Just Eat plc Annual Report & Accounts 2017 Annual Report Creating the world’s greatest food community Annual Report & Accounts 2017 WorldReginfo - f5b0c721-e5d8-4dfc-a2c6-df7579591a37 Delivering more choice and convenience to create the world’s greatest food community WorldReginfo - f5b0c721-e5d8-4dfc-a2c6-df7579591a37 Introduction Our vision is to create the world’s greatest food community For our Customers, it is about offering them >> Read more about our the widest choice – whatever, whenever Customers on page 7 and wherever they want to eat. For our Restaurant Partners, we help them >> Read more about our Restaurant Partners on to reach more Customers, support their page 21 businesses and improve standards in the industry. >> Read more about our For our People, it is being part of an People on page 37 amazing global team, helping to connect 21.5 million Active Customers with our 82,300 Restaurant Partners. Strategic report Corporate governance Financial statements 2 Highlights 44 Corporate governance report 84 Independent auditor’s report 4 At a glance 46 Our Board 90 Consolidated income statement 8 Chairman’s statement 48 Report of the Board 91 Consolidated statement of other 10 Chief Executive Officer’s review 56 Report of the Audit Committee comprehensive income 14 Our business model 61 Report of the Nomination Committee 92 Consolidated balance sheet 16 Our markets 65 Report of the Remuneration 93 Consolidated statement of changes 18 Our strategy Committee in equity 19 Our key performance indicators 67 Annual report on remuneration 94 Consolidated cash flow statement 22 Principal risks and uncertainties 95 Notes to the consolidated financial 28 Chief Financial Officer’s review statements 38 Our People 138 Company balance sheet 42 Corporate social responsibility 139 Company statement of changes in equity 139 Company cash flow statement 140 Notes to the Company financial statements 142 Directors’ report 146 Glossary of terms 148 Company information Front cover 149 Five-year summary Golden Dragon Chinese Takeaway & Off Licence, established in Port Tennant, Swansea in 2005, serves a new generation of Chinese food with restaurant quality cuisine at takeaway prices. www.justeatplc.com 1 WorldReginfo - f5b0c721-e5d8-4dfc-a2c6-df7579591a37 Highlights A year of strong execution Financial highlights Orders1 Revenue1 Underlying EBITDA1,2 +26% +45% +42% 17 172.4m 17 £546.3m 17 £163.5m 16 136.4m 16 £375.7m 16 £115.3m 15 96.2m 15 £247.6m 15 £59.7m Operating (loss)/profit Net operating cash flow Underlying EBITDA margin2 -200% +72% -3% 17 £(72.5)m 17 £166.7m 17 29.9% 16 £72.5m 16 £97.0m 16 30.7% 15 £35.5m 15 £74.2m 15 24.1% (Loss)/profit before tax Adjusted basic earnings per share2 Basic earnings per share -183% +38% -242% 17 £(76.0)m 17 16.8p 17 (15.2)p 16 £91.3m 16 12.2p 16 10.7p 15 £34.6m 15 6.6p 15 3.8p 1. Highlights that are key performance indicators are detailed further on page 19. 2. Refer to Note 2e of the financial statements on page 97 for full definition of adjusted measures. Refer to the reconciliation of uEBITDA on page 29 and of Adjusted EPS on page 34. 2 Annual Report & Accounts 2017 WorldReginfo - f5b0c721-e5d8-4dfc-a2c6-df7579591a37 Strategic reportStrategic Summary • Excellent Group performance underpinned by strong execution across our markets. • UK business continues to excel and is further strengthened by the acquisition of Hungryhouse. • Continued strong momentum internationally. • Strong cash flow leaves us in a position of great strength, enabling investment in significant new opportunities. “The bedrock of our business model is offering Customers the widest possible range of restaurants and the best possible ordering experience in every market where we operate.” Peter Plumb Chief Executive Officer >> Read more about our key performance indicators on page 19 www.justeatplc.com 3 WorldReginfo - f5b0c721-e5d8-4dfc-a2c6-df7579591a37 At a glance Creating the world’s greatest food community Restaurant Partners Customers Our network starts here. Restaurant supply is crucial. Greater convenience, choice and increasingly, quality Our success is linked to the breadth and depth of the of service has resulted in Customers embracing delivered cuisine we offer as well as the commitment and coverage food as a feature of their daily lives. of our estate. Of our key 18–34 year-old Customers, the largest single Restaurants will want to join the platform if they feel group are young families who typically place orders of it will create value for their businesses – both top line higher value. and bottom line. Our scale, technology and marketing programmes all contribute to that value creation. Number of restaurants Number of Active Customers at the end of 2017 at the end of 2017 82,300 +20% 21.5m +22% The Customer journey Choose restaurant Delivery method Customers can then make Once processed through an informed choice an Orderpad, the Customer by reading Customer receives a notification when reviews and examining the delivery is on its way, the menu. Once placed, unless they have chosen details of the order are to collect their order. sent to the restaurant via our proprietary technology. Postcode Payment method The Just Eat apps and The Customer can choose websites enable Customers either to pay securely to search for restaurants online or by cash. The on our network in their Customer receives a neighbourhood using a notification once the variety of criteria, such restaurant has accepted as by cuisine choice and the order. preference for delivery or collection. 