TIDMOCDO
RNS Number : 8662E
Ocado Group PLC
09 July 2019
OCADO GROUP PLC
Trading in line with expectations; statutory results impacted by
Andover fire
Interim results for the 26 weeks ended 2nd June 2019
9 July 2019
Financial highlights
-- 9.7% Retail Revenue growth demonstrates the resilience of the
business, with the impact of the Andover fire estimated at 2% of
sales in the half
-- Fees invoiced from Solutions partners of GBP122.7 million, up
36% on the same period in the prior year, with fees from
international partners almost doubling
-- Group EBITDA of GBP18.7 million reflects the combined impacts
of the Andover fire, IFRS 15 delaying the recognition of fees from
international Solutions partners as revenue, and the cost of share
schemes
Statutory Adjusted
-------------------- ------------------------- ---------------------------- ------------------
1H 2019 1H 2018 1H 2019 1H 2018 Change Adjusted
GBPm Restated(1) Adjusted(2) Adjusted(2) vs 1H 2018
GBPm GBPm GBPm %
-------------------- ---------- ------------- ------------- ------------- ----------------
Retail Revenue* 811.5 736.6 803.2 732.5 9.7
Solutions Revenue* 70.8 58.7 70.8 58.7 20.6
Group Revenue(4) 882.3 795.3 874.0 791.2 10.5
Retail EBITDA* 43.4 45.5 44.1 46.1 (4.3)
Solutions EBITDA* (16.2) (6.6) (16.2) (6.6)
Other EBITDA* (9.1) (4.6) (9.2) (4.7)
Group EBITDA*(5) 18.1 34.3 18.7 34.8 (46.3)
Exceptionals(3) (99.0) - - -
Loss before tax (142.8) (13.6) (43.0) (12.9)
Cash and cash
equivalents 360.1 447.6
Net (debt) /
cash* (0.1) 72.4
Notes:
1. 2018 restatement was due to adoption of IFRS 15 in the second
half of the year. Refer to note 3 in the condensed financial
statements
2. Adjusted to remove Fabled which is now an asset held for
sale
3. GBP98.5 million of exceptionals reflects the net cost
associated with the write-down of Andover CFC and associated
assets, comprising GBP110.3 million of costs, offset by GBP11.8
million in insurance proceeds recognised in exceptionals to
date
See page 4 for Notes Continued
Tim Steiner, Chief Executive Officer of Ocado, said:
"In the last six months the centre of gravity at Ocado Group has
shifted. Our exciting new joint venture with M&S creates
further growth opportunities for both parties in the U.K. and
allows Ocado Group to increase focus on growing our Ocado Solutions
business and innovating for our partners. At the same time we are
beginning to apply our technology skills and expertise to other
related activities which we expect to be of benefit to our
Solutions partners as well as to other Ocado Group
stakeholders.
The innovation factory we have created is founded on a near
twenty-year heritage of constant re-examination and reinvention of
technology to provide the best customer experience. We have never
had as many opportunities to grow as we do today. As we look to
successfully scale our business and deliver outstanding execution
to our partners, our challenge will be to select and prioritise the
most attractive of these opportunities."
Key milestones
Over the last six months, the centre of gravity at Ocado Group
has shifted from our heritage as an iconic and much-loved domestic
pure-play online grocer to our future as a technology-driven global
software and robotics platform business, providing a unique and
proprietary end-to-end solution for online grocery, and an
innovation factory, applying our technology expertise to adjacent
markets and other verticals.
Focusing on our global technology-led platform business
-- Announced the creation of a 50:50 joint venture with Marks
& Spencer ("M&S") to transform online grocery retail in the
UK, with the Ocado Retail JV becoming one of now eight global
partners whose online business will be enabled by the Ocado Smart
Platform ("OSP")(6)
-- The GBP562.5 million upfront cash payment on the close of the
M&S deal in August, will provide us with ample financial
flexibility to execute on current commitments and to take full
advantage of opportunities to grow Ocado Solutions and to
accelerate the development of our platform
-- Sold our remaining retail business, Fabled, to Next to simplify our operation
-- Signed our sixth international partnership with Coles to
develop the OSP in Australia, utilising both our proprietary
software and algorithms as well as our robotic infrastructure
solutions
-- Extended our partnership with Sobeys, ahead of time, with the
announcement of a second Customer Fulfilment Centre ("CFC") in
Montreal
-- Fees invoiced from international Solutions partners grew
strongly in 1H 2019 to GBP46.7 million from GBP23.7 million in 1H
2018, with only an immaterial amount recognised as revenue. This
will increase in the future
-- We remain engaged with multiple retailers in a variety of
markets with a view to adding more partnerships to our platform
Building a partner-focused business to deliver outstanding
execution
-- Our nearly 20-strong dedicated Transformation team is
supporting the hundreds of colleagues who are working to prepare to
open the 34 CFCs committed by partners to date. We are fully
focused on successful delivery and execution
-- We continue to invest in outstanding people. We hired 255 new
software and hardware engineers in the half, out of a total
addition to headcount in Ocado Group of 1,300
-- We have made progress in delivering OSP to all our partners.
Delivery of the first CFCs for each of Groupe Casino and Sobeys
continues, both set to open in the first half of 2020; ICA is on
track for scheduled migration onto OSP, and Kroger is ordering to
plan, having broken ground on the first Kroger CFC, in Monroe,
Ohio, with two other CFC locations announced in the half and
continued progress in identifying further sites. Bon Preu is now
making online deliveries and, in the UK, we continue to support the
growth of Morrisons' online business
Investing in innovation to future proof the platform for our
partners
-- Launched initial test site for immediacy offer, Ocado Zoom.
Strong customer response and operating metrics to date reinforce
our confidence that we can help partners to serve and shape this
new market segment, profitably, at scale
-- First strategic investments made through our ventures arm,
which seeks to leverage our technology expertise to support new
opportunities for customers and partners through investments in
other verticals. To date, we have made investments in automated
meal preparation (minority stake in Karakuri) and vertical farming
(majority stake in Jones Food Company, the largest vertical farm in
Europe, and the creation of a three-way JV with 80 Acres in the US
and Priva in The Netherlands)
Ocado Retail continues to perform well, as work to form a 50/50
JV between Ocado Group and M&S from Monday August 5th nears
completion.
Demonstrating the resilience of the UK business, growing the
customer base, and winning market share
-- Although the Andover fire removed 10% of our capacity, its
impact was estimated at 2% of sales in the half, demonstrating the
resilience of the business
-- The total of insurance cash receipts in the first half was
GBP43 million, net of fees, of which we recognised GBP12 million
income in exceptionals
-- Strong underlying growth, with active customers(7) up 9.7% to 745,000 (1H 2018: 679,000)
-- Total order volumes from Ocado.com and Fetch now an average
of 318,000 orders per week (1H 2018: 288,000)
-- Average hypermarket basket value was stable at GBP108.04 (1H
2018: GBP108.18), as the trend to smaller baskets as a result of
ordering on mobile was offset by price inflation
-- CFC3, in Andover, being rebuilt with a new state of the art
facility expected to go live in late 2021/early 2022. CFC4 capacity
increased by more than 50% in the period. Construction for CFC5, in
Purfleet, will also commence soon
Continuing to improve the offer for Ocado's retail customers
-- Ocado Retail continues to lead the market on service, with
improved rates of delivery punctuality of 95.7% (1H 2018: 94.7%)
and order accuracy of 98.9% (1H 2018: 98.8%)
-- Ocado Retail offers the broadest range (55,000 SKUS in 1H
2019) and has anticipated key market trends, adding over 900 vegan
products in the period and introducing other initiatives
-- This unrivalled customer experience was recognised by The
Grocer's award for "Online Supermarket of the Year", a leading
position on which Ocado Retail will continue to build as part of
the joint venture with M&S
Outlook statement
EBITDA performance for FY19, adjusted for the impact of the
Andover fire (GBP15 million) and share incentives (GBP10 million),
is in line with market expectations.
New guidance
-- GBP15 million impact on Group EBITDA from Andover-related
business disruption: Of this, GBP8 million is related to reduced
fees in Solutions and higher fixed costs as a result of Morrisons'
holiday(8) on capacity at Erith, with the balance the Retail sales
lost due to the Andover fire. We anticipate insurance payments
relating to the Andover fire to provide a full indemnity for
business disruption experienced over the next few years, including
lost sales and cost inefficiencies, with the income, when
recognised, as exceptional.
-- GBP10 million impact on Other EBITDA from share schemes: At
today's share price, we expect additional management incentive
charges during the 2019 financial year largely due to recent share
price performance
Current guidance
-- Retail revenue guidance in H2 unchanged: Assuming economic
conditions remain broadly stable, we continue to be confident that
Ocado Retail will achieve retail revenue growth of 10-15% in the
balance of the 2019 financial year, despite the impact of the
Andover fire, given strong underlying demand growth and our ability
to utilise additional capacity in CFC4
-- Further growth in underlying EBITDA expected for Ocado
Retail: As drop densities continue to improve, and CFC4 ramps up,
we will continue to find efficiencies in our business and as such
we expect further growth in the underlying EBITDA contribution of
Ocado Retail
-- Morrisons holiday will slow Solutions revenue growth: Given
the loss of fees resulting from the Morrisons holiday on Erith
capacity, we expect Solutions revenue growth to be lower than that
of Ocado Retail. As previously guided at FY18 results, we continue
to expect GBP15-20 million additional in operating costs necessary
to prepare the CFCs and to provide features on the platform
-- Capital expenditure guidance unchanged at GBP350 million
-- Continue to target further Solutions deals: These would
generate additional cash fees but may impact short term profits
Results presentation
A results presentation will be held for investors and analysts
at 9.30am today at Numis, 1 Paternoster Square, London EC4M 7LT.
Presentation material and webcast link will be available online at
http://www.ocadogroup.com/investors/reports--and--presentations/2019.aspx
shortly before the presentation starts.
Contacts
Tim Steiner, Chief Executive Officer on 020 7353 4200 today or
01707 228 000
Duncan Tatton--Brown, Chief Financial Officer on 020 7353 4200
today or 01707 228 000
David Shriver, Director of Communications, on 020 7353 4200
today or 01707 228 000
Martin Robinson at Tulchan Communications on 020 7353 4200
Notes continued
4. Revenue is online sales (net of returns) including charges
for delivery but excluding relevant vouchers/offers and VAT. The
recharge of costs to Morrisons and fees charged to Morrisons are
also included in revenue
5. EBITDA* is a non-GAAP measure which we define as earnings
before net finance cost, taxation, depreciation, amortisation,
impairment and exceptional items*
6. Following the formation of the joint venture, Ocado Retail
will be charged fees for the use of OSP on arms-length commercial
terms, so reducing capital requirements but also reducing Retail
EBITDA
7. Customers are classified as active if they have shopped on
Ocado.com within the previous 12 weeks
8. In May, Morrisons agreed to amended terms of agreement
including a temporary suspension of their right to 30% of the
capacity at Erith (CFC4) until February 2021. In return, they will
not incur any of the costs associated with the use of CFC4 and will
pay lower store pick fees
* These measures are Alternative Performance Measures, refer to
note 15 in the condensed financial statements.
Financial Calendar
The schedule for Ocado Retail results for the remainder of the
year is for a Q3 Trading Statement on 17 September 2019 and a Q4
Trading Statement on 12 December 2019.
Cautionary statement
Certain statements made in this announcement are
forward--looking statements. Such statements are based on current
expectations and assumptions and are subject to a number of risks
and uncertainties that could cause actual events or results to
differ materially from any expected future events or results
expressed or implied in these forward-- looking statements. Persons
receiving this announcement should not place undue reliance on
forward--looking statements. Unless otherwise required by
applicable law, regulation or accounting standard, Ocado does not
undertake to update or revise any forward--looking statements,
whether as a result of new information, future developments or
otherwise.
Chief Financial Officer's review
For the period to 2 June 2019, we maintained significant sales
growth in a competitive environment while continuing to transform
our business further.
The Group has secured a sixth international partnership and a
transformational deal with M&S in the UK providing additional
financing headroom while continuing to deliver double digit revenue
growth despite losing the Andover CFC capacity as a result of a
fire. Profitability in the period was impacted by the significant
International investments in our platform to support future growth,
the annualised cost of our new facility in Erith, share-based
management incentive charges, and additional depreciation. Loss
before tax increased due to costs relating to the Andover CFC
fire.
