Solutions that deliver,

Innovations that inspire

Ocado Group plc Annual Report and Accounts

for the 53 weeks ended 3 December 2023

Strategic Report

Financial, Operational and Strategic Progress

Across Ocado Group in FY23 01

Ocado Group at a Glance 02

Chair’s Letter 06

Key Performance Indicators 08

Chief Executive Officer’s Review 12

Our Business Model 18

Our Strategy 21

How our Culture and Values

Support our Strategy 22

How our Investment and Capital Allocation

Support our Strategy 23

Ocado Group’s Intellectual Property 24

Our Markets 26

Business Segments 28

Financial Review 40

Stakeholder Engagement 60

Section 172(1) Statement 64

Responsible Business Report 67

Task Force on Climate-Related Disclosures 82

How We Manage Our Risks 103

Going Concern and Viability Statements 112

Non-Financial and Sustainability

Information Statement 115

Governance

Governance at a Glance 116

Chair’s Governance Statement 117

Board of Directors 118

Corporate Governance Statement 2023 122

People Committee Report 138

Audit Committee Report 144

Directors’ Remuneration Report 154

Letter from the Chair of the

Remuneration Committee 154

Annual Report on Remuneration 2023 166

Directors’ Remuneration Policy 186

Directors’ Report 204

Financial

Statements

Group

Independent Auditor’s Report 216

Consolidated Income Statement 226

Consolidated Statement

of Comprehensive Income 227

Consolidated Balance Sheet 228

Consolidated Statement

of Changes in Equity 230

Consolidated Statement of Cash Flows 231

Notes to the Consolidated

Financial Statements 232

Company

Company Balance Sheet 295

Company Statement of Changes in Equity 296

Notes to the Company Financial Statements 297

Additional

Information

Alternative Performance Measures 302

Five-Year Summary 304

Glossary 305

Shareholder Information 309

Our purpose is to reimagine the world

of distribution, fulfilment and ecommerce

to drive outstanding customer outcomes.

Our mission is to change the way

the world shops, for good.

Our strategic vision is to be the

undisputed leader and global partner

of choice in providing technology

and automation solutions for

grocery retail and beyond.

Financial, Operational and Strategic Progress

Across Ocado Group in FY23

Financial progress

• Group revenue of £2,766m (52 weeks) and £2,825m

(53 weeks).

• Group adjusted EBITDA

growth driven by revenue

growth in Technology Solutions and Ocado Retail (“ORL”)

and a Group-wide focus on costs.

• Group loss before tax of £(394)m (52 weeks) and £(403)m

(53 weeks).

• Significant underlying cash outflow

improvement and

strong liquidity.

Operational progress

• 25% year-on-year increase in average live modules and

three new Customer Fulfilment Centres (“CFCs”) went live.

• Productivity and cost efficiency improvements across all

business segments.

• Partner Success teams supported and delivered tangible

results for Ocado Smart Platform (“OSP”) Partners.

105

average live modules

(FY22: 84)

1.65%

OSP direct operating costs

as a percentage of installed

sales capacity (FY22: 2.02%)

Strategic progress

• Ocado Intelligent Automation (“OIA”) announced its

first deal to provide automated fulfilment technology

at a distribution site for McKesson Canada.

Responsible business progress

• Net Zero Roadmap approved by Board and Group-wide

carbon reduction initiatives in place.

• Focus on talent and diversity: new initiatives and

programmes for leadership and management

development; new diversity targets launched.

“ The quality and productivity of our technology is

compelling. It’s incredibly exciting to see our newest

innovations driving even better results as we strive to

transform the economics of online grocery retailing.

It is also critical that our partners see attractive returns

from the capital that they have invested in the Ocado

Smart Platform. Their success is our success and our

dedicated Partner Success teams are working hard

to help them expand profitably through increased

automation, utilisation and productivity. Ocado Group’s

own performance in FY23 is down to our teams and their

disciplined execution, driving financial, strategic and

operational progress across the Group. I am proud to

witness the day-to-day energy, passion and commitment

to innovation shown by our employees.”

Tim Steiner, CEO

Read more about

our strategy on page

21 and our responsible

business approach

on pages 67 to 81

Group revenue

(£m)

1,756.6

2,331.8

2,498.8

2,516.8

FY19

FY20

FY21

FY22

FY23

2,765.6

Group adjusted EBITDA

(£m)

43.3

73.1

61.0

(74.1)

FY19

FY20

FY21

FY22

FY23

51.6

Food waste

(% of sales),

Ocado Retail

0.4

0.6

0.9

0.7

FY19

FY20

FY21

FY22

FY23

Tonnes of CO

100,000 orders

(Scope 1 and 2 –

location based)

514

501

489

458

422

FY19

FY20

FY21

FY22

FY23

Employee Net Promoter

Score (“eNPS”)

(Technology Solutions)

FY21

FY22

FY23

Loss before tax

(£m)

(214.5)

(52.3)

(176.9)

(500.8)

(393.6)

FY19

FY20

FY21

FY22

FY23

Gross liquidity*

(£m)

850.6

1,706.8

1,468.6

1,628.0

1,184.8

FY19

FY20

FY21

FY22

FY23

FY23 is a 53-week year to 3 December 2023. The

comparative period is 52 weeks to 27 November 2022.

To aid comparability, the headline results, associated

commentary and percentage changes are presented

on an unaudited 52-week basis unless otherwise stated.

Where this symbol

appears throughout the

Report, see Alternative

Performance Measures

on pages 302 and 303

* FY23 is 53 weeks

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Ocado Group

at a Glance

Our strategic vision

is to be the undisputed leader

and global partner of choice

in providing technology and

automation solutions for

grocery retail and beyond.

Who we are

Ocado Group brings to market cutting-edge

technology solutions that leverage the latest

advances in automation, robotics, machine

learning and artificial intelligence (“AI”) for

the online grocery and non-grocery

distribution industries.

We are headquartered in Hatfield, UK and employ

18,869 people globally across our technology

and logistics operations. We have a strong retail

heritage with Ocado Retail Limited (“ORL”),

the UK’s largest pure-play online grocery retailer,

which is a 50:50 JV with Marks & Spencer Group

plc (“M&S”).

What we do

We use our deep know-how within the online

grocery domain together with our patent-protected

technology from over 20 years’ experience as one

of the world’s most successful pure-play online

grocers to help transform both the economics and

service in grocery ecommerce worldwide. We do

this through OSP, which we provide as a managed

service to grocery retailers around the world

(see case study on page 31). We have recently

expanded into new sectors with our first

non-grocery warehouse fulfilment technology

deal announced with McKesson Canada.

Read more about our culture and values

on page 22

OCADO GROUP PLC Annual Report and Accounts 2023

Our structure

Ocado Group consists of three business segments: Technology Solutions, Ocado Logistics and Ocado Retail,

a50:50ownedJVwithM&S.Thesethreebusinesssegmentshavetheirownmanagementteamsanddistinctivebusiness

models,andbenefitfromclearprofit&lossownershipandperformanceaccountability.Ourownershipandunderstanding

oftheoperationsofOcadoRetailandOcadoLogisticsprovidesdetailedvisibilityoftheentireOSPvaluechainand

anin-depthunderstandingofOcado’sinternationalpartners’ownOSPoperations,shapinghowwesupportthem

toachievescalableandprofitablegrowth.

Read more about our businesses in our business model and strategy on pages 18 to 22

The FY23 Annual Report is the first time that we are reporting using this new business segment reporting structure

to make the distinct business models underlying our value proposition clearer for our stakeholders.

Read more about revenue and cost re-allocation between business segments in our Financial Review on page 40

Ocado Group plc: UK company listed on the Main Market of the London Stock Exchange.

Technology Solutions

Software and robotics platform

business providing OSP

as a managed service to partners

around the world.

Technology Solutions includes OIA,

a business dedicated to selling our

technology to complex, high-volume

warehouse environments

in non-grocery markets.

Ocado Logistics

High-performing third-party logistics

and fulfilment business, operating

in the UK for Ocado Retail and

Wm Morrison Supermarkets Limited

(“Morrisons”).

Every shopping bag is carefully

packed in one of 12 automated sites

using Ocado’s market-leading

software and technology.

Shopping is then delivered directly

to customers using the

Ocado Logistics network.

Ocado Retail

50:50 owned JV with M&S;

fully consolidated in

Ocado Group’s accounts;

separate board and governance.

Pure-play online grocery retail

business serving customers in the

UK, with a geographical coverage

of over 80% of UK households.

FY23

£420m

FY22: £291m

revenue

£15m

FY22: £(102)m

adjusted EBITDA

Read more on our strategy on page 21

EMBED A

RESPONSIBLE

BUSINESS

APPROACH

DELIVER

TRANSFORMATIONAL

TECHNOLOGY

OPTIMISE

OSP

ECONOMICS

DRIVE SUCCESS

FOR OUR

PARTNERS

GROW OUR

REVENUE

Canada UK Sweden Poland Japan

USA Spain France South Korea

Australia

OCADO GROUP PLC Annual Report and Accounts 2023

Ocado Smart Platform

Supply Chain

Ecommerce

Fulfilment

Last Mile

Ocado Smart Platform

OSP has been designed specifically

for the grocery market to offer the

best available proposition to their

customers. Consumers benefit from

a convenient end-to-end shopping

experience and extensive

product choice.

The solution enables retailers to ensure

that their customers get fresh products,

very low substitution rates and flexible

lead times on deliveries. Service

is everything.

OSP software supports a number

of growth levers, enabling partners

to acquire and retain high-value

customers, grow every basket,

increase frequency and spend,

and unlock new revenue streams.

Ocado Group is today powering

live online operations for nine grocery

retailers worldwide. The competencies,

technologies and Intellectual Property

(“IP”) we have acquired through

innovation and self-disruption are

being applied to solve many

complex problems in the grocery

sector and beyond.

OSP is the world’s

most advanced end-to-end

ecommerce, fulfilment

and logistics platform.

Operating the full suite of

OSP capabilities enables

high levels of productivity

and efficiency due to

the automation of manual

tasks throughout the online

grocery model, helping the

retailer improve margins

as well as grow their

ecommerce business.

similar results. Key events such as

the Ocado:Beyond conference

provide an excellent forum for feedback

and exchange of ideas between

Ocado Group and our OSP leadership

club of 12 international retailers.

We will continue to pay close attention

to the development of the Partner

Success capability and the progression

of our partner economics in FY24.

Beyond grocery with

Ocado Intelligent

Automation

Another exciting milestone for the

Group was the signing of OIA’s first

deal outside of the grocery market with

McKesson Canada, a leading diversified

healthcare provider in Canada and

the largest pharmaceutical distributor

in the country. The deal is a clear

demonstration that our technology

can be applied to automate and solve

challenges in industries beyond online

grocery. We are optimistic our teams

will sign more contracts in the coming

years that will leverage our existing

technology R&D investment to drive

higher returns on capital for Ocado

Group, a core ongoing focus for

the Board.

AutoStore settlement

The successful settlement reached

with AutoStore Technology AS

(“AutoStore”) in July 2023

demonstrated the value of our IP

portfolio. The agreement included the

settlement of all claims between the

companies, avoiding further litigation

and associated costs, and is

confirmation that we were correct to

have vigorously defended our patents.

We will continue to protect our

innovations through our IP capability.

At the same time, our ongoing capital

expenditure on R&D, recognised on

the Balance Sheet, will drive future

value for Ocado’s shareholders.

Rick Haythornthwaite

Chair

“ We have made further strides towards achieving our vision.”

OCADO GROUP PLC Annual Report and Accounts 2023

Organisational change

FY23 is the first time we are reporting

under the new segmental structure and

the Board is pleased with the resulting

improved financial and operational

visibility. This new reporting structure,

reflecting the three distinct businesses

of Technology Solutions, Ocado

Logistics and Ocado Retail, has brought

additional focus on the allocation of

capital and how we manage our costs.

You will see the results of this in the

reduced support costs over the year.

In conjunction with the revised

reporting structure we have revisited

our Group purpose to better describe

what we are striving to achieve: to

reimagine the world of distribution,

fulfilment and ecommerce to drive

outstanding customer outcomes.

Managing our teams by business

segment has brought a sharper

focus on the needs, skills and training

requirements of Technology Solutions

and Ocado Logistics but maintains

interaction across the Group, sharing

leadership and management

programmes as well as recruitment and

re-training opportunities. These teams

are doing an excellent job in embedding

the changes without losing the

dynamism of our culture, something

we monitor closely (read more on

page22).Weseetheseadvancements

as a natural evolution of the Group,

ensuring we stay fit for the future,

driving transparency for stakeholders,

setting priorities and assessing

and managing performance.

Board evolution

The Board evolved this year, bringing

new experience and increased gender

diversity to the mix. In January 2023,

we welcomed Julia M. Brown and,

in September, Rachel Osborne to the

Board as independent Non-Executive

Directors and Rachel as Chair of the

Audit Committee. Julia has significant

expertise in change management and

the consumer goods sector and was

previously Chief Product Officer at

Mars. Rachel, former CEO of Ted Baker,

brings a wealth of executive, financial

and retail experience. We said thank

you and farewell to both Michael

Sherman, who stepped down due

to other executive commitments,

and Luke Jensen, who announced his

intention to retire. The Board extends

a particular appreciation to Luke

for the pivotal role he played in the

transformation of the business since

his appointment in 2018 and driving

our partnerships across the world. His

position has been filled by John Martin,

who stepped down from the Board to

become CEO, Ocado Solutions, a great

demonstration of how we continue to

move talent around the Group. We are

confident he will be a great business

leader of Ocado Solutions and play

a key role in driving our success. On

2 February 2024, Neill Abrams and

Mark Richardson stepped down as

Executive Directors from the Board,

although they remain part of the

Executive Committee. Following the

resignation of Neill and Mark, the Board

has 10 members.

New Directors’

Remuneration Policy

and Share Plan

As we are approaching the end of the

original Value Creation Plan (“VCP”)

in March 2024, the Remuneration

Committee has undertaken an in-depth

review of the current Directors’

Remuneration Policy, giving very

careful consideration to whether

the VCP remains as motivational

and retentive as it once was. Following

extensive shareholder consultation, the

Remuneration Committee has decided

to put forward a new Directors’

Remuneration Policy and 2024

Performance Share Plan (“PSP”) to the

2024 AGM, one year before the expiry

of the current Policy, to ensure that a

suitable remuneration structure will

be in place following the end of the

original VCP.

Full details of the Directors’

Remuneration Policy and the PSP

can be found on pages 186 to 203.

Responsible business

As well as monitoring the Group’s

strategic, financial and operational

progress the Board spent time

understanding the evolving

environmental, social and governance

(“ESG”) risks and opportunities for

the Group. These include upcoming

sustainability reporting requirements

and the need to operationalise these

changes, especially in the collection

of data we require to evidence

actions and results.

More importantly, we focused on

looking beyond the numbers in search

of strategic and operational insights

and pathways to effective action.

Our assessment of the Group’s Scope 3

carbon emissions provided a fuller

understanding of our total carbon

footprint, enabling the development of

a Net Zero Roadmap and re-affirming

our commitment to be Net Zero in our

operations(Scope1and2)by2035and

inourvaluechain(Scope3)by2040.

Like many companies, we have been

able to plan in detail the near-term

actions and costs which kick off this

programme but our medium- and

longer-term plans are likely to evolve

significantly. The Net Zero Roadmap

was approved by the Board in

November 2023. It is also pleasing

to see the progress in the depth

of analysis in our Task Force on

Climate-Related Financial Disclosures

(“TCFD”) report on page 82.

Looking forward

We made good progress on many levels

in FY23, but there is much more we can

and must achieve. The year ahead will

see an even deeper focus on driving

the success of all of our partners,

innovating to enhance the efficiency

and longevity of our technology, rolling

out Re:Imagined technology globally

and exploring new business

opportunities with OIA. We retain

sufficient capital to fund our growth

and are focused on managing our cash

flows to reach cash flow positive in the

mid-term. Improving cash flow

dynamics is vitally important for a

successful refinancing of our debt,

a topic that, as you would expect,

continues to be a core area of

Board discussion.

Above all, the Board hopes to look

back at FY24 with a sense of pride

and achievement: that Ocado Group

has continued to deliver tangible

progress for all stakeholders,

whilst driving technological advantage

through innovation, hard work and

collaboration. It is this combination

that will create long-lasting value for all.

Rick Haythornthwaite

Chair

29 February 2024

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Key Performance Indicators (“KPIs”)

Group KPIs reflect aggregate performance across our reported segments. In FY23

we reviewed our KPIs to reflect the new reporting structure and the focus on driving

profitability and cash flow across the Group.

All FY23 KPIs are on a 52-week basis to aid comparability, with the exception of underlying cash flow movement,

tonnes of CO

e and year end active customers which are all on a 53 week basis.

Read more about how these, and our key segmental drivers (pages 28 and 43), have driven performance in FY23

(CEO’s Review on pages 12 to 17) and are considered in Directors’ remuneration (pages 154 to 203)

Read more about our strategy on pages 21 to 23

Read more about our responsible business approach on pages 67 to 81

Financial KPIs

Non-financial KPIs

Why we use this measure

Measures revenue growth

of Ocado Group.

Why we use this measure

Measures efficiency of Ocado Retail

operations, as enabled by OSP

technology, in terms of waste

minimisation: the lower the better.

Why we use this measure

Measures the adjusted EBITDA

performance of Ocado Group.

Why we use this measure

Measures the greenhouse gas

emissions intensity (direct and indirect)

of our total business operations.

Why we use this measure

Measures the underlying movement

in cash and cash equivalents.

Why we use this measure

This is a scoring system widely

used in industry designed

to help us measure the

engagement of our people.

Group revenue

(£m)

1,756.6

2,331.8

2,498.8

2,516.8

FY19

FY20

FY21

FY22

FY23

2,765.6

Food waste

(% of sales

Ocado Retail

0.4

0.6

0.9

0.7

FY19

FY20

FY21

FY22

FY23

Group adjusted EBITDA

(£m)

43.3

73.1

61.0

(74.1)

FY19

FY20

FY21

FY22

FY23

51.6

514

501

489

458

422

FY19

FY20

FY21

FY22

FY23

Tonnes of CO

100,000 orders

(Scope 1 and 2 –

location based)

Group underlying cash flow

(£m)

(260.8)

(311.9)

(743.8)

(828.2)

(472.5)

FY19

FY20

FY21

FY22

FY23

Employee Net Promoter

Score (“eNPS”)

(Technology Solutions)

FY21

FY22

FY23

Group

OCADO GROUP PLC Annual Report and Accounts 2023

Business segment KPIs

In FY23 Ocado Group changed its segmental reporting to reflect the three distinct business models

of Technology Solutions, Ocado Logistics and Ocado Retail. The KPI metrics and methodologies

shown below have been selected to best reflect the objectives and growth strategies of each business.

Financial KPIs

Non-financial KPIs

Why we use this measure

Measures OSP recurring revenue

growth of Technology Solutions.

Why we use this measure

Measures cumulative modules

of maximum capacity for which a

contractual agreement has been

signed with a partner and an invoice

issued for the associated site fees,

providing near-to medium-term

visibility of ongoing capacity build.

Why we use this measure

Measures the exit rate position at

the period end for the Group’s site-level

operational costs, including engineering,

cloud, insurance and property tax costs.

Why we use this measure

Measures the weighted average

modules of capacity installed and ready

for use by OSP clients during the year,

which drives Technology Solutions

recurring revenue.

Why we use this measure

Measures the adjusted EBITDA of

the Technology Solutions segment.

Why we use this measure

This is a scoring system widely

used in industry designed to help

employers measure loyalty

and satisfaction of people

within organisations.

Technology Solutions

OSP recurring revenue

(£m)

253.4

363.4

FY22

FY23

OSP direct operating costs

as % of installed

sales capacity

2.74

2.02

1.65

FY21

FY22

FY23

Number of

modules ordered

141

168

213

232

FY19

FY20

FY21

FY22

FY23

Adjusted EBITDA

(£m)

15.4

(101.5)

FY22

FY23

Average number of

live modules

105

FY19

FY20

FY21

FY22

FY23

Employee Net Promoter

Score (“eNPS”)

FY21

FY22

FY23

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Key Performance Indicators continued

Ocado Logistics

Why we use this measure

Measures the adjusted EBITDA

of the Ocado Logistics segment.

Why we use this measure

Measures total Ocado Logistics costs

divided by total units (eaches) of

volume fulfilled for UK clients.

Why we use this measure

Measures total units of volume fulfilled

for UK clients, the key driver of cost

recharges revenue.

Why we use this measure

Measures the efficiency of our service

delivery operations (note: metric based

on Ocado Retail data only).

Why we use this measure

Measures CFC operational efficiency in

average units picked per labour hour

(“UPH”) in our UK OSP CFCs

(note: excludes Hatfield and

Dordon CFCs).

Why we use this measure

Measures the number of orders that

are delivered on time to Ocado Retail

customers (note: metric based on

Ocado Retail data only).

Financial KPIs Non-financial KPIs

Adjusted EBITDA

(£m)

33.6

30.1

FY22

FY23

Cost per each

(£)

0.54

FY22

FY23

Total eaches shipped

(million)

1,003

1,229

1,273

1,196

FY19

FY20

FY21

FY22

FY23

1,182

Drops per van route

(eight-hour shift)

20.3

19.0

19.7

21.3

FY19

FY20

FY21

FY22

FY23

21.5

OSP CFC UPH

122

171

168

184

FY19

FY20

FY21

FY22

FY23

208

On-time delivery

(%)

95.2

95.9

97.0

95.2

FY19

FY20

FY21

FY22

FY23

95.6

OCADO GROUP PLC Annual Report and Accounts 2023

Ocado Retail

Non-financial KPIs

Why we use this measure

Measures aggregate impact on

average shopping basket for Ocado.com

(note: comparatives restated to reflect

no longer deducting cancelled orders on

the road from total orders and changed

from using gross sales to now using

product sales).

Why we use this measure

Measures growth in Ocado Retail

core customers who shopped at

Ocado.com within the previous 12 weeks.

Why we use this measure

Measures revenue growth of

the Ocado Retail joint venture.

Why we use this measure

Measures order growth in the

Ocado Retail business for Ocado.com

(note: comparatives restated to reflect

Ocado.com orders only and no longer

deducting cancelled orders on the road).

Why we use this measure

Measures the adjusted EBITDA

of the Ocado Retail segment

as a percentage of revenue.

Why we use this measure

Measures total units of volume for

Ocado.com divided by the total

number of Ocado.com orders,

the key driver of average basket

value for the Ocado Retail business.

Financial KPIs

Average basket value

(£)

105.70

136.04

127.87

117.74

FY19

FY20

FY21

FY22

FY23

120.94

Year end active customers

(000s)

796

682

832

942

998

FY19

FY20

FY21

FY22

FY23

Revenue growth

(%)

10.1

36.6

6.3

(3.8)

FY19

FY20

FY21

FY22

FY23

7.0

Average orders per week

(000s)

307

319

358

378

393

FY19

FY20

FY21

FY22

FY23

Adjusted EBITDA margin

(%)

1.1

7.5

6.6

(0.2)

FY19

FY20

FY21

FY22

FY23

0.4

Average eaches per basket

FY19

FY20

FY21

FY22

FY23

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Chief Executive Officer’s Review

Our technology continues to meet

all of our demanding expectations,

delivering strong productivity and

efficiency performance. This past year

we collaborated closely with our retail

partners around the world to help them

get the very best out of OSP and

deliver attractive returns as they

grow their online grocery operations.

We know that their success drives

ours and we are determined to fulfil the

enormous potential that exists for all.

Our teams have done a great job

driving financial and operational

progress across the Group in FY23.

I am also very pleased to report on

strategic growth developments with

our first non-grocery deal announced

for OIA.

Overview

The founding vision of Ocado was

to use cutting-edge technology and

automation to transform the online

grocery space. Today, it is exciting

to report that, through our unwavering

commitment to that vision and the

incredible depth of talent within

Ocado, we now have 26 live

sites with 9 of our 12 OSP Partners

operating our highly reliable,

high-quality, high-performing

technology in North America, Europe

and Asia-Pacific. Three further

partners will go live on OSP across the

next two years. FY23 was a pivotal

year as every business segment

generated positive adjusted EBITDA

a first for the Group as we pursue our

path to profitable growth, strong cash

flows and higher returns on capital.

On a personal note I wish to thank

the Board and recognise the role

it plays in supporting our Executive

Committee. We are fortunate to have

access to the skill sets and know-how

of a group of distinguished

professionals. Their shared experience,

knowledge, insight and guidance

are invaluable.

Highlights

In last year’s report I emphasised

that the building blocks were in place

for profitable growth and that our

technology and operational execution

were driving results. Those dynamics

continued in FY23 and, despite the

tougher economic climate, our teams

have performed well, evolving nimbly

with the business and adjusting

to operational cost disciplines and

new financial reporting structures.

Undoubtedly the financial performance

from Technology Solutions was a key

achievement in the year with adjusted

EBITDA

turning positive, driven by

strong growth in recurring fees from

live modules. We embedded a laser-

like focus on helping our retail partners

drive capacity utilisation and profitable

growth through our Partner Success

teams. It is encouraging to report on

their progress (see page 29) as well as

the confirmation of the strength of our

IP portfolio achieved in the settlement

reached with AutoStore in July 2023

(see page 25).

Ocado Logistics delivered significantly

improved productivity in average UPH,

drops per van route further increased

and the business also achieved an

adjusted EBITDA

of £30m while

adjusting to the challenges of closing

two spokes, ceasing operations at our

oldest CFC in Hatfield and opening a

new CFC in Luton. It is pleasing that

almost half of our Hatfield CFC

employees moved to Luton with us,

many in new roles within the CFC, and

managed the fastest ramp-up of a CFC

to date – a huge achievement. The

Luton CFC is now more energy efficient

than the Hatfield CFC (measured on a

per each basis) and contains our

latest Re:Imagined technology,

demonstrating the potential of

OSP as a showcase for the Group.

Another key highlight for me in FY23

was seeing Ocado Retail return to

positive volume growth and positive

adjusted EBITDA

in what has

been a tough grocery market,

with significant food price inflation

and reduced basket sizes. The

“Perfect Execution” programme and

the network optimisation of CFCs

played an important role in achieving

this performance and it was very

encouraging to see active customer

growth increase to 998,000 by the

year end.

Tim Steiner

CEO

“A year of operational, financial and strategic delivery.”

OCADO GROUP PLC Annual Report and Accounts 2023

Market dynamics

In the “Our Markets” section of this

report (see page 26) we discuss how

the combined pressures of rising costs,

food price inflation and decreasing

basket sizes impacted global grocery

markets and capital expenditure spend

in FY23. For Ocado, the impact has

been a slowdown in the purchase of

new OSP modules. We believe this is a

temporary feature and not a long-term

headwind to our success. Structurally,

these dynamics should play to the

power of our OSP end-to-end solution,

automating processes that were

historically manual, and driving cost

efficiencies and higher productivity.

Over time our Re:Imagined technology

with the lighter-weight 600 series bots,

lighter grid and other features such as

On-Grid Robotic Pick (“OGRP”) and

Automated Frameload (“AFL”) offer

compelling economics, especially as

production increases and our partners

can reap the benefits of scale.

Priorities for FY24

In FY24 we will build on the progress

we made in FY23. We are motivated

and focused on helping our retail

partners win in their online grocery

businesses. We expect the two sites

in Australia (in Sydney and Melbourne

for Coles) and our first site in Madrid

for Alcampo to go live. In Technology

Solutions our Partner Success teams

will make further inroads in helping

our retail partners increase their

CFC capacity utilisation and raise

productivity; we know what is possible

from the performance of our

technology in our own UK operations.

We anticipate that this will then help

accelerate partner orders for additional

modules and CFC sites. This is

particularly important to Ocado as we

would like to grow our module count

with existing partners as well as future

new partners.

We are excited about the prospects

for more OIA contract announcements

and new Solutions deals being signed.

And for Ocado Retail, there remains

huge potential to grow and achieve

industry-leading levels of profitability,

supported by the strong capabilities

of Ocado Logistics.

I know our teams across the business

will work hard to deliver our objectives,

remaining disciplined on costs, driving

stronger cash flow and helping

maintain the Group’s liquidity position.

Our growth plans remain in place

and we are fully funded for these.

I am confident that Ocado Group will

reap the rewards of over 20 years of

technological investment, innovation

and courage to challenge and stretch

boundaries. These are qualities that

are fundamental to our capabilities

today and will continue to shape

our future.

“ I know our teams across

the business will work hard

to deliver our objectives,

remaining disciplined on costs,

driving strong cash flow and

helping maintain the Group’s

liquidity position.” 13

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Chief Executive Officer’s Review continued

Ocado Re:Imagined

progress

In January 2022 we unveiled Ocado

Re:Imagined, a series of technology

innovations in both hardware and

software, designed to drive efficiency

and performance. The technology

upgrades span several critical

components of the OSP end-to-end

solution, from the evolution of our bots

to warehouse construction to supply

chain management, fulfilment

and delivery. They will deliver

compelling economic benefits for our

retail partners by reducing capital

investment and build times, enhancing

levels of automation and reducing

labour intensity. Importantly, we have

developed the underlying technology

in a live production environment over

the last two years, giving us direct,

on-the-ground experience

of how and why it works.

Certain Re:Imagined technology

became available for commercial use

in FY23, with OGRP and AFL deployed

to Ocado Retail in the UK at a small

number of CFCs including Purfleet

and Luton (see case studies on

pages 15 and 36). The phased

roll-out of Re:Imagined technology

across Ocado Retail’s CFC estate

is driving operational efficiencies,

primarily through increased

automation.

AFL

already live in the UK and Sweden

600

series

bots

to be deployed in the UK at existing

sites during FY24

Our Purfleet and Luton CFCs are

already demonstrating some of these

benefits and we expect these to build

further in FY24. Overseas, ICA in

Sweden went live with AFL during

FY23 for all of its live CFC capacity,

with the mechanical handling

equipment (“MHE”) also performing

very well for the company. We are

excited to be in discussions

with several of our other international

retail partners about the roll-out

of Re:Imagined technology.

The 600 series bots and the latest

version of the grid, both of which will

be our lightest and lowest cost, will

start to be deployed from late FY25

for new sites going live. Read more

about our 600 series bots and grid

in the Responsible Business Report

on page 67.

Swift Router will also be delivered in

2024 and the software will enable

partners to use the beginning of the

van routes leaving the CFC for short

lead time orders (less than four hours)

and with the rest of the route to deliver

longer lead time orders. The benefit

this technology brings is greater last

mile efficiency by removing the need

for specific routes just for short lead

time orders, and therefore lower costs

for fulfilling these routes.

We are launching a proof of concept of

Orbit in early 2024, a supply system

software where we consolidate and

distribute stock to the CFC network

from one “parent” CFC. We believe

Orbit to be the best alternative to

direct supply, where minimum ordering

constraints often cause unnecessary

stockholdings.

OCADO GROUP PLC Annual Report and Accounts 2023

Case study:

OGRP: driving automation and labour efficiency

OGRP, one of our Re:Imagined

technologies, went live in the

UK this year and combines

cutting-edge machine vision,

deep reinforcement learning and

advanced sensing to pick and

pack grocery items without any

prior knowledge of what they are,

making smart decisions on the fly.

Four robotic arms have been

operating in the Purfleet CFC since

February 2023 and 22 robotic arms

have been operating in the Luton

CFC since its opening in September

2023. The performance of OGRP

equipment to date underlines our

confidence in how the technology

will lower labour costs for our

retail partners.

We expect each OGRP arm to pick

240 shopping items (units) per hour;

in Purfleet the system has been

proven to be able to pick over 200

items per hour already. To date, the

system has picked over one million

items and yielded critical learnings

that have been applied to the

operational sites. We expect both

Luton and Purfleet to continue to

ramp up in the coming months,

achieving the full operational

benefits of reduced labour.

At Purfleet, OGRP is currently capable

of picking 30% of the stock-keeping

unit (“SKU”) range. We are confident

that OGRP will in time be able to pick,

verify and pack SKUs for a range

velocity equivalent to >70% of a CFC.

This goal will be achieved through

further development in hardware,

automation and monitoring tools

that we plan to deliver over

the next two to three years.

This will allow SKUs with more

complex characteristics, for example

delicate items and glass packaging,

to be available for picking with

OGRP equipment.

Our retail partners have the option

to retrofit existing CFCs with OGRP

equipment. The economics are

compelling; the additional

modest ongoing fees for partners will

be more than offset by labour savings

and productivity gains.

Technology Solutions

Partner Success teams

in focus

Our Account Management teams

are supported by a dedicated Partner

Success function, which expanded

in 2023 with increased investment.

The function is critical in bringing

targeted support to our partners to

get the best out of OSP, delivering

advice and analysis as they go live

and scale with the platform.

Ocado has many knowledgeable and

talented people across the Company,

including those who have deep

experience in Ocado Logistics and

Ocado Retail as well as technology.

We are leveraging their skill sets and

today there are around 40 people

on international assignments

who are working closely with

our international partners.

These teams provide both targeted

projects and rolling support across

the board to drive improvements

in operating efficiency, customer

marketing and platform monetisation.

The Partner Success teams include

more than 80 specialists with

key capabilities focused around

the following:

Ecommerce: acquisition and

retention, monetisation, marketing,

search engine optimisation and

range strategy.

Fulfilment: labour planning,

warehouse processes and

supply chain.

Last mile: zoning and routing.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Chief Executive Officer’s Review continued

FY23 operational review

Technology Solutions

The Technology Solutions business

performed well in FY23, demonstrating

strong operational execution as further

capacity was rolled out for new and

existing retail partners. Three new

CFCs went live in Alberta, Canada;

Tokyo, Japan; and Luton, UK. These

openings were delivered on time and

on budget. In early December I also

had the privilege to join our Partner,

Lotte, at the ground breaking of the

first of six CFCs planned in Korea.

Revenue increased by 44.3% to

£420.5m, largely driven by recurring

licence fees from the higher number

of live modules in operation. The power

of our operating model is clear to see,

with strong revenue growth and

continued improved efficiencies in

Ocado’s direct CFC operating costs,

which fell to 1.65% of installed sales

capacity, a key metric for the business.

We have also reduced support costs.