4 Annual Report & Accounts 2017 WorldReginfo - f5b0c721-e5d8-4dfc-a2c6-df7579591a37 Strategic reportStrategic Why invest in Just Eat? • Large and growing market • Ongoing technology innovation >> Read more about • Known and loved brands • Low average market penetration the marketplace in which we operate on • Scale drives leverage and • Sustainable double-digit growth pages 16 and 17 long-term profitability • Highly cash-generative • Strong operational execution operating model Our global coverage Norway Denmark Canada UK Ireland Switzerland France Mexico Spain Italy Brazil Profitable territory Australia Investment territory No presence New Zealand Outside of the UK and Australia & New Zealand, our segments are: Established Markets Developing Markets The Group’s associate in Latin America, iFood, also has a presence in Colombia and Argentina. Canada Ireland Italy In addition, our Canadian business, SkipTheDishes Denmark Norway Mexico has a small operation in the USA. France Switzerland Spain www.justeatplc.com 5 WorldReginfo - f5b0c721-e5d8-4dfc-a2c6-df7579591a37 Delivering more food choice for our Customers 6 Annual Report & Accounts 2017 WorldReginfo - f5b0c721-e5d8-4dfc-a2c6-df7579591a37 Strategic reportStrategic People love takeaway food. We offer a vast choice of restaurants and cuisines, and a convenient and easy to use digital platform. Just Eat has built its business by having the widest choice of traditional foods available on our platforms, from great local restaurants, imaginative pop-ups and renowned international branded chains. This exciting variety is what continues to drive Customer loyalty. 13,800 Net restaurants added during the year Over 100 Number of different cuisine types available on Just Eat www.justeatplc.com 7 WorldReginfo - f5b0c721-e5d8-4dfc-a2c6-df7579591a37 Chairman’s statement A year of strong execution A year of strong operational progress An outstanding team >> Read more about In 2017, Just Eat achieved another year of strong The results we have reported for the year are a corporate governance trading, whilst our industry continues to benefit reflection of the Company’s leadership and also on page 44 from rapid change. Advancements in technology, the strength of the wider Executive Team – all compounded by notable societal shifts, are achieved against what can only be described changing consumer buying habits. Technology is as a difficult set of circumstances. also having a positive impact on the restaurants In February 2017, David Buttress announced we serve, helping to enlarge their customer base that he was stepping down from his role as and provide the tools to operate more efficiently Chief Executive Officer. Our then Chairman, and dynamically. John Hughes, assumed the temporary role of Against this backdrop, I am pleased with the Executive Chairman only to step down shortly Group’s excellent results for the year ended thereafter due to ill health. John subsequently 31 December 2017. passed away on 12 June 2017, following a short period of medical treatment. John had been During the year, we enjoyed strong organic Chairman since December 2011 and played a growth and continued to make progress with the fundamental role in the successful development integration of the acquired Canadian business, of Just Eat as first a private and then a public SkipTheDishes. We also received regulatory company for five and a half years. approval for our acquisition of Hungryhouse in the UK, which we subsequently completed Following John Hughes stepping down, the Board on 31 January 2018. and I asked Paul Harrison to act as Interim Chief Executive Officer and I would like to thank Paul Our strategy is based on providing an unbeatable for his outstanding management of the business takeaway experience for both our Customers and during a period of significant uncertainty. Restaurant Partners. As a technology business, we will continue to invest in innovation and to We were pleased to appoint Peter Plumb partner with others in order to enhance our as Chief Executive Officer with effect from Customers’ experience and create additional 18 September 2017. Peter has a successful value for our Restaurant Partners. track record of running customer-focused, high-growth technology companies, and this The restaurants with whom we work are primarily experience will prove invaluable as we continue small independent businesses that form part of to build our business in the coming years. a rapidly growing industry.