4 of the IAS Regulation and IFRS as issued by the International Accounting Standards Board.
The financial statements have been prepared on the historical cost basis, except for certain financial instruments which
have been measured at fair value. In accordance with the exemption allowed under section 408(3) of the Companies Act
2006, the Company has not presented its own income statement and statement of comprehensive income. The Company
has applied the same accounting policies as the Group. These policies have been consistently applied to all years presented.
The Company’s risk management policies relating to market risk, credit risk and liquidity risk are detailed in Note 33.
39. Investments in subsidiaries
At 1 January
Additions
At 31 December
2017
£m
581.8
5.7
587.5
2016
£m
573.7
8.1
581.8
The Company’s operating subsidiaries, directly owned by the Company, are disclosed in Note 35. The investments in
subsidiaries are all stated at cost less cumulative impairment charges.
40. Trade and other receivables
Amounts owed by subsidiary undertakings
Other receivables
Total trade and other receivables
As at
31 December
2017
£m
As at
31 December
2016
£m
6.1
10.0
16.1
10.4
11.4
21.8
At 31 December 2017, other receivables of £10.0 million (2016: £11.4 million) included amounts due from the EBT Trustee
of £7.0 million (2016: £8.3 million) and loans made to the participants of the JSOP of £0.3 million (2016: £1.7 million).
The carrying amounts of these assets approximate their fair value.
There are no overdue or impaired receivable balances (2016: £nil).
41. Related party transactions
Compensation of key management personnel of the Company
Short-term employee benefits
Post-employment pension
Share based compensation
Total compensation of key management personnel
Year ended
31 December
2017
£m
Year ended
31 December
2016
£m
2.2
—
0.6
2.8
2.7
—
0.9
3.6
140
Annual Report & Accounts 2017
41. Related party transactions continued
Compensation of key management personnel of the Company continued
The amounts disclosed in the table are the amounts recognised as an expense during the reporting period relating to key
management personnel of the Company, which are disclosed in more detail in Notes 4 and 32.
Key management personnel are members of the Board. At 31 December 2017, the two Executive members of the Board
were the only employees of the Company (2016: two). Further information on the remuneration of the Directors and
Directors’ interests in Ordinary shares of the Company are disclosed in the Annual report on remuneration on pages 67 to 83.
On 24 March 2014, prior to the IPO, the Company called all the unpaid subscription amounts, totalling £13.2 million,
in respect of certain shares issued under the JSOP. In order to facilitate this, the Company made loans to participants
of the JSOP and Estera Trust (Jersey) Limited totalling £5.3 million and £7.9 million respectively. The loans provided to
the participants of the JSOP included loans to key management personnel totalling £3.0 million. As at 31 December 2017,
the amount due from key management personnel in respect of these loans was £0.2 million (2016: £1.0 million).
The weighted average subscription price of the JSOP awards was 28 pence. Should the Company’s share price fall below
the subscription price, on exercise by the employee or on the Company calling the loans, the Company has guaranteed to
fund the shortfall.
Key management personnel’s interests in the share schemes
The outstanding share options and awards held by key management personnel are summarised below:
Year of issue
2011
2013
2015
2016
2017
31 December
2017
Number
(‘000)
31 December
2016
Number
(‘000)
—
422
72
215
170
879
Vesting date
Up to April 2012
Up to July 2016
Up to April 2018
Up to December 2019
233
2,899
96
346
— Up to September 2020
3,574
Refer to Note 32 for further details about the Group’s share options and award schemes.
42. Retained earnings
At 1 January
Loss attributable to equity shareholders
Share based payment charge
Tax on share options
At 31 December
2017
£m
34.6
(6.6)
6.1
(0.1)
34.0
Weighted
average
threshold/
exercise price
(pence)
—
74.0
—
—
—
2016
£m
37.2
(5.4)
2.8
—
34.6
The distributable reserves of Just Eat plc approximate to the balance of the Company’s retained earnings of £34.0 million
as at 31 December 2017.
www.justeatplc.com
141
Financial statements
Directors’ report
The Directors have pleasure in presenting their Annual
Report and audited financial statements of the Company
and the Group for the year ended 31 December 2017.
