TIDMJE.
RNS Number : 7641G
JUST EAT plc
06 March 2018
6 March 2018
Just Eat plc
Full Year 2017 Results
Exceeding expectations whilst investing for future growth
Just Eat plc (LSE: JE.) today reports its results for the year
ended 31 December 2017, with revenue up 45% to GBP546 million and
Underlying EBITDA(1) up 42% to GBP164 million.
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
o Our 10.5 million Active Customers(2) purchased GBP1.9 billion
worth of food from our 28,400 entrepreneurial Restaurant Partners,
delivering UK revenue of GBP304 million
o The Just Eat brand reached its highest ever brand awareness
due to innovative brand and marketing initiatives, including X
Factor sponsorship and the latest Magic TV campaign
o Continued expansion of delivery pilots with growing number of
branded restaurant chains(3)
-- Continued strong momentum internationally
o International revenue grew 75%, now representing 44% of
Group
o SkipTheDishes delivered 264% pro forma(4) order growth,
becoming the second largest business in the Group
o France and Italy both surpassed 1 million Active Customers
during the year
-- Strong cash flow leaves us in a position of great strength,
enabling investment in significant new opportunities
Financial highlights
-- Orders up 26% to 172 million
-- Revenue up 45% to GBP546 million, up 30% on an organic basis(5)
-- uEBITDA(1) up 42% to GBP164 million
-- Non-cash impairment charge of GBP180 million recognised
against Australia & New Zealand goodwill
-- Excluding the non-cash impairment, profit before tax of GBP104 million
-- Adjusted basic earnings per share(6) up 38% to 16.8p
-- Net operating cash flow up 72% to GBP167 million
-- Statutory loss before tax of GBP76 million; basic earnings per share loss of 15.2p
Peter Plumb, Chief Executive Officer, commented:
"2017 was a record year for Just Eat. We helped 21.5 million
customers order 172 million takeaways around the world, growing
Group revenue by 45% to GBP546 million. More Restaurant Partners
joined our platform, increasing the breadth of choice for our
customers and strengthening the Group's geographical coverage to
over 82,000 restaurants.
"As the new CEO, I will be increasing our investment in brand,
Developing Markets and delivery services that will be engineered to
complement our thriving marketplace business by bringing more
choice to our takeaway-loving Customers."
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 GBP215 -
235 million in 2018. We will expand our investments in brand,
Developing Markets and delivery services, resulting in Group
revenue of between GBP660 - 700 million and uEBITDA of GBP165 - 185
million in 2018.
________________
(1) The main measure of profitability used by management to
assess the performance of the Group's businesses is Underlying
EBITDA ("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.
(2) Defined as those Customers that have placed at least one
order within the last 12 months.
(3) "Branded restaurant chains" denotes Quick Service Restaurant
branded chains, for example KFC, Burger King and Subway.
(4) In order to give a more meaningful comparison, pro forma
refers to the orders processed by SkipTheDishes during the calendar
year 2016, rather than from the date of its acquisition by the
Group in December 2016.
(5) Organic growth excludes the impact from the acquisition of
SkipTheDishes, the disposal of our Benelux businesses in 2016, and
currency movements.
(6) Adjusted basic 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
of acquired intangible assets, share of results from associates
below uEBITDA, and the tax impact of these adjusting items.
- Ends -
Presentation
The Company will hold a presentation for analysts and investors
today at 9.30am at The Lincoln Centre, 18 Lincoln's Inn Fields,
London WC2A 3ED.
The presentation will be webcast live at
www.justeatplc.com/investors/results-reports.
An on-demand replay will also be available on the Just Eat
website following the presentation.
Enquiries:
+44 (0)20 3667
Just Eat 6961
Peter Plumb, Chief Executive Officer
Paul Harrison, Chief Financial Officer
Adam Kay, Head of Investor Relations
+44 (0)20 7404
Brunswick Group LLP 5959
Sarah West, David Litterick, Chris
Buscombe
Forward looking statements
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". By their nature,
forward-looking statements involve risk and uncertainty since they
relate to future events and circumstances. Actual results may, and
often do, differ materially from any forward-looking statements.
Any forward-looking statements in this announcement reflect
management's view with respect to future events as at the date of
this announcement. Save as required by law or by the Listing Rules
of the UK Listing Authority, the Company undertakes no obligation
to publicly revise any forward-looking statements in this
announcement following any change in its expectations or to reflect
events or circumstances after the date of this announcement.
About Just Eat
Just Eat plc operates a leading global marketplace for takeaway
food delivery. Headquartered in London, we use proprietary
technology to offer a quick and efficient digital ordering service
for 21.5 million Customers and 82,300 Restaurant Partners across
the UK, Australia & New Zealand, Canada, Denmark, France,
Ireland, Italy, Mexico, Norway, Spain, Switzerland and Brazil. Just
Eat is a member of the FTSE 100 Index.
2017 PERFORMANCE REVIEW
Overview
2017 was a very successful year for Just Eat. We added a net
13,800 restaurants to end the year with 82,300 Restaurant Partners
on our platform (2016: 68,500) and 21.5 million Active Customers
(2016: 17.6 million) who ordered GBP3.3 billion of food in
2017.
The growth of our marketplace and increase in Customer numbers
translated into 172.4 million orders
(2016: 136.4 million), up 26%, and revenue of GBP546.3 million
(2016: GBP375.7 million), up 45%. Whilst we continued to invest in
initiatives designed to drive an even better experience for both
our Customers and Restaurant Partners, we also grew uEBITDA by 42%
to GBP163.5 million (2016: GBP115.3 million). Taking into account
the non-cash, IFRS-based impairment charge of GBP180.4 million in
Australia & New Zealand, we posted a statutory loss of GBP76.0
million.
2017 was a highly successful year for our UK business. Supported
by innovative marketing campaigns, which raised our brand awareness
to new highs, we surpassed our previous monthly order record,
achieving 10 million orders in December. This was a strong
performance and is attributable to exceptional execution by the
team.