The commentary is on a pre-exceptional basis(3) to aid
understanding of underlying performance of the business, with a
separate section on the exceptional costs incurred by the business
in the period.
Statutory(3) Adjusted(4)
================================= ================== ================== =============
1H 2019 1H 2018 1H 2019 1H 2018 Variance
vs adjusted
1H 2018
%
GBPm GBPm GBPm GBPm
================================= ======== ======== ======== ======== =============
Revenue (1) 882.3 795.3 874.0 791.2 10.5
Gross profit 305.3 269.2 304.0 268.3 13.3
Other income 39.7 34.0 39.7 34.0 16.8
Distribution and administrative
costs 327.4 269.5 325.5 268.1 21.4
Share of results from
joint venture 0.5 0.6 0.5 0.6 (16.7)
================================= ======== ======== ======== ======== =============
EBITDA*(2) 18.1 34.3 18.7 34.8 (46.3)
================================= ======== ======== ======== ======== =============
Exceptional items 99.0 - - - -
--------------------------------- -------- -------- -------- -------- -------------
Depreciation, amortisation
and impairment 55.2 41.7 55.0 41.5 32.5
Net finance costs 6.7 6.2 6.7 6.2 8.1
================================= ======== ======== ======== ======== =============
Loss before tax (142.8) (13.6) (43.0) (12.9) 233.3
================================= ======== ======== ======== ======== =============
(1) Revenue is online sales (net of returns) including charges
for delivery but excluding relevant vouchers/offers and value added
tax. It also includes revenue earned from Solutions' clients and
the recharge of costs to Morrisons
(2) EBITDA is an alternative performance measure which we define
as earnings before net finance cost, taxation, depreciation,
amortisation, impairment and exceptional items
(3) 2018 restatement was due to adoption of IFRS 15 in the
second half of 2018
(4) Adjusted to remove exceptional items and Fabled which is now
classified as held for sale. Exceptional items are an alternative
performance measure.
Revenue grew by 10.5% to GBP874.0 million in comparison to 2018
revenue of GBP791.2 million. This was driven by an increase in the
average number of orders per week, despite capacity limitations
following the fire at CFC Andover, and by additional fees earned
from Morrisons. Gross profit of GBP304.0 million exceeded the rate
of revenue growth despite the competitive nature of the market. We
continued to increase our media income from suppliers as we provide
them more ways to grow their revenues through Ocado.com, and total
Other Income was up by 16.8%.
EBITDA* of GBP18.7 million was 46.3% lower than the prior year.
This was primarily driven by the increased investment in developing
the head office teams required to support our international growth,
annualised costs of the Erith CFC and higher share incentive costs
in the period primarily due to the increase in the share price.
Depreciation, amortisation and impairment increased by 32.5% to
GBP55.0 million, driven primarily by the annualised impact of the
Erith CFC.
Net finance costs increased from GBP6.2 million to GBP6.7
million year-on-year. This primarily consists of finance costs
relating to the GBP250 million Senior Secured Notes, and the growth
came from reduced capitalisation of interest on qualifying assets,
offset by cost savings from debt expiring such as finance
leases.
Corporate Developments
This has been a period of rapid change for Ocado Group and
several events have had a material impact on the results for the
period. To aid understanding of the numbers, a summary of these is
given below.
Andover CFC
In February 2019, a fire destroyed the Andover CFC, including
the building, machinery and all inventory held on site. The Group
has comprehensive insurance and claims have been formally accepted
by the insurers. Due to the capacity constraints following the CFC
Andover fire, the Group has agreed with Morrisons to temporarily
suspend their access to capacity in CFC Erith towards the end of
the period in exchange for lower store pick fees and no cost
recharges from the warehouse. Although there is no material impact
in the period, the Group will begin to recognise 100% of all fixed
and variable costs for Erith.
In addition in exceptionals there is a net cost of GBP98.5
million relating to the Andover CFC comprising GBP110.3 million of
costs, offset by GBP11.8 million of insurance proceeds recognised
to date.
Ocado Solutions
In March, the Group signed an agreement with Coles Group Ltd to
develop two CFCs, one in Sydney and one in Melbourne, expected to
open by 2023. Coles Online will also transition its store-pick
based operations to the Ocado Smart Platform and this is expected
to take place in parallel to the opening of the CFCs.
In May the Group announced an agreement between Ocado Solutions
and Sobeys Inc. ("Sobeys") to build a second CFC in Pointe-Claire,
Montreal. The new site will be Sobeys' second, adding to the centre
already under construction in Vaughan, Ontario to serve the Greater
Toronto Area.
These additional agreements contributed to the increase in head
office costs but there was no revenue impact to the results in 1H
2019.
Formation of the Ocado Retail Joint Venture with Marks and
Spencer ("M&S")
In February 2019, the Group announced the creation of a new
50/50 joint venture with M&S. The joint venture will comprise
Ocado's UK retail business, Ocado.com, supported by a new
partnership for Solutions services underpinned by the Ocado Smart
Platform and the provision of branding and sourcing from M&S.
M&S products will be available on Ocado.com by September 2020,
replacing Ocado's current sourcing agreement with Waitrose Limited.
M&S has agreed to pay Ocado GBP562.5 million in upfront cash
and a deferred cash payment of GBP187.5 million up to five years
after completion, dependent on the satisfaction of certain
financial and operational conditions.
On 20 May 2019 the transaction was approved by Ocado's
shareholders at an extraordinary general meeting and the
transaction is expected to complete in Q3 2019.
Growth of new venture investments
In the period, the Group announced two complementary
investments, a proposed joint venture with 80 Acres Farm Inc. and
Priva Holdings BV, expected to complete shortly, along with the
purchase of a 58% stake in Jones Food Company. We believe that
these investments will add to the significant portfolio of
technologies and know-how that we are building to revolutionise the
way customers access fresh food.
There is no material impact to the results for these
developments in 1H 2019.
Sale of Fabled to Next
Post the period end, the Group agreed the sale of Fabled to Next
which completed on 8 July 2019. As this happened after period end,
the fair value of Fabled is accounted for as an asset held for sale
on the Balance Sheet. To aid underlying performance comparison, the
current and prior year results of the Group have been adjusted to
remove Fabled.
Trading review by segment
Retail Segment
Adjusted(3)
================================= ================== ============
1H 2019 1H 2018 Variance
vs 1H 2018
adjusted
GBPm GBPm %
================================= -------- ======== ------------
Revenue* 803.2 732.5 9.7
Gross profit 233.2 209.8 11.2
Other income 33.3 27.9 19.4
Distribution and administrative
costs *(1) 222.4 191.6 16.1
EBITDA*(2) 44.1 46.1 (4.3)
================================= ======== ======== ============
(1) Distribution and administrative costs* excludes
depreciation, amortisation, impairment and exceptional items for
the period. This is an alternative performance measure which we
define in note 15 to the condensed financial statements.
(2) EBITDA* is an alternative performance measure which we
define as earnings before net finance cost, taxation, depreciation,
amortisation, impairment and exceptional items*
(3) Adjusted to remove exceptional items and Fabled which is now
classified as held for sale. Exceptional items are an alternative
performance measure.
Retail revenue* growth of 9.7% was primarily due to a 10.4%
year-on-year increase in orders per week to 318,000 (1H 2018:
288,000) driven by an increase in the number of new customers. The
average basket at Ocado.com of GBP108.04 decreased slightly by
(0.1)% compared to 1H 2018.
Gross profit
Gross profit was up 11.2% to GBP233.2 million, driven by higher
order volumes, slightly ahead of revenue growth.
Other income
Other income increased by 19.4% to GBP33.3 million (1H 2018:
GBP27.9 million) with supplier income increasing year-on-year by
20.2% to GBP32.1 million (1H 2018: GBP26.7 million) equivalent to
4.0% of retail revenue* (1H 2018: 3.6%).
Distribution and administrative costs*
Adjusted(3)
=============================== ================== ============
1H 2019 1H 2018 Variance
vs 1H 2018
adjusted
GBPm GBPm %
=============================== ======== ======== ============
CFC 81.4 65.7 23.9
Trunking and Delivery 97.5 90.2 8.1
Other operating costs 5.5 5.5 n/a
Marketing(1) 8.7 5.9 47.5
Head office costs 29.3 24.3 20.6
=============================== ======== ======== ============
Total retail distribution and
administrative costs*(2) 222.4 191.6 16.1
=============================== ======== ======== ============
(1) Marketing expenditure excludes voucher costs
(2) Retail distribution and administrative costs* is an
alternative performance measure, which we define in note 15 to the
condensed financial statements and excludes depreciation,
amortisation, impairment and exceptional items
(3) Adjusted to remove exceptional items and Fabled which is now
classified as held for sale. Exceptional items are an alternative
performance measure.
Retail distribution and administrative costs* consist of costs
for the fulfilment and delivery operations of the business as well
as head office costs. Total distribution and administrative costs*
increased by 16.1% year-on-year.
CFC costs increased from GBP65.7 million to GBP81.4 million, an
increase of 23.9% year-on-year. The rate of growth ahead of sales
was primarily due to the annualised impact of the Erith CFC, which
was not operating in the previous year, and which currently has
higher engineering costs per order. The remaining underlying
increase was driven by greater order volumes and inflationary
pressures in key cost lines, offset by savings from fixed costs in
Andover CFC after the fire.
Mature CFC UPH (units per hour) efficiencies continued to
improve on the prior year at 167 (1H 2018: 163), driven mainly by
improvements at Dordon CFC.
Trunking and delivery costs increased by GBP7.3 million to
GBP97.5 million, an increase of 8.1% year-on-year (1H 2018: GBP90.2
million). This is due to increases in wage-related and vehicle
costs as a result of greater order volumes and inflationary cost
pressures but was below the rate of sales growth because of
improved delivery efficiency. Deliveries per van per week have
risen by 2.7% to 194 (1H 2018: 189) as customer density improved
and with continued enhancements to our routing system.
Head office costs increased by 20.6% year-on-year from GBP24.3
million to GBP29.3 million. This is driven by technology costs as
we begin the project to transition Ocado.com onto our new platform,
and additional headcount partly to support the warehouse operations
opened in the last 12 months.
Marketing costs excluding voucher spend increased from GBP5.9
million to GBP8.7 million due to increases in online acquisition
and trialling of an offline media campaign. This was 1.1% as a
percentage of retail revenue* (1H 2018: 0.8%).
EBITDA*(2)
EBITDA*(2) for the retail business decreased from GBP46.1
million in 1H 2018 to GBP44.1 million.
Solutions Segment
Adjusted(3)
================================= ================== ============
1H 2019 1H 2018 Variance
vs 1H 2018
adjusted
GBPm GBPm %
================================= ======== ======== ============
Fees Invoiced 122.7 90.1 36.2
================================= ======== ======== ============
Revenue* 70.8 58.7 20.6
Distribution and administrative
costs*(1) 87.0 65.2 33.4
EBITDA*(2) (16.2) (6.6) 145.5
================================= ======== ======== ============
(1) Solutions distribution and administrative costs* is an
alternative performance measure, which we define in note 15 to the
condensed financial statements and excludes depreciation,
amortisation, impairment and exceptional items
(2) EBITDA* is an alternative performance measure which we
define as earnings before net finance cost, taxation, depreciation,
amortisation, impairment and exceptional items*
(3) Adjusted to remove exceptional items. Exceptional items are
an alternative performance measure.
Fees
Fees invoiced, exclusive of VAT, amounted to GBP122.7 million,
of which GBP46.7 million relates to international Solutions
partners (1H 2018: GBP90.1 million, of which GBP23.7 million
relates to international Solutions partners) and are a combination
of fees due for services invoiced under existing solutions
contracts and amounts received in advance of new Solutions
contracts. Fees relating to Solutions contracts are not recognised
as revenue until a working solution is delivered to the partner.
When fees invoiced are greater than the revenue recognised, the
Group recognises a contract liability.
Revenue*
The revenue* from Ocado's Solutions businesses was GBP70.8
million, up from GBP58.7 million in 2018. This comprises fees from
our arrangement with Morrisons, for services rendered, technology
support, research and development, management fees and a recharge
of relevant operational variable and fixed costs and also an
immaterial revenue from International solutions partners.