The Directors’ Report contains certain statutory,
regulatory and other information and incorporates, by
reference, the Strategic Report and the Corporate
Governance Report included earlier in this document.
Strategic report
A fair review of the Group’s performance during the period
and of its position at the period end, including commentary
on its likely future development and prospects, is set out in
the Strategic Report on pages 2 to 43, whilst information
on principal risks and uncertainties and key performance
indicators is given on pages 22 to 27 and page 19,
respectively. All this information should be read in
conjunction with this report. The Corporate Governance
Report, including the Directors’ Remuneration Report, on
pages 44 to 83, summarises the Company’s governance and
Directors’ remuneration arrangements. Our People report
and Corporate social responsibility report on pages 38 to
43 summarises the Group’s approach to diversity, health
and safety, environmental matters and community matters.
All these sections form part of this Directors’ Report, into
which they are incorporated by reference.
Results and dividends
The audited financial statements of the Group and of the
Company for the period under review are set out on pages
90 to 137 and pages 138 to 141, respectively. The Company
intends to retain its earnings to expand the growth and
development of its business and, therefore, the Directors
do not anticipate paying ordinary dividends in the
foreseeable future.
2018 Annual General Meeting (“AGM”)
An explanation of the resolutions to be proposed at the
AGM, and the recommendation of Directors in relation to
these, is included in the circular to shareholders accompanying
this Annual Report. Resolutions regarding the authority to
issue shares are commented upon later in this report under
share capital.
The Company’s AGM will be held at The Lincoln Centre,
18 Lincoln’s Inn Fields, London WC2A 3ED at 9.30 am
on 26 April 2018.
Research and development
We continue to dedicate resources to improve the
Customer experience and enhance our offering to our
Restaurant Partners. Expenses incurred are capitalised
when it is probable that future economic benefits will be
attributable to the asset and that these costs can be
measured reliably (see Note 6).
142
Annual Report & Accounts 2017
Change of control
In the event of a takeover, a scheme of arrangement (other
than a scheme of arrangement for the purposes of creating
a new holding company) or certain other events, unvested
Executive Director and employee share awards may, in certain
circumstances, become exercisable. Such circumstances
may, although do not necessarily, depend on the achievement
of performance conditions or the discretion of the
Remuneration Committee. The Company does not have
any agreements with any Director or officer of the
Company that would provide compensation for loss
of office or employment resulting from a takeover.
The Group has facility agreements in place with its bank
lenders which contain provisions giving those lenders
certain rights on a change of control of the Company.
Save as otherwise disclosed above, there are no other
significant agreements to which the Company is a party
to that take effect, alter or terminate upon a change of
control following a takeover bid.
Financial instruments
Our risk management policies relating to capital risk and
financial risk (which includes market risk, credit risk and
liquidity risk) are detailed within Note 33 of the notes to
the financial statements on pages 130 to 134. In addition,
the overall risk framework and strategy for the Group is
included within the Strategic Report on pages 2 to 43.
Employment of disabled persons
Our policy in respect of the employment of disabled
persons is set out in Our People report on page 40.
Employee consultation
Details of employee consultation are set out in Our People
report on page 40.
Substantial shareholdings
At 5 March 2018, the Company had been notified in
accordance with the Disclosure and Transparency Rules
of the UK Listing Authority, or was aware, that the following
held, or were beneficially interested in, 3% or more of the
Company’s shares at that date:
The Sara Marron Discretionary
Settlement (the “SM Trust”)2
Capital Group Companies, Inc.
Deutsche Bank AG3
BlackRock, Inc.