These dynamics contributed to

Technology Solutions producing

an adjusted EBITDA

of £15.4m,

a £116.9m improvement from the

prior year.

A key focus for us in FY23 was working

with our partners to help them deliver

attractive returns from their investment

in CFCs and OSP. We have addressed

this challenge through the development

of our global Partner Success teams,

which have taken a hands-on approach

with partners. Our work with Kroger

has delivered tangible results including

higher capacity utilisation, increased

warehouse productivity and more

efficient last mile economics. We are

also collaborating with Kroger on the

consumer-facing front end in order to

drive improved local sales densities

and more consistent trading volumes

in their CFCs across the day.

Read more about the key areas

of focus in the Business in focus:

Ocado Retail section on pages 37

to 39

FY24 Ocado Retail outlook: Revenue

growth expected to be in the mid-high

single digits, with a circa 2.5%

underlying adjusted EBITDA

margin

(underlying excludes Hatfield fees of

£33m p/a).

Tim Steiner

CEO

29 February 2024

Progress against strategic priorities in FY23

Ocado is making good progress against its five Group strategic priorities.

The focus on cost efficiencies and productivity has a natural fit with our

responsible business approach which is driving change through the use

of fewer resources. We cannot achieve our strategic vision without delivering

tangible results for each strategic priority, and this will ultimately determine

the delivery of scalable, profitable growth and strong cash flow generation,

for both Ocado and its partners.

See page 21 for more detail on Ocado’s strategy

1. Grow our revenue

Group revenue growth of 9.9% (FY23: £2,766m; FY22: £2,517m)

2. Optimise OSP economics

OSP direct operating costs as % of installed sales capacity

(FY23: 1.65%; FY22: 2.02%)

OSP CFC UPH (FY23: 208; FY22: 184)

Purfleet return on capital employed (“ROCE”) (22%+)

3. Deliver transformational technology

Technology development headcount (FY23: c.2,100; FY22: c.3,000)

Total number of patents granted (FY23: 1,011; FY22: 775)

4. Drive success for our partners

Average number of modules live (FY23: 105; FY22: 84)

5. Embed a responsible business approach

Food waste as % of sales at Ocado Retail (FY23: 0.7%; FY22: 0.9%)

Tonnes of tCO

e/ 100,000 orders (Scope 1 and 2) (FY23: 422; FY22: 458)

Technology Solutions eNPS (FY23: 19; FY22: 31)

5 2

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Our Business Model

Our purpose: to reimagine the world of distribution, fulfilment and ecommerce to drive

outstanding customer outcomes

What we do Why our partners and

customers choose us

How we

make money

Delivering for

our stakeholders

Technology Solutions

Employees: c.5,000

Partners: major grocery retailers

and non‑grocery businesses.

Business: market‑leading end‑to‑end

technology solutions, with a wide range of

fulfilment formats to automate warehouse

and ISF operations, optimise the online

consumer retail experience and drive

the most effective last mile fulfilment.

Technology: hardware and software

products installed in our partners’

warehouses (CFCs) are sold or leased as

a recurring managed service fee for OSP

partners and sold directly to OIA clients.

Quality and reliability of our end‑to‑end

technology solution.

Deep sector know‑how as a global

leader in online grocery and fulfilment.

Technology has market‑leading

throughput, up time and productivity.

High levels of service.

Innovation – significant capital

investment to ensure products and

solutions remain cutting‑edge.

OSP: upfront and recurring fees charged for

technology; key investment and operating

costs are:

• development of the OSP technology platform;

• initial site MHE capital investment and

replacement capex; and

• ongoing costs, e.g. direct operating costs

to maintain the MHE and hosting OSP as well

as support costs.

OIA: capital‑light “MHE sell” model, with upfront

fees closely matching Ocado’s cash outflows;

annual fees for servicing and maintenance fees

of MHE and access to fulfilment software.

Our people

page 60

Investors

page 61

Partners

page 62

Suppliers

page 63

Environment

and society

page 63

Ocado Logistics

Employees: c.14,000

Partners: 100% ORL and Morrisons CFC

online grocery business in the UK.

Business: full end‑to‑end logistics service:

supply chain, fulfilment, middle mile, last

mile, support functions and analytics,

operating across all CFC formats.

A standalone business within

Ocado Group with full accountability

of its profit & loss statement.

Deep knowledge and expertise

from over 20 years of operating

an online logistics model using

Ocado technology.

High performance levels across

productivity, availability,

on‑time delivery and doorstep

customer experience.

Continuous focus on cost efficiencies

and reducing operational costs for our

UK partners.

Transparent cost‑plus model.

Cost-plus business model with stable cash flows.

Revenues: recharge of costs incurred to execute

logistics services for our UK retail partners,

including a cost‑plus fee.

Costs: incurred to execute logistics services

which include fulfilment, last mile and support

costs, recharged for our UK partners.

Ocado Retail Limited

Employees: c.900 employees

Customers: UK consumers

Business: pure‑play online grocery

retailer in the UK, with operations enabled

by Ocado Technology Solutions and

logistics services provided by Ocado

Logistics.

Ownership: 50:50 JV with M&S; 100%

consolidated; separate management team

and board. See separate section on

page 20 for governance structure.

Choice – broad range of products at

market prices.

Quality – high‑quality, fresh products.

Reliability – 99% of items delivered as

promised and 95% of deliveries on time.

Convenience – reaching more than

80% of UK households with a flexible

mix of tailored delivery options.

Revenues: sale of grocery goods to

consumers through the Ocado online platform

and supplier services.

Costs: cost of sales, distribution and fulfilment

costs, marketing and headquarter operating

costs, and technology fees to Ocado Group.

Our key resources and inputs

Read more about

Our people

Our c.19,000 (c.20,000 including Ocado

Retail (“ORL”)) employees are talented,

motivated and key in creating and driving

the quality of our products and services.

Our people on

pages 68 to 72

The value of our IP creates and maintains

our competitive advantage and is

protected by 1,011 patents granted and

1,611 applications pending at year end.

Our IP on page 24

Physical assets

Our physical assets are primarily

the mechanical handling equipment

(“MHE”) installed and operational

in 26 global sites.

Our technology

on page 28

Financial resources

Gross liquidity

of £1.2bn,

sufficient to deliver on our

medium‑term growth plans.

Our financial

resources in our

Financial Review

on pages 40 to 59

Networks

Robust and collaborative relationships

with our partners and supplier

networks.

How we help

our partners

on page 29 and

our responsible

sourcing on

page 81

Natural resources

Fossil fuels used to run our logistics

operation and embodied carbon in

our CFC technology.

Our Net Zero

Roadmap on

page 75

Governance

Ocado Group plc is listed on the

London Stock Exchange in the UK

with a diverse Board of highly skilled

and experienced Directors.

Our governance

on pages 122

Helping us to achieve our strategic vision

To be the undisputed leader and global partner of choice in providing

technology and automation solutions for grocery retail and beyond

OCADO GROUP PLC Annual Report and Accounts 2023

What we do Why our partners and

customers choose us

How we

make money

Delivering for

our stakeholders

Technology Solutions

Employees: c.5,000

Partners: major grocery retailers

and non‑grocery businesses.

Business: market‑leading end‑to‑end

technology solutions, with a wide range of

fulfilment formats to automate warehouse

and ISF operations, optimise the online

consumer retail experience and drive

the most effective last mile fulfilment.

Technology: hardware and software

products installed in our partners’

warehouses (CFCs) are sold or leased as

a recurring managed service fee for OSP

partners and sold directly to OIA clients.

Quality and reliability of our end‑to‑end

technology solution.

Deep sector know‑how as a global

leader in online grocery and fulfilment.

Technology has market‑leading

throughput, up time and productivity.

High levels of service.

Innovation – significant capital

investment to ensure products and

solutions remain cutting‑edge.

OSP: upfront and recurring fees charged for

technology; key investment and operating

costs are:

• development of the OSP technology platform;

• initial site MHE capital investment and

replacement capex; and

• ongoing costs, e.g. direct operating costs

to maintain the MHE and hosting OSP as well

as support costs.

OIA: capital‑light “MHE sell” model, with upfront

fees closely matching Ocado’s cash outflows;

annual fees for servicing and maintenance fees

of MHE and access to fulfilment software.

Our people

page 60

Investors

page 61

Partners

page 62

Suppliers

page 63

Environment

and society

page 63

Ocado Logistics

Employees: c.14,000

Partners: 100% ORL and Morrisons CFC

online grocery business in the UK.

Business: full end‑to‑end logistics service:

supply chain, fulfilment, middle mile, last

mile, support functions and analytics,

operating across all CFC formats.

A standalone business within

Ocado Group with full accountability

of its profit & loss statement.

Deep knowledge and expertise

from over 20 years of operating

an online logistics model using

Ocado technology.

High performance levels across

productivity, availability,

on‑time delivery and doorstep

customer experience.

Continuous focus on cost efficiencies

and reducing operational costs for our

UK partners.

Transparent cost‑plus model.

Cost-plus business model with stable cash flows.

Revenues: recharge of costs incurred to execute

logistics services for our UK retail partners,

including a cost‑plus fee.

Costs: incurred to execute logistics services

which include fulfilment, last mile and support

costs, recharged for our UK partners.

Ocado Retail Limited

Employees: c.900 employees

Customers: UK consumers

Business: pure‑play online grocery

retailer in the UK, with operations enabled

by Ocado Technology Solutions and

logistics services provided by Ocado

Logistics.

Ownership: 50:50 JV with M&S; 100%

consolidated; separate management team

and board. See separate section on

page 20 for governance structure.

Choice – broad range of products at

market prices.

Quality – high‑quality, fresh products.

Reliability – 99% of items delivered as

promised and 95% of deliveries on time.

Convenience – reaching more than

80% of UK households with a flexible

mix of tailored delivery options.

Revenues: sale of grocery goods to

consumers through the Ocado online platform

and supplier services.

Costs: cost of sales, distribution and fulfilment

costs, marketing and headquarter operating

costs, and technology fees to Ocado Group.

Helping us to achieve our strategic vision

To be the undisputed leader and global partner of choice in providing

technology and automation solutions for grocery retail and beyond

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Ocado Group – Our Differentiators

Market-leading and

patent-protected

technology offering

flexible, end-to-end

automated solutions

Ocado provides efficient and flexible

automated fulfilment solutions in

a highly complex industry, where

retailers face the challenge of growing

their ecommerce operations in an

economically viable way. Our systems

automate processes, extend hours

of operation and reduce reliance

on high‑cost labour. We provide our

partners with a range of solutions

from in-store fulfilment (“ISF”) and

micro‑fulfilment centres to large,

centralised automated sites which

can be implemented across

different geographies.

20+ years of retail and

logistics operational

know-how to support

our partners

The ownership and operation of

Ocado Retail and Ocado Logistics in

the UK give us valuable insight into

the entire online business model.

We use this insight to help our partners

get the very best out of OSP. We have

the know‑how and ability to flexibly

configure our products and services

to optimise their service and

performance potential.

OSP enables leading online

grocery execution

and profitability

The full suite of OSP technology,

combining end‑to‑end software

systems with our physical fulfilment

assets (MHE), can deliver market-

leading levels of productivity and

efficiencies for online grocery by

increasing automation and reducing

headcount. It enables retailers to grow

their online businesses profitably

through leading service with 95%

on‑time delivery, 99% basket

accuracy and a 50,000+ SKU range.

The Ocado ecommerce software

enables our grocery retail partners to

acquire and retain high‑value

customers by building loyalty, growing

basket sizes by inviting customers to

add more items to their basket at every

step of their online shop, increasing

frequency and spend, and unlocking

new revenue streams via retail media.

Our technology is highly

applicable for non-grocery

automated storage

and retrieval systems

(“ASRS”) markets

Battle‑hardened by our experience and

expertise in complex grocery retailing,

Ocado’s technology can also transform

automation processes and efficiency

for warehouses in other industries.

Growing recurring revenue,

improving cash flow and

strong return on capital

Our OSP business model generates

recurring revenue through the

licensing of our hardware and software

technology products and services.

As the number of CFCs and modules

grows for our partners, so will our

revenue and cash flow, enabling

increasing returns on capital.

Driving more sustainable

and efficient ways of doing

business responsibly

We are committed to be carbon

Net Zero in our own operations

(Scope 1 and 2) by 2035 and in our

value chain (Scope 3) by 2040. Ocado

can play an important role in a

sustainable future, where our products

and customer proposition through our

online grocery delivery model result in

lower levels of food waste and reduce

our partners’ energy consumption

levels by removing millions of weekly

shopping basket miles.

Ocado Retail

ORL is a unique stakeholder for

Ocado Group. It is a 50:50 joint

venture formed in August 2019

between Ocado Group and M&S

and has its own independent

governance framework and board

made up of M&S and Ocado

representatives, with one board

observer from each of the

JV shareholders.

The three Ocado Group

representatives are: Group CEO

Tim Steiner, Chair, ORL; Group

CFO Stephen Daintith, a non-

executive director and Chair of the

ORL Audit Committee; and James

Matthews, CEO, Ocado

Technology and a non‑executive

director of ORL. Along with the

remaining directors they maintain

oversight of the key operations of

Ocado Retail and support the

strategic relationship between

Ocado Group, ORL and M&S.

The Ocado Group Board receives

regular updates from CEO Hannah

Gibson and CFO Mat Ankers,

taking place at Board meetings

throughout the year. Details on

trading performance of the

business, progress against the

strategic priorities, and updates

on employee engagement,

customer behaviour and supplier

relationships can be found in the

ORL Annual Report and Accounts.

OCADO GROUP PLC Annual Report and Accounts 2023

Our Strategy

Our vision is to be the undisputed leader and global partner of choice in providing technology and automation solutions

for grocery retail and beyond. Our strategic framework of five interdependent priorities supports delivery of this vision

and our ability to monitor performance and progress. Conducting business responsibly is at the core of our business

and embodies our approach to all other priorities.

You can read more about our responsible business approach across our operations and supply chain on pages 67 to 81

Our strategic framework

Our strategy delivery is focused on five priorities and long‑term goals:

Priorities

Why this

is a priority

Link to

stakeholders

How we

measure progress Links to risk

How culture

supports this

Grow our

revenue

Developing, building,

acquiring and

diversifying our

revenue streams

Ocado Group

revenue growth %

Technology Solutions

recurring revenue

growth %

Ocado Retail revenue

growth %

Market proposition

Supply chain

Partner success

Climate, environment

& geopolitical

We innovate to

create sustainable

success for

ourselves

and our partners

Optimise OSP

economics

Ensuring our

technology,

implementation

and services deliver

industry‑leading

returns and lowest‑

cost operations

OSP direct operating

costs as % of sales

capacity

Ocado Logistics cost

per each

OSP CFC UPH

Purfleet return on

capital employed

Market proposition

Product innovation,

protection &

performance

Supply chain

Climate, environment

& geopolitical

Partner success

We collaborate to

deliver improved

efficiency and

greater capital

returns for

ourselves and

our partners

Deliver

transformational

technology

Led by innovation,

we will always stay

ahead, by identifying,

developing and

protecting our

digital ecosystem

Technology

development

headcount

Patents granted

and submitted

Product innovation,

protection &

performance

Supply chain

Talent & capability

Cybersecurity & data

Climate, environment

& geopolitical

Partner success

We like to challenge

boundaries and

stretch the art

of the possible.

We remain curious

and restless in

our pursuit

of operational

technology

excellence

Drive success for

our partners

Providing efficient

and scalable

solutions – listening

first and delivering

leading customer

service

Average number of

modules live

Partner orders of

additional CFCs

Total eaches

processed through

the platform

Supply chain

Talent & capability

Fire & safety

Climate, environment

& geopolitical

Partner success

We care for our

partners;

their success

is our success.

We recognise

our accountability

and will always

go the extra mile

Embed a

responsible

business

approach

Continuing to

strengthen our

responsible business

foundations as we

scale, from human

and natural capital

management to

governance, will

support us to deliver

on our operational

objectives into

the long term

Carbon intensity

(tCO

e/100,000

orders (Scope 1 & 2)

ORL food waste % of

sales

Technology Solutions

eNPS

Ocado Logistics

eNPS

% of senior managers

that are female or

ethnically diverse

All risks (excluding

partner success)

See pages 103 to 111

We create an

environment that

enables talent

development and

growth, listening

to our people to

improve employee

engagement

Key:

Our people Investors Partners Suppliers Environment and society

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

How our Culture and Values

Support our Strategy

Ocado has a strong, distinctive culture

that remains central to our success,

born from our original ambitions in the

early days of our business. Our culture

is open and collegiate, engaged,

innovative and entrepreneurial. We

are a growing organisation, built on

the pioneering spirit of curiosity and

innovation. This culture has evolved

as the Company has scaled and

expanded internationally and we are

proud of how these qualities have

helped Ocado become the business

it is today. Equally, we must maintain

and nurture our culture at every level

to drive future success; doing this is

a core focus for the Board (see the

Governance section on culture on

pages 124 and 125) and we continue

to monitor how culture is reflected

appropriately in everyday working life

at Ocado.

We do this through a mix of qualitative

and quantitative oversight including

measuring eNPS (Employee Net

Promoter Score, measured through

a system called “Peakon”, our

employee listening tool), and

direct engagement with Ocado teams

at every level of the business.

In Ocado Technology, for example,

we provide our teams with an

excellent selection of developer tools

that are reliable, efficient and easy to

use. Our distinctive approach offers

engineers the freedom to focus on

building innovative solutions across our

vast platform and technology estate.

We collaborate with our developers

to agree on a software engineering

philosophy, and we treat this as a living

reflection of our engineering culture,

with room to be refined and improved

as we grow.

Our culture has been shaped by

a set of values and behaviours that

are integrated at every stage of an

employee’s experience at Ocado,

from the very first interview to the

last day of work; employees know

that core values form the basis for

every decision the Company makes.

Technology Solutions and Ocado

Logistics are distinct businesses

and each has a distinct set of values

which we further refined in FY23.

Our Technology

Solutions values are:

1. Aligned autonomy

Free to move with speed,

aligned to act with purpose.

2. Learn fast

Be curious, experiment

and evolve.

3. Build trust

We’re on the same team.

4. Craft smart

Innovate and create sustainable

success for us and our partners.

5. Collective potential

Collaborate to achieve more.

Our Ocado Logistics

values are:

1. We’re in it together

We fight for the common

purpose, show trust and respect,

and care for each other.

2. We can be even better

We do the right thing, go the

extra mile for customers and

celebrate our successes.

3. We’re proud of what we do

We never stop improving,

thrive on change and learn

from our mistakes.

Our Ocado Retail

values are:

1. Always be curious

We ask why.

We keep on learning.

2. Bring our best selves

We take ownership.

We deliver, together.

3. Challenge what’s possible

We raise the bar.

We never give up.

OCADO GROUP PLC Annual Report and Accounts 2023

How our Investments and Capital Allocation

Support our Strategy

For over 20 years, Ocado has invested

significantly in its business to create

the market‑leading technology used by

our partners around the world. This

investment supports our strategy to be

the undisputed leader and

global partner of choice in providing

technology and automation solutions

for grocery retail and beyond. The

size of our growing patent portfolio

is evidence to that approach (standing

at 1,011 patents granted at the end

of FY23), ensuring our automated

fulfilment and delivery solutions retain

a strong competitive advantage with

a global presence.

Read more about our investments

in the Financial Review on

pages 40 to 59

Use of cash Reason

FY23

investment Progress Projected returns

Technology Solutions

CFC sites Investment in MHE to deliver and

install OSP in partners’ CFCs,

driving secure and recurring

revenue streams for the Group

£253m 3 CFCs launched in the

year and 12 new live

modules; total of 26 sites

and 111 modules now live

at the end of the year

and ramping up

22%+ ROCE for

Ocado Group at site

level pre‑Re:Imagined

technology, as

demonstrated

by Purfleet CFC

Technology To further improve the OSP platform

and OIA technology, through

innovation that drives either:

• indirect improvements in returns

through improved customer

proposition; or

• direct improvements in returns

through step changes in capital

or operating efficiency

£203m Re:Imagined technology

deployed at Purfleet and

Luton CFCs in the UK and

in Sweden (see page 15)

and to be rolled out

further for our retail

partners from FY24

First OIA deal signed

in November 2023

Mid‑term targets

post‑Re:Imagined

technology: ~40%

ROCE Group site level;

15%+ reduction in

MHE capital costs,

c.20% lower

construction and

lease costs for our

partners and 1ppt+

operating margin

benefit for OSP

Partners

Group support

and other

Comprises projects relating

to support costs, systems

and infrastructure

£34m Spend reduced versus

FY22 – completed several

key investments in

support function systems

and infrastructure

Enabling successful

scale‑up of the

business and delivery

of commitments

to partners

Ocado Logistics

Logistics

technology

platform

Running the technology platform

for non-OSP legacy CFCs and

transitioning from the legacy

platform to OSP

£14m Continued progress to

transition our UK partners

from our legacy platforms

to OSP

Enables Ocado Group

to run our non‑OSP

sites and then

transition to OSP

Ocado Retail (fully consolidated)

Supporting

Ocado Retail

growth in the UK

CFC and Zoom build and maintenance

capital expenditure to support

future capacity growth, asset

replenishment, IT, spoke expansion

and General Merchandise (including

recharges from Ocado Logistics)

£25m Luton CFC went live

during FY23

Mid‑term target:

High mid‑single digit

EBITDA margin

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Ocado Group’s Intellectual Property (“IP”)

Driving competitive advantage, technological strength and balance sheet value

How it works at Ocado:

IP talent and rigorous

processes are embedded

in how we do business

The drive to innovate is a powerful

strategic objective and motivating

force at Ocado, and a very significant

amount of valuable IP is created

throughout the Technology Solutions

business. This IP needs to be properly

directed and protected, key tasks

of our internal IP team.

The team comprises 11 qualified patent

attorneys, all scientists or engineers by

training, and an IP business intelligence

analyst. This highly qualified, centrally

managed internal IP team is embedded

in our Ocado Technology Engineering

teams, enabling continual participation

in their engineering processes and

discussions. The value this structure

brings is four‑fold:

• We can prioritise protection of

our inventions.

• We ensure the freedom to operate

our solutions by landscaping and

being aware of competitor IP.

• We can offer alternative engineering

solutions that may be less risky

from a third‑party IP perspective.

• We can train our engineers

to ensure IP best practice

throughout the process.

The IP team engages with other

business functions in Ocado Group,

providing risk management services

that further strengthen our IP

competitive advantage. These include

overseeing third‑party confidentiality

regimes, ensuring externally published

information is “IP safe” and embedding

appropriate IP terms and conditions

in contracts.

The use of IP is widespread in

Ocado Group. Our Data Science

and Engineering teams utilise their

expertise at the forefront of many

technologies to create new client

solutions and this generates IP

at a fast pace.

Our non‑engineering employees use

our IP daily in their interactions with

partners, social media and other

interested parties. Our partners have

access to our IP in their CFCs and

access to each others’ IP via the

partner panels. All these teams have

quick and easy access to our internal

IP professionals who give high‑level

advice in complex situations in a

cost‑effective manner. Occasionally

we require niche IP expertise that is

not available internally, e.g. in complex

litigation scenarios. The flexibility of

this structure enables cost‑effective

management in fast‑moving

IP situations for Ocado Group.

Our patent portfolio

in numbers

At the end of FY23 there were 1,611

patent applications and 1,011 granted

patents protecting Ocado’s

proprietary technology.

Applications

1,611

Work‑in‑

progress

162

Granted

1,011

OCADO GROUP PLC Annual Report and Accounts 2023

Our IP in action:

600 series bot

and Mk3 Grid

The 600 series bot began life as a blue sky project to create a lightweight

robot that would enable the use of a less structurally demanding grid.

The aim of the blue sky project was to reduce the energy required to build

and maintain our grid frameworks. The environmental attributes of the

grid would improve as a structurally lighter grid framework could be used,

thereby reducing manufacturing cost and energy as well as transport

costs. To have a lightweight grid required a lightweight bot. In late 2019

our Emerging Technology teams developed a concept for a robot using

additive manufacturing (3D printing), with a prototype soon developed

and demonstrated to senior stakeholders. The IP team worked closely

with the Emerging Technology teams and were able to ensure protection

of the 600 series bots as soon as the project was greenlit. For example,

the basic concept of a “3D printed bot” was protected as well as the

details of the compliant direction change mechanism and the novel wheel

incorporating suspension (the “tweel”). The first patent applications were

filed in early March 2020 and published in September 2021.

The development of the concept 600 series bots enabled work to start

on the lightweight grid. Over 65 patent applications have been filed

in relation to the 600 series bots and the Mk3 lightweight grid.

The IP team worked closely with the Emerging Technology teams and

later the Productionisation teams to ensure that all material aspects

of the 600 series bots and the associated Mk3 grid are the subject

of patent applications globally. This approach enables OIA to produce bots

and grids and demonstrate them at trade shows and other public arenas.

Our IP in action:

AutoStore litigation

settlement, July 2023

IP litigation is a complex and

involved process. The action

started by AutoStore in October

2020 involved the International

Trade Commission (“ITC”) and the

District Courts in the US, the High

Court of England and Wales and

the Intellectual Property Office in

the UK. Ocado Group responded

by filing defences, and our own

actions, in the District Courts in

the US, the German District Courts,

the new EU Unified Patent Court

and the European Patent Office.

Crucially, Ocado Group’s internal

IP team was pivotal in the

litigation process, from gathering

information, maintaining a

consistent approach across

jurisdictions, and briefing partner

companies and internal and

external stakeholders, to being

present throughout all actions in all

jurisdictions. This approach placed

us in a strong negotiating position,

as the internal team was aware

of all the separate actions and

the overall advantages and

disadvantages of the litigation to

Ocado Group. The results of this

intense litigation period were

as follows:

• All litigation was settled by

negotiation on 22 July 2023.

• Ocado prevailed in the ITC,

the UK High Court and the

German litigation.

• A cross‑licence was entered into

over both parties’ pre‑2020

patent portfolios, but Ocado

retains the exclusive right to the

Single‑Space Bot concept.

• Post‑2020 patents are subject

to a non‑assertion agreement

against each other for products

existing on 22 July 2023.

• Any future issues between

the parties will be resolved

via internal mechanisms or

ultimately via arbitration.

• A balancing payment of

£200m was determined to be

payable in 24 monthly

installments from AutoStore.

600 series bot

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Our Markets

Ocado’s role in changing the way

the world shops, for good

Consumer demand

and the channel shift

to online grocery

Our mission is to “change the way

the world shops, for good”. We play

a major role in the continued evolution

of the grocery market, which over the

last 70 years has transformed from

over‑the‑counter specialist stores

to high street supermarkets, out of

town hypermarkets and now a growing

online sector. We believe online

grocery enables and marries the

personalised contact famed by the

specialist stores of the 1950s with

a significantly broader, high‑quality

product range, product prices that

match brick and mortar stores and

the convenience of delivery at a time

and place that suit the customer, seven

days a week. It is this complete

package combined with excellent

service that is driving grocery

consumers online.

Online grocery trends

today and the impact

of Covid-19

The grocery market we serve

has been gradually migrating

online since the mid 2000s but this

accelerated during the Covid-19

pandemic when online penetration

nearly doubled in many regions,

including the UK.

During this time retailers had to

quickly adjust their operations to meet

demand, and new competitors and

significant new capital entered the

market. Consumer expectations

regarding convenience altered, with

the desire for retail “immediacy” or

“Quick Commerce” gaining

prominence. As the impact of Covid-19

eased in 2022 and high food price

inflation across the world impacted

volumes, there was natural attrition

from the pandemic peaks as customers

reduced their grocery baskets, began

eating out again and started topping

up more in store. Online penetration

has now stabilised at much higher

levels than pre Covid-19 and resumed

growth over the past year. This trend

has been particularly evident in more

developed online grocery markets

such as the UK, USA and South Korea.

Despite the somewhat volatile period,

analysts forecast that online grocery

growth and increased penetration of

the overall grocery market will continue

over the next five years driven by

customer demand for convenience,

as seen in the chart below.

Online grocery penetration by OSP partner market 2023 vs 2027 forecast

Online penetration (2023)

Online penetration forecast (2027)

1. Data source: Global Data (Spain, UK, Sweden, USA, South Korea, Japan, Canada, Poland)

and IGD (France, Australia).

SwedenUKSpain France USA Australia South

Korea

Japan PolandCanada

3.8%

4.7%

11.9%

5.9%

7.3%

6.7%

9.5%

9.0%

26.9%

9.6%

7.9%

6.1%

8.8%

7.0%

20.4%

7.6%

6.4%

1.3%

1.7%

13.8%

Channel shift has happened in grocery before

Pre-1950s 1950s 1980s 1990s 2015

Over‑the‑counter

specialist stores

Self‑service

grocery stores

High street

supermarkets

Out of town

hypermarkets

Online

grocery

Range

Prices

Personalisation

OCADO GROUP PLC Annual Report and Accounts 2023

The case for automation –

how OSP addresses

market needs

The grocery market is the largest

retail market in the world, estimated

to be worth £9.8tn in 2023 (source:

IGD), with consumer demand for online

food shopping growing as seen in the

chart on the previous page. For

retailers, online grocery fulfilment (the

process of storing inventory, picking

and packing products, and shipping

online orders to customers) is complex.

It involves a high volume of SKUs,

traditionally low gross margins and an

expensive supply chain that has a high

labour content and cost. Products

need to be carefully handled, often

with short shelf lives. In high‑labour‑

cost markets, fulfilling orders manually

in store, whereby employees carry out

the picking and packing, is not

profitably scalable. This is due to the

time it takes to pick a customer

shopping basket order, the number of

people involved in the process and the

resulting high cost.

Only through technological innovation

and automation will retailers be able

to meet these consumer demands

profitably in markets with high

labour costs.

It is this reality, and the roles that robots,

automation and AI can play to provide

flexible, robust online grocery fulfilment

with better customer experiences,

that are driving demand for Ocado’s

end‑to‑end service of solutions, OSP.

OSP automation today allows a typical

customer’s shopping basket order

to be fulfilled in less than 15 minutes,

which we expect to improve even

further to below 10 minutes with the

benefits of the Ocado Re:Imagined

technology. This compares with the

manual operation in a supermarket

where we believe it takes around

70 minutes to fulfil the equivalent

basket. OSP enables significantly

reduced labour intensity in a world

where labour is increasingly expensive

and scarce. Our consumer‑facing

software is also dynamic, responding

in real time to calculate the most

dense, more cost‑effective delivery

routes in a smart, efficient and

profitable way. For the consumer,

OSP enables 99% order accuracy, 95%

on-time delivery and 50,000+ SKUs

in the range, compared with a typical

supermarket of around 30,000 SKUs.

Our technology can deliver this leading

service across the full range of grocery

shopping missions, from immediacy

(small baskets delivered within

60 minutes from order) to the big

basket shop and across multiple

fulfilment formats.

In the future, OSP will be able to

support other delivery methods such

as unattended delivery, click and

collect and collection lockers, offering

even more convenience to customers.

Ocado’s in-store

fulfilment solutions

Ocado also offers ISF solutions,

a capital‑light option for grocery

retailers, in markets which are not

yet mature enough to justify full

automation. We are currently

live with our ISF solution in over

1,000 stores across the world.

These solutions bring benefits

to our partners, including:

• enabling partners to generate

higher overall turnover from

their bricks and mortar network

alongside in‑store shopping;

• enabling partners to fulfil online

orders in low‑density areas that

would not warrant investment

in automation;

• provide an option for rapid

customer acquisition in markets

where they are building CFCs

to serve customers for the long

term; and

• benefits from full integration

into Ocado’s end‑to‑end

solutions spanning ecommerce,

supply chain and last mile.

Natural resource

efficiency and

food waste management

Grocery retailers around the world are

looking for ways to reduce their carbon

footprint, lower their energy usage

and improve food waste management.

As a facilitator of online grocery

operations, Ocado has a key role

to play here in making this happen

through our technology.

Read more about OIA on page 32

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Business in focus:

Technology Solutions

Technology Solutions is our global technology platform business providing

OSP as a managed service to our 12 grocery retail partners and ASRS

technology to non‑grocery clients. Day‑to‑day operations are carried

out by Ocado Solutions, Ocado Technology and OIA.

Ocado Solutions is run by John Martin, who joined the team in September

2023, having previously served as a Non-Executive Director of Ocado Group

plc since June 2019. John and his team are responsible for our grocery

partnerships and new sales.

Ocado Technology, run by James Matthews, is responsible for innovation

and design, product, platform development, installation of Ocado

technology within a CFC and maintaining the end-to-end platform.

OIA, led by Mark Richardson, is also part of Technology Solutions and

develops new markets for Ocado’s warehouse automation technology

beyond the grocery sector.

See page 32 for further information on OIA

Here, John Martin and James Matthews review the

achievements of FY23 and their priorities for

FY24 for Ocado Solutions and Ocado Technology.

FY23 – demonstrating

the power of OSP

It has been another year of progress

for Technology Solutions. We have

generated positive adjusted EBITDA

for the first time and are now operating

more OSP sites internationally than in

the UK. Our teams have continued to

work in true Ocado style, challenging

themselves and striving to improve the

quality and performance of OSP for

our partners. We collaborated even

more closely with our partners this

year as they adopted our technology,

and while there is more to do, we are

pleased with the progress so far.

Revenue was £420m, up 44%,

and adjusted EBITDA

£15m compared

with a loss of £102m in FY22. The

power of the Technology Solutions

operating model is shining through,

with live modules driving higher

recurring revenue. The continued focus

on reducing direct operating costs has

resulted in a strong contribution

margin of 70% of sales.

Read more about our financial

performance in the Financial

Review on page 40

We now have 26 sites and 111 live

modules around the world. Three new

CFCs went live during the year: Luton

in the UK, the first live site for AEON in

Chiba city (just outside Tokyo) in

Japan, and a third CFC for Sobeys in

Calgary, Canada. In Australia, following

completion of initial build and testing

phases, final regulatory approvals are

now being sought by Coles for the

occupancy certificate for their Sydney

CFC before moving into the final

stages for go-live. The Melbourne CFC

build is advancing well. Reflecting this

progress, we now expect to go live

with both sites in FY24.

