Creating the world’s greatest food community Just Eat plc Annual Report and Accounts 2016 Annual Report Annual Report and Accounts 2016 Front cover At Just Eat we operate a leading global Father and son team at Moja Indian & Bangladeshi marketplace for online food delivery, Takeaway, Stockton- on-Tees. Finalist, North East region, at providing customers with an easy the British Takeaway and secure way to order and pay for Awards 2016. food from our Restaurant Partners. Since we launched in Denmark in 2001, we have expanded globally into 11 other markets, with a strategy to be market leader in each country in which we operate. Our scale creates compelling network effects. Our values Make Razor Big Happy Sharp Hearted See page 2 See page 12 See page 34 5 Annual Report & Accounts 2016 Contents Our vision Strategic report Our vision is to create 4 Highlights 2016 the world’s greatest food 6 Chairman’s statement community. We’ll achieve this 8 At a glance through our purpose, which is 10 Chief Executive Officer’s review 14 Our business model to make food discovery exciting 16 Market overview for everyone. 18 Our strategy 19 Our key performance indicators For our customers it is about 20 Principal risks and uncertainties discovering the widest choice 24 Chief Financial Officer’s review and facilitating what they 32 Operational review want to eat, when and where. 36 Our people and community For our Restaurant Partners Corporate governance it is about working with them 40 Corporate governance report to help them reach more 42 Our Board customers, supporting their 44 Report of the Board business and driving 51 Report of the Audit Committee 56 Report of the Nomination Committee standards in the industry. 60 Report of the Remuneration Committee For our colleagues it is about 62 Annual report on remuneration 71 Appendix to the Directors’ the opportunity to be part of remuneration report making this happen across the globe, helping to connect Financial statements 17.6 million customers with our 78 Independent auditor’s report 68,500 Restaurant Partners. to the members of Just Eat plc 85 Consolidated income statement 86 Consolidated statement of other comprehensive income Keep up to date 87 Consolidated balance sheet For more information on our business and 88 Consolidated statement of changes all our latest news and press releases simply in equity visit us at: justeatplc.com. 89 Consolidated cash flow statement 90 Notes to the consolidated financial statements 135 Company balance sheet 136 Company statement of changes in equity 136 Company cash flow statement 137 Notes to the Company financial statements 139 Directors’ report 144 Glossary of terms 146 Company information 147 Five-year summary www.justeatplc.com 1 Make Happy We aim to provide the widest choice to customers and offer restaurants innovative technology and exclusive partner deals to help them better manage their businesses. Number of different cuisine types Driving more choice available on Just Eat for more occasions Over 100 As well as adding a greater selection of restaurants and more cuisine types, we also Average number of orders aim to increase mealtime choices to cater for all processed per restaurant takeaway occasions – breakfast, lunch and dinner. 2,167 +19% We are working with many top technology brands to connect more customers and provide new ways of ordering, making it easier for food to be delivered or collected. We are also increasing the number of better known brands on our platforms, this is expected to drive the number of potential dining occasions, along with customer frequency and loyalty. 2 Annual Report & Accounts 2016 Our restaurant >> Refer to the partnership programme Chief Executive Officer’s review uses our scale to provide commencing on page 10 for great products and more information services to our estate, such as food, soft drinks, card processing, wifi, broadband, motorbike insurance, business rates advice and finance funding. 33 Highlights 2016 A year of strong progress Operational highlights Financial highlights • Just Eat processed orders worth £2.5 billion Orders1 for our Restaurant Partners (2015: £1.7 billion). • Active Users increased 31 per cent to +42% 17.6 million (2015: 13.4 million). 16 136.4m • Orders placed via mobile devices continued to grow, rising to 73 per cent of Group orders 15 96.2m (2015: 66 per cent). 14 61.2m • More than 50 per cent of UK orders4 were processed through an Orderpad, our tablet-based order management platform, 1,3 well ahead of our target to have one third Underlying EBITDA of UK orders processed through this technology by March 2017. +93% • In line with the Group’s strategy to be market 16 £115.3m leader, Just Eat acquired and integrated 15 £59.7m businesses in Italy, Spain and Mexico during 14 £32.6m the year. • In December, we announced the acquisition of SkipTheDishes in Canada and are pleased with its performance to date. Profit before tax2 • The proposed acquisition of hungryhouse in the UK was also announced in December, +164% and remains subject to approval by the 16 £91.3m Competition and Markets Authority (“CMA”). 