Number of
Ordinary shares
% of voting
rights 1
91,472,442
53,980,409
39,101,331
31,837,455
13.45
7.94
5.75
4.68
1. Total voting rights attached to the issued share capital of the Company
comprising 680,045,152 Ordinary shares each of £0.01 nominal value, being the
680,045,152 Ordinary shares in issue at 5 March 2018.
2. STM Fidecs Trust Company Limited is the holder of the registered legal title to
the Ordinary shares beneficially owned by the SM Trust.
3. As at 31 December 2017 Deutsche Bank AG held 40,760,590 shares
representing 5.99% of the voting rights in the Company at that time.
The Company received no notifications of interests
indicating a different whole percentage holding at
31 December 2017 other than as shown in the footnotes
to the table above.
Directors
The Directors of the Company who served throughout the
period and up to the date of signing this Annual Report
(except where noted) were:
• Andrew Griffith (Interim Non-executive Chairman and
Senior Independent Director)
• Peter Plumb (CEO) (appointed 18 September 2017)
• Paul Harrison (CFO)
• Gwyn Burr
• David Buttress
• Frederic Coorevits
• Alistair Cox (appointed 2 May 2017)
• Roisin Donnelly
• Diego Oliva
• Dr. John Hughes (passed away 11 June 2017)
Certain key matters in connection with the Directors are
shown below:
• The business of the Company is managed by its
Directors, who may exercise all powers of the Company
subject to the Articles of Association and UK legislation.
Directors of the Company are appointed either by the
Board or by shareholders under the Company’s Articles
of Association and may resign or be removed in a similar
manner.
• Biographical details of the current Directors are set out
on pages 46 and 47. The Directors’ interests in the Ordinary
share capital of the Company and any interests known to
the Company of their connected persons are set out in
the Report of the Remuneration Committee commencing
on page 65.
• The Company has made qualifying third-party indemnity
provisions for the benefit of its Directors in relation to
certain losses and liabilities that they may incur in the
course of acting as Directors of the Company, its subsidiaries
or associates, which remain in force at the date of this
report. No member of the Board had a material interest
in any contract of significance with the Company or any
of its subsidiaries at any time during the year, except for
their interests in shares and in share awards and under
their service agreements and letters of appointment
disclosed in the Report of the Remuneration Committee
commencing on page 65.
Share capital
Certain key information relating to the Company’s shares
is shown below:
• The Company’s shares at the year end comprised entirely
Ordinary shares of £0.01 each, which rank equally in
all respects.
• The rights attached to the shares, in addition to those
conferred on their holders by law, are set out in the
Company’s Articles of Association. The Company’s
Articles of Association may only be amended by a special
resolution of the shareholders.
• There are no restrictions on the transfer of shares or on
the exercise of voting rights attached to them, except: (i)
where the Company has exercised its right to suspend
their voting rights or to prohibit their transfer following
the omission of their holder, or any person interested in
them, to provide the Company with information requested
by it in accordance with Part 22 of the Companies Act
2006 (the “Act”); or (ii) where their holder is precluded
from exercising voting rights by the FCA’s Listing Rules
or the City Code on Takeovers and Mergers.
• The Group operates employee share plans as set out in
the Report of the Remuneration Committee commencing
on page 65 and in Note 32 of the financial statements.
• Shares held by the Employee Benefit Trusts (“EBTs”)
abstain from voting.
• Save as described above, shares acquired through the
Company’s employee share plans rank pari passu with
shares in issue and have no special rights.
• At the year end, the Company had authority exercisable
by the Directors to issue up to 451,456,911 shares subject
to certain restrictions. The Company will seek to renew
its authority to issue shares at the 2018 AGM.
• At the AGM on 27 April 2017, shareholders granted the
Company limited authority to make market purchases of
up to 10% of the Company’s issued share capital. This is a
standard authority which many listed companies maintain
and which the Company has no current intention of
utilising, however, it will seek to renew this authority
again at the 2018 AGM.