We also delivered excellent growth in our international markets,
led by SkipTheDishes in Canada, which outperformed our expectations
in its first full year as part of the Group. Elsewhere, our
businesses in Spain and Italy continued to deliver strong growth,
in still early-stage markets. We now have over one million Active
Customers in each of our Spanish, French and Italian markets. In
Australia & New Zealand, we have now migrated our platforms to
the Just Eat core platform and, in 2018, will complement our
marketplace business with the addition of restaurant delivery
services using the advanced technology and logistics capabilities
of SkipTheDishes.
Across the Group, we achieved our target of expanding our
leading marketplace businesses into second tier cities, adding
Customers, Restaurant Partners and driving order growth. We have
also learned a great deal from our pilots with branded restaurant
chains in the UK, which have proven successful, fuelling a
compelling expansion opportunity and basis for future
investment.
2017 was a year of great change for the business. Despite
management successions and the sad loss of our Chairman, Dr. John
Hughes, the team delivered an excellent set of results providing
the business with a strong base as we enter 2018.
Strategic progress
We operate in a highly dynamic market and constantly seek to
innovate to meet the evolving demands of our Customers and
Restaurant Partners.
In 2017, we continued to improve our Customers' experience by
offering greater choice, including more independent Restaurant
Partners as well as the addition of branded restaurant chains to
our UK marketplace. We focused on improving Customer availability
with platform reliability improvements, and through continuous
improvement to our apps.
Feedback from our Restaurant Partners is clear. Our Orderpad
terminal is an essential tool to improve the Customer experience
and their business performance. We rolled out a further 12,900
units across our estate and 78% of UK orders are now processed on
an Orderpad. These devices provide Restaurant Partners with
insights into their operations and performance, and through
functions such as "on its way" notifications, enables a better,
more personalised experience for Customers.
Going forward, we see great potential, through Orderpad, to
empower our Restaurant Partners to be more agile through the
introduction of additional features. We continue to use Orderpad to
showcase additional restaurant services, such as our negotiated
favourable procurement contracts with relevant vendors, which we
also communicate at our regular face to face meetings through our
field sales teams.
We continue to champion the interests of our independent
Restaurant Partners. In 2017, we successfully sponsored one of
Britain's biggest broadcast TV shows, the X Factor, and Dublin
Bikes in Ireland. Across several markets, we have been a driving
force behind the establishment of industry representation groups,
such as the British Takeaway Campaign, which promotes and
represents the interests of the independent takeaway sector.
Acquisition updates
2017 saw the first full year of contribution from our December
2016 acquisition of SkipTheDishes. This acquisition significantly
strengthened our market leadership in Canada and we are very
pleased with its performance this year, which materially exceeded
our expectations.
SkipTheDishes operates a delivery-based model highly suited to
the Canadian market, which features a significant proportion of
branded restaurant chains requiring logistics services.
SkipTheDishes delivered revenue of GBP50.4 million and, as it
establishes its presence across Canada, an uEBITDA loss of GBP8.5
million. SkipTheDishes has demonstrated a clear route to profit in
markets where it has built up a strong restaurant base and
associated customer demand. Furthermore, it offers expertise in
managing delivery services that we will deploy, where relevant, to
other parts of the Group.
Throughout 2017, we worked with the Competition and Markets
Authority in the UK as it evaluated our proposed acquisition of
Hungryhouse. We were pleased to secure approval of this transaction
and, consequently, completed the acquisition on 31 January 2018 for
GBP240.0 million payable in cash, of which an estimated GBP24.0
million will be deferred until 2019. We have now started the
process of transitioning Hungryhouse's restaurants and customers to
the Just Eat platform.
Branded restaurant chains
In 2017, we saw a number of prominent branded restaurant chains
seek access to the growing demand of people wanting to enjoy
takeaway food in their own homes. We believe this represents a new
GBP18 billion market opportunity for Just Eat, which will
complement our leading marketplace businesses and is therefore a
significant new driver of long-term growth. As market leader, we
were approached by a number of these branded restaurant chains
seeking to explore how they might join our marketplace and how Just
Eat could manage the delivery component of the service.
The provision of delivery services is not new for Just Eat. For
over a decade, we have operated a profitable delivery business in
our original market, Denmark, and we now have the highly successful
SkipTheDishes in Canada. Through the Group we utilise three
methodologies for delivery: employing our own drivers in Denmark;
using couriers in Canada; and working with third parties in other
markets, including the UK. In each market, we will continue to
adopt the most appropriate and advantageous model.
In the UK, we entered into a series of controlled pilots with
selected branded restaurant chains designed to evaluate the impact
on our marketplace of adding their restaurants to our platform and
assess the economics associated with providing delivery services.
These pilots, together with Customer market research, have proven
the case for combining our traditional marketplace business, which
sees Restaurant Partners managing their own delivery needs, with
the addition of selected branded restaurant chains.
Whilst delivery-based activity has a different margin profile to
our marketplace businesses, our ambition is to offer a hybrid
marketplace model, fully aligned to our Customer's needs and
Restaurant Partners' commercial requirements - whilst managing the
economics of such models with great care.
Segment results
United Kingdom
The UK business delivered a strong performance in 2017 with
revenue growth of 28% to GBP303.8 million (2016: GBP237.1 million),
whilst uEBITDA increased by 28% to GBP155.4 million (2016: GBP121.8
million).
This performance was underpinned by order growth of 19% to 105.0
million (2016: 88.1 million). In May 2017, we processed our 300
millionth order since launching the UK business in 2006. December
broke yet more records, with the highest single day of orders
marking the final of the X Factor competition, when we processed
more than 500,000 orders for our customers. We saw more than 10
million orders during the month, another record for the
business.
Through 2017, we increased the number of UK Active Customers by
14% to 10.5 million (31 December 2016: 9.2 million) and increased
the proportion of UK orders from mobile devices to 85% (2016: 80%).
