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Just Eat Plc (JE.)

Just Eat Plc

Full Year Results
RNS Number : 5981H
JUST EAT plc
17 March 2015
 



JUST EAT plc

 

("JUST EAT", the "Company" or the "Group")

 

Full Year Results

 

Excellent growth, momentum continues into 2015

 

 

JUST EAT plc (LSE: JE.) the world's leading online market place for restaurant delivery, connecting 8.1 million Active Users to over 45,700 takeaway restaurants, today reports another year of excellent growth with revenues for the year ended 31 December 2014 up 62% to £157.0 million and Underlying EBITDA up 131% to £32.6 million.

 

 

Financial Highlights

·      Revenues up 62% to £157.0 million (2013: £96.8 million)

·      Orders up 52% to 61.2 million (2013: 40.2 million)

·      Underlying EBITDA1 up 131% to £32.6 million (2013: £14.1 million)

·      Basic earnings per share up 553% to 9.8p (2013: 1.5p)

·      Adjusted basic earnings per share2 up 200% to 4.2p (2013: 1.4p)

·      Operating cash flow up 98% to £38.1 million (2013: £19.2 million), representing 117% of Underlying EBITDA

·      Continued investment for long-term growth

 

Operational and Strategic Highlights

·      Active Users3 up 37% to 8.1 million (2013: 5.9 million)

·      The Group processed orders worth over £1 billion for our takeaway restaurants

·      Continued progress on our three strategic initiatives of improving consumer experience, bringing greater choice and driving channel shift

·      Mobile strategy success as UK orders placed via mobile devices now 61% of orders (2013: 43%)4

·      Seven strategic acquisitions completed in 2014; a further three completed post year-end

 

 

David Buttress, Chief Executive Officer, commented

"It's been another excellent year for JUST EAT. Our results demonstrate how we are successfully building market-leading positions as more consumers discover the ease of use and wide choice of cuisines that our marketplaces for takeaway food offer. This would not have been possible without the commitment and passion of all of our teams and I would like to thank them for their hard work and dedication.

 

I am delighted with the progress we have made both financially and operationally. I remain confident for the year ahead as we focus on our strategic objectives, investing to deliver long-term, sustainable returns for our shareholders."

 

Current Trading and Outlook

Strong trading momentum has continued into 2015. Investment for growth in areas such as technology, marketing and people will continue, and as a result, the Board expects 2015 revenues to marginally exceed £200 million, at current exchange rates.

 

- Ends -

 

1. Underlying EBITDA is the main measure of profit used by management to assess the performance of the Group's businesses. It is based on EBITDA (defined as earnings before finance income and costs, taxation, depreciation and amortisation) but excludes the Group's share of depreciation and amortisation of joint ventures and associates, long term employee incentive costs, exceptional items, foreign currency gains and losses and 'other gains and losses' (being profits or losses arising on the disposal and deemed disposal of operations, and fair value gains and losses on financial assets classified as fair value through profit or loss). At a segmental level, Underlying EBITDA also excludes intra-group franchise fee arrangements and incorporates an allocation of Group technology and central costs (all of which net out on a consolidated level). A reconciliation between operating profit and Underlying EBITDA is shown below.

2. Adjusted Basic Earnings per Share is the main measure of earnings per share used by the Group and is calculated using profit attributable to the holders of Ordinary shares in the parent before long term employee incentive costs, acquired intangible asset amortisation, exceptional items, 'other gains and losses', foreign currency gains and losses and the tax impact of these adjusting items.

3. An Active User represents an account that has placed at least one order within the last 12 months.

4. Includes those orders placed using tablet devices.

 

The Company will hold a presentation for analysts today at 9.30 am at the Lincoln Centre, 18 Lincoln's Inn Fields, London, WC2A 3ED.

 

The presentation will be webcast live and will be accessible via the JUST EAT website at www.just-eat.com.

 

An on-demand replay will also be available on the JUST EAT website following the presentation.

 

 

Enquiries:


JUST EAT

+44 (0) 20 3667 6900

David Buttress, Group Chief Executive Officer


Michael Wroe, Group Chief Financial Officer


Adam Kay, Head of Investor Relations




Brunswick Group LLP

+44 (0) 20 7404 5959

Sarah West, Natalia Dyett


 

 

Forward looking statements

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". By their nature, forward-looking statements involve risk and uncertainty since they relate to future events and circumstances. Actual results may, and often do, differ materially from any forward-looking statements. Any forward-looking statements in this announcement reflect management's view with respect to future events as at the date of this announcement. Save as required by law or by the Listing Rules of the UK Listing Authority, the Company undertakes no obligation to publicly revise any forward-looking statements in this announcement following any change in its expectations or to reflect events or circumstances after the date of this announcement.

 

 

About the JUST EAT Group

JUST EAT plc operates the world's leading online market place for restaurant delivery. Headquartered in London, there are currently over 45,700 takeaway restaurants within the international JUST EAT network, which uses proprietary technology to offer a quick and efficient online ordering service for consumers and restaurant partners alike. JUST EAT is a member of the FTSE 250 Index. www.just-eat.com/investors5

 

 

Chairman's Statement

 

This has been another excellent year for JUST EAT, with revenues up 62% to £157.0 million and Underlying EBITDA up 131% to £32.6 million, demonstrating the scale of the market opportunity and our ability to drive top and bottom line growth by meeting the needs of consumers and restaurants.

 

We aim to deliver predictable and transparent financial performance. JUST EAT's significant operational leverage saw margins expand as revenues grew, more than offsetting our substantial ongoing investments in group infrastructure, technology and markets. Furthermore, the business has an attractive cash profile, with a very favourable working capital cycle.

 

As well as sharply higher order volumes in 2014, which increased 52% year-on-year, we have seen a continuing shift to mobile. Through our mobile-led strategy this channel now provides over 60% of orders for the UK. We also enhanced our relationship with our restaurant partners, who are embracing the improved tools we offer them.

 

2014 was a landmark year, with our IPO in April being an important milestone and we were delighted to attract such a high-quality shareholder base. We believe that the investment community is increasingly recognising the value of JUST EAT, as we continue to deliver on our commitments. Our business model delivers value to consumers and restaurants, which in turn creates value for shareholders.

 

The IPO has given us the financial strength to develop through acquisition, if opportunities to buy leading positions in markets of scale present themselves. In the short term, our strategy is to continue to build our business by extending our leadership in existing markets and to focus on technology and innovation.

 

John Hughes, CBE

Chairman

17 March 2015

 

 

CEO's Statement

 

Excellent growth

Order growth is a key measure of JUST EAT's success. It illustrates how well we have executed on our strategy and reinforces the attractiveness of our market for the long term. In 2014, orders grew by 52% to 61.2 million, worth over £1 billion to our restaurant partners.

 

Revenues grew 62% to £157.0 million. Underlying EBITDA increased to £32.6 million from £14.1 million, which is an excellent result in a period where we made significant investment in our future growth.

 

Continued strategic progress

We are committed to leading the industry and improving our consumers' experience. During 2014, we continued our mobile-led product evolution, with our web refresh meaning users see the same product flow, whatever device they are using. We expanded our pilot in real-time order tracking with trials now in 11 restaurants. In the long term, we believe our ability to innovate at scale will profoundly change the consumer experience and reinforce the benefits of building the leading market place for the fragmented takeaway industry.

 

Our technology gives us a real competitive advantage in bringing greater choice. JUST EAT has more than a decade of experience in building, operating and enhancing a complex real-time eCommerce platform. At peak, we now process 1,100 orders per minute through our contracted network, demonstrating our ability to reliably deliver scalable solutions to our 45,700 restaurant partners. We have recently worked on expanding into the collection market and have now signed over 1,000 collection-only restaurants in the UK; initial results from this market are positive.

 

Consumers trust strong brands. We believe that television remains the best way to reach a mass-market audience, to help create and strengthen our brand and accelerate channel shift from telephone to online. We remain strongly committed to building our brand in all of our markets, and we are now a TV brand in the majority of them. This investment increases loyalty and consumer allegiance to JUST EAT, ensuring we remain the clear choice for hungry consumers. In the UK, top-of-mind awareness6 increased from 39% in December 2013 to 44% in December 2014.