With retail partners now in 10

countries, we have evolved our team

structures and their geographical

locations to map the operations of our

partners. Our Partner Success teams,

with a focus on supporting our retail

partners, have grown to over 80

people, including 7 based in North

America and 5 in Asia‑Pacific. The

local teams enable us to keep close to

our partners and their operations,

ensuring they are getting the best out

of our technology while providing

solutions and feedback in real time.

Business Segments

OCADO GROUP PLC Annual Report and Accounts 2023

Our technology

The past year has demonstrated that

the full suite of OSP products can

perform, and is performing, at levels

in line with or better than our initial

expectations, achieving high

productivity, low direct operating

costs as a percentage of CFC sales

capacity and low energy usage. The

performance is demonstrated most

visibly in our newer CFCs in Purfleet

and Luton in the UK, which also

benefit from some of the Re:Imagined

technology installed in FY23, including

OGRP, and AFL at the Purfleet CFC

(see case studies on pages 15 and 30).

These innovations have resulted in

significantly lower labour intensity

and more efficient overall running

of the CFC. Read more about our

new Luton CFC on page 36.

Our international partners, including

ICA in Sweden, are also starting to

benefit from Re:Imagined technology

such as AFL and we look forward

to further roll‑out and deployment

in FY24. The short payback and

savings on labour from deploying

Re:Imagined technology present

compelling economic opportunities

for our partners.

Another key feature of Re:Imagined

technology is a more cost‑effective

grid. By reducing the weight of the grid

and bots, OSP can be installed in a

broader range of space and buildings,

reducing the initial capital outlay and

subsequent running costs.

Read more in our Responsible

Business and TCFD reports

on pages 67 and 82

Investing in

Technology Solutions

We invested £292m in our technology

in FY23, both capital and operating

expenditure. Constant innovation

ensures our solution is at the

intersection of multiple cutting‑edge

technologies and helps us lead the

way and stay ahead of retail and

wider industry trends. Naturally, our

investment philosophy has evolved

as our business has changed. While

there has been a historical emphasis

on R&D investment to develop the OSP

platform, we are gradually shifting our

focus to the optimisation of fulfilment,

last mile delivery and ecommerce

for our retail partners. This shift in

investment focus will help our

partners drive utilisation and

profitability and also encourage

them to order more new modules

to grow their business further.

You can read more about our

investment in the Financial Review

on page 40

Our people in Technology Solutions

(c.5,000 employees in FY23) are the

major source of our investment and

value creation. It is encouraging that

around three‑quarters of our managers

in Technology Solutions have come

from within the business. We have a

team that is motivated, innovative and

collegiate and it is important that we

continue to support them by providing

the skills and experience to aid their

ongoing development. Our eNPS,

which is used to monitor the level of

engagement of our people, is 19. In

FY23 we conducted workshops and

provided training to over 100 of our

managers to ensure best practice in

managing performance and helping us

retain and attract the best talent.

You can read more about how

we are investing in our people

on page 68

Partner Success – evolving

the Ocado Solutions teams

to support our partners’

long-term growth

and profitability

A key challenge for our grocery

partners is to increase utilisation and

optimise the operational performance

of their CFCs to drive returns from their

investment in Ocado’s technology.

Our Partner Success teams worked

hard in FY23 to provide support to

our partners so that they can access

our knowledge and expertise where

they need it most (see case study

on page 15).

As partners move into live operations,

the focus of our account teams in

Ocado Solutions shifts from pre‑go‑

live support and set‑up, to steady‑state

support for our partners, enabling

long‑term growth and optimal

operating efficiency.

Ocado Solutions has three Presidents

leading our regional teams across

North America, Asia‑Pacific and

Europe. Our Presidents are responsible

for account management, partner

success and business development

in their regions, leading local teams

with the right skill sets to support

our partners’ operations and growth.

These teams include dedicated Partner

Success resources locally, alongside

a central team of deep knowledge

experts covering all areas of the online

grocery ecosystem. The knowledge

experts bring global analytics

capabilities to our regional Partner

Success operations, and provide

extra targeted support as needed

to individual partners.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Business in focus: Technology Solutions continued

Partner Success

with Kroger

During FY23 Ocado and Kroger

worked closely together on a

targeted programme aimed at

optimising operational performance

at Kroger CFCs.

Our teams focused on two sites in

Ohio and Florida. Together, we have

achieved a 25% reduction in variable

operational cost per item, reflecting

increased warehouse productivity,

further waste reduction and more

drops per van route.

Our Partner Success teams are

working closely with all our partners

across areas including continuous

development of the online ‘playbook’,

driving operational efficiency and

growth, and collaborating closely on

the product roadmap to meet evolving

consumer expectations.

We will continue to work with Kroger,

and all our partners, in each of these

areas, in order to support their path

to generating attractive returns

through OSP.

“ We are working closely with

Ocado to make our CFCs even

more efficient and productive.

As a result of these joint

efforts, our Monroe facility

greatly improved the cost per

order over the past quarter,

and we’re now in the process

of applying these learnings

across our other sites.

NPS continues to increase

– CFC volumes are growing in

line with expectations in 2023.”

Gary Millerchip

CFO, Kroger 15 June 2023

Most of Ocado Group’s live CFCs currently operate

with manual frameloading, which is the physically

demanding process of loading outbound totes with

customer‑ready orders from conveyors onto frames,

ready for dispatch. Manual frameloading faces both

labour and health and safety challenges. Labour is

intensive and costly and it can be difficult to recruit

and retain staff. Ensuring our teams are well trained

and comply with health and safety standards is

also costly.

Ocado’s AFL equipment enables operational cost

savings across the CFC. Automating the process

reduces the headcount for the dispatch team and

drives onsite productivity. We have found through

18 months of “live” production testing that it can

achieve up to 70% reduction in labour costs for

frameloading, resulting in up to 5% reduction in

labour costs for fulfilment across the CFC. Further

efficiencies can be realised from indirect cost savings

such as recruitment and training. AFL delivers high

performance and reliability, loading up to 400 totes

per hour with 99% availability, thereby also improving

overall fulfilment time.

AFL was deployed to our Swedish partner ICA’s Brunna

CFC in 2023. Purfleet CFC in the UK now has four

AFL installations, which is expected to increase,

covering more of the CFC’s frameloading function.

The equipment is quick to install and demonstrated

a fast ramp‑up in order fulfilment as can be seen in the

first chart on the right.

In little over a month, 100% of totes at the ICA CFC

in Brunna were processed using the AFL machines,

removing the need for labour to complete this task.

The chart above highlights the actual percentage

of totes processed using AFL at the Brunna CFC.

Case study:

Early deployment and performance of “live” AFL equipment is encouraging

Easy to run, easy to ramp up

April May June July August

100

Percentage of totes loaded by AFL (%)

Reporting week

Automated frameloading improves overall fulfilment time

March

April May

Reduction in

total fulfilment time

– 5 min

OCADO GROUP PLC Annual Report and Accounts 2023

Outlook and priorities

for FY24

We have clear priorities for the year

ahead as we continue to help our

partners grow and be profitable in

their online grocery operations. We will

help them deliver increased warehouse

productivity, higher capacity utilisation

and better last mile economics.

We are all incentivised to achieve

this as our partners’ success is our

success. We are confident that orders

for new modules will accelerate once

again as the results of our work with

partners come through. At the same

time, we will remain focused on

becoming more efficient ourselves,

driving cost efficiencies and improved

cash flow with a keen focus on return

on investment.

Ocado Technology Solutions: how we performed

against our Group strategic priorities

Group strategic priorities Technology Solutions performance

1. Grow our revenue Revenue +44.3%

2. Optimise OSP economics Direct operating costs as % of installed

sales capacity reduced to 1.65% (FY22:

2.02%)

3. Deliver transformational technology Re:Imagined technology being rolled out –

OGRP now live at Purfleet and Luton CFCs

and AFL now live at CFCs in Brunna

and Purfleet

4. Drive success for our partners Partner Success teams working closely

with partners. Kroger project delivering

reduction in variable operational cost per

item at Ohio and Florida sites

5. Embed a responsible business approach eNPS 19 (FY22: 31)

See page 21 for more detail on Ocado’s strategy

5 2

Case study:

The benefits of partner networking – the OSP leadership club

and 2023 Beyond conference

Mature grocery markets worldwide are typically

dominated by large local players. The majority of OSP

partners are leading grocery retailers in some of the

world’s largest markets. The OSP leadership clubs

are unique, global forums, bringing together senior

stakeholders across these market leaders to share

insights and best practice on topics ranging from

operational efficiency to growth strategies. During

FY23 we hosted 30 OSP leadership club sessions

covering a wide range of topics, with very high

collaboration across the board.

The annual “Ocado:Beyond” event brings together

Partners from across the world for two days of

networking and knowledge sharing. This year, we

welcomed key decision‑makers from some of the

world’s leading online grocery retailers to London.

At the event, partners exchanged battle‑tested insights

on how to gain market share, stories of operational

excellence from the field, and winning strategies

to drive customer acquisition and loyalty.

Over the course of the two-day Beyond event in 2023

there were many engaging sessions, including those

hosted by senior executives from across our

global partners, as well as by Ocado Group leaders.

They covered a range of topics, from deep‑dive

growth strategies, to live international case studies

covering the roll‑out of Ocado’s latest technologies,

to innovative sustainability initiatives being deployed

by partners alongside the launch of OSP.

Partners left Beyond as part of an expanded

network – gaining a greater understanding

of how to unlock new opportunities,

galvanise growth and accelerate operations.

OSP leadership club sessions

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Mark Richardson, CEO, OIA, discusses automation

developments outside the grocery sector and

how Ocado is creating a compelling solution

to meet the needs of the market.

What is OIA?

Our business was established in 2022

with the aim of bringing Ocado’s

outstanding proprietary ASRS

technology to clients beyond the

grocery sector. Our team is now 43

strong and spread across the world.

Many of our employees are originally

from the Ocado Technology team, well

schooled in our collegiate, engaged,

innovative culture and well versed

in the power of OSP and what it can

bring to potential clients.

The OIA business model for

non‑grocery technology solutions

is different to our grocery solutions.

OIA operates a capital‑light “MHE sell”

model, leveraging OSP’s existing

technology and with upfront

fees closely matching Ocado’s

cash outflows.

We were excited to announce in

November 2023 OIA’s first contract

win with McKesson Canada, the largest

pharmaceutical distributor in the

country. The deal is a good example

of how our technology is ideally suited

to supply chains that require dense

storage, highly accurate inventory

management and secure stock control.

Ocado will install its proven, unique

warehouse fulfilment technology in

one of McKesson’s distribution sites

and provide the AI‑powered software

applications necessary to operate that

technology long term. Under this first

deal Ocado will receive upfront fees

during the construction process with

a final payment upon final installation.

Ocado will also receive an ongoing

annual fee related to the Software as a

Service (“SaaS”) solutions and the

servicing and maintenance of the

technology. It is a capital‑light deal

which will be cash neutral throughout

the development phase and is

expected to be cash and EBITDA

positive in FY25 when installation

is due to be complete.

Business in focus:

Ocado Intelligent Automation

OCADO GROUP PLC Annual Report and Accounts 2023

We acquired 6RS in June 2023 to gain access to the company’s cutting-

edge technology and leverage its business success for OIA. Since the

acquisition, we have fully integrated the teams into Ocado Technology

and OIA for Development & Operations and Sales respectively, focusing

on business continuity and future technology development opportunities.

Ocado Technology, backed by the OIA commercial teams, has taken

the decision to invest in the development of a pallet‑moving autonomous

mobile robot (“AMR”) to be added to the OIA portfolio of capability.

Typical pallet‑moving AMRs commercially available today do not possess

the physical attributes to support different pallet types in densely packed

and high‑tempo operations. They also typically lack the control and

sensing sophistication to operate in these domains effectively. The new

pallet‑moving AMR that we are developing is designed to operate in a

small footprint, to be able to navigate in cluttered and busy operations

while maintaining throughput. The technology will leverage the same type

of remote teleoperation developed for our grocery picking robot to ensure

operational reliability from the outset whilst also supporting cutting‑edge

AI that will learn and improve over time.

The photo below is an AMR, known as a Chuck robot, in action.

Case study:

6 River Systems – integration and development

of game-changing technology

The market we address

Having worked through and managed

the complexity of the online grocery

market, we are confident that Ocado’s

ASRS end‑to‑end solution is widely

applicable to a range of markets.

These include general retail,

healthcare, fast‑moving consumer

goods (“FMCG”) products, the

components market and more.

The market potential for our

technology is large and the drivers of

demand are common to grocery: the

need to automate warehouses due to

the reducing pools and the rising costs

of labour. Our technology can also

be used in internal supply chains

and potentially enables a “lights out”

warehouse, where no people would be

needed on site. Our acquisition of

6 River Systems (“6RS”) in June 2023

adds to our capabilities in this respect.

See case study and read more

about our market in Our Markets

on page 26

Our differentiators

Our differentiators are compelling.

We offer a complete end‑to‑end

solution, not just the fastest robot.

Our solution is space efficient; it

takes account of potential bottlenecks

and ensures the highest levels of

productivity for the total warehouse.

Our know‑how and real‑life experience

gained while operating ASRS

machinery in the grocery sector

have helped reassure our potential

clients that we understand the issues

at stake and have the expertise and

resource to evolve our solutions

to solve specific tasks or challenges

as they emerge.

Looking forward

It is these factors that motivate and

excite us about the future. With the

first OIA deal signed in FY23, our

focus for FY24 is on exploring more

opportunities, winning more clients

and delivering high‑quality projects

on time and on budget.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Brian McClory, Managing Director, Ocado Logistics

in the UK, reviews the business achievements in

FY23 and priorities for the year ahead. A keen focus

on operational excellence and harnessing the

increased productivity of OSP technology has

driven our performance this year.

Business in focus:

Ocado Logistics

Shining a light on

Ocado Logistics

Our mission is to operate and optimise

Ocado Group’s platforms, delivering

the best value for our UK retail

partners and their customers.

The new reporting structure helps

shine a light on Ocado Logistics as

a distinct business and the value we

bring to the Group, serving Ocado

Retail and Morrisons in the UK. In FY23

we were responsible for the smooth

operation of 12 CFCs (including 4

Zoom sites) and the efficient, accurate

and timely delivery of grocery goods to

consumers’ homes. The quality of our

service is a key factor in driving our

retail partners’ growth and profitability

through our own pursuit of the highest

productivity levels. Our c.14,000

employees, who work across fulfilment

and delivery operations, are motivated

to deliver outstanding levels of

productivity, availability, on‑time

delivery and doorstep customer

experience. Doing this well will grow

all our businesses and we are proud

to be at industry‑leading levels

of service in all these areas.

As part of Ocado Group, Ocado

Logistics also acts as a “showcase”

for our existing and prospective

international partners, demonstrating

the opportunity and performance that

are achievable across fulfilment

through OSP especially when the full

suite of automated technology is

adopted.

FY23 – driving productivity

Ocado Logistics achieved an adjusted

EBITDA

of £30m in FY23, reflecting

the reliable cash and profit‑generative

characteristics of the cost‑plus model.

Operational costs were broadly flat

driven by growing customer orders

per week, up 3.2%. The number

of items in the basket (“eaches”)

declined by 4.3% due to

inflationary pressures.

Read more about our financial

performance on page 40

FY23 was an important year in

demonstrating our capabilities and the

potential of OSP for our retail partners

around the world. There was a step

change in productivity in our CFCs,

witnessed through the improving

productivity levels of the number

of eaches picked per labour hour

(“UPH KPI”).

OCADO GROUP PLC Annual Report and Accounts 2023

Productivity was boosted by the closure of our oldest CFC in Hatfield and the

opening of the Luton CFC containing some of the latest Re:Imagined technology, all

supported by the performance of our teams (see the Re:Imagined progress on

page 14).

Our focus on performance resulted in OSP CFC UPH of 208, DP8 of 21.5 and cost

per each of £0.54, which was impacted by smaller shopping baskets and inflation,

partly offset by operational efficiencies. UPH at the Purfleet CFC achieved a

high of >228 and we see further potential for productivity levels as we deploy

additional elements of OSP and Re:Imagined technology to the CFC estate over

the coming years.

Cost per each

(£)

0.54

FY22

FY23

Drops per van route

(eight-hour shift)

20.3

19.0

19.7

21.3

FY19

FY20

FY21

FY22

FY23

21.5

OSP CFC UPH

122

171

168

184

FY19

FY20

FY21

FY22

FY23

208

On-time delivery

(%)

95.2%

95.9%

97.0%

95.2%

FY19

FY20

FY21

FY22

FY23

95.6%

Making Ocado Logistics

a great place to work

Our people are at the heart of

everything we do, so ensuring they

have a great experience at work is

a top priority for us. With network

changes implemented this year,

including the closure of our oldest

site in Hatfield and opening a new

CFC in Luton, we are incredibly

pleased that just under half of our

impacted employees were retained

by transferring to alternative locations.

The large turnout celebrating the

history of the Hatfield CFC at the

farewell celebration demonstrated

our culture of being “in it together”

and “proud of what we do”. It was an

historic moment for the Group closing

our first ever site that was opened over

20 years ago. We are also encouraged

by our improving eNPS score of 6,

testament to our efforts to invest in

the skills and ambition of our people,

striving to make Ocado Logistics

a great place to work.

FY23 saw a focus on a number

of people development initiatives

including building career pathways,

listening to our people through

face‑to‑face town hall meetings and

driving internal talent programmes.

It is encouraging that 10% of the

participants on the frontline managers

programme were subsequently

promoted to manager and we have

plans in place to improve flexible

hours in response to key feedback

we received from our employees.

Improving flexible hours, and a

programme embedding a thorough

induction and support for our new

starters, are important in enlarging,

retaining and attracting our future

pool of employees.

Read more in our Responsible

Business Report on pages 67 to 81

With the closure of our oldest “legacy” site in Hatfield, and with the exception

of the Dordon CFC, we now operate OSP in all of our other CFCs in the UK. These

CFCs, whether large or small, are consistent, stable, reliable and high-productivity

performers. The recent opening of the Luton CFC has also demonstrated our

ability to ramp up capacity utilisation much faster than historically. Indeed, the

Luton CFC is testament of what OSP and our teams can achieve together. We are

now using the Luton CFC as a showcase for our partners who are opening, or plan

to open, new CFCs internationally (see case study on page 36).

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

The Luton CFC, which is ORL’s newest robotic CFC,

opened in September 2023 with some of our latest

innovations such as OGRP, enabling huge leaps

forward in fulfilment productivity and a better

experience for ORL customers. The new Luton CFC

will have double the level of productivity (UPH) versus

our first generation Hatfield CFC, which ceased

operations at the end of 2023.

40,000 orders were transferred from the Hatfield

CFC, allowing for a quick ramp-up to 47,000 orders

per week by the end of FY23 and achieving 70% of

design capacity utilisation. The Luton CFC will be our

fastest ever ramping CFC; within the first four weeks

the site ramped from 0 to c.40,000 orders per week.

At full capacity the CFC will process 65,000 orders

per week. The fast ramp-up of the CFC is not only

a huge win for Ocado Logistics and Ocado Retail, it is

also an incredibly useful demonstration of the

capability of our OSP solution to existing and potential

customers worldwide.

By the end of FY23, the Luton CFC had already

achieved UPH of >190, which we expect to further

increase over the coming years to 300+ with the

benefit of OGRP and AFL technologies.

Case study:

Our brand new CFC opened in Luton

in September 2023

Priorities for FY24

In FY24 we will continue to focus

on our people, service, costs and

productivity to deliver best‑in‑class

logistics and fulfilment for our partners.

Further goals include ensuring the

smooth transition from our legacy

systems to the OSP‑enabled

consumer‑facing online shopping

experience and an enhanced focus on

customer service. Trials of electricity‑

powered delivery vans will also give us

a better understanding in formulating

future fleet requirements on behalf

of our UK partners as we work

together in our drive for Net Zero.

Read more in our Responsible

Business Report on pages 67

to 81

Ocado Logistics: how we performed against our

Group strategic priorities

Group strategic priorities Ocado Logistics performance

Grow our revenue Revenue +0.7%

Adjusted EBITDA

£30.1m (FY22: £33.6m)

(cost-plus model)

Optimise OSP economics OSP UPH 208 (FY22: 184)

DP8 21.5 (FY22: 21.3)

Cost per each £0.54 (FY22: £0.54)

Deliver transformational technology Transfer of capacity from Hatfield CFC

to brand new Luton CFC

Drive success for our partners Eaches shipped 1,182m (FY22: 1,196m);

on-time delivery of 95.6% (FY22: 95.2%)

Embed a responsible business approach eNPS 6 (FY22: 2)

5 2

Business in focus: Ocado Logistics continued

OCADO GROUP PLC Annual Report and Accounts 2023

Hannah Gibson, CEO,

Ocado Retail, reviews

the progress made

since her appointment

in September 2022,

her vision for

Ocado Retail and

priorities for the future.

Business

in focus:

Ocado Retail

FY23 – a focus on

Perfect Execution

Going into 2023 we were facing a

post-Covid-19 pandemic normalisation

in online grocery, a cost‑of‑living crisis,

rapid food price inflation and high

global energy prices. We responded

well to these challenges during the

year and made strong progress,

accelerating our return to growth and

profitability. We launched a “Perfect

Execution” programme, to make

sure every element of our customer

proposition and our operating model

is at its best. To us, this means

unbeatable choice, unrivalled service

and reassuringly good value, as well

as relentlessly focusing on our costs.

These initiatives, combined with a

focus on costs, have led us back to

delivering positive adjusted EBITDA

of £10m and 7.0% revenue growth in

the year as we served more customers

than ever. The charts below and to

the right show how our KPIs have

evolved in recent years, driving the

performance of the business.

Average basket value

(£)

105.70

136.04

127.87

117.74

FY19

FY20

FY21

FY22

FY23

120.94

Year end active customers

(000s)

796

682

832

942

998

FY19

FY20

FY21

FY22

FY23

Average orders per week

(000s)

307

319

358

378

393

FY19

FY20

FY21

FY22

FY23

Average eaches per basket

FY19

FY20

FY21

FY22

FY23

Market share in

online UK grocery

11.7%

12.3%

12.7%

FY21

FY22

FY23

Data source: Nielsen

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Our unique model

As a pure‑play online grocer,

Ocado Retail (“ORL”) has a unique

operating model in the UK. Our seven

operational CFCs and four Zoom sites

(micro‑fulfilment centres supporting

the one‑hour delivery service Zoom by

Ocado) are amongst some of the most

highly automated grocery facilities

in the world. Thousands of bots work

together across a giant grid to put

together a typical 50 item order in less

than 15 minutes (and getting quicker)

with our sites, large and small,

located within reach of over 80%

of UK households. Combined with

a broad range of delivery options,

this gives us several advantages

over other multi‑channel grocers,

around which we have built our

plans for future growth.

One of our commercial advantages

is that we can stock the largest

range out of the major UK online

grocery operations (see chart on the

right). This is due to the huge holding

capacity and storage density of our

CFCs which can hold more SKUs than

the biggest superstore of any one

of our competitors.

Business in focus: Ocado Retail continued

Our strategy

Our strategy focuses on three

customer pillars: Unbeatable Choice,

Unrivalled Service and Reassuringly

Good Value. Each of these builds on

our base assumption of continuously

executing to the best of our abilities

by offering the best choice,

broadening our delivery options

and delivering the best possible

value we can.

Another advantage is our focus

on continuous optimisation and

end‑to‑end automation. Rolling out

the latest OSP technology throughout

our network of CFCs will unlock more

flexibility to enable more orders and

late item additions to baskets,

ultimately driving higher returns.

The three customer pillars to our strategy:

Unbeatable Choice:

Our model enables us to

stock a high‑quality, wide

and differentiated range of

products that is not feasible

with a traditional retail

estate. We can have new

products in our seven

operational CFCs, available

to all across the country,

almost immediately.

This model enables us to

champion smaller suppliers

and offer exciting choice and

differentiated products.

1st

Unrivalled Service: Ensuring

perfect orders and top‑quality

service upon delivery, and

using our sophisticated

delivery systems to enable

spontaneous and last‑minute

purchase decisions and

catering to more occasions –

plus increasing moments

of delight, inspiration and

product engagement through

personalisation, building

propositions to drive customer

“stickiness” and loyalty.

2nd

Reassuringly Good Value:

Ensuring that prices are

comparable with the market

while offering good value

and inspiring promotions.

We provide a comprehensive

tiered offering.

3rd

SKUs by online retailer

Source: Ocado Retail desk research, number of products before filling out postcode

AsdaOcado Sainsbury’s Tesco Waitrose Morrisons

Number of SKUs by online retailer

OCADO GROUP PLC Annual Report and Accounts 2023

Priorities for FY24

and beyond

In FY24 and beyond we will remain

obsessively focused on Perfect

Execution and pursuing our vision

of “making our customers’ lives better

by delivering the supermarket of

tomorrow, today”. We aim to continue

to outperform the UK online grocery

channel and ultimately change the

way people shop by broadening our

customer base, delivering amazing

service and achieving industry‑leading

levels of profitability.

We are working closely with M&S

to ensure our customers know about

the company’s fantastic product range

available to buy through Ocado.com.

This will help attract new customers

by catering for a range of basket sizes

and more missions.

Our focus on operating cost efficiency

will continue and we also anticipate

capacity utilisation will increase as

the benefits of the Luton CFC ramp-up

flow through. Encouragingly, we have

enough capacity for ORL to grow its

number of customers and volumes

over the next few years without

needing to build further CFCs.

Revenue and EBITDA growth will

ultimately demonstrate whether

we are successful in our strategy

and ambitions. We look forward

to the future of ORL with

confidence and excitement.

ORL: how we performed against our Group strategic priorities

Group strategic priorities ORL performance

1. Grow our revenue Revenue +7.0% (FY22: (3.8)%)

2. Optimise OSP economics Capacity utilisation >75% (FY22: c.60%)

OSP CFC UPH 208 (FY22: 184)

3. Deliver transformational technology Transfer of capacity from Hatfield CFC to brand new Luton CFC

4. Drive success for our partners Active customers +5.9% (FY22: +13.2%)

5. Embed a responsible business approach Food waste % of sales reduction of 0.2ppts (FY23: 0.7%; FY22: 0.9%)

5 2

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Financial Review

Headlines

Revenue increased by 9.9% to

£2,765.6m (FY22: £2,516.8m):

• Technology Solutions delivered

strong revenue growth, up 44.3%

to £420.5m (FY22: £291.4m) with

105 average live modules during

the period (FY22: 84), up by 25.0%.

In the year we added three new

sites and 12 additional modules.

These included the first Customer

Fulfilment Centre (“CFC”) in the

Asia‑Pacific region for AEON in

Chiba city, just outside Tokyo, Japan;

the third CFC for Sobeys in Calgary,

Canada; and the eighth CFC for

Ocado Retail in Luton, UK.

We now have 26 live sites

(FY22: 23 sites) and 111 live

modules (FY22: 99 live modules).

• Logistics revenue grew by 0.7%

to £667.5m (FY22: £662.9m) and

primarily represents cost recharges

to Ocado Retail and Wm Morrison

Supermarkets Limited (“Morrisons”)

of £633.9m (FY22: £633.6m).

Orders per week increased by

3.2% to 510,000 (FY22: 494,000);

eaches (individual items in the

shopping basket) declined by

1.2% primarily due to the decrease

in basket sizes as customers

adjusted their spending in response

to an inflationary environment.

• Retail revenue increased by

7.0% year‑on‑year to £2,357.5m

(FY22: £2,203.0m) reflecting growth

of 5.9% in active customers to

998,000 at the end of the year

(FY22: 942,000). Price inflation

continued, with the average item

price up 7.9% to £2.74 (FY22: £2.54).

This was partially offset by smaller

basket sizes, declining 4.5% to an

average of 44.2 individual items

(FY22: 46.3 items) as customers

managed their overall basket spend.

Orders per week grew by 4.0% to

393,000 (FY22: 378,000), driven

by the increase in active customers

and partially offset by the lower

frequency of orders.

Adjusted EBITDA

for the period

was £51.6m (FY22: loss of £74.1m),

an improvement of £125.7m. The

change was driven by Technology

Solutions, which generated a positive

adjusted EBITDA

of £15.4m, up

£116.9m (FY22: loss of £101.5m) due

to the strong profit flow‑through from

revenue growth. Logistics delivered

adjusted EBITDA

of £30.1m

(FY22: £33.6m) from its resilient

cost‑plus model with adjusted

EBITDA

decreasing year‑on‑year

driven by lower asset rental income

and higher non‑recharged technology

costs. Retail generated a £10.4m

adjusted EBITDA

profit (FY22:

loss of £4.0m) driven by strong

trading and cost control.

Loss before tax of £393.6m

(FY22: £500.8m loss) includes

depreciation, amortisation and

impairment charges of £395.9m

(FY22: £348.6m), net finance costs

of £73.2m (FY22: £48.2m) and net

adjusting items

of £23.9m income

(FY22: £29.9m expense), which is

largely income from the settlement

reached with AutoStore Technology

AS (“AutoStore”) relating to patent

infringement offset by the reduction

in the IFRS 13 value of the contingent

consideration due from M&S and

one‑off costs relating to changes

in Ocado Retail’s UK site network.

Good liquidity maintained to support

our growth plans, with cash and cash

equivalents of £884.8m at the end of

the period (FY22: £1,328.0m) and

liquidity of £1.2bn (FY22: £1.6bn)

(including the undrawn revolving credit

facility (“RCF”) of £0.3bn). Net debt

at the end of the period was

£(1,075.1)m (FY22: £(577.1)m).

Group revenue

(£m)

1,756.6

2,331.8

2,498.8

2,516.8

FY19

FY20

FY21

FY22

FY23

2,765.6

Group adjusted EBITDA

(£m)

43.3

73.1

61.0

(74.1)

FY19

FY20

FY21

FY22

FY23

51.6

Stephen Daintith

Chief Financial Officer

FY23 is a 53-week year to 3 December 2023. The comparative period is 52 weeks to

27 November 2022. To aid comparability, the FY23 results, associated commentary and

percentage changes are presented on an unaudited 52‑week basis, other than year‑end

balance sheet and cash flow data, unless otherwise stated.

OCADO GROUP PLC Annual Report and Accounts 2023

Group summary

£m

FY23

53 weeks

Exclude

week 53

FY23

52 weeks

FY22

52 weeks Change

Revenue 2,825.0 (59.4) 2,765.6 2,516.8 9.9%

Operating costs (2,769.9) 56.8 (2,713.1) (2,589.5) (4.8)%

Share of results from joint ventures and associates (0.9) – (0.9) (1.4) 35.7%

Adjusted EBITDA

54.2 (2.6) 51.6 (74.1) £125.7m

Depreciation, amortisation and impairment (405.2) 9.3 (395.9) (348.6) (13.6)%

Net finance costs (76.1) 2.9 (73.2) (48.2) (51.9)%

Adjusted (loss)/profit before tax

(427.1) 9.6 (417.5) (470.9) £53.4m

Adjusting items

23.9 – 23.9 (29.9) £53.8m

(Loss)/profit before tax (403.2) 9.6 (393.6) (500.8) £107.2m

These measures are alternative performance measures. Please refer to pages 302 to 303.

1. Depreciation, amortisation and impairment of £395.9m (FY22: £348.6m) excludes £47.5m (FY22: £nil) recognised in adjusting items

2. Net finance costs of £73.2m (FY22: £48.2m) excludes £6.1m (FY22: £nil) recognised in adjusting items

This commentary is on a pre‑adjusting

item

basis to aid understanding of

the performance of the business on

a comparable basis. Following the

change in the reporting of the Group’s

operating segments during the year

(as explained further below), the Group

has adopted a revised presentation

of the Income Statement. Cost of

sales, distribution expenses and

administrative expenses are replaced

with a single line item for operating

costs. Adjusted EBITDA

excludes

the impact of adjusting items

Depreciation, amortisation and

impairment, and net finance costs

are also shown excluding the

impact of adjusting items

The revised presentation provides an

Income Statement that is more relevant

for the total Group. Our three reporting

segments have different operating

models and costs, therefore we have

summarised the presentation of costs

for the Consolidated Income Statement

and provided relevant details by

segment in each of the appropriate

sections. This reflects the growing

significance of the Technology

Solutions business to the Group’s

performance and provides more

reliable reporting by eliminating

the need for allocations

between distribution and

administrative expenses.

Revenue for the period increased by

9.9% to £2,765.6m (FY22: £2,516.8m).

Technology Solutions revenue

increased by 44.3% from £291.4m

to £420.5m with the go‑live of three

sites in the year. Sobeys’ third CFC in

Calgary and our first CFC for AEON in

Chiba city, just outside Tokyo, opened

during the first half of the year and

Ocado Retail’s Luton CFC opened in

the second half, ramping to 80% of

capacity by the end of the year.

The average number of live modules

is the key revenue driver for

Technology Solutions and average

live modules increased by 25.0%

to 105 from 84 in FY22.

Logistics revenue increased by 0.7%

to £667.5m (FY22: £662.9m) and

largely comprises cost recharges to its

two UK customers, Ocado Retail and

Morrisons. Retail revenue increased by

£154.5m from £2,203.0m to £2,357.5m,

up by 7.0% reflecting strong growth

in active customers, growing order

volumes and continued price inflation,

partially offset by smaller basket sizes

as customers manage their overall

shopping basket spend.

Net cumulative invoiced fees

to our

partners on our Balance Sheet and not

yet recognised as revenue increased

by £23.8m from £422.9m at FY22

to £446.7m at FY23. Net cumulative

invoiced fees are recognised as

contract liabilities on the Balance

Sheet and are an indicator of future

revenues as the balances will be

released to the income statement

over the life of our CFC contracts. The

following commentary is on a 53‑week

basis to reflect the closing balance

sheet position. The net movement of

£23.8m is driven by amounts invoiced

of £47.6m and £9.2m acquired on

the acquisition of 6 River Systems LLC

(“6RS”) less revenue recognised in the

Income Statement of £33.0m during

the 53 weeks. The amounts invoiced

of £47.6m were driven by 1. new orders

from our Ocado Smart Platform

(“OSP”) partners Lotte, Auchan Poland

and AEON, 2. incremental staged

payments and orders from existing

partners and 3. amounts invoiced

to 6RS customers. The release to

the income statement of £33.0m was

mainly driven by revenue recognised

on operational CFCs in line with

IFRS 15.