This shift drove Customer loyalty, order frequency, which rose to
10 orders per Customer per year, and offered a better Customer
experience.
Our latest marketing campaign, "Magic", helped brand awareness
reach its highest ever levels. Sponsorship of the X Factor was a
major driver of additional brand awareness and recognition, which
benefited both sides of our marketplace. Our Restaurant Partners
were excited to be part of our X Factor sponsorship, with several
owners and staff featuring in the show's advertising breaks. We
launched our Local Legends campaign to champion the nation's
favourite entrepreneurial restaurants. We also continued to help
our Restaurant Partners improve their businesses' performance by
providing technology and offering money saving initiatives.
Through our pilots with branded restaurant chains, we learned
that we were able to attract new Customers who go on to discover
and order food from local independent restaurants. Furthermore, the
pilots encouraged all Customers to order more frequently from our
platform. We ended the year with strong relationships with several
much-loved brands, including KFC and Burger King. We will
accelerate our investment in this important initiative in 2018 by
extending the pilots into areas with compelling
characteristics.
In 2017, delivery-related business comprised 1.6% of total UK
revenue. Our investment of GBP12.2 million in this activity was
balanced by increased profitability in our marketplace business,
thereby maintaining overall UK uEBITDA margins at 51%. As we seek
to expand this model, we will make increased investments while this
business attains scale.
Established Markets
This segment comprises our businesses in Canada, Denmark,
France, Ireland, Norway and Switzerland. The inclusion of
SkipTheDishes for the first full year had a material benefit with
segment revenue growing 96% to GBP148.3 million (2016: GBP75.5
million), while uEBITDA contracted by 12% to GBP11.7 million (2016:
GBP13.3 million). On a constant currency basis(7) , revenue grew
84%.
Canada is now our second largest market following the addition
of SkipTheDishes, which in 2017 contributed GBP50.4 million of
revenue reflecting pro forma order growth of 264%. The combined
business now has coast-to-coast coverage across all cities of more
than 100,000 people, more than 10,000 Restaurant Partners and
agreements with 50 national and regional chains. There is still
considerable opportunity for growth in Canada. Therefore, we will
continue to increase our investment to fund expansion into new
cities and towns. In 2017, this investment resulted in an uEBITDA
loss of GBP8.5 million.
The remaining countries in this segment, including our original
Canadian business, also delivered strong performances with revenue
up 35% to GBP97.9 million (2016: GBP72.4 million), or 26% on an
organic basis. Notably, Denmark, our oldest business, recorded its
17(th) consecutive year of double digit revenue growth, which
proves the enduring strength of our marketplace model.
Australia & New Zealand
Our Australia & New Zealand businesses delivered revenue of
GBP49.8 million (2016: GBP36.8 million), reflecting growth of 35%,
or 25% on a constant currency basis.
In March 2017, we set out our agenda for this business. We
presented the need to move away from two legacy platforms onto the
Just Eat platform and to focus on the Menulog brand while retiring
the Eat Now brand. We have now migrated this business onto the Just
Eat platform and will shortly conclude the brand consolidation.
Australia has unique characteristics as a market with an
unusually high proportion of its population residing in just two
major cities, making it a highly competitive market. Given the
structure of the Australian market, in order to compete
effectively, we plan to add a delivery capability to our
platform.
________________
(7) Applying the foreign exchange rates used in the current
period to the results of the prior year.
To ensure our model is best attuned to local conditions, we will
seek to apply learnings from the delivery-centric SkipTheDishes.
Similar to the roll-out of delivery in other markets, this will
require investment over the short to medium-term.
The rapid evolution of this market and the transformation
underway in our business has led us to re-evaluate the carrying
value of goodwill associated with the 2015 acquisition of Menulog.
Consequently, we have recorded a non-cash, IFRS-based impairment
charge of GBP180.4 million in our 2017 results.
Given the significant changes being made to this business, we
took a disciplined view to cost management in the year. As a
result, uEBITDA grew 128% to GBP17.3 million (2016: GBP7.6
million).
Developing Markets
This segment comprises the high potential, earlier-stage markets
of Italy, Mexico and Spain. Revenue from this segment was up 69% to
GBP44.4 million (2016: GBP26.2 million), or 59% on a constant
currency basis. Segmental uEBITDA losses were GBP3.7 million (2016:
GBP13.7 million loss).
Together, Spain and Italy accounted for 98% of segmental
revenue. 2017 was another strong year of growth for both markets.
In Italy, we grew our restaurant estate by 45%, increasing our
geographical coverage across the country. In Spain, our nationwide
presence resulted in only 30% of orders being generated in Madrid
and Barcelona.
These markets remain exciting given the large majority of orders
are still made by telephone. Furthermore, there remains
considerable opportunity to grow our restaurant estate in these
countries. We will therefore continue to prioritise revenue growth,
reinvesting significantly in marketing activities designed to
stimulate both sides of our marketplace.
iFood
iFood is our associate in Latin America, trading principally in
Brazil, in which it remains the clear market leader. In 2017, iFood
generated revenue of GBP76.2 million (2016: GBP28.8 million), up a
very strong 165% year on year, or 130% on a constant currency
basis.
Just Eat owns 32% of iFood and continues to see significant
potential in the Brazilian market. Our success there has seen us
create a valuable asset that is not reflected in our headline
numbers, nor is its fair value recognised on our balance sheet.
Exceptional items
Exceptional items of GBP191.1 million in the year (2016: GBP14.6
million) consist primarily of the GBP180.4 million non-cash,
IFRS-based impairment of goodwill pertaining to the acquisition of
our Australia & New Zealand businesses. A further GBP9.0
million relates to accrued consideration, separate from acquisition
consideration, for the SkipTheDishes management team providing
certain services to the Group post-completion. This includes
knowledge-sharing related to the operation of a delivery function
at scale. The remaining costs relate to acquisition-related
transaction costs.