 

In our business, being market leader is critical for many reasons, crucially to ensure the consumer has a strong single source of information and choice in a highly fragmented sector. We continue to build clear leadership positions wherever we operate. In Brazil, we merged our business with iFood to give us a 25% share of the undisputed market leader, increasing our stake to 30% after year-end. In France we increased our share in market leading alloresto.fr from 50% to 80%. These deals have strengthened our position in two of our key international markets. We also cemented our leadership position in Ireland with the purchase of Eatcity.ie in November 2014.

 

Clear priorities

We have a clear focus on delivering on our three strategic initiatives, including completing appropriate M&A and developing our people for the long term.

 

We are continuing to increase our investment in engineering and product into 2015, to accelerate the introduction of new features on our platforms. We are driving channel shift through initiatives such as mobile and brand refresh; improving the consumer experience through innovation and improved information whilst expanding choice through restaurant signings.

  

We completed seven M&A transactions during the year and three post year end. These delivered on our stated aims of acquiring leaders in markets of scale, making in-market acquisitions and advancing our technology base.

 

People are integral to what we do and we have an outstanding team of more than 1,500 passionate and dedicated JUST EATers. We are committed to enhancing our team by selective recruitment and developing our existing team through our in-house talent management programmes. We have opened a new office in Bristol with support from Invest Bristol & Bath and are building a relationship with the University of Bristol to attract the best technical engineering graduates in the West Country and Wales; an area with a history of success within the technology sector.

 

Outlook

Looking forward, we must capitalise on our clear leadership positions both in established markets such as the UK and in large, developing markets such as France, Brazil and Spain, markets of significant scale but in which online ordering is still at an early stage. Building leadership positions in those markets will create great long-term value for shareholders.

 

Going into 2015, JUST EAT is in a very strong position. We are on track to deliver on our growth targets, and in 2015 we currently expect revenues marginally in excess of £200 million, at current exchange rates.

 

We will continue to drive channel shift and further strengthen our brand. We will also continue to innovate and then scale that innovation, to ensure that new products and features are available to the vast majority of our 8.1 million Active Users, truly empowering them to love their takeaway experience.

 

David Buttress

CEO

17 March 2015

 

 

CFO Update and Financial Review

 

The results of the Group for the year ended 31 December 2014 (the "Year" or the "Period") demonstrate the on-going strength of the JUST EAT business model with revenue growth of 62% (65% on a forex neutral basis) and continued margin expansion.

 

This significant increase in revenues and the operational leverage achieved resulted in the Group Underlying EBITDA margin growing to 21% from 15%. This is pleasing in a year in which we delivered a successful IPO, completed seven M&A transactions and continued to drive long-term growth through further investment in staff, marketing, technology and product.

 

Summary and Outlook

The Group delivered excellent revenue growth of 62% in 2014, with all segments trading ahead of expectations. These results are a tangible demonstration of the continued hard work and commitment from all the teams across the JUST EAT business.

 


Year ended 31 December

2014
£m

Year ended 31 December

2013

£m

2014 growth %

2013 growth %

Revenue

157.0

96.8

62%

62%

Underlying EBITDA

32.6

14.1

131%

513%

Operating profit

19.0

6.8

179%

n/a

Operating cash flow

38.1

19.2

98%

90%

Adjusted basic EPS

4.2

1.4

200%

n/a

 

The growth in 2014 was delivered alongside an increase in Underlying EBITDA in the UK and Denmark and, as planned, our Other segment losses were in line with 2013 but generated 83% more revenue. The returns generated in the UK and Denmark more than offset the ongoing investment in Other and Head Office resulting in the Underlying EBITDA for the Group increasing by 131% to £32.6 million.

 

Underlying EBITDA converts strongly to operating cash flow due to the beneficial working capital cycle inherent in the business model. In 2014, operating cash flow represented 117% of Underlying EBITDA (2013: 136%).

 

The investment seen during 2014 is expected to continue in 2015 as we strengthen our team, expand our marketing activities and develop existing and new products. This investment is expected to deliver long-term growth and for 2015, the Board currently expects revenues to marginally exceed £200 million (at current exchange rates).

 

Group Result

The Group's Income Statement is shown below. All key metrics on the Income Statement, including revenue, operating profit, profit before tax, basic and adjusted EPS have improved year-on-year.

 

Summary Income Statement

 

 

 


Year ended 31 December 2014

£m

Year ended 31 December 2013

£m

Continuing operations




Revenue


157.0   

96.8

Cost of sales


(16.1)   

(10.0)



 

 

Gross profit


140.9   

86.8



 

 

Long term employee incentive costs


(4.9)  

(1.7)

Exceptional items


(2.7)  

(1.0)

Other administrative expenses


(113.5)  

(77.3)



 

 

Total administrative expenses


(121.1)  

(80.0)



 

 

Share of results of joint venture and associate


(0.8)  

-



 

 

Operating profit


19.0  

6.8





Other gains


38.2  

3.4

Finance income


0.4  

0.2

Finance costs


(0.2)  

(0.2)



 

 

Profit before tax


57.4  

10.2

Taxation


(5.6)  

(3.4)



 

 

Profit for the year


51.8  

6.8



 

 

 

The Income Statement includes some significant fluctuations that are not considered part of normal business operations. These include the 'other gains', long term employee incentive costs, exceptional items (such as the IPO costs and acquisition costs) and foreign exchange. These are removed from the measure of profit before tax, along with interest, depreciation and amortisation to arrive at Underlying EBITDA. This is the measure we use to assess our operational and segmental performance. We believe this Underlying EBITDA measure more accurately reflects the key drivers of long term profitability for the Group and removes those items (both positive and negative), which are mainly non-cash and do not impact underlying trading performance.

 

A reconciliation between Operating Profit and Underlying EBITDA is shown below.



Year ended 31 December 2014

Year ended 31 December 2013



£m

£m





Operating profit


19.0    

6.8





Depreciation - Subsidiaries


3.3    

2.7

Depreciation and amortisation - JV and associate


0.2    

0.4

Amortisation - Acquired intangible assets


2.1    

0.8

Amortisation - Other assets


0.6    

0.1

Long term employee incentive costs


4.9    

1.7

Exceptional items


2.7    

1.0

Foreign currency gains and losses


(0.2)    

0.6



 

 

Underlying EBITDA


32.6    

14.1



 

 

 

Segmental Review

The Group reports its results under three operating segments, the UK, Denmark and Other. The UK and Danish operations are shown separately as they are our most established markets in terms of market penetration and maturity. The Other segment contains all other controlled businesses, which are at various stages of growth and development. Some are profitable whilst others are still at an earlier stage requiring significant investment relative to their size, particularly in sales and marketing. To ensure appropriate measurement of success by segment, the results of each segment include its fully allocated share of central technology, product and head office costs, as explained below.

 

Technology and Product continue to be areas of significant additional investment, with headcount in 2014 increasing to 206 from 126. It is predominantly run as a single integrated team to improve efficiency and speed up internationalisation of products. The individual trading segments are allocated the full cost of this support and development (including all servers, maintenance, innovation and engineering) on a per fixed order fee basis for those nine countries on our "core" platform, representing 95% of orders. During 2014, only a small proportion of specific project costs were not allocated which were either included as part of Head Office costs or capitalised. As we move to further develop the innovative technology referred to in the CEO statement, we expect some of the additional investment in technology development to be capitalised in 2015 and beyond.

 

Head office costs include both the ongoing central costs of operating the Group as a whole and those functions required for efficiency of shared expertise, such as Search Engine Marketing ("SEM"), finance, legal and HR. Those head office costs that can be reasonably attributed to individual segments are allocated on a consistent basis and therefore, the reported Head Office costs are the true central costs remaining after such allocations.

 

The results from Joint Ventures are equity accounted and presented separately since the Group does not control these operations.