Operating costs include all costs

incurred in the continuing operations

of the Group. Operating costs

increased by 4.8% to £2,713.1m

(FY22: £2,589.5m). Technology

Solutions operating costs increased by

3.1% to £405.1m (FY22: £392.9m) due

to the increase in average live modules

and their associated operating costs

and higher technology costs as we

continued to support and invest in OSP.

This was partially offset by an 8.3%

reduction in support costs of £17.2m

to £191.1m (FY22: £208.3m). Logistics

operating costs increased by 1.3%

to £637.4m (FY22: £629.3m) due to a

3.2% growth in orders that was offset

by lower basket sizes and improved

productivity across our OSP sites.

Retail operating costs increased by

6.3% to £2,347.1m (FY22: £2,207.0m)

largely driven by the growth in orders,

continued inflation and incremental

OSP fees year‑on‑year. Operating

costs for Retail increased at a lower

rate than revenue due to 1. improved

gross margin, 2. strict control of

support costs and 3. electricity

cost price decreases year‑on‑year.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Financial Review continued

Adjusted EBITDA

for the period was

£51.6m (FY22: £74.1m loss) with the

£125.7m improvement driven by a

£116.9m improvement in Technology

Solutions to £15.4m (FY22: £101.5m

loss), offset by a £3.5m decline in

Logistics to £30.1m (FY22: £33.6m).

The improvement in Technology

Solutions adjusted EBITDA

was

driven by the strong flow‑through of

incremental revenue to adjusted

EBITDA

, improving contribution

margin of 70% (FY22: 64%) and an

absolute reduction in support costs,

which were down 8.3% to £191.1m

(FY22: £208.3m). The improvement

in Retail adjusted EBITDA

was driven

by a combination of 1. strong growth

in active customers resulting in a

4.0% increase in orders per week

and 2. operating cost control.

Depreciation, amortisation and

impairment increased by 13.6% to a

charge of £395.9m (FY22: £348.6m),

primarily due to the increase in

amortisation relating to internally

generated intangible assets (primarily

the investment in OSP) together

with the continuing roll‑out of OSP

hardware and software at our CFC

sites. At the end of the period, there

were 26 live sites (FY22: 23 sites)

comprising 22 CFCs and 4 Zooms

(FY22: 19 CFCs and 4 Zooms; a site

is considered live when it has any

modules installed and is available

for use by our partner). Property,

plant and equipment (“PP&E”) held

on the Balance Sheet was £1,794.9m

(FY22: £1,777.8m). The increase largely

relates to the three sites that went

live in the year and the go‑live of

technology development projects

in the same period.

Net finance costs of £73.2m increased

by £25.0m (FY22: £48.2m). This

comprises the net of finance costs

of £95.1m (FY22: £90.0m) primarily

related to our gross debt and lease

liabilities, finance income of £40.0m

(FY22: £13.5m) primarily interest on

our cash balances, and the net

impact of foreign exchange and

revaluation movements of £18.1m

loss (FY22: gain of £28.3m).

Adjusting items

of £23.9m income

(FY22: £29.9m expense) primarily

relate to income from the agreement

reached with AutoStore to settle

IP patent legal cases under which

AutoStore will pay the Group £200.0m

in instalments over the two years that

commenced in July 2023, of which the

full £200.0m (discounted net present

value of £186.5m) was recognised

as adjusting income in FY23. Other

material one-off costs relate to 1. the

£67.0m reduction in the IFRS 13 value

of the contingent consideration due

from M&S, 2. changes following Ocado

Retail’s review of UK network capacity,

including the ceasing of operations

at our Hatfield CFC, of £32.2m,

3. impairment costs relating to the

strategy and capacity review for the

Zoom by Ocado network, of £27.4m,

and 4. organisational restructuring

costs of £15.5m.

Loss before tax of £393.6m

(FY22: loss of £500.8m) reflects an

adjusted EBITDA

profit of £51.6m

(FY22: loss of £74.1m), depreciation,

amortisation and impairment of

£395.9m (FY22: £348.6m), net finance

costs of £73.2m (FY22: £48.2m)

and net adjusting items

of £23.9m

income (FY22: £29.9m expense).

OCADO GROUP PLC Annual Report and Accounts 2023

Change in operating

segments

In FY23, the Group has changed the

reporting of its business segments to

reflect the Group’s three distinct

business models of Technology

Solutions, Ocado Logistics and Ocado

Retail. The new segmental reporting

commenced at the start of the financial

year and reflects the new operating

structure. The comparatives have

been restated on this new basis. The

analysis for each segment has been

set out to reflect the key revenue and

cost categories for each business area.

Detailed components of each revenue

and cost category are provided within

the narrative for the relevant segment.

An overview of each of our three

business segments is provided below.

Technology Solutions is the global

technology platform business

providing OSP as a managed service

to 12 grocery retail partners at the year

end. This segment also includes the

revenue and costs associated with

the Group’s non‑grocery business,

Ocado Intelligent Automation (“OIA”),

including Kindred and 6RS.

Technology Solutions comprises

1. the revenue and direct operating

costs of the OSP and OIA businesses,

2. the commercial and technology

costs to sustain and grow these

businesses and 3. the support costs

for these businesses, such as Solutions

Sales and Partner Success, OIA Sales,

Finance, Legal, HR, Information

Technology and the Board.

Ocado Logistics is our third‑party

logistics business providing services

to customers in the UK (Ocado Retail

and Morrisons). The Logistics business

operates automated warehouses and

provides the associated supply

chain and delivery services to our

UK partners, and recharges these

costs in full, together with an additional

management fee. The business also

generates revenue from capital

recharges relating to certain historical

material handling equipment (“MHE”)

assets used to provide logistics

services. The segment includes

1. revenue from cost recharges

(primarily CFC and delivery costs

incurred), capital recharges and the

management fee for operating all

UK sites, 2. the related CFC fulfilment

and delivery costs, 3. technology

costs directly related to sites and

any non‑OSP customer platform

technology costs, and 4. costs relating

to central functions to support the

provision of the logistics business.

Ocado Retail is the UK online grocery

retail business serving a broad range

of shopper missions, from large weekly

shops to “dinner‑for‑tonight” top‑up

shops. Ocado Retail is a 50% owned

joint venture with M&S and is fully

consolidated into the Group’s results.

Inter-segment eliminations represent

the elimination of inter‑segmental

revenue and costs. These relate to

transactions between Ocado Retail,

and the Technology Solutions and

Logistics businesses. Technology

Solutions and Logistics each generate

revenue from services provided to

Ocado Retail, which are included as

costs within the Ocado Retail segment.

For FY23, inter-segmental revenue

eliminations were £679.9m

(FY22: £640.5m). The increase of

£39.4m is primarily due to incremental

OSP fees charged to Ocado Retail by

the Technology Solutions segment,

due to an increase in the number of

live modules. Inter‑segmental adjusted

EBITDA

eliminations relate to

amortised upfront fees and CFC

pre‑go‑live services paid for by

Ocado Retail to Technology Solutions,

which are included within revenue in

Technology Solutions. Ocado Retail

capitalises these charges within fixed

assets relating to the CFC assets; the

associated depreciation is reported

outside adjusted EBITDA

. For FY23,

inter‑segmental adjusted EBITDA

eliminations were £4.3m (FY22: £2.2m).

The £2.1m increase is mainly driven

by the annualisation of the four sites

opened during FY22 and the opening

of the Luton CFC during the year.

Segmental summary

£m

FY23

52 weeks

FY22

52 weeks Change

Revenue

Technology Solutions 420.5 291.4 44.3%

Logistics 667.5 662.9 0.7%

Retail 2,357.5 2,203.0 7.0%

Inter‑segment eliminations (679.9) (640.5) (6.2)%

Group 2,765.6 2,516.8 9.9%

Adjusted EBITDA

£m

Technology Solutions 15.4 (101.5) 116.9

Logistics 30.1 33.6 (3.5)

Retail 10.4 (4.0) 14.4

Inter‑segment eliminations (4.3) (2.2) (2.1)

Group 51.6 (74.1) 125.7

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Financial Review continued

Technology Solutions

£m

FY23

52 weeks

FY22

52 weeks Change

Fees invoiced

437.7 360.3 21.5%

Revenue 420.5 291.4 44.3%

Direct operating costs (124.5) (103.6) (20.2)%

Contribution 296.0 187.8 57.6%

Contribution % 70% 64% 6ppts

Technology costs (89.5) (81.0) (10.5)%

Support costs (191.1) (208.3) 8.3%

Adjusted EBITDA

15.4 (101.5) £116.9m

Adjusted EBITDA % 4% (35)% 39ppts

1. Fees invoiced represent design and capacity fees invoiced during the period for existing and future sites and in-store fulfilment (“ISF”). This also includes fees invoiced

by the OIA business relating to the provision of MHE and support services to the non-grocery market. These are recognised in the Income Statement under IFRS 15.

Key performance indicators

The following table sets out a summary of selected operating information in the period:

£m

FY23

52 weeks

FY22

52 weeks Change

Number of modules live

1,2

111 99 12.1%

Average live modules 105 84 25.0%

Cumulative number of modules ordered

2,3

232 232 –

Direct operating cost (% of site sales capacity)

1.65% 2.02% 0.37ppts

1. A module is considered live when it has been fully installed and is available for use by our partner. This includes 14 modules for the Hatfield CFC and Leeds Zoom, which are not

actively trading at the year end, but are available for use by Ocado Retail and for which fees are being received in full.

2. Ordered modules represent the maximum capacity of sites for which a contractual agreement has been signed with a partner and an invoice has been issued for the associated

site fees.

3. A module of capacity is assumed as 5,000 eaches picked per hour and c.£73m per annum of partner site sales capacity.

4. Direct operating costs as a percentage of site sales capacity reflects the P12 exit rate position for all OSP CFCs live at the period end. Direct operating costs include

engineering, cloud and other technology direct costs.

As detailed above, the Technology

Solutions segment now combines our

UK Solutions and International Solutions

businesses. Comparatives have been

restated on a like‑for‑like basis.

The scale of our international

operations grew further during the

year with the milestone of the go‑live

of our first CFC in the Asia‑Pacific

region for AEON in Chiba city, just

outside Tokyo; and the third CFC for

Sobeys going live in Calgary. In the UK,

our eighth CFC for Ocado Retail went

live in Luton and capacity for Morrisons

increased by two modules within our

existing facilities. We have 26 live sites,

comprising 22 CFCs and four Zooms,

with a total of 111 live modules

(FY22: 23 sites, 19 CFCs, 4 Zooms;

99 modules).

The 111 modules include 14 modules of

capacity installed and available for use

by Ocado Retail, but on sites where

Ocado Retail has decided to cease

operations. The Technology Solutions

business continues to charge Ocado

Retail capacity fees in full for these

modules. This follows Ocado Retail

carrying out a network capacity

review during the year for its CFCs

and a strategy and capacity review for

its Zoom sites. The subsequent

changes following these reviews

include the decision to cease trading at

the Hatfield CFC and Leeds Zoom site

and to optimise the utilisation of its

London properties. At the year‑end

date, Technology Solutions has 24

sites (21 CFCs and 3 Zooms), with

97 modules in which partners are

actively trading.

Fees and revenue

Fees invoiced increased by 21.5% to

£437.7m (FY22: £360.3m). These fees

include 1. the design and access

fees invoiced across clients relating

to existing and future CFC and

ISF commitments, 2. the recurring

capacity fees associated with the live

operations, primarily Ocado Retail,

Kroger, Sobeys and Morrisons, and

3. fees invoiced by the OIA business.

The 21.5% year-on-year growth in fees

invoiced was lower than the 44.3%

year‑on‑year growth in revenue mainly

due to lower design and access fees

invoiced as fewer sites went live in the

year. Ongoing capacity fees invoiced

of £360.3m (FY22: £247.3m) increased

in line with the increase in ongoing

revenue. Fees invoiced by OIA increased

year‑on‑year mainly driven by the

acquisition of 6RS during the year.

Under revenue recognition rules,

design and access fees are not

recognised as revenue until a working

solution is delivered to the partner,

i.e. the site goes ‘live’. At the end of

the 53 weeks, cumulative fees not yet

recognised as revenue, but instead

recorded on the Balance Sheet within

contract liabilities, were £446.7m

(FY22: £422.9m).

Revenue in the period of £420.5m

(FY22: £291.4m) comprises

ongoing capacity fees of £363.4m

(FY22: £253.4m) and £34.8m

(FY22: £21.1m) relating to the release

to the Income Statement of the design

and upfront fees received from our

operational partners, which were

included within the contract liability

amount on the Balance Sheet; these

primarily relate to Ocado Retail, Kroger,

Morrisons and Sobeys. Ongoing

capacity fee revenue in Technology

Solutions is driven by the average

number of live modules in the period.

OCADO GROUP PLC Annual Report and Accounts 2023

Technology and

support costs

Technology costs mainly comprise

the non‑capitalised management time

spent on early‑stage research projects

and maintaining OSP through ongoing

client support. Other costs include

legal and professional fees and

non‑capitalised software costs.

Technology costs in FY23 were

£89.5m (FY22: £81.0m), an increase

of £8.5m primarily due to an increase

in the average headcount of 280

as we continue to invest in OSP.

Support costs are costs incurred

supporting the global operations

of the business and have been

significantly streamlined over

FY22 and FY23. They include several

different activities including Solutions

Sales and Partner Success, OIA Sales,

Finance, HR, IT and Legal. Costs

reduced by £17.2m to £191.1m during

the year (FY22: £208.3m). The £17.2m

reduction in spend was mainly driven

by headcount reductions across our

central functions as we continued to

optimise our cost base and ensure

it reflects the current and future needs

of the business. £8.2m of the gross

savings of £20.4m from our cost

reduction initiatives have been

reinvested in OIA, and Solutions Sales

and Partner Success, two areas of

critical focus for the Group. Support

costs also include the one‑off benefit

of the sale of the Dartford spoke site

during the first half of the year, which

generated a profit on disposal of £5.0m.

Under the revised segmentation,

Board costs of £22.1m (FY22: £29.1m)

are included within Technology

Solutions support costs. The

year‑on‑year decrease of £7.0m

was mainly driven by a decrease in

share‑based payment charges of

£6.2m to £10.7m (FY22: £16.9m).

We invested a further £5.8m in

developing the Partner Success

function, supported by a new and

experienced leadership team, which

is dedicated to driving growth for new

and existing partners. OIA central costs

increased in the year as we continue

to scale the business and were mainly

driven by the acquisition of 6RS during

the second half of the year.

Adjusted EBITDA

Technology Solutions delivered

positive adjusted EBITDA

for the

period of £15.4m (FY22: loss of

£101.5m), an improvement of £116.9m.

The strong profit flow‑through from

the £129.1m growth in revenue was

driven by 1. the benefits of scale as

more modules went live in our existing

CFC sites, 2. the ongoing optimisation

of direct CFC operating costs

(including maintenance and data costs)

which have reduced as a percentage

of sales capacity and 3. the benefit

of cost reductions in support costs.

In FY23 these grew by 25% to

105 average live modules (FY22: 84).

Revenue grew at a faster rate than the

average live modules (+44.3%

compared with +25.0%) due to the

increased number and proportion of

live OSP modules, which generate a

higher fee per module of sales capacity

than non‑OSP sites.

There are 30 legacy non‑OSP modules

within the 111 modules at the end of the

year that primarily relate to the Hatfield

and Dordon CFCs and that generate

a lower fee per module than an OSP

module. During the year the Hatfield

CFC ceased trading; the Technology

Solutions business is entitled to

continued capacity fees at Hatfield

and continues to charge them in full

to Ocado Retail. Revenue also includes

£21.2m (FY22: £11.5m) relating

to OIA (previously Kindred) and

equipment sales to retail partners of

£0.9m (FY22: £4.6m) recognised as

revenue under IFRS 15 (the cost of this

equipment is recognised within direct

operating costs).

Direct costs

Direct operating costs relate to the

day‑to‑day costs of operating our CFC

and Zoom sites, primarily engineering

support, maintenance and spares, and

the costs of hosting the technology

services for partners. Costs increased

by £20.9m (20.2%) to £124.5m

(FY22: £103.6m) primarily driven by the

25.0% growth in average live modules.

The exit rate of direct operating costs

as a percentage of client sales

capacity, a key measure of operational

efficiency across sites, improved from

2.02% in FY22 to 1.65%. The decrease

was mainly driven by a reduction in

cloud costs from decommissioning

old environments, rationalising the

retained data and storage optimisation.

This led to an improvement in

contribution margin from 64% to 70%.

Revenue:

£420.5m

(FY22: £291.4m)

Adjusted EBITDA

£15.4m

(FY22: £101.5m loss)

Average number of

live modules

105

FY19

FY20

FY21

FY22

FY23

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Financial Review continued

Ocado Logistics

£m

FY23

52 weeks

FY22

52 weeks

Change

Cost recharges 633.9 633.6 –

Fee revenue 33.6 29.3 14.7 %

Revenue 667.5 662.9 0.7 %

Other income 6.8 10.7 (36.4)%

Fulfilment and delivery costs (579.3) (580.2) 0.2%

Technology and support costs (64.9) (59.8) (8.5)%

Adjusted EBITDA

30.1 33.6 £(3.5)m

Key performance indicators

The following table sets out a summary of selected operating information in the period:

£m

FY23

52 weeks

FY22

52 weeks Change

Total eaches (million) 1,182.4 1,196.3 (1.2)%

Orders per week (000s) 510 494 3.2%

OSP CFC UPH

1,2

208 184 13.0%

DP8

21.5 21.3 0.9%

1. Measured as units picked from the CFC per variable hour worked by operational personnel.

2. OSP CFCs are all CFCs excluding Hatfield and Dordon.

3. DP8 represents the drops per standardised eight-hour shift for Ocado Retail only.

Ocado Logistics is a wholly‑owned

third‑party logistics business operating

exclusively in the UK. This business

manages and operates automated

warehouses and the related supply

chain and online delivery services on

behalf of our two partners, Ocado

Retail and Morrisons. Ocado Logistics

operates on a cost‑plus model

whereby it charges its clients the

costs of the operations we manage

on their behalf, plus a management

fee of circa 4%.

Given this model, client volumes in the

sites we operate are a key driver of our

revenue and costs. During the year,

average orders per week across our

two partners increased by 3.2% to

510,000 (FY22: 494,000). While orders

grew, the volume of eaches decreased

by 1.2% to 1,182.4m (FY22: 1,196.3m).

The decline in eaches reflects

the change in customer shopping

behaviour towards smaller

shopping baskets in the face

of high price inflation.

Revenue

This comprises 1. cost recharges,

which are the recharge of variable

and fixed costs incurred to provide

fulfilment and delivery services, which

are recharged to Ocado Retail and

Morrisons, 2. a 4% management fee

charged on rechargeable costs and

Fee revenue of £33.6m (FY22: £29.3m)

increased by 14.7% and includes

£22.8m of management fees

(FY22: £23.1m) and £10.8m of capital

recharges (FY22: £5.3m). The £4.3m

increase in fee revenue is primarily

due to an increase of £5.5m in capital

recharges year‑on‑year due to the

impact of a one-off reduction in FY22.

Management fees are around 4% of

rechargeable costs and are broadly

flat period‑on‑period in line with

the movement in cost recharges.

Capital recharges of £10.8m

(FY22: £5.3m) relate to charges to

Ocado Retail for the use of certain

assets that are owned by the Group

and utilised by Ocado Retail. For

partner‑shared sites (primarily Dordon

and Erith), capital recharges are

accounted for (per IFRS 16) as revenue

as we are considered to be providing

a service. For sites that are used

exclusively by Ocado Retail (primarily

Hatfield, Purfleet, Bristol and Andover),

this income is accounted for (per IFRS 16)

as finance income (below adjusted

EBITDA

) as we are considered to

be providing a finance lease.

Recharges and fees to Ocado

Retail of £524.1m (FY22: £521.1m)

included within the £667.5m revenue

(FY22: £662.9m) are eliminated

on consolidation.

3. capital recharges to Ocado Retail for

the use of certain fixtures and fittings,

and plant and machinery that were

not transferred to Ocado Retail on its

formation as a separate business.

Cost recharges of £633.9m

were broadly flat year‑on‑year

(FY22: £633.6m). These costs

represent the operational costs

that are recharged to Ocado Retail

and Morrisons for the provision of

third‑party logistics services. The key

cost recharge driver is the volume

processed through the CFC sites.

While orders per week increased by

3.2%, total eaches declined by 1.2%.

Despite the decline in eaches, cost

recharges were flat due to labour and

fuel price inflation and the negative

impact of the smaller shopping baskets

(resulting in fewer eaches delivered

per van). These were offset by the

improved efficiency from the higher

average number of units picked per

labour hour (“UPH”) in our OSP sites

where UPH increased by 13.0% to

208 (FY22: 184). Cost recharges are

greater than rechargeable costs of

£618.8m (FY22: £619.8m) as cost

recharges include lease income for

lease costs in shared sites, where

we are providing a service, for

which the cost is included below

adjusted EBITDA

OCADO GROUP PLC Annual Report and Accounts 2023

Technology and

support costs

Technology and support costs

comprise 1. head office and related

costs to operate the Logistics

business, 2. technology costs related

to the operating of our pre‑OSP

grocery fulfilment platform and

3. the non‑capitalised element of

the programme costs to transition

our UK partners from the pre‑OSP

technology platform to OSP. This

programme is expected to be largely

completed in 2024.

Technology and support costs

increased by £5.1m to £64.9m

(FY22: £59.8m) primarily due to

investment in the Ocado Retail

transition to OSP. Head office costs

and a portion of technology costs are

recharged to our partners as part of

our contractual agreements. The cost

of operating the pre‑OSP platform and

the transition to OSP is not recharged

to partners.

Adjusted EBITDA

for the period

was £30.1m, a decrease of £3.5m

(FY22: £33.6m); the £5.5m increase

in capital recharges was more than

offset by the reduction in MHE JVCo

asset rental income and an increase

in non‑recharged technology costs,

each of which are described above.

Other income

Other income of £6.8m (FY22: £10.7m)

relates to MHE JVCo asset rental

income. The year‑on‑year decrease of

£3.9m was mainly driven by the expiry

of asset rental agreements in the year.

This is within operating costs in the

Consolidated Income Statement.

Fulfilment and

delivery costs

These costs comprise the costs of

fulfilment and delivery operations

which are recharged to Ocado Retail

and Morrisons.

Total fulfilment and delivery costs

decreased by 0.2% to £579.3m

(FY22: £580.2m) while eaches

declined by 1.2% to 1,182.4m

(FY22: 1,196.3m). Costs decreased

by less than eaches because higher

fuel costs and labour inflationary

pressure offset the benefits from the

year‑on‑year reduction in utilities unit

costs and productivity improvements.

Productivity improvements are

demonstrated by the improvement

in UPH in OSP CFCs (Erith, Andover,

Purfleet, Bristol and Bicester), which

improved year‑on‑year to an average

UPH of 208 in the period (FY22: 184),

exceeding our target of 200 UPH.

A higher UPH results in lower labour

intensity and therefore lower costs

for the same volume. The improvement

in UPH and resulting productivity

improvements reduced the labour cost

required per each and partially offset

the inefficiencies generated by smaller

basket sizes.

Adjusted EBITDA

£30.1m

(FY22: £33.6m)

Total eaches shipped

(million)

1,003

1,229

1,273

1,196

FY19

FY20

FY21

FY22

FY23

1,182

OSP CFC UPH

122

171

168

184

FY19

FY20

FY21

FY22

FY23

208

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Financial Review continued

Ocado Retail

£m

FY23

52 weeks

FY22

52 weeks Change

Revenue 2,357.5 2,203.0 7.0%

Gross profit 797.2 739.9 7.7%

Gross margin % 33.8% 33.6% 0.2ppts

Fulfilment and delivery costs (467.1) (463.8) (0.7)%

Marketing costs (43.0) (57.6) 25.3%

Support costs (101.6) (83.4) (21.8)%

Fees (175.1) (139.1) (25.9)%

Adjusted EBITDA

10.4 (4.0) £14.4m

The results of the Ocado Retail Limited joint venture (referred to as either “Ocado Retail” or “Retail”) are fully consolidated

in the Group. The cost lines in the Ocado Retail Income Statement have been amended since the FY22 Financial Review

to add clarity on the nature of the costs in Ocado Retail and align with management reporting.

Key performance indicators

The following table sets out a summary of selected Ocado.com operating information in the period:

Ocado.com

FY23

52 weeks

FY22

52 weeks Change

Active customers (000s)

998 942 5.9%

Average orders per week (000s)

393 378 4.0%

Average basket value (£)

120.94 117.74 2.7%

Average selling price (£)

2.74 2.54 7.9%

Average basket size (eaches) 44.2 46.3 (4.5)%

1. Ocado.com excludes Zoom by Ocado as Ocado.com represents the core business of Ocado Retail.

2. Active customers are classified as active if they have shopped at Ocado.com within the previous 12 weeks at the statutory year-end date of 3 December 2023. FY22 has been

restated from 940,000 to include customers active at trial sites, which were previously excluded.

3. FY22 has been restated to no longer deduct cancelled orders on the road, to align with management reporting. In the prior year, this metric was reported as 377,000 and under

the same methodology, FY23 like-for-like orders per week would be 391,000, an increase of 3.7%.

4. Average basket value (£) is defined as product sales divided by total orders. FY22 has been restated to reflect two changes to the calculation of this KPI. First, we no longer

deduct cancelled orders on the road from total orders. Second, we have changed from using gross sales to now using product sales. The revised approach better reflects

the equivalent basket value if purchased in a store to enable better comparability. Under the previous approach FY22 was £118.46, FY23: £122.11.

5. Average selling price (£) (“ASP”) is defined as product sales divided by total eaches. FY22 ASP has been restated to reflect two changes to the calculation of this KPI.

First, we no longer deduct cancelled eaches on the road from total eaches. Second, we have changed from using gross sales to now using product sales. The revised approach

better reflects the equivalent average item price if purchased in a store to enable better comparability. Under the previous approach FY22 ASP was £2.55, FY23: £2.75.

3 December 2022). As our customer

base continued to increase, average

orders per week grew by 4.0% to

393,000 (FY22: 378,000). The increase

in average orders per week compared

with growth in active customers is due

to the lower frequency of orders, which

is driven by customers managing their

overall outgoings in response to high

levels of inflation.

The average basket value grew by

2.7% to £120.94 (FY22: £117.74) driven

by the increase in selling price of 7.9%

to £2.74 (FY22: £2.54), partly offset

by a reduction in the number of

eaches. In the face of cost‑of‑living

pressures, shoppers managed the

overall value of their baskets by

choosing smaller baskets and slightly

reducing the frequency of orders.

As a consequence, the average

items per basket reduced by

4.5% to 44.2 items (FY22: 46.3).

We remain committed to offering

reassuringly good value to customers

and did not pass through the full

impact of food price inflation to our

customers; the average selling price

on Ocado.com has increased by 7.9%,

well below UK grocery inflation of

10.4% (Nielsen). We continued to

invest in the Ocado Price Promise,

which we launched in early

2023 matching customers’ shops to

Tesco.com on over 10,000 products,

including Clubcard prices. This is a key

component of our value strategy to

support the growth and retention of

our customers. Alongside this, we

made multiple rounds of price cuts in

the year, reducing the prices on

thousands of products, to ensure that

we continue to combine our

unbeatable range and unrivalled

service with reassuringly good value

for our customers.

Revenue

Revenue increased by 7.0% to

£2,357.5m (FY22: £2,203.0m) driven

by growth in Ocado.com, with 4.0%

order growth to 393,000 orders per

week (FY22: 378,000 orders per week)

and 2.7% growth in basket value to

£120.94 (FY22: £117.74).

We continued to win new customers

through a focus on offering

competitive prices. We achieved

effective customer acquisition results

through vouchering and marketing

activity and improved customer

retention through our strengthened

customer proposition. We continue

to focus on consistent and strong

operational performance in key areas

such as delivering on time and in full.

Active customers now stand at

998,000, up by 5.9% from 942,000

at FY22. Ocado grew its share of

the online grocery market to 12.7%

(FY22: 12.3%, Nielsen; FY23 as at

2 December 2023; FY22 as at

OCADO GROUP PLC Annual Report and Accounts 2023

Gross profit

Gross profit increased by 7.7% to £797.2m (FY22: £739.9m). Growth was higher than revenue growth (+7.0%) due to

improvements in gross margin from 33.6% in FY22 to 33.8% in FY23. This improvement was driven by improved range and

stock management, reduced wastage, and an increase in delivery income following the reduction in lower‑priced slots.

Gross profit includes the net benefit of supplier-funded media income of £81.6m (FY22: £82.0m) and the cost of vouchers

of £24.7m (FY22: £21.1m).

Fulfilment and delivery costs

£m

FY23

52 weeks

FY22

52 weeks Change

CFC (182.1) (187.7) 3.0%

Service delivery (260.9) (247.4) (5.5)%

Utilities (24.1) (28.7) 16.0%

Fulfilment and delivery costs (467.1) (463.8) (0.7)%

CFC costs primarily comprise labour

costs in CFCs. Costs reduced by

3.0% to £182.1m (FY22: £187.7m)

despite the 4.0% growth in average

orders per week. This improved

efficiency was achieved by again

improving the productivity of our CFC

sites. The average UPH for Ocado.com

improved by 10.4% from 173 to 191.

The OSP CFCs (Erith, Andover, Bristol,

Bicester, Purfleet and Luton) showed

robust improvements in productivity

reaching an average of 208 UPH

(FY22: 184 UPH), an improvement

of 13.0%. All of the mature OSP sites

(Erith, Andover, Purfleet and Bristol)

achieved an average of over 200 UPH

in the period.

Service delivery costs comprise

labour, fleet, fuel and related costs

to enable the delivery of orders to

customers. Costs increased by 5.5%

to £260.9m (FY22: £247.4m), primarily

driven by the growth in number of

orders (+4.0%). Service delivery costs

are driven by the productivity of the

delivery (‘last mile’ operations). This

productivity is measured in ‘eaches

per van’, which reduced by 1.2% to

988 eaches (FY22: 1,000) as a result

of smaller basket sizes, reducing

efficiency in the fleet, and reflected

in the service delivery costs growing

at a higher amount (+5.5%) than the

growth in orders (+4.0%).

Utilities costs across CFCs and service

delivery decreased by 16.0% to £24.1m

(FY22: £28.7m) due to significantly

lower unit costs (FY23: 27.1p per

kilowatt hour; FY22: 33.2p per kilowatt

hour) partially offset by an increase in

the volume of electricity used driven

by the increased number of live

modules year‑on‑year.

Marketing and

support costs

Marketing costs comprise the cost

of marketing activities to customers

and exclude vouchering costs,

which are included within revenue.

Activities focused on driving increased

awareness of the Ocado value

proposition. Costs decreased by

£14.6m to £43.0m (FY22: £57.6m) as

we optimised the marketing channel

mix and improved marketing spend

efficiency. As a result, marketing spend

as a percentage of revenue decreased

to 1.8% (FY22: 2.6%).

Support costs of £101.6m

(FY22: £83.4m) comprise head office,

customer support and other overhead

costs for Ocado Retail. Support costs

increased by £18.2m, primarily due

to the prior year support costs

benefiting from the accrual release

of management incentive plans.

Excluding the impact of these one-offs,

underlying support costs reduced

year‑on‑year, driven by headcount

rationalisation in support functions.

Fees

Fees comprise 1. the OSP fees paid to

Technology Solutions for the operation

of OSP, 2. logistics management fees

and 3. capital recharges paid to

Ocado Logistics. Fees of £175.1m

(FY22: £139.1m) increased by £36.0m,

driven by the additional OSP fees due

to Technology Solutions following the

opening of the Luton CFC during the

year and the annualisation of CFCs

which went live during FY22.

Adjusted EBITDA

for the Retail

business was £10.4m (FY22: £4.0m

loss). The primary drivers for the

£14.4m year-on-year increase were

growth in active customers and orders

driving trading performance, lower

marketing spend from optimisation of

the marketing channel mix and savings

in utilities costs across our CFCs.

Adjusted EBITDA margin

1.1

7.5

6.6

(0.2)

FY19

FY20

FY21

FY22

FY23

0.4

Revenue

(£m)

1,618.1

2,188.6

2,289.9

2,203.0

FY19

FY20

FY21

FY22

FY23

2,357.5

Year end active customers

(000s)

796

682

832

942

998

FY19

FY20

FY21

FY22

FY23

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Financial Review continued

While the contractual outcome is binary,

the Group has applied the principles of

IFRS 9 Financial Instruments and IFRS 13

Fair Value Measurement in determining

the accounting fair value of the

contingent consideration financial

instrument recorded in the Group’s

financial statements at each reporting

date. IFRS 13 requires that the

characteristics of the contract be valued

from the perspective of a hypothetical,

independent ‘market participant’

who would exclude broader facts,

circumstances and commercial

arrangements pertaining to the

ongoing relationship with M&S.

At the year end the IFRS 13 fair value

has been estimated using the expected

present value technique and has been

based on several probability‑weighted

possible scenarios that a market

participant would consider and has

been determined to be £28.0m

(FY22: £95.0m). This financial reporting

estimate of the contingent consideration

at 3 December 2023 is significantly

lower than the amount that Ocado

believes it will receive in the future

(either via a formal litigation process

or settlement).

The Group has engaged specialists in

order to support the identification and

quantification of proposed adjustments

to the contingent consideration Target,

incurring costs during the period

of £0.7m. As these costs have been

incurred in the process of securing

an adjusting income, these costs have

been classified as adjusting.

Adjusting items

£m

FY23

52 weeks

FY22

52 weeks

Litigation costs, net of cost recoveries (5.0) (26.5)

Litigation settlement 186.5 –

Changes in IFRS 13 fair value of contingent consideration and related costs (68.1) (58.4)

UK network capacity review (32.2) –

Zoom by Ocado strategy and network capacity review (27.4) –

Organisational restructure (15.5) (3.0)

Finance, IT and HR systems transformation (12.2) (11.0)

Acquisition costs of 6RS (2.2) –

Insurance proceeds relating to Andover and Erith CFCs – 70.4

Loss on disposal of Speciality Stores Limited (“Fetch”) – (1.4)

Total adjusting items

23.9 (29.9)

Adjusting items

are items that are considered to be significant due to their size/nature, not in the normal course of business

or are consistent with items that were treated as adjusting in the prior periods or that may span multiple financial periods.

