Ocado Group Annual Report 2023

FY2023 Annual Report · Ocado Group

Loading PDF…

Solutions that deliver,
Innovations that inspire

Ocado Group plc Annual Report and Accounts
for the 53 weeks ended 3 December 2023

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.

Strategic Report

Financial, Operational and Strategic Progress
Across Ocado Group in FY23
Ocado Group at a Glance
Chair’s Letter
Key Performance Indicators
Chief Executive Officer’s Review
Our Business Model
Our Strategy
How our Culture and Values
Support our Strategy
How our Investment and Capital Allocation
Support our Strategy
Ocado Group’s Intellectual Property
Our Markets
Business Segments
Financial Review
Stakeholder Engagement
Section 172(1) Statement
Responsible Business Report
Task Force on Climate-Related Disclosures
How We Manage Our Risks
Going Concern and Viability Statements
Non-Financial and Sustainability
Information Statement

01
02
06
08
12
18
21

23
24
26
28
40
60
64
67
82
103
112

115

Governance

Governance at a Glance
Chair’s Governance Statement
Board of Directors
Corporate Governance Statement 2023
People Committee Report
Audit Committee Report
Directors’ Remuneration Report
Letter from the Chair of the
Remuneration Committee
Annual Report on Remuneration 2023
Directors’ Remuneration Policy
Directors’ Report

116
117
118
122
138
144
154

154
166
186
204

Financial
Statements

214
226

Group
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement
of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement
of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated
Financial Statements
Company
Company Balance Sheet
295
296
Company Statement of Changes in Equity
Notes to the Company Financial Statements 297

230
231

227
228

232

Additional
Information

Alternative Performance Measures
Five-Year Summary
Glossary
Shareholder Information

302
304
305
309

Financial, Operational and Strategic Progress
Across Ocado Group in 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.

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

(53 weeks).

• Group adjusted EBITDA A

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).

Group revenue
(£m)

Group adjusted EBITDA
(£m)

6
5
6
7
2

8
6
1
5
2

8
8
9
4
2

8
.
1
3
3
2

6
6
5
7
,
1

1
.
3
7

0
.
1
6

3
3
4

6
.
1
5

)
1
.
4
7
(

• Significant underlying cash outflow A

improvement and

FY19

FY20

FY21

FY22

FY23

FY19

FY20

FY21

FY22

FY23

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.

Loss before tax
(£m)

Gross liquidity*
(£m)

8
6
0
7
,
1

0
8
2
6
,
1

6
8
6
4
,
1

8
4
8
1
,
1

6
0
5
8

)
3
2
5
(

)
9
6
7
1
(

)
5
4
1
2
(

)
6
3
9
3
(

)
8
0
0
5
(

FY19

FY20

FY21

FY22

FY23

FY19

FY20

FY21

FY22

FY23

* FY23 is 53 weeks

Tonnes of CO²e/
100,000 orders
(Scope 1 and 2 –
location based)

9
0

7
0

6
0

4
1
5

1
0
5

9
8
4

8
5
4

2
2
4

Food waste
(% of sales),
Ocado Retail

4
0

FY19

FY20

FY21

FY22

FY23

FY19

FY20

FY21

FY22

FY23

“ 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.”

Employee Net Promoter
Score (“eNPS”)
(Technology Solutions)

1
3

5
2

9
1

Tim Steiner, CEO

FY21

FY22

FY23

A Where this symbol

appears throughout the
Report, see Alternative
Performance Measures
on pages 302 and 303

Read more about
our strategy on page
21 and our responsible
business approach
on pages 67 to 81

OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL 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 on our business model and
strategy on pages 18 to 21

Our culture and values
We pride ourselves on the distinctive culture
that runs through all of our businesses and
defines who we are today. Our culture is
open and collegiate, engaged, innovative and
entrepreneurial. These qualities are vital in
shaping our future success and delivering our
strategic vision. In FY23 we set specific values
for each business segment, acknowledging
their different capabilities and their importance
in helping us achieve our strategic vision.

Read more about our culture and values
on page 22

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

Technology Solutions

Ocado Logistics

Ocado Retail

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.

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.

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

FY23

£668m

FY22: £663m

FY23

£2,358m

FY22: £2,203m

revenue

£15m

FY22: £(102)m

adjusted EBITDA A

£30m

FY22: £34m

adjusted EBITDA A

£10m

FY22: £(4)m

adjusted EBITDA A

Read more on engagement

with our key stakeholders
on pages 60 to 63

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

Link to section 172 icons:

Stakeholder icons:

A The likely consequences of any decision in the long term

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

B The interests of our employees

C The need to foster business relationships with

key stakeholders

and environment

E The desirability of maintaining a reputation for

high standards of business conduct

F The need to act fairly as between members

Our people

Partners

Investors

Suppliers

Environment and society

Case study: Ceasing operations at the Hatfield CFC

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:

A B C D E

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Section 172 Statement continued

Link to section 172 icons:

Stakeholder icons:

A The likely consequences of any decision in the long term

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

B The interests of our employees

C The need to foster business relationships with

key stakeholders

and environment

E The desirability of maintaining a reputation for

high standards of business conduct

F The need to act fairly as between members

Our people

Partners

Investors

Suppliers

Environment and society

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: A B C

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.

Stakeholders:

s172: A C

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.

Materiality analysis

s
r
e
d
o
h
e
k
a
t
s
o
t
e
c
n
a
t
r
o
p
m

Energy efficiency and
carbon emissions

Responsible
sourcing

Occupational health,
safety and wellbeing

Cybersecurity

Business ethics
and governance

Food waste
management

Employee diversity
and inclusion

Operational waste
management

Data
privacy
management

Product quality
and governance

Talent
attraction
and
development

Community
engagement

Ethics of artificial
intelligence and
robotics

Equipment
lifecycle and
circularity

Low

Business impact

High

Environment and
natural resources

Our people and
skills for the future

Platform resilience
and innovation

Energy efficiency and
carbon emissions

2. Food waste
management

3. Operational waste

management

Talent attraction
and development

Employee diversity
and inclusion

Occupational health,
safety and wellbeing

4. Equipment lifecycle and

circularity

8. Community
engagement

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

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.

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

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.

Headcount
by business

Headcount
by geography

Headcount
by gender

4,880

2,067

300

3,460

13,989

16,802

15,109

Key:

Ocado Logistics
Technology Solutions

Key:

UK
International

18,869

Total number of employees*

* Excludes ORL employees (FY23: 900 employees).

Key:

Male
Female
Not disclosed

KPIs

Target

FY23

Employee headcount

% of female senior managers1

–

40%

% of ethnic diversity senior managers1

x2 by 2027

Employee engagement
(eNPS of Technology Solutions)

Employee engagement
(eNPS of Ocado Logistics)

18,869

32%

FY22

19,744

36%

–

Year on year
movement

-4%

-4ppts

–

-12

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.

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.

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.

• 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.

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.

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 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONResponsible Business Report continued

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.

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.

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.

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

Female

Not specified/prefer not to say

–

58%

42%

–

Breakdown by ethnic background as at 3 December 2023

White British or other White
(including minority-White groups)

Black/African/Caribbean/Black
British

Other ethnic group

Not specified/prefer not to say

–

75%

16%

–

87.5%

12.5%

–

75%

–

25%

–

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.

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.

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.

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONResponsible 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.

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).

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.

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.

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.

Regional
Distribution
Centres

Suppliers &
Wholesalers

Supermarket

Stores

CFC’s

Exclusions: production of groceries,
last mile, customer’s home,
secondary and tertiary packaging,
and end of life emissions

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.

Customer’s homeOnline deliveryClick and CollectDeliveryOCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL 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.

KPIs3

Scope 1 GHGs (tCO2e)1,3

Scope 2 (market-based) GHGs (tCO2e)3

Scope 3 GHGs (tCO2e)2

FY23

FY22

93,293

96,386

887

815

154,962

226,411

Scope 1 & 2 GHGs (market based) (tCO2e)

94,180

97,201

Scope 1 & 2 GHG intensity
(market based) (tCO2e per 100,000 orders)

Total energy use (MWh)

Renewable energy (%)

Energy intensity (MWh per 100,00 orders)

348

379

496,956

491,834

20.0

1,835

21.3

1,916

Year-on-year
movement

-3.2%

8.8%

-31.6%

-3.1%

-8.2%

1.0%

-6.1%

-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.

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.

Our Net Zero Roadmap
Our Net Zero Roadmap1 was approved by the Board in November 2023.