 



Year ended 31 December

2014
millions

Year ended 31 December 2013
millions

Segment orders




United Kingdom


45.5         

29.1          

Denmark


4.5         

4.2          

Other


11.2         

6.9          



61.2         

40.2          

Revenue (£m)




United Kingdom


114.1        

68.8          

Denmark


12.8        

11.6          

Other


29.8        

16.3          

Total segment revenue


156.7        

96.7          

Head Office


0.3        

0.1          



157.0        

96.8          

Underlying EBITDA and result (£m)




United Kingdom


45.9        

25.5          

Denmark


5.1        

4.6          

Other


(11.8)        

(11.7)          

Total segment Underlying EBITDA


39.2        

18.4          

Head Office


(6.0)        

(4.7)          

Share of equity accounted joint venture and associates7


(0.6)        

0.4          



32.6        

14.1          



 

United Kingdom

The UK business had another excellent year and continues to be the main driver of revenue growth in the Group. The order-driven revenues (predominately commission) continued to grow, both in absolute terms and as a percentage of revenue. These represented 92% of total UK revenue (2013: 88%).

 

The key drivers of UK order growth (up 56% to 45.5 million) include:

 

·   expansion of the restaurant partner network where we added over 4,500 new takeaway restaurants to the platform during the year (2013: 4,700). Included within this number for the first time are over 1,000 new restaurants signed as part of our trial to expand our offering to include collection-only restaurants (i.e. those who do not offer delivery services). Expansion of this trial will continue in 2015 and our focus will be on driving consumer adoption;

·   an overall increase in Active Users in the UK to 5.5 million at 31 December 2014 from 3.9 million at 31 December 2013;

·   continuous improvement of our mobile offering, including the launch of iPad and Android tablet apps. During the year total mobile orders (including tablets) in the UK accounted for almost 61% of total orders (2013: 43%) and orders via our apps now account for 55% of these mobile orders (up from 43%);

·   investment in marketing, which continued to grow with an increase in total spend of 42%, all of which was expensed to the income statement. 2014 saw a number of new initiatives, namely the refresh of our brand and launch of our #minifistpump campaign, along with sponsoring ITV's Take Me Out and becoming the main shirt sponsor for Derby County Football Club. These complemented our ongoing activities in digital, trade and brand marketing. Despite the size of the increase in marketing, investment spend as a percentage of revenue reduced to 18% from 21% last year; and

·   year-on-year order growth comparatives can be impacted by particularly hot or cold and wet weather. However, the very wet spell in the UK at the end of 2013 and into early 2014 has had little overall effect on the year-on-year growth rates as the positive impact in January/February 2014 was offset by tougher prior year comparatives for December 2014.

 

The UK continued to break daily order records through the year and in November reached the milestone of processing its 100 millionth UK order since it started trading in March 2006.

 

On 1 January 2014 the commission rate charged to restaurants on orders increased to 12% from 11%, the first increase in three years. Only a handful of restaurants left the network following this price change, which we feel supports the work we have done in building relationships with our restaurant partners and in demonstrating the value JUST EAT brings to their businesses. This commission increase was the major driver in the 10% increase year-on-year in UK Average Revenue per Order ("ARPO"). This is up from the 2013 year-on-year ARPO growth of 2.4% that was driven just by food/service price inflation.

 

Underlying EBITDA margin (the segment result) in the UK grew to 40% (2013: 37%). Our belief in the scale of the opportunity in the UK means that we will continue to invest in UK sales, marketing, technology and new products to drive long-term growth.

 

Denmark

The Danish business has continued to perform well in the relatively mature Danish online takeaway market, a credit to the team. Revenues, up 10% (2013: 16%) to £12.8 million (2013: £11.6 million) was driven mainly by an increase in orders up 7% to 4.5 million (2013: 4.2 million), and conversion of top-placement advertising.

 

On a forex neutral basis, revenue growth in Denmark would have been 16%.

 

The Underlying EBITDA margin in Denmark was maintained at 40% (2013: 40%) generating £5.1 million of Underlying EBITDA (2013: £4.6 million). As with revenue, the weakness of the Danish Kroner reduced the reported 2014 EBITDA on conversion to Pound Sterling compared with 2013. We continue to believe there remains steady revenue growth prospects in the Danish market and as such we will manage margins in Denmark to maximise such growth rather than optimise for short term profitability.

 

Other

This segment consists of the trading entities we control outside the core UK and Danish businesses, including our higher potential growth opportunity countries of France, Canada and Spain. Our French business became part of this segment in July 2014 when we obtained control by increasing our shareholding from 50% to 80%. Brazil ceased to be consolidated from November following that businesses' merger with iFood when JUST EAT's stake reduced to 25%. We increased this stake to 30% post year-end.

 

Progress in this segment remains good with total revenues up 83% to £29.8 million in 2014, up 96% on a forex neutral basis. This growth includes the impact of consolidating the French business from July but having to exclude the Brazilian business from November. Adjusting for these changes, the growth would have been 64% on a forex neutral basis. Additionally, the contraction of our Dutch business has a notable detrimental impact on our reported growth in this segment.

 

This segment represents a blend of growth rates across the nine geographies. Spain and Italy are amongst the fastest growing countries with slightly slower growth in our more mature markets such as the now profitable Irish business. The only outlier is the highly competitive Benelux region, which contracted slightly during the year and where we remain the number two in the market.

 

Orders remain the key driver of growth in this segment, growing by 62% year-on-year (2013: 60%). On a like for like basis (adjusting for the changes in control), orders grew 51%. The Other segment also benefitted from rising food prices and commission rates being gradually increased in some territories, leading to an ARPO increase of 8.7% (2013: 15.7%).

 

With continued investment in growth, full-year Underlying EBITDA losses in the Other segment remain in line with 2013 at £11.8 million, although reducing significantly as a percentage of revenue. Initiatives including the launch of television advertising in Spain and the expansion of French sales activities outside Paris, were planned and delivered with considerable success. The additional revenues generated by these initiatives was reinvested to build long-term growth potential. This, combined with the low levels of online penetration for takeaway ordering in the majority of these geographies, provides substantial runway for JUST EAT and we will continue our investment to drive consumer channel shift and secure market share.

 

Share of profits from the joint venture and associates

The Indian associate remained in this category all year and was the main driver of the reported JV losses. It was classified as Held for Sale in the balance sheet as it was sold after the year-end.

 

The results of the French business moved from being classed as a Joint Venture into being a subsidiary in the Other segment in July 2014.

 

The joint venture and associates continue to perform strongly. We are delighted to have merged our business with iFood to create the undisputed market leader in Brazil in which we owned 25% at the year-end. Following the merger, this business has become one of the fastest growing geographies in the Group and now has over 480,000 orders per month. Given the market potential in Brazil we expect to continue to invest heavily in this associate.

 

Head Office Costs

Head Office costs, after recharges, have significantly increased year-on-year due to the expenses of being a publicly listed company and the impact of further investment in people, technology and product. The vast majority of technology and product costs are expensed as incurred. As described above, technology and certain Head Office costs are allocated to the Group's operational businesses such that segmental EBITDAs include all appropriate costs.

 

The Group has opened a second UK technology site in Bristol in order to attract talent from the West Country and Wales.

 

Items between Underlying EBITDA and Operating Profit

Depreciation

The depreciation charges mainly relate to the JCT terminals that are in situ in the vast majority of the 45,700 restaurants on the JUST EAT network. These are depreciated over three years.

 

Amortisation

The amortisation charge principally relates to the intangibles acquired as a result of the many acquisitions completed by the Group. The assets principally acquired are the restaurant contracts, the brand of the acquired company and any intellectual property, typically relating to the underlying technology platform. The increase in the charge in 2014 compared to 2013 (up £1.8 million to £2.7 million excluding the joint venture and associates) is principally a result of the intangible assets recognised as part of the Meal2Go purchase in February 2014 and the French step-up in July 2014. The full year impact of this additional amortisation will be felt in 2015.

 

Long term employee incentive costs

Long term employee incentive costs of £4.9 million (2013: £1.7 million) primarily relate to share awards granted to employees, recognised over the vesting period of the awards. The increased charge reflects the additional awards granted at or around the time of the IPO, including the free share award granted to all qualifying employees in April 2014. As a rapidly growing technology business we expect equity participation to remain an important element of attracting and motivating the right people.

 

Exceptional items

Exceptional items of £2.7 million (2013: £1.0 million) included £2.3 million of costs relating to the IPO and £0.4 million of acquisition costs.

 

Foreign currency translation

A foreign currency transaction gain of £0.2 million (2013: loss of £0.6 million) arose due to retranslating monetary assets and liabilities in foreign currencies.  

 

Items below operating profit

Other gains

The business has recorded a significant non-cash gain on two deemed disposals in relation to our French and Brazilian operations.