Litigation costs, net of

cost recoveries and

litigation settlement

Litigation costs within adjusting

items

are costs incurred on patent

infringement litigation between the

Group and AutoStore. The gross costs

during the period amount to £11.7m

(FY22: £26.5m), which have been

offset by £6.7m (FY22: £nil) received

relating to cost recovery as a result of

court judgements as detailed below.

The net litigation cost for the period is,

therefore, £5.0m (FY22: £26.5m).

Following Ocado’s victory in the

UK High Court, in June 2023 the

UK High Court issued a formal order

stating that Ocado infringes none

of AutoStore’s patents and that

AutoStore’s bot patents are invalid and

revoked. The UK High Court ordered

AutoStore to pay Ocado £6.7m in costs

relating to the UK High Court trial.

As usual in patent cases, AutoStore

was given leave to appeal. The £6.7m

received is included in the total

litigation costs for the period. The net

cumulative costs to date are £62.2m.

During the year, the Group reached

an agreement with AutoStore to settle

all patent litigation and cross‑licence

pre‑2020 patents, for which AutoStore

undertook to pay Ocado Group a total

of £200.0m in instalments over two

years, beginning July 2023. At the end

of the period, £186.5m was recognised

in the Consolidated Income Statement

comprising £180.4m (as the discounted

net present value of the receivable)

and £6.1m amortisation of the

discount recognised as adjusting

finance income.

Changes in IFRS 13

fair value of contingent

consideration and

related costs

The Group holds contingent

consideration receivable items at

the accounting fair value as prescribed

by IFRS 13. These are revalued through

the Income Statement at each

reporting date. Refer to Note 3.7 to the

Consolidated Financial Statements

for further details.

Under the terms of the disposal of 50%

of Ocado Retail to M&S that took place

during 2019, a final consideration

payment may become due from

M&S to Ocado Group of £156.3m plus

interest (the contingent consideration),

dependent on certain contractually

defined Ocado Retail performance

measures (the “Target”) being

achieved for the FY23 financial year.

The contractual outcome is binary,

meaning if the Target is achieved, it will

trigger the full payment. Conversely,

there would be no consideration due

if the Target is not achieved. There is

no formal arrangement for a payment

between zero and £190.7m.

Ocado Retail failed to meet the

performance measures for the FY23

financial year that were required for

automatic payment of the contingent

consideration. However, the

contractual arrangement with M&S

expressly provides for the Target to

be adjusted for certain Ocado Retail

management decisions or actions that

differ from the assumptions used in

the discounted cash flow model which

underpinned the sale transaction.

OCADO GROUP PLC Annual Report and Accounts 2023

Organisational restructure

During the period, the Group partially

reorganised its head office and

support functions, resulting in

redundancies of around 400 heads

and related costs of £15.5m. The FY22

costs of £3.0m related to initial

reorganisation in FY22, resulting in

redundancies of around 50 heads.

Net cumulative costs to date are

£18.5m. These costs have been

classified as an adjusting item on the

basis that the costs are considered

to be significant and resulted from a

strategic restructuring which is outside

of the normal operating activities of

the Group.

Finance, IT and HR systems

transformation

Costs comprise 1. £7.6m (FY22: £7.0m)

relating to Ocado Group’s Finance

transformation programme; the

cumulative costs expensed to date

amount to £14.6m (FY22: £7.0m), 2.

£2.6m (FY22: £4.0m) relating to

Ocado Retail IT and Finance systems

transformation; the cumulative costs

expensed to date amount to £11.2m,

and 3. £2.0m (FY22: £nil) relating

to Ocado Group’s HR system

transformation. Further details of

these adjusting items

can be found

in Note 2.5 to the Consolidated

Financial Statements.

Acquisition costs of 6RS

In May 2023, the Group announced

that it has reached an agreement

with Shopify Inc. to acquire 6RS, a

collaborative autonomous mobile robot

(“AMR”) fulfilment solutions provider

to the logistics and non‑grocery

retail sectors, based in the US.

The acquisition was completed

on 30 June 2023 for consideration

of US$12.7m (£10.0m).

A total of £2.2m of acquisition‑related

costs have been incurred and treated

as an adjusting item as they are

significant and resulted from a

strategic investment that is not part

of the normal operating costs of

the business. The costs have been

recognised within operating costs in

the Consolidated Income Statement.

Tax impact on

adjusting items

The change in IFRS 13 fair value of

contingent consideration receivable

is not subject to tax. The remaining

adjusting items

are taxable or tax

deductible and give rise to a tax charge

of £nil (FY22: tax credit of £0.8m).

A further tax charge of £21.7m

(FY22: charge of £6.4m) has not been

recognised as it relates to tax losses

which are not recognised for deferred

tax purposes.

In FY19, the Group sold Marie Claire

Beauty Limited (“Fabled”) to Next plc.

Part of the consideration for this

transaction was contingent on future

events. A loss on revaluation of

£0.4m (FY22: £0.8m loss) is reported

through adjusting items

UK network

capacity review

In April 2023, the Group announced the

plan to cease operations at its Hatfield

CFC as part of a wider review of UK

network capacity. As a result, the

Group recorded impairment charges

of £20.3m (right-of-use assets £13.2m;

PP&E £7.0m; £0.1m other intangible

assets), restructuring costs of £6.8m

and other related costs of closure of

£5.1m, which includes costs provided

for onerous contracts.

Zoom by Ocado

strategy and network

capapcity review

During the period, Ocado Retail

undertook a strategy and capacity

review for the Zoom network,

as a result the Group recorded

impairment charges of £27.2m (£14.5m

to right-of-use assets, £12.5m PP&E

and £0.2m other intangible assets) and

other costs of £0.2m. These costs have

been classified as adjusting on the

basis that they are material and part of

a significant strategic review.

Other items below adjusted EBITDA

Depreciation, amortisation

and impairment

Total depreciation, amortisation

and impairment costs were £395.9m

(FY22: £348.6m), an increase of

£47.3m, or 13.6% year-on-year.

This includes 1. depreciation of

PP&E of £182.8m (FY22: £154.4m),

2. depreciation of RoU assets of

£69.1m (FY22: £66.0m), 3. amortisation

expense of £122.1m (FY22: £114.7m)

and 4. impairment charge of £21.9m

(FY22: £13.5m).

The increase was driven by

1. £38.9m additional depreciation and

amortisation due to the go‑live of three

sites within the previous 12 months,

the annualisation of 12 sites that went

live during FY22 and technology

projects going live in the last

12 months, and 2. an £8.4m increase

in impairments due to the impairment

of assets largely related to our contract

with Groupe Casino.

Net finance costs

Net finance costs of £73.2m increased

by £25.0m (FY22: £48.2m). Net finance

costs comprise the net of finance costs

of £95.1m (FY22: £90.0m), finance

income of £40.0m (FY22: £13.5m)

and the net impact of foreign exchange

and revaluation movements of £18.1m

loss (FY22: gain of £28.3m). Finance

income is primarily interest income

on cash balances.

Finance costs of £95.1m

(FY22: £90.0m) mainly comprise:

interest expense on borrowings

of £68.4m (FY22: £61.3m), which

increased by £7.1m primarily due to

1. interest expense on the shareholder

loan from M&S to Ocado Retail and

2. incremental fees on the RCF

(agreed in June 2022), and interest

expense on lease liabilities of £25.3m

(FY22: £28.3m).

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Financial Review continued

Net foreign exchange and revaluation

movement of £(18.1)m (FY22: gain

of £28.3m) comprises net foreign

exchange losses of £11.6m

(FY22: £16.4m gain), largely in respect

of USD balances held, and loss on

revaluation of financial assets of

£6.5m (FY22: £11.9m gain) largely as a

result of the Group’s warrants held in

Karakuri and loan notes to Karakuri

being written off as Karakuri has

entered into administration.

Total borrowings at the end of the

53-week period were £1,462.1m

(FY22: £1,372.8m). Total lease liabilities

at the end of the 53‑week period were

£497.8m (FY22: £532.3m).

Share of results from joint

ventures and associates

The Group has accounted for a

£0.9m loss (FY22: £1.4m loss) for the

share of results from joint ventures

and associates.

The Group has two joint ventures

(Ocado Retail and the MHE JVCo) and

one associate (Karakuri, a robotics

business involved in the development

of automation for quick‑service

restaurants). The results of the

Ocado Retail joint venture are fully

consolidated within the Ocado Group.

• MHE JVCo is a 50:50 joint venture

with Morrisons and holds the Dordon

CFC MHE assets which Ocado Retail

and Morrisons use to service their

online businesses. The Group’s

share of the MHE JVCo loss after

tax in the period amounted to

£0.1m (FY22: £0.2m loss); and

• Karakuri Limited is an associate

and the Group’s 26.3% interest in

Karakuri contributed a loss of £0.8m

in the period (FY22: £1.2m loss).

Karakuri appointed administrators

in June 2023 and the £0.8m share

of losses in the period resulted in the

remaining investment of £0.8m being

written down to £nil value. The

revaluation of equity investments

(as referenced above) is in respect of

other assets related to Karakuri but

not recorded directly in investments

in associates.

Adjusted loss before tax

of £417.5m

(FY22: loss of £470.9m) reflects an

adjusted EBITDA

profit of £51.6m

(FY22: loss of £74.1m), depreciation,

amortisation and impairment

of £395.9m (FY22: 348.6m),

and net finance costs of £73.2m

(FY22: £48.2m).

Loss before tax

Loss before tax of £393.6m (FY22: loss

of £500.8m) is stated after net

adjusting items

of £23.9m

(FY22: £29.9m expense).

Taxation

The Group reported a total tax credit

in the Income Statement for the period

of £16.2m (FY22: £19.5m). This amount

includes a UK corporation tax charge

of £3.2m (FY22: credit of £8.4m).

A deferred tax credit of £21.6m

(FY22: credit of £11.3m) was

recognised in the period.

Deferred tax assets decreased due

to the derecognition of losses mainly

in Ocado Retail. Deferred tax liabilities

decreased due to the removal of

deferred tax on consolidation following

an intercompany transfer of intangible

assets from Haddington and Kindred

to Ocado Innovation Ltd.

At the end of the 53‑week period, the

Group had £1,550.1m (FY22: £973.9m)

of unutilised carried-forward tax

losses.

Dividend

During the period, the Group did not

declare a dividend (FY22: £nil).

Loss per share

Basic and diluted loss per share were

38.44 pence (FY22: 58.93 pence) on a

53-week basis (FY22: 52-week basis).

The 52‑week adjusted loss per share

was 43.89 pence (FY22: 53.47 pence).

Capital expenditure

Capital expenditure for the 53-week period totalled £520.3m (FY22: £797.3m), a reduction of £277.0m, primarily due to a

decrease in the number of CFCs and new modules going live and under construction in the year. Capital expenditure largely

comprises new site construction costs and technology development costs to enhance OSP.

An analysis of capital expenditure by key categories is presented below:

£m

FY23

53 weeks

FY22

52 weeks Change

CFC Sites 253.1 440.8 42.6%

Technology 202.8 186.7 (8.6)%

Group support and other 34.3 52.0 34.0%

Technology Solutions 490.2 679.5 27.9%

Logistics 14.4 19.5 26.2%

Retail 25.2 133.8 81.2%

Eliminations

(9.5) (35.5) (73.2)%

Group capital expenditure 520.3 797.3 34.7%

1 The elimination of capital expenditure comprises the design and set up fees charged to Ocado Retail by Technology Solutions (those fees charged to Ocado Retail are

eliminated on consolidation of the Group).

OCADO GROUP PLC Annual Report and Accounts 2023

Technology Solutions

£m

FY23

53 weeks

FY22

52 weeks Change

CFC technologies 119.1 108.1 (10.2)%

Ecommerce 28.6 29.9 4.3%

Logistics and supply chain 22.1 18.8 (17.6)%

Other 33.0 29.9 (10.4)%

Technology 202.8 186.7 (8.6)%

CFC sites capital expenditure relates to

the construction of new CFCs and

Zoom sites and was £253.1m in the

period, a decrease of £187.7m

(FY22: £440.8m). The investment

predominantly relates to the launch of

the three CFCs which went live in FY23

together with five further sites under

construction. The reduction is primarily

driven by 1. the lower number of

new CFCs going live in the year, with

only three CFCs opening in FY23

(FY22: 9 CFCs, 3 Zooms) and 2. the

reduced in-year capital expenditure on

sites under construction.

Technology development spend

increased to £202.8m (FY22: £186.7m),

driven by the ongoing investment in

OSP with a continued focus on

delivering the Re:Imagined product

innovations announced in January

2022. Re:Imagined includes seven key

innovations: the 600 series bot, the

600 grid and optimised site design,

Automated Frameload, On‑Grid

Robotic Pick (“OGRP”), Ocado Orbit,

Ocado Swift Router and Ocado Flex.

We continue to enhance our customer

proposition delivering world‑class

end‑to‑end grocery ecommerce and

fulfilment solutions. OSP includes

ecommerce, order management,

forecasting, routing and delivery,

automated storage and retrieval

systems (“ASRS”), dexterous robotics

and other material handling elements.

• CFC technologies are at the core

of our OSP proposition. This capital

expenditure encompasses the

ongoing development of our grid

and bots (our ASRS and the robots

on the grid), its peripheral MHE

and the enhancement of these

propositions. We invested £119.1m

this year (FY22: £108.1m), over half

of the £202.8m total Technology

development spend capitalised. This

element of our capital expenditure is

focused on reducing both the capital

cost and the ongoing running costs

of the CFC for the partner and

Ocado Group.

FY23 development spend was

invested in several key propositions,

including: the development of our

lowest‑cost and lightest bot ever and

its associated grid, the 600 series;

the development and client

deployment of an automated

freezer solution (“autofreezer”);

and the development of fire

retardant metal totes.

This spend enabled key propositions

to be introduced into the new CFC

at Luton from the site launch. This

included both OGRP and autofreezer

capabilities. The autofreezer solution

is more energy efficient, reducing

our energy costs. OGRP reduces

partner labour costs and enables

a more optimised site design with

reduced mezzanine floor space as

less space is needed for the manual

packing of groceries.

OGRP ramped up quickly from the

launch date in Luton and is now

regularly picking more than 30,000

eaches per day. The system targets

240 UPH and has been proven to

pick over 200 UPH in our development

environment at our Purfleet CFC. To

date, the system has picked over one

million items and has yielded critical

learnings that have been applied to

the operational sites. We expect

both Luton and Purfleet to continue

to ramp up in the coming months,

achieving the full operational

benefits of reduced labour.

• Ecommerce: we invested £28.6m

(FY22: £29.9m) in developing our

ecommerce platform, a core element

of the OSP end‑to‑end solution.

These additional OSP ecommerce

innovations continue to enhance

every aspect of the shopper journey.

They include improvements to the

search and browse experience,

specific developments to bolster our

capacities for general merchandise and

the introduction of product “regulars”

to five additional partners providing

a more tailored and time‑efficient

experience for shoppers.

• Logistics and supply chain: one of

the core benefits of OSP is our deep

expertise in logistics and supply

chain. We invested £22.1m in these

propositions in FY23 (FY22: £18.8m),

with the focus of our investment

on the planning, optimisation and

execution of delivery. This includes

optimisation of the grocery supply

chain, including ensuring increased

availability to customers and

decreased stockholding days.

• The balance of the spend

predominantly relates to our teams

creating tooling and development

systems for the wider Technology

function where we invested

£33.0m (FY22: £29.9m).

Group support and other capital

expenditure comprise projects relating

to support costs systems and

infrastructure; they include capital

expenditure for our fully consolidated

joint venture, Jones Food Company

Limited, related to the opening of

the company’s second vertical farm.

Capital expenditure of £34.3m

is £17.7m lower than last year

(FY22: £52.0m) as we have completed

several key investments in support

function systems and infrastructure.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Financial Review continued

Logistics

Capital expenditure of £14.4m

(FY22: £19.5m) largely relates to

technology system development of

£13.3m (FY22: £18.6m) to transition

our UK clients from our legacy

platforms onto OSP.

This reduced year‑on‑year as no new

CFC sites have been committed to in

the period.

Capital expenditure in Retail decreased

by £108.6m due to a reduction in new

CFC investment following the openings

in FY22 of the Bicester CFC and the

Zoom sites in Leeds and Leyton. During

the period CFC investment was

primarily related to building the new

Luton CFC, which opened in the

second half of FY23.

Cash flow

£m

FY23

53 weeks

FY22

52 weeks

Adjusted EBITDA

54.2 (74.1)

Movement in contract liabilities 47.9 78.7

Other working capital movements 19.4 32.0

Finance costs paid (56.3) (55.8)

Taxation received 9.9 13.4

Insurance proceeds relating to business interruption – 54.3

Adjusting items

(1.7) (43.9)

Other non‑cash items 8.8 3.3

Operating cash flow 82.2 7.9

Capital expenditure (536.4) (785.9)

Acquisition of subsidiaries, net of cash acquired (11.4) (5.5)

Insurance proceeds relating to rebuilding Andover CFC and Erith claim – 5 7.0

Dividend from joint venture 5.1 8.0

Net proceeds from interest‑bearing loans and borrowings 54.1 37.2

Repayment of lease liabilities (66.8) (57.4)

Net proceeds from share issues 2.6 567.3

Other investing and financing activities 42.6 9.0

Movement in cash and cash equivalents (excl. FX changes) (428.0) (162.4)

Effect of changes in FX rates (15.2) 21.8

Movement in cash and cash equivalents (incl. FX changes) (443.2) (140.6)

Retail

Capital expenditure of £25.2m

(FY22: £133.8m) largely comprises

CFC construction costs recharged

from Ocado Group, along with design

and set‑up fees for new sites and IT

project costs. Design and set‑up fees

of £9.5m (FY22: £35.5m) to Ocado

Retail from Technology Solutions are

eliminated on consolidation of the

Group and principally relate to the

Luton CFC.

Cash and cash equivalents (including

FX changes) reduced by £443.2m

(FY22: reduction of £140.6m). There

was an increase in cash outflow

of £302.6m year-on-year, as FY22

included £564.1m of net cash

proceeds from the equity raise.

Adjusted EBITDA

(as detailed in the

alternative performance measures

on pages 302 to 303 ) improved by

£128.3m to £54.2m on a 53-week

basis (FY22: loss of £74.1m).

Operating cash flow improved by

£74.3m to an inflow of £82.2m (FY22:

inflow of £7.9m). The movement can be

analysed as follows:

• Contract liabilities: cash inflow

of £47.9m (FY22: £78.7m inflow)

relating to upfront design and access

fees paid by partners. Design fees

are typically paid in instalments

during the CFC construction

process. The cash inflow is lower

than the prior year driven by the

timing of design fee instalment

payments, fewer CFCs going

live in the period and fewer

modules ordered.

• Working capital: cash inflow

of £19.4m (FY22: £32.0m inflow)

• Trade and other receivables

reduced by £36.6m mainly due to

lower prepayments and deposits

for spares relating to new CFCs

and cash receipts from our

Technology Solutions partners.

This was partially offset by an

increase in receivables due to

Ocado Retail mainly due to the

timing of receipt of media and

promotional income.

• Inventories reduced by £3.1m.

• Trade and other payables reduced

by £20.3m mainly due to the

timing of the payroll run at the

period‑end (in the prior year the

monthly payroll run was after the

period end and the payment was

accrued) and reduced accruals

for capital expenditure. This

was partially offset by higher VAT

payable driven by higher amounts

invoiced during the year.

• Finance costs: cash outflow of

£56.3m (FY22: £55.8m outflow)

comprises £30.6m interest

and charges on borrowings

(FY22: £27.5m) and £25.7m for the

interest element of assets held under

finance leases (FY22: £28.3m).

• Taxation: cash inflow of £9.9m

(FY22: inflow of £13.4m) reflects a

tax refund received by Ocado Retail,

partially offset by taxation payments

OCADO GROUP PLC Annual Report and Accounts 2023

by foreign subsidiaries. No UK tax

was paid in the period.

• Adjusting items

: cash outflow of

£1.7m (FY22: outflow of £43.9m)

relates to cash‑settled adjusting

items

and comprises the following:

• £41.7m (FY22: £nil) relating to the

AutoStore litigation settlement;

• £(5.0)m (FY22: £(26.5)m) relating

to litigation costs;

• £(15.5)m (FY22: £(3.0)m)

organisational restructuring costs;

• £(12.2)m (FY22: £(11.0)m) Finance,

HR and Retail IT system

transformation costs;

• £(7.8)m (FY22: £nil) UK network

capacity review;

• £(2.2)m (FY22: £nil) acquisition

costs of 6RS;

• £(0.7)m (FY22: £nil) costs relating

to contingent consideration

negotiations with M&S; and

• £nil (FY22: £(3.4)m) Andover CFC

adjusting items

• Other non-cash items: inflow of

£8.8m (FY22: inflow of £3.3m)

relates to adjustments for the

following non‑cash elements of

adjusted EBITDA

• £(33.0)m (FY22: £(24.7)m) revenue

recognised from long‑term

contracts;

• £33.3m (FY22: £42.0m) of

share‑based payments;

• £2.9m (FY22: £10.8) non-cash

write‑off of property, plant and

equipment;

• £(5.0)m (FY22: £nil) gain on the

disposal of property, plant and

equipment, recognised in the

Income Statement but the

proceeds from the disposal are

included in other investing and

financing activities;

• £0.9m (FY22: £1.4m) share of

losses from joint ventures and

associates; and

• £9.7m (FY22: £(26.2)m) movement

in provisions.

The movements above result in an

operating cash inflow of £82.2m

(FY22: cash inflow of £7.9m). The

following movements explain the

overall movement in cash and cash

equivalents outflow of £443.2m

(FY22: outflow of £140.6m):

• Capital expenditure of £536.4m

(FY22: £785.9m) primarily relates

to the continued investment in

OSP and new CFCs in the UK and

internationally. Capital expenditure

also includes investment in Group

support activities. The year‑on‑year

reduction of £249.5m reflects

1. the lower number of new CFCs

going live in the year, with only

three CFCs opening in FY23

(FY22: 9 CFCs, 3 Zooms) and

2. the reduced in‑year capital

expenditure on sites under

construction.

• Net proceeds from interest-bearing

loans and borrowings of £54.1m

(FY22: £37.2m) reflect 1. £60.0m

shareholder loan from M&S to Ocado

Retail, 2. £(10.0)m RCF repayment

by Ocado Retail, and 3. £4.1m net

loan drawn down by Jones Food.

• Lease liability repayments of £66.8m

(FY22: £57.4m), increased by £9.4m

year‑on‑year mainly driven by an

increase in motor vehicle leases,

incremental CFC lease costs at

Purfleet and Luton, and new

office leases.

• Net proceeds from share issue of

£2.6m (FY22: £567.3m) in respect

of employee share schemes; the

prior year includes the equity raise

of £564.1m (net of £14.1m

associated costs).

• Other investing and financing

activities of £42.6m (FY22: £9.0m)

include £41.7m (FY22: £9.6m)

of interest received on treasury

deposits, £9.4m (FY22: £nil)

proceeds from the disposal of assets

held for sale and £1.5m (FY22: £nil)

cash contingent consideration

received in respect of the sale of

Fabled to Next plc. This was offset

by investments in Oxa Autonomy

of £10.0m (FY22: £nil).

• Effect of changes in FX rates of

£(15.2)m (FY22: £21.8m gain) relates

to the FX loss (reported under net

finance costs) and translation FX on

our non‑sterling cash balances

(predominantly USD cash balances

held to fund the expansion of our

Technology Solutions business in

the US).

Underlying cash outflow

is £472.5m

(FY22: £828.2m) and improved by

£355.7m year‑on‑year. Underlying

cash flow

is the movement in cash

and cash equivalents excluding the

impact of adjusting items

, costs of

new financing activity, investment in

unlisted equity investments and

FX movements.

£m

FY23

53 weeks

FY22

52 weeks

Movement in cash and cash equivalents (443.2) (140.6)

Adjusting items

1.7 (67.4)

Purchase of unlisted equity investments and loans to investee companies

10.0 0.6

Proceeds from disposal of asset held for sale (9.4) –

Financing

(56.7) (604.5)

Cash received in respect of contingent consideration receivable (1.5) –

Acquisition of subsidiaries, net of cash acquired 11.4 5.5

Effect of changes in FX rates 15.2 (21.8)

Underlying cash outflow

(472.5) (828.2)

1. Adjusting items

of £67.4m in FY22 include the following items from the cash flow above adjusting items outflow £(43.9)m, insurance proceeds relating to business

interruption £54.3m inflow, insurance proceeds relating to rebuilding Andover CFC and Erith claim £57.0m inflow.

2. Purchase of unlisted equity investments and loans to investee companies of £10.0m (FY22: £0.6m) during the year relates to the Group’s investment in Oxa Autonomy.

3. Financing of £56.7m (FY22: £604.5m) includes net proceeds from interest-bearing loans and borrowings of £54.1m (FY22: £37.2m) and net proceeds from share issues

of £2.6m (FY22: £567.3m).

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Financial Review continued

Assets

Goodwill of £158.6m (FY22: £164.7m)

arises on the acquisition of a business

where the purchase cost exceeds

the fair value of the tangible assets,

the liabilities and the intangible assets

acquired. It therefore represents the

expected future benefit to Ocado

Group of businesses that have been

acquired. Goodwill of £158.6m arises

from the prior acquisitions of Kindred

Systems Inc., Haddington Dynamics

Inc., Myrmex Inc. and Jones Food

Company. This future benefit derives

from the development of new

technology, the ability to attract

new customers and cost synergies.

Goodwill decreased by £6.1m in

the year mainly due to the foreign

exchange impact of the revaluation

of the goodwill (predominantly

USD-denominated).

Other intangible assets net book

value of £461.3m increased by

£84.1m (FY22: £377.2m). The

movement was driven by:

• £167.8m (FY22: £117.5m) internal

development costs capitalised

during the year that related to the

development of our technology

capabilities for our partners, across

our CFC, Zoom and ISF solutions;

• £38.2m (FY22: £27.4m) of intangible

assets acquired primarily relating

to software and patents;

• Amortisation charge for the 53‑week

period of £125.0m (FY22: £114.7m);

and

• Other smaller movements of £3.1m

(FY22: £1.8m).

• Other intangible assets are typically

depreciated over five years.

Property, plant and equipment net

book value increased by £17.1m to

£1,794.9m (FY22: £1,777.8m) and

comprise fixtures, fittings, plant

and machinery of £1,586.3m

(FY22: £1,577.2m), land and buildings

of £206.0m (FY22: £197.5m) and

motor vehicles of £2.6m (FY22: £3.1m).

• Fixtures, fittings, plant and

machinery predominantly comprise

the material handling and other

operating equipment within our sites.

• This increased by £9.1m to

£1,586.3m driven by £261.3m

of additions (FY22: £494.4m)

primarily relating to the go‑live

of client sites for Sobeys,

AEON and Ocado Retail.

• Internal development costs of

£32.7m (FY22: £63.9m) were

capitalised and relate to OSP

technology development

and deployment.

• These increases were partly

offset by depreciation for the

53-week period of £182.9m

(FY22: £148.5m), net foreign

exchange movements of £(47.2)m

(FY22: £37.3m) and impairments

of £41.2m (FY22: £9.2m).

Impairments were recognised

relating to the cessation of

operations at our Hatfield CFC,

the strategy and capacity review

of the Zoom network and assets

relating to our contract with

Groupe Casino and other

smaller movements.

• Land and buildings comprise CFC

and Zoom sites in the UK, spokes

and offices. The net book value

increased by £8.5m to £206.0m.

• Motor vehicles primarily comprise

the vehicles owned by Ocado

Group relating to CFC and head

office operations.

• Tangible assets are typically

depreciated over nine years.

Balance Sheet

£m

3 December

2023

27 November

2022 Movement

Assets

Goodwill 158.6 164.7 (6.1)

Other intangible assets 461.3 377.2 84.1

Property, plant and equipment 1,794.9 1,777.8 17.1

Right‑of‑use assets 428.1 493.9 (65.8)

Investment in joint venture and associates 9.5 15.6 (6.1)

Trade and other receivables 427.8 329.3 98.5

Cash and cash equivalents 884.8 1,328.0 (443.2)

Other financial assets 127.7 185.4 (57.7)

Inventories 127.1 106.8 20.3

Other assets 9.2 34.5 (25.3)

Total assets 4,429.0 4,813.2 (384.2)

Liabilities

Contract liabilities (446.7) (422.9) (23.8)

Trade and other payables (470.4) (508.2) 37.8

Borrowings (1,462.1) (1,372.8) (89.3)

Lease liabilities (497.8) (532.3) 34.5

Other Liabilities (41.0) (42.7) 1.7

Total liabilities (2,918.0) (2,878.9) (39.1)

Net assets 1,511.0 1,934.3 (423.3)

Total equity (1,511.0) (1,934.3) 423.3

OCADO GROUP PLC Annual Report and Accounts 2023

Right-of-use assets of £428.1m

(FY22: £493.9m) represent the value

of assets held under long‑term leases,

comprising land and buildings of

£359.9m (FY22: £415.0m), motor

vehicles of £50.5m (FY22: £63.1m) and

fixtures, fittings, plant and machinery

of £17.7m (FY22: £15.8m).

During the year, the Group entered

into new leases for assets of £32.7m:

• £13.4m of which is fixtures, fittings,

plant and machinery; this primarily

relates to new leases established

with MHE JVCo, the joint venture

between the Group and Morrisons,

for the operation of MHE at the

Dordon CFC;

• £10.4m of which is motor vehicles;

and

• £8.9m of which is land and buildings,

primarily relating to our London and

Toronto offices

The depreciation charge for the

53-week period was £(70.4)m

(FY22: £(66.0)m) and an impairment

charge of £(27.7)m (FY22: £(0.6)m)

was recognised relating to the

closure of the Hatfield CFC and

Zoom strategy and capacity review.

Investment in joint ventures and

associates includes the Group’s 50%

investment in MHE JVCo and the

Group’s 26.3% investment in Karakuri

(both no change in percentage holding

from the prior year). During the period,

the Group’s investment in Karakuri was

written off as the business entered

into administration in the year

(FY22: £0.8m). The carrying amount

at the end of the period of £9.6m

relates solely to the investment in

MHE JVCo (FY22: £14.8m).

Trade and other receivables

increased by £98.5m to £427.8m

(FY22: £329.3m). The balance

comprises the following:

• Trade receivables (net of expected

credit loss allowance) of £126.8m

(FY22: £124.2m) primarily comprise

receivable balances due from

Technology Solutions retail partners

and amounts due to Ocado Retail

from suppliers as part of commercial

and media income.

• Other receivables of £190.4m

(FY22: £82.7m). Other receivables

largely comprise amounts receivable

from AutoStore following the

settlement of patent litigation,

tax refunds due and receivables

expected from contract

manufacturers for components

sourced on their behalf. The

increase of £107.7m is mainly driven

by the recognition of the AutoStore

receivable and higher corporation

tax receivable offset by tax credit

receipts in respect of research

and development.

• Included in other receivables is

£144.8m (FY22: £nil) due from

AutoStore as a result of the litigation

settlement reached during the

period. The receivable was initially

recognised at fair value of £180.4m.

The balance will be reduced by

monthly instalments received and

increased by the unwinding of the

discounting as the receivable moves

towards maturity.

• Prepayments of £55.8m

(FY22: £76.5m) include CFC

components, software maintenance

payments, and business rates and

utilities payments. The £20.7m

decrease was mainly driven by a

reduction in prepaid CFC

components and the Group

optimising its utilisation of MHE

already purchased.

• Accrued income of £54.8m

(FY22: £45.9m) relates to accrued

income for media and promotions,

solutions capacity fees, and volume‑

related rebates. The increase is

mainly driven by accrued media and

promotional income and accrued

fee income from our partners.

• Amounts due from suppliers relating

to commercial and media income

are £91.5m (FY22: £71.2m). £59.1m

(FY22: £52.5m) of the total is within

trade receivables and £32.4m

(FY22: £18.7m) is within

accrued income.

Cash and cash equivalents were

£884.8m (FY22: £1,328.0m) at the

year end. Gross debt (including lease

liabilities) at the period end was

£1,959.9m (FY22: £1,905.1m), with net

debt

at the period-end of £1,075.1m

(FY22: £577.1m). In May 2023, the

Group renegotiated the covenant

terms on the RCF with its banking

group to provide additional flexibility

around access to the facility. Current

borrowing facilities include a £600m

convertible bond that matures in

December 2025, a £500m senior

unsecured note that matures in

October 2026 and a £350m convertible

bond that matures in January 2027.

These facilities are expected to be

refinanced on a timely basis to

maintain appropriate liquidity.

The Group also has access to a £300m

RCF that is undrawn. In May, the Group

renegotiated the covenant terms on

the RCF with its banking group to

provide additional flexibility around

access to the facility. The RCF is due

to expire in June 2025.

Other financial assets of £127.7m

(FY22: £185.4m) comprise:

• £29.4m (FY22: £98.3m) total

contingent consideration receivables

• £28.0m (FY22: £95.0m) due from

M&S relating to the disposal of

50% of Ocado Retail in August

2019; and

• £1.4m (FY22: £3.3m) due from

Next plc (“Next”) relating to the

disposal of Fabled in July 2019;

• £82.7m (FY22: £69.8m) unlisted

equity investments held by the

Group in Oxa Autonomy,

Wayve Technologies and 80 Acres;

• £14.4m (FY22: £14.2m) loans

receivable held at amortised cost;

and

• £1.2m (FY22: £3.1m) other items.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Financial Review continued

The decrease of £57.7m is due to

1. change in the IFRS 13 fair value of

the contingent consideration due from

M&S, 2. the revaluation of the Group’s

unlisted equity investments, and 3. the

increase in the Group’s investment

in Oxa Autonomy.

Contingent consideration receivables

Contingent consideration due from M&S

We have reduced the value of the

contingent consideration due from

M&S relating to the disposal of 50%

of Ocado Retail by £67.0m to £28.0m

(FY22: £95.0m).

