Half year results 2022

Over the past six months, we have made underlying progress in Ocado Retail, despite the challenging trading environment in the UK, and have continued to successfully accelerate the global rollout of OSP for our partners.

Ocado Retail has reached a new high in active customers, evidencing continued demand for online grocery and Ocado Retail’s leading customer proposition.

The Ocado Smart Platform is now powering the online grocery activities of eight of the world’s leading food retailers and another 3 will go live next year.

During the first half of the 2022 financial year, we signed our 11th OSP partner; Auchan Polska, and our new partner pipeline is as strong as ever.

We went live with 6 international CFCs, bringing our total live to 16. For the first time, there are more CFCs live outside of the UK than within, with 10 automated CFCs live for six partners. We also launched our first fully automated micro site, for Ocado Retail, in Canning Town, with 4 more set to open in the coming year, in and outside the UK. Each of these sites was opened on time and on budget.

At the same time, we made significant progress on our own targeted OSP economics. Indeed, our newest UK site, Purfleet, is on track to achieve a 22%+ ROCE, with a clear path towards 30% after including the benefits of Ocado Re: Imagined.

Delivery of the game-changing suite of 7 innovations that make up Ocado Re: Imagined (announced in January) is on track. These innovations will redefine both the customer experience and the economics, of online grocery shopping, once again. We expect enhanced economics, and improved customer propositions, to lead to faster growth from existing, and new, OSP partners

Following the successful capital raise and financing completed in June, we are well set up for this growth, with no further Group financing expected to be required into the mid-term, as the business becomes cash flow positive.

The building blocks for momentum are in place and we’re looking forward to the future with confidence.

Over the last three years, we have significantly ramped up the delivery of our Customer Fulfilment Centres (CFCs). Six partners are live in robotic CFCs in their markets, with a combination of large, mini and micro sites. This is all alongside leading service levels and improving efficiencies.

The announcement of Ocado Re:Imagined earlier this year, is transforming the economics of the Ocado Smart Platform (OSP). These include further step changes in capital and operating costs with a 30-40% reduction in labour cost in a CFC, and platform flexibility for our partners.

Delivery is on track with the technology innovations, with first installations of some aspects going live later this year.

We are growing and evolving with current partners including a JV with Group Casino where OSP can be offered to new partners in France, and multi-tenant CFCs will now be facilitated. Ocado Retail has immediacy offerings expanding in London, Leeds, and Bristol throughout 2023.

We announced Auchan Polska as our 11th OSP partner earlier this year, and its first CFC in Warsaw is due in 2024.

We have ample liquidity to deliver on our ambitious growth plans over the coming years. Our proforma liquidity position is around £2bn following our £875m capital raise and bank financing.

OSP is a resilient model for challenging times. For example, Ocado Retail boasts leading customer satisfaction with best-in-class efficencies. Their sustainable, diversifying customer offer provides an opportunity to grow other income.

* These measures are Alternative Performance Measures, refer to note 15 in the condensed financial statements.

1. Revenue is a. Retail - online sales (net of returns) including charges for delivery but excluding relevant vouchers/offers and value added tax, b. International Solutions - the fees charged to international clients and c. the recharge of costs and associated fees from UK Solutions & Logistics to our UK clients with the exception of recharges from UK Solutions & Logistics to Ocado Retail which are eliminated on consolidation.

2. See note 3 to the financial statements for details of the restatements.

3. EBITDA* is a non-GAAP measure which we define as earnings before net finance cost, taxation, depreciation, amortisation, impairment and exceptional items

4. Net exceptional costs of £(7.0)m primarily relates to £6.4m of insurance income related to the Erith CFC fire in 2021, offset by litigation costs of £11.1m (principally related to patent infringement litigation between the Group and AutoStore Technology AS). Other exceptional items include costs associated with Ocado Group Finance transformation and Software-as-a-Service (SaaS) implementation costs, Ocado Retail IT systems transformation, and Andover CFC and a benefit related to changes in fair value of contingent consideration.

The commentary is on a pre-exceptional basis to aid understanding of underlying performance of the business