After exceptional items, the statutory loss before tax was
GBP76.0 million (2016: GBP91.3 million profit). Adjusting for the
non-cash, IFRS-based impairment charge relating to our Australia
& New Zealand businesses, the statutory loss would have been a
profit before tax of GBP104.4 million.
Taxation
The effective tax rate on underlying profits ("Underlying ETR")
was 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.
Earnings per share
Adjusted basic earnings per share ("EPS") increased by 38% to
16.8 pence (2016: 12.2 pence). Adjusted EPS is calculated using the
adjusted profit to equity shareholders. Statutory EPS declined to a
loss per share of 15.2 pence (2016: 10.7 pence profit) following
the impact of the non-cash impairment charge required under
IFRS.
Cash flow
The Group continued its high level of cash conversion(8) , with
uEBITDA converting to net cash flows before restaurant payments at
91% (2016: 93%). If exceptional items were excluded, the cash
conversion would be circa 100% in both the current and prior years.
In 2017, net cash generated from operations (including payments for
tax and interest) was GBP166.7 million (2016: GBP97.0 million).
The Group spent GBP35.7 million in investing activities during
the year (2016: GBP167.5 million), which in the current year
predominantly related to cash used in developing our platforms and
the purchase of other technology related assets, including Orderpad
units.
At 31 December 2017, the Group had cash balances of GBP265.1
million (2016: GBP130.6 million). The Group has access to a
GBP350.0 million revolving credit facility (2016: GBP200.0
million), which was undrawn at the balance sheet date.
Post-balance sheet event
Subsequent to the year end, on 31 January 2018, the Group
completed the acquisition of Hungryhouse for GBP240.0 million,
resulting in a draw-down on the Group's revolving credit facility
of GBP100.0 million (see Note 11).
Looking ahead
Notwithstanding the strong performance of our marketplace
business in 2017, the online food delivery sector is evolving.
Competition is intensifying in certain markets, including Australia
& New Zealand, while Customers expect an ever-better experience
from their digital services. At the same time, there are clear
opportunities to broaden our addressable market and to accelerate
growth in markets that remain under-served.
In 2018, we will make considered investments to position the
business for the future. These include investments into delivery in
the UK, Canada and Australia & New Zealand, and into our
Developing Markets which offer significant growth potential. This
is alongside the investments we are already making into our
technology to offer a world-class website and mobile experience for
our Customers.
We expect these investments to improve overall Group performance
over the medium- to long-term, helping us to capture clear
opportunities and insulate the business from fast-moving and
well-capitalised competitors.
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 GBP215 -
235 million in 2018. We will expand our investments in brand,
Developing Markets and delivery services, resulting in Group
revenue of between GBP660 - 700 million and uEBITDA of GBP165 - 185
million in 2018.
Peter Plumb Paul Harrison
Chief Executive Officer Chief Financial Officer
5 March 2018 5 March 2018
________________
(8) A reconciliation of how uEBITDA correlates to net cash
generated from operating activities is included in Note 2.
Consolidated income statement
Year ended 31 December 2017
Year ended Year ended
31 December 31 December
2017 2016
Notes GBPm GBPm
Continuing operations
Revenue 3 546.3 375.7
Cost of sales (96.0) (35.2)
Gross profit 450.3 340.5
Long-term employee incentive costs 4 (6.6) (3.1)
Exceptional items (including impairment
charges) 5 (191.1) (14.6)
Other administrative expenses (324.5) (250.2)
Total administrative expenses (522.2) (267.9)
Share of results of associates (0.6) (0.1)
------------- -------------
Operating (loss)/profit (72.5) 72.5
Other gains and losses 6 (2.0) 18.8
Finance income 0.7 0.6
Finance costs (2.2) (0.6)
(Loss)/profit before tax (76.0) 91.3
Taxation 7 (27.5) (19.9)
(Loss)/profit for the year (103.5) 71.4
============= =============
Attributable to:
Equity shareholders (102.7) 71.7
Non-controlling interests (0.8) (0.3)
------------- -------------
(103.5) 71.4
============= =============
Earnings per Ordinary share (pence)
Basic 8 (15.2) 10.7
Diluted 8 (15.2) 10.5
Adjusted earnings per Ordinary share(9)
(pence)
Basic 8 16.8 12.2
Diluted 8 16.6 12.0
Reconciliation of operating profit to
uEBITDA(9)
Operating (loss)/profit (72.5) 72.5
Depreciation and amortisation 3 38.4 24.3
Long-term employee incentive costs 4 6.6 3.1
Exceptional items (including impairment
charges) 5 191.1 14.6
Net foreign exchange (gains)/losses (0.5) 0.2
Share of results from associates below
uEBITDA 0.4 0.6
uEBITDA 3 163.5 115.3
________________
(9) A definition of uEBITDA and adjusted EPS is included in
Notes 3 and 8, respectively.