 

The Group increased its stake in the French business from 50% to 80%. This resulted in a change in control and so the business was no longer treated as a joint venture, but as a subsidiary. The transaction resulted in a non-cash gain of £32.0 million, of which £17.8 million was the gain on the deemed disposal of the Joint Venture and £14.2 million resulted from the fair value gains on the Group's option to acquire the remaining shares.

 

The control of the Brazilian business also changed in the year. The business changed from being classified as a subsidiary to an associate, resulting in a further non-cash gain of £5.8 million.

 

The 2013 comparative comprised £3.4 million non-cash gains on control changes in our Swiss and Indian businesses.

 

These non-cash gains are considered to be non-operational and so are excluded from Operating Profit and Underlying EBITDA. The gains recorded in 2014 are substantial, but are not taxable as they do not arise in the local books of the business.

 

Net finance income

The finance income results from interest on deposits held. This is offset by the unwinding of the present value of the deferred consideration due on the French business, where an annual charge of c.£0.1 million is expected through to 2017.

 

Profit before tax

Profit before tax for the year of £57.4 million (2013: £10.2 million) mainly included the operational profits of the Group, plus the non-cash gains made on the disposal of the French and Brazilian operations.

 

Taxation

The income tax expense was recognised at the tax rate prevailing in the respective jurisdictions on the estimated taxable profits for the year. The Group's tax charge has increased to £5.6 million (2013: £3.4 million) but the Effective Tax Rate ("ETR") has fallen to 9.8% from 33.3% last year. The Adjusted ETR, after adjusting for the impact of the other gains, exceptional items, long-term employee incentive costs, foreign currency translation differences, amortisation in respect of acquired intangibles and their associated tax impact, is 22.6% (2013: 37.6%).

 

The reduction in the Adjusted ETR results primarily from the recognition of deferred tax assets in the UK and Switzerland and the reducing corporate tax rates in the UK and Denmark.

 

The Group pays significant tax on profits made in the UK and Denmark, but as losses generated in other jurisdictions cannot be offset against these profits, the Group's ETR is higher than the prevailing UK corporate tax rate of 21.5%. We expect the Group's ETR to trend towards this rate over time.

 

Earnings per share

Basic earnings per share were 9.8p (2013: 1.5p), representing a 553% year-on-year increase.

 

Adjusted earnings per share were 4.2p (2013: 1.4p), up 200%. This excludes the impact of non-trading items that fluctuate from year to year, many of which have no cash impact. The Directors believe that this adjusted measure more appropriately reflects the underlying performance of the Group. Adjusted earnings per share is calculated using the adjusted profit attributable to the holders of Ordinary shares as set out in the table below.



 

 

 


Year ended

31 December 2014

£m

Year ended

31 December 2013

£m




Profit attributable to the holders of Ordinary shares in the parent

52.0  

7.0  

Long-term employee incentive costs

4.9  

1.7  

Exceptional items

2.7  

1.0  

Other gains

(38.2)  

(3.4)  

Foreign currency gains and losses

(0.2)  

0.6  

Amortisation - Acquired intangible assets

2.1  

0.8  

Tax impact of the adjusting items

(0.9)  

(0.7)  

Adjusted profit attributable to the holders of Ordinary shares in the parent

22.4  

 

7.0  




Adjusted EPS excluding acquired amortisation

4.2  

1.4  



 

The movement year-on-year on both measures is due to the higher Group profit, partly offset by dilution arising predominantly on the primary issue of shares on IPO.

 

Balance sheet

The relatively straightforward business model and low operational capital expenditure requirements of JUST EAT results in a simple balance sheet at an operating level. The consolidated balance sheet is more complex due to the impact of business combinations.

 

Summary balance sheet

 

 


As at 31 December 2014

£m

As at 31 December 2013

£m

 

Non-current assets




 

Goodwill


51.2

10.2

 

Property, plant and equipment


7.2

5.5

 

Other non-current assets


28.4

12.1

 



 

 

 



86.8

27.8

 



 

 

 

Current assets




 

Cash and cash equivalents


164.4

61.6

 

Other current assets


12.4

4.9

 



 

 

 



176.8

66.5

 



 

 

 

Current liabilities


(65.6)

(38.5)

 



 

 

 

Net current assets


111.2

28.0

 



 

 

 

Non-current liabilities




 

Provisions for liabilities


(9.3)

(0.1)

 

Other long-term liabilities total


(4.9)

(2.1)

 



 

 

 



(14.2)

(2.2)

 



 

 

 

Total liabilities


(79.8)

(40.7)

 



 

 

 

Net assets


183.8

53.6

 



 

 

 

Equity




Share capital & share premium


126.2

55.8

Other reserves


(6.3)

1.3

Retained earnings/(accumulated losses)


63.1

(3.9)



 

 

Equity attributable to owners of the Company


183.0

53.2





Non-controlling interests


0.8

0.4



 

 

Total equity


183.8

53.6



 

 

 

The non-current assets of the Group have increased by £59.0 million to £86.8 million. This is a result of the M&A completed in the year which resulted in the recognition of goodwill, other intangible assets and increased interests in associates.

 

Cash balances have increased mainly due to trading, the net proceeds from the IPO in April 2014 and the increase in cash held on behalf of restaurants due to order growth. Restaurant cash of £27.7 million was paid across to them shortly after the year-end.

 

Other current assets increased primarily due to the loans issued to employees and directors in relation to recent Joint Share Option Plan ("JSOP") grants. There is a corresponding entry in share capital and share premium and overall the cash impact on the Group from this transaction was nil.

 

Current liabilities increased due to growth in our operations, which increases trade payables and also results in a higher balance owed to restaurants at the year end. The Group acquired borrowings of £0.5 million as a result of the French acquisition. Of these borrowings, £0.2 million has since been repaid and the remaining £0.3 million will be repaid during 2015.

 

Non-current liabilities increased by £12 million to £14.2 million, primarily due to forward contracts to acquire non-controlling interests.

 

Cash flow

The Group continued its high level of cash conversion, benefiting from collecting the gross order value ahead of making twice monthly net payments to restaurants. In 2014, cash generated from operations was £38.1 million (2013: £19.2 million).

 

Underlying EBITDA conversion to Net Cash from Operating Activities

Year ended 31 December 2014

£m

Year ended 31 December 2013

£m




Underlying EBITDA

32.6  

14.1 




Net change in working capital

12.3  

11.6 

JSOP loans

5.2  

Tax cash flow out

(4.4)  

(4.2) 

Other

0.3  

(0.8) 

Free cash flow before exceptional items

46.0  

20.7 

IPO costs

(2.3)  

(1.4) 

Acquisition costs

(0.4)  

(0.1) 

Free cash flow

43.3  

19.2 

JSOP loans

(5.2)  

Net cash flow from operating activities

38.1  

19.2 

 

When compared to underlying EBITDA, this represents a conversion of 117%. Adjusting for the operational cash flow impact of the Joint Share Option Plan ("JSOP") which has no impact on the Group's overall cash flow, this conversion would have been 133%.



 

Cash flow statement



Year
ended 31 December 2014
£m

Year
ended 31 December
2013
£m





Net cash from operating activities


38.1

19.2





Net cash used in investing activities


(19.3)

(7.7)





Net cash from financing activities


84.2

-



 

 

Net increase in cash and cash equivalents


103.0

11.5





Cash and cash equivalents at beginning of year


61.6

50.0





Effect of changes in foreign exchange rates


(0.5)

0.1







 

 

Net cash and cash equivalents at end of year


164.1

61.6



 

 

 

The Group invested £19.3 million in investing activities during the year. Of this, £13.2 million (2013: £3.7 million) was spent acquiring subsidiaries and associates. The £3.7 million Meal2Go acquisition in February enabled us to acquire the market-leading EPOS technology for the UK takeaway sector and later in 2014 we acquired the collection-app business Orogo. The Group strengthened its position in Ireland by buying the number two operator, Eatcity.ie; in France by acquiring a further 30% stake in Alloresto for £5.8 million; and in Brazil through its merger with iFood.

 

The Group raised £95.7 million (net of fees) through the primary proceeds of the IPO and paid a pre-IPO dividend of £18.1 million. At the balance sheet date, the Group had cash balances totalling £164.4 million (2013: £61.6 million) and borrowings of £0.3 million (2013: £nil).