Distribution and administrative costs*
Adjusted(2)
================================== ================== ============
1H 2019 1H 2018 Variance
vs 1H 2018
adjusted
GBPm GBPm %
================================== -------- ======== ------------
Distribution costs 58.3 47.1 23.8
Administrative costs 28.7 18.1 58.6
================================== ======== ======== ============
Total Solutions distribution and
administrative costs*(1) 87.0 65.2 33.4
================================== ======== ======== ============
(1) Solutions distribution and administrative* costs excludes
depreciation, amortisation, impairment and exceptional items and is
an alternative performance measure which we define in note 15 to
the condensed financial statements
(2) Adjusted to remove exceptional items. Exceptional items are
an alternative performance measure.
Distribution and administrative costs* predominantly consist of
fulfillment and delivery operation costs for the Morrisons business
and the costs of employees who are developing solutions for and
supporting our partnership agreements. These costs grew 33.4%
year-on-year as a result of increases in headcount to support
further improvements in our platform, to support existing
international clients, and to build further capabilities to sign
future clients.
EBITDA*
EBITDA* from our Solutions activities was GBP(16.2) million, an
increased loss of GBP(9.6) million due to continued investment for
our existing and new partnership agreements.
Other Segment
EBITDA* was GBP(9.2) million in 1H 2019, an increased loss of
GBP(4.5) million primarily due to the increase in national
insurance expense relating to share-based management incentive
charges.
Exceptional Items
26 Weeks ended 26 Weeks ended 52 weeks ended
2 June 2019 3 June 2018 2 December
GBPm GBPm 2018
GBPm
====================================================== ============================ =============== ===============
Andover CFC
------------------------------------------------------ ---------------------------- --------------- ---------------
96.9 - -
* Write off of property, plant and equipment
3.2 - -
* Write off of intangible assets
5.6 - -
* Loss of inventory
(11.8) - -
* Insurance reimbursement
4.6 - -
* Other exceptional costs
Disposal of Fabled 0.1 - -
Joint venture with Marks & 0.4 - -
Spencer
Litigation costs - - 0.1
====================================================== ============================ =============== ===============
Total exceptional items 99.0 - 0.1
====================================================== ============================ =============== ===============
Andover CFC
In February 2019, a fire destroyed the Andover CFC, including
the building, machinery and all inventory held on site. The Group
has comprehensive insurance and claims have been formally accepted
by the insurers. Property, plant and equipment with a net book
value of GBP96.9 million was destroyed or damaged to the extent
that nothing significant is expected to be recoverable. Inventory
held at cost of GBP5.6 million was destroyed by the fire.
Insurance reimbursement for inventory is for the retail price of
destroyed inventory, other incremental costs and a portion of
business interruption losses.
There have been a number of other exceptional costs as a result
of the fire which include, but are not limited to, temporary costs
of transporting employees to other warehouses to work, professional
fees relating to the insurance claims process, reimbursement of
employee's personal assets that were destroyed and a restructuring
provision that has been recognised as a result of the formal
redundancy consultation that commenced in May 2019.
The Group expects to receive further insurance reimbursements in
respect of reconstruction costs and business interruption losses.
Claim negotiations are ongoing and the Group have not included any
further amount in respect of these reimbursements as the likely
insurance proceeds cannot be accurately quantified at this point.
Income will be recognised in the future as the rebuilding costs of
the CFC are incurred.
Disposal of Fabled
Legal and other transaction costs of GBP0.1 million were
incurred in relation to the planned sale of Fabled.
Joint venture with M&S
Whilst certain costs relating to the transaction are permitted
to be accounted for directly within equity, there are others that
do not meet the requirements and as a result have been reported as
exceptional costs. These include, but are not limited to, legal
fees for advice relating to TUPE regulations and contractor fees
incurred relating to transitional arrangements.
Loss before tax
Statutory Adjusted(1)
============================ ================== ================== ===============
1H 2019 1H 2018 1H 2019 1H 2018 Variance
vs 1H
2018 adjusted
GBPm GBPm GBPm GBPm %
============================ ======== ======== ======== ======== ===============
Depreciation, amortisation
and impairment 55.2 41.7 55.0 41.5 32.5
Net finance costs 6.7 6.2 6.7 6.2 8.1
Share of results from
joint venture 0.5 0.6 0.5 0.6 (16.7)
Loss before tax (142.8) (13.6) (43.0) (12.9) 233.3
============================ ======== ======== ======== ======== ===============
(1) Adjusted to remove exceptional items and Fabled which is now
classified as held for sale. Exceptional items are an alternative
performance measure.
Depreciation, amortisation and impairment
Total depreciation and amortisation costs excluding write off of
Andover were GBP55.0 million (1H 2018: GBP41.5 million), an
increase of 32.5% year-on-year, driven primarily by the annualised
impact of the Erith CFC and new front end software as a result of
Bon Preu going live in the period.
Net finance costs
Net finance costs increased from GBP6.2 million to GBP6.7
million year-on-year. This primarily consists of finance costs
relating to the GBP250 million Senior Secured Notes, and the growth
came from reduced capitalisation of interest on qualifying assets,
offset by cost savings from debt expiring such as finance
leases.
GBP0.3 million of interest costs have been capitalised in the
period in relation to the Bond and the RCF in accordance with the
relevant accounting standards (1H 2018: GBP2.0 million).
Share of result from joint venture
MHE JVCo Limited ("MHE JVCo") holds Dordon CFC assets, which
Ocado uses to service its and Morrisons' online business and is
owned 50% by Ocado and 50% by Morrisons. The Group share of MHE
JVCo profit after tax in the period amounted to GBP0.5 million (1H
2018: GBP0.6 million).
Loss before tax and exceptional items*
Loss before tax and exceptional items* for the period was
GBP43.0 million (1H 2018: loss of GBP12.9 million).
Taxation
Due to the availability of capital allowances and Group loss
relief, the Group does not expect to pay corporation tax during the
period. No deferred tax credit was recognised in the period. Ocado
had approximately GBP267.5 million (1H 2018: GBP207.6 million) of
unutilised carried forward tax losses at the end of the period.
Dividend
During the period, the Group did not declare a dividend.
Earnings per share
Basic loss per share as per the statutory results was 19.77p (1H
2018: loss per share of 2.22p) and diluted loss per share was
19.77p (1H 2018: loss per share of 2.22p).
Capital expenditure
Capital expenditure for the period:
1H 2019 1H 2018
GBPm GBPm
========================================= ======== ========
Mature CFCs 1.8 1.5
New CFCs 26.4 53.2
International CFCs 22.4 0.5
Delivery 5.7 3.8
Technology 31.6 26.4
Fulfilment Development 13.5 8.5
Other 10.6 7.3
========================================= ======== ========
Total capital expenditure(,) (excluding
share of MHE JVCo) 112.0 101.2
========================================= ======== ========
Total capital expenditure (including
share of MHE JVCo) 112.2 101.6
========================================= ======== ========
Capital expenditure in the Hatfield CFC was GBP1.8 million (1H
2018: GBP1.5 million), which mainly related to a number of small
projects to improve the capacity and resiliency of these sites.
We incurred GBP26.4 million of costs in the period for our new
CFCs, with the majority at Erith CFC to support ramping up
operations.
The building works on our new international CFCs continued in
FY19. These relate to deals signed for CFCs in France, Canada and
USA.
Total expenditure on new vehicles in the period was GBP5.7
million (1H 2018: GBP3.8 million). This expenditure enabled
business growth and replacement of vehicles that have reached or
exceeded their five year useful life.
Ocado continued to develop its own proprietary software and
incurred GBP31.6 million (1H 2018: GBP26.4 million) of internal
development costs in the period on technology, with GBP5.8 million
(1H 2018: GBP4.4 million) being spent on computer hardware and
software. We expanded our headcount as increased investments were
made to support our strategic initiatives. The main areas of
investment were replatforming of our technology including the
greater use of public and private cloud services, and support for
the growth of Erith CFC and existing partners' future CFCs.
Fulfilment development expenditure of GBP13.5 million (1H 2018:
GBP8.5 million) represents the development of our next generation
fulfilment solutions which will be used in our latest CFCs and
within CFCs for our Solutions partners.
In the period, we incurred our share of the capital expenditure
relating to MHE JVCo of GBP0.2 million (1H 2018: GBP0.4 million) to
improve operational capacity and efficiency of the Dordon CFC and
various minor improvement projects.
Other capital expenditure was GBP10.6 million in the period,
primarily relating to our distribution network and investments in
the transformation of our business process and infrastructure to
support the OSP expansion, including a new HR system.
At 2 June 2019, capital commitments contracted, but not provided
for by the Group, amounted to GBP78.8 million (1H 2018: GBP49.9
million). We expect capital expenditure in 2019 to be approximately
GBP350 million which mainly comprises the continuing investment in
our infrastructure and technology solutions, the implementation of
our solution to our international partners, roll out of our new
CFCs and additional investment in new vehicles to support business
growth. This includes capex requirements related directly to our
new Solutions' customers.
Cash flow
Net operating cash flow after finance costs paid decreased to an
outflow of GBP8.6 million, from an inflow of GBP38.1 million in
2018 as detailed below:
1H 2019 1H 2018
GBPm GBPm
===================================================== ========= ========
EBITDA*(1) 18.1 34.3
Working capital movement 38.6 1.8
Other non-cash items 14.9 8.7
Finance costs paid (3.5) (6.7)
----------------------------------------------------- --------- --------
Cash settlement of Growth Incentive Plan (80.2) -
----------------------------------------------------- --------- --------
Insurance proceeds relating to destroyed inventory 3.5 -
===================================================== ========= ========
Operating cash flow (8.6) 38.1
Insurance proceeds relating to Andover CFC 40.0 -
Capital investment (131.8) (72.7)
Decrease in finance obligations (12.6) (8.6)
Dividend from joint venture 6.6 -
Proceeds from share issues net of transaction
costs 57.7 340.3
Transaction costs (3.8) -
----------------------------------------------------- --------- --------
Interest received 1.8 0.5
===================================================== ========= ========
Movement in cash and cash equivalents (50.7) 297.6
===================================================== ========= ========
1. EBITDA* is an alternative performance measure which we define
as earnings before net finance cost, taxation, depreciation,
amortisation, impairment and exceptional items*
Operating cash flow decreased by GBP46.7 million during the year
driven mainly by the cash settlement of share incentive schemes,
partially offset by an increase in Solutions fees received and
insurance proceeds of GBP3.5 million received for the loss of
inventory for the CFC in Andover. The increase in working capital
inflow of GBP38.6 million is driven by an increase in trade and
other payables of GBP44.8 million and an increase in contract
liabilities of GBP41.9 million, offset by an increase in trade and
other receivables of GBP54.8 million. The remaining GBP6.7 million
is due to the decrease of inventories and settlement of cash flow
hedges.
During the period there was GBP131.8 million of capital
expenditure and investment, which was paid in cash, as the Group
continues to invest for future growth comprising investments in new
CFCs, development of our next generation fulfilment solutions, and
spend on new vehicles and spoke sites. Insurance proceeds of
GBP40.0 million were received towards the rebuilding of the Andover
CFC. The Group also received a dividend of GBP6.6 million from MHE
JVCo, a joint venture company in which the Group holds a 50%
interest.
Net financing cash flows in the period were GBP41.3 million,
comprising GBP57.7 million of proceeds from the disposal of shares,
offset by GBP12.6 million decrease in financing obligations and
GBP3.8 million of transaction costs.
Balance sheet
The Group had cash and cash equivalents of GBP360.1 million at
the end of the period versus GBP410.8 million as at 2 December
2018.
Gross debt at the period end was GBP360.2 million (1H 2018:
GBP375.2 million) and external gross debt*, excluding obligations
under finance leases owing to MHE JVCo, was GBP291.1 million (1H
2018: GBP282.9 million). External net cash* at the period end was
GBP69.0 million (1H 2018: GBP164.7 million). External net cash* for
1H 2018 included a one-off uplift from cash generated by the
proceeds from the issue of share capital.
Trade and other receivables includes GBP51.5 million (1H 2018:
GBP33.0 million) of amounts due from suppliers in respect of
commercial income. GBP9.2 million (1H 2018: GBP4.9 million) is
within trade receivables, and GBP42.3 million (1H 2018: GBP28.1
million) within accrued income.
The Group has recognised GBP157.1 million (1H 2018 restated:
GBP74.3 million) of contract liabilities which are fees invoiced to
Solutions customers prior to the recognition of revenue. The
increase is due to new Solutions deals signed since that date.
Included within property, plant and equipment is capital
work--in--progress for land and buildings of GBP48.8 million (1H
2018: GBP38.1 million) and capital work--in--progress for fixtures,
fittings, plant and machinery of GBP56.4 million (1H 2018: GBP93.8
million), the decrease is largely due to costs included in 1H 2018
relating to Erith CFC, which opened in the second half of 2018.