• Save as described under the Board Representation
Agreement described below, the Company is not aware
of any agreements or control rights between shareholders
that may result in restrictions on the transfer of securities
or on voting rights.
Further information regarding the Company’s share capital,
including the changes to this during the year, is set out in
Note 24 of the financial statements.
www.justeatplc.com
143
Financial statements Directors’ report continued
Board Representation Agreement
At the time of the Company’s IPO, the SM Trust (the
“Shareholder Party”) entered into an agreement (the
“Agreement”) with the Company which entitles the
Shareholder Party to appoint one Director to the Board of
the Company. Frederic Coorevits, who is the nominated
appointee on behalf of SM Trust, will remain on the Board
until he steps down or the Agreement lapses in the event
of the Shareholder Party ceasing to hold at least 10% of the
Ordinary shares.
The Shareholder Party has also agreed not to propose the
appointment of a further Board representative or vote
against the election or re-election of a person the Board
has put forward for election or re-election as a Director of
the Company.
Corporate governance
The Company is committed to achieving the highest
standards of corporate governance. Its application of
the principles of good governance in respect of the UK
Corporate Governance Code for the period under review
is described in the Corporate Governance Report on
pages 44 to 45.
The Directors’ responsibility statement in respect of this
Annual Report and the financial statements appears on
page 145.
Tax governance
The Company is committed to high standards of tax
governance. In complying with para 16(2) and para 25(1),
Sch 19 of the UK Finance Act 2016, the Group’s Tax
Strategy, as approved by the Board, is published on the
Corporate website.
Going concern and risk management
The Company’s statement with regard to the going
concern basis for preparing the financial statements is
included in Principal Risks and Uncertainties on page 23.
The Directors carried out a robust assessment of the
principal risks facing the Group. This included those that
could threaten its business model, future performance,
solvency or liquidity. Details of how we manage and
mitigate these are set out in the Report of the Audit
Committee on pages 56 to 60.
Political donations
The Company did not make any political donations during
the year.
Greenhouse gas emissions (unaudited)
This section has been prepared in accordance with our
regulatory obligation to report greenhouse gas emissions
pursuant to section 7 of The Companies Act 2006 (Strategic
Report and Directors’ Report) Regulations 2013.
The table below shows our emissions performance for the
years ended 31 December 2015, 2016 and 2017. Our 2017
emissions disclosure has been independently verified by
Carbon Credentials against the ISO 14064-3 standard.
Scope 1 combustion of fuel and
operation of facilities (tCO2)
Scope 2 (location based) – electricity
(tCO2)
Scope 2 (market based) – electricity
(tCO2)
Scope 3 business travel (tCO2)
Total Scope 1, 2 & 3 emissions
(location-based)
tCO2e per £m Scope 1, 2 & 3
emissions (location based)
2017
2016
2015
1,118
1,088
1,026
615
802
627
636
910
2,625
2,306
n/a
771
4,358
4,196
2,424
8.0
11.2
9.8
Scope 1 comprises vehicle emissions in relation to operational visits to restaurants.
Scope 2 comprises our energy consumption in buildings.
Scope 3 comprises other business travel.
Data notes:
• We quantify and report our organisational greenhouse
gas emissions in alignment with the WRI’s Greenhouse
Gas (“GHG”) Protocol Corporate Accounting and
Reporting Standard.
• Emissions from the consumption of electricity outside
of the UK are reported in tCO2 rather than tCO2e since
the International Energy Agency emission factors for
electricity currently account for carbon dioxide
emissions only.
• This year we have calculated our Scope 2 emissions
using the location based and market based methods.
Under the location based method, we have utilised the
UK Government and the International Energy Agency
country-specific emission factors for electricity
generation. Under the market based method, for our
European operations, we have utilised the residual mix
electricity emission factor published by RE-DISS as we
have been unable to obtain tariff specific emission
factors from our suppliers, and for all non-European
suppliers we have utilised the location-based grid
electricity emission factors as residual emission factors
have yet to be calculated outside of Europe. This approach
is in line with the data hierarchy outlined in the GHG
Protocol Scope 2 Guidance.