 

The Board has not recommended a dividend since the IPO, as in order to deliver longer term value, the Group intends to retain any earnings to invest in development and expansion as opportunities arise.

 

 

Post balance sheet events

 

The Group has completed three M&A transactions since the year end (Mexico, India and Switzerland) and has signed a facility agreement with a syndicate of banks consisting of Barclays Bank plc, HSBC plc and RBS plc, for a revolving credit facility for £90 million. This has a one-off fee and will result in an increase in interest costs for the Group in 2015, depending on the amount drawn down. As at the date of signing, the facility was unused.

 

Directors' responsibility statement

 

The responsibility statement below has been prepared in connection with the company's full annual report for the year ending 31 December 2014.  Certain parts thereof are not included within this announcement.

 

We confirm to the best of our knowledge:

 

1. The Group and Company financial statements, 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 Company; and

 

2. The business review, which is incorporated into the Directors' report, includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties they face.

 

The Directors of JUST EAT plc are listed in the Group's Annual report & Accounts for the year ended 31 December 2014. A list of current directors is maintained on the Company website, www.just-eat.com.

 

By order of the Board,

 

David Buttress

CEO

17 March 2015

Mike Wroe

CFO

17 March 2015

 

 

 



 

Consolidated Income Statement

Year ended 31 December 2014

 




Year

ended 31 December

Year

ended 31 December

Continuing operations


Notes

2014
£m

2013

£m

Revenue


3

157.0

96.8

Cost of sales



(16.1)

(10.0)




 

 

Gross profit



140.9

86.8




 

 

Long term employee incentive costs


4

(4.9)

(1.7)

Exceptional items


5

(2.7)

(1.0)

Other administrative expenses



(113.5)

(77.3)




 

 

Total administrative expenses



(121.1)

(80.0)




 

 

Share of results of joint venture and associates



(0.8)

-




 

 

Operating profit



19.0

6.8






Other gains


6

38.2

3.4

Finance income



0.4

0.2

Finance costs



(0.2)

(0.2)




 

 

Profit before tax



57.4

10.2

Taxation


7

(5.6)

(3.4)




 

 

Profit for the year



51.8

6.8




 

 

Attributable to:





Owners of the Company



52.0

7.0

Non-controlling interests



(0.2)

(0.2)




 

 




51.8

6.8




 

 

Earnings per Ordinary share (pence)


8



Basic



9.8

1.5

Diluted



9.4

1.4

Earnings per B Ordinary share (pence)


8



Basic



-

-

Diluted



-

-

Adjusted earnings per Ordinary share (pence)


8



Basic



4.2

1.4

Diluted



4.0

1.4

 

Underlying EBITDA




Operating profit


19.0

6.8

Depreciation - Subsidiaries


3.3

2.7

Amortisation - Acquired intangible assets


2.1

0.8

Amortisation - Other assets


0.6

0.1

Depreciation and amortisation - Joint venture and associates


0.2

0.4

Long term employee incentive costs

4

4.9

1.7

Exceptional items

5

2.7

1.0

Foreign exchange gains and losses


(0.2)

0.6



 

 

Underlying EBITDA

3

32.6

14.1



 

 

Underlying EBITDA is the main measure of profitability used by the Group and is defined as earnings before finance income and costs, taxation, depreciation and amortisation and additionally excludes the Group's share of depreciation and amortisation of joint venture and associates, long term employee incentive costs, exceptional items, foreign exchange gains and losses and 'other gains'. 

Consolidated Statement of Other Comprehensive Income

Year ended 31 December 2014

 


 

 

 

Year
ended 31 December

2014
£m

Year
ended 31 December

2013
£m




Profit for the year


51.8    

6.8    



 

 

Items that may be reclassified subsequently to profit or loss




Exchange differences on translation of foreign operations


(2.7)    

0.1    

Exchange differences on translation of foreign operations reclassified to income statement on disposal


3.5    

-     







0.8    

0.1

Items that will not be reclassified subsequently to profit or loss




Tax on share options


2.3    

-     



 

 

Other comprehensive income for the year


3.1    

0.1    



 

 

Total comprehensive income for the year


54.9    

6.9    



 

 

Attributable to:




  Owners of the Company


55.1    

7.1    

  Non-controlling interests


(0.2)     

(0.2)    



 

 

Total comprehensive income for the year


54.9     

6.9     



 

 






Consolidated Balance Sheet

As at 31 December 2014

 



As at 31 December

2014

£m

As at 31 December 2013

£m

Non-current assets





Goodwill



51.2  

10.2

Other intangible assets



12.7  

3.4

Property, plant and equipment



7.2  

5.5

Investment in joint venture



-  

7.4

Investments in associates



13.2  

0.4

Deferred tax assets



2.5  

0.9




 

 




86.8  

27.8




 

 

Current assets





Inventories



0.9  

0.8  

Trade and other receivables



10.2  

3.9  

Current tax assets



0.7  

0.2  

Cash and cash equivalents



164.4  

61.6  

Associate held for sale



0.2  

-  

Derivative financial instrument



0.4  





 

 




176.8  

66.5  




 

 

Total assets



263.6

94.3  




 

 

Current liabilities





Trade and other payables



(59.1)  

(33.4) 

Current tax liabilities



(2.0)  

(1.1) 

Deferred revenue



(4.0)  

(4.0) 

Provisions for liabilities



(0.2)  

-  

Borrowings



(0.3)  

-  




 

 




(65.6)  

(38.5) 




 

 

Net current assets



111.2  

28.0  




 

 

Non-current liabilities





Deferred tax liabilities



(2.9)  

(0.4)  

Deferred revenue



(1.3)  

(1.2)  

Provisions for liabilities



(9.3)  

(0.1)  

Other long-term liabilities



(0.7)  

(0.5)  




 

 




(14.2)  

(2.2)  




 

 

Total liabilities



(79.8)  

(40.7)  




 

 

Net assets



183.8  

53.6  




 

 

Equity





Share capital



5.7  

-  

Share premium account



120.5  

55.8  

Other reserves



(6.3)  

1.3  

Retained earnings/(accumulated losses)



63.1  

(3.9)  




 

 

Equity attributable to owners of the Company



183.0  

53.2  






Non-controlling interests



0.8  

0.4  




 

 

Total equity



183.8  

53.6  




 

 


Consolidated Statement of Changes in Equity

Year ended 31 December 2014

 


Share capital


Share premium account


Shares to be issued


Other reserves


Retained earnings


Total


Non-controlling interest


Total equity























£m


£m


£m


£m


£m


£m


£m


£m

















1 January 2013

0.1


55.6


0.1


1.4


(10.4)


46.8


(0.3)


46.5

Profit for the year

-


-


-


-


7.0


7.0


(0.2)


6.8

Other comprehensive income

-


-


-


0.1


-


0.1


-


0.1

Issue of capital

-


0.1


(0.1)


-


-


-


-


-

Share based payment charge

-


-


-


-


1.7


1.7


-


1.7

Adjustments arising from changes in NCI

-


-


-


-


(2.2)


(2.2)


0.9


(1.3)

Treasury shares

-


-


-


(0.2)


-


(0.2)


-


(0.2)

Transfer to share premium

(0.1)


0.1


-


-


-


-


-


-

31 December 2013

-


55.8


-


1.3


(3.9)


53.2


0.4


53.6

















Profit for the year

-


-


-


-


52.0


52.0


(0.2)


51.8

Other comprehensive income

-


-


-


(2.7)


-


(2.7)


-


(2.7)

Reclassified to income statement

-


-


-


3.5


-


3.5


-


3.5

Issue of capital (net of costs)

0.5


96.7


-


(0.6)


-


96.6


-


96.6

Share based payment charge

-


-


-


-


4.4


4.4


-


4.4

Tax on share options

-


-


-


-


2.3


2.3


-


2.3

JSOP subscription

-


13.2


-


(7.9)


-


5.3


-


5.3

Exercise of JSOP awards

-


-




0.1


-


0.1


-


0.1

Adjustment arising on justeat.in

-


-


-


-


0.2


0.2


-


0.2

NCI arising on acquisitions

-


-


-


-


-


-


0.6


0.6

Bonus share issue

5.2


(5.2)


