TIDMJE.
RNS Number : 9411T
JUST EAT plc
25 March 2019
25 March 2019
Just Eat plc
("Just Eat" or the "Company")
2018 Annual Report and Notice of 2019 Annual General Meeting
Just Eat (LSE: JE), a leading global hybrid marketplace for
online food delivery, advises that the following documents have
been mailed to the Company's shareholders today and will shortly be
available on the Company's website:
www.justeatplc.com/investors.
1. Annual Report and Accounts 2018
2. Circular containing the Notice of 2019 Annual General Meeting
Copies of the Annual Report and Accounts 2018 and the Circular
containing the Notice of 2019 Annual General Meeting are being
submitted to the National Storage Mechanism and will shortly be
available for inspection at
http://www.morningstar.co.uk/uk/NSM.
A condensed set of Just Eat plc's Group financial statements,
and information on important events that have occurred during the
year and their impact on the financial statements, were included in
Just Eat's Preliminary Results announcement issued on 6 March 2019.
That information, together with the information set out in Sections
1 to 3 below, which is extracted from the 2018 Annual Report and
Accounts, constitute the material required by Disclosure Guidance
and Transparency Rule 6.3.5 to be communicated to the media in
unedited full text through a Regulatory Information Service. This
material is not a substitute for reading the full 2018 Annual
Report and Accounts. Page numbers and cross-references in the
extracted information refer to page numbers and cross-references in
the Annual Report and Accounts 2018.
Section 1. Principal risks and uncertainties
The following information is extracted from pages 20 to 28 of
the Annual Report and Accounts 2018.
Effective risk management is an enabler to exploring market
opportunity Principal risks and uncertainties.
We believe it is essential to understand and respond to our
principal risks while we accelerate our growth agenda.
During 2018, we invested further into our risk management
capability by onboarding an experienced Director of Internal Audit
and Risk. The director strengthened the team, bringing on board two
experienced auditors and an enterprise risk analyst. Recruitment
will continue into 2019 as we continue to invest in the team. This
will enable, amongst other things, the Internal Audit and Risk team
to complete a maturity assessment of the internal control
environment, to ensure it remains appropriate given the recent
rapid growth of the business. This increase in capability resulted
in a refresh of several aspects of our risk management approach and
a broadening of risk assessment activities across the Group,
functional and country levels. The outputs allowed the Board to
carry out a robust assessment of the principal risks facing the
Company and were a significant constituent of the Audit Committee's
agenda. The Board also noted greater prominence of formal risk
articulation whilst interacting with the business. The principal
risks overleaf include those that would threaten our business
model, future performance, solvency or liquidity.
During the year, the Board defined our risk appetite and
monitored the management of significant risks to ensure that the
nature and extent of those significant risks did not compromise our
overall goals and strategic objectives. Our 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 our overall risk profile continued to evolve.
Through our ongoing review of strategy and performance in 2018, 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 our risk
appetite.
In presenting the principal risks on the following pages, the
Board has provided details as appropriate around strategic context,
mitigation, key risk indicators, categorisation and ownership. Two
risks were merged and one risk has been added. A summary of the
changes is provided below:
Growth, people and culture - This risk brings elements of the
"Growth and scalability" and "People and culture" risks together
from 2017. The result is a new risk which speaks to the challenges
in balancing our need for greater structure, process and governance
as we grow, with the existing culture and entrepreneurial energy
that has been responsible for our successes. Furthermore it
discusses the cultural and uncertainty risks associated with
leadership changes.
Supplier resilience - This is a new entrant into our principal
risks and recognises our dependence on a variety of suppliers
including large cloud providers, niche technology services
companies, outsourcers, delivery logistics suppliers and device
manufacturers. Dependent on supplier, disruptive impacts could be
experienced across our online platforms, our operational call
centres and our expanding delivery networks.
Certain business risks we face, such as those disclosed within
Note 20, 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 subject to review by the Board.
The risk management process, illustrated below, seeks to
identify and assess risks through both top-down and bottom-up
processes.
Top-down processes encompass risk identification and assessment
of probability and impact across Group, functional and country
dimensions. This process generates risk registers across Just Eat,
with risks being assigned to owners and mitigating actions being
agreed and tracked.
Bottom-up processes encompass the "blueprinting" of inherent
risks across Just Eat's process universe. This involves line
management taking responsibility for understanding their day-to-day
risk and control environment, and collaborating with the internal
audit and risk team to articulate this understanding in formal
artefacts. This manual activity today represents the beginning of a
vision to ingest this data into an automated risk solution in order
to deliver powerful risk information and visualisations to aid
decision making in the future.
The Executive Team supports the Board in monitoring our risk
exposure through regular reviews. The risk register and the
methodology applied are subject to review by the Executive Team 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. The corporate risk register is presented to, and
reviewed by, the Board and Audit Committee on a regular basis.
Longer-term prospects
The sections described "Our Business Model" and "Our markets" in
the Strategic Report describe how the Board has positioned the
Company to take advantage of the growing markets in which the
business operates and how the Company is positioned to create value
for shareholders, taking account of the risks described in this
section of the Annual Report.
Viability statement
In accordance with provision C.2.2 of the Corporate Governance
Code, the Board has assessed the prospects of the Company over a
longer period than the 12 months required when preparing financial
statements on a Going Concern basis. 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 as this is the period
covered by the Group's three-year strategic plan approved by the
Board on 6 February 2019.
The three-year strategic plan considers the Group's cash flows,
Underlying EBITDA, investment in areas such as marketing and
technology and key financial ratios over the period. For the
purposes of the viability statement, certain key assumptions of the
plan were subjected to sensitivity analysis, both individually and
in aggregate, to ensure the business is still viable in a stressed
environment and to identify if any additional financing
requirements would be required.
The sensitised scenarios model the impact of certain of the
Group's principal risks materialising. For example, a fall in
orders due to a total outage from an unmitigated technology failure
(Technology resilience), an unexpected change in legislation
(Social, regulatory, and legislative), a sudden and sustained
inability to process card payments (Supplier resilience) and an
adverse outcome from ongoing taxation audits, as well as downside
impacts that may result from competition and economic headwinds
e.g. Brexit. Mitigating factors to address these risks, which might
include a reduction in marketing spend, delaying or cancelling
discretionary activities and a headcount freeze, have not been
modelled. These assumptions formed the a "reasonable worst case"
scenario.
The three-year strategic plan does not include cash flows in
respect of any future mergers and acquisitions that might be
approved by the Board in the future. Such activities will be
approved by the Board having regard to the Company's financial
position and projected cash flows at such future time.
Based on the results of this analysis, and assuming that any
impact of the Group's principal risks does not exceed the impacts
modelled, 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 to 31
December 2021.
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 18, in Note
20 to the Group's financial statements on pages 124 to 128, and the
Group's principal risks and uncertainties as set out on pages 20 to
28.
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.
EU referendum ("Brexit") update
With the scheduled withdrawal of the United Kingdom under
Article 50 on 29 March 2019, we have continued to monitor
developments and potential impacts that Brexit may have on our
performance and results. Our ongoing work with the British Takeaway
Campaign, which had an active year engaging with MPs and responding
to government consultations on matters such as immigration and
skills shortages, has allowed us to keep abreast with those risks
and issues that are of most concern to the takeaway industry. The
Campaign's efforts have also helped represent the industry as
post-Brexit policy has been developed.
There remains significant uncertainty as negotiations extend
into 2019; however, we have concluded that Brexit risks fall within
our overall "Global economic and political headwinds" principal
risk, rather than being a principal risk in its own right. 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 51% 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.
Employee attrition
Changes to immigration policy or impacts to residency status
could affect our employee attrition rates. A low percentage of UK
based employees are EU nationals.
Potential indirect implications
Restaurant Partner contraction
Under a scenario where Brexit has a significant adverse impact
on the UK economy, there is a risk that lines of credit and
borrowing products may be more difficult to access, increasing
liquidity and business closure risks.
Skills and capacity shortages
Restrictive changes to UK migration policy have the potential to
add further burdens to an existing skills and capacity shortage
within the restaurant, takeaway and delivery industry. This could
impact short-term industry performance but perhaps more importantly
could impact the longer-term growth of our industry.
Cost and availability of food
Recent public debate around the cost and availability of food
and the impact of a no-deal shift to WTO rules in a post-Brexit UK
signifies the ongoing uncertainty around the net cost impact of
imported food for the industry. Further concerns 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.
Key to principal risks table on pages 23 to 28
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, recognizing 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.
Strategic pillars
1 Enhancing our unrivalled marketplace foundation
2 Targeted world-class delivery to complement our
marketplace
3 Highly experienced team, supporting extraordinary local
customer experts
Strategic
Competition
Owner: Chief Executive Officer
Change: Risk increased
Link to strategic pillars: 1 2 3
What is the risk and impact?
An inability to counter the increased scale, service experience,
choice and funding of our competitors over the short to medium
term.
Over the longer term, an ineffectual response to either the
development of new business models by competitors, the
strengthening of existing players or the disintermediation of
material Restaurant Partnerships.
This could adversely impact market share, growth, revenue,
margin and overall profitability.
What is the strategic context?
Countering competition risk is central to our hybrid strategy of
evolving Just Eat towards a global delivery capability to
complement our highly successful marketplace business and further
open market opportunity. See SkipTheDishes integration and
reorganisation on page 26. Furthermore, we have placed significant
focus on growing our partnerships with Branded Restaurant Groups,
and enhancing service experience through our ongoing innovations on
our platform. See Changing service experience.
How is the risk managed?
Global delivery underway - We have brought Australia and parts
of the UK onto our global delivery model and are carefully
monitoring performance.
Roll-out plan - We have a programme plan for the roll-out of
targeted delivery across other territories.
Strategic partner growth - We have teams and specialists focused
on extending our range to include the branded meals our customers
really enjoy.
Ongoing business intelligence - We closely monitor territory
performance through advanced analytics.
Key risk indicators
-- Order volumes/growth trends
-- Net new customers
-- Customer satisfaction and loyalty levels
-- Restaurant satisfaction and loyalty levels
-- Delivery revenue
-- Driver cost per order
-- Overall order margins
-- Market share
Technology
Changing service experience
Owner: Chief Product and Technology Officer
Change: Risk stable
Link to strategic pillars 1 2 3
What is the risk and impact?
The Group's pace of technology change fails to meet either the
evolving expectations of our customers and Restaurant Partners, or
the velocity of our competitors.
This could impact our brand, customer and Restaurant Partner
experience and loyalty and ultimately market share, revenue and
profitability.
What is the strategic context?
Allied to our rapid growth, we have inherited multiple platforms
and code designs that can prolong deployment of new features to
market. We continue to focus on moving our markets onto our core
strategic platform and introducing modular and flexible designs to
increase agility.
Optimising our pace of technology change is an important factor
- to be an industry leader, to meet the increasing demands of both
customers and our Restaurant Partners, and to be confident that our
platforms will bring our hybrid service experience to life.
How is the risk managed?
Product roadmap - We develop our service experience against a
clear roadmap of prioritised features and improvements.
Customer and Partner product development teams - We have
dedicated teams which innovate and develop new features for our
services.
Organisational and operational reviews - We undertake periodic
assessments to ensure we align to leading digital development and
operational practices.
Service platform consolidation - We are undertaking discrete
initiatives to homogenise our core platform across the markets we
operate in.
Key risk indicators
-- Customer satisfaction and loyalty levels
-- Restaurant satisfaction and loyalty levels
-- Ease of use metrics
Regulatory
Social, regulatory and legislative change
Owner: Group General Counsel
Change: Risk increased
Link to strategic pillars: 2 3
What is the risk and impact?
Increased social pressures or changes in laws and regulations
adversely impact the business, or we fail to obtain required
regulatory approvals or licences.
Impacts include brand and reputational loss, compromised revenue
streams and/or increased cost of operations. Additionally,
instances of non-compliance or adverse judgements could result in
litigation, fines, revocation of licences and financial loss.
What is the strategic context?
Society is placing increased pressures on businesses to take on
greater responsibilities. As a technology takeaway platform,
several factors relating to workers' rights and benefits, food,
health and the environment represent important areas of focus for
the public.
In addition, our operations across several markets expose us to
a variety of laws and regulations. Allergens, food safety and
payment services regulations are examples of applicable areas, but
more broadly GDPR, customer protection, competition (anti-trust),
bribery, modern slavery, money laundering, taxation (including EC
State Aid investigations, ongoing tax disputes and Digital Services
Tax) and reporting.
How is the risk managed?
Corporate communications - A dedicated team communicate
externally and channel feedback and public opinion back into our
organisation to drive improvement.
Monitoring and compliance - Our in-house legal, finance, tax and
compliance functions monitor emerging, new and evolving risks,
while Internal Audit assess compliance and controls.
Access to expertise - Where required, external specialists
supplement our teams to assess, scope and plan responses to changes
in the regulatory landscape.
Change projects - We establish discrete project teams to address
significant legislation changes.
Key risk indicators
-- Monitoring of emerging topics and government
consultations
-- Internal operational compliance reporting
-- Internal audit findings
Reputational
Brand
Owner: Chief Executive Officer
Change: Risk stable
Link to strategic pillars: 1 2
What is the risk and impact?
An event, or a series of events, inflicts considerable harm to
our brand over the short term. 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.
What is the strategic context?
Our level of investment in marketing indicates the importance of
our brand in driving customer and Restaurant Partner acquisition
and loyalty. It is therefore essential that our brand is positively
perceived and resonates with the pleasures associated with our
customers' and Restaurant Partners' food moments.
As we continue to grow, we will be engaging with more third
parties by way of couriers, contractors and logistics and outsource
suppliers who may use our branding. Their actions and behaviours
will reflect on our brand, which bears risk.
How is the risk managed?
Brand ownership and strategy - Senior accountability, strategies
and plans exist to enhance and protect our brand.
Crisis management - Management and communication plans are
established to minimise brand damage following an adverse
event.
Proactive initiatives - We live our brand values and 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.
Key risk indicators
-- Customer satisfaction and loyalty levels
-- Restaurant satisfaction and loyalty levels
-- Ongoing market research metrics
Operational
Cyber security and data protection
Owner: Chief Product and Technology Officer
Change: Risk stable
Link to strategic pillars: 1 2
What is the risk and impact?
We sustain a major security breach or lose control of sensitive
systems and data.
A major security breach has the potential to cause significant
operational disruption, data theft or destruction, malicious damage
and/or theft of assets. Further loss of control over data could
result in private or commercially sensitive data being made
available to unauthorised parties.
Following such an incident, it is probable that the reputational
and operational impacts would weaken orders, revenue and underlying
profitability and could lead to regulatory impact.
What is the strategic context?
Our customers' and Restaurant Partners' trust is critical and
depends on us providing secure systems. Our strategy is therefore
to develop a strong cyber security and data governance capability
that is adaptive to a continuously evolving risk profile. We also
seek to implement pragmatic yet robust security solutions so that
security is seen as an enabler and further embeds into Just Eat's
culture.
How is the risk managed?
Security team - We are growing our security team to support
business projects, monitor operations, identify and resolve
vulnerabilities and rapidly respond to cyber incidents.
Security systems - We are building advanced detection and
prevention systems to protect our environment and quickly detect
potential issues.
Identity management - We continue to integrate and enhance
identity management to ensure there is one source of truth across
Just Eat.
Data governance - We have invested across people, process and
technology to govern and protect our data.
Key risk indicators
-- Externally sourced threat intelligence
-- Volumes, trends and root causes of prevented and detected
attacks
-- Network and system health and status of critical updates
-- Unapproved changes reaching production environment
-- Internal audit findings
Organisational
SkipTheDishes integration and reorganisation
Owners: Chief Executive Officer and Chief Financial Officer
Change: Risk increased
Link to strategic pillars: 2
What is the risk and impact?
We fail to (i) integrate and mature SkipTheDishes' governance in
line with the Group, and/or (ii) reorganise effectively to
capitalise on SkipTheDishes' global delivery role.
Dependent on the risk, impacts could range from data,
intellectual property or financial losses, service quality impacts,
regulatory non-compliance and any associated brand and reputation
damage.
What is the strategic context?
Just Eat Canada was operationally merged into SkipTheDishes
during 2018 and, using the SkipTheDishes business model, has
significantly grown to become the Group's second largest national
market.
Further, SkipTheDishes is now central to the Group's delivery
and logistics strategy, responsible for building logistics
solutions and providing centralised operations for other Group
businesses.
How is the risk managed?
Leadership changes - We have made significant changes to the
leadership of SkipTheDishes during 2018, bringing in experienced
executives to strengthen leadership capability.
Governance changes - We moved an experienced Just Eat Finance
Director to Canada and have built and strengthened teams
responsible for compliance across legal, finance, security and
risk. We will continue with further changes through 2019.
Organisational changes - These are underway to bring clarity to
global delivery versus Canadian market responsibilities.
Transparency - We launched the Group's whistleblowing policy and
anonymous contact process in Canada.
Key risk indicators
-- Governance-related complaints
-- Whistleblowing cases
-- Projects' status for global delivery roll-out
-- Projects' risks for global delivery roll-out
Infrastructure
Technology resilience
Owner: Chief Product and Technology Officer
Change: Risk decreased
Link to strategic pillars: 1 2
What is the risk and impact?
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.
What is the strategic context?
Offering a reliable service is key to building our customers'
and Restaurant Partners' loyalty and trust. That is why we innovate
and operate with a resilient mindset and have increased our
reliability capability and performance through 2018, lowering this
risk from prior levels.
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.
How is the risk managed?
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.
Key risk indicators
-- Systems availability/percentage of uptime levels
-- Backup success metrics
-- Outage root cause and problem management metrics
-- Results of business recovery exercises
Organisational
Growth, people and culture
Owners: Chief Executive Officer and Chief People Officer
Change: Risk increased
Link to strategic pillars: 1 2 3
What is the risk and impact?
We change our scale and organisation without protecting the
positive and powerful aspects of our culture today as an agile,
entrepreneurial business.
In addition, the changes across our senior leadership team
create uncertainty and/or impact on the positive aspects of our
culture, increasing this risk.
This may in turn impact our ability to attract and retain key
talent, affecting our achievement of strategic objectives and
performance milestones.
What is the strategic context?
As we grow in scale and complexity as a listed business, we will
continue to introduce structural, leadership, process and
governance improvements that allow us to manage and control our
business effectively.
However, we recognise that the energy and creativity we have
comes from our cultural underpinnings as a disruptive,
entrepreneurial business and this is worth protecting. Therefore we
seek to strike the right balance when making leadership changes and
adopting corporate best practices to ensure our culture is
protected.
How is the risk managed?
Talent assessment - This provides leadership and decision making
on investing, succession planning and management of our talent
pipeline, in line with our values, vision and strategy.
Change Management - Through planning and consistent two-way
communication, we ensure collective alignment and employees that
are engaged with business change.
Employee voice - We listen to our employees, and regularly
measure their engagement to ensure we have a clear employee value
proposition that motivates and retains our talent.
Inclusive culture - Through our diversity, inclusion and
belonging programme, we are striving to create a culture of
inclusion and openness that drives actionable feedback from our
workforce.
Key risk indicators
-- Levels of existing talent
-- Number of critical vacancies
-- Time to hire data
-- Key employee engagement metrics
Operational
Supplier resilience
Owner: Chief Financial Officer
Change: Risk increased
Link to strategic pillars: 1 2
What is the risk and impact?
Any of our key suppliers suffer significant and prolonged loss
of their services, disrupting our business operations.
Dependent on the supplier, disruptive impacts could be
experienced across our online platforms, our operational call
centres and our expanding delivery networks. This could impact
orders, revenue, customer and Restaurant Partner experience, and
ultimately our brand in the most severe of cases.
What is the strategic context?
We rely on an extensive network of suppliers including, amongst
others: large cloud providers, niche technology services companies,
outsourcers, delivery logistics suppliers and device manufacturers.
A combination of our growth and the maturing of our third party
governance and controls has increased visibility and appreciation
of this risk to the point of inclusion as a principal risk.
Aligned to our focus on building trust and loyalty across our
customers and Restaurant Partners, it is important that we
understand our supplier base and have the necessary contingency and
mitigation strategies in place to minimise our risks.
How is the risk managed?
Technology - Single points of disruption risks are reviewed,
prioritised and acted upon by the CIO.
Operations - We have globally distributed outsource capabilities
divided across tier one suppliers with cross-site failovers and
approved local recovery plans.
Delivery logistics - As we execute our global delivery strategy,
we are building logistics solutions with resiliency requirements
and recognise the ability to balance external providers with our
internal SkipTheDishes service.
Ordering devices - As part of our device management lifecycle,
we evaluate our suppliers and associated risks.
Key risk indicators
-- Systems availability/percentage of uptime levels
-- Operational incident reporting
-- Logistics incident reporting
-- Supplier risk evaluations
Financial
Global economic and political headwinds
Owner: Chief Financial Officer
Change: Risk stable
Link to strategic pillars: 1 2 3
What is the risk and impact?
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 risks and opportunities. For example, Brexit may have adverse
implications on immigration, access to talent and food price
inflation, impacting the Group and Restaurant Partners. The
opportunity of customers' "trade down" behaviour increasing online
takeaways represents upside during a recession. A particularly deep
and prolonged event has the potential to change behaviours, which
could adversely impact revenue and underlying profitability.
What is the strategic context?
The world continues to be volatile on a number of fronts
including ongoing Brexit uncertainty, signs of economic slowdown in
Europe and China, and conflicts in world trade. 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.
How is the risk managed?
Impact assessments - When events such as the Brexit referendum
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 - Our global footprint
continues to diversify as Canada grows to be our second largest
territory, 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.
Key risk indicators
-- Net new customers
-- Order growth
-- Reorder frequencies
-- Acquisition cost of new customers
-- Restaurant churn rates
Section 2. Directors' Responsibility Statement
The following information is extracted from page 142 of the
Annual Report and Accounts 2018.
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 IFRS, 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.
Each of the Directors, whose names and functions are listed on
pages 40 to 41, confirm that, to the best of each person's
knowledge and belief:
-- the Company and Group financial statements, which have been
prepared in accordance with IFRS, as adopted by the European Union,
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.
The Board considers the Annual Report and Accounts, taken as a
whole, is fair, balanced and understandable, and provides the
information necessary for shareholders to assess the Company's
position, performance, business model and strategy.
Section 3. Related party transactions
The following information is extracted from page 133 of the
Annual Report and Accounts 2018.
26. Related party transactions
During the year, we entered into transactions in the ordinary
course of business with related parties. Further details are
provided in this Note.
Compensation of key management personnel
Key management personnel comprises members of the Board and the
Executive Team. Key management personnel compensation is shown in
the table below:
2018 2017
GBPm GBPm
Short-term employee benefits 8.2 5.4
----- ------------
Post-employment pension 0.1 0.1
----- ------------
Termination benefits 1.0 -
----- ------------
Share based compensation 2.7 2.0
----- ------------
Total compensation of key management
personnel 12.0 7.5
----- ------------
The amounts disclosed in the table above are the amounts
recognised as an expense during the reporting period related to key
management personnel, which are disclosed in more detail in Note 7.
Further information concerning Directors' remuneration,
shareholdings, pension entitlements, share options and long-term
incentives, as required by the Act, is shown in the Annual Report
on Remuneration on pages 69 to 85.
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 2018, the amount due from key management
personnel in respect of these loans was GBPnil (2017: GBP0.2
million).
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:
Weighted
average
----------
2018 2017 threshold/
------ ------ -------------------- ----------
Number Number exercise
price
------ ------ -------------------- ----------
Year of issue ('000) ('000) Vesting date (pence)
------ ------ -------------------- ----------
2011 - 1 Up to April 2012 -
------ ------ -------------------- ----------
2013 408 926 Up to July 2016 49.9
------ ------ -------------------- ----------
2015 159 321 Up to May 2018 -
------ ------ -------------------- ----------
2016 463 658 Up to December 2019 -
------ ------ -------------------- ----------
2017 647 573 Up to September 2020 -
------ ------ -------------------- ----------
2018 833 - Up to September 2021 -
------ ------ -------------------- ----------
2,510 2,479
------ ------ -------------------- ----------
Refer to Note 7 for further details about the PSP, JSOP and EMI
schemes.
Amounts owed by or to related parties
With the exception of key management personnel and GBP1.1
million (2017: GBP0.6 million) accrued for IF-JE management
services, no amounts were owed by and to related parties at the
balance sheet date.
Other transactions with related parties
As explained in Note 15, funding transactions took place with
companies in which a non-controlling interest is held by us.
For further information, please contact:
Tony Hunter
Company Secretary
Just Eat plc + 44 (0) 207 603 1515
About Just Eat:
Just Eat plc (LSE: JE) operates a leading global hybrid
marketplace for online food delivery. Headquartered in London, we
use proprietary technology to offer a quick and efficient digital
ordering service for over 26 million customers and more than
100,000 Restaurant Partners across the UK, Australia & New
Zealand, Canada, Denmark, France, Ireland, Italy, Mexico, Norway,
Spain, Switzerland and Brazil.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCUVRBRKVAOUAR
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