Under the terms of the disposal of

50% of Ocado Retail to M&S that took

place during 2019, a final consideration

payment may become due from

M&S to Ocado Group of £156.3m plus

interest, dependent on certain

contractually defined Ocado Retail

performance measures (the “Target”)

being achieved for the FY23 financial

year (the contingent consideration).

The contractual outcome is binary,

meaning if the Target is achieved, it will

trigger the full payment. Conversely,

should the Target not be achieved, no

consideration would be payable by

M&S. There is no formal arrangement

for a payment between zero and

£190.7m. Ocado Retail failed to meet

the performance measures for the

FY23 financial year that were

required for automatic payment

of the contingent consideration.

The contractual arrangement with

M&S does, however, expressly provide

for the Target to be adjusted for certain

decisions or actions taken by Ocado

Retail management that differ from the

assumptions used in the discounted

cash flow model which underpinned

the sale transaction. We believe that

there were several significant

decisions and actions taken by

Ocado Retail management that require

adjustment to the Target. The adoption

of these adjustments, if established,

would result in Ocado Retail achieving

the Target (as adjusted) and the full

payment of £190.7m.

Notwithstanding the application of the

adjustments (that remains unresolved

at present) the Group has appropriately

applied the principles of IFRS 9

Financial Instruments and IFRS 13

Fair Value Measurement in determining

the fair value of the contingent

consideration financial instrument

recorded in the Group’s financial

statements at each reporting date.

IFRS 13 requires that the

characteristics of the contract be

valued from the perspective of a

hypothetical, independent ‘market

participant’ who would exclude

broader facts, circumstances and

commercial arrangements pertaining

to the ongoing relationship with M&S.

At the year end the fair value has been

estimated using the expected present

value technique and has been based

on several probability‑weighted

possible scenarios that a market

participant would consider and has

been determined to be £28.0m

(FY22: £95.0m), resulting in a £67.0m

reduction in the value of the asset.

This financial reporting estimate is

significantly lower than the amount

that Ocado believes it will receive in

the future (either via a formal litigation

process or settlement).

Contingent consideration due from Next

The fair value of the contingent

consideration due from Next is

estimated to be £1.4m (FY22: £3.3m).

During the period, the Group

received cash consideration

of £1.5m (FY22: £nil).

Unlisted equity investments, loans

and other items

The fair value of unlisted equity

investments increased by £12.9m to

£82.7m (FY22: £69.8m). The total

movement comprises £16.5m loss on

the revaluation of these investments

and £29.4m increase in the Group’s

equity investment in Oxa Autonomy.

During the year, the Group revalued its

unlisted equity investments designated

as fair value through other

comprehensive income and recognised

a loss of £16.5m (FY22: gain of

£33.3m) due to changes in the

commercial outlook of the companies

in which the Group is invested,

primarily to Oxa Autonomy, Paneltex

Limited (“Paneltex”) and Inkbit

Corporation (“Inkbit”).

OCADO GROUP PLC Annual Report and Accounts 2023

The Group has a 12.2% (FY22: 8.8%)

share of Oxa Autonomy, a technology

company focused on the development

of autonomous vehicles. In December

2022, the company completed its

Series C Fundraising, which resulted in

the Group’s warrants being exercised

to acquire 21,934 Series B shares for

£10.0m. Following the exercise of the

warrants, the Group now holds a 12.2%

(FY22: 8.8%) interest in Oxa Autonomy.

The fair value of the warrants before

the transaction was £19.4m, which

together with the exercise cost of

£10.0m comprises a £29.4m increase

in the Group’s equity investment in

Oxa Autonomy.

Inventories of £127.1m (FY22: £106.8m)

comprise Ocado Retail grocery

inventory, Technology Solutions grid

and bots spares and 6RS Chuck

robots. Inventories increased by

£20.3m during the year mainly driven

by the reclassification of £12.5m of grid

and bot spares from property, plant

and equipment to inventory under

IAS 2. Inventory with a fair value of

£10.7m was acquired on acquisition

of 6RS comprising mainly Chuck

robots and spares.

Other assets of £9.2m (FY22: £34.5m)

relate primarily to assets held for sale

of £4.9m (FY22: £4.4m) and share

warrants that have a carrying value

of £3.3m (FY22: £27.4m), and which

decreased by £24.1m mainly due to

the exercise of share warrants for Oxa

Autonomy of £19.4m, revaluation of

warrants for Wayve Technologies and

80 Acres of £2.5m and impairment

of Karakuri warrants of £2.1m.

Liabilities

Contract liabilities of £446.7m

(FY22: £422.9m) primarily relate to

the consideration received in advance

from Technology Solutions and OIA

customers. Revenue is recognised

when the performance obligation is

satisfied, typically when a site goes

live or OIA products and services are

provided. The £23.8m increase in

the year is driven by:

• £47.6m (FY22: £69.1m) invoiced

to partners for their contracted

contribution towards the initial

MHE investment made in a site

or build and design of MHE;

• £9.2m recognised on acquisition

of 6RS; and

• £(33.0)m (FY22: £(24.7)m)

in respect of prior receipts

recognised as revenue in the year.

The current liabilities portion of the

contract liabilities balance of £38.6m

(FY22: £29.1m) represents amounts

due to be recognised as revenue within

12 months of the year end. Long-term

liabilities of £408.1m (FY22: £393.8m)

make up the balance.

Trade and other payables of £470.4m

(FY22: £508.2m) reduced by £37.8m,

mainly due to the timing of the monthly

payroll run and reduced accruals for

capital expenditure partly offset by

the timing of VAT payments.

Borrowings of £1,462.1m

(FY22: £1,372.8m) comprise the

liability element of the two unsecured

convertible bonds, the senior

unsecured bond and the

shareholder loan provided by

M&S (the non-controlling interest)

to Ocado Retail.

The increase of £89.3m is due to:

• £65.8m accrued interest on loans

and borrowings held at amortised

cost;

• £60.0m shareholder loan provided

by M&S (the non-controlling interest)

to Ocado Retail;

• £4.4m loan drawn by Jones Food;

• £(30.6)m interest repayments; and

• £(10.3)m principal repayments

comprising largely the repayment

of the RCF by Ocado Retail.

Lease liabilities of £497.8m

(FY22: £532.3m) comprise land and

buildings of £426.9m (FY22: £447.3m),

motor vehicles of £51.6m

(FY22: £65.5m) and fixtures, fittings,

plant and machinery of £19.3m

(FY22: £19.5m). New lease liabilities

of £32.9m were entered into during

the year (FY22: £64.2m) and largely

comprised fixtures, fittings, plant

and machinery and land and buildings.

Lease liabilities decreased by

payments made of £92.5m

(FY22: £85.7m) and £(0.6)m of other

movements (FY22: £(2.9)m), partly

offset by £25.7m of accrued interest

(FY22: £28.3m).

Lease liabilities of £497.8m

(FY22: £532.3m) include £16.5m

(FY22: £17.5m) payable to MHE JVCo,

a company in which the Group holds

a 50% interest.

Other liabilities of £41.0m

(FY22: £42.7m) comprise:

• £40.8m (FY22: £26.4m) of

provisions. The £14.4m increase in

provisions mainly reflects adjusting

items

costs relating to the closure

of the Hatfield CFC;

• £0.2m (FY22: £1.6m) derivative

financial liabilities primarily related to

diesel hedges; and

• £nil (FY22: £14.7m) of deferred tax

liabilities. The £14.7m decrease is

due to the removal of deferred tax on

consolidation following an

intercompany transfer of intangible

assets from Haddington and Kindred

to Ocado Innovation Limited.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Stakeholder Engagement

The information in this section highlights our key stakeholders. Although we have other stakeholders, such as regulators and

professional advisors, we have identified as key those stakeholders that are fundamental to achieving our strategic priorities.

For each stakeholder group we outline their value to our business and their role in achieving our strategy, the key issues that

we have identified as material to them and the engagement mechanisms we utilise. We further highlight the key outcomes as

aresultofourengagementandourprioritiesforthenextyear.WenoteOcadoRetailisauniquestakeholder(seepage20).

Our people

Why we value them Our stakeholder’s material interests

Our people are our most valuable resource. We rely on a talented,

engaged and innovative workforce to achieve our strategic priorities:

in particular, delivering transformational technology and driving the

success of our clients.

• Company performance and what this means for them individually.

• Health, safety and wellbeing at work.

• Opportunities for growth and development.

• Fair reward and recognition.

• A diverse and inclusive working environment.

• Having a voice and feeling heard.

• Being offered flexibility and choice.

Board engagement and oversight Group engagement

• Regular engagement by Andrew Harrison, the Designated

Non‑Executive Director for workforce engagement (“DNED”),

withouremployees(seepage128).

• People Committee consideration of people engagement issues (see

page140),andRemunerationCommitteeconsiderationofGroup-

wideremunerationandworkforce-relatedpolicies(seepage172).

• Regular updates to the Board on people matters, health and safety

matters and from the DNED and Committee Chairs.

• Non‑Executive Director lunch with community group chairs and

informal meetings with senior management.

• Regular business updates held by the CEO and Executive Directors.

• Key metrics monitored by the Board include eNPS scores, health and

safety incidents, gender pay gap, and whistleblowing reports.

• “Peakon”, our employee listening tool, is used to gather employee

feedbackandinturnguideresponsiveaction(seepage68).Several

communication channels are used including regular email updates on the

business and people‑related news, our online communication and

collaboration tool, and our intranet platforms.

• A wide range of employee community groups designed to connect people,

enable networking and create a sense of belonging, as part of an inclusive

workplace across business segments.

• Employee representatives including those on the Ocado Logistics Council

and listening champions.

Outcomes from engagement Priorities for 2024

• Internal goals launched to provide clearer direction to our people

in Technology Solutions and Ocado Logistics as to how our strategic

objectives will be furthered in the short term. These were cascaded

down across teams to provide clear ways in which employees can

contribute to our overall objectives.

• Payroll remediation programme completed earlier this year brought

in new processes and internal controls to improve accuracy in the

employee payroll experience.

• New global health and wellbeing partner launched, providing access

to a variety of tools, methods and resources for employee wellbeing.

• New initiatives introduced to support talent growth and employee

development in Ocado Logistics and Technology Solutions

(seepage68and69).

• Listening and engagement review introduced. The results,

feedback from employees and actions being taken are shared

with the business, twice a year.

• Implementation of core standards for leaders and managers across all

business segments. Align development experiences to these, and expand

the use of our 360 feedback tool to provide leader and manager options

aligned to expectations.

• Deliver and embed our policy and framework for talent and performance

in Technology Solutions, including the roll‑out of a performance and talent

process and toolkit available for all employees, to support the ongoing

development of our people.

• Focus on executive succession planning for the top leaders.

• Continue to align the emerging talent pipeline and new hire diversity

with ethnicity and gender targets.

• Improve data collection to provide more detailed analysis to be able to

address the needs and concerns of our people and assist in setting

targets across the business to continue to progress in diversity, equity

and inclusion (“DE&I”).

• Further develop our global and local onboarding programmes in

Technology Solutions to reflect and enable our international culture,

footprint and expansion.

OCADO GROUP PLC Annual Report and Accounts 2023

Investors

Why we value them Our stakeholder’s material interests

Our current and potential investors ensure our continued access

to the capital that enables us to pursue our strategic objectives.

Through continued investment, we are able to continue to develop

and grow our business.

• Strategic priorities, opportunities and risks for the business.

• Financial and operational performance.

• Goodgovernance.

• ESGissuesincludingclimatechangeandDE&I.

• Director remuneration.

• Transparent reporting and clear and consistent communication.

• Compliance with listing requirements and regulations.

Board engagement and oversight Group engagement

• Regular face‑to‑face and virtual meetings with investors, investor

roadshowsandattendanceatinvestorevents(seepage130).

• Board review and approval of material communications to investors.

• Regular updates to the Board on market sentiment and

investor feedback.

• Key metrics monitored by the Board include share price and share

held and attended.

• Remuneration Committee Chair letter to top investors regarding

the2023AGMvotingoutcomeonremunerationpolicyencouraging

furtherfeedback(seepage129).

• Investor engagement meetings held in advance of the new proposed

Directors’ Remuneration Policy and new Ocado Performance

SharePlan2024–seetheDirectors’RemunerationReport

on pages 154 to 203.

• Information and updates provided through our website, press releases,

regulatory news announcements, shareholder circulars and quarterly,

half‑year and annual results.

• Investor roadshows and attendance and participation at investor

conferences.

• Regular discussions and briefings for investors and analysts.

• Results presentations held in person and online including a question and

answer session.

• Site visits to UK CFCs for investors.

• CapitalmarketsfeedbackincludedinOcadoGroup’sReputation

Dashboard, enabling the Board to understand and follow the conversation

abouttheGroupamongkeystakeholders.Thisisupdatedquarterly

and is subject to discussion at regular Board meetings.

Outcomes from engagement Priorities for 2024

• Refresh of investor materials including presentation and RNS

statements for half‑year and full‑year results to advance

communication of our strategy and business objectives.

• Continued with the well‑received Chair’s governance breakfast

this year and held two in‑person governance roadshows,

where the Chair met with investors and analysts.

• AlackofvirtualattendanceatourprevioushybridAGMsledtoa

movebacktoaphysical-onlyAGMin2023.

• ThedevelopmentofourESGstrategycontinued,includingapproval

by the Board of our Net Zero Roadmap.

• Continue to advance communication of our strategy and business

objectives to current and potential investors and help increase their

understanding of our business model and prospects.

• Build our level of engagement with investors through in‑person

roadshows, conference appearances and capital markets days.

• Attract new shareholders to the register while providing an attractive

return for current shareholders.

• Focus on maximising investor and broader stakeholder engagement

using a variety of platforms which enable us to educate the capital

marketsontheOcadoGroupequitystory.

• Increase the use of analytical tools to maximise the efficiency of our

investor engagement programme.

• Continue to develop our reporting and provide comprehensive information

regardingESGissues.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Stakeholder Engagement continued

Partners

Why we value them Our stakeholder’s material interests

Strong trusted relationships with our partners are critical to our

success. Understanding the needs of our partners and working

together enable us to help them get the most out of our technology,

develop our solutions, meet our strategic objectives and deliver on

our commitments.

• Quality, reliability and financial performance of OSP.

• Ensuring strong working relationship with Ocado.

• Innovation and product development.

• A flexible end‑to‑end offering, with a wide range of fulfilment options.

• Efficient and effective supply chain management.

• Expect us to understand them and their challenges.

Board engagement and oversight Group engagement

• Regular Executive Director engagement with senior executives

of partners, including quarterly executive leadership meetings

with all global OSP Partners.

• Update reports at each Board meeting on OSP Partner relationships,

including performance and progress on operations and any

key issues.

• Key metric monitored by the Board is OSP Partner site utilisation.

• The Regional Presidents and Account teams, the Partner Success teams

and operational teams across the business engage directly and regularly

with our OSP Partners.

• KPIs are set and feedback provided during ongoing projects with

our partners.

• Ocado Beyond, the Ocado Solutions product conference exclusive to our

OSP Partners, offered networking opportunities, expert talks, panels and

live tours. This helps further understanding and share user knowledge

and assists them in getting the best out of OSP.

• Representatives from all OSP Partners come together periodically to

work collaboratively and discuss experiences of shared importance.

Outcomes from engagement Priorities for 2024

• The Partner Success programme was developed further,

with tailored action plans for each OSP Partner introduced.

• Regional presidents for Ocado Solutions in Asia‑Pacific and Europe

were appointed (in addition to the President for the Americas

appointed last year), to develop a regional support model for

OSP Partners.

• Develop a playbook for Partner Success that will inform existing and

new partners on how to get the best out of the platform.

• Continue to develop the Partner Success teams to ensure that they are

appropriately resourced.

• Develop internal and external training material to be able to provide

partners with the best opportunity to make use of the functionality

within OSP.

• The primary goal across Ocado Solutions will be to drive utilisation growth

across OSP Partner CFCs.

OCADO GROUP PLC Annual Report and Accounts 2023

Suppliers

Why we value them Our stakeholder’s material interests

Our suppliers are imperative to the success of our business. A strong

supply chain is critical in enabling us to deliver on our commitments

to our OSP Partners and continue to develop and grow our

business globally.

• Fair contractual and payment terms.

• Building long‑term strategic relationships.

• Sustainability and growth of Ocado’s business.

• Equitable and compliant supply chain practices.

• Social, environmental and ethical impacts.

Board engagement and oversight Group engagement

• Regular business reports to the Board raising any concerns regarding

suppliers and any supply chain issues.

• Oversee prompt payment practices filings.

• ApprovetheModernSlaveryActStatement.

• Key metrics monitored by the Board include prompt payment

practices reports and Scope 3 emissions data related to the

supply chain.

• Onboarding process for new suppliers and ongoing dialogue with

suppliers to raise and resolve any issues.

• Auditing critical/strategic suppliers within our supply chain.

• Dedicated third‑party tool for critical and high‑risk suppliers/categories

of spend, for corporate responsibility, ethics and responsible sourcing

management and reporting.

Outcomes from engagement Priorities for 2024

• New Supplier Code of Conduct introduced which provides

a framework of standards and expectations for suppliers.

• New Procurement Policy introduced with standard internal

processes set out to ensure the correct procedures are followed

across the business so that goods and services are procured in

a consistent manner.

• Continue improvement to third‑party risk management and due diligence

processes, including additional utilisation of existing and new tools to

support this.

• Procurement leads will communicate with suppliers regarding compliance

with the new Supplier Code of Conduct.

• Implement an audit process for suppliers to measure compliance with the

new Supplier Code of Conduct.

Environment and society

Why we value them Our stakeholder’s material interests

Makingameaningfulcontributiontothewidersocietyenablesusto

generate positive environmental and social impacts and further our

objective to operate as a responsible business.

• Legal and regulatory compliance of the business.

• Environmental and social issues, including climate change, carbon

emissions, human rights, responsible sourcing and waste management.

• Socially responsible business practices.

• Transparency and engagement.

Board engagement and oversight Group engagement

• Board discussion and debate on Ocado’s Net Zero Strategy

throughout the year.

• Regular updates to the Board regarding corporate responsibility,

governanceandcomplianceandESG,includingreportsfromthe

management-levelESGCommitteechairedbyourGroup

GeneralCounselandCompanySecretary

• BoardandAuditCommitteetrainingonESGissuesundertaken

duringtheyear(seepage134).

• Corporate responsibility reporting on our website, including carbon,

modern slavery, and education and information on our sustainability

strategy, Ocado Unlimited.

• TheESGCommittee,supportedbyacross-functionalworkinggroup,

collaborates with leaders across business segments to ensure there

isengagementwithESGissues.

Outcomes from engagement Priorities for 2024

• Approval by the Board of the Net Zero Roadmap.

• Launched employee questionnaire to enable us to collect employee

carbon footprint data.

• Started a project to switch to electric vehicles (“EVs”) in our fleet

(seepage76).

• Progress with the delivery of the Net Zero Roadmap approved in 2023.

• Analysis of our supply chains to identify further opportunities to reduce

our Scope 3 emissions.

• Improve our external reporting, maturing the control environment for

ESGdata,andadoptaplantomeetnewregulatoryrequirementsover

the coming years.

• Explore ways to improve the carbon footprint of our buildings.

• Set more granular Net Zero milestones and ways to measure progress.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Section172(1)Statement

The likely consequences

of any decision in

the long term

The Board recognises that

decisions taken today will affect

the long‑term success and

sustainabilityoftheGroupand

decision‑making is made within

the context of the long‑term

strategyoftheGroup.TheBoard

held a three‑day strategy meeting

this year to consider the long‑term

strategicdirectionoftheGroup

and the short‑ and medium‑term

steps to achieve this, including

the five‑year plan to increase

profitability and improve cash flow.

The Board receives regular reports

from across the business on

performance, financing and

the implementation of strategy,

as well as updates on external

factors. These factors feed into

discussions on strategy and

setting priorities to ensure that

the potential impact of decisions,

particularly in the long term, are

understood and considered.

The Board oversees the culture

oftheGroupandtheframework

of governance, risk management

and internal controls to ensure

that the focus on long‑term

success is embedded across

the business where

decision‑making is delegated.

Read about our business model

and strategy on pages 18 to 21

The desirability of

maintaining a reputation

for high standards

of business conduct

The Board is responsible for

setting and monitoring the culture,

values and reputation of the

Groupandensuringtheculture

encourages our people to adhere

to our values and do the right

thing, through responsible

businessconduct.Maintaininga

reputation for high standards of

business conduct is an essential

aspect of this responsibility. Our

Code of Conduct, updated in

2023, sets out the principles of

how we expect everyone who

works with or represents the

Grouptobehaveanddobusiness

and the Board reviews and

approves policies that support

good business conduct. The Board

receives quarterly reputation

reports with a headline score

assigned to each of investors,

business media, partners,

employees and society. The

scores are based on metrics such

as share price, volume of buyers

and sellers, media coverage, and

partner scorecards. The Board

also receives biannual compliance

reports, including issues raised

through Speak Up, our confidential

whistleblowing hotline, and our

internal control and risk

management framework includes

regular reporting to the Board.

Other ways in which the culture

oftheGroupismonitoredbythe

Board are discussed on page 126.

Read more in our TCFD report

on pages 82 to 102

Directors’ duty to promote the success of the Company

During the year, the Directors acted in the way they considered, in good faith, would be most likely to promote the success of

theGroupforthebenefitofitsmembersasawhole,withregardtoourstakeholdersandthematterssetoutinSection172(1)

oftheCompaniesAct2006(“Section172(1)”).

The Board recognises its responsibilities to all stakeholders and the Directors endeavour to ascertain and consider the

interests and views of our stakeholders, particularly as part of its discussions and decision‑making at Board meetings.

The Board strives to balance the competing priorities and interests of the Company’s stakeholders but is aware that not

every decision will result in each stakeholder’s preferred outcome.

ThedutiesunderSection172(1)arehighlightedateachmeetingandBoardandCommitteepapertemplatesincludeasection

onSection172(1)matterstoensuretheseareconsideredandanypotentialimpactonstakeholdersofproposalssubmitted

totheBoardishighlighted.TheapproachoftheBoardinconsideringthefactorssetoutinSection172(1)initsactions,

discussions and decision‑making is set out below.

OCADO GROUP PLC Annual Report and Accounts 2023

Our stakeholders:

the interests of our

employees and the

need to foster business

relationships with

key stakeholders

and act fairly as

between members

The Board recognises the

importance of our key

stakeholders to the long‑term

successoftheGroupandthe

need to maintain strong and

constructive relationships. The

graphic to the right summarises

the value of our key stakeholder

relationships for our stakeholders

and us. The Board ensures that it

understands the views and

interests of our stakeholders to

enable effective consideration

of these, in decision‑making and

setting our strategic priorities.

A key consideration in the Board’s

decision‑making is the potential

impact of decisions taken on key

stakeholders and it is the case

that some actions will not have

a positive outcome for all

stakeholders so competing

interests must be balanced, for

example ceasing operations at

the Hatfield CFC earlier this year.

Read more on engagement

with our key stakeholders

on pages 60 to 63

Two-way constructive relationships with

our stakeholders provide value both for

our stakeholders and for Ocado Group:

ThefollowingexamplesdemonstratehowtheBoardconsideredSection172(1)mattersaspartofBoarddiscussions

and decision‑making.

The Key Board focus areas during the year can be found on pages 123 and 124

In April 2023, the Board took the decision to cease

operations at our oldest CFC in Hatfield, opened in 2002.

• A key consideration for the Board was the impact

that ceasing operations would have on our employees

working at the site. A focus on offering opportunities

for redeployment was important in mitigating the impact,

with almost half of those employees affected remaining

at Ocado working at other facilities, primarily the

new Luton CFC which opened in September 2023.

• The decision was based on the expectation that it

will bring longer‑term financial benefit and improved

productivity due to the greater efficiency at our

newer CFCs using OSP technology and the introduction

ofcertainRe:ImaginedtechnologiessuchasOGRP.

• The Board considered the environmental impact of

ceasing operations at Hatfield and using other CFCs,

primarily Luton, to fulfil the lost capacity. The Luton CFC

has better energy efficiency and a lower carbon footprint.

Stakeholders:

s172:

Case study: Ceasing operations at the Hatfield CFC

Link to section 172 icons:

The likely consequences of any decision in the long term

The interests of our employees

The need to foster business relationships with

key stakeholders

 TheimpactoftheGroup’soperationsonthecommunity

and environment

The desirability of maintaining a reputation for

high standards of business conduct

The need to act fairly as between members

Stakeholder icons:

Our people Partners

Suppliers

Investors

Environment and society

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Section 172 Statement continued

Stakeholders:

s172:

Case study:

Agreement to provide fulfilment technology

to McKesson Canada

In November 2023, Ocado agreed a deal for OIA to provide automated

fulfilmenttechnologyatadistributionsiteforMcKessonCanada,a

pharmaceutical distributor.

• The Board considered the long‑term consequences of the agreement

in broadening the provision of our technology into a new sector,

todemonstratetheviabilityofOIAandsupporttheGroup’slong-term

strategy in growth beyond the grocery market.

• The Board considered the impact on our existing partners, noting the

potential for new learnings from a different market sector that could

benefit them but also the need to assure them of our focus on continuing

to provide first‑class solutions tailored to the grocery sector.

• The Board considered the minimal capital requirement, with upfront fees

during the construction process, and the forecast to be cash and EBITDA

positive in FY25 to provide a positive value for our stakeholders.

Case study:

Acquisition of 6 River Systems

In June 2023, Ocado acquired 6RS, a collaborative autonomous

mobilerobot(“AMR”)fulfilmentsolutionsprovidertothelogistics

andnon-groceryretailsectors,basedinMassachusetts,USA.

• The decision to acquire 6RS was based on the potential for

increased revenue as well as the alignment of 6RS’s products

and experience in non‑grocery sectors with the development

of OIA offering and the potential for this to support the long‑term

strategy in growth beyond the grocery market.

• The Board considered the impact of the new acquisition on our

employees and the need to ensure that the new employees joining

as part of the acquisition would integrate well. It was considered

that the integration of employees from our previous acquisitions

ofMyrmex,KindredandHaddingtonprovidedatemplateto

ensure this would be a smooth process.

• The Board considered the existing client base and revenue stream

from the business to provide a positive value for our stakeholders.

Stakeholders:

s172:

Link to section 172 icons:

The likely consequences of any decision in the long term

The interests of our employees

The need to foster business relationships with

key stakeholders

 TheimpactoftheGroup’soperationsonthecommunity

and environment

The desirability of maintaining a reputation for

high standards of business conduct

The need to act fairly as between members

Stakeholder icons:

Our people Partners

Suppliers

Investors

Environment and society

OCADO GROUP PLC Annual Report and Accounts 2023

Responsible Business Report

Our purpose is to reimagine

the world of distribution,

fulfilment and ecommerce

to drive outstanding

customer outcomes. It is

this premise that helps

shape our approach to

responsible business.

Our initiatives in developing

our people’s skills for the

future, driving efficiencies

in our use of natural

resources and ensuring

platform resilience, while

remaining innovative, will

all contribute to building

profitable, scalable growth

for us and our partners.

Responsible business

governance

The Board has had regular discussions

on environmental, social and

governance (“ESG”) topics throughout

the year, including our Net Zero

Roadmap, responsible sourcing, and

responsible artificial intelligence (“AI”).

The Board also received training during

the year on ESG’s role in corporate value

creation and the Audit Committee

received training on upcoming ESG

reporting regulations. The Board

approved the Net Zero Roadmap

at the end of FY23.

Our ESG Committee defines and

oversees the responsible business

strategy and ensures it is successfully

implemented. The Committee is

chaired by our Group General Counsel

and Company Secretary, Neill Abrams,

with additional sponsorship by our

Chief Financial Officer, Stephen

Daintith, and comprises leaders from

across the business who are key to

Ocado’s strategic and operational

success. It meets quarterly in a

decision-making capacity and reports

to the Board. In 2023, the Committee

endorsed the initial findings of the

Climate Physical Risk Assessment and

approved the Net Zero Roadmap. The

Committee underwent specific training

on governance and executive oversight

concerning climate-related reporting

during the year.

Our senior leaders are incentivised to

deliver on our sustainability ambitions

as part of their remuneration (see page

161 of the Directors’ Remuneration

Report for more information).

For more information on responsible

business governance at Ocado,

see our Task Force on Climate-Related

Financial Disclosures (“TCFD”) report

on page 83 to 85.

Our approach and priorities

Conducting business responsibly,

with stakeholders at the heart of our

decisions, is core to our strategy and

success. For our business to scale

soundly it must be built on firm

foundations, and that includes

responsible governance of the issues

that are material to our stakeholders.

We believe that the 14 topics that

were identified in our last materiality

assessment (2020) remain relevant

to our business today and continue

to organise our activities around

these topics.

Progress in FY23

We review the progress during

the year under our three headline

themes in the remainder of this

chapter and in our TCFD report, which

outlines our approach to managing

the impact of climate change on our

business in more detail (see pages

82 to 102).

Achievements included:

• the development and approval

of our Net Zero Roadmap covering

Scope 1, 2 and 3 carbon emissions;

• more in-depth analysis and

assessment of the long-term

implications of climate change

on our business;

• new initiatives and programmes

for leadership and management

development; and

• new diversity targets launched

for our senior leaders and their

direct reports.

Materiality analysis

Importance to stakeholders

Ethics of artificial

intelligence and

robotics

Business ethics

and governance

Energy efficiency and

carbon emissions

Food waste

management

Operational waste

management

Equipment

lifecycle and

circularity

Occupational health,

safety and wellbeing

Employee diversity

and inclusion

Community

engagement

Talent

attraction

and

development

Product quality

and governance

Data

privacy

management

Responsible

sourcing

Cybersecurity

Business impact HighLow

1213

1. Energy efficiency and

carbon emissions

2. Food waste

management

3. Operational waste

management

4. Equipment lifecycle and

circularity

Environment and

natural resources

5. Talent attraction

and development

6. Employee diversity

and inclusion

7. Occupational health,

safety and wellbeing

8. Community

engagement

Our people and

skills for the future

9. Product quality

and governance

10. Business ethics

and governance

11. Ethics of artificial

intelligence

and robotics

12. Data privacy

management

13. Cybersecurity

14. Responsible sourcing

Platform resilience

and innovation

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Our focus areas

Our people are core to our success

and we recognise that we recruit in a

competitive market for the best talent.

We aim to make Ocado an attractive

place to work through our training and

career path development, competitive

reward, proactive diversity, equity and

inclusion (“DE&I”) initiatives, and

health and wellbeing actions. During

the year we have set new targets for

increasing female representation

and ethnic diversity amongst our

senior managers.

This year we have actively invested

in the development of our leaders and

management skills through dedicated

training programmes, as a crucial aspect

of talent attraction and development.

Our leaders recognise they play an

important role in maintaining our

open and collegiate, engaged,

innovative and entrepreneurial culture.

The energy that comes from this is

central in supporting and motivating

our employees and their sense

of wellbeing.

Peakon, our employee listening tool,

helps us continually evaluate the

employee experience and monitor

wellbeing. All our people can

confidentially share their views,

and our managers and leaders can

engage and plan action on insights

shared. It measures eNPS across a

range of issues, and thus enables us to

take timely, responsive and focused

action at the local and corporate level.

More information about the specific

measures each business is

implementing can be found below.

Sharing in the success

of Ocado

We are keen that our employees share

in the success of Ocado and we

encourage shareholdings amongst

all our employees globally by granting

Free Shares equivalent to 0.5% of their

salary to those who have completed

six months of service or more, twice

a year. We also provide a Sharesave

Scheme and Buy As You Earn plan

for our employees in the UK, and

an Employee Stock Purchase Plan

to international employees. This

ensures that nearly everyone has the

opportunity to purchase Ocado shares

and be able to invest in our Company.

Talent attraction

and development

Leaders and managers significantly

influence the employee experience,

and play a crucial role in establishing

and sustaining our high-performance

culture. They serve as role models for

their teams and connect our strategic

goals to daily activities, including

demonstrating behaviours and

expectations in line with our DE&I

priorities and supporting our

commitment to the health and

wellbeing of our people.

Responsible Business Report continued

Our people and skills for the future

We employ nearly 19,000 people across Technology

Solutions and Ocado Logistics. Their contribution is

vital in all business areas including developing new

technologies, securing robust patents, driving Partner

Success, operating our CFCs and delivering excellent

service as the face of our Company to UK consumers.

Key:

Ocado Logistics

Technology Solutions

Key:

International

Key:

Male

Female

Not disclosed

18,869

Total number of employees*

* Excludes ORL employees (FY23: 900 employees).

KPIs Target FY23 FY22

Year on year

movement

Employee headcount – 18,869 19,744 -4%

% of female senior managers

40% 32% 36% -4ppts

% of ethnic diversity senior managers

x2 by 2027 5% – –

Employee engagement

(eNPS of Technology Solutions) ^2 19 31 -12

Employee engagement

(eNPS of Ocado Logistics) ^2 6 2 +4

1. “Senior managers” is defined as our Executive Committee and the level below.

2. Our target is to improve the employee experience for all and reduce the eNPS gap of female managers to male

managers by 10 points.

Headcount

by business

4,880

13,989

Headcount

by geography

2,067

16,802

Headcount

by gender

15,109

3,460

300

OCADO GROUP PLC Annual Report and Accounts 2023

Technology Solutions

There is a wide variety of roles and

skills required in our Technology

Solutions business. We employ

nearly 5,000 people across a range

of functions including technology

R&D, design and development,

software and hardware engineering,

sales and marketing, client support

and human resources.

Developing leadership and managerial

capabilities is a top priority in

Technology Solutions as the business

evolves. We are proud that many of

our leaders and managers have been

promoted internally, a strong reflection

of the high calibre of our employees

and the exciting career opportunities

available within the Ocado Group.

In FY23, we focused on two initiatives:

Leader and manager impact

• launched an accredited

Ocado Leadership Diploma

for 53 senior managers;

• invested in targeted talent

development initiatives for 17 senior

leaders (accelerated development

programmes, coaching

and assessment); and

• piloted a new manager

development programme involving

60 managers globally.

Performance and talent enablement

• introduced a digital onboarding

journey for all new joiners;

• supported a 43% increase in new

global assignments through talent

mobility initiatives; and

• completed two pilot cohorts of the

advancing leaders programme,

involving 22 high-potential leaders

(55% of whom have undergone

role changes since participating).