-


-


-


-


-


-

Capital reduction

-


(40.0)


-


-


40.0


-


-


-

Dividend for year

-


-


-


-


(18.1)


(18.1)


-


(18.1)

Forward contracts to acquire non-controlling interests

-


-


-


-


(13.8)


(13.8)


-


(13.8)

31 December 2014

5.7


120.5


-


(6.3)


63.1


183.0


0.8


183.8

 

Consolidated Cash Flow Statement

Year ended 31 December 2014

 

Notes


Year
ended 31 December

2014
£m

Year
ended 31 December

2013
£m






Net cash from operating activities

11


38.1  

19.2  




 

 






Investing activities










Interest received



0.4  

0.2  

Funding provided to associates



(0.1)  

(0.2)  

Net cash outflow on acquisition of interests in joint venture and associate



(4.4)  

Net cash outflow on acquisition of subsidiaries

10


(8.8)  

(3.7)  

Purchases of property, plant and equipment

Purchases of intangible assets

 

 


(5.4)  

(1.0)  

(3.3)  

(0.7)  




 

 

Net cash used in investing activities



(19.3)  

(7.7)  




 

 

Financing activities










Net IPO proceeds



95.7  

JSOP subscription proceeds



5.3  

Proceeds arising on exercise of options and warrants



1.1  

Dividend paid (net of dividends received by the employee benefit trust)

9


(18.1)  

Repayment of borrowings



0.2  




 

 

Net cash from financing activities



84.2  




 

 

Net increase in cash and cash equivalents



103.0  

11.5  






Cash and cash equivalents at beginning of year



61.6  

50.0  






Effect of changes in foreign exchange rates



(0.5)  

0.1  









 

 

Net cash and cash equivalents at end of year



164.1  

61.6  




 

 

 

1.       Background

The financial information, comprising of the consolidated income statement, consolidated statement of other comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated cash flow statement and related notes, has been taken from the consolidated financial statements of JUST EAT plc ("Company") for the year ended 31 December 2014, which were approved by the Board of Directors on 16 March 2015. The financial information does not constitute statutory accounts within the meaning of sections 435(1) and (2) of the Companies Act 2006 or contain sufficient information to comply with the disclosure requirements of International Financial Reporting Standards ("IFRS").

An unqualified report on the consolidated financial statements for the year ended 31 December 2014 has been given by the auditors Deloitte LLP. It did not include reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain any statement under section 498 (2) or (3) of the Companies Act 2006.

The consolidated financial statements will be filed with the Registrar of Companies, subject to their approval by the Company's shareholders at the Company's Annual General Meeting on 13 May 2015.

 

2.       Basis of preparation

The Company's consolidated financial statements have been prepared on the going concern basis in accordance with IFRS adopted for use in the European Union and those parts of the Companies Act 2006 that are applicable to companies reporting under IFRS.

The consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments which have been measured at fair value.

The going concern basis has been adopted in preparing the consolidated financial statements as the Directors are satisfied that the Company and its subsidiaries (together the "Group") will continue to be able to meet their liabilities as they fall due for the foreseeable future, being a period of at least 12 months from the date of presenting this financial information. 

No new standards or amendments to standards had any impact on the Group's financial position or performance nor the disclosures in the consolidated financial information presented.

The underlying EBITDA and adjusted earnings per share measures provide additional useful information for shareholders and users of the financial information on the underlying performance of the business. These measures are used by management of the Group to measure underlying business performance. Underlying EBITDA is defined in note 3 and adjusted EPS is defined in note 8.

 

3.       Segmental analysis      

The Group has three reportable segments: United Kingdom, Denmark (core business) and Other. The non-core element of Denmark has been included in the "Other" segment in the following table. Each segment includes businesses with similar operating characteristics. Underlying EBITDA is the main measure of profit used by the Chief Operating Decision Maker ("CODM") to assess and manage performance. The CODM is David Buttress, the Group's Chief Executive Officer. Underlying EBITDA is defined as earnings before finance income and costs, taxation, depreciation and amortisation ("EBITDA") and additionally excludes the Group's share of depreciation and amortisation of joint ventures and associates, long term employee incentive costs, exceptional items, foreign exchange gains and losses and 'other gains and losses'. At a segmental level, Underlying EBITDA also excludes intra-group franchise fee arrangements and incorporates an allocation of Group technology and central costs (all of which net out on a consolidated level).

 

Segment revenue


Year
ended 31 December
2014
£m

Year

ended 31 December

2013
£m





United Kingdom


115.1  

69.9  

Less inter-segment sales


(1.0)  

(1.1)  





United Kingdom


114.1  

68.8  

Denmark


12.8  

11.6  

Other


29.8  

16.3  





Total segment revenue


156.7  

96.7  

Head Office


0.3  

0.1  



 

 

Total Revenue


157.0  

96.8  



 

 

 

Total 2014 revenues in Denmark (including the non-core Just Delivery business, which has been included in the "Other" segment) were £14.6 million (2013: £13.3 million).

 

The Group's revenue is generated as follows:



Year
ended 31 December
2014
£m

Year

ended 31 December

2013
£m





Commission


119.4  

72.7  

Payment card and administration fees


21.0  

11.9  

Connection fees


7.0  

5.0  

Top-placement


8.0  

6.0  

Other revenue


1.6  

1.2  



 

 

Total revenue


157.0  

96.8  



 

 

 



 

Segment Underlying EBITDA and result




Year

ended 31 December

2014

£m

Year

ended 31 December

2013

£m













United Kingdom




45.9

25.5

Denmark




5.1

4.6

Other




(11.8)

(11.7)





 

 

Total segment Underlying EBITDA




39.2

18.4







Share of equity accounted joint venture and associates (excluding depreciation and amortisation)




(0.6)

0.4

Head office costs




(6.0)

(4.7)





 

 

Underlying EBITDA




32.6

14.1







Long term employee incentive costs (note 4)




(4.9)

(1.7)

Exceptional items (note 5)




(2.7)

(1.0)

Foreign exchange gains and losses




0.2

(0.6)





 

 

EBITDA




25.2

10.8







Depreciation - Subsidiaries




(3.3)

(2.7)

Amortisation - Acquired intangible assets




(2.1)

(0.8)

Amortisation - Other assets




(0.6)

(0.1)

Depreciation and amortisation - Joint venture and associates




(0.2)

(0.4)





 

 

Operating profit




19.0

6.8

 

Other gains (note 6)




38.2

3.4

Finance income




0.4

0.2

Finance costs




(0.2)

(0.2)





 

 

Profit before tax




57.4

10.2





 

 

 



 

Property, plant & equipment and intangible assets



 

 

Additions year ended 31 December

 

         Depreciation and

amortisation year

        ended 31 December



2014

£m

2013

£m

2014

£m

2013

£m







United Kingdom


9.4

1.8

2.6

1.4

Denmark


0.1

0.1

0.2

0.2

Other


50.5

5.2

2.1

1.4



 

 

 

 



60.0

7.1

4.9

3.0

Head office


0.8

1.4

1.1

0.6



 

 

 

 

Total


60.8

8.5

6.0

3.6



 

 

 

 

 

Additions include goodwill and other intangible assets acquired as part of business combinations, as well as purchases of tangible and intangible fixed assets.

 

4.       Long term employee incentive costs

The total expense recorded in relation to the long term employee incentives was £4.9 million (2013: £1.7 million). This charge is comprised £4.4 million (2013: £1.7 million) in respect of share based payments and £0.5 million (2013: nil) in respect of employer's social security costs on the exercise of options.

 

5.       Exceptional items

 


Year
ended 31 December

2014
£m

Year
ended 31 December

2013
£m

 




 

IPO costs

2.3

1.4

 

Acquisition related expenses

0.4

0.1

 

Impairment charges

-

0.3

 

Gain on release of contingent consideration provision

-

(0.8)

 




 

Total exceptional items

2.7

1.0



 

 

 

The IPO costs were the costs associated with the Company's listing and initial public offering in April 2014 that did not directly relate to the issue of new shares. Further costs of £4.5 million were charged to the share premium account.

 

Acquisition costs relate to legal, third party due diligence and other third party costs incurred as a result of the Group's acquisitions.

 

The 2013 impairment charge of £0.3 million was in respect of the Group's Brazilian CGU.

