TIDMJE.
RNS Number : 2344W
JUST EAT plc
31 July 2018
31 July 2018
Just Eat plc
("Just Eat", the "Company" or the "Group")
2018 Interim Results
Strong first half performance, upgraded full year revenue
guidance
Just Eat plc (LSE: JE.), a leading global marketplace for online
food delivery, today reports its results for the six months ended
30 June 2018 ("H1" or the "First Half").
Financial highlights
-- Orders up 30% to 104.4 million (H1 2017: 80.4 million)
-- Revenue up 45% to GBP358.4 million (H1 2017: GBP246.6
million), up 46% on a constant currency basis
-- uEBITDA[1] up 12% to GBP82.7 million (H1 2017: GBP73.6 million)
-- Profit before tax down 3% to GBP48.1 million (H1 2017:
GBP49.5 million) given costs associated with the acquisition of
Hungryhouse
-- Basic earnings per share ("EPS") remains unchanged at 5.5p (H1 2017: 5.5p)
-- Adjusted basic EPS[2] up 10% to 8.6p (H1 2017: 7.8p)
-- Cash generated by operations up 13% to GBP77.2 million (H1 2017: GBP68.1 million)
Operational highlights
-- UK revenue up 30%; Hungryhouse successfully migrated
-- Canada revenue up 212%, or 227% at constant currency; driven
by a strong performance from SkipTheDishes, Just Eat Canada merged
with Skip
-- Australia revenue down 8%, or down 2% at constant currency.
Australia business transition to hybrid delivery underway
-- International revenue up 36%, or 35% at constant currency
driven by strong order growth in Italy, Spain and Mexico
-- Orders via app: accounted for 54% of total orders (H1 2017: 46%)
Peter Plumb, Chief Executive Officer, commented:
"The Just Eat Group served 24 million customers with 104 million
takeaways through the Group's platforms around the world. Our
increased investments in technology, brand and delivery are on
track to make our service even easier to use, whilst expanding our
customer's choice. I'm pleased with the strong start to the year
and excited by our opportunity to help many more people enjoy more
of their takeaway moments through our platforms."
Outlook
The Board is confident in the current performance and strategy
of the Group and is raising investment for long term growth from
GBP50 million to GBP55 - GBP60 million. Therefore, revenue guidance
is raised for 2018 to between GBP740 - GBP770 million, up from
GBP660 - GBP700 million. Underlying EBITDA guidance for the Full
Year remains unchanged between GBP165 - GBP185 million.
- Ends -
Presentation
A presentation will be held for analysts and professional
investors at 09.30am (UK time) at UBS, 5 Broadgate, London EC2M
2QS.
The presentation will be webcast live and will be accessible via
the Just Eat website[3] at
www.justeatplc.com/investors/results-reports.
An on-demand replay will also be available on the Just Eat
website following the presentation.
Enquiries:
Just Eat +44 (0)20 3667 6961
Peter Plumb, Chief Executive Officer
Paul Harrison, Chief Financial Officer
Adam Kay, Head of Investor Relations
Brunswick Group LLP +44 (0)20 7404 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, such
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 subsequent events or
circumstances following 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 24.0 million customers and 93,700 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.
H1 2018 PERFORMANCE REVIEW
Overview
This has been a strong first six months for the Group, which has
seen us add a net 11,400 restaurants and 5.6 million new customers.
We sent our restaurant partners 104.4 million orders worth GBP2.0
billion, up 33% from GBP1.5 billion in the prior comparable
period.
Group revenue was GBP358.4 million, up 45% (H1 2017: GBP246.6
million), and up 46% at constant currency. uEBITDA increased 12% to
GBP82.7 million and we generated GBP77.2 million of cash from
operations (H1 2017: GBP68.1 million). These results reflect
increased investment, specifically in key areas such as marketing,
technology and product development. These improvements are
benefitting both sides of our marketplace and providing a solid
platform for the launch of delivery services.
Our non-UK businesses now account for 49% of Group revenues (H1
2017: 43%) and we continue to see strong growth in the majority of
those markets, with the exception of Australia where the launch of
delivery is beginning to gain momentum.
Strategic progress
At our 2017 preliminary results announcement in March, we noted
that 2018 would be a year when we would invest to grow and at our
Capital Markets Day ("CMD") in June, we outlined our vision to
unlock the GBP57 billion market opportunity across our core
geographies, with a further GBP26 billion in Latin America where we
operate through our associate, iFood. It is this prize that created
our ambition to serve every customer's takeaway moment.
At the CMD, we shared the knowledge that we had gained, and
introduced the strategic pillars that underpin how the Group
intends to target this opportunity. These are to: Build our
marketplace to be world-class; Engineer delivery services to
complement our marketplace; and Lead a world-class digital global
team, supporting extraordinary local customer experts.
Build our marketplace to be world-class
Creating a more engaging user experience and building a stronger
brand are essential tenets to driving customer attraction, order
frequency and retention. We have an opportunity and a plan to
create a world-class customer experience, measured by top of mind
awareness and Net Promotor Score, which at a Group level increased
by seven percentage points to 36 in the first six months of
2018.
In respect of technology investment, in the first half we spent
GBP46.7 million (H1 2017: GBP35.6 million) in improving both the
customer and our restaurant partner experience. Building brands is
a long-term commitment, and marketing spend over the First Half was
GBP69.6 million up 29% on the comparable period (H1 2017: GBP54.0
million).
App users are more loyal and order more frequently than other
customers. We are rapidly improving the user experience of our apps
to encourage increasing numbers of customers to connect with us
through that channel. We are pleased to note that 54% of orders
over the First Half were made via the app (H1 2017: 46%).
Over the First Half, average order frequency across the Group on
an annualised basis improved to 8.1 (H1 2017: 8.0).
We also added 11,400 net new restaurants onto our platform, with
approximately 70% of our estate now being in tier 2-5 cities,
reflecting the wide reach of our leading marketplace
businesses.
At our preliminary results in March, we committed to rolling out
our restaurant device, Orderpad, to all restaurants. We're pleased
to note that as at 30 June, Orderpad was in 34,300 restaurants (H1
2017: 15,400), including 18,800 in UK restaurants. Orderpad
provides significant benefits to all parties. The technology helps
our restaurant partners run better businesses through greater
control and insight, whilst offering the potential to improve
customer service by enabling direct contact with restaurants rather
than through our contact centres.
Engineer delivery services to complement our marketplace
Delivery revenue grew by 238% to GBP81.9 million (H1 2017:
GBP24.2 million), representing 23% of Group revenue (H1 2017: 10%).
At constant currency, delivery revenue grew 249%. This was led by
Canada where we are merging our Just Eat business with
SkipTheDishes and, following further development of a French
language version of the platform, we will leverage our existing
marketplace business to bring the Skip business to Quebec during
the second half.