Ocado Logistics

In Ocado Logistics we employ almost

14,000 people across several roles

including CFC warehouse operatives

(where our employees work alongside

our technology and robots), delivery

van drivers and fulfilment planning

functions. We operate in an industry

with a high employee turnover rate

and this dynamic is fundamental to our

approach and priorities as a business.

New joiners undergo a comprehensive

13-week settling-in period, with

tapered responsibilities and targets,

and additional support from their

management teams.

Increased flexibility in working hours is

a key priority for our employees. During

FY23 we extended our choice of roster

patterns, and currently over 20% of

our frontline employees have opted

for fixed shifts or part-time options

of their choice. We plan to further

increase these options in 2024 with

the implementation of our new time

and attendance system.

We also emphasise reward and

recognition. Alongside competitive pay

rates, we offer a variety of additional

benefits. A popular one is the option

for salaried and lunar paid employees

to draw down wages during the month,

which assists them in managing

monthly cash flows. In FY23 we

introduced anniversary reward

payments for our longest-

serving employees.

In 2023 our initiatives included:

• Launch into management: an

internal talent programme designed

for new and aspiring frontline

managers. Currently, there are 48

active participants, with 10% of them

already promoted to managerial

roles this year.

• Senior management development

programme: tailored for site and

department leads. 61 managers

expressed interest and 86% of

them were selected to participate

in the pilot for September 2023 and

January 2024.

• Advancing leaders programme:

three future leaders from our

organisation have successfully

completed this programme

in collaboration with Technology

Solutions.

• A new performance framework:

was rolled out to operational

managers based on three pillars:

1. self-appraisal, 2. manager

feedback and 3. team appraisal.

Case study:

Advancing leaders

programme, supporting

Technology Solutions and Ocado Logistics

The advancing leaders programme is designed to enhance the visibility and

develop the leadership and business capabilities of our future senior leaders.

The initiative involves individuals across the Company including from

under-represented groups taking into account gender, ethnicity, disabilities

and international location.

The programme spans six months and combines education, exposure and

practical experience. Participants engage in developmental courses covering

self-awareness, communication, influence and strategic thinking and the

learning is supplemented by group coaching sessions and a 360-degree

feedback profile. The programme also includes a hands-on business

challenge where participants address real business problems or

opportunities and gain exposure by presenting their solutions to members

of our Executive Committee. Throughout the programme, participants

receive guidance from a senior mentor or coach and maintain continuous

connections with their cohort.

Following the success of the pilot groups, we have three further cohorts

committed in 2024, for a total of 42 participants. We intend to commit

to at least two cohorts of this programme per year.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Employee engagement

Employee engagement is an important

measure of how well we are doing

at attracting and retaining the best

talent. Our Technology Solutions

business went through a significant

restructure in the last quarter of FY23.

We recognise this was a difficult time

for all our employees and thus

it is unsurprising that employee

engagement in this quarter dropped

significantly (from 31 to 19), after rising

steadily in the previous three quarters.

We are committed to reversing this

trend in FY24 and have included it

as a KPI in the Annual Incentive Plan

(“AIP”) targets for senior leaders (see

the Directors’ Remuneration Report

on pages 154 to 203).

Caring for and respecting our

employees is at the heart of our

approach and reflective of our culture

and values in Ocado Logistics. We

believe this was a key reason why

we retained almost half of our staff

from the closure of the Hatfield CFC

and for the continuing improvement in

the eNPS of 6 (FY22: 2) despite the

uncertainty caused by the CFC

closure. It also reflects the ongoing

work in developing effective listening

and communication channels with our

employees. We use monthly local

action groups for site management

teams to address site specific issues,

complementing existing network-wide

channels such as Peakon, “hot topic”

forums and the Ocado Council

(a network of elected employee

representatives who feed back

challenges and successes to

senior management and cascade

information to their employees).

Diversity, equity

and inclusion

Our Board recognises the importance

of DE&I, both in the boardroom and in

the organisation. You can read more

about Board changes in the year in

the Corporate Governance Report on

pages 116 to 137 and about our

progress towards our diversity

targets in our Board Diversity Policy

on pages 142 and 143.

In FY23, we furthered our

commitment to DE&I across both

business segments. We introduced

two diversity targets for our senior

leaders and their direct reports

combined with a target of 40% women

representation and a target to double

the number of ethnic minority talent.

Our gender data reflects the industries

we are in, but we are confident of

making progress towards increased

female representation throughout the

business through the initiatives

highlighted below.

We implemented recommendations

from the 2022 in-depth audit and

external benchmarking process, using

the government backed UK National

Equality Standard (“NES”). We were

delighted to achieve certification

during FY23, reflecting our progress

and improved performance against

35 competencies. Key initiatives that

supported our certification included:

1. Improving people data insights

We are enhancing our understanding

of our workforce through detailed data

analysis. By delving into engagement,

progression and mobility data, we can

empower our leaders to identify

potential issues related to attraction,

development and fairness. This

approach ensures accountability in

addressing these concerns effectively.

2. Diversifying talent pathways

We are creating new pathways,

fostering diversity through reskilling

initiatives, emerging talent

programmes and targeted recruitment

and talent mobility efforts. Additionally,

we are widening our reach by

promoting education and skills

development, preparing our

employees for future opportunities.

3. Creating an inclusive culture

Our focus is on fostering inclusivity

at every level. First, by developing

inclusive products, policies

and programmes, we ensure that our

environment is welcoming for

everyone. Second, we support and

promote flexible working options and

clear routes for career progression.

We continue to advocate for minority

groups and communities, championing

their voices and providing essential

support. We are delighted to continue

being a signatory of the Armed Forces

Covenant – which means we are

accredited as being a supportive

employer for armed services veterans.

Reporting in alignment with

UK Listing Rules provisions

We report our Board and executive

management (our Executive

Committee) diversity data as at

3 December 2023 in accordance with

the UK Listing Rules disclosure

requirements and our progress in

meeting the UK Listing Rules board

diversity targets.

The representation of women on the

Board currently meets the UK Listing

Rules target of 40%. We also meet the

requirement of having at least one

Director from an ethnic minority

background on the Board. Although

the data in the charts below is as at

3 December 2023, from 2 February

2024, our representation of women on

the Board was 50%, following Neill

Abrams and Mark Richardson stepping

down from the Board.

Responsible Business Report continued

Number of

Board

members

% of

the Board

Number of

senior

positions

on the

Board

Number in

Executive

Management

% of

Executive

Management

Gender representation as at 3 December 2023

Male 7 58% 4 7 87.5%

Female 5 42% 0 1 12.5%

Not specified/prefer not to say – – – – –

Breakdown by ethnic background as at 3 December 2023

White British or other White

(including minority-White groups)

9 75% 2 6 75%

Black/African/Caribbean/Black

British

1 9% 0 0 –

Other ethnic group 2 16% 2 2 25%

Not specified/prefer not to say – – – – –

1. Under the Listing Rules, “Executive Management” is defined as the executive committee or most senior

executive or managerial body below the board, including the company secretary but excluding administrative

and support staff.

OCADO GROUP PLC Annual Report and Accounts 2023

Although in the year we have not met

the target of having at least one senior

Board position being held by a woman,

we are pleased to report that the

Chairs of our Audit Committee and

Remuneration Committee are women.

The Board is committed to continued

enhancement of its diversity, as set out

on pages 142 and 143. For the wider

workforce, 2023 was the first year we

have collected ethnicity data of our

employees and not all senior managers

disclosed their ethnicity data.

Approach to data collection

Gender and ethnicity data relating to

the Board, executive management and

Company Secretary is collected on

an annual basis as part of our Director

year-end confirmation in a confidential

questionnaire. The individual self-

reports (or specifies they do not wish

to report) such data. For ethnicity, the

self-reported criteria align to the

classifications as designated by the UK

Office for National Statistics. The same

data was reported as part of the annual

Parker Review submission.

You can read more about our work to

ensure gender equality in our UK

workforce in our Gender Pay Gap

Report on our corporate website,

www.ocadogroup.com.

Occupational health,

safety and wellbeing

Health and safety

Ensuring the health and safety

of our people is a key priority and

supports our ambition to attract,

retain and empower the best people

in an industry where talent is a

key differentiator.

We manage a range of safety issues

across the business. Our employees

who work in our UK CFCs and across

the driver delivery network are a key

focus given it is largely physical work.

Our Customer Service Team Members

are among the groups most vulnerable

to injuries. We monitor injury reports,

which helps us identify steps to

reduce future injuries, including

changes to working procedures,

such as van loading.

Using this information, we have also

collaborated with our vehicle body

supplier to make vehicle design

modifications to minimise potential

risks as we renew our vehicle fleet.

We use reporting and data to

identify trends and areas that

need improvement.

These metrics encompass accident

frequency rates, closeout rates for

audit, and investigation actions. We

also undertake senior management

reviews of serious incidents and

leadership tours in our CFCs to help

support our focus on improving our

performance.

Fire safety was an area of focus

in 2023, with a range of risk

mitigations embedded into the

business. A significant area of change

was the introduction of metal totes into

UK CFCs. The roll-out of fire retardant

metal totes, which commenced in

2023, will help significantly reduce

our fire risk in CFCs over time.

Wellbeing

Including our people in the design

and implementation of our initiatives

is central to our approach to wellbeing

and ensures we provide support that

is relevant and valuable to our people.

A recent example of this is how we

have developed our menopause and

fertility policies, which were designed

by leveraging an internal working

group of our global employees

across both Technology Solutions

and Logistics. We are focusing

on three key initiatives:

1. Improving people data insights

This is a common objective alongside

our DE&I initiatives to enable greater

insight on the health and wellbeing

of our people. It also enables leaders

to spot potential issues and take

accountability for addressing them,

whilst influencing broader

organisational change.

2. Creating a culture that supports

the wellbeing of our people

Creating an environment where the

health and wellbeing of our people are

prioritised is a critical part of building

trust. This includes focusing on

leadership, developing and supporting

management capability and driving

consistency in the day-to-day

employee experience.

3. Enabling access to wellbeing

support that considers the

“whole person”

Our aim is to develop and provide

products and services that consider

the whole person, improve the

understanding and accessibility of

existing products and services and

listen to our people when evolving how

we support their health and wellbeing.

Case study:

Ensuring diversity in our Emerging Talent programme

This programme is focused on attracting diverse individuals from universities,

student societies and partnerships that concentrate on low socioeconomic

backgrounds, gender and ethnicity. It is open to individuals across Ocado,

enabling our people to move between divisions. This year we piloted a

“Recode Your Career” initiative to provide further reskilling and career growth

opportunities. We received over 500 applications and hired a 50:50 balance

of men and women onto the programme. Our partnerships include working

with Bright Network, 93% club and career experts including Academy, which

are key to helping us achieve our DE&I goals in emerging talent.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Responsible Business Report continued

Case study:

Equity mentoring

programme

Since 2019, we have partnered with

Moving Ahead to support the growth

of women and ethnic minorities

within our organisation. Feedback

from the most recent cohorts has

been overwhelmingly positive, with

98% of those surveyed suggesting

that we continue with the programme.

Mentors have expressed that they

found the experience inspiring,

thought-provoking and rewarding.

Likewise, mentees have found the

perspectives and support from

individuals outside of Ocado

to be particularly valuable.

For the 2023/24 programme,

we are committed to increasing

our participation with 50 mentors

and 50 mentees taking part.

To enhance our measurement of

success and return on investment,

we have developed additional

impact and engagement metrics.

Participants receive support through

workshops and resources provided

by Moving Ahead. Additionally, our

internal Career Development and

Inclusion specialists will conduct

regular individual check-ins to ensure

continuous support and progress.

Case study:

Community

engagement with

Great Ormond

Street Hospital

We collaborate on a number

of technology and innovation

projects with Great Ormond Street

Hospital and Charity (“GOSH”).

Throughout the past year, our

employees supported projects with

both the Hospital and Charity on a

pro-bono basis. We firmly believe

this new form of cross-sector

collaboration can leverage the

skills, experience and expertise

of industry to help solve pressing

challenges in another sector.

Some specific areas of

collaboration include:

• Support for GOSH’s

ground‑breaking ‘Clinical

Intelligence Unit’, charged with

finding efficiencies in hospital

operations. Ocado’s Data team

has advised on the Unit’s set-up,

structure, analytics best practices

and governance since February

2023. We also seconded an

Ocado Data Analyst to the Unit at

the end of 2023.

“The analytics expertise that

the Ocado Technology team has

provided has been invaluable to

us as we set up our own internal

analytics function. They have

given us great insight and

constructive feedback based

on their extensive experience

to shape our team and the way

we run projects. We are now

accelerating delivery of

meaningful analytics to further

our data-driven decision-

making across GOSH.”

– William Bryant, Clinical

Intelligence Unit Lead, GOSH

• Advising the Trust’s Pharmacy

team. We have conducted

analysis on GOSH’s pharmacy

data to recommend optimum

stock levels to maximise drug

availability, while decreasing the

cost and environmental impact

of “purge” i.e. disposal of expired

items. This draws on Ocado’s

experience in demand forecasting

using deep neural networks.

• Chairing the Charity’s Innovation

Advisory Group. Ocado chairs

the Group and brings an external

perspective to the Charity’s future

fundraising and internal change

initiatives. We offer advice

on technology and innovation,

including data strategy

and AI opportunities.

Specific actions to support our

progress in FY23 included:

• signed the Leadership Pledge

coordinated by the Global Business

Collaboration for Better Workplace

Mental Health and joined

the MindForward Alliance;

• expanded the Mental Health

Champion Framework that was

launched in 2022 as an internal

global network of individuals to

enable peer-to-peer support,

adding 11 new champions globally

for Technology Solutions and

78 for Logistics;

• designed and launched a

foundational mental health course;

• launched a new wellbeing

programme, providing both proactive

and reactive wellbeing support to

our people, including counselling.

1,256 employees have registered

on the site which has in turn

managed 131 Employee Assistance

Programme cases.

Community engagement

We continue to further develop our

community engagement methods and

our collaboration with GOSH shows

one example of how our work with

GOSH and engagement have provided

such support (see case study).

OCADO GROUP PLC Annual Report and Accounts 2023

Progress in FY23

In FY22, we commissioned Anthesis

Consulting Ltd to assess the carbon

intensity of fulfilling 1kg of groceries

via the Ocado model versus the

equivalent operations in a store-based

network. The findings were critically

reviewed by an independent panel of

experts and delivered in 2023.

This year, Anthesis completed a

Carbon Efficiency Study of our CFCs.

This has confirmed that our OSP model

is already significantly more carbon

efficient than equivalent online grocery

fulfilment in typical store networks,

up to the point at which orders

are dispatched.

We are very proud of this but there is

more that we can achieve: our newest

innovations, such as the 600 series

bots and grid, are lighter and more

energy efficient than the previous

500 series bots and should help

improve this even more.

Environment and natural resources

A core tenet of our business model is delivering operating

and capital efficiencies. The greater our efficiency gains

the lower our environmental impact and the more

compelling our OSP platform becomes for our partners.

Our KPIs to monitor progress in this area are the carbon

footprint of our operations and food waste in Ocado Retail.

Key achievements during the year have included

developing our Net Zero Roadmap, reducing food

waste and driving further operating efficiencies

across the platform. All these enable an efficient

use of natural resources.

Case study:

Customer Fulfilment

Centre (“CFC”) carbon

efficiency

Anthesis’ assessment, based

on data from our UK operations,

found that the carbon footprint

of Ocado’s CFCs, up to the point

at which orders are dispatched,

is about three times smaller than

the supermarket online delivery

and supermarket click and

collect cases. The majority

of the difference is due to

the higher carbon footprint

of energy consumed in stores,

infrastructure differences

between stores and Ocado

CFCs, and the transport required

between upstream distribution

centres and store networks.

The carbon footprint of the

last mile was found to vary

substantially depending on the

type of delivery van used (as well

as local consumer habits).

We continue to work on

improving our data quality

in this area.

Key assumptions:

• Functional unit is “fulfilment of

1kg of groceries in preparation

for delivery or collection to

consumer householders”.

• OSP and traditional models

assume the same split of

ambient, refrigerated and

frozen and infrastructure

impacts allocated based

on 30 years’ life.

• OSP model is based on data

collected from the Erith CFC

(operating in 2020) and

assumes 500 series bots

in operation.

Supermarket

Regional

Distribution

Centres

CFC’s

Suppliers &

Wholesalers

Customer’s home

Online

delivery

Click

and

Collect

Delivery

Exclusions: production of groceries,

last mile, customer’s home,

secondary and tertiary packaging,

and end of life emissions

Stores

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Responsible Business Report continued

Energy efficiency and carbon emissions

We are committed to doing our part to enable society to transition to a net zero

economy and remain committed to be Net Zero in our own operations (Scope 1 and

2 GHGs) by 2035 and in our value chain (Scope 3 GHGs) by 2040.

KPIs

FY23

FY22

Year-on-year

movement

Scope 1 GHGs (tCO

1,3

93,293 96,386 -3.2%

Scope 2 (market-based) GHGs (tCO

887 815 8.8%

Scope 3 GHGs (tCO

154,962 226,411 -31.6%

Scope 1 & 2 GHGs (market based) (tCO

e) 94,180 97,201 -3.1%

Scope 1 & 2 GHG intensity

(market based) (tCO

e per 100,000 orders)

348 379 -8.2%

Total energy use (MWh) 496,956 491,834 1.0%

Renewable energy (%) 20.0 21.3 -6.1%

Energy intensity (MWh per 100,00 orders) 1,835 1,916 -4.2%

1. Scope 1 GHGs excludes Ocado Retail Scope 1 GHGs = 120 tonnes.

2. For a breakdown of Scope 3 GHGs by category, see page 102.

3. This data has been independently verified by Carbon Trust according to their proprietary standard, see our

corporate website www.ocadogroup.com for the FY23 certificate. For our full SECR disclosure see page 102.

Our Scope 1 and 2 GHG footprint

has decreased by 3% this year as

we embarked on delivering our

Net Zero commitments. This has

been achieved through a number

of initiatives including:

• Reducing the use of dry ice by

optimising the temperature and

packing efficiency of the freezers

in our warehouses;

• LED lighting: the roll-out of LED

lighting has been completed

across the majority of our UK CFCs

and offices;

• Enhancing driving skills and fuel

efficiency: during the year our new

in-cab vehicle training system,

Lightfoot, has undergone successful

trials in Purfleet and Walthamstow.

It has already improved our fuel

efficiency (miles to gallon) by 5%

at these sites. The system was

implemented across all our

delivery vehicles by the end of

November 2023.

• Energy monitoring: we have energy

monitoring at all CFC sites. During

the year we upgraded the energy

monitoring systems at some of our

CFC sites, to provide additional

insight on energy consumption.

The majority of our remaining Scope 1

and 2 emissions are within Ocado

Logistics and we are working closely

with vehicle providers to reduce

these (see case study on page 76).

However, we recognise that most of

our GHG emissions occur in our value

chains (Scope 3), so we will have to

take action throughout our

organisation to deliver further tangible

progress, for example to reduce

the embodied carbon in the

Technology Solutions MHE used

by our global partners.

With a fuller understanding of our

Scope 3 baseline emissions across all

15 categories (see page 102) this year

we developed our Net Zero Roadmap

(see next page). We have identified six

critical areas of activity to achieve our

Net Zero goals, driving a reduction

in carbon emissions from our own

operations and also helping our

partners to reduce theirs. They

cover our full business operations

for Technology Solutions and Ocado

Logistics, reflecting the spread of

our carbon emitting activities.

Our people are key enablers in

integrating our carbon reduction plans

into how we do business. They need

to be carbon literate and feel able to

make sustainable decisions, so we

plan to implement a carbon learning

programme across the Company and

include Ocado’s Net Zero commitments

in our new employee induction

programme. We are also updating our

policies and operating procedures to

encourage, for example, low-carbon

travel and commuting.

We plan to update our Net Zero

Roadmap annually as our programme

identifies and assesses initiatives, in

line with our financial planning cycle.

Case study:

600 series bot

and Mk3 grid

600 series bot – a lighter

and more efficient fulfilment bot

Our super efficient bots pick

groceries from the grids in our

warehouses. We develop them in

house using cutting-edge design

methods, such as topology

optimisation and advanced

manufacturing tools including

3D printers. Unique in the

robotics industry, 3D printing

empowers engineers to create

intricate parts that have high

stiffness at a low weight whilst

also having a high degree of

recyclability. The 600 series bot

is our most recent model, which

will start to be rolled out from

FY24, initially at one of the

current live UK CFCs, and

presents several economic

and operational benefits. These

include a lower build cost with

c.50% 3D printing and total

weight that is three times lighter

than the previous 500 series bot,

as well as lower maintenance

costs and carbon footprint and

higher productivity with almost

no down time and continual

software updates.

Mk3 grid and optimised

site design – lighter and

more energy efficient grids,

installed more quickly

The lightweight design of the

600 series bot allows us to build

lighter grids, in a faster timeframe

and with a shorter installation

time (currently 40% faster than

our previous grid system). Less

material is required and in turn

the grid has a lower cost

(60% reduction) and a lower

carbon footprint (>50% lower

embodied carbon than our

previous grid system).

The Mk3 grid will be deployed

for the first time for new sites

going live in FY25 and beyond.

OCADO GROUP PLC Annual Report and Accounts 2023

2020 2025 2030 2035 2040

Planning:

Carbon analysis

and development

of our Net Zero

Plan

Short-term:

Enablers and

planned

innovations

Medium-term:

Expansion and

optimisation

Longer-term:

The harder to

reach savings

Our Commitment:

100% renewable electricity

sources by 2023

Our Commitment:

Net Zero in our business

operations by 2035

Our Commitment:

Net Zero in our value chain

by 2040

Fleet

Reducing the

carbon impact of

our UK delivery

vehicles

Electric vehicles

from three sites,

driver fuel

efficiency

training

Wider electric vehicle rollout, low

global warming refrigerants, dry ice

replacement, vehicle technology

trials and strategy

Strategic fleet alternatives

deployments

Buildings

Adopting renewable

energy and reducing

usage through

efficiencies

Energy efficiency

improvements

and building

strategy

Transition our sites to low emission

fuel usage

Innovation and investment in the

remaining difficult to decarbonise

areas

Freight

Minimise upstream

transport by

reducing distances

and use of air freight

Data maturity

review and

analysis

Quick wins in decarbonising freight Freight carbon budgeting and management

Product

design

Placing

sustainability at the

forefront of our

product design

principles

Product

circularity and

low carbon

review

Low carbon design and Ocado

Re:Imagined roll-out

Net Zero principles ingrained into product designs and rollout

Procurement

Working with

suppliers to reduce

the impact of the

materials and

products that

we purchase

Do more with

fewer trials and

processes, data

improvements

Rollout supplier requirements Net Zero supply chain

Invest in the remaining, lower volume

and difficult to decarbonise suppliers

People

Enhancing carbon

literacy and

enabling our people

to take sustainable

decisions

Employee

engagement

and skills

Employee engagement and skills Commuting incentives and business travel policies

Other

Ensuring the

enablers are in place

for the enduring

delivery of Net Zero

Investor

engagement,

carbon

budgeting

Investor engagement,

carbon budgeting

Investee engagement,

carbon budgeting

Departmental carbon budgets,

offsetting, insetting and

carbon removal

Our Net Zero Roadmap

was approved by the Board in November 2023.

We have identified six critical areas of activity to achieve our Net Zero goals, driving a reduction in carbon emissions from

our own operations and also helping our partners to reduce theirs. We are also undertaking enabling activities to support

our progress in these areas.

Near‑term actions

Our near-term actions focus on what we can do to reduce our Scope 1 and 2 emissions. We have identified over 40 initiatives

such as trialling electric vehicles as we start to transition our delivery fleet, installing solar panels and optimising cloud storage.

Many of these actions are already in progress and we have clear visibility on their cost and how they will drive down emissions.

Medium‑term to long‑term actions

A more significant reduction in emissions beyond the impact of our near-term initiatives is required to achieve net zero.

These include the transition of our vehicle fleet to zero emission vehicles, embedding sustainability by design into our

processes, adopting carbon-driven procurement and raising supplier engagement. Some of these will also require the

development of new carbon-efficient technology, such as widespread availability of green steel and improvements in

performance of zero emission delivery vehicles.

1. Ocado Retail, as an independently governed business, has its own net zero roadmap.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Case study:

Electric vehicles

We are working with our

UK partners to reduce

our combined carbon

footprint by enhancing

the fuel efficiency of

the last mile fleet.

These improvements

will be implemented in

the following ways:

Following the completion of an

initial trial, we approved capital

expenditure to significantly

upgrade the electricity

infrastructure at three sites. These

upgrades will facilitate the

increased deployment of more

EVs across our network by helping

manage the increased demand in

peak power.

We have collaborated closely with

vehicle manufacturers in the last

year, conducting trials of their new

fully electric models using the

Ocado-designed delivery system.

The number of vehicles we can

deploy is restricted by the current

limitations of EVs range between

charges.

We will increase our use of EVs or

alternatively fuelled vehicles as the

technology evolves and will

continue to monitor developments

closely – we are currently working

with manufacturers to assess

hydrogen fuel cell vehicles.

Responsible Business Report continued

Food waste management

Food loss and waste are a critical

global challenge with wide-reaching

environmental, social and economic

consequences that ultimately impact

us all through a mix of excess carbon

emissions, higher priced food, food

poverty and financial loss. In the UK,

it is estimated that more than 10 million

tonnes of food waste were produced in

2021 across the entire UK food chain.

Grocery retailers, as key touchpoints in

the supply of food, play an important

role in helping reduce food waste

through improving operational

processes, working with suppliers

and educating consumers to adjust

behaviours. We help all our partners

through a mix of sophisticated

technology (that optimises inventory

management, the fulfilment chain and

the webshops). We report the food

waste of our 50% JV Ocado Retail

(“ORL”) here, as our most direct impact

and exemplar of what is possible.

FY23

FY22

Year-on-year

movement

Food waste

(% of Ocado

Retail sales)

0.7% 0.9% 22%

decrease

22%

decrease in food waste as

% of Ocado Retail sales

OCADO GROUP PLC Annual Report and Accounts 2023

How Ocado Retail is

tackling food waste

ORL’s goal is to reduce food waste

tonnage by 20% by 2025 and 50% by

2030 from a 2022 baseline. This will be

achieved in a mix of ways without

comprising our offer and broad range.

ORL actively manages its food waste,

with 72% of unsold food redistributed

through our community food partners,

the Company shop and the Felix

Project which distributes to charities,

schools and the vulnerable in society.

Inedible food is sent to anaerobic

digestion, which creates energy

that powers the Dordon CFC.

We will improve food waste through

improving processes such as timely

and accurate data collection, real time

scanning of returns, focusing

employees on quick turnarounds

and the avoidance of packaging

contamination. In the very short term

we have goals to identify data at a

more central level to help identify more

opportunities for redistribution and

recovery of unsold food.

Further out, we plan to change

processes to improve the proposition

that is returned to stock, reduce

customer refusals by calling ahead

when orders have not been edited,

continue improving our on-time

deliveries, reducing substitutions and

working with our partners on freshness

and product life.

At the customer level we are beginning

to optimise more of the capabilities

of OSP in our webshops. These now

enable ORL to execute “flash sales”

and discounts at a local level and are

showing encouraging results. Longer

term, reducing food waste will be a

continuous process of improvement.

There will be more to gain from OSP:

increased accuracy, improved

efficiency, enhanced predictive

capabilities, and a deeper

understanding of our customers’

habits at an individual level.

All of this will provide us, our suppliers,

and our customers with more insight,

helping us to adjust our behaviours,

optimise inventory levels, and drive

down food waste, all while still

delivering excellent fresh products

to our customers.

The role of OSP in

tackling food waste

Beyond the UK, OSP has a key role in

helping our international partners

optimise their online grocery offerings,

thus playing a role in driving down their

food waste too. The complete suite of

OSP products maximises operational

efficiencies and fulfilment, drives new

customers, helps build loyalty through

personalisation and brings increased

insight into data, actions and

outcomes. We see regular

improvements and we take these

learnings to improve our service,

product and offering. As we scale as

a global technology solutions provider,

our ambition is to enable each of our

OSP Partners to reduce food waste in

their respective markets and we look

forward to reporting on our progress.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Responsible Business Report continued

Platform resilience and innovation

Data privacy management

We are committed to data privacy

as we collect and process significant

volumes of customer data to assist our

Partners in fulfilling orders. Our quality

improvement programme ensures

adherence to data privacy laws and we

integrate data privacy obligations into

our organisational culture. We employ

the EU General Data Protection

Regulation consistently across

all Ocado entities and necessary

considerations are made for

derogations, exemptions, and specific

requirements required by local laws.

Central to our approach is robust

governance and oversight. We operate

a Federated Computational Data

Governance model. Our approach

applies smart automation, low or

no-friction solutions to ensure that we

maintain oversight of – and governance

controls over – the huge volumes

of fast-moving data from all client

operations, and our own robotic

installations.

We have a Personal Data Committee

which is accountable to the Audit

Committee. Its role is to bolster and

steer the data privacy governance

agenda, providing assuring to the

Executive Committee of the effective

data privacy governance and best

practice mechanisms in place. Topics

covered during FY23 included findings

from annual data privacy compliance

audits, changes in data privacy

legislation and how this will impact

Ocado. Every employee, including our

Executive Committee, undergoes

annual data privacy and security

training.

Our Data Protection team is led by a

Data Protection Officer. Each business

unit has an appointed Data Privacy

Champion who focuses on privacy

matters within their department, in

addition to their regular duties, acting

as ambassadors to promote privacy as

a fundamental organisational concept.

Over the past 12 months, we

concentrated on several key areas:

• Changes in the legal landscape:

keeping abreast of developments

with the UK’s new data protection

legislation, the EU Artificial

Intelligence Act, the new EU-US

Data Privacy Framework (“DPF”) and

UK-US data bridge to understand the

practical implications for Ocado.

• Expansion to new jurisdictions:

continuing to adapt our framework

for operating OSP in new countries

such as South Korea.

• Streamlining compliance processes:

The Data Protection team

collaborated with employees in

Information Security, Procurement,

and the Commercial team to

streamline due diligence practices,

incorporating feedback from Data

Privacy Champions and other

stakeholders.

Technology is at the heart of Ocado’s business. Providing a

robust and scalable platform for our partners, underpinned

by strong governance, critical information and data-related

risk management, is central to our ongoing success. We

are focused on proactive handling of material issues of data

privacy, cybersecurity, product governance, business

ethics and governance (including the ethics of artificial

intelligence (“AI”) and robotics) and responsible sourcing.

This approach is essential to sustaining our leading service

to clients and partners throughout our Technology

Solutions and Logistics operations. Vigilance in managing

these topics and a strong governance oversight are crucial

to maintaining our operational integrity and upholding

our commitment to delivering exceptional service.

OCADO GROUP PLC Annual Report and Accounts 2023

Cybersecurity

Cybersecurity & Data remains a Group

principal risk for Ocado, and we are

committed to safeguarding our data

and assets. We recognise the

ever-changing threats and understand

the crucial role robust cybersecurity

practices play in maintaining the trust

of our partners and stakeholders.

The landscape is evolving rapidly,

marked by increasingly sophisticated

cyber threats. Cyber criminals are

adopting advanced tactics, including

the use of AI tools, to exploit

vulnerabilities and breach systems.

Ransomware and supply chain attacks

remained major attack vectors in 2023

and will continue to pose significant

threats in 2024 and beyond.

As a provider of critical technology,

we are alert to these issues and

continually enhance our cybersecurity

programme to respond to the evolving

threats. This proactive approach

ensures the protection of both our

own and our partners’ systems from

cyber attacks.

Our comprehensive security

programme covers both our corporate

systems and OSP including:

• a well-defined security governance

framework overseen by the

Information Security Committee,

which feeds into the Audit

Committee;

• a proactive awareness programme

to educate all employees about

cybersecurity risks;

• a dedicated Security Operations

team to detect and respond to

security incidents;

• a vendor assurance programme

to manage third-party cyber risks;

• regular security testing of our

applications and infrastructure; and

• implementing a “secure by design”

approach, embedding security into

our software development process.

In FY23 we created a cybersecurity

strategy in order to define the

cybersecurity risks, priorities and

objectives for the next three years.

The strategy is based on the findings

from an independent review of our

management of cyber risks that was

completed in 2022. The cybersecurity

strategy was reviewed and approved

by the Board.

Our security programme undergoes

annual external audits as part of our

Systems and Organisation Controls

(“SOC2”) certification. SOC2

certification provides our clients

with an independent and standardised

assessment of Ocado’s security

practices, demonstrating our ongoing

commitment to safeguarding their

systems and data. Our SOC2

programme will continue to be

a critical component of our

cybersecurity strategy, ensuring our

security measures remain effective

as the threat landscape evolves.

Ethics of AI and robotics

As early adopters we recognise it is

important to harness the full benefits

of AI and robotics technologies. It is

crucial we develop and deploy them

in a safe, effective and responsible

manner. This approach ensures the

trust of our partners and prepares

us for upcoming regulations.

In FY23, in line with our commitment

to governance, we expanded our

AI and Robotics registry to include

business owners and technical

contacts. This registry now

encompasses AI tools used across

the entire Ocado Group, not just those

developed in Ocado Technology.

Presently, the registry covers over

80 use cases within the Group. We

proactively reviewed specific use

cases to ensure that the relevant

teams have adequate awareness

and support.

Our AI and robotics

commitments

In the past year, we focused on

implementing our commitments

to responsible AI and robotics:

Building awareness:

We launched an internal campaign to

introduce responsible AI and robotics

commitments to approximately 4,000

staff members across Ocado Group.

Our audience included technology

teams and individuals working in risk

and regulatory functions. Raising

awareness among our staff is crucial

because our decentralised approach

requires individuals and teams to take

appropriate actions based on the

specific AI or robotics use case.

Resources and innovation:

We pool internal resources to share

and promote best practices. For

instance, we provide guidance on

breaking down “AI explainability” into

understanding how the system works,

how to control the inputs and how to

interpret the outputs. Additionally, we

developed specific guidance on the

responsible use of generative AI.