 

The 2013 release of contingent consideration was consideration for the Group's acquisition of a joint venture that did not become payable as its performance targets were not met.

 

6.       Other gains

 


Year
ended 31 December

2014
£m

Year
ended 31 December

2013
£m

 

 

Gain in respect of FBA Invest (note 10)

32.0

-

 

Gain on the disposal of Justeat Brasil Servicos Online LTDA

5.8

-

 

Fair value gain on convertible debt

0.4

-

 

Gain on deemed disposal of Achindra Online Marketing Private Limited

-

0.3

 

Gain on deemed disposal of Eat.ch GmbH

-

3.1

 




 

Total other gains

38.2

3.4



 

 

 

7.       Taxation



Year
ended 31 December

2014
£m

Year
ended 31 December

2013
£m

Current taxation




Current year


6.3

3.6

Adjustment for prior years


0.1

(0.1)



 

 



6.4

3.5

Deferred taxation




Temporary timing differences


(0.8)

(0.2)

Adjustment for prior years


-

0.1



 

 



(0.8)

(0.1)



 

 

Total tax charge for the year


5.6

3.4



 

 

 

UK corporation tax was calculated at 21.5% (2013: 23.25%) of the taxable profit for the year. As announced in the March 2013 Budget, the standard rate of corporation tax in the UK changed from 23% to 21% with effect from 1 April 2014. Accordingly, the effective rate for the year ended 31 December 2014 was 21.5%.

 

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

 

Taxation on items taken directly to other comprehensive income was a credit of £2.3m and relates to tax arising on share based payments.

  

The total tax charge for the year can be reconciled to the profit per the income statement as follows:

 



 

Year ended 31 December 2014

 

Year ended 31 December 2013



Before adjusting items

 

Adjusting

items

Total

Before adjusting items

 

Adjusting

items

Total



£m

£m

£m

£m

£m

£m









Profit before tax


28.7

28.7

57.4

10.9

(0.7)

10.2



________
 

 

 
 

 

Tax at the UK corporation tax rate of 21.5% (2013: 23.25%)


 

6.1

 

6.2

12.3

 

2.5

 

(0.1)

2.4

Expenses/(income) non-deductible/(non-taxable)


 

(0.3)

 

0.4

0.1

 

(0.4)

 

0.1

(0.3)

Share based payments


-

0.6

0.6

-

0.3

0.3

Profit on the deemed disposals of businesses


 

-

 

(8.1)

(8.1)

 

-

 

(0.8)

(0.8)

Adjustments in respect of prior periods


 

0.1

 

-

0.1

 

0.2

 

(0.2)

-

Effect of different tax rates of subsidiaries operating in other jurisdictions


 

-

 

-

-

 

0.1

 

-

0.1

Other overseas taxes


1.1

-

1.1

0.9

-

0.9

Change in unrecognised deferred tax asset


 

(0.5)

 

-

(0.5)

 

0.9

 

-

0.9

Reduction in tax rate in UK


-

-

-

(0.1)

-

(0.1)



 

 

 
 

 

Total tax charge for the year


6.5

(0.9)

5.6

4.1

(0.7)

3.4



 
 
 
 
 

 


22.6%


9.8%

37.6%


33.3%



 


 
 
 

 

 

The effective tax rate on underlying profits (i.e. profits before adjusting items) was 22.6% (2013: 37.6%). The adjusting items are comprised of long term employee incentive costs, exceptional items, 'other gains', foreign exchange gains and losses, amortisation in respect of acquired intangible assets and their associated tax impact.

8.       Earnings per share

Basic earnings per share was calculated by dividing the profit for the year attributable to the shareholders of the Company by the weighted average number of shares outstanding during the period, excluding unvested shares held pursuant to the Group's JSOP and SIP.

 

Prior to the 8 April 2014, holders of the B Ordinary Shares had rights to share in profits which differed to those of the holders of Ordinary shares, Preference A shares, Preference B shares and Preference C shares. Earnings per share figures have therefore been presented separately for the B Ordinary shares, up until 8 April 2014. The B Ordinary Shares, Preference A shares, Preference B shares and Preference C shares were reclassified as Ordinary Shares on 8 April 2014.

 

The B Ordinary shareholders were only entitled to dividends after aggregate distributions of £18.25 million had been made to the holders of Ordinary shares, Preference A shares, Preference B shares and Preference C shares. Prior to 8 April 2014, aggregate distributions of this amount had not been made. As a result no earnings are attributable to the Ordinary B Shares in the earnings per share ("EPS") calculations.

 

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 had potentially dilutive shares in the form of share options, warrants 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 underlying profit attributable to the holders of Ordinary shares in the parent, which is defined as profit attributable to the holders of Ordinary shares in the parent, before long term employee incentive costs, exceptional items, 'other gains' (being profits or losses on the disposal and deemed disposal of operations, and fair value gains and losses), foreign exchange gains and losses and the tax impact of the adjusting items. Additionally, adjusted EPS now excludes amortisation of acquired intangible assets and its tax impact, as the Directors believe it's a more appropriate measure of the underlying performance of the Group. This change in the definition of adjusted EPS did not change the reported adjusted EPS for the year ended 31 December 2013, of 1.4p.

 

Basic and diluted earnings per share have been calculated as follows:

 


Year ended

31 December 2014

£m

Year ended

31 December 2013

£m




Profit attributable to the holders of Ordinary shares in the parent

52.0

7.0

Long term employee incentive costs

4.9

1.7

Exceptional items

2.7

1.0

Other gains

(38.2)

(3.4)

Foreign exchange gains and losses

(0.2)

0.6

Amortisation in respect of acquired intangible assets

2.1

0.8

Tax impact of the adjusting items

(0.9)

(0.7)


 

 

Adjusted profit attributable to the holders of Ordinary shares in the parent

22.4

 

7.0


 

 

Profit attributable to the holders of B Ordinary shares in the parent

-

-




 

 



 




Number of shares ('000)


Year

Ended 31 December

2014

Year ended 31 December

2013

 

Weighted average number of Ordinary shares for basic earnings per share

533,278

477,792

Effect of dilution:



      - Share options

10,713

-

      - Unvested JSOP and SIP shares

8,593

-

      - Warrants

1,540

5,286


 

 

Weighted average number of Ordinary shares adjusted for the effect of dilution

554,124

483,078


 

 

Weighted average number of B Ordinary shares for basic earnings per share

6,959

21,714

Effect of dilution:



      - Share options

2,729

8,651

      - Unvested JSOP shares

450

4,439


 

 

Weighted average number of B Ordinary shares adjusted for the effect of dilution

10,138

34,804


 

 

 

Earnings per Ordinary share

Pence

Pence

Basic

9.8

1.5

Diluted

9.4

1.4





Earnings per B Ordinary share




Basic

-


-

Diluted

-


-





Adjusted earnings per Ordinary share




Basic

4.2


1.4

Diluted

4.0


1.4

 

9.       Dividends

On 2 April 2014, the Directors declared a dividend of £18.25 million (31 December 2013: nil), to be paid to the holders of Preference A shares, Preference B shares, Preference C shares and Ordinary shares pro rata to their holding of shares in the Company. The dividend was paid, on 8 April 2014, immediately prior to the reclassification of Preference A shares, Preference B shares and Preference C shares as Ordinary shares. A small part of this dividend was earned by Appleby Trust (Jersey Trust) Limited, the Group's Employee Benefit Trustee. The dividend disclosed in these consolidated financial statements (£18.1 million), is stated net of the amount of the dividend earned by the Group's Employee Benefit Trustee.