In the UK, we made significant progress in the First Half,
expanding delivery services to major cities such as Leeds,
Liverpool and Manchester. Our courier partners are able to deploy
resource across non-competing industries and, consequently, pass on
significantly reduced delivery costs and improved service
times.
At the beginning of April, we launched delivery services in
Australia with strong collaboration between our Menulog,
SkipTheDishes and technology teams. Whilst there remains more to do
to emulate the full SkipTheDishes experience in Australia, by the
end of June, we were live in seven delivery zones covering a
population of 2 million people and are adding a new zone every ten
days.
Lead a world-class digital global team, supporting extraordinary
local customer experts
We have significantly strengthened our team over the First Half.
In the period, we appointed Peter Duffy as our first Chief Customer
Officer. Peter will lead our new initiatives to put our customers
at the heart of everything we do with responsibility for Marketing,
Digital, Customer Relationship Management (CRM), Business
Intelligence (BI), Data, Machine Learning and Group Operations -
all of which are vital for Just Eat to offer our customers the best
and easiest way to find and order their takeaway treat.
Furthermore, we continue to strengthen our technology team with the
addition of new development resource.
2018 strategic investment
As a result of encouraging H1 learnings, the Board have
increased growth investment from GBP50 million to GBP55 - GBP60
million. We successfully invested GBP24 million in the First Half,
which included:
-- Driving continued exceptional growth in Canada and launching
SkipTheDishes technology into Australia
-- Scaling delivery for branded restaurants and working to
improve the delivery economics in the UK
-- Further nurturing and growing our businesses in earlier stage markets.
Segment results
At our Capital Markets Day we set out new reporting segments
which reflect how we now manage the business. We are reporting
according to these segments for the first time.
United Kingdom
Strong growth in the UK business continued during the period,
with orders up 20% to 59.3 million (H1 2017: 49.5 million),
including 2.2m orders through the Hungryhouse platform, which was
fully integrated, ahead of plan, on 22 May 2018. Revenue was up by
30% to GBP182.7 million (H1 2017: GBP140.1 million), driven by
order growth and Average Revenue Per Order ("ARPO") growth of 9%
(H1 2017: 6%).
Key highlights of the First Half include:
-- Achieving the 400 millionth UK order since launch
-- Increasing the Active customer[4] base by 16% to 11.3 million customers (H1 2017: 9.7 million)
-- An acceleration of delivery orders, driven by an increase in
the number of branded restaurants we are working with and
significantly improved economics. As well as working with third
party couriers, we intend to launch SkipTheDishes technology in
selected cities during the second half of 2018.
The uEBITDA margin was 49% (H1 2017: 52%), reflecting investment
in marketing, technology and delivery. We anticipate increased
expenditure in the second half of the year as we continue to roll
out delivery services and enhance our brand, particularly with our
recently announced sponsorship of X Factor for a second season.
Canada
Canada saw orders up by 189% to 12.7 million (H1 2017: 4.4
million) and revenue of GBP73.0 million (H1 2017: GBP23.4 million),
up by 212% or 227% at constant currency. This was driven by a
strong performance from SkipTheDishes.
Key highlights of the First Half include:
-- Launched SkipTheDishes outside of Canada for the first time,
bringing its leading technology and expertise to Australia
-- Established a centre of excellence for delivery services,
particularly courier management, in Winnipeg
-- Completed the integration of SkipTheDishes and Just Eat Canada business.
Canadian uEBITDA losses were GBP8.5 million (H1 2017: GBP3.1
million loss).
Australia & New Zealand
Over the First Half, the Menulog Group achieved 6.5 million
orders (H1 2017: 7.4 million), generating revenue of GBP21.6
million (H1 2017: GBP23.6 million), down 8% or 2% on a currency
neutral basis. uEBITDA decreased by GBP2.1 million to GBP4.4
million (H1 2017: GBP6.5 million). These results demonstrate the
importance in this region of complementing our marketplace business
with a delivery capability which has been introduced since 31
December 2017.
During the First Half we launched delivery services under the
Menulog brand using SkipTheDishes' expertise and we are now present
in seven delivery zones in Sydney and Melbourne. Whilst this
enables access to more than 2 million potential customers to
supplement our marketplace business, there remains significant
further engineering work to do to create an outstanding customer
experience.
International
This segment contains eight countries - Denmark, France,
Ireland, Italy, Mexico, Norway, Spain and Switzerland. In the First
Half they generated 25.9 million orders (H1 2017: 19.0 million), an
increase of 36%, and revenue of GBP81.1 million (H1 2017: GBP59.5
million), up 36% or 35% on a currency neutral basis.
Italy, Spain and Mexico had strong performances, with Spain
achieving one million orders in a month for the first time. Mexico
is responding well to increased investment, although this remains
an early stage market. France performed well as we continue to add
restaurants to diversify the French business, with fewer than 60%
of orders now coming from Greater Paris. During the half we also
rebranded the French business to Just Eat from Allo Resto. In
Switzerland we saw an acceleration of order growth in the First
Half.
This segment achieved uEBITDA of GBP4.3 million (H1 2017: GBP4.2
million), with the additional scale of more established markets
being mitigated by stronger investment in earlier stage
markets.
iFood ("IF-JE")
We saw continued excellent performance over the First Half of
the year from iFood, generating 45.0 million orders (H1 2017: 21.7
million), an increase of 107%. This drove revenue of GBP52.7
million (H1 2017: GBP31.4 million), up 68% (up 98% on a constant
currency basis). The business remains predominantly Brazil-based
and has significant long-term potential. During the First Half, we
increased our stake in IF-JE to 33% as the last minority holders
were bought out.
Profit before tax
Profit before tax was GBP48.1 million, down 3% from the
comparable period (H1 2017: GBP49.5 million). The scale benefit of
a 45% increase in revenue was offset by a reduction in gross margin
as a result of the higher level of delivery orders, exceptional
costs pertaining to the acquisition of Hungryhouse and an increase
in depreciation and amortisation associated with this
transaction.
Taxation
The income tax expense was recognised based on management's best
estimate of the annual income tax rate expected for each
jurisdiction for the full financial year applied to profit before
tax for the interim period, jurisdiction by jurisdiction. On this
basis, the Group's tax charge was GBP11.9 million (H1 2017: GBP13.1
million). The adjusted effective tax rate, after taking account of
the impact of long-term employee incentive costs, exceptional
items, other gains and losses, foreign exchange gains and losses,
amortisation in respect of acquired intangibles and an adjustment
for the associates uEBITDA, was 21.2% (H1 2017: 23.4%). The
effective tax rate, based on profit before tax, was 24.7% (H1 2017:
26.5%).
Earnings per share
Adjusted basic EPS was 8.6p (H1 2017: 7.8p), an increase of 10%
in the period. Adjusted basic EPS is calculated using the adjusted
profit attributable to the holders of ordinary shares. Basic EPS
for the period was unchanged at 5.5p (H1 2017: 5.5p).