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

Freight
Minimise upstream
transport by
reducing distances
and use of air freight

Data maturity
review and
analysis

Product
design
Placing
sustainability at the
forefront of our
product design
principles

Procurement
Working with
suppliers to reduce
the impact of the
materials and
products that
we purchase

People
Enhancing carbon
literacy and
enabling our people
to take sustainable
decisions

Product
circularity and
low carbon
review

Do more with
fewer trials and
processes, data
improvements

Employee
engagement
and skills

Other
Ensuring the
enablers are in place
for the enduring
delivery of Net Zero

Investor
engagement,
carbon
budgeting

Our Commitment:
100% renewable electricity
sources by 2023

Planning:
Carbon analysis
and development
of our Net Zero
Plan

Short-term:
Enablers and
planned
innovations

Transition our sites to low emission
fuel usage

Innovation and investment in the
remaining difficult to decarbonise
areas

Quick wins in decarbonising freight

Freight carbon budgeting and management

Low carbon design and Ocado
Re:Imagined roll-out

Net Zero principles ingrained into product designs and rollout

Rollout supplier requirements

Net Zero supply chain

Invest in the remaining, lower volume
and difficult to decarbonise suppliers

Employee engagement and skills

Commuting incentives and business travel policies

Investor engagement,
carbon budgeting

Investee engagement,
carbon budgeting

Departmental carbon budgets,
offsetting, insetting and
carbon removal

Our Commitment:
Net Zero in our business
operations by 2035

Our Commitment:
Net Zero in our value chain
by 2040

Medium-term:
Expansion and
optimisation

Longer-term:
The harder to
reach savings

2020

2025

2030

2035

2040

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 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Responsible Business Report continued

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.

22%

decrease in food waste as
% of Ocado Retail sales

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

0.7%

0.9%

Year-on-year
movement

22%
decrease

Food waste
(% of Ocado
Retail sales)

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 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Responsible Business Report continued

Platform resilience and innovation

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.

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.

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

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 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONResponsible Business Report continued

Case study:
How AI is used at Ocado

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

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.

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

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.

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.

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONTask 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

a) Describe the board’s

Consistent

oversight of climate-related
risks and opportunities.

Disclose the
organisation’s
governance around
climate-related risks
and opportunities

b) Describe management’s
role in assessing and
managing climate-related
risks and opportunities.

Consistent

2. Strategy

a) Describe the

Consistent

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

climate-related risks
and opportunities the
organisation has identified
over the short, medium,
and long term.

b) Describe the impact

Consistent

of climate-related risks
and opportunities on the
organisation’s businesses,
strategy and
financial planning.

c) Describe the resilience of

Consistent

the organisation’s strategy,
taking into consideration
different climate-related
scenarios, including a
2°C or lower scenario.

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

b) Describe the organisation’s
processes for managing
climate-related risks.

Consistent

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.

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.

We expanded and updated
our climate risk assessment
to cover our global footprint.

We strengthened
the consideration of
climate-related risks and
opportunities within our
five-year plan informing
sensitivities.

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.

Continue to operationalise
and embed governance
around our Net Zero
Programme.

Continue to improve
the governance around
managing climate-related
risks and opportunities,
including monitoring
and reporting of
mitigating actions.

Ongoing management of
climate-related risks and
opportunities in line with our
Enterprise Risk Management
(“ERM”) approach
(pages 103 to 106).

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.

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).

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.

Section

Section &
recommendation

Disclosure
consistency

Pages

Progress in FY23

Next steps

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

Consistent

c) Describe how processes
for identifying, assessing
and managing climate-
related risks are integrated
into the organisation’s
overall risk management.

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

101

b) Disclose Scope 1, Scope 2
and, if appropriate, Scope
3 greenhouse gas (“GHG”)
emissions, and the
related risks.

c) Describe the targets

Consistent

used by the organisation
to manage climate-related
risks and opportunities
and performance
against targets.

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.

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.

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.

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 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONTCFD continued

Governance of climate-related risks and opportunities

Board

Audit Committee

Risk Committee

ESG Committee

Environmental Sustainability
Compliance and Reporting
Working Group

Ocado Retail, Ocado Group,
Ocado Logistics Climate Change
Management Group

Board-level governance

Other relevant forums

Management-level governance

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.

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.

Risk assessment period

Short term

Time horizon

0 – 2 years

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.

Medium term

Long term

2 – 10 years

10 – 25 years

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.

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONTCFD 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.

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: UK

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.

Key:

Geography

Timeframe

UK UK

Global

Short

Medium

Long

In the UK our operations encompass our UK Logistics
business and our shared ownership Retail business.

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.

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 ££

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

Major £££

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

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 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL 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: UK

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: UK

• 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 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.

• 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.

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).

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.

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

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
TCFD continued

Climate risk/opportunity definition

Potential impact on Ocado

Potential financial impact

What are we doing to manage this risk/opportunity

4. Natural Resources
There is a risk that policies on sustainable materials
e.g. plastics, mined raw materials, carbon pricing
are introduced resulting in increased prices or reduced
availability of raw materials.

Link to principal risk:

• Climate, environment and geopolitical
• Supply chain

Link to Metrics:

We currently monitor metrics around the number of suppliers
who have signed our Supplier Code of Conduct, and number
of suppliers screened during the supplier onboarding process.
We have plans to mature the metrics we monitor.

Category: Policy and Legal

Geography and timeframe: UK

Under both a Hot House World and Orderly Transition
scenario we expect that the potential impacts will
be similar:

• It is expected that this risk will be driven by the

introduction of policies such as carbon pricing increasing
the cost of carbon intensive materials such as cement
or steel.

• Similarly increased demand for, or reduced availability

of, materials required for sustainable solutions
(e.g. lithium for batteries) may result in cost increases.

5. Internal Combustion Engine (“ICE”) Vehicles Ban
There is a risk that the technology required to transition our
fleet to use alternative fuels (e.g. electric or hydrogen) is not
available or is not economically viable for us to be able to meet
the ban on the use of internal combustion engines by the UK
Government deadline. Currently, the relatively low range of EVs
in comparison with ICE vehicles poses a limitation on the
number of operational sites which we are able to electrify. The
impact of this risk is that we may need to change our model to
meet client demand, and face reputational damage.

Link to principal risk:

• Climate, environment and geopolitical

Link to Metrics:

Van fleet utilising zero emissions technology (%)

Targets:

• Net Zero fleet by 2035 (Scope 1)

Category: Policy and Legal

Geography and timeframe: UK

• The majority of the fleet we operate are vans

(under 3.5 tonnes) which are leased by Ocado Retail
and Morrisons, and trucks (above 26 tonnes),
which we lease and operate.

• The UK Government, as part of its transport

decarbonisation plan, will end the sale of new petrol
and diesel cars and vans (under 3.5 tonnes) by 2035.

• We are a signatory member of the British Retail

Consortium (“BRC”) Net Zero Roadmap and are therefore
already committed to decarbonising our fleet by 2035
as part of its strategy.

• We need to build new relationships with zero emissions
vehicle suppliers and novel infrastructure suppliers, and
we may need to invest in pilot studies to support the
implementation of new technologies and understand
the operational impact of alternative fuel technologies.

CFC construction costs (UK only)
In the UK, increased costs of carbon intensive materials
would likely result in a pass-through of these costs from
suppliers resulting in increased capital expenditure costs
for CFC construction. Internationally, Ocado’s OSP partners
site and develop CFC buildings, into which Ocado installs
its MHE.

Short term: We do not plan to build any new CFCs in the
UK in the short term, as we seek to maximise capacity in
the existing infrastructure.

Medium/long term: the impact of increased costs would
be considered in the business case for any new CFCs.

MHE Costs (UK & global)
Short term: We will manage this through our supply chain
management and procurement policies and procedures.
We are also continuing to identify opportunities within
our products that require less carbon intensive material,
amongst other initiatives.

Medium/long term: The extent to which any financial impact
will be felt is dependent on the extent to which we include
cost increases within the cost of our product/
pass on costs to clients.

Procurement policies:
The controls we are implementing to manage other
ESG issues in the supply chain will support the
management of climate-related risks. This includes:

• Procurement policies in technology hardware

manufacturing supply chains;

• A pre-qualification questionnaire for all new suppliers

in strategic sourcing category segments, as of July 2023.

• A Responsible Sourcing Screening Standard Operating

Procedure (“SOP”) for onboarding new suppliers in
Ocado Technology.

• An Ocado Supplier Code of Conduct was implemented in

January 2023, and will be monitored as part of our
responsible sourcing programme.