 



 

10.     Acquisition of businesses


FBA Invest SaS


 

 

Meal2Go


 

 

Other


 

 

Total

 

 £m


£m


 £m


 £m

 

Fair values of net assets acquired:








 

Cash

2.8


-


0.5


3.3

 

Borrowings

(0.5)


-


-


(0.5)

 

Loans from selling shareholders

-


(0.7)


-


(0.7)

 

Intangible assets - Restaurant contracts

3.4


0.2


0.2


3.8

 

Intangible assets - Brand

4.1


-


-


4.1

 

Intangible assets - Other

0.4


2.3


0.3


3.0

 

Deferred tax asset in respect of losses

0.1


0.2


-


0.3

 

Deferred tax liability on intangible assets

(2.5)


(0.5)


(0.1)


(3.1)

 

Receivables

1.2


-


-


1.2


Other net assets

(7.6)


0.4


(0.1)


(7.3)

 


1.4


1.9


0.8


4.1

 

Goodwill

39.7


1.8


1.6


43.1

 

Non-controlling interest

(0.3)


-


(0.3)


(0.6)

 

Total consideration

40.8


3.7


2.1


46.6

 









 

Satisfied by:








 

Cash

5.8


3.0


2.1


10.9

 

Fair value of previously held interest

25.5


-


-


25.5

 

Fair value of option

9.5


-


-


9.5

 

Capital contribution

-


0.7


-


0.7

 


40.8


3.7


2.1


46.6

 









 

Net cash outflow arising on acquisition:








 

Cash consideration

5.8


3.0


2.1


10.9

 

Repayment of shareholder loans

-


0.7


-


0.7

 

Cash acquired

(2.8)


-


(0.5)


(3.3)

 

Debt acquired

0.5


-


-


0.5

 

Net cash outflow

3.5


3.7


1.6


8.8

 









 

 

 

FBA Invest SAS

In July, the Group exercised its option to acquire a further 30% of FBA Invest SaS ("FBA"), which owns 100% of the share capital of Eat OnLine Sa ("EOL"), the company trading under the brand ALLORESTO.fr. The consideration paid, of £5.8 million, was based on a pre-determined range of prices set out in the 2011 share purchase agreement.

As a result of exercising its option the Group owned 80% of FBA and gained control of it.

At this point, the Group became committed to acquiring the minority 20% shareholder in 2017. The amount payable in 2017 is dependent upon the performance of EOL at that time. The Directors have estimated that the amount payable in 2017 will be €6.9 million. As a result a provision of £5.6 million was established in July 2014, being the discounted Pound Sterling amount of the estimated amount payable. 

Up until July 2014, the Group's 50% interest in FBA was accounted for as a joint venture using the equity accounting method. From the time the Group obtained control of FBA, in July 2014, FBA and EOL were accounted for as subsidiaries.

A gain of £32.0 million was recognised as a result of the transactions surrounding the acquisition of FBA. This gain was comprised as follows:



£m




Gain on deemed disposal of joint venture interest in FBA


17.8   

Fair value gain in respect of the second completion option


9.5   

Fair value gain in relation to minority shareholder buy-out


4.7   



 

Total gain recognised in the income statement


32.0   



 

 

The gains are based on the Directors' valuation of FBA and EOL.

The FBA acquisition accounting is provisional in respect of certain liabilities for which more information as to their fair value may come to light in the future. 

Meal2Go

On 27 February 2014, the Group acquired the entire share capital of Meal2Order.com Limited ("Meal2Go") for cash consideration totalling £3.7 million, including the repayment of loans from the selling shareholders, of £0.7 million. The Group obtained control of Meal2Go and as a result the acquisition has been accounted for as a business combination in accordance with IFRS 3.

Meal2Go was principally acquired for its leading EPOS (Electronic Point-Of-Sale) technology, specifically designed for the takeaway industry.

Other Acquisitions

Orogo Limited

On 10 July 2014, the Group acquired 45% of the ordinary share capital of Orogo Limited ("Orogo"). On the same day it increased its holding to 60% through a share subscription, providing working capital to the business.

Orogo is an innovative collection only app, which enables consumers to order and pay for their lunch in advance and collect at their convenience, from some of central London's most popular restaurants.

The Group is committed to acquiring the minority shareholdings in Orogo in 2017 for consideration based on the performance of the business at that time. A provision of £3.6 million was established for this commitment, being the discounted (for the time value of money) fair value of the estimated consideration payable. £3.6 million has been charged to equity as a result.

Eatcity.ie

On 3 November 2014, the Group acquired 100% of the ordinary share capital of Eatcity Limited ("Eatcity"), which traded as Eatcity.ie in Ireland. The Group obtained control of Eatcity and as a result the acquisition has been accounted for as a business combination in accordance with IFRS 3.

Menu Express and Delivery Town

During 2014, Just Eat Canada Inc purchased the assets of two small businesses.

 

11.     Net cash inflow from operating activities






Year

ended 31 December 2014

£m

Year ended 31 December 2013

£m





Operating profit for the year


19.0  

 

6.8  

 

Adjustments for:




Share of results of joint venture and associates


0.8  

-  

Depreciation of property, plant and equipment


3.3  

2.7  

Amortisation of intangible assets


2.7  

0.9  

Non-cash long term employee incentive costs


4.7 

1.7  

Other non-cash items


(0.3)  

(0.3)  



 

 





Operating cash flows before movements in working capital


30.2 

11.8  





Increase in inventories


(0.2)  

(0.3)  

Increase in receivables


(6.8)  

(0.2)  

Increase in payables


19.2  

10.6  

Increase in deferred income


0.1  

1.5  



 

 

Cash generated by operations


42.5  

23.4  





Income taxes paid


(4.4)  

(4.2)  



 

 

Net cash inflow from operating activities


38.1  

19.2  



 

 

 

 

12.     Related party transactions

 

On 24 March 2014, prior to the IPO, the Company called all the unpaid subscription amounts, totalling £13.2 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 Appleby Trust (Jersey Trust) Limited totalling £5.3 million and £7.9 million, respectively. The loans provided to the participants of the JSOP included loans to key management personnel totalling £4.9 million. As at 31 December 2014, the amount due from key management personnel in respect of these loans was £4.8 million (2013: nil). This included £3.0 million in respect of Directors of the Company (2013: nil).

 

The total compensation (including the IFRS 2 Share Based Payment charge for share awards) of key management personnel for the year ended 31 December 2014 was £4.7 million (2013: £3.0 million).

 

During the year ended 31 December 2014 dividends totalling £0.3 million (2013: nil) were paid to key management personnel. Of this £0.2 million (2013: nil) was paid to Directors of the Company

 

13.     Post balance sheet events

 

On 22 January 2015 the Group acquired the minority shareholdings in eat.ch GmbH, the Group's Swiss trading subsidiary. As a result, the Group's stake increased from 64% to 100%. As eat.ch GmbH was already consolidated as a subsidiary the acquisition will have no impact on the Group's revenues or underlying EBITDA.

On 11 February the Group acquired a further 5% stake in IF-JE Participações Ltda ("IF-JE"), the Group's Brazilian associated undertaking, bringing its total stake to 30%. The consideration payable is dependent upon the future performance of IF-JE and is payable in instalments over the period to 31 October 2016. Following the acquisition of the further stake, IF-JE will continue to be accounted for as an associated undertaking. As IF-JE is currently loss making the acquisition of a further stake will initially have a small negative impact of the Group's Underlying EBITDA. 

On 13 February the Group acquired the entire share capital of Sindelantal Mexico SA DE CV "Sindelantal Mexico"). Sindelantal Mexico is the market leader in mobile and online takeaway in Mexico. It has approximately 2,500 restaurant partners and generates over 50,000 orders per month. Given the timing of the acquisition, it has not been possible to determine the fair values of the assets and liabilities acquired. As Sindelantal Mexico is currently loss making the acquisition will initially have a negative impact of the Group's Underlying EBITDA. 

The total consideration for the above acquisitions is expected to be around £35 million.

In January the Group sold its shares in Achindra Online Marketing Private Limited, the Group's Indian associated undertaking, to foodpanda. Prior to the disposal the investment was accounted for using the equity accounting method. As a consequence the sale will have no impact on the Group's revenues and a small positive impact on Underlying EBITDA, as the Group will no longer recognise a share of the entity's losses. The Group will recognise its investment in foodpanda's Indian holding company at fair value.

 

In March the Group signed a £90 million revolving credit facility agreement with a syndicate of banks consisting of Barclays Bank plc, HSBC plc and RBS plc. This has a one off fee and will result in an increased interest costs for the Group in 2015, depending on the amount drawn down. As at the date of signing the financial statements no debt has been drawn down.

 

 

5. The content of the JUST EAT web site should not be considered to form a part of or be incorporated into this announcement.
6. Based on a UK survey conducted by YouGov of adult takeaway users.
7. Excluding depreciation and amortisation.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR EAADKFFFSEAF
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