Cash flow and net debt
The Group continued its high level of cash conversion,
benefiting from collecting the gross order value ahead of making
net payments to its restaurant partners. Cash generated by
operations was GBP77.2 million (H1 2017: GBP68.1 million).
To fund the purchase of Hungryhouse, we drew down GBP145.0
million from the Group's GBP350 million revolving credit facility.
At the balance sheet date, the Group had cash balances of GBP156.7
million (H1 2017: GBP177.5 million). Excluding cash remitted to
restaurants following the end of the period, the Group assessed its
net debt to be GBP6.8 million (H1 2017: GBP142.9 million net
cash)[5].
Capital structure and dividend
No dividends were declared during the period (H1 2017: nil).
Whilst Just Eat generates strong earnings and has high cash
conversion, the Board continues to prioritise investment to drive
strong long-term revenue growth and profitability. The Board
regularly reviews its capital allocation and return policy in order
to maximise long-term returns to shareholders.
Outlook
The Board is confident in the current performance and strategy
of the Group and is raising investment for long term growth from
GBP50 million to GBP55 - GBP60 million. Therefore, revenue guidance
is raised for 2018 to between GBP740 - GBP770 million, up from
GBP660 - GBP700 million. Underlying EBITDA guidance for the Full
Year remains unchanged between GBP165 - GBP185 million.
Audit Tender
Just Eat will shortly be holding a competitive tender process to
select and formalise the appointment of the external auditor for
the financial year ending 31 December 2019.
Deloitte LLP have acted as Just Eat's external auditor since
2009 and will undertake the audit of the financial statements for
the year ending 31 December 2018.
An announcement will be made in due course to confirm the
appointment of an external auditor following the conclusion of the
audit tender process.
Principal risks and uncertainties
The principal risks and uncertainties set out in the last annual
report remain valid at the date of this report. In summary, these
include:
-- Inability to offer compelling service propositions
-- User experience fails to meet expectations
-- Changes in regulation and legislation
-- Brand is harmed by an event or strategy
-- Sustain a cyber security breach
-- Prolonged outage of critical platforms and infrastructure
-- Challenges in growing and scaling the business
-- Significant delays and challenges with integration of new acquisitions
-- Key talent leaves the business or talent acquisition is ineffective
-- Global economic or political events weaken performance.
Directors' responsibility statement
The Directors confirm that, to the best of their knowledge:
-- The Interim Financial Statements, which have been prepared in
accordance with IAS 34 Interim Financial Reporting, give a true and
fair view of the assets, liabilities, financial position and profit
or loss of the issuer, or the undertakings included in the
consolidation as a whole as required by DTR 4.2.4R
-- The Interim Management Report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year)
-- The Interim Management Report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
Peter Plumb Paul Harrison
Chief Executive Officer Chief Financial Officer
Consolidated Income Statement
For the period ended 30 June 2018
Year ended
Period ended 30 31 December
June 2017
Audited
GBPm
2018 2017
Unaudited Unaudited
Notes GBPm GBPm
Continuing operations
Revenues 3 358.4 246.6 546.3
Cost of sales (93.1) (36.8) (96.0)
----------- ----------- -------------
Gross profit 265.3 209.8 450.3
Long-term employee incentive costs 4 (3.1) (3.3) (6.6)
Exceptional items 5 (11.1) (4.3) (191.1)
Other administrative expenses (205.4) (152.3) (324.5)
----------- ----------- -------------
Total administrative expenses (219.6) (159.9) (522.2)
Share of results of associates (0.1) 0.5 (0.6)
----------- ----------- -------------
Operating profit/(loss) 45.6 50.4 (72.5)
Other gains and losses 6 2.8 (0.7) (2.0)
Finance income 0.2 0.2 0.7
Finance costs (0.5) (0.4) (2.2)
----------- ----------- -------------
Profit/(loss) before tax 48.1 49.5 (76.0)
Taxation 7 (11.9) (13.1) (27.5)
----------- ----------- -------------
Profit/(loss) for the period 36.2 36.4 (103.5)
=========== =========== =============
Attributable to:
Equity shareholders 37.2 37.3 (102.7)
Non-controlling interests (1.0) (0.9) (0.8)
----------- ----------- -------------
36.2 36.4 (103.5)
=========== =========== =============
Earnings per ordinary share (pence)
Basic 8 5.5 5.5 (15.2)
Diluted 8 5.4 5.4 (15.2)
Adjusted earnings per ordinary share[6]
(pence)
Basic 8 8.6 7.8 16.8
Diluted 8 8.5 7.7 16.6
Reconciliation of operating profit
to uEBITDA(1)
Operating profit/(loss) 45.6 50.4 (72.5)
Depreciation and amortisation 3 21.6 15.0 38.4
Long-term employee incentive costs 4 3.1 3.3 6.6
Exceptional items 5 11.1 4.3 191.1
Net foreign exchange losses/(gains) 0.5 0.2 (0.5)
Adjustment for associates uEBITDA[7] 0.8 0.4 0.4
----------- ----------- -------------
uEBITDA(1) 3 82.7 73.6 163.5
=========== =========== =============
Consolidated Statement of Other Comprehensive Income
For the period ended 30 June 2018
Year ended
Period ended 30 31 December
June 2017
Audited
GBPm
2018 2017
Unaudited Unaudited
GBPm GBPm
Profit/(loss) for the period 36.2 36.4 (103.5)
Items that may be reclassified subsequently
to the income statement:
Exchange differences on translation of
foreign operations - Group (10.2) 11.2 (2.6)
Exchange differences on translation of foreign
operations - Associates (4.0) (1.8) (3.8)
Exchange differences on translation of
non-controlling interests - 0.6 (0.1)
Fair value losses on cash flow hedges - (0.2) (0.1)
Fair value gains on available-for-sale
investments - - 0.1
Other comprehensive (loss)/income for the
period (14.2) 9.8 (6.5)
Total comprehensive income/(loss) for the
period 22.0 46.2 (110.0)
============ =========== =============
Attributable to:
Equity shareholders 23.0 46.5 (109.1)
Non-controlling interests (1.0) (0.3) (0.9)
------------ ----------- -------------
Total comprehensive income/(loss) for the
period 22.0 46.2 (110.0)
============ =========== =============
Consolidated Balance Sheet
As at 30 June 2018
As at 31
As at 30 June December
2017
Audited
GBPm
2018 2017
Unaudited Unaudited
Notes GBPm GBPm
Non-current assets
Goodwill 9 735.3 736.1 544.9
Other intangible assets 126.8 98.5 94.5