Critical suppliers:
• As part of our Net Zero Programme, we have measured,
and are starting to engage with our suppliers based on,
spend-based GHG emissions factors with the goal of
reducing our carbon emissions, by focusing on our highest-
emission suppliers first. This work continues into next year
and has the goal of gaining more mature data next year.
• We have also started to map critical suppliers to different
materials in order to better respond to regulations which
impact certain resources (e.g. aluminium, steel, etc.).
This work continues into next year.

Scope and assumptions of financial impact analysis:

• Our analysis considered data from Network for Greening the Financial System (“NGFS”) (GCAM5.3) and Bloomberg. However, we require more

understanding of the drivers of this risk to enable financial modelling under a Hot House World and Orderly Transition scenario.

Short term: Minor £
In the short term we expect leasing, maintenance and fuel
costs to change incrementally as we transition the fleet to
alternative fuel technologies, beginning with those vans
where the technology is available to meet our operational
needs (i.e. delivery route lengths).

In the first tranche of our proposed fleet transition
(planned for FY24), Ocado Retail plans to lease the capital
infrastructure required.

Medium/long term: Not quantified
Given the evolution of alternative fuel technologies, and the
need for vehicle range to improve to meet the needs of our
operations we are unable to quantify the financial impact
in the medium to long term.

We anticipate that there will be a financial cost associated
with acquiring the infrastructure and assets required to
transition the fleet.

Scope and assumptions of financial impact analysis:

Fleet transition plan:
• Analysis of sites has been conducted with a view to

prioritising sites for electrification on the basis of site
characteristics and available EV technology.

• This includes route length, power availability/cost, current
infrastructure and physical limitations, and encumbrance.

• On the basis of this analysis a roll-out plan has been
developed with tranches of electrification proposed.

Vehicle manufacturer engagement:
• Ocado is engaging with multiple vehicle manufacturers

on novel technologies, including hydrogen-fuelled vehicles
and infrastructure.

• We have assumed that this risk is scenario agnostic.
• Our financial analysis to date uses Ocado Retail data from existing plans for the acquisition of charging infrastructure at three spoke sites.
• Our approach to transitioning our fleet to alternative fuel technologies depends on the capability of current and future technology to meet

our operational needs, and the associated economic viability.

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

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

TCFD continued

Climate risk/opportunity definition

Potential impact on Ocado

Potential financial impact

What are we doing to manage this risk/opportunity

6. Net Zero Challenge
There is a risk that we fail to articulate and deliver on our
Net Zero commitments due to a lack of mandate, lack of
commitment, lack of budget, prioritised decision-making
and resourcing required to create a cohesive plan to achieve
Net Zero, resulting in regulatory scrutiny and loss of client
and investor reputation.

Orderly Transition:
We anticipate that the regulatory scrutiny and
consequences will be greater in an Orderly Transition
scenario, but that the coordinated large scale
cross-industry and cross-organisational response
would mean that technological advances are more
readily available to support initiatives.

Link to principal risk:

• Climate, environment and geopolitical

Link to Metrics:

GHG emissions (Scope 1, 2, and 3)

Hot House World:
We anticipate that whilst there may be less regulatory
scrutiny, the slower pace of technological advance under
a Hot House World scenario would make transitioning
to Net Zero more challenging.

% of UK sites using renewable electricity sources

Under both scenarios we expect:

• Achieving Net Zero will require a co-ordinated large scale

cross-industry and cross-organisational response.
• The impact of failing to articulate and deliver on our
Net Zero commitments would be both reputational
and regulatory.

• Similarly, investors are increasingly asking companies

that have published Net Zero targets to articulate better
how they will deliver on these targets, supported by
credible commitments.

• Re:Imagined technology that requires less carbon

intensive material or reduces operational energy use
could provide a unique opportunity to help Ocado
and its partners reduce their own carbon footprints.

Targets:

• Net Zero in our operations by 2035 (Scope 1 and Scope 2)
• Net Zero in our value chain by 2040 (Scope 3)
• 100% renewable electricity sources by 2023

Category: Policy and Legal, Reputational

Geography and timeframe:

7. Low-carbon MHE
There is an opportunity to design low-carbon components
into the product and supply chain (upstream and downstream),
to improve product efficiency, circularity, and to prepare for
future regulation and business expectations.

Link to principal risk:

• Product innovation, protection & performance

Link to Metrics:

We will consider setting metrics and targets as we develop our
Net Zero Roadmap.

Opportunity category: Products and Services

Timeframe:

• The financial impact will primarily be across systems,

processes, controls and people to ensure the accuracy
and robustness of data and information reported.

• Also, investment into novel technologies will be

required, which might include operational expenditure
or capital expenditure.

Governance:
• Net Zero Programme governance established during FY23.
• Executive Committee sponsorship confirmed.
• A business lead and Net Zero Programme manager have
been appointed at the annual Board strategy meeting in
June 2023.

• Our Net Zero Programme will analyse costs on a project-by-

project basis.

Net Zero programme:
• A roadmap of initiatives has been developed for FY24
and FY25 as part of the Net Zero Roadmap, developed
in partnership with xtonnes. Refer to page 75 for
more information.

External capability:
• xtonnes, a carbon analytics provider, has been contracted

for an additional three years of support.

Scope and assumptions of financial impact analysis:

• We have assumed that the financial impact of this risk is scenario agnostic.
• Our Net Zero Programme will analyse costs on a project-by-project basis, and therefore we are currently unable to quantify the overall

financial impact.

• This opportunity could result in increased partnerships as
sustainable ecommerce solutions become more desirable
for retailers.

Re:Imagined technology development:
• Development teams continue to identify re-design

opportunities for Re:Imagined technology that requires less
carbon intensive material, creates fewer transportation
emissions or reduces operational energy use.

Net Zero Programme:
• This opportunity will be analysed through our

Net Zero programme.

Scope and assumptions of financial impact analysis:

• We are currently unable to quantify the financial impact of this opportunity.

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

TCFD continued

b) Describe the impact of climate-related risks and opportunities on the organisation’s
businesses, strategy and financial planning
How identified climate-related issues have affected their businesses, strategy, and financial planning
In 2022 we clarified our fifth priority, and renamed it “Responsible business approach”. This priority provides a foundational
bedrock to the other four “pillars” in the strategy, enabling us to focus on our resilience and encompassing our activities
to address climate risk.

Several of the risks and opportunities identified above (Risks 3, 4, 5, 6 and 7) are to some extent addressed through the
delivery of our Net Zero Programme. This forms part of our work to develop our transition plan (see pages 74 and 75),
which is delivering our commitments to becoming a Net Zero business (see Metrics and Targets section below). Other risks
and opportunities identified above (Risks 1, 2, 3, 4 and 6) are addressed through mitigations which we consider to be part
of business as usual (e.g. insurance, governance, monitoring). Where mitigations are more strategic in nature, we have
described the impact of these on our business strategy in the areas set out in the table below.

The impact of climate-related issues on the organisation’s financial performance (e.g., revenues, costs)
and financial position
The climate-related risks, opportunities and scenario analysis which we disclosed in FY22 informed key sensitivities included
in our five-year plan, which was discussed at the Board’s annual strategy meeting in June 2023.

Risk mitigations and initiatives are factored into financial planning via enterprise-wide budgetary and capital allocation
processes. 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. Where mitigations are
more strategic in nature, we have set out below the extent to which our activities to address climate risk are currently factored
into financial planning.

Impact on strategy

Impact on financial planning

Fleet transformation (Investment in research and development, mitigation activities)

Link to risk(s)/opportunity: 5

Research and development
• Research and development includes collaboration

projects with vehicle manufacturers, to provide them
with real world testing of next generation vehicles.

Mitigation activities
• Mitigation activities include plans for the electrification

of our fleet to prepare for the UK Government ban
on the sale of new petrol and diesel cars and vans
(under 3.5 tonnes) by 2035.

• Electrification of our ORL van fleet is being conducted in
“tranches” to allow us to pilot technologies, provide data
and inform lessons learnt for future investments.

Energy diversification (mitigation activities, value chain)

Link to risk(s)/opportunity: 3

Research and development
• Collaboration projects with vehicle manufacturers
included in teams’ business plans and budgets.

Mitigation activities
• The business case for tranche 1 of our fleet transition,

proposed for FY24, has been approved by the ORL board.

• Ocado has contracted with a company which operates

• Energy prices are agreed with the company who operates

anaerobic digestion plants to recycle organic waste into
green energy for the UK national grid.

• There is an active project looking at solar photovoltaics

across all CFCs.

anaerobic digestion plants on a six-monthly basis.

• Commercials for solar photovoltaics at our CFCs are
being developed. Executive agreement has been
obtained for the core components, with the infrastructure
aspects now being costed for final Board approval.