Key performance indicators
The following table sets out a summary of selected unaudited
operating information for 1H 2019 and 1H 2018:
1H 2019 1H 2018 Variance
Average orders per week(1) 318,000 288,000 10.4%
-------- -------- ---------
Average order size (GBP)(2) 108.04 108.18 (0.1)%
-------- -------- ---------
Overall CFC efficiency (units
per hour) (3) 167 163 2.4%
-------- -------- ---------
Average deliveries per van
per week (DPV/week) (4) 194 189 2.7%
-------- -------- ---------
Average product wastage (%
of retail revenue*) (5) 0.7% 0.7% n/a
-------- -------- ---------
Source: the information in the table above is derived from
information extracted from internal financial and operating
reporting systems and is unaudited
1. Average orders per week refers to results of Ocado.com and Fetch.
2. Average retail value of goods a customer receives (including
VAT and delivery charge) per order from Ocado.com
3. Measured as units dispatched from the CFC per variable hour
worked by Hatfield CFC and Dordon CFC operational personnel. We
consider the mature CFCs to be Hatfield and Dordon
4. Average deliveries per van per week has been adjusted to
exclude the period in which the Andover spoke was not operational,
following the fire.
5. Value of products purged for having passed Ocado's "use by"
life guarantee divided by retail revenue*
*These measures are considered Alternative Performance Measures
which we define in note 15 to the condensed financial
statements
Condensed Consolidated Income Statement
for the 26 weeks ended 2 June 2019
26 weeks ended 2 June 26 weeks 52 weeks
2019 ended 3 ended
June 2018 2 December
Restated(b) 2018(c)
Results Exceptional Total
before items (Note
exceptional 5)
items
Notes GBPm GBPm GBPm GBPm GBPm
=============================== ====== ============ ============ =========== ============ ===========
(unaudited) (unaudited) (unaudited) (unaudited) (audited)
Revenue 4 882.3 - 882.3 795.3 1,598.8
Cost of sales (577.0) (5.6) (582.6) (526.1) (1,051.3)
=============================== ====== ============ ============ =========== ============ ===========
Gross profit 305.3 (5.6) 299.7 269.2 547.5
Other income 39.7 11.8 51.5 34.0 71.9
Distribution costs (275.1) (4.6) (279.7) (234.2) (485.4)
Administrative expenses (107.5) (100.6) (208.1) (77.0) (167.1)
Operating loss before share
of result from joint venture (37.6) (99.0) (136.6) (8.0) (33.1)
Share of result from joint
venture 0.5 - 0.5 0.6 1.2
Operating loss (37.1) (99.0) (136.1) (7.4) (31.9)
Finance income 7 1.6 - 1.6 0.5 2.2
Finance costs 7 (8.3) - (8.3) (6.7) (14.7)
=============================== ====== ============ ============ =========== ============ ===========
Loss before tax (43.8) (99.0) (142.8) (13.6) (44.4)
Taxation (0.2) - (0.2) (0.3) (0.5)
=============================== ====== ============ ============ =========== ============ ===========
Loss for the period (44.0) (99.0) (143.0) (13.9) (44.9)
=============================== ====== ============ ============ =========== ============ ===========
Loss per share pence pence pence
=============================== ====== ============ ============ =========== ============ ===========
Basic and diluted loss per
share 6 (19.77) (2.22) (6.85)
=============================== ====== ============ ============ =========== ============ ===========
Earnings before interest, taxation, depreciation, amortisation,
impairment and exceptional items (EBITDA(a) )
26 weeks ended 26 weeks ended 52 weeks ended
2 June 2019 3 June 2018 2 December 2018
Restated(b)
Notes GBPm GBPm GBPm
============================== ====== ======================= ============================== =====================
(unaudited) (unaudited) (audited)
Operating loss (136.1) (7.4) (31.9)
Adjustments for:
Exceptional items(c) 5 99.0 - 0.1
Depreciation of property,
plant and equipment 37.5 28.9 63.3
Amortisation expense 17.7 12.8 27.1
Impairment of property, plant
and equipment - - 0.5
Impairment of intangibles - - 0.4
EBITDA (a) 18.1 34.3 59.5
============================== ====== ======================= ============================== =====================
(a) EBITDA is an alternative performance measure, refer to note
15 for further information.
(b) 2018 restatement was due to adoption of IFRS 15 in the
second half of 2018. Refer to note 3 for further details.
(c) Exceptional items of GBP0.1 million in 2018 have been
reclassified to administrative expenses in the income statement for
purposes of presenting the comparative information.
Condensed Consolidated Statement of Comprehensive Income
for the 26 weeks ended 2 June 2019
26 weeks 26 weeks ended 52 weeks ended
ended 3 June 2018 2 December
2 June 2019 Restated(a) 2018
GBPm GBPm GBPm
============================================= ============================= ==================== ==================
(unaudited) (unaudited) (audited)
Loss for the period (143.0) (13.9) (44.9)
Other comprehensive (expense)/income:
Items that may be reclassified to
profit or loss in subsequent years:
Cash flow hedges:
Gains arising on hedging contracts - 0.4 1.0
Losses arising on hedging contracts (1.4) - -
Foreign exchange gain/(loss) on
translation
of foreign subsidiary 0.1 (0.5) (0.3)
Items that will not be reclassified
to profit or loss in subsequent years:
Gains on equity instruments designated
at fair value through other comprehensive
income 5.2 - -
============================================= ============================= ==================== ==================
Other comprehensive income/(expense)
for the period, net of tax 3.9 (0.1) 0.7
============================================= ============================= ==================== ==================
Total comprehensive expense for the
period (139.1) (14.0) (44.2)
============================================= ============================= ==================== ==================
(a) 2018 restatement was due to adoption of IFRS 15 in the
second half of 2018. Refer to note 3 for further details.
Condensed Consolidated Balance Sheet
as at 2 June 2019
2 June 2019 3 June 2018 2 December
Restated(a) 2018
Notes GBPm GBPm GBPm
==================================== ===== =========== ============ ============
(unaudited) (unaudited) (audited)
Non-Current Assets
Intangible assets 160.4 123.1 143.2
Property, plant and equipment 498.5 514.7 556.7
Deferred tax asset 16.7 14.5 16.6
Costs to obtain contracts 0.8 - 0.8
Financial assets 10.8 3.7 4.1
Investment in joint venture 46.1 51.7 52.2
Investment in associate 10 4.8 - -
738.1 707.7 773.6
==================================== ===== =========== ============ ============
Current Assets
Assets held for sale 11 12.5 4.2 4.2
Inventories 44.4 43.4 56.5
Trade and other receivables 144.8 97.6 104.7
Derivative financial instruments - 0.6 0.1
Cash and cash equivalents 360.1 447.6 410.8
==================================== ===== =========== ============ ============
561.8 593.4 576.3
==================================== ===== =========== ============ ============
Total Assets 1,299.9 1,301.1 1,349.9
==================================== ===== =========== ============ ============
Current Liabilities
Trade and other payables (377.5) (251.8) (291.0)
Contract liabilities (3.7) (5.4) (6.6)
Obligations under finance leases 8 (26.5) (32.6) (22.9)
Derivative financial instruments (0.1) (0.2) (0.5)
Provisions (0.8) (1.1) (8.3)
Liabilities associated with assets
held for sale 11 (2.4) - -
==================================== ===== =========== ============ ============
(411.0) (291.1) (329.3)
==================================== ===== =========== ============ ============
Net Current Assets 150.8 302.3 247.0
==================================== ===== =========== ============ ============
Non-Current Liabilities
Contract liabilities (153.4) (68.9) (108.6)
Borrowings 8 (244.8) (243.8) (244.3)
Obligations under finance leases 8 (88.9) (98.8) (93.4)
Provisions (10.7) (15.1) (8.8)
Deferred tax liability (8.9) (6.8) (8.9)
==================================== ===== =========== ============ ============
(506.7) (433.4) (464.0)
==================================== ===== =========== ============ ============
Net Assets 382.2 576.6 556.6
==================================== ===== =========== ============ ============
Equity
Share capital 14.1 13.9 14.0
Share premium 676.1 587.6 587.0
Treasury shares reserve (88.9) (38.3) (9.2)
Reverse acquisition reserve (116.2) (116.2) (116.2)
Other reserves 6.5 1.0 1.4
Retained earnings (92.1) 128.6 79.6
Non-controlling interests (17.3) - -
==================================== ===== =========== ============ ==========
Total Equity 382.2 576.6 556.6
==================================== ===== =========== ============ ==========
(a) 2018 restatement was due to adoption of IFRS 15 in the
second half of 2018. Refer to note 3 for further details.
Condensed Consolidated Statement of Changes in Equity
for the 26 weeks ended 2 June 2019
Attributable to owners of Ocado Group plc
======================================================================
Treasury Reverse Other Retained Total
Share Share shares acquisition reserves earnings Non-controlling Total
capital premium reserve reserve interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
========================================================= ======== ======== ======== =========== ======== ======== ======= =============== =======
Balance at 3 December
2018 (audited) 14.0 587.0 (9.2) (116.2) 1.4 79.6 556.6 - 556.6
IFRS 9: Impact of change
in accounting policy(a) - - - - 1.2 - 1.2 - 1.2
--------------------------------------------------------- -------- -------- -------- ----------- -------- -------- ------- --------------- -------
Restated balance at
3 December 2018(a) 14.0 587.0 (9.2) (116.2) 2.6 79.6 557.8 - 557.8
--------------------------------------------------------- -------- -------- -------- ----------- -------- -------- ------- --------------- -------
Loss for the period - - - - - (143.0) (143.0) - (143.0)
Other comprehensive
(expense)/income:
Gain on equity instruments
designated at fair
value through other
comprehensive income - - - - 5.2 - 5.2 - 5.2
Cash flow hedges
* Losses arising on hedging contracts - - - - (1.4) - (1.4) - (1.4)
Translation of foreign
subsidiary - - - - 0.1 - 0.1 - 0.1
--------------------------------------------------------- -------- -------- -------- ----------- -------- -------- ------- --------------- -------
Total comprehensive
(expense)/income for
the period - - - - 3.9 (143.0) (139.1) - (139.1)
--------------------------------------------------------- -------- -------- -------- ----------- -------- -------- ------- --------------- -------
Transactions with owners:
* Issue of ordinary shares 0.1 87.6 (86.4) - - - 1.3 - 1.3
* Alloted in respect of share option schemes - 1.5 - - - 1.5 - 1.5
* Disposal of treasury shares on exercise by
Participants - - 0.5 - - 0.2 0.7 - 0.7
* Disposal of unallocated treasury shares - - 5.7 - - 48.5 54.2 - 54.2
* Transfer of treasury shares to participants - - 0.8 - - (0.8) - - -
* Reclassification between reserves - - (0.3) - - 0.3 - - -
* Growth Incentive Plan cash settlement on vesting - - - - - (80.2) (80.2) - (80.2)
* Share-based payments charge - - - - - 3.3 3.3 - 3.3
* Non-controlling interests on part-disposal of
subsidiary - - - - - - - (17.3) (17.3)
========================================================= ======== ======== ======== =========== ======== ======== ======= =============== =======
Total transactions
with owners 0.1 89.1 (79.7) - - (28.7) (19.2) (17.3) (36.5)
========================================================= ======== ======== ======== =========== ======== ======== ======= =============== =======
Balance at 2 June
2019 (unaudited) 14.1 676.1 (88.9) (116.2) 6.5 (92.1) 399.5 (17.3) 382.2
--------------------------------------------------------- -------- -------- -------- ----------- -------- -------- ------- --------------- -------
(a) 2018 restatement was due to adoption of IFRS 9. Refer to note 3
for further details.