• In line with previous years we have presented our total
emissions in relation to revenue, in order to represent
how our emissions are impacted by the growth in
the business.
144
Annual Report & Accounts 2017
Each of the Directors, whose names and functions are
listed on pages 46 to 47, confirm that, to the best of each
person’s knowledge and belief:
• the Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s and the
Group’s performance, business model and strategy;
• the Company and Group financial statements, which
have been prepared in accordance with IFRS, as adopted
by the EU, give a true and fair view of the assets, liabilities,
financial position and profit of the Group and the Parent
Company; and
• the Strategic Report and Directors’ Report include a
fair review of the development and performance of the
business and the position of the Company and the Group,
together with a description of the principal risks and
uncertainties that they face.
Disclosure of information to the auditor
Each of the Directors of the Company at the time when
this report was approved confirms that:
• so far as the Director is aware, there is no relevant audit
information of which the Company’s auditor is unaware; and
• he or she has taken all the steps that he or she ought
to have taken as a Director in order to make himself
or herself aware of any relevant audit information and
to establish that the Company’s auditor is aware of
that information.
This confirmation is given in accordance with section 418(2)
of the Act.
Auditor
Deloitte LLP, the Group’s auditor, has indicated its willingness
to continue in office and, on the recommendation of the
Audit Committee and in accordance with section 489
of the Act, a resolution to reappoint it will be put to the
2018 AGM.
On behalf of the Board
Tony Hunter
Company Secretary
5 March 2018
Performance
Emissions have increased by 4% which is due to the
continued growth of the business. In the prior year,
emissions increased by 73% due to M&A and integration
activities (five businesses acquired in 2015 to 2017) and an
increase in the number of leased vehicles across the Group.
In the prior year, the sale of the Group’s business in
Benelux would not have had a material impact on total
emissions given its size relative to the remaining Group.
Related party transactions with Directors
Please refer to Note 34 for details of transactions entered
into with related parties.
Overseas branches
The Company has no branches outside the UK.
Events after the balance sheet date
On 31 December 2018, the Group completed the acquisition
of Hungryhouse. See Note 30 of these financial statements
for more details on this acquisition.
Directors’ responsibility statement
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulations. UK company law requires
the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared
the Group and Parent Company financial statements in
accordance with IFRS, as adopted by the European Union.
Under UK company law the Directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Group
and the Company, and of the profit or loss of the Group for
that period. In preparing these financial statements, the
Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether applicable IFRSs, as adopted by the
European Union, have been followed, subject to any
material departures disclosed and explained in the
financial statements; and
• prepare the financial statements on a going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and the Group and enable them to ensure that the financial
statements and the Directors’ Remuneration Report comply
with the Act and, as regards the Group financial statements,
Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Company and the Group and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
www.justeatplc.com
145
Financial statements Glossary of terms
Active Customers – those Customers that have placed
at least one order within the last 12 months.
Adjusted earnings per share – profit attributable to the
equity shareholders, before long-term employee incentive
costs, exceptional items, other gains and losses, foreign
exchange gains and losses, amortisation of acquired
intangible assets, share of results from associates below
uEBITDA, and the tax impact of these adjusting items;
divided by the weighted average number of shares
outstanding during the period.
Admission – the admission of the Ordinary Shares to the High
Growth Segment of the Main Market of the London Stock
Exchange which occurred on 8 April 2014. On 6 May 2014,
the Group transitioned to the Premium Listing Segment
of the Official List of the UK Financial Conduct Authority.
AGM – the Annual General Meeting of the Company, which
will be held on 26 April 2018 at 9.30am at The Lincoln Centre,
18 Lincoln’s Inn Fields, London WC2A 3ED.
ANZ – the Group’s operations in Australia & New Zealand.