Re:Imagined Technology

Link to risk(s)/opportunity: 5 and 7

• Development teams continue to identify re-design

• We are committed to a three-year partnership with

opportunities for Re:Imagined technology that requires
less carbon intensive material, creates fewer
transportation emissions or reduces operational
energy use.

xtonnes, a carbon analytics provider that supports our
work to develop a Net Zero Roadmap, and supports our
development teams in understanding the carbon footprint
of our products.

c) Describe the resilience of the organisation’s strategy, taking into consideration
different climate-related scenarios, including a 2°C or lower scenario
Scenarios used to inform the organisation’s strategy and financial planning
Last year we worked with external expert advisors to support the undertaking of scenario analysis. This scenario analysis
was reviewed in the FY23 reporting year, and updated as required. Our scenario analysis will be reviewed on an annual basis,
and updated when required.

During the year we have matured the financial modelling associated with our scenario analysis to support increased
quantification in our disclosures.

Our scenario analysis considered an Orderly Transition scenario and a Hot House World scenario so that we were informed by
a breadth of physical and transition risks. Whilst transition and physical risks are expected to occur in all scenarios, the Orderly
Transition scenario is characterised by high transition risks, whilst the Hot House World scenario is characterised high physical
risks. Additional information on these scenarios is included in the box below.

Climate scenarios
• These scenarios are aligned to climate scenarios defined by the Network for Greening the Financial System (“NGFS”)

https://www.ngfs.net/ngfs-scenarios-portal/, International Energy Agency (“IEA”) Carbon Price Models and the
Intergovernmental Panel on Climate Change Working Group I (“IPCC WGI”) Interactive Atlas.

• Proprietary Ocado operational data is overlaid to reflect the business strategy and trends.
• Our scenario analysis is performed over a 30-year timeframe, to 2050, aligning to the Paris Agreement and the

UK’s commitment in the Climate Change Act 2008 (2050 Target Amendment) Order 2019.

Orderly Transition
Description
• Climate policies are introduced early and gradually

become more stringent.

• Surface temperature is expected to stay below a

2°C increase.

Key scenario drivers
• Carbon pricing is introduced in the early 2020s and

gradually increases by 2030.

• Significant levels of investment into energy efficiency,
green electricity and storage, and carbon capture and
storage are sustained from 2030 to 2050.

• Transition risks are expected to grow in proportion with

climate action.

• Physical impacts are less severe (although not negligible)

in comparison with the Hot House World scenario.

Hot House World
Description
• Some climate policies are implemented, but global efforts

are insufficient in halting significant global warming.

• Surface temperature is predicted to increase within a

range of 3-5°C.

Key scenario drivers
• Carbon pricing is introduced in the early 2020s and

anticipated to have negligible changes through to 2050.
• While investment into energy efficiency, green electricity
and storage is still substantial, investment into fossil fuel
extraction and brown electricity generation is greater
than in the Orderly Transition scenario.

• Transition risks are initially relatively low as limited action

is taken.

• Physical risks are severe, with irreversible impacts.

Physical Risk Scenario Analysis
To understand our exposure to physical risk in additional detail, a third party supported a Physical Risk Scenario Analysis
across 25 of our CFC locations internationally (both Ocado- and client-owned sites). This analysis utilised the following
climate scenarios based on IPCC’s 6th Coupled Model Intercomparison Project (CMIP-6):

• <2 degrees Celsius SSP 1 – RCP 2.6

2-3 degrees Celsius SSP 2 – RCP 4.5

>4 degrees Celsius SSP 5 – RCP 8.5

This analysis examined the climate risk across eight different 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).

Through our risk and scenario analysis we consider our business to be resilient to the risks we have identified. This assessment
is supported by the mitigating actions previously described as well as other factors, including that:

• we run a diverse business across three operational segments, meaning that transition risks which impact particular sectors

pose less impact to us;

• we have a geographically distributed base of partners, providing a natural hedge against weather extremities; and
• we have established OIA to bring Ocado’s unique and proprietary technology to clients outside grocery, further diversifying

and spreading the impact of risk.

Transition plan
You can read about the Net Zero Roadmap on page 75. This forms part of our work to develop our transition plan.

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION4. Metrics and Targets
a) Disclose the metrics used by the organisation to assess climate-related risks and
opportunities in line with its strategy and risk management process and c) Describe
the targets used by the organisation to manage climate-related risks and opportunities
and performance against targets
The following section summarises the targets we use to manage climate-related risks and to realise climate-related
opportunities including targets linked to both an overarching reduction in emissions and a reduction in individual risks
or their impacts previously described.

Interim targets
Our carbon strategy, which we published last year, outlines our commitments to becoming a Net-Zero business in our
operations and value chain. For the first time this year we have published more detail relating to priorities we have set
to achieve our Net-Zero commitments (see Net Zero Roadmap on page 75). We have also taken steps to disclose
additional metrics this year, and will continue to mature our non-financial data. In future years interim targets will be
identified and informed by our Net Zero Roadmap and the ongoing development of non-financial metrics as appropriate.

Additional risk and opportunities metrics and targets
We continue to develop new metrics and approaches to help us manage our climate-related risks and opportunities and
improve our non-financial data capabilities for Risk 1. Extreme weather; Risk 2. Mandatory climate-related disclosures; Risk 4.
Natural resources and opportunity; and Risk 7. Low-carbon MHE.

TCFD continued

3. Risk Management
a) Describe the organisation’s processes for identifying and assessing climate-related risks
Our ERM approach has identified Climate, environment and geopolitical as a principal risk. Therefore, the approach to identify,
assess and manage this risk on an ongoing basis follows our overall risk management approach which is described on pages
103 to 106. Risk and opportunity identification is performed at Ocado Group level, with our process allowing us to categorise
risks as applying to Ocado Technology Solutions or Ocado Logistics. We maintain alignment with ORL, which manages its
risk process independently, via our governance structure (see pages 83 and 104), and which has a roadmap to publish
its TCFD disclosure in 2024. Refer to the ‘How we manage our risks’ section (page 103) for additional detail on how we
maintain alignment between Ocado Group and ORL.

Our ERM approach allows for the continual identification and assessment of climate-related risks. For each principal risk we
consider additional characteristics which are pertinent to that risk, so as part of an annual review, climate-related risks and
opportunities are identified and assessed considering additional characteristics in line with TCFD requirements. This includes
geography, timeframe, and specific categories of risk, opportunity and impact. Amongst other considerations, ongoing climate
risk reviews include assessment of impact on products and services; supply chain; mitigation activities; investment in research
and development; and operations. Risks such as compliance with existing and emerging regulatory requirements related
to climate change are considered against principal risks such as Climate, environment and geopolitical (page 111) and
Regulatory and compliance (page 110).

Our approach to identify and assess climate-related risks and opportunities built on work performed in previous years
when we engaged external subject matter experts to obtain additional external information and data, and this year reflected
the following:

• Enterprise Risk team review of a “long-list” of climate-related risks and opportunities.
• Informed by prior risk assessment activities, 18 climate-related risks and eight climate-related opportunities were selected
for review through key stakeholder interviews, which sought to prioritise the risks by reviewing the business impact of the
risks/opportunities and the time horizon from which risks could likely begin to have an impact.

• Key risks were prioritised based on the results of the outcome of key stakeholder interviews and considering

expected impact.

• Key risks were further assessed, managed and monitored in line with our principal risk process.

The Enterprise Risk team, working with stakeholders across the business, undertook additional scenario analysis and financial
modelling on those key risks which are scenario specific or which have characteristics which can be modelled.

During the year we also engaged external subject matter experts to obtain additional external information and data to fully
assess and perform scenario analysis in relation to Physical Risks.

b) Describe the organisation’s processes for managing climate-related risks
Key risks are assigned to senior owners in line with ERM practice. Neill Abrams and Stephen Daintith are the Risk Owners
of the Climate, environment and geopolitical principal risk. Tactical risk management decisions are taken by management
groups previously outlined (see page 84), with oversight provided by the ESG Committee and Risk Committee. Strategic risk
mitigation decisions are taken by the ESG Committee, and regularly reviewed to ensure they remain relevant and on track.
The Risk Committee meets quarterly and reviews the management of all principal and key risks at least once a year as part
of our annual risk review process, including decisions to mitigate, transfer, accept or control risks.

c) Describe how processes for identifying, assessing and managing climate-related
risks are integrated into the organisation’s overall risk management
See above how climate-related risks are identified, assessed and managed in line with our overall risk management approach.

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONTCFD continued

The metric
we use to
monitor
progress

Target

Performance

Explanation

Trend

FY23

FY22

The metric
we use to
monitor
progress

Target

Performance

Explanation

Trend

FY23

FY22

2. Climate risk disclosures

CDP score

We have not
currently set
a target.