Property, plant and equipment 20.8 15.2 19.0
Investments in associates 53.2 44.0 41.4
Available-for-sale investments 11 4.2 4.1 4.2
Deferred tax assets 23.1 12.3 18.1
----------- ----------- ----------
963.4 910.2 722.1
----------- ----------- ----------
Current assets
Operating cash 98.9 143.9 213.6
Cash to be paid to Restaurant Partners 57.8 33.6 51.5
----------- ----------- ----------
Cash and cash equivalents 156.7 177.5 265.1
Inventories 4.4 2.5 2.8
Trade and other receivables 24.7 23.7 24.2
Derivative financial instruments 11 0.3 - 0.1
Current tax assets 1.0 1.1 0.4
187.1 204.8 292.6
----------- ----------- ----------
Total assets 1,150.5 1,115.0 1,014.7
----------- ----------- ----------
Current liabilities
Trade and other payables (220.8) (117.8) (185.2)
Derivative financial instruments 11 - (0.1) (0.6)
Current tax liabilities (28.3) (25.8) (36.4)
Deferred revenue (3.3) (3.5) (3.3)
Provisions for liabilities 13 (13.0) (35.5) (22.6)
Borrowings 12 (0.4) (0.7) (0.4)
(265.8) (183.4) (248.5)
----------- ----------- ----------
Net current (liabilities)/assets (78.7) 21.4 44.1
----------- ----------- ----------
Non-current liabilities
Deferred tax liabilities (21.6) (23.2) (18.2)
Deferred revenue (3.8) (0.9) (0.8)
Provisions for liabilities 13 - (20.7) (20.2)
Borrowings 12 (105.3) (0.3) (0.3)
Other long-term liabilities - (9.4) -
----------- ----------- ----------
(130.7) (54.5) (39.5)
----------- ----------- ----------
Total liabilities (396.5) (237.9) (288.0)
----------- ----------- ----------
Net assets 754.0 877.1 726.7
=========== =========== ==========
Equity
Share capital 6.8 6.8 6.8
Share premium account 562.8 562.5 562.7
Translation reserve 74.1 104.1 88.3
Other reserves (5.0) (6.3) (5.2)
Retained earnings 106.2 201.6 65.9
----------- ----------- ----------
Equity attributable to shareholders
of the Company 744.9 868.7 718.5
Non-controlling interest 9.1 8.4 8.2
----------- ----------- ----------
Total equity 754.0 877.1 726.7
=========== =========== ==========
Consolidated Statement of Changes in Equity
For the period ended 30 June 2018
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
1 January 2018
(audited) 6.8 562.7 88.3 (5.2) 65.9 718.5 8.2 726.7
--------- --------- ------------ ---------- ---------- ------- ---------------- --------
Profit/(loss) for
the period - - - - 37.2 37.2 (1.0) 36.2
Other comprehensive
income - - (14.2) - - (14.2) - (14.2)
--------- --------- ------------ ---------- ---------- ------- ---------------- --------
Total comprehensive
income/ (loss) for
the period - - (14.2) - 37.2 23.0 (1.0) 22.0
Exercise of share
options - 0.1 - - - 0.1 - 0.1
Share based payment
charge - - - - 2.7 2.7 - 2.7
Exercise of JSOP
awards - - - 0.2 - 0.2 - 0.2
Tax on share options - - - - 0.4 0.4 - 0.4
Adjustment to
Mexican
NCI - - - - - - 1.9 1.9
30 June 2018
(unaudited) 6.8 562.8 74.1 (5.0) 106.2 744.9 9.1 754.0
========= ========= ============ ========== ========== ======= ================ ========
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
1 January 2017
(audited) 6.8 562.2 94.7 (6.4) 160.7 818.0 7.7 825.7
--------- --------- ------------ ---------- ---------- -------- ---------------- --------
Profit/(loss) for
the period - - - - 37.3 37.3 (0.9) 36.4
Other comprehensive
income/(loss) - - 9.4 (0.2) - 9.2 0.6 9.8
--------- --------- ------------ ---------- ---------- -------- ---------------- --------
Total comprehensive
income/ (loss) for
the period - - 9.4 (0.2) 37.3 46.5 (0.3) 46.2
Exercise of share
options - 0.3 - - - 0.3 - 0.3
Share based payment
charge - - - - 2.8 2.8 - 2.8
Exercise of
JSOP/SIP
awards - - - 0.3 - 0.3 - 0.3
Tax on share
options - - - - 0.8 0.8 - 0.8
Adjustment to
Mexican
NCI - - - - - - 1.0 1.0
30 June 2017
(unaudited) 6.8 562.5 104.1 (6.3) 201.6 868.7 8.4 877.1
--------- --------- ------------ ---------- ---------- -------- ---------------- --------
(Loss)/profit for
the period - - - - (140.0) (140.0) 0.1 (139.9)
Other comprehensive
(loss)/income - - (15.8) 0.2 - (15.6) (0.7) (16.3)
Total comprehensive
loss for the
period - - (15.8) 0.2 (140.0) (155.6) (0.6) (156.2)
Exercise of share
options - 0.2 - - - 0.2 - 0.2
Share based payment
charge - - - - 3.3 3.3 - 3.3
Exercise of
JSOP/SIP
awards - - - 0.9 - 0.9 - 0.9
Adjustment for
cash-settled
share options - - - - (0.2) (0.2) - (0.2)
Tax on share
options - - - - 1.2 1.2 - 1.2
Adjustment to
Mexican
NCI - - - - - - 0.4 0.4
31 December 2017
(audited) 6.8 562.7 88.3 (5.2) 65.9 718.5 8.2 726.7
========= ========= ============ ========== ========== ======== ================ ========
Consolidated Cash Flow Statement
For the period ended 30 June 2018
Year ended
Period ended 30 31 December
June 2017
Audited
GBPm
2018 2017
Unaudited Unaudited
GBPm GBPm
Operating profit for the period 45.6 50.4 (72.5)
Adjustments for:
Amortisation of intangible assets 16.7 11.7 31.1
Depreciation of property, plant
and equipment 4.9 3.3 7.3
Loss on disposal of property,
plant and equipment and intangible
assets 0.7 0.5 0.9
Share of results of associates 0.1 (0.5) 0.6
Movement in provisions (0.2) 0.1 0.3
Non-cash long-term employee incentive
costs 3.1 3.3 6.6
Impairment charges - - 180.4
Other non-cash items - 0.1 (0.3)
----------- ----------- -------------
70.9 68.9 154.4
(Increase)/decrease in inventories 0.1 (0.5) (0.2)
Increase in receivables (5.2) (1.7) (4.6)
Increase in payables 8.6 1.7 42.7
Increase/(decrease) in deferred
income 2.8 (0.3) (0.6)
----------- ----------- -------------
Net cash generated by operations 77.2 68.1 191.7
Interest paid (0.2) - (0.7)
Facility fees paid (0.2) (0.3) (2.3)
Income taxes paid (21.3) (9.5) (22.0)
Net cash generated from operating
activities 55.5 58.3 166.7
----------- ----------- -------------
Investing activities
Interest received 0.2 0.2 0.7
Acquisition of subsidiary businesses (230.7) (0.3) (0.4)
Acquisition of interests in associates (17.0) (2.0) (2.6)
Disposal of subsidiary businesses - 3.7 3.6
Disposal of minority stake in Mexican
business - 0.5 1.2
Funding provided to associates (3.1) - (0.8)
Purchase of intangible assets (12.9) (8.3) (24.0)
Purchase of property, plant and
equipment (7.1) (8.2) (14.6)
Other cash outflows - 0.8 1.2
----------- ----------- -------------
Net cash used in investing activities (270.6) (13.6) (35.7)
----------- ----------- -------------
Financing activities
Proceeds from exercise of options
and awards 0.6 1.0 3.1
Cash inflow on borrowings 145.0 - -
Repayment of borrowings (40.0) - (0.4)