AOV – average order value.
APA – advanced pricing agreement.
Articles – the Articles of Association of the Company.
Average revenue per order (“ARPO”) – calculated as order
driven revenue divided by the number of orders.
Benelux – the Group’s former operations in Belgium and
Netherlands (sold in August 2016).
BEPS – base erosion and profit shifting.
Board – the Board of Directors of Just Eat plc.
Cash conversion – net cash flow generated from operating
activities, excluding those amounts held for Restaurant
Partners, as a percentage of uEBITDA.
CFC – controlled foreign company.
CGU – cash generating unit.
CMA – the UK Competition and Markets Authority.
CODM – the chief operating decision maker.
Companies Act – the Companies Act 2006 (as amended).
Company – Just Eat plc, a company incorporated in
England and Wales with registered number 06947854,
whose registered office is at Masters House,
107 Hammersmith Road, London W14 0QH.
Disclosure and Transparency Rules – the Disclosure and
Transparency Rules made under Part VI of the Financial
Services and Markets Act 2000 (as amended).
EBITDA – earnings before finance income and costs,
taxation, depreciation and amortisation.
EBTs – the Employee Benefit Trusts, which are administered
by Estera Trust (Jersey) Limited (formerly known as
Appleby Trust (Jersey) Limited), Ocorian Limited and
Equiniti Share Plan Trustees Limited.
ECAC – El Cocinero a Cuerda SL.
EMI Scheme – the Just Eat Enterprise Management
Incentive Scheme.
EPS – earnings per share.
Established Markets – includes the Group’s operations in
Canada, Denmark, France, Ireland, Norway, Switzerland
and Benelux (sold August 2016).
ETR – effective tax rate.
EU – the European Union.
Executive Directors – Peter Plumb (appointed 18 September
2017), Paul Harrison, David Buttress (resigned 31 March 2017)
and John Hughes as Executive Chairman (between 1 April
and 28 April 2017).
Exceptional items – items that, by virtue of their nature
and incidence, have been disclosed separately in order
to draw them to the attention of the reader of the
financial statements.
Executive Team – The Executive Directors, Adrian Blair
(Chief Operating Officer), Graham Corfield (UK Managing
Director), Barnaby Dawe (Chief Marketing Officer), Jerome
Gavin (International Managing Director), Fernando Fanton
(Chief Product and Technology Officer) and Lisa Hillier
(Chief People Officer).
FRC – the Financial Reporting Council.
FTSE – The Financial Times Stock Exchange Index.
FTSE (ex IT) – FTSE excluding investment trusts.
Full-time equivalent (“FTE”) – the number of employees
after factoring in reduced hours worked by part time staff.
FVLCD – fair value less costs of disposal.
FVTPL – fair value through profit or loss.
GAAP – generally accepted accounting principles.
Constant currency – applying the foreign exchange rates
used in the current period to the results of the prior period.
GDPR – General Data Protection Regulation, as defined
by Regulation (EU) 2016/679.
Corporate website – www.justeatplc.com.
GHG – greenhouse gases.
CSOP – the Just Eat Company Share Option Plan.
Customer – end users of the Just Eat websites and apps,
who use them to place orders online.
DCF – discounted cash flow.
Developing Markets – includes the Group’s operations in
Italy, Mexico and Spain.
Directors – the Directors of the Company whose names are
set out on pages 46 and 47.
Group – Just Eat plc and its subsidiary undertakings
(as defined by the Companies Act 2006).
hellofood Brazil – Hellofood Intermediacal de Negocios Ltd,
which was acquired in February 2016 and immediately sold
to IF-JE, an associated undertaking of the Group.
hellofood Mexico – Inversiones Hellofood S. de R.L. de C.V.,
which was acquired in February 2016.
HMRC – Her Majesty’s Revenue & Customs.