▽

△

0.083 kWh/Each

0.081 kWh/Each

CDP rating is the independent global standard
widely used by investors to judge the maturity of
an organisation’s preparedness for climate change
and disclosure. We use it internally to measure our
own preparedness to meet investor and regulator
expectations.

The reduction is due to the introduction of new
requirements that we are working towards, such
as assurance over our Scope 3 emissions

The majority of electricity we purchase relates to
running premises, of which our UK CFC network
comprises a significant component.

Although the overall trend is increasing, electricity
consumption (kWh/Each) at all UK CFCs except
for Hatfield and Luton decreased in comparison
with last year. The Hatfield CFC closed and the
Luton CFC opened during the year meaning that
these sites were not operating as usual. Excluding
these sites electricity consumption (kWh/Each)
decreased by 10.7%.

How we calculate this
This is calculated using the total electricity consumption (kWh) for UK CFCs (i.e. excluding spoke and Zoom sites).

Electricity consumption is divided by the total number of eaches (a single product item) the UK CFCs have picked
for Ocado Retail and Morrisons.

Due to the relatively low material nature of electricity consumption, this was measured for the closest 12 months
of best fit.

△

11.3%

There are various initiatives ongoing to diversify
our supply of electricity.

The increase in this metric reflects that we used an
anaerobic digester to provide electricity for the
first time this year.

How we calculate this
This is calculated using the total electricity produced from non-grid sources (MWh) during the year.

Electricity produced by anaerobic digestion (MWh) is divided by the total electricity consumption (MWh) for UK
CFCs (i.e. excluding spoke and Zoom sites).

Due to the relatively low material nature of electricity consumption, this was measured for the closest 12 months
of best fit.

Note that our anaerobic digester came live as of April 2023, operating for eight months of the year.

–

1.2%

A large proportion of our direct emissions 91.4%
comes from operating our fleet. The majority of the
fleet we operate are vans (under 3.5 tonnes) and
trucks (above 26 tonnes).

This metric allows us to monitor progress
transitioning our van fleet to zero emission
technology. Tranches of van fleet electrification
have been proposed (see page 76).

Additional metrics relating to our trucks may be
developed in the future.

How we calculate this
This is based on the fleet of Ocado Retail and Morrisons vans we operate, and is calculated by taking the number
of zero emission vehicles as a percentage of the total number of Ocado Retail and Morrisons vans we operate.

3. Energy usage

CFC electricity
consumption
(kWh/Each)

This is our first
year disclosing
these metrics.
As we continue
to develop the
metrics and
targets we
monitor to
manage our
climate-related
risks and
opportunities
we will consider
setting targets
as appropriate.

Electricity
produced
from non-grid
sources
(% of total
electricity
consumption)

5. ICE vehicles ban

Van fleet
utilising zero
emissions
technology
(%)

Net Zero fleet
by 2035
(Scope 1)

6. Net Zero challenge

Scope 1
emissions

Net Zero in our
own operations
by 2035 (Scope
1 and 2) will be
delivered across
multiple work
streams
including:

• Net Zero fleet

by 2035
(Scope 1)

• Net Zero dry
ice by 2030
(Scope 1)
• Net Zero

refrigeration
by 2035
(Scope 1)

% of UK sites
using
renewable
electricity
sources

100% renewable
electricity
sources by
2023

Scope 2
emissions

(Location-
based)

Net Zero in our
own operations
by 2035 (scope
1 and scope 2)

▽

93,293
Tonnes CO2e

96,386
Tonnes CO2e

For Ocado Group, this reflects our Logistics
operations serving UK clients (i.e. ORL and
Morrisons). A large proportion (98.4%) of this
comes from operating our fleet of vans and trucks.

The Scope 1 emissions have reduced by 3.2%
primarily due to a significant decrease in the
volumes of dry ice used in our operations.

How we calculate this (See Basis of Reporting for supplementary detail)
Scope 1 includes direct CO2e emissions that originate from assets under Ocado’s operational control. This
includes fuel consumption from our complete vehicle fleet and emergency backup generators, natural gas used
by our facilities (leased and owned) (for offices located in North America, an estimation of the energy used is
made based on the square footage of the property), refrigerant gas losses, dry ice for cooling, and compressed
natural gas consumed within our HGV fleet. Emissions are calculated by multiplying the consumption by the
relevant emissions factors.

Specific inputs include:

• total fuel consumed (litres);
• total natural gas consumed (kWh) – estimated for the final month of the reporting period;
• total refrigerant gas (kilogrammes);
• total dry ice delivered (tonnes) – estimated for the final month of the reporting period; and
• total compressed natural gas consumed (kilogrammes).

Emissions are reported in line with our financial year. Due to the relatively low material nature of natural gas
consumption; refrigerant gas consumption; fuel consumption for backup generators; dry ice consumption; and
compressed natural gas consumption, this was measured for the closest 12 months of best fit.

Complete – All of the electricity purchased by Ocado Group is Renewable Energy Guarantees of Origin (“REGO”)
certified, excluding those sites where electricity is provided by the landlord and therefore is outside of our control.

How we calculate this
This is calculated as a percentage of the electricity we purchase for Ocado Group sites which utilise REGO
certified electricity.

△

21,145
Tonnes CO2e

21,098
Tonnes CO2e

Scope 2 emissions have remained in line with prior
year primarily due to the use of an anaerobic
digester at one of our sites which offset the
additional electricity consumed across our CFCs.

How we calculate this (See Basis of Reporting for supplementary detail)
Scope 2 includes all indirect CO2e emissions in relation to the consumption of electricity, and district heating and
cooling by assets under Ocado’s operational control. Consumption is measured in kWh, based on invoices,
multiplied by the relevant emissions factors. For properties located in North America, energy consumption is
estimated based on the square footage leased.

Due to the relatively low material nature of electricity consumption and district heating and cooling, this was
measured for the closest 12 months of best fit.

With regard to electricity consumption, an estimate is made for the final month of the reporting period (the final
two months are estimated in Poland).

Specific inputs include:

• total electricity consumed (kWh); and
• total heating and cooling consumed (kWh).

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONTCFD continued

The metric
we use to
monitor
progress

Target

Trend

Performance
FY23

FY22

Explanation

6. Net Zero Challenge (continued)

▽

154,962
Tonnes CO2e

226,411
Tonnes CO2e

Scope 3
emissions

Net Zero in our
value chain by
2040 (Scope 3)
will be delivered
across multiple
work streams.

Refer to page 75
for details of
Ocado Group
Net Zero
Programme.

For Ocado Group, this reflects the
provision and operations of the global
Technology Solutions platform. A large
proportion (54.7%) of this comes from
purchases of equipment or services to
run our technology and clients use of
our technology.

Scope 3 emissions have decreased
primarily due to a reduction in capital
expenditures (3.2 Capital Goods), in
particular on high carbon intensity items.

Emissions were further reduced due to
fewer freight journeys being required
during the year.

How we calculate this (See Basis of Reporting for supplementary detail)
Scope 3 emissions are calculated using actual, estimated or modelled data, and the relevant emissions
factors. For the nine Scope 3 categories relevant to Ocado Group specific inputs include:

• 3.1 Purchased Goods and Services: payments made to third-party suppliers categorised as providing

goods and services;

• 3.2 Capital Goods: payments made to third-party suppliers categorised as providing capital goods;
• 3.3 Fuel and Energy Related Activities: Scope 1 and Scope 2 energy usage multiplied by the relevant

“well-to-tank” emissions factor;

• 3.4 Upstream Transportation and Distribution: transportation and logistics journeys identified in central
procurement data, both “upstream” (i.e. journeys to Ocado Group) and “downstream” (i.e. journeys to
clients);

• 3.5 Waste Generated in Operations: waste and waste water data for all properties where the information

was available. Where not available, the emissions were included in category 3.1;

• 3.6 Business Travel: travel data from Ocado Group’s travel provider, covering the air, rail and public

transport travel of Ocado Group employees, as well as hotel stays and rental vehicles;

• 3.7 Employee Commuting: based on a commuting survey used to estimate employee’s commuting

behaviour for which 1,200 responses were received;

• 3.13 Downstream Leased Assets: Based on the average energy use of the various pieces of hardware of

a typical module; and

• 3.15 Investments: the most recent full year revenue from an investee company on which Ocado does not

have operational control, adjusted for the Group’s share of ownership.

b) Disclose Scope 1,
Scope 2 and, if appropriate,
Scope 3 greenhouse
gas (GHG) emissions,
and the related risks
Methodology
Our GHG emissions have been
calculated in line with the GHG
Protocol: A Corporate Accounting and
Reporting Standard (revised edition),
developed by the World Resources
Institute/World Business Council
for Sustainable Development.
Ocado has selected the operational
control approach to define our
reporting boundary.