|Funding received from non-controlling 1.9 - -
interest
Net cash generated from financing
activities 107.5 1.0 2.7
----------- ----------- -------------
Net (decrease)/increase in cash
and cash equivalents (107.6) 45.7 133.7
Cash and cash equivalents at beginning
of period 265.1 130.6 130.6
Effect of changes in foreign exchange
rates (0.8) 1.2 0.8
----------- ----------- -------------
Cash and cash equivalents at end
of period 156.7 177.5 265.1
=========== =========== =============
Notes to the Interim Financial Statements
1. General information
The Directors of Just Eat plc (the "Company") present their
interim report and the unaudited condensed consolidated financial
statements for the period ended 30 June 2018 ("Interim Financial
Statements"). The Company is a public limited company, incorporated
and domiciled in the UK. Its registered address is Masters House,
107 Hammersmith Road, London, W14 0QH.
The Interim Financial Statements have been reviewed, but not
audited, by Deloitte LLP and were approved by the Board of
Directors on 30 July 2018.
The information for the period ended 30 June 2018 does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006. The Interim Financial Statements should be
read in conjunction with the Annual Report and Financial
Statements, for the year ended 31 December 2017, which were
prepared in accordance with European Union endorsed International
Financial Reporting Standards ("IFRS") and those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
The Annual Report and Financial Statements for the year ended 31
December 2017 were approved by the Board of Directors on 5 March
2018 and delivered to the Registrar of Companies. The auditor's
report on those financial statements was unqualified, did not
contain an emphasis of matter paragraph and did not contain any
statement under section 498(2) or (3) of the Companies Act
2006.
2. Basis of preparation
The Interim Financial Statements have been prepared in
accordance with IAS 34 Interim Financial Reporting as endorsed by
the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
The Interim Financial Statements are presented in pounds
sterling, rounded to the nearest GBP0.1 million, unless otherwise
stated. They were prepared under the historical cost convention,
except for assets and liabilities acquired as part of a business
combination, deferred contingent consideration, available-for-sale
investments, derivative financial instruments, and other financial
assets and liabilities recognised at fair value through profit or
loss, which have been measured at fair value.
Going concern
The Directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of at least 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the Interim Financial Statements.
Accounting policies
The accounting policies adopted in the preparation of the
Interim Financial Statements are consistent with those applied in
the preparation of the Group's consolidated financial statements
for the year ended 31 December 2017.
New and amended standards adopted by the Group
The Group have implemented IFRS 9 Financial Instruments and IFRS
15 Revenue from contracts with customers, both effective for the
first time for the financial year beginning on 1 January 2018.
Neither standard has had a material impact on the Group's financial
position or performance therefore no restatement of the comparative
figures has been required.
Critical accounting judgements and key sources of estimation
uncertainty
In the course of preparing the financial statements, management
necessarily makes judgements and estimates that can have a
significant impact on the financial statements. The most critical
accounting judgements relate to capitalised development costs. Key
sources of estimation uncertainty relate to the fair value
calculations on acquired intangible assets in respect of business
combinations, the impairment of goodwill and intangible assets, and
the impact of uncertain tax provisions. The use of inaccurate
assumptions in assessments made for any of these judgements and
estimates could result in a significant impact on the financial
results.
With the exception of the additional estimation uncertainty
concerning the fair value of the business combination in the
period, these critical accounting judgements and key sources of
estimation uncertainty are the same as those disclosed in note 2 of
the Group's 2017 Annual Report, which can be obtained from the
Company's registered office or from the Company's website
www.justeatplc.com.
3. Operating segments
The Group's segmental reporting is designed to give greater
transparency to the reader of the Group's financial statements by
disclosing the Group's results on geographical basis, where each
market has similar economic characteristics. Due to both the
current and expected future size of the Canada and Australia &
New Zealand ("ANZ") segments, the Group has changed its reporting
segments to be: United Kingdom, ANZ, Canada and International
(which consists of Denmark, France, Ireland, Italy, Mexico, Norway,
Spain and Switzerland). The comparative segmental disclosures below
have been restated for this change in operating segments.
Each of the businesses aggregated within International have
similar economic characteristics as they have similar business
models and therefore are expected to have similar long-term uEBITDA
margins. The chief operating decision maker ("CODM") is Peter
Plumb, the Group's Chief Executive Officer, who manages and reports
to the Board on the same basis as the new reporting segments. The
principal measure of profit used by the CODM to assess and manage
performance is uEBITDA. It is defined as earnings before finance
income and costs, taxation, depreciation and amortisation
("EBITDA"), and additionally excludes long-term employee incentive
costs, exceptional items, foreign exchange gains and losses, other
gains and losses, and the share of results from associates falling
outside this definition.
At a segmental level, uEBITDA incorporates an allocation of
Group technology and central costs.
Year ended
Period ended 30 June 31 December
2017
Audited
GBPm
2018 2017
Unaudited Unaudited
Segment revenue GBPm GBPm
Restated Restated
United Kingdom 182.7 140.1 303.8
ANZ 21.6 23.6 49.8
Canada[11] 73.0 23.4 64.4
International 81.1 59.5 128.3
Total revenue 358.4 246.6 546.3
============= =========== =============
Year ended
Period ended 30 June 31 December
2017
Audited
GBPm
2018 2017
Revenue by source Unaudited Unaudited
GBPm % GBPm % %
Commission revenue 308.2 86 205.7 83 458.4 84
Payment card and administration
fees 40.0 11 28.6 12 60.1 11
Discounts (14.3) (4) (6.4) (3) (14.5) (3)
------------ ------------ -------------
Order-driven revenue 333.9 93 227.9 92 504.0 92
Top-placement fees 20.4 6 13.8 6 31.6 6
Connection fees and other
revenue 4.1 1 4.9 2 10.7 2
------------ ------------ -------------
Ancillary revenue 24.5 7 18.7 8 42.3 8
Total revenues 358.4 246.6 546.3
============ ============ =============
Order-driven revenue by segment was as follows: United Kingdom
GBP171.4 million (H1 2017: GBP130.9 million), ANZ GBP20.3 million
(H1 2017: GBP22.8 million), Canada GBP71.1 million (H1 2017:
GBP22.2 million) and International GBP71.1 million (H1 2017:
GBP52.0 million).