Attributable to owners of Ocado Group plc
======================================================================
Treasury Reverse Other Retained Total
Share Share shares acquisition reserves earnings Non-controlling Total
capital premium reserve reserve interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
========================================================= ======== ======== ======== =========== ======== ======== ======= =============== =======
Balance at 4 December
2017 (audited) 12.6 258.4 (48.0) (116.2) 0.7 163.2 270.7 - 270.7
IFRS 15: Impact of
change in accounting
policy(b) - - - - - (23.1) (23.1) - (23.1)
--------------------------------------------------------- -------- -------- -------- ----------- -------- -------- ------- --------------- -------
Restated balance at
4 December 2017(b) 12.6 258.4 (48.0) (116.2) 0.7 140.1 247.6 - 247.6
--------------------------------------------------------- -------- -------- -------- ----------- -------- -------- ------- --------------- -------
Restated loss for the
period(b) - - - - - (13.9) (13.9) - (13.9)
Other comprehensive
(expense)/income:
Currency translation
differences - - - - - (0.4) (0.4) - (0.4)
Cash flow hedges
* Gains arising on hedging contracts - - - - 0.4 - 0.4 - 0.4
Translation of foreign
subsidiary - - - - (0.1) - (0.1) - (0.1)
--------------------------------------------------------- -------- -------- -------- ----------- -------- -------- ------- --------------- -------
Restated total comprehensive
(expense)/ income for
the period(a) - - - - 0.3 (14.3) (14.0) - (14.0)
--------------------------------------------------------- -------- -------- -------- ----------- -------- -------- ------- --------------- -------
Transactions with owners:
* Issue of ordinary shares 1.3 329.2 - - - - 330.5 - 330.5
* Movement in treasury shares - - 9.7 - - - 9.7 - 9.7
* Share-based payments charge - - - - - 2.8 2.8 - 2.8
Total transactions
with owners 1.3 329.2 9.7 - - 2.8 343.0 - 343.0
========================================================= ======== ======== ======== =========== ======== ======== ======= =============== =======
Balance at 3 June
2018 (unaudited) 13.9 587.6 (38.3) (116.2) 1.0 128.6 576.6 - 576.6
--------------------------------------------------------- -------- -------- -------- ----------- -------- -------- ------- --------------- -------
(b) 2017 and 2018 restatement was due to adoption of IFRS 15.
Refer to note 3 for further details.
Condensed Consolidated Statement of Cash Flows
for the 26 weeks ended 2 June 2019
26 weeks 26 weeks 52 weeks
ended 2 June ended 3 June ended 2 December
2019 2018 2018
Restated(a)
Notes GBPm GBPm GBPm
============================================ ===== ============= ============= =================
(unaudited) (unaudited) (audited)
Cash flows from operating activities
Loss before tax (142.8) (13.6) (44.4)
Adjustments for:
- Depreciation, amortisation and
impairment losses 55.2 41.7 91.3
- Write off of fixed assets, intangible
assets and inventories 105.7 - -
- Movement in provisions (5.7) 6.1 7.0
- Share of profit in joint venture (0.5) (0.6) (1.2)
- Share-based payments charge 3.3 2.8 6.1
- Net finance costs 7 6.7 6.2 12.5
- Movement in costs to obtain contract - - (0.8)
Changes in working capital:
- Movement in inventories 6.6 (0.4) (13.6)
- Movement in trade and other receivables (54.8) (29.5) (36.1)
- Movement in trade and other payables 44.8 7.1 55.0
- Movement in contract liabilities 41.9 24.6 65.5
- Settlement of cash flow hedges 0.1 0.4 1.6
============================================ ===== ============= ============= =================
Cash generated from operations 60.5 44.8 142.9
Interest paid (3.5) (6.7) (14.5)
Settlement of Growth Incentive Plan (80.2) - -
Movement in other taxation relating
to the settlement of the Growth Incentive
Plan 11.1 - -
Insurance proceeds relating to destroyed
inventory 3.5 - -
============================================ ===== ============= ============= =================
Net cash flows from operating activities (8.6) 38.1 128.4
============================================ ===== ============= ============= =================
Cash flows from investing activities
Insurance proceeds relating to rebuiding
Andover CFC 40.0 - -
Purchase of property, plant and equipment (88.4) (50.2) (112.8)
Purchase of intangible assets (38.6) (22.5) (57.3)
Dividend received from joint venture 6.6 - -
Interest received 1.8 0.5 2.2
Purchase of investment in associate 10 (4.8) - -
============================================ ===== ============= ============= =================
Net cash flows from investing activities (83.4) (72.2) (167.9)
============================================ ===== ============= ============= =================
Cash flows from financing activities
Proceeds from the issue of ordinary
share capital net of transactions
costs 1.3 324.0 323.4
Proceeds from allotment of share
options 1.5 4.0 6.2
Proceeds from disposal of treasury
shares on exercise by participants 0.7 12.3 3.5
Proceeds from disposal of unallocated
treasury shares 54.2 - -
Transaction costs (3.8) - -
Repayments of obligations under finance
leases (12.3) (8.0) (32.0)
Payment of financing fees (0.3) (0.6) (0.8)
Net cash flows from financing activities 41.3 331.7 300.3
============================================ ===== ============= ============= =================
Net (decrease)/increase in cash and
cash equivalents (50.7) 297.6 260.8
Cash and cash equivalents at the
beginning of the period 410.8 150.0 150.0
============================================ ===== ============= ============= =================
Cash and cash equivalents at the
end of the period 360.1 447.6 410.8
============================================ ===== ============= ============= =================
(a) 2018 restatement was due to adoption of IFRS 15 in the second half
of 2018. Refer to note 3 for further details.
Notes to the Condensed Consolidated Interim Financial
Information
1 General Information
Ocado Group plc (hereafter "the Company") is incorporated in the
United Kingdom and domiciled in England and Wales (registration
number 07098618). The address of its registered office is Buildings
One & Two, Trident Place, Mosquito Way, Hatfield AL10 9UL. The
condensed consolidated interim financial information (hereafter
"financial information") comprises the results of the Company and
its subsidiaries (hereafter "the Group").
The financial period represents the 26 weeks ended 2 June 2019
(prior period 26 weeks ended 3 June 2018; prior financial year 52
weeks ended 2 December 2018).
2 Basis of Preparation
The financial information has been prepared in accordance with
IAS 34 'Interim Financial Reporting' as adopted by the European
Union and the Disclosure Rules and Transparency Rules of the UK
Financial Conduct Authority.
The financial information does not amount to full statutory
accounts within the meaning of section 434 of the Companies Act
2006 and does not include all of the information and disclosures
required for full annual financial statements. It should be read in
conjunction with the Annual Report and Accounts of Ocado Group plc
for the 52 weeks ended 2 December 2018 which was prepared in
accordance with IFRS as adopted by the European Union and were
filed with the Registrar of Companies. This report is available
either on request from the Company's registered office or to
download from www.ocadogroup.com. The auditor's report on these
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under section 498 of
the Companies Act 2006.
The financial information is presented in sterling, rounded to
the nearest hundred thousand unless otherwise stated. It has been
prepared under the historical cost convention, except for certain
financial instruments, which have been measured at fair value.
The directors are satisfied that the Company has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the condensed consolidated financial statements. In
assessing going concern, the Directors take into account the
Group's cash flows, solvency and liquidity positions and borrowing
facilities. At the period end, the Group had cash and cash
equivalents of GBP360.1 million (1H 2018: GBP447.6 million) and net
current assets of GBP150.8 million (1H 2018: GBP302.3 million)
3 Significant Accounting Policies
The accounting policies applied by the Group in these interim
financial statements are consistent with those applied by the Group
in its consolidated financial statements for the 52 weeks ended 2
December 2018, with the exception of IFRS 9 "Financial Instruments"
which became effective for the Group for the period commencing 3
December 2018.
IFRS 9 Financial Instruments
IFRS 9 "Financial Instruments" replaces IAS 39 for annual
periods beginning on or after 1 January 2018, bringing together all
three aspects of the accounting for financial instruments:
classification and measurement, impairment and hedge
accounting.
The main changes the new standard introduces are:
-- new requirements for the classification and measurement of
financial assets and financial liabilities;
-- a new model for recognising impairment of financial assets; and
-- changes to hedge accounting by aligning hedge accounting more
closely to an entity's risk management objectives.
The changes have been applied by adjusting the Consolidated
Balance Sheet at 3 December 2018, the date of initial application,
with no restatement of comparative information. In accordance with
IFRS 9 transition guidance, comparative financial information in
the primary financial statements remains compliant with the
classification and measurement requirements of IAS 39.
Classification and Measurement
IFRS 9 introduced a principles-based approach to the
classification of financial assets. Financial assets are measured
at fair value through profit or loss (FVTPL), fair value through
other comprehensive income (FVTOCI) or amortised cost.
Classification is determined by the nature of the cash flows of the
assets and the business model in which they are held. These
categories replace the existing IAS 39 classifications. For
financial liabilities, most of the pre-existing requirements for
classification and measurement previously included in IAS 39 were
carried forward unchanged into IFRS 9.
An assessment of the Group's business models was made as at the
date of initial application on 3 December 2018 and applied
prospectively. The changes in classification resulted in an
increase in an unlisted equity investment held within Non-current
financial assets as at
3 December 2018. A summary of the respective classifications
under IAS 39 and IFRS 9 is presented below:
Measurement Category Carrying Amount as at 3 December 2018
============= ============================ ================================================ ==========================
Original New Difference
Balance Original
sheet line (IAS 39) New (IFRS 9) GBPm GBPm GBPm
============= ============= ============= ============================= ================= ==========================
Non-current
financial
assets
Unlisted
equity Available
investment for sale FVTOCI 0.4 1.6 1.2(a)
Other Loans and Amortised
receivables receivables cost 3.7 3.7 -
Current -
financial
assets
Trade Loans and Amortised
Receivables receivables cost 52.4 52.4 -
Other Loans and Amortised
Receivables receivables cost 39.4 39.4 -
Derivatives FVTPL FVTPL 0.1 0.1 -
Cash and
cash Loans and Amortised
equivalents receivables cost 410.8 410.8 -
Current
financial
liabilities
Trade Amortised Amortised
payables cost cost 133.4 133.4 -
Other Amortised Amortised
payables cost cost 135.2 135.2 -
Obligations
under
finance Amortised Amortised
leases cost cost 22.9 22.9 -
Derivative
financial
instruments FVTPL FVTPL 0.5 0.5 -
Non-current
financial
liabilities
Senior
secured Amortised Amortised
notes cost cost 244.3 244.3 -
Obligations
under
finance Amortised Amortised
leases cost cost 93.4 93.4 -
============= ============= ============== ============================= ================= ==========================
(a) Previously the Group measured the investment at cost as
permitted by IAS 39. Measurement at cost is no longer permitted and
an election to measure the investment at FVTOCI has been made.
IFRS 15 "Revenue from Contracts with Customers"
The Group early adopted IFRS 15 "Revenue from Contracts with
Customers" using the full retrospective method for the 52 week
period ended 2 December 2018. The adoption was in the second half
of the 2018 and hence the H1 18 results require restatement as a
comparative. This note shows the impact of the adoption of IFRS 15
on the Group's half year results for the 26 weeks ended 3 June
2018.
Consolidated Income Statement Restatement under IFRS 15
Below is a description of the IFRS 15 impact on material areas
requiring reclassification or restatement:
As previously Impact of 26 weeks
reported, IFRS 15 ended
26 weeks ended 3 June 2018
3 June 2018 Restated
Notes GBPm GBPm GBPm
=========================================== ===== ======= ============== =============
Revenue 4 799.9 (4.6) 795.3
Cost of sales (526.1) - (526.1)
=========================================== ===== ======= ============== =============
Gross profit 273.8 (4.6) 269.2
Other income 34.0 - 34.0
Distribution costs (234.2) - (234.2)
Administrative expenses (77.0) - (77.0)
=========================================== ===== ======= ============== =============
Operating loss before result from joint
venture and exceptional items* (3.4) (4.6) (8.0)
Share of result from joint venture 0.6 - 0.6
Exceptional items* - - -
=========================================== ===== ======= ============== =============
Operating loss (2.8) (4.6) (7.4)
Finance income 7 0.5 - 0.5
Finance costs 7 (6.7) - (6.7)
=========================================== ===== ======= ============== =============
Loss before tax (9.0) (4.6) (13.6)
Taxation (0.3) - (0.3)
=========================================== ===== ======= ============== =============
Loss for the period (9.3) (4.6) (13.9)
=========================================== ===== ======= ============== =============
Loss per share pence pence Pence
=========================================== ===== ======= ============== =============
Basic and diluted loss per share 6 (1.49) (0.73) (2.22)
=========================================== ===== ======= ============== =============
Recognition of Revenue:
Under the Group's previous accounting policy, revenue for
certain contracts was recognised under the percentage of completion
method based upon costs incurred to date as a proportion of the
estimated full cost of completing the contract and applying the
percentage to the total revenue expected to be earned. Such
percentage of completion accounting would typically result in
higher levels of revenue recognised in the earlier stages of a
contract in line with the profile of costs incurred.