Consolidated statement of other comprehensive income
Year ended 31 December 2017
Year ended Year ended
31 December 31 December
2017 2016
GBPm GBPm
(Loss)/profit for the year (103.5) 71.4
Items that may be reclassified subsequently to
the income statement:
Exchange differences on translation of foreign
operations - Group (2.6) 97.9
Exchange differences on translation of foreign
operations - associates (3.8) 7.7
Exchange differences on translation of foreign
operations
reclassified to the income statement on disposal - 0.1
Exchange differences on translation of non-controlling
interest (0.1) (0.2)
Fair value (losses)/gains on cash flow hedges (0.1) 1.8
Fair value gains on available-for-sale investments 0.1 -
Income tax related to fair value gains on cash
flow hedges - (0.5)
Net fair value gains on cash flow hedges reclassified
to goodwill - (1.3)
Other comprehensive (loss)/income for the year (6.5) 105.5
Total comprehensive (loss)/income for the year (110.0) 176.9
============= =============
Attributable to:
Equity shareholders (109.1) 177.4
Non-controlling interests (0.9) (0.5)
Total comprehensive (loss)/income for the year (110.0) 176.9
============= =============
Consolidated balance sheet
As at 31 December 2017
As at 31 As at 31
December December
2017 2016
Notes GBPm GBPm
Non-current assets
Goodwill 10 544.9 725.2
Other intangible assets 94.5 103.4
Property, plant and equipment 19.0 12.4
Investments in associates 41.4 29.7
Available-for-sale investments 4.2 4.1
Deferred tax assets 18.1 14.4
722.1 889.2
---------- ----------
Current assets
Operating cash 213.6 96.8
Cash to be paid to Restaurant Partners 51.5 33.8
---------- ----------
Cash and cash equivalents 265.1 130.6
Inventories 2.8 1.7
Trade and other receivables 24.2 26.5
Derivative financial instruments 0.1 -
Current tax assets 0.4 0.4
292.6 159.2
---------- ----------
Total assets 1,014.7 1,048.4
========== ==========
Current liabilities
Trade and other payables (185.2) (112.1)
Derivative financial instruments (0.6) -
Current tax liabilities (36.4) (22.0)
Deferred revenue (3.3) (3.8)
Provisions for liabilities (22.6) (13.6)
Borrowings (0.4) (0.4)
---------- ----------
(248.5) (151.9)
---------- ----------
Net current assets 44.1 7.3
---------- ----------
Non-current liabilities
Deferred tax liabilities (18.2) (25.9)
Deferred revenue (0.8) (0.9)
Provisions for liabilities (20.2) (43.1)
Borrowings (0.3) (0.6)
Other long-term liabilities - (0.3)
---------- ----------
(39.5) (70.8)
---------- ----------
Total liabilities (288.0) (222.7)
---------- ----------
Net assets 726.7 825.7
========== ==========
Equity
Share capital 6.8 6.8
Share premium account 562.7 562.2
Translation reserve 88.3 94.7
Other reserves (5.2) (6.4)
Retained earnings 65.9 160.7
---------- ----------
Equity attributable to shareholders of the
Company 718.5 818.0
Non-controlling interests 8.2 7.7
---------- ----------
Total equity 726.7 825.7
========== ==========
Consolidated statement of changes in equity
Year ended 31 December 2017
Share
Share premium Translation Other Retained Non-controlling Total
capital account reserve reserves earnings Total interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2016 6.8 555.5 (11.0) (6.4) 80.6 625.5 0.4 625.9
--------- --------- ------------ ---------- ---------- -------- ---------------- --------
Profit/(loss) for
the year - - - - 71.7 71.7 (0.3) 71.4
Other comprehensive
income/(loss) - - 105.7 - - 105.7 (0.2) 105.5
Total comprehensive
income/(loss) for
the year - - 105.7 - 71.7 177.4 (0.5) 176.9
Tax on share
options - - - - 0.8 0.8 - 0.8
Issue of capital
(net of costs) - 6.2 - - - 6.2 - 6.2
Exercise of share
options - 0.5 - - - 0.5 - 0.5
Share based payment
charge - - - - 2.8 2.8 - 2.8
Lapses of JSOP
awards - - - (0.5) - (0.5) - (0.5)
Exercise of JSOP
awards - - - 0.5 - 0.5 - 0.5
Partial disposal
of Mexican
business - - - - 4.8 4.8 7.3 12.1
Adjustment to
Mexican
NCI - - - - - - 0.5 0.5
At 31 December
2016 6.8 562.2 94.7 (6.4) 160.7 818.0 7.7 825.7
========= ========= ============ ========== ========== ======== ================ ========
Loss for the year - - - - (102.7) (102.7) (0.8) (103.5)
Other comprehensive
loss - - (6.4) - - (6.4) (0.1) (6.5)
Total
comprehensive
loss for
the year - - (6.4) - (102.7) (109.1) (0.9) (110.0)
Tax on share
options - - - - 2.0 2.0 - 2.0
Exercise of share
options - 0.5 - - - 0.5 - 0.5
Share based payment
charge - - - - 6.1 6.1 - 6.1
Exercise of
JSOP/SIP
awards - - - 1.2 - 1.2 - 1.2
Adjustment for
cash-settled share
options - - - - (0.2) (0.2) - (0.2)
Adjustment to
Mexican
NCI - - - - - - 1.4 1.4
At 31 December
2017 6.8 562.7 88.3 (5.2) 65.9 718.5 8.2 726.7
========= ========= ============ ========== ========== ======== ================ ========
Consolidated cash flow statement
Year ended 31 December 2017
Year ended Year ended
31 December 31 December
2017 2016
Notes GBPm GBPm
Operating (loss)/profit (72.5) 72.5
Adjustments for:
Amortisation of intangible assets 31.1 18.1
Depreciation of property, plant and equipment 7.3 6.2
Loss on disposal of property, plant and equipment
and intangible assets 0.9 0.5
Share of results from associates 0.6 0.1
Increase in provisions 0.3 6.1
Non-cash long-term employee incentive costs 6.6 3.0
Impairment charges 5 180.4 -
Other non-cash items (0.3) -
-------------- --------------
154.4 106.5
-------------- --------------
Increase in inventories (0.2) (0.5)
(Increase)/decrease in receivables (4.6) 3.0
Increase in payables 42.7 1.9
Decrease in deferred revenue (0.6) (0.1)
-------------- --------------
Net cash generated by operations 191.7 110.8
Interest paid (0.7) (0.4)
Facility fees paid (2.3) (0.7)
Income taxes paid (22.0) (12.7)
Net cash generated from operating activities 166.7 97.0
Investing activities
Interest received 0.7 0.6
Acquisition of subsidiary businesses 11 (0.4) (154.7)
Hungryhouse deposit 11 - (6.0)
Acquisition of interests in associates (2.6) (7.2)
Acquisition of available-for-sale investments - (3.5)
Disposal of subsidiary businesses 3.6 16.7
Disposal of minority stake in Mexican business 1.2 9.3
Funding provided to associates (0.8) (2.1)
Funding provided by minority interests 1.4 0.5
Purchases of intangible assets (24.0) (11.7)
Purchases of property, plant and equipment (14.6) (9.5)
Other cash (outflows)/inflows (0.2) 0.1
Net cash used in investing activities (35.7) (167.5)
-------------- --------------
Financing activities
Proceeds arising on exercise of options
and awards 3.1 2.4
Repayment of borrowings (0.4) -
Cash outflow of the acquisition of minority
interests - (0.1)
Net cash generated from financing activities 2.7 2.3
-------------- --------------
Net increase/(decrease) in cash and cash
equivalents 133.7 (68.2)
Cash and cash equivalents at beginning of
year 130.6 192.7
Effect of changes in foreign exchange rates 0.8 6.1
-------------- --------------
Cash and cash equivalents at end of year 265.1 130.6
============== ==============
1. General information
The financial information, comprising the consolidated income
statement, consolidated statement of other comprehensive income,
consolidated balance sheet, consolidated statement of changes in
equity, consolidated cash flow statement and related notes, has
been taken from the consolidated financial statements of Just Eat
plc (the "Company") for the year ended 31 December 2017, which were
approved by the Board of Directors on 5 March 2018. The financial
information does not constitute statutory accounts within the
meaning of sections 435(1) and (2) of the Companies Act 2006, or
contain sufficient information to comply with the disclosure
requirements of International Financial Reporting Standards
("IFRS").