3. Operating segments (continued)
Year ended
Period ended 30 June 31 December
2017
Audited
GBPm
2018 2017
Unaudited Unaudited
Segment uEBITDA and results GBPm GBPm
Restated Restated
United Kingdom 89.4 73.4 155.4
ANZ 4.4 6.5 17.3
Canada (8.5) (3.1) (11.4)
International 4.3 4.2 19.4
------------- ----------- -------------
Total segment uEBITDA 89.6 81.0 180.7
Share of uEBITDA from associates[12] 0.7 0.9 (0.2)
Head office costs (7.6) (8.3) (17.0)
------------- ----------- -------------
uEBITDA 82.7 73.6 163.5
Long-term employee incentive costs (3.1) (3.3) (6.6)
Exceptional items[13] (11.1) (4.3) (191.1)
Net foreign exchange (losses)/gains (0.5) (0.2) 0.5
EBITDA 68.0 65.8 (33.7)
Depreciation (4.9) (3.3) (7.3)
Amortisation - Acquired intangible
assets (11.6) (9.3) (24.4)
Amortisation - Other intangible assets (5.1) (2.4) (6.7)
Share of results from associates below
uEBITDA(8) (0.8) (0.4) (0.4)
------------- ----------- -------------
Operating profit/(loss) 45.6 50.4 (72.5)
Other gains and losses 2.8 (0.7) (2.0)
Finance income 0.2 0.2 0.7
Finance costs (0.5) (0.4) (2.2)
------------- ----------- -------------
Profit/(loss) before tax 48.1 49.5 (76.0)
============= =========== =============
Property, plant & equipment and intangible assets
Additions[14] Depreciation and amortisation
Period ended 30 Year ended Year ended
June 31 December Period ended 30 June 31 December
2018 2017 2017 2018 2017 2017
GBPm GBPm GBPm GBPm GBPm GBPm
Restated Restated Restated Restated
United Kingdom 242.2 1.4 2.6 5.1 1.6 3.0
ANZ 0.8 0.9 0.2 4.5 5.6 15.0
Canada 2.5 0.9 1.7 2.4 2.2 4.3
International 2.7 1.7 3.4 3.2 3.3 8.6
------ --------- ------------ -------- ------------ ------------
248.2 4.9 7.9 15.2 12.7 30.9
Head office 11.0 9.4 30.8 6.4 2.3 7.5
Total 259.2 14.3 38.7 21.6 15.0 38.4
====== ========= ============ ======== ============ ============
4. Long-term employee incentive costs
During the period ended 30 June 2018, the Group recognised a
charge in respect of long-term employee incentive costs of GBP3.1
million (H1 2017: GBP3.3 million; year ended 31 December 2017:
GBP6.6 million). This charge was in respect of the Group's
share-based long-term incentive plans and related employer's
national insurance (or local equivalent). During the period, the
Company granted awards of 84,740 shares under the Group's long-term
employee incentive plans (period ended 30 June 2017: 2,217,059
shares).
5. Exceptional items
Year ended
Period ended 30 June 31 December
2017
Audited
GBPm
2018 2017
Unaudited Unaudited
GBPm GBPm
Impairment charges - - 180.4
M&A transaction costs 1.6 1.2 1.7
Acquisition integration costs 9.5 3.1 9.0
----------------- ----------- -------------
Total exceptional items 11.1 4.3 191.1
================= =========== =============
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 just two cities,
Sydney and Melbourne. This characteristic makes Australia an
attractive market for delivery focussed competitors, with the
consequence that Australia is today one of our most competitive
markets. As a consequence, success will be partly dependent on our
ability to add delivery capability to complement our marketplace
business.
During the period, the Group's Australian business commenced
delivery operations by utilising the SkipTheDishes technology.
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 that will place the business in a
good position for solid future growth.
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 period ended 30 June 2018, they
include GBP1.0 million (H1 2017: GBP1.1 million; year ended 31
December 2017: GBP1.3 million) of costs in respect of the
acquisition of Hungryhouse Holdings Limited ("Hungryhouse"), which
completed on 31 January 2018.
Acquisition integration costs
The acquisition integration costs relate to the integration of
recently acquired businesses into the Group.
For the period ended 30 June 2018, GBP1.4 million relates to
accrued consideration (separate to the acquisition consideration)
of SkipTheDishes' management providing certain services to the
Group post-completion (H1 2017: GBPnil; year ended 31 December
2017: GBP9.0 million).
Also included in the period ended 30 June 2018 is GBP8.1 million
related to the integration of Hungryhouse into the Group. These
costs include non-recurring costs of running two offices and
platforms during employee consultation processes, redundancy costs,
lease termination costs and related advisers' fees.
6. Other gains and losses
Year ended
Period ended 30 June 31 December
2017
Audited
GBPm
2018 2017
Unaudited Unaudited
GBPm GBPm
Movement in minority shareholders'
buy-out provision - (0.4) (0.5)
Gain/(loss) on derivative financial
instruments 0.3 0.1 (0.4)
Fair value gain/(loss) on contingent
consideration 2.5 (0.4) (1.1)
---- ------ ------
Total other gains and losses 2.8 (0.7) (2.0)
==== ====== ======
7. Taxation
Year ended
Period ended 30 June 31 December
2017
Audited
GBPm
2018 2017
Unaudited Unaudited
GBPm GBPm
Current taxation
Current period 13.2 13.2 38.0
Adjustment for prior periods - - (0.3)
--------------- ----------- -------------
13.2 13.2 37.7
--------------- ----------- -------------
Deferred taxation
Temporary timing differences (1.3) (0.1) (10.0)
Adjustments for prior periods - - (0.2)
(1.3) (0.1) (10.2)
--------------- ----------- -------------
Total tax charge for the period 11.9 13.1 27.5
=============== =========== =============
UK corporation tax was calculated at 19% (H1 2017: 19.25%; year
ended 31 December 2017: 19.25%) 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 GBP0.4 million (H1 2017: GBP0.8
million; year ended 31 December 2017: GBP2.0 million), which
comprised of a credit of GBP0.5 million relating to current tax and
a debit of GBP0.1 million relating to deferred tax.
The effective tax rate on underlying profits ("Underlying ETR")
is 21.2% (H1 2017: 23.4%; year ended 31 December 2017: 23.7%).
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 GBP11.9 million (H1 2017: GBP13.1
million; year ended 31 December 2017: GBP27.5 million) is made up
of a current tax charge of GBP13.2 million (H1 2017: GBP13.2
million; year ended 31 December 2017: GBP37.7 million), primarily
consisting of corporate tax arising in the UK, Denmark, France,
Ireland and Switzerland; and a net deferred tax credit of GBP1.3
million (H1 2017: GBP0.1 million; year ended 31 December 2017:
GBP10.2 million) resulting from the unwinding of the 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
GBP17.6 million (H1 2017: GBP10.0 million; as at 31 December 2017:
GBP17.4 million). Included within this provision is an amount held
in relation to an ongoing transfer pricing audit in Denmark (as
disclosed in note 10 of the Group's 2017 Annual Report). There has
been no movement in claim proceedings since the 2017 Annual Report
and the Group's view of the expected outcome of the claim remains
unchanged. This remains a key source of estimation uncertainty as
outlined in Note 2.