Accordingly, in line with the
Streamlined Energy and Carbon
Reporting (“SECR”) requirements,
we set out in the table below the Scope
1, Scope 2 and Scope 3 GHG emissions
for Ocado Group. Ocado has selected
the operational control approach to
define our reporting boundary,
meaning that GHG emissions relating
to ORL controlled activities are
excluded from the Group footprint.

However, as a large unquoted
company, ORL falls under the SECR
reporting requirements and therefore
we have set out in the table on page
102 the Scope 1, 2 and 3 (Category 6.
Business Travel (where responsible for
fuel)) GHG emissions for ORL.

Following the operational control
approach adopted to define our
reporting boundary, the GHG
emissions for Ocado Retail are
exclusive of the GHG emissions
for Ocado Group.

Refer to the Ocado Group “Basis of
Reporting” document on our website
at https://www.ocadogroup.com/
our-responsible-business/corporate-
statements/ for more information
relating to the methodologies,
inclusions and exclusions.

Ocado Group SECR reporting
Reflecting the maturity of our UK
operations, we have reported our
Scope 1 and 2 emissions since 2012/13.
Since then, we have delivered a
cumulative 48.7% reduction in Scope 1
and 2 carbon intensity (as defined by
our location-based intensity KPI
measure of tCO2e per 100,000 orders),

Scope 1 and 2 greenhouse gas (GHG) footprint and energy efficiency

even as total emissions have increased
by 87.2%, reflecting the rapid growth
of our UK Partners.

Energy efficiency initiatives
implemented during the year include:

• LED lighting: the roll-out of LED

lighting has been completed across
the majority of our UK CFCs, spokes,
and Zoom sites, to be completed
in 2024.

• 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.
• Driver efficiency technology:
during the year our new in-cab
vehicle training system, Lightfoot,
has undergone successful trials at
Purfleet and Walthamstow, and
commenced full implementation
across our van fleet. This is an
in-vehicle training and coaching
technology to enhance the driving
skills of our workforce. We also
updated the driver efficiency
technology in our truck fleet.

Ocado Group SECR reporting1

Scope 1 – Direct emissions

of which UK

Scope 2 – Indirect emissions

Location-based

of which UK

Market-based

of which UK

Total Scope 1 & Scope 2 emissions (Location-based)

of which UK

Total Scope 1 & Scope 2 emissions (Market-based)

of which UK

Energy consumption associated with
Scope 1 & Scope 2 emissions

of which UK

Scope 1 & Scope 2 emissions intensity measure

Location-based

Market-based

Energy consumption

2021/22

96,386

96,347

21,098

20,629

815

301

117,484

116,976

97,201

96,648

491,834

Year on
year change

(3,093)

(3,080)

(52)

(122)

(3,046)

(3,132)

(3,021)

(3,202)

5,122

494,982

490,168

4,814

422

348

1,835

458

379

1,916

(36)

(31)

(81)

Unit

2022/23

93,293

93,267

21,145

20,577

887

179

114,438

113,844

94,180

93,446

496,956

tCO2e

MWh

tCO2e/
100,000
orders

MWh/
100,000
orders

100

1. Uses World Business Council for Sustainable Development/World Resources Institute Greenhouse Gas Protocol: A Corporate Accounting Standard revised edition

methodology with an operation control approach. Refer to page 210 for more information relating to the methodology and conversion factors used.

101

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

TCFD continued

Scope 3 GHG emissions by category

Scope 3 emissions table by category1

3.1 Purchase Goods & Services

3.2 Capital Good

3.3 Fuel and Energy-Related Activities

3.4 Upstream Transport

3.5 Waste in Operations

3.6 Business Travel

3.7 Employee Commuting

3.13 Downstream Leased Assets

3.15 Investments

Total Scope 3 GHG emissions2

FY23
(tonnes
CO2e)

21,887

36,347

29,072

10,824

1,161

11,202

24,195

15,752

4,522

FY22
(tonnes
CO2e)

Year on year
change
%

24,637

90,509

28,723

30,561

1,138

8,233

25,389

13,296

3,925

-11%

-60%

+1%

-65%

+2%

+36%

-5%

+18%

+15%

154,962

226,411

-31.6%

1. Scope 3 emissions from prior year have been restated, in line with the GHG Protocol and Ocado’s Restatement Policy, to reflect a change in methodology with regard

to our MHE which are now reported under category 3.13 Downstream Leased Assets and data improvements identified during the year.

2. Category 8 (Upstream Leased Assets), 9 (Downstream Transportation and Distribution), 10 (Processing of Sold Products), 11 (Use of Sold Products), 12 (End of Life Treatment

of Sold Products) and 14 (Franchises) are not relevant to Ocado Group as we do not have operations that relate to these categories.

ORL SECR reporting
ORL’s gross total GHG emissions Scope 1, Scope 2 (location-based) and Scope 3 (Category 6. Business Travel
(where responsible for fuel)) for FY23 are 385 tonnes CO2e (FY22: 454 tonnes CO2e). ORL’s footprint is solely UK-based.

The methodology used is the WBCSD/WRI Greenhouse Gas Protocol: a corporate accounting standard revised edition
in conjunction with UK Government environmental reporting guidelines including SECR guidance. An operational control
approach has been taken. We have used the UK Government GHG conversion factors for company reporting 2023. Scope 2
emissions from purchased electricity are reported using a location-based approach, with emissions also calculated using a
market-based approach.

ORL total energy consumption for FY23 is 1,922 MWh (FY22: 2,368 MWh). This includes the company’s share of electricity and
natural gas usage for the Apollo Court building and Sunderland building, and transport fuels for business travel in employee-
owned cars and hire cars. It should be noted that since July 2021 ORL has been accounting for 100% of consumption at Apollo
Court building, against 72% previously due to the building being shared with Ocado Group.

The emission reduction in FY23 comes from a reduction of energy consumption at Apollo Court.

ORL is not reporting any energy efficiency actions this year.

Ocado Retail SECR reporting1

Scope 1 – Direct emissions

Scope 2 – Indirect emissions

Location-based

Market-based

Total Scope 1 & Scope 2 emissions (Location-based)

Energy consumption associated with
Scope 1 & Scope 2 emissions

Scope 1 & Scope 2 emissions intensity measure

Scope 3 emissions –
Category 6. Business Travel (where responsible for fuel)

Unit

2022/23

2021/22

2020/21

tCO2e

120

146

117

tCO2e

MWh

tCO2e/
100,000
orders

tCO2e

246

366

1,922

1.8

284

430

2,368

2.2

215

332

1,697

1.8

1. Uses World Business Council for Sustainable Development/World Resources Institute Greenhouse Gas Protocol: A Corporate Accounting Standard (revised edition)

methodology with an operation control approach, using UK Government GHG conversion factors.

Internal carbon price
We have assessed the potential financial impact of the risk of policies on sustainable materials (including carbon pricing) on
page 90. This analysis shows that in the short term we do not expect there to be an impact relating to the construction of CFCs
(as we do not plan to build any new CFCs in the UK in the short term), or MHE costs (we will manage this through our supply
chain management and procurement policies and procedures). In light of this we have not set an internal carbon price. The
approach we have adopted to developing our Net Zero Roadmap considers the financial costs and benefits alongside the
carbon reduction potential of initiatives.

102

How we manage our risks

Ocado Group’s Enterprise
Risk Management (“ERM”)
enhances our resilience
and improves confidence in
the delivery of our strategy
and business objectives.

Risk management
principles and culture
During the year we continued the
evolution of our risk management
approach to improve governance
and operations, and enhance our
stakeholder value.

Organisation
Our risk organisation is structured
around a collaborative three lines
model, with the participation of the
underlying teams continually evolving
to meet our changing business needs.

Our second line teams provide
targeted monitoring and guidance
to ensure effective identification,
assessment, management and
monitoring of our risks across
the full span of the business.

Risk organisation three lines model framework

Governance (Board and Audit Committee, Risk Committee)
Role: establishes the strategic objectives of the business
and provides governance and oversight of ERM

Governing body roles: integrity, leadership and transparency

Delegation,
direction,
resources,
oversight

Accountability,
reporting

Management
Actions (including
managing risk) to achieve
organisational objectives

First line
roles:
Provision of
products/
services to
clients;
managing
risk

Second line
roles:
Expertise,
support,
monitoring
and
challenge on
risk-related
matters

Alignment,
communication,
co-ordination,
collaboration

E
x
t
e
r
n
a

a
s
s
u
r
a
n
c
e
p
r
o
v
d
e
r
s

Internal Audit
Independent
assurance

Third line roles:
Independent and
objective assurance
and advice on all
matters related to
the achievement
of objectives

R
e
g
u
a
t
o
r
y
b
o
d
e
s

Process
Our risk management framework adopts an end-to-end four-stage approach. Evaluation and mitigation of our risks are
owned by the business.