146
Annual Report & Accounts 2017
Hungryhouse – Hungryhouse Holdings Limited, acquired
by the Group on 31 January 2018.
IAS – International Accounting Standard(s).
IF-JE / iFood – IF-JE Participações S.A., the Group’s Latin
American associated undertaking.
IF-JE NL – IF-JE Holdings B.V., the Group’s associated
undertaking that holds a 49% stake in our Mexican
business. This associate is 67% owned by Movile.
IFRS – International Financial Reporting Standard(s)
as adopted for use in the European Union.
IP – intellectual property.
IPO – initial public offering of the Company’s Ordinary
Shares immediately post-admission on 8 April 2014.
Just Connect Terminal (“JCT”) – mobile network
technology provided to Restaurant Partners, which
enables them to receive orders from Just Eat.
Just Eat – the Group or Just Eat plc and its subsidiary
undertakings (as defined by the Companies Act 2006).
JSOP – the Just Eat Joint Share Ownership Plan.
KPI – key performance indicator.
La Nevera Roja – Grupo Yamm Comida a Domicilio S.L.,
which was acquired in April 2016 and subsequently merged
with Just Eat Spain SLU.
LTIP – long-term incentive plan.
MAP – mutual agreement procedure.
Marketplace models – A two-sided marketplace is the
‘traditional’ marketplace model, consisting of the Customer
and the Restaurant Partner, who manages all food related
logistics, with Just Eat managing the payment processing.
In a three-sided marketplace, a delivery partner is
introduced into the above market to manage the delivery
of food from the Restaurant Partner to the Customer.
Payment by the Customer must be made online.
Other gains and losses – the profits or losses arising on the
disposal and deemed disposal of operations, gains and
losses on financial assets classified as fair value through
profit or loss, gains and losses on derivative financial
instruments, and movements on provisions for deferred
consideration or obligations to acquire minority interests.
Partner centre – the global support portal for Just Eat’s
Restaurant Partners, featuring restaurant and menu
management tools, reviews and ratings, order history and
invoicing.
People – all 2,900 of our Just Eaters who live and breathe
our values of Make Happy, Razor Sharp and Big Hearted.
PizzaBo – Webs S.r.l, which was acquired in February 2016
and subsequently merged with Just Eat Italy S.r.l.
PSP – the Just Eat plc Performance Share Plan
QSR – Quick Service Restaurant chains are restaurants
that offer standardised, mostly counter-service ‘hand held’
food at a mass-market price point. The ambiance is mostly
functional for a high turnover environment – fixed seating
and table tops, fluorescent lighting and the chain’s
branded graphics. The segment is dominated by global
branded chains e.g. McDonald’s, KFC, Subway, Burger King.
R&D – research and development.
Restaurant Partner – any restaurant signed up to Just Eat,
offering either delivery or collection services via the Just
Eat websites or apps.
Restaurant Services – a programme that provides
exclusive deals and discounts on key supplies to our
Restaurant Partners.
Shareholder – a holder, for the time being, of Ordinary
shares of the Company.
SinDelantal – SinDelantal Mexico S.A. de C.V., the Group’s
Mexican subsidiary.
SkipTheDishes – SkipTheDishes Restaurant Services Inc.,
and its subsidiaries.
Menulog – Menulog Group Limited and its subsidiary
undertakings, which include the Group’s operations in
Australia & New Zealand.
SIP – the Just Eat Share Incentive Plan.
The Code – UK Corporate Governance Code 2016.
MGL – Menulog Group Limited.
Mobile device – smartphones, tablets and any other
handheld computing device.
Movile – Movile Internet Movel S.A.
NCI – non-controlling interest.
NIC – national insurance contribution.
Non-executive Directors – the Non-executive Directors
of the Company designated as such on pages 46 and 47.
OECD – the Organisation for Economic Co-operation.
