just eat prospectus - Just

JUST EAT PROSPECTUS
660939 JustEast_Prospectus_Cov.indd 1-3
25/03/2014 21:12
Admission to the High Growth Segment of the Main Market of the London Stock Exchange is
primarily intended for high growth companies, which are likely to have a lower proportion of
securities in public hands at admission than companies admitted to the Official List. High
Growth Segment securities are not admitted to the Official List of the Financial Conduct
Authority (“Official List”). Therefore the Company has not been required to satisfy the eligibility
criteria for admission to listing on the Official List and is not required to comply with the
Financial Conduct Authority’s Listing Rules. The London Stock Exchange has not examined or
approved the contents of this document. A prospective investor should be aware of the risks of
investing in such companies and should make the decision to invest only after careful
consideration and, if appropriate, consultation with an independent financial adviser.
A copy of this document, which comprises a prospectus (the “Prospectus”) relating to JUST EAT plc
(the “Company”), prepared in accordance with the prospectus rules of the Financial Conduct Authority
(“FCA”) made pursuant to section 73A of the Financial Services and Markets Act 2000, as amended
(“FSMA”), has been filed with the FCA and made available to the public in accordance with Rule 3.2 of
the Prospectus Rules. This document has been approved as a prospectus by the FCA under
section 87A of the FSMA.
Application has been made to the London Stock Exchange for all of the Ordinary Shares, currently in
issue and to be issued pursuant to the Offer described in this document, to be admitted to trading on the
High Growth Segment of the London Stock Exchange plc’s (“London Stock Exchange”) Main Market
(“Admission”). Admission to the London Stock Exchange’s Main Market constitutes admission to trading
on a regulated market. As at the date of this document, no Ordinary Shares are admitted to trading on a
regulated market. Conditional dealings in the Ordinary Shares are expected to commence on the London
Stock Exchange at 8.00am (London time) on 3 April 2014. It is expected that Admission will become
effective and that unconditional dealings on the London Stock Exchange in the Ordinary Shares will
commence at 8.00am (London time) on 8 April 2014. Any dealings in the Ordinary Shares before the
commencement of unconditional dealings will be on a “when issued” basis and of no effect if Admission
does not take place and such dealings will be at the sole risk of the parties concerned. No application has
been, or is currently intended to be, made for such Ordinary Shares to be admitted to listing or dealt with
on any other stock exchange.
Prospective investors should read the whole of this document and, in particular, Part II (Risk
Factors) for a discussion of certain risks and other factors that should be considered in
connection with any investment in the Ordinary Shares.
JUST EAT PLC
(incorporated and registered in England and Wales under the
Companies Act 2006 with registered number 06947854)
Offer of 138,502,501 Ordinary Shares of £0.01 each at an Offer Price
of 260p per Ordinary Share and
admission to trading on the High Growth Segment of
the Main Market of the London Stock Exchange
Joint Global Co-ordinator
and Joint Bookrunner
Goldman Sachs International
Co-lead Manager
Oakley Capital
Key Adviser, Joint Global Co-ordinator
and Joint Bookrunner
J.P. Morgan Cazenove
Advisers to JUST EAT
Torch Partners
EXPECTED ORDINARY SHARE CAPITAL IMMEDIATELY FOLLOWING ADMISSION
Issued and fully paid
Number
Amount
563,592,935
£5,635,929
The Company intends to issue 38,461,538 new Ordinary Shares (“New Ordinary Shares”) under the
Offer and the Selling Shareholders intend to sell in aggregate 100,040,963 existing Ordinary Shares
(“Existing Ordinary Shares”) under the Offer (the New Ordinary Shares and the Existing Ordinary
Shares, together the “Offer Shares”).
The Offer Shares will, upon Admission, rank pari passu in all respects with each other and with all
Ordinary Shares then in issue and will rank in full for all dividends and other distributions declared in
respect of the Ordinary Shares following Admission.
The distribution of this document and the offer, issue and sale of the Ordinary Shares in certain
jurisdictions may be restricted by law and therefore persons into whose possession this document may
come should inform themselves about and observe any such restrictions. Any failure to comply with
these restrictions may constitute a violation of the securities laws of any such jurisdiction. No action
has been or will be taken by the Company, Goldman Sachs International (“Goldman Sachs”),
J.P. Morgan Securities plc, which conducts its UK investment banking business as J.P.Morgan
Cazenove (“J.P.Morgan Cazenove”) or Oakley Capital Limited (“Oakley”) that would permit
possession or distribution of this document or any other material relating to the Ordinary Shares in any
country or jurisdiction where action for that purpose is required, other than in the United Kingdom. This
document does not constitute an offer of, or the solicitation of an offer to buy or subscribe for, Ordinary
Shares in any jurisdiction to whom or in which such offer or solicitation is unlawful.
The Ordinary Shares have not been and will not be registered under the US Securities Act of 1933 (the
“Securities Act”) or with any securities regulatory authority of any state or other jurisdiction of the
United States, and may not be offered, sold, resold, pledged, delivered, distributed or transferred,
directly or indirectly, in the United States except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and in compliance with any applicable
securities laws of any state or other jurisdiction of the United States. The Offer Shares are being
offered and sold (i) outside the United States in reliance on Regulation S under the Securities Act
(“Regulation S”) and (ii) in the United States only to persons the sellers reasonably believe to be
“qualified institutional buyers” (“QIBs”) as defined in Rule 144A under the Securities Act (“Rule 144A”)
in reliance on Rule 144A or another exemption from the registration requirements of the Securities Act.
Prospective investors are hereby notified that the sellers of the Ordinary Shares may be relying upon
the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.
Neither the US Securities and Exchange Commission, nor any securities regulatory authority of any
state of the United States, has approved the Ordinary Shares or passed upon the adequacy or
accuracy of this document. Any representation to the contrary is a criminal offense in the United
States.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED
STATUTES (“RSA 421-B”) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A
SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW
HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY
DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER
ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A
SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN
ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN
APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR
CAUSE TO BE MADE, TO ANY PROSPECTIVE INVESTOR, CUSTOMER OR CLIENT ANY
REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
TABLE OF CONTENTS
Page
Part I SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Part II RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
Part III IMPORTANT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
Part IV DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS . . . . .
32
Part V EXPECTED TIMETABLE OF PRINCIPAL EVENTS AND OFFER STATISTICS . . . . . . . . .
33
Part VI INDUSTRY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34
Part VII BUSINESS OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39
Part VIII DIRECTORS, SENIOR MANAGERS AND CORPORATE GOVERNANCE . . . . . . . . . . .
54
Part IX SELECTED FINANCIAL AND OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60
Part X OPERATING AND FINANCIAL REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63
Part XI CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75
Part XII HISTORICAL FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76
Part XIII PRO FORMA FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
138
Part XIV DETAILS OF THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
141
Part XV TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
149
Part XVI ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
155
Part XVII GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
208
Part XVIII DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
209
[THIS PAGE INTENTIONALLY LEFT BLANK]
PART I
SUMMARY
Summaries are made up of disclosure requirements known as ‘Elements’. These elements are
numbered in Sections A — E (A.1 — E.7).
This summary contains all the Elements required to be included in a summary for this type of securities
and Issuer. Because some Elements are not required to be addressed, there may be gaps in the
numbering sequence of the Elements.
Even though an Element may be required to be inserted in the summary because of the type of securities
and Issuer, it is possible that no relevant information can be given regarding the Element. In this case a
short description of the Element is included in the summary with the mention of ‘not applicable’.
Section A — Introduction and Warnings
A.1
Introduction and warnings
This summary should be read as an introduction to the
prospectus.
Any decision to invest in the securities should be based
on consideration of the prospectus as a whole by the
investor.
Where a claim relating to the information contained in a
prospectus is brought before a court, the plaintiff investor
might, under the national legislation of the Member
States, have to bear the costs of translating the
prospectus before the legal proceedings are initiated.
Civil liability attaches only to those persons who have
tabled the summary, including any translation thereof, but
only if the summary is misleading, inaccurate or
inconsistent when read together with the other parts of
the prospectus or it does not provide, when read together
with the other parts of the prospectus, key information in
order to aid investors when considering whether to invest
in such securities.
A.2
Consent for intermediaries
Not applicable. No consent is given for the use of this
document for any resale or final placement of securities
by financial intermediaries.
Section B — Issuer
B.1
Legal and commercial name
JUST EAT plc.
B.2
Domicile,
legal
form, The Company is a public limited company, incorporated
applicable legislation and in England and Wales with registered number 06947854
country of incorporation
and its registered office situated in England. The
Company operates under the Companies Act.
B.3
Key factors of the Company’s JUST EAT operates the world’s largest online
current
operations
and marketplace for restaurant delivery based on average
principal activities
search volume in 2013, according to the Google keyword
research tool. JUST EAT provides consumers of
takeaway food with an easy and secure way to order from
takeaway restaurants in their local area. Takeaway
restaurants contract with the Group to join the JUST EAT
platform and have their menu made accessible to
1
consumers. JUST EAT’s websites and mobile apps allow
consumers to search for local takeaway restaurants,
place orders online and pay online or by cash on delivery.
The online orders are transmitted to and accepted by
takeaway restaurants via JustConnect Terminals
(“JCTs”), which send confirmations to consumers,
following which the takeaway restaurants prepare and
deliver the food.
The Company primarily derives its revenue from
commissions charged to restaurants on the value of orders
placed through its platform, which were on average
approximately 10.7% for the year ended 31 December
2013. In addition, takeaway restaurants that join the JUST
EAT network pay sign-up fees of up to approximately
£850, depending on their geographical market.
Restaurants may also pay JUST EAT fees for orders
placed by credit or debit card, which the restaurants may
choose to pass on to consumers, or for additional services,
such as promotional top-placement marketing on the
Company’s platform, and merchandise, such as JUST EAT
branded packaging and menus. In certain countries, JUST
EAT charges consumers a fixed fee on orders paid for by
credit or debit card. For the year ended 31 December
2013, 87.5% of JUST EAT’s revenue was order-driven
(consisting of commission revenue and payment card fee
revenue, which together constitute B2C revenue).
B.4a
Significant recent trends
affecting the Company and its
industry
JUST EAT operates in the takeaway food market. The
delivery part of this market is estimated by the Company to
have been worth £58 billion globally in 2013. In recent
years, the takeaway food market has been growing faster
than GDP, with online ordering growing much faster, fuelled
by the adoption of e-commerce and increased smartphone/
tablet penetration, according to “Consumer Foodservice in
the UK” by Euromonitor and EIU. The online channel shift
experienced in the ordering of takeaway food is similar to
the migration towards the use of the Internet by consumers
in other highly fragmented markets, such as restaurant
bookings, travel and hospitality, tickets for live
entertainment and classified advertising.
The global takeaway market has grown in value from 2010
to 2013 at a CAGR of 1.6%, according to Euromonitor. This
growth has been driven by changing lifestyles, with busier
daily routines resulting in an increasing number of
consumers ordering food with increasing frequency from
takeaway restaurants offering an array of food varieties,
instead of cooking at home. The online ordering channel
has grown significantly faster than the overall takeaway
market, driven by general e-commerce adoption and
increased mobile usage, in addition to the value proposition
that online takeaway aggregators such as JUST EAT offer
to both consumers and participating restaurants.
The Directors believe the online takeaway industry
benefits from strong and favourable market dynamics and
2
expect growth in the online takeaway market to continue,
driven by general e-commerce adoption and the
increasing use and penetration of mobile devices.
B.5
Description of the Group
The Company is the holding company of the Group and
has 24 wholly owned subsidiaries and investments in four
entities which are not wholly owned. The Group’s key
operations are Just-Eat.dk ApS, Just Eat Holding Limited,
Just-Eat.co.uk Limited and Eat Online Sa.
B.6
Interests in the Company and
voting rights
As at 2 April 2014, being the latest practicable date prior
to publication of this document (the “Latest Practicable
Date”), insofar as is known to the Company, the following
persons had an interest which represents 3% or more of
the voting share capital of the Company (assuming that a
proposed share capital re-organisation has taken place
and taking into account the number of Existing Ordinary
Shares to be sold, and the number of New Ordinary
Shares to be issued, in connection with the Offer and
assuming that the Over-allotment Option has not been
exercised):
Number of Ordinary Percentage
Shares (as at the
of voting
Latest Practicable
share
Date) held
capital
Shareholder
SM Trust(1) . . . . . . . . . . . . . . . . .
134,472,442
23.9%
............
118,373,488
21.0%
Vitruvian Partners(3) . . . . . . . . . .
61,580,327
10.9%
Redpoint Ventures(4) . . . . . . . . .
34,023,695
6.0%
Greylock I LP . . . . . . . . . . . . . . .
23,799,939
4.2%
Index
Ventures(2)
(1) STM Fidecs Trust Company Limited is the holder of registered legal
title to the Ordinary Shares beneficially owned by SM Trust.
(2) Index Ventures is a venture capital advisory group that holds its
interests in the Ordinary Shares through: Index Ventures Growth I
(Jersey), LP; Index Ventures Growth I Parallel Entrepreneur Fund
(Jersey), LP; Index Ventures V (Jersey), LP; Index Ventures V
Parallel Entrepreneur Fund (Jersey), LP; and Yucca (Jersey) SLP.
(3) Vitruvian Partners LLP is an independent private equity firm that
holds its interests in the Ordinary Shares through Munch S.à r.l.
(4) Redpoint Ventures is a growth equity and venture capital firm that
holds its interests in the Ordinary Shares through Redpoint Omega,
LP and Redpoint Omega Associates LLC.
So far as the Company is aware, no person or persons,
directly or indirectly, jointly or severally, own or exercise
or could exercise control over the Company.
There are no differences between the voting rights
enjoyed by the shareholders described above and those
enjoyed by any other holder of Ordinary Shares.
3
B.7
Selected historical financial
information
Consolidated income statement
The table below sets out the consolidated income
statements of the Group for the years ended
31 December 2013, 2012 and 2011.
Year ended 31 December
2013
2012
2011
(£‘000) (£‘000) (£‘000)
Revenue . . . . . . . . . . . . . . . . . . . . . . . 96,753 59,770 33,765
Cost of sales . . . . . . . . . . . . . . . . . . . . (9,988) (5,062) (3,156)
Gross Profit . . . . . . . . . . . . . . . . . . . .
Long term employee incentive
costs . . . . . . . . . . . . . . . . . . . . . .
Exceptional items . . . . . . . . . . . . . .
Other administrative expenses . . .
Administrative expenses . . . . . . . . . .
Share of results of joint ventures and
associates . . . . . . . . . . . . . . . . . . . .
Operating profit/(loss) . . . . . . . . . . .
Other gains . . . . . . . . . . . . . . . . . . . . .
Finance income . . . . . . . . . . . . . . . . .
Finance costs . . . . . . . . . . . . . . . . . . .
Profit/(loss) before tax . . . . . . . . . . .
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit/(loss) for the year . . . . . . . . .
86,765 54,708 30,609
(1,731)
(968)
(77,286)
(79,985)
(1,624)
(231)
(7,547)
(450)
(54,679) (31,428)
(63,850) (32,109)
11
6,791
3,363
172
(145)
10,181
(3,410)
6,771
(521)
(257)
(9,663) (1,757)
6,946
—
206
99
(117)
(74)
(2,628) (1,732)
(1,877)
497
(4,505) (1,235)
Underlying EBITDA1 . . . . . . . . . . . . . 14,077
2,278
99
(1) “Underlying EBITDA” means 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, currency translation differences
and ‘other gains and losses’ (being profits or losses arising on the
disposal of operations).
The table below presents a reconciliation of profit/(loss)
for the year to Underlying EBITDA for the years ended
31 December 2013, 2012 and 2011.
Year ended 31 December
2013
2012
2011
(£‘000) (£‘000) (£‘000)
Profit/(loss) for the year . . . . . . . . . . . . 6,771 (4,505) (1,235)
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,410 1,877
(497)
Finance costs . . . . . . . . . . . . . . . . . . .
145
117
74
Finance income . . . . . . . . . . . . . . . . . .
(172) (206)
(99)
Other gains . . . . . . . . . . . . . . . . . . . . . (3,363) (6,946)
—
Operating profit/(loss) . . . . . . . . . . . . .
Depreciation — Subsidiaries . . . . . . .
Amortisation — Subsidiaries . . . . . . .
Depreciation and amortisation —
Joint Ventures and associates . . . .
Long term employee incentive
costs . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency (gains)/losses . . . . .
Exceptional items . . . . . . . . . . . . . . . .
6,791 (9,663) (1,757)
2,708 1,760 1,114
919
529
155
421
361
1,731
539
968
1,624
120
7,547
231
(138)
450
Underlying EBITDA . . . . . . . . . . . . . . . 14,077
2,278
99
4
44
Consolidated balance sheet
The table below sets out the consolidated balance sheets
of the Group as at 31 December 2013, 2012 and 2011.
As at 31 December
2013
2012
2011
(£‘000) (£‘000) (£‘000)
Non-current assets
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . 10,245
Other intangible assets . . . . . . . . . . .
3,424
Property, plant and equipment . . . . .
5,481
Investments . . . . . . . . . . . . . . . . . . . . .
—
Investments in joint ventures and
associates . . . . . . . . . . . . . . . . . . . .
7,749
Deferred tax assets . . . . . . . . . . . . . .
940
6,957
3,342
5,013
—
4,587
1,334
2,861
6,918
7,167
772
7,247
1,026
27,839 23,251 23,973
Current assets
Inventories . . . . . . . . . . . . . . . . . . . . . .
743
435
Trade and other receivables . . . . . . .
3,872
4,492
Current tax assets . . . . . . . . . . . . . . .
241
—
Cash and cash equivalents . . . . . . . . 61,620 50,026
42
2,432
—
7,858
66,476 54,953 10,332
Total assets . . . . . . . . . . . . . . . . . . . . 94,315 78,204 34,305
Current liabilities
Trade and other payables . . . . . . . . . (33,381) (25,020) (11,024)
Current tax liabilities . . . . . . . . . . . . . . (1,093) (1,564)
(91)
Borrowings . . . . . . . . . . . . . . . . . . . . .
—
—
(63)
Deferred revenue . . . . . . . . . . . . . . . . (3,982) (2,442) (1,715)
Provision for liabilities . . . . . . . . . . . .
—
(718)
(485)
(38,456) (29,744) (13,378)
Net current assets/(liabilities) . . . . 28,020 25,209
Non-current liabilities
Deferred tax liabilities . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . .
Provision for liabilities . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . .
(3,046)
(442)
(703) (1,360)
(1,212) (1,287)
(751)
(101)
—
(645)
(498)
—
—
(2,253) (1,990) (2,756)
Total liabilities . . . . . . . . . . . . . . . . . . (40,709) (31,734) (16,134)
Net assets . . . . . . . . . . . . . . . . . . . . . 53,606 46,470 18,171
Total equity . . . . . . . . . . . . . . . . . . . . 53,606 46,470 18,171
Consolidated statement of cash flows
The table below sets out extracts from the consolidated
statements of cash flows of the Group for the years ended
31 December 2013, 2012 and 2011.
Year ended 31 December
2013
2012
2011
(£‘000) (£‘000) (£‘000)
Net cash from operating activities . . . . 19,213 10,103
4,885
Net cash used in investing activities . . (7,681) (3,140) (14,552)
Net cash from financing activities . . . .
13 35,167 12,643
Net increase in cash and cash
equivalents . . . . . . . . . . . . . . . . . . . . . 11,545 42,130
2,976
Cash and cash equivalents at the end
of the year . . . . . . . . . . . . . . . . . . . . . 61,620 50,026
7,858
5
The summary below presents certain significant changes in
JUST EAT’s financial condition and results of operations
during the years ended 31 December 2013, 2012 and 2011.
JUST EAT’s revenue was £96.8 million, £59.8 million and
£33.8 million for the years ended 31 December 2013, 2012
and 2011, respectively. Revenue for the year ended
31 December 2013 increased by 61.9% compared to
2012, primarily due to an increase in the number of orders
and average revenue per order. Revenue for the year
ended 31 December 2012 increased by 77.0% compared
to 2011, primarily due to the increase in the number of
orders as a result of growth in the number of takeaway
restaurants in the JUST EAT network and the increase in
the number of consumers transacting through JUST EAT,
particularly as the JUST EAT brand has grown.
JUST EAT’s administrative expenses were £80.0 million,
£63.9 million and £32.1 million for the years ended
31 December 2013, 2012 and 2011, respectively. The
increase in administrative expenses during the periods
under review was primarily due to the increase in salary
costs, mainly as a result of the expansion of the UK
business and the related increase in full time employees of
the Company. In addition, marketing costs increased during
the periods under review due to the Company’s decision to
invest in the JUST EAT brand both in the UK and in JUST
EAT’s overseas operations.
JUST EAT had operating profit of £6.8 million for the year
ended 31 December 2013 and operating losses of
£9.7 million and £1.8 million for the years ended
31 December 2012 and 2011, respectively. The
improvement in the operating result for the year ended
31 December 2013 compared to 2012 was primarily due to
the growth in revenue (particularly in the UK) and leveraging
of the Group’s cost base. The increase in operating losses
of £7.9 million for the year ended 31 December 2012
compared to 2011 was mainly due to impairment charges of
£7.3 million primarily relating to the Dutch business.
Underlying EBITDA was £14.1 million, £2.3 million and
£0.1 million for the years ended 31 December 2013, 2012
and 2011, respectively. Growth in Underlying EBITDA
during the periods under review reflected growth in the
UK and Denmark, offset by negative Underlying EBITDA
in a number of other countries where the Company has
been implementing its strategy of incurring greater costs
to expand its network of takeaway restaurants, build
brand awareness and increase the scale of the business.
JUST EAT has generated positive net cash from
operating activities during each of the periods under
review. Net cash from operating activities amounted to
£19.2 million, £10.1 million and £4.9 million for the years
ended 31 December 2013, 2012 and 2011, respectively.
The increases in net cash from operating activities during
the periods under review were mainly due to the growth
in number of orders and the increasing proportion of
orders paid for by credit or debit card, for which JUST
EAT collects payment on behalf of the takeaway
restaurants.
6
There has been no significant change in JUST EAT’s
financial condition or results of operations since
31 December 2013.
B.8
Selected unaudited pro forma
financial information
The unaudited pro forma statement of net assets set out
below has been prepared to illustrate the effect of the Offer
on the Group’s net assets as if the Offer had taken place on
31 December 2013. This unaudited pro forma statement of
net assets has been prepared for illustrative purposes only
and, because of its nature, addresses a hypothetical
situation and, therefore, does not represent the Group’s
actual financial position or results. The unaudited pro forma
statement of net assets is compiled on the basis set out
below from the IFRS consolidated balance sheet of the
Company as at 31 December 2013. It may not, therefore,
give a true picture of the Group’s financial position or results
nor is it indicative of the results that may, or may not, be
expected to be achieved in the future. The pro forma
financial information has been prepared on the basis set out
in the notes below and in accordance with Annex II to the
Prospectus Directive Regulation.
As at
Adjustments Unaudited
31 December
IPO
Pro
2013(1)
Proceeds(2) Forma(3)(4)
£‘000
Non-current assets
Goodwill . . . . . . . . . . . .
Other intangible
assets . . . . . . . . . . . .
Property, plant and
equipment . . . . . . . . .
Investments in joint
venture . . . . . . . . . . .
Investments in
associates . . . . . . . . .
Deferred tax assets . . .
Current assets
Inventories . . . . . . . . . .
Trade and other
receivables . . . . . . . .
Current tax assets . . . .
Cash and cash
equivalents . . . . . . . .
£‘000
£‘000
10,245
—
10,245
3,424
—
3,424
5,481
—
5,481
7,353
—
7,353
396
940
—
—
396
940
27,839
—
27,839
743
—
743
3,872
241
—
—
3,872
241
61,620
94,030
155,650
66,476
94,030
160,506
Total assets . . . . . . . .
94,315
94,030
188,345
Current liabilities
Trade and other
payables . . . . . . . . . .
Current tax liabilities . .
Deferred revenue . . . . .
(33,381)
(1,093)
(3,982)
—
—
—
(33,381)
(1,093)
(3,982)
(38,456)
—
(38,456)
Net current assets . . .
7
28,020
94,030
122,050
As at
Adjustments Unaudited
31 December
IPO
Pro
(1)
2013
Proceeds(2) Forma(3)(4)
£‘000
£‘000
£‘000
Non-current liabilities
Deferred tax
liabilities . . . . . . . . . .
Deferred revenue . . . . .
Provisions for
liabilities . . . . . . . . . .
Other long term
liabilities . . . . . . . . . .
(442)
(1,212)
—
—
(442)
(1,212)
(101)
—
(101)
(498)
—
(498)
(2,253)
—
(2,253)
Total liabilities . . . . . .
(40,709)
—
(40,709)
Net assets . . . . . . . . . .
53,606
94,030
147,636
(1) The financial information has been extracted from the historical
financial information set out in Part XII (Historical Financial
Information).
(2) The adjustment reflects an estimate of the proceeds of the Offer of
£100.0 million, after deduction of estimated fees and expenses of
£6.0 million (which do not include £1.4 million of expenses that
were charged to the income statement during the year ended 31
December 2013).
(3) The unaudited pro forma statement of net assets does not
constitute financial statements within the meaning of section 434 of
the Companies Act.
(4) The unaudited pro forma statement of net assets does not reflect
any trading results or other transactions undertaken by the Group
since 31 December 2013.
B.9
Profit forecast or estimate
Not applicable. No profit forecast or estimate is included
in this document.
B.10
Nature of any qualifications in
audit report
Not applicable. No qualifications are included in any audit
report on the historical financial information included in
this document.
B.11
Explanation in respect of
insufficient working capital
Not applicable. The Company is of the opinion that,
taking into account the proceeds of the Offer, JUST EAT
has sufficient working capital for its present requirements,
that is, for at least twelve months following the date of
publication of this document.
Section C — Securities
C.1
Type and class of securities
being offered and admitted to
trading
The Offer comprises Ordinary Shares in the capital of the
Company.
C.2
Currency
The Ordinary Shares are denominated in pounds sterling
(“GBP” or “£”).
C.3
Issued share capital
The issued share capital of the Company immediately
following Admission will comprise 563,592,935 Ordinary
Shares each with a nominal value of £0.01 in issue (all of
which will be fully paid or credited as fully paid).
When admitted to trading, the Ordinary Shares will be
registered with ISIN GB00BKX5CN86.
8
C.4
Rights attached to the
Ordinary Shares
The Ordinary Shares rank equally in all respects and
have the following rights attaching to them:
•
on a show of hands at a general meeting every
member present in person has one vote and every
proxy or representative present who has been duly
appointed by a member entitled to vote has one vote;
and on a poll every member (whether present in
person or by proxy or representative) has one vote
per Ordinary Share;
•
the right to receive dividends on a pari passu basis;
and
•
if the Company is wound up, with the sanction of a
special resolution and any other sanction required by
law and subject to the Companies Act, the liquidator
may divide among the members in specie the whole
or any part of the assets of the Company and for that
purpose may value any assets and determine how
the division shall be carried out as between the
members or different classes of members.
C.5
Restrictions on free
transferability of the
securities
There are no restrictions on the free transferability of the
Ordinary Shares set out in the constitutional documents
of the Company.
C.6
Admission to trading on
regulated market
Application has been made to the London Stock
Exchange for admission of the Ordinary Shares to the
High Growth Segment of the Main Market operated by
the London Stock Exchange. It is expected that
conditional dealings in the Ordinary Shares will
commence on 3 April 2014 with Admission taking place
on 8 April 2014. No application has been, or is currently
intended to be, made for the Ordinary Shares to be
admitted to listing or dealt in on any other stock
exchange.
The Company intends to apply for admission to the
Official List at a future date. At the date of this document,
the Company considers that the only requirement under
the Listing Rules that it may be unable to meet, in order
to satisfy the eligibility requirements for admission to the
premium listing segment of the Official List of the FCA, is
the requirement under Listing Rule 6.1.19R that a
sufficient number of the Company’s shares are distributed
to the public in one or more EEA states. In the future, the
Company anticipates that it will be able to meet the
requirements of Listing Rule 6.1.19R as a result of its
current shareholders selling shares in the Company to
members of the public in one or more EEA states.
C.7
Dividend policy
The Offer Shares will rank in full for dividends or other
distributions declared in respect of Ordinary Shares after
Admission. The Company intends to retain any earnings
to expand the growth and development of its business
and, therefore, does not anticipate paying dividends in
the foreseeable future.
9
Section D — Risks
D.1
Key risks related to the
Company and its industry
Prior to making an investment decision in relation to the
Ordinary Shares, prospective investors should consider,
together with the other information contained in this
document, the factors and risks attaching to an
investment in the Company, including the following risks:
•
Consumer acceptance of ordering takeaway food
online and through aggregator portals may not be
sustained or improve, and may affect the Company’s
ability to attract and retain consumers and takeaway
restaurants and maintain or increase the number of
orders received.
•
Takeaway restaurants may not continue to accept
the value proposition of online aggregator portals like
JUST EAT, such that the number of takeaway
restaurants that sign up to the JUST EAT platform
may not increase.
•
The Company relies on its interdependent IT
systems to manage the process of online takeaway
food ordering, and a failure in any one of them,
especially with respect to a significant number of
JCTs, may disrupt the efficiency and functioning of
the Company’s operations.
•
The Company is dependent on the reputation of and
value associated with its brands, which are critical to
retaining existing and attracting new consumers and
takeaway restaurants to JUST EAT.
•
The Company faces competition from other
companies and potential new entrants to the industry
or the markets in which the Company currently
operates, and competitive pressures or the
Company’s inability to adapt effectively and quickly
to a changing competitive landscape could affect
demand for the Company’s services and thereby its
prices, fees and margins.
•
Changes to search engines’ algorithms or terms of
services could cause the Company’s websites to be
excluded from or ranked lower in organic search
results, which could significantly reduce the
Company’s ability to direct higher margin consumer
traffic to its platform, thereby increasing consumer
acquisition costs.
•
The Company is subject to risks relating to the
receipt and processing of online payments, including
risks in relation to regulations, compliance
requirements and exposure to fraud.
•
The Company is responsible for the cash that it holds
on behalf of takeaway restaurants arising from
payments made by credit or debit card, and any loss
of cash through bank failures or other factors beyond
JUST EAT’s control may have a material adverse
effect on the Company’s reputation, business and
financial condition.
10
D.3
Key risks related to the
Ordinary Shares
•
Future sales or issues of Ordinary Shares, or the
possibility or perception of such future sales or
issues, may affect the market price of the Ordinary
Shares.
•
An active or liquid market for the Ordinary Shares
may not develop, and consequently investors may
have difficulty selling their Ordinary Shares or may
not be able to sell their Ordinary Shares at or above
the Offer Price.
•
The market price of the Ordinary Shares may be
volatile, which could cause the value of an
investment in the Ordinary Shares to decline.
Section E — Offer
E.1
Total net proceeds and
estimate of total expenses
The Company expects to receive net proceeds of
approximately £94.0 million, after estimated expenses of
approximately £6.0 million (which do not include
£1.4 million of expenses that were charged to the income
statement during the year ended 31 December 2013).
The Selling Shareholders expect to receive net proceeds
of approximately £249.5 million, after estimated total
expenses of approximately £10.6 million.
No expenses will be charged to investors.
E.2a
Reasons for the Offer and use
of proceeds
The Directors believe that the Offer will provide additional
capital to support the development and growth of JUST
EAT and that Admission will enhance JUST EAT’s profile
and increase JUST EAT’s brand recognition and
credibility. In addition, the Offer will create a market in the
Ordinary Shares for existing Shareholders and provide
the Selling Shareholders with a partial realisation of their
investment in the Company.
The Company intends to use the net proceeds it receives
from the Offer for general corporate purposes, including
to support growth in the business following Admission. In
particular the Company intends to seek opportunities to
acquire complementary businesses within existing
territories, to expand into one or more additional
territories or to acquire related technologies to support
the growth of its core business. Until the Company uses
the net proceeds of the Offer for a particular purpose, it
intends to invest such proceeds in short term, interest
bearing securities or similar deposits.
E.3
Terms and conditions of the
Offer
The Offer comprises an offer of:
• 38,461,538 New Ordinary Shares to be issued by the
Company; and
•
100,040,963 Existing Ordinary Shares to be sold by
the Selling Shareholders.
Under the Offer, all Offer Shares will be sold at the Offer
Price, which will be determined by the Company and the
Major Selling Shareholders in consultation with the Joint
Bookrunners. A number of factors will be considered in
deciding the Offer Price and the bases of allotment under
11
the Offer, including the level and nature of demand for Offer
Shares and the objective of encouraging the development of
an orderly after-market in the Ordinary Shares.
The Offer comprises an offer to certain institutional and
professional investors in the United Kingdom and
elsewhere outside the United States in reliance on
Regulation S and in the United States only to QIBs in
reliance on Rule 144A or another exemption from the
registration requirements of the Securities Act.
Over-allotment Shares (representing up to 7.5% of the
maximum number of Offer Shares) will be made available
to the Stabilisation Manager pursuant to the Overallotment Option.
Admission is expected to become effective, and
unconditional dealings in the Ordinary Shares are
expected to commence on the London Stock Exchange,
at 8.00 a.m. on 8 April 2014. It is expected that dealings
in the Offer Shares will commence on a conditional basis
on the London Stock Exchange at 8.00 a.m. on 3 April
2014. The earliest date for settlement of such dealings
will be 8 April 2014. All dealings in Ordinary Shares prior
to the commencement of unconditional dealings will be
on a “when issued basis”, will be of no effect if Admission
does not take place, and will be at the sole risk of the
parties concerned.
The Offer is subject to the satisfaction of conditions
contained in the Underwriting Agreement which are
customary for transactions of this type, including
Admission becoming effective by no later than 8.00 a.m.
on 8 April 2014 or such later time and/or date as the
parties to the Underwriting Agreement may agree (not
being later than 30 June 2014) and on the Underwriting
Agreement not having been terminated prior to
Admission.
None of the Offer Shares may be offered for subscription,
sale or purchase or be delivered, or be subscribed, sold
or delivered, and this document and any other offering
material in relation to the Offer Shares may not be
circulated, in any jurisdiction where to do so would breach
any securities laws or regulations of any such jurisdiction
or give rise to an obligation to obtain any consent,
approval or permission, or to make any application, filing
or registration.
E.4
Material interests to the Offer
Not applicable. There is no interest, including any
conflicting interest, that is material to the Offer.
E.5
Name of persons offering to
sell the securities:
JUST EAT plc and Appleby Trust (Jersey Trust) Limited;
Carlos Morgado; Clare Morgado; David Buttress; Gemma
Buttress; Greylock I LP; Index Ventures Growth I (Jersey)
LP; Index Ventures Growth I Parallel Entrepeneur Fund
(Jersey), LP; Index Ventures V (Jersey) LP; Index
Ventures V Parallel Entrepreneur Fund (Jersey), LP;
Klaus Nyengaard; Mathew Braddy; Michelle Braddy;
Michael Wroe; Rachel Wroe; Munch S.à r.l.; Rasmus
Wolff; Redpoint Omega, LP; Redpoint Omega
12
Associates LLC; the SM Trust (STM Fidecs Trust
Company Limited is the registered holder); and Yucca
(Jersey) SLP
Lock-up arrangements:
The Company is subject to a 180 day lock-up period
following Admission, during which time it may not issue or
dispose of any Ordinary Shares.
The Major Selling Shareholders are subject to a 180 day
lock-up period following Admission, during which time
they may not dispose of any interest in their Ordinary
Shares without the consent of the Joint Global Coordinators.
The Director shareholders and the Senior Manager
shareholders who are selling Ordinary Shares in
connection with the Offer are subject to a 360 day lock-up
period following Admission, during which time they may
not dispose of any interest in their Ordinary Shares
without the consent of the Joint Global Co-ordinators.
All lock-up arrangements are subject to certain customary
exceptions.
E.6
Amount and percentage of
dilution
38,461,538 New Ordinary Shares will be issued pursuant
to the Offer. The Ordinary Shares other than the New
Ordinary Shares will represent 93.2% of the total issued
Ordinary Shares immediately following Admission.
E.7
Estimated expenses charged
to investor
Not applicable. No expenses will be charged to the
investors by the Company or the Selling Shareholders in
respect of the Offer.
13
PART II
RISK FACTORS
An investment in the Ordinary Shares is subject to a number of risks. Accordingly, prospective
investors should consider the following risks and uncertainties together with all the other information
set out in this document prior to making any investment decision. If any of the following risks actually
materialises, the Company’s business, financial condition, results of operations and prospects could be
materially adversely affected and the value of the Ordinary Shares could decline.
Prospective investors should consider carefully whether an investment in the Ordinary Shares is
suitable for them in light of the information in this document and their personal circumstances.
Prospective investors should note that the risks relating to the Company, its industry, and the Ordinary
Shares summarised in the section of this document headed “Summary” are the risks that JUST EAT
believes to be the most essential to an assessment by a prospective investor of whether to consider an
investment in the Ordinary Shares. However, as the risks which the Company faces relate to events
and depend on circumstances that may or may not occur in the future, prospective investors should
consider not only the information on the key risks summarised in the section of this document headed
“Summary” but also, amongst other things, the risks and uncertainties described below.
1.
RISKS RELATING TO THE COMPANY
1.1
Consumer acceptance of ordering takeaway food online and through aggregator portals
may not be sustained or may not improve.
The online purchase of takeaway food is relatively new and rapidly evolving. The Company’s success
will depend to a substantial extent on the willingness of consumers to continue, and increase, their use
of online services, and of online aggregator portals in particular, as a method of buying takeaway food,
rather than using telephone-based and walk-in services or other online options provided by local
restaurants. If demand for online ordering of takeaway food decreases compared to current levels or
consumer acceptance does not increase in line with JUST EAT’s expectations, the Company’s
business, financial condition, results of operations and prospects could be materially adversely
affected.
Maintaining and enhancing the numbers of consumer visits to and orders placed on the Company’s
platform is critical to the Company’s success. Factors important to maintaining and increasing the
number of orders on the Company’s platform include the Company’s ability to:
•
maintain a convenient, efficient and reliable user experience for both consumers and
takeaway restaurants;
•
attract new consumers and takeaway restaurants to the platform;
•
offer a broad range of takeaway restaurants within a consumer’s local area;
•
maintain and monitor its relationships with the takeaway restaurants in its network;
•
manage new and existing technologies and sales channels, including mobile devices;
•
increase awareness of its brands and platform through marketing and promotional activities;
•
obtain or increase purchases from repeat consumers; and
•
assure its consumers of the security of its platform for online purchases.
Any failure to properly manage these factors could negatively impact the Company’s ability to attract
and retain consumers and takeaway restaurants and maintain or increase the number of orders
received, which could have a material adverse effect on the Company’s business, financial condition,
results of operations and prospects.
1.2
Takeaway restaurants may not continue to accept the value proposition of online
aggregator portals like JUST EAT.
As the online takeaway food business continues to evolve, the Company’s success will also depend
substantially on the willingness of takeaway restaurants to join the JUST EAT network as a method of
14
attracting consumers and processing orders efficiently, rather than creating their own websites and
mobile apps or relying solely on telephone orders or walk-in services. If the number of takeaway
restaurants that sign up to the platform does not increase or restaurants’ acceptance of JUST EAT’s
value proposition is not sustained in line with expectations, the Company’s business, financial
condition, results of operations and prospects could be materially adversely affected.
1.3
The Company’s IT systems are interdependent and a failure in any one of them may
disrupt the efficiency and functioning of the Company’s operations.
The Company’s business model relies on the systematic interaction between its websites and mobile
apps with JustConnect Terminals (“JCTs”) in operation at the takeaway restaurants in its network. The
Company is reliant, therefore, on numerous IT systems to manage the entire process, from the placing
of and payment for orders online by consumers to the receipt of and confirmation of those orders by
the takeaway restaurants. A failure of any individual IT system, and in particular any failure with
respect to a significant number of JCTs, would impact the Company’s ability to receive, process and
accept payment for orders. In addition, the different IT systems are dependent on each other to be able
to complete their processes, and a failure of any of the core IT systems may result in the inability of
other IT systems to function properly and/or failures of other IT systems, which could in turn result in
consumer orders not being captured on the Company’s platform or processed by the takeaway
restaurants. The efficient operation of the Company’s business and IT systems is critical, therefore, to
attracting and retaining takeaway restaurants and consumers.
The Company relies to a significant degree on the efficient and uninterrupted operation of its computer
and communications systems and those of third parties, including the internet and GPRS connectivity.
Consumer access to the Company’s platform, the ease with which a consumer is able to navigate and
order on the platform and the speed with which the order is received and confirmed for processing by
the takeaway restaurants are factors which affect the attractiveness of the Company’s services to both
consumers and restaurants. Any failure of the internet or GPRS connectivity or any failure of current or
new computer and communication systems or software systems could result in consumer orders not
being captured on the Company’s platform or processed by takeaway restaurants. While the Company
has disaster recovery and business continuity contingency plans, no assurance can be given that, if a
serious disaster affecting the Company’s systems or operations occurred, such plans would be
sufficient to enable the Company to continue or recommence trading without a loss of business.
Furthermore, the Company has, from time to time, experienced minor operational failures in its
systems and technologies which have resulted in order errors such as incorrect items and delays or
failures in communicating orders to takeaway restaurants but none of these instances to date have had
a material impact on JUST EAT’s business. The Company expects operational issues to continue to
occur from time to time due to a combination of one or more of the following: equipment failures,
computer server or system failures, platform outages, human error (including any errors made by
takeaway restaurants in their handling of JCTs), network outages, software performance problems and
power failures. The Company contracts with a nearshoring IT Company based in Kiev, Ukraine and
any disruption to its operations as a result of recent protests and political hostilities in Ukraine could
adversely affect the Group’s IT development projects.
If the Company is unable to meet demand or service expectations due to the occurrence of one or
more of the aforementioned issues, the Company’s business, financial condition and results of
operations may be materially adversely affected.
1.4
The Company is dependent on the reputation of and value associated with its brands.
Developing and maintaining the reputation of, and value associated with, the Company’s brands is of
central importance to the success of the Company. Brand identity is a critical factor in retaining existing
and attracting new consumers and takeaway restaurants. The Company is highly reliant on direct
traffic, “organic” (i.e., listings not dependent on advertising or other payments) and paid internet
searches, which all depend to a varying extent on the strength of the JUST EAT brand. The Company
has devoted and will continue to devote time and resources to marketing and customer relations, but
its marketing efforts and other promotional activities may not achieve expected results.
Promotion and enhancement of the Company’s brands is also expected to depend on the Company’s
success in providing a positive experience for consumers ordering takeaway food online and an
efficient and effective service for takeaway restaurants seeking orders through the additional channel.
15
Any failure by the Company or the restaurants in its network to offer a high quality and efficient
experience and excellent customer service to consumers could damage the Company’s reputation and
brands and result in the loss of consumer confidence. Unfavourable publicity concerning the Company,
its takeaway restaurants or the industry could also damage the Company’s brands. In particular, any
violation of food hygiene or food labelling regulations by the takeaway restaurants in the JUST EAT
network, as well as systemic problems in the takeaway food industry, such as food contamination, can
damage JUST EAT’s reputation or brand. There can also be no assurance that a violation of other
regulations by takeaway restaurants, such as those relating to money laundering and tax evasion, will
not damage the Company’s reputation and brand by association.
Moreover, the Company relies heavily on social media such as Facebook and Twitter for brand
promotion and marketing, and any negative publicity or reputational damage may be accelerated
through social media due to its immediacy and accessibility as a means of communication, which may
materially adversely affect the Company’s business, financial condition and results of operations.
1.5
The Company faces competition from other companies and potential new entrants to the
industry or the markets in which the Company currently operates.
The takeaway food market is highly competitive. Consumers have many choices for takeaway food,
including online takeaway food aggregator portals, independent restaurants and restaurant chains
offering online ordering services, as well as local restaurants offering telephone-based and walk-in
takeaway food services.
JUST EAT faces competition from a number of other online takeaway food aggregator portals in the
UK, Denmark and its other countries of operation. The Company also faces competition from
independent restaurants and restaurant chains that offer online ordering services through their own
websites and mobile apps, such as Domino’s Pizza or similar chains. Moreover, new competitors may
emerge, or similar businesses that are currently established in other countries may choose to enter or
expand in the Company’s countries of operation.
Some of these competitors and new entrants may have brands that are or become more widely
recognised by consumers than the Company’s brand, and they may also have substantially greater
financial, marketing, technical or other resources. The Company’s competitors may also merge or form
strategic partnerships. These factors could adversely impact the Company’s competitive position.
In addition, the Company competes with a wide range of local restaurants offering telephone-based
and walk-in takeaway food services, often for an established local consumer base. These may include
existing takeaway restaurants in JUST EAT’s network. The Company may fail to increase its market
share if consumers’ buying behaviour does not shift towards increased online ordering.
The Company competes for consumers and takeaway restaurants mainly on the basis of the quality of
its service offering, including the convenience and functionality of its IT platform, the size and variety of
its network of restaurants and the strength of its brand. If the Company fails to compete effectively in
any of these areas, it may lose existing consumers and restaurants and fail to attract new consumers
and restaurants.
Competitive pressures from one or more of the Company’s competitors or the Company’s inability to
adapt effectively and quickly to a changing competitive landscape could affect demand for the
Company’s services and thereby its prices, fees and margins, which may have a material adverse
effect on the Company’s business, financial condition, results of operations and prospects.
1.6
Changes to search engines’ algorithms or terms of services could cause the Company’s
websites to be excluded from or ranked lower in organic search results.
A significant number of consumers access the Company’s websites by clicking on a link contained in
search engines’ organic search results. Transactions effected by these consumers result in higher
gross margins to the Company as there are lower associated direct costs. Search engines do not
accept payments to rank websites in their organic search results and instead rely on algorithms to
determine which websites are included in the results of a search query.
16
The Company endeavours to enhance the relevance of the Company’s websites to common consumer
search queries and thereby improve the rankings of the Company’s websites in organic search results,
a process known as “search engine optimisation” or “SEO”. Search engines frequently modify their
algorithms and ranking criteria to prevent their organic search results from being manipulated, which
could impair the Company’s SEO activities. These algorithms and ranking criteria may be confidential
or proprietary information, and the Company may not have complete information on the methods used
to rank its websites. If the Company is unable to quickly recognise and adapt its techniques to such
modifications in search engine algorithms or if the effectiveness of the Company’s SEO activities is
affected for any other reason, the Company may need to increase its spending on other forms of
marketing or may potentially suffer a significant decrease in traffic to its websites, which could have a
material adverse effect on its business, financial position, results of operations and prospects.
Search engines may also prohibit the use of any software, process or service which sends automated
queries to determine the ranking of a website or webpage (an important tool in developing successful
SEO techniques), or the use of particular methods deemed by the search engine to be manipulative or
deceptive. A violation of a search engine’s terms of services may result in a website’s exclusion from
that search engine’s organic search results. If a search engine were to modify its terms of service or
interpret existing or modified terms of service in a manner such that the Company’s SEO practices
were deemed to violate such terms, the Company’s websites could be excluded from the search
engine’s organic search results. Such an exclusion could significantly reduce the Company’s ability to
direct higher margin consumer traffic to the Company’s platform, thereby increasing consumer
acquisition costs, and materially adversely affect the Company’s business, financial condition, results
of operations and prospects.
1.7
The Company is subject to risks relating to the receipt and processing of online payments.
Consumers who order through JUST EAT’s websites or mobile apps may choose from a range of
payment methods, including credit cards and debit cards. The Company pays fees and other charges
for the processing of credit and debit card payments, which may increase over time and raise operating
costs and lower margins. The Company relies on third parties to provide these payment processing
services in relation to credit and debit card payments, and if these companies become unwilling or
unable to provide these services or increase the costs of providing such services, the Company’s
operations may be disrupted or become unreliable and its operating costs, including payment
processing fees, could increase.
Furthermore, the Company is subject to payment card association operating rules, certification
requirements, Payment Card Industry Data Security Standards (“PCI-DSS”), regulations concerning
payment service providers and rules governing electronic funds transfers. JUST EAT has recently
moved from the requirement to comply with level 2 standards under the PCI-DSS to level 1, which are
among the most difficult to comply with. The Company is currently undergoing an audit to verify its
compliance with this standard given its new status. These rules, requirements, standards or regulations
could change or be reinterpreted to make them difficult or impossible to comply with, which could result
in the Company becoming subject to fines or higher transaction fees and in extreme cases losing its
ability to accept credit or debit card payments from consumers, process electronic funds transfers or
facilitate other types of online payments. Moreover, if the Company offers new payment options to its
consumers, it may become subject to additional regulations and compliance requirements.
In addition, allowing payment to be made by credit and debit cards exposes the Company to the risk of
fraud and the associated costs to business. High levels of payment card fraud could result in the
Company having to comply with additional requirements or pay higher payment processing fees or
fines or, ultimately, losing its card payment processing licence. Furthermore, permitting further online
payment options may increase the risk of fraud. Any of the foregoing could have a material adverse
effect on the Company’s business, financial condition and results of operations.
1.8
The Company is responsible for the cash that it holds on behalf of takeaway restaurants
arising from payments made by credit or debit card.
When a consumer chooses to make payment online using a credit or debit card, JUST EAT collects
the full order value on behalf of the takeaway restaurant. JUST EAT receives the cash for this payment
after approximately three working days from the payment card company and then, on the next payment
17
date, transfers to the takeaway restaurant an amount equal to the online payments collected less JUST
EAT’s commissions (for both cash and payment card orders) and other fees. Payment to takeaway
restaurants is made twice per month and, until such payment is made, JUST EAT is responsible for the
cash that it holds on behalf of the takeaway restaurants. For the year ended 31 December 2013, 59%
of all orders were paid for by credit or debit card. Any loss of cash through bank failures or other
factors beyond JUST EAT’s control may have a material adverse effect on the Company’s reputation,
business and financial condition. Any failures in the controls relating to processes by which JUST EAT
reconciles cash in-hand on behalf of takeaway restaurants and payment due to restaurants could also
have a similar material adverse effect.
1.9
The Company’s payment card fee revenue may decline if it is required to lower fees
charged for card payments.
Payment card fees are charged by JUST EAT on each order placed through JUST EAT that is paid for
by credit or debit card. The fee covers the charges incurred by JUST EAT from the payment service
provider, and often includes a surcharge, thereby generating a margin for JUST EAT. Payment card
fee revenue comprised 12% of revenue for the year ended 31 December 2013. From June 2013,
following the introduction of new regulations in Denmark, JUST EAT has been required to charge, and
has charged, payment card fees that are equal to the fees charged by the payment service provider,
with no additional surcharge. If JUST EAT were to decide to adopt this practice, or be required to do
so, in its other countries of operation, including the UK, this revenue stream may be reduced in the
future.
1.10 The number of orders placed through JUST EAT’s platform fluctuates on a seasonal basis.
Demand for takeaway food is seasonal and subject to weather conditions, particularly in areas such as
the UK and northern Europe where the seasons are more pronounced. Order numbers across the
takeaway food industry are typically higher during autumn and winter, when consumers are less likely
to dine out due to the shorter daylight hours and likelihood of bad weather; conversely, orders decline
in number during the warmer spring and summer months, when conditions are more conducive to
dining out or other alternatives such as barbeques. Unexpected or atypical fluctuations in weather,
particularly extended periods of warm conditions, may have a significant negative effect, therefore, on
the number of orders placed through JUST EAT’s websites and mobile apps and could materially
adversely affect the Company’s business, financial condition and results of operations.
1.11 The Company may face online security breaches and service disruptions due to hacking,
viruses, fraud and malicious attack.
The Company relies on encryption and authentication technology to provide the security necessary to
effect the secure transmission of information from its consumers, such as credit or debit card numbers.
The Company cannot guarantee absolute protection against unauthorised attempts by third parties or
its current or former employees to access its IT systems, including malicious third party applications
that may interfere with or exploit security flaws in its products and services. Viruses, worms and other
malicious software programmes could, amongst other things, jeopardise the security of information
stored in a user’s computer or in the Company’s computer systems or attempt to change the internet
experience of users by interfering with the Company’s ability to connect with its users. Hackers may
also act in a coordinated manner to launch denial of service attacks or other coordinated attacks that
may cause the Company’s JCTs, websites or other systems to experience service outages or other
interruptions or result in the creation of fraudulent transactions. If any compromise in the Company’s
security measures were to occur, or if the Company’s websites or other systems were to experience
service outages or other interruptions, the Company’s reputation may be harmed and its business,
financial condition and results of operations may be materially adversely affected.
1.12 The Company is subject to risks relating to data protection.
The Company processes personal data, some of which may be sensitive, as part of its business. The
Company may be subject to investigative or enforcement action by the Information Commissioner’s
Office in the UK or similar regulatory authorities in the Company’s other countries of operation, legal
claims and reputational damage if it acts or is perceived to be acting inconsistently with the terms of its
privacy policy, consumer expectations or the law.
18
From time to time, concerns may be expressed about whether the Company’s products and services
compromise the privacy of consumers using the platform. Concerns about the Company’s collection,
use or sharing of personal information or other privacy-related matters, even if unfounded, could
damage the Company’s reputation.
In addition, there can be no assurance that advances in computer capabilities, new discoveries in the
field of cryptography, or other events or developments will not result in a compromise or breach of the
processes used by the Company to protect consumer transaction data. Such personal data could
become public if there were a security breach in respect of such data and, if one were to occur, the
Company could face liability under data protection laws and lose the goodwill of its consumers, which
may have a material adverse effect on the Company’s business, financial condition, results of
operations and prospects.
1.13 The Company relies on a single supplier for the JCTs which facilitate the receiving and
processing of online orders by takeaway restaurants.
The Company currently is dependent upon a single supplier, VeriFone, for the supply of the JCTs that
are installed in the majority of takeaway restaurants contracted with JUST EAT. If VeriFone were to
terminate its supply relationship with the Company, or if VeriFone itself becomes unable for any reason
to supply the Company with the requisite numbers of JCTs, the ability of the Company to service the
restaurants in its existing network and expand its network of takeaway restaurants may be materially
adversely affected. Furthermore, in the event of product damage or failure in a particular delivery of
JCTs from VeriFone, there may be consequential constraints upon the Company’s ability to supply
JCTs to takeaway restaurants. Any inability to overcome supply constraints to meet higher levels of
demand from an expanding network of takeaway restaurants may have a material adverse effect on
the Company’s business, financial condition and results of operations.
1.14 The Company may not keep pace with new technological and product developments.
The Company’s success depends in part upon its ability to store, retrieve, process and manage
substantial amounts of information. To achieve its strategic objectives and remain competitive, the
Company must continue to develop and enhance its information systems and technological product
offerings. This may require the acquisition of equipment and software and the development, either
internally or through independent consultants, of new proprietary software and products such as
enhanced mobile apps for consumers or improved order processing systems for takeaway restaurants.
The Company may be unable to continue to design, develop, implement or utilise, in a cost-effective
manner, information systems and products that provide the capabilities necessary for the Company to
compete effectively. Any failure to keep pace with changes in the online takeaway food industry or
adapt to technological developments, or the development and introduction of a superior product by a
competitor, could mean that the Company fails to capture what may become an increasingly important
part of the online takeaway food market and this may have a material adverse effect on the Company’s
business, financial condition, results of operations and prospects.
1.15 The Company is dependent on its Executive Directors and senior management team as
well as certain other key personnel and the loss of their services could materially
adversely affect its business.
The Company depends upon the continued services and performance of its Executive Directors, senior
management team and other key personnel. These individuals, amongst other things, play a key role in
maintaining the Company’s culture, technology systems and marketing activities, as well as in setting
the Company’s strategic direction. The unexpected departure or loss of any of them could have a
material adverse effect on the business, financial condition and results of operations of the Company,
and there can be no assurance that the Company will be able to attract or retain suitable replacements
for such personnel in a timely manner or at all. The Company may also incur significant additional
costs in recruiting and retaining suitable replacements.
1.16 The Company’s growth may place significant demands on its management and
infrastructure.
The growth of the Company’s business to date has placed, and its future growth is expected to
continue to place, significant demands on the Company’s management and its technological,
19
operational and financial infrastructure. Continued growth could also strain the Company’s ability to
maintain reliable service levels for consumers and takeaway restaurants; develop and improve its
operational, financial and management controls; enhance its reporting systems and procedures and
recruit, train and retain employees. In addition, the Company’s business and IT systems may be
unable to accommodate a significant increase in the number of consumers, takeaway restaurants or
orders if the Company cannot scale its JCT and other IT systems effectively across a wider network. If
the Company is unable to accommodate a substantial increase in orders, its growth strategy may be
materially adversely affected.
As the Company’s operations grow further, it will need to continue to improve and upgrade its systems
and infrastructure. This expansion will require the Company to commit substantial financial, operational
and technical resources in anticipation of an increase in the size of the business, with no assurance
that the volume of business will increase.
1.17 The Company’s operations in certain countries outside of the UK and Denmark may not
progress to profitability as planned.
In the years ended 31 December 2011, 2012 and 2013, Underlying EBITDA was negative for the Other
segment of JUST EAT’s business that represents countries outside of the UK and Denmark. Segment
Underlying EBITDA for the Other segment was negative £6.3 million for the year ended 31 December
2011 compared to negative £13.1 million for the year ended 31 December 2012 and negative £11.8
million for the year ended 31 December 2013. The negative Underlying EBITDA during the periods
under review reflect JUST EAT’s strategy of incurring greater expenditures in operations in certain
countries to expand its network of takeaway restaurants, build brand awareness and increase scale in
order to gain a competitive advantage in the market. There can be no assurance, however, that the
Company will be able to implement its strategy effectively or that the business model it established in
the UK and Denmark can be successfully replicated or scaled in other countries. If JUST EAT is unable
to implement its strategy or replicate and scale its business model effectively, its Other operating
segment may continue to have negative Underlying EBITDA, which could have a material adverse
effect on its business, financial condition and results of operations.
1.18 The Company’s entry into new business areas or overseas markets may not be
successful.
The Company may continue to grow its operations by expanding its business in new overseas markets
or offering new services to its existing consumers and takeaway restaurants.
The Company may not be able to do this in a cost-effective or timely manner. Furthermore, any new
business or website launched by the Company that is not favourably received by consumers could
damage the Company’s reputation or brands.
Such expansion of the Company’s operations would also be likely to require significant additional
investment, together with operations and resources, which would strain the Company’s management,
financial and operational resources. The lack of market acceptance of such efforts or the Company’s
inability to generate satisfactory revenues from such expanded services, products or operations to
offset their costs could have a material adverse effect on the Company’s business, financial condition,
results of operations and prospects.
1.19 Any expansion by the Company through merger and acquisition activity may be
unsuccessful.
The Company may expand through mergers and acquisitions. In the right circumstances, JUST EAT’s
acquisition strategy is to expand by acquiring complementary businesses within existing geographies
and entering new geographies via the acquisition of market leaders with positions of scale in those
countries. In identifying potential merger and acquisition targets, the Company would make every effort
to ensure appropriate due diligence is carried out, but acquisitions would necessarily leave the
Company exposed, at least to some degree, to any operational failings of the target company, to
additional regulatory requirements if expanding into new countries and potentially to overpaying for any
such target. Any payment for such target company with Ordinary Shares could also dilute the interests
of Shareholders.
In addition, merger and acquisition activity, including the difficulties involved in integrating companies,
businesses or assets, may divert financial and management resources from the Company’s core
20
business, which could have a material adverse effect on the Company’s business, financial condition,
results of operations and prospects. The Company may also carry out opportunistic acquisitions that
are not in line with its stated acquisition strategy, and there is no assurance that any acquisitions will
be made at all. In addition, there can be no assurance that any mergers or acquisitions will
successfully achieve their aims, and any mergers or acquisitions that are unsuccessful or do not
proceed according to plan may result in impairment charges.
1.20 The Company is subject to risks associated with plans to acquire the remaining interest in
its joint venture operations in France.
The Company’s operations in France are currently conducted through its 50% interest in a joint
venture, and it plans to acquire the remaining interests during the period from 2014 to 2017. The
transition from being a joint venture partner to fully acquiring and operating the business in France,
including the difficulties involved in assuming control, integrating operations and harmonising different
IT operating platforms, may be more costly and time-consuming than expected, which could have a
material adverse effect on the Company’s business, financial condition, results of operations and
prospects.
1.21 The Company is subject to risks associated with operating with joint venture partners.
The Company participates in and may expand through joint ventures and other collaborative activities
with third parties. Moreover, the Company’s strategy for entering a new country, particularly in
developing markets, may require or be restricted to the purchase of a partial or a controlling interest in
an existing entity, whilst retaining that entity’s management, in order to leverage local market
knowledge. There can be no assurance that the Company will always have a controlling interest in any
company it acquires or joint venture it enters into or that it will not lose a controlling interest. The loss of
a controlling interest may occur as a result of, for example, the possible imposition of, or changes in,
foreign ownership restrictions.
There are certain risks associated with joint venture partners, including the risk that joint venture
partners may:
•
have economic or business interests or goals that are inconsistent with those of the
Company;
•
veto proposals in respect of joint venture operations;
•
be unable or unwilling to fulfil their obligations under the joint venture or other agreements; or
•
experience financial or other difficulties.
Joint ventures, including the difficulties involved in integrating companies, businesses or assets and
harmonising different IT operating platforms, may divert financial and management resources from the
Company’s core business, which could have a material adverse effect on the Company’s business,
financial condition, results of operations and prospects.
1.22 If the Company fails to maintain its culture, or if the Company is unable to attract, train,
motivate and retain qualified personnel, its business, financial condition and results of
operations may be materially adversely affected.
The Company is reliant on its staff for the management, operation, development, maintenance, repair,
upgrading and expansion of its business, operations and systems. The Company must train its
employees so that they have up-to-date knowledge of various aspects of the Company’s operations
and motivate its employees to meet the Company’s demand for high quality services. If the Company
fails to provide adequate training to its employees, or if the Company fails to motivate its employees or
otherwise fails to maintain its culture, the quality of its services may deteriorate and its brands and
relationships with consumers and takeaway restaurants may be materially adversely affected.
The Company’s ability to recruit, retain and motivate suitably qualified and experienced staff is
important for the Company’s on-going success. The Company may be unable to recruit and retain
sufficient personnel of the right calibre or may incur significant expense in attracting and retaining
personnel, which may have a material adverse effect on the Company’s business, financial condition
and results of operations.
21
Any significant disagreements between the Company and its employees could disrupt the Company’s
operations and increase its operating costs, which could have a material adverse effect on the
Company’s business, financial condition and results of operations.
1.23 The Company may not have adequate protection for its intellectual property rights.
The business and IT systems underpinning the order placement and processing functions of the
Company’s platform and other bespoke intellectual property are not protected by patents or registered
design rights, which means that JUST EAT cannot preclude or inhibit competitors from entering the
same market if they develop the same or similar technology independently. The Company is
particularly reliant, therefore, on copyright, trade secret protection and confidentiality and license
agreements with its employees, suppliers, consultants and others to protect its intellectual property
rights. Although the Company has taken steps consistent with industry practice to reduce these risks,
such steps may be inadequate.
The Company is particularly reliant on the intellectual property rights it holds in respect of its brand,
which comprises the JUST EAT name used both as plain words and in its stylised form together with
the JUST EAT logo. The Company’s portfolio of registered trade marks protects both the JUST EAT
name and the JUST EAT name and logo in addition to a number of other trade marks. JUST EAT also
owns a number of domain name registrations, including www.just-eat.co.uk and www.just-eat.dk. The
Company’s legal team manages the registration and administration of the Group’s domain name
portfolio, with assistance from a third party domain name management company. If the Company or
the third party fails to register, renew or enforce JUST EAT’s intellectual property rights, or there is any
unauthorised use or significant impairment of the Company’s intellectual property rights, the value of its
products and services could be diminished, the Company’s competitive position could be adversely
affected and its business may suffer.
In addition, third parties may independently discover the Company’s trade secrets or access
proprietary information or systems and, in such cases, the Company may not be able to rely on any
intellectual property rights to prevent the use of such trade secrets, information or systems by such
parties. Costly and time-consuming litigation could be necessary to determine and enforce the scope of
the Company’s proprietary rights and the outcome of such litigation could not be guaranteed. Failure to
prevent the use of such secrets, information or systems by such third parties could materially adversely
affect the Company’s competitive business position, financial condition and results of operations.
1.24 The Company may be affected by an increase in governmental regulation of the internet,
online retail and electronic marketing.
The application or modification of existing laws or regulations, or adoption of new laws and regulations
relating to the internet (including data protection) and online retail and marketing operations could
materially adversely affect the manner in which the Company currently conducts its business. The law
of the internet remains largely unsettled, even in areas where there has been some legislative action.
For example, a 2012 report by the European Commission proposed a comprehensive review of privacy
protection in the European Union. The regulation proposed in the report includes rules that broaden the
definition of personal data, strengthen the rights of data subjects, enhance penalties for noncompliance and continue to restrict the transfer of personal data to countries outside the EU. The
proposed regulation would also limit what would be considered valid consent on behalf of an individual,
introduces a “right to be forgotten” (a broadened right by individuals to have their data deleted at their
request) and substantially increases the enforcement powers of the European Commission. The
proposed regulation, if enacted, could materially adversely affect JUST EAT’s operations in the EU and
the parts of the Company’s platform that are accessed by EU residents.
As another example, the UK’s Privacy and Electronic Communications Regulations 2003 were
amended in 2011 to increase website operators’ obligations with regard to the use of cookies (which
can be used to enable retail functionality and to track user behaviour).
In addition, the growth and development of the market for online retail may lead to more stringent
customer protection laws, such as in relation to card payment processing requirements, which may
impose additional burdens on the Company and increase its costs of business. All of the above may
have a material adverse effect on the Company’s business, financial condition, results of operations
and prospects.
22
1.25 The Company may be affected by an increase in governmental regulation of the takeaway
restaurant industry.
Increased or changing regulations relating to the food business may affect the operations of takeaway
restaurants in the JUST EAT network. For example, the Food Information Regulations (EU 1169/2011),
which are due to come into force on 1 December 2014, provide that “food business operators” must
provide certain information about allergens on non-prepacked foods, which would include takeaway
food, such that takeaway restaurants would be required to know the allergen content of their dishes.
Compliance with such new regulations may require significant investment by takeaway restaurants.
Should the Company decide to assist the restaurants in complying with these regulations, it may also
need to commit significant employee resources and costs, which may have a material adverse effect
on its business, financial condition and results of operations.
Moreover, changes in tax rates, tax laws or HMRC’s published practice in relation to the taxation of
takeaway restaurants, or changes in or interpretation of or misinterpretation of the law or HMRC’s
published practice, or any failure by takeaway restaurants to manage tax risks adequately, could result
in increased charges, financial loss and penalties for the restaurants, which may in turn have a material
adverse effect on the Company’s financial condition.
1.26 The Company’s operations are subject to the laws and regulations of numerous national
and local authorities.
JUST EAT has operations in 13 countries, as a result of which the Company incurs, and expects to
continue to incur, substantial costs and expenditures and commits a significant amount of
management’s time and resources to comply with increasingly complex and restrictive laws and
regulations. Changes in such laws and regulations may constrain the Company’s ability to provide
services to consumers and takeaway restaurants or increase the costs of providing such services.
Furthermore, a failure to comply with applicable laws and regulations could result in substantial fines,
claims relating to violations of social, labour or other legislation or revocation of licences, which could
have a material adverse effect on the Company’s business, financial condition and results of
operations.
1.27 The Company is exposed to political and legal risks in the different countries in which it
operates, including a heightened risk associated with operating in developing markets.
The Company is subject to risks associated with operating in developing markets, where the political,
economic and legal systems and economic conditions are generally less predictable than in countries
with more developed institutional structures, including increased risks associated with inflation,
recession and currency and interest rate fluctuations; reduced intellectual property protection; an
inability to enforce judgments; difficulty in adequately establishing, staffing and managing operations;
risk of non-compliance and business integrity issues; changes in regulation and governmental policies
and the consistency with which such regulations and policies are interpreted or enforced; and risk of
political and social instability, including war, civil disturbance and terrorism. There can be no assurance
that the foregoing risks will not have a material adverse effect on the Company’s business, financial
condition, results of operations and prospects.
1.28 The Company may be adversely affected by tax disputes or tax audits or by changes in tax
legislation or the interpretation of such legislation in the UK.
JUST EAT’s tax returns are subject to regular review and examination. The Company cannot
guarantee that any tax audit or tax dispute to which it may be subject in the future will result in a
favourable outcome for the Company. There is a risk that any such audit or dispute could result in
additional taxes payable by JUST EAT as well as negative publicity and reputational damage. In any
such case, substantial additional tax liabilities and ancillary charges could be imposed on the
Company, which could increase JUST EAT’s effective tax rate.
JUST EAT’s effective tax rate, which was 34% for the year ended 31 December 2013, may also be
affected by changes in, or the interpretation of, tax laws, including those tax laws relating to the
utilisation of capital allowances, net operating losses and tax loss or credit carry forwards, as well as
changes in management’s assessment of certain matters, such as the ability to realise deferred tax
23
assets. JUST EAT’s effective tax rate in any given financial year reflects a variety of factors that may
not be present in the succeeding financial year or years. An increase in JUST EAT’s effective tax rate
in future periods could have a material adverse effect on the Company’s financial condition and results
of operations.
1.29 Fluctuations in currency exchange rates may significantly impact the presentation of the
Company’s financial results.
A substantial portion of the Company’s consolidated revenue is denominated in sterling and Danish
Krone, with the remainder of the Company’s consolidated revenue denominated in the local currencies
of the other countries in which the Company operates. The Company generally seeks to match the
currency of its revenue and expenses for its operations in each jurisdiction to reduce its exposure to
currency fluctuations but, in limited circumstances, the revenue and expenses may be in different
currencies and, therefore, subject to foreign exchange risk. In addition, the Company presents its
consolidated financial statements in sterling. Consequently, the presentation of the consolidated
financial statements may be materially affected by movements in foreign exchange rates and
particularly by Danish Krone/sterling and Euro/sterling exchange rates.
2.
RISKS RELATING TO THE OFFER AND THE ORDINARY SHARES
2.1
Future sales or issues of Ordinary Shares, or the possibility or perception of such future
sales or issues, may affect the market price of the Ordinary Shares.
Following Admission, sales by any Shareholders or issuances by the Company of Ordinary Shares
may significantly reduce the Company’s share price. Subject to certain limited exceptions, the Directors
and certain Shareholders will be prevented from selling Ordinary Shares held by them for a period of
360 days and 180 days, respectively, following Admission. Similarly, the Company will be restricted,
subject to certain limited exceptions, for a period of 180 days from Admission from issuing Ordinary
Shares. On the expiry of these periods, the Company may issue Ordinary Shares and the Directors
and relevant Shareholders will be free (subject to applicable law) to sell the Ordinary Shares held by
them. The potentially increased supply of Ordinary Shares on the market may have a material adverse
effect on the market price of the Ordinary Shares.
Similarly, sales of additional Ordinary Shares by the Directors or significant Shareholders and
issuances of additional Ordinary Shares by the Company may affect the confidence of the market in
the Ordinary Shares and cause the market price of the Ordinary Shares to fall.
2.2
An active or liquid market for the Ordinary Shares may not develop.
Prior to the Offer, there has been no public trading market for the Ordinary Shares. The Offer Price will
be agreed between the Joint Global Co-ordinators, the Company and the Major Selling Shareholders
and may not be indicative of the market price for the Ordinary Shares following Admission. Although
the Company has applied for admission to trading on the High Growth Segment of the London Stock
Exchange’s Main Market, there can be no assurance that an active trading market for the Ordinary
Shares will develop or, if developed, that it will be maintained. The failure to develop an active trading
market may affect the liquidity of the Ordinary Shares and the Company cannot assure Shareholders
that the market price of the Ordinary Shares will not decline below the Offer Price. Consequently,
investors may have difficulty selling their Ordinary Shares or may not be able to sell their Ordinary
Shares at or above the Offer Price.
2.3
The market price of the Ordinary Shares may be volatile, which could cause the value of
an investment in the Ordinary Shares to decline.
Following Admission, the trading price of the Ordinary Shares may be subject to wide fluctuations in
response to many factors, including those referred to in this section, as well as stock market
fluctuations and general economic conditions that may materially adversely affect the market price of
the Ordinary Shares. Publicly traded securities from time to time experience significant price and
volume fluctuations that may be unrelated to the operating performance of the companies that have
issued them. In addition, the market price of the Ordinary Shares may prove to be highly volatile. The
market price of the Ordinary Shares may fluctuate significantly in response to a number of factors,
some of which are beyond the Company’s control, including:
•
variations in operating results in the Company’s reporting periods;
24
•
any shortfall in revenue or profitability or any increase in losses from the levels expected by
market analysts or Shareholders;
•
increases in capital expenditure compared to expectations;
•
failure to make efficiency improvements;
•
changes in financial estimates by securities analysts;
•
changes in market valuations of similar companies;
•
announcements by the Company of significant contract gains or losses, acquisitions, strategic
alliances, joint ventures or new initiatives;
•
regulatory matters;
•
additions or departures of key personnel; and
•
future issues or sales of Ordinary Shares.
Any or all of these events or others could result in material fluctuations in the price of the Ordinary
Shares and investors may lose part or all of their investment in the Ordinary Shares.
The Offer Price might not be indicative of prices that will prevail in the trading market and investors
may not be able to resell the Ordinary Shares at or above the price paid.