An unqualified report on the consolidated financial statements
for the year ended 31 December 2017 has been given by the auditor
Deloitte LLP. It did not include reference to any matters to which
the auditor drew attention by way of emphasis without qualifying
their report and did not contain any statement under sections
498(2) or (3) of the Companies Act 2006.
The consolidated financial statements will be filed with the
Registrar of Companies, subject to their approval by the Company's
shareholders at the Company's Annual General Meeting on 26 April
2018.
2. Basis of preparation
The financial statements have been prepared in accordance with
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.
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 at fair
value through profit or loss, which have been measured at fair
value. The principal accounting policies adopted by the Group are
set out in the consolidated financial statements for the year ended
31 December 2016. These policies have been consistently applied to
all years presented.
The going concern basis has been adopted in preparing the
consolidated financial statements as the Directors are satisfied
that the Company and its subsidiaries (together the "Group") will
continue to be able to meet their liabilities as they fall due for
the foreseeable future, being a period of at least 12 months from
the date of presenting this financial information.
Management has identified critical accounting judgements and key
sources of estimation uncertainty relating to the impairment of
goodwill and intangible assets, capitalised development costs and
taxation. These accounting judgements and sources of uncertainty
have been discussed with the Group's Audit Committee. 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.
The uEBITDA and adjusted earnings per share measures provide
additional useful information for shareholders and users of the
financial information on the underlying performance of the
business. These measures are used by management of the Group to
measure underlying business performance. A definition of uEBITDA
and adjusted EPS is included in Notes 3 and 8, respectively.
A reconciliation of how uEBITDA correlates to net cash generated
from operating activities is below:
Year ended Year ended
31 December 31 December
2017 2016
GBPm GBPm
uEBITDA 163.5 115.3
Net change in working capital (excluding movement
in restaurant payables) 19.6 14.3
Income taxes paid (22.0) (12.7)
Interest cash outflow (including facility
fees) (3.0) (1.1)
Other non-cash items 1.6 0.3
-------------- --------------
Cash flow before exceptional items 159.7 116.1
Cash outflow in respect of exceptional items (10.7) (9.1)
-------------- --------------
Net cash flow before movement in restaurant
payables 149.0 107.0
Movement in restaurant payables 17.7 (10.0)
-------------- --------------
Net cash flow from operating activities 166.7 97.0
============== ==============
Cash conversion 91% 93%
Cash conversion (excluding exceptional item
cash flows) 98% 101%
============== ==============
3. Operating segments
The Group's businesses are managed on a geographical basis.
Selected financial data is presented on this basis below.
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.
The principal measure of profit used by the Chief Operating
Decision Maker ("CODM") to assess and manage performance is
uEBITDA. The CODM is Peter Plumb, the Group's Chief Executive
Officer. 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.
Year ended Year ended
31 December 31 December
2017 2016
Segment revenue GBPm GBPm
United Kingdom 304.1 238.3
Less inter-segment revenue (0.3) (1.2)
United Kingdom 303.8 237.1
Australia & New Zealand 49.8 36.8
Established Markets 148.3 75.5
Developing Markets 44.4 26.2
------------- -------------
Total segment revenue 546.3 375.6
Head office 3.3 2.8
Less head office inter-segment revenue (3.3) (2.7)
Total revenue 546.3 375.7
============= =============
Year ended Year ended
31 December 31 December
2017 2016
Revenue by source GBPm % GBPm %
Commission revenue 458.4 84 305.2 81
Payment card and administration fees 60.1 11 48.5 13
Discounts(10) (14.5) (3) (7.7) (2)
------------- -------------
Order-driven revenue 504.0 92 346.0 92
Top-placement fees 31.6 6 19.7 5
Connection fees and other revenue 10.7 2 10.0 3
------------- -------------
Ancillary revenue 42.3 8 29.7 8
------------- -------------
Total revenue 546.3 375.7
============= =============
Order-driven revenue by segment was as follows: United Kingdom
GBP283.2 million (2016: GBP223.4 million), Australia & New
Zealand GBP47.8 million (2016: GBP34.2 million), Established
Markets GBP134.9 million (2016: GBP65.5 million), and Developing
Markets GBP38.1 million (2016: GBP22.9 million).
________________
(10) 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.