Future actions:

Given our operations in the EU we

will continue to monitor the EU AI Act

and take proactive steps to anticipate

any compliance obligations. In this

fast-paced field, we are confident that

our early efforts to promote the ethical

adoption of AI and robotics will position

us favourably in utilising these

technologies for the benefit of

Ocado’s employees, partners and

customers.

c.4,000

employees across Ocado Group

reached with internal campaign to

introduce responsible AI and robotics

commitments.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

From the beginning, we have

had to solve hard problems for

the online grocery industry.

This has challenged us to get

the best out of fast-evolving

technologies including AI

and machine learning (“ML”).

We have invested in and expanded

our Data Function team, building

expertise to leverage AI in our

product development. The majority

of the current 80+ AI use cases

in Ocado focus on two areas:

consumer experience; and efficient

operations. Below are some

examples of how we have applied

AI to improve the performance of our

technology across the OSP suite.

Creating a better

consumer experience

AI applications in our OSP software

help retailers serve core consumer

needs, assisting them to find

products they love, as well as

discover new products they might

Case study:

How AI is used at Ocado

love, as easily as possible. AI and ML

are used to improve the consumer’s

ease of shopping, such as the “Instant

Shop” which automatically generates a

whole order with their favourites,

based on their order history (70%+ of a

grocery shop is composed of products

previously bought). AI and ML are also

used for consumer inspiration such as

“Recommendations” which present

customers with interesting products

bought by others with similar habits.

Driving more efficient operations

For a grocery retailer’s supply chain,

AI powers product demand forecasting

for an average basket to account for

capacity adjustments at the CFC

and last mile capacity, as well as

ecommerce trends (e.g. how

customers build their basket over

time). We use deep learning to find

patterns in these multiple data sources,

which increases the accuracy

of predictions and can also help

to reduce food waste.

In a CFC, On-Grid Robotic Pick

(“OGRP”) (see page 15) stacks

an array of AI solutions on top of

each other, from computer vision,

behaviour cloning, dextrous

manipulation, robotic arm control

and packing strategies to complex

co-ordination and planning in the

space shared between the arms

and the bots. These AI solutions

contribute to OGRP’s capability

of efficiently picking and packing

grocery items without any prior

knowledge of what they are.

For last mile delivery, the OSP

routing optimiser continuously

optimises van routes for a given

delivery zone and date up to the

point when they have to be picked

in the corresponding CFC or store.

It handles two jobs: to efficiently

assign orders to routes; and to

balance the punctuality to the slot

time and adherence to physical

capacity limits, against the number

of vans used and miles driven.

Responsible Business Report continued

Business ethics

Maintaining and building on our

compliance framework is critical to

conduct business at high standards

of honesty and integrity. Regular

reports outlining our plans and

progress, along with compliance

metrics tracking, are provided

to the Board, Audit Committee

and Risk Committee.

Focus in FY23

• Updating our Code of Conduct,

anti-bribery and anti-tax evasion

training modules.

• Launching a new Supplier Code of

Conduct and Procurement Policy,

driving high standards of compliance

from our suppliers.

• Evolving our communication strategy

to enhance awareness of core

compliance topics, including the

launch of a compliance pack

for managers.

• Reviewing several existing

compliance policies to ensure they

remain fit for purpose and

accessible globally.

• Strengthening our fraud compliance

programme by developing a fraud

controls framework.

• Improving our processes for

tracking legislation and sanctions.

Our Code of Conduct

Our updated Code of Conduct

underpins our expanding business by

emphasising the principles guiding our

actions. It encapsulates our mission,

values and policies for our employees.

The Code of Conduct was updated

to include our new values (read more

on page 22) and emphasises the

importance of complying with our

minimum standards and expectations.

These fundamental principles are

reflected in a new Group Supplier Code

of Conduct, ensuring uniform

compliance and high standards from all

our suppliers.

Whistleblowing

We are dedicated to fostering a

culture of openness and transparency

within our organisation. We have a

whistleblowing programme, known

internally as “Speak Up” to facilitate

whistleblowing without fear of

retaliation. This initiative allows

employees and third parties to report

concerns confidentially through phone

or online channels 24/7. The Board and

its Committees receive reports on the

use of the service, how issues were

managed and any mitigating actions.

Anti‑bribery and anti‑corruption

In FY23 we updated our Anti-Bribery

and Anti-Money Laundering Policies to

align with the launch of our new

Procurement Policy. These policies,

along with our public-facing

Anti-Bribery Statement, reiterate our

zero-tolerance approach and outline

the standards expected from those

associated with us. The Anti-Bribery

Policy covers reporting requirements

OCADO GROUP PLC Annual Report and Accounts 2023

related to gifts and hospitality and

outlines key principles for engaging

with third parties and is aligned with

our Procurement Policy.

Our Procurement Policy is reinforced

by new supplier qualifying

requirements, a supplier compliance

statement, and updated onboarding

and sanctions compliance forms.

Our anti-bribery standards and

other compliance requirements are

integrated into our standard

purchasing terms and conditions.

We provide third parties with access

to our Code of Conduct, Supplier Code

of Conduct and confidential

reporting channels.

New employees undergo training

during their induction to help them

identify and manage potential bribery

risks, and existing employees receive

periodic refresher training. In FY23

our bribery risk assessment was

updated to reflect recent changes

in the business.

Modern slavery

We are committed to respecting

and supporting the internationally

recognised human rights encapsulated

in the Universal Declaration of Human

Rights and the International Labour

Organization’s Declaration on

Fundamental Principles and Rights

at Work. We take human rights abuse

seriously, including forced labour, child

labour and human trafficking, and will

not tolerate any such practices in our

operations or our supply chains.

Protecting the human rights of our

workforce and the workers in our

value chains is embedded within

our Human Rights Policy.

In FY23 we began a review of this

policy ahead of relaunching it in 2024.

We have an ongoing commitment to

raise awareness of this issue, to assess

our risks, and to implement appropriate

due diligence within our own

organisation as seen with our

responsible sourcing programme

(see below). Our commitment and

actions during this financial year are

set out in our annual Modern Slavery

Act Statement. Read our most recent

Modern Slavery Act Statement on our

corporate website,

www.ocadogroup.com.

Responsible sourcing

Our responsible sourcing initiative

focuses on driving industry-leading

practices into our global hardware

manufacturing supply chain, to

increase our overall business

resilience. It is primarily directed

towards the high-risk manufacturing

supply chain where we strive to

identify, mitigate, monitor and prevent

supply chain and business risks

through a robust human rights and

environmental due diligence plan.

Our progress in FY23

We have a five-year plan in place for

responsible sourcing within our global

hardware manufacturing supply chain.

We made substantial progress in three

key areas:

1. Developing responsible sourcing

standards and policies:

• We developed a pre-qualification

questionnaire for new suppliers

in strategic sourcing categories.

This aids the identification of

modern slavery risks, the evaluation

of environmental management

(including carbon footprint),

transparency, and pinpoints areas

for further due diligence.

• We published our first Supplier Code

of Conduct for a high-risk segment

of suppliers, covering labour and

human rights, business integrity and

ethics, and management systems

principles and standards. The

Supplier Code of Conduct can be

found on our corporate website,

www.ocadogroup.com.

• We established a mandatory

procedure for embedding

responsible sourcing assessment

into our standard procurement

systems for supplier onboarding.

It forms part of a comprehensive

supplier screening process

encompassing quality, finance,

and data quality assessments.

2. Mapping inherent risk in our

broader supply chains:

• We incorporated analysis from

SupplyShift to better understand

inherent risks in our supply chain

based on location, site type and

industry, and have used this to

determine which suppliers

to prioritise for an onsite

sustainability audit.

• We have continued to use EcoVadis

to assess new suppliers and key

existing suppliers’ sustainability

performance, across all categories

in our Supplier Code of Conduct.

3. Beginning engagement with our

key suppliers:

• We engaged with our key suppliers

representing c.£400m of spend in

our hardware manufacturing supply

chain, including signing our Supplier

Code of Conduct, completing the

pre-qualification questionnaire and

undergoing a risk categorisation.

• We implemented social auditing

requirements for suppliers displaying

high social risk factors, ensuring they

submit an audit of their facilities

by an Ocado-approved auditing

body before commencing supply

to us. We have completed six onsite

audits in four different countries in

the first year of our programme.

• We incorporated responsible

sourcing aspects into quarterly

business reviews with strategic

suppliers in scope of the

responsible sourcing programme

in order to monitor and drive

continuous improvement.

These efforts underscore our

dedication to responsible sourcing

practices, enhancing transparency,

and fostering ethical supplier

relationships across our global

hardware manufacturing supply chain.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

Task Force on Climate-Related

Financial Disclosures (“TCFD”) 2023

Compliance Statement

In accordance with the UK’s Financial Conduct Authority (“FCA”) Listing Rule 9.8.6R(8), the table below sets out

whether Ocado Group has made disclosures consistent with the TCFD recommendations and recommended disclosures.

It also summarises where the relevant disclosures are addressed in the report and the steps we are taking to improve our

disclosure, alongside progress in FY23. The climate-related financial disclosures made by Ocado Group comply with the

requirements of the Companies Act 2006 as amended by the Companies (Strategic Report) (Climate-related Financial

Disclosure) Regulations 2022.

Section

Section &

recommendation

Disclosure

consistency Pages Progress in FY23 Next steps

1. Governance

Disclose the

organisation’s

governance around

climate-related risks

and opportunities

a) Describe the board’s

oversight of climate-related

risks and opportunities.

Consistent 83 As part of its annual strategy

meeting in June 2023 the

Board received an update on

our Net Zero Programme,

with updates also provided in

September and final Board

approval of our Net Zero

Roadmap in November 2023.

Continue to operationalise

and embed governance

around our Net Zero

Programme.

b) Describe management’s

role in assessing and

managing climate-related

risks and opportunities.

Consistent 84 We evolved our

TCFD Working Group to

cover a broader remit of

Environmental Sustainability

Compliance and Reporting

and increased the frequency

of alignment sessions with

Ocado Retail.

Continue to improve

the governance around

managing climate-related

risks and opportunities,

including monitoring

and reporting of

mitigating actions.

2. Strategy

Disclose the actual

and potential impacts

of climate-related

risks and

opportunities on

the organisation’s

businesses, strategy

and financial

planning where

such information

is material

a) Describe the

climate-related risks

and opportunities the

organisation has identified

over the short, medium,

and long term.

Consistent 85 We expanded and updated

our climate risk assessment

to cover our global footprint.

Ongoing management of

climate-related risks and

opportunities in line with our

Enterprise Risk Management

(“ERM”) approach

(pages 103 to 106).

b) Describe the impact

of climate-related risks

and opportunities on the

organisation’s businesses,

strategy and

financial planning.

Consistent 94 We strengthened

the consideration of

climate-related risks and

opportunities within our

five-year plan informing

sensitivities.

Continue to improve

the linkage between

climate-related risks and

opportunities and our

five-year planning process.

This will be part of improving

the financial modelling

associated with our scenario

analysis to support increased

quantification in our

disclosures and to better

understand our resilience.

c) Describe the resilience of

the organisation’s strategy,

taking into consideration

different climate-related

scenarios, including a

2°C or lower scenario.

Consistent 95 During the year we have

matured the financial

modelling associated

with our scenario analysis

to support increased

quantification in our

disclosures and to better

understand our resilience.

3. Risk Management

Disclose how

the organisation

identifies, assesses

and manages

climate-related risks

a) Describe the organisation’s

processes for identifying

and assessing

climate-related risks.

Consistent 96 We updated our climate

risk identification and

assessment approach to

more formally consider our

global footprint, and support

improved disclosures.

Continue to ensure that

climate-related risks and

opportunities are identified

and assessed in line

with our ERM approach

(see pages 103-106).

b) Describe the organisation’s

processes for managing

climate-related risks.

Consistent 96 The increased frequency

of alignment sessions

with Ocado Retail and the

formalisation of our Net Zero

Programme supported more

consistent governance

of many of the mitigating

actions to manage

climate-related risks

and opportunities.

As our Net Zero Programme

continues to mature, we

expect that the oversight

and monitoring of many

mitigating actions to manage

climate-related risks

and opportunities will be

governed by this programme.

OCADO GROUP PLC Annual Report and Accounts 2023

Section

Section &

recommendation

Disclosure

consistency Pages Progress in FY23 Next steps

c) Describe how processes

for identifying, assessing

and managing climate-

related risks are integrated

into the organisation’s

overall risk management.

Consistent 96 Continued to manage

climate-related risks within

our Climate, environment

and geopolitical principal risk

in line with our Enterprise

Risk Management (ERM)

approach (see pages

103-106).

Continue to ensure that

the management of

climate-related risks and

opportunities is integrated

into the organisation’s overall

risk management, especially

as we evolve and mature

our processes.

4. Metrics and

Targets

Disclose the metrics

and targets used to

assess and manage

relevant climate-

related risks and

opportunities where

such information

is material

a) Disclose the metrics used

by the organisation to

assess climate-related

risks and opportunities in

line with its strategy and

risk management process.

Consistent 97 We have made progress in

identifying and developing

metrics to assess our

climate-related risks

and opportunities. The

non-financial data to

support the assessment

of climate-related risks

and opportunities and their

disclosure is still maturing.

We will continue to mature

our non-financial data to

support the assessment

of climate-related risks

and opportunities in line

with our strategy and risk

management process,

and to support the

relevant disclosures.

b) Disclose Scope 1, Scope 2

and, if appropriate, Scope

3 greenhouse gas (“GHG”)

emissions, and the

related risks.

Consistent 101 We continue to collect data

to support our understanding

and disclosure of our Scope

1, Scope 2 and Scope 3 GHG

emissions, and have

progressed in developing our

Net Zero Roadmap.

We will continue to develop

and embed our Net Zero

Roadmap, leveraging our

Scope 1, Scope 2 and

Scope 3 GHG emissions

data.

c) Describe the targets

used by the organisation

to manage climate-related

risks and opportunities

and performance

against targets.

Consistent 97 We have made progress

in developing our Net Zero

Roadmap, which will inform

interim targets relating to our

longer-term GHG emission

targets as appropriate.

As we continue to mature

our non-financial data we

will consider setting targets

as appropriate as metrics

are further embedded

into the business.

1. Governance

Leadership has oversight of

climate-related risks and opportunities

through the Board and Audit

Committee. The management-level

Risk Committee, ESG Committee and

working groups have delegated

responsibility for delivery of the

business-level actions as set out

in the diagram below.

a) Describe the board’s

oversight of climate-related

risks and opportunities

Board

The Board sets and leads the

Company’s climate-related strategy

and has oversight of climate-related

risks and opportunities in line with

our ERM approach (see pages 103

to 111).

The Board is responsible for the review

and approval of Ocado Group’s risk

management framework and the

principal and emerging risks, including

a review of the Group’s risk appetite.

The Board discussed the Company’s

principal risks in December 2022,

June 2023 and February 2024.

The Board is responsible for setting

our overall strategy, which includes

the commitment to reduce our

environmental impact. As part of its

annual strategy meeting in June 2023

the Board received an update on

our Net Zero Programme, and

approved our Net Zero Roadmap

in November 2023.

As part of defining our strategy,

the Board also considers our five-year

plan, which this year factored in

climate-related risks as sensitivities

to a number of the key assumptions

in the plan.

Many of our Net Zero initiatives are

proposed for future years, but this

year we have incorporated some

Net Zero initiatives into financial

budgets for FY24.

This will better inform our next rolling

five-year plan, and as we continue

to develop our Net Zero Roadmap,

we expect more initiatives to be

considered as part of our

budgeting process.

To inform its decision-making,

the Board undertook two externally

facilitated training sessions during

the year relating to the ESG

regulatory landscape.

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

TCFD continued

Performance and remuneration

ESG, which included a Group-wide

emissions roadmap to Net Zero, is

included as part of the vesting

consideration criteria for the Annual

Incentive Plan (“AIP”) in our Directors’

Remuneration Policy, thereby ensuring

that the Remuneration Committee

considers this factor when determining

whether the formulaic vesting levels

are appropriate. This year each

of our Executive Directors had

objectives relating to ESG

including the development

of an environmental roadmap.

See the AIP Corporate Scorecard

of performance measures and

information relating to the

ESG objectives set for FY24

on page 183

Audit Committee

The Board delegates elements of its

responsibility to the Audit Committee.

The Audit Committee meets at least

quarterly and, delegated by the Board,

is responsible for the review of the

effectiveness of risk management

and the system of internal control

for Ocado Group. Twice a year the

Audit Committee discusses the Risk

Committee’s enterprise risk report,

including our Climate, environment

and geopolitical principal risk.

The Audit Committee also receives

ad hoc updates on climate-related

risks, which this year included an

update on the evolving ESG

regulatory landscape, and the

status of activities to mature our

climate-related disclosures.

In 2024, our Internal Audit function will

review the status of activities of both

the ESG and Net Zero Programmes.

The Chair of the Audit Committee

provided updates to the Board

throughout the year on matters

discussed at Committee meetings,

including updates on our evolving

ESG landscape.

b) Describe management’s

role in assessing and

managing climate-related

risks and opportunities

Risk Committee

The Risk Committee meets quarterly

and reviews and challenges the risk

management process at Ocado Group,

including the identification,

prioritisation and management of

principal and key risks, including our

Climate, environment and geopolitical

principal risk. The Risk Committee has

delegated oversight of climate-related

risks to the ESG Committee to better

leverage subject matter expertise.

The Risk Committee reports to the

Audit Committee and the Board.

ESG Committee

The ESG Committee convenes four

times a year and has governance of our

climate-related risks and opportunities.

The Committee is chaired by Neill

Abrams (Group General Counsel and

Company Secretary), sponsor of our

climate change agenda. Neill, along

with Stephen Daintith (Chief Financial

Officer), maintains oversight of our net

zero and climate risk management

activities and reporting. Members

include Claire Ainscough (Chief People

Officer), James Matthews (CEO, Ocado

Technology) and Brian McClory

(Managing Director, Ocado Logistics).

Updates on its decisions and actions

are provided to the Risk Committee,

Audit Committee and the Board.

Topics discussed by the ESG

Committee during the year included:

our Scope 1, Scope 2 and Scope 3

GHG emissions; the basis of reporting

GHG emissions; the development

of a Net Zero Roadmap; and

initiatives which underpin this.

The ESG Committee also received

training on climate matters

specifically focused around

governance requirements under

new and emerging ESG regulations.

Other relevant forums

Environmental Sustainability

Compliance and Reporting

Working Group

Formerly the TCFD Working Group,

the Environmental Sustainability

Compliance and Reporting Working

Group is a management group which

co-ordinates risk, compliance and

reporting activities, with a focus on

environmental sustainability

regulations. This working group

supports alignment across central

functions for the ongoing assessment

and reporting of climate-related risks

and opportunities, and reports to the

Audit Committee. Topics managed by

this group include current and

emerging reporting requirements

relating to environmental sustainability.

Ocado Retail (“ORL”), Ocado Group,

Ocado Logistics Climate Change

Management Group

ORL governs the management of

climate-related risks and opportunities

independently from the Ocado Group

risk governance structure.

Governance of climate-related risks and opportunities

Board

Audit Committee

Ocado Retail, Ocado Group,

Ocado Logistics Climate Change

Management Group

Environmental Sustainability

Compliance and Reporting

Working Group

Board-level governance Management-level governance

Other relevant forums

Risk Committee

ESG Committee

OCADO GROUP PLC Annual Report and Accounts 2023

To maintain appropriate alignment and

manage dependencies a management

group with representatives from across

ORL, Ocado Group and Ocado

Logistics convene on a six-weekly

basis to co-ordinate the management

of climate-related risks. Issues

discussed by the management group

include GHG emissions data, food

waste and fleet decarbonisation.

Various operational meetings are held

in addition to this. This group reports

to the Ocado Group ESG Committee

and ORL ESG Committee.

See the How we manage our

risks section (pages 103 to 111)

for additional detail on how we

maintain alignment between

Ocado Group and Ocado Retail

2. Strategy

a) Describe the

climate-related risks

and opportunities the

organisation has identified

over the short, medium,

and long term

Climate-related risks are identified,

assessed, managed and monitored in

line with our ERM approach (page 103).

To understand our exposure to

physical risk in additional detail, a

third party supported a Physical Risk

Scenario Analysis across 25 CFC

locations in the UK and internationally.

The process(es) used to

determine which risks and

opportunities could have

a material financial impact

on the organisation

Building on last year’s climate risk

assessment, which engaged external

subject matter experts to obtain

additional external information and

data, we worked with stakeholders

across the business to review a

“long-list” of climate-related risks

across the following categories:

Risks

• Policy and Legal

• Technology

• Market

• Reputation

• Physical Risk (Acute)

• Physical Risk (Chronic)

Opportunities

• Resource Efficiency

• Energy Source

• Products and Services

• Market Opportunity

• Resilience

We asked business stakeholders to

consider the impact and timeframe

over which risks and opportunities

might materialise, and this informed

the prioritisation of those climate-

related risks which have been

identified as key risks within

our Climate, environment and

geopolitical principal risk.

Risk assessment period

We recognise that one of the key

characteristics of climate-related

risks and opportunities is that they

materialise over the longer term.

To better understand and manage

climate-related risks, we extend

our time horizons beyond our five-year

plan to consider the impact of climate

on our business over the lifetime of

our CFCs and other significant assets.

We consider our climate-related risks

by geography, in terms of either i) UK

– affecting our Logistics business; or

ii) Global – affecting our Technology

Solutions business.

Short, medium, and long term

time horizons

We describe the climate-related risks

and opportunities we identified over

the short, medium, and long term,

by geography, and in reference to

climate-related risk and opportunity

categories below.

Risk assessment period

Short term

Long term

Medium term

Time horizon

This aligns with the standard

ERM horizon used for assessment

of principal and key risks.

This provides a helpful projection

beyond our five-year plan, to offer

additional near term insight.

This considers the impact of

climate on our business over

the lifetime of our CFCs and

other significant assets.

0 – 2 years 2 – 10 years 10 – 25 years

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

TCFD continued

Our key climate-related risks and opportunities

Through our risk and scenario analysis, the following risks and opportunities have been identified. Our analysis during the year

has allowed us to continue to better define climate-related risks for Ocado Group, as our understanding of the risks deepens.

This will continue into next year. See pages 95 and 87 for a description of the scenarios and financial impact analysis ranges used.

Geography

Key: Timeframe

Short

Medium Long Global

Climate risk/opportunity definition Potential impact on Ocado Potential financial impact What are we doing to manage this risk/opportunity

1. Extreme weather

There is a risk of increased severity of extreme weather

events such as heatwaves, hurricanes and floods disrupting

the supply chain

Link to principal risk:

• Climate, environment and geopolitical

Link to Metrics:

We are still evaluating suitable metrics to monitor impact of

Extreme Weather.

Category: Physical Risk (Acute)

Geography and timeframe:

Extreme weather could cause damage to physical

assets and impacts on insurance liabilities and

disruption to operations, transportation and supply chains.

Analysis of eight different climate hazards across

25 CFC locations in the UK and internationally is

performed. In the long term under a >4 degree Celsius

scenario (i.e. the worst case scenario):

• all CFCs in the UK and internationally are expected

to experience increased heat and precipitation risk;

• some CFCs in the UK and internationally are expected

to experience increased drought, flood, windspeed,

and wildfire risk;

• few CFCs internationally are expected to experience

increased hail/thunderstorm risk; and

• all CFCs in the UK and internationally are expected

to experience less cold risk.

In the UK our operations encompass our UK Logistics

business and our shared ownership Retail business.

Internationally, CFCs are sited, developed and operated by

our clients. As such, Ocado has less direct financial exposure

to this risk outside of the UK. Nonetheless, we have

considered the exposure to physical risks at international

CFCs given their strategic importance.

Financial analysis of four climate hazards across 25 CFC

locations in the UK and internationally:

<2 degrees Celsius SSP 1 – RCP 2.6:

Short term: Minor

Medium term: Minor

Long term: Minor

2-3 degrees Celsius SSP 2 – RCP 4.5:

Short term: Minor

Medium term: Minor

Long term: Moderate

££

>4 degrees Celsius SSP 5 – RCP 8.5:

Short term: Minor

Medium term: Moderate

££

Long term: Moderate

££

Insurance:

• Our insurance arrangements respond to natural

catastrophe risks (e.g. flood, earthquake, windstorm, wild

fire) covering both physical assets and liabilities under a

global insurance programme aligned with our exposure and

risk appetite.

Crisis management and business continuity

arrangements:

• Our business continuity management programme is already

embedded in the UK and at our international development

centres. Plans are in place to develop business continuity

capability arrangements for international client sites.

Definitions, scope and assumptions of financial impact analysis:

• Physical risk assessment covered 25 CFC sites across the UK and internationally, and therefore spoke and Zoom sites are not included in this analysis.

• Physical risk assessment covered eight climate hazards: extreme rainfall; days of extreme cold; hail and thunderstorm probability; drought

frequency; flood depth of water; extreme wind speeds; days of high heat; and wildfire risk.

• – Additional assumptions specific to the analysis performed on each hazard type were built into the modelling e.g. mitigation from governmental

flood defences in certain geographies.

• Financial quantification covered four climate hazards: flood depth of water; extreme wind speeds; wildfire; and days of high heat.

• – Estimates of physical asset and site contents value were based on insured values, with proxy values allocated for sites which are not yet live.

• – Estimates of site specific revenue were based on the number of modules live or expected at “go live date” at an assumed standard revenue per module.

• – Additional assumptions specific to the analysis performed on each hazard type were built into the financial modelling e.g. the damage to buildings

caused by extreme events.

• The analysis does not take account of site specific mitigating actions when assessing the baseline financial impact of the risks.

• SSP – Shared Socioeconomic Pathway; RCP – Representative Concentration Pathways.

• Potential financial impact analysis was performed to the nearest million (£).

OCADO GROUP PLC Annual Report and Accounts 2023

Climate risk/opportunity definition Potential impact on Ocado Potential financial impact What are we doing to manage this risk/opportunity

1. Extreme weather

There is a risk of increased severity of extreme weather

events such as heatwaves, hurricanes and floods disrupting

the supply chain

Link to principal risk:

• Climate, environment and geopolitical

Link to Metrics:

We are still evaluating suitable metrics to monitor impact of

Extreme Weather.

Category: Physical Risk (Acute)

Geography and timeframe:

Extreme weather could cause damage to physical

assets and impacts on insurance liabilities and

disruption to operations, transportation and supply chains.

Analysis of eight different climate hazards across

25 CFC locations in the UK and internationally is

performed. In the long term under a >4 degree Celsius

scenario (i.e. the worst case scenario):

• all CFCs in the UK and internationally are expected

to experience increased heat and precipitation risk;

• some CFCs in the UK and internationally are expected

to experience increased drought, flood, windspeed,

and wildfire risk;

• few CFCs internationally are expected to experience

increased hail/thunderstorm risk; and

• all CFCs in the UK and internationally are expected

to experience less cold risk.

In the UK our operations encompass our UK Logistics

business and our shared ownership Retail business.

Internationally, CFCs are sited, developed and operated by

our clients. As such, Ocado has less direct financial exposure

to this risk outside of the UK. Nonetheless, we have

considered the exposure to physical risks at international

CFCs given their strategic importance.

Financial analysis of four climate hazards across 25 CFC

locations in the UK and internationally:

<2 degrees Celsius SSP 1 – RCP 2.6:

Short term: Minor

Medium term: Minor

Long term: Minor

2-3 degrees Celsius SSP 2 – RCP 4.5:

Short term: Minor

Medium term: Minor

Long term: Moderate

££

>4 degrees Celsius SSP 5 – RCP 8.5:

Short term: Minor

Medium term: Moderate

££

Long term: Moderate

££

Insurance:

• Our insurance arrangements respond to natural

catastrophe risks (e.g. flood, earthquake, windstorm, wild

fire) covering both physical assets and liabilities under a

global insurance programme aligned with our exposure and

risk appetite.

Crisis management and business continuity

arrangements:

• Our business continuity management programme is already

embedded in the UK and at our international development

centres. Plans are in place to develop business continuity

capability arrangements for international client sites.

Definitions, scope and assumptions of financial impact analysis:

• Physical risk assessment covered 25 CFC sites across the UK and internationally, and therefore spoke and Zoom sites are not included in this analysis.

• Physical risk assessment covered eight climate hazards: extreme rainfall; days of extreme cold; hail and thunderstorm probability; drought

frequency; flood depth of water; extreme wind speeds; days of high heat; and wildfire risk.

• – Additional assumptions specific to the analysis performed on each hazard type were built into the modelling e.g. mitigation from governmental

flood defences in certain geographies.

• Financial quantification covered four climate hazards: flood depth of water; extreme wind speeds; wildfire; and days of high heat.

• – Estimates of physical asset and site contents value were based on insured values, with proxy values allocated for sites which are not yet live.

• – Estimates of site specific revenue were based on the number of modules live or expected at “go live date” at an assumed standard revenue per module.

• – Additional assumptions specific to the analysis performed on each hazard type were built into the financial modelling e.g. the damage to buildings

caused by extreme events.

• The analysis does not take account of site specific mitigating actions when assessing the baseline financial impact of the risks.

• SSP – Shared Socioeconomic Pathway; RCP – Representative Concentration Pathways.

• Potential financial impact analysis was performed to the nearest million (£).

Key to financial impact analysis ranges

In our analysis of the financial impact of the identified risks, we have used the below financial impact ranges. These align

with the financial quantification criteria used in our enterprise risk management impact approach. The results of our analysis

is summarised in the risk table on pages (86 to 93). Risks should be considered in isolation as the complex interrelationship

between multiple risks has not been considered.

Impact Financial impact analysis range – average annual profit before tax/asset loss

Major

£££

Financial quantification of the risk is more than £25m

Moderate

££

Financial quantification of the risk is between £10m and £25m

Minor

Financial quantification of the risk is less than £10m

OCADO GROUP PLC Annual Report and Accounts 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

TCFD continued

Climate risk/opportunity definition Potential impact on Ocado Potential financial impact What are we doing to manage this risk/opportunity

2. Climate-related disclosures

There is a risk of an increasing landscape of mandatory

climate-related disclosures with additional complexity and

compliance burden (e.g. TCFD, CSRD, Companies Act 2006).

Link to principal risk:

• Regulatory & compliance

Link to Metrics:

CDP score

Category: Policy and Legal

Geography and timeframe:

• Ocado’s international operations and subsidiaries mean

that Ocado is exposed to international regulation as well

as UK climate reporting obligations.

• Compliance with an increasing landscape of mandatory

climate-related disclosures has a cost burden.

• If this were unmitigated, failure to comply could result

in a loss of trust in Ocado’s reporting, reputational

damage and reduced ability to secure finance.

• This is an increasing risk as investors and insurers are

requiring more climate information to be able to

appropriately assess and price climate-related risks

and opportunities.

• The financial impact will primarily be across systems,

processes, controls and people to ensure the accuracy

and robustness of data and information reported.

• If this were unmitigated, there may be potential costs

due to failure to comply with regulatory requirements

(e.g. fines) or an increased cost of funding/inability

to raise finance.

Governance:

• Refer to pages 83 to 85 to read more about how we govern

climate-related risks.

• Updates on compliance status and emerging regulation

were provided to Board and management-level committees

regularly throughout the year.

Regulatory horizon scanning:

• Workshops were held during the year to identify gaps

and improvement focus areas for the identification,

assessment and implementation of new, emerging

and current climate-related regulatory requirements.

Scope and assumptions of financial impact analysis:

• We are already experiencing an increasing landscape of mandatory climate-related disclosures with additional complexity and compliance burden,

and as such our analysis has not considered the impact of scenarios on this risk.

3. Energy usage

There is a risk of changing climate patterns (mean

temperature increase) leading to increased CFC energy

requirements (and costs) for cooling.

Link to principal risk:

• Climate, environment and geopolitical

Link to Metrics:

CFC Electricity Consumption (kWh/Each)

Electricity produced from non-grid sources (% of total

Electricity Consumption)

Category: Physical Risk (Chronic)

Geography and timeframe:

• The main impact is on energy usage to maintain food

temperature.

• Energy demand for CFC cooling is anticipated to increase

over the medium and long term (driven by changing

climatic conditions).

• Energy pricing is also expected to increase over

the medium and long term (driven by carbon pricing/

energy supply).

• This risk impacts our UK Logistics business and our

shared ownership Retail business.

• Internationally, our clients own and build their CFCs, as

well as being responsible for the utilities within CFCs.

As such, the international risk sits with our clients.

Under both Orderly Transition and Hot House World

scenarios we anticipate that both the energy consumption

for our CFCs and energy prices will increase.

The increase in energy consumption is greater under a

Hot House World scenario (driven to a greater extent by

demand for cooling) whilst the increase in energy price is

greater in an Orderly Transition (driven to a greater extent

by factors such as carbon pricing).

Orderly Transition:

Short term: Minor

Medium term: Minor

Long term: Moderate

££

Hot House World:

Short term: Minor

Medium term: Moderate

££

Long term: Moderate

££

Energy supply diversification:

• We are beginning to diversify our supply of energy

including the use of anaerobic digestion and solar

photovoltaics at our CFCs.

Net Zero Programme:

• Our Net Zero Programme is developing a roadmap of

initiatives including adopting renewable energy and

reducing energy usage through efficiency measures.

Energy supply monitoring:

• We have an Electricity Procurement Risk Management

Policy, which has been approved by the Audit Committee,

and a governance structure in place for electricity

procurement.

• We take expert advice on energy price hedging and other

control measures.

Scope and assumptions of financial impact analysis:

• We modelled the impact on CFC electricity costs of changing electricity usage and prices under different scenarios.

• Modelled using data from Network for Greening the Financial System (“NGFS”) (GCAM5.3) and Ocado Group electricity consumption and cost data.

• We have modelled the change in energy price and consumption for our UK CFCs utilising our FY22 data as a baseline. This baseline already

includes an increase in energy prices following the energy crisis in 2021-2022. The baseline spend data used includes all electricity consumption

(e.g. freezers, chillers, MHE, lighting) and we have not apportioned this figure before performing our analysis.

• Scope of modelling included UK CFCs only, and not spoke or Zoom sites.

• We assumed no additional mitigations are put in place (e.g. energy efficiency initiatives).

• We have not modelled any change in energy consumption due to growth in our operations.