TSR – total shareholder return, being the growth in value
of a shareholding over a specified period, assuming that
dividends are reinvested to purchase additional shares.
uEBITDA – the main measure of profitability used by
management to assess the performance of the Group’s
businesses is Underlying EBITDA. It is defined as earnings
before finance income and costs, taxation, depreciation
and amortisation (“EBITDA”), and additionally excludes
long-term employee incentive costs, exceptional items,
foreign exchange gains and losses, other gains and losses,
and the share of results from associates falling outside of
this definition.
Orderpad – internet connected Android tablet provided to
Restaurant Partners, which enables them to receive orders
and provide order tracking to Customers.
VAT – UK value added taxation.
VIU – value in use.
Ordinary Shares – the Ordinary Shares with a nominal
value of £0.01 each in the share capital of the Company.
www.justeatplc.com
147
Financial statements Company information
Company secretary
Tony Hunter
Company number
06947854
Registered office
Masters House
107 Hammersmith Road
London
W14 0QH
United Kingdom
Website
www.justeatplc.com
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
United Kingdom
Twitter: @AskEquiniti
Phone: 0371 384 2030 (UK holders)
Phone: +44 121 415 7047 (international holders)
Website: www.shareview.co.uk
Auditor
Deloitte LLP
Corporate advisers
Brokers
Goldman Sachs International
UBS Limited
Solicitors
Linklaters LLP
Taylor Wessing LLP
Bird & Bird LLP
Just Eat plc is committed to the environmental issues reflected in this
Annual Report. The report is printed on Splendorgel, which is FSC® certified
and ECF (Elemental Chlorine Free).
Printed in the UK by Park Communications using their environmental
printing technology. Both manufacturing mill and the printer are registered
to the Environmental Management System ISO14001 and are Forest
Stewardship Council® (FSC) chain-of-custody certified.
148
Annual Report & Accounts 2017
Board photography: Matt Leetee
Five-year summary
The following tables sets out a summary of selected audited key financial information for the Group.
Summary income and cash flow statements
Revenue
uEBITDA
(Loss)/profit before tax
(Loss)/profit for the year
Adjusted basic earnings per share (pence)
Net cash generated from operating activities
Net cash outflow used in investing activities
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Summary balance sheet
Net assets
Cash and cash equivalents
2017
£m
546.3
163.5
(76.0)
(103.5)
16.8
166.7
(35.7)
2.7
133.7
2017
£m
726.7
265.1
Year ended 31 December
2016
£m
375.7
115.3
91.3
71.4
12.2
97.0
(167.5)
2.3
(68.2)
2015
£m
247.6
59.7
34.6
23.0
6.6
74.2
(465.5)
425.1
33.8
As at 31 December
2016
£m
825.7
130.6
2015
£m
625.9
192.7
The following table sets out a summary of selected key performance indicators for the Group.
Key performance indicators (unaudited)
Orders (millions)
ARPO (£)
Active Customers (millions)
Restaurant Partners (‘000)
2017
172.4
2.92
2017
21.5
82.3
Year ended 31 December
2016
136.4
2.59
2016
17.6
68.5
2015
96.2
2.35
As at 31 December
2015
13.4
61.5
2014
£m
157.0
32.6
57.4
51.8
4.2
38.1
(19.3)
84.2
103.0
2014
£m
183.8
164.4
2014
61.2
2.29
2014
8.1
45.7
2013
£m
96.8
14.1
10.2
6.8
1.4
19.2
(7.7)
—
11.5
2013
£m
53.6
61.6
2013
40.2
2.11
2013
5.9
36.4
Keep up to date
For more information on our business and all our
latest news and press releases simply visit us at
www.justeatplc.com
www.justeatplc.com
149
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7
Fleet Place House
2 Fleet Place
London EC4M 7RF
United Kingdom
Tel: +44 (0) 20 3114 3333
Email: investor.relations@just-eat.com
www.justeatplc.com