Under IFRS 15 revenue is recognised once, or as, a performance
obligation is fulfilled. Typically, in an Ocado Solutions contract,
revenue recognition would not commence until the date of "go-live".
Previously revenue was typically recognised in the earlier
development stages of a contract. This change has resulted in a
reduction of GBP4.6 million in revenue recognised in the period to
3 June 2018. Under IFRS 15, revenue is now spread over the expected
duration of the period the services are provided.
Consolidated Balance Sheet Restatement under IFRS 15
As previously reported,
3 June 2018 Impact of Other adjustment 3 June 2018
IFRS 15 Restated
Notes GBPm GBPm GBPm GBPm
==================================== ===== ======================= ========== ================= ============
Non-current assets
Intangible assets 123.1 - - 123.1
Property, plant and equipment 497.4 16.8 0.5 514.7
Deferred tax asset 14.5 - - 14.5
Costs to obtain contracts - - - -
Financial assets 3.7 - - 3.7
Investment in joint ventures 51.7 - - 51.7
==================================== ===== ======================= ========== ================= ============
690.4 16.8 0.5 707.7
==================================== ===== ======================= ========== ================= ============
Current assets
Asset held for sale 11 4.7 - (0.5) 4.2
Inventories 43.4 - - 43.4
Trade and other receivables 97.6 - - 97.6
Derivative financial instruments 0.6 - - 0.6
Cash and cash equivalents 447.6 - - 447.6
==================================== ===== ======================= ========== ================= ============
593.9 - (0.5) 593.4
==================================== ===== ======================= ========== ================= ============
Total assets 1,284.3 16.8 - 1,301.1
==================================== ===== ======================= ========== ================= ============
Current liabilities
Trade and other payables (281.6) 29.8 - (251.8)
Contract liabilities - (5.4) - (5.4)
Borrowings 8 - - - -
Obligations under finance leases 8 (32.6) - - (32.6)
Derivative financial instruments (0.2) - - (0.2)
Provisions (1.1) - - (1.1)
(315.5) 24.4 - (291.1)
==================================== ===== ======================= ========== ================= ============
Net current assets 278.4 24.4 (0.5) 302.3
==================================== ===== ======================= ========== ================= ============
Non-current liabilities
Contract liabilities - (68.9) - (68.9)
Borrowings 8 (243.8) - - (243.8)
Obligations under finance leases 8 (98.8) - - (98.8)
Provisions (15.1) - - (15.1)
Deferred tax liability (6.8) - - (6.8)
==================================== ===== ======================= ========== ================= ============
(364.5) (68.9) - (433.4)
==================================== ===== ======================= ========== ================= ============
Net assets 604.3 (27.7) - 576.6
==================================== ===== ======================= ========== ================= ============
Equity
Share capital 13.9 - - 13.9
Share premium 587.6 - - 587.6
Treasury shares reserve (38.3) - - (38.3)
Reverse acquisition reserve (116.2) - - (116.2)
Other reserves 1.0 - - 1.0
Retained earnings 156.3 (27.7) - 128.6
==================================== ===== ======================= ========== ================= ============
Total equity 604.3 (27.7) - 576.6
==================================== ===== ======================= ========== ================= ============
The cumulative effect of the adoption of IFRS 15 has resulted in
a decrease in net assets of GBP27.7 million as at 3 June 2018 and a
corresponding decrease in retained earnings. This reflects an
important change in accounting policy as the Group moves from
percentage of completion to a methodology that is focused on
aligning revenue recognition to the delivery of its performance
obligation. The new policy results in lower levels of revenue being
recognised in the early stages of a contract but higher levels
towards the end of a contract.
The decrease in trade and other payables relates to the
reclassification and restatement of deferred income as non-current
and current contract liabilities. Prior to adoption of IFRS 15,
deferred income was classified within 'Trade and other
payables'.
The increase in property, plant and equipment relates to
contributions received from a customer towards the cost of an
asset. These are within the scope of IFRS 15 and are therefore
recognised as contract liabilities and released over the life of
the contract but were previously offset against the cost of the
asset.
The other adjustment of GBP0.5 million relates to an item of
property, plant and equipment that was classified as a non-current
asset held for sale at 3 June 2018. It was incorrectly remeasured
at fair value which exceeded its carrying amount. This adjustment
corrects that remeasurement.
Consolidated Statement of Cash Flows Restatement under IFRS
15
As previously reported, Impact of IFRS 15 26 weeks ended
26 weeks ended 3 June 2018
3 June 2018 Restated
Notes GBPm GBPm GBPm
================================================================= ===== ====== ================= ==============
Cash flows from operating activities
Loss before tax (9.0) (4.6) (13.6)
Adjustments for:
- Depreciation, amortisation and impairment losses 41.7 - 41.7
- Movement in provisions 6.1 - 6.1
- Share of profit in joint venture (0.6) - (0.6)
- Share-based payments charge 2.8 - 2.8
- Net Finance costs 7 6.2 - 6.2
Changes in working capital:
- Movement in inventories (0.4) - (0.4)
- Movement in trade and other receivables (29.5) - (29.5)
- Movement in trade and other payables 24.8 (17.7) 7.1
- Movement in contract liabilities - 24.6 24.6
- Settlement of cash flow hedges 0.4 - 0.4
================================================================== ===== ====== ================= ==============
Cash generated from operations 42.5 2.3 44.8
Interest paid (6.7) - (6.7)
================================================================== ===== ====== ================= ==============
Net cash flows from operating activities 35.8 2.3 38.1
================================================================== ===== ====== ================= ==============
Cash flows from investing activities
Purchase of property, plant and equipment (47.9) (2.3) (50.2)
Purchase of intangible assets (22.5) - (22.5)
Interest received 0.5 - 0.5
================================================================== ===== ====== ================= ==============
Net cash flows used in investing activities (69.9) (2.3) (72.2)
================================================================== ===== ====== ================= ==============
Cash flows from financing activities
Proceeds from the issue of ordinary share capital net of
transaction costs 324.0 - 324.0
Proceeds from allotment of share options 4.0 - 4.0
Proceeds from disposal of treasury shares on exercise by
participants 12.3 - 12.3
Repayments of obligations under finance leases (8.0) - (8.0)
Payment of financing fees (0.6) - (0.6)
Net cash flows from financing activities 331.7 - 331.7
================================================================== ===== ====== ================= ==============
Net increase in cash and cash equivalents 297.6 - 297.6
Cash and cash equivalents at the beginning of the period 150.0 - 150.0
================================================================== ===== ====== ================= ==============
Cash and cash equivalents at the end of the period 447.6 - 447.6
================================================================== ===== ====== ================= ==============
As a result of the adoption of IFRS 15, certain
reclassifications were required in relation to the cash flow
movements between relevant balance sheet accounts. There has been
no change in the net increase in cash and cash equivalents as a
result of these reclassifications or the restatement of these
balance sheet accounts.
The following new standards are not yet effective and the impact
on the Group is currently under review:
IFRS 16 "Leases" provides guidance on the classification,
recognition and measurement of leases to help provide useful
information to the users of financial statements. The main aim of
this standard is to ensure all leases will be reflected on the
Consolidated Balance Sheet, irrespective of substance over form.
The new standard will replace IAS 17 "Leases" and is effective for
annual periods beginning on or after 1 January 2019 unless adopted
early and and will be applicable for the year commencing 2 December
2019. IFRS 16 is expected to have a significant impact on the
amounts recognised in the Group's consolidated financial
statements. On adoption of IFRS 16 the Group will recognise within
the balance sheet a right of use asset and lease liability for all
applicable leases. Within the income statement, rent expense will
be replaced by depreciation and interest expense. This will result
in a decrease in operating expenses and an increase in finance
costs. The standard will also impact a number of statutory measures
such as operating profit, cash generated from operations and
alternative performance measures, such as EBITDA, that are used by
the Group. The Group's ongoing review of IFRS 16 indicates that the
financial impact will result in an increase in finance leased
assets and financial liabilities of between GBP250 to GBP300
million on the Consolidated Balance Sheet based on the current
portfolio at 2 June 2019.
Taxes on income in the interim periods are accrued using the tax
rate that is expected to be applicable to expected total annual
earnings.
The preparation of interim financial information requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates. In preparing these interim
financial statements, the significant judgements made by management
in applying the Group's accounting policies and the key sources of
estimation were the same as those that applied to the Annual Report
and Accounts for the 52 weeks ended 2 December 2018.
4 Segmental Reporting
The Group's principal activity is grocery retailing and the
development of Intellectual Property ("IP") and technology used for
the online retailing, logistics and distribution of grocery and
consumer goods for its UK business and other partners. The Group is
not reliant on any major customer for 10% or more of its
revenue.
In accordance with IFRS 8 "Operating Segments", an operating
segment is defined as a business activity whose operating results
are reviewed by the chief operating decision-maker and for which
discrete information is available. Operating segments are reported
in a manner consistent with the internal reporting provided to the
chief operating decision-maker, as required by IFRS 8. The chief
operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has
been identified as the Executive Directors.
The Group has determined it has two reportable segments: Retail
and Solutions. The Retail segment provides online grocery and
general merchandise offerings to customers within the UK. The
Solutions segment provides end-to-end online retail solutions to
corporate customers within and outside of the UK. In order to
reconcile segment revenues(a) to the Group revenue and profit, a
third category entitled "Other" shows unallocated costs such as
central business activities.
The Board assesses the performance of all segments on the basis
of EBITDA(a) . EBITDA(a) as reported internally by segment is the
key measure utilised in assessing the performance of operating
segments within the Group.
The accounting policies of the segments are the same as those
for the Group as a whole. Any transactions between the business
segments are subject to normal commercial terms and market
conditions. Segment results and assets include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis.
Retail Solutions Other Total
GBPm GBPm GBPm GBPm
============================ ============== ================= ============= ============
Segment revenue(a) and
EBITDA(a)
26 weeks ended 2 June 2019
(unaudited)
Segment revenue(a) 811.5 70.8 - 882.3
Segment EBITDA(a) 43.4 (16.2) (9.1) 18.1
============================ ============== ================= ============= ============
26 weeks ended 3 June 2018
restated(b) (unaudited)
Segment revenue(a) 736.6 58.7 - 795.3
Segment EBITDA(a) 45.5 (6.6) (4.6) 34.3
============================ ============== ================= ============= ============
52 weeks ended 2 December
2018 (audited)
Segment revenue(a) 1,475.8 123.0 - 1,598.8
Segment EBITDA(a) 82.5 (17.9) (5.1) 59.5
============================ ============== ================= ============= ============
(a) Segement revenue and segment EBITDA is an alternative
performance measure, refer to note 15 for further information.
(b) 2018 restatement was due to adoption of IFRS 15 in the
second half of 2018. Refer to note 3 for further details.
5 Exceptional Items
26 weeks ended 26 weeks ended 52 weeks ended
2 June 2019 3 June 2018 2 December
2018
GBPm GBPm GBPm
==================================================== ==================== ==================== ====================
(unaudited) (unaudited) (audited)
Andover CFC
96.9 - -
* Write off of property, plant and equipment
3.2 - -
* Write off of intangible assets
5.6 - -
* Loss of inventory
(11.8) - -
* Insurance reimbursement
4.6 - -
* Other exceptional costs
Disposal of Marie Claire 0.1 - -
Beauty Limited ("Fabled")
Joint venture with Marks 0.4 - -
& Spencer
Litigation costs - - 0.1
==================================================== ==================== ==================== ====================
99.0 - 0.1
==================================================== ==================== ==================== ====================
Andover CFC
In February 2019 a fire destroyed the Andover CFC, including the
building, machinery and all inventory held on site. The Group has
comprehensive insurance and claims have been formally accepted by
the insurers.
Write off of property, plant and equipment and intangible
assets
Property, plant and equipment with a net book value of GBP96.9
million was destroyed or damaged to the extent that nothing
significant is expected to be recoverable. Where amounts are
expected to be recovered, for example through scrap proceeds, those
assets are impaired down to that recoverable amount. Intangible
assets with a net book value of GBP3.2 million were written off as
it was determined these costs were specific to the Andover location
and infrastructure.
Loss of inventory
Inventory held at cost of GBP5.6 million was destroyed by the
fire.
Other exceptional costs
These include, but are not limited to, temporary costs of
transporting employees to other warehouses to work, professional
fees relating to the insurance claims process, reimbursement of
employee's personal assets that were destroyed and a restructuring
provision that has been recognised as a result of the formal
redundancy consultation that commenced in May 2019.
Insurance reimbursement
This includes insurance reimbursements for the retail price of
destroyed inventory and other incremental costs plus a portion of
business interruption losses. The reimbursement has been presented
within 'other income'.
The Group expects to receive further insurance reimbursements in
respect of reconstruction costs and business interruption losses.
Claim negotiations are ongoing and the Group have not included any
further amount in respect of these reimbursements as the likely
insurance proceeds cannot be accurately quantified at this point.
Income will be recognised in the future as the rebuilding costs of
the CFC are incurred.
Disposal of Fabled
Legal and other transaction costs were incurred in relation to
the planned disposal of Fabled.
Joint venture with Marks & Spencer ("M&S")
In February 2019 the Group announced the creation of a new 50/50
joint venture with M&S. The joint venture will comprise Ocado's
UK grocery retail business supported by a new partnership for
solutions services underpinned by Ocado Smart Platform and the
provision of branding and sourcing from M&S. M&S products
will be available on Ocado.com by September 2020, replacing Ocado's
current sourcing agreement with Waitrose Limited. M&S have
agreed to pay Ocado GBP562.5 million in upfront cash and a deferred
cash payment of GBP187.5 million five years after completion
dependent on the satisfaction of certain financial and operational
conditions.
On 20 May 2019 the transaction was approved by Ocado's
shareholders at a general meeting and the transaction is expected
to complete in Q3 2019. Whilst certain costs relating to the
transaction are permitted to be accounted for directly within
equity, there are others that do not meet the requirements and as a
result have been reported as exceptional costs. These include, but
are not limited to, legal fees for advice relating to TUPE
regulations, contractor fees incurred relating to transitional
arrangements and accelerated share-based payment expenses for those
employees who are transferring to the new joint venture.
6 Loss Per Share
Basic loss per share is calculated by dividing the loss
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the period,
excluding ordinary shares held pursuant to the Group's JSOS which
are accounted for as treasury shares.
Diluted loss per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion
of all potentially dilutive shares. The Company has classes of
instruments that are potentially dilutive: share options, share
interests held pursuant to the Group's Joint Share Ownership Scheme
and shares under the Group's staff incentive plans.
Basic loss per share have been calculated as follows:
26 weeks ended 26 weeks ended 52 weeks ended
2 June 2019 3 June 2018 2 December
2018
m m m
(unaudited) (unaudited) (audited)
===================================== ============== ==================== ===============
Number of shares
Issued shares at the beginning of
the period 721.7 601.4 601.4
Weighted average effect of share
options exercised in the period 0.2 6.0 20.7
Weighted average effect of treasury
shares disposed of in the period 0.9 (2.5) (5.0)
Weighted average effect of treasury
shares transferred to participant
in the period 0.2 - (4.4)
Weighted average effect of shares
issued in the period 0.4 20.9 42.7
===================================== ============== ==================== ===============
Weighted average number of shares
at the end of the period 723.4 625.8 655.4
===================================== ============== ==================== ===============
GBPm GBPm GBPm
===================================== ============== ==================== ===============
Loss for the period (143.0) (13.9) (44.9)
===================================== ============== ==================== ===============
pence pence pence
===================================== ============== ==================== ===============
Basic and diluted loss per share (19.77) (2.22) (6.85)
===================================== ============== ==================== ===============
7 Finance Income and Costs
26 weeks ended 26 weeks ended 52 weeks ended
2 June 2019 3 June 2018 2 December
2018
GBPm GBPm GBPm
================================ ================= ==================== =====================
(unaudited) (unaudited) (audited)
Interest on cash balances 1.6 0.5 2.2
================================ ================= ==================== =====================
Finance income 1.6 0.5 2.2
================================ ================= ==================== =====================
Borrowing costs
- Obligations under finance
leases (2.9) (3.3) (6.5)
- Borrowings (5.4) (3.4) (8.2)
================================ ================= ==================== =====================
Finance costs (8.3) (6.7) (14.7)
================================ ================= ==================== =====================
Net finance costs (6.7) (6.2) (12.5)
================================ ================= ==================== =====================
8 Borrowings and Obligations Under Finance Leases
2 June 2019 3 June 2018 2 December
2018
GBPm GBPm GBPm
==================================== =========== ================= ===========
(unaudited) (unaudited) (audited)
Current liabilities
Obligations under finance leases 26.5 32.6 22.9
==================================== =========== ================= ===========
26.5 32.6 22.9
==================================== =========== ================= ===========
Non-current liabilities
Borrowings 244.8 243.8 244.3
Obligations under finance leases 88.9 98.8 93.4
==================================== =========== ================= ===========
333.7 342.6 337.7
==================================== =========== ================= ===========
Total group borrowings and finance
leases 360.2 375.2 360.6
==================================== =========== ================= ===========
9 Analysis of Net (Debt)/Cash*
Net (debt)/cash*
2 June 2019 3 June 2018 2 December 2018
GBPm GBPm GBPm
================================== =========== =========== ===============
(unaudited) (unaudited) (audited)
Current assets
Cash and cash equivalents 360.1 447.6 410.8
================================== =========== =========== ===============
360.1 447.6 410.8
================================== =========== =========== ===============
Current liabilities
Obligations under finance leases (26.5) (32.6) (22.9)
================================== =========== =========== ===============
(26.5) (32.6) (22.9)
================================== =========== =========== ===============
Non-current liabilities
Borrowings (244.8) (243.8) (244.3)
Obligations under finance leases (88.9) (98.8) (93.4)
================================== =========== =========== ===============
(333.7) (342.6) (337.7)
================================== =========== =========== ===============
Net (debt)/cash* (0.1) 72.4 50.2
================================== =========== =========== ===============
*Net (debt)/cash is an alternative performance measure; refer to
note 15 for further information
Net (debt)/cash* is calculated as total debt (obligations under
finance leases and borrowings as shown in the Condensed
Consolidated Balance Sheet), less cash and cash equivalents.
Reconciliation of net cash flow to movement in net
(debt)/cash*
26 weeks ended 26 weeks ended 52 weeks ended
2 June 2019 3 June 2018 2 December 2018
GBPm GBPm GBPm
================================== ==================== ==================== ================
(unaudited) (unaudited) (audited)
Net (decrease)/increase in cash
and cash equivalents (50.7) 297.6 260.8
Net decrease in debt and lease
financing 11.8 7.4 31.0
Non-cash movements:
- Assets acquired under finance
lease (11.4) (4.6) (13.6)
================================== ==================== ==================== ================
Movement in net (debt)/cash* in
the period (50.3) 300.4 278.2
Opening net cash/(debt)* 50.2 (228.0) (228.0)
================================== ==================== ==================== ================
Closing net (debt)/cash * (0.1) 72.4 50.2
================================== ==================== ==================== ================
*Net (debt)/cash is an alternative performance measure; refer to
note 15 for further information
10 Investment in Associate
The Group's share of the results of its associate is included in
the Consolidated Income Statement and is accounted for using the
equity method of accounting. The investment in associate is carried
in the Consolidated Balance Sheet at cost plus post-acquisition
changes in the Group's share of the net assets of the entity, less
any impairment in value.
During the current period the Group acquired a 21% interest in
Karakuri Limited, which is a robotics start-up. Karakuri Limited is
incorporated in the UK and registered at 1 Heathside Road,
Northwood, United Kingdom, HA6 2EE, which is also its principal
place of business.
The carrying amount of the Group's investment is GBP4.8 million
(2018: GBPnil).
11 Assets Held for Sale
2 June 2019 3 June 2018
Restated(*)
GBPm GBPm
========================================================== ================= ==================
(unaudited) (unaudited)
Assets held for sale of
* Planned disposal of Fabled 8.3 -
* Other property 4.2 4.2
Total assets classified as held for sale 12.5 4.2
========================================================== ================= ==================
* Liabilities associated with assets held for sale (2.4) -
Net assets classified as held for sale 10.1 4.2
========================================================== ================= ==================
(a) Refer to note 3 for details of the 2018 restatement.
Disposal of Fabled
The major classes of assets and liabilities of Fabled classified
as held for sale at 2 June 2019 are as follows:
2 June 2019
GBPm
======================================= =================
(unaudited)
Assets classified as held for sale
* Property, plant and equipment 1.3
* Inventories 6.1
* Trade receivables 0.4
* Cash and cash equivalents 0.5
======================================= =================
Total assets of disposal group
held for sale 8.3
======================================= =================
Liabilities directly associated
with assets classified as held
for sale
* Other payables (2.4)
======================================= =================
Total liabilities of disposal group
held for sale (2.4)
======================================= =================
Net assets of disposal group held
for sale 5.9
======================================= =================
The proceeds of disposal are expected to exceed the carrying
amount of the related net assets and therefore no impairment loss
has been recognised on the classification of this disposal group as
held for sale.
Property held for sale
The asset held for sale of GBP4.2 million (2018: GBP4.2 million)
represents the carrying value of a UK property previously used in
the Group's distribution network that it is in the process of
selling. Unforeseen delays relating to certain elements of the
planning permission submissions made by the vendor occurred, but
the sale negotiations are well advanced and the Group are still
committed to selling the property, with the sale expected to
complete in the second half of 2019.
12 Capital Expenditure and Commitments
During the period the Group acquired property, plant and
equipment of GBP68.6 million (2018: GBP139.3 million, 1H 2018:
GBP79.0(a) million). During the period, the Group acquired
intangible assets of GBP5.9 million (2018: GBP6.8 million, 1H 2018:
GBP1.9 million) and internal development costs capitalised were
GBP40.9 million (2018: GBP68.7 million, 1H 2018: GBP21.5
million).
At 2 June 2019, capital commitments contracted, but not provided
for by the Group, amounted to GBP78.8 million (2018: GBP69.7
million, 1H 2018: GBP49.9 million).
(a) 2018 restatement was due to adoption of IFRS 15. Refer to
note 3 for further details
13 Related Party Transactions
Key management personnel
Only the Executive and Non-Executive Directors are deemed to be
key management personnel. It is the Board which has responsibility
for planning, directing and controlling the activities of the
Group. With the exception of key management personnel remuneration,
there were no related party transactions with key management
personnel (1H 2018: GBPnil). All transactions with Directors are on
an arm's length basis and no period end balances have arisen as a
result of these transactions.
At the end of the period, key management personnel did not owe
the Group any amounts (1H 2018: GBPnil). There were no other
material transactions or balances between the Group and its key
management personnel or members of their close family.
Investment
The Group holds a 25% interest in Paneltex Limited whose
registered office is at Paneltex House, Somerden Road, Hull HU9
5PE. The Group's interest in Paneltex Limited has not been treated
as an associated undertaking as Ocado does not have significant
influence
over Paneltex Limited. The following direct transactions were
carried out with Paneltex Limited:
26 weeks ended 26 weeks ended 52 weeks ended
2 June 2019 3 June 2018 2 December
2018
GBPm GBPm GBPm
====================== ==================== ==================== ====================
(unaudited) (unaudited) (audited)
Purchase of goods
- Plant and machinery 0.1 - -
- Consumables 0.3 0.3 0.6
Sales of goods - 0.1 -
====================== ==================== ==================== ====================
Indirect transactions, consisting of the purchase of plant and
machinery through some of the Group's finance lease counterparties,
were carried out with Paneltex Limited to the value of GBP0.5
million (1H 2018: GBP0.4 million).
At period end, the Group owed GBP0.7 million (1H 2018: GBP0.1
million) to Paneltex.
There were no transactions between the Group and Karakuri
Limited during the 26 week period to 2 June 2019.
Joint Venture
The following transactions were carried out with MHE JVCo, a
joint venture company in which the Group holds a 50% interest:
26 weeks ended 26 weeks ended 52 weeks ended
2 June 2019 3 June 2018 2 December
2018
GBPm GBPm GBPm
=============================================== ==================== ================= ===============
(unaudited) (unaudited) (audited)
Sale and Leaseback Transaction
Capital contributions made to MHE JVCo - - -
Dividend received from MHE JVCo 6.6 - -
Reimbursement/(Settlement) of supplier
invoices paid on behalf of MHE JVCo 3.7 0.5 (0.6)
Lease of assets from MHE JVCo - 1.4 -
Capital element of finance lease instalments
paid to MHE JVCo 1.8 1.4 2.8
Capital element of finance lease instalments
due to MHE JVCo 8.1 - 12.9
Interest element of finance lease instalments
accrued or paid to MHE JVCo 1.6 2.3 4.4
=============================================== ==================== ================= ===============
Included within trade and other receivables is a balance of
GBP0.7 million owed by MHE JVCo (1H 2018: GBP2.8 million). Included
within trade and other payables is a balance of GBP15.8 million
owed to MHE JVCo (1H 2018: GBP12.1 million). Included within
obligations under finance leases is a balance of GBP69.1 million
owed to MHE JVCo (1H 2018: GBP92.2 million).