15 £34.6m 14 £57.4m 4 Annual Report & Accounts 2016 1. Highlights that are key Revenues1 Operating profit performance indicators and are detailed further on page 19. 2. 2014 includes the impact of +52% +104% a one-off, non-cash book gain. 3. Refer to Chief Financial 16 £375.7m 16 £72.5m Officer’s review commencing on page 24 for full definition of adjusted measures. 15 £247.6m 15 £35.5m 4. Based on seven days to 14 £157.0m 14 £19.0m 31 December 2016. Underlying EBITDA margin3 Net operating cash flow +27% +31% 16 30.7% 16 £97.0m 15 24.1% 15 £74.2m 14 20.8% 14 £38.1m Basic earnings per share2 Adjusted earnings per share3 +182% +85% 16 10.7p 16 12.2p 15 3.8p 15 6.6p 14 9.8p 14 4.2p www.justeatplc.com 5 Chairman’s statement Building on our market leadership I am pleased to announce the Group’s results for the year “Just Eat has had another strong year ended 31 December 2016. in which we have seen our revenues Total revenues increased by 52 per cent and Underlying EBITDA continue to to £375.7 million (2015: £247.6 million), grow significantly.” Underlying EBITDA was up by 93 per cent to £115.3 million (2015: £59.7 million) and Dr John Hughes CBE, Hon DSc profit before tax was up 164 per cent Chairman to £91.3 million (2015: £34.6 million). Furthermore, the Group continued to be highly cash generative, with £97.0 million of Our agreed acquisition of hungryhouse net operating cash flow (2015: £74.2 million). in the UK is conditional upon receiving >> Read more In February 2017, we announced that about corporate regulatory approval. These transactions governance David Buttress will be stepping down as follow the 2015 acquisition of Menulog, commencing Chief Executive Officer at the end of the the clear market leader in Australia, where on page 40 first quarter, due to urgent family matters, we continue to drive further value from at which time I will assume the role of that business. Executive Chairman until David’s successor Our strategy is underpinned by the desire to is appointed. anticipate and fulfil the needs of consumers On behalf of the Board, I would like to thank and restaurants. As leaders in technology, David for his outstanding contribution. we will continue to invest in innovation and David has been an incredible leader and seek partnerships with others where we can colleague, who has earned the respect and enhance the consumer experience or create loyalty of all who have worked with him. additional value to our Restaurant Partners. Whilst we have commenced the search We will continue to evolve our brand and for a new Chief Executive Officer, David make the right investments behind it, both will leave an experienced leadership team to further grow the total market and to at the helm and will continue on the Board increase our share within it. as a Non-executive Director. Corporate governance During the year, we extended our leadership Corporate governance has always been positions in the 12 markets where we important to us, as it provides the structure compete and are now profitable in eight within which the entrepreneurial culture of of those, on an Underlying EBITDA basis. the Group can thrive. It enables continued As well as generating strong organic growth, growth in an environment that is both we remained focused on our strategy of supportive and controlled, while ensuring consolidating our number one positions that shareholder value and stakeholder across our markets, acquiring businesses interests are aligned and can be maximised in Spain, Italy, Mexico, Brazil and Canada. in the long-term. 6 Annual Report & Accounts 2016 Strategic reportStrategic In my statement last year, I noted that we Looking ahead would become fully compliant with all of the While the UK remains our largest market, >> Read more about our culture on provisions of the UK Corporate Governance we are excited by the growth we are seeing page 36 Code during the year, and this was achieved in our international businesses. The majority on 1 March 2016. of these markets are much less penetrated than the UK and therefore represent As set out a year ago, Benjamin Holmes and significant opportunity for the Group. Michael Risman stepped down from the Board as Non-executive Directors following We will continue to build our presence in all publication of our full year results in 2016. our geographies and extend our leadership through investment in our technology, brand The Board was delighted to welcome Roisin and people.