A public perception that the Company is an internet, e-commerce or technology company may result in
the price of the Ordinary Shares moving in line with other shares in companies of this nature.
Traditionally, the share prices of internet, e-commerce and technology companies have tended to be
more volatile than share prices of companies operating in other industries.
2.4
The proposed listing of the Ordinary Shares on the High Growth Segment of the Main
Market of the London Stock Exchange will afford investors a lower level of regulatory
protection than a listing on the premium segment of the Official List of the Financial
Conduct Authority
Application will be made for the Ordinary Shares to be admitted to trading on the High Growth
Segment of the Main Market of the London Stock Exchange. High Growth Segment securities are not
admitted to the Official List of the Financial Conduct Authority and, therefore, the Company has not
been required to satisfy the eligibility criteria for admission to listing on the Official List and is not
required to comply with the Financial Conduct Authority’s Listing Rules. A High Growth Segment listing
will afford investors in the Company a lower level of regulatory protection than that afforded to
investors in a company that is listed on the premium segment of the Official List, which is subject to
additional obligations under the Listing Rules. Moreover, a High Growth Segment listing will not permit
the Company to gain FTSE indexation, which may have an adverse effect on the valuation of the
Ordinary Shares.
2.5
The Company is subject to risks associated with the lower minimum free float requirement
for admission to the High Growth Segment
Admission to trading on the High Growth Segment of the Main Market of the London Stock Exchange
is primarily intended for companies which are likely to have a lower proportion of securities in public
hands at admission than companies admitted to the Official List. In order to be eligible for admission, at
least 10% of the number of securities to be admitted (having a value of at least £30 million) must be in
public hands, compared to the 25% minimum free float required for a listing on the premium segment
of the Official List of the Financial Conduct Authority. The lower minimum free float requirement for
companies listing on the High Growth Segment may affect the liquidity of the Ordinary Shares and the
Company cannot assure Shareholders that the market price of the Ordinary Shares will not decline
below the Offer Price. With reduced liquidity of the Ordinary Shares, investors may have difficulty
selling their Ordinary Shares or may not be able to sell their Ordinary Shares at or above the Offer
Price.
In addition, the lower minimum free float requirement for admission to trading on the High Growth
Segment may result in a higher percentage of Ordinary Shares being held by the Company’s existing
25
Shareholders following Admission than would otherwise be the case for a listing on the Official List.
The Company’s existing Shareholders may be in a position to influence the outcome of matters relating
to the Company, including appointments to the Board and the approval of significant transactions,
including change of control transactions. The interests of these Shareholders may be different from the
interests of the Company or the other Shareholders. In particular, this control may have the effect of
making certain transactions more difficult without the support of the Directors and existing
Shareholders, and may have the effect of delaying or preventing an acquisition or other change in
control of the Company. If the existing Shareholders’ interests were to conflict with those of other
Shareholders, it may have a material adverse effect on the value of the Ordinary Shares and JUST
EAT’s business, financial condition, results of operations and prospects.
2.6
Future issues of Ordinary Shares may dilute the holdings of Shareholders.
Other than the proposed offering of Ordinary Shares, the Company has no current plans for an offering
of Ordinary Shares and, as described above, will be unable to do so for a fixed period after Admission
(subject to certain limited exceptions). It is possible, however, that the Company may decide to offer
additional Ordinary Shares in the future, either to raise capital or for other purposes. Subject to any
applicable statutory pre-emption rights, any future issues of Ordinary Shares may have a dilutive effect
on the holdings of Shareholders and could have a material adverse effect on the market price of
Ordinary Shares as a whole.
2.7
An investment in Ordinary Shares by an investor whose principal currency is not sterling
may be affected by exchange rate fluctuations.
The Ordinary Shares are, and any dividends to be paid in respect of them will be, denominated in
sterling. An investment in Ordinary Shares by an investor whose principal currency is not sterling
exposes the investor to foreign currency exchange rate risk. Any depreciation of sterling in relation to
such foreign currency will reduce the value of the investment in the Ordinary Shares or any dividends
in relation to such foreign currency.
2.8
The rights, including the pre-emptive rights, of US and other non-UK holders of Ordinary
Shares may be limited or not capable of exercise, which could have a material adverse
effect on the Company’s business as well as on the liquidity and price of the Ordinary
Shares.
The Company could undertake future equity issues that could have a material adverse effect on the
market price of the Ordinary Shares and may reduce the percentage ownership and voting interests of
Shareholders. Moreover, the Company may issue new shares that have rights, preferences or
privileges senior to those of the Ordinary Shares.
In the case of certain increases in the Company’s share capital, the existing holders of the Ordinary
Shares generally would be entitled to pre-emption rights pursuant to the Companies Act 2006 unless
such rights have been waived by a special resolution of the Shareholders at a general meeting or, in
certain circumstances, pursuant to the Articles. Holders of Ordinary Shares outside the
United Kingdom may not be able to exercise their pre-emption rights in respect of Ordinary Shares
unless exemptions from any overseas securities law requirements are available and the Company
decides to comply with local law and regulations. In particular, US holders of the Ordinary Shares may
not be able to exercise pre-emption rights unless the Ordinary Shares or other securities issued by the
Company are registered under the Securities Act or an exemption from the registration requirements is
available. The Company cannot assure prospective investors that any exemption from such overseas
securities law requirements would be available to enable US and other non-UK holders to exercise
such pre-emption rights or, if available, that the Company will utilise any such exemption.
2.9
There is no guarantee that dividends will be paid by the Company.
There can be no assurance as to the payment of dividends to Shareholders or, if the Company does
pay dividends, the amount of such dividends. The Company intends to retain any earnings to expand
the growth and development of its business and, therefore, does not anticipate paying dividends in the
foreseeable future.
26
PART III
IMPORTANT INFORMATION
1.
NOTICE TO PROSPECTIVE INVESTORS
J.P. Morgan Cazenove has been appointed as Key Adviser. Goldman Sachs and J.P. Morgan
Cazenove, have been appointed as Joint Global Co-ordinators and Joint Bookrunners in connection
with the Offer and Oakley has been appointed as Co-Lead Manager and are each authorised by the
Prudential Regulation Authority (“PRA”) and regulated by the FCA and PRA in the United Kingdom and
Oakley, which is authorised and regulated by the FCA in the United Kingdom. Goldman Sachs and J.P.
Morgan Cazenove are acting exclusively for the Company and no one else in connection with the Offer
and will not regard any other person (whether or not a recipient of this document) as a client in relation
to the Offer and will not be responsible to anyone other than the Company for providing the protections
afforded to their respective clients or for providing advice in relation to the Offer or any other matter
referred to herein.
Apart from the responsibilities and liabilities, if any, which may be imposed on Goldman Sachs,
J.P. Morgan Cazenove and Oakley by the FSMA or the regulatory regime established thereunder,
none of Goldman Sachs, J.P. Morgan Cazenove or Oakley accepts any responsibility whatsoever, and
makes no representation or warranty, express or implied, in relation to the contents of this document,
including its accuracy, completeness or for any other statement made or purported to be made by it or
on behalf of it, the Company, the Directors, the Selling Shareholders or any other person, in connection
with the Company, the Ordinary Shares, the Selling Shareholders or the Offer and nothing in this
document shall be relied upon as a promise or representation in this respect, whether as to the past or
the future. Each of Goldman Sachs, J.P. Morgan Cazenove and Oakley accordingly disclaims all and
any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above),
which it might otherwise have in respect of this document or any such statement.
Prospective investors should rely solely on the information contained in this document (and any
supplementary prospectus produced to supplement the information contained in this document) when
making a decision as to whether to purchase Offer Shares. No person has been authorised to give any
information or make any representation other than those contained in this document and, if given or
made, such information or representation must not be relied upon as having been so authorised by the
Company, the Directors, Goldman Sachs, J.P. Morgan Cazenove or Oakley. In particular, the content
of JUST EAT’s websites do not form part of this document and prospective investors should not rely on
such content. Without prejudice to any obligation of the Company to publish a supplementary
prospectus pursuant to section 87G(1) of the FSMA and Rule 3.4 of the Prospectus Rules, neither the
delivery of this document nor any issue or sale made under this document shall, under any
circumstances, create any implication that there has been no change in the business or affairs of the
Company or of the Company and its subsidiaries taken as a whole (the “Group” or “JUST EAT”) since
the date of this document or that the information contained herein is correct as at any time subsequent
to the date of this document.
Without prejudice to any legal or regulatory obligation on the Company to publish a supplementary
prospectus neither the delivery of this document, nor Admission, shall under any circumstances create
any implication that there has been no change in the affairs of the Company or the Group since the
date of this document or that the information contained herein is correct at any time subsequent to the
date of this document.
The contents of this document should not be construed as legal, business or tax advice. Each
prospective investor should consult his, her or its own legal adviser, independent financial adviser or
tax adviser for legal, financial or tax advice.
Investors in the Offer shall be deemed to have made certain representations, warranties, undertakings,
agreements and acknowledgments. See “Terms and conditions of the Offer — Representations,
warranties, undertakings, agreement and acknowledgments” in Part XIV (Details of the Offer) of this
document.
In connection with the Offer, the Underwriters and any of their respective affiliates acting as an investor
for its or their own account(s) may subscribe for or purchase Ordinary Shares and, in that capacity,
may retain, purchase, sell, offer to sell or otherwise deal for its or their own account(s) in the Ordinary
27
Shares, any other securities of the Company or other related investments in connection with the Offer
or otherwise. Accordingly, references in this document to the Ordinary Shares being issued, offered,
subscribed, sold, purchased or otherwise dealt with should be read as including any issue, offer or sale
to, or subscription, purchase or dealing by, the Underwriters or any of them and any of their affiliates
acting as an investor for its or their own account(s). The Underwriters do not intend to disclose the
extent of any such investment or transactions otherwise than in accordance with any legal or regulatory
obligation to do so.
2.
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements regarding the financial condition, results of
operations, cash flows, dividends, financing plans, business strategies, operating efficiencies or
synergies, budgets, capital and other expenditures, competitive positions, growth opportunities, plans
and objectives of management and other matters relating to JUST EAT. Statements in this document
that are not historical facts are hereby identified as “forward-looking statements”. In some instances,
these forward-looking statements can be identified by the use of forward-looking terminology, including
the terms “believes”, “intends”, “may”, “will” or “should” or, in each case, their negative or other
variations or comparable terminology. Such forward-looking statements, including, without limitation,
those relating to the future business prospects, revenue, interest costs and income, in each case
relating to the Company wherever they occur in this document, are necessarily based on assumptions
reflecting the views of the Company, involve a number of risks and uncertainties that could cause
actual results to differ materially from those suggested by the forward-looking statements and speak
only as at the date of this document.
Important factors which may cause actual results to differ include, but are not limited to, those
described in Part II (Risk Factors).
Save as required by law, or by the High Growth Segment Rulebook, the Prospectus Rules or the
Disclosure and Transparency Rules, the Company undertakes no obligation to release publicly the
results of any revisions to any forward-looking statements in this document that may occur due to any
change in the Directors’ expectations or to reflect events or circumstances after the date of this
document.
3.
SOURCING OF INFORMATION
Certain information in this document has been sourced from third parties. Save as set out below,
where information in this document has been sourced from third parties, the source of such information
has been clearly stated adjacent to the reproduced information.
All information contained in this document which has been sourced from third parties has been
accurately reproduced and, as far as the Company is aware and is able to ascertain from information
published by the relevant third party, no facts have been omitted which would render the reproduced
information inaccurate or misleading.
All references to market data, industry statistics and forecasts and other information in this document
consist of estimates based on data and reports compiled by industry professionals, organisations,
analysts, publicly available information or the Company’s own knowledge of its sales and markets.
Market data and statistics are inherently predictive and speculative and are not necessarily reflective of
actual market conditions. Such statistics are based on market research, which itself is based on
sampling and subjective judgments by both the researchers and the respondents, including judgments
about what types of products and transactions should be included in the relevant market. In addition,
the value of comparisons of statistics for different markets is limited by many factors, including that
(i) the markets are defined differently, (ii) the underlying information was gathered by different methods
and (iii) different assumptions were applied in compiling the data. Accordingly, the market statistics
included in this document should be viewed with caution and no representation or warranty is given by
any person as to their accuracy.
Certain market and industry data contained in this document has been extracted from “Take-Away
Market: Sizing the Consumer Opportunity in UK, France, Denmark and Canada”, an independent
report (the “Callcredit Report”) published in January 2014 by Callcredit Information Group
(“Callcredit”). At the time of publication of the Callcredit Report, Callcredit was a portfolio company of
Vitruvian Partners, a shareholder of the Company.
28
4.
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
Unless stated otherwise, financial information relating to the Group for the financial years ended
31 December 2013, 2012 and 2011 has been extracted without material adjustment from the financial
information in Part XII (Historical Financial Information), which has been prepared in accordance with
International Financial Reporting Standards as adopted by the European Commission for use in the
European Union (“IFRS”).
Unless stated otherwise, the financial information in this document assumes that the share capital reorganisation described in paragraph 4.2 of Part XVI (Additional Information) has taken place and that
the Over-allotment Option is not exercised.
This document contains certain financial measures that are presented in, or derived from measures
that are presented in, the Group’s financial statements, which are prepared in accordance with IFRS,
but which themselves are not measures that are recognised under IFRS. These measures include the
following:
“Underlying EBITDA” means 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, profits or losses on disposal of operations, long term employee incentive
costs, exceptional items and foreign exchange gains and losses. In respect of the results of the Group’s
operating segments, it also excludes intra-group franchise fee arrangements and incorporates an
allocation of Group technology and other central costs. Underlying EBITDA is the main measure of
profitability used by the Chief Operating Decision Maker (“CODM”) to assess and manage the
performance of the Company’s operating segments and thus management believe it is helpful to also
present Underlying EBITDA on a consolidated basis. Underlying EBITDA and the related ratios
presented in this document are unaudited supplementary measures of the Group’s performance and
liquidity that are not required by, or presented in accordance with IFRS. Management believes that the
additional items excluded from the definition of Underlying EBITDA should be excluded for the following
reasons:
•
profit or loss on disposal of operations do not form part of the core operation of the business
as the Group is not in the business of acquiring and disposing businesses for a profit;
•
the Group’s share of depreciation and amortisation of joint ventures are excluded on the basis
that the Group does not exclusively wholly acquire businesses, but where deemed
appropriate form strategic partnerships, and with such partnerships forming part of the core
operations of the Group, it is deemed that the depreciation and amortisation related to these
ventures should be excluded;
•
long term employee incentive costs are excluded on the basis that they can vary depending
on the timing of grants to employees;
•
impairment charges are excluded on the basis that they inherently represent accelerated
depreciation and amortisation;
•
acquisition related expenses are excluded because of their one-off nature; and
•
foreign exchange gains and losses due are excluded due to their unpredictability (in the
absence of hedge accounting) and the distorting effect when attempting to assess the true
operational performance of the Group as a whole, including its foreign entities.
Furthermore, Underlying EBITDA is not a measure of the Group’s financial performance or liquidity
under IFRS and should not be considered as an alternative to gross profit, operating profit/(loss) or any
other performance measures derived in accordance with IFRS or as an alternative to cash flow from
operating activities. Underlying EBITDA may not be indicative of the Group’s historical operating
results, nor is it meant to be predictive of future results. The Underlying EBITDA figures for the financial
years ended 31 December 2013, 2012 and 2011 have been derived from the historical financial
information contained in Part XII (Historical Financial Information). Where information has been
derived, it has been calculated by adding together and/or subtracting figures which are extracted
without material adjustment either from the income statements that appear in Part XII (Historical
Financial Information) or the notes thereto.
The Company has presented these unaudited supplementary measures because they are used by the
Group in managing its business. In addition, the Directors believe that Underlying EBITDA is commonly
29
reported by comparable businesses and used by securities analysts, investors and other parties in
comparing the performance of businesses on a consistent basis without regard to interest, taxes,
depreciation or amortisation, which can vary significantly depending upon accounting methods
(particularly when acquisitions have occurred) or other non-operating factors. Underlying EBITDA as
presented herein will not, however, be comparable to similarly titled measures disclosed by other
companies. Prospective investors should not consider these non-GAAP measures in isolation or as a
substitute for operating profit/(loss) as determined by IFRS, or as an indicator of the Group’s operating
performance or of cash flows from operating activities as determined by IFRS. Investors should not use
this measure as a substitute for the analysis of the Company’s results as reported in the income
statement or cash flow statement.
Some of the limitations of Underlying EBITDA as a measure are:
•
it does not reflect the Group’s cash expenditures or future requirements for capital
expenditure on contractual commitments;
•
it does not reflect changes in, or cash requirements for, the Group’s working capital needs;
•
although depreciation and amortisation are non-cash charges, the assets being depreciated
and amortised will often have to be replaced in the future, and Underlying EBITDA measures
do not reflect any cash requirements for such replacements; and
•
other companies in the Group’s industry may calculate Underlying EBITDA measures
differently than the Group does, limiting their usefulness as a comparative measure.
Because of these limitations, Underlying EBITDA should not be considered as a measure of
discretionary cash available to the Group to invest in the growth of its business. The Company
compensates for these limitations by relying primarily on the Group’s IFRS results and using
Underlying EBITDA only as a supplementary measure of performance. Accordingly, undue reliance
should not be placed on the Underlying EBITDA data contained in this document.
All references to “pounds”, “pounds sterling”, “sterling”, “£”, “pence”, and “p” are to the lawful currency
of the United Kingdom. The Group prepares its financial statements in pounds sterling.
Percentages in tables have been rounded and accordingly may not add up to 100%. Certain financial
data has been rounded. As a result of this rounding, the totals of data presented in this document may
vary slightly from the actual arithmetic totals of such data.
5.
DEFINITIONS
Certain terms used in this document, including capitalised terms and certain technical terms, are
defined and explained in Part XVIII (Definitions).
Reference to any statute or statutory provision includes a reference to that statute or statutory
provision as from time to time amended, extended or re-enacted.
6.
STABILISATION
In connection with the Offer, Goldman Sachs (the “Stabilisation Manager”) or its affiliates may, for
stabilisation purposes, over-allot or effect other transactions which stabilise or maintain the market
price of the Ordinary Shares at a level which might not otherwise prevail in the open market. Such
transactions may be effected on the London Stock Exchange or otherwise. Such stabilising
transactions, if commenced, may be discontinued at any time and must be brought to an end after a
limited period. Save as required by law, the Stabilisation Manager, who will act as stabilising agent for
any such transactions, does not intend to disclose the extent of any over-allotments or stabilisation
transactions.
In connection with the Offer, the Major Selling Shareholders have granted to the Stabilisation Manager
an option, exercisable for 30 days after commencement of conditional dealings of the Ordinary Shares
on the London Stock Exchange, to make available additional Ordinary Shares up to an aggregate
amount of 7.5% of the total number of Offer Shares (excluding for these purposes such additional
30
shares) at the Offer Price to cover over-allotments, if any, made in connection with the Offer and to
cover short positions resulting from stabilisation transactions. If exercised, the Over-allotment Option
will be exercised so as to require the Major Selling Shareholders (as a whole) to sell an equal number
of Ordinary Shares. In addition, Index Ventures V (Jersey) LP agreed to lend stock to the Stabilisation
Manager for the purpose of enabling over-allotments and facilitating settlement for a period of up to 30
days after settlement of the Offer.
7.
AVAILABLE INFORMATION FOR INVESTORS IN THE UNITED STATES
The Company has agreed that, for so long as any Ordinary Shares remain outstanding and are
“restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Company will,
during any period in which it is neither subject to Section 13 or 15(d) of the US Securities Exchange
Act of 1934 (the “Exchange Act”), nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder,
provide to any holder or beneficial owner of these restricted securities or prospective investor
designated by such holder or beneficial owner, in each case upon the request of such holder,
beneficial owner or prospective investor, the information required to be provided by Rule 144A(d)(4)
under the Securities Act.
8.
ENFORCEMENT OF JUDGEMENTS
The Company is a public company incorporated under the laws of England and Wales. The Directors
are citizens or residents of countries other than the United States and all or substantially all of the
assets of such persons and the Company are located outside the United States. As a result, it may be
difficult for investors to effect service of process within the United States upon the Company or such
persons or to enforce outside of the United States judgements obtained against the Company or such
persons in the United States, including without limitation judgements based upon the civil liability
provisions of the United States federal securities laws or the laws of any state or territory within the
United States. In addition, an award or awards of punitive damages in actions brought in the United
States or elsewhere may be unenforceable in the United Kingdom. Investors may also have difficulties
enforcing, in original actions brought in courts in jurisdictions outside the United States, liabilities under
United States securities laws.
31
PART IV
DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS
Directors
Name
Position
John Hughes, CBE
David Buttress
Michael Wroe
Benjamin Holmes
Michael Risman
Frederic Coorevits
Laurel Bowden
Andrew Griffith
Gwyn Burr
Non-Executive Chairman
Group Chief Executive Officer
Group Chief Financial Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Senior Independent Non-Executive Director
Independent Non-Executive Director
Company Secretary
Tony Hunter
Registered Office
Masters House, 107 Hammersmith Road, London, W14 0QH
Joint Global Co-ordinator and Joint Bookrunner
Key Adviser, Joint Global Co-ordinator and
Joint Bookrunner
Goldman Sachs International
Peterborough Court
133 Fleet Street
London EC4A 2BB
J.P. Morgan Securities plc
25 Bank Street
Canary Wharf
London E14 5JP
Co-Lead Manager
Advisers to the Company
Oakley Capital Limited
3 Cadogan Gate
London SW1X 0AS
Torch Partners
33 Cavendish Square
London W1G 0PW
Legal Advisers to the Company as to English
law and United States law
Legal Advisers to the Key Adviser, Joint
Global Co-ordinators, Joint Bookrunners and
Co-Lead Manager as to English and United
States Law
Herbert Smith Freehills LLP
Exchange House
Primrose Street
London EC2A 2EG
Linklaters LLP
One Silk Street
London EC2Y 8HQ
Legal Advisers to SM Trust, Index
Ventures, Vitruvian Partners, Redpoint
Ventures and Greylock IL
Dechert LLP
160 Queen Victoria Street
London EC4V 4QQ
Auditor and Reporting Accountant
Registrar
Deloitte LLP
Abbots House
Abbey Street
Reading RG1 3DB
Equiniti Limited
Aspect House
Spencer Road
Lancing Business Park
Lancing
West Sussex BN99 6DA
32
PART V
EXPECTED TIMETABLE OF PRINCIPAL EVENTS AND OFFER STATISTICS
Expected Timetable of Principal Events
All references to time in this document are to the time in London, United Kingdom, unless otherwise
stated. Each of the times and dates in the table below are indicative only and may be subject to
change.
Date
Announcement of Offer Price
7.00 am on 3 April
Commencement of conditional dealings on London Stock Exchange
8.00 am on 3 April
Prospectus published
3 April
Admission and commencement of unconditional dealings in Ordinary Shares on
London Stock Exchange
8.00 am on 8 April
CREST accounts credited in respect of the New Ordinary Shares
8 April
It should be noted that if Admission does not occur, all conditional dealings will be of no effect
and any such dealings will be at the sole risk of the parties concerned.
Offer Statistics
Offer Price (per Ordinary Share)
260p
Number of Ordinary Shares in issue immediately prior to Admission1
525,131,397
Number of New Ordinary Shares to be issued by the Company pursuant to the Offer
38,461,538
Percentage of the Company’s issued share capital to be issued pursuant to the Offer
6.8%
Number of Existing Ordinary Shares to be offered by the Selling Shareholders
pursuant to the Offer2
100,040,963
Number of Offer Shares subject to the Over-allotment Option
10,387,687
Number of Ordinary Shares in issue following Admission
563,592,935
Expected market capitalisation of the Company3
£1,465 million
Estimated net proceeds of the Offer receivable by the Company4
£94.0 million
Estimated net proceeds of the Offer receivable by the Selling Shareholders2,5
£249.5 million
1
2
3
4
5
Assuming the share capital re-organisation described in paragraph 4.2 of Part XVI (Additional Information) has taken place.
Assuming Over-allotment Option is not exercised.
Based on the Offer Price. The market capitalisation of the Company at any given time will depend on the market price of the
Ordinary Shares at that time. There can be no assurance that the market price of an Ordinary Share will equal or exceed the
Offer Price.
After deduction of the estimated commissions, fees and expenses of the Offer payable by the Company, expected to be
approximately £6.0 million (which do not include £1.4 million of expenses that were charged to the income statement during
the year ended 31 December 2013).
After deduction of the estimated commissions, fees and expenses of the Offer payable by the Selling Shareholders,
expected to be approximately £10.6 million.
33
PART VI
INDUSTRY OVERVIEW
1.
INDUSTRY OVERVIEW
JUST EAT operates in the takeaway food market. The delivery part of this market is estimated by the
Company to have been worth £58 billion globally in 2013. In recent years, the takeaway food market
has been growing faster than GDP, with online ordering growing much faster, fuelled by the adoption of
e-commerce and increased smartphone/tablet penetration (source: EIU and Euromonitor “Consumer
Foodservice in the UK”). The online channel shift experienced in the ordering of takeaway food is
similar to the migration towards the use of the Internet by consumers in other highly fragmented
markets, such as restaurant bookings, travel and hospitality, tickets for live entertainment and
classified advertising.
The Directors believe the online takeaway industry benefits from strong and favourable market
dynamics and expect growth in the online takeaway market to continue, driven by general e-commerce
adoption and the increasing use and penetration of mobile devices.
1.1 Total Addressable Market
The markets in which the Company currently operates, namely the UK, Denmark, France, Canada,
Belgium, Brazil, Ireland, Italy, the Netherlands, Norway, Spain, Switzerland and India are estimated to
represent a total annual takeaway order value (for delivery) of £20.0 billion (excluding India) in 2013,
whilst total delivery takeaway order value in the non-JUST EAT markets set forth in Table 1 (which
represent markets considered by management to be receptive to online takeaway), is estimated by the
Directors to have been £38.0 billion per annum in 2013.
Table 1: Total Delivery Takeaway Order Value by Country (2013)
Country
Total annual delivery takeaway order value (£m)
UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Norway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,406
192
2,313
2,642
673
1,127
233
3,739
1,066
370
2,601
603
Current JUST EAT footprint(1) . . . . . . . . . . . . . . . . . . . . . . .
19,965
Country
Total annual delivery takeaway order value (£m)
Non-JUST EAT markets
USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-JUST EAT markets(2) . . . . . . . . . . . . . . . . . . . . . . .
17,644
20,354
Total non-JUST EAT market . . . . . . . . . . . . . . . . . . . . . . . .
37,998
Source: Callcredit Report (for UK, Denmark, France and Canada), JUST EAT management (for other
markets)
(1) Excludes India
(2) The total order value for other non-JUST EAT markets comprises estimated total order values for Australia, Finland,
Germany, Hong Kong, SAR, China, Japan, Korea, Mexico, Singapore, South Africa and Sweden
34
The global takeaway market has grown in value from 2010 to 2013 at a CAGR of 1.6% and is expected
to grow at a CAGR of 2.3% from 2014 to 2017, according to Euromonitor. This growth has been driven
by changing lifestyles, whereby busier daily routines are resulting in an increasing number of
consumers ordering food with increasing frequency from takeaway restaurants offering an array of food
varieties, instead of cooking at home.
1.2 Online Ordering of Takeaway Food
The online ordering channel has grown significantly faster than the overall takeaway market, driven by
general e-commerce adoption and increased mobile usage, in addition to the value proposition that
online takeaway aggregators such as JUST EAT offer to both consumers and participating restaurants.
In the UK, JUST EAT’s largest single market, overall e-commerce penetration has increased (as a
percentage of total retail spend) from 6.6% in 2009 to 10.4% in 2013, a 58% increase (source:
Euromonitor).
Table 2: e-Commerce Penetration in the UK: Online as a Percentage of Total Retail Spend
(2009-2013)
UK Online spend as a % of total retail spend
9.5%
10.4%
8.6%
7.6%
6.6%
2009
2010
2011
2012
2013
Source: Euromonitor
Mobile penetration has also increased significantly, with smartphone and tablet penetration of
households in the UK increasing from 27% and 2% respectively in 2011 to 51% and 24% respectively
in 2013 (source: Ofcom Technology Tracker). Furthermore, the importance and growth of the online
and mobile channels have also been demonstrated by comScore, who estimate that at the end of June
2013, year-on-year e-commerce spending increased 16% and m-commerce spending increased by
24%, compared to overall consumer spending growth of 5%.
This increase in the proportion of online retail spend to total retail spend has been reflected in a similar
shift towards online takeaway ordering. The Callcredit Report estimates that, as of November 2013, the
online penetration of takeaway ordering, measured as the number of consumers who have ordered
takeaway food online as a percentage of the total number of consumers who have ordered takeaway
food was 58% in Denmark (the JUST EAT territory with the highest proportion of online ordering of
takeaway food), 32% in Canada, 28% in the UK and 20% in France.
Table 3: Online Penetration of Takeaway Ordering as a Percentage of the Total Number of Customers
Ordering Takeaway Food in Key Markets (2013)
Online penetration (%)¹
58.3%
31.7%
28.0%
19.7%
Denmark
Canada
UK
35
France
Source: Callcredit Report
1
Online penetration measured as the number of consumers who have ordered takeaway food online as a percentage of the
total number of consumers who have ordered takeaway food
The Directors expect the proportion of takeaway ordering online to continue to increase and believe
that the channel shift from telephone to online ordering experienced by Domino’s Pizza in the UK may
reflect the potential increase in online penetration for the broader industry.
Table 4: Domino’s Pizza UK: Proportion of Orders Placed Online or by Mobile Devices
% of UK delivered sales
70%
65.5%
60%
55.7%
50%
44.3%
40%
30%
35.8%
27.8%
20%
2009
2010
2011
2012
2013
Source: Domino’s Pizza Q4 trading update (2009-13)
Note: Represents digital penetration as of H1 each year
Furthermore, the Directors believe that the increasing propensity of consumers to use their mobile
devices to purchase goods and services has the potential to accelerate the online penetration of
takeaway ordering. In the UK, JUST EAT’s largest single market, approximately 45% of search queries
leading to the Company’s website already originate from smartphones, representing growth of
approximately 71% compared to the prior year, according to Google Analytics in December 2013. In
addition, according to internal company data, UK mobile and tablet orders (as a percentage of total
orders) have increased from approximately 3% in January 2011 to approximately 54% in December
2013.
Table 5: JUST EAT Non-Desktop Orders (Monthly from Dec 2009–Dec 2013)
% of Non-Desktop Orders
60%
50%
40%
30%
20%
10%
0%
2009
2010
2011
2012
2013
Source: JUST EAT management
1.3 Competition
JUST EAT competes with a range of online and offline participants in the takeaway food business,
including other online takeaway food aggregator portals (e.g., hungryhouse.com in the UK), local
independent restaurants, as well as independent restaurants and restaurant chains offering
conventional or online ordering services or both (e.g., Domino’s Pizza in the UK).
36
The following chart illustrates spontaneous brand awareness, which measures the percentage of
consumers for whom a given brand is the first brand that comes to mind when a customer is asked an
unprompted question about a category, for JUST EAT in the UK for the periods indicated.
Table 6: Spontaneous Brand Awareness in the UK (Aug 2012–Dec 2013)
Just-Eat¹
50%
Pizza Hut
Domino's
Papa John’s
Hungry House
40%
30%
20%
10%
0%
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
Aug-13
Oct-13
Dec-13
Source: YouGov — “JUST EAT” brand tracking — Wave 17 (evaluation December 2013)
Question asked: “Now please think about brands which enable you to order take-away food for
delivery. Which brands can you think of?” — analysis based on 1,101 responses
1
JUST EAT pro-forma for Fillmybelly acquisition
1.4 Competitive Position of JUST EAT in Selected Markets
Management commissioned Callcredit, an independent third party research firm, to estimate the size
and breakdown of the takeaway market in the four key geographies (Denmark, UK, France, and
Canada) in which JUST EAT operates.
A three stage method was adopted to perform the analysis for each country:
1.
Consumer research was carried out using established providers to assess take-away
behaviours and preferences;
2.
Consumer research findings were combined with demographic data to estimate market size,
with external checks performed to test the robustness and veracity of the market size
estimates;
3.
Market size estimates were combined with JUST EAT customer data to investigate existing
market penetration levels.
United Kingdom
The Directors believe that there are over 42,000 takeaway restaurants offering delivery and another
47,000 takeaway restaurants offering collection in the UK as at November 2013. According to the
Callcredit Report, the total annual delivery takeaway order value in the UK in 2013 was estimated at
£4.4 billion, of which the online delivery takeaway order value was estimated at £1.3 billion per annum.
The Callcredit Report indicates that whilst the online ordering channel has already been established,
significant growth opportunities exist in the form of further online penetration in the delivery and
collection takeaway market. Given the Company’s existing approximate 50% share of consumers
already ordering takeaway online according to the Callcredit Report, the Directors believe that JUST
EAT is well positioned to attract new users as online takeaway penetration continues to increase. The
Directors believe that the majority of the remaining approximate 50% of the market represents chains
(predominantly Domino’s), rather than aggregators.
Denmark
The Directors believe that there are over 2,500 takeaway restaurants in Denmark as at November
2013. According to the Callcredit Report, the total annual delivery takeaway order value in Denmark in
2013 was estimated at approximately £190 million, of which the online delivery takeaway order value
was estimated at approximately £130 million per annum.
37
JUST EAT currently has an approximate 64% share of the online delivery market, according to the
Callcredit Report. The Callcredit Report also indicates that a significant portion of the delivery
takeaway market is already accessed via the online ordering channel and therefore, the Directors
believe that the potential for growth in online ordering is likely to be more limited than the potential for
growth in certain other geographies such as the UK.
France
The Directors believe that there are over 10,500 takeaway restaurants in France as at November 2013.
According to the Callcredit Report, the total annual delivery takeaway order value in France in 2013
was approximately £2.3 billion, of which the online delivery takeaway order value was estimated at
approximately £620 million.
The Callcredit Report indicates that whilst the online ordering channel is already established, significant
further opportunity for additional online penetration in the delivery takeaway market still exists. JUST
EAT currently enjoys an established position in this market, with an approximate 10% share of the
online delivery market by number of active customers according to the Callcredit Report.
The Directors believe that the market size stated above may be over-stated due to the methodology
employed in the Callcredit Report. In French, there is no single translation for “takeaway” but rather this
term includes repas livrés (delivered meals), plats à emporter (takeaway meals) and traiteur (prepared
meals for take-away, which includes supermarket traiteur counters). Given this definitional ambiguity,
there is potential for over-estimation of the delivery takeaway market size in the analysis in the
Callcredit Report.
Canada
The Directors believe that there are over 11,700 takeaway restaurants in Canada, while the total
annual delivery takeaway order value was estimated at approximately £2.6 billion as at November
2013. Of this, the Callcredit Report indicates that the online delivery takeaway order value was
approximately £1.0 billion per annum.
The Callcredit Report indicates that whilst the online ordering channel is already established, significant
opportunity remains for further online penetration in the delivery takeaway market. JUST EAT currently
has an approximate 5% share of the online delivery market according to the Callcredit Report. The
Directors believe that the majority of the remaining 95% of the market is attributable to restaurant
chains in Canada, rather than online delivery aggregators.
Table 7: JUST EAT Reach of Key Markets (2013)
Country
UK . . . . . . . . . . . . . . . .
France . . . . . . . . . . . .
Denmark . . . . . . . . . . .
Canada . . . . . . . . . . . .
Total market
active
customers (m)(1)
Total market
active online
customers (m)(2),(4)
JUST
EAT active
customers (m)(3)
24.6
12.7
1.2
12.3
6.9
2.5
0.7
3.9
3.4
0.3
0.5
0.2
JUST
EAT share as a
% of market
active online
customers(4)
50%
10%
64%
5%
JUST
EAT share as a
% of market
active
customers
14%
2%
39%
2%
Source: Callcredit: “Take-Away Market: Sizing the Consumer Opportunity in UK, France, Denmark and
Canada”, November 2013
(1)
(2)
(3)
(4)
Defined as individuals who order delivered takeaway food
Defined as individuals who order takeaway food online
Defined as individuals who ordered takeaway food on JUST EAT in the last 12 months
The Directors believe that with regard to France and Canada, where there are significantly fewer takeaway restaurants
offering delivery services through online ordering, the total market for active online customers has been significantly
overstated in the Callcredit Report and, consequently, JUST EAT’s market share for active online customers has been
significantly understated.
38
Part VII
BUSINESS OVERVIEW
1.
INTRODUCTION
JUST EAT operates the world’s largest online marketplace for restaurant delivery based on average
search volume in 2013, according to the Google keyword research tool. By enabling an easy and
secure way to order takeaway food (food for delivery or collection) from local takeaway restaurants, the
Company seeks to fulfil its mission to empower consumers to love their takeaway experience. JUST
EAT’s websites and mobile apps enable consumers to find an extensive array of local takeaway
restaurants and place orders directly through the JUST EAT platform. JUST EAT has market-leading
positions in the majority of the 13 countries in which it operates (based on Google search traffic),
including in its largest markets — the UK, Denmark, France, Canada, Ireland and Spain.
JUST EAT encourages consumers to shift from telephone based takeaway ordering to its online
platform by offering breadth of choice, ratings and reviews, ease of use and a more efficient consumer
experience when ordering from local takeaway restaurants.
JUST EAT provides takeaway restaurants with a cost effective channel for consumer acquisition as
well as a robust technology platform that can enhance both restaurant productivity during peak
ordering hours and kitchen utilisation during off-peak ordering hours.
The benefits offered by JUST EAT to both consumers and takeaway restaurants create network effects
that are self-reinforcing: more consumers are drawn to the platform due to the number of takeaway
restaurants, which in turn attracts even more takeaway restaurants to the platform. The Directors
believe that having a leading competitive position in a given local market drives these network effects.
As a result, the Company is well placed to benefit from the combination of underlying growth in the
food delivery market and an ongoing shift towards online ordering. The number of orders placed
through the JUST EAT platform grew from approximately 14 million during the year ended
31 December 2011 to 40 million during the year ended 31 December 2013, at a CAGR of 70%, and the
number of takeaway restaurants in the JUST EAT network increased from 16,985 as at 31 December
2011 to 36,415 as at 31 December 2013. Over the same period, revenue increased at a CAGR of 69%
to £96.8 million.
For the year ended 31 December 2013, JUST EAT had revenue of £96.8 million, Underlying EBITDA
of £14.1 million and profit before tax of £10.2 million. The Company has generated positive Underlying
EBITDA in the UK since 2010 and, on a consolidated basis, since 2011.
2.
HISTORY AND DEVELOPMENT
The first JUST EAT website was launched in Denmark on 1 August 2001 and, by the end of 2002, the
Company was processing on average more than 250 orders per day. By the beginning of 2004, the
website had over 500 takeaway restaurants in its network and first achieved profitability.
In 2006, JUST EAT launched in the UK under the leadership of David Buttress, who subsequently
became Group CEO in 2013. Based on share of search traffic in 2013 and JUST EAT’s estimated 50%
share of consumers ordering takeaway food online in the UK (according to the Callcredit Report), the
Directors believe that the Company’s UK business is a market leader. The UK business is the largest
of the JUST EAT operations in terms of the number of takeaway restaurants and orders.
The Company’s global headquarters moved from Denmark to the UK in 2008.
In July 2009, JUST EAT raised £5 million from a Series A investment round led by Index Ventures.
This investment enabled the Company to expand into other markets internationally, including Canada,
and further develop its UK and Irish businesses. In February 2011, JUST EAT raised an additional
£15 million from a Series B investment, with participation by Greylock IL and Redpoint Ventures. This
investment enabled JUST EAT to acquire operations including joint ventures and associates in France,
Italy and Switzerland. A third Series C round of investment in April 2012 was led by Vitruvian Partners
and raised £35 million for the Company.
39
Since its inception, JUST EAT has invested significant management, operational and financial
resources in developing its network of takeaway restaurants, consumer offerings, business processes,
technology infrastructure and brand, as well as international expansion. The Company currently
operates in the UK, nine other countries in Europe (Denmark, France, Spain, Ireland, Italy,
Switzerland, Belgium, the Netherlands and Norway), Canada, Brazil and India.
Since 2009, the original founders of JUST EAT have not been involved in its operations and, after
2011, have held no ownership interests in JUST EAT.
3.
THE JUST EAT BUSINESS
3.1 Overview of business operations
JUST EAT provides consumers of takeaway food with an easy and secure way to order from takeaway
restaurants in their local area. Takeaway restaurants contract with the Group to join the JUST EAT
platform and have their menus made accessible to consumers. JUST EAT’s websites and mobile apps
allow consumers to search for local takeaway restaurants, place orders online and pay online or by
cash on delivery. The online orders are transmitted to and accepted by takeaway restaurants via
JustConnect Terminals (“JCTs”), which send confirmations to consumers, following which the
takeaway restaurants prepare and deliver the food.
The Company primarily derives its revenue from commissions charged to restaurants on the value of
orders placed through its platform, which were on average approximately 10.7% for the year ended
31 December 2013. In addition, takeaway restaurants that join the JUST EAT network pay sign-up fees
of up to approximately £850, depending on their geographical market. Restaurants may also pay
JUST EAT fees for orders placed by credit or debit card, which they may choose to pass on to
consumers, or for additional services, such as promotional top-placement marketing on the Company’s
platform, and merchandise, such as JUST EAT branded packaging and menus. In certain countries,
JUST EAT charges consumers a fixed fee on orders paid for by credit or debit card. For the year
ended 31 December 2013, 87.5% of JUST EAT’s revenue was order driven (consisting of commission
revenue and payment card fee revenue, which together constitute B2C revenue).
When a consumer chooses to make payment online, JUST EAT collects the full order value on behalf
of the takeaway restaurant. JUST EAT receives the cash for this payment from the payment card
company after approximately three working days and then, on the next payment date, transfers to the
takeaway restaurant an amount equal to the online payments received less JUST EAT’s commissions
for both cash and payment card orders and other fees. Payment to takeaway restaurants is made twice
per month in most of the countries in which JUST EAT operates.
3.2 Service to consumers
JUST EAT’s websites and mobile apps have an intuitive, user-friendly interface that allows consumers
to find and choose their preferred takeaway restaurants and food. Restaurant search results, menus
and consumer reviews are displayed in a consistent format and consumers can quickly view details for
several takeaway restaurants. The Directors believe that the Company’s online aggregation and
comparison services simplify the ordering experience for consumers of takeaway food.
The following table sets forth the number of orders placed through JUST EAT for the years ended
31 December 2013, 2012 and 2011.
Number of orders for the
year ended 31 December
2013
2012
2011
(‘000)
UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29,109 17,095
4,144
3,834
6,918
4,336
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40,171 25,265 13,897
40
9,033
3,478
1,386
3.2.1 Key benefits for consumers of takeaway food
The Directors believe that the key elements of JUST EAT’s value proposition to consumers are as
follows:
•
Informed choice
The JUST EAT platform hosts a wide range of local takeaway restaurants, typically offering a
variety of cuisines with multiple takeaway restaurants for each cuisine. Consumers can view
full menus for food and beverages for each takeaway restaurant and read consumer reviews
and ratings of the takeaway restaurants before ordering. JUST EAT currently has four million
reviews on its platform, covering a range of topics from food quality to speed of delivery.
Accordingly, the JUST EAT platform offers consumers immediate access to more information
than they would otherwise be able to obtain, such as over the phone, from directories or from
advertising leaflets.
•
Convenience
JUST EAT offers a quick and easy way for consumers to order takeaway food. Consumers
can choose to pay cash on delivery or online with a credit or debit card, and can generally
store card and address/contact details, as well as details of previous orders and favourites, for
future ease of ordering. JUST EAT’s mobile apps allow consumers to also order while on the
go.
•
Ordering experience
Unlike traditional telephone ordering, ordering through JUST EAT avoids delays or frustration
from engaged telephone lines or any confusion that can arise in telephone conversation. If the
consumer chooses to pay with a credit or debit card, details are taken by JUST EAT rather
than the takeaway restaurant, for a more secure and centralised transaction. JUST EAT also
offers customer service, both online through order support and chat, and offline through call
centres.
3.3 Service to takeaway restaurants
The JUST EAT network offers takeaway restaurants access to a large number of consumers who
purchase takeaway food. The Directors believe that membership in the network improves transactional
efficiency and also has a discernible impact on order volume and average order value and, thereby,
total transaction value for takeaway restaurants, which justifies the costs of joining the network. For the
years ended 31 December 2013, 2012 and 2011, total transaction value for takeaway restaurants in
the JUST EAT network amounted to £682.4 million, £417.3 million and £232.8 million, respectively.
The following table sets forth the number of takeaway restaurants in the JUST EAT network as at
31 December 2013, 2012 and 2011.
Number of takeaway restaurants
as at 31 December
2013
2012
2011
UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,017 15,317 10,236
1,920
1,890
1,690
14,478 12,732
5,059
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,415 29,939 16,985
3.3.1 Key benefits for takeaway restaurants
The Directors believe that the key elements of JUST EAT’s value proposition to takeaway restaurants
are as follows:
•
Increased orders and higher average order value
JUST EAT offers takeaway restaurants an additional channel for attracting consumers from a
wider potential audience. In the UK, for the year ended 31 December 2013, the top 10% of
takeaway restaurants measured by their volume of activity on the JUST EAT platform
received on average 422 orders per month through JUST EAT, while the top 85% of
41
takeaway restaurants on the platform received on average 138 orders per month through
JUST EAT. In addition, the average value of an order placed online is approximately 30%
higher than the average value of an order placed over the telephone.
•
Efficiency
The Company provides takeaway restaurants with an easy-to-use system through which they
receive a clear print-out of consumer orders, thereby reducing communication errors and the
number of staff required to process orders. The systems used by JUST EAT also enable
takeaway restaurants to process orders more quickly and efficiently than they can with
telephone ordering. This added efficiency is particularly beneficial during peak ordering
periods (evenings of Friday to Sunday), when UK takeaway restaurants receive on average
26,000 orders per hour, compared to 10,000 orders per hour during quiet periods (Monday to
Thursday).
•
Better marketing
Takeaway restaurants in the JUST EAT network benefit from the Company’s extensive online,
television and other marketing campaigns. In addition, takeaway restaurants can offer
targeted discounts through JUST EAT to drive sales volume during slower periods.
Restaurants also have the opportunity to purchase top-placement rankings in search results
on the JUST EAT platform to better attract the attention of potential consumers.
•
Scale benefits
Takeaway restaurants benefit from the scale of JUST EAT’s operations, which enable the
Company to develop and provide order management technology for the restaurants that
would be difficult and costly for such restaurants to develop independently. In addition, JUST
EAT’s scale gives it purchasing power with respect to merchandise such as branded
packaging and menus, so that takeaway restaurants can purchase these items from JUST
EAT at comparatively lower prices than those set by other merchandise suppliers. Through
consumer reviews on the platform and industry conferences hosted by the Company,
takeaway restaurants can also learn about consumer preferences and review feedback,
helping them to develop their businesses accordingly.
3.4 Contractual arrangements
In all of JUST EAT’s countries of operation, takeaway restaurants that wish to join the JUST EAT
platform are generally required to enter into contracts with the Company containing terms and
conditions substantially based on each country’s standard form or forms. Each standard contract
contains a right to terminate for any reason on between 30 to 90 days’ notice (depending on the
country) by the takeaway restaurant and on between zero and 90 days’ notice by the Company.
Certain of the standard contracts also permit one or both parties to terminate only after expiration of a
minimum initial term, or allow one or both parties to terminate on shorter notice in certain
circumstances, such as breach of certain material obligations by, or insolvency of, the other party.
4.
STRENGTHS OF THE JUST EAT BUSINESS
The Directors believe that the Company’s key strengths are:
4.1 Compounded benefits from underlying growth of the takeaway food market and ongoing
shift towards online ordering
JUST EAT’s most established countries of operation, the UK and Denmark, have experienced
sustained growth in the takeaway food market, supported by evolving consumer behaviour (such as a
reduced willingness to cook at home) and expanded consumer appetites for more diverse cuisines. In
addition, the Directors believe that the penetration of online ordering within the overall takeaway food
market is steadily increasing, driven by general e-commerce adoption trends as well as the specific
benefits that JUST EAT offers to both consumers and takeaway restaurants.
42
4.2 Attractive local markets in key countries of operation
JUST EAT has market-leading positions in the majority of the 13 countries in which it operates,
including in its largest markets — the UK, Denmark, France, Canada, Ireland and Spain. The Directors
believe that these countries are among the world’s most attractive markets for takeaway food, as they
are characterised by factors such as ideal weather conditions for takeaway ordering (long cold winters
with diminished daylight hours), a fragmented market of largely independent takeaway restaurants and
fewer established restaurant chains offering competing takeaway services, as well as high levels of
internet penetration and e-commerce adoption. In the UK in particular, where the fragmented
restaurant base is particularly suited to JUST EAT’s business model, consumer preferences for varied
cuisines have encouraged the growth and diversification of the takeaway industry. For the year ended
31 December 2013, the top ten takeaway restaurants measured by volume of activity on the JUST
EAT platform represented less than 1% of orders and commission revenue in the UK and less than 5%
in Denmark, and the top 10% of restaurants represented less than 40% of total transaction value and
commission revenue in the UK and in Denmark.
4.3 Competitive advantages for the local market leader through strong network effects
The Directors believe that having a leading competitive position in a given local market drives stronger
network effects, creating a self-reinforcing business model. More consumers are drawn to the platform
due to the number of takeaway restaurants, which in turn attracts even more takeaway restaurants to
the platform. These network effects create a virtuous circle that helps to build the JUST EAT brand and
drive consumer engagement in the JUST EAT marketplace. As a result, JUST EAT’s competitive
advantages in those markets where it is the leader are further reinforced.
4.4 Strength of the JUST EAT online presence driving consumer traffic
JUST EAT has an established online presence, which helps to drive consumer traffic to the platform.
JUST EAT generally appears in the top three in search results for “takeaway food” and related
takeaway food searches (e.g., “Chinese, Leeds”). The Company seeks to enhance its online visibility
and raise brand awareness through pay-per-click (“PPC”) marketing (also known as search engine
marketing (“SEM”)) and search engine optimisation (“SEO”), and has in-house experts to undertake
such marketing activities in a cost effective manner. PPC marketing focuses on sponsored or paid
listings that are generated in response to search engine queries (i.e., paid search), while SEO focuses
on enhancing the rankings and relevance of JUST EAT’s websites in organic search results. On
average, the Company is bidding on more than 3.5 million active keywords at any given time. JUST
EAT’s social media presence, with 2.2 million Facebook fans worldwide and over 40,000 Twitter
followers, is also useful for enhancing brand awareness and attracting consumer traffic to the JUST
EAT platform.
4.5 Strength of the JUST EAT brand driving consumer traffic
The Directors believe that JUST EAT’s brand awareness is a key driver of website and mobile app
popularity and helps drive consumer traffic to the JUST EAT platform. The JUST EAT brand has
benefited from award-winning creative positioning delivered through coordinated multi-media and multichannel marketing initiatives, and the strength of the brand is reflected by the percentage of orders
(approximately 80% for the year ended 31 December 2013 and approximately 88% for the three
months ended 31 December 2013 in the UK) that are made through free traffic to the websites.
The Company has invested in television commercials and other advertising with both the immediate
effect of directing consumers to the site and the longer term benefit of increased brand recognition.
Top-of-mind awareness, which measures the percentage of consumers for whom a given brand is the
first brand that comes to mind when a customer is asked an unprompted question about a category,
increased for JUST EAT in the takeaway food category from 20% in August 2012 to 39% in December
2013 (in the UK). JUST EAT branding, such as signage on takeaway restaurant windows and logos on
food packaging and menus, not only acts as a cost effective marketing tool but is increasingly viewed
by takeaway restaurants as an asset due to JUST EAT’s brand credibility. By marketing through
takeaway restaurants in this manner, the Company can benefit from increased brand visibility at little to
no additional cost.
43
4.6 Low consumer acquisition costs and predictable consumer usage supporting attractive
unit economics
According to the Company’s calculations, the cost per active account for the year ended December
2013 was approximately £3.70 in the UK, compared to average revenue per order during the same
period of approximately £2.10. Consumer acquisition costs are kept low through cost effective PPC
marketing activities and the growing use of mobile apps, which generate an additional source of free
traffic.
JUST EAT’s platform has a high and stable conversion rate of visits to orders, which in the UK was
28% for the year ended 31 December 2013, helping to lower the average consumer acquisition cost.
Moreover, consumer re-order rates are stable and predictable, with approximately 50% of consumers
returning to the platform after their first order and continuing to order on average 10 times per year
thereafter in the UK. As a result, the Company has typically received relatively rapid payback for its
consumer acquisition costs and derives high average lifetime values from its consumers. JUST EAT’s
business model, therefore, benefits from attractive unit economics.
4.7 Strong and active relationships with takeaway restaurants
JUST EAT maintains strong and active relationships with its takeaway restaurants through regular
visits and phone calls by members of the sales team and dedicated telephone support centres. These
relationships are underpinned by each restaurant’s initial investment upon signing up to the JUST EAT
network, as well as the restaurants’ ongoing contractual arrangements with the Company, each of
which the Directors believe encourages active participation and engagement by both parties. By
developing long-term relationships with takeaway restaurants, JUST EAT can also use its industry
knowledge and experience to help professionalise the industry by, for example, introducing more
advanced order management technology, thereby allowing takeaway restaurants to deliver better
service to consumers.
4.8 Efficient, established and scalable technology platform
The systems used by the Company both enhance the consumer experience of ordering online and
deliver business with speed and efficiency to takeaway restaurants. The Directors believe that the
Company’s installed base of JCTs and highly scalable back-end systems hosted by Amazon Web
Services provide a competitive advantage to JUST EAT over other online takeaway food businesses,
in terms of the completeness, accuracy and efficiency of the systems and the ability to scale across
many takeaway restaurants.
The Company’s JCTs are in use in nearly all of JUST EAT’s takeaway restaurants in the UK and
Denmark. JUST EAT installed JCTs across its network of takeaway restaurants from an early stage
and, in the Directors’ belief, significantly earlier than its competitors’ use of equivalent devices. To
achieve a comparable installed base and scalable systems of similar complexity would be difficult,
costly and time-consuming. The Directors believe, therefore, that this early implementation and
widespread roll-out represents a significant competitive advantage.
Certain features of JCTs make them particularly well suited to providing fast and reliable service to
consumers and more efficient and cost effective service to takeaway restaurants. JCTs provide a
closed loop system for the takeaway restaurant to send an order confirmation to the consumer. The
closed loop system also allows JUST EAT to monitor the status of orders in progress for better
information about takeaway restaurant operations. The quick response time between order and
confirmation through JCTs helps takeaway restaurants to deliver better customer service and achieve
greater operating efficiency, by reducing order processing times. Moreover, the units require only
GPRS connectivity, which reduces the need for broadband infrastructure and provides for fast and
easy implementation across takeaway restaurants.
4.9 Strong track record of growth and profitability in the UK and Denmark
JUST EAT has demonstrated a strong track record of revenue growth in the UK and Denmark. Over
the three-year period ended 31 December 2013, JUST EAT’s revenue in the UK increased to £68.8
million compared to £21.4 million and its revenue in Denmark increased to £11.5 million compared to
£8.8 million, reflecting a CAGR of 79% and 14%, respectively. Moreover, the Directors expect the
percentage of takeaway orders placed online to increase in the UK, from 20% as at November 2013 to
levels more comparable to the 49% observed in Denmark.
44
The margin potential of the JUST EAT model can be seen in Denmark, where the market is well
established in terms of online penetration and where the Company enjoys a solid leadership position.
For the year ended 31 December 2013, the Denmark business generated a segment Underlying
EBITDA margin of 40.2%. In the UK, JUST EAT’s segment Underlying EBITDA margin has increased
over the past three financial years, to 37.1% for the year ended 31 December 2013 compared to
33.4% for 2012 and 22.5% for 2011. As online penetration increases in the takeaway food market and
the Company’s marketing and other operations become more cost effective, the Directors believe that
there is potential for Underlying EBITDA margins in the UK to expand further.
4.10 Significant opportunity for revenue growth in the Company’s other markets
The Directors believe that JUST EAT has strong growth opportunities across its less established
countries of operations (i.e., countries other than the UK and Denmark). Since 2007, the Company has
expanded internationally, having entered 11 countries through a combination of organic development
and acquisitions. In the majority of these countries, JUST EAT has established a leading presence. In
addition, the growth to date of the number of orders and takeaway restaurants in these countries
reinforces the Directors’ belief that the Company can continue to make use of its scalable technology
platform and sales and marketing best practices, amongst other abilities, to further develop these
businesses.
4.11 Potential to expand into takeaway food collection
The Directors believe that the Company can further expand its addressable market by allowing
ordering for collection in addition to delivery. This represents another potential market for JUST EAT,
and would expand the network to those restaurants that do not offer delivery services. With the
increasing popularity of JUST EAT’s mobile apps, the Directors anticipate that ordering for collection
will become a growing part of the Company’s business.
4.12 Strong cash generation driven by attractive and growing margins, favourable working
capital dynamics and low capital expenditure requirements
JUST EAT benefits from a business model that minimises credit risk and has favourable working
capital dynamics, whereby the Company receives cash from card transactions within approximately
three working days on average and distributes payment to takeaway restaurants twice a month in most
countries net of commissions and fees. For the year ended 31 December 2013, 59% of all orders were
paid for by credit or debit card. The Company generally receives cash from card transactions in an
amount that exceeds the payment amount to be distributed to its takeaway restaurants. Accordingly,
the Company has very low bad debt. In addition, the Company is able to recoup the majority of its
capital expenditure requirements, as takeaway restaurants subsidise the cost of JCTs through the
connection fee charged by JUST EAT.
4.13 Experienced management team
JUST EAT’s strong track record of growth has been delivered by its established and experienced
management team. The Company’s senior management team has significant expertise across
functional areas such as information technology, technology product development and marketing. The
Chief Executive Officer, David Buttress, led the UK business from launch in 2006, while the Chief
Financial Officer, Mike Wroe, joined the business in 2008 and has extensive experience in CFO and
Finance Director roles. The Directors believe that the management team’s expertise and continuity are
important advantages in a rapidly growing market.
5.
JUST EAT’S STRATEGY
The principal elements of the Company’s strategy are to:
5.1 Continue to improve the consumer experience to maintain JUST EAT’s leading market
positions
JUST EAT intends to grow its leading positions in the market for online takeaway food by enhancing
the consumer experience in the following ways:
•
More choice in takeaway restaurants
By expanding its network of takeaway restaurants, the Company can broaden and diversify
the range of choices available to consumers across existing and new local markets.
45
•
Improved technology platform
The Company intends to improve the JUST EAT user interface through new website
functionalities, as well as enhanced offerings for mobile devices, such as regularly updated
and improved mobile apps that can store previous order details and enable ordering for
collection.
•
More information and improved ordering experience
Moreover, JUST EAT intends to maintain its focus on customer service. It is seeking to
enhance the consumer’s ability to keep track of timing for the overall process of placing an
order, receiving the order confirmation, and being informed of the processing and delivery
statuses. In addition to information about the status of orders, the Company is considering
introducing features to allow consumers to access more information about the takeaway
restaurants themselves, such as more reviews, nutrition and allergy information, and details
relating to other dietary requirements. The use of email communications that are tailored to
consumers’ demonstrated preferences can provide further informed choice.
5.2 Enhance offering to takeaway restaurants
The Company intends to continue to enhance its offering to takeaway restaurants in the following
ways:
•
Increase order volume and order value
As the business expands, JUST EAT intends to deliver higher order volumes to takeaway
restaurants by virtue of the informed choice, convenience and ordering experience that its
platform offers to consumers of takeaway food. JUST EAT also intends to help generate
higher average order values through upselling to consumers, and to further develop its
promotions platform to encourage more ordering activity during quiet periods. Finally, the
Company will seek to make use of its valuable database of user information to generate
increased order volumes and increase its engagement with consumers, for example, through
targeted email newsletters announcing new local takeaway restaurants.
•
Better tools for takeaway restaurants
JUST EAT intends to offer better tools for takeaway restaurants to enhance their business,
such as new models of JCTs, more advanced electronic point-of-sale (“EPOS”) systems for
in-store order management and order status tracking, as well as the Partner Centre, where
takeaway restaurants can order merchandise from JUST EAT and otherwise monitor their
level of business activity with the Company. As a first step towards being able to offer the
EPOS tool to takeaway restaurants, JUST EAT recently acquired Meal 2 Order.com Limited.
•
Better marketing and more targeted promotions
JUST EAT will also continue to develop marketing strategies that benefit its network, such as
additional opportunities for on-platform advertising by takeaway restaurants. The Company
will continue to assist takeaway restaurants to even out supply and demand imbalances for
takeaway food, by encouraging restaurants to offer special promotions during quiet periods
(i.e., Monday to Thursday).
The Directors believe that, as a result of these initiatives, takeaway restaurants will view the JUST EAT
platform as increasingly important and value enhancing for their businesses.
5.3 Continue transition to mobile based order platform
The Company intends to continue its transition to a mobile-first strategy, as increasing numbers of
consumers are favouring mobile devices for online purchases. For the year ended 31 December 2013,
43.8% of the orders received in the UK were placed from mobile devices, either through the
Company’s mobile apps or mobile websites. The Company intends to continue to upgrade its
46
technology on a regular basis, for example by releasing enhanced apps for the iPhone and iPad, in
order to continue to provide a convenient, efficient and reliable service for the increasing proportion of
consumers for whom mobile has become the preferred platform for conducting e-commerce
transactions.
5.4 Continue to build the JUST EAT brand
The Company intends to continue to increase brand awareness through coordinated online and other
marketing initiatives, which should help to drive existing consumer re-order rates by helping the brand
to remain top-of-mind, as well as enabling JUST EAT to acquire new consumers and attract more
takeaway restaurants. In particular, JUST EAT plans to continue to raise its profile by focusing its
marketing efforts on further television advertising campaigns, and by continuing to deliver better
service to consumers through its customer care team. The Company’s SEO marketing is also aimed at
increasing free traffic by enhancing the rankings of the JUST EAT websites on popular search engines.
5.5 Improve operational efficiency and margins
JUST EAT plans to continue to improve its profitability by pursuing operational excellence and
capturing further margin potential. In addition to sharing technology costs by further integrating the
existing JUST EAT platforms, the Company intends for other costs, including marketing expenditure, to
decrease as a percentage of revenue. The Directors also expect that continuing investment in brand
awareness and enhanced SEO and PPC marketing strategies will help to drive free or lower cost traffic
and may potentially lower overall consumer acquisition costs. Where appropriate, the Company will
also improve its order management system to maintain cost discipline, for example with regard to the
number and location of order management staff.
5.6 Strengthen competitive position in existing markets and potentially expand into new
countries via selective acquisitions
JUST EAT intends to pursue opportunities to strengthen and develop its business. The Company plans
to grow within its existing countries of operation by continuing to invest in technology, marketing and
the sales team, as well as through newer initiatives such as enhancing the network’s ability to allow
consumers to order food for collection in addition to delivery and by acquiring and integrating
complementary businesses. In the right circumstances, JUST EAT may potentially expand by entering
new geographies via the acquisition of market leaders with positions of scale in those countries. The
Company is also prepared to strengthen its business by divesting operations, if doing so is likely to be
value-enhancing.
6.
MARKETING AND PROMOTION
The JUST EAT brand is one of the Company’s most important assets. JUST EAT’s marketing
campaigns are directed at both consumers of takeaway food and takeaway restaurants, with the goal
of attracting more consumers to the platform and more restaurants to the network. The Company has
adopted a “challenger” brand marketing strategy that uses both conventional and more innovative
marketing channels to create a comprehensive brand identity. According to an online survey conducted
by YouGov in December 2013, approximately 73% of all UK adults who have ordered takeaway food at
least once every three months are aware of the JUST EAT brand. The same survey found that JUST
EAT overtook Domino’s Pizza as highest ranked for top-of-mind awareness when the same set of
consumers was asked to name a takeaway food service, with 39% now naming JUST EAT as the top
brand.
For the year ended 31 December 2013, JUST EAT spent £23 million on marketing. The Company
employs an in-house team to implement its marketing strategies in a cost effective manner. The
Directors believe that investment in television advertising, in particular, can help to lower consumer
acquisition costs by generating more direct-to-site and organic search traffic.
47
6.1 Marketing to consumers
6.1.1 Online and other digital marketing
For the year ended 31 December 2013, approximately 80% (and approximately 88% for the three
months ended 31 December 2013) of the Company’s orders in the UK were acquired through non-paid
traffic to the websites, i.e., organic searches for terms such as “JUST EAT” or “takeaway food”, as well
as direct visits to the website. JUST EAT’s digital marketing team is seen as an industry leader and is
often invited to speak at industry conferences. In 2013, the digital marketing team won a number of
awards, including the IQ Talent Award and Best Social Customer Service Strategy at the Social Buzz
awards.
•
SEO
Search engines are an important source of traffic for JUST EAT and potential consumers can arrive at
the Company’s websites through organic search results or through sponsored listings. Search engines
such as Google do not charge websites to appear in organic search results but rather rank websites
according to an algorithm. The more highly ranked the website, the greater the probability that a user
will visit that website rather than a competing lower ranked website. SEO activities are focused on
enhancing the rankings and relevance of JUST EAT’s websites in organic search results that are
delivered to internet users in response to search queries. Visitors to the websites originating from
organic search results entail minimal direct costs to the Company and, as a result, SEO activities are a
particularly cost effective means of consumer acquisition, although changes in search engines’
algorithms (particularly Google’s) can, from time to time, result in reduced rankings on certain search
terms. JUST EAT has developed significant internal expertise in this area of online marketing.
•
PPC (SEM) marketing
JUST EAT has a dedicated PPC marketing team that uses a bid management tool to manage
campaigns on search engines, including Google and Bing. In contrast to SEO, PPC marketing focuses
on sponsored or paid listings that are generated in response to search engine queries (i.e., paid
search). For the year ended 31 December 2013, PPC marketing comprised 31% of the Company’s
marketing expenditure.
The Company purchases sponsored listings on search engines’ results pages for certain relevant
keyword searches. A website’s position within the paid search results table for particular keywords is
determined by the revenue earned by the search engine from the listing. The search engine will display
the sponsored listing from which it will earn the greatest revenue at the top of the sponsored listings
table, typically on the top or right hand side of the search results page. A search engine’s revenue is
determined by the bid price for the search term (i.e., cost per click) multiplied by the click-through rate
of the sponsored listing (i.e., the predicted propensity of internet users to actually click on the
sponsored link). The click-through rate is in part influenced by brand awareness, since greater brand
awareness will generally lead to a higher click-through rate. This means that well recognised brands
can potentially attract visitors at a lower cost per click than lesser known brands because well
recognised brands will generally attract increased volumes of clicks. The relevance of the explanatory
text used beneath the actual link can also improve the click through rate and consequently reduce
consumer acquisition costs through PPC marketing.
•
Social media marketing
As at 31 December 2013, JUST EAT had 2.2 million Facebook fans worldwide and over 40,000
followers on Twitter. JUST EAT’s social media accounts are used to respond to customer service
queries and, more broadly, to communicate quickly and directly with consumers to stimulate online
mentions of the brand. The Company’s social media presence also enables “dual screen” marketing to
viewers of JUST EAT television advertisements who are also engaged with JUST EAT on their mobile
devices. In addition, the Company sends out weekly newsletter emails and other email
communications, including promotions and discounts, to the consumers in its database.
Following the launch in 2013 of JUST EAT apps for iPhone and Android, the Company has marketed
them under various slogans. The digital marketing team won the 2013 IQ Talent Award for this
campaign in the UK.
48
6.1.2 Television
JUST EAT’s television advertising campaigns are targeted at its core consumer demographics of
students, young professionals and technology-literate families and scheduled at times when they are
more likely to be feeling hungry. In addition to raising brand awareness, television advertising may
result in an almost immediate response from viewers to order from JUST EAT via mobile devices or
computers, and also allows the Company to monitor the effect of its advertising on consumers after it is
broadcast.
For the year ended 31 December 2013, television marketing comprised 31% of the Company’s
marketing expenditure.
JUST EAT commenced its first television marketing campaign in the UK in November 2009. The first
two segments of the advertisements continued to be broadcast throughout 2010, and a second wave
was broadcast until February 2012.
Following the launch of the “Don’t cook, JUST EAT” re-brand campaign in September 2012, a new
series of television advertisements was broadcast across 11 countries in which JUST EAT operates. In
2013, the Company went beyond normal television media to engage in “dual screen” marketing,
staging a live televised “kidnapping” of a celebrity chef, during which viewers were invited to interact
with the chef via their mobile devices. The “Don’t cook, JUST EAT” campaign has won multiple
advertising and digital marketing awards, including the Sunday Times Tech Track Brand of the Year in
2012 and Re-brand of the Year and the Chairman’s Award at the Drum Marketing Awards in 2013.
6.1.3 Other offline marketing
JUST EAT has adopted innovative and award-winning offline marketing strategies. In November 2012,
the Company entered the figurehead of the “Don’t cook, JUST EAT” campaign, “Mr Mozzarella”, into a
parliamentary by-election in Corby, in the UK. The campaign, which attracted national media attention,
won the 2013 International Silver SABRE Award for best guerrilla campaign, the significance of which
is reflected by the fact that the SABRE awards attract more entries from around the world than any
other PR award. JUST EAT also markets through branded cars for its sales team and additional
advertising on buses, taxis and other dedicated outdoor spaces.
6.2 Marketing through takeaway restaurants
The Company benefits from the use of JUST EAT branded merchandise and signage by takeaway
restaurants, usually at little or no additional cost, which gives JUST EAT a significant high street
presence and visibility with minimal marketing expenditure. A number of takeaway restaurants display
either or both of a “JUST EAT” sticker in their window and a “JUST EAT” sign above their doors. As
JUST EAT can use its greater purchasing power (relative to independent takeaway restaurants) to
enable restaurants to purchase packaging, menu leaflets, delivery bags and other merchandise at
comparatively lower prices than they would find elsewhere, the Company also receives predominantly
free publicity through the JUST EAT branding on that merchandise.
6.3 Marketing to takeaway restaurants
JUST EAT markets to takeaway restaurants in order to expand the JUST EAT network and offer
consumers more choice in takeaway food. The Company has a team of over 150 sales people
worldwide to recruit new takeaway restaurants to the network and maintain ongoing relationships with
existing members. JUST EAT also uses dedicated trade advertising and attendance at restaurant
conferences to promote the benefits of its network to potential new members. The Company sponsors
the British Curry Awards and the Pizza, Pasta & Italian Food Association awards.
7.
COMPETITION
JUST EAT competes with a range of online and offline participants in the takeaway food business,
including other online takeaway food aggregator portals (e.g., hungryhouse.com in the UK), local
independent restaurants, as well as independent restaurants and restaurant chains offering
conventional or online ordering services or both (e.g., Domino’s Pizza in the UK).
49
The market for takeaway food is characterised by a large number of participants, and JUST EAT faces
competition from local independent restaurants (including existing takeaway restaurants in its own
network) offering telephone-based and walk-in takeaway food services. These restaurants often have
an established local customer base that may not be incentivised to shift towards online ordering. JUST
EAT also faces competition from independent restaurants and restaurant chains that offer online
ordering services through their own websites and mobile apps, such as Domino’s Pizza or similar
chains.
The Directors expect that competition from these market participants will remain significant and that
new participants with similar or greater technological capabilities may also enter the market. In order to
maintain its position in the online takeaway food market, JUST EAT intends to continue to improve the
consumer experience, expand its network of takeaway restaurants, and enhance the efficiency of its
ordering systems through upgrades in the quality and functionality of the website and apps for mobile
devices.
8.
INFORMATION TECHNOLOGY
8.1 Information Technology (“IT”) systems
JUST EAT has an in-house IT team that is dedicated to maintaining the stability and security of existing
operations, supporting business growth, delivering innovation and advancement in the Company’s
technology and integrating acquired businesses and platforms. The Company’s IT department has
grown from 45 individuals in the year ended 31 December 2011 to 96 individuals in the year ended
31 December 2013. This increase reflects the growth of the Company’s investment in technology as
the JUST EAT business has grown.
The Company’s e-commerce platform and its associated applications, as well as its testing and
developmental toolsets and mobile apps, are primarily hosted through a cloud infrastructure provided
by Amazon Web Services. The Directors believe that the use of a public cloud infrastructure provides
resilience, flexibility and cost effectiveness in relation to software architecture, as well as efficiencies
and capacity provisioning during peak business hours.
JUST EAT uses the majority of tools provided by the Google Apps package. These include Gmail for
corporate email requirements, Google Drive for local file storage, Sites for intranet tools and Google+
and Hangouts for internal networking and collaboration.
The Company contracts with a nearshoring IT Company based in Kiev, Ukraine, which currently
engages a team of consultants to work on certain projects, including product localisation and platform
migration projects.
8.2 Order management and JCTs
JUST EAT has developed and implemented a real-time order management system based on the use
of JCTs in takeaway restaurants. The Directors believe that the Company’s installed base of JCTs and
equivalent systems help to differentiate JUST EAT from many other online takeaway food businesses,
in terms of the accuracy and efficiency of the systems and the ability to scale across many thousands
of takeaway restaurants.