1. Set strategy: Our strategy informs the setting of objectives across

the business as described on page 21. The Board and Executive Committee
members evaluate the principal risks and associated risk appetite for
the Group.

2. Evaluate risks: Segment directors and second line teams identify and

evaluate risks significant to each of their areas. Identified risks are assessed
(considering likelihood and impact) and challenged on the basis of reasonable
worst case scenarios. Risks are recorded in operational registers. Those
considered significant to the Group are escalated to the enterprise register
(key risks) which inform our principal risk assessment.

3. Implement mitigation: Taking account of risk appetite, management

determines how risks will be managed. Mitigation information is added
to the operational and key risk registers as appropriate to determine
residual exposure.

4. Review risks: The Enterprise Risk team in conjunction with the

Risk Committee oversees the risk management process. Group-wide risks
and mitigation processes are regularly reviewed by the Risk Committee and
Audit Committee.

This was the process for identifying, evaluating and managing the principal risks
faced by the Group that operated during the period and up to the date of this
Annual Report. Such a system can only provide reasonable, and not absolute,
assurance, as it is designed to manage rather than eliminate the risk of failure
to achieve business objectives.

Set
strategy

Review

risks4.

Evaluate

risks2.

Implement
mitigation

103

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

How we manage our risks continued

Risk management
governance
Risk management delivery is governed
by the Board and a structured set of
Committees:

• The Board is responsible for the
review and approval of the risk
management framework and Ocado
Group’s principal and emerging risks.
As part of its annual strategy review,
the Board also reviews and approves
the associated risk appetite.

• The Audit Committee, delegated

by the Board, is responsible for the
review of the effectiveness of risk
management, the system of internal
control, the monitoring of the quality
of financial statements and
consideration of any findings
reported by the external auditor,
Deloitte, in relation to Ocado’s
control environment and its
financial reporting procedures.

• The Risk Committee reviews

principal, key and emerging risks,
and monitors effectiveness of risk
management and risk appetite
across the Group. The Committee
is chaired by an Executive
Committee member. Attendees
include other executives and the
Chair of the Audit Committee, and
the Risk Committee is directly
supported by the Enterprise Risk
team. The Committee reviews a full
enterprise risk report twice a year
which is, in turn, discussed by the
Audit Committee and the Board.
• The Risk Committee is supported
by specialist risk committees and
second line teams covering risk
areas such as information security,
safety, ESG and data privacy.

Internal Audit supports the Audit
Committee and Risk Committee in
reviewing the effectiveness of the
risk management framework and
the management of individual risks
driven by a risk-based audit plan.

We have an ERM Policy which
covers the management of risks,
encompassing ESG matters. This
has the purpose of protecting and
enhancing enterprise value. The
Company has a number of other
policies which cover specific
ESG topics. You can find further
detail on these policies on page 81.

Strengthening our
framework
The Board assumes ultimate
responsibility for the effective
management of risk across the Group,
determining its risk appetite and
monitoring the implementation
of appropriate internal controls.
The Audit Committee has delegated
responsibility from the Board for the
oversight of the Group’s systems of
risk management and internal control.
The key features of the Group’s risk
management and internal control
systems that underpin the accuracy
and reliability of financial reporting
include:

• a three lines of defence model and
an organisational structure with
clearly defined lines of accountability
and delegation of authority;
• the Group’s Code of Conduct

and a framework of policies and
procedures that cover key areas,
financial planning and reporting;

• a capital expenditure approval policy

and governance that controls
Ocado’s capital expenditure;

• a Risk Committee, a Risk team, and a
Financial Controls team which help
monitor Ocado’s risks and controls;
• an Information Security Committee
and an Information Security team
which monitor Ocado’s information
security and a Personal Data
Committee and Data Protection
team that support data privacy
governance; and

• an Internal Audit function that

provides independent assurance on
key risks, controls and programmes.

Deloitte, the independent auditor,
provides independent assurance.

The Board has delegated responsibility
for reviewing the effectiveness of the
Group’s systems of risk management
and internal control to the Audit
Committee, which includes financial,
operational and compliance controls
and risk management systems.

In making an assessment on
effectiveness, the Audit Committee
relies on a number of sources of
assurance from the Group, including
the following:

1. Internal Audit: The Group’s primary
source of internal assurance is through
delivery of the Internal Audit plan,
which is structured to align with the
Group’s strategic priorities and
principal risks, and is developed by
Internal Audit with input from
management and the Audit Committee.
The plan is reviewed periodically
throughout the year to confirm it
remains relevant for new and emerging
risks and circumstances, both internal
and external and to adjust for the
growing complexity of the Group. The
findings and actions from Internal Audit
reviews are agreed with the relevant
business area, communicated to the
Audit Committee and tracked through
to completion or risk acceptance.

2. Management updates and risk deep
dives: The Audit Committee Chair
gains additional insight on the
management of risk in Ocado, by
attending the Group’s regular Risk
Committee meetings. The Risk
Committee, receives reports from the
business on a range of risk topics and
discusses principal risks and risk
appetite. As part of the Risk
Committee’s annual calendar, it receives
updates on various risk areas including
finance risks, business continuity,
finance transformation, compliance,
whistleblowing and fraud.

3. Monitoring: A broad range of
activities have been designed and
established across the business to
monitor key risk areas, such as health
and safety and privacy. The OSP
platform is subject to independent
attestation of its IT security controls
under the SOC2 assurance standard.
The results of these assurance
activities are reported to the Audit
Committee and the Board.

4. Operational oversight: Various
governance committees and operational
forums provide oversight and challenge
on key risk areas within individual
business areas including fire, health
and safety, DE&I, sustainability, cyber,
fraud, whistleblowing, compliance,
technology, AI, data governance and
other areas of regulation or risk. The
output from these committees is part
of the periodic updates provided to
the Audit Committee.

Ocado Retail
Ocado Retail governs the
management of risks and opportunities
independently from the Ocado Group
risk governance structure. To maintain
alignment we consider risk in relation
to our activities and investment in
Ocado Retail supported by half-yearly
meetings. Ocado Group’s Audit
Committee and Risk Committee
formally review the Ocado Retail
principal and key risks as part of their
half-year and full-year risk reviews.

Risks of significance are set out below:

• Geopolitical and economic

uncertainty given the current
situation with higher fuel, utilities
and cost prices, and continuing
events in Ukraine.

• Failure to maintain a retail
proposition that appeals
to a broad customer base.

• Cybersecurity – the Transitional

Services Agreement for IT services
from Ocado Group comes to an end
in 2024, and consequently Ocado
Retail will assume full management
of this risk.

Other joint ventures
and associates
The Board has oversight of risk
management and internal control
for wholly-owned subsidiaries.
For joint ventures and investments,
risk management and internal control
are managed via their own boards
and management teams.

Our emerging risks are provided to the
Risk Committee for further scrutiny.
Our response is to then decide either
to monitor or manage the risks that are
reported up to the Audit Committee
and Board. This process helps to
identify when an emerging risk should
be considered for transition to an
active risk and is then incorporated
into the relevant level of the risk
management framework.

Our process identified one emerging
risk of note. Our ability to harness
disruptive technologies such as
generative AI within our OSP product
set or operations is an emerging risk
and opportunity being actively
pursued. Whilst we already have a
range of mature and impactful AI use
cases, we will continue to explore
further applications in 2024. As with
all new technology this space is not
without risk. Successful adoption will
need to align with our responsible AI
commitments; and AI’s increasing
availability in the business environment
may increase our risk of cyber attack
and IP protection risk.

Setting risk appetite
Risk appetite is the level of risk that
we are willing to accept in pursuit
of our strategy, before any action is
determined to be necessary in order to
reduce that risk. The assessment takes
into account significant ESG matters,
climate-related risks, our regulatory
environment, culture, and the
geographies in which we operate.

We monitor our risk levels against
appetite at the Board and Risk
Committee using a five-point scale
ranging from “open” (meaning that
we are willing to take justified risks
to achieve highest return and accept
possibility of failure) to “averse”
(meaning that avoidance of risk is
a core objective, and we will always
select the lowest risk option). For
example, a lower appetite is adopted
in relation to safety and regulatory and
compliance risk matters, and a higher
appetite in relation to innovation topics.