3. Operating segments continued
Year ended Year ended
31 December 31 December
2017 2016
Segment uEBITDA and results GBPm GBPm
United Kingdom 155.4 121.8
Australia & New Zealand 17.3 7.6
Established Markets 11.7 13.3
Developing Markets (3.7) (13.7)
Total segment uEBITDA 180.7 129.0
Share of uEBITDA from associates(11) (0.2) 0.5
Head office (17.0) (14.2)
uEBITDA 163.5 115.3
Long-term employee incentive costs (6.6) (3.1)
Exceptional items (including impairment charges)(12) (191.1) (14.6)
Net foreign exchange gains/(losses) 0.5 (0.2)
EBITDA (33.7) 97.4
Depreciation (7.3) (6.2)
Amortisation - acquired intangible assets (24.4) (15.5)
Amortisation - other intangible assets (6.7) (2.6)
Share of results from associates below uEBITDA(11) (0.4) (0.6)
Operating (loss)/profit (72.5) 72.5
Other gains and losses (2.0) 18.8
Finance income 0.7 0.6
Finance costs (2.2) (0.6)
(Loss)/profit before tax (76.0) 91.3
============= =============
As at 31 As at 31
December December
2017 2016
Segment net book value of non-current assets GBPm GBPm
United Kingdom 8.5 12.4
Australia & New Zealand 313.1 512.6
Established Markets 167.8 176.1
Developing Markets 129.3 128.0
618.7 829.1
Head office 62.0 30.4
Associates 41.4 29.7
---------- ----------
Net book value of non-current assets 722.1 889.2
========== ==========
________________
(11) Respective amounts that fall either inside or outside of
the Group's definition of uEBITDA.
(12) The current year includes an impairment charge of GBP180.4
million which relates to the carrying value of goodwill included
within the Australia & New Zealand CGU (see Note 10).
3. Operating segments continued
Property, plant & equipment and intangible assets
Depreciation and
Additions year ended amortisation year
31 December(13) ended 31 December
2017 2016 2017 2016
GBPm GBPm GBPm GBPm
United Kingdom 2.6 2.9 3.0 3.5
Australia & New Zealand 0.2 1.3 15.0 10.2
Established Markets 3.2 113.6 8.9 4.6
Developing Markets 1.9 98.2 4.0 3.2
---------- ---------- ---------------- ----------------
7.9 216.0 30.9 21.5
Head office 30.8 12.3 7.5 2.8
Total 38.7 228.3 38.4 24.3
4. Long-term employee incentive costs
The total expense recorded in relation to the long-term employee
incentives was GBP6.6 million (2016: GBP3.1 million). This charge
comprises GBP6.1 million (2016: GBP2.8 million) in respect of share
based payments and GBP0.5 million (2016: GBP0.3 million) in respect
of provisions for employer's social security costs on the exercise
of options.
5. Exceptional items
Year ended Year ended
31 December 31 December
2017 2016
GBPm GBPm
Impairment charges 180.4 -
M&A transaction costs 1.7 9.5
Acquisition integration costs 9.0 5.1
------------- -------------
Total exceptional items 191.1 14.6
============= =============
Impairment charges
During the year ended 31 December 2017, an impairment charge of
GBP180.4 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.
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 GBP180.4 million
against goodwill reduces the carrying value of the ANZ businesses
to GBP302.2 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 and
aborted acquisitions. For the year ended 31 December 2017, they
include GBP1.3 million (2016: GBP6.3 million) of costs in respect
of the acquisition of Hungryhouse Holdings Limited
("Hungryhouse").
________________
(13) Additions include goodwill and other intangible assets
acquired as part of business combinations, as well as purchases of
tangible and intangible fixed assets.
5. Exceptional items continued
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, GBP9.0 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. Other gains and losses
Year ended Year ended
31 December 31 December
2017 2016
GBPm GBPm
Gain on disposal of Benelux businesses - 18.7
Movement in minority shareholders' buy-out provision (0.5) -
Loss on derivative financial instruments (0.4) -
Fair value loss on contingent consideration (1.1) -
Fair value gains on available-for-sale investments - 0.5
Other losses - (0.4)
Net other (losses)/gains (2.0) 18.8
============= =============
On 2 August 2016, the Group disposed of its Benelux operations
(Belgium and Netherlands) to Takeaway.com for GBP19.3 million in
total consideration, which resulted in a gain on disposal of
GBP18.7 million. A cash inflow of GBP14.6 million was received in
the year ended 31 December 2016, and the balance of GBP3.6 million
was received in the year ended 31 December 2017.
7. Taxation
Year ended Year ended
31 December 31 December
2017 2016
GBPm GBPm
Current taxation
Current year 38.0 29.0
Adjustment for prior years (0.3) 0.1
------------- -------------
37.7 29.1
------------- -------------
Deferred taxation
Temporary timing differences (10.0) (8.6)
Adjustment for prior years (0.2) (0.7)
Effect of tax rate change - 0.1
------------- -------------
(10.2) (9.2)
------------- -------------
Total tax charge for the year 27.5 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 GBP2.0 million (2016: GBP0.8 million
credit), which comprised of GBP0.9 million relating to current tax
and GBP1.1 million relating to deferred tax.
In the prior year, taxation on items taken directly to other
comprehensive income (GBP0.5 million debit) relates to fair value
gains on cash flow hedges which have been reclassified to
goodwill.
7. 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:
Year ended 31 December 2017
---------------------------------
Before Year ended
adjusting Adjusting 31 December
items items Total 2016
GBPm GBPm GBPm GBPm
(Loss)/profit before tax 148.0 (224.0) (76.0) 91.3
---------- ----------- ------- ------------
UK rate of 19.25% (2016:
20%) 28.5 (43.1) (14.6) 18.3
Adjusted for the effects
of:
Non-deductible expenditure 0.6 2.5 3.1 3.0
Non-taxable income (5.9) - (5.9) (5.3)
Share based payments - 0.3 0.3 0.1
Impairment charges - 34.7 34.7 -
Profit on the deemed disposals
of businesses - - - (3.8)
Prior year adjustments (0.5) - (0.5) (0.6)
Unrecognised deferred tax
asset changes 2.3 (0.7) 1.6 2.4
Overseas tax rates (0.3) (1.4) (1.7) (2.5)
Other overseas taxes 10.4 - 10.4 8.2
Associates results - 0.1 0.1 -
Reduction in UK tax rate - - - 0.1
Total tax charge for the
year 35.1 (7.6) 27.5 19.9
Effective tax rate 23.7% (36.2%) 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 GBP27.5 million (2016: GBP19.9 million)
is made up of: a current tax charge of GBP37.7 million (2016:
GBP29.1 million), primarily consisting of corporate tax arising in
the UK, Denmark, France, Ireland and Switzerland; and a deferred
tax credit of GBP10.2 million (2016: GBP9.2 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
GBP17.4 million at 31 December 2017 (2016: GBP9.8 million).