The JCTs are supplied by VeriFone and provided to takeaway restaurants that join the JUST EAT
network. They are operated through the Box Handler application, which manages connections to the
JCTs and the transmission of order data. When an order is placed on the JUST EAT platform, it is
transmitted to the JCT, which emits a sound to announce the order. Staff members at the takeaway
restaurant have the option to confirm the order, modify the delivery time of the order or reject the order.
The order confirmation is sent to the Box Handler, which then informs the consumer accordingly. Once
the response has been sent, the final part of the order summary, containing the confirmation and timing
of the order or the rejection, is printed. This closed loop system allows JUST EAT to monitor the status
of orders for better information about restaurant operations. The largely automated nature of the JCT
system enables the quick and efficient addition of new takeaway restaurants to the network and is,
therefore, an important component of the business’s ability to scale.
The JCT uses a GPRS modem and wireless SIM over the mobile telephone network, with no need for
internet connectivity.
50
8.3 Websites
The first JUST EAT site was launched in August 2001. The Company’s principal website in the UK,
www.just-eat.co.uk, was launched in 2006 and, for the year ended 31 December 2013, received on
average approximately 7 million visitors per month, an increase of 150% since 2011. The websites
operate search algorithms that enable consumers to search for takeaway food by postcode and to filter
by cuisine, distance, restaurant type and consumer rating. Reviews from consumers are sorted based
on volume and form part of the algorithm for restaurant listings. Restaurants in the network may also
pay additionally for promotion through top placement in search results on the websites. In the UK,
approximately 6,500 takeaway restaurants in the JUST EAT network have had websites built for them
by the Company. These websites link to the menu page on www.just-eat.co.uk and have no
independent transactional capability.
JUST EAT works with third parties to improve the consumer experience by using technology to
interpret consumer feedback regarding its websites in the UK, and plans to expand the feedback
programme to other locations in which the Company operates.
8.4 Mobile technology
JUST EAT launched its first mobile website in 2011, and first released mobile apps for iPhone in 2012
and Android in 2013. Orders placed on mobile devices increased by 350% between the year ended
31 December 2011 and 2012, and again by a further 200% between the year ended 31 December
2012 and 2013. For the year ended 31 December 2013, 43.8% of JUST EAT orders received in the UK
were placed from mobile devices, either through the Company’s mobile apps or mobile website. Orders
placed through mobile apps comprised approximately 42% of total mobile orders in the UK during that
period.
The Company’s mobile apps operate in a similar manner to its websites, by requiring the consumer to
enter a postcode (or via automated geo-location) and then applying a filter to show takeaway
restaurants within delivery or collection distance. The consumer may then select any of the resulting
restaurants and add menu items to the shopping cart shown on screen. JUST EAT intends to continue
to improve and upgrade its mobile apps, for example to enable re-ordering on the basis of the
consumer’s previous order history and tracking of the order processing and delivery status after an
order has been confirmed.
8.5 Information technology support and protection
JUST EAT has dedicated engineering and technology teams that are responsible for the various
components of the e-commerce platform, including development, deployment and operations.
Operational support for the platform is available around the clock. JUST EAT’s public platform and
internal services are continuously monitored and alerts are raised automatically to staff when issues
arise so that the on-call team can take appropriate action.
The majority of the Company’s systems are hosted by Amazon Web Services. In addition, the
Company has a managed hosting relationship with Solido, which hosts certain financial and other
applications for JUST EAT. Consumer payment card data is processed by third-party service providers
that are compliant with security standards for the card payment industry.
8.6 Resilience and disaster recovery
JUST EAT has established formal disaster recovery policies for its UK and Danish business operations
that aim to restore business productivity as quickly as possible, in order to protect the Company’s
commercial interests and uphold levels of service for consumers and takeaway restaurants. The
disaster recovery policies contain guidelines regarding the dissemination of information, assessment of
the disaster, relocation, repair or replacement of systems, interim recovery steps, and required
deliverables to facilitate recovery from disaster scenarios. Among other situations, the disaster
recovery policies address failure of internet connection, failure of payment provider or card acquirer
services, unavailability of one or more telecommunications network providers, inability to access the
office, power outages and failures of one or more JUST EAT systems or applications.
The Directors believe that the use of cloud infrastructure through Amazon Web Services to host JUST
EAT’s platform has reduced the risk of both systems failure and physical loss of data, although the
51
Company also creates a back-up data repository on a daily basis and stores this off-site in order to
recover data if ever required. In addition, JUST EAT maintains insurance policies that provide cover
for, amongst other things, loss of or damage to computer hardware, loss of data (including as a result
of accidental damage, malicious attacks or viruses, natural disasters and corruption of data) and
computer virus, denial of service and unauthorised use.
9.
INTELLECTUAL PROPERTY
The Company’s key trade mark is the JUST EAT name itself, whether used in its plain or stylised
forms, or in conjunction with one or more of its marketing slogans. JUST EAT takes a proactive
approach to the protection of its intellectual property. The Company has registered or applied for trade
marks in every country of operation, as well as with the Office for Harmonization for the Internal Market
of the European Union.
JUST EAT has proprietary rights over bespoke information technology applications and systems that it
has developed for operating its business and interacting with its network of takeaway restaurants. The
Company also has software development agreements in place with certain third party software
developers, pursuant to which all intellectual property and proprietary rights over the software that has
been developed vest in JUST EAT, although the developer may use certain information for a specified
project under licence.
The Company has registered domain names for approximately 18,000 website addresses, including all
of its key existing websites, such as www.just-eat.co.uk, www.just-eat.dk, www.just-eat.ca,
www.alloresto.fr, www.just-eat.es and www.just-eat.ie. The Company’s legal team manages the
registration and administration of the Group’s domain name portfolio, with assistance from a third party
domain name management company.
In addition, JUST EAT relies on a combination of certain registered rights, unregistered rights and
intellectual property laws, as well as confidentiality agreements and licence agreements with its
takeaway restaurants, suppliers and others, to protect its proprietary rights. The Company has
confidentiality and proprietary information arrangements in place with key employees to protect trade
secrets and commercially sensitive information.
The Company also licenses technology software from third parties for managing aspects of its
business, including its accounting and invoicing functions.
10. EMPLOYEES
As JUST EAT has invested in growing its network of takeaway restaurants and expanded into new
geographies, the number of full-time equivalent employees has grown significantly over the last three
years, as reflected in the table below.
Average for the
year ended
31 December
2013
2012
2011
UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Head office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
367
43
346
130
272
39
291
110
160
29
129
66
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
886
712
384
11. REGULATION
11.1 Internet
JUST EAT relies on the collection, use, disclosure and other processing of information from consumers
to conduct its business. In the course of placing orders via the JUST EAT platform, consumers submit
personal and financial information, including names, addresses and credit or debit card details. JUST
EAT uses this information to process payment for online orders and discloses certain consumer
information to takeaway restaurants to enable their delivery of orders.
52
As a result of these activities, the Company is subject to laws governing the conduct of business on the
internet generally. These laws, which relate to privacy, information security, intellectual property rights,
taxation, card payments, the enforceability of online contracts and other issues, are evolving and vary
from jurisdiction to jurisdiction.
In particular, JUST EAT is subject in the UK to a number of regulations relating to data protection and
privacy law. These regulations include the Data Protection Act 1998 (the “DPA”) and UK Privacy and
Electronic Communications Regulations implementing the Privacy and Electronic Communications (EC
Directive) Regulations 2003 (the “PEC Regulations”), which seek to protect individuals with regard to
the processing of their personal data.
The DPA gives individuals the right to know what personal data is held about them, and it provides a
framework to ensure that personal data is handled safely by obliging those who are responsible for
processing (which includes obtaining, recording, holding, using, blocking, destroying and disclosing)
personal data to comply with key principles relating to the fair handling of such personal data.
The PEC Regulations apply in varying degrees to the sending of unsolicited direct marketing
messages by electronic means. Direct marketing is defined in the DPA as “the communication (by
whatever means) of any advertising or marketing material which is directed to particular individuals”. In
the case of a direct marketing email to an individual, for example, this should only be sent if the
individual has asked for it.
The operation of the JUST EAT platform is also subject to the EU Cookie Directive (2009/136/EC),
which amends the E-Privacy Directive (2002/58/EC) and the PEC Regulations. These laws require
internet sites operating throughout and outside the EU to provide consumers with information about the
use of cookies and to obtain their consent in certain circumstances before setting cookies on the
computers of users from EU member states.
JUST EAT publishes its information collection, dissemination and processing practices in privacy and
cookies policies that are published on its website, which may be modified from time to time to meet
operational needs, changes in the law or industry best practice.
11.2 Food safety
The Food Hygiene Rating (Wales) Regulations 2013 require food business establishments to ensure
that the following wording appears on any website operated by the food business establishment on the
page referring to that establishment, in a conspicuous place where it is capable of being easily read by
anyone viewing the website: “To find out the Food Hygiene Rating of this establishment go to
http://ratings.food.gov.uk/”, together with a hyperlink to http://ratings.food.gov.uk/. Although the
Company is not required to comply with these regulations, it currently has a policy in the UK of
displaying the above message on the “Info” page for each takeaway restaurant in the UK network.
53
PART VIII
DIRECTORS, SENIOR MANAGERS AND CORPORATE GOVERNANCE
1.
DIRECTORS
The Directors of the Company as at the date of this document and their respective roles are set out
below:
Name
Position
John Hughes, CBE . . Non-Executive Chairman
David Buttress . . . . . . Group Chief Executive Officer
Michael Wroe . . . . . . . Group Chief Financial Officer
Benjamin Holmes . . . . Non-Executive Director (4)
Michael Risman . . . . . Non-Executive Director (4)
Frederic Coorevits . . . Non-Executive Director (1) (4)
Laurel Bowden . . . . . . Non-Executive Director (4)
Andrew Griffith . . . . . . Senior Independent Non-Executive Director (1) (2) (3)
Gwyn Burr . . . . . . . . . Independent Non-Executive Director (1) (2) (3)
(3)
(1)
(2)
(3)
(4)
Date of Birth
20 July 1951
9 March 1976
8 August 1968
12 October 1973
7 June 1968
2 March 1970
18 May 1965
23 February 1971
12 January 1963
Member of the Audit Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Representative of a Major Shareholder
The management expertise and experience of each of the Directors is set out below.
John Hughes, CBE (62), Non-Executive Chairman
Appointed as a director of the Company in December 2011, Mr. Hughes has more than thirty years’
experience leading complex, high technology businesses operating at a global level. This has included
senior executive positions at Thales Group (where he was latterly Executive Vice President and Chief
Operating Officer, responsible for an organisation with over 25,000 people), Lucent Technologies
(where his responsibilities included being President of its worldwide Global System for Mobile
communication (GSM) and Universal Mobile Telecommunications System (UMTS) businesses), and
Hewlett Packard. Mr. Hughes currently serves as Chairman of the Board for Sepura plc, Spectris plc,
and Telecity plc; he also serves as a Non-Executive Director at CSG Systems International Inc.
Mr. Hughes holds a Bachelor of Science in Electrical and Electronic Engineering from University of
Hertfordshire (formerly Hatfield Polytechnic). He was awarded the CBE for services to international
telecommunications in the Queen’s 2011 New Year Honours List.
Talfryn David Buttress (38), Group Chief Executive Officer
Appointed Group Chief Executive and a director of the Company in 2013, Mr. Buttress joined JUST
EAT in March 2006 to launch its UK business. Mr. Buttress started his career with Coca-Cola
Enterprises at the start of 1998. During his time at Coca-Cola he had a variety of senior sales roles
before moving into the internet world with JUST EAT. He won the prestigious Account Manager of the
Year award when he was managing the key national restaurant customers in the UK for Coca-Cola.
Mr. Buttress holds a Bachelor of Arts (Hons.) in Law & Business from Middlesex University Business
School.
Michael Wroe, FCA (45), Group Chief Financial Officer
Appointed a director of the Company in 2013, Mr. Wroe joined JUST EAT in late 2008 as Chief
Financial Officer. Prior to joining JUST EAT, he was Chief Financial Officer at telecommunications
software business Nexagent. Prior to joining Nexagent, he was Chief Financial Officer of listed Radio
Frequency Identification (RIFD)/ Near Field Communication (NFC) chip design business Innovision
54
Research and Technology plc which went public in 2001. Mr. Wroe now has over 20 years’ commercial
experience having qualified as a chartered accountant in 1993 with Deloitte. Mr. Wroe holds a Joint
Honours Bachelor of Science in Chemistry and Management Studies from The University of
Nottingham.
Benjamin Holmes (40), Non-Executive Director
Appointed a director of the Company in July 2009, Mr. Holmes is a General Partner at Index Ventures,
based in the London office which he joined in 2002. He is most active in e-commerce and consumer
investments and played a key role in building the portfolio of games investments. His other investments
on behalf of Index Ventures include Secret Escapes, Notonthehighstreet.com, Shapeways, King and
Trustpilot. Prior to Index Ventures he worked as an investment manager at New Media Spark and as a
consultant at OC&C Strategy Consultants. He graduated with a Masters in Engineering, Economics
and Management from Oxford University.
Michael Risman (45), Non-Executive Director
Mr. Risman was appointed as a director of the Company in March 2014. Mr. Risman also acted as the
primary representative of the former corporate director of the Company, Vitruvian Directors 1 Limited,
from April 2012 to March 2014. Mr. Risman is a Managing Partner at Vitruvian and one of the founders
of the firm. Mr. Risman’s eighteen year track record in private equity includes numerous transactions in
Europe and the US. At Vitruvian, Mr. Risman focuses on leading technology and technology-influenced
investments including those driven by the internet. He is currently Chairman of the board for Flexpay
(Linnealex AB), Snow Software (Iglu Intressenter AB) and Unicom (Etihad Topco Limited) and also
serves as a director on the board of Inenco (Energy Services TopCo Limited) for the Vitruvian funds.
Prior to founding Vitruvian in 2005, Mr. Risman was a Global Equity Partner at Apax Partners and led
the technology team in Europe. Mr. Risman holds a Master of Business Administration from Harvard
Business School and a Masters (MA) in Electrical Engineering and Management from Cambridge
University.
Frederic Coorevits (44), Non-Executive Director
Appointed a director of the Company in July 2009, Mr. Coorevits is an advisor for SM Trust for which
he has been working for more than 10 years. He manages SM Trust’s portfolio of investments which
focus on the areas of e-commerce and cloud computing. Prior to this, Mr. Coorevits worked as finance
director for i-spire plc and as senior manager for PricewaterhouseCoopers transaction services in
London. Mr. Coorevits holds a Masters in Business Administration and a Masters in Organic Chemistry
from Louvain (Belgium).
Laurel Bowden (48), Non-Executive Director
Appointed a director of the Company in March 2011, Ms. Bowden is a General Partner at Greylock IL,
which she joined in 2008, and is based in London. Ms. Bowden has over 10 years’
investment experience, primarily in technology businesses. She has led investments in companies
such as Hybris, Qliktech, and Notonthehighstreet. She joined Greylock from JVP, where she was a
General Partner, covering investments in Europe. Prior to JVP, Ms. Bowden was a Director at
GE Capital in London, where she led the team responsible for acquisitions in consumer and transport
finance in Europe. Ms. Bowden holds a Bachelor of Science in Electrical Engineering from the
University of Cape Town and a Masters in Business Administration from INSEAD.
Ms. Bowden has indicated to the Company that she intends to resign as a Director within 180 days
following Admission.
Andrew Griffith (43), Senior Independent Non-Executive Director
Appointed a director of the Company in March 2014, Mr. Griffith accepted the role of senior
Independent Non-Executive Director. Mr. Griffith has served as Chief Financial Officer of British Sky
Broadcasting Group plc (“BSkyB”) since April 2008 and, since 2012, has in addition had executive
responsibility for BSkyB’s commercial businesses, including advertising, data services and
broadcasting to licensed premises. Mr. Griffith joined BSkyB in 1999 from Rothschild, the investment
banking organisation, where he provided financial and strategic advice to corporate clients in the
technology, media and telecommunications sector. Mr. Griffith is a member of the 100 Group of
55
Finance Directors and he serves on the Advisory Board of the Oxford University Centre for Business
Taxation and a number of BSkyB associate companies including Tour Racing Limited, the holding
company of the Team Sky professional cycling team. Mr. Griffith is a qualified Chartered Accountant
and holds a Bachelor of Law from The University of Nottingham.
Gwyn Burr (51), Non-Executive Director
Appointed a director of the Company in March 2014. Ms. Burr is an Independent Non-Executive
Director of Hammerson plc, where she sits on the audit and remuneration committees. She was
appointed a Non-Executive Director of Sainsbury’s Bank plc in September 2006, where she currently
chairs the nomination committee and is a member of the remuneration and risk committees. She is
also a Non-Executive Director of the Financial Ombudsman Service Limited and Wembley National
Stadium Limited. From May 2005 to March 2013, Ms. Burr was Customer Director and a member of
the operating board for J Sainsbury plc, with responsibility for brand, own brand customer service,
corporate communications and corporate and social responsibility. In 2010, she added human
resources to her remit. Ms. Burr spent her early career at Asda, where she became Marketing Director
in 1996 and subsequently progressed to roles as Customer Service Director and Financial Services
Director. Between leaving Asda in 2001 and joining Sainsbury’s in 2005, she founded The Resultant
Team marketing consultancy. Ms. Burr holds a Bachelor of Science in Economics and History from
The University of Bradford.
For further information on the Directors, including the companies of which each of the Directors has
been a director at any time in the past five years, see “Directors and Other Interests” in paragraph 6 of
Part XVI (Additional Information).
The business address of each of the Directors is Masters House, 107 Hammersmith Road, London,
W14 0QH.
2.
SENIOR MANAGERS
The following comprise the Company’s Senior Managers:
Name
Adrian Blair . . . . . . . . . . . . . . . . . . . . . . .
Carlos Morgado . . . . . . . . . . . . . . . . . . . .
Daniel Read . . . . . . . . . . . . . . . . . . . . . . .
Mathew Braddy . . . . . . . . . . . . . . . . . . . .
Position
Group Chief Operating Officer
Group Chief Technology Officer
Group Chief Product Officer
Group Chief Marketing Officer
Date of Birth
12 April 1975
20 April 1965
1 September 1972
31 March 1974
The management expertise and experience of each of the Senior Managers is set out below.
Adrian Blair (38), Group Chief Operating Officer
Mr. Blair joined JUST EAT in 2011. He is the Group’s Chief Operating Officer. He leads all country
teams globally across sales, marketing, operations and customer care, running the Group’s operations
in the UK, Brazil, Canada, France, Denmark, Netherlands, Spain, Italy, Ireland, Belgium, Norway, India
and Switzerland. He joined JUST EAT from Spotify, where as Director of European Business
Development he led a partnerships team across seven countries. Prior to Spotify, Mr. Blair spent six
years at Google in a variety of senior management roles in California and London. Prior to his time at
Google, he taught undergraduate Economics at Harvard University and was part of the executive team
at Ask Jeeves. Mr. Blair holds a Masters in Business Administration from Harvard Business School and
a Bachelor of Arts in Philosophy, Politics and Economics from Oxford University.
Carlos Morgado (48), Group Chief Technology Officer
Dr. Morgado joined JUST EAT in July 2009 to head up JUST EAT’s technology function. Prior to
joining JUST EAT, Dr. Morgado acted as a consultant for several companies in the social media,
mobile, and online dating spaces. Prior to that, he spent a number of years at AOL, growing the
technology team from a maintenance role to become an integral part of the business, delivering and
operating business-to-consumer and business-to-business applications. Dr. Morgado has worked for a
number of start-ups, marrying his experience of the internet and mainframe technologies to bring web
research tools to the executive desktop. Dr. Morgado holds a PhD in Physics from the University of
Bristol.
56
Daniel Read (41), Group Chief Product Officer
Mr. Read joined JUST EAT in 2011. He is the Group’s Chief Product Officer, responsible for product vision
and execution globally. Mr. Read was previously Chief Product Officer at Ask.com, where he was tasked
with driving product, user experience and innovation. He was a founding member of the team at Ask Jeeves
UK, and before this, he created the first web and ecommerce operations at British Airways and Royal Mail.
Mr. Read is the founder of product lab, Freeform, and an adviser to a number of consumer product and
technology businesses. He holds a Bachelor of Arts in Business Studies from Leeds Metropolitan University
and Master of Arts in Design from Central St Martins. Mr. Read is also a Chartered Marketer.
Mathew Braddy (40), Group Chief Marketing Officer
Mr. Braddy joined JUST EAT in 2009 and set about establishing the Company as the leading brand in
delivery takeaway around the world. Since that time, he has built a team of experts covering Retail,
brand and digital marketing. In 2012, Mr. Braddy led the global launch of JUST EAT’s brand campaign
to ban home cooking, ‘Don’t Cook, JUST EAT’. Mr. Braddy previously worked for The Financial Times,
toptable and gameplay.com. Mr. Braddy holds a Bachelor of Arts in Business Administration
(Marketing) and an HND in Business & Finance (Marketing) from the University of East London.
The business address of each of the Senior Managers is Masters House, 107 Hammersmith Road,
London, W14 0QH.
3.
DIRECTORS’ AND SENIOR MANAGERS’ INTERESTS
Details of the interests of each Director and Senior Manager in the voting rights of the Company,
together with what their respective interests are expected to be immediately following Admission, are
set out in paragraph 6.2 of Part XVI (Additional Information).
4.
CORPORATE GOVERNANCE
The Board is committed to the highest standards of corporate governance. Other than as set out in this
paragraph 4, (a) on Admission the Board will comply, and (b) from Admission intends to continue to
comply, with the UK Corporate Governance Code, which sets out standards of good practice in relation
to board leadership and effectiveness, remuneration, accountability and relations with shareholders.
The Board also intends to take account of institutional shareholder and governance rules and guidance
on disclosure and shareholder authorisation.
The UK Corporate Governance Code recommends that at least half the members of the board of
directors, excluding the chairman, should comprise non-executive directors determined by the board to
be independent. For the purposes of assessing compliance with the UK Corporate Governance Code,
the Board considers that Andrew Griffith and Gwyn Burr are non-executive directors who are
independent of management and free from any business or other relationship that could materially
interfere with the exercise of their independent judgment. The Board also considers that the chairman of
the Company was independent at the time of appointment.
Following his appointment, the Chairman has participated in the Company’s Joint Share Ownership Plan.
Under the Joint Share Ownership Plan the Chairman holds an interest in 1,620,000 B ordinary Shares
and 1,597,050 Ordinary Shares, held jointly with the trustee of an employee benefit trust. In common with
other participants in the Joint Share Ownership Plan, the Chairman participates in the associated loan
arrangements on the same terms as other participants, and on the Latest Practicable Date had an
outstanding balance of £544,447.01. The terms of the Joint Share Ownership Plan and associated loan
arrangements are described in paragraph 9.1.4 of Part XVI (Additional Information). The Board does not
consider that this participation in the Company’s Joint Share Ownership Plan and associated loan
arrangements has an adverse impact on the Chairman’s exercise of independent judgment. As the Board
consists of the chairman, two independent non-executive directors, two executive directors and four nonexecutive directors who are not regarded as independent for the purposes of the UK Corporate
Governance Code by virtue of their connection with certain Major Selling Shareholders, the Company
does not comply with this recommendation of the UK Corporate Governance Code. As the Board will
have two independent non-executive directors as well as a chairman (who the Board considers was
independent on appointment), the Board is satisfied that no individual will dominate the Board’s decision
57
taking, no undue reliance will be placed on particular individuals, there will be sufficient challenge of
executive management in meetings of the Board and the Board will be capable of operating effectively
from Admission. The Company is actively seeking to recruit an additional independent non-executive
director and intends to make an appointment within 90 days following Admission. In addition Ms Bowden
has indicated that she intends to resign as a director within 180 days following Admission.
The Company intends to become fully compliant with the UK Corporate Governance Code in the
medium term. The Company also intends that each of the directors will stand for re-election on an
annual basis.
The senior independent director is Andrew Griffith, who will serve as an additional point of contact for
shareholders should they feel that their concerns are not being addressed through the normal
channels. Mr. Griffith is, furthermore, available to fellow non-executive directors, either individually or
collectively, should they wish to discuss matters of concern in a forum that does not include the
executive directors.
The Board has established three principal committees, the Audit Committee, the Remuneration
Committee and the Nomination Committee which will take effect following Admission.
Following Admission becoming effective, the members of each committee will be as follows:
Chairman
Members
Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Andrew Griffith
Gwyn Burr
Frederic Coorevits
Remuneration Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gwyn Burr
Andrew Griffith
Nomination Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
John Hughes
Gwyn Burr
Andrew Griffith
Audit Committee
The UK Corporate Governance Code recommends that an Audit Committee is established which is
comprised of at least three members, all of whom are independent non-executive directors and at least
one of whom will have recent and relevant financial experience. The chairman of the Audit Committee
shall be an independent non-executive director and shall not be the chairman of the Company. The
chairman of the Audit Committee is Andrew Griffith and he has recent and relevant financial
experience. Although the composition of the committee does not comply with the requirements of the
UK Corporate Governance Code by virtue of one of its members, Frederic Coorevits, not being an
independent non-executive director, the Board considers that it has a strong independent
non-executive component and that the continuity, experience and knowledge of Mr Coorevits should
ensure that he makes a significant contribution to the work of the committee. Further, as noted above
the Company intends to appoint an additional independent non-executive director to the Board within
90 days following Admission and, once appointed it is intended that this director, would also be
appointed as a member of the Audit Committee and replace Mr Coorevits following an appropriate
transition period. Following such changes the composition of the Audit Committee is expected to
comply with the UK Corporate Governance Code.
The terms of reference of the Audit Committee state that the Audit Committee shall meet as frequently
as the Audit Committee deems appropriate, and in any event not less than three times per full financial
year. The quorum for meetings of the Audit Committee will be two members. The Audit Committee
shall meet the external auditor at least once a year, without management being present, to discuss the
auditor’s remit and any issues arising out of the audit. The terms of reference of the Audit Committee
also set out the authority of the Audit Committee to investigate any matter within its terms of reference.
The responsibilities of the Audit Committee will include monitoring the integrity of the Company’s
results and financial statements, reviewing reports received from the Company’s management on the
adequacy and the effectiveness of the Company’s internal controls and risk management systems,
considering annually whether there is a need for an effectiveness of the Company’s internal audit
function and assessing the on-going suitability of the external auditors and ensure their co-ordination
with any internal audit function.
58
Remuneration Committee
The UK Corporate Governance Code recommends that a Remuneration Committee is established
which is comprised of at least three members, each of whom shall be independent non-executive
directors (and may include the chairman of the Company if he was considered independent upon his
appointment). The chairman of the Remuneration Committee shall be an independent non-executive
director and shall not be the chairman of the Company. The chairman of the Remuneration Committee
is Gwyn Burr. Although the composition of the committee does not comply with the requirements of the
UK Corporate Governance Code because it does not comprise of at least three members who are
independent non-executive directors, the Board considers that the committee will function appropriately
and intends to appoint an additional independent non-executive director to the Board within 90 days
following Admission and, once appointed, it is intended that this director would also be appointed as a
member of the Remuneration Committee. Following such changes the composition of the
Remuneration Committee is expected to comply with the UK Corporate Governance Code.
The terms of reference of the Remuneration Committee state that the Remuneration Committee shall
meet as frequently as the Remuneration Committee deems appropriate, and in any event not less than
twice in each full financial year. The quorum for meetings of the Remuneration Committee will be two
members. The terms of reference of the Remuneration Committee also set out the authority of the
Remuneration Committee to investigate any matter within its terms of reference.
The Remuneration Committee shall be responsible for all elements of the remuneration of the
executive directors and the chairman and for recommending and monitoring the structure and level of
remuneration for the senior management.
Nomination Committee
The UK Corporate Governance Code recommends that a Nomination Committee is established which
is comprised of a majority of independent non-executive directors. The Chairman or an independent
non-executive director should chair the Nomination Committee, but the Chairman should not chair the
Nomination Committee when it is dealing with the appointment of a successor to the chairmanship.
The chairman of the Nomination Committee is John Hughes, CBE.
The terms of reference state that the Nomination Committee shall meet as often as the Nomination
Committee deems appropriate, and in any event shall be held not less than once in each full financial
year. The quorum for meetings of the Nomination Committee will be two members, both of whom must
be independent non-executive directors. The terms of reference of the Nomination Committee also set
out the authority of the Nomination Committee to investigate any matter within its terms of reference.
The Nomination Committee shall be responsible for all aspects of the appointment of directors of the
Company and for regularly reviewing the structure, size and composition of the Board (including
evaluating the balance of skills, knowledge, independence and experience of the Board), giving full
consideration to succession planning and leading the process for appointments to the Board and
making any recommendations to the Board.
5.
MODEL CODE
Following Admission, the Company intends to comply with a code of securities dealings in relation to
the Ordinary Shares which is consistent with the Model Code. This code will apply to the Directors and
relevant employees of the Group.
59
PART IX
SELECTED FINANCIAL AND OTHER INFORMATION
The following is a summary of JUST EAT’s selected financial and other information for the periods
indicated. The income statement, balance sheet and cash flow data have been extracted without
material adjustment from the financial information in Part XII (Historical Financial Information). The
summary should be read in conjunction with that section and with Part X (Operating and Financial
Review). Investors are advised to read the whole of this document and not rely on the information
summarised in this Part IX (Selected Financial and Other Information).
Consolidated income statement
The table below sets out the consolidated income statements of the Group for the years ended
31 December 2013, 2012 and 2011.
Year ended 31 December
2013
2012
2011
(£‘000)
(£‘000)
(£‘000)
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96,753 59,770
(9,988) (5,062)
33,765
(3,156)
Gross Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86,765
30,609
54,708
Long term employee incentive costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,731) (1,624)
(231)
Exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(968) (7,547)
(450)
Other administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (77,286) (54,679) (31,428)
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (79,985) (63,850) (32,109)
Share of results of joint ventures and associates . . . . . . . . . . . . . . . . . . . . .
11
(521)
(257)
Operating profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,791
3,363
172
(145)
(9,663)
6,946
206
(117)
(1,757)
—
99
(74)
Profit/(loss) before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,181
(3,410)
(2,628)
(1,877)
(1,732)
497
Profit/(loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,771
(4,505)
(1,235)
60
Consolidated balance sheet
The table below sets out the consolidated balance sheets of the Group at 31 December 2013, 2012
and 2011.
As at 31 December
2013
2012
2011
(£‘000)
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(£‘000)
(£‘000)
10,245
3,424
5,481
—
396
7,353
940
6,957
3,342
5,013
—
31
7,136
772
4,587
1,334
2,861
6,918
332
6,915
1,026
27,839
23,251
23,973
743
3,872
241
61,620
435
4,492
—
50,026
42
2,432
—
7,858
66,476
54,953
10,332
94,315
78,204
34,305
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33,381) (25,020) (11,024)
Current tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,093) (1,564)
(91)
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
(63)
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,982) (2,442) (1,715)
Provision for liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(718)
(485)
(38,456) (29,744) (13,378)
Net current assets/(liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,020
25,209
(3,046)
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(442)
(1,212)
(101)
(498)
(703)
(1,287)
—
—
(1,360)
(751)
(645)
—
(2,253)
(1,990)
(2,756)
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40,709) (31,734) (16,134)
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53,606
46,470
18,171
Consolidated statement of cash flows
The table below sets out data derived from the consolidated statements of cash flows of the Group for
the years ended 31 December 2013, 2012 and 2011.
Year ended 31 December
2013
2012
2011
(£‘000)
(£‘000)
(£‘000)
Net cash from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,213 10,103
4,885
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,681) (3,140) (14,552)
Net cash from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13 35,167 12,643
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,545 42,130
2,976
Cash and cash equivalents at the end of the year . . . . . . . . . . . . . . . . . . . . . 61,620 50,026
7,858
61
Other financial data
Underlying EBITDA
“Underlying EBITDA” means earnings before finance income and costs, taxation, depreciation and
amortisation (“EBITDA”) and additionally excludes the Group’s share of amortisation of joint ventures
and associates, profits or losses on disposal of operations, long term employee incentive costs,
exceptional items and foreign exchange gains and losses. See “Presentation of Financial and Other
Information” in Part III (Important Information).
The table below presents a reconciliation of profit/(loss) for the year to Underlying EBITDA for the
years ended 31 December 2013, 2012 and 2011.
Year ended 31 December
2013
2012
2011
(£‘000)
(£‘000)
(£‘000)
Profit/(loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,771 (4,505) (1,235)
3,410 1,877
(497)
145
117
74
(172) (206)
(99)
(3,363) (6,946)
—
Operating profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation — Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortisation — Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortisation — Joint Ventures and associates . . . . . . .
Long term employee incentive costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency (gains)/losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,791 (9,663) (1,757)
2,708 1,760 1,114
919
529
155
421
361
44
1,731 1,624
231
539
120
(138)
968 7,547
450
Underlying EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,077
62
2,278
99
PART X
OPERATING AND FINANCIAL REVIEW
The following is a discussion of JUST EAT’s financial condition and results of operations as at and for
the years ended 31 December 2013, 2012 and 2011. This discussion should be read in conjunction
with the selected historical consolidated financial information included herein and the consolidated
financial statements, including the notes thereto, presented under Part XII (Historical Financial
Information).
The financial information as at and for each of the three years ended 31 December 2013, 2012 and
2011 has been prepared in accordance with IFRS.
This discussion contains forward-looking statements that involve risks and uncertainties. For additional
information regarding these risks and uncertainties, please refer to the section headed
“Forward-looking statements” in Part III (Important Information) of this document. Investors should also
read Part II (Risk Factors) of this document for a discussion of certain factors that may affect
JUST EAT’s business, financial condition and results of operations.
In this Part X (Operating and Financial Review), references to order numbers exclude orders placed
through the Group’s joint ventures and associate undertakings.
1.
OVERVIEW
JUST EAT operates the world’s largest online marketplace for restaurant delivery based on average
search volume in 2013, according to the Google keyword research tool. By enabling an easy and
secure way to order takeaway food (food for delivery or collection) from local takeaway restaurants, the
Company seeks to fulfil its mission to empower consumers to love their takeaway experience. JUST
EAT’s websites and mobile apps enable consumers to find an extensive array of local takeaway
restaurants and place orders directly through the JUST EAT platform. JUST EAT has market-leading
positions in the majority of the 13 countries in which it operates (based on Google search traffic),
including in its largest markets — the UK, Denmark, France, Canada, Ireland and Spain.
The benefits offered by JUST EAT to both consumers and takeaway restaurants create network effects
that are self-reinforcing: more consumers are drawn to the platform due to the number of takeaway
restaurants, which in turn attracts even more takeaway restaurants to the platform. The Directors
believe that having a leading competitive position in a given local market drives these network effects.
As a result, the Company is well placed to benefit from the combination of underlying growth in the
food delivery market and an ongoing shift towards online ordering. The number of orders placed
through the JUST EAT platform grew from approximately 14 million during the year ended
31 December 2011 to 40 million during the year ended 31 December 2013, at a CAGR of 70%, and the
number of takeaway restaurants in the JUST EAT network increased from 16,985 as at 31 December
2011 to 36,415 as at 31 December 2013. Over the same period, revenue increased at a CAGR of 69%
to £96.8 million.
For the year ended 31 December 2013, JUST EAT recorded revenue of £96.8 million, Underlying
EBITDA of £14.1 million and profit before tax of £10.2 million. Revenue amounted to £68.8 million,
£11.5 million and £16.3 million in the UK, Denmark and Other operations, respectively, while segment
Underlying EBITDA amounted to £25.5 million, £4.6 million and negative £11.8 million, respectively.
2.
SIGNIFICANT FACTORS AFFECTING RESULTS OF OPERATIONS
The Directors believe that the following factors have had, and may continue to have, a material effect
on JUST EAT’s results of operations.
2.1 Growth in number of orders and average revenue per order
The number of orders placed through the Company’s platform and the average revenue per order
directly affect JUST EAT’s results of operations, and in particular affect the levels of commission and
payment card fee revenue. Commissions are charged to takeaway restaurants based on the value of
63
each order they receive through JUST EAT. Average revenue per order is determined by the average
order value, the average commission rate and the average credit or debit card fee charged by
JUST EAT. Commission revenue constitutes the largest component of JUST EAT’s revenue and
amounted to 75.2%, 72.5% and 70.4% of revenue for the years ended 31 December 2013, 2012 and
2011, respectively. Commission revenue increased during the periods under review, primarily as a
result of the higher number of orders placed, which was in turn driven by increases in the number of
consumers and the number of takeaway restaurants in the JUST EAT network.
The Company also generates revenue from fees charged in connection with orders paid for by credit or
debit card. Payment card fee revenue amounted to 12.3%, 12.2% and 10.9% of revenue for the years
ended 31 December 2013, 2012 and 2011, respectively. The fee charged to takeaway restaurants and/
or consumers varies depending on the country and payment method. Payment card fees averaged
approximately £0.50 per card order for the year ended 31 December 2013. Revenue from payment
card fees has increased as a result of the higher number of orders, as well as an increase in the
proportion of consumers paying by credit or debit card.
B2C revenue is the total of commission revenue and revenue from fees charged in connection with
orders paid for by credit or debit card.
2.2 Growth in number of takeaway restaurants
JUST EAT derives revenue from the takeaway restaurants in its network in the form of connection fees
and top-placement fees. Connection fees represent the initial sign-up fee paid by a takeaway
restaurant to join the JUST EAT network, as well as the equipment fee paid for the provision of a JCT.
Connection fees are one-off payments. Connection fee revenue is allocated between the sign-up fee
portion, which is recognised as revenue over a 12-month period, and the equipment fee portion, which
is recognised as revenue on a straight-line basis over a three-year period. During the periods under
review, increases in the number of new takeaway restaurants joining the platform and in the
connection fee charged resulted in higher connection fee revenue. Connection fees also have a
favourable impact on net cash flow from operating activities, since the payments for these fees are
received in advance of the connection fee being recognised.
JUST EAT also receives annual subscription fees from its takeaway restaurants in Denmark and
France in addition to commission revenue. As the number of takeaway restaurants in these countries
increased during the periods under review, the additional subscription fees received also contributed to
higher revenue for JUST EAT.
Top-placement fees are charged to takeaway restaurants to be listed amongst the top search results
for a particular postcode. Revenue from top-placement fees is recognised over the duration of the
placement, which can be for up to three months. During the periods under review, higher numbers of
takeaway restaurants in a particular area generally led to greater competition between restaurants and
increased demand for the top-placement service.
2.3 Marketing costs
During the periods under review, JUST EAT invested significantly in marketing, which is a key
component of the Company’s strategy to be the largest online marketplace for restaurant delivery in
each of its countries of operation. The Directors believe that as a result of greater brand awareness,
more consumers will be attracted to the JUST EAT platform and, consequently, more takeaway
restaurants will join the JUST EAT network. Marketing expenditure amounted to 24.2%, 25.6% and
23.1% of revenue for the years ended 31 December 2013, 2012 and 2011, respectively.
The following table sets forth marketing expenditure as a percentage of revenue for each of the
Company’s operating segments for the periods indicated.
Year ended 31 December
2013
2012
2011
UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64
21.2% 22.2% 24.6%
10.1% 9.2% 10.0%
47.0% 60.0% 46.0%
2.4 Cost of establishing operations in countries outside of the UK and Denmark
JUST EAT’s operations in countries outside of the UK and Denmark are included in the Other segment
in the consolidated financial statements. The Company has incurred marketing and other expenditures
as part of its strategy to establish leading competitive positions in these markets, resulting in negative
segment Underlying EBITDA in the Other segment. Given the levels of expenditure, the Other segment
recorded negative segment EBITDA of £11.8 million, £13.1 million and £6.3 million, for the years
ended 31 December 2013, 2012 and 2011, respectively. The negative segment Underlying EBITDA in
the Other segment has impacted, and may continue in future periods to impact, JUST EAT’s
consolidated results of operations and Underlying EBITDA.
As part of its international expansion, JUST EAT also made a number of acquisitions during the
periods under review, which have impacted its results of operations and Underlying EBITDA. JUST
EAT acquired one operation during the year ended 31 December 2013, three operations during the
year ended 31 December 2012 and six operations during the year ended 31 December 2011. In
addition, the Company entered into two joint ventures during the year ended 31 December 2011.
2.5 Impairment of the Netherlands business
In January 2012, JUST EAT purchased the outstanding share capital of its joint venture operation in
the Netherlands, which from that time became a wholly owned subsidiary and was consolidated in
JUST EAT’s consolidated financial statements. At the time that this business became a subsidiary,
goodwill and other intangible assets of £7.4 million were recognised on acquisition. Management
subsequently wrote off these assets, resulting in an impairment charge of £7.2 million recorded in the
income statement for the year ended 31 December 2012, as management made the judgment that the
Dutch business had not achieved a significant competitive position in its market.
2.6 Seasonal fluctuations
JUST EAT’s results of operations are subject to seasonal fluctuations across the year. Order numbers
across the takeaway food industry are typically higher during autumn and winter, when consumers are
less likely to dine out due to the shorter daylight hours and likelihood of bad weather; conversely,
orders decline during the warmer spring and summer months when conditions are more conducive to
dining out and consumers choose alternatives such as barbeques. In terms of specific months,
January often has lower orders as many consumers cut back on the number of takeaway meals they
plan to eat in the New Year, although 1 January in Denmark is the peak trading day, with orders
significantly exceeding any other trading day. In the UK, there is usually an increase in revenue growth
in September and October, as a large number of JUST EAT consumers are students and university
and college terms begin in this month. As a result of these seasonal fluctuations, comparisons of JUST
EAT’s operating results over any interim periods may not be meaningful and such comparisons may
not be an accurate indicator of the Company’s future performance for any annual period.
2.7 Foreign currency translation
JUST EAT conducted operations in 13 countries around the world as at 31 December 2013. A
substantial portion of JUST EAT’s revenue is denominated in Sterling and Danish Krone, with the
remainder of revenues being denominated in the local currencies of the other countries in which the
Company operates. The Company generally seeks to match the currency of its revenue and expenses
for its operations in each jurisdiction to reduce its exposure to currency fluctuations. In limited
circumstances, however, the revenues and expenses may be in different currencies. The Company
reports its consolidated financial statements in Sterling and, consequently, the presentation of the
consolidated financial statements may be materially affected by movements in foreign exchange rates
and, particularly, by Danish Krone/Sterling and Euro/Sterling exchange rates.
65
3.
KEY PERFORMANCE INDICATORS
JUST EAT monitors four operational key performance indicators (“KPIs”): number of orders, average
revenue per order (defined as B2C revenue divided by the number of orders), number of active
consumer accounts (unique accounts used to place at least one completed order during the previous
365 days) and number of takeaway restaurants. Each of these KPIs has increased during the periods
under review.
Year ended or as at 31 December
%
%
2013
change
2012
change
2011
Number of orders (‘000) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average revenue per order . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of active accounts (‘000) . . . . . . . . . . . . . . . . . . . . .
Number of takeaway restaurants . . . . . . . . . . . . . . . . . . . . .
4.
40,171
£2.11
5,896
36,415
59.0
5.5
42.6
21.6
25,265
£2.00
4,133
29,939
81.8
1.5
70.8
76.3
13,897
£1.97
2,420
16,985
RESULTS OF OPERATIONS FOR THE YEARS ENDED 31 DECEMBER 2013, 2012 AND 2011
The following table sets forth the Company’s consolidated results of operations for the periods
indicated:
Year ended 31 December
2013
2012
2011
(£‘000)
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96,753
(9,988)
59,770
(5,062)
33,765
(3,156)
Gross Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86,765
54,708
30,609
Long term employee incentive costs . . . . . . . . . . . . . . . . . . . . . . . . . .
Exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,731)
(1,624)
(231)
(968)
(7,547)
(450)
(77,286) (54,679) (31,428)
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(79,985) (63,850) (32,109)
Share of results of joint ventures and associates . . . . . . . . . . . . . . . . . . .
11
(521)
(257)
Operating profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,791
3,363
172
(145)
(9,663)
6,946
206
(117)
(1,757)
—
99
(74)
Profit/(loss) before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,181
(3,410)
(2,628)
(1,877)
(1,732)
497
Profit/(loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,771
(4,505)
(1,235)
Underlying EBITDA(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,077
2,278
99
(1) See section 4.5 below for a reconciliation of profit/(loss) to Underlying EBITDA for the periods indicated.
4.1 Revenue
JUST EAT generates three main types of revenue: B2C revenue (comprised of commission and
payment card fee revenue), connection fee revenue and top-placement fee revenue. Revenue
increased by 61.9% to £96.8 million for the year ended 31 December 2013 compared to £59.8 million
for the year ended 31 December 2012. Revenue for the year ended 31 December 2012 increased by
77.0% compared to £33.8 million for the year ended 31 December 2011. Growth in revenue during the
periods under review was driven by the increase in the number of orders as a result of growth in the
number of takeaway restaurants and the increase in the number of consumers transacting through
JUST EAT, particularly as the JUST EAT brand has grown, as well as higher average revenue per
order.
66
4.1.1 Revenue by source
For the year ended 31 December 2013, B2C revenue, connection fee revenue and top-placement fee
revenue amounted to £84.6 million, £5.0 million and £6.0 million, respectively. The table presents a
breakdown of revenue by source for the periods indicated.
Year ended 31 December
2013
2012
2011
(£‘000)
B2C revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Connection fee revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Top-placement fee revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84,625 50,639 27,430
4,954
4,187
2,665
5,969
4,443
2,679
1,205
501
991
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96,753 59,770 33,765
(A)
B2C revenue
The largest component of revenue is B2C revenue, which comprises commission revenue and revenue
from fees charged in connection with orders paid for by credit or debit card. B2C revenue amounted to
£84.6 million, £50.6 million and £27.4 million, representing 87.5%, 84.7% and 81.2% of total revenue
for the years ended 31 December 2013, 2012 and 2011, respectively.
During the periods under review, B2C revenue increased primarily due to higher order numbers, as
well as increases in the average revenue per order. The number of orders placed through the
JUST EAT platform increased to 40.2 million for the year ended 31 December 2013 compared to 25.3
million for 2012 and 13.9 million for 2011. Moreover, the increase in B2C revenue also was due to the
increase in the average revenue per order during the periods under review, which was £2.11 for the
year ended 31 December 2013 compared to £2.00 for 2012 and £1.97 for 2011.
Commission is charged to takeaway restaurants based on the value of each order they receive through
JUST EAT. The commission rate charged varies across JUST EAT’s countries of operation and was
approximately 10.7% on average for the year ended 31 December 2013. JUST EAT has been able to
increase its commission rates in certain circumstances as the scale of operations in a country and both
the number of takeaway restaurants and the number of orders have grown. In Denmark, B2C revenue
constituted a lower proportion of revenue due to historically lower commission rates, which are
supplemented by an annual subscription fee paid by the takeaway restaurants which is recorded in
connection fee revenue.
Payment card fees are charged by JUST EAT to takeaway restaurants and/or consumers on almost all
orders placed through JUST EAT that are paid for by credit or debit card. The fee covers the charges
incurred by JUST EAT (which are recorded in the cost of sales) from the payment service provider, the
card acquirer and administration costs, and also generates a margin for JUST EAT.
During the periods under review, payment card fee revenue increased primarily due to higher order
numbers, as well as an increased percentage of orders paid for by card. From June 2013 onwards, in
Denmark, JUST EAT has only charged payment card fees that are equal to the fees charged by the
payment service provider, as a result of a change in the applicable regulations that has required it to do
so. If JUST EAT were to decide to adopt this practice, or be required to do so, in its other countries of
operation, the rate of growth for payment card fee revenue will be reduced in future periods.
(B)
Connection fee revenue
Connection fees represent the initial sign-up fee paid by a takeaway restaurant to join the JUST EAT
network, as well as the equipment fee paid for the provision of a JCT. Connection fees are one-off
payments, and connection fee revenue is allocated between the sign-up fee portion, which is
recognised as revenue over a 12-month period, and the equipment fee portion, which is recognised as
revenue on a straight-line basis over a three-year period. In Denmark, the connection fee also includes
an annual subscription fee paid by takeaway restaurants. Total connection fee revenue amounted to
£5.0 million, £4.2 million and £2.7 million, representing 5.1%, 7.0% and 7.9% of revenue for the years
ended 31 December 2013, 2012 and 2011, respectively. The increase in connection fee revenue
during the periods under review reflected increases in the number of new takeaway restaurants joining
the network.
67
(C)
Top-placement fee revenue
Top-placement fees are charged to takeaway restaurants who want to be listed amongst the top
search results in a particular postcode. Takeaway restaurants can pay a fee to be in the top four places
of a particular postcode for a period of up to 12 weeks, with pricing varying by postcode. Topplacement fee revenue amounted to £6.0 million, £4.4 million and £2.7 million, representing 6.2%,
7.4% and 7.9% of revenue for the years ended 31 December 2013, 2012 and 2011, respectively. The
increase in top-placement fee revenue during the periods under review was mainly due to the increase
in takeaway restaurants in the network. As the number of takeaway restaurants in a location increases,
the demand to be at the top of the search results also generally increases and results in greater
potential revenue to JUST EAT from the top-placement service.
(D)
Other revenue
Other revenue primarily consists of revenue from the sale of merchandise to takeaway restaurants in
the network, including JUST EAT branded merchandise and menus. Other revenue amounted to
£1.2 million, £0.5 million and £1.0 million for the years ended 31 December 2013, 2012 and 2011,
respectively. The increase in other revenue for the year ended 31 December 2013 compared to 2012
was mainly due to an increase in UK merchandise sales and a decrease in promotional discounts
given to consumers in the Netherlands. The decrease in other revenue for the year ended
31 December 2012 compared to 2011 was due to increased promotional discounts given to consumers
in Benelux and Spain, as part of the Company’s strategy to increase order numbers in those countries.
4.1.2 Revenue by operating segment
JUST EAT has three operating segments: the UK, Denmark and Other, which includes operations in
Brazil, Canada, Spain, Ireland, Italy, Norway, Switzerland, Belgium and the Netherlands, as well as the
Just Delivery business in Denmark, which provides a delivery service for takeaway restaurants that do
not operate an in-house delivery service. Prior to 14 November 2013, the Other segment also included
India. Switzerland and the Netherlands have been included in the Other segment since becoming full
subsidiaries in January 2013 and January 2012, respectively. The UK, Denmark and Other segments
generated 71.1%, 11.9% and 16.8% of JUST EAT’s revenue, respectively, for the year ended
31 December 2013.
The following table presents a breakdown of revenue by operating segment for the periods indicated,
after adjusting for intersegment sales, which reflect the sale of JCTs from the UK to Denmark and other
operations.
Year ended 31 December
2013
2012
2011
(£‘000)
UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Head office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68,815 41,106 21,393
11,541
9,969
8,832
16,257
8,695
3,540
140
—
—
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96,753 59,770 33,765
(A)
UK revenue
UK revenue increased by 67.4% to £68.8 million for the year ended 31 December 2013 compared to
£41.1 million for the year ended 31 December 2012. UK revenue for the year ended 31 December
2012 increased by 92.1% compared to £21.4 million for the year ended 31 December 2011. Growth in
revenue during the periods under review was primarily due to the increase in the number of orders as a
result of increases in the number of takeaway restaurants and consumers transacting through JUST
EAT, as well as higher average revenue per order, which led to higher commission revenue. Average
revenue per order was £2.09, £2.04 and £1.94 for the years ended 31 December 2013, 2012 and
2011, respectively. During the periods under review, JUST EAT’s orders in the UK increased to 29.1
million for the year ended 31 December 2013 compared to 17.1 million for 2012 and 9.0 million for
2011. UK revenue also increased as a result of the increase in the percentage of orders made via
payment cards, which resulted in higher payment card fee revenue. In addition, the increased number
of takeaway restaurants generated higher connection fee and top-placement fee revenues for JUST
EAT.
68
(B)
Denmark revenue
Revenue in Denmark (which does not include revenue from the Just Delivery business) increased by
15.8% to £11.5 million for the year ended 31 December 2013 compared to £10.0 million for the year
ended 31 December 2012. This increase in revenue was primarily due to the commission rate increase
(which was introduced for new restaurants in 2012 and applied to all restaurants in the autumn of
2013), an 8% increase in the number of orders, a 6% increase in the average order value and a 31%
increase in top-placement revenue. Revenue in Denmark for the year ended 31 December 2012
increased by 12.9% compared to £8.8 million for the year ended 31 December 2011, predominantly
due to an increase in the number of orders and the introduction of higher commission rates for new
restaurants during 2012. During the periods under review, JUST EAT’s orders in Denmark increased to
4.1 million for the year ended 31 December 2013 compared to 3.8 million for 2012 and 3.5 million for
2011. Growth in revenue in Denmark was slower than growth in the UK, due to the greater maturity of
the online takeaway food market in Denmark and the Company’s established market share.
(C)
Other revenue
Other revenue relates to overseas operations that are principally in the early stages of development.
Other revenue increased by 87.0% to £16.3 million for the year ended 31 December 2013 compared to
£8.7 million for the year ended 31 December 2012. The increase in revenue was primarily due to a
£6.2 million increase in commission revenue together with a £0.5 million increase in payment card fee
revenue and a decrease in promotional discounts. The growth in commission revenue reflected a 60%
increase in the number of orders and a 10% increase in the average revenue per order. Other revenue
for the year ended 31 December 2012 increased by 145.6% to £8.7 million compared to £3.5 million for
the year ended 31 December 2011, primarily due to an increase in the number of orders resulting from
an increase in the number of takeaway restaurants and consumers during this period. During the
periods under review, JUST EAT’s orders in the Other segment increased to 6.9 million for the year
ended 31 December 2013 compared to 4.3 million for 2012 and 1.4 million for 2011. Revenue also
increased by £1.7 million as a result of Switzerland being fully consolidated for the year ended 31
December 2013, and by £1.7 million as a result of the Netherlands business being fully consolidated
for the year ended 31 December 2012.
4.2 Cost of sales
Cost of sales represents direct variable costs, primarily relating to payment card fees and SIM card
costs for the JCTs. As the Company’s business has grown, these costs have increased by 97.3% for
the year ended 31 December 2013 compared to 2012 and 60.4% for the year ended 31 December
2012 compared to 2011. Gross profit margins for JUST EAT remained stable over the periods under
review, at 89.7%, 91.5% and 90.7% for the years ended 31 December 2013, 2012 and 2011,
respectively.
4.3 Administrative expenses
Administrative expenses consist of impairment charges, long term employee incentive costs,
acquisition related costs and other administrative expenses, which include salaries, marketing,
depreciation, amortisation and other costs. Administrative expenses increased by 25.3% to
£80.0 million for the year ended 31 December 2013 compared to £63.9 million for the year ended
31 December 2012, and by 98.9% for the year ended 31 December 2012 compared to £32.1 million for
the year ended 31 December 2011.
The following table presents a breakdown of administrative expenses for the periods indicated.
Year ended 31 December
2013
2012
2011
(£‘000)
Long term employee incentive costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,731 1,624
231
Exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
968 7,547
450
Other administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,964 25,433 16,012
— Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,427 15,318
7,795
— Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,268 11,639
6,352
— Depreciation and amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,627 2,289
1,269
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,985 63,850 32,109
69
4.3.1 Other administrative expenses
Other administrative expenses, which form the largest component of administrative expenses, consist
of salaries, marketing, depreciation and amortisation and other costs. Other administrative expenses
represented 79.9%, 91.5% and 93.1% of revenue for the years ended 31 December 2013, 2012 and
2011, respectively.
The largest component of other administrative expenses is salaries, which consist of salaries and other
staff related costs. Salary costs represented 39.2%, 42.6% and 47.4% of revenue for the years ended
31 December 2013, 2012 and 2011, respectively. During the periods under review, salaries increased,
predominantly due to the expansion of the UK business and the related increase in full-time employees
of the Company. JUST EAT had 886, 712 and 384 average full time equivalent employees for the
years ended 31 December 2013, 2012 and 2011, respectively.
Marketing costs are comprised of digital marketing costs relating to PPC (SEM) marketing on Google
and offline marketing costs including brand marketing, trade marketing and certain in-house marketing
personnel. Marketing costs represented 24.2%, 25.6% and 23.1% of revenue for the years ended
31 December 2013, 2012 and 2011, respectively. During the periods under review, marketing costs
have increased due to the Company’s decision to invest in the JUST EAT brand both in the UK and in
JUST EAT’s overseas operations. The increase in marketing costs for the year ended 31 December
2013 compared to 2012 was primarily due to increased expenditure on PPC marketing and an
increase in television advertising. In addition, there was an increase in marketing expenditure in key
cities, such as in London, where there were London Underground and taxi campaigns. The increase in
marketing costs for the year ended 31 December 2012 compared to 2011 was primarily due to the
Company’s global re-branding during the year ended 31 December 2012, for which it introduced a new
slogan, television advertising campaign and printed marketing materials.
Growth in other costs, such as property costs, travel and vehicle costs, recruitment expenses, legal
and professional fees, communication costs and training costs, was again mainly due to the growth of
JUST EAT’s operations. Other costs represented 12.7%, 19.5% and 18.8% of revenue for the years
ended 31 December 2013, 2012 and 2011, respectively. The increase in other costs for the year ended
31 December 2013 compared to 2012 was due to growth in the Group’s operations and the number of
employees, although other costs decreased as a proportion of revenue as a result of greater
economies of scale. The increase in other costs for the year ended 31 December 2012 compared to
2011 was primarily due to growth in the Company’s operations and the number of employees.
4.3.2 Exceptional items
The following table presents a breakdown of exceptional items for the periods indicated.
Year ended
31 December
2013
2012
2011
(£’000)
Impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IPO costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Release of contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
307 7,320
1,413
—
88
227
(840)
—
18
—
432
—
Total exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
968 7,547
450
The impairment charges of £7.3 million for the year ended 31 December 2012 represented the write-off
of the goodwill and intangible assets amounting to £7.2 million that had been recognised when the
business in the Netherlands became a subsidiary, as well as impairment charges relating to Achindra
Online in India amounting to £0.1 million. The decision to write off the Dutch assets was based on that
business not having achieved a significant competitive position in its market, such that JUST EAT’s
strategic and financial plans for this business did not follow the same profile as other businesses in the
Company.
The £0.8 million release of contingent consideration for the year ended 31 December 2013 relates to a
provision that was established on the acquisition of the Group’s stake in its French joint venture. Part of
the consideration was contingent upon the performance of the French business in 2013. The
performance criteria were not met and, as a result, the provision was released to the income statement.
70
4.3.3 Long-term employee incentive costs
Long-term employee incentive costs amounted to £1.7 million for the year ended 31 December 2013,
all of which related to charges in respect of share options held by employees of the Group. Long-term
employee incentive costs amounted to £1.6 million for the year ended 31 December 2012, of which
£0.5 million related to charges in respect of share options held by employees of the Group and
£1.1 million represented bonuses paid to certain members of the senior management team for their
longer term performance and achievement of certain longer term goals in the year. Long-term
employee incentive costs of £0.2 million for the year ended 31 December 2011 related to charges in
respect of share options.
4.4 Operating profit/(loss)
JUST EAT had an operating profit of £6.8 million for the year ended 31 December 2013, compared to
operating losses of £9.7 million and £1.8 million for the years ended 31 December 2012 and 2011,
respectively. The improvement of £16.5 million in the operating result for the year ended 31 December
2013 compared to 2012 was primarily due to the reduction in administrative expenses as a proportion
of revenue, as well as the absence of the prior year’s impairment charge of £7.3 million, primarily in
respect of the Netherlands. The increase in operating losses of £7.9 million for the year ended
31 December 2012 compared to 2011 was mainly due to impairment charges of £7.3 million primarily
relating to the Netherlands business.
4.5 Underlying EBITDA
“Underlying EBITDA” means 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, profits or losses on disposal of operations, long-term employee
incentive costs, exceptional items and foreign exchange gains and losses. In respect of segmental
disclosure, it also excludes intra-group franchise fee arrangements and incorporates an allocation of
Group technology and other central costs.
The following table presents a reconciliation of profit/(loss) to Underlying EBITDA for the periods
indicated.
Year ended 31 December
2013
2012
2011
(£‘000)
Profit/(loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,771 (4,505) (1,235)
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,410 1,877
(497)
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
145
117
74
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(172) (206)
(99)
Other gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,363) (6,946)
—
Operating profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation — Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortisation — Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortisation – Joint Ventures and associates . . . . . . . .
Long term employee incentive costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency losses/(gains) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,791 (9,663) (1,757)
2,708 1,760 1,114
919
529
155
421
361
44
1,731 1,624
231
968 7,547
450
539
120
(138)
Underlying EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,077
2,278
99
Underlying EBITDA increased to £14.1 million for the year ended 31 December 2013 compared to
£2.3 million for the year ended 31 December 2012. Underlying EBITDA for the year ended
31 December 2012 increased by £2.2 million compared to £0.1 million for the year ended
31 December 2011.
Growth in Underlying EBITDA during the periods under review reflected growth in segment Underlying
EBITDA in the UK and Denmark, offset by negative segment Underlying EBITDA in the Other
segment, predominantly in Brazil, Canada and Spain. The negative segment Underlying EBITDA in
these jurisdictions reflected marketing expenditure and other administrative expenses, in light of the
Company’s strategy of gaining scale in these countries. There was a further negative impact on
Underlying EBITDA for the year ended 31 December 2012 compared to 2011 due to the
71
consolidation of the Netherlands business after it became a wholly owned subsidiary of JUST EAT.
The growth in Underlying EBITDA for the year ended 31 December 2013 compared to 2012 was
primarily due to the growth in revenue (particularly in the UK) and the leveraging of the Group’s cost
base.
The following table presents a breakdown of segment Underlying EBITDA by operating segment for
the periods indicated.
Year ended 31 December
2013
2012
2011
(£‘000)
UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25,519 13,722 4,805
4,641
4,025 3,159
(11,755) (13,136) (6,279)
18,405
Share of results of joint ventures and associates (excluding depreciation
and amortisation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Head office costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
432
(4,760)
Underlying EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,077
4,611
1,685
(160)
(213)
(2,173) (1,373)
2,278
99
In the UK, segment Underlying EBITDA amounted to £25.5 million, £13.7 million and £4.8 million for
the years ended 31 December 2013, 2012 and 2011, respectively. Segment Underlying EBITDA
margin increased to 37.1% for the year ended 31 December 2013 compared to 33.4% for the year
ended 31 December 2012 and 22.5% for the year ended 31 December 2011. The growth in segment
Underlying EBITDA margin was primarily due to revenues growing at a higher rate than costs, as a
significant proportion of the UK operation’s cost base is fixed.
In Denmark, segment Underlying EBITDA amounted to £4.6 million, £4.0 million and £3.2 million for
the years ended 31 December 2013, 2012 and 2011, respectively. Segment Underlying EBITDA
margin was 40.2% for the year ended 31 December 2013 compared to 40.4% for the year ended
31 December 2012 and 35.8% for the year ended 31 December 2011. Like the UK operations,
Denmark also has a predominantly fixed cost base. In addition, the business there has focused on
generating revenue from higher margin services such as top placement, which has minimal direct
costs.
Segment Underlying EBITDA for the Other segment was negative £11.8 million, negative £13.1 million
and negative £6.3 million for the years ended 31 December 2013, 2012 and 2011, respectively.
Negative segment Underlying EBITDA in this segment reflects JUST EAT’s strategy of incurring
greater costs in certain countries to expand its network of takeaway restaurants, build brand
awareness and increase the scale of the business. In addition, the impact of acquisitions made in 2013
reduced segment Underlying EBITDA by £0.4 million for the year ended 31 December 2013 compared
to 2012. The impact of acquisitions made in 2012 reduced segment Underlying EBITDA by £1.2 million
for the year ended 31 December 2012 compared to 2011.
4.6 Other gains
Other gains for the year ended 31 December 2013 amounted to £3.4 million, which primarily related to
the deemed disposal of the Swiss business when it became a subsidiary in January 2013. Other gains
of £6.9 million for the year ended 31 December 2012 related to profit arising on the disposal of JUST
EAT’s minority interest in OnlinePizza Norden AB in Sweden and the profit arising on the deemed
disposal of the joint venture in the Netherlands when it became a subsidiary.
4.7 Tax
JUST EAT is subject to taxation in each of its countries of operation.
For the year ended 31 December 2013, JUST EAT had a total tax charge amounting to £3.4 million on
a profit before tax of £10.2 million, resulting in an effective tax rate of 34%. The tax charge was
primarily comprised of a current tax charge of £3.5 million, principally in respect of the Group’s UK and
Danish operations.
72
For the year ended 31 December 2012, JUST EAT had a total tax charge amounting to £1.9 million
despite making a loss before tax of £2.6 million, primarily as a result of a current tax charge in the
Denmark business of £2.1 million which could not be sheltered by losses arising elsewhere in the Group.
For the year ended 31 December 2011, JUST EAT had a tax credit of £0.5 million, after making a loss
before tax of £1.8 million. The main reason for recording a tax credit was due to the recognition of a
deferred tax asset on trading losses arising in Just Eat Host A/S and Just-Eat.co.uk Limited.
5.
LIQUIDITY AND CAPITAL RESOURCES
5.1 Cash flow
JUST EAT has generated positive net cash from operating activities during each of the periods under
review. The following table summarises the principal components of the Company’s consolidated cash
flows for the periods indicated.
Year ended 31 December
2013
2012
2011
(£‘000)
Net cash inflow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19,213 10,103
4,885
(7,681) (3,140) (14,552)
13 35,167 12,643
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,545 42,130
2,976
Cash and cash equivalents at the end of the year . . . . . . . . . . . . . . . . . . . . .
61,620 50,026
7,858
5.1.1 Net cash from operating activities
For the years ended 31 December 2013, 2012 and 2011, net cash inflow from operating activities was
£19.2 million, £10.1 million and £4.9 million, respectively. JUST EAT’s operating activities benefitted
from net improvements in working capital of £11.6 million for the year ended 31 December 2013,
£9.7 million for the year ended 31 December 2012 and £5.2 million for the year ended 31 December
2011. Working capital consists of trade and other receivables, inventories, trade and other payables,
current tax liabilities and current deferred revenue. The improvements in working capital were primarily
driven by increases in credit or debit card orders by consumers, for which JUST EAT collects payment
on behalf of the takeaway restaurants, thereby increasing trade payables due to the restaurants.
Working capital is further improved when the number of takeaway restaurants increases as the initial
connection fees (including the JCT equipment fees) are paid in advance and deferred (within deferred
revenue) on the balance sheet.
5.1.2 Net cash used in investing activities
For the year ended 31 December 2013, net cash used in investing activities was £7.6 million. This
included cash outflows on acquisitions of subsidiaries amounting to £3.7 million, including the
acquisition of one subsidiary and the payment of deferred consideration in respect of acquisitions
made in earlier years. It also included purchases of property, plant and equipment of £3.3 million (a
decrease of 13.7% compared to the year ended 31 December 2012) primarily for the purchase of JCTs
as the number of takeaway restaurants increased.
For the year ended 31 December 2012, net cash used in investing activities was £3.1 million,
consisting primarily of cash outflows on acquisitions of subsidiaries amounting to £5.1 million that
included three subsidiaries and other deferred consideration, as well as purchases of property, plant
and equipment amounting to £3.8 million (an increase of 81.1% compared to the year ended
31 December 2011) primarily for the purchase of JCTs. In March 2012, JUST EAT’s cash position
improved as a result of the sale of its investment in OnlinePizza Norden AB in Sweden for cash
proceeds of £6.4 million.
For the year ended 31 December 2011, net cash used in investing activities was £14.6 million,
consisting primarily of cash outflows on acquisitions of interests in joint ventures amounting to
£7.2 million that included payment of £6.6 million cash consideration for a 50% interest in the joint
73
venture in France. Cash outflow on acquisitions of subsidiaries amounted to £3.1 million for six
subsidiaries. Purchases of property, plant and equipment amounted to £2.1 million, primarily
representing JUST EAT’s investment in JCTs.
5.1.3 Net cash from financing activities
For the year ended 31 December 2013, net cash from financing activities was £13,000, representing
cash received on the exercise of share options.
For the year ended 31 December 2012, net cash from financing activities was £35.2 million as a result
of JUST EAT’s Series C round of fundraising in April 2012. The Company repaid £63,000 in
borrowings and overdrafts during this period, leaving it with no outstanding debt as at 31 December
2012.
For the year ended 31 December 2011, net cash from financing activities was £12.6 million principally
as a result of the Series B round of fundraising in March 2011. The Company repaid £2.1 million in
borrowings and overdrafts during this period.
6.
CURRENT TRADING AND PROSPECTS
The Group’s strong financial performance has continued since 31 December 2013 with trading in line
with management expectations and consistent with the trends experienced in 2013. A strong
performance in the UK reflects both the positive underlying market trends and the impact from
marketing campaigns (such as JUST EAT’s sponsorship of ITV’s Take Me Out) and the unusually wet
winter weather. Performance across the Group’s other geographic markets has also been strong and
continued to reflect the underlying growth trends and the expected development of the Group in these
markets.
The Group also completed the acquisition of Meal 2 Order.com Limited in February 2014. Meal 2
Order.com Limited has an EPOS technology specifically designed for the takeaway restaurant industry
which, when implemented, would enable restaurant owners to better organise their day-to-day
operations and determine business priorities by providing a better view of their customers’ ordering
habits.
7.
CRITICAL ACCOUNTING JUDGEMENTS
In the application of JUST EAT’s accounting policies, which are described in note 3 to the consolidated
financial statements presented under Part XII (Historical Financial Information), the Directors are
required to make judgements, estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods if the revision affects both current and future
periods. The key assumptions concerning the future and other key sources of estimation uncertainty
are detailed in note 4 to the consolidated financial statements presented under Part XII (Historical
Financial Information).
8.
FINANCIAL RISK MANAGEMENT
JUST EAT’s activities expose it to a number of financial risks, which are detailed in note 39 to the
consolidated financial statements presented under Part XII (Historical Financial Information).
74
PART XI
CAPITALISATION AND INDEBTEDNESS
1.
CAPITALISATION AND INDEBTEDNESS
The following tables do not reflect the impact of the Offer on JUST EAT’s capitalisation and
indebtedness (including receipt of the net proceeds of the Offer by the Company). Please refer to Part
XIII (Pro Forma Financial Information) for an analysis of the impact of the Offer on the consolidated net
assets of the Group.
Investors should read these tables together with Part X (Operating and Financial Review) and Part XII
(Historical Financial Information) of this document.
1.1 Indebtedness
The Group had no indebtedness as at 31 January 2014.
1.2 Capitalisation
The following table sets out the capitalisation of the Group as at 31 January 2014.
As at 31 January
2014
£ million
Shareholders’ Equity
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share premium account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.0
55.9
1.3
(3.2)
Equity attributable to owners of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54.0
0.3
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54.3
1.3 Net Financial Indebtedness
The following table shows the net financial indebtedness of the Group as at 31 January 2014 as
extracted from the Group’s unaudited accounting records:
As at 31 January
2014
£ million
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65.8
—
Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current financial debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65.8
—
Net current liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current financial indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65.8
—
Net financial funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65.8
75
PART XII
HISTORICAL FINANCIAL INFORMATION
A) ACCOUNTANT’S REPORT ON THE HISTORICAL FINANCIAL INFORMATION RELATING TO
THE GROUP
Deloitte LLP
Abbots House
Abbey Street
Reading
RG1 3BD
The Board of Directors
on behalf of JUST EAT plc
Masters House
107 Hammersmith Road
London
W14 0QH
J.P. Morgan Securities plc
25 Bank Street
Canary Wharf
London
E14 5JP
3 April 2014
Dear Sirs
JUST EAT plc
We report on the financial information for the three years ended 31 December 2013 set out in this
Part XII of the prospectus dated 3 April 2014 of JUST EAT plc (the “Company” and, together with its
subsidiaries, the “Group”) (the “Prospectus”). This financial information has been prepared for
inclusion in the Prospectus on the basis of the accounting policies set out in note 3 to the financial
information. This report is required by Annex I item 20.1 of Commission Regulation (EC) No 809/2004
(the “Prospectus Directive Regulation”) and is given for the purpose of complying with that
requirement and for no other purpose.
Responsibilities
The Directors of the Company are responsible for preparing the financial information in accordance
with International Financial Reporting Standards as adopted by the European Union.
It is our responsibility to form an opinion on the financial information and to report our opinion to you.
Save for any responsibility arising under Prospectus Rule 5.5.3R(2)(f) to any person as and to the
extent there provided, to the fullest extent permitted by law we do not assume any responsibility and
will not accept any liability to any other person for any loss suffered by any such other person as a
result of, arising out of, or in connection with this report or our statement, required by and given solely
for the purposes of complying with Annex I item 23.1 of the Prospectus Directive Regulation,
consenting to its inclusion in the Prospectus.
Basis of opinion
We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing
Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the
76
amounts and disclosures in the financial information. It also included an assessment of significant
estimates and judgments made by those responsible for the preparation of the financial information
and whether the accounting policies are appropriate to the entity’s circumstances, consistently applied
and adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that
the financial information is free from material misstatement whether caused by fraud or other
irregularity or error.
Our work has not been carried out in accordance with auditing or other standards and practices
generally accepted in jurisdictions outside the United Kingdom, including the United States of America,
and accordingly should not be relied upon as if it had been carried out in accordance with those
standards and practices.
Opinion on financial information
In our opinion, the financial information gives, for the purposes of the Prospectus, a true and fair view
of the state of affairs of the Group as at the periods stated and of its profits/losses, cash flows and
changes in equity for the periods stated in accordance with International Financial Reporting Standards
as adopted by the European Union.
Declaration
For the purposes of Prospectus Rule 5.5.3R(2)(f), we are responsible for this report as part of the
Prospectus and declare that we have taken all reasonable care to ensure that the information
contained in this report is, to the best of our knowledge, in accordance with the facts and contains no
omission likely to affect its import. This declaration is included in the Prospectus in compliance with
Annex I item 1.2 of the Prospectus Directive Regulation.
Yours faithfully
Deloitte LLP
Chartered Accountants
Deloitte LLP is a limited liability partnership registered in England and Wales with registered number
OC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK
private company limited by guarantee, whose member firms are legally separate and independent
entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL
and its member firms.
77
B) HISTORICAL FINANCIAL INFORMATION
Consolidated Income Statement
Notes
Year
ended
31 December
2013
£‘000
Year
ended
31 December
2012
£‘000
Year
ended
31 December
2011
£‘000
Continuing operations
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96,753
(9,988)
59,770
(5,062)
33,765
(3,156)
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86,765
54,708
30,609
(1,731)
(968)
(77,286)
(1,624)
(7,547)
(54,679)
(231)
(450)
(31,428)
(79,985)
(63,850)
(32,109)
(521)
(257)
Long term employee incentive costs . . . . . . . . . . . . . . .
Exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other administrative expenses . . . . . . . . . . . . . . . . . . . .
7
8
Total administrative expenses . . . . . . . . . . . . . . . . . .
Share of results of joint ventures and associates . . . . .
18,19
Operating profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . .
Other gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
8
11
11
6,791
3,363
172
(145)
(9,663)
6,946
206
(117)
(1,757)
—
99
(74)
Profit/(loss) before tax . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
10,181
(3,410)
(2,628)
(1,877)
(1,732)
497
6,771
(4,505)
(1,235)
6,976
(205)
(3,871)
(634)
(607)
(628)
6,771
(4,505)
(1,235)
39.7
—
(23.1)
—
(4.1)
—
39.2
—
(23.1)
—
(4.1)
—
Profit/(loss) for the year . . . . . . . . . . . . . . . . . . . . . . . .
Attributable to: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owners of the Company . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings/(loss) per share (pence per share)
Basic earnings/(loss) per Ordinary and Preference
share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings/(loss) per B Ordinary share . . . . . . . . . .
Diluted earnings/(loss) per Ordinary and Preference
share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings/(loss) per B Ordinary share . . . . . . . .
78
32
11
13
Consolidated Statement of Other Comprehensive Income
Profit/(loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . .
Items that may be classified subsequently to profit or
loss:
Exchange differences on translation of foreign
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences on translation of foreign
operations reclassified to profit and loss . . . . . . . . . . . .
Fair value adjustment on available for sale financial
asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences on available for sale financial
asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassified to profit and loss on sale of available for
sale financial asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax relating to components of other comprehensive
income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended
31 December
2013
£‘000
Year ended
31 December
2012
£‘000
Year ended
31 December
2011
£‘000
6,771
(4,505)
(1,235)
30
61
(311)
(152)
30
38
—
—
(233)
4,624
30
—
30
—
—
15
5
(3,450)
64
98
—
(983)
Other comprehensive income/(expense) for the
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
114
(3,925)
3,587
Total comprehensive income/(expense) for the
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,885
(8,430)
2,352
7,068
(183)
(7,801)
(629)
2,985
(633)
6,885
(8,430)
2,352
Attributable to:
Owners of the Company . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . .
79
32
Consolidated Balance Sheet
Note
As at
31 December
2013
£‘000
14
15
16
20
18
19
25
10,245
3,424
5,481
—
7,353
396
940
6,957
3,342
5,013
—
7,136
31
772
4,587
1,334
2,861
6,918
6,915
332
1,026
27,839
23,251
23,973
743
3,872
241
61,620
435
4,492
—
50,026
42
2,432
—
7,858
66,476
54,953
10,332
94,315
78,204
34,305
(33,381)
(1,093)
—
(3,982)
—
(25,020)
(1,564)
—
(2,442)
(718)
(11,024)
(91)
(63)
(1,715)
(485)
(38,456)
(29,744)
(13,378)
28,020
25,209
(3,046)
(442)
(1,212)
(101)
(498)
(703)
(1,287)
—
—
(1,360)
(751)
(645)
—
(2,253)
(1,990)
(2,756)
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(40,709)
(31,734)
(16,134)
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53,606
46,470
18,171
2
55,862
—
1,320
(3,937)
2
55,764
56
1,477
(10,476)
1
19,498
—
5,414
(6,899)
53,247
46,823
18,014
Non-current assets
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . .
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in joint ventures . . . . . . . . . . . . . . . . . . . . . . .
Investments in associates . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . .
Current tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .
21
22
35
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . .
Current tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions for liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
24
38
26
Net current assets/(liabilities) . . . . . . . . . . . . . . . . . . . .
Non-current liabilities
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions for liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share premium account . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares to be issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
38
26
27
28
29
28
30
31
Equity attributable to owners of the Company . . . . . .
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80
32
359
53,606
As at
31 December
2012
£‘000
(353)
46,470
As at
31 December
2011
£‘000
157
18,171
81
1
—
—
—
—
—
—
—
1
—
—
—
1
—
—
—
—
—
2
—
—
—
—
—
—
—
—
—
—
2
31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55,862
4,680
—
—
—
14,818
—
—
—
19,498
—
—
—
36,266
—
—
—
—
—
55,764
—
—
—
—
98
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
56
—
56
—
—
—
29
(85)
—
—
—
—
—
1,320
1,994
—
4,570
(1,155)
—
—
—
5
5,414
—
(539)
57
—
—
—
(5)
—
(3,450)
1,477
—
61
—
—
—
—
—
(22)
38
(234)
870
(607)
4,570
(983)
14,780
97
(718)
5
18,014
(3,871)
(539)
64
36,250
480
(176)
(5)
56
(3,450)
46,823
6,976
61
15
29
13
1,731
(2,183)
(22)
38
(234)
Total
£’000
(3,937) 53,247
(5,805)
(607)
—
172
(38)
97
(718)
—
(6,899)
(3,871)
—
7
(17)
480
(176)
—
—
—
(10,476)
6,976
—
15
—
—
1,731
(2,183)
—
—
—
Share
premium Shares to be Other Retained
issued
reserves earnings
Share capital account
£’000
£’000
£’000
£’000
£’000
1 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax charged to equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issue of capital (net of costs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share based payment charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments arising from changes in NCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NCI foreign exchange movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax charged to equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issue of capital (net of costs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share based payment charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments arising from changes in NCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NCI foreign exchange movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingently issuable shares (note 28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sale of AFS asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences on translation of foreign operations . . . . . . . . . . . . . . . . .
Deferred tax charged to equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingently issuable shares (note 28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issue of capital (net of costs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share based payment charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments arising from changes in NCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NCI foreign exchange movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassified to income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statement of Changes in Equity
359
(136)
(628)
—
—
—
—
926
(5)
157
(634)
—
—
—
—
119
5
—
—
(353)
(205)
—
—
—
—
—
895
22
—
—
53,606
734
(1,235)
4,570
(983)
14,780
97
208
—
18,171
(4,505)
(539)
64
36,250
480
(57)
—
56
(3,450)
46,470
6,771
61
15
29
13
1,731
(1,288)
—
38
(234)
Non-controlling
interest
Total equity
£’000
£’000
Consolidated Cash Flow Statement
Note
Net cash inflow from operating activities . . . . . . . . .
Investing activities
Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Funding provided to joint ventures and associates . . . .
Net cash outflow on investment in OnlinePizza Norden
AB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash inflow upon sale of OnlinePizza Norden
AB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash outflow on acquisition of subsidiaries . . . . . . .
Net cash outflow on acquisition of interest in jointventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of property, plant and equipment . . . . . . . .
Purchases of intangible assets . . . . . . . . . . . . . . . . . . . .
35
Year
ended
31 December
2013
£‘000
Year
ended
31 December
2012
£‘000
19,213
10,103
Year
ended
31 December
2011
£‘000
4,885
172
(193)
223
(543)
—
—
(1,628)
20
33
—
(3,716)
6,397
(5,080)
—
(3,144)
34
—
(3,283)
(661)
(332)
(3,805)
—
(7,154)
(2,101)
—
(7,681)
(3,140)
(14,552)
—
13
—
(54)
35,230
(9)
(1,041)
14,780
(1,096)
Net cash from financing activities . . . . . . . . . . . . . . .
13
35,167
12,643
Net increase in cash and cash equivalents . . . . . . .
11,545
42,130
2,976
Cash and cash equivalents at beginning of year . .
Effect of changes in foreign exchange rates . . . . . . . . .
50,026
49
7,858
38
4,934
(52)
Cash and cash equivalents at end of year . . . . . . . .
61,620
50,026
7,858
Net cash used in investing activities . . . . . . . . . . . . .
Financing activities
Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds arising on issue of shares . . . . . . . . . . . .
Repayment in bank overdrafts . . . . . . . . . . . . . . . . . . . .
82
24
28,29
24
99
(624)
1.
General information
JUST EAT plc (the “Company”) and its subsidiaries (the “Group”) operate the world’s largest online
marketplace for restaurant delivery. Information on the Group’s structure is provided in note 17. The
Company is incorporated and domiciled in the United Kingdom. The address of its registered office is
Masters House, 107 Hammersmith Road, London W14 0QH. The historical financial information (the
“financial information”) presented is as at and for the years ended 31 December 2013, 31 December
2012 and 31 December 2011.
2.
Basis of preparation
The financial information has been prepared in accordance with International Financial Reporting
Standards (“IFRS”) and International Financial Reporting Interpretation Committee interpretations as
endorsed by the European Union, and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS, and therefore comply with Article 4 of the EU IAS Regulation and
IFRS as issued by the International Accounting Standards Board.
The financial information has been prepared on the historical cost basis, except for certain financial
instruments which have been measured at fair value. The principal accounting policies adopted are set
out below. These polices have been consistently applied to all years presented.
3.
Summary of significant accounting policies
Basis of consolidation
The financial information represents the consolidated financial information of the Company and entities
controlled by the Company (its subsidiaries) made up to 31 December each year.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its power over the investee.
Specifically, the Group controls an investee if and only if the Group has i) power over an investee; ii)
exposure, or rights, to variable returns from its involvement with the investee; and iii) the ability to use
its power over the investee to affect the amount of the investor’s returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group
considers all relevant facts and circumstances in assessing whether it has power over an investee,
including i) the contractual arrangement with the other vote holders of the investee; ii) rights arising
from other contractual arrangements; and iii) the Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins
when the Group obtains control over the subsidiary and ceases when the Group loses control of the
subsidiary.
Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are
included in the consolidated income statement from the date the Group gains control until the date the
Group ceases to control the subsidiary.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the
accounting policies used into line with those used by the Group. All intra-group transactions, balances,
income and expenses are eliminated on consolidation.
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The
interests of non-controlling shareholders may be initially measured at fair value or at the non-controlling
interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of
measurement is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying
amount of non-controlling interests is the amount of those interests at initial recognition plus the noncontrolling interests’ share of subsequent changes in equity. Total comprehensive income is attributed
to non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for
as equity transactions. The carrying amount of the Group’s interests and the non-controlling interests
83
are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between
the amount by which the non-controlling interests are adjusted and the fair value of the consideration
paid or received is recognised directly in equity and attributed to the owners of the Company.
When the Group loses control of a subsidiary, it derecognises the carrying amount of any noncontrolling interests and the cumulative translation differences recorded in equity. It further recognises
the fair values of the consideration received and any investment retained, with any surplus or deficit
being recognised in profit or loss.
Amounts previously recognised in other comprehensive income in relation to the subsidiary are
accounted for (i.e., reclassified to profit or loss or transferred directly to retained earnings) in the same
manner as would be required if the relevant assets or liabilities are disposed of. The fair value of any
investment retained in the former subsidiary at the date when control is lost is regarded as the fair
value on initial recognition for subsequent accounting under IAS 39 ‘Financial Instruments: Recognition
and Measurement’ or, when applicable, the costs on initial recognition of an investment in an associate
or jointly controlled entity.
Going concern
The financial information has been prepared on a going concern basis, which assumes that the Group
will continue to be able to meet its liabilities as they fall due for the foreseeable future. At the date of
approving the financial information, the Directors are not aware of any circumstances that could lead to
the Group being unable to settle commitments as they fall due during the twelve months from date of
signing.
At 31 December 2013, the Group had net current assets of £28.0 million, cash of £61.6 million and
generated cash inflows from operating activities of £19.2 million in the year ended 31 December 2013.
Note 39 describes the Group’s objectives, policies and processes for managing its exposure to credit
risk and liquidity risk.
New standards, interpretations and amendments adopted
The Group applied, for the first time, certain standards, amendments to existing standards and
interpretations for the year ended 31 December 2013. The nature and the impact of these are outlined
below.
IFRS 10 ‘Consolidated Financial Statements’ (“IFRS 10”) and IAS 27 (2011) ‘Separate Financial
Statements’ (“IAS 27”)
IFRS 10 establishes a single control model that applies to all entities including special purpose entities.
IFRS 10 replaces the parts of previously existing IAS 27 ‘Consolidated and Separate Financial
Statements’ that dealt with consolidated financial statements and Standard Interpretations Committee
Interpretation (“SIC”)-12 ‘Consolidation – Special Purpose Entities’. IFRS 10 changes the definition of
control such that an investor controls an investee when it is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to affect those returns through its power over
the investee. To meet the definition of control in IFRS 10, all three criteria must be met, including:
i)
an investor has power over an investee;
ii)
the investor has exposure, or rights, to variable returns from its involvement with the investee;
and
iii)
the investor has the ability to use its power over the investee to affect the amount of the
investor’s returns.
The adoption of IFRS 10 had no impact on the consolidation of investments held by the Group.
IFRS 11 ‘Joint Arrangements’ (“IFRS 11”) and IAS 28 (2011) ‘Investment in Associates and Joint
Ventures’ (“IAS 28”)
IFRS 11 replaces IAS 31 ‘Interests in Joint Ventures’ and SIC-13 ‘Jointly-controlled Entities — Nonmonetary Contributions by Venturers’. The provisions of IFRS 11 include the removal of the option to
account for jointly controlled entities using proportionate consolidation. Instead, jointly controlled
entities that meet the definition of a joint venture under IFRS 11 must be accounted for using the equity
method.
84
The adoption of IFRS 11 resulted in Eat.ch GmbH (“Eat.ch”) being reclassified to an associate in
accordance with IAS 28 as it did not satisfy the provisions of IFRS 11 to be classified as a joint
arrangement. This reclassification is applicable from its initial acquisition in March 2011 up to
31 December 2012. The reclassification did not have any effect on the reported financial performance
and financial position of the Group for the years ended 31 December 2012 and 2011 as the Group
previously accounted for its investment in Eat.ch under the equity method of accounting in accordance
with IAS 31 ‘Interests in Joint Ventures’. In January 2013 the Group gained control of Eat.ch, from
which time it was fully consolidated.
IFRS 12 ‘Disclosure of Interests in Other Entities’ (“IFRS 12”)
IFRS 12 sets out the requirements for disclosures relating to an entity’s interests in subsidiaries, joint
arrangements, associates and structured entities. The requirements in IFRS 12 are more
comprehensive than the previously existing disclosure requirements for subsidiaries (i.e., where a
subsidiary is controlled with less than a majority of voting rights). The Group does not have any
material non-controlling interests. It does not have any unconsolidated structured entities. IFRS 12
disclosures are provided in notes 17 and 32.
IFRS 13 ‘Fair Value Measurement’ (“IFRS 13”)
IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13
does not change when an entity is required to use fair value, but rather provides guidance on how to
measure fair value under IFRS when fair value is required or permitted. The application of IFRS 13 has
not materially impacted the fair value measurements carried out by the Group.
IFRS 13 also requires specific disclosures on fair values, some of which replace existing disclosure
requirements in other standards, including IFRS 7 ‘Financial Instruments: Disclosures’. The Group
provides the IFRS 13 disclosures in note 39.
IAS 1 ‘Presentation of Financial Statements’ — Items of other comprehensive income
(Amendment) (“IAS 1”)
The amendments to IAS 1 introduce a grouping of items presented in other comprehensive income.
Items that could be reclassified (or recycled) to profit or loss at a future point in time now have to be
presented separately from items that will never be reclassified.
The amendment affected presentation only and had no impact on the Group’s financial position or
performance.
IAS 36 ‘Impairment of Assets’ — Recoverable amount disclosures for non-financial assets
(Amendments) (“IAS 36”)
These amendments remove the unintended consequences of IFRS 13 on the disclosures required
under IAS 36. In addition, these amendments require disclosure of the recoverable amounts for the
assets or CGUs for which impairment loss has been recognised or reversed during the period.
These amendments are effective retrospectively for annual periods beginning on or after 1 January
2014 with earlier application permitted, provided IFRS 13 is also applied. The Group has early adopted
these amendments to IAS 36 in the current period.
The amendment affected presentation only and had no impact on the Group’s financial position or
performance presented in this financial information.
Early adoption
The new standards IFRS10, IFRS11, IFRS 12, IAS 27 and IAS 28 are effective for financial periods
beginning on or after 1 January 2013. These standards have been endorsed by the EU for financial
periods beginning on or after 1 January 2014 with early adoption being permitted. The Group has early
adopted these standards and amendments. Other new standards and amendments to standards also
apply for the first time in 2013. However, they do not impact the financial information of the Group and
have therefore not been disclosed.
85
The following new standards and amendments to existing standards are in issue, but have not been
early adopted by the Group as they are still subject to EU endorsement:
•
Amendments to IFRS 10 ‘Consolidated Financial Statements’, IFRS 12 ‘Disclosure of
Interests in Other Entities’ and IAS 27 (2011) ‘Separate Financial Statements’ on
consolidation for investment entities (effective 1 January 2014); and
•
IFRS 9 ‘Financial Instruments’ (effective 1 January 2015).
The Directors do not expect that the adoption of the standards listed above will have a material impact
on the financial information of the Group in future periods.
Business combinations and goodwill
Businesses combinations are accounted for using the acquisition method. The consideration for each
acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given,
liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of
the acquiree. For each business combination, the Group elects whether to measure the non-controlling
interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net
assets. Acquisition-related costs are recognised in profit or loss as incurred and included within other
administrative expenses.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a
contingent consideration arrangement, measured at its acquisition-date fair value. Contingent
consideration classified as an asset or liability that is a financial instrument and within the scope of IAS
39 ‘Financial Instruments: Recognition and Measurement’, is measured at fair value with changes in
fair value recognised either in profit or loss or as a change to Other Comprehensive Income (“OCI”). If
the contingent consideration is not within the scope of IAS 39, it is measured in accordance with the
appropriate IFRS. Subsequent changes in such fair values are adjusted against the cost of acquisition
where they qualify as measurement period adjustments (see below).
Where a business combination is achieved in stages, the Group’s previously-held interests in the
acquired entity are remeasured to fair value at the acquisition date (i.e., the date the Group attains
control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from
interests in the acquiree prior to the acquisition date that have previously been recognised in other
comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if
that interest were disposed of.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for
recognition under IFRS 3 (2008) ‘Business Combinations’ (“IFRS 3”) are recognised at their fair value
at the acquisition date, except for certain items which are measured in accordance with the relevant
IFRSs.
If the initial accounting for a business combination is incomplete by the end of the reporting period in
which the combination occurs, the Group reports provisional amounts for the items for which the
accounting is incomplete. Those provisional amounts are adjusted during the measurement period
(see below), or additional assets or liabilities are recognised, to reflect new information obtained about
facts and circumstances that existed as of the acquisition date that, if known, would have affected the
amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains
complete information about facts and circumstances that existed as of the acquisition date, and is
subject to a maximum of one year.
Goodwill arising in a business combination is recognised as an asset at the date that control is
acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the fair value of the
acquirer’s previously held equity interest (if any) in the entity over the net of the acquisition-date
amounts of the identifiable assets acquired and the liabilities assumed.
If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets
exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the
excess is recognised immediately in profit or loss as a bargain purchase gain.
86
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of
impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to
benefit from the synergies of the combination. Cash-generating units to which goodwill has been
allocated are tested for impairment annually, or more frequently when there is an indication that the
unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying
amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying
amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a
subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the
profit or loss on disposal. The Group’s policy for goodwill arising on the acquisition of an associate is
described above.
Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee, but is not control or
joint control over those policies.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities
require unanimous consent of the parties sharing control.
The considerations made in determining significant influence or joint control are similar to those
necessary to determine control over subsidiaries.
The Group has investments in associates and jointly controlled entities and recognises its interests
using the equity method.
Under the equity method, the investment in an associate or a joint venture is initially recognised at
cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of
net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate
or joint venture is included in the carrying amount of the investment and is neither amortised nor
individually tested for impairment.
The consolidated income statement reflects the Group’s share of the results of operations of the
associate or joint venture. Any change in OCI of those investees is presented as part of the Group’s
OCI. In addition, when there has been a change recognised directly in the equity of the associate or
joint venture, the Group recognises its share of any changes, when applicable, in the statement of
changes in equity. Unrealised gains and losses resulting from transactions between the Group and the
associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.
The aggregate of the Group’s share of profit or loss of an associate and a joint venture is shown on the
face of the consolidated income statement outside operating profit or loss and represents profit or loss
after tax and non-controlling interests in the subsidiaries of the associate or joint venture.
Upon loss of significant influence over the associate or joint control over the joint venture, the Group
measures and recognises any retained investment at its fair value. Any difference between the carrying
amount of the associate or joint venture upon loss of significant influence or joint control and the fair
value of the retained investment and proceeds from disposal is recognised in profit or loss.
Aggregate amounts of current and long-term assets and liabilities, income and expenses are disclosed
in note 18 and 19. Where applicable, the aggregate amount of capital commitments and contingent
liabilities are also disclosed.
Fair value measurement
The Group measures certain financial instruments, such as deferred contingent consideration, at fair
value at each balance sheet date.
87
The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at
amortised cost in the financial information approximate their fair values. The fair values of financial
instruments measured at amortised cost are disclosed in note 39.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2 Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable; and
Level 3 Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
For assets and liabilities that are recognised at fair value in the financial statements on a recurring
basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.
The Group presents the valuation results to the audit committee and the Group’s independent auditors.
This includes a discussion of the major assumptions used in the valuations.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on
the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value
hierarchy as explained above.
Revenue recognition
Revenue is derived from commission, JustConnect Terminal (“JCT”) box equipment fee, connection
fees, payment card fees and top-placement fees.
Commission revenue, earned from restaurants, is earned and recognised at the point of order
fulfilment to the restaurant’s customers. Commission is measured at the fair value of the consideration
received or receivable and represents amounts receivable for goods and services provided in the
normal course of business, net of discounts, VAT and other sales-related taxes.
JCTs are order confirmation terminals situated at restaurant sites for the purposes of communicating
between end user customers and restaurants via the central JUST EAT ordering infrastructure. JCT
equipment fees are deferred to the balance sheet and recognised on a straight line basis over 36
months. This is considered to be an appropriate time period as the fair value of the consideration
received or receivable for the JCT.
The JCT connection fee revenue is payable on connection but deferred and recognised on a straight
line basis over 12 months. The connection fees are non-refundable.
Revenue from payment card fees is recognised when the service is completed, in line with the revenue
recognised on commissions. This is the point at which an order is successfully processed and the
Group has no remaining transactional obligations.
Revenue from top-placement fees is recognised over the period in which the service is rendered.
Leasing
The Group as lessee
Rentals payable under operating leases are charged to income on a straight-line basis over the term of
the relevant lease except where another more systematic basis is more representative of the time
pattern in which economic benefits from the lease asset are consumed. Contingent rentals arising
under operating leases are recognised as an expense in the period in which they are incurred.
88
In the event that lease incentives are received to enter into operating leases, such incentives are
recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental
expense on a straight-line basis, except where another systematic basis is more representative of the
time pattern in which economic benefits from the leased asset are consumed.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Foreign currencies
The financial information of each group company is presented in the currency of the primary economic
environment in which it operates (its functional currency). For the purpose of the consolidated financial
information, the results and financial position of each group company are expressed in Pound Sterling,
which is the functional currency of the Company, and the presentation currency for the consolidated
financial information.
In preparing the financial statements of the individual companies, transactions in currencies other than
the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing
on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary
items carried at fair value that are denominated in foreign currencies are translated at the rates
prevailing at the date when the fair value was determined. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise.
For the purpose of presenting consolidated financial information, the monetary assets and liabilities of
the Group’s foreign operations are translated at exchange rates prevailing on the balance sheet date.
Income and expense items are translated at the average exchange rates for the period, unless
exchange rates fluctuate significantly during that period, in which case the exchange rates at the date
of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive
income and accumulated in equity (attributed to non-controlling interests as appropriate).
On the disposal of a foreign operation (i.e., a disposal of the Group’s entire interest in a foreign
operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation,
loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of significant
influence over an associate that includes a foreign operation), all of the accumulated exchange
differences in respect of that operation attributable to the Group are reclassified to profit or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets
and liabilities of the foreign entity and translated at the closing rate.
Operating profit or loss
Operating profit or loss is stated after charging for long-term employee incentive provisions,
exceptional items and foreign exchange gains or losses but before other gains and losses, finance
income and finance costs.
Exceptional items
Exceptional items are items that, by virtue of their nature and incidence, have been disclosed
separately in order to draw them to the attention of the reader of the financial information.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall
due.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
89
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
reported in the income statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The
Group’s liability for current tax is calculated using tax rates that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the financial information and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition of goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, associates and interests in joint ventures, except
where the group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of
the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
settled or the asset is realised based on tax laws and rates that have been enacted at the balance
sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items
charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in
other comprehensive income.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current
tax assets against current tax liabilities and when they relate to income taxes levied by the same
taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Intangible assets
The Group has four classes of intangible asset: patents, licences and intellectual property (“IP”),
restaurant lists, brands and development costs.
Patents, licences and IP
Patents, licences and IP are included at cost and amortised in equal annual instalments over their
useful economic life, which is typically three to five years depending on the period over which benefits
are expected to be realised from the asset. Provision is made for any impairment.
Restaurant lists
A restaurant list intangible asset is recorded as part of the acquisition accounting for business
combinations or when an associate is acquired or joint venture established. They are initially recorded
at fair value and amortised on a straight line basis over the useful economic life of the asset. This
period of time is the period over which the acquired restaurant list is reasonably expected to confer
economic benefits to the Group, which is usually between four and ten years. The fair values of
restaurant lists are determined with reference to the present value of their after tax cash flows
projected over their remaining useful lives. Cash flows and discount rates used in the value-in-use
calculation are risk adjusted to the extent deemed necessary by management to accurately reflect local
risks and uncertainties associated with the asset.
90
Brands
A brand intangible asset is recorded as part of the acquisition accounting for business combinations or
when an associate is acquired or joint venture established. They are initially recorded at fair value and
amortised, on a straight line basis over the useful economic life of the asset, which is usually between
15 months and four years. This period of time is the period over which the acquired brand is
reasonably expected to confer economic benefits to the Group. Fair value of brand assets are
established using the relief from royalty valuation method. Cash flows and discount rates used in the
relief from royalty model are risk adjusted to the extent deemed necessary by management to
accurately reflect local risks and uncertainties associated with the asset.
Research and development
All ongoing research expenditure is expensed in the period in which it is incurred. Where an application
or product is technically feasible, production and sale are intended, a market exists, expenditure can
be measured reliably, and sufficient resources are available to complete the project, development
costs are capitalised and amortised on a straight-line basis over the estimated useful life of the
respective product.
Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation and any provision for impairment.
Depreciation is provided on all property, plant and equipment, at rates calculated to write off the cost,
less estimated residual value, of each asset on a straight-line basis over its expected useful life, as
follows:
Fixtures and fittings
Equipment
Leasehold improvements
33% per annum
33% per annum
20% per annum or the period of the lease if shorter
Impairment of property, plant and equipment and intangible assets excluding goodwill
Under IFRS, the Group is required to review for impairment when indicators of impairment exist. On
these occasions, the Group reviews the carrying amounts of its property, plant and equipment and
intangible assets to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows
that are independent from other assets, the Group estimates the recoverable amount of the cashgenerating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for
impairment at least annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value-in-use. In assessing valuein-use the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit, “CGU”) is estimated to be less than its
carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An
impairment loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset (or CGU) in prior years. A reversal of an impairment loss is recognised
immediately in profit or loss.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials.
Cost is calculated using the first-in first-out method. Net realisable value represents the estimated
selling price less all estimated costs of completion and costs to be incurred in marketing, selling and
distribution.
91
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group
becomes a party to the contractual provisions of the instrument.
Financial assets
All financial assets are recognised and derecognised on a trade date where the purchase or sale of a
financial asset is under a contract whose terms require delivery of the financial asset within the
timeframe established by the market concerned, and are initially measured at fair value, plus
transaction costs, except for those financial assets classified as at fair value through profit or loss,
which are initially measured at fair value.
Financial assets are classified into the following specified categories: financial assets ‘at fair value
through profit or loss’ (“FVTPL”), ‘held-to-maturity’ investments, ‘available-for-sale’ (“AFS”) financial
assets and ‘loans and receivables’. The classification depends on the nature and purpose of the
financial assets and is determined at the time of initial recognition. The Group historically has held AFS
financial assets and ‘loans and receivables’.
Available-for-sale financial assets
The Group had investments in unlisted shares that were not traded in an active market but were
classified as AFS financial assets and stated at fair value (because the Directors considered that fair
value could be reliably measured). Fair value was determined in the manner described in note 39.
Gains and losses arising from changes in fair value were recognised in other comprehensive income
and accumulated in the AFS reserve with the exception of impairment losses, interest calculated using
the effective interest method and foreign exchange gains and losses on monetary assets, which were
recognised in other comprehensive income. Where the investment was disposed of or was determined
to be impaired, the cumulative gain or loss previously recognised in the AFS reserve was reclassified
to profit or loss.
The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign
currency and translated at the spot rate at the balance sheet date. The foreign exchange gains and
losses that are recognised in profit or loss are determined based on the amortised cost of the monetary
asset. Other foreign exchange gains and losses are recognised in other comprehensive income.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not
quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are
measured at amortised cost using the effective interest method, less any impairment. Interest income
is recognised by applying the effective interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
Impairment of financial assets
Financial assets, other than those held at FVTPL, are assessed for indicators of impairment at each
balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of
one or more events that occurred after the initial recognition of the financial asset, the estimated future
cash flows of the investment have been affected. Evidence of impairment may include indications that
a receivable or a group of receivables is experiencing significant financial difficulty, default or
delinquency in payment, the probability that they will enter bankruptcy or other financial reorganisation
and where observable data indicate that there is a measurable decrease in the estimated future cash
flows.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously
recognised in other comprehensive income are reclassified to profit or loss in the period.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the
asset expire, or when it transfers the financial asset and substantially all the risks and rewards of
92
ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the
risks and rewards of ownership and continues to control the transferred asset, the Group recognises its
retained interest in the asset and an associated liability for amounts it may have to pay. If the Group
retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group
continues to recognise the financial asset and also recognises a collateralised borrowing for the
proceeds received.
Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’.
The Group currently does not hold any financial liabilities ‘at FVTPL’.
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction
costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest
method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the financial liability, or, where
appropriate, a shorter period, to the net carrying amount on initial recognition.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are
discharged, cancelled or they expire.
Share-based payments
Equity-settled share-based payments to employees and others providing similar services are
measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect
of non-market-based vesting conditions. Details regarding the determination of the fair value of equitysettled share-based transactions are set out in note 37.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on
a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that
will eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity
instruments expected to vest as a result of the effect of non-market-based vesting conditions. The
impact of the revision of the original estimates, if any, is recognised in profit or loss such that the
cumulative expense reflects the revised estimate, with a corresponding adjustment to the share based
payment reserve.
4
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies, which are described in note 3, the Directors are
required to make judgements, estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods if the revision affects both current and future
periods. The key assumptions concerning the future and other key sources of estimation uncertainty at
the balance sheet date used in preparing these accounts are:
Acquired intangible assets
An intangible resource acquired with a subsidiary undertaking is recognised as an intangible asset if it
is separable from the acquired business or arises from contractual or legal rights, is expected to
generate future economic benefits and its fair value can be measured reliably. Acquired intangible
93
assets, comprising brands and restaurant lists, are amortised through the consolidated income
statement on a straight-line basis over their estimated economic lives of between 15 months and ten
years. Significant judgement is required in determining the fair value and economic lives of acquired
intangible assets.
Share-based payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair
value of the equity instruments at the date at which they are granted. Estimating fair value for sharebased payment transactions requires determination of the most appropriate valuation model, which is
dependent on the terms and conditions of the grant. Judgements are applied in relation to estimations
of the number of options that will vest and of the fair value of the options granted to employees.
Estimates of fair value are made using a widely recognised share option value model and are referred
to third party experts where necessary. Judgement is applied in determining the assumptions input into
the share option value model.
Impairment of assets
Impairment exists when the carrying value of an asset or CGU exceeds its recoverable amount, which
is the higher of its fair value less costs of disposal and its value-in-use. Determining whether an asset
is impaired requires an estimation of the value-in-use of the cash-generating units to which the asset
has been allocated. The value-in-use calculation is based on a discounted cash flow model. The cash
flows are derived from the budget for the next three years and do not include restructuring activities
that the Group is not yet committed to or significant future investments that will enhance the asset’s
performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used
for the discounted cash flow model as well as the expected future cash inflows and the growth rate
used for extrapolation purposes. The key assumptions used to determine the recoverable amount for
the different CGUs, including a sensitivity analysis, are disclosed and further explained in note 14.
Revenue recognition
Revenue is partly derived from JCT equipment fees and connection fees charged to restaurants. JCTs
are order confirmation terminals situated at restaurant sites for the purposes of communicating
between end user customers and restaurants via the central JUST EAT ordering infrastructure.
JCT equipment fee is deferred to the balance sheet and recognised on a straight line basis over
36 months. This is considered to be an appropriate time period as the fair value of the consideration
received or receivable for the JCT. Judgement is applied in determining the period over which the JCT
equipment fee revenue is recognised.
The JCT connection fee revenue is payable on connection but deferred and recognised on a straight
line basis over 12 months. The connection fees are non-refundable and 12 months is considered to be
the required period of service. Judgement is applied in determining the period over which the
connection and installation fee is earned.
Deferred taxation
The recognition of deferred tax assets is based upon whether it is more likely than not that sufficient
and suitable taxable profits will be available in the future against which the reversal of temporary
differences can be deducted. To determine the future taxable profits, reference is made to the latest
available profit forecasts. Where the temporary differences are related to losses, relevant tax law is
considered to determine the availability of the losses to offset against the future taxable profits.
Recognition of deferred tax assets therefore involves judgement regarding the future financial
performance of the particular legal entity or tax group in which the deferred tax asset has been
recognised.
94
5.
Operating segments
The Group has three reportable segments: United Kingdom; Denmark (core business); and Other.
Each segment includes businesses with similar operating and marketing characteristics. Segment
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,
‘other gains and losses’ (being profits or losses on the disposal of operations), exceptional items and
foreign exchange gains and losses. At a segmental level, Underlying EBITDA also excludes intragroup franchise fee arrangements and incorporates an allocation of Group technology and other
central costs (both of which net out on a consolidated level).
Year ended
31 December
2013
£‘000
Year ended
31 December
2012
£‘000
Year ended
31 December
2011
£‘000
Segment revenue
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: inter-segment sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69,920
(1,105)
42,140
(1,034)
21,797
(404)
Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Head Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68,815
11,541
16,257
140
41,106
9,969
8,695
—
21,393
8,832
3,540
—
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96,753
59,770
33,765
Total 2013 revenues in Denmark (including the non-core Just Delivery business) were £13.3 million
(2012: 11.2 million; 2011: £9.8 million). The non-core element of Denmark has been included in the
“Other” segment in the table above.
Year ended
31 December
2013
£‘000
Year ended
31 December
2012
£‘000
Year ended
31 December
2011
£‘000
25,519
4,641
(11,755)
13,722
4,025
(13,136)
4,805
3,159
(6,279)
18,405
4,611
1,685
432
(4,760)
(160)
(2,173)
(213)
(1,373)
Underlying EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long term employee incentive costs (note 7) . . . . . . . . . . . . . . .
Exceptional items (note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation differences . . . . . . . . . . . . . . . . . . .
Depreciation — Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortisation — Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortisation — Joint ventures and
associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,077
(1,731)
(968)
(539)
(2,708)
(919)
2,278
(1,624)
(7,547)
(120)
(1,760)
(529)
99
(231)
(450)
138
(1,114)
(155)
(421)
(361)
(44)
Operating profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other gains (note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,791
3,363
27
(9,663)
6,946
89
(1,757)
—
25
Profit/(loss) before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,181
(2,628)
(1,732)
Segment underlying EBITDA
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of equity accounted joint ventures and associates
(excluding depreciation and amortisation) . . . . . . . . . . . . . . .
Head office costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
95
Segment assets and liabilities
Assets as at 31 December
2013
2012
2011
£‘000
£‘000
£‘000
United Kingdom . . . . . . . . . . . . . . . . . .
Denmark . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total segment assets/(liabilities) . . . . .
Head office . . . . . . . . . . . . . . . . . . . . . .
Investment in OnlinePizza Norden . . .
Joint ventures . . . . . . . . . . . . . . . . . . . .
Associated undertakings . . . . . . . . . . .
47,832
10,277
18,153
26,370
13,128
21,786
76,262
61,284
315,214 125,765
—
—
7,353
7,136
396
31
Liabilities as at 31 December
2013
2012
2011
£‘000
£‘000
£‘000
8,085
10,937
7,812
(26,136)
(4,435)
(16,977)
26,834
(47,548)
63,477 (134,837)
6,918
—
6,915
—
332
—
(17,275)
(6,312)
(20,702)
(9,963)
(5,812)
(6,347)
(44,289) (22,122)
(68,988) (40,127)
—
—
—
—
—
—
399,225 194,216 104,476 (182,385) (113,277) (62,249)
Consolidation adjustments:
Elimination of intercompany debtors/
creditors . . . . . . . . . . . . . . . . . . . . . . .
Elimination of intercompany
investments . . . . . . . . . . . . . . . . . . . .
Other consolidation adjustments . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(143,435) (84,149) (47,443)
143,412
(161,958) (32,767) (23,577)
483
904
849
94,315
78,204
Additions of plant, property and equipment, intangible assets,
depreciation and amortisation
34,305
—
(1,736)
(40,709)
Additions year ended
31 December
2013
2012
2011
£‘000
£‘000
£‘000
84,149
47,443
—
(2,606)
—
(1,328)
(31,734) (16,134)
Depreciation and
amortisation year ended
31 December
2013
2012
2011
£‘000
£‘000
£‘000
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,772
2,941 1,734 1,372 1,069
99
322
76
208
161
5,181 11,956 3,755 1,390
787
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Head office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,052 15,219 5,565 2,970 2,017 1,210
1,435
1,213
260
657
272
59
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,487 16,432 5,825 3,627 2,289 1,269
6.
773
104
333
Operating profit/(loss)
Profit/(loss) for the year has been arrived at after charging/(crediting):
Depreciation of property, plant and equipment (note 16) . . . . .
Amortisation of intangible assets (note 15) . . . . . . . . . . . . . . . .
Operating lease charges (note 36) . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange loss/(gain) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Staff costs (note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bad debt expense (see note 22) . . . . . . . . . . . . . . . . . . . . . . . . .
Exceptional items (note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on sale of property, plant and equipment . . . . . . . . . . . . .
7.
Year ended
31 December
2013
£‘000
Year ended
31 December
2012
£‘000
Year ended
31 December
2011
£‘000
2,708
919
1,840
539
36,094
248
968
61
1,760
529
1,546
120
26,367
411
7,547
32
1,114
155
613
(138)
17,850
179
450
34
Long term employee incentive costs
The total expense recorded in relation to the long term employee incentives was £1.7 million
(2012: £1.6 million; 2011: £0.2 million). This charge includes £1.7 million (2012: £0.5 million;
2011: £0.2 million) in relation to share based payments (see note 37). The 2012 charge also includes
bonuses, of £1.1 million, paid to certain of the Group’s senior management for their long term
performance and the Group’s achievement of certain longer term goals in 2012.
96
8.
Exceptional items and other gains
Year ended
31 December
2013
£‘000
Year ended
31 December
2012
£‘000
Year ended
31 December
2011
£‘000
Exceptional items
Impairment charges (note 14) . . . . . . . . . . . . . . . . . . . . . . . . . . .
IPO costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Release of contingent consideration (note 26) . . . . . . . . . . . . . .
307
1,413
88
(840)
7,320
—
227
—
18
—
432
—
Total exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
968
7,547
450
—
4,274
—
Other gains
Profit on sale of OnlinePizza Norden AB (note 20) . . . . . . . . . .
Profit on deemed disposal of Just-Eat Benelux BV
(note 33) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit on deemed disposal of Achindra Online Marketing
Private Limited (note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit on deemed disposal of Eat.ch GmbH (note 33) . . . . . . . .
—
2,672
—
281
3,082
—
—
—
—
Total other gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,363
6,946
—
In January 2012, the Group acquired the remaining 44% shareholding in Just-Eat Benelux BV. A profit
of £2.7 million was recognised on the deemed disposal of the Group’s previous joint venture interest in
Just-Eat Benelux BV. On 23 March 2012, the Group realised its investment in OnlinePizza Norden AB
through a sale of its interest to a third party for £6.7 million. The net profit on disposal, after including
£0.3 million of due diligence costs was £4.3 million.
9.
Auditor’s remuneration
The Group obtained the following services from its auditors:
Year ended
31 December
2013
£‘000
Year ended
31 December
2012
£‘000
Year ended
31 December
2011
£‘000
Fees payable to Deloitte for the audit of the Company’s
financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees payable to Deloitte and its associates for the audit of the
Company’s subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75
44
45
140
134
90
Total audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
215
178
135
— Audit-related assurance services . . . . . . . . . . . . . . . . . .
— Taxation compliance services . . . . . . . . . . . . . . . . . . . . .
— Taxation advisory services . . . . . . . . . . . . . . . . . . . . . . .
— Corporate finance services . . . . . . . . . . . . . . . . . . . . . . .
— Other services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64
24
82
443
18
50
56
297
154
8
—
10
11
103
3
Total non-audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
631
565
127
Total Deloitte fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
846
743
262
Fees payable to other auditors for audit of the Company’s
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
13
9
10. Staff costs
Average number of full time equivalent persons employed
during the year (including Executive Directors) was: . . . . . . .
97
Year ended
31 December
2013
Number
Year ended
31 December
2012
Number
Year ended
31 December
2011
Number
886
712
384
Their aggregate remuneration comprised:
Wages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Social security costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation for loss of office and redundancy costs . . . . . . .
Share-based payments charge (see note 37) . . . . . . . . . . . . . .
Directors remuneration
Wages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits in kind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation for loss of office . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended
31 December
2013
£‘000
Year ended
31 December
2012
£‘000
Year ended
31 December
2011
£‘000
30,847
2,668
390
458
1,731
23,736
1,880
271
—
480
16,326
1,082
211
—
231
36,094
26,367
17,850
300
—
1
283
231
6
—
—
168
—
—
—
584
237
168
The above is in respect of four Directors (2012: two; 2011: two). Included within the above are the
following amounts relating to the highest paid Director:
Wages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
170
218
168
Pension costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
6
—
....................................................
170
224
168
No directors exercised share options during the year ended 31 December 2013 (2012: none; 2011:
one). No directors received shares under long-term incentive schemes (2012: none; 2011: none).
Further information on the Group’s share based long term incentive arrangements are given in note 37
and details of key management’s interest in such arrangements are disclosed in note 40.
11. Finance income and finance costs
Year ended
31 December
2013
£‘000
Year ended
31 December
2012
£‘000
Year ended
31 December
2011
£‘000
Interest received on bank deposits . . . . . . . . . . . . . . . . . . . . . . .
172
206
99
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
172
206
99
Interest on bank overdrafts and loans . . . . . . . . . . . . . . . . . . . . .
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unwind of discount on deferred consideration . . . . . . . . . . . . . .
—
8
137
—
40
77
6
68
—
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
145
117
74
Net finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
89
25
98
12. Taxation
Current tax
Current year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment for prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax (see note 25)
Temporary timing differences . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment for prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total tax charge/(credit) for the year . . . . . . . . . . . . . . . . . . . . . .
Year ended
31 December
2013
£‘000
Year ended
31 December
2012
£‘000
Year ended
31 December
2011
£‘000
3,613
(148)
2,346
(318)
515
44
3,465
2,028
559
(137)
76
6
(612)
424
37
(1,091)
35
—
(55)
(151)
(1,056)
3,410
1,877
(497)
Corporation tax is calculated at 23.25% (2012: 24.5%; 2011: 26.5%) of the estimated taxable profit for
the year. The Budget 2012 introduced a reduction in the main rate of corporation tax from 25% to 23%
with effect from 1 April 2013. As such, a blended rate has been used to calculate corporation tax
charge for the year.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
More information on the calculation of deferred tax is provided in note 25.
The charge/(credit) for the year can be reconciled to the profit/(loss) per the income statement as
follows:
Profit/(loss) before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax at the UK corporation tax rate of 23.25% (2012: 24.5%;
2011: 26.5%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses/(income) not deductible/(non-taxable) . . . . . . . . . . . .
Share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit on sale of investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment to prior periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of different tax rates of subsidiaries operating in other
jurisdictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Overseas taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in unrecognised deferred tax asset . . . . . . . . . . . . . . . .
Reduction in tax rate in UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development tax relief . . . . . . . . . . . . . . . . . . . . .
Total tax charge/(credit) for the year . . . . . . . . . . . . . . . . . . . . . .
99
Year ended
31 December
2013
£‘000
Year ended
31 December
2012
£‘000
Year ended
31 December
2011
£‘000
10,181
(2,628)
(1,732)
(644)
969
(22)
(1,047)
106
(459)
(157)
383
—
79
129
268
2,056
62
—
3
2
(369)
21
—
1,877
(497)
2,367
(278)
371
(780)
(72)
136
897
898
(90)
(39)
3,410
A deferred tax asset has not been recognised in all tax jurisdictions in respect of temporary differences
relating to tax losses and short term temporary differences where there is insufficient evidence that the
asset will be recovered. The amount of the asset not recognised is £7.6 million (2012: £6.1 million;
2011: £3.3 million). The asset would be recognised if sufficient suitable taxable profits were made in
the future. See note 25 for further details.
Deferred tax assets not recognised:
Accelerated capital allowances . . . . . . . . . . . . . . . . . . . . . . . . . .
Short term temporary differences . . . . . . . . . . . . . . . . . . . . . . . .
Unrelieved tax losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrelieved tax losses in joint venture . . . . . . . . . . . . . . . . . . . . .
Year ended
31 December
2013
Year ended
31 December
2012
Year ended
31 December
2011
£‘000
£‘000
£‘000
17
226
5,948
1,226
209
35
26
5,403
523
126
—
32
2,827
288
190
7,626
6,113
3,337
13. Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing the profit/(loss) for the year attributable to the
shareholders of the Company by the weighted average number of Ordinary Shares, B Ordinary
Shares, Preference A Shares, Preference B Shares and Preference C Shares outstanding during the
year. The B Ordinary Shares have a right to share in profits which is different from the rights held by all
other classes of shares (“Ordinary and Preference shares”), and earnings/(loss) per share will
therefore be calculated separately for B Ordinary Shares.
Diluted earnings/(loss) per share is calculated by adjusting the weighted average number of Ordinary
and Preference Shares outstanding to assume conversion of all potentially dilutive shares. The Group
has potentially dilutive shares in the form of share options, warrants and shares held pursuant to the
Group’s JSOP.
There was no difference in the weighted average number of shares used for basic and diluted loss per
share for both the years ended 31 December 2012 and 31 December 2011, as the effect of all
potentially dilutive shares outstanding was anti-dilutive due to the Group making a loss.
100
The following reflects the income and share data used in the basic and diluted earnings/(loss) per
share computations:
Profit/(loss) attributable to the holders of Ordinary and
Preferred Shares in the parent for basic and diluted
earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit/(loss) attributable to the holders of B Ordinary Shares in
the parent for basic and diluted earnings . . . . . . . . . . . . . . . .
Year ended
31 December
2013
£’000
Year ended
31 December
2012
£’000
Year ended
31 December
2011
£’000
6,976
(3,871)
(607)
—
—
—
Number of
shares
Weighted average number of Ordinary and Preference Shares
for basic earnings/(loss) per share . . . . . . . . . . . . . . . . . . . . .
Effect of dilution:
— JSOP shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average number of Ordinary and Preference Shares
adjusted for the effect of dilution . . . . . . . . . . . . . . . . . . . . . . .
Weighted average number of B Ordinary shares for basic
earnings/(loss) per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of dilution:
— Share options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— JSOP shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average number of B Ordinary Shares adjusted for
the effect of dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings/(loss) per Ordinary and Preference Share
(pence per share) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings/(loss) per B Ordinary Share (pence per
share) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings/(loss) per Ordinary and Preference Share
(pence per share) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings/(loss) per B Ordinary Share (pence per
share) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of
shares
Number of
shares
17,591,342 16,758,873 14,663,416
—
193,360
—
—
—
—
17,784,702 16,758,873 14,663,416
788,242
330,137
164,408
1,282,787
798,126
—
—
798,126
39.7
(23.1)
—
—
39.2
(23.1)
—
—
569,540
—
—
569,540
(4.1)
—
(4.1)
—
Movements in issued share capital are disclosed in note 28.
14. Goodwill
Total
£’000
Carrying amount as at 1 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognised on acquisition of subsidiaries (note 33) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,187
2,726
(308)
(18)
Carrying amount as at 31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognised on acquisition of subsidiaries (note 33) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,587
8,654
(284)
(6,000)
Carrying amount at 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in provisional acquisition accounting (note 33) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognised on acquisition of subsidiary (note 33) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,957
647
3,063
(115)
(307)
Carrying amount at 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,245
Accumulated impairment losses at 31 December 2013 were £6.4 million (2012: £6.0 million; 2011:
£18,000). During the year ended 31 December 2013 accumulated impairment losses increased by
£0.1 million as a result of foreign exchange movements.
101
Goodwill acquired in a business combination is allocated on acquisition to the Cash Generating Units
(“CGU”) that are expected to benefit from that business combination. The carrying amount of goodwill
has been allocated as follows:
Goodwill allocated
by CGU
Legal entity
Just Eat.dk ApS . . . . . . . . . . . . . . . . .
Justeat Brasil Servicos Online
LTDA . . . . . . . . . . . . . . . . . . . . . . . .
Urbanbite Limited, EatStudent Ltd
and FillMyBelly Limited . . . . . . . . . .
SinDelantal Internet, S.L. . . . . . . . . . .
Eat.ch . . . . . . . . . . . . . . . . . . . . . . . . .
Other (comprising several CGUs) . . .
Country of
operation
CGU
Denmark
just-eat.dk
Brazil
United
Kingdom
Spain
Switzerland
RestauranteWeb.com.br
just-eat.co.uk and its
subsidiaries
just-eat.es
Eat.ch
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013
£‘000
2012
£‘000
2011
£‘000
1,826 1,781 1,795
707 1,188 1,360
895
895
136
2,708 2,023
—
3,078
—
—
1,031 1,070 1,296
10,245 6,957 4,587
The Group tests goodwill annually for impairment or more frequently if there are indications that
goodwill might be impaired.
The recoverable amounts of the CGUs are determined from value-in-use calculations. The key
assumptions used in the value-in-use calculations are the discount rate and the Underlying EBITDA
growth rate (which is a function of expected changes in selling prices and costs, together with other
factors). Management uses pre-tax discount rates that reflect current market assessments of the time
value of money and the risks specific to the particular CGU. The Underlying EBITDA growth rates are
based on past experience and management’s future expectations. Changes in selling prices and direct
costs are based on recent results and expectations of future changes in the market. It is anticipated
that sales volumes will grow in all jurisdictions over the forthcoming years.
The Group prepares cash flow forecasts derived from the most recent financial budgets approved by
the Board, which are currently for three years. Management expects that some markets will enjoy a
period of sustained high growth continuing from the end of the current budgetary cycle to maturity (the
medium term). During this period each CGU will continue to acquire new customers and increase order
activity above and beyond the long term growth rate applicable to each market. Management expects
that all CGUs will reach maturity after a period in excess of five years and therefore considers it
appropriate for the forecasts to extend beyond a five year period. A suitable medium term growth rate,
based on previous experience of growth rates has been applied individually to reflect each CGU’s
activity in this period. After this a long term growth rate is applied.
The pre-tax rates used to discount the forecast cash flows were in the range of 7.8% to 14.8% for all
geographies except Brazil which was 22.7% (2012: 11.9% to 15.8%). The long term growth rates used
in the forecast cash flows were in the range of 1.4% to 2.1% (2012: 2.1% to 3.6%).
Impairment charges
Year ended 31 December 2013
An impairment charge of £0.3 million has been charged to the income statement in respect of the
Brazilian CGU. As a result of the worsening economic environment in South America and the CGU’s
recent trading performance management now believes that the route to profitability of our Brazilian
business is longer than previously expected. This, combined with an increase in the discount rate, from
15.4% to 22.7%, has led to a downward revision of the recoverable amount of the Brazilian CGU.
At the end of the financial year the fair value of goodwill was in excess of its book value for all other
CGUs.
102
Year ended 31 December 2012
£‘000
Just-Eat Benelux BV
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant list . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,840
1,320
Total impairment in respect of Just-Eat Benelux BV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Achindra Online Marketing Private Limited
Goodwill impairment in respect of Achindra Online Marketing Private Limited . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,160
Total impairment charged to the income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,320
125
35
Just-Eat Benelux BV
£7.2 million of the impairment charge, for the year ended 31 December 2012, relates to the write-down,
to their recoverable amounts, of the goodwill and other intangible assets of the Group’s Dutch
business. This is the one market in which the Group operates where the business is significantly
smaller than its competitor. As such, the Group’s strategic plans and route to profitability for this
business do not follow the same profile as the other businesses in the Group. As a result of this, the
Group does not expect the Dutch business to be profitable in the foreseeable future. Given this, the
recoverable amounts of the Dutch intangible assets have been determined to be nil.
In calculating the impairment in respect of the Group’s Dutch business both the value-in-use and fair
value less cost to sell of the CGU (being the Dutch business) were determined to be nil. A pre-tax
discount rate of 11.9% was used in calculating the value-in-use.
Achindra Online Marketing Private Limited (“justeat.in”)
The carrying value of the goodwill in respect of justeat.in was £0.1 million. The Directors have
determined that its recoverable amount was nil and as a result an impairment charge of £0.1 million
was recorded in the income statement for the year ended 31 December 2012.
Sensitivity analysis
The Group has conducted a sensitivity analysis on the impairment test for each CGU. This included
reducing the future cash flows and increasing discount rates. With the exception of Brazil, as at 31
December 2013, no reasonably expected change in the key assumptions used in the value-in-use
calculations would give rise to an impairment charge. Regarding Brazil, the impairment recognised in
the 2013 financial statements represents the excess of the previous carrying value over the
recoverable amount. Accordingly, any changes in key assumptions which reduced the recoverable
amount further would increase the impairment loss.
The changes to the key assumptions used in the Brazilian value-in-use calculation, set out in the table
below, would in isolation lead to an increase or (decrease) of the impairment loss as follows:
Sensitivity
Measured
against
Pre-tax adjusted discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long term growth rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Underlying EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
103
± 2 pps
± 2 pps
± 10 pps
Increase in
assumption
£ ‘000
Decrease in
assumption
£ ‘000
520
(307)
(307)
(307)
268
673
15. Other intangible assets
Patents, licences
and IP
£‘000
Cost
At 1 January 2011 . . . . . . . . . . . . . . . . . . . . .
Intangible assets recognised through
acquisitions in the year . . . . . . . . . . . . . . .
Exchange movements . . . . . . . . . . . . . . . . .
Restaurant
lists
£‘000
Brands
£‘000
Development
costs
£‘000
Total
£‘000
277
303
—
—
580
—
(5)
1,060
(50)
—
—
—
—
1,060
(55)
At 31 December 2011 . . . . . . . . . . . . . . . . . .
Intangible assets recognised through
acquisitions in the year . . . . . . . . . . . . . . .
Exchange movements . . . . . . . . . . . . . . . . .
272
1,313
—
—
1,585
—
(7)
3,415
15
419
12
—
—
3,834
20
At 31 December 2012 . . . . . . . . . . . . . . . . . .
Change in provisional acquisition
accounting (note 33) . . . . . . . . . . . . . . . . .
Transfer from tangible assets . . . . . . . . . . . .
Intangible assets recognised through
acqusitions in the year . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange movements . . . . . . . . . . . . . . . . .
Deemed disposal of Achindra Online
Marketing Private Limited . . . . . . . . . . . . .
265
4,743
431
—
5,439
—
190
(1,210)
—
—
—
—
—
(1,210)
190
—
661
(10)
658
—
(70)
274
—
8
—
478
—
932
1,139
(72)
—
(24)
—
—
713
478
—
—
—
—
—
—
99
155
(3)
At 31 December 2013 . . . . . . . . . . . . . . . . . .
1,106
4,097
(24)
6,394
Accumulated amortisation
At 1 January 2011 . . . . . . . . . . . . . . . . . . . . .
Charge for the year . . . . . . . . . . . . . . . . . . . .
Exchange movements . . . . . . . . . . . . . . . . .
79
92
(2)
At 31 December 2011 . . . . . . . . . . . . . . . . . .
Charge for the year . . . . . . . . . . . . . . . . . . . .
Impairments . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange movements . . . . . . . . . . . . . . . . .
169
66
—
(4)
82
364
1,320
—
—
99
—
1
—
—
—
—
251
529
1,320
(3)
At 31 December 2012 . . . . . . . . . . . . . . . . . .
Transfer from tangible assets . . . . . . . . . . . .
Charge for the year . . . . . . . . . . . . . . . . . . . .
Exchange movements . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . .
231
4
140
(13)
—
1,766
—
369
(26)
(7)
100
—
410
(4)
—
—
—
—
—
—
2,097
4
919
(43)
(7)
At 31 December 2013 . . . . . . . . . . . . . . . . . .
362
2,102
506
—
2,970
Carrying amount
At 31 December 2011 . . . . . . . . . . . . . . . . . .
At 31 December 2012 . . . . . . . . . . . . . . . . . .
At 31 December 2013 . . . . . . . . . . . . . . . . . .
103
34
744
1,231
2,977
1,995
—
331
207
—
—
478
1,334
3,342
3,424
20
63
(1)
All intangible assets have finite lives. The amortisation periods for patents, licences, IP and brands are
between fifteen months and four years. The amortisation periods for restaurant lists are between four
and ten years.
104
16. Property, plant and equipment
Fixtures and
fittings
£‘000
Equipment
£‘000
Leasehold
improvements
£‘000
Total
£‘000
Cost
At 1 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of subsidiaries . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
431
758
11
(17)
(29)
2,973
1,003
—
(18)
(37)
—
341
—
—
—
3,404
2,102
11
(35)
(66)
At 31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of subsidiaries . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,154
744
20
(1)
(9)
3,921
2,372
84
(21)
(786)
341
689
35
—
—
5,416
3,805
139
(22)
(795)
At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer to intangibles . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of subsidiaries . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,908
(190)
876
7
7
(123)
5,570
—
2,357
60
74
(798)
1,065
—
50
—
5
(14)
8,543
(190)
3,283
67
86
(935)
At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,485
7,263
1,106
10,854
Accumulated depreciation
At 1 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charge for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
163
219
(1)
(17)
1,323
878
(12)
(15)
—
17
—
—
1,486
1,114
(13)
(32)
At 31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charge for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
364
185
(1)
(5)
2,174
1,489
(21)
(758)
17
86
—
—
2,555
1,760
(22)
(763)
At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer to intangibles . . . . . . . . . . . . . . . . . . . . . . . . . .
Charge for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
543
(4)
707
4
(91)
2,884
—
1,707
9
(770)
103
—
294
—
(13)
3,530
(4)
2,708
13
(874)
At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,159
3,830
384
5,373
Carrying amount
At 31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . .
790
1,365
1,326
1,747
2,686
3,433
324
962
722
2,861
5,013
5,481
At 31 December 2013, the Group had entered into contractual commitments for the acquisition of
property, plant and equipment amounting to £0.6 million (2012: £1.8 million; 2011 £0.4 million).
105
17. Subsidiaries
A list of the investments in subsidiaries, joint ventures and associated undertakings, including the
name, country of incorporation, and proportion of voting rights held is given below:
Representing:
Proportion of
Proportion of
Proportion of
Country of voting rights held voting rights held voting rights held
incorporation
2013
2012
2011
Subsidiary undertakings
Just Eat Group Limited Gibraltar
Just Eat Holding
UK
Limited
Nil
100%
Nil
100%
100%
100%
Just Eat.co.uk Limited
UK
100%*
100%*
100%*
Biteguide GmbH
Germany
100%*
100%*
Just-Eat Ireland
Ireland
100%*
100%*
100%*
Just Eat Host A/S
Just Eat.dk ApS
Denmark
Denmark
100%*
100%*
100%*
100%*
100%*
100%*
Just Eat.no As
Norway
100%*
100%*
100%*
Just-Eat.ca
Management Limited
Just Eat Canada Inc.
Canada
100%*
100%*
100%*
Canada
100%*
82%*
82%*
Just-Eat Belgie BVBA
Belgium
100%*
100%*
92%*
Just-Eat Spain S.L.
Spain
100%*
100%*
100%*
EatStudent Limited
UK
100%*
100%*
100%*
Justeat Brasil Servicos
Online LTDA
Just-Eat Italy S.r.l
Brazil
100%*
100%*
100%*
Italy
100%*
100%*
100%*
Nil
Urbanbite Holdings
Limited
Urbanbite Limited
UK
100%*
100%*
100%*
UK
100%*
100%*
100%*
Yummyweb Inc
Canada
Just-Eat Benelux BV
Netherlands
100%*
100%*
56%*
FillMyBelly Limited
UK
100%*
100%*
Nil
SinDelantal Internet
S.L.
Just Eat Denmark
Holdings ApS
Just Eat.lu Sarl
Eat.ch GmbH
Spain
100%*
Nil
Power & Power
Investments Inc
Joint ventures and
associates
FBA Invest SaS
Eat On Line Sa
Nil
Nil
100%*
Denmark
100%*
Nil
Nil
Luxembourg
Switzerland
100%*
64%*
Nil
50%*
Nil
50%*
Canada
100%*
Nil
Nil
France
France
50%*
50%*
50%*
50%*
50%*
50%*
50%**
84%*
67%*
Nil
Nil
19%*
Achindra Online
India
Marketing Private
Limited
Fixed asset investments
OnlinePizza Norden AB Sweden
*
**
Nil
Nature of business
Holding company
Holding and
management
company
Online takeaway
portal
Online takeaway
portal
Online takeaway
portal
Hosts servers
Online takeaway
portal
Online takeaway
portal
Holding company
Online takeaway
portal
Online takeaway
portal
Online takeaway
portal
Online takeaway
portal
Online takeaway
portal
Online takeaway
portal
Holding company
Online takeaway
portal
Online takeaway
portal
Online takeaway
portal
Online takeaway
portal
Online takeaway
portal
Holding Company
Finance Company
Online takeaway
portal
Holding Company
Holding company
Online takeaway
portal
Online takeaway
portal
Online takeaway
portal
indicates an indirect holding by Just-Eat Group Holdings Limited
With the exception of Achindra Online Marketing Private Limited (in which the Group had a 59% ownership interest as at
31 December 2013) the proportion of voting rights held equated to the proportion of ownership interests held for all entities.
106
In January 2012, the Group gained full control of Just-Eat Belgie BVBA, which operates in Belgium and
Just-Eat Benelux BV, which operates in The Netherlands. The total consideration payable was £6.0m.
In March 2012, the Group agreed to sell its 19% minority stake in OnlinePizza Norden AB in Sweden
for £6.7 million (note 20).
Yummyweb Inc was dissolved on 31 December 2012.
On 1 January 2013, the assets and trade of SinDelantal Internet S.L. were merged into Just-Eat Spain.
In January 2013, the Group bought out the non-controlling interest in its Canadian business, Just eat
Canada Inc. This was achieved via the purchase of Power & Power Inc., a Canadian holding company
(note 32).
In January 2013, a Group company acquired, through the conversion of a loan to equity, an additional
13% of the ordinary share capital of Eat.ch and gained control of Eat.ch (note 31). The Group’s
shareholding increased from 50% to 63% and subsequently to 64% following a further loan conversion.
On 26 August 2013, the Group liquidated the non-trading entity Biteguide GmbH.
The Group’s shareholding in Achindra Online Marketing Private Limited (“justeat.in”) had increased
from 84% to 91% over the course of 2013 via a series of capital injections. In November 2013, the
Group relinquished control of justeat.in, as a result of Axon Partners Group and Forum Synergies India
making investments in justeat.in. This transaction reduced the Group’s shareholding to 59%. The
Group’s voting rights and economic interests decreased to 49.9%. justeat.in is now accounted for as
an investment in an associate under the equity method of accounting.
18. Investments in joint ventures
2013
£‘000
2012
£‘000
2011
£‘000
Carrying value of joint ventures under equity accounting method
Investments in joint ventures at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Just-Eat Benelux BV becoming a subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of investments in joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in investment/capital contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of post-tax profits/(losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,136 6,915 (446)
—
615
—
—
— 7,620
—
4
(64)
64 (226) (129)
153 (172)
(66)
Investments in joint ventures at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,353 7,136 6,915
£0.4 million (2012: £0.4 million; 2011: £44,000) of depreciation and amortisation is included within the
share of the post-tax losses of the joint ventures.
The adoption of IFRS 11 resulted in Eat.ch being reclassified from a joint venture to an associated
undertaking (note 19).
FBA Invest SaS
On 23 December 2011 the Group acquired 50% of the share capital of FBA Invest SaS (“FBA”), which
owns 100% of the share capital of Eat On Line Sa, the company trading under the brand
“ALLORESTO.Fr”. At the time of acquiring the shareholding, the Group entered into a joint-venture
agreement with the other shareholders; which contained two call options. The Group has the first
option to buy 30-50% more of the shareholding not already held, thus obtaining between 80-100% of
FBA’s share capital. This option is only exercisable between 1 June and 30 June 2014, after which it
will lapse. The purchase price for these shares will be according to a pre-determined range of prices
set out in the share purchase agreement.
The second call option is held by the other 50% shareholders and only becomes exercisable should
the aforementioned Group option lapse. The second call option is only exercisable for the period
30 July 2014 to 31 December 2014. This option entitles the other 50% shareholders to purchase 2050% of FBA from the Group, for a price determined by a fixed formula.
107
The 50% held is considered to be jointly controlled with substantive economic interests held by the
Group. 50% of the result of this company has therefore been recognised using the equity accounting
method.
2013
£‘000
2012
£‘000
2011
£‘000
Summary consolidated financial information for FBA
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit/(loss) after tax and total comprehensive income . . . . . . . . . . . . . . . . . . . . .
6,511 3,979
(24)
(53)
128 (452)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,330 1,861 1,470
155
324
686
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,485 2,185 2,156
4,971 5,336 5,961
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,456 7,521 8,117
—
—
(13)
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,635) (3,728) (3,590)
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(394) (579) (791)
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,029) (4,307) (4,381)
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,427 3,214 3,736
50% interest in joint venture’s net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,714 1,607 1,868
5,639 5,529 5,663
Carrying value of interest in joint venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,353 7,136 7,531
Just-Eat Benelux BV
The Group holds 100% of the shares in Just-Eat Benelux BV (2012: 100%; 2011: 56%). The Group
increased its shareholding in the company by 44% to 100% on 18 January 2012, from which time it
was accounted for as a subsidiary. Prior to gaining control, the joint venture was equity accounted for
using the equity method.
2011
Summary consolidated financial information for Just-Eat Benelux BV
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit/(loss) after tax and total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
£’000
1,822
21
(244)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54
90
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
144
117
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
261
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(624)
(740)
Total current liabilities and total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,364)
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,103)
56% interest in joint venture’s net assets and carrying value of interest in joint venture . . . . . . .
(616)
108
19. Investments in associates
2013
£’000
2012
£’000
2011
£’000
Carrying value of joint ventures under equity accounting method
Balance as at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of investment Eat.ch GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eat.ch GmbH becoming a subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Achindra Online Marketing Private Limited becoming an associate . . . . . . . . . . . . . .
Increase in investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of post-tax losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31 332 —
—
—
314
(31) —
—
448
—
—
—
—
148
(53) (295) (128)
1
(6)
(2)
Investments in associates at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
396
31
332
Eat.ch GmbH
On 22 March 2011, the Group acquired a 33% stake in Eat.ch GmbH (“Eat.ch”), which rose to 50% in
September 2011. Eat.ch is an entity incorporated and operating in Switzerland.
The Group’s investment in Eat.ch for the period since its initial investment up to 31 December 2012
had been accounted for as an investment in a joint venture in accordance with the provisions of IAS 31
‘Interests in Joint Ventures’. During the year ended 31 December 2013, the Group adopted IFRS 11,
which contain provisions under which the Group’s investment in Eat.ch does not qualify as a joint
arrangement. The Group’s investment has therefore been reassessed, and for the period since the
initial investment up to 31 December 2012 is now accounted for as an investment in an associate
under the equity method of accounting, in accordance with the provisions of IAS 28.
This reclassification did not have any impact on the results or financial position of the Group for the
years ended 31 December 2012 and 31 December 2011, due to equity accounting being applied under
both classifications.
In January 2013, a Group company acquired, through the conversion of loans to equity, an additional
13% of the ordinary share capital of Eat.ch, bringing the Group’s holding in Eat.ch to 63% (see note
33). The Group obtained control of Eat.ch and as a result the acquisition has been accounted for as a
business combination in accordance with IFRS 3. As control of Eat.ch has been achieved in stages the
provisions of IFRS 3 relating to step-acquisitions have been applied.
Summarised financial information in respect of Eat.ch is set out below:
2012
£’000
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss after tax and total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011
£’000
745 188
(590) (337)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
79
116
45
60
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
195
303
105
290
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
498
395
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(543)
(223)
(9)
(54)
Total current liabilities and total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(766)
(63)
Net liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(268)
332
50% interest in joint venture’s net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(134)
165
166
166
Carrying value of interest in associate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31
332
109
Achindra Online Marketing Private Limited (“justeat.in”)
On 14 November 2013 the Group’s stake in justeat.in decreased from 91% to 59% following the
investments made by two new investors. The Group’s voting rights and economic interests decreased
to 49.9%. Since this transaction justeat.in has been accounted for as an associate in accordance with
IAS 28.
The change from subsidiary to associate had the following impacts on the Group financial statements:
£’000
Derecognition of net liabilities of subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derecognition of cumulative translation losses recognised in equity . . . . . . . . . . . . . . . . . . . . . . . .
Recognition of fair value of retained investment in associate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Funding provided to justeat.in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61
(35)
448
(193)
Gain recognised in income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
281
Summarised financial information in respect of justeat.in from 14 November 2013 to 31 December
2013 is set out below:
2013
£’000
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit after tax and total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(107)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
795
7
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
802
4
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
806
Current liabilities and total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(15)
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
791
50% interest in associated undertaking’s net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
396
—
Carrying value of interest in associated undertaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
396
20. Investments
2013
£‘000
Available for sale investments carried at fair value
Balance as at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional investment purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sale of OnlinePizza Norden AB shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
Total investments as at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
2012
£‘000
2011
£‘000
6,918
419
— 1,777
(233) 4,624
5
98
(6,690)
—
—
6,918
On 23 March 2012, the Group realised its investment in OnlinePizza AB through a sale of its interest to
a third party for £6.7 million. The net profit on disposal, after including £0.3 million of due diligence
costs was £4.3 million.
21. Inventories
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As at
31 December
2013
£‘000
As at
31 December
2012
£‘000
As at
31 December
2011
£‘000
743
435
42
Inventories are comprised of packaging materials and consumable items sold to restaurants. There is
no material difference between the balance sheet value of stock and its replacement cost.
110
22. Trade and other receivables
As at
31 December
2013
£‘000
As at
31 December
2012
£‘000
As at
31 December
2011
£‘000
Amount receivable for the provision of services . . . . . . . . . . . . .
Allowance for doubtful debts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,443
(430)
1,661
(401)
1,229
(289)
Other debtors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts due from related parties (see note 40) . . . . . . . . . . . .
Amounts due from joint ventures and associates . . . . . . . . . . .
1,013
197
2,414
—
248
1,260
1,409
1,280
—
543
940
39
667
162
624
3,872
4,492
2,432
As at 31 December 2013, the amounts due from joint ventures and associates related to services
provided to justeat.in and Eat On Line Sa, by third parties, but paid for by the Group.
At 31 December 2012, the amounts due from joint ventures and associates comprised loans made to
Eat.ch. These loans were converted into equity in January 2013 at which point Eat.ch became a
subsidiary of the Group.
At 31 December 2011, the amounts due from joint ventures and associates comprised loans made to
Just-Eat Benelux BV. In January 2012 Just-Eat Benelux BV became a wholly owned subsidiary of the
Group. From this time the loans were eliminated on consolidation.
Trade receivables
Trade receivables disclosed above are classified as loans and receivables and are therefore measured
at amortised cost. The average age of the trade receivables as at 31 December 2013 was 67 days
(2012: 62 days; 2011: 65 days).
The Group has reviewed all balances and has made an allowance for debts which are considered
unlikely to be collectable based on past default experience, and an analysis of the counterparty’s
current financial position. Allowances against doubtful debts are recognised against trade receivables.
Trade receivables disclosed above include amounts which are past due at the reporting date but
against which the Group has not recognised an allowance for doubtful receivables because there has
not been a significant change in credit quality and the amounts are still considered recoverable. The
Group does not hold any collateral or other credit enhancements over these balances.
Movement in the allowance for doubtful debts:
2013
£‘000
Balance at the beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment losses recognised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts written off during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts recovered during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012
£‘000
2011
£‘000
401 289 144
350 411 179
(219) (299) (34)
(102) —
—
430
401
289
In determining the recoverability of a trade receivable the Group considers any change in the credit
quality of the trade receivable from the date credit was initially granted up to the reporting date. The
concentration of credit risk is limited due to the customer base being large and unrelated. The Directors
111
consider that the carrying amount of trade and other receivables is approximately equal to their fair
value. At 31 December 2013 £0.3 million (2012: £0.3 million; 2011: £0.2 million) of the allowance for
doubtful debts was in respect of receivables more than 120 days old.
23. Trade and other payables
Trade creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other creditors and accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other taxes and social security . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts due to related parties (see note 40) . . . . . . . . . . . . . .
As at
31 December
2013
£‘000
As at
31 December
2012
£‘000
As at
31 December
2011
£‘000
20,182
9,150
4,049
—
—
14,250
5,998
2,205
2,567
—
6,501
2,703
1,660
—
160
33,381
25,020
11,024
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. Included in the trade creditor balance are amounts owed to restaurants of £16.0m (2012:
£10.5m; 2011: £5.1m). These amounts are settled on a fortnightly basis. The average credit period
taken for restaurants is 7 days (2012: 8 days; 2011: 9 days). For most suppliers no interest is charged
on the trade payables for the first 30 days from the date of the invoice.
The Group has financial risk management policies in place for all payables to be paid within the preagreed credit terms. The Directors consider that the carrying amount of trade payables approximates
to their fair value.
The deferred consideration balances as at 31 December 2012, related to the Groups 2012 acquisition
of the shares it did not hold in Just-Eat Benelux BV (£2.2 million) and the Group’s 2012 acquisition of
FillMyBelly Limited (£0.4 million).
24. Borrowings
As at
31 December
2013
£‘000
Unsecured borrowing at amortised cost
Bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured borrowing at amortised cost
Bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount due for settlement within 12 months . . . . . . . . . . . . . .
As at
31 December
2012
£‘000
As at
31 December
2011
£‘000
—
—
9
—
—
54
—
—
63
Analysis of borrowings by currency:
31 December 2011
Bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canadian
Dollar
Danish
Krone
£‘000
£‘000
Total
£‘000
—
54
9
—
9
54
54
9
63
During 2012, the Group closed its overdraft facilities with Sydbank A/S and Barclays Bank plc and
repaid its loan with the Royal Bank of Canada. The Group deemed its cash reserves were sufficient to
meet the needs of the business.
112
25. Deferred taxation
Deferred taxation is provided for as follows:
Short term Short term
temporary temporary Acquired Acquired
Share
based Available differences differences intangibles intangibles
Losses payment for sale
(assets) (liabilities) (assets) (liabilities) Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
At 1 January 2011 . . . . . . . . . .
Credit/(debit) to income
statement . . . . . . . . . . . . . . .
Credit/(debit) to equity . . . . . . .
Foreign exchange . . . . . . . . . . .
Rate change . . . . . . . . . . . . . . .
Prior year adjustment . . . . . . . .
Amounts arising on acquisition
of subsidiaries . . . . . . . . . . . .
—
—
525
—
—
—
—
—
At 31 December 2011 . . . . . . .
525
(Debit)/Credit to the income
statement . . . . . . . . . . . . . . . (265)
Credit to equity . . . . . . . . . . . . . —
Foreign exchange . . . . . . . . . . . —
Rate change . . . . . . . . . . . . . . . (39)
Prior year adjustment . . . . . . . . (42)
Amounts arising on acquisition
of subsidiaries . . . . . . . . . . . . —
At 31 December 2012 . . . . . . . 179
Reclassification . . . . . . . . . . . . . —
(Debit)/Credit to the income
statement . . . . . . . . . . . . . . . (135)
Credit to equity . . . . . . . . . . . . . —
Foreign exchange . . . . . . . . . . . —
Rate change . . . . . . . . . . . . . . . —
Prior year adjustment . . . . . . . .
51
Amounts arising on acquisition
of subsidiaries . . . . . . . . . . . . 224
As at 31 December 2013 . . . . .
319
(20)
(5)
—
—
(78)
3
2
—
—
—
—
(1,156)
—
2
—
546
—
(11)
—
(35)
—
—
—
—
—
—
—
—
—
—
16 1,090
— (1,154)
5
(6)
6
8
—
(35)
—
—
—
—
—
(134)
(134)
(1,174)
495
—
—
(185)
(334)
7
7
—
—
—
—
1,174
—
—
—
425
—
36
(5)
(377)
—
—
—
—
—
—
—
—
—
—
445
612
—
1,181
(13)
23
7
(37)
70
(349)
—
—
—
—
—
(1,027) (1,027)
19
—
—
—
574
90
—
(90)
—
137
(703)
(137)
69
—
80
15
—
(1)
—
—
—
—
—
—
(29)
—
—
(38)
(244)
42
—
(3)
11
—
(8)
—
—
—
26
187
—
(1)
22
91
137
15
(4)
(6)
(76)
—
—
—
—
—
139
363
113
—
353
(40)
155
(402)
498
5
2013
£‘000
Analysed as:
Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at the end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012
£‘000
(103)
2011
£‘000
(442) (703) (1,360)
940 772 1,026
498
69
(334)
The Budget 2012 introduced a reduction in the main rate of corporation tax from 25% to 23% with
effect from 1 April 2013. This legislation was substantively enacted on 3 July 2012 and as such, in
accordance with IFRS the rate of 23% is used for the calculation of the deferred tax position at
31 December 2012 on the basis that it will materially reverse after 1 April 2013.
The Budget 2013, issued on 20 March 2013, announced that the main rate of corporation tax would be
reduced to 21% from 1 April 2014 and to 20% with effect from 1 April 2015. These future rate
reductions were substantively enacted on 2 July 2013, and have therefore been reflected in these
financial statements in accordance with IFRS. A rate of 21% has been used in order to calculate
deferred tax on the basis that it is expected that the majority of the deferred tax assets will unwind in
the year ended 31 December 2014.
113
26. Provisions for liabilities
2013
£‘000
Balance at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration arising on acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utilised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase as a result of unwinding discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Released to the income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012
£‘000
718 1,130
99
—
—
(485)
137
77
(13)
(4)
(840)
—
Balance at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
101
2011
£‘000
485
645
—
—
—
—
718 1,130
This is split between current and non-current liabilities as follows:
2013
£‘000
2012
£‘000
—
101
718
—
485
645
101
718
1,130
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011
£‘000
The provision of £0.1 million, as at 31 December 2013, relates to contingent consideration following the
Group’s purchase of Power & Power Inc. in January 2013. £0.1 million becomes payable in February
2017 if Just Eat Canada Inc. meet certain performance targets in 2016 (note 32).
The provision of £0.7 million, as at 31 December 2012, (and the non-current provision of £0.6 million
as at 31 December 2011), related to contingent deferred consideration in respect of the Group’s
French joint venture. The performance targets were not met and hence this provision was released to
the income statement in 2013 (see note 8).
The current provision as at 31 December 2011 of £0.5 million related to contingent deferred
consideration in respect of the Group’s Brazilian business which was settled during 2012.
27. Other long-term liabilities
2013
£‘000
Deferred consideration for Power & Power Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long term creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012
£‘000
2011
£‘000
340
158
—
—
—
—
498
—
—
The deferred consideration in respect of the acquisition Power & Power Inc. is payable in January 2016
(see note 32). The long term creditor is payable in 2015 and relates to the purchase of a software
licence.
28. Share capital
Ordinary
shares
Number issued of shares (‘000)
Ordinary B Preference Preference Preference
shares
A shares
B shares
C shares
Total
Total
£‘000
At 1 January 2011 . . . . . . . . . .
Shares issued . . . . . . . . . . . . .
Loan conversion . . . . . . . . . . .
Options exercised . . . . . . . . . .
8,300
—
—
—
413
72
—
396
4,973
—
—
—
—
1,756
53
—
—
—
—
—
13,686
1,828
53
396
—
At 31 December 2011 . . . . . . .
Shares issued . . . . . . . . . . . . .
Options exercised . . . . . . . . . .
B Ordinary conversion . . . . . . .
JSOP shares issued . . . . . . . .
8,300
55
—
—
—
881
—
89
(192)
223
4,973
—
—
—
—
1,809
—
—
—
—
—
2,311
—
192
—
15,963
2,366
89
—
223
2
—
—
—
—
At 31 December 2012 . . . . . . .
Shares issued . . . . . . . . . . . . .
Options exercised . . . . . . . . . .
JSOP shares issued . . . . . . . .
8,355
6
—
46
1,001
—
18
—
4,973
—
—
—
1,809
—
—
—
2,503
—
—
—
18,641
6
18
46
2
—
—
—
At 31 December 2013 . . . . . . .
8,407
1,019
4,973
1,809
2,503
18,711
2
114
1
1
During the year ended 31 December 2011, the Company issued and allotted 468,248 B Ordinary
shares of £0.0001 each and 1,808,526 Preference B shares of £0.0001 each.
During the year ended 31 December 2012, the Company issued and allotted 55,000 Ordinary shares
of £0.0001 each, 312,372 B Ordinary shares of £0.0001 each and 2,311,216 Preference C shares of
£0.0001 each which were credited as fully paid. Also in 2012, 191,655 B Ordinary shares were
converted to Preference C shares of £0.0001 each and credited as fully paid.
During the year ended 31 December 2013, the Company issued 51,952 Ordinary shares of £0.0001
each and 17,845 B Ordinary shares of £0.0001 each.
As at 31 December 2013, the Company had in issue 8,407,052 Ordinary shares, 1,018,836 B Ordinary
shares, 4,973,200 Preference A shares, 1,808,526 Preference B shares and 2,502,871 Preference C
shares.
As at 31 December 2013, 45,500 Ordinary shares and 222,700 B Ordinary shares had been issued to
Appleby Trust (Jersey) Limited under the Group’s Joint Share Ownership Plan (“JSOP”) arrangement.
As at 31 December 2013, these shares were partly paid. This is in line with standard practice for such
JSOP arrangements. These shares have subsequently been fully paid up, and all shares are now fully
paid.
Ordinary shares
Ordinary shares have a par value of £0.0001 each, and entitle the holders to receive notice, attend,
speak and vote at general meetings.
Holders of Ordinary shares are entitled to distributions of available profits together with the holders of
Preference A shares, Preference B shares and Preference C shares, and, to the extent that the
aggregate amount of distributions, both paid to date and for the current financial year, exceed
£18.25 million, with the B Ordinary shareholders (pari passu as if the all the classes shares constituted
one class of share) pro rata to their respective holdings of shares.
B Ordinary shares
B Ordinary shares have a par value of £0.0001 each, and do not entitle the holders to receive notice,
attend, speak or vote at any general meeting. The B Ordinary shares are convertible into Ordinary
shares on a one-for-one basis, upon the satisfaction of a range of criteria as set out in the Company’s
Articles. Holders of B Ordinary shares are entitled to distributions of available profits together with the
holders of Ordinary shares, Preference A shares, Preference B shares and Preference C shares (pari
passu as if all the classes shares constituted one class of share) pro rata to their respective holdings of
shares, only after aggregate distributions of £18.25 million have been made to the holders of Ordinary
shares, Preference A shares, Preference B shares and Preference C shares.
Preference A shares
Preference A shares have a par value of £0.0001 each, and entitle the holders to receive notice,
attend, speak and vote at general meetings. The Preference A Shares are convertible at any time into
Ordinary shares on a one-for-one basis, subject to the majority of Preference A shareholders serving
notice to the Company.
Holders of Preference A shares are entitled to distributions of available profits together with the holders
of Ordinary shares, Preference B shares and Preference C shares, and, to the extent that the
aggregate amount of distributions, both paid to date and for the current financial year, exceed
£18.25 million, with the B Ordinary shareholders (pari passu as if all the classes shares constituted one
class of share) pro rata to their respective holdings of shares.
Preference B shares
Preference B shares have a par value of £0.0001 each, and entitle the holders to receive notice,
attend, speak and vote at general meetings. The Preference B shares are convertible at any time into
Ordinary shares on a one-for-one basis, subject to the majority of Preference B shareholders serving
notice to the Company.
115
Holders of Preference B shares are entitled to distributions of available profits together with the holders
of Ordinary shares, Preference A shares and Preference C shares, and, to the extent that the
aggregate amount of distributions, both paid to date and for the current financial year, exceed £18.25
million, with the B Ordinary shareholders (pari passu as if all the classes of shares constituted one
class of share) pro rata to their respective holdings of shares.
Preference C shares
Preference C shares have a par value of £0.0001 each, and entitle the holders to receive notice,
attend, speak and vote at general meetings. The Preference C shares are convertible at any time into
Ordinary shares on a one-for-one basis, subject to the majority of Preference C shareholders serving
notice to the Company.
Holders of Preference C shares are entitled to distributions of available profits together with the holders
of Preference A shares, Preference B shares and Preference C shares, and, to the extent that the
aggregate amount of distributions, both paid to date and for the current financial year, exceed £18.25
million, with the B Ordinary shareholders (pari passu as if all the classes shares constituted one class
of share) pro rata to their respective holdings of shares.
Shares to be issued
Shares to the value of €100,000 (£85,000) were issued to the previous shareholders of SinDelantal
Internet SL in February 2013. The issue of the shares was contingent upon the provision of integration
services to the Group, post the completion of the acquisition of SinDelantal Internet SL by the Group.
The shares to be issued, of £56,000, as at 31 December 2012 reflect the proportion of the services
completed at that date with the related charge of the same amount being included in acquisition costs
in the consolidated income statement.
29. Share premium account
Share
premium
£‘000
Balance at 1 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premium arising from issue of equity shares — Series B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premium arising on exercise of share options over Ordinary B shares . . . . . . . . . . . . . . . . . . . .
Share issue costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at 31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premium arising from issue of equity shares — Ordinary Shares . . . . . . . . . . . . . . . . . . . . . . . .
Premium arising from issue of equity shares — Series C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premium arising from issue of equity shares — Just-Eat Benelux BV acquisition . . . . . . . . . . .
Premium arising from issue of equity shares — Ordinary B Shares . . . . . . . . . . . . . . . . . . . . . .
Share issue costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premium arising from issue of equity shares — Ordinary Shares . . . . . . . . . . . . . . . . . . . . . . . .
Premium arising from issue of equity shares — Ordinary B Shares . . . . . . . . . . . . . . . . . . . . . .
4,680
15,000
128
(310)
19,498
17
36,194
779
321
(1,045)
55,764
85
13
Balance at 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55,862
116
30. Other reserves
Available for
sale reserve
£’000
Balance at 1 January 2011 . . . . . . . . . . . . . . . . . . .
Currency translation differences — Group . . . . . . .
Currency translation differences — Joint
ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effects of foreign exchange attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences arising on AFS
investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value adjustment of AFS investment . . . . . . . .
Deferred tax liability on AFS investment . . . . . . . . .
54
—
Translation
reserve
£’000
Merger
reserve
£’000
Treasury
shares
reserve
£’000
19
(151)
1,921
—
—
—
1,994
(151)
Total
£’000
—
(1)
—
—
(1)
—
5
—
—
5
—
4,624
(1,155)
98
—
—
—
—
—
—
—
—
98
4,624
(1,155)
3,523
—
(30)
(141)
1,921
—
—
—
5,414
(141)
—
(170)
—
—
(170)
—
(5)
—
—
(5)
Balance at 31 December 2011 . . . . . . . . . . . . . . . .
Currency translation differences — Group . . . . . . .
Currency translation differences — Joint
ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effects of foreign exchange attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences arising on AFS
investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value adjustment of AFS investment . . . . . . . .
Deferred tax liability on AFS investment . . . . . . . . .
Sale of AFS investment . . . . . . . . . . . . . . . . . . . . . .
—
(233)
57
(3,347)
5
—
—
(103)
—
—
—
—
—
—
—
—
5
(233)
57
(3,450)
Balance at 31 December 2012 . . . . . . . . . . . . . . . .
—
(444)
1,921
—
1,477
Currency translation differences — Group . . . . . . .
Currency translation differences — Joint ventures
and associates . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effects of foreign exchange attributable to noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassified to income statement . . . . . . . . . . . . . .
—
(93)
—
—
(93)
—
—
154
—
—
—
—
(234)
154
(234)
—
—
(22)
38
—
—
—
—
(22)
38
Balance at 31 December 2013 . . . . . . . . . . . . . . . .
—
(367)
1,921
(234)
1,320
Translation reserve
Exchange differences relating to the translation of the net assets, income and expenses of the Group’s
foreign operations, from their functional currency into the parent’s reporting currency, being
Pound Sterling, are recognised directly in the translation reserve.
Available for sale reserve
This arose on the revaluation to fair value of the Group’s investment in OnlinePizza Norden AB. This
investment was sold in 2012 (see note 20).
Treasury shares reserve
This reserve arose when the Group issued equity share capital under the Just-Eat Group Holdings
Limited Joint Ownership Plan (“JSOP”), which is held in trust by the trustee of the Group’s employee
benefit trust (“EBT”). See note 37 for more information on the six tranches of the JSOP that have yet to
be allocated.
Merger reserve
In July 2009 a group reconstruction was undertaken. Under this reconstruction ordinary shares were
issued and cancelled and Preference A shares were issued. This was treated as a common control
transaction under IFRS as the ultimate shareholders and their relative rights were the same before and
afterwards. This reserve represents the difference between the nominal value of the shares issued and
the nominal value of the shares on the group reorganisation in July 2009. The balance of this account
has not changed and remains at £1.9 million as at 31 December 2013.
117
31. Retained earnings
£’000
Balance at 1 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss attributable to the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments arising from changes in NCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit to equity for share-based payment charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share options exercised in the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax adjustment to share based payment reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5,805)
(607)
(718)
97
(38)
172
Balance at 31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss attributable to the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments arising from changes in NCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit to equity for share-based payment charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share options exercised in the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax adjustment to share based payment reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6,899)
(3,871)
(176)
480
(17)
7
Balance at 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit attributable to the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit to equity for share-based payment charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax adjustment to share based payment reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments arising from changes in NCI: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— Buy-out of minority shareholdings in Just Eat Canada Inc. (note 32) . . . . . . . . . . . . . . .
— Eat.ch. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— justeat.in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10,476)
6,976
1,731
15
Balance at 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,937)
(2,107)
(5)
(71)
The tax adjustment to share based payment reserve arises because under IAS 12 Income Taxes, the
deferred tax asset arising on the share based payments, in excess of the cumulative share based
payments charge, is recognised in equity rather than being taken directly to the income statement.
118
32. Non-controlling interest
£‘000
Balance at 1 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Initial recognition of NCI on acquisition of Achindra Online Marketing Private Limited . . . . . . . . . .
Adjustment to NCI on increase in the Group’s ownership interest in Achindra Online Marketing
Private Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buyout of Achindra Online Marketing Private Limited minority shareholders . . . . . . . . . . . . . . . . . .
Adjustment to NCI on increase in the Group’s ownership interest in Just-Eat Canada Inc . . . . . . .
Adjustment to NCI on increase in the Group’s ownership interest in Just-Eat Belgie BVBA . . . . .
Effects of foreign exchange attributable to NCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(136)
(628)
113
Balance at 31 December 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment to NCI on increase in the Group’s ownership interest in Achindra Online Marketing
Private Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buyout of Achindra Online Marketing Private Limited minority shareholders . . . . . . . . . . . . . . . . . .
Buyout of Just-Eat Belgie BVBA minority shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effects of foreign exchange attributable to NCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
157
(634)
Balance at 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment to NCI on increase in the Group’s ownership interest in Achindra Online Marketing
Private Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment to NCI on Eat.ch becoming a subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment to NCI on increase in the Group’s ownership interest in Eat.ch . . . . . . . . . . . . . . . . . .
Buy-out of Just Eat Canada Inc minority shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effects of foreign exchange attributable to NCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(353)
(205)
Balance at 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
359
111
(16)
467
251
(5)
89
(6)
36
5
36
355
107
397
22
justeat.in
In January 2011 the Group acquired a 33% shareholding in justeat.in. This rose to 67% in line with
planned injections of capital into the business by the Group throughout 2011. The substance of the
original investment transaction in January 2011 conferred control to the Group; subsequent injections
of capital were therefore accounted for wholly within equity in accordance with IFRS 3 (2008) ‘Business
Combinations’.
During 2012 the Group increased its holding in justeat.in, to 84%, through a combination of a number
of capital injections and the buy-out of a number of the minority shareholders.
The Group’s shareholding in justeat.in had increased from 84% to 91% over the course of 2013 via a
series of capital injections. In November 2013, the Group relinquished control of justeat.in, following
investment injections from Axon Partners Group and Forum Synergies India. The Group’s shareholding
reduced to 59% and its voting rights and economic interests decreased to 49.9%. As a result, justeat.in
is now accounted for as an investment in an associate under the equity method of accounting, in
accordance with the provision of IAS 28.
119
Just Eat Canada Inc.
On 16 January 2013, the Group acquired 100% of the share capital of Power & Power Investments Inc
(“P&P”). The reason for this acquisition was to acquire the 18% minority shareholding in Just Eat
Canada Inc. which was held by P&P. The acquisition took the Group’s holding in Just Eat Canada Inc.
to 100%. The consideration payable for the transaction comprised:
£‘000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,247
334
99
Total fair value of consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,680
The net cash outflow arising on acquisition comprised:
Cash consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,247
(20)
1,227
Deferred consideration of C$0.75 million (with a fair value of £0.3 million, calculated on a discounted
cash flow basis) is payable in January 2016. Further consideration of C$0.25 million (with a fair value
of £0.1m, calculated on a discounted cash flow basis) is payable in February 2017, if certain
performance criteria are met. It is management’s view that the performance criteria will be met, and as
a result a provision of £0.1 million, for the full consideration (on a discounted basis), is included in the
2013 financial information. If the performance criteria are not met then none of the contingent
consideration of C$0.25 million will become payable.
In accordance with IFRS 10 ‘Consolidated Financial Statements’, the difference of £2.1 million between
the amount by which the non-controlling interests were adjusted and the fair value of the consideration
paid has been debited to equity together with the acquisition cost incurred, of £15,000.
P&P contributed no revenue and a loss after tax of £393 in the period between the date of acquisition
and 31 December 2013.
The following table sets out the summary financial information in respect of Just Eat Canada Inc. as at
and for the years ending 31 December 2012 and 31 December 2011:-
Summarised financial information for Just Eat Canada Inc
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss after tax and total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012
£‘000
2011
£‘000
1,898
(2,773)
712
(2,078)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
420
718
201
47
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,138
1,476
248
1,322
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,614
1,570
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,550)
(81)
(845)
—
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,631)
(845)
Net liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,017)
725
Non-controlling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(366)
132
Summary financial information is not provided in respect of justeat.in and Eat.ch as their noncontrolling interests are not material to the Group.
120
33. Businesses combinations
2013 acquisitions:
Eat.ch
In January 2013, a Group company acquired, through the conversion of loans to equity, an additional
13% of the ordinary share capital of Eat.ch, bringing the Group’s holding in Eat.ch to 63%. The Group
obtained control of Eat.ch and as a result the acquisition has been accounted for as a business
combination in accordance with IFRS 3. As control of Eat.ch has been achieved in stages the
provisions of IFRS 3 relating to step-acquisitions have been applied.
A gain of £3.1 million has been recognised in other gains in the income statement, being the deemed
disposal and re-acquisition of the Group’s previously held interest at fair value.
£‘000
Fair values of net assets acquired:
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets — Restaurant list . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets — Brand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognition of deferred tax on intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
67
116
79
(223)
658
274
224
(224)
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
971
3,063
Total consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,034
Satisfied by:
Fair value of previously held interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conversion of loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,137
542
355
4,034
Net cash outflow arising on acquisition:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(79)
Contribution since control obtained and since the start of year:
— Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,672
(322)
The goodwill arising on the step acquisition of Eat.ch is attributable to the anticipated profitability of the
sale of the company’s products in the market and the anticipated future operating synergies from the
combination. The goodwill is not deductible for tax purposes.
The fair values of the previously held interest and the non-controlling interest were based on
management’s valuation of the acquired business. The valuation was determined using a discounted
cash flow methodology, the key inputs for which were the expected future cash flows of the business
and the post-tax discount rate, of 11.9%. The latter was determined by reference to the Group’s
weighted average cost of capital, as adjusted for specific risks pertinent to the business. The expected
future cash flows were based on Eat.ch’s budget for 2013, its forecast results for the years 2014 to
2017 (based on extrapolations of the 2013 budget) and a 2% growth in cash flows thereafter.
121
2012 acquisitions:
JustEat
Benelux
BV
£‘000
FillMyBelly
Limited
£‘000
SinDelantal
Internet S.L.
£‘000
Total
£‘000
Fair values of net assets acquired:
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets — Restaurant list . . . . . . . . . . . . . . . . . . . . .
Intangible assets — Brand . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognition of deferred tax on intangible assets . . . . . . . . . .
116
34
53
(1,299)
1,493
—
(373)
9
29
36
(59)
728
99
(190)
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
5,945
652
759
6
2,558
682
9,262
Total consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,969
1,411
2,564
9,944
Satisfied by:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of previously held interest . . . . . . . . . . . . . . . . . . . .
Deferred consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
949
779
2,054
2,187
1,021
—
—
390
2,564
—
—
—
4,534
779
2,054
2,577
5,969
1,411
2,564
9,944
949
(53)
1,021
(36)
2,564
(31)
4,534
(120)
896
985
2,533
4,414
77
17
137
231
1,710
117
341
45
33
(157)
2,084
5
1,710
117
439
53
179
(930)
2,328
(760)
833
—
1,345
—
390
—
—
—
—
833
390
1,345
Net cash outflow arising on acquisition:
Cash consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents acquired . . . . . . . . . . . . . . . . . . . .
Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contribution since control obtained:
— Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— Operating profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contribution if control had been obtained at start of year:
— Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— Operating profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred consideration payable:
— January 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— April 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— July 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
162
31
(444)
27
320
(104)
139
225
120
(1,802)
2,248
419
(667)
Just-Eat Benelux BV
In January 2012, the Group acquired the remaining 44% shareholding in Just-Eat Benelux BV, which is
a trading entity operating in the Netherlands. The nature of the control of this entity was such that it
was accounted for as a joint venture before the acquisition. The shareholding held by the Group is now
100%. The acquisition has been accounted for as a business combination in accordance with IFRS 3
(2008) ‘Business Combinations’.
A profit of £2.7 million was recognised on the deemed disposal of the Group’s previous joint venture
interest in Just-Eat Benelux BV.
The goodwill arising on the acquisition of Just-Eat Benelux BV was attributable to the anticipated
profitability of the sale of the company’s products and the anticipated future operating synergies that
were expected at the time the acquisition was completed.
Of the acquisition costs of £77,000, £60,000 were accrued and recognised in 2011.
122
FillMyBelly Limited
In April 2012, the Group acquired a 100% shareholding in FillMyBelly Limited, based in the United
Kingdom. The acquisition has been accounted for as a business combination in accordance with
IFRS 3 (2008) Business Combinations.
The goodwill arising on the acquisition of FillMyBelly Limited is attributable to the anticipated
profitability of the sale of the company’s products and the anticipated future operating synergies.
SinDelantal Internet S.L.
In October 2012, a Group company acquired 100% of the share capital of SinDelantal Internet S.L., an
established business operating throughout Spain. The acquisition had been accounted for as a
business combination in accordance with IFRS 3 (2008) Business Combinations.
The goodwill arising on the acquisition of SinDelantal is attributable to the anticipated profitability of the
sale of the company’s products in the market and the anticipated future operating synergies from the
combination. The fair values of the assets acquired recorded in the Group’s financial statements for the
year ended 31 December 2012 were provisional. As a result of finalising the acquisition accounting the
provisional fair values of trade and other payables decreased by £0.2 million to £0.4 million, the
restaurant list intangible asset decreased in value by £1.2 million to £27,000 and the deferred tax
liability decreased by £0.4 million to £0.1 million. As a result of these changes, goodwill increased by
£0.6 million to £2.6 million. The amounts quoted in the table above are the final fair values.
123
2011 acquisitions:
Achindra
Online
Marketing
Private
Limited
£‘000
Fair values of net assets
acquired:
Property, plant and
equipment . . . . . . . . . . . .
Trade and other
receivables . . . . . . . . . . .
Cash and cash
equivalents . . . . . . . . . . .
Trade and other
payables . . . . . . . . . . . . .
Intangible assets —
Restaurant list . . . . . . . . .
Contingent liabilities
assumed . . . . . . . . . . . . .
Recognition of deferred tax
on intangible assets . . . .
Urbanbite
Limited
£‘000
YummyWeb
Inc.
£‘000
10
—
—
26
176
1
1
(22)
32
—
(8)
Restaurante
Web
£‘000
Grub
Canada
Inc.
£‘000
Clickeat.it
£‘000
—
—
—
—
—
213
—
—
—
—
2
(78)
(22)
—
—
—
365
65
11
46
(25)
—
—
(91)
(18)
(14)
478
1
Total
£‘000
69
11
(122)
1,055
—
—
(25)
(135)
133
(133)
Goodwill . . . . . . . . . . . . . . . .
39
149
348
105
36
201
32
1,496
343
360
203
415
1,001
2,726
Total consideration . . . . . . .
188
453
237
1,528
703
618
3,727
188
453
237
954
703
618
3,153
—
—
—
574
—
—
188
453
237
1,528
703
618
3,727
188
453
237
954
703
618
3,153
—
—
—
—
Satisfied by:
Cash . . . . . . . . . . . . . . . . . .
Contingent
consideration . . . . . . . . . .
Net cash outflow arising on
acquisition:
Cash consideration . . . . . . .
Cash and cash equivalents
acquired . . . . . . . . . . . . . .
Acquisition costs . . . . . . . . .
Contribution since control
obtained:
— Turnover . . . . . . . . . . . . .
— Operating profit/(loss) . .
Contribution if control had
been obtained at start of
year:
— Turnover . . . . . . . . . . . . .
— Operating profit/(loss) . .
(1)
(1)
574
(2)
187
452
237
954
703
618
3,151
36
226
35
10
61
2
370
56
(887)
105
(27)
15
2
87
(823)
91
(55)
58
(90)
421
(110)
15
2
#
#
209
(180)
34
(399)
#
#
388
(2,189)
703
(378)
Note: # — Financial information in respect of RestauranteWeb and Clickeat.it for the periods prior to
their acquisition is not available.
justeat.in
In January 2011 the Group acquired a 33% shareholding in justeat.in, based in India and trading as
“Hungryzone”. At the time of purchase, the Group entered into an agreement to provide future funding
to the company and also increase its equity interest. The substance of the transaction and provisions
within the agreement were such that the company has been treated as a subsidiary of the Group for
124
the entire period from acquisition. During the year, capital injections were made in accordance with the
agreement made with the former owners such that the Group’s closing equity interest in the Indian
business was 67%. The Indian business now trades as “justeat.in”.
The acquisition has been accounted for as a business combination in accordance with IFRS 3
(2008) Business Combinations, as management consider the substance of the transaction to constitute
a business combination in the sense laid out in the general provisions of IFRS 3 (2008) and the
specific provisions of IFRS 10 ‘Consolidated Financial Statements’ relating to establishing control
despite only 33% of the shareholding being purchased in the initial acquisition.
The goodwill arising on the acquisition of justeat.in is attributable to the anticipated profitability of the
sale of the company’s products and the anticipated future operating synergies.
Urbanbite Limited (“urbanbite.com”)
On 29 September 2011, a Group company acquired 100% of the share capital of Urbanbite Holdings
Limited, which owns 100% of the share capital of Urbanbite Limited, an established business in the
United Kingdom, based predominately in London.
The acquisition has been accounted for as a business combination in accordance with IFRS 3
(2008) Business Combinations. Urbanbite’s main focus is on the London corporate sector.
The goodwill arising on the acquisition of Urbanbite Limited is attributable to the anticipated profitability
of the sale of the company’s products in the corporate market and the anticipated future operating
synergies from the combination.
YummyWeb Inc. (“yummyweb.com”)
On 11 April 2011, a Group company acquired 100% of the share capital of YummyWeb Inc, an
established business based on the Canadian West coast.
The acquisition has been accounted for as a business combination in accordance with IFRS 3
(2008) Business Combinations. YummyWeb operates on the Canadian West coast so this acquisition
allowed Just-Eat Canada to operate a coast-to-coast business. The YummyWeb website now directs
traffic to the Just-Eat.ca website.
The goodwill arising on the acquisition of YummyWeb Inc is attributable to the anticipated profitability
of the sale of the company’s products in the student market and the anticipated future operating
synergies from the combination.
RestauranteWeb (“restauranteweb.br”)
The Group established a wholly owned subsidiary, Justeat Brasil Servicos Online LTDA, in Brazil
during 2011. The purpose of this company was to acquire the trade and assets of “RestauranteWeb”,
an established business in Brazil. The transaction was completed on 18 August 2011.
The trade and assets acquired were deemed by management to constitute an integrated set of
activities and assets that is capable of being conducted and managed for the purpose of providing a
return to the Group, and has accordingly been accounted for as a business combination under the
provisions of IFRS 3 (2008) Business Combinations.
The goodwill arising on the acquisition of the trade and assets of RestauranteWeb is attributable to the
anticipated profitability of the sale of the company’s products in the market and the anticipated future
operating synergies from the combination.
Substantially all of the result for the period was derived from the trade and assets acquired.
Included in the Group consolidated financial information is a liability of £0.1 million, which has been
recognised in respect of an agreement entered into with the former owners of RestauranteWeb to
provide post-combination services to the newly acquired entity. In accordance with the provisions of
IFRS 3 (2008), this arrangement has been recorded as a separate transaction to the business
combination outlined above.
125
Contingent consideration is payable over a 12 month period subject the business meeting certain
performance criteria. At the acquisition date management estimated that the performance criteria
would be met and therefore included this value as part of the consideration for acquiring the business.
Grub Canada Inc. (“grubcanada.com”)
On 13 October 2011 the Group, via its subsidiary Just-Eat Canada Inc., acquired the trade and assets
of the Canadian trading company Grub Canada Inc. The acquisition was deemed by management to
constitute an integrated set of activities and assets that is capable of being conducted and managed
for the purpose of providing a return to the Group, and has accordingly been accounted for as a
business combination under the provisions of IFRS 3 (2008) Business Combinations.
The goodwill arising on the acquisition of the trade and assets of Grub Canada Inc. is attributable to
the anticipated profitability of the sale of the company’s products in the market and the anticipated
future operating synergies from the combination.
Clickeat.it (“clickeat.it”)
The Group established a wholly owned subsidiary, Just-Eat Italy S.r.l, in Italy during the current period.
The purpose of this entity was to acquire the trade and assets of “Clickeat.it”, an established business
owned by Deepsun S.r.l. The transaction was completed on 4 April 2011. The trade and assets
acquired were deemed by management to constitute an integrated set of activities and assets that is
capable of being conducted and managed for the purpose of providing a return to the Group, and has
accordingly been accounted for as a business combination under the provisions of IFRS 3
(2008) Business Combinations.
The goodwill arising on the acquisition of the trade and assets of Clickeat.it is attributable to the
anticipated profitability of the sale of the company’s products in the market and the anticipated future
operating synergies from the combination.
Substantially all of the result for the period was derived from the trade and assets acquired.
Included in the Group consolidated financial statements is a liability of £29,000, which relates to an
agreement with the former owners to provide post-combination services. In accordance with the
provisions of IFRS 3 (2008), this arrangement has been recorded as a separate transaction to the
business combination outlined above.
Net cash outflow on acquisition of subsidiaries
The net cash outflow on acquisition of subsidiaries for the year ended 31 December 2013, of £3.7
million, principally related to the buy-out of the Just Eat Canada Inc. minority shareholders (£1.3
million) and deferred consideration payments in respect of the Group’s 2012 acquisition of the shares it
did not hold in Just-Eat Benelux BV (£2.2 million). The net cash outflow on acquisition of subsidiaries
for the year ended 31 December 2013, of £5.1 million, principally related to payments in respect of the
acquisitions of SinDelantal Internet S.L. (£2.5 million) and FillMyBelly Limited (£1.0 million) and the
buy-out of the Just Eat Canada Inc. minority shareholders (£0.9 million).
The net cash outflow on acquisition of subsidiaries for the year ended 31 December 2011, of
£3.1 million, principally related to payments in respect of the acquisitions of RestauranteWeb (£1.0
million), Grub Canada Inc (£0.7 million) and Clickeat.it (£0.6 million).
126
34. Acquisition of investments in joint venture and associate
FBA Invest SaS
£‘000
Eat.ch GmbH
£‘000
Total
£‘000
Fair values of net assets acquired:
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets — Restaurant list . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets — Brand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognition of deferred tax on intangible assets . . . . . . . . . . . . . .
6
341
732
(1,227)
842
2,137
(1,004)
—
—
68
(8)
96
—
(8)
6
341
800
(1,235)
938
2,137
(1,012)
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,827
5,793
148
165
1,975
5,958
Total consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,620
313
7,933
Satisfied by:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition costs settled in cash during 2012 . . . . . . . . . . . . . . . . .
Acquisition date fair value of contingent consideration . . . . . . . . .
6,626
332
662
313
—
—
6,939
332
662
Total consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,620
313
7,933
Net cash outflow arising on acquisition:
Cash consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,626
—
203
110
6,829
110
6,626
313
6,939
Contribution to share of results of joint venture and associate
since acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7)
(128)
(135)
FBA Invest SaS (“Alloresto.fr”)
On 23 December 2011, the Group acquired a 50% interest in FBA Invest SaS (“FBA”), a French
holding company which owns 100% of the share capital of Eat On Line Sa, trading as “Alloresto.fr”. As
part of the deal to acquire the 50% shareholding, the Group entered into a joint venture agreement with
the previous owners. At the time of issuing the Group’s 2011 financial statements the accounting for
this acquisition was provisional. The acquisition accounting was finalised in 2012 and it is those
numbers which are disclosed above.
The goodwill arising on the acquisition of the 50% share in FBA is attributable to the anticipated
profitability of the sale of the company’s products in the market and the anticipated future operating
synergies from the combination.
Eat.ch GmbH (“Eat.ch”)
On 22 March 2011, the Group acquired a 33% economic interest in Eat.ch, a Swiss company. As part
of the deal to acquire the 33% shareholding, the Group entered into an agreement with the previous
owners, which committed the Group to contribute future funding to the venture and thereby increasing
its economic interest to 50%, which it had by 31 December 2011. Management does not consider the
substance of the transaction to confer control to the Group, and therefore has recorded balances in
accordance with IFRS 11 ‘Joint Arrangements’ and have applied the equity method to record those
balances in the Group consolidated financial statements. At the time of issuing the Group’s 2011
financial statements the accounting for this acquisition was provisional. The acquisition accounting was
finalised in 2012 and it is those numbers which are disclosed above.
The goodwill arising on the acquisition of the 50% share in Eat.ch is attributable to the anticipated
profitability of the sale of the Company’s products in the market and the anticipated future operating
synergies from the combination.
127
35. Net cash inflow from operating activities
Year ended
31 December
2013
£‘000
Year ended
31 December
2012
£‘000
Year ended
31 December
2011
£‘000
Operating profit/(loss) for the year . . . . . . . . . . . . . . . . . . . . . . .
Adjustments for:
Share of (profit)/loss of joint ventures and associates . . . . . . . .
Depreciation of property, plant and equipment . . . . . . . . . . . . .
Amortisation of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based payment expense . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposal of property, plant and equipment . . . . . . . . . .
Impairment charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Release of contingent consideration . . . . . . . . . . . . . . . . . . . . . .
Other non-cash items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,791
(9,663)
(1,757)
(11)
2,708
919
1,731
61
307
(840)
166
521
1,760
529
480
32
7,320
—
—
257
1,114
155
231
34
18
—
—
Operating cash flows before movements in working capital . . .
(Increase)/decrease in inventories . . . . . . . . . . . . . . . . . . . . . . .
(Increase)/decrease in receivables . . . . . . . . . . . . . . . . . . . . . . .
Increase in payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in other provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,832
(307)
(198)
10,617
—
1,471
979
(393)
(1,200)
10,059
—
1,262
52
6
576
4,981
(1,037)
633
Cash generated by operations . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,415
(4,194)
(8)
10,707
(564)
(40)
5,211
(251)
(75)
Net cash inflow from operating activities . . . . . . . . . . . . . . . . . .
19,213
10,103
4,885
Year ended
31 December
2013
£‘000
Year ended
31 December
2012
£‘000
Year ended
31 December
2011
£‘000
1,840
1,546
613
36. Operating lease arrangements
The group as lessee
Minimum lease payments under operating leases recognised
as an expense in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At the balance sheet date, the Group had outstanding commitments for future minimum lease
payments under non-cancellable operating leases, which fall due as follows:
2013
£‘000
Property
Within one year . . . . . . . . . . . . . . . . . . .
In the second to fifth years inclusive . .
2013
£‘000
Plant and
Equipment
2012
£‘000
Property
2012
£‘000
Plant and
Equipment
2011
£‘000
Property
2011
£‘000
Plant and
Equipment
1,967
2,728
508
596
1,301
2,940
422
433
193
1,113
340
434
4,695
1,104
4,241
855
1,306
774
37. Share based payments
The Group operates a number of equity settled, share based compensation plans. In accordance with
IFRS 2, the value of the awards are measured at fair value at the date of the grant. The fair value is
expensed on a straight line basis over the vesting period, based on the management’s estimate of the
number of shares that will eventually vest. The fair value of the options granted is calculated using the
Black-Scholes option pricing model, taking into account the terms and conditions upon which the
options were granted.
In total, the Group recognised an expense of £1.7 million related to equity-settled share-based
payment transactions in 2013 (2012: £0.5 million) (2011: £0.2 million).
128
The Company operates the Just-Eat Group Holdings Limited Enterprise Management Incentive
Scheme (“EMI Scheme”) and the Just-Eat Group Holdings Limited Company Share Option Plan
(“CSOP”) for employees of the Group.
EMI Scheme
Under the terms of the EMI Scheme, the Board granted options to certain employees of the Group to
purchase shares in the Company. Options are no longer being granted under this scheme.
CSOP
Under the terms of the CSOP, the Board may grant options to purchase Ordinary shares in the
Company. The CSOP is an equity-settled share option scheme approved by Her Majesty’s Revenue &
Customs (“HMRC”) and was established in 2011.
Under the CSOP, the Board may grant options over shares in the Company to eligible employees. The
eligible employees to whom options are granted and the terms of such options are determined by the
Board. All employees are eligible to participate in the CSOP, including employees of the Company’s
subsidiaries, but not all grants are approved by HMRC. Options are not transferable.
The exercise price of options may not be less than the market value of the Company’s shares on the
date of grant, in order for the scheme to qualify as an approved HMRC scheme.
Vested options in the CSOP scheme become exercisable when the Company achieves an exit.
EMI Scheme and CSOP
Options are exercisable at a price equal to the estimated fair value of the Company’s shares on the
date of grant. Options vest in stages over a three year period commencing on a specified date
established on grant. Options are forfeited if an employee leaves the Group before the options vest
and expire if they remain unexercised 10 years after the date of grant.
Details of the share options outstanding, under the EMI Scheme and CSOP, during the year are as
follows:
2013
Number of
share
options
(‘000)
2013
Weighted
average
exercise
price
(in £)
2012
Number of
share
options
(‘000)
2012
Weighted
average
exercise
price
(in £)
2011
Number of
share
options
(‘000)
2011
Weighted
average
exercise
price
(in £)
Outstanding at 1 January . . . . . . . . . .
Granted during the year . . . . . . . . . . .
Forfeited during the year . . . . . . . . . . .
Exercised during the year . . . . . . . . . .
451
122
(31)
(18)
3.88
9.19
5.99
0.74
430
128
(17)
(90)
1.71
7.01
5.29
2.43
677
155
(5)
(397)
0.37
4.12
2.34
0.02
Outstanding at 31 December . . . . . . .
524
4.90
451
3.88
430
2.05
Exercisable at 31 December . . . . . . . .
189
0.98
129
1.79
141
1.71
The weighted average exercise price of share options exercised during the year was £0.74 (2012:
£2.43; 2011: £0.02). The options outstanding at 31 December 2013 had a weighted average exercise
price of £4.90 (2012: £3.88; 2011: £2.05) and a weighted average remaining contractual life of 8.6
years (2012: 9.6 years; 2011: 9.8 years).
Joint Share Ownership Plan (JSOP)
The JSOP is an executive share ownership scheme under which the employee and Appleby Trust
(Jersey) Limited, the EBT Trustee, held at the balance sheet date a joint interest in 45,500 Ordinary
shares (2012: Nil) and 222,700 (2012: 222,700) B Ordinary shares. Shares in respect of tranche 8 –
tranche 13 had not yet been allotted at 31 December 2013.
129
Interests under the JSOP take the form of restricted interests in Ordinary shares and B Ordinary
shares in the Company. An interest permits a participant to benefit from the increase (if any) in the
value of a number of Ordinary shares or B Ordinary shares in the Company over specified threshold
amounts. In order to acquire an interest, a participant must enter into a joint share ownership
agreement with the EBT Trustee, under which the participant and the EBT Trustee jointly acquire the
shares and agree that when the shares are sold the participant has a right to receive payment of their
subscription amount and the proportion of the sale proceeds that exceed the threshold amount.
The vesting of interests granted to employees is subject to the option holder continuing to be employed
by the Group. Interests vest in stages over a three year period commencing on a specified date
established on grant.
The fair value of interests awarded under the JSOP was determined using the Black-Scholes Option
Pricing Model. Details of the JSOP interests are shown below:
Number of
shares
Vesting start
date
Tranche 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tranche 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tranche 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tranche 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tranche 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tranche 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tranche 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tranche 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tranche 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tranche 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tranche 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tranche 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tranche 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46,000
85,000
31,700
60,000
22,000
3,500
20,000
68,125
98,300
34,062
81,775
34,063
81,775
01/04/2012
01/07/2012
01/10/2012
01/01/2013
01/07/2014
01/04/2014
01/05/2014
01/01/2014
01/07/2014
01/01/2015
01/07/2015
01/01/2016
01/07/2016
........................................................
666,300
Threshold
(£)
1.25
4.50
3.25
3.25
9.19
9.19
9.19
15.57
15.57
17.91
17.91
20.59
20.59
Assumptions
In determining the fair value of the options and interests granted, under the EMI Scheme, CSOP and
JSOP, the Black-Scholes Option Pricing Model was used with the following inputs:
Year ended
31 December
2013
Weighted average share price . . . . . . . . . . . . . . . . . . .
Weighted average exercise price . . . . . . . . . . . . . . . . .
Expected volatility (based on FTSE 350 3 year) . . . . .
Expected life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-free rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected dividend yields . . . . . . . . . . . . . . . . . . . . . . .
Year ended
31 December
2012
Year ended
31 December
2011
2,460p
1,125p
825p
919p
701p
412p
39.67%
17.2%
19.2%
36–48 months 36–68 months 54–89 months
0.38%–1.69%
1.58%
1.60%
0.0%
0.0%
0.0%
Expected volatility was determined by comparing the Company to others of a similar size or operating
in a similar field. The expected life used in the model was management’s best estimate, adjusted for
the effects of non-transferability, exercise restrictions and behavioural considerations. All such share
awards are equity-settled.
38. Deferred revenue
As at
31 December
2013
£‘000
As at
31 December
2012
£‘000
As at
31 December
2011
£‘000
Current deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,982
1,212
2,442
1,287
1,715
751
Total deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,194
3,729
2,466
130
JCTs used by restaurants are paid for upfront. This revenue is deferred over 36 months. A connection
fee is also charged when restaurants join the network. This revenue is recognised over a 12 month
period.
39. Financial instruments
Financial instruments comprise both financial assets and financial liabilities. The carrying value of
these financial assets and liabilities approximate their fair value.
Financial assets in the Group comprise trade and other receivables, cash and cash equivalents and
investments classified as available for sale. These types are all classified as other financial assets in
the table below.
Financial liabilities in the Group comprise borrowings which are categorised as debt at amortised cost.
Financial liabilities also comprise trade and other payables, other long-term liabilities and provisions for
liabilities which are classified as other financial liabilities.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going
concerns.
The capital structure of the Group consists of minimal borrowings, as disclosed in note 24, cash and
cash equivalents and equity attributable to equity holders of the parent, comprising issued capital,
retained earnings and other reserves, as disclosed in notes 28 to 31.
The Group is not subject to any externally imposed capital requirements.
Financial risk management objectives
The main financial risks faced by the Group are credit risk, liquidity risk and market risk, which include
interest rate risk and currency risk. The Board regularly reviews these risks. The Group does not enter
into or trade financial instruments, including derivative financial instruments, for speculative purposes.
Categories of financial instruments
As at
31 December
2013
£‘000
As at
31 December
2012
£‘000
As at
31 December
2011
£‘000
Financial assets
Other financial assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments classified as available for sale . . . . . . . . . . . . . . . .
61,620
3,872
—
50,026
4,492
—
7,858
2,432
6,918
Total financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65,492
54,518
17,208
Other financial liabilities
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions for liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
498
33,381
101
—
—
25,020
718
63
—
11,024
—
Total financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33,980
25,738
11,087
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of
three months or less. The carrying amount of these assets is equal to their fair value.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange
rates and interest rates.
131
Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies; consequently exposures to
exchange rate fluctuations arise.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary
liabilities at the reporting date are as follows:
Euros . . . . . . . . . . . . .
Canadian Dollars . . .
Danish Kroner . . . . . .
Norwegian Kroner . . .
Indian Rupees . . . . . .
Brazilian Reals . . . . .
Swiss Francs . . . . . . .
As at
31 December
2013
£’000
Assets
As at
31 December
2012
£‘000
As at
31 December
2011
£‘000
As at
31 December
2013
£‘000
Liabilities
As at
31 December
2012
£‘000
As at
31 December
2011
£‘000
2,633
881
5,429
276
—
361
204
1,674
707
6,050
337
124
254
—
4,344
262
2,845
224
184
128
—
3,587
1,376
3,947
317
—
532
279
1,995
936
2,864
221
68
449
—
3,137
651
2,888
179
17
187
—
The Group is primarily exposed to the Euro, Danish Krone, Canadian Dollar and Brazilian Real.
The following table details the Group’s sensitivity to a 10% depreciation in Pound Sterling against the
relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk
internally to key management personnel and represents management’s assessment of a reasonably
possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign
currency denominated monetary items and adjusts their translation at the period end for a 10% change
in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign
operations within the Group.
Impact on other comprehensive income/(loss)
Appreciation in
Pound Sterling
2013
2012
2011
£’000 £’000 £’000
Euros . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canadian Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Danish Kroner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Norwegian Kroner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Swiss Francs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brazilian Reals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation in
Pound Sterling
2013
2012
2011
£’000 £’000 £’000
87
29 319 (106) (36) (389)
45
21
35
(55) (25) (43)
(135) (290) 79 165 354
(96)
4
(11)
(4)
(5) 13
5
7 —
—
(8) —
—
16
18
(7) (19) (22)
9
The Group’s sensitivity to fluctuations in foreign currencies is the result of increased activity in the
foreign owned subsidiaries which has led to a significant increase in foreign currency denominated
trade payables and trade receivables.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates at the
balance sheet date. For assets and floating rate liabilities, the analysis is prepared assuming the
amount of asset/liability outstanding at the balance sheet date was outstanding for the whole year. A
10% increase or decrease in the interest rate is used when reporting interest rate risk internally to key
management personnel and represents management’s assessment of the reasonably possible change
in interest rates.
132
If interest rates had been 10% higher/lower and all other variables were held constant, the Group’s:
•
profit for the year ended 31 December 2013 would increase/decrease by £16,000 (2012:
£20,000; 2011: £9,000); and
•
there would have been no effect on amounts recognised directly in equity.
Other price risks
The Group is exposed to equity price risks arising from equity investments. Equity investments are held
for strategic rather than trading purposes. The Group does not actively trade these investments.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the Group. The Group’s exposure and the credit ratings of its major counterparties are
continuously monitored.
Trade receivables consist of a large number of customers, spread across geographical areas.
On-going credit evaluation is performed on the financial condition of accounts receivable and, where
appropriate, credit guarantee insurance cover is purchased.
The carrying amount of financial assets recorded in the financial information, which are stated net of
impairment losses, represents the Group’s maximum exposure to credit risk as no collateral or other
credit enhancements are held.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings
assigned by international credit-rating agencies.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board, which has established an
appropriate liquidity risk management framework for the management of the Group’s short, medium
and long-term funding and liquidity management requirements. The Group manages liquidity risk by
maintaining adequate cash reserves, by continuously monitoring forecast and actual cash flows, and
by matching the maturity profiles of financial assets and liabilities.
Liquidity and interest risk tables
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial
liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted
cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.
The table includes both interest and principal cash flows. To the extent that interest flows are floating
rate, the undiscounted amount is derived from interest rate curves at the balance sheet date. The
contractual maturity is based on the earliest date on which the Group may be required to pay.
Weighted
average
effective
interest rate
%
Less than
1 year
£‘000
1-2 years
£‘000
2-5 years
£‘000
5+ years
£‘000
Total
£‘000
31 December 2013
Non-interest bearing . . . . . . . . . . . . . . . . .
—
33,381
33,381
158
158
441
441
—
—
33,980
33,980
31 December 2012
Non-interest bearing . . . . . . . . . . . . . . . . .
—
25,020
718
—
—
25,738
25,020
718
—
—
25,738
11,024
63
11,087
—
—
—
—
—
—
—
—
—
11,024
63
11,087
31 December 2011
Non-interest bearing . . . . . . . . . . . . . . . . .
Variable interest rate instruments . . . . . .
—
4.17
133
The following table details the Group’s expected maturity for its financial assets and has been drawn
up based on the undiscounted contractual maturities of the financial assets, including interest that will
be earned on those assets.
Weighted
average
effective
interest
rate
%
Less than
1 month
£’000
1-3
months
£’000
3 months
to 1 year
£’000
1-5 years
£’000
5+ years
Total
£’000
31 December 2013
Non-interest bearing . . . . . . . . . . .
Fixed interest rate instruments . . .
—
0.42
31,438
29,054
60,492
—
5,000
5,000
—
—
—
—
—
—
—
—
—
31,438
34,054
65,492
31 December 2012
Non-interest bearing . . . . . . . . . . .
Fixed interest rate instruments . . .
—
0.80
24,472
25,044
49,516
—
5,002
5,002
—
—
—
—
—
—
—
—
—
24,472
30,046
54,518
31 December 2011
Non-interest bearing . . . . . . . . . . .
Fixed interest rate instruments . . .
—
—
17,208
—
17,208
—
—
—
—
—
—
—
—
—
—
—
—
17,208
—
17,208
The Group has previously had access to financing overdraft facilities, which as of the balance sheet
date have all been cancelled. The Group expects to meet its other obligations from operating cash
flows and proceeds of maturing financial assets.
Financing facilities
As at
31 December
2013
£‘000
Unsecured bank overdraft facility, reviewed annually and
payable at call:
— amount used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— amount unused . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As at
31 December
2012
£‘000
—
—
—
—
—
—
As at
31 December
2011
£‘000
9
4,245
4,254
There were no available for sale financial assets held as at 31 December 2013 and 31 December
2012. As at 31 December 2011, the Group held available for sale financial assets in the form of
unquoted equities of £6,918k. These equities have been classified as Level 3.
There were no transfers between levels during 2011, 2012 and 2013.
The investment in OnlinePizza Norden AB was disposed of during 2012, with no AFS financial assets
existing at the 2012 year end. Although OnlinePizza Norden AB was not listed, the fair value of the
asset was calculated by reference to an offer received for the shares held. This was considered to
represent fair value.
Reconciliation of Level 3 fair value measurements of financial assets for 2012:
Available for sale
unquoted equities
Level 3
Total
£‘000
£‘000
Balance at 1 January 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sale of available for sale unquoted entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,918
(6,918)
6,918
(6,918)
Balance at 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
134
Significant assumptions used in determining fair value of financial assets
The consolidated balance sheet includes holdings in unlisted shares which are measured at fair value
(note 20). Fair value is estimated using a discounted cash flow model due to the absence of
observable market prices. However, in 2012, the valuation was based on a third party offer price and
subsequent sale price of the investment.
In determining the fair value in the prior year, an earnings growth factor of 3.8% and a cash flow risk
adjustment factor of 2% are used. Cash flows were discounted at 12.74%. If the discount rate used in
the model was increased by 10% to 14.01% while all the other variables were held constant, the
estimated fair value of the shares would decrease by £44,000.
40. Related party transactions
The following table provides the total amount of transactions that have been entered into with related
parties for the relevant financial year together with amounts owed by and to related parties at the
balance sheet date.
Amounts
Amounts
Sales to
Purchases
owed by
owed to
related
from related
related
related
parties
parties
parties*
parties*
Year end
Year end
As at
As at
31 December 31 December 31 December 31 December
£‘000
£‘000
£‘000
£‘000
Associates:
Achindra Online Marketing Private
Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eat.ch Gmbh . . . . . . . . . . . . . . . . . . . . . . . . . .
Joint venture in which the parent is a
venturer:
FBA Invest SAS . . . . . . . . . . . . . . . . . . . . . . .
Just-Eat Benelux BV . . . . . . . . . . . . . . . . . . .
2013
2012
2011
2013
2012
2011
—
N/a
N/a
N/a
—
—
—
N/a
N/a
N/a
—
—
72
N/a
N/a
N/a
543
6
—
N/a
N/a
N/a
—
—
2013
2012
2011
2013
2012
2011
—
—
—
N/a
N/a
—
—
—
—
N/a
N/a
—
176
13
—
N/a
N/a
539
—
—
—
N/a
N/a
—
*The amounts are classified as trade receivables and trade payables respectively
Loans to related parties
The following amounts were outstanding at the balance sheet date:
Amounts
Amounts
owed to
owed by
Interest
related
Interest
related
payable
parties
receivable
parties
Year ended
As at
Year ended
As at
31 December 31 December 31 December 31 December
£‘000
£‘000
£‘000
£‘000
Happy Investments BV
Key management personnel
2013
2012
2011
2013
2012
2011
—
—
—
—
—
—
—
—
160
—
—
—
—
—
—
—
—
—
—
—
—
—
—
162
Happy Investments BV was a related party through its 46% shareholding in Just-Eat Benelux BV and
25% shareholding in Just-Eat Belgie BVBA. Happy Investments BV was bought out in January 2012,
with the Group consequently having a 100% shareholding in both Just-Eat Benelux BV and Just-Eat
Belgie BVBA.
135
Compensation of key management personnel of the Group
Year Ended
31 December
2013
£’000
Year Ended
31 December
2012
£’000
Year Ended
31 December
2011
£’000
Short-term employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . .
Post-employment pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Termination benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,692
—
371
956
2,455
6
—
299
1,058
1
—
144
Total compensation of key management personnel . . . . . .
3,019
2,760
1,203
The amounts disclosed in the table are the amounts recognised as an expense during the reporting
period related to key management personnel. The amounts in respect of share based compensation
are the IFRS 2 charges. Key management personnel are members of the Board and members of the
Group’s Executive Team.
Key management personnel’s interests in the JSOP and EMI scheme
Share options held by key management personnel, as at 31 December 2013, under the JSOP and EMI
scheme have the following expiry dates and exercise prices:
Issue date
2011
2011
2011
2011
2011
2013
2013
Number
............................................
............................................
............................................
............................................
............................................
............................................
............................................
Vesting start date
Threshold/
Exercise price
£
46,000
1 April 2012
1.25
85,000
1 July 2012
4.50
31,700 1 October 2012
3.25
60,000 1 January 2013
3.25
25,100 1 January 2013
1.25
136,250 1 January 2014 15.57 – 20.59
261,850
1 July 2014 15.57 – 20.59
Refer to note 37 for further details about the JSOP and EMI scheme.
Other related party transactions
In October 2010, the Group created a £1 million 12% convertible loan note facility. The Lenders were
Index funds (comprising Index Ventures V (Jersey) LP, Index Ventures Parallel Entrepreneur Fund
(Jersey) LP and Yucca Partners LP (Jersey branch)) and STM Fidecs Trust Company Limited (as
trustee of the Sara Marron Discretionary Settlement), who are related parties to the Group. The loan
was split 34%/66% between the Index funds and STM Fidecs Trust Company Limited respectively. The
loan notes were convertible into Series A Preference shares. The loan notes were subscribed in two
tranches, £0.5m in October 2010 and £0.5m in December 2010. As part of the Series B funding round
in March 2011, the loan notes held by the Index funds were instead converted into Series B Preference
shares and the loan notes held by STM Fidecs Trust Company Limited were repaid.
On 2 November 2011, the Group entered into a £3 million loan facility from STM Fidecs Trust
Company Limited (as trustee of the Sara Marron Discretionary Settlement), a related party to the
Group. The drawdown period was from 4 November 2011 to 1 May 2012 and any amounts drawn
down were required to be repaid at the earlier of 364 days after the facility was first used, or upon the
Group completing a fundraising that raised at least £3 million. The Group drew down £2 million on or
around 16th March 2012 and the remaining £1 million on or around 13th April 2012. The Group repaid
the facility in full on or around 4th May 2012, following the completion of the Series C funding round.
41. Events after the balance sheet date
On 27 February 2014 the Group acquired the entire share capital of, Birmingham based, Meal 2
Order.com Limited for cash consideration totalling £3.7 million. Given the timing of the acquisition,
management has not yet been able to determine the fair values of the acquired assets and liabilities.
In January 2014, the Company issued and allotted 424,350 ordinary shares of £0.0001 each which
were credited as partly paid up at the time of issue and which have subsequently been fully paid.
Between 1 January 2014 and 20 March 2014, the Company issued and allotted 5,937 B ordinary
shares of £0.0001 each which were credited as fully paid.
136
On 20 March 2014 the Company’s share premium account was reduced by £40.0 million by way of a
reduction of capital. On the same day the Company conducted a bonus issue of 2,699 shares for every
one ordinary, B ordinary, Preference A, Preference B and Preference C share in issue. This was
followed by a consolidation of each of the ordinary shares, B ordinary shares, Preference A shares,
Preference B shares and Preference C shares such that the nominal value of each share increased
from £0.0001 to £0.01.
On 24 March 2014 the Company re-registered as JUST EAT plc.
On 24 March 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) 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.
Between 20 March 2014 and 2 April 2014, the Company issued and allotted 2,120,553 B ordinary
shares of £0.01 each which were credited as fully paid.
On 2 April 2014 the Directors declared a dividend of £18.25 million, 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.
137
Part XIII
PRO FORMA FINANCIAL INFORMATION
A) ACCOUNTANTS’ REPORT ON THE PRO FORMA FINANCIAL INFORMATION RELATING TO
THE GROUP
Deloitte LLP
Abbots House
Abbey Street
Reading
RG1 3BD
The Board of Directors
on behalf of JUST EAT plc
Masters House
107 Hammersmith Road
London
W14 0QH
J.P. Morgan Securities plc
25 Bank Street
Canary Wharf
London
E14 5JP
3 April 2014
Dear Sirs,
JUST EAT plc (the “Company”)
We report on the pro forma financial information (the “Pro Forma Financial Information”) set out in
this Part XIII of the prospectus dated 3 April (the “Prospectus”), which has been prepared on the basis
described in notes 1 to 4, for illustrative purposes only, to provide information about how the
transaction might have affected the financial information presented on the basis of the accounting
policies adopted by the Company in preparing the financial statements for the period ended
31 December 2013. This report is required by Annex I item 20.2 of Commission Regulation (EC) No
809/2004 (the “Prospectus Directive Regulation”) and is given for the purpose of complying with that
requirement and for no other purpose.
Responsibilities
It is the responsibility of the directors of the Company (the “Directors”) to prepare the Pro forma
financial information in accordance with Annex II items 1 to 6 of the Prospectus Directive Regulation.
It is our responsibility to form an opinion as to the proper compilation of the Pro forma financial
information and to report that opinion to you in accordance with Annex II item 7 of the Prospectus
Directive Regulation.
Save for any responsibility arising under Prospectus Rule 5.5.3R (2)(f) to any person as and to the
extent there provided, to the fullest extent permitted by law we do not assume any responsibility and
will not accept any liability to any other person for any loss suffered by any such other person as a
result of, arising out of, or in connection with this report or our statement, required by and given solely
for the purposes of complying with Annex I item 23.1 of the Prospectus Directive Regulation,
consenting to its inclusion in the Prospectus.
138
In providing this opinion we are not updating or refreshing any reports or opinions previously made by
us on any financial information used in the compilation of the Pro forma financial information, nor do we
accept responsibility for such reports or opinions beyond that owed to those to whom those reports or
opinions were addressed by us at the dates of their issue.
Basis of Opinion
We conducted our work in accordance with the Standards for Investment Reporting issued by the
Auditing Practices Board in the United Kingdom. The work that we performed for the purpose of
making this report, which involved no independent examination of any of the underlying financial
information, consisted primarily of comparing the unadjusted financial information with the source
documents, considering the evidence supporting the adjustments and discussing the Pro forma
financial information with the Directors.
We planned and performed our work so as to obtain the information and explanations we considered
necessary in order to provide us with reasonable assurance that the Pro forma financial information
has been properly compiled on the basis stated and that such basis is consistent with the accounting
policies of the Company.
Our work has not been carried out in accordance with auditing or other standards and practices
generally accepted in jurisdictions outside the United Kingdom, including the United States of America,
and accordingly should not be relied upon as if it had been carried out in accordance with those
standards or practices.
Opinion
In our opinion:
(a) the Pro forma financial information has been properly compiled on the basis stated; and
(b) such basis is consistent with the accounting policies of the Company.
Declaration
For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of the
Prospectus and declare that we have taken all reasonable care to ensure that the information
contained in this report is, to the best of our knowledge, in accordance with the facts and contains no
omission likely to affect its import. This declaration is included in the Prospectus in compliance with
Annex I item 1.2 of the Prospectus Directive Regulation.
Yours faithfully
Deloitte LLP
Chartered Accountants
Deloitte LLP is a limited liability partnership registered in England and Wales with registered number
OC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK
private company limited by guarantee, whose member firms are legally separate and independent
entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL
and its member firms.
139
B) PRO FORMA FINANCIAL INFORMATION
UNAUDITED PRO FORMA STATEMENT OF NET ASSETS
The following unaudited pro forma statement of net assets of the Group has been prepared to illustrate
the effect of the Offer on the Group’s net assets as if the Offer had taken place on 31 December 2013.
The pro forma financial information has been prepared on the basis set out in the notes below, in
accordance with Annex II to the Prospective Directive Regulation and in a manner consistent with the
accounting polices applied in preparing the Group’s historical financial information as set out in Part XII
(Historical Financial Information). This unaudited pro forma statement of net assets has been prepared
for illustrative purposes only, and because of its nature, addresses a hypothetical situation and,
therefore does not represent the Group’s actual financial position or results. It may not, therefore, give
a true picture of the Group’s financial position or results nor is it indicative of the results that may, or
may not, be expected to be achieved in the future.
As at
31 December
2013
(Note 1)
£‘000
Non-current assets
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in joint venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in associate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments
IPO
Proceeds
(Note 2)
£‘000
Unaudited
Pro Forma
(Notes 3,4)
£‘000
10,245
3,424
5,481
7,353
396
940
—
—
—
—
—
—
10,245
3,424
5,481
7,353
396
940
27,839
—
27,839
743
3,872
241
61,620
—
—
—
94,030
743
3,872
241
155,650
66,476
94,030
160,506
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
94,315
94,030
188,345
Current liabilities
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(33,381)
(1,093)
(3,982)
—
—
—
(33,381)
(1,093)
(3,982)
(38,456)
—
(38,456)
Net current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,020
94,030
Non-current liabilities
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions for liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(442)
(1,212)
(101)
(498)
—
—
—
—
(442)
(1,212)
(101)
(498)
(2,253)
—
(2,253)
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(40,709)
—
(40,709)
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53,606
94,030
122,050
147,636
Notes:
(1) The financial information has been extracted from the historical financial information set out in Part XII (Historical Financial
Information).
(2) The adjustment reflects an estimate of the proceeds of the Offer of £100.0 million, after deduction of estimated fees and
expenses of £6.0 million (which do not include £1.4 million of expenses that were charged to the income statement during
the year ended 31 December 2013).
(3) The unaudited pro forma statement of net assets does not constitute financial statements within the meaning of section 434
of the Companies Act.
(4) The unaudited pro forma statement of net assets does not reflect any trading results or other transactions undertaken by the
Group since 31 December 2013.
140
Part XIV
DETAILS OF THE OFFER
1.
THE OFFER
There are 138,502,501 Offer Shares available under the Offer comprising 38,461,538 New Ordinary
Shares to be issued by the Company and 100,040,963 Existing Ordinary Shares (before any exercise
of the Over-allotment Option) to be sold by the Selling Shareholders. The Offer represents 24.6% of
the Ordinary Shares of the Company assuming no exercise of the Over-allotment Option and 26.4%
assuming exercise in full of the Over-allotment Option.
The Selling Shareholders are selling 100,040,963 Existing Ordinary Shares representing in aggregate
19.9% of their combined holdings before any exercise of the Over-allotment Option.
38,461,538 New Ordinary Shares will be issued pursuant to the Offer. The Ordinary Shares other than
the New Ordinary Shares will represent 93.2% of the total issued Ordinary Shares immediately
following Admission (including any Ordinary Shares issued pursuant to the Over-allotment Option).
Under the Offer, Ordinary Shares are being made available to certain institutional and professional
investors in the United Kingdom and elsewhere outside of the United States in reliance on Regulation
S and in accordance with other applicable laws and in the United States only to persons reasonably
believed to be QIBs in reliance on Rule 144A or another exemption from the registration requirements
of the Securities Act. Certain restrictions that apply to the distribution of this document and Ordinary
Shares in certain jurisdictions are described in paragraph 9 of this Part XIV (Details of the Offer).
When admitted to trading, the Ordinary Shares will be registered with ISIN (International Securities
Identifying Number) GB00BKX5CN86 and SEDOL (Stock Exchange Daily Official List) number
BKX5CN8.
The New Ordinary Shares being issued by the Company will, following Admission, rank pari passu in
all respects with all Ordinary Shares then in issue in the issued ordinary share capital of the Company,
including the right to receive all dividends and other distributions declared in respect of the Ordinary
Shares after Admission. The Existing Ordinary Shares being sold by the Selling Shareholders will be
sold together with the right to receive all dividends and other distributions declared on the Ordinary
Shares after Admission. The Ordinary Shares will be freely transferable under the Articles of
Association.
The Company intends to apply for admission to the Official List at a future date. At the date of this
document, the Company considers that the only requirement under the Listing Rules that it may be
unable to meet, in order to satisfy the eligibility requirements for admission to the premium listing
segment of the Official List of the FCA, is the requirement under Listing Rule 6.1.19R that a sufficient
number of the Company’s shares are distributed to the public in one or more EEA states. In the future,
the Company anticipates that it will be able to meet the requirements of Listing Rule 6.1.19R as a
result of its current shareholders selling shares in the Company to members of the public in one or
more EEA states.
2.
REASONS FOR THE OFFER AND USE OF PROCEEDS
The Directors believe that the Offer will provide additional capital to support the development and
growth of JUST EAT and that Admission will enhance JUST EAT’s profile and increase JUST EAT’s
brand recognition and credibility. In addition, the Offer will create a market in the Ordinary Shares for
existing Shareholders and provide the Selling Shareholders with a partial realisation of their investment
in the Company.
141
The Company expects to receive net proceeds of approximately £94.0 million, after estimated
expenses of approximately £6.0 million (which do not include £1.4 million of expenses that were
charged to the income statement during the year ended 31 December 2013). The Selling Shareholders
expect to receive net proceeds of approximately £249.5 million, after estimated total expenses of
approximately £10.6 million.
The Company intends to use the net proceeds it receives from the Offer for general corporate
purposes, including to support growth in the business following Admission. In particular the Company
intends to seek opportunities to acquire complementary businesses within existing territories, to
expand into one or more additional territories or to acquire related technologies to support the growth
of its core business. Until the Company uses the net proceeds of the Offer for a particular purpose, it
intends to invest such proceeds in short term, interest bearing securities or similar deposits.
3.
ALLOCATION AND PRICING
All Ordinary Shares made available pursuant to the Offer will be payable in full at the Offer Price. The
Offer Price and the number of Ordinary Shares allocated to investors under the Offer are expected to
be announced on 3 April.
Allocations under the Offer will be determined by the Joint Global Co-ordinators, following consultation
with the Company. The Offer Price will be determined by the Company and the Major Selling
Shareholders in consultation with the Joint Global Co-Ordinators. A number of factors will be
considered in determining the Offer Price and the basis of allocation under the Offer, including the level
and nature of demand for Ordinary Shares and the objective of encouraging the development of an
orderly after-market in the Ordinary Shares.
Upon accepting any allocation, prospective investors will be contractually committed to acquire the
number of Ordinary Shares allocated to them at the Offer Price and, to the fullest extent permitted by
law will be deemed to have agreed not to exercise any rights to rescind or terminate, or withdraw from,
such commitment.
The rights attaching to the Ordinary Shares, including any Over-allotment Shares acquired pursuant to
the Over-allotment Option, will be uniform in all respects and the Ordinary Shares will form a single
class for all purposes.
Each investor will be required to pay the Offer Price for the Ordinary Shares sold or issued to such
investor in such manner as shall be directed by the Joint Global Co-ordinators.
Liability for stamp duty and stamp duty reserve tax is described in Part XV (Taxation).
4.
OVER ALLOTMENT AND STABILISATION
In connection with the Offer, Goldman Sachs, as stabilisation manager (the “Stabilisation Manager”)
or its affiliates, may for stabilisation purposes (but will be under no obligation to), to the extent
permitted by applicable law, over-allot or effect other transactions with a view to supporting, stabilising
or maintaining the market price of the Ordinary Shares at a level higher than that which might
otherwise prevail in the open market. The Stabilisation Manager is not required to enter into such
transactions and such transactions may be effected on the London Stock Exchange, in over-thecounter markets or otherwise. Such stabilising transactions, if commenced, may be discontinued at any
time without prior notice and may only be taken in the period of 30 days immediately following
commencement of conditional dealings in the Ordinary Shares on the London Stock Exchange. Save
as required by law or regulation, neither the Stabilisation Manager nor any of its affiliates intends to
disclose the extent of any over-allotments and/or stabilisation transactions conducted in connection
with the Offer.
In connection with the Offer, the Selling Shareholders and the Company have granted to the
Stabilisation Manager an option (the “Over-allotment Option”) pursuant to which the Stabilisation
Manager may require the Selling Shareholders to sell additional Ordinary Shares up to an aggregate of
7.5% of the total number of Offer Shares (excluding such additional Ordinary Shares) at the Offer Price
to cover over-allotments, if any, made in connection with the Offer and to cover short positions
resulting from stabilisation transactions.
142
In connection with settlement and stabilisation, the Stabilisation Manager has also entered into a stock
lending agreement (the “Stock Lending Agreement”) with Index Ventures V (Jersey) LP pursuant to
which the Stabilisation Manager will be able to borrow up to 7.5% of the total number of Offer Shares
(excluding the Ordinary Shares subject to the Over-allotment Option) on Admission for the purposes,
amongst other things, of allowing the Stabilisation Manager to cover short positions resulting from
over-allotments, if any, made in connection with the Offer. If the Stabilisation Manager borrows
Ordinary Shares pursuant to the Stock Lending Agreement, it will be required to return equivalent
securities to Index Ventures V (Jersey) LP by no later than the date that is three business days after
the date which is 30 days after the date of the Stock Lending Agreement.
The Over-allotment Option is exercisable, in whole or in part, upon notice by the Stabilisation Manager
to the Major Selling Shareholders at any time during the period commencing on the date of
commencement of conditional dealings of the Ordinary Shares on the London Stock Exchange and
ending 30 days thereafter.
5.
DEALING ARRANGEMENTS
It is expected that dealings in the Ordinary Shares will commence on a conditional basis on the London
Stock Exchange at 8.00am on 3 April 2014. The earliest date for settlement of such dealings will be
8 April 2014. All dealings in the Ordinary Shares prior to the commencement of unconditional dealings
will be on a “when issued basis”, will be of no effect if Admission does not take place and such
dealings will be at the sole risk of the parties concerned.
Admission is expected to become effective, and unconditional dealings in the Ordinary Shares are
expected to commence on the London Stock Exchange, at 8.00am on 8 April 2014. It is expected that
Ordinary Shares allocated to investors will be delivered in uncertificated form and settlement will take
place through CREST on 8 April 2014 or as soon thereafter as is practicable. Temporary documents of
title will not be issued.
6.
UNDERWRITING ARRANGEMENTS
The Company, the Directors, the Major Selling Shareholders and the Banks entered into the
Underwriting Agreement pursuant to which the Underwriters severally agreed, subject to certain
conditions, to procure subscribers, or failing which subscribe themselves, for the Ordinary Shares to be
issued by the Company pursuant to the Offer at the Offer Price and to procure purchasers of, or failing
which purchase themselves, the Ordinary Shares being sold by such Major Selling Shareholders
pursuant to the Offer. Each of the Selling Shareholders (other than the Major Selling Shareholders)
entered into separate Deeds of Election in connection with the underwriting arrangements.
The Underwriting Agreement provides that the obligations of the Underwriters are conditional upon the
satisfaction of certain conditions, including Admission occurring by no later than 8.00am on
8 April 2014 or such later time and/or date as the Company, the Major Selling Shareholders and the
Underwriters may agree (not being later than 30 June 2014).
Further details of the terms of the Underwriting Agreement and the Deeds of Election are set out in
paragraph 20.1 of Part XVI (Additional Information).
7.
LOCK-UP ARRANGEMENTS
Pursuant to the Underwriting Agreement and the Deeds of Election, the Company, the Major Selling
Shareholders, the Directors and the Senior Managers who are selling Ordinary Shares in connection
with the Offer have each undertaken, subject to certain exceptions, that they will be subject to certain
lock-up arrangements and that they will not otherwise, as applicable, directly or indirectly, issue, offer,
lend, assign, charge or grant any option, right or warrant to acquire or otherwise dispose of any
Ordinary Shares (or any interest therein or in respect thereof).
Further details of the lock-up arrangements are set out in paragraph 20.2 of Part XVI (Additional
Information).
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8.
CREST
CREST is a paperless settlement system enabling securities to be transferred and held by electronic
means rather than by a certificate or written instrument. The system is designed to reduce the costs of
settlement, and facilitate the processing of settlement and the updating of registers, through an
electronic settlement system. Ordinary Shares held by the Company’s shareholders in CREST will be
in electronic form and evidence of title to Ordinary Shares will be established on an electronic register
maintained by the Registrar which can only be altered by an electronic instruction sent through
CREST. It will be possible for shareholders in CREST to transfer their Ordinary Shares without
executing written stock transfer forms.
On Admission, the Articles of Association will permit the holding of Ordinary Shares through the
CREST system. The Company has applied for the Ordinary Shares to be admitted to CREST with
effect from Admission. Accordingly, settlement of transactions in the Ordinary Shares following
Admission may take place within the CREST system if any shareholder so wishes. CREST is a
voluntary system and holders of Ordinary Shares who wish to receive and retain share certificates will
be able to do so. An investor applying for Ordinary Shares under the Offer may, however, elect to
receive Ordinary Shares in uncertificated form if such investor is a system-member (as defined in the
CREST Regulations) in relation to CREST.
9.
Selling Restrictions
9.1 European Economic Area
In relation to each member state of the European Economic Area which has implemented the
Prospectus Directive (each, a “Relevant Member State”), no Ordinary Shares have been offered or
will be offered pursuant to the Offer to the public in that Relevant Member State prior to the publication
of a prospectus in relation to the Ordinary Shares which has been approved by the competent authority
in that Relevant Member State, or, where appropriate, approved in another Relevant Member State
and notified to the competent authority in that Relevant Member State, all in accordance with the
Prospectus Directive, except that offers of Ordinary Shares to the public may be made at any time
under the following exemptions under the Prospectus Directive, if they are implemented in that
Relevant Member State:
•
to any legal entity which is a qualified investor as defined in the Prospectus Directive;
•
to fewer than 150, or, if the Relevant Member State has not implemented the relevant
provision of the Prospectus Directive, 100 natural or legal persons (other than qualified
investors as defined in the Prospectus Directive) in such Relevant Member State subject to
the consent of the Joint Global Co-ordinators having been obtained; or
•
in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of Ordinary Shares shall result in a requirement for the publication of a
prospectus pursuant to Article 3 of the Prospectus Directive or any measure implementing the
Prospectus Directive in a Relevant Member State and each person who initially acquires any Ordinary
Shares or to whom any offer is made under the Offer will be deemed to have represented,
acknowledged and agreed that it is a “qualified investor” within the meaning of Article 2(1)(e) of the
Prospectus Directive.
For the purposes of this provision, the expression “offer to the public” in relation to any offer of Ordinary
Shares in any Relevant Member State means a communication in any form and by any means
presenting sufficient information on the terms of the offer and any Ordinary Shares to be offered so as
to enable an investor to decide to purchase or subscribe for the Ordinary Shares, as the same may be
varied in that Relevant Member State by any measure implementing the Prospectus Directive in that
Relevant Member State and the expression “Prospectus Directive” means Directive 2003/71/EC (as
amended), to the extent implemented in the Relevant Member State and includes any relevant
implementing measure in each Relevant Member State.
The distribution of this document in other jurisdictions may be restricted by law and therefore persons
into whose possession this document comes should inform themselves about and observe any such
restrictions.
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9.2 United Kingdom
In the United Kingdom this document is being distributed to, and is directed only at, qualified investors
(as defined in the Prospectus Directive) who are also (i) persons having professional experience in
matters relating to investments falling within the definition “investment professionals” in Article 19(5) of
The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the
“Order”) or (ii) high net worth bodies corporate, unincorporated associations and partnerships and
trustees of high value trusts as described in Article 49(2) of the Order, and other persons to whom it
may lawfully be communicated. Any investment or investment activity to which this communication
relates is only available to and will only be engaged in with such persons and persons within the United
Kingdom who receive this document (other than persons falling within (i) and (ii) above) should not rely
on or act upon this document.
9.3 United States
The Ordinary Shares have not been and will not be registered under the Securities Act, or with any
securities regulatory authority of any state or other jurisdiction of the United States, and may not be
offered, sold, resold, pledged, delivered, distributed or transferred directly or indirectly, in the United
States except pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and in compliance with any applicable securities laws of any state or
other jurisdiction of the United States.
The Offer Shares are being offered and sold (i) outside the United States in reliance on Regulation S
and (ii) in the United States only to persons reasonably believed to be QIBs in reliance on Rule 144A
or another exemption from the registration requirements of the Securities Act.
In addition, until 40 days after the commencement of the offering of the Offer Shares, an offer or sale
of Offer Shares in the United States by any dealer (whether or not participating in the offering) may
violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in
accordance with Rule 144A.
9.4 Canada
The offer and sale of Ordinary Shares in Canada will only be made in the Provinces of Ontario and
Québec or to residents thereof and not in, or to the residents of, any other Province or Territory of
Canada. Such offer and sales will be made only under exemptions from the requirement to file a
prospectus with the Ontario Securities Commission and/or the Authorité des marches financiers and
will be made only by authorised dealer representatives of the dealers that are properly registered under
the laws of the Provinces of Ontario and/or Québec or, alternatively, are entitled to rely on exemptions
from the dealer registration requirements in the Provinces of Onterio and/or Québec.
10. Terms and conditions of the Offer
10.1 Introduction
Each investor who applies to subscribe for the Offer Shares will be bound by these terms and
conditions:
10.2 Agreement to acquire the Offer Shares
Conditional on: (i) Admission occurring and becoming effective by 8.00 a.m. on or prior to 8 April 2014
(or such later time and/or date as the Company and the Joint Global Co-ordinators may agree (not
being later than 30 June 2014)) and (ii) the investor being allocated Offer Shares, an investor who has
applied for Offer Shares agrees to acquire those Offer Shares allocated to it by the Joint Global Coordinators (such number of Offer Shares not to exceed the number applied for by such Investor) at the
Offer Price. To the fullest extent permitted by law, each investor acknowledges and agrees that it will
not be entitled to exercise any remedy of rescission at any time. This does not affect any other rights
an investor may have. Each such investor is deemed to acknowledge receipt and understanding of this
document and in particular the risk and investment warnings contained in this document.
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10.3 Payment for the Offer Shares
Each investor must pay the Offer Price for the Offer Shares issued to the investor in the manner
directed by the Joint Global Co-ordinators.
If any investor fails to pay as so directed by the Joint Global Co-ordinators, the relevant investor’s
application for Offer Shares may be rejected.
If Admission does not occur, subscription monies will be returned without interest at the risk of the
applicant.
10.4 Representations, warranties, undertakings, agreements and acknowledgements
Each investor and, in the case of paragraph l) below, a person who agrees on behalf of an investor, to
purchase Offer Shares under the Offer and/or who authorises any of the Underwriters to notify the
investor’s name to the Registrar, will be deemed to represent, warrant, undertake, agree and
acknowledge to the Underwriters, the Registrar and the Company that:
a)
in agreeing to purchase Offer Shares, the investor is relying solely on this document, any
supplementary prospectus and any regulatory announcement issued by or on behalf of the
Company on or after the date hereof and prior to Admission, and not on any other information or
representation concerning the Company, the Selling Shareholders or the Offer. The investor
agrees that none of the Company, the Underwriters or the Registrar nor any of their respective
officers or directors will have any liability for any other information or representation. The investor
irrevocably and unconditionally waives any rights it may have in respect of any other information or
representation;
b)
the content of this document is exclusively the responsibility of the Company and the Directors and
none of the Underwriters, the Registrar nor any person acting on their behalf nor any of their
respective affiliates is responsible for or shall have any liability for any information, representation or
statement contained in this document or any information published by or on behalf of the Company,
and none of the Underwriters, the Registrar nor any person acting on their behalf nor any of their
respective affiliates will be liable for any decision by an investor to participate in the Offer based on
any information, representation or statement contained in this document or otherwise;
c)
it has not relied on any information given or representations, warranties or statements made by the
Company, the Directors, the Selling Shareholders, any of the Underwriters, the Registrar or any
other person in connection with the Offer other than information contained in this document and/or
any supplementary prospectus or regulatory announcement issued by or on behalf of the
Company on or after the date hereof and prior to Admission. The investor irrevocably and
unconditionally waives any rights it may have in respect of any other information or representation;
d)
none of the Underwriters are making any recommendations to the investor or advising it regarding
the suitability or merits of any transaction it may enter into in connection with the Offer, and the
investor acknowledges that participation in the Offer is on the basis that it is not and will not be a
client of any of the Underwriters and that the Underwriters are acting for the Company and no one
else in connection with the Offer, and will not be responsible to anyone other than their respective
clients for the protections afforded to their respective clients, nor for providing advice in relation to
the Offer, the contents of this document or any transaction, arrangements or other matters
referred to herein, or in respect of any representations, warranties, undertakings or indemnities
contained in the Underwriting Agreement or for the exercise or performance of any of the
Underwriters’ rights and obligations under the Underwriting Agreement, including any right to
waive or vary any condition or exercise any termination right contained therein;
e)
if the investor is in the United Kingdom, it is a qualified investor as defined in the Prospectus
Directive and also: (a) a person having professional experience in matters relating to investments
who falls within the definition of “investment professionals” in Article 19(5) of the Order; or (b) a
high net worth body corporate, unincorporated association or partnership or trustee of a high value
trust as described in Article 49(2) of the Order, or is otherwise a person to whom an invitation or
inducement to engage in investment activity may be communicated without contravening section
21 of FSMA;
f)
if the investor is in any EEA State which has implemented the Prospectus Directive, it is: (i) a legal
entity which is a qualified investor as defined in the Prospectus Directive; or (ii) a legal entity which
is otherwise permitted by law to be offered and issued New Ordinary Shares in circumstances
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which do not require the publication by the Company of a prospectus pursuant to Article 3 of the
Prospectus Directive or other applicable laws. If the Investor purchases Offer Shares as a financial
intermediary, as that term is used in Article 3(2) of the Prospectus Directive, it further represents,
warrants and undertakes that: (y) the Ordinary Shares have not been and will not be acquired on
behalf of, nor have they been nor will they be acquired with a view to their offer or resale to,
persons in any EEA State other than qualified investors, as that term is defined in the Prospectus
Directive; and (z) where New Ordinary Shares have been acquired by it on behalf of persons in an
EEA State other than qualified investors, the offer of those Offer Shares to it is not treated under
the Prospectus Directive as having been made to such persons;
g)
the Ordinary Shares have not been and will not be registered under the Securities Act, or with any
securities regulatory authority of any state of the United States, and may not be offered or sold,
directly or indirectly, except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and in compliance with any applicable securities
laws of any state of the United States;
h)
if the investor is outside the United States, the investor (i) is acquiring the Offer Shares in an
“offshore transaction” (as defined in Regulation S) meeting the requirements of Regulation S,
(ii) will not offer, sell or otherwise transfer any Offer Shares except in accordance with the
Securities Act and any applicable securities laws of any state of the United States, and
(iii) acknowledges that the Company may not recognise any offer, sale or other transfer of the
Offer Shares made other than in compliance with the above-mentioned restrictions;
i)
if the investor is in the United States, the investor (i) is a QIB acquiring Offer Shares for its own
account, or for the account of one or more QIBs with respect to whom it has the authority to make,
and does make, the representations, warranties, undertakings, agreements and
acknowledgements set forth herein, (ii) is acquiring Offer Shares for investment purposes and not
with a view to any further distribution of such Offer Shares, (iii) is aware and each beneficial owner
of such Offer Shares has been advised that the offer and sale of the Offer Shares to it is being
made in reliance on Rule 144A or another exemption from the registration requirements of the
Securities Act, (iv) is aware that the Offer Shares are being offered in the United States in a
transaction not involving any public offering in the United States within the meaning of the
Securities Act, (v) will not offer, sell or otherwise transfer any Offer Shares except (A) to a person
whom it and any person acting on its behalf reasonably believes is a QIB purchasing for its own
account or for the account of a QIB in a transaction meeting the requirements of Rule 144A, (B) in
an “offshore transaction” meeting the requirements of Rule 903 or Rule 904 of Regulation S,
(C) pursuant to an exemption from registration under the Securities Act provided by Rule 144
thereunder (if available) or (D) pursuant to an effective registration statement under the Securities
Act and, in each case, in accordance with any applicable securities laws of any state of the United
States, (vi) acknowledges the Offer Shares are “restricted securities” within the meaning of Rule
144(a)(3) under the Securities Act and that no representation is made as to the availability of the
exemption provided by Rule 144 for resales of Offer Shares, (vii) will not deposit or cause to be
deposited any Offer Shares into any unrestricted depositary receipt facility established or
maintained by a depositary bank so long as such Offer Shares are “restricted securities” within the
meaning of Rule 144(a)(3) under the Securities Act, (viii) acknowledges that the Company may not
recognise any offer, sale or other transfer of the Offer Shares made other than in compliance with
the above-stated restrictions, and (ix) acknowledges that the Offer Shares (to the extent they are
in certificated form), unless otherwise determined by the Company in accordance with applicable
law, will bear a legend substantially to the following effect:
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE US SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR WITH ANY
SECURITIES REGULATORY AUTHORITY OF ANY STATE OF THE UNITED STATES AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT (A) TO A PERSON
WHO THE SELLER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT (A “QIB”) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (B) IN AN
“OFFSHORE TRANSACTION” MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904
OF REGULATION S UNDER THE SECURITIES ACT, (C) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION
147
STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NO
REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR THE RESALE OF THIS
SECURITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, THIS
SECURITY MAY NOT BE DEPOSITED INTO ANY UNRESTRICTED DEPOSITARY RECEIPT
FACILITY IN RESPECT OF SECURITIES ESTABLISHED OR MAINTAINED BY A DEPOSITARY
BANK;
j)
it has complied with its obligations in connection with money laundering and terrorist financing
under the Proceeds of Crime Act 2002, the Terrorism Act 2000 and the Money Laundering
Regulations 2003, and applicable legislation in any other jurisdiction (together, the “Money
Laundering Regulations”) and, if it is making payment on behalf of a third party, it has obtained
and recorded satisfactory evidence to verify the identity of the third party as required by the Money
Laundering Regulations;
k)
it is entitled to purchase the Offer Shares under the laws of all relevant jurisdictions which apply to it;
it has fully observed such laws and obtained all governmental and other consents which may be
required under such laws and complied with all necessary formalities; it has paid all issue, transfer or
other taxes due in connection with its acceptance in any jurisdiction; and it has not taken any action
or omitted to take any action which will or may result in any of the Underwriters, the Company, the
Selling Shareholders, the Registrar or any of their respective directors, officers, agents, employees
or advisers acting in breach of the legal and regulatory requirements of any jurisdiction in connection
with the Offer or, if applicable, its acceptance of or participation in the Offer;
l)
in the case of a person who agrees on behalf of an investor, to purchase Offer Shares under the
Offer and/or who authorises any of the Underwriters to notify the investor’s name to the Registrar,
that person represents and warrants that he has authority to do so on behalf of the investor; and
m) it will pay to the Underwriters (or as they may direct) any amounts due from it in accordance with
this document on the due time and date set out herein;
The Company, the Selling Shareholders and each of the Underwriters will rely upon the truth and
accuracy of the foregoing representations, warranties, undertakings, agreements and
acknowledgements. If any of the foregoing representations, warranties, undertakings, agreements and
acknowledgements are no longer accurate or have not been complied with, the investor shall promptly
notify the Company.
10.5 Miscellaneous
The rights and remedies of each of the Joint Global Co-ordinators, the Company, the Selling
Shareholders and the Registrar under these terms and conditions are in addition to any rights and
remedies which would otherwise be available to each of them and the exercise or partial exercise of
one will not prevent the exercise of others.
On application, if an investor is a discretionary fund manager, that investor may be asked to disclose in
writing or orally to the Joint Global Co-ordinators the jurisdictions in which its funds are managed or owned.
All documents will be sent at the investor’s risk. They may be sent by post to such investor at an
address notified to the Joint Global Co-ordinators.
The contract to purchase Offer Shares, the appointments and authorities mentioned herein and the
representations, warranties and undertakings set out herein will be governed by, and construed in
accordance with, English law. For the exclusive benefit of the Joint Global Co-ordinators, the
Company, the Selling Shareholders and the Registrar, each investor irrevocably submits to the
exclusive jurisdiction of the English courts in respect of these matters. This does not prevent an action
being taken against an Investor in any other jurisdiction.
In the case of a joint agreement to purchase Offer Shares, references to an “investor” in these terms
and conditions are to each of the investors who are a party to that joint agreement and their liability is
joint and several.
Each of the Joint Global Co-ordinators and the Company expressly reserves the right to modify the
terms of the Offer (including, without limitation, its timetable and settlement) at any time before closing.
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Part XV
TAXATION
1. UK TAXATION
The following paragraphs are intended as a general guide only and are based on current law and HM
Revenue and Customs practice (which is subject to change and possibly with retrospective effect) as
at the date of this document and are not exhaustive. They summarise the position of Shareholders who
(unless the position of non-resident Shareholders is expressly referred to) are resident and domiciled in
the United Kingdom for tax purposes, who are the absolute beneficial owners of their Shares and who
hold their Shares as an investment. The discussion below addresses UK tax only, and does not
address all possible tax consequences relating to an investment in shares. Certain Shareholders, such
as dealers in securities, those that are exempt from taxation, employees and officers of the Company
(or a connected company), insurance companies, and collective investment vehicles may be taxed
differently and are not considered.
If you are in any doubt as to your tax position or you are subject to tax in a jurisdiction outside the
United Kingdom, you should consult an appropriate professional adviser before taking any actions.
1.1 Dividends
Under current law, no United Kingdom tax will be withheld by the Company when it pays a dividend.
A UK resident individual Shareholder who receives a dividend from the Company will be entitled to a
tax credit, currently at the rate of 1/9th of the cash dividend paid (which is equivalent to 10% of the
gross dividend, being the cash dividend received plus the related tax credit). The individual is treated
as receiving for UK tax purposes the gross dividend. The tax credit is then set against the individual’s
tax liability on the gross dividend.
A UK resident individual Shareholder who is a basic rate taxpayer will be liable to UK income tax on
the receipt of the gross dividend at the rate of 10%. The tax credit will be set against this tax liability
and as a result, such a shareholder will have no further income tax liability in respect of the dividend.
A UK resident individual Shareholder who is a higher rate taxpayer will be liable to UK income tax on
the gross dividend at the rate of 32.5% to the extent that such gross dividend when treated as the top
slice of the Shareholder’s income falls above the threshold for higher rate income tax. After taking
account of the tax credit, this equates to an effective tax rate of 25% on the cash dividend. For
example, a cash dividend of £80 will carry a tax credit of £8.89. The UK income tax payable by a
higher rate taxpayer would be 32.5% of £88.89, namely £28.89, less the tax credit of £8.89, leaving a
net tax liability of £20.
A UK resident individual Shareholder who is an additional rate taxpayer will be liable to UK income tax
on the gross dividend at a rate of 37.5% to the extent that such gross dividend when treated as the top
slice of the Shareholder’s income falls above the threshold for additional rate income tax. After taking
into account the tax credit, the effective tax rate is therefore 30.56% of the cash dividend. For example
a cash dividend of £80 will carry a tax credit of 8.89. The UK income tax payable by an additional rate
taxpayer (after 6 April 2013) would be 37.5% of £88.89, namely £33.34 less the tax credit of £8.89,
leaving a net tax liability of £24.45.
UK resident Shareholders who are not liable to UK income tax or whose liability to UK income tax on
the dividend and related tax credit is less than the tax credit (including pension funds, charities and
certain individuals) are not entitled to claim repayment of any part of the tax credit associated with the
dividend from HM Revenue and Customs.
UK resident corporate Shareholders which are “small companies” (for the purposes of UK taxation of
dividends) will not generally expect to be subject to UK corporation tax on dividends from the
Company. Other UK resident corporate Shareholders will not generally be subject to UK corporation
tax on dividends received from the Company as long as the dividends fall within an one of a number of
statutory exemptions. Examples of dividends that fall within an exemption are dividends paid on shares
that are ‘ordinary share capital’ for UK tax purposes and are not redeemable and dividends paid to a
person holding less than 10% of the issued share capital of the payer (or any class of that share
capital) and who is entitled to (i) less than 10% of the profits available for distribution to holders of the
issued share capital (or the relevant class of share capital) of the payer and (ii) would be entitled on a
winding up to less than 10% of the assets of the Company available for distribution to holders of the
issued share capital (or the relevant class of share capital) of the payer.
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Non-UK resident individual Shareholders will not generally be subject to UK tax on any dividends
received by the Company. Whether a Shareholder who is not resident in the United Kingdom for tax
purposes is entitled to a tax credit in respect of dividends paid by the Company and to claim payment
of any part of the tax credit will depend, in general, on the provisions of any double taxation convention
which exists between the Shareholder’s country of residence and the United Kingdom. A non-UK
resident Shareholder may also be subject to foreign taxation on dividend income under their local law.
1.2 Taxation of Chargeable Gains
A disposal of Shares by a Shareholder who is resident in the United Kingdom may, subject to the
Shareholder’s circumstances and any available exemption or relief, give rise to a chargeable gain (or
allowable loss) for the purposes of UK taxation of chargeable gains.
For UK resident corporate Shareholders within the charge to UK corporation tax on chargeable gains,
indexation allowance should be available to reduce the amount of chargeable gain realised on a
disposal of Shares (but not to create or increase any loss). A UK resident individual will, subject to any
exemption or relief, generally be liable to pay UK capital gains tax on any gains above the annual
exempt amount at a rate of 18% or 28% depending on the total amount of the individual’s taxable
income. Trustees and personal representatives pay UK capital gains tax at 28%. UK resident individual
shareholders who are basic rate taxpayers will, subject to any exemption or relief, be liable to UK
capital gains tax at a rate of 18% on any gains over the annual exempt amount until the combined total
of their income and capital exceeds the higher rate threshold; thereafter, gains are taxed at 28%. UK
resident individual Shareholders who are higher or additional rate taxpayers will, subject to any
exemption or relief be liable to UK capital gains tax at a rate of 28% on any gains in excess of the
annual exempt amount.
A Shareholder who is not UK resident will not be subject to UK tax on a gain arising on a disposal of
Shares unless (i) the Shareholder carries on a trade, profession or vocation in the United Kingdom
through a branch, agency or permanent establishment and, broadly, holds the Shares for the purposes
of the trade, profession, vocation, branch, agency or permanent establishment or (ii) the Shareholder
falls within the anti-avoidance rules applying to individuals who are temporarily not resident or
ordinarily resident in the United Kingdom.
1.3 Inheritance Tax
The Shares will be assets situated in the UK for the purposes of UK inheritance tax. A gift of such
assets by an individual shareholder, or the death of an individual shareholder, may give rise to a
liability to UK inheritance tax depending upon the shareholder’s circumstances and subject to any
available exemption or relief. A transfer of Shares at less than market value may be treated for
inheritance tax purposes as a gift of the Shares. Special rules apply to close companies, (as to which,
see section 1.5 below) and to trustees of certain settlements who hold Shares and such rules may
bring them within the charge to inheritance tax. The inheritance tax rules are complex and
Shareholders should consult an appropriate professional adviser in any case where those rules may be
relevant, particularly in (but not limited to) cases where Shareholders intend to make a gift of Shares,
to transfer Ordinary Shares at less than market value or to hold Ordinary Shares through a company or
trust arrangement.
1.4 Stamp Duty and Stamp Duty Reserve Tax (“SDRT”)
No UK stamp duty or SDRT will be payable by Shareholders on the allotment, issue or registration of
Shares.
Any subsequent conveyance or transfer on sale of Shares will usually be subject to UK stamp duty, at
the rate of 0.5% (rounded up to the nearest multiple of £5) of the amount or value of the consideration
paid. Stamp duty is normally paid by the purchaser. A charge to SDRT at the rate of 0.5% of the
amount or value of the consideration paid will arise in relation to an unconditional agreement to transfer
Shares. SDRT is normally a liability of the purchaser. However, if within six years of the date of the
agreement (or, if the agreement was conditional, the date on which the agreement became
unconditional) a share transfer is executed pursuant to the agreement and is duly stamped (unless
certified as exempt), the stamping of the transfer will normally cancel the SDRT liability. Any SDRT
already paid will be refunded.
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A transfer of Shares effected on a paperless basis through CREST will generally be subject to SDRT at
the rate of 0.5% of the amount or value of the consideration paid. Euroclear UK & Ireland Limited
(Euroclear) will collect SDRT on relevant transactions settled through CREST and will account for the
SDRT to HM Revenue and Customs.
There will be no UK stamp duty or SDRT on a transfer of Shares into or out of CREST where such a
transfer is made for no consideration.
UK domestic law provides that where Shares are transferred to issuers of depositary receipts or
providers of clearance services (or their nominees or agents) UK stamp duty or SDRT may be payable,
broadly, at the higher rate of 1.5% of the amount or value of the consideration payable or, in certain
circumstances, 1.5% of the value of the Shares (rounded up to the nearest multiple of £5 in the case of
stamp duty). Following a decision of the European Court of Justice (in HSBC Holdings plc and Vidacos
Nominees Ltd v HMRC (Case C-569/07)) and the First tier Tribunal in HSBC Holdings plc and the
Bank of New York Mellon Corporation v HMRC ([2012] UK FTT 163) HM Revenue and Customs has
confirmed that it will not seek to apply the 1.5% SDRT charge where new shares are issued into an EU
or non EU depositary receipt system or clearance system.
Special rules apply to agreements made by market intermediaries and to certain sale and repurchase
and stock borrowing arrangements. Charities are exempt from UK stamp duty and SDRT on the
acquisition of shares.
1.5 Close Companies
The Company may, before and after the Offer, be a close company within the meaning of Part 10 of
the Corporation Tax Act 2010. As a result, certain transactions entered into by the Company or other
members of the Group may have certain tax implications for shareholders in the Company.
Shareholders should consult their own professional advisers on the potential impact of the close
company rules.
One potential implication is that transfers of value by the Company, or any of the companies in which it
owns (directly or indirectly) shares or certain other rights, may, in certain circumstances and subject to
applicable exemptions, be attributed to and so give rise to inheritance tax for individual Shareholders
who are domiciled or deemed to be domiciled in the UK and hold 5% or more of the Ordinary Shares,
or for Shareholders whose estate is increased by the transfer.
In addition, certain transfers at an undervalue by the Company or certain members of the Group may
result in a reduction in the chargeable gains tax base cost of the shares for certain Shareholders.
2.
CERTAIN US FEDERAL INCOME TAX CONSIDERATIONS
TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, HOLDERS ARE
HEREBY NOTIFIED THAT (A) ANY DISCUSSION OF US FEDERAL TAX ISSUES IN THIS
PROSPECTUS IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE
RELIED UPON, BY HOLDERS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE
IMPOSED ON HOLDERS UNDER THE INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS
INCLUDED HEREIN BY THE COMPANY IN CONNECTION WITH THE PROMOTION OR
MARKETING (WITHIN THE MEANING OF CIRCULAR 230) BY THE COMPANY OF THE
TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) HOLDERS SHOULD SEEK
ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX
ADVISER.
The following is a summary of certain US federal income tax consequences of the acquisition,
ownership and disposition of Offer Shares by a US Holder (as defined below). This summary deals
only with initial purchasers of Offer Shares that are US Holders and that will hold the Offer Shares as
capital assets. The discussion does not cover all aspects of US federal income taxation that may be
relevant to, or the actual tax effect that any of the matters described herein will have on, the
acquisition, ownership or disposition of Offer Shares by particular investors, and does not address
state, local, non-US or other tax laws. This summary also does not address tax considerations
applicable to investors that own (directly or indirectly) 10% or more of the voting stock of the Company,
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nor does this summary discuss all of the tax considerations that may be relevant to certain types of
investors subject to special treatment under the US federal income tax laws (such as financial
institutions, insurance companies, investors liable for the alternative minimum tax or net investment
income tax, individual retirement accounts and other tax-deferred accounts, tax-exempt organisations,
dealers in securities or currencies, investors that will hold the Offer Shares as part of straddles,
hedging transactions or conversion transactions for US federal income tax purposes or investors
whose functional currency is not the US dollar).
As used herein, the term “US Holder” means a beneficial owner of Offer Shares that is, for US federal
income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation created
or organised under the laws of the United States or any State thereof, (iii) an estate the income of
which is subject to US federal income tax without regard to its source, or (iv) a trust if a court within the
United States is able to exercise primary supervision over the administration of the trust and one or
more US persons have the authority to control all substantial decisions of the trust, or the trust has
validly elected to be treated as a domestic trust for US federal income tax purposes.
The US federal income tax treatment of a partner in an entity treated as a partnership for US federal
income tax purposes that holds Offer Shares will depend on the status of the partner and the activities
of the partnership. Prospective purchasers that are entities treated as partnerships for US federal
income tax purposes should consult their tax advisers concerning the US federal income tax
consequences to their partners of the acquisition, ownership and disposition of Offer Shares by the
partnership.
The summary assumes that the Company will not be a passive foreign investment company (a “PFIC”)
for US federal income tax purposes for the current taxable year, which the Company believes will be
the case. The Company’s possible status as a PFIC must be determined annually and therefore may
be subject to change. If the Company were to be a PFIC in any year, materially adverse consequences
could result for US Holders.
This summary is based on the tax laws of the United States, including the Internal Revenue Code of
1986, as amended, its legislative history, existing and proposed regulations thereunder, published
rulings and court decisions, as well as on the income tax treaty between the United States and the
United Kingdom (the “Treaty”), all as of the date hereof and all subject to change at any time, possibly
with retroactive effect.
THE SUMMARY OF US FEDERAL INCOME TAX CONSEQUENCES SET OUT BELOW IS FOR
GENERAL INFORMATION ONLY. ALL PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR
TAX ADVISERS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF ACQUIRING,
OWNING, AND DISPOSING OF THE OFFER SHARES, INCLUDING THE APPLICABILITY AND
EFFECT OF STATE, LOCAL, NON-US AND OTHER TAX LAWS AND POSSIBLE CHANGES IN
TAX LAW.
2.1 Dividends
General
Distributions paid by the Company out of current or accumulated earnings and profits (as determined
for US federal income tax purposes) will generally be taxable to a US Holder as foreign source
dividend income, and will not be eligible for the dividends received deduction allowed to corporations.
Distributions in excess of current and accumulated earnings and profits will be treated as a non-taxable
return of capital to the extent of the US Holder’s basis in the Offer Shares and thereafter as capital
gain. However, the Company does not maintain calculations of its earnings and profits in accordance
with US federal income tax accounting principles. US Holders should therefore assume that any
distribution by the Company with respect to Offer Shares will be reported as ordinary dividend income.
US Holders should consult their own tax advisers with respect to the appropriate US federal income tax
treatment of any distribution received from the Company.
Dividends paid by the Company will generally be taxable to a non-corporate US Holder at the special
reduced rate normally applicable to long-term capital gains, provided the Company qualifies for the
benefits of the Treaty which the company believes to be the case. A US Holder will be eligible for this
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reduced rate only if it has held the Offer Shares for more than 60 days during the 121-day period
beginning 60 before the ex-dividend date. A US Holder will not be able to claim the reduced rate on
dividends received from the Company if the Company is treated as a PFIC in the taxable year in which
the dividends are received or in the preceding taxable year. See “Passive Foreign Investment
Company Considerations” below.
Prospective purchasers should consult their tax advisers concerning the applicability of the foreign tax
credit and source of income rules to dividends on the Offer Shares.
Foreign Currency Dividends
Dividends paid in pounds sterling will be included in income in a US dollar amount calculated by
reference to the exchange rate in effect on the day the dividends are received by the US Holder,
regardless of whether the pounds sterling are converted into US dollars at that time. If dividends
received in pounds sterling are converted into US dollars on the day they are received, the US Holder
generally will not be required to recognise foreign currency gain or loss in respect of the dividend
income.
2.2 Sale or other Disposition
Upon a sale or other disposition of Offer Shares, a US Holder generally will recognise US source
capital gain or loss for US federal income tax purposes equal to the difference, if any, between the
amount realised on the sale or other disposition and the US Holder’s adjusted tax basis in the Offer
Shares. This capital gain or loss will be long-term capital gain or loss if the US Holder’s holding period
in the Offer Shares exceeds one year. However, regardless of a US Holder’s actual holding period, any
loss may be long-term capital loss to the extent the US Holder receives a dividend that qualifies for the
reduced rate described above under “Dividends-General”, and exceeds 10% of the US Holder’s basis
in its Offer Shares.
A US Holder’s tax basis in an Offer Share will generally be its US dollar cost. The US dollar cost of an
Offer Share purchased with foreign currency will generally be the US dollar value of the purchase price
on the date of purchase, or the settlement date for the purchase, in the case of Offer Shares traded on
an established securities market, within the meaning of the applicable Treasury Regulations, that are
purchased by a cash basis US Holder (or an accrual basis US Holder that so elects). Such an election
by an accrual basis US Holder must be applied consistently from year to year and cannot be revoked
without the consent of the Internal Revenue Service (“IRS”). The amount realised on a sale or other
disposition of Offer Shares for an amount in foreign currency will generally be the US dollar value of
this amount on the date of sale or disposition. On the settlement date, the US Holder will generally
recognise US source foreign currency gain or loss (taxable as ordinary income or loss) equal to the
difference (if any) between the US dollar value of the amount received based on the exchange rates in
effect on the date of sale or other disposition and the settlement date. However, in the case of Offer
Shares traded on an established securities market that are sold by a cash basis US Holder (or an
accrual basis US Holder that so elects), the amount realised will be based on the exchange rate in
effect on the settlement date for the sale, and no exchange gain or loss will be recognised at that time.
2.3 Disposition of Foreign Currency
Foreign currency received on the sale or other disposition of an Offer Share will have a tax basis equal
to its US dollar value on the settlement date. Foreign currency that is purchased will generally have a
tax basis equal to the US dollar value of the foreign currency on the date of purchase. Any gain or loss
recognised on a sale or other disposition of a foreign currency (including its use to purchase Offer
Shares or upon exchange for US dollars) will be US source ordinary income or loss.
2.4 Passive Foreign Investment Company Considerations
A foreign corporation will be a PFIC in any taxable year in which, after taking into account the income
and assets of the corporation and certain subsidiaries pursuant to applicable “look-through rules,”
either (i) at least 75% of its gross income is “passive income” or (ii) at least 50% of the average value
of its assets is attributable to assets which produce passive income or are held for the production of
passive income. The Company does not believe that it should be treated as a PFIC for US federal
153
income tax purposes for the preceding taxable year, does not believe that it will be treated as a PFIC
for the current taxable year and does not expect to become a PFIC in any subsequent year but the
Company’s possible status as a PFIC must be determined annually and therefore may be subject to
change. This determination will depend in part on whether the Company continues to earn substantial
amounts of operating income, as well as on the market valuation of the Company’s assets and the
Company’s spending schedule for its cash balances and the proceeds of the Offer. If the Company
were to be treated as a PFIC, US Holders of Offer Shares would be required (i) to pay a special US
addition to tax on certain distributions and gains on sale and (ii) to pay tax on any gain from the sale of
Offer Shares at ordinary income (rather than capital gains) rates in addition to paying the special
addition to tax on this gain. Additionally, dividends paid by the Company would not be eligible for the
special reduced rate of tax described above under “Dividends-General”. Prospective purchasers
should consult their tax advisers regarding the potential application of the PFIC regime.
2.5 Backup Withholding and Information Reporting
Payments of dividends and other proceeds with respect to Offer Shares, by a US paying agent or other
US intermediary will be reported to the IRS and to the US Holder as may be required under applicable
regulations. Backup withholding may apply to these payments if the US Holder fails to provide an
accurate taxpayer identification number or certification of exempt status or fails to report all interest and
dividends required to be shown on its US federal income tax returns. Certain US Holders are not
subject to backup withholding. US Holders should consult their tax advisers as to their qualification for
exemption from backup withholding and the procedure for obtaining an exemption.
2.6 Foreign Financial Asset Reporting
US Holders are subject to reporting requirements on the holding of certain foreign financial assets,
including equity of foreign entities, if the aggregate value of all of these assets exceeds $50,000 at the
end of the taxable year or $75,000 at any time during the taxable year. The thresholds are higher for
individuals living outside of the United States and married couples filing jointly. The Offer Shares are
expected to constitute foreign financial assets subject to these requirements unless the Offer Shares
are held in an account at a financial institution (in which case the account may be reportable if
maintained by a foreign financial institution). US Holders should consult their tax advisors regarding the
application of the rules relating to foreign financial asset reporting.
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Part XVI
ADDITIONAL INFORMATION
1.
RESPONSIBILITY
The Company and the Directors, whose names appear in paragraph 1 of Part VIII (Directors, Senior
Managers and Corporate Governance), accept responsibility for the information contained in this
document. To the best of the knowledge of the Company and the Directors (who have taken all
reasonable care to ensure that such is the case), the information contained in this document is in
accordance with the facts and does not omit anything likely to affect the import of such information.
2.
INCORPORATION AND REGISTERED OFFICE
The Company was incorporated and registered in England and Wales on 30 June 2009 as a private
company limited by shares with the name Just-Eat Group Holdings Limited and the registered number
06947854.
On 24 March 2014, the Company was re-registered as a public limited company, changed its name to
“JUST EAT plc” and adopted the Interim Plc Articles in substitution for the Interim Ltd Articles.
On 17 March 2014, pursuant to a special written resolution passed by the members of the Company, it
was resolved that, with effect from and conditional upon Admission, the Company adopt the New
Articles.
The principal legislation under which the Company operates and under which the Company’s Ordinary
Shares will be issued is the Companies Act 2006 and the regulations made thereunder.
The Company is domiciled in the United Kingdom with its registered office at Masters House, 107
Hammersmith Road, London W14 0QH. The Company’s principal place of business is at Fleet Place
House, 2 Fleet Place, London EC4M 7RF. The telephone number of the Company’s principal place of
business is +44 203 667 6900.
3.
ORGANISATIONAL STRUCTURE
The Company is the ultimate holding company of the Group. The Company’s principal subsidiaries and
associated undertakings (each of which is considered by the Company to be likely to have a significant
effect on the assessment of the assets and liabilities, the financial position or the profits and losses of
the Group) are as follows:
Name of subsidiary undertaking
Country of
incorporation
Just-Eat.ca Management
Limited . . . . . . . . . . . . . . . . . . . .
Canada
Just Eat Canada Inc. . . . . . . . . . . .
Just-Eat.dk ApS . . . . . . . . . . . . . . .
Just Eat Denmark Holding ApS . .
Just Eat Holding Limited . . . . . . . .
Just-Eat.co.uk Limited . . . . . . . . . .
Eat Online SaS . . . . . . . . . . . . . . .
FBA Invest SaS . . . . . . . . . . . . . . .
Proportion of voting rights held
100% owned by Just Eat
Holding Limited
Canada
82% owned by Just Eat
Canada.ca Management
Limited and 18% owned by
Power & Power Investments
Inc. (another Group company)
Denmark
100% owned by Just Eat
Denmark Holding ApS
Denmark
100% owned by Just Eat
Holding Limited
England and 100% owned by the Company
Wales
England and 100% owned by Just Eat
Wales
Holding Limited
France
100% owned by FBA Invest
SaS
France
50% owned by Just Eat Holding
Limited
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Nature of business
Holding company
Online takeaway
portal
Online takeaway
portal
Holding company
Holding and
management
company
Online takeaway
portal
Online takeaway
portal
Holding company
4.
SHARE CAPITAL
4.1 Issued share capital
The issued fully paid up share capital of the Company (assuming the capital re-organisation described
in paragraph 4.2 of this Part XVI (Additional Information) has taken place and having regard to the
number of New Ordinary Shares to be issued in connection with the Offer) as at the date of Admission
is expected to be:
Issued and fully paid
Class
Ordinary Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number
Nominal value per share £
563,592,935
0.01
4.2 Changes in share capital prior to Admission
On incorporation the authorised share capital of the Company was £2,000.00 divided into 200,000
shares of £0.01 each, of which a single subscriber share was issued to the subscriber to the
memorandum of association of the Company (the “Memorandum of Association”).
Since incorporation there have been the following changes to the Company’s authorised and issued
share capital:
(A) Pursuant to the authority granted under the Company’s articles of association and pursuant to an
agreement for the sale and purchase of the entire issued share capital of Just-Eat Group Limited
entered into between the Company and STM Fidecs Nominees Limited and dated 8 July 2009, the
issued share capital of the Company was increased by the issue and allotment of 109,244
ordinary shares of £0.01 each.
(B) Pursuant to the authorities granted by a resolution, passed as a special resolution by the members
of the Company on 10 July 2009, the share capital of the Company was reduced from £2,000.00
to £1,737.56 by the cancellation of 26,244 ordinary shares of £0.01 each.
(C) Pursuant to the authorities granted by resolutions, passed as special and ordinary resolutions (as
applicable) by the members of the Company on 10 July 2009:
(i)
the Company adopted new articles at association, as a result of which a new class of series A
shares was created;
(ii) the authorised share capital of the Company was reduced from £1,737.56 to £1,037.56,
comprising 103,756 ordinary shares of £0.01 each, by cancelling 20,000 ordinary shares of
£0.01 each in the authorised but unissued share capital of the Company; and
(iii) the authorised share capital of the Company was increased from £1,037.56, comprising
103,756 ordinary shares of £0.01 each, to £2,000.00, comprising 70,000 series A shares of
£0.01 each and 130,000 ordinary shares of £0.01 each.
(D) On 10 July 2009, the Company issued and allotted 49,732 series A shares of £0.01 each.
(E) Pursuant to the authority granted by a resolution, passed as an ordinary resolution by the
members of the Company on 4 March 2010, the authorised share capital of the Company was
increased from £2,000.00 to £2,194.68 by the creation of 19,468 B ordinary shares of £0.01 each.
(F) Pursuant to the authorities granted by a resolution, passed as a special resolution by the members
of the Company on 4 March 2010, the Company adopted articles of association which authorised
the directors to generally and unconditionally offer or allot shares up to a maximum nominal
amount of shares equal to the amount of the authorised but unissued share capital of the
Company for a period of five years commencing upon the date on which these articles of
association were adopted.
(G) Pursuant to the authorities granted by written resolutions, passed as ordinary resolutions by the
members of the Company on 6 July 2010, the classes of shares forming the authorised share
capital were subdivided into:
(i)
13,000,000 ordinary shares of £0.0001 each;
(ii) 1,946,800 B ordinary shares of £0.0001 each;
(iii) 7,000,000 series A shares of £0.0001 each.
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(H) Between 4 October 2010 and 31 December 2010, the issued share capital of the Company was
increased by the issue of 413,900 B ordinary shares of £0.0001 each that were allotted and issued
pursuant to the exercise of options and were credited as fully paid.
(I)
Between 1 January 2011 and 18 March 2011, the Company issued and allotted 46,000 B ordinary
shares of £0.0001 each of which were credited as partly paid up at the time of issue and which
have subsequently been fully paid.
(J) Pursuant to the authority granted by a written resolution, passed as a special resolution by the
members of the Company on 18 March 2011, the Company adopted new articles of association,
as a result of which:
(i)
the limit on the authorised share capital of the Company was removed;
(ii) a new class of series B shares was created;
(iii) the directors were authorised to generally and unconditionally offer or allot shares up to a
maximum amount of 2,000,000 series B shares, 250,000 ordinary shares and 2,200,000 B
ordinary shares for a period of five years commencing upon the date on which these articles
of association were adopted; and
(iv) 1,808,526 series B shares of £0.0001 each were issued and allotted.
(K) Between 19 March 2011 and 31 December 2011, the Company issued and allotted 422,248 B
ordinary shares of £0.0001 each (245,548 of such B ordinary shares were credited as fully paid up
and 176,700 of such B ordinary shares were credited as partly paid up at the time of issue and
have subsequently been fully paid).
(L) Between 1 January 2012 and 31 December 2012, the Company issued and allotted 312,372 B
ordinary shares of £0.0001 each, which were credited as fully paid.
(M) In January 2012, the Company issued and allotted 55,000 ordinary shares of £0.0001 each, which
were credited as fully paid.
(N) Pursuant to the authority granted by a written resolution, passed as a special resolution by the
members of the Company on 27 April 2012, the Company adopted new articles of association, as
a result of which:
(i)
a new class of series C shares was created;
(ii) the directors were authorised to generally and unconditionally offer or allot shares up to
a maximum amount of 2,311,216 series C shares, 1,000,000 ordinary shares and
2,200,000 B ordinary shares for a period of five years commencing upon the date on which
these articles of association were adopted; and
(iii) the issued share capital of the Company was increased by the issue and allotment of
2,311,216 series C shares of £0.0001 each which were credited as fully paid, re-designation
into series C shares of 191,655 B ordinary shares.
(O) On 15 April 2013, the Company issued and allotted 6,452 ordinary shares of £0.0001 each which
were credited as fully paid.
(P) Between 1 January 2013 and 31 December 2013, the Company issued and allotted 15,971 B
Ordinary shares of £0.0001 each, which were credited as fully paid.
(Q) On 9 July 2013, STM Fidecs Trust Company Limited transferred 67,572 series A shares to
Greylock I LP and 698,752 series A shares to Munch S.à r.l. for consideration of £19.5348 per
share.
(R) In August 2013, the Company issued and allotted 45,500 ordinary shares of £0.0001 each which
were credited as partly paid up at the time of issue and which have subsequently been fully paid.
(S) In December 2013, the Company issued and allotted 45,500 ordinary shares of £0.0001 each,
which were credited as fully paid.
(T) Between 1 January 2014 and 1 March 2014, the Company issued and allotted 5,937 B ordinary
shares of £0.0001 each.
(U) In January 2014, the Company issued and allotted 424,350 ordinary shares of £0.0001 each
which were credited as partly paid up at the time of issue and which have subsequently been fully
paid.
157
(V) On 20 March 2014, pursuant to the authorities granted by written shareholder resolutions and
written class consents on 17 March 2014:
(i)
the Company’s share premium account was reduced by £40,000,000 by way of a reduction of
capital;
(ii) the issued nominal share capital of the Company was increased from £1,914.08 to
£5,168,008.44 by the creation and allotment of the following numbers of shares in the
respective classes by way of a bonus issue of shares to existing shareholders on a pro rata
basis:
a.
23,835,953,998 ordinary shares of £0.0001 each;
b.
2,765,862,327 B ordinary shares of £0.0001 each;
c.
13,422,666,800 series A shares of £0.0001 each;
d.
4,881,211,674 series B shares of £0.0001 each;
e.
6,755,248,829 series C shares of £0.0001 each;
(iii) a consolidation of each of the ordinary shares, B ordinary shares, series A shares, series B
shares and series C shares was carried out so that the nominal value of each of the shares
was increased from £0.0001 to £0.01, resulting in the following numbers of shares in issue:
a.
238,447,854 ordinary shares of £0.01 each;
b.
27,668,871 B ordinary shares of £0.01 each;
c.
134,276,400 series A shares of £0.01 each;
d.
48,830,202 series B shares of £0.01 each;
e.
67,577,517 series C shares of £0.01 each;
(W) Between 26 March 2014 and 2 April 2014, the Company issued and allotted 2,120,553 B ordinary
shares of £0.01 each which were credited as fully paid;
(X) On 2 April 2014, the Directors declared a dividend of £18.25 million, to be paid to the holders of
series A shares, series B shares, series C shares and ordinary shares pro rata to their holding of
shares in the Company with a record date of 7.59 a.m. on the date of Admission. The dividend will
be paid shortly after Admission however any holders of Existing Ordinary Shares sold by Selling
Shareholders will not, for the avoidance of doubt, be entitled to any portion of the dividend, which
will be retained by the Selling Shareholders;
(Y) Pursuant to the authorities granted by written shareholder resolutions and written class consents
on 17 March 2014:
(i)
the issue and allotment of new Ordinary Shares pursuant to the exercise of warrants granted
to Torch Partners Corporate Finance Limited, up to an aggregate nominal amount of £62,100,
was authorised;
(ii) the issue and allotment of new Ordinary Shares as part of, and pursuant to the terms of, the
Offer, up to an aggregate nominal amount of £2,000,000, was authorised;
(iii) with effect from and conditional upon Admission, the Directors were generally and
unconditionally authorised, in accordance with section 551 of the Companies Act, to exercise
all the powers of the Company to allot Ordinary Shares in the Company and to grant rights to
subscribe for or to convert any securities into Ordinary Shares in the Company:
(1) up to a maximum aggregate nominal value representing one-third of the issued share
capital of the Company at Admission; and
(2) up to a maximum aggregate nominal value representing two-thirds of the issued share
capital of the Company at Admission, where an offer is made in connection with a fully
pre-emptive rights issue;
for a period expiring (unless previously revoked or varied by the Company in a general
meeting) at the end of the next annual general meeting of the Company or, if earlier, 30 June
2015, save that the Company shall be entitled to make offers or agreements before the expiry
of such authority which would or might require shares in the Company to be allotted or rights
to subscribe for or convert securities into shares to be granted after such expiry and the
158
Directors may allot shares or grant rights to subscribe for or convert securities into shares in
pursuance of such an offer or agreement as if the authority conferred by the resolution
granting such authority had not expired;
(iv) with effect from and conditional upon Admission, the Directors were empowered, pursuant to
section 570 and section 573 of the Companies Act, to allot equity securities (as defined in
section 560 of the Companies Act) for cash either pursuant to the authority conferred by the
resolution described in paragraph (iii) above or by way of a sale of treasury shares as if
section 561(1) of the Companies Act did not apply to any such allotment, provided that such
power shall be limited to:
(1) the allotment of equity securities in connection with an offer of securities (but in the case
of the authority granted under sub-paragraph (2) of paragraph (iii) above by way of rights
issue only) in favour of holders of Ordinary Shares on the register of members at such
record date as the Directors may determine and other persons entitled to participate
therein where the equity securities respectively attributable to the interests of the ordinary
shareholders are in proportion (as nearly as may be practicable) to the respective
numbers of Ordinary Shares held or deemed to be held by them on any such record date,
subject to such exclusions or other arrangements as the Directors may deem necessary
or expedient to deal with treasury shares, fractional entitlements or legal or practical
problems arising under the laws of any overseas territory or the requirements of any
regulatory body or stock exchange or any other matter;
(2) the allotment otherwise than pursuant to sub-paragraph (1) above, to any person or
persons up to an aggregate nominal amount of 5% of the issued share capital of the
Company at Admission;
for a period expiring upon the expiry of the general authority described in paragraph
(iii) above, save that the Company shall be entitled to make offers or agreements before the
expiry of such power which would or might require equity securities to be allotted after such
expiry and the Directors shall be entitled to allot equity securities pursuant to any such offer or
agreements as if the power conferred by the resolution granting such power had not expired;
(v) with effect from and conditional upon Admission, a general meeting, other than an annual
general meeting, may be called on not less than 14 clear days’ notice;
(vi) with effect from and conditional upon Admission and, in accordance with section 366 and 367
of the Companies Act the Company and any member of the Group be generally and
unconditionally authorised to:
(i)
make political donations to political parties or independent election candidates not
exceeding £35,000 in total;
(ii) make political donations to political organisations other than political parties not
exceeding £35,000 in total; and
(iii) incur political expenditure not exceeding £35,000 in total.
(as such terms are defined in the Companies Act such authority ending at the end of the next
annual general meeting of the Company or, if earlier, on 30 June 2015).
(Z) The B ordinary shares, series A shares, series B shares and series C shares will be reclassified as
Ordinary Shares upon or shortly prior to Admission.
(AA) With effect from and conditional upon Admission the rights attaching to the Ordinary Shares shall
be as set out in the New Articles.
There are no acquisition rights or obligations in relation to the issue of Ordinary Shares in the capital of
the Company or an undertaking to increase the capital of the Company.
From Admission there will be no outstanding convertible securities, exchangeable securities or
securities with warrants in the Company.
Save as disclosed in this document, during the three years immediately preceding the date of this
document, there has been no issue of share capital of the Company fully or partly paid either for cash
or other consideration and no such issues are proposed and no share capital of any wholly owned
member of JUST EAT is under option or agreed, conditionally or unconditionally, to be put under
option.
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Rights attaching to the Ordinary Shares are summarised in paragraph 5.3 of this Part XVI (Additional
Information) below.
No commissions, discounts, brokerages or other special terms have been granted in respect of the
issue of any share capital of the Company.
The Ordinary Shares are and the New Ordinary Shares will, when issued, be in registered form and,
subject to the provisions of the CREST Regulations, the Directors may permit the holding of Ordinary
Shares in uncertificated form and title to the Ordinary Shares may be transferred by means of a
relevant system (as defined in the CREST Regulations). Where the Ordinary Shares are held in
certificated form, share certificates will be sent to the registered share owners by first class post. No
temporary documents of title have been or will be issued in respect of the Company Ordinary Shares.
5.
MEMORANDUM AND ARTICLES OF ASSOCIATION
The Memorandum of Association and New Articles are available for inspection at the Company’s
registered office as described in paragraph 25 of this Part XVI (Additional Information) of this
document.
The New Articles, which were adopted pursuant to a special resolution on 17 March 2014 and shall be
effective upon Admission, contain (among others) provisions to the following effect:
5.1 Unrestricted objects
The New Articles provide that the Company’s objects are unrestricted, pursuant to section 31 of the
Companies Act.
5.2 Share capital
5.2.1 Liability of members
The liability of the members is limited to the amount, if any, unpaid on the Ordinary Shares held by
them. (Article 3)
5.2.2 Further issues and rights attaching to Ordinary Shares
Without prejudice to any rights attached to any existing Ordinary Shares, any Ordinary Share may be
issued with such rights or restrictions as the Company may by ordinary resolution determine or, if the
Company has not so determined, as the directors may determine. (Article 4)
5.2.3 Changes to the share capital
The Company may by ordinary resolution:
•
consolidate and divide all or any of its share capital into shares of larger amounts than its
existing shares;
•
sub-divide its shares, or any of them, into shares of smaller amounts than its existing shares;
and
determine that, as between the shares resulting from such a sub-division, any of the shares may have
any preference or advantage as compared with the others. (Article 40)
5.2.4 Redemption of shares
Any share may be issued which is or is to be liable to be redeemed at the option of the Company or the
holder, and the directors may determine the terms, conditions and manner of redemption of any such
share. (Article 5)
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5.3 Rights attaching to the Ordinary Shares of the Company
5.3.1 Dividends
The Company may by ordinary resolution declare dividends in accordance with the respective rights of
the members but no dividends shall exceed the amount recommended by the directors. The directors
may pay interim dividends or dividends payable at a fixed rate, if it appears to them that they are
justified by the profits of the Company available for distribution. If the directors act in good faith they
shall not incur any liability to the holders of shares conferring preferred rights for any loss they may
suffer by the lawful payment of an interim dividend on any shares having deferred or non-preferred
rights. (Articles 110, 111)
Except as otherwise provided by the Articles of Association or the rights attached to shares, all
dividends shall be declared and paid according to the amounts paid up on the shares on which the
dividend is paid. If any share is issued on terms that it ranks for dividend as from a particular date, it
shall rank for dividend accordingly. In any other case, dividends shall be apportioned and paid
proportionately to the amounts paid up on the shares during any portion(s) of the period in respect of
which the dividend is paid. (Article 112)
A general meeting declaring a dividend may, upon the recommendation of the directors, direct that it
shall be satisfied wholly or partly by the distribution of specific assets and, where any difficulty arises in
regard to the distribution, the directors may settle the same as they think fit.
The directors may, with the authority of an ordinary resolution of the Company, offer any holders of
Ordinary Shares the right to elect to receive Ordinary Shares, credited as fully paid, instead of cash in
respect of the whole (or some part, to be determined by the directors) of any dividend specified by the
ordinary resolution. (Articles 113, 118)
Notwithstanding any other provision of the Articles of Association, but without prejudice to the rights
attached to any shares, the Company or the directors may fix a date as the record date by reference to
which a dividend will be declared or paid or a distribution, allotment or issue made, and that date may
be before, on or after the date on which the dividend, distribution, allotment or issue is declared, paid
or made. (Article 120)
No dividend or other money payable in respect of a share shall bear interest against the Company,
unless otherwise provided by the rights attached to the share. (Article 116)
The Company intends to pay dividends solely by means of electronic transfer to an account nominated
by the holder of the Ordinary Shares.
The Company may cease to send any payment in respect of any dividend payable in respect of a
share if:
• in respect of at least two consecutive dividends payable on that share the cheque or warrant
has been returned undelivered or remains uncashed (or another method of payment has
failed); or
•
in respect of one dividend payable on that share the cheque or warrant has been returned
undelivered or remains uncashed, or another method of payment has failed, and reasonable
enquiries have failed to establish any new address or account of the recipient; or
•
a recipient does not specify an address, or does not specify an account of a type prescribed
by the directors, or other details necessary in order to make a payment of a dividend by the
means by which the directors have decided in accordance with the Articles of Association that
a payment is to be made, or by which the recipient has elected to receive payment, and such
address or details are necessary in order for the Company to make the relevant payment in
accordance with such decision or election,
but, subject to the Articles of Association, the Company may recommence sending cheques or
warrants or using another method of payment for dividends payable on that share if the person(s)
entitled so request and have supplied in writing a new address or account to be used for that purpose.
(Article 115)
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Any dividend which has remained unclaimed for 12 years from the date when it became due for
payment shall, if the directors so resolve, be forfeited and cease to remain owing by the Company.
(Article 117)
5.3.2 Voting Rights
Subject to any rights or restrictions attached to any Ordinary Shares:
•
on a show of hands:
•
every member who is present in person has one vote;
•
every proxy present who has been duly appointed by one or more members entitled to
vote on the resolution has one vote, except that if the proxy has been duly appointed by
more than one member entitled to vote and is instructed by one or more of those
members to vote for the resolution and by one or more others to vote against it, or is
instructed by one or more of those members to vote in one way and is given discretion as
to how to vote by one or more others (and wishes to use that discretion to vote in the
other way) he has one vote for and one vote against the resolution; and
•
every corporate representative present who has been duly authorised by a corporation
has the same voting rights as the corporation would be entitled to;
•
on a poll every member present in person or by duly appointed proxy or corporate
representative has one vote for every share of which he is the holder or in respect or which
his appointment as proxy or corporate representative has been made; and
•
a member, proxy or corporate representative entitled to more than one vote need not, if he
votes, use all his votes or cast all the votes he uses the same way. (Article 62)
For the purposes of determining which persons are entitled to attend or vote at a general meeting and
how many votes such persons may cast, the Company may specify in the notice convening the
meeting a time, not more than 48 hours before the time fixed for the meeting (not including any part of
a day that is not a working day), by which a person must be entered on the register in order to have the
right to attend or vote at the meeting. (Article 63)
In the case of joint holders, the vote of the senior who tenders a vote shall be accepted to the exclusion
of the votes of the other joint holders, and seniority shall be determined by the order in which the
names of the holders stand in the register of members. (Article 64)
No member shall have the right to vote at any general meeting or at any separate meeting of the
holders of any class of shares, either in person or by proxy, in respect of any share held by him unless
all amounts presently payable by him in respect of that share have been paid. (Article 66)
5.3.3 Transfer of the shares
A share in certificated form may be transferred by an instrument of transfer which may be in any usual
form or in any other form approved by the directors, executed by or on behalf of the transferor and,
where the share is not fully paid, by or on behalf of the transferee. A share in uncertificated form may
be transferred by means of the relevant system concerned. The transfer may not be in favour of more
than four transferees. (Articles 28, 29)
In their absolute discretion and without giving any reasons the directors may refuse to register the
transfer of a share in certificated form which is not fully paid provided that if the share is listed on the
Official List such refusal does not prevent dealings in the shares from taking place on an open and
proper basis. The directors may also refuse to register a transfer of a share in certificated form
(whether fully paid or not) unless the instrument of transfer:
•
is lodged, duly stamped, at the registered office of the Company or such other place as the
directors may appoint and is accompanied by the certificate for the share to which it relates
and such other evidence as the directors may reasonably require to show the right of the
transferor to make the transfer;
•
is in respect of only one class of share; and
•
is not in favour of more than four transferees.
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The directors may refuse to register a transfer of a share in uncertificated form to a person who is to
hold it thereafter in certificated form in any case where the Company is entitled to refuse to register the
transfer under the Uncertificated Securities Regulations. (Article 30)
If the directors refuse to register a transfer of a share, they shall send the transferee notice of that
refusal with reasons for the refusal within two months after the date on which the transfer was lodged
with the Company (in the case of a transfer of a share in certificated form) or the date on which the
Operator-instruction was received by the Company (in the case of a transfer of a share in uncertificated
form which will be held thereafter in certificated form). The directors shall send such further information
about the reasons for the refusal to the transferee as the transferee may reasonably request.
(Article 31)
No fee shall be charged for the registration of any instrument of transfer of other document or
instruction relating to or affecting the title to any share. (Article 32)
5.3.4 Distribution of assets on a winding-up
If the Company is wound up, the liquidator may, with the sanction of a special resolution and any other
sanction required by law, divide among the members in specie the whole or any part of the assets of
the Company and may, for that purpose, value any assets and determine how the division shall be
carried out as between the members or different classes of members. The liquidator may, with the like
sanction, vest the whole or any part of the assets in trustees upon such trusts for the benefit of the
members as he may with the like sanction determine, but no member shall be compelled to accept any
assets upon which there is a liability. (Article 139)
5.3.5 Restrictions on rights: failure to respond to a section 793 notice
If a member, or any other person appearing to be interested in shares held by that member, fails to
provide the information requested in a notice given to him/her under section 793 of the Companies Act
2006 by the Company in relation to his/her interest in shares (the “default shares”) within 14 days
from the date of giving the notice, sanctions shall apply, unless the directors determine otherwise. The
sanctions available are the suspension of the right to attend or vote (whether in person or by
representative or proxy) at any general meeting or at any separate meeting of the holders of any class
or on any poll; and where the default shares represent at least 0.25% of their class (excluding treasury
shares) also the withholding of any dividend payable in respect of those shares and the restriction of
the transfer of any shares (subject to certain exceptions). (Article 38)
5.3.6 Untraced members
The Company shall be entitled to sell at the best price reasonably obtainable any share held by a
member, or any share to which a person is entitled by transmission, if
•
for a period of 12 years, no cheque or warrant or other method of payment for amounts
payable in respect of the share sent and payable in a manner authorised by the Articles of
Association has been cashed or effected and no communication has been received by the
Company from the member or person concerned;
•
during that period the Company has paid at least three dividends (whether interim or final)
and no such dividend has been claimed by the member or person concerned;
•
the Company has, after the expiration of that period, by advertisement in a national
newspaper published in the United Kingdom and in a newspaper circulating in the area of the
registered address or last known address of the member or person concerned, given notice of
its intention to sell such share, and the advertisements, if not published on the same day,
shall have been published within 30 days of each other; and
•
the Company has not during the further period of three months following the date of
publication of the advertisements (or, if published on different dates, the later or latest of
them) and prior to the sale of the share received any communication from the member or
person concerned.
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The Company shall be indebted to the member or other person entitled to the share for an amount
equal to the net proceeds of the sale, but no trust or duty to account shall arise and no interest shall be
payable in respect of the proceeds of sale. (Article 39)
If on three consecutive occasions notices, documents or information sent or supplied to a member
have been returned undelivered, the member shall not be entitled to receive any subsequent notice,
document or information until he has supplied to the Company (or its agent) a new registered address,
or a postal address within the United Kingdom, or shall have informed the Company of an electronic
address. (Article 129)
5.3.7 Variation of Rights
If the capital of the Company is divided into different classes of shares, the rights attached to any class
may be varied, either while the Company is a going concern or during or in contemplation of a winding
up in such manner (if any) as may be provided by those rights or if there are no such provisions either
with the consent in writing of the holders of three-quarters in nominal value of the issued shares of that
class (not including any treasury shares), or with the sanction of a special resolution passed at a
separate meeting of the holders such shares.
To every such separate meeting the provisions of the Articles of Association relating to general
meetings shall apply, except that the quorum for any such meeting shall be two persons together
holding or representing by proxy at least one-third in nominal value of the issued shares of the class in
question (excluding treasury shares). At an adjourned meeting the quorum shall be, one person
holding shares of the class in question (excluding treasury shares) or his proxy. (Article 10)
Unless otherwise expressly provided by the rights attached to any class of shares, those rights shall be
deemed not to be varied by the purchase by the Company of any of its own shares or the holding of
such shares in treasury. (Article 11)
5.4 Directors of the Company
5.4.1 Appointment
Unless the Company determines otherwise by ordinary resolution, the number of directors (other than
alternate directors) shall not be subject to any maximum but shall not be less than two. (Article 76)
Subject to the provisions of the Articles of Association, the Company may by ordinary resolution
appoint a person who is willing to act as a director, and is permitted by law to do so, to be a director,
either to fill a vacancy or as an additional director. (Article 77)
The directors may appoint a person who is willing to act as a director, and is permitted by law to do so,
to be a director, either to fill a vacancy or as an additional director, provided that the appointment does
not cause the number of directors to exceed any number fixed as the maximum number of directors. A
director so appointed shall retire at the next AGM and shall then be eligible for reappointment.
(Article 80)
Other than a director retiring at the meeting, no person shall be appointed or reappointed a director at
any general meeting unless he is recommended by the directors or notice of the intention to propose
such person for appointment or reappointment executed by a member qualified to vote on the
appointment or reappointment is given to the company not less than seven nor more than 35 days
before the date of appointed for the meeting. (Article 78)
5.4.2 Retirement
At each annual general meeting all of the directors shall retire from office except any director appointed
by the board after the notice of that annual general meeting has been given and before that annual
general meeting has been held. (Article 81)
If the Company, at the meeting at which a director retires under any provision of the Articles of
Association, does not fill the vacancy the retiring director shall, if willing to act, be deemed to have
been reappointed unless at the meeting it is resolved not to fill the vacancy or a resolution for the
164
reappointment of the director is put to the meeting and lost. If a director retiring at an AGM is not
reappointed or deemed to have been reappointed, he shall retain office until the meeting elects
someone in his place or, if it does not do so, until the close of the meeting. (Articles 82, 83)
5.4.3 Removal
In addition to any power of removal under the Companies Act, the Company may remove a director
before the expiration of his period of office by special resolution. (Article 84)
A person ceases to be a director as soon as:
•
that person ceases to be a director by virtue of any provision of the Companies Act or is
prohibited from being a director by law; or
•
a bankruptcy order is made against that person; or
•
a composition is made with that person’s creditors generally in satisfaction of that person’s
debts; or
•
notification is received from the Company from that person that he is resigning or retiring from
his office as director, and such resignation or retirement has taken effect in accordance with
its terms; or
•
in the case of a director who holds any executive office, his appointment as such is terminated
or expires and the directors resolve that he should cease to be a director; or
•
that person is absent without permission of the other directors from meetings of the directors
for more than six consecutive months and the other directors resolve that he should cease to
be a director; or
•
a notice in writing is served upon him, signed by all the other directors stating that that person
shall cease to be a director with immediate effect. (Article 85)
5.4.4 Powers of directors
The business of the Company shall be managed by the directors who, subject to the provisions of the
Articles of Association and to any directions given by special resolution to take, or refrain from taking,
specified action, may exercise all the powers of the Company. (Article 92)
The directors may appoint one or more of their number to the office of managing director or to any
other executive office of the Company and any such appointment may be made for such term, at such
remuneration and on such other conditions as the directors think fit. Any such appointment shall
terminate if he ceases to be a director but without prejudice to any claim for damages for breach of the
contract of service between the director and the Company. (Article 99)
Subject to the provisions of the Articles of Association, the directors may delegate any of the powers
which are conferred on them under the Articles of Association: to such person or committee; by such
means (including by power of attorney); to such an extent; in relation to such matters or territories; and
on such terms and conditions, as they think fit. (Article 95(1))
Any director (other than an alternate director) may appoint any other director, or any other person
approved by resolution of the directors and willing to act and permitted by law to do so, to be an
alternate director and may remove such an alternate director appointed from office. (Article 86)
An alternate director shall be entitled to receive notices of meetings of the directors, to attend and vote
at any such meeting at which the director appointing him is not present and generally to perform all the
functions of his appointer as director in his absence. (Article 87)
The Company may change its name by resolution of the directors. (Article 138)
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5.4.5 Borrowing powers
The directors shall restrict the borrowings of the Company and exercise all powers of control
exercisable by the Company in relation to its subsidiary undertakings so as to secure (insofar as they
can) that the aggregate principal amount (including any premium payable on final repayment)
outstanding of all money borrowed by the Group (excluding intra group borrowings other than as
specifically provided by the Articles of Association) shall not at any time, save with the previous
sanction of an ordinary resolution of the Company, exceed the greater of £200 million or an amount
equal to two times the aggregate of:
•
the amount paid up, or credited as paid up, on the share capital of the Company (excluding
any share capital presented as debt); and
•
the total of any credit balance on the distributable and undistributable reserves of the Group,
but excluding amounts attributable to outside shareholders in subsidiary undertakings of the
Company and deducting any debit balance on any reserve,
all as shown in the latest audited consolidated balance sheet of the Group, but adjusted as may be
necessary in respect of any variation in the paid up share capital or share premium account or capital
redemption reserve of the Company since the date of that balance sheet and further adjusted as the
directors may reasonably consider to be appropriate to reflect any change since that date in the
companies comprising the Group. (Article 93)
5.4.6 Provisions for employees on cessation or transfer of business
The directors may decide to make provision for the benefit of persons employed or formerly employed
by the Company or any of its subsidiary undertakings (other than a director or former director or
shadow director) in connection with the cessation or transfer to any person of the whole or part of the
undertaking of the Company or that subsidiary undertaking. (Article 94)
5.4.7 Voting at board meetings
No business shall be transacted at any meeting of the directors unless a quorum is present and the
quorum may be fixed by the directors. If the quorum is not fixed by the directors, the quorum shall be
two. A director shall not be counted in the quorum present in relation to a matter or resolution on which
he is not entitled to vote (or when his vote cannot be counted) but shall be counted in the quorum
present in relation to all other matters or resolutions considered or voted on at the meeting. An
alternate director, who is not himself a director shall if his appointer is not present, be counted in the
quorum. An alternate director who is himself a director shall only be counted once for the purpose of
determining if a quorum is present. (Article 106)
Questions arising at a meeting shall be decided by a majority of votes. In case of an equality of votes,
the chairman shall (unless he is not entitled to vote on the resolution in question) have a second or
casting vote. (Article 102)
A resolution in writing agreed to by all the directors entitled to receive notice of a meeting of the
directors and who would be entitled to vote (and whose vote would have been counted) on a resolution
at a meeting of the directors shall (if that number is sufficient to constitute a quorum) be as valid and
effectual as if it had been passed at a meeting of the directors, duly convened and held. (Article 105)
5.4.8 Restrictions on voting
Subject to the provisions of the Articles of Association, a director shall not vote at a meeting of the
directors on any resolution concerning a matter in which he has, directly or indirectly, a material
interest (other than an interest in shares, debentures or other securities of, or otherwise in or through,
the Company) unless his interests arises only because the case falls within one or more of the
following sub-paragraphs:
•
the resolution relates to the giving to him of a guarantee, security, or indemnity in respect of
money lent to, or an obligation incurred by him for the benefit of, the Company or any of its
subsidiary undertakings;
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•
the resolution relates to the giving to a third party of a guarantee, security or indemnity in
respect of an obligation of the Company or any of its subsidiary undertakings for which the
director has assumed responsibility in whole or part and whether alone or jointly with others
under a guarantee or indemnity or by the giving of security;
•
the resolution relates to the giving to him of any other indemnity which is on substantially the
same terms as indemnities given or to be given to all of the other directors or to the funding by
the Company of his expenditure on defending proceedings or the doing by the Company of
anything to enable him to avoid incurring such expenditure where all other directors have
been given or are to be given substantially the same arrangements;
•
the resolution relates to the purchase or maintenance for any director or directors of insurance
against any liability;
•
his interest arises by virtue of his being, or intending to become, a participant in the
underwriting or sub-underwriting of an offer of any shares in or debentures or other securities
of the Company for subscription, purchase or exchange;
•
the resolution relates to an arrangement for the benefit of any of the employees, directors,
former employees or former directors of the Company or any of its subsidiary undertakings, or
the members of their families or any person who is or was dependent on such persons,
including but without being limited to a retirement benefits scheme and an employees’ share
scheme, which does not accord to any director any privilege or advantage not generally
accorded to the employees or former employees to whom the arrangement relates; and
•
the resolution relates to a transaction or arrangement with any other company in which he is
interested, directly or indirectly (whether as director or shareholder or otherwise), provided
that he is not the holder of or beneficially interested in 1% or more of any class of the equity
share capital of that company and not entitled to exercise 1% or more of the voting rights
available to members of the relevant company. (Article 107)
The Company may by ordinary resolution suspend or relax to any extent, in respect of any particular
matter, any provision of the Articles of Association prohibiting a director from voting at a meeting of the
directors or of a committee of the directors. (Article 108)
5.4.9 Directors’ interests
Provided that he has disclosed to the directors the nature and extent of any material interest of his, a
director notwithstanding his office:
•
may be a party to, or otherwise interested in, any transaction or arrangement with the
Company or in which the Company is otherwise interested; and
•
may be a director or other officer of, or employed by, or a party to any transaction or
arrangement with, or otherwise interested in, any body corporate in which the Company is
interested,
and (i) he shall not, by reason of his office, be accountable to the Company for any benefit which he
derives from any such office or employment or from any such transaction or arrangement or from any
interest in any such body corporate; (ii) he shall not infringe his duty to avoid a situation in which he
has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of
the Company as a result of any such office or employment or any such transaction or arrangement or
any interest in any such body corporate; (iii) he shall not be required to disclose to the Company, or
use in performing his duties as a director of the Company, any confidential information relating to such
office or employment if to make such a disclosure or use would result in a breach of a duty or
obligation of confidence owed by him in relation to or in connection with such office or employment;
(iv) he may absent himself from discussions, whether in meetings of the directors or otherwise, and
exclude himself from information, which will or may relate to such office, employment, transaction,
arrangement or interest; and (v) no such transaction or arrangement shall be liable to be avoided on
the ground of any such interest or benefit. (Article 100(1))
The directors may authorise, to the fullest extent permitted by law, any matter which would otherwise
result in a director infringing his duty to avoid a situation in which he has, or can have, a direct or
indirect interest that conflicts, or possible may conflict, with the interests of the Company and which
167
may reasonably be regarded as likely to give rise to a conflict of interests. They may also authorise, to
the fullest extent permitted by law, a director to accept to continue in any office, employment or position
in addition to his office as a director of the Company, and may authorise the manner in which a conflict
of interest arising out of such office, employment or position may be dealt with.
Such authorisation is only effective if any requirement as to quorum at the meeting at which the matter
is considered is met without counting the director in question or any other interested director and the
matter was agreed to without their voting (or would have been agreed to if they votes had not been
counted). (Article 101)
5.4.10 Directors’ remuneration and expenses
Until otherwise determined by the Company by ordinary resolution, there shall be paid to the directors
who do not hold executive office (other than alternate directors) such fees for their services in the office
of director as the directors may determine and, not exceeding in the aggregate an annual sum of
£2,000,000 or such larger amount as the Company may by ordinary resolution decide, divided between
the directors as they may determine, or, failing such determination, equally.
Any director who holds any other office in the Company (including for this purpose the office of
chairman or deputy-chairman or senior independent director), or who serves on any committee of the
directors, or who performs, or undertakes to perform, services which the directors consider go beyond
the ordinary duties of a director may be paid such additional remuneration (whether by way of fixed
sum, bonus, commission, participation in profits or otherwise) as the directors may determine. (Article
96)
The directors may also be paid all reasonable expenses properly incurred by them in connection with
their attendance at meetings of the directors or of committees of the directors or general meetings or
separate meetings of the holders of any class of shares and any reasonable expenses properly
incurred by them otherwise in connection with the exercise of their powers and the discharge of their
responsibilities in relation to the Company. (Article 97)
5.4.11 Directors’ gratuities and benefits
The directors may provide benefits, whether by the payment of allowances, gratuities or pensions, or
by insurance or death, sickness or disability benefits or otherwise, for any director or any former
director of the Company or of any body corporate which is or has been a subsidiary undertaking of the
Company or a predecessor in business of the Company or of any such subsidiary undertaking, and for
any member of his family (including a spouse or civil partner or a former spouse or former civil partner)
or any person who is or was dependent on him and may (before as well as after he ceases to hold
such office) contribute to any fund and pay premiums for the purchase or provision of any such benefit.
(Article 98)
5.4.12 Indemnity
The Company may:
•
indemnify to any extent any person who is or was a director, or a director of any associated
company, directly or indirectly (including by funding any expenditure incurred or to be incurred
by him) against any loss or liability, whether in connection with any proven or alleged
negligence, default, breach of duty or breach of trust by him or otherwise, in relation to the
Company or any associated company;
•
indemnify to any extent any person who is or was a director of an associated company that is
a trustee of an occupational pension scheme, directly or indirectly (including by funding any
expenditure incurred or to be incurred by him) against any liability incurred by him in
connection with the company’s activities as trustee of an occupational pension scheme; and
•
purchase and maintain insurance for any person who is or was a director, or a director of any
associated company, against any loss or liability or any expenditure he may incur, whether in
connection with any proven or alleged negligence, default, breach of duty or breach of trust by
him or otherwise, in relation to the Company or any associated company.
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The Articles of Association do not authorise any indemnity which would be prohibited or rendered void
by any provision of the Acts or by any other provision of law. (Article 140)
5.5 General Meetings
5.5.1 Appointment
The directors may call general meetings. If there are not sufficient directors to form a quorum in order
to call a general meeting, any director may call a general meeting. If there is no director, any member
of the Company may call a general meeting. (Article 41)
An annual general meeting and all other general meetings of the Company shall be called by at least
such minimum period of notice as is prescribed or permitted under the Acts. (Article 42)
The notice shall specify the place, the date and the time of meeting and the general nature of the
business to be transacted, and in the case of an annual general meeting shall specify the meeting as
such. Where the Company has given an electronic address in any notice of meeting, any document or
information relating to proceedings at the meeting may be sent by electronic means to that address,
subject to any conditions or limitations specified in the relevant notice of meeting. Subject to the
provisions of the Articles of Association and to any rights or restrictions attached to any shares, notices
shall be given to all members, to all persons entitled to a share in consequence of the death or
bankruptcy of a member or otherwise by operation of law and to the directors and auditors of the
Company. Any notice to be given to a member may be given by reference to the register of members
as it stands at any time within the period of 21 days before the notice is given; and no change in the
register after that time shall invalidate the giving of the notice. A member whose registered address is
not within the United Kingdom shall not be entitled to receive any notice, document or information from
the Company unless he gives the Company an address (not being an electronic address) within the
United Kingdom at which notices, documents or information may be sent or supplied to him. In the
case of a member registered on a branch register, any notice, document or other information can be
posted or despatched in the United Kingdom or in the country where the branch register is kept.
(Articles 42, 124, 122)
Where, by reason of any suspension or curtailment of postal services, the Company is unable
effectively to give notice of a general meeting or meeting of the holders of any class of shares, the
board may decide that the only persons to whom notice of the affected general meeting must be sent
are: the directors; the Company’s auditors; those members to whom notice to convene the general
meeting can validly be sent by electronic means and those members to whom notification as to the
availability of the notice of meeting on a website can validly be sent by electronic means. (Article 125)
No business shall be transacted at any meeting unless a quorum is present. Two persons entitled to
vote upon the business to be transacted, each being a member or a proxy for a member or a duly
authorised representative of a corporation which is a member (including for this purpose two persons
who are proxies or corporate representatives of the same member), shall be a quorum. (Article 44)
A member is entitled to appoint another person as his proxy to exercise all or any of his rights to attend
and to speak and vote at a meeting of the Company. The appointment of a proxy shall be deemed also
to confer authority to demand or join in demanding a poll. Delivery of an appointment of proxy shall not
preclude a member from attending and voting at the meeting or at any adjournment of it. A proxy need
not be a member. A member may appoint more than one proxy in relation to a meeting, provided that
each proxy is appointed to exercise the rights attached to a different share or shares held by him. An
appointment of proxy shall be in writing in any usual form or in any other form which the directors may
approve and shall be executed by or on behalf of the appointor which in the case of a corporation may
be either under its common seal or under the hand of a duly authorised officer or other person duly
authorised for that purpose. Subject to the provisions of the Acts, any corporation (other than the
Company itself) which is a member of the Company may, by resolution of its directors or other
governing body, authorise such person(s) to act as its representative(s) any meeting of the Company,
or at any separate meeting of the holders of any class of shares. The Company may require such
person(s) to produce a certified copy of the resolution before permitting him to exercise his powers.
The directors may (and shall if and to the extent that the Company is required to do so by the
Companies Act) allow an appointment of proxy to be sent or supplied in electronic form subject to any
conditions or limitations as the directors may specify. (Articles 68, 70, 71, 75)
169
Directors may attend and speak at general meetings and at any separate meeting of the holders of any
class of shares, whether or not they are members. (Article 50)
A resolution put to the vote of a general meeting must be decided on a show of hands unless a poll is
validly demanded. A poll on a resolution may be demanded either before a vote on a show of hands on
that resolution or immediately after the result of a show of hands on that resolution is declared. A poll
on a resolution may be demanded by:
•
the chairman of the meeting;
•
a majority of the directors present at the meeting;
•
not less than five members having the right to vote at the meeting;
•
a member or members representing not less than one-tenth of the total voting rights of all the
members having the right to vote at the meeting (excluding any voting rights attached to any
shares in the Company held as treasury shares); or
•
a member or members holding shares conferring a right to vote on the resolution on which an
aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on
all the shares conferring that right (excluding any shares in the Company conferring a right to
vote at the meeting which are held as treasury shares). (Article 56)
The directors or the chairman of the meeting may direct that any person wishing to attend any general
meeting should submit to and comply with such searches or other security arrangements as they or he
consider appropriate in the circumstances. The directors or the chairman of the meeting may in their or
his absolute discretion refuse entry to, or eject from, any general meeting any person who refuses to
submit to a search or otherwise comply with such security arrangements. (Article 48)
The directors or chairman of the meeting may take such action, give such direction or put in place such
arrangements as they or he consider appropriate to secure the safety of the people attending the
meeting and to promote the orderly conduct of the business of the meeting. (Article 49)
The directors may make arrangements for simultaneous attendance and participation by electronic
means allowing persons not present together at the same place to attend, speak and vote at the
meeting (including the use of satellite meeting places). The arrangements for simultaneous attendance
and participation at any place at which persons are participating, using electronic means may include
arrangements for controlling or regulating the level of attendance at any particular venue provided that
such arrangements shall operate so that all members and proxies wishing to attend the meeting are
able to attend at one or other of the venues. (Article 51)
170
6.
DIRECTORS’ AND SENIOR MANAGERS’ INTERESTS
6.1 Other Directorships
Save as set out below, none of the Directors and Senior Managers have been a member of any
partnerships, or held any directorships of any other company (other than subsidiaries of the Company),
at any time in the five years prior to the date of this document.
Directors
Previous directorships and
partnerships held in the previous
five years
Current directorships and
partnerships
John Hughes, CBE . . . . Sepura plc
Spectris plc
Telecity Group plc
CSG Systems International, Inc.
Scorpion Ventures Limited.
AIRCOM International Limited
Vitec Group plc
Intec Telecom Systems plc
Chloride Group plc
Parity Group plc
Bi\Holding S.p.A.
Barco NV
Nice Systems Limited
Chington Limited
H.I.G. Europe-Aircom I Limited
David Buttress . . . . . . . . Minicabster Limited
—
Michael Wroe . . . . . . . . . —
FBA Invest SaS(1)
Benjamin Holmes . . . . . Stardoll, Inc
Stardoll AB
Paperdoll Heaven Oy
Notonthehighstreet Enterprises
Limited
Shapeways, Inc.
Rebtel Owners AB
Grey Area Labs Oy
iZettle AB
HappyLatte Inc.
Astley Clarke Limited
Secret Escapes Limited
TrustPilot A/S
Index Venture Management LLP
Massive Media BV
Panther Express, Inc.
Playfish Limited
Mindcandy Limited
Michael Risman . . . . . . . Vitruvian Partners LLP
Vitruvian Scotcar LP
Apax Partners LLP
The Venture Partnership
Foundation Limited
Linnealex AB
Iglu Intressenter AB
Energy Services TopCo Limited
Etihad Topco Limited
—
Frederic Coorevits . . . . . Lambswalk Limited
Unicorn Group Limited
Unicorn City Limited
Freeagent Central Limited
Onapp Limited
Rocketroute Limited
Oak Leaf Systems SL
Plaisir D’amour SL
Casa Del Cardenal Dalt Villa, SL
International Flight Referral BVBA
Ventnet BVBA
Efficax NV
WF Horwood & Co (Bristol) Limited
Cowan, de Groot Nominees Limited
Farenheit 360 Limited
Ernest Derrick & Co., Limited
International Computer Training Limited
Norman Rose (Electrical) Limited
Harper Lee & Co. Limited
CSI (Holdings) Limited
Berwick Electronics Limited
Burgoyne and Company Limited
Inncuisine Limited
Loewestein and Hecht (Codeg) Limited
171
Moshi Monsters Music Limited
34 Ifield Road (Managements) Limited
Directors
Previous directorships and
partnerships held in the previous
five years
Current directorships and
partnerships
FCD Invest BVBA
Wadena NV
Golden River Private Stichting
Dewitte Welvaert Private Stichting
Adrimes NV
Teamwood Holdings Limited
Omega Preservation Fund NV
K F Mayer Limited
I L Bondy Limited
Country Trust Inns Limited
Neejam 24 Limited
Laurel Bowden . . . . . . . . Greylock IL LLP
Wonga Group Limited
Notonthehighstreet Enterprises
Limited
iZettle AB
G&T Ventures Limited
BlueVine Capital Inc.
Workable Technology Limited
Hybris AG
Webswappers Limited
Andrew Griffith . . . . . . . . British Sky Broadcasting Group plc
—
Gwyn Burr . . . . . . . . . . . Financial Ombudsman Service
Incorporated Society of British
Limited
Advertisers Limited
Hammerson plc
Principality Building Society
Sainsbury’s Bank plc
Sainsbury’s Supermarkets Limited
Wembley National Stadium Limited
Senior Manager
Adrian Blair . . . . . . . . . . .
Carlos Morgado . . . . . . .
Daniel Read . . . . . . . . . .
Mathew Braddy . . . . . . .
Previous directorships and
partnerships held in the previous
five years
Current directorships and
partnerships
FBA Invest SaS(1)
—
—
RPS Media Limited
—
Zenerlogic Limited
—
—
(1) FBA Invest SaS is a joint venture in which the Company has an interest.
6.2 Interests of Directors and Senior Managers in share capital
As at the Latest Practicable Date, insofar as is known to the Company, the interests (all of which are
beneficial) of each Director and Senior Manager in the number of shares and the associated voting
rights of the Company are set out in the following tables:
Director(1)
Interests as at the Latest Practicable Date
Ordinary
B ordinary
Series A Series B Series C
shares
shares
shares
shares
shares
John Hughes, CBE . . . . . . . . . . . . . . . . . . . . . . . . . . .
David Buttress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michael Wroe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benjamin Holmes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michael Risman . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Frederic Coorevits . . . . . . . . . . . . . . . . . . . . . . . . . . .
Laurel Bowden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Andrew Griffith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gwyn Burr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135,000
—
— 4,993,920
— 2,795,040
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
13,905
13,905
—
—
—
—
—
—
(1) The number of shares set out in this table includes those held by Directors and their respective connected persons.
172
—
—
—
—
—
—
—
—
—
Interests as at the Latest Practicable Date
Ordinary
B ordinary
Series A Series B Series C
shares
shares
shares
shares
shares
Senior Manager(1)
Adrian Blair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carlos Morgado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Daniel Read . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mathew Braddy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...........................................
—
—
—
—
—
1,253,907
—
1,034,991
—
—
—
—
—
13,905
—
13,770
—
—
—
—
(1) The number of shares set out in this table includes those held by Senior Managers and their respective connected persons.
Following the reclassification of the ordinary shares, B ordinary shares, series A shares, series B
shares and series C shares into Ordinary Shares on a one for one basis upon or shortly prior to
Admission as described in paragraph 4.2 of this Part XVI (Additional Information), the Directors and
Senior Managers are expected to have the following respective interests in the Ordinary Shares of the
Company (taking into account the number of Existing Ordinary Shares to be sold, and the number of
New Ordinary Shares to be issued, including the New Ordinary Shares to be issued and allotted to
Torch Partners Corporate Finance Limited as described in paragraph 4.2(Y), in connection with the
Offer and assuming that the Over-allotment Option has not been exercised):
Interests immediately
following Admission
Percentage of
No. of Ordinary enlarged issued
Shares
share capital
Director(1)
John Hughes, CBE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
David Buttress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michael Wroe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benjamin Holmes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michael Risman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Frederic Coorevits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Laurel Bowden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Andrew Griffith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gwyn Burr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135,000
2,216,511
1,107,945
—
—
—
—
—
—
0.0%
0.4%
0.2%
—
—
—
—
—
—
(1) The number of shares set out in this table includes those held by Directors and their respective connected persons.
Interests immediately following
Admission
Percentage of
No. of Ordinary enlarged issued
Shares
share capital
Senior Manager(1)
Adrian Blair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carlos Morgado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Daniel Read . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mathew Braddy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
13,905
—
13,775
—
0.0%
—
0.0%
(1) The number of shares set out in this table includes those held by Senior Managers and their respective connected persons.
Details of options over the Ordinary Shares held by the Directors and Senior Managers are set out
below. They are not included in the interests of the Directors and Senior Managers shown in the tables
above.
173
The Directors and Senior Managers had the following options and awards relating to Ordinary Shares
under the Approved CSOP, International CSOP, EMI Plan, EMI Plan No.2 and the Joint Ownership
Awards as at the Latest Practicable Date:
Joint ownership arrangements
Director(1)
No. of
Ordinary
Shares
under
award(2)
Date of
award
No. of
Ordinary
Shares or
B Ordinary
No. of
Hurdle
Shares vested
B Ordinary price per
as at the
Shares
Ordinary or
Latest
under
B Ordinary Practicable
award(2)
Share (£)(2)
Date(2)
John Hughes,
CBE(3) . . . . . . . . . . 22.12.2011
— 1,620,000 £0.1204
28.10.2013 540,000
£0.3404
31.01.2014 352,350
£0.5767
31.01.2014 352,350
£0.6633
31.01.2014 352,350
£0.7626
David Buttress(3) . . . . 31.01.2014 1,839,375
£0.5767
31.01.2014 919,674
£0.6633
31.01.2014 919,701
£0.7626
Michael Wroe(3) . . . . 22.12.2011
—
720,900 £0.1204
31.01.2014 892,350
£0.5767
31.01.2014 446,175
£0.6633
31.01.2014 446,175
£0.7626
Benjamin Holmes . . .
—
—
—
Michael Risman . . . .
—
—
—
Frederic Coorevits . .
—
—
—
Laurel Bowden . . . . .
—
—
—
Andrew Griffith . . . . .
—
—
—
Gwyn Burr . . . . . . . . .
—
—
—
911,250
—
—
—
—
574,803
—
—
450,549
—
—
—
—
—
—
—
—
—
Final
vesting
date
Expiry
date
01/01/16
01/05/17
01/07/17
01/07/18
01/07/19
01/01/17
01/01/18
01/01/19
01/10/15
01/07/17
01/07/18
01/07/19
—
—
—
—
—
—
22/12/2021
28/10/2013
31/01/2024
31/01/2024
31/01/2024
31/01/2024
31/01/2024
31/01/2024
22/12/2021
31/01/2024
31/01/2024
31/01/2024
—
—
—
—
—
—
(1) The number of shares set out in this table includes those held by Directors and their respective connected persons.
(2) The number of Ordinary or B Ordinary Shares shown is the full number of Ordinary or B Ordinary Shares subject to the
award and the full number of Ordinary or B Ordinary Shares in respect of which the participant’s interest was vested at the
Latest Practicable Date respectively. The participant has a partial interest in such number of Ordinary or B Ordinary Shares,
being the value above the hurdle price, in accordance with the terms of the Joint Share Ownership Plan as described in
paragraph 9.1.4 of this Part XVI.
(3) In common with other participants in the Joint Share Ownership Plan, John Hughes, David Buttress and Michael Wroe each
participate in the associated loan arrangements on the same terms as other participants, and on the Latest Practicable Date
had an outstanding balance of £544,447.01, £1,658,842.42 and £845,534.85 respectively. The terms of the Joint Share
Ownership Plan and associated loan arrangements are described in paragraph 9.1.4 of this Part XVI (Additional
Information).
Individual options arrangements
Senior Manager
Adrian Blair . . . . . . . . . . . . . .
Carlos Morgado . . . . . . . . . .
Daniel Read . . . . . . . . . . . . .
Mathew Braddy . . . . . . . . . .
Share Plan /
Scheme
—
EMI
—
EMI
Date of
grant
No. of
B Ordinary
Shares
under
option
Exercise
price per
Ordinary
Share (£)
Option
vested as
at the
Latest
Practicable
Date
Expiry
date
—
—
—
—
—
05.03.2010 1,474,848 £0.0333 1,474,848 05/03/2020
—
—
—
—
—
05.03.2010 1,030,509 £0.0333 1,030,509 05/03/2020
174
Joint ownership arrangements
Senior Manager(1)
Date of
award
Adrian Blair(3) . . . . . . . . 25.02.2011
22.12.2011
31.01.2014
31.01.2014
31.01.2014
Carlos Morgado(3) . . . . . 31.01.2014
31.01.2014
31.01.2014
Daniel Read(3) . . . . . . . . 12.12.2011
31.01.2014
31.01.2014
31.01.2014
Mathew Braddy(3) . . . . . 31.01.2014
31.01.2014
31.01.2014
No. of
Ordinary or B
Hurdle
Ordinary
No. of
No. of
price per Shares vested
Ordinary B Ordinary Ordinary
as at the
Shares
Shares
or
Latest
under
under
B Ordinary Practicable
award(2)
award(2)
Share (£)(2)
Date(2)
352,350
352,350
352,350
352,350
352,350
352,350
352,350
352,350
352,350
352,350
352,350
352,350
1,242,000 £0.0463
135,000 £0.1204
£0.5767
£0.6633
£0.7626
£0.5767
£0.6633
£0.7626
2,295,000 £0.1667
£0.5767
£0.6633
£0.7626
£0.5767
£0.6633
£0.7626
931,500
84,375
—
—
—
—
—
—
1,577,799
—
—
—
—
—
—
Final
vesting
date
Expiry
date
01/04/15
01/10/15
01/07/17
01/07/18
01/07/19
01/07/17
01/07/18
01/07/19
01/07/15
01/07/17
01/07/18
01/07/19
01/07/17
01/07/18
01/07/19
25/02/2021
22/12/2021
31/01/2024
31/01/2024
31/01/2024
31/01/2024
31/01/2024
31/01/2024
12/12/2021
31/01/2024
31/01/2024
31/01/2024
31/01/2024
31/01/2024
31/01/2024
(1) The number of shares set out in this table includes those held by Senior Managers and their respective connected persons.
(2) The number of Ordinary or B Ordinary Shares shown is the full number of Ordinary or B Ordinary Shares subject to the
award and the full number of Ordinary or B Ordinary Shares in respect of which the participant’s interest was vested at the
Latest Practicable Date respectively. The participant has a partial interest in such number of Ordinary or B Ordinary Shares,
being the value above the hurdle price, in accordance with the terms of the Joint Share Ownership Plan as described in
paragraph 9.1.4 of this Part XVI.
(3) In common with other participants in the Joint Share Ownership Plan, Adrian Blair, Carlos Morgado, Daniel Read and
Mathew Braddy each participate in the associated loan arrangements on the same terms as other participants, and on the
Latest Practicable Date had an outstanding balance of £460,469.34, £452,835.00, £476,635.00 and £452,835.00
respectively. The terms of the Joint Share Ownership Plan and associated loan arrangements are described in paragraph
9.1.4 of this Part XVI (Additional Information).
Save as disclosed in this paragraph no Director or Senior Manager has any interests (beneficial or
non-beneficial) in the share capital of the Company or any of its subsidiaries.
Save as disclosed above, no other person involved in the Offer has an interest which is material to the
Offer.
6.3 Confirmations and conflicts of interest
Confirmations
At the date of this document, none of the Directors or Senior Managers has during at least the previous
five years:
(A) any convictions in relation to fraudulent offences;
(B) save as disclosed above, been a member of the administrative, management, supervisory
body or senior management of a company associated with any bankruptcies, receiverships or
liquidations; or
(C) been subject to any official public incrimination or sanctions by any statutory or regulatory
authorities (including designated professional bodies) or been disqualified by a court from
acting as a member of the administrative, management or supervisory bodies of an issuer or
from acting in the management or conduct of the affairs of any issuer.
There are no family relationships between any of the Directors or members of Senior Managers.
Conflicts of interest
Save as set out below, no Director or Senior Manager has any potential conflict of interest between his
or her duties to the Company and his or her private interests or other duties.
175
Laurel Bowden was appointed as a Director of the Company pursuant to Greylock IL’s rights as
shareholder under the Old Articles.
Benjamin Holmes was appointed as a Director of the Company pursuant to Index Ventures’ rights as a
shareholder under the Old Articles.
Frederic Coorevits was appointed as a Director of the Company pursuant to the rights of the SM Trust
under the Old Articles.
Michael Risman was appointed as a Director of the Company pursuant to the rights of Vitruvian
Partners under the Old Articles.
Andrew Griffith is a director of British Sky Broadcasting Group plc (“BSkyB”). The Company purchases
advertising services on wholly commercial terms from Sky Media, a division of the BSkyB group.
Transactions with Directors
No Director or Senior Manager has, or has had, any interest in any transaction which is or was unusual
in its nature or conditions or which is, or was, significant in relation to the business of the Company and
which was effected by any member of JUST EAT during the current or immediately preceding financial
year, or during any earlier financial year, and remains in any respect outstanding or underperformed.
Save as otherwise described in paragraph 9.1.4 of this Part XVI, there are no outstanding loans
granted by the Company or any Group company to any of the Directors or Senior Managers nor has
any guarantee been provided by the Company or any Group company for their benefit.
Director appointment arrangements
Save as otherwise disclosed in this paragraph 6.3 and paragraph 18.8 of this Part XVI, there are no
arrangements or understandings with the Major Selling Shareholders, customers, suppliers or others
pursuant to which any Director or Senior Manager was selected as a director or senior manager (as
the case may be).
7.
SUMMARY OF REMUNERATION AND BENEFITS
A summary of the amount of remuneration paid to the Directors (including any contingent or deferred
compensation) and benefits in kind for the financial year ended 31 December 2013 is set out in the
table below. The Directors and Senior Managers are categorised in their positions as at the Latest
Practicable Date for these purposes.
Salary / fees
(£)
Director
Role
John Hughes,
CBE . . . . . . . . .
David Buttress . .
Chairman
59,993
Group Chief
Executive
Officer
Group Chief
Financial
Officer
Non-Executive
Director
Non-Executive
Director
Non-Executive
Director
Non-Executive
Director
238,584
190,808
Michael Wroe . . .
Benjamin
Holmes . . . . . .
Michael
Risman . . . . . .
Frederic
Coorevits . . . . .
Laurel
Bowden . . . . . .
Total . . . . . . . . . .
Benefits in
kind
(£)
Bonus
(£)
—
Total year
ended
31 December
2013
(£)
—
59,993
116,162
831
355,577
54,874
1,942
247,624
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
489,385
171,036
176
2,773
663,194
For the year ended 31 December 2013, the aggregate total remuneration paid (including contingent or
deferred compensation) and benefits in kind granted (under any description whatsoever) to all of the
Senior Managers was £1,692,244. Of this, £1,326,290 was in respect of salary/fees, £354,563 was in
respect of bonuses and £11,391 was in respect of benefits in kind. In addition, £371,057 was paid to
certain members of senior management in respect of compensation for loss of office.
The aggregate amount set aside by JUST EAT to provide pension, retirement or similar benefits in
relation to Directors and Senior Managers in the last financial year (ended 31 December 2013) was
£nil.
8.
DIRECTORS TERMS AND CONDITIONS
8.1 Remuneration Policy
The remuneration policy for Executive Directors and other senior managers is reviewed regularly by
the Remuneration Committee in order to ensure that it remains appropriate for a listed company of
comparable size, value and complexity. The Company intends to conduct such a review following
Admission. The Remuneration Committee, in undertaking a review, takes independent, specialist,
advice.
The principal objectives of the remuneration policy are to attract, retain, and motivate the Group’s
Executive Directors and senior management, provide incentives that align with, and support, the
Group’s business strategy, and align incentives with the creation of long-term shareholder value. The
Remuneration Committee seeks to ensure that the Executive Directors are fairly rewarded for the
Group’s performance over the short- and long-term. A significant proportion of potential total
remuneration is therefore performance-related.
The Remuneration Committee takes into consideration the remuneration arrangements for the wider
employee population in making its decisions on remuneration for Executive Directors and senior
management. Remuneration decisions are also driven by external considerations, in particular local
competitive practice in the markets in which the Group competes for talent.
Subject to any amendments which may be made as a result of the review to be conducted by the
Remuneration Committee following Admission, the following is a summary of the Company’s
remuneration policy.
Base salary
Base salary provides the foundation of a package that will attract, retain and motivate the right talent
for JUST EAT. Salaries reflect each individual’s role, responsibilities and experience, and take into
account competitive practice in relevant talent markets.
Current base salaries are £300,000 for the CEO and £250,000 for the CFO. Adjustments to Executive
Director salaries will take account of increases awarded across the Group as a whole, and conditions
elsewhere in the Group, the experience and performance of the individual, pay levels for comparable
roles at comparable online businesses and listed companies of comparable value, size and complexity,
and any changes in responsibilities or scope of the role.
Pension
Executive Directors are auto-enrolled into the Company’s defined contribution pension plan on the
same terms as other UK employees, receiving pension contributions of 1% of salary, increasing to 3%
over the next 3 years. Executive Directors are offered the opportunity of sacrificing a proportion of their
salary into pension arrangements, in which circumstances the Company makes a contribution equal to
the amount of its National Insurance saving.
Benefits
Executive Directors will receive benefits which the Remuneration Committee considers to be
competitive in the markets in which each individual is employed. Such benefits currently include private
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medical insurance and life insurance, and the Company will reimburse the reasonable costs of
commuting (and associated tax costs) with a value of up to £12,000 per year. In addition, the CEO, but
not the CFO, is currently provided with a car allowance of £7,900. Relocation allowances and
international assignment related benefits may also be provided as necessary.
Annual bonus
Executive Directors and other senior managers participate in annual bonus arrangements which are
designed to incentivise and reward outperformance of financial and non-financial targets, to deliver
increased value to shareholders and accelerate delivery of the strategic plan.
Performance measures, targets and weightings are set at the start of each financial year by reference
to Group financial measures (currently Underlying EBITDA and revenue growth), as well as the
achievement of personal/strategic objectives. The bonus for threshold performance will not exceed
25% of the maximum opportunity. For 2014, the financial and personal/strategic objectives are each
weighted 50%, although the Committee retains discretion to vary these weightings to maintain
alignment with the business priorities for the year. Performance targets are generally calibrated with
reference to the Company’s budget for the year.
Although currently paid in cash on a six-monthly basis, from 2015 the Remuneration Committee
proposes that bonuses will be paid annually and will also keep under review whether it is appropriate
for bonuses to be partly deferred into shares. Where such arrangements are operated, individuals
would be able to receive a dividend equivalent in cash or shares equal to the value of dividends which
would have accrued during the vesting period.
Long-term incentives
Executive Directors and other senior managers will participate in long-term incentive arrangements
designed to drive sustained long-term performance that supports the creation of shareholder value.
Following Admission, Executive Directors and other senior managers may receive awards of shares,
nil-cost options or market value options, which may be granted annually. Award levels are expressed
as a number of shares, in the normal course equivalent in value of up to 200% of salary in the case of
performance shares or nil cost options and 300% of salary in market value options. The Remuneration
Committee will review award sizes prior to each grant to ensure that they are appropriate in light of
market data and individual and Group performance.
Vesting of any long-term incentives will be subject to continued employment and achievement of
performance conditions measured generally over a period of at least 3 years. If no entitlement has
been earned at the end of the relevant performance period, awards will lapse. Vesting for threshold
performance will not exceed 25% of the maximum opportunity. Performance conditions may include,
but will not be limited to, TSR relative to a relevant comparator group, EPS, Underlying EBITDA and
revenue growth. The Committee will determine the appropriate performance measures, weightings and
targets prior to grant to align with the Company’s strategy and creation of shareholder value.
Individuals may receive a dividend equivalent in cash or shares equal to the value of dividends which
would have accrued during the vesting period.
Clawback
Clawback provisions may be operated by the Remuneration Committee in respect of awards under the
new long-term incentive arrangements in certain circumstances, including the individual’s misconduct,
a material misstatement of results, or a mistake being made in calculating the vesting of any award.
Share ownership guidelines
To help further align Executive Directors’ and other senior managers’ interests with shareholders, the
Remuneration Committee has implemented share ownership guidelines which are designed to
encourage individuals to build up a significant shareholding in the Company. Executive Directors are
required to build and/or maintain a shareholding (excluding shares held conditionally under any
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incentive arrangements but including a number of shares equivalent to the value of any vested and
exercisable interest under the Company’s Joint Share Ownership Plan) equivalent to at least 200% of
base salary. For other senior managers, shares equivalent to at least 75% of base salary should be
built up and/or maintained. Until the relevant shareholding levels are met, 50% of any vested shares
from incentive arrangements (net of tax) must be retained.
Recruitment policy
New Executive Director and senior management hires will be offered remuneration packages in line
with the Company’s remuneration policy in force at the time. In addition to the above elements of
remuneration, the Committee may, in exceptional circumstances, consider it appropriate to grant an
award under a different structure in order to facilitate the buyout of outstanding awards held by an
individual on recruitment. Any buyout award would be limited to what the Remuneration Committee
considers to be a fair estimate of the value of awards foregone when leaving the former employer and
will be structured so as to take into account other key terms, such as vesting schedules and
performance targets, of the awards which are being replaced.
Chairman and Non-executive Director fees
The Chairman’s and the other Non-Executive Directors’ fees will be set at a level to reflect the amount
of time and level of involvement required in order to carry out their duties as members of the Board and
its committees, and to attract and retain Non-Executive Directors of the highest calibre with relevant
commercial and other experience.
Fee levels are set by reference to non-executive director fees at companies of similar size and
complexity and general increases for salaried employees within the Company. The fee paid to the
Chairman is determined by the Remuneration Committee, while the fees for other Non-Executive
Directors are determined by the Board as a whole. Additional fees are payable for acting as Senior
Independent Director and as Chairman of the Board’s Audit and Remuneration Committees. The
current fee levels are a base fee of £100,000 for the Chairman and £45,000 for the other NonExecutive Directors, with an additional £5,000 for the Senior Independent Director and £7,500 for the
Chairman of each of the Board’s Audit and Remuneration Committees. The maximum aggregate
annual fee for non-executive directors provided in the Company’s Articles of Association is
£2,000,000 p.a.
Subject to the Chairman’s existing interests noted in paragraph 6.2 of this Part XVI, the Chairman and
other Non-executive Directors are not eligible to participate in any of the Company’s incentive
arrangements going forward, and do not receive pension contributions.
8.2 Executive Directors
8.2.1 General terms
On 25 March 2014, the Company entered into new service contracts with David Buttress and Michael
Wroe (each an “Executive Director”, together the “Executive Directors”). The new service contracts
are conditional upon and take effect from Admission. The principal terms of these service contracts are
set out below.
David Buttress and Michael Wroe will be paid annual base salaries of £300,000 and £250,000,
respectively, which will be reviewed by the Remuneration Committee at least once in each twelve
month period, but the Remuneration Committee shall not be obliged to make any increase in the
salary.
The Company shall provide each of the Executive Directors with a benefit package which includes
membership of a private medical insurance scheme, the Group Death in Service Life Assurance
Scheme, and reimbursement of the cost of commuting (and associated tax costs) with a value of up to
£12,000 per year. In addition, David Buttress will receive an annual car allowance of £7,900.
In addition to English public holidays, the Executive Directors shall each be entitled to 25 days’ holiday
in each calendar year to be taken at such times as may be approved by the Board.
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8.2.2 Termination provisions
The service contracts of the Executive Directors may be terminated by not less than 12 months’ written
notice by the Company and 6 months’ notice by the Executive Director. The contracts do not contain
any specific provisions relating to a change of control of the Company.
At any time after notice of termination has been served by either party, or if the Executive Director
resigns without giving due notice and the Company does not accept his resignation, the Company may
in its discretion place the Executive Director on garden leave during which time the Executive Director
is subject to certain restrictions.
The Company may elect to terminate the Executive Directors’ employment immediately by making a
payment equivalent to, in the case of David Buttress, 1.6 times, and in the case of Michael Wroe, 1.4
times, basic salary (if notice is given on or before 31 December 2014) or, in the case of David Buttress,
1.2 times, and in the case of Michael Wroe, 1.1 times, basic salary (if notice is given on or after
1 January 2015) in each case in lieu of notice or, if notice has already been given, the remainder of the
notice period.
The Company shall be entitled to terminate the employment of an Executive Director with immediate
effect in certain circumstances, including where that Executive Director (i) is guilty of serious
dishonesty or of gross misconduct or incompetence or wilful neglect of duty or commits any serious or
persistent breach of any term of his service contract other than a breach which is capable of remedy
and which is remedied within 30 days; (ii) is convicted of a criminal offence; (iii) is guilty of conduct
which in the reasonable opinion of the Board brings himself or the Company or any other member of
the Group into disrepute; (iv) is declared bankrupt; (v) is disqualified or disbarred being a director by
reason of any order made by any competent court; (vi) ceases to be a director of the Company or any
Group Company by his own act or default; (vii) is unable to perform his duties through sickness or
injury for twenty six consecutive weeks or an aggregate of twenty six weeks in any fifty two consecutive
weeks; (viii) after receiving written warning from the Company in respect of the poor performance of his
duties, continues, in the reasonable opinion of the Board, to perform his duties to an unsatisfactory
standard; or (ix) engages in any activity, practice or conduct which contravenes any applicable laws,
statutes, regulations, and codes relating to anti-bribery and anti-corruption including but not limited to
the Bribery Act 2010 and any policies and procedures published by the Company.
For the period of twelve months after termination of an Executive Director’s service contract, that
Executive Director may not (i) be engaged in or exercise a dominant or controlling influence over a
competing business; (ii) canvas, solicit, approach or seek out any person who was a customer or client
of the business during the 12 months prior to the earlier of the termination of the Executive Director’s
employment, the commencement of any garden leave period and the date on which the Executive
Director is no longer required to conduct his role or provide a handover to his successor (the “Period”)
and with whom the Executive Director dealt with during the Period; (iii) have any business dealings
with any person who was a customer or client of the business during the Period and with whom the
Executive dealt during the Period; (iv) interfere with the continuance of any supplies to the business
from any supplier who has supplied the Company and/or any Group Company at any time during the
Period; (v) approach, solicit, seek out or endeavour to entice away any person who is an employee or
consultant to the Company or any Group Company in a senior, executive, technical, advisory or sales
capacity and who the Executive Director knew or worked with during the Period; and (v) offer
employment in a competing business to any person who is an employee or consultant to the Company
or any Group Company in a senior, executive, technical, advisory or sales capacity and who the
Executive Director knew or worked with during the Period.
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8.2.3 Summary of service contracts
Details of the service contracts entered into with the Executive Directors on 25 March 2014 are set out
below:
Director
David
Buttress . . . . .
Michael Wroe . .
Position
Group Chief
Executive
Officer
Group Chief
Financial
Officer
Date of
commencement
Unexpired
term (months)
Notice period
by Company
(months)
Notice period
by director
(months)
Admission
—
12
6
Admission
—
12
6
8.3 Non-Executive Directors
8.3.1 General terms
The Company has the following non-executive directors: John Hughes CBE, the Non-Executive
Chairman; Andrew Griffith, the Senior Independent Non-Executive Director, Gwyn Burr, an
independent Non-Executive Director, and Benjamin Holmes, Michael Risman, Frederic Coorevits and
Laurel Bowden (each of the non-executive directors, a “Non-Executive Director”, together the “NonExecutive Directors”). Each of the Non-Executive Directors was appointed by letter of appointment for
an initial term of two years from Admission other than Laurel Bowden whose letter of appointment was
for a term of up to 180 days following Admission.
From Admission, John Hughes CBE will be paid an annual fee of £100,000. Each of Andrew Griffith
and Gwyn Burr will be paid an annual fee of £45,000. An additional fee of £5,000 is payable to Mr.
Griffith for his role as Senior Independent Non-Executive Director and an additional fee of £7,500 is
payable to Mr. Griffith and Ms. Burr for their roles as chairman of the Audit Committee and
Remuneration Committee, respectively. None of Benjamin Holmes, Michael Risman, Frederic
Coorevits or Laurel Bowden shall receive a fee in connection with their appointment as Non-Executive
Directors.
Each of the Non-Executive Directors shall be entitled to have reimbursed all fees that they reasonably
incur in the performance of their duties as a director in accordance with their terms of appointment.
8.3.2 Termination provisions
The appointment of a Non-Executive Director may be terminated immediately without any entitlement
to compensation if that Non-Executive Director is (i) removed as a director; or (ii) required to vacate
office for any reason pursuant to the Articles of Association or under any applicable law.
The appointment of a Non-Executive Director may be terminated with immediate effect if that NonExecutive Director (i) commits a material or repeated breach or non-observance of his or her
obligations to the Company; (ii) is guilty of any fraud or dishonesty, convicted of any arrestable criminal
offence or have acted in a manner which, in the opinion of the Company acting reasonably, brings or is
likely to bring the Non-Executive Director or the Company into disrepute or is materially adverse to the
interests of the Company; or (iii) is declared bankrupt or is disqualified from acting as a director.
For the period of six months immediately after the termination of a Non-Executive Director’s
appointment, that Non-Executive Director may not carry on or be engaged, concerned or interested in
any business which competes directly with any business being carried on by the Company.
181
8.3.3 Summary of letters of appointment
Details of the terms of the letters of appointment of the Non-Executive Directors are set out below:
Director
Date of Appointment
John Hughes CBE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benjamin Holmes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michael Risman(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Frederic Coorevits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Laurel Bowden(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Andrew Griffith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gwyn Burr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current
term
15 December 2011
2 years
10 July 2009
2 years
12 March 2014
2 years
10 July 2009
2 years
18 March 2011 180 days
12 March 2014
2 years
12 March 2014
2 years
Current
age
62
40
45
44
48
43
51
(1) Mr. Risman also acted as the primary representative of the former corporate director of the Company, Vitruvian Directors 1
Limited, from April 2012 to March 2014.
(2) Ms. Bowden has indicated to the Company that she intends to resign as a Director no later than 180 days after Admission.
8.4 Directors’ indemnities
All of the Directors have been granted indemnities by the Company to the maximum extent permitted
by the Companies Act 2006 (including the right to recover costs on an “as incurred” basis), subject to
certain exceptions including that such indemnities will not apply to the extent that any recovery is made
by or on behalf of the Director under any policy of insurance.
9.
EMPLOYEE SHARE SCHEMES
9.1 Existing employee share plans
The Company currently has options and awards outstanding under five employee incentive
arrangements (each as defined below), the Approved CSOP, the International CSOP, the EMI Plan,
the EMI Plan No. 2 and the Joint Share Ownership Plan.
No new grants will be made under these arrangements following Admission.
9.1.1 Company Share Option Plan (the “Approved CSOP”)
The Approved CSOP is an HM Revenue & Customs approved company share option plan which
provides for the grant of options over Ordinary Shares.
As at the Latest Practicable Date there are options under the Approved CSOP outstanding over
5,701,698 Ordinary Shares, of which options over 1,787,265 Ordinary Shares have vested, with
exercise prices of between £0.1667 and £0.5767 per Ordinary Share.
The exercise of options under the Approved CSOP may be satisfied with the issue of new Ordinary
Shares.
Options vest over time, as to 25% on the first anniversary of the vesting start date and then equally on
a quarterly basis until becoming fully vested on the fourth anniversary of the vesting start date. Options
are exercisable at any time from Admission to the extent vested as at the date of exercise.
Unexercised options lapse on the tenth anniversary of the grant date.
Unexercised options will also lapse in the event of a participant ceasing to be a director or employee of
any member of the Group by reason of gross misconduct. On ceasing to a director or employee for any
other reason, unvested options lapse, but any vested options continue to be capable of exercise
provided that the participant does not breach of any restrictive covenant or other term of the
participant’s employment contract or commence employment with a competitor within 12 months of
ceasing to be a director or employee of the Group.
The number of Ordinary Shares and/or the option exercise price may be adjusted on a variation of
share capital of the Company so that the total exercise price payable in respect of an option remains
unchanged. The Board may amend the terms of the Approved CSOP at any time, subject to obtaining
182
any necessary approval from HM Revenue & Customs, and provided that no amendment to the
advantage of participants may be made without prior approval of the Company in general meeting
(save where the amendment is necessary or desirable in order to obtain or maintain HM Revenue &
Customs approval and/or favourable tax, exchange control or regulatory treatment, minor to benefit the
administration of the plan and/or to take account of changes in legislation). Benefits under the
Approved CSOP are not pensionable.
9.1.2 Company Share Option Plan No. 2 (International) (the “International CSOP”)
The terms of the International CSOP are the same as the terms of the Approved CSOP, save as set
out below.
As at the Latest Practicable Date there are options under the International CSOP outstanding over
3,849,984 Ordinary Shares, of which options over 1,452,870 Ordinary Shares have vested.
The International CSOP is not an HM Revenue & Customs approved plan. The options granted under
the International CSOP have exercise prices between £0.1667 and £0.5767 per ordinary share.
The exercise of options under the International CSOP may be satisfied in whole or part by a cash
payment in lieu of the issue or transfer of Ordinary Shares.
9.1.3 Enterprise Management Incentive Share Option Plan (the “EMI Plan”) and the Enterprise
Management Incentive Share Option Plan No. 2 (the “EMI Plan No. 2”)
Options granted under the EMI Plan and the EMI Plan No. 2 (together the “EMI Plans”) are HM
Revenue & Customs tax advantaged enterprise management incentive options granted over B ordinary
shares.
As at the Latest Practicable Date there are options under the EMI Plan outstanding over 2,505,357
B ordinary shares, all of which have vested and are therefore fully exercisable, with exercise prices of
£0.0333 per B ordinary share, and options under the EMI Plan No. 2 outstanding over 407,538
B ordinary shares, of which options over 311,310 B ordinary shares have vested, with an exercise
price of £0.0463 per B ordinary share.
On the reclassification of B ordinary shares as Ordinary Shares, options granted under the EMI Plans
will be adjusted so as to continue to subsist as options over the same number of Ordinary Shares.
The exercise of options granted under the EMI Plans may be satisfied with the issue of new B ordinary
shares or, following the adjustment to reflect the reclassification of B ordinary shares as Ordinary
Shares, will be able to be satisfied by the issue of new Ordinary Shares.
Under the EMI Plan, where a participant is dismissed summarily for gross misconduct, options will
lapse, unless the Board determines otherwise. Where the reason for the cessation is other than due to
gross misconduct, options will be exercisable for a period of 40 days (or 12 months in the case of
death). Any unexercised options will lapse on the fifth anniversary of the date on which they became
fully vested.
In respect of the EMI Plan No. 2, all options which are not yet fully vested vest and become exercisable
over time, as to 25% on the first anniversary of the vesting start date (as stipulated in the option
agreement) and then equally on a quarterly basis until becoming fully vested on the fourth anniversary
of the vesting start date (as stipulated in the option agreement). Options may only be exercised to the
extent vested as at the date of exercise.
Under the EMI Plan No. 2, in the event of a participant ceasing to be a director or employee of the
Group due to death, ill-heath or disability an option may be exercised to the extent vested for a period
of 40 days (or 12 months in the case of death). Where the cessation is for any other reason options
shall lapse unless the Board determines otherwise. Unexercised options shall lapse on the tenth
anniversary of grant.
183
Under both of the EMI Plans, the number of shares subject to options and/or the option exercise price
may be adjusted on a variation of share capital of the Company. The Board may amend the terms of
the EMI Plans at any time provided that no amendment to EMI Plan No. 2 to the advantage of
participants may be made without prior approval of the Company in general meeting (save where the
amendment is to obtain favourable tax, exchange control or regulatory treatment, or to benefit the
administration of the plan and/or to take account of changes in legislation). Benefits under the EMI
Plans are not pensionable.
9.1.4 Joint Share Ownership Plan (“JSOP”)
Joint Ownership Awards have been made to certain directors and employees of the Group and these
awards consist of a joint interest in the shares subject to the terms set out below (the “Joint
Ownership Awards”). Joint Ownership Awards have been granted in respect of B ordinary shares and
Ordinary Shares. The B ordinary shares and Ordinary Shares subject to the Joint Ownership Awards
are already in issue and are held by an employee benefit trust (the “Employee Benefit Trust”). As at
the Latest Practicable Date 6,012,900 B ordinary shares and 12,685,950 Ordinary Shares were in
issue subject to the Joint Ownership Awards. Awards in respect of 3,955,473 B ordinary shares have
vested and awards in respect of 598,428 Ordinary Shares have vested.
The B ordinary shares under the Joint Ownership Awards will be subject to the reclassification of B
ordinary shares as Ordinary Shares as further described above. Consequently, following Admission
these Joint Ownership Awards will continue on their existing terms over the same number of Ordinary
Shares.
Pursuant to the Joint Share Ownership Plan, participants subscribed for the jointly owned shares
subject to the Joint Ownership Award jointly with the Employee Benefit Trust. Under the terms on
which participants subscribed for the jointly owned shares, the participant’s interest in the jointly owned
shares entitles the participants to share in the proceeds of sale of the jointly owned shares up to the
aggregate of the participant’s subscription amount and the value in excess of a set hurdle.
Each participant was required to pay a subscription amount for the jointly owned shares equal to the
market value of the participant’s interest as determined by HMRC, and, in accordance with the terms of
the JSOP, such amount was left outstanding as a liability to the Company. Due to the differing
circumstances on the different dates on which participants subscribed for jointly owned shares, HMRC
determined market value on certain acquisition dates as being only a nominal sum, and on other
acquisition dates as being more significant.
As a preparatory step to Admission, the Company called all outstanding subscription amounts on the
jointly owned shares. In order to facilitate this, the Company has made a loan to every participant in the
Joint Share Ownership Plan whose subscription amount was valued by HMRC at more than a nominal
sum (which includes the Executive Directors, the Chairman and the Senior Managers). The amount of
each loan was the same as the amount of each such participant’s outstanding subscription amount,
and was immediately applied by the Company in full in paying up that amount. The aggregate amount
of the loans made to participants was £5,259,098.60, which remains an outstanding obligation in
favour of the Company. This is the same amount as the aggregate subscription amount for such
participants, which until paid up with the loan was also an outstanding obligation in favour of the
Company. The loans become due for repayment at the latest by the date on which the jointly owned
shares are disposed of. If, on the date on which jointly owned shares vest or on the first date thereafter
on which a disposal of those jointly owned shares would not be prohibited by law or regulation (or in
the event that the loan is required to be repaid while jointly owned shares are unvested), the value of
the participant’s interest in those jointly owned shares is less than the outstanding loan amount
attributable to those jointly owned shares, provided that vested shares are disposed of at (or without
delay on behalf of the participant as soon as reasonably possible following) that time and the proceeds
are applied in reducing the loan, the amount of the loan attributable to those jointly owned shares that
shall be repayable shall be limited to the value of the participant’s interest in those jointly owned shares
with any balance of the loan amount attributable to those jointly owned shares no longer being
repayable. Until the Joint Ownership Awards are fully vested, the Company will also make annual
payments to the participants the net amount of which will reimburse the participants for the annual
income tax charge that arises on such proportion of the outstanding loan amount as is attributable to
unvested jointly owned shares.
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The Joint Ownership Awards vest over time, as to 25% on the specified date established on grant and
then equally on a quarterly or monthly basis until becoming fully vested on the fourth anniversary of the
vesting start date, and certain Joint Ownership Awards are subject to additional vesting conditions.
Once vested, the participant can require the shares subject to the Joint Ownership Awards to be sold.
The participant will normally forfeit all or part of his unvested interest on a no-gain no-loss basis on
ceasing employment, subject to the reason for the cessation. To the extent not otherwise sold, the
Employee Benefit Trust can require all shares subject to Joint Ownership Awards to be sold on the
tenth anniversary of the date of award or, in respect of more recent awards, on the tenth anniversary of
the date of Admission.
Dividends payable on the jointly owned shares are split between the participant and the Employee
Benefit Trust, in proportion to the value of their respective interests at such time. Dividends will be
payable on jointly owned shares where the Company so determines, in the absence of which the
dividend is waived. The voting rights in respect of the Ordinary Shares subject to the Joint Ownership
Awards may be exercised only by the Employee Benefit Trust.
The hurdle may be adjusted on a variation of share capital of the Company or on a reorganisation or
reconstruction of the Company or the demerger of any member from the Group. The terms of Joint
Ownership Awards may be amended by agreement of the Employee Benefit Trust and the participant.
Benefits under the Joint Ownership Awards are not pensionable.
9.2 The New Employee Share Plans
The Board believes that it is important to attract, motivate and retain employees of the appropriate
calibre and to align their interests with those of shareholders in the Company. Accordingly, the New
Employee Share Plans have been adopted, some or all of which may be used by the Company from
time to time as appropriate.
The terms of the New Employee Share Plans are summarised below and were approved by a
shareholder written resolution passed on 17 March 2014.
9.2.1 The JUST EAT Performance Share Plan (the “PSP”)
Administration
Awards may be granted, and the PSP will be administered, by the Board or a duly authorised
committee of the Board. The current intention is that the PSP will be administered and awards granted
by the Remuneration Committee (and this will always be the case in respect of awards for Executive
Directors).
Eligibility
Awards may be granted to any of the employees of the Company or its subsidiaries, including the
Executive Directors.
Form of awards
Under the PSP, awards will take the form of either:
•
a conditional right to receive Shares which will be automatically transferred to the award
holder following vesting (a ‘‘Conditional Award’’);
•
a nil or nominal-cost option, exercisable by the award holder following vesting during a
permitted exercise period (extending not later than the tenth anniversary of the date of award)
(an ‘‘Option’’); or
•
an interest in Shares which will be held on behalf of the award holder until vesting (a
‘‘Forfeitable Share Award’’). The award holder will not be entitled to call for or otherwise deal
in the Shares subject to a Forfeitable Share Award prior to vesting.
185
Dividend equivalents
Award holders may receive an additional payment (or Shares of equivalent value) equal to the
dividends during the vesting period which would have been paid on the number of Shares that vest.
Individual limit
The maximum market value of the Shares over which an employee may be granted an award under
the PSP in any financial year shall not exceed an amount equal to 200% of the employee’s gross
annual basic salary at that time. In exceptional circumstances, this limit may be increased to 300% at
the discretion of the Remuneration Committee.
Performance conditions
The Remuneration Committee will determine the performance conditions which will apply to awards
and which will be measured, ordinarily, over a period of not less than three years. The Remuneration
Committee may specify a shorter period only where an award is granted in connection with the
recruitment of an eligible employee. There will be no provision for re-testing. The Remuneration
Committee may alter the performance conditions if events happen after the date of grant that cause
the Remuneration Committee to consider that any element of the performance condition is no longer a
fair measure of the Company’s performance, provided that the revised target is not considered to be
materially less challenging in the circumstances.
Vesting
Awards will normally only vest three years after the date of grant, while the award holder remains in
office or employment with the Group, and to the extent that relevant performance conditions have been
met. The Remuneration Committee may specify a shorter vesting period only where an award is
granted in connection with the recruitment of an eligible employee.
If the Remuneration Committee so determines, an award may be satisfied in whole or in part by a cash
payment as an alternative to the issue or transfer of Shares.
Leavers
An award will normally lapse where the award holder ceases to hold office or employment with the
Group. Awards will not lapse where the cessation of office or employment with the Group is due to
injury, disability, redundancy, retirement, the transfer of the award holder’s employment in connection
with a business sale, the company with which the award holder holds office or employment ceasing to
be a member of the Group, or any other reason if the Remuneration Committee so determines (a
‘‘Good Leaver’’).
Where an award holder ceases employment for a Good Leaver reason, the award will continue and
vest on its normal vesting date. However, the Remuneration Committee may determine that the award
will instead vest on or at any time following the date of cessation. On the death of a participant, an
award shall immediately vest. Where an award holder ceases employment for a Good Leaver reason
or by reason of death, an award in the form of an Option will be exercisable during a period of six
months from the date of cessation (or such longer period as the Remuneration Committee may permit)
or 12 months in the case of death.
Corporate actions
In the event of a change of control, awards will normally vest and Options may be exercised for a
period of six months. In the event of the passing of a resolution for the voluntary winding-up of the
Company, awards will vest and Options will be exercisable for a period of two months. In the event of a
demerger of a substantial part of the Group’s business, a special dividend or a similar event affecting
the value of the Shares to a material extent, awards may be adjusted as set out below or the
Remuneration Committee may allow awards to vest, in which case Options may be exercised for a
period of two months, or such longer period as the Remuneration Committee may permit. Where the
corporate action forms part of an internal re-organisation, unless the Remuneration Committee
determines otherwise, an award shall not vest, and instead will be rolled-over into an award over
shares in the new controlling company of equivalent value.
186
Extent of vesting
Awards will only vest (including for leavers or on a corporate action) to the extent that the relevant
performance conditions have been satisfied. Where an award vests prior to the normal vesting date,
the Remuneration Committee will assess performance using such information as it determines to be
appropriate.
Where, prior to the normal vesting date, an award holder ceases employment for a Good Leaver
reason or there is a corporate action, the number of Shares in respect of which an award vests will,
unless the Remuneration Committee determines otherwise, be pro-rated on the basis of the number of
whole months which have elapsed from grant to the date of cessation or the corporate action (as
applicable).
Joint ownership awards
As an alternative to granting an award under the PSP, the Company may structure the grant as a joint
ownership award in order to provide tax benefits to the employee. Joint ownership awards will have the
same vesting terms as awards granted under the PSP but will be structured in the same way as the
joint ownership awards which were granted by the Company prior to Admission, together with a right
for the employee to receive, for nil or nominal cost, the part interest held by the trustee. Joint
ownership awards will count towards the individual and overall plan limits for the PSP as outlined
above.
9.2.2 The JUST EAT Employee Share Option Scheme (the “ESOS”)
Administration
Options may be granted, and the ESOS will be administered, by the Board, or a duly authorised
committee of the Board. The current intention is that the ESOS will be administered and options
granted by the Remuneration Committee (and this will always be the case in respect of options granted
to Executive Directors, if any).
Eligibility
Options may be granted to any of the employees of the Company or its subsidiaries, including the
Executive Directors (although it is currently not anticipated that Executive Directors will participate in
the ESOS).
Form of options
Under the ESOS, options will take the form of either:
•
options to acquire Shares in the Company granted under Part A of the ESOS; or
•
options to acquire Shares in the Company granted under Part B of the ESOS, which are UK
tax-advantaged options governed by relevant statutory provisions (“Tax Advantaged
Options”).
Alternatively, the Company may make joint ownership awards, as set out below.
Exercise price
No consideration shall be payable for the grant of an Option.
The exercise price of an option will not be less than the greater of:
•
the middle-market quotation of a Share on the date of grant, or the dealing day immediately
preceding the date of grant, or averaged over the three dealing days immediately preceding
the date of grant (in either case, the dealing day(s) must not be earlier than the first day after
the Company makes an announcement of its final or interim results); and
•
in the case of options over unissued Shares, the nominal value of a Share.
187
Individual limits
The maximum market value of the Shares, measured at the date of grant, over which any employee
may be granted Tax-Advantaged Options, when including Tax-Advantaged Options which are currently
held by that employee, is £30,000.
The maximum market value of the Shares over which any employee may be granted options under the
ESOS (under either or both of Part A and Part B) in any financial year shall not exceed an amount
equal to 300% of the employee’s gross annual basic salary at that time. In exceptional circumstances,
this limit may be increased to 400% at the discretion of the Remuneration Committee.
Performance conditions
The Remuneration Committee will determine the performance conditions which will apply to options
and which will be measured, ordinarily, over a period of not less than three years. For eligible
employees other than Executive Directors, the Remuneration Committee may determine that
performance conditions need not apply over and above the inherent requirement for share price
growth. Where performance conditions apply there will be no provision for re-testing. The
Remuneration Committee may alter any performance conditions if events happen after the date of
grant that cause the Remuneration Committee to consider that any element of the performance
condition is no longer a fair measure of the Company’s performance, provided that the revised target is
not considered to be materially less challenging in the circumstances.
Exercise of options
Options will normally only vest and become exercisable three years after the date of grant, while the
option holder remains in office or employment with the Group, and to the extent that relevant
performance conditions have been met. Options will lapse not later than the tenth anniversary of the
date of grant.
If the Remuneration Committee so determines, Options granted under Part A may be satisfied in whole
or in part by a cash payment, or a transfer of shares without payment from the option holder,
equivalent in value to the gain which would be made by the option holder on exercise.
Leavers
Options will normally lapse where the option holder ceases to hold office or employment with the
Group. Options will not lapse where the cessation of office or employment with the Group is due to
death, injury, disability, redundancy, retirement, the transfer of the option holder’s employment in
connection with a business sale, the company with which the option holder holds office or employment
ceasing to be a member of the Group, or any other reason if the Remuneration Committee so
determines (a “Good Leaver”).
Where an option holder ceases employment for a Good Leaver reason:
•
a Tax-Advantaged Option will immediately vest and be capable of exercise for a period of six
months (or 12 months in the case of death); and
•
any other option will continue and become exercisable on its normal vesting date, although
the Remuneration Committee may determine that the option will instead vest and become
exercisable on or at any time following the date of cessation.
Once vested, options may be exercised by a Good Leaver for a period of six months (or such longer
period as the Remuneration Committee may permit).
On the death of an option holder, options shall immediately vest and may be exercised during a period
of 12 months.
Corporate actions
In the event of a change of control, options will normally vest and may be exercised for a period of six
months. In the event of the passing of a resolution for the voluntary winding-up of the Company,
options will vest and will be exercisable for a period of two months.
188
In the event of a demerger of a substantial part of the Group’s business, a special dividend or a similar
event affecting the value of the Shares to a material extent, options (other than Tax-Advantaged
Options) may be adjusted as set out below or the Remuneration Committee may allow options to vest
and be exercised for a period of two months, or such longer period as the Remuneration Committee
may permit.
Where the corporate action forms part of an internal re-organisation, unless the Remuneration
Committee determines otherwise, an option shall not vest, and instead will be rolled-over into an option
over shares in the new controlling company of equivalent value.
Extent of vesting
Options will only become exercisable (including for leavers or on a corporate action) to the extent that
any relevant performance conditions have been satisfied. Where an option becomes exercisable prior
to the normal vesting date, the Remuneration Committee will assess performance using such
information as it determines to be appropriate.
Where, prior to the normal vesting date, an option holder ceases employment for a Good Leaver
reason or there is a corporate action, the number of Shares in respect of which the option may be
exercised will, unless the Remuneration Committee determines otherwise, be pro-rated on the basis of
the number of whole months which have elapsed from grant to the date of cessation or the corporate
action (as applicable).
Joint ownership awards
As an alternative to granting options under Part A to an employee, the Company may structure the
grant as a joint ownership award in order to provide tax benefits to the employee. Joint ownership
awards will have the same vesting terms as options granted under Part A of the ESOS but will be
structured in the same way as the joint ownership awards which were granted by the Company prior to
Admission, details of which are set out at paragraph 9.1.4 of this Part XVI of the Prospectus. Joint
ownership awards will count towards the individual and overall plan limits for the ESOS as outlined
above.
9.2.3 The JUST EAT Sharesave Scheme (the “SAYE”)
The SAYE is a UK tax-advantaged all-employee Save As You Earn option plan governed by relevant
statutory provisions.
Administration
Options will be granted, and the SAYE will be administered, by the Board, or a duly authorised
committee of the Board.
Eligibility
The SAYE will be open to all employees of the Company, and any of its subsidiaries which the Board
selects for participation, who meet the eligibility criteria. All eligible employees who are chargeable to
income tax as a UK resident must be invited to participate.
Savings arrangements
Employees who apply for an option must enter into HMRC approved savings arrangements. Under
these arrangements, the employee will agree to make monthly savings contributions of a fixed amount
within statutory limits (up to a maximum, from 6 April 2014, of not more than £500). Shares may only
be acquired on the exercise of the option using the repayment of accrued savings and interest under
the savings arrangements. Such repayment may be taken as including any bonus (interest) payable, if
any, under the savings arrangements if the Board so decides.
189
Exercise Price
The price payable for each Share under option will be determined by the Board at grant provided that it
must not be less than 80 per cent of the market value of a Share at the time of grant.
Exercise of options
An option may not normally be exercised until the option holder has completed making contributions
under his savings arrangements (which will be either three or five years from the date of entering into
those savings arrangements) and then not more than six months thereafter.
Leavers
Options will normally lapse where the option holder ceases to hold office or employment with the
Group. Options will not lapse where the cessation of office or employment with the Group is due to
death, injury, disability, redundancy, retirement, the transfer of the option holder’s employment in
connection with a business sale, or the company with which the option holder holds office or
employment ceasing to be a member of the Group (a “Good Leaver”).
Where an option holder ceases employment for a Good Leaver reason, the option will be capable of
exercise, for a period of six months (or 12 months in the case of death), only to the extent of accrued
savings and interest, if any, to the date of exercise.
Corporate actions
Options may be exercised in the event of a change of control, a court sanctioning a compromise or
arrangement of the Company, or a winding-up of the Company. In such circumstances, options may be
exercised, for a period of up to six months, to the extent of accrued savings and interest, if any, to the
date of exercise.
In the event of a change of control of the Company, an acquiring company may offer a roll-over into an
option over shares in the acquiring company, subject to complying with the statutory requirements.
9.2.4 The JUST EAT Share Incentive Plan (the “SIP”)
The SIP is a UK tax-advantaged all-employee plan governed by relevant statutory provisions.
Administration
The SIP will be administered by the Board, or a duly authorised committee of the Board. Shares
acquired under the SIP are held within a UK trust required to be established by the relevant legislation.
Eligibility
The SIP will be open to all employees of the Company, and any of its subsidiaries which the Board
selects for participation, who meet the eligibility criteria. All eligible employees who are chargeable to
income tax as a UK resident must be invited to participate. Other employees may be invited to
participate.
Form of awards
The SIP provides for awards to be made in one or more of the following ways:
•
an award of Shares without payment from the employee (“Free Shares”) up to annual
statutory limits (£3,600 from 6 April 2014);
•
Shares purchased by employees from deductions made from their pre-tax salary
(“Partnership Shares”) up to annual statutory limits (£1,800 from 6 April 2014, or 10 per cent
of an employee’s salary for the year if less); and
•
an award of Shares without payment from the employee in proportion to the number of
Partnership Shares acquired by that employee (“Matching Shares”), not to exceed statutory
limits (currently two Matching Shares for each Partnership Share acquired).
190
Dividend Shares
If dividends are declared in respect of any Shares held in the SIP trust, the Board may allow or require
those dividends to be re-invested on behalf of the employee in the acquisition of further Shares
(“Dividend Shares”).
Holding period
Free Shares and Matching Shares awarded under the SIP must be held in the SIP trust for a holding
period specified by the Board of between three and five years. The holding period will end if the
participant ceases to be employed by the Company or an associated company. Dividend Shares must
remain in the SIP trust for a holding period of three years unless the participant ceases to be employed
by the Company or an associated company. Partnership Shares may also be subject to a holding
period if determined by the Board.
Restrictions on shares, including forfeiture
Shares in the SIP may be subject to such other restrictions as may be imposed by the Board, including
forfeiture restrictions, subject to the provisions of the applicable legislation.
Corporate actions
Participants in the SIP will have the same rights in the event of a change of control of the Company as
other shareholders. To the extent that shares in the acquiring company are received, subject to certain
statutory requirements, such shares may continue to be held in the SIP trust and receive tax benefits.
In other circumstances, shares will cease to be subject to the SIP although restrictions, including
forfeiture provisions, may apply.
International participants
The Company will also establish an International SIP, which will be based on the SIP but modified to
take account of overseas tax, exchange control and securities laws. Awards under the International
SIP will take the form of conditional rights to receive Shares or a cash equivalent amount on vesting.
Award holders may receive an additional payment (or Shares of equivalent value) equal to the
dividends during the vesting period which would have been paid on the number of Shares that vest.
Awards under the International SIP will be subject to the same individual limits on participation as
under the SIP and will count towards the overall plan limit in the SIP (as described below).
Operation of the SIP and International SIP upon Admission
In connection with Admission, eligible employees in the UK and in specified other countries with at
least six months’ qualifying service at Admission will each receive an award of Free Shares. The
number of Free Shares awarded will be dependent on the length of qualifying service, with employees
who have between six and twelve months’ qualifying service receiving £500 worth of Free Shares,
rising to a maximum of £3,000 worth of Free Shares for employees who have qualifying service of
three years or more. The number of Shares awarded will be determined at the IPO offer price.
Employees will be required to leave the Free Shares in the SIP trust during a holding period of three
years.
Where an employee ceases employment with the Group prior to the end of the holding period, to the
extent the Free Shares are not forfeit (as set out below) a restriction on sale will continue to apply,
provided that where an employee leaves in circumstances where a tax charge arises sufficient of the
Free Shares may be sold on behalf of the employee to fund the tax liability with the net number of
Shares remaining subject to the restriction on sale.
The Free Shares will also be subject to a forfeiture provision whereby employees will lose all or a
proportion of their Free Shares if they cease to hold office or employment with the Group within three
years, save where the reason for cessation is death, injury, disability, redundancy, retirement, the
transfer of the participant’s employment in connection with a business sale, or the company with which
191
the participant holds office or employment ceasing to be a member of the Group. Where the cessation
occurs within one year, all of the Free Shares will be forfeit; where the cessation occurs within two
years, 50% of the Free Shares will be forfeit; and where the cessation occurs within three years 25% of
the Free Shares will be forfeit.
9.2.5 Provisions common to more than one of the New Employee Share Plans
Timing of grant of awards
Options and awards under the PSP and ESOS may, save in exceptional circumstances, only be
granted and, in relation to the SAYE, invitations for options made, within a period of 42 days following
the date of announcement by the Company of its interim or final results (or as soon as practicable
thereafter if the Company is restricted from being able to grant options or awards, or make invitations,
during such period). SAYE invitations may also be made following the publication of a new prospectus
in relation to certified SAYE savings arrangements. Options and awards may be granted within 42 days
of Admission.
Options and awards under the PSP and ESOS may not be granted more than ten years after
Admission.
Non-Transferable and Non-Pensionable
Options and awards are non-transferable, save to personal representatives following death, and do not
form part of pensionable earnings.
Plan Limits
Shares may be newly issued, transferred from treasury or market purchased for the purposes of the
New Employee Share Plans.
The number of Shares subject to outstanding options or awards granted within the previous 10 years
and the number of Shares issued for the purpose of options and awards granted within the previous
10 years shall not exceed 10% of the Company’s ordinary share capital in issue immediately prior to
the proposed date of grant under all employees’ share schemes adopted by the Company.
The number of Shares subject to outstanding options or awards granted within the previous 10 years
and the number of Shares issued for the purpose of options and awards granted within the previous
10 years shall not exceed 5% of the Company’s ordinary share capital in issue immediately prior to the
proposed date of grant under all discretionary employees’ share schemes adopted by the Company.
These limits do not include rights to Shares which have been released, lapsed or otherwise become
incapable of exercise or vesting, or any option or award granted under any of the Company’s
employees’ share schemes prior to Admission (or, under the SIP or International SIP, within 14 days of
Admission).
Treasury shares will count as new issue shares for the purpose of these limits for so long as
institutional investor bodies consider that they should be so counted.
Variation of capital
The number of Shares subject to options and awards may be adjusted, in such manner as the Board or
Remuneration Committee, as applicable may determine, following any variation of share capital of the
Company or, except for tax-advantaged options, a demerger of a substantial part of the Group’s
business, a special dividend or a similar event affecting the value of Shares to a material extent.
Alterations
The Board may amend the rules of the New Employee Share Plans as it considers appropriate, subject
to any relevant legislation, provided that no modification may be made which confers any additional
advantage on participants relating to eligibility, plan limits, the basis of individual entitlement, the price
192
payable for the acquisition of Shares and the provisions for the adjustment of options and awards
without prior shareholder approval, except in relation to performance conditions or minor amendments
to benefit the administration of the New Employee Share Plans, to take account of a change in
legislation, or to obtain or maintain favourable tax, exchange control or regulatory treatment for
participants or the Company (or other Group companies).
Clawback
The Remuneration Committee may apply clawback (other than to tax-advantaged options or awards)
where at any time before or within three years of vesting it determines that the financial results of the
Company were misstated, an error was made in any calculation or in assessing performance, which
resulted in the number of Shares in respect of which the option or award was granted or vested being
more than it should have been. The Remuneration Committee may also apply a claw-back where the
option or award holder has been dismissed for misconduct.
A clawback may be satisfied in a number of ways, including by reducing the amount of any future
bonus, by reducing the vesting of any subsisting or future options or awards (other than taxadvantaged options or awards), by reducing the number of Shares under any vested but unexercised
option and/or by either one or both of a requirement to make a cash payment or transfer of shares to
the Company.
The clawback provisions will not apply following the occurrence of a takeover or similar corporate
event.
Overseas plans
Each of the New Employee Share Plans contains provisions which permit the Board to establish further
plans for the benefit of overseas employees based on the relevant New Employee Share Plan but
modified as necessary or desirable to take account of overseas tax, exchange control or securities
laws. Any new Shares issued under such plans would count towards the individual and overall plan
limits outlined above.
9.2.6 Employee Benefit Trust (the “EBT”)
The Company may use its existing employee benefit trust, or may establish a new employee benefit
trust, to operate in conjunction with the New Employee Share Plans and otherwise to benefit
employees and former employees of the Company and its subsidiaries.
The Company and its subsidiaries may fund the EBT by loan or gift to acquire Shares by market
purchase, by subscription or from treasury. Any Shares issued to the EBT (where the trust does not
acquire Shares by market purchase) will be treated as counting against the plan limits contained in the
rules of the New Employee Share Plans.
The EBT is, or will be, constituted by a trust deed between the Company and an offshore independent
professional trustee. The power to appoint and remove the trustee rests with the Company. The EBT
will not, without prior shareholder approval, be able to make an acquisition of Shares where it would
then hold more than 5% of the Company’s issued share capital from time to time.
10. PENSIONS
In April 2014 the Group began to make contributions to the personal pension plans of its UK staff
through a defined contribution company personal pension scheme which is administered by Aviva.
Employer contributions to the scheme are a percentage of salary.
In addition, the Group makes defined contributions to the pension arrangements of certain Group
employees outside the UK.
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11. SELLING SHAREHOLDERS
As at the date of this document, the Selling Shareholders comprise of the SM Trust, Index Ventures,
Vitruvian Partners, Redpoint Ventures and Greylock IL (each as defined below; the SM Trust, Index
Ventures, Vitruvian Partners, Redpoint Ventures and Greylock IL are together referred to as the “Major
Selling Shareholders”) as well as Appleby Trust (Jersey Trust) Limited; Carlos Morgado; Clare
Morgado; David Buttress; Gemma Buttress; Greylock I LP; Index Ventures Growth I (Jersey) LP; Index
Ventures Growth I Parallel Entrepeneur Fund (Jersey), LP; Index Ventures V (Jersey) LP; Index
Ventures V Parallel Entrepreneur Fund (Jersey), LP; Klaus Nyengaard; Mathew Braddy; Michelle
Braddy; Michael Wroe; Rachel Wroe; Munch S.à r.l.; Rasmus Wolff; Redpoint Omega, LP; Redpoint
Omega Associates LLC; the SM Trust (STM Fidecs Trust Company Limited is the registered holder);
and Yucca (Jersey) SLP. The table below sets out the interests of each Selling Shareholder
immediately prior to and immediately following the Offer:
Selling Shareholder(1)(2)
STM Fidecs Trust
Company Limited(5) . . . . .
Index Ventures V (Jersey),
LP . . . . . . . . . . . . . . . . . . .
Index Ventures V Parallel
Entrepreneur Fund
(Jersey), LP . . . . . . . . . . .
Yucca Partners LP Jersey
Branch . . . . . . . . . . . . . . .
Index Ventures Growth I
(Jersey), LP . . . . . . . . . . .
Index Ventures Growth I
Parallel Entrepreneur
Fund (Jersey), LP . . . . . .
Munch S.à r.l . . . . . . . . . . . .
Redpoint Omega, LP . . . . .
Redpoint Associates
LLC . . . . . . . . . . . . . . . . . .
Greylock I LP . . . . . . . . . . . .
David Buttress(6) . . . . . . . . .
Gemma Buttress(6) . . . . . . .
Michael Wroe(6) . . . . . . . . . .
Rachel Wroe(6) . . . . . . . . . .
Carlos Morgado(7) . . . . . . . .
Clare Morgado(7) . . . . . . . . .
Mathew Braddy(7) . . . . . . . .
Michelle Braddy(7) . . . . . . . .
Klaus Nyengaard(8) . . . . . . .
Rasmus Wolff(8) . . . . . . . . . .
Appleby Trust (Jersey
Trust) Limited . . . . . . . . .
Ordinary Shares
owned prior
to the Offer
No.
%(3)
Existing
Ordinary
Shares to be
sold in the
Offer
No.
Ordinary
Shares
Ordinary
owned after
Shares to be
the Offer
sold if the
assuming no
Overexercise of
allotment
the OverOption is
allotment
exercised in
Option
full
No.
%(4)
No.
Ordinary
Shares
owned after
the Offer
if the Overallotment
Option is
exercised
in full
No.
%(4)
168,090,552 32.0 33,618,110
134,472,442 23.9 37,486,226 130,604,326 23.2
112,897,395 21.5 22,579,479
90,317,916 16.0 25,177,489 87,719,906 15.6
910,629 0.2
182,125
728,504 0.1
203,080
707,549 0.1
1,603,611 0.3
320,722
1,282,889 0.2
357,624
1,245,987 0.2
31,457,727 6.0
6,291,545
25,166,182 4.5
7,015,453 24,442,274 4.3
1,097,496 0.2
219,499
74,193,165 14.1 12,612,838
41,360,058 7.9
8,272,011
877,997 0.2
244,754
852,742 0.2
61,580,327 10.9 14,064,077 60,129,088 10.7
33,088,047 5.9
9,223,792 32,136,266 5.7
1,169,559
29,749,923
5,002,875
4,950
2,789,656
19,289
1,262,862
4,950
1,043,811
4,950
9,193,905
1,795,905
935,648
23,799,939
2,216,511
—
1,107,945
—
13,905
—
13,775
—
8,274,514
1,592,014
0.2
5.7
1.0
0.0
0.5
0.0
0.2
0.0
0.2
0.0
1.8
0.3
233,911
5,949,984
2,786,364
4,950
1,681,711
19,289
1,248,957
4,950
1,030,036
4,950
919,391
203,891
18,698,850 3.6 1,856,250(9)
Total . . . . . . . . . . . . . . . . . . 502,352,118
0.2
4.2
0.4
—
0.2
—
0.0
—
0.0
—
1.5
0.3
260,824
908,735 0.2
6,634,592 23,115,331 4.1
2,786,364
2,216,511 0.4
4,950
— —
1,681,711
1,107,945 0.2
19,289
— —
1,248,957
13,905 0.0
4,950
— —
1,030,036
13,775 0.0
4,950
— —
919,391
8,274,514 1.5
203,891
1,592,014 0.3
16,842,600 3.0
1,856,250 16,842,600 3.0
100,040,963 402,311,155(10)
110,428,650 391,923,468
(1) The business address of each Selling Shareholder is c/o JUST EAT plc, Masters House, 107 Hammersmith Road, London,
W14 0QH.
(2) The above table assumes that the share capital re-organisation (including the issue and allotment of shares to Torch
Partners Corporate Finance Limited) described in paragraph 4.2 of this Part XVI (Additional Information) has taken place
and does not include interests in the Ordinary Shares under any option or award arrangement, except where specified
otherwise.
(3) Percentage calculated prior to the issue of 38,461,538 New Ordinary Shares.
(4) Percentage calculated after taking into account the issue of 38,461,538 New Ordinary Shares.
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(5) Prior to the Offer, STM Fidecs Trust Company Limited holds the legal title to 168,090,552 Ordinary Shares for which SM
Trust is the beneficial owner. In addition, STM Fidecs Trust Company Limited holds the legal title to a further 6,261,678
Ordinary Shares for which the beneficial owner is a third party pursuant to a trust arrangement, but none of such 6,261,678
Ordinary Shares are being sold in connection with the Offer.
(6) David Buttress and Michael Wroe are the Executive Directors of the Company and Gemma Buttress and Rachel Wroe are
their respective spouses.
(7) Carlos Morgado and Mathew Braddy are Senior Managers of the Company and Clare Morgado and Michelle Braddy are
their respective spouses.
(8) Klaus Nyengaard is a former director of the Company and Rasmus Wolff is a former employee of the Group.
(9) Appleby Trust (Jersey Trust) Limited holds the legal title to 1,856,250 Existing Ordinary Shares being sold in connection with
the Offer, of which, under the Joint Ownership Awards, John Hughes has a beneficial interest in 253,125 Ordinary Shares,
Sue Hughes has a beneficial interest in 253,125 Ordinary Shares, Adrian Blair has a beneficial interest in 534,767 Ordinary
Shares, Aurore Blair (the spouse of Adrian Blair) has a beneficial interest in 5,233 Ordinary Shares and Daniel Read has a
beneficial interest in 810,000 Ordinary Shares.
(10) As described in paragraph 9.2.4 of this Part XVI (Additional Information), the Company intends to make an award of Free
Shares under the SIP in connection with Admission. The maximum value of such an award, if all of the Free Shares are
taken up by eligible employees, will be £723,000. The Directors and Senior Managers have declined the award under the
SIP in connection with Admission, and so will not receive any Free Shares. The number of Free Shares subject to the award
will be calculated as the award value divided by the Offer Price, and the Free Shares subject to the award are expected to
be issued around the date of Admission.
Each of the Major Selling Shareholders is described below:
The Sara Marron Discretionary Settlement
The Sara Marron Discretionary Settlement (the “SM Trust”) is a discretionary trust set up by way of a
trust deed executed in Gibraltar on 8 July 1994. The purpose of the SM Trust is wealth management,
property holding and investments. The SM Trust has no named beneficiaries.
The trustee of the SM Trust is STM Fidecs Trust Company Limited (originally called Fidecs Trust
Company Limited and subsequently known as BDO Fidecs Trust Company Limited), a company
incorporated as a limited company in Gibraltar on 5 June 1990 which carries on business as a trust
manager providing trustee services. Its registered office is Montagu Pavilion, 8-10 Queensway, Gibraltar.
The settlor of the SM Trust was Christen Michael Hoegsberg (the “Settlor”) who, in 1994, settled
£2,000.00 into the SM Trust. Subsequent activities of the SM Trust have depended upon the success
of the underlying companies in which the SM Trust has invested. Pursuant to a letter of wishes dated
8 July 1994, the Settlor expressed his desire that in the exercise of their discretion in the administration
of the SM Trust, and the accumulation and distribution of its funds, the Trustee consider the wishes of
Mr Bo Bendtsen, a Danish entrepreneur, as expressed from time to time.
The SM Trust holds its interests in the Company through STM Fidecs Trust Company Limited. The SM
Trust’s Board appointee is Frederic Coorevits, who guides and advises STM Fidecs Trust Company
Limited as Trustee of the SM Trust, which is ultimately responsible for the investment decisions and
management of the whole portfolio of the SM Trust.
Index Ventures
Index Ventures (“Index Ventures”) is a venture capital advisory group specialising in investments in
early to growth stage companies. Index Ventures has advised on investments in numerous companies,
mainly in Europe and the United States, across a wide range of technology, healthcare and softwarebased sectors. Index Ventures was founded in 1996 and has offices in London, Geneva, San
Francisco and Jersey. Index Ventures advises various investment funds including those which hold
interests in the Company: namely Index Ventures Growth I (Jersey), LP; Index Ventures Growth I
Parallel Entrepreneur Fund (Jersey), LP; Index Ventures V (Jersey), LP; Index Ventures V Parallel
Entrepreneur Fund (Jersey), LP; and Yucca (Jersey) SLP.
Benjamin Holmes, who is a Partner at Index Ventures, the UK advisory firm, represents these Index
funds on the board of the Company. Benjamin Holmes focuses on investments in e-commerce, games
and social media companies at Index Ventures.
Vitruvian Partners
Vitruvian Partners LLP (“Vitruvian Partners”) is an independent private equity firm that specialises in
middle-market buyouts, growth buyouts and growth capital investments in Northern Europe. Founded
in 2006, the firm recently raised its second fund, a £1 billion vehicle that is continuing Vitruvian
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Partners’ strategy of making both minority and majority investments in “dynamic situations”
— businesses that operate in industries characterised by growth and change. These industries include
information technology, media, telecoms, financial services, business services and healthcare. Its
Board appointee is Michael Risman, who is a Managing Partner and Founder of Vitruvian Partners.
Vitruvian Partners was incorporated as a limited liability partnership in England and Wales under
registration number OC319894 and has its registered address at 105 Wigmore Street, London W1U
1QY.
Vitruvian Partners holds its interests in the Company through Munch S.à r.l.
Redpoint Ventures
Redpoint Ventures (“Redpoint”) is a growth equity and venture capital firm investing globally in the
technology sector across the United States, Israel, Brazil, China and European developed markets.
Redpoint has invested in over 380 companies and generally seeks to be a lead or co-lead investor in
its portfolio companies.
Redpoint was founded in 1999 and has $3.4 billion under management. Redpoint is based in Menlo
Park, California, with additional offices in Los Angeles, Beijing and Shanghai.
Redpoint holds its interests in the Company through Redpoint Omega, LP and Redpoint Omega
Associates LLC.
Greylock IL
Greylock I LP (“Greylock IL”) is a venture capital firm investing in all areas of technology. Greylock IL
focuses on investments in Europe and Israel and is an affiliate fund of Greylock Partners, a US venture
capital firm. Greylock IL generally prefers to oversee its investments by way of a position on the board
of directors of its portfolio companies. Greylock IL’s Board appointee for the Company is Laurel
Bowden, whose areas of focus include software, internet and mobile, and Europe as a key market.
12. SIGNIFICANT SHAREHOLDERS
As at the Latest Practicable Date, insofar as is known to the Company, the following persons had an
interest which represents 3% or more of the voting share capital of the Company (assuming that the
share capital re-organisation described in paragraph 4.2 of this Part XVI (Additional Information) has
taken place and taking into account the number of Existing Ordinary Shares to be sold, and the
number of New Ordinary Shares to be issued, in connection with the Offer and assuming that the Overallotment Option has not been exercised):
Number
of Ordinary
Shares
Name of Shareholder
SM Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vitruvian Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redpoint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Greylock IL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
134,472,442
118,373,488
61,580,327
34,023,695
23,799,939
Percentage
of issued
share
capital
23.9%
21.0%
10.9%
6.0%
4.2%
Save as disclosed in this paragraph 12, the Directors are not aware of any interest which will represent
an interest in the Company’s share capital or voting rights which is notifiable under the Disclosure and
Transparency Rules following the transaction becoming effective and Admission occurring.
So far as the Company is aware, on Admission, no person or persons, directly or indirectly, jointly or
severally, will exercise or could exercise control over the Company.
There are no differences between the voting rights enjoyed by the shareholders described in this
paragraph 12 and those enjoyed by any other holder of the Company’s Ordinary Shares.
13. MANDATORY BIDS AND COMPULSORY ACQUISITION
Upon Admission, the Company is subject to the City Code and therefore shareholders are entitled to
the protection afforded by the City Code.
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13.1 Mandatory bids
Under Rule 9 of the City Code (i) when a person acquires an interest in shares which (taken together
with the shares in which he and persons acting in concert with him are interested) carry 30% or more
of the voting rights of a company subject to the City Code; or (ii) where a person who, together with
persons acting in concert with him is interested in shares which in the aggregate carry not less than
30% of the voting rights of a company, but does not hold shares carrying more than 50% of the voting
rights of the company subject to the City Code, and such person, or any persons acting in concert with
him, acquires an interest in any other shares which increases the percentage of the shares carrying
voting rights in which he is interested, then in either case, that person together with the person acting
in concert with him, is normally required to extend offers in cash, at the highest price paid by him (or
any persons acting in concert with him) for shares for in the company within the preceding twelve
months, to the holders of any class of equity share capital of that company whether voting or nonvoting and also to the holders of any other transferable securities carrying voting rights.
13.2 Squeeze-out
Under the Companies Act, if a “takeover offer” (as defined in section 974 of the Act) is made for a
company’s shares and the offeror were to acquire or unconditionally contract to acquire, not less than
90% in value of the shares to which the offer relates and not less than 90% of the voting rights
attached to those shares, within three months of the last day on which its offer can be accepted, it
could acquire compulsorily the remaining 10%. It would do so by sending a notice to outstanding
shareholders telling them that it will acquire compulsorily their shares to which the offer relates and
then, six weeks later, it would execute a transfer of the outstanding shares under the takeover offer in
its favour and pay the consideration to the company, which would hold the consideration on trust for
outstanding shareholders. The consideration offered to the shareholders whose shares are acquired
compulsorily under the Companies Act must, in general, be the same as the consideration that was
available under the takeover offer.
13.3 Sell-out
The Companies Act also gives minority shareholders a right to be bought out in certain circumstances
by an offeror who has made a takeover offer. If a takeover offer related to all the shares and at any
time before the end of the period within which the offer could be accepted the offeror held or had
agreed to acquire not less than 90% of the shares to which the offer relates, any holder of shares to
which the offer related who had not accepted the offer could by a written communication to the offeror
require it to acquire those shares. The offeror is required to give any shareholder notice of his right to
be bought out within one month of that right arising. The offeror may impose a time limit on the rights of
the minority shareholders to be bought out, but that period cannot end less than three months after the
end of the acceptance period. If a shareholder exercises his or her rights, the offeror is bound to
acquire those shares, on the terms of the offer or on such other terms as may be agreed.
14. WORKING CAPITAL
The Company is of the opinion that, taking into account the net proceeds receivable by the Company
from the Offer, the working capital available to the Group is sufficient for its present requirements, that
is for at least the next 12 months from the date of publication of this document.
15. DIVIDEND POLICY
The Company intends to retain any earnings to expand the growth and development of its business
and, therefore, does not anticipate paying dividends in the foreseeable future.
16. NO SIGNIFICANT CHANGE
There has been no significant change in the financial or trading position of the Group since
31 December 2013, being the date to which the last audited financial information has been published
(see Part XII (Historical Financial Information)).
17. RELATED PARTY TRANSACTIONS
Save as disclosed in the Historical Financial Information, there were no related party transactions
entered into by the Company during the years ended 31 December 2013, 2012 and 2011.
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For the period from 1 January 2014 to the Latest Practicable Date, the Company has entered into the
following related party transactions:
17.1 Joint Share Ownership Plan
In connection with the Joint Share Ownership Plan and in common with other participants in the plan,
John Hughes, David Buttress, Michael Wroe, Adrian Blair and Carlos Morgado each participated in the
associated loan arrangements on the same terms as other participants, and on the Latest Practicable
Date had an outstanding balance of £544,447.01, £1,658,842.42, £845,534.85, £460,469.34 and
£452,835.00 respectively. The terms of the Joint Share Ownership Plan and associated loan
arrangements are described in paragraph 9.1.4 of this Part XVI (Additional Information).
18. MATERIAL CONTRACTS
The following is a summary of each material contract, other than contracts entered into in the ordinary
course of business, to which the Company or any member of the Group is a party, for the two years
immediately preceding the date of publication of this document and a summary of any other contract
(not being a contract entered into in the ordinary course of business) entered into by any member of
the Group which contains any provision under which any member of the Group has any obligation or
entitlement which is material to the Group as at the date of this document:
18.1 Subscription & shareholders’ agreement relating to the Company
Subscription & shareholders’ agreement
For the purpose of acquiring, approximately, an additional £36 million funding, the Company entered
into a subscription and shareholders’ agreement dated 27 April 2012 (the “Subscription &
Shareholders’ Agreement”) with the SM Trust, the series C investors, who include, inter alia,
Vitruvian Partners, Greylock IL, Index Ventures and Redpoint, the series B investors, who include, inter
alia, Greylock IL, Index Ventures and Redpoint, and the series A investors, who are entities controlled
by Index Ventures. On 27 April 2012, the Company also entered into a deed of termination with the SM
Trust, the series B investors and the series A investors to terminate an existing subscription and
shareholders’ agreement dated 18 March 2011. Pursuant to the terms of the Subscription &
Shareholders’ Agreement, the SM Trust, the series B investors and the series A investors agreed to
waive or procure the waiver of all pre-emption, tag along or co-sale rights in connection with a sale and
purchase agreement entered into on 27 April 2012 by Vitruvian Partners, as purchaser, and certain B
ordinary shareholders, pursuant to which 191,655 B ordinary shares were sold to Vitruvian Partners
and converted by redesignation into series C shares. Upon entering the Subscription & Shareholders’
Agreement, the Company gave certain warranties in favour of the series C investors in relation to, inter
alia, the Company and its subsidiaries, assets, accounts, history, taxation, litigation, employment
arrangements, compliance with laws, borrowings, capital commitments, insurance and key employees.
The aggregate liability of the Company for any claims brought in connection with such warranties is
limited to approximately £36 million and such claims must be brought by no later than 12 months after
delivery to the series C investors of the consolidated accounts of the Company for the financial year
ending 31 December 2012 having been approved by the Directors.
Pursuant to the terms of the Subscription & Shareholders’ Agreement, each of Index Ventures,
Vitruvian Partners, Greylock IL and the SM Trust have the right to appoint and maintain in office such
person as that investor may from time to time nominate as a Director. Further details about the
Directors of the Company are set out in paragraph 1 of Part VIII (Directors, Senior Managers and
Corporate Governance). Redpoint is entitled to appoint a representative to attend board meetings of
the Company as an observer.
The Subscription & Shareholders’ Agreement contains certain matters that require the consent of one
or more of the Major Selling Shareholders to become effective, including the variation of rights
attaching to different classes of shares in the Company, the amendment of the Old Articles, the
payment of dividends, any material change to the nature of the Company’s business or the jurisdiction
in which it is managed and controlled or the negotiation or permission for the disposal of shares in the
Company. In addition, any increase in the current number of shares of any of the respective share
classes of the Company shall require a simple majority of each of the series C investors, the series B
investors, the series A investors, the Company’s shareholders as a whole and the approval of the
198
Chairman of the Company. Certain other matters, including without limitation, adopting an operating or
capital budget, capital expenditure, subscriptions, acquisitions or disposals exceeding a threshold of
£0.25 million beyond that set in the approved budget, incurring indebtedness beyond £0.5 million, entry
into any joint venture, related party transaction or transaction not conducted at arm’s length and
appointments to the board of the Company, require the consent of a majority of the Directors, including
at least two of the nominated representatives of Vitruvian Partners, Greylock IL and Index Ventures.
The parties to the Subscription & Shareholders’ Agreement have agreed that the agreement will
terminate upon Admission.
18.2 Investment in Eat.ch GmbH
Series A investment and subscription agreement
On 22 March 2011, Just-Eat Holding Limited (“Just Eat Holding”) entered into, among other
agreements, an investment and subscription agreement pursuant to which it subscribed for a 33%
shareholding in Eat.ch GmbH (“Eat.ch”), a Swiss incorporated limited liability company. The core
business of Eat.ch is the provision of online and offline marketing and ordering services to takeaway
restaurants. The terms of the investment and subscription agreement required the Group to contribute
additional funding to increase its shareholding to 50%. The combined consideration paid by the Group
to acquire the 50% shareholding in Eat.ch was CHF 600,000. Just Eat Holding has subsequently
increased its shareholding in Eat.ch to 64% through the capitalisation of loans and participation in
capital increases.
Series A shareholders’ agreement
On 22 March 2011, Just Eat Holding entered into a shareholders’ agreement with Eat.ch and the
shareholders thereof. The terms of the shareholders’ agreement gives Just Eat Holding the right to be
represented by two managing directors on a management board that comprises a maximum of four
managing directors. Since 1 January 2013, Just Eat Holding has been entitled to elect the chairman of
the management board who, since that date, has had the casting vote on board decisions. All
transactions and agreements between Eat.ch and its shareholders (or affiliates or related persons of
such shareholders) must be on arm’s-length terms. The shareholders’ agreement grants rights of first
refusal, tag-along rights and drag-along rights to the shareholders.
The shareholders agreement contains arrangements for Eat.ch to obtain additional funding from its
shareholders. Pursuant to the terms of the shareholders’ agreement, Just Eat Holding has an exclusive
and irrevocable option, exercisable between 1 January 2015 and 30 June 2015, to acquire the
remaining share capital of Eat.ch that it does not own at fair market value, as determined by an
independent valuation expert.
18.3 Alloresto joint venture
Stock purchase agreement
On 22 December 2011, Just Eat Holding Limited (“Just Eat Holding”), a wholly-owned subsidiary of
the Company, entered into a stock purchase agreement to acquire a 50% shareholding in FBA Invest
SaS (“FBA Invest”), a company established in France, of which Eat On Line SaS (“Eat On Line”) is a
wholly owned subsidiary. The cash consideration paid by Just Eat Holding for the shares in FBA Invest
was £6.6 million.
Under the terms of the stock purchase agreement, Just Eat Holding has an option to purchase
between 30% and 50% of the share capital of FBA Invest, which is exercisable between 1 July 2014
and 30 July 2014. The total number of shares which Just Eat Holding may acquire under the option will
be determined by the vendors of the shares and will be offered at a minimum price of €23 million
multiplied by the percentage shareholding of FBA Invest being acquired pursuant to the option (the
“Initial Payment”). Following approval of FBA Invest’s 2014 audited financial statements, Just Eat
Holding may be liable to pay an additional amount to the vendors, in respect of such option exercise,
being an agreed multiple of the profit before tax multiplied by the percentage shareholding being
purchased, less the Initial Payment. The value of the multiple of the profit before tax for 2014 is capped
at €100 million. In the event that there is a force majeure event continuing during the time at which Just
199
Eat Holding may give notice to exercise the option, then Just Eat Holding may postpone giving notice
of its exercise of the option until it so chooses, or until the expiry of one year from when the vendors
declare the end of such force majeure event. In any such interim period, Just Eat Holding, the vendors
may agree on a reduced price for the acquisition of the relevant shareholder percentage pursuant to
the exercise of the option. In the event that Just Eat Holding does not exercise this option, then the
vendors shall have the right to exercise an option pursuant to which they may purchase between 20%
and 50% of FBA Invest from Just Eat Holding for the percentage of shareholding in FBA Invest being
purchased multiplied by €6.93 million. In the event that Just Eat Holding does exercise its option in July
2014 but does not purchase all of the shares in FBA Invest held by the vendors, then Just Eat Holding
may exercise a further option to purchase all of the remaining shares in FBA Invest held by the
vendors which is exercisable between 1 June 2017 and 30 June 2017 and the price of which will be
determined by the number of shares being purchased by Just Eat Holding pursuant to the exercise of
the option, multiplied by the profit before tax shown in the 2017 interim audited financial statements
multiplied by the same 2014 multiple and divided by the total number of issued shares in FBA Invest.
Just Eat Holding may be liable to make an additional payment to the vendors after the exercise of such
option of an amount equal to the difference between a multiple of the agreed profit before tax in the
2017 interim audited financial statements and a multiple of the agreed profit before tax in the 2017
financial audited accounts, increased by 50% and multiplied by the percentage shareholding in FBA
Invest being acquired by Just Eat Holding pursuant to the exercise of such further option.
Shareholders’ agreement
Just Eat Holding also entered into a shareholders’ agreement with FBA Invest, Eat On Line, and the
other shareholders of FBA Invest dated 22 December 2011 which sets out the rights and obligations of
the shareholders of FBA Invest and terminates on the tenth anniversary of the date of the agreement.
Pursuant to the terms of the shareholders’ agreement, there are certain reserved matters listed in the
shareholders’ agreement for which the parties undertake to use their respective best efforts to ensure a
two-third majority board approval is achieved. In circumstances where such majority board approval is
not obtained, a deadlock notice may be served which may lead to a binding mediation.
Just Eat Holding and, together, the other shareholders, have each granted the other pre-emptive rights
in respect of the transfer of all or part of their shares in FBA Invest and right of first refusal over the
issue of any new shares or securities in FBA Invest. Under the terms of the agreement, certain
restrictions apply on the transfer of shares in FBA Invest, including tag-along rights and drag-along
rights.
Whilst the other shareholders remain shareholders of FBA Invest they may be entitled to receive
certain bonus and dividends, including an exit dividend which Just Eat Holding undertakes to vote for
and approve in the event Just Eat Holding exercises its call option in July 2014, in accordance with the
mechanisms set out in the shareholders’ agreement. The bonus and dividend payments, including an
exit dividend, will be payable to the other shareholders according to their respective shareholdings and
subject to a certain level of net cash remaining within Eat On Line.
18.4 Disposal of holding in OnlinePizza Norden
Share purchase agreement
On 23 March 2012, Just Eat Holding entered into a share purchase agreement with Delivery Hero
Holding GmbH, a company incorporated in Germany, for the sale of Just Eat Holding’s shares
representing 18.56% of the entire issued and allotted share capital of OnlinePizza Norden AB
(“OnlinePizza”), a company incorporated in Sweden which provides an online food ordering service for
takeaway restaurants and consumers across Sweden. The total consideration received by Just Eat
Holding for the sale of the whole of its shareholding in OnlinePizza was approximately £6.69 million.
Just Eat Holding gave certain customary warranties to Delivery Hero at the time of the disposal and,
subject to certain exceptions, the period during which Delivery Hero may bring a claim under the
warranties has expired.
18.5 Acquisition of SinDelantal
Share purchase and sale agreement
On 19 September 2012, Just Eat Spain, S.L. (“Just Eat Spain”), as purchaser, and the Company
entered into, inter alia, a share purchase and sale agreement to acquire 100% of the issued share
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capital of SinDelantal Internet, S.L. (“SinDelantal”), a company incorporated in Spain, from its selling
shareholders. The aggregate consideration paid by Just Eat Holding to acquire the shares was
approximately €2.75 million.
SM agreement
Pursuant to the terms of the share purchase and sale agreement, the Company, Just Eat Spain, a
limited liability company owned by SinDelantal’s selling shareholders (“Newco”) and Newco’s
shareholders entered into an agreement dated 1 October 2012 that was amended and restated on
17 July 2013 by which (a) Just Eat Spain granted to Newco (i) a loan with a maturity term of three
years for a principal amount of €0.325 million and (ii) a convertible loan with a maturity term of three
years for a principal amount of €0.175 million, in each case, for the purpose of contributing them to
SinDelantal Mexico, S.A. DE C.V (“SinDelantal Mexico”), a wholly owned subsidiary of Newco
incorporated in Mexico, for its exclusive use as working capital and in the development of its Mexican
business; and (b) Newco’s shareholders and Just Eat Spain granted each other a call and put option,
respectively, over the entire share capital of Newco as further detailed below (the “SM Agreement”).
On or around 1 April 2015, Newco may request that the term of the loans is extended by one year.
At any time before the maturity term of the loans, Just Eat Spain may convert the convertible loan into
shares in Newco that represent 10% of the share capital of Newco. Subject to certain exceptions, Just
Eat Spain has a right to participate in up to 20% by value of any debt or equity financing of either or
both of Newco and SinDelantal Mexico.
The shareholders in Newco granted to Just Eat Spain a call option over 100% of the share capital in
Newco that entitles Just Eat Spain to purchase such share capital at fair market value, as determined
by a single independent valuation professional. If Just Eat Spain does not exercise the call option
within the prescribed period, then within ten business days from the expiry of the call option, Newco’s
shareholders may exercise a put option requesting Just Eat Spain to purchase all (but not part of)
Newco’s shares at a 20% discount to the valuation provided by the independent valuation professional.
Just Eat Spain may elect to reject the put option in writing within twenty business days from the
exercise of the put option. The call option is exercisable approximately four years from the date the
loans were made. In the event that Newco requests that the term of the loans be extended by one
year, as referred to above, and that request is not accepted, then the call and put options shall not be
exercisable.
18.6 Acquisition of Power & Power
Share purchase agreement
On 16 January 2013, Just-Eat.ca Management Limited (“Just-Eat.ca”), as purchaser, and Just Eat
Holding, as guarantor, entered into a share purchase agreement to acquire 100% of the issued share
capital of Power & Power Investments, Inc. (“Power & Power”), a corporation incorporated under the
laws of Ontario. As at 16 January 2013, Power & Power owned an 82% shareholding in Just Eat
Canada Inc. (“Just Eat Canada”), a corporation incorporated under the laws of Ontario, that was
previously operated as a 50:50 joint venture between the Group and Power & Power pursuant to the
terms of a joint venture agreement. Execution of the share purchase agreement resulted in the
termination of both the joint venture agreement and an amended and restated consultancy agreement
between Power & Power and Just Eat Canada. The consideration paid for the shares in Power &
Power was CAD$2 million on closing, subject to a purchase price adjustment, and an additional
deferred payment of CAD$0.75 million is payable on 2 January 2016. A further deferred earn-out
payment of CAD$0.25 million may become payable on 28 February 2017 dependant on the aggregate
revenues generated by Just Eat Canada in the calendar year ending 31 December 2016.
18.7 Acquisition of Meal 2 Order.com Limited
Share purchase agreement
On 27 February 2014, Just Eat Holding entered into a share purchase agreement for the sale and
purchase of all the issued share capital of Meal 2 Order.com Limited (“Meal 2 Order”), a private
company limited by shares incorporated in England and Wales, and its affiliate companies, Meal 2 Go
Limited, 1Epos Limited and Meal2Go Ireland Limited (together with Meal 2 Order, the “Meal 2 Order
Group”). The consideration paid to the vendors was approximately £2.6 million on 27 February 2014,
with a further £0.2 million payable on each of 27 August 2014 and 27 February 2015, with each subject
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to customary adjustments or withholdings, as applicable. In addition, Just Eat Holding is liable for the
repayment of the Meal 2 Order Group’s debt of approximately £0.72 million. Three key employees of
Meal 2 Order signed service contracts with the Company at the closing of the transaction.
18.8 Board Representation Agreement
On 2 April 2014 the SM Trust, Index Ventures and Vitruvian Partners entered into an agreement with
the Company which, conditional on Admission, entitles each such shareholder party and their
respective permitted transferees (together the “Shareholder Parties” and each a “Shareholder
Party”) to appoint one director to the Board of the Company. The initial appointees are Frederic
Coorevits (SM Trust appointee), Benjamin Holmes (Index Ventures appointee) and Michael Risman
(Vitruvian Partners appointee). This entitlement shall lapse in respect of a Shareholder Party, and such
Shareholder Party shall procure that its appointee will resign:
(a) during the period commencing on the date of the agreement and expiring on the date falling two
years thereafter, or if later, the date of the Company’s annual general meeting held in 2016 (the
“Initial Period”), if:
(i)
that Shareholder Party ceases to hold at least 5 per cent of the Ordinary Shares; or
(ii) on the occurrence of the Company’s annual general meeting held in 2016, if such
Shareholder Party has ceased at any time during the Initial Period to hold at least 10 per cent
of the Ordinary Shares; and
(b) at any time following the Initial Period, where that Shareholder Party does not hold at least 10 per
cent of the Ordinary Shares.
Each Shareholder Party has also agreed not to propose the appointment of a further board
representative or vote against the election or re-election of a person the Board has put forward for
election or re-election as a director of the Company.
18.9 Orderly Marketing Agreement
On 2 April 2014, the Company and the SM Trust, Index Ventures and Vitruvian Partners entered into
an orderly marketing agreement in relation to the sale of Ordinary Shares by each Shareholder Party
(“Orderly Marketing Agreement”).
The Orderly Marketing Agreement provides that no Shareholder Party will be permitted to dispose of
Ordinary Shares where the total consideration for such shares is expected to exceed 1% of the market
capitalisation of the Company (aggregated with any other sales by that Shareholder Party during the
then current calendar year), without following a specified process inviting the other Shareholder Parties
to participate in such sale or obtaining their written consent. Certain types of sales are excluded from
these restrictions, including but not limited to, disposals pursuant to a takeover offer (including the
giving of an irrevocable undertaking to accept an offer or the sale of Ordinary Shares to an offeror (or
potential offeror) which is named in a public announcement of a firm intention to make a takeover offer
(or possible intention to make a takeover offer)).
Subject to certain exceptions the Company has agreed to provide reasonable cooperation and
assistance to any Shareholder Party which is proposing to sell Ordinary Shares for consideration in
excess of 1% of the market capitalisation of the Company.
The agreement will terminate (a) in respect of a Shareholder Party (i) when it holds less than 3% of the
Ordinary Shares, or (ii) six weeks after it ceases to have a representative on the Board, (b) 18 months
following the date of Admission, (c) on the agreement having been terminated with respect to all of the
Shareholder Parties, and (d) when the Company ceases to be admitted to trading on the Main Market
of the London Stock Exchange or upon certain insolvency events.
18.9 Underwriting Agreement
Details of the Underwriting Agreement are set out at paragraph 20.1 of this Part XVI (Additional
Information).
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19. PROPERTY, PLANT AND EQUIPMENT
Details of any existing or planned material tangible fixed assets, including leased properties, and any
material encumbrances thereon, that are occupied by JUST EAT are set out below:
Location
Floor 1, Imperial Place 4, Elstree Way,
Borehamwood, Hertfordshire,
WD6 1JN . . . . . . . . . . . . . . . . . . . . . . .
Floor 3, Imperial Place 4, Elstree Way,
Borehamwood, Hertfordshire,
WD6 1JN . . . . . . . . . . . . . . . . . . . . . . .
Floor 3, Imperial Place 2, Elstree Way,
Borehamwood, Hertfordshire,
WD6 1JN . . . . . . . . . . . . . . . . . . . . . . .
Floor 6, Fleet Place House, 2 Fleet
Place, Holborn Viaduct, London,
EC4M 7RF . . . . . . . . . . . . . . . . . . . . .
Floor 7, Fleet Place House, 2 Fleet
Place, Holborn Viaduct, London,
EC4M 7RF . . . . . . . . . . . . . . . . . . . . .
Tenure
Utilisation
Term
Leasehold
Office
space
10 years from 26 February 2014 to
25 February 2024(1)
Leasehold
Office
space
10 years from 26 February 2014 to
25 February 2024(1)
Leasehold
Office
space
10 years from 26 February 2014 to
25 February 2024(1)
Leasehold
Office
space
Leasehold
Office
space
Approximately 11 years and 4
months from 10 February 2009(2) to
20 June 2020
Approximately 3 years and 5 months
from 3 September 2012 to 23
February 2016
(1) The Borehamwood leases include a 5 year break clause, exercisable by Just Eat.co.uk Ltd.
(2) Just Eat Holding Limited obtained the lease on 3 September 2012 for the remainder of the term of the lease.
20. Underwriting, Lock-up and Stock Lending Arrangements
20.1 Underwriting Arrangements
On 3 April 2014 the Company, the Directors, the Major Selling Shareholders and the Banks entered
into an underwriting agreement (the “Underwriting Agreement”). Each of the Selling Shareholders
(other than the Major Selling Shareholders) entered into a separate deed poll of election (each a “Deed
of Election” and together the “Deeds of Election”). Pursuant to the terms of the Underwriting
Agreement and Deeds of Election:
•
the Company has agreed, subject to certain conditions (the last condition being Admission), to
allot and issue, at the Offer Price, the New Ordinary Shares to be issued in connection with
the Offer;
•
the Selling Shareholders have agreed, subject to certain conditions (the last condition being
Admission), to sell, at the Offer Price, the Existing Ordinary Shares to be sold by them in
connection with the Offer;
•
the Underwriters have severally agreed, subject to certain conditions (the last condition being
Admission), to procure subscribers and purchasers for (or, failing which, to subscribe or
purchase themselves) the Offer Shares (in such proportions as set out in the Underwriting
Agreement) pursuant to the Offer. The Underwriting Agreement will become unconditional on
Admission;
•
The Major Selling Shareholders have granted the Over-allotment Option to the Stabilisation
Manager, pursuant to which the Stabilisation Manager may, subject to certain conditions,
procure purchasers for or purchase itself up to such additional Ordinary Shares representing
7.5% of the total number of Offer Shares (excluding the Ordinary Shares subject to the Overallotment Option) at the Offer Price, for the purposes of allowing the Stabilisation Manager to
cover short positions resulting from over-allotments, if any, made in connection with the Offer.
The number of Ordinary Shares to be transferred pursuant to the Overallotment Option, if
any, will be determined not later than 30 days from the date of publication of the Offer Price.
Settlement of the Over-allotment Option will take place shortly after the exercise of the Overallotment Option. If exercised, the over-allotment option will be exercised so as to require
such Major Selling Shareholders (as a whole) to sell an equal proportion of their then
holdings;
•
the obligations of the Company and the Selling Shareholders to issue or sell, as applicable,
the Offer Shares and the obligations of the Underwriters to procure subscribers or purchasers
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for, or failing which, to subscribe for or purchase themselves the Offer Shares to be issued
and sold under the Offer are conditional upon certain conditions that are customary for an
agreement of this nature;
•
the Company has agreed to pay to the Banks a commission of 2.5% of the amount equal to
the Offer Price multiplied by the aggregate number of New Ordinary Shares;
•
each Selling Shareholder has agreed to pay to the Banks a commission of 2.5% of the
amount equal to the Offer Price multiplied by the number of Existing Ordinary Shares sold by
such Selling Shareholder pursuant to the Offer;
•
each Major Selling Shareholder has agreed to pay to the Banks a commission of 2.5% of the
amount equal to the Offer Price multiplied by the number of Over-allotment Shares sold by
such Major Selling Shareholder pursuant to the exercise of the Over-allotment Option;
•
the Company has agreed to pay to the Banks a commission of 0.5% of the amount equal to
the Offer Price multiplied by the aggregate number of New Ordinary Shares with the allocation
of such commission between the Banks to be determined by the Company in its absolute
discretion;
•
each Selling Shareholder has agreed to pay to the Banks a commission of 0.5% of the
amount equal to the Offer Price multiplied by the number of Existing Ordinary Shares sold by
such Selling Shareholder pursuant to the Offer with the allocation of such commission
between the Banks to be determined by the Company in its absolute discretion;
•
each Major Selling Shareholder has agreed to pay to the Banks a commission of 0.5% of the
amount equal to the Offer Price multiplied by the number of Over-allotment Shares sold by
such Major Selling Shareholder pursuant to the exercise of the Over-allotment Option with the
allocation of such commission between the Banks to be determined by the Company in its
absolute discretion;
•
the Company may pay to the Banks, in the sole and absolute discretion of the Company, a
commission of 0.5% of the amount equal to the Offer Price multiplied by the aggregate
number of New Ordinary Shares;
•
each Major Selling Shareholder may pay to the Banks, in the sole and absolute discretion of
that Major Selling Shareholder, a commission of 0.5% of the amount equal to the Offer Price
multiplied by the number of Existing Ordinary Shares being sold by it pursuant to the Offer;
•
each Selling Shareholder (other than the Major Selling Shareholders) may pay to the Banks,
in the sole and absolute discretion of the Company, a commission of 0.5% of the amount
equal to the Offer Price multiplied by the number of Existing Ordinary Shares being sold by it
pursuant to the Offer;
•
each Major Selling Shareholder may pay to the Banks, in the sole and absolute discretion of
that Major Selling Shareholder, a commission of 0.5% of the amount equal to the Offer Price
multiplied by the number of Over-allotment Shares sold by such Major Selling Shareholder
pursuant to the exercise of the Over-allotment Option; and
•
the Company, the Selling Shareholders and the Directors have each given certain customary
contractual protections to the Banks in connection with the Underwriting Agreement. The
liability of the Company pursuant to the Underwriting Agreement is unlimited by time and
amount, whereas the liability of the Major Selling Shareholders and the Directors is several
and limited by both time and amount.
20.2 Lock-up Arrangements
The Company has agreed with the Underwriters, save for certain customary exceptions and other than
pursuant to the Offer or with the consent of the Joint Bookrunners, not to offer, issue, lend or dispose
of, or agree to offer, issue, lend, assign, charge or otherwise dispose of, or grant any option, right or
warrant to acquire, directly or indirectly, any further Ordinary Shares for a period of 180 days after the
date of Admission. The exceptions include (a) the issue and offer by or on behalf of the Company of
the Offer Shares; (b) the grant by the Company of any option or other award under any share option or
other employee incentive scheme in existence at (and for the avoidance of doubt including the
employee incentive schemes adopted with effect from) the date of Admission as disclosed in
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this document, and the issue by the Company of any Ordinary Shares pursuant to any such option or
award; (c) the issue of Ordinary Shares in connection with the Company’s reorganisation prior to
Admission; and (d) the issue of any shares in the Company to which the Joint Bookrunners have
consented prior to the date of the Underwriting Agreement.
Each of the Major Selling Shareholders has agreed with the Underwriters, save for certain exceptions
and other than pursuant to the Offer or with the consent of the Joint Bookrunners, not to offer, issue,
lend, assign, charge or otherwise dispose of, or grant any option, right or warrant to acquire, or agree
to offer or dispose of, directly or indirectly, any Ordinary Shares or certain related securities or any
interest in those Ordinary Shares or securities for a period of 180 days after the date of Admission. The
exceptions to this agreement are (a) any disposal under the Underwriting Agreement or Stock Lending
Agreement; (b) any disposal notified in writing in advance to the Joint Bookrunners and the Company
and to which the Joint Bookrunners give their prior written consent; (c) (i) an acceptance of a general
offer for the ordinary share capital of the Company made in accordance with the City Code; or (ii) the
provision of an irrevocable undertaking to accept such an offer; or (iii) a sale of Ordinary Shares to an
offeror or potential offeror during an offer period (within the meaning of the City Code); (d) any disposal
pursuant to a scheme of reconstruction under section 110 of the Insolvency Act 1986 in relation to the
Company; (e) any disposal pursuant to a compromise or arrangement under section 896 of the
Companies Act providing for the acquisition by any person of 50 per cent. or more of the ordinary
share capital of the Company; (f) any disposal of Ordinary Shares acquired following Admission other
than (i) Ordinary Shares issued pursuant to a capital reorganisation on or after Admission in respect of
Ordinary Shares beneficially owned, held or controlled by it, him or her on or after Admission or in
respect of Ordinary Shares acquired as described in (iii) below; (ii) Ordinary Shares issued pursuant to
the conversion of any convertible debt securities or the exercise of any warrants, options or similar
rights held by it, him or her at Admission; and (iii) all or any Ordinary Shares or other securities, if any,
which are allotted or issued to him or it by way of rights in respect of any Ordinary Shares beneficially
owned, held or controlled by it, him or her on Admission or issued to it, him or her in the circumstances
set out in (ii) and (iii); (g) any disposal of rights to new Ordinary Shares to be issued by way of rights
issue to fund its, his or her take-up of the balance of his or her rights; (h) any disposal to a Major
Selling Shareholder’s ultimate holding company or subsidiary undertaking; and (i) any disposal to
certain other permitted transferees.
Each of the Directors and the Senior Managers who are selling Ordinary Shares in connection with the
Offer have agreed with the Underwriters, save for certain exceptions and other than pursuant to the
Offer or with the consent of the Joint Bookrunners, not to offer, issue, lend, assign, charge or otherwise
dispose of, or grant any option, right or warrant to acquire, or agree to offer or dispose of, directly or
indirectly, any Shares or certain related securities or any interest in those Shares or securities for a
period of 360 days after the date of Admission. The exceptions to this agreement are (a) any disposal
notified in writing to the Joint Bookrunners and the Company to which the Joint Bookrunners and the
Company give their prior written consent; (b) (i) an acceptance of a general offer for the ordinary share
capital of the Company made in accordance with the City Code; or (ii) the provision of an irrevocable
undertaking to accept such an offer; or (iii) a sale of Ordinary Shares to an offeror or potential offeror
during an offer period (within the meaning of the City Code); (c) any disposal pursuant to a scheme of
reconstruction under section 110 of the Insolvency Act 1986 in relation to the Company; (d) any
disposal pursuant to a compromise or arrangement under section 896 of the Companies Act providing
for the acquisition by any person of 50% or more of the ordinary share capital of the Company; (e) any
disposal by way of gift (i) by any individual to a family member; (ii) by any individual to any person or
persons acting in the capacity of trustee or trustees of a trust created by such individual or, upon any
change of trustees of a trust so created, to the new trustee or trustees, provided that the trust is
established for charitable purposes only or there are no persons beneficially interested under the trust
other than the individual and his family members; or (iii) by the trustee or trustees of a trust to which
(ii) applies to any person beneficially interested under that trust; (f) any disposal of Ordinary Shares
acquired following Admission other than (i) Ordinary Shares issued pursuant to a capital reorganisation
on or after Admission in respect of Ordinary Shares beneficially owned, held or controlled by it, him or
her on or after Admission or in respect of Ordinary Shares acquired as described in (iii) below;
(ii) Ordinary Shares issued pursuant to the conversion of any convertible debt securities or the exercise
of any warrants, options or similar rights held by it, him or her at Admission; and (iii) all or any Ordinary
Shares or other securities, if any, which are allotted or issued to him or it by way of rights in respect of
any Ordinary Shares beneficially owned, held or controlled by it, him or her on Admission or issued to
it, him or her in the circumstances set out in (ii) and (iii); (g) disposals of rights to new Ordinary Shares
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to be issued by way of rights issue to fund its, his or her take-up of the balance of his or her rights; and
(h) any disposals to or by personal representatives of an individual who dies.
20.3 Stock Lending Arrangements
In connection with settlement and stabilisation, the Stabilisation Manager has entered into a stock
lending agreement (the “Stock Lending Agreement”) with Index Ventures V (Jersey) LP pursuant to
which the Stabilisation Manager will be able to borrow up to 7.5% of the total number of Offer Shares
(excluding the Ordinary Shares subject to the Over-allotment Option) on Admission for the purposes,
amongst other things, of allowing the Stabilisation Manager to cover short positions resulting from
over-allotments, if any, made in connection with the Offer. If the Stabilisation Manager borrows
Ordinary Shares pursuant to the Stock Lending Agreement, it will be required to return equivalent
securities to Index Ventures V (Jersey) LP by no later than the third Business Day after the date that is
30 days after the date of the Stock Lending Agreement.
21. LITIGATION
Other than as set out below, there are no governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which the Company is aware) which may have,
or have had during the 12 months preceding the date of this document, a significant effect on the
Group or its financial position or profitability.
An action has been brought against a subsidiary of the Company, just-eat.dk ApS (“Just Eat DK”), in
the Danish Maritime and Commercial Court by two competitors, e-takeaway and Pizza.dk (together,
the “Claimants”), for alleged violations of the Danish Competition Act and the Danish Marketing Act,
claiming damages of 21.8 million Danish Kroner. It is argued by the Claimants that Just Eat DK was in
a dominant position in the relevant market in the period from 2005 until 2008 and that in that same
period of time it abused this dominant position by using exclusivity terms in its contracts with
restaurants and by helping restaurants terminate their cooperation with e-takeaway and Pizza.dk. The
Claimants also claim that Just Eat DK’s use of the word “takeaway” in advertising violates
e-takeaway’s trademark rights and the Danish Marketing Act, and that Just Eat DK has violated
e-takeaway’s trademark rights by using “e-takeaway” as a Google ad word.
The Claimants also filed an application with the Danish Competition Authority (the “DCA”) to reopen a
complaint that the Claimants had made in relation to Just Eat DK that was originally rejected (in its
entirety) by the DCA in 2009. The DCA has refused to date to reopen the complaint. e-takeaway has,
as a consequence, initiated a judicial review proceeding in relation to the DCA’s refusal.
The Danish Maritime and Commercial Court refused e-takeaway’s request to stay its proceedings until
e-takeaway’s case against the DCA is concluded. The oral hearings for the action in the Danish
Maritime and Commercial Court have been scheduled for January 2015.
Just Eat DK has received legal advice that the Claimants’ prospect of success in the Danish and
Maritime Court and with the DCA is remote.
22. AUDITORS
Deloitte LLP, a member firm of the Institute of Chartered Accountants in England and Wales, is the
Group’s auditor. Deloitte’s report on the historical financial information relating to the Group is included
in Part XII (Historical Financial Information).
23. CONSENTS
Deloitte has given and has not withdrawn its consent to the inclusion in this document of its
accountant’s report set out in Part XII (Historical Financial Information) and its report on pro forma
financial information set out in Part XIII (Pro Forma Financial Information) and the references thereto in
the form and context in which they are included and has authorised the contents of its reports for the
purpose of paragraph 5.5.3R(2)(f) of the Prospectus Rules.
A written consent under the Prospectus Rules is different from a consent filed with the SEC under
Section 7 of the Securities Act. As the Ordinary Shares have not been and will not be registered under
the Securities Act, Deloitte has not filed a consent under Section 7 of the Securities Act.
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Callcredit has given and has not withdrawn its written consent to inclusion in this document of its name
and references to the Callcredit Report and the inclusion of information therefrom in this document in
the form and context in which they are included and has authorised the inclusion of its name and such
references and information for the purpose of paragraph 5.5.3R(2)(f) of the Prospectus Rules. At the
time of publication of the Callcredit Report, Callcredit was a portfolio company of Vitruvian Partners, a
shareholder of the Company.
24. GENERAL
The total costs and expenses (exclusive of VAT) payable by the Company in connection with the Offer
and Admission are estimated to be approximately £7.4 million, including £1.4 million that was charged
to the income statement in the year ended 31 December 2013. Given the inter-relationship between
the Offer and Admission, it is not practicable to separate costs attributable solely to the Offer and to
Admission. There are no amounts payable to financial intermediaries.
25. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection at the Company’s registered office,
Masters House, 107 Hammersmith Road, London, W14 0QH during normal business hours on Monday
to Friday each week (public holidays excepted) for a period from and including the date of publication
of this document until the date of Admission:
•
Memorandum of Association, the Interim Articles and the New Articles;
•
historical financial information relating to the Group and the report thereon by Deloitte, as set
out in Part XII (Historical Financial Information) of this document;
•
the pro-forma financial information relating to the Group and the report thereon by Deloitte, as
set out in Part XIII (Pro Forma Financial Information) of this document;
•
the Callcredit Report;
•
the consents referred to in paragraph 23 of this Part XVI (Additional Information); and
•
this document.
This document is dated 3 April 2014.
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PART XVII
GLOSSARY
The following meanings and interpretations shall apply throughout this document unless the context
requires otherwise:
“cloud computing” . . . . . . . . . . . . . . on-demand delivery of IT resources via the internet with payas-you-go pricing
“EPOS” . . . . . . . . . . . . . . . . . . . . . . . . electronic point of sale
“GPRS” . . . . . . . . . . . . . . . . . . . . . . . . general packet radio service; the network over which orders are
transmitted to JCTs
“JCTs”, each a “JCT” . . . . . . . . . . . . . JustConnect Terminals or, in certain instances, JustConnect
Technology
“mobile device” . . . . . . . . . . . . . . . . . smartphones, tablets and any other handheld computing
device, or any or all of them
“mobile app” . . . . . . . . . . . . . . . . . . . . a software application designed to run on a mobile device
“online” . . . . . . . . . . . . . . . . . . . . . . . . connecting via the internet, using a personal computer, laptop
or any mobile device
“organic search results” . . . . . . . . . listings on search engine results pages that appear because of
their relevance to the search terms, as opposed to being
advertisements or sponsored links
“PPC” . . . . . . . . . . . . . . . . . . . . . . . . . . pay-per-click, as further described in section 6.1 of Part VII
(Business Overview) of this document
“SEO” . . . . . . . . . . . . . . . . . . . . . . . . . . search engine optimisation, as further described in section 6.1
(Business Overview) of Part VII of this document
“takeaway food” . . . . . . . . . . . . . . . . . food that is prepared by a takeaway restaurant and made
available for delivery or collection by consumers
“takeaway restaurant” . . . . . . . . . . . a restaurant providing takeaway food
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PART XVIII
DEFINITIONS
The following definitions shall apply throughout this document unless the context requires otherwise:
“Admission” . . . . . . . . . . . . . . . . . . . . the admission of the Ordinary Shares to trading on the High
Growth Segment of the London Stock Exchange’s Main Market
and Admission becoming effective means it becoming effective
in accordance with the Admission and Disclosure Standards
“Admission and Disclosure
Standards” . . . . . . . . . . . . . . . . . . . the requirements contained in the publication “Admission and
Disclosure Standards” dated 16 April 2013 containing, among
other things, the admission requirements to be observed by
companies seeking admission to trading on the London Stock
Exchange’s Main Market
“Articles of Association” or “New
Articles” . . . . . . . . . . . . . . . . . . . . . the articles of association of the Company which have been
adopted conditional on Admission
“Audit Committee” . . . . . . . . . . . . . . the audit committee established by the Board to monitor
financial risks in the Company’s businesses, as described in
paragraph 4 of Part VIII (Directors, Senior Managers and
Corporate Governance)
“Auditors” . . . . . . . . . . . . . . . . . . . . . . Deloitte LLP
“Banks” . . . . . . . . . . . . . . . . . . . . . . . Goldman Sachs International, J.P. Morgan Securities plc and
Oakley Capital Limited
“Board” . . . . . . . . . . . . . . . . . . . . . . . . the board of Directors of the Company
“business day” . . . . . . . . . . . . . . . . . . a day (other than a Saturday or Sunday) on which banks are
open for general business in London
“City Code” . . . . . . . . . . . . . . . . . . . . . the City Code on Takeovers and Mergers issued from time to
time by or on behalf of the Panel on Takeovers and Mergers
“Co-Lead Manager” . . . . . . . . . . . . . Oakley Capital Limited
“Companies Act” . . . . . . . . . . . . . . . . the UK Companies Act 2006, as amended
“Company” . . . . . . . . . . . . . . . . . . . . . JUST EAT plc; a company registered in England and Wales
with registered number 06947854
“Company Register” . . . . . . . . . . . . . the register of members of the Company
“CREST” . . . . . . . . . . . . . . . . . . . . . . . the system of paperless settlement of trades in securities and
the holding of Uncertificated securities operated by Euroclear
UK & Ireland Limited in accordance with the Uncertificated
Securities Regulations 2001 (SI 2001 No. 3755) as amended
from time to time
“Deed of Election” or “Deeds of
Election” . . . . . . . . . . . . . . . . . . . . . has the definition set out in paragraph 20.1 of Part XVI
(Additional Information)
“Directors” . . . . . . . . . . . . . . . . . . . . . the directors of the Company whose names appear in
paragraph 1 of Part VIII (Directors, Senior Managers and
Corporate Governance)
209
“Disclosure and Transparency
Rules” . . . . . . . . . . . . . . . . . . . . . . . the disclosure rules and transparency rules of the FCA made
pursuant to section 73A of FSMA
“EEA State” . . . . . . . . . . . . . . . . . . . . . a state which is a contracting party to the agreement on the
European Economic Area signed on 2 May 1992, as it has
effect for the time being
“EU” . . . . . . . . . . . . . . . . . . . . . . . . . . . the European Union
“Euroclear” . . . . . . . . . . . . . . . . . . . . . Euroclear UK & Ireland Limited, the operator of CREST
“Exchange Act” . . . . . . . . . . . . . . . . . the US Securities Exchange Act of 1934
“Executive Directors” . . . . . . . . . . . . David Buttress and Michael Wroe
“Existing Ordinary Shares” . . . . . . . the Ordinary Shares in issue and to be sold by the Selling
Shareholders pursuant to the Offer
“FCA” . . . . . . . . . . . . . . . . . . . . . . . . . . the Financial Conduct Authority
“FSMA” . . . . . . . . . . . . . . . . . . . . . . . . the Financial Services and Markets Act 2000 as amended
“Government” . . . . . . . . . . . . . . . . . . Her Majesty’s Government of the United Kingdom
“Group” or “JUST EAT” . . . . . . . . . . . JUST EAT plc and its subsidiary undertakings (as defined in
the Companies Act 2006)
“High Growth Segment” . . . . . . . . . . as such term is defined in the Admission and Disclosure
Standards
“High Growth Segment
Rulebook” . . . . . . . . . . . . . . . . . . . . the London Stock Exchange’s High Growth Segment rulebook
dated 27 March 2013
“Historical Financial
Information” . . . . . . . . . . . . . . . . . . the IFRS Historical Financial Information for the Group set out
in Part XII (Historical Financial Information)
“HM Revenue and Customs” . . . . . . Her Majesty’s Revenue and Customs
“IFRS” . . . . . . . . . . . . . . . . . . . . . . . . . International Financial Reporting Standards as adopted by the
European Commission for use in the European Union
“Interim Ltd Articles” . . . . . . . . . . . . the articles of association of the Company adopted on
17 March 2014 which replaced the Old Articles and were
replaced by the Interim Ltd Articles on 24 March 2014
“Interim plc Articles” . . . . . . . . . . . . . the articles of association adopted by the Company on reregistration as a public limited company on 24 March 2014 that
will apply until Admission
“ISIN” . . . . . . . . . . . . . . . . . . . . . . . . . . International Security Identification Number
“ITEPA” . . . . . . . . . . . . . . . . . . . . . . . . the Income Tax (Earnings and Pensions) Act 2003
“Joint Bookrunners” . . . . . . . . . . . . . Goldman Sachs International and J.P. Morgan Securities plc
“Joint Global Co-ordinators” . . . . . . Goldman Sachs International and J.P. Morgan Securities plc
“Key Adviser” . . . . . . . . . . . . . . . . . . . J.P. Morgan Securities plc, the key adviser to the Company
pursuant to the High Growth Segment Rulebook
210
“Listing Rules” . . . . . . . . . . . . . . . . . . the listing rules of the FCA made pursuant to section 73A of
FSMA
“London Stock Exchange” . . . . . . . . London Stock Exchange plc
“Main Market” . . . . . . . . . . . . . . . . . . as such term is defined in the Admission and Disclosure
Standards
“Major Selling Shareholders” . . . . . Greylock I LP; Index Ventures Growth I (Jersey) LP; Index
Ventures Growth I Parallel Entrepeneur Fund (Jersey), LP;
Index Ventures V (Jersey) LP; Index Ventures V Parallel
Entrepreneur Fund (Jersey), LP; Munch S.à r.l.; Redpoint
Omega, LP; Redpoint Omega Associates LLC; STM Fidecs
Trust Company Limited; and Yucca (Jersey) SLP
“Memorandum of Association” . . . . the memorandum of association of the Company
“Model Code” . . . . . . . . . . . . . . . . . . . the Model Code published by the UKLA at Annex 1 of Listing
Rule 9 of the Listing Rules
“Money Laundering
Regulations” . . . . . . . . . . . . . . . . . . the Proceeds of Crime Act 2002, the Terrorism Act 2000 and
the Money Laundering Regulations 2003, and any other similar
laws and regulations outside of the United Kingdom
“New Articles” . . . . . . . . . . . . . . . . . . the articles of association of the Company adopted on
17 March 2014 which will replace the Interim plc Articles with
effect from Admission
“New Ordinary Shares” . . . . . . . . . . the Ordinary Shares issued by the Company pursuant to the
Offer
“Nomination Committee” . . . . . . . . . the director nomination committee established by the Board to
consider and make recommendations to the Board concerning
the composition of the Board, as described in paragraph 4 of
Part VIII (Directors, Senior Managers and Corporate
Governance)
“Non-Executive Directors” . . . . . . . . John Hughes, CBE, Andrew Griffith, Gwyn Burr, Benjamin
Holmes, Michael Risman, Frederic Coorevits and Laurel
Bowden
“Offer” . . . . . . . . . . . . . . . . . . . . . . . . . the offer of the Offer Shares to investors in the United Kingdom
and elsewhere as described in Part XIV (Details of the Offer)
“Offer Price” . . . . . . . . . . . . . . . . . . . . the price at which the Offer Shares are to be offered and sold
under the Offer
“Offer Shares” . . . . . . . . . . . . . . . . . . the New Ordinary Shares and the Existing Ordinary Shares
“Official List” . . . . . . . . . . . . . . . . . . . the Official List of the FCA
“Old Articles” . . . . . . . . . . . . . . . . . . . the articles of association of the Company adopted on 27 April
2012 which were replaced by the Interim Ltd Articles on
17 March 2014
“Order” . . . . . . . . . . . . . . . . . . . . . . . . the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005
“Ordinary Shares” . . . . . . . . . . . . . . . the ordinary shares with a nominal value of £0.01 each in the
share capital of the Company
“Over-allotment Option” . . . . . . . . . . the over-allotment option granted by the Company and the
Major Selling Shareholders to the Stabilisation Manager as
described in Part XIV (Details of the Offer)
211
“Over-allotment Shares” . . . . . . . . . the Ordinary Shares that are the subject of the Over-allotment
Option
“Prospectus” . . . . . . . . . . . . . . . . . . . this document
“Prospectus Directive” . . . . . . . . . . . Directive of the European Parliament and of the Council
2003/71/EC
“Prospectus Rules” . . . . . . . . . . . . . . the prospectus rules of the FCA made pursuant to section 73A
of FSMA
“QIBs” . . . . . . . . . . . . . . . . . . . . . . . . . “qualified institutional buyers” as defined in Rule 144A
“Registrar” . . . . . . . . . . . . . . . . . . . . . Equiniti Limited
“Regulation S” . . . . . . . . . . . . . . . . . . Regulation S under the Securities Act
“Remuneration Committee” . . . . . . . the remuneration committee established by the Board to
consider and make recommendations to the Board as to the
remuneration of Company’s directors and senior executives, as
described in paragraph 4 of Part VIII (Directors, Senior
Managers and Corporate Governance)
“Reporting Accountants” . . . . . . . . . Deloitte LLP
“Rule 144A” . . . . . . . . . . . . . . . . . . . . Rule 144A under the Securities Act
“SDRT” . . . . . . . . . . . . . . . . . . . . . . . . stamp duty reserve tax
“SEC” . . . . . . . . . . . . . . . . . . . . . . . . . . the US Securities and Exchange Commission
“Securities Act” . . . . . . . . . . . . . . . . . the US Securities Act of 1933
“Selling Shareholders”, each a
“Selling Shareholder” . . . . . . . . . . Appleby Trust (Jersey Trust) Limited; Carlos Morgado; Clare
Morgado; David Buttress; Gemma Buttress; Greylock I LP; Index
Ventures Growth I (Jersey) LP; Index Ventures Growth I Parallel
Entrepeneur Fund (Jersey), LP; Index Ventures V (Jersey) LP;
Index Ventures V Parallel Entrepreneur Fund (Jersey), LP; Klaus
Nyengaard; Mathew Braddy; Michelle Braddy; Michael Wroe;
Rachel Wroe; Munch S.à r.l.; Rasmus Wolff; Redpoint Omega,
LP; Redpoint Omega Associates LLC; the SM Trust (STM
Fidecs Trust Company Limited is the registered holder); and
Yucca (Jersey) SLP
“Senior Managers” . . . . . . . . . . . . . . those members of the management bodies of the Company
and its subsidiary undertakings who are relevant to establishing
that the Company has the appropriate expertise and
experience for the management of its business for the
purposes of paragraph 14.1 of Annex 1 of the Prospectus
Rules and whose names appear in paragraph 2 of Part VIII
(Directors, Senior Managers and Corporate Governance)
“Shareholders” . . . . . . . . . . . . . . . . . holders of the Ordinary Shares from time to time
“Stabilisation Manager” . . . . . . . . . . Goldman Sachs International
“Stock Lending Agreement” . . . . . . the stock lending agreement dated 3 April 2014 between Index
Ventures V (Jersey) LP and the Stabilisation Manager
“Uncertificated Securities
Regulations” . . . . . . . . . . . . . . . . . the Uncertificated Securities Regulations 2001
212
“UK Corporate Governance
Code” . . . . . . . . . . . . . . . . . . . . . . . the UK Corporate Governance Code issued by the Financial
Reporting Council in September 2012
“UK Listing Authority” or
“UKLA” . . . . . . . . . . . . . . . . . . . . . . the FCA when it is exercising its powers under Part 6 of the
FSMA
“Underlying EBITDA” . . . . . . . . . . . . has the meaning set out in Part III (Important Information)
“Underwriters” . . . . . . . . . . . . . . . . . . Goldman Sachs International and J.P. Morgan Securities plc
“Underwriting Agreement” . . . . . . . the underwriting and Key Adviser’s agreement dated
3 April 2014 between and among the Company, the Directors,
the Major Selling Shareholders and the Banks
“United Kingdom” or “UK” . . . . . . . . the United Kingdom of Great Britain and Northern Ireland
“United States” or “US” . . . . . . . . . . . the United States of America, its territories and possessions,
any state of the United States of America and the District of
Columbia
“VAT” or “Value Added Tax” . . . . . . value added tax
213
Printed by RR Donnelley, 660939
JUST EAT PROSPECTUS
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