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, adjustment for associates uEBITDA, and
the tax impact of these adjusting items.
Basic and diluted earnings per share have been calculated as
follows:
Year ended
Period ended 30 June 31 December
2017
Audited
GBPm
2018 2017
Unaudited Unaudited
Basic and diluted earnings per share GBPm GBPm
Profit/(loss) attributable to equity
shareholders 37.2 37.3 (102.7)
Long-term employee incentive costs 3.1 3.3 6.6
Exceptional items 11.1 4.3 191.1
Other gains and losses (2.8) 0.7 2.0
Net foreign exchange losses/ (gains) 0.5 0.2 (0.5)
Amortisation in respect of acquired
intangible assets 11.6 9.3 24.4
Adjustment for associates uEBITDA 0.8 0.4 0.4
Tax impact of the adjusting items (3.5) (2.8) (7.6)
--------------- ----------- -------------
Adjusted profit attributable to equity
shareholders 58.0 52.7 113.7
=============== =========== =============
Number of shares ('000)
Year ended
Period ended 30 June 31 December
2017
Audited
2018 2017
Unaudited Unaudited
Weighted average number of ordinary
shares for basic earnings per share 677,973 676,238 676,844
Effect of dilution
Share options and awards 5,211 6,400 5,159
Unvested JSOP shares 153 1,337 943
Shares held in escrow - 1,047 -
Weighted average number of ordinary
shares adjusted for the effect of dilution 683,337 685,022 682,946
============== =========== =============
Year ended
Period ended 30 June 31 December
2017
Audited
Pence
2018 2017
Unaudited Unaudited
Pence Pence
Earnings per ordinary share
Basic 5.5 5.5 (15.2)
Diluted[15] 5.4 5.4 (15.2)
Adjusted earnings per ordinary share
Basic 8.6 7.8 16.8
Diluted 8.5 7.7 16.6
================= =========== =============
9. Goodwill
Year ended
Period ended 30 June 31 December
2017
Audited
GBPm
2018 2017
Unaudited Unaudited
GBPm GBPm
At start of period 544.9 725.2 725.2
Arising on acquisition of Hungryhouse 201.0 -
(see note 10) -
SkipTheDishes acquisition adjustment[16] - 1.3 1.5
Impairment charges[17] - - (180.4)
Foreign exchange movement (10.6) 9.6 (1.4)
--------------- ----------- -------------
At end of period 735.3 736.1 544.9
=============== =========== =============
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 represent 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.
Note 12 to the Group's financial statements for the year ended
31 December 2017 included the following statement: "With the
exception of the ANZ and MX CGUs, no reasonably expected change in
the key assumptions used in the VIU calculations would give rise to
an impairment charge". The Directors continue to believe this to be
the case.
10. Acquisitions
Hungryhouse
Provisional fair values of businesses acquired in the current GBPm
period[18]
Cash 7.9
Intangible assets - Restaurant contracts 39.4
Deferred tax liabilities in respect
of the intangible assets (6.7)
Deferred tax asset in respect of losses 6.5
Trade and other receivables 0.1
Trade and other payables (8.5)
Provisions (0.2)
------------
38.5
Goodwill 201.0
------------
Total consideration 239.5
============
Satisfied by:
Cash consideration 216.0
Deferred consideration 23.5
------------
Total consideration 239.5
============
Net cash outflow arising on acquisition:
Cash consideration 216.0
Cash acquired (7.9)
------------
Net cash outflow 208.1
============
Contribution since control obtained[19]
Revenue n/a
uEBITDA n/a
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 for consideration totalling
GBP239.5 million.
Funding for the acquisition was obtained from both existing cash
reserves and a draw down on the Group's revolving credit facility.
Estimated deferred consideration of GBP23.5 million is payable on
31 January 2019.
The acquisition is consistent with Just Eat's strategic ambition
to further its growth and increase its market presence in every
geography in which it operates. Hungryhouse is an online food
company operating solely in the UK, with a comparable business
model to Just Eat.
The acquisition is expected to generate significant benefits for
Just Eat's Restaurant Partners and Customers. It creates an
enlarged Customer base for Restaurant Partners to access, whilst
increasing the breadth of choice on offer to UK consumers through
Just Eat's platform. The combination of the two businesses also
generates compelling economic benefits of scale, with high
operating leverage expected to drive material synergies post
integration. 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.
Transaction costs incurred on acquisition (including the CMA
process) and integration costs have been separately recognised as
exceptional items in note 5.
10. Acquisitions (continued)
Net cash outflow on acquisition of businesses
The net cash outflow on acquisition of businesses during the
period ended 30 June 2018 as shown in the table above was GBP208.1
million. GBP202.1 million of this was paid during the period ended
30 June 2018. The remaining GBP6.0 million was paid in the year
ended 31 December 2016. The amount in the Consolidated Cash Flow
Statement also includes GBP28.6 million of deferred consideration
paid during the year in respect of acquisitions made in previous
years.
11. Financial instruments
The Group measures financial instruments subsequent to initial
recognition at fair value for forward exchange contracts (level 2)
and available-for-sale investments (level 3). There have been no
transfers between levels 2 and levels 3 in any of the periods
presented.
a) Available-for-sale investments
At 30 June 2018, the Group held GBP4.2 million of
available-for-sale investments (H1 2017: GBP4.1m; as at 31 December
2017: GBP4.2 million). The level 3 measurement techniques and
inputs applied in fair valuing these investments included a
comparison to valuations used by other comparable companies that
have recently raised capital.
b) Derivative financial instruments
At 30 June 2018, the Group had entered into six forward
contracts to purchase US$6.0 million which will be used to hedge
highly probable forecasted US$ denominated operating costs. The
Group designated US$nil of the foreign exchange forward contracts
as cash flow hedges. At 30 June 2018, the Group has recognised a
financial asset of GBP0.3 million to reflect the fair value of the
outstanding forward contracts.
12. Borrowings
As at
As at 30 June 31 December
2017
Audited
GBPm
2018 2017
Unaudited Unaudited
GBPm GBPm
Current
Other borrowings (0.4) (0.7) (0.4)
----------- ----------- -------------
(0.4) (0.7) (0.4)
=========== =========== =============
Non-current
Revolving credit facility (105.0) - -
Other borrowings (0.3) (0.3) (0.3)
----------- ----------- -------------
(105.3) (0.3) (0.3)
=========== =========== =============
Net Debt
Operating cash 98.9 143.9 213.6
Current borrowings (0.4) (0.7) (0.4)
Non-current borrowings (105.3) (0.3) (0.3)
----------- ----------- -------------
(6.8) 142.9 212.9
=========== =========== =============
Revolving credit facility
The Group has access to a GBP350.0 million revolving credit
facility which has been partly utilised in the current period as a
result of acquisition of Hungryhouse (see note 10).