8. Earnings per share
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.
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.
8. Earnings per share continued
Year ended Year ended
31 December 31 December
2017 2016
Basic and diluted earnings per share GBPm GBPm
(Loss)/profit attributable to equity shareholders (102.7) 71.7
Long-term employee incentive costs 6.6 3.1
Exceptional items (including impairment charges) 191.1 14.6
Other gains and losses 2.0 (18.8)
Net foreign exchange (gains)/losses (0.5) 0.2
Amortisation in respect of acquired intangible
assets 24.4 15.5
Share of results from associates below uEBITDA 0.4 0.3
Tax impact of these adjusting items (7.6) (5.0)
Adjusted profit attributable to equity shareholders 113.7 81.6
============= =============
Number of shares
('000)
Year ended Year ended
31 December 31 December
2017 2016
Weighted average number of Ordinary shares for
basic earnings per share 676,844 669,462
Effect of dilution:
Share options and awards 5,159 6,420
Unvested JSOP shares 943 3,547
Shares held in escrow - 48
Weighted average number of Ordinary shares adjusted
for the effect of dilution 682,946 679,477
============= =============
Year ended Year ended
31 December 31 December
2017 2016
(pence) (pence)
Earnings per Ordinary share
Basic (15.2) 10.7
Diluted(14) (15.2) 10.5
Adjusted earnings per Ordinary share
Basic 16.8 12.2
Diluted 16.6 12.0
============= =============
9. Dividends
No dividends have been declared or paid in the current year
(2016: GBPnil).
10. Goodwill
2017 2016
GBPm GBPm
At 1 January 725.2 457.1
Arising on acquisition - 181.2
SkipTheDishes acquisition adjustment(15) 1.5 -
Impairment charges(16) (180.4) -
Foreign exchange movement (1.4) 86.9
-------- ------
At 31 December 544.9 725.2
======== ======
________________
(14) Ordinary shares are only treated as dilutive when their
conversion would decrease earnings per share or increase loss per
share from continuing operations.
(15) Due to the limited time 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 GBP1.5 million (see Note
11).
(16) Impairment charges at 31 December 2017 relate to the
Group's ANZ business. Accumulated impairment charges were GBP180.4
million (2016: GBPnil).
10. Goodwill continued
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.
Goodwill acquired in a business combination is allocated on
acquisition to the CGUs that are expected to benefit from that
business combination.
11. Acquisitions
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 GBP240.0 million, which
includes:
GBPm
Cash deposit paid in 2016 6.0
Cash paid on completion 210.0
Estimated deferred consideration payable 24.0
Estimated total consideration 240.0
======
Funding for the acquisition was obtained from both existing cash
and a GBP100.0 million draw down on the Group's revolving credit
facility. Estimated deferred consideration of GBP24.0 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, while
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.
Due to the limited amount of time since 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 GBP35.3 million and a loss before tax of GBP14.8
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 and migration costs cannot yet be reliably
estimated.
11. Acquisitions continued
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 GBP1.8 million to GBP17.6 million.
-- The deferred tax liability that directly corresponds to the
valuation of the acquired intangible assets decreased by GBP0.3
million to GBP3.7 million.
-- Total consideration transferred remains unchanged at GBP108.4
million, meaning goodwill recognised on acquisition was GBP93.4
million. At 31 December 2017, goodwill decreased to GBP91.8 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 GBP0.4 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
GBP154.7 million related to the acquisition of La Nevera
Roja/PizzaBo/hellofood Brazil/hellofood Mexico (GBP97.8 million),
SkipTheDishes (GBP56.2 million) and deferred consideration paid in
respect of acquisitions made in previous years (GBP0.7
million).
12. Related party transactions
During the year, the Group entered into transactions in the
ordinary course of business with related parties.
IF-JE Participacoes S.A. ("IF-JE")
During the year ended 31 December 2017, the Group provided its
associate, IF-JE, with working capital funding of GBP0.8 million
(2016: GBP2.1 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 GBP2.1 million
total consideration.
IF-JE has contracted to provide management services to
SinDelantal Mexico. The total charge incurred for the year was
GBP0.6 million (2016: GBP0.4 million), which was accrued on the
balance sheet at 31 December 2017.
IF-JE Holdings B.V. ("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 GBP3.4 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
GBP6.6 million of funds contributed by Movile to acquire 49% of the
share capital in ECAC (a subsidiary of the Group) for GBP12.1
million total consideration.
Compensation of key management personnel of the Group
On 24 March 2014, prior to the IPO, the Company called all the
unpaid subscription amounts, totalling GBP13.2 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 GBP5.3 million and GBP7.9 million,
respectively. The loans provided to the participants of the JSOP
included loans to key management personnel totalling GBP4.9
million. As at 31 December 2017, the amount due from key management
personnel in respect of these loans was GBP0.2 million (2016:
GBP1.1 million).
The total compensation of key management personnel for the year
ended 31 December 2017 was GBP7.5 million (2016: GBP6.1
million).
13. Events after the balance sheet date
On 31 January 2018, the Group completed the acquisition of
Hungryhouse (see Note 11).
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LFFEIVRIEIIT
(END) Dow Jones Newswires
March 06, 2018 02:01 ET (07:01 GMT)
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