No other transactions that require disclosure under IAS 24 have
occurred during the current financial period.
14 Post Balance Sheet Events
On 6 June 2019, the Group announced its intention to redeem
GBP25 million of the 4.00% Senior Secured Notes due 2024. The Notes
were redeemed at a redemption price equal to 103% of the principal
amount, plus accrued and unpaid interest, on 14 June 2019.
On 10 June 2019, the Group announced it had made two key
investments totalling GBP17.6 million in developing vertical
farms.
A joint venture, called Infinite Acres, is proposed with 80
Acres Farms Inc., a US vertical farm business, and Priva Holding
BV, a Dutch firm that provides climate control technology. Each
partner will hold one third of the joint venture's equity. The
Group will make a cash payment to 80 Acres and Priva for their
investments to date, an equity capital contribution to Infinite
Acres, and will provide the joint venture with a line of
credit.
Concurrently the Group has completed the acquisition of a 58%
stake in Jones Food Company Limited, Europe's largest operating
vertical farm based in Scunthorpe.
On 19 June 2019, the Group announced it has sold Fabled, its
wholly-owned subsidiary, to Next Holdings Limited for a small
upfront payment and an earn-out based on sales in each of the four
years ending January 2021 - January 2024, with a minimum guaranteed
payment of GBP3 million. This sale completed on 8 July 2019.
15 Alternative Performance Measures
The Group assesses its performance using a variety of
alternative performance measures, which are not defined under IFRS
and are therefore termed 'non-GAAP' measures. These measures
provide additional useful information on the underlying trends,
performance and position of the Group. The non--GAAP measures used
by the Group are as follows:
-- Segment Revenue;
-- Exceptional Items;
-- Segment Administrative Costs and Distribution Costs;
-- EBITDA;
-- Segment EBITDA;
-- External Gross Debt
-- Net (Debt)/Cash; and
-- External Net Cash
A reconciliation from these non-GAAP measures to the nearest
measure prepared in accordance with IFRS is presented below. The
alternative performance measures used may not be directly
comparable with similarly titled measures used by other
companies.
Segment Revenue/Revenue (Retail)/Revenue (Solutions)
Segment revenue is a measure of reported revenue for the Group's
Retail and Solutions segments. A reconciliation of revenue for the
segments to revenue for the Group can be found in note 4 to the
condensed consolidated financial statements.
Exceptional Items
The Group's Condensed Consolidated Income Statement separately
identifies trading results before exceptional items. The Directors
believe that presentation of the Group's results in this way is
relevant to an understanding of the Group's financial performance.
This presentation is consistent with the way that financial
performance is measured by management and reported to the Board and
assists in providing a meaningful analysis of the trading results
of the Group. This also facilitates comparison with prior periods
to assess trends in financial performance more readily. The Group
applies judgement in identifying significant non-recurring items of
income and expense that are recognised as exceptional to help
provide an indication of the Group's underlying business. In
determining whether an event or transaction is exceptional in
nature, management considers quantitative as well as qualitative
factors such as the frequency or predictability of occurrence.
Examples of items that the Group considers exceptional include,
but are not limited to, costs relating to warehouse fire, material
costs relating to the opening of a new warehouse, corporate
reorganisations, material litigation, and any material costs,
outside of the normal course of business as determined by
management.
The Group have adopted a three-column approach to the Condensed
Consolidated Income Statement to aid clarity and allow users of the
financial statements to more easily understand the performance of
the underlying business and the impact of the one-off events.
Segment/Retail/Solutions Administrative Costs and Distribution
Costs
Segment/Retail/Solutions distribution and administrative costs
are measures which seek to reflect the performance of the Group's
segments in relation to the long-term sustainable growth of the
Group. These measures exclude the impact of certain costs that are
not allocated to a segment; depreciation, amortisation, impairment
and other central costs. A reconciliation from reported
distribution and administrative costs, the most directly comparable
IFRS measures, to the segment distribution and administrative
costs, is set out below.
26 weeks ended 26 weeks ended 52 weeks ended
2 June 2019 3 June 2018 2 December
2018
GBPm GBPm GBPm
======================================== ==================== ==================== ====================
(unaudited) (unaudited) (audited)
Retail distribution and administrative
costs 222.4 191.6 401.9
Solutions distribution and
administrative costs 87.0 65.2 140.7
Unsegmented distribution and
administrative costs 178.4 54.4 109.8
====================
487.8 311.2 652.4
====================
26 weeks ended 26 weeks ended 52 weeks ended
2 June 2019 3 June 2018 2 December
2018
GBPm GBPm GBPm
============================= ==========================================
(unaudited) (unaudited) (audited)
Reported distribution costs 279.7 234.2 485.4
Reported administrative
expenses 208.1 77.0 167.0
============================= ==========================================
487.8 311.2 652.4
============================= ==========================================
EBITDA
In addition to measuring financial performance of the Group
based on operating profit, the Group also measures performance
based on EBITDA. EBITDA is defined as the Group earnings before
depreciation, amortisation, impairment, net finance expense,
taxation and exceptional items. EBITDA is a common measure used by
investors and analysts to evaluate the operating financial
performance of companies. The Group considers EBITDA to be a useful
measure of its operating performance because it approximates the
underlying operating cash flow by eliminating depreciation and
amortisation. EBITDA is not a direct measure of liquidity, which is
shown by the cash flow statement, and needs to be considered in the
context of the Group's financial commitments. A reconciliation from
operating profit to EBITDA can be found on the face of the
Condensed Consolidated Income Statement on page 1.
Segment EBITDA/EBITDA (Retail)/EBITDA (Solutions)
The financial performance of the Group's segments is measured
based on EBITDA, as reported internally. A reconciliation of EBITDA
for the segments to EBITDA for the Group can be found in note 4 to
the condensed consolidated financial statements.
External Gross Debt
External gross debt consists of loans and other borrowings (both
current and noncurrent), less finance leases payable to joint
venture interests of the Group. External gross debt is a measure of
the Group's indebtedness to third parties which are not considered
a related party to the Group. A reconciliation from external gross
debt to gross debt can be found below:
26 weeks ended 26 weeks ended 52 weeks ended
2 June 2019 3 June 2018 2 December
2018
GBPm GBPm GBPm
========================= ==================== ==================== ====================
(unaudited) (unaudited) (audited)
External gross debt 291.1 282.9 286.1
Finance leases relating
to joint ventures 69.1 92.3 74.5
========================= ==================== ==================== ====================
Gross debt 360.2 375.2 360.6
========================= ==================== ==================== ====================
Net (Debt)/Cash
Net (debt)/cash consists of loans and other borrowings (both
current and non-current), less cash and cash equivalents. Loans and
other borrowings are measured as the net proceeds raised, adjusted
to amortise any discount over the term of the debt. Net (debt)/cash
is a measure of the Group's net indebtedness that provides an
indicator of the overall balance sheet strength. It is also a
single measure that can be used to assess the combined impact of
the Group's cash position and its indebtedness. The use of the term
'net (debt)/cash' does not necessarily mean that the cash included
in the net (debt)/cash calculation is available to settle the
liabilities included in this measure. Net (debt)/cash is considered
to be an alternative performance measure as it is not defined in
IFRS. The most directly comparable IFRS measure is the aggregate of
loans and other borrowings (current and non-current) and cash and
cash equivalents.
External Net Cash
External net cash is calculated as cash and cash equivalents
less gross debt (excluding finance leases payable to joint venture
interests of the Group). External net cash is a measure that can be
used to assess the combined impact of the Group's cash position and
its indebtedness to third parties which are not considered a
related party to the Group. A reconciliation from external net cash
to cash and cash equivalents to can be found below:
26 weeks ended 26 weeks ended 52 weeks ended
2 June 2019 3 June 2018 2 December
2018
GBPm GBPm GBPm
=========================== ==================== ==================== ====================
(unaudited) (unaudited) (audited)
Cash and cash equivalents 360.1 447.6 410.8
Gross debt (360.2) (375.2) (360.6)
Finance leases relating
to joint ventures 69.1 92.3 74.5
=========================== ==================== ==================== ====================
External net cash 69.0 164.7 124.7
=========================== ==================== ==================== ====================
Principal risks and uncertainties
The Group faces a number of risks and uncertainties that may
have an adverse impact on the Group's operation, performance or
future prospects.
The Board regularly assesses and monitors the principal risks of
the business. Set out in the Group's Annual Report and Accounts for
the 52 weeks ended 2 December 2018 were details of the principal
risks and uncertainties for the Group and the key mitigating
activities used to address them, applicable at that time. Other
than where indicated below, the Board does not consider that the
principal risks and uncertainties have changed and remain relevant
for the remaining six months of the 2019 financial year.
-- Risk of decline in high service levels in the retail business.
o This principal risk will increase especially during the
transitional period of change associated with the creation of the
retail joint venture and the establishment of the alternative
product sourcing supply chain options.
-- Failure to maintain a retail proposition which appeals to a
broad customer base and sustains growth rates while managing any
change in sourcing which may follow the end of the current Waitrose
sourcing agreement in 2020.
o This principal risk has changed because the retail joint
venture will replace the Waitrose own-label product range with the
M&S own-label product range and will develop other sourcing
capabilities in order to continue to offer customers a broad
product range proposition.
-- Risk of not having sufficient management, technology and
engineering capabilities to be able to execute effectively the
requirements for multiple Ocado Solutions contracts simultaneously
in many international locations.
-- Risk of delays in the generation of new capacity in the UK.
-- Risk that the long-term cost of ownership for our fulfilment
solutions is not priced at a level that is attractive to our
clients while still providing acceptable returns for our
shareholders.
o This principal risk recognises the increasing importance of
developing our platform while securing the cost efficiencies within
the long-term model given the success in growing Ocado
Solutions.
-- Technological innovation supersedes our own and offers
improved methods of food distribution to consumers.
-- Protecting our IP.
-- Infringing a third party's IP.
-- A risk of a food safety or product safety incident
o This principal risk has broadened to continue to recognise the
importance of managing health and safety risks because Ocado is
developing multiple new sites across the globe.
-- A risk of changes in regulations impacting our business model
or the viability of Ocado Solutions deals.
-- Risk of negative implications caused by final Brexit terms
such as increase in import costs or difficulty in hiring
employees.
-- Risk of major cyber attack or data loss impacting the retail
business or the Ocado Solutions business.
-- Business interruption.
More information on most of these principal risks and
uncertainties together with an explanation of the Group's approach
to risk management is set out in Ocado Group plc's Annual Report
and Accounts for the 52 weeks ended 2 December 2018, a copy of
which is available on the Group's corporate website,
www.ocadogroup.com.
INDEPENDENT REVIEW REPORT TO OCADO GROUP PLC
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
26 weeks ended 2nd June 2019 which comprises the income statement,
the balance sheet, the statement of changes in equity, the cash
flow statement and related notes 1 to 15. We have read the other
information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our review
work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 26 weeks ended 2 June
2019 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
London
9th July 2019
Statement of Directors' Responsibilities
The Directors confirm that, to the best of their knowledge, this
condensed set of consolidated financial statements have been
prepared in accordance with IAS 34 ("Interim Financial Reporting")
as adopted by the European Union, and that the interim management
report includes a fair review of the information required by DTR
4.2.7R and DTR 4.2.8R of the Disclosure Rules and Transparency
Rules.
The Directors of Ocado Group plc as at the date of this
announcement are as follows:
Executive Directors
Tim Steiner, Chief Executive Officer;
Neill Abrams, Group General Counsel & Company Secretary;
Duncan Tatton-Brown, Chief Financial Officer;
Mark Richardson, Chief Operations Officer;
Luke Jenson, Chief Executive Officer - Ocado Solutions;
Non-Executive Directors
Lord Rose, Chairman;
Ruth Anderson;
Jörn Rausing;
Andrew Harrison (Senior Independent Director);
Emma Lloyd;
Julie Southern; and
John Martin (Appointed 1 June 2019)
Approved by the Board and signed on its behalf by
Duncan Tatton-Brown
Chief Financial Officer
Neill Abrams
Group General Counsel & Company Secretary 9 July 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR UWORRKSABRUR
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