This facility is unsecured, has an interest rate range of 0.75%
to 1.35% above LIBOR and is repayable in November 2022, with an
option to extend for up to two further years. Financial covenants
to this facility include ratios relating to interest cover,
leverage and earn-out deferred consideration.
13. Provisions
As at
As at 30 June 31 December
2017
Audited
GBPm
2018 2017
Unaudited Unaudited
GBPm GBPm
Current 13.0 35.5 22.6
Non-current - 20.7 20.2
----------- ----------- -------------
13.0 56.2 42.8
=========== =========== =============
Provisions as at 30 June 2018 included GBP9.6 million (H1 2017:
GBP9.4 million; as at 31 December 2017: GBP9.6 million) in respect
of the Group's commitment to buy out the minority shareholder of
FBA Invest SaS and associated legal costs.
Provisions as at 31 December 2017 included GBP9.8 million (H1
2017: GBPnil) in respect of contingent consideration on the
acquisition of a further 1.5% stake in IF-JE, (an associated
undertaking of the group). The contingent consideration was a level
3 measurement recorded at fair value. The discount rate applied to
the obligation was 1.17%. The consideration is no longer considered
to be contingent and therefore the amount payable is now included
in trade and other payables.
Provisions as at 30 June 2017 included GBP40.8 million relating
to contingent consideration on the acquisition of SkipTheDishes. At
30 June 2018, the acquired business has met the conditions for
payment of the additional consideration and therefore it is no
longer considered contingent. The remaining consideration payable
has therefore been transferred to trade and other payables (as at
31 December 2017: GBP20.6 million included in trade and other
payables). The consideration was a level 3 measurement recorded at
fair value. The discount rate applied to the obligation was
1.73%.
Movements in provisions, other than their utilisation, are
recognised within other gains and losses.
Other provisions total GBP3.4 million (H1 2017: GBP6.0 million;
as at 31 December 2017: GBP3.2 million).
14. Related-party transactions
Transactions between the Group and its related parties are made
on terms equivalent to those that prevail in arm's length
transactions. The following transactions were entered into with
related parties:
IF-JE Participacoes S.A. ("IF-JE")
During the period ended 30 June 2018, the Group provided its
associate, IF-JE, with working capital funding of GBP2.7 million
(H1 2017: GBPnil; year ended 31 December 2017: GBP0.8 million). The
majority shareholder, Movile, also participated in the funding. As
the IF-JE minority shareholders did not participate in the funding,
the Group's holding in IF-JE increased by less than 0.1%.
IF-JE has contracted to provide management services to
SinDelantal Mexico. The total charge incurred for the period ended
30 June 2018 was GBP1.2 million (H1 2017: GBP0.4 million; year
ended 31 December 2017: GBP0.6 million), all of which were accrued
on the balance sheet on their respective period ends.
IF-JE Holdings B.V. ("IF-JE NL")
During the period ended 30 June 2018, the Group provided its
associate, IF-JE NL, with net working capital funding of GBP0.4
million.
Long-term incentives
Amounts recognised as long-term incentive costs during the
period in respect of key management personnel were GBP0.9 million
(H1 2017: GBP0.9 million; year ended 31 December 2017: GBP2.0
million).
15. Post balance sheet events
There have been no events subsequent to the balance sheet date
that require disclosure.
Independent review report to Just Eat plc
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2018 which comprises the Consolidated
Income Statement, the Consolidated Statement of Other Comprehensive
Income, the Consolidated Balance Sheet, the Consolidated Statement
of Changes in Equity, the Consolidated Cash Flow Statement and
related notes 1 to 15. We have read the other information contained
in the half-yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial
statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our review
work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this Half Year financial report has been prepared in accordance
with International Accounting Standard 34 Interim Financial
Reporting as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2018 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
London, United Kingdom
30 July 2018
Officers and registered office
Directors
M. Evans (Chairman) Appointed 6 March 2018
P. Plumb (Chief Executive Officer)
P. Harrison (Chief Financial Officer)
G. Burr
D. Buttress Retired 26 April 2018
F. Coorevits
A. Cox
R. Donnelly
A. Griffith
D. Oliva
Secretary
T. Hunter
Company registration number
06947854
Registered office
Masters House
107 Hammersmith Road
London
W14 0QH
[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 an adjustment for the associates uEBITDA. See note
3.
[2] 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, an adjustment for the associates
uEBITDA, and the tax impact of these adjusting items. See note
8.
[3] The content of the Just Eat website should not be considered
to form a part of or be incorporated into this announcement.
[4] Defined as those customers that have placed at least one
order within the last 12 months.
[5] See note 12.
[6] A definition of adjusted EPS is included in note 8.
[7] The adjustment for associates uEBITDA recognises the group's
share of items which fall between uEBITDA and operating profit and
therefore should be added back to calculate group uEBITDA.
[11] Includes both Just Eat Canada and SkipTheDishes.
[12] Respective amounts that fall either inside or outside of
the Group's definition of uEBITDA.
[13] The prior year includes an impairment charge of GBP180.4
million which relates to the carrying value of goodwill included
within the Australia & New Zealand CGU.
[14] Additions include goodwill and other intangible assets
acquired as part of business combinations, as well as purchases of
tangible and intangible fixed assets.
[15] Ordinary shares are only treated as dilutive when their
conversion would decrease earnings per share or increase loss per
share from continuing operations.
[16] SkipTheDishes was acquired on 14 December 2016. The
acquisition accounting at 31 December 2016 and 30 June 2017 was
provisional as the valuation of the acquired intangible assets was
based on estimated inputs at that stage. In the year ended 31
December 2017, the valuation models and acquisition accounting was
finalised, resulting in an increase in goodwill of GBP1.5
million.
[17] Impairment charges at 31 December 2017 related to the
Group's ANZ CGU.
[18] Due to the limited amount of time since the acquisition of
Hungryhouse, on 31 January 2018, the acquisition accounting is
provisional. This includes the valuation of the acquired intangible
assets as some of the inputs to the valuation models are based on
estimates.
[19] Immediately after acquisition, management started
transferring Hungryhouse customers and restaurants on to the Just
Eat UK ordering platform. The Hungryhouse platform ceased operating
on 22 May 2018. Because of this, it is not possible to track
Hungryhouse's total contribution to the Group's results since the
date of acquisition, as information is only available in respect of
orders placed directly through the Hungryhouse platform, which
would exclude orders from Hungyhouse customers that had transferred
on to the Just Eat platform.
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
IR LFFSIDSIIVIT
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