Just Eat sets out IPO plans

Just Eat, the online service to order takeaway food from local restaurants, has announced details of its forthcoming initial public offering (IPO).

The company says it has a market-leading positions in the majority of the 13 countries in which it operates based on Google search traffic. E-commerce is growing, aided by smartphone/tablet penetration globally, while other trends that support the company are an increased taste for a variety of cuisine and a reluctance to cook at home, the company said.

The first website was launched in 2001 and Just Eat has since expanded rapidly, generating revenue of £96.8 million and underlying EBITDA of £14.1 million, representing growth of 61.9% and 518% respectively compared to 2012.

The company primarily derives its revenue from commissions charged to restaurants on the value of orders placed through its platform, which were on average 10.7% across the group for the year ended December 2013. Takeaway restaurants that join the network also pay sign-up fees that vary depending on their geographical market.

Just Eat's technology platform can process almost 900 real-time orders per minute at peak times in the UK, with customers offered ratings and reviews, and payment by credit or debit card. Online orders are typically 30% higher in value than traditional over-the-phone orders, the statement said.

This estimated £58 billion global market should be scalable. In 2013 the company generated combined revenue in its more established markets of the UK and Denmark of £80.4 million and underlying EBITDA of £30.2 million, representing growth of 57.3% and 69.9% respectively over the year. Yet there is still modest penetration in the majority of its existing markets - 20% in the UK, 49% in Denmark and under 10% in other jurisdictions - highlighting the opportunity for further growth across the group's geographic footprint.

Just Eat further believes that its largest markets - the UK, Denmark, France, Canada, Ireland and Spain - are attractive markets for takeaway food, as they are characterised by factors such as long cold winters with diminished daylight hours, a fragmented market of largely independent takeaway restaurants and fewer established restaurant chains offering competing takeaway services. In the UK in particular, where the fragmented restaurant base is particularly suited to the company's business model, consumer preferences for varied cuisines have encouraged the diversification of the takeaway industry.

The company's 2013 results show a strong financial performance characterised by growth in revenue and strong cash conversion, with 6,476 net new contracted takeaway restaurants added to the platform, taking the number to 36,415, and orders increased by 59% to 40.2 million from 25.3 million previously. Average revenue per order grew by 5.5% to £2.11 (2012: £2.00) and revenues hit £96.8 million, a year-on-year increase of 61.9% (2012: £59.8 million).

The cash conversion rate was 109% for 2013 (2012: 276.3%), driven by attractive underlying EBITDA margins, favourable working capital dynamics and low capex requirements.

Proceeds from the primary offering of £100 million will be used to develop less mature and new markets.

The company is chaired by the experienced John Hughes, former chief operating officer at Thales Group. David Buttress, chief executive and a former Coca Cola executive, said: "Just Eat brings together tens of thousands of local takeaway restaurants globally and processes millions of online orders monthly, which I believe makes us one of the most exciting global growth companies in Europe."

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