The Committee has also considered
the control findings raised in the
independent auditor’s reports.

The Group was compliant throughout
the year with the provisions of the UK
Corporate Governance Code relating
to risk management and internal
control systems. No significant failings
or weaknesses in these systems were
identified by the Audit Committee’s
review in respect of the period and
up to the date of this Annual Report.
Where the Committee identifies areas
requiring improvement, processes are
in place to ensure that the necessary
action is taken and that progress
is monitored.

You can read more about the Audit
Committee’s role on pages 144 to 153.

Principal and
emerging risks
Principal risks are considered in
the context of how they relate to the
achievement of the Group’s strategic
objectives. Emerging risks are less
defined than our Group principal risks
and typically do not pose an immediate
threat. They are future focused,
with greater uncertainty and are
more difficult to quantify; however,
they could threaten the future delivery
of our strategy. Set out on the pages
below are details of the principal risks
and uncertainties for the Group, and the
key mitigating activities used to address
them. This includes an assessment of
the residual (or post-mitigation) risk
movement during the year for each
principal risk and uncertainty.

Details of consideration given to
finance risks by the Company are
set out on pages 112 to 114 and
278 to 280

Details of consideration given to
climate-related risks by the Company
are set out on pages 86 to 93

Details of Going Concern and Viability
Statements are set out on pages 112
to 114

We identify new emerging risks and
trends using inputs from analysis of
the external environment and internal
sources. We work with the relevant
teams across the business to
understand the potential impacts
of identified emerging risks. In some
cases, the information may be
insufficient to determine the scale
or define a mitigation plan.

104

105

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONHow we manage our risks continued

Changes to our principal
risks during the year
We have 10 principal risks and during
the year there was a comprehensive
review undertaken, including an
assessment of the key control
activities, alignment to risk appetite
and any future mitigating actions.
This resulted in the following changes
in the principal risks:

• We have combined product

innovation, performance and IP into
a single principal risk (Product
innovation protection & performance)
as managing our IP risk helps protect
our innovation.

• Partner success has been separated

from Product performance.

• We have combined Geopolitical and
economic uncertainty and Climate
into a single principal risk (Climate,
environment & geopolitical) because
of the commonality of many of the
risk drivers.

• We have included our OIA product
offer in our assessment of principal
risks for the first time this year. OIA
remains a substantially less material
part of the overall business risk.

• We have introduced a new principal

risk called Liquidity & cash
management to reflect the need
to maintain sufficient liquidity to
fund our growth plans and to meet
our obligations.

• The risk Product commercial
proposition is now called
Market proposition.

The following risks increased in year:

• Partner success – throughout

this report we discuss the partner
success activities and progress,
including initiatives to increase
warehouse productivity, drive more
efficient last mile economics and
optimise the consumer-facing front
end experience. While our partner
success initiatives expanded in
2023, it is still early days and the
Board recognises that our partners’
success will ultimately determine
Ocado’s success and significant
further progress is needed to
measure the effectiveness of
our initiatives. Consequently the
partner success risk has increased.
• Cybersecurity & data – the greater

risk posed in the external
cybersecurity environment, coupled
with the risks posed by the adoption
of AI by the business, means that the
cyber security threat is considered
to have increased for Ocado.
• Regulatory & compliance – there
has been a significant increase in
regulation impacting the operation
of the business and how it reports
to stakeholders. The regulations
are varied and include emerging
non-financial and environment
reporting requirements and new
cyber, AI and data regulations, as
well as laws impacting our supply
chain and growing global footprint.

Risk movement key:

Decreasing

No change

Increasing

Link to strategy key:

1. Grow our revenue

2. Optimise OSP economics

3. Deliver transformational technology

4. Drive success for our partners

5. Embed a responsible
business approach

Responsible business key:

Our people and skills for the future

Environment and natural resources

Platform resilience and innovation

Market proposition
OSP & OIA

Partner success
OSP

What is the risk?
Our OSP and OIA product offer, features, implementation
schedule, pricing or terms may not be sufficiently
attractive to potential partners or may not be commercially
attractive to them at a level that delivers adequate and
sustainable returns for us.

Key risks
• Commercial viability both for us and our partners
• Our pricing is not competitive
• The functionality of our products is not

sufficiently attractive

• We fail to market our products professionally
• Competitive environment

What is the risk?
We invest in robots and MHE alongside our partners in the
CFCs that we develop for them and we rely on the growth
of our partners’ online businesses to generate appropriate
economic returns from this investment. If our partners do
not achieve sustainable returns from their investment then
they may not expand their utilisation of the capacity that
we have jointly invested in, in which case we may fail to
generate our planned returns. It is also possible that if
our partners are unable to generate acceptable returns
themselves they may close existing CFC facilities.

Key risks
• Partners may be unable to generate sufficient demand to
fill the capacity of the CFCs in which they have invested
• Partners may be unable to operate their online grocery
businesses efficiently enough to generate the planned
returns, including the ability to generate density in last
mile operations

• The strategies that our partners adopt may compromise
their ability to generate viable ecommerce businesses

Risk owner
John Martin, Mark Richardson

Movement

Link to strategy

Risk owner
John Martin

Movement

Link to strategy

Responsible business

How we manage this risk
• Our regional and commercial teams undertake quarterly pricing
reviews, review market pricing and seek price disclosure from
prospective partners to ensure that we remain competitive.
• We analyse prospective partner profitability to ensure that our

products can deliver benefits to both ourselves and our partners.
Ocado is in the position of running a large scale operation of our
own using the same products that we are selling to our clients,
which provides us with a unique and valuable perspective of the
value that our products bring.

• We constantly develop our products to reduce their costs

in order to maximise market appeal and commercial viability.

How we manage this risk
• We have established and expanded our Partner Success teams
with the sole aim of supporting our partners in the profitable
growth of their online businesses. The Partner Success teams
include specialists in ecommerce, marketing, retail media,
retention, operations, last mile and solutions.

• We review and benchmark partner performance at least monthly

to identify areas for improvement which we discuss with
our partners.

• We review our technology roadmap with our partners to identify
specific, relevant features that we can develop to support their
growth and profitability.

• We review the features and functionality that our solutions

• We develop training and development materials and

provide, and discuss this with potential partners to understand
how well our solutions fulfil their needs and determine whether it
is appropriate to develop specific features that our prospective
partners require.

• We invest substantially in product teams to develop our
technology roadmaps to ensure that our products are as
relevant as possible and cost effective to our current and
prospective partners.

• We invest significant sums in the development of our products

to ensure that they remain leading-edge.

• We assess the potential for new business in each of our three

international regions.

• In 2023 we launched OIA to deploy our product to a new market

segment (see page 32 for more information relating to OIA).

• Our Board approves all material new deals.

best-practice information which we share with our partners.
• We appoint dedicated account management and development

teams to support professional account management and partner
success. These teams are encouraged to locate either on or
close to partner sites.

• See page 15 for further information on partner success.

106

107

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
How we manage our risks continued

Risk movement key:

Decreasing

No change

Increasing

Link to strategy key:

1. Grow our revenue

2. Optimise OSP economics

3. Deliver transformational technology

4. Drive success for our partners

5. Embed a responsible
business approach

Responsible business key:

Our people and
skills for the future

Environment and
natural resources

Platform
resilience
and
innovation

Product innovation,
protection & performance
OSP & OIA

Supply chain

Talent & capability

Cybersecurity & data

What is the risk?
Our innovation and development processes may not meet
partner needs, or we may fail to provide protected, reliable
and commercially viable products. This could undermine
our ability to attract and retain partners.

What is the risk?
Disruption in our extended and complex supply chain
may adversely affect product availability and responsible
sourcing. This could result in increased costs and fines,
delays to contractual commitments and loss of revenue.

What is the risk?
Difficulty in filling key positions, a loss of top performers
and an inability to embed diversity could undermine
business operations and growth plans.

What is the risk?
The disruption or loss of critical assets and sensitive
information as a result of a cyber attack, insider threat or a
data breach within our Group network or our supply chain
could result in business interruption, reputational damage
or regulatory impacts, for both Ocado and our partners.

Key risks
• Product strategy and roadmap
• Disruptive technologies are not adopted and invested

in early enough, e.g. AI

• IP infringement and lack of protection
• Insufficiently sustainable design
• Insufficient product quality and performance
• Site implementation timeframes

Risk owner
James Matthews, Neill Abrams

Movement

Link to Strategy

Key risks
• Contract performance and forecasting demand
• Regulation and responsible sourcing (natural resources)
• Supplier dependencies

Risk owner
James Matthews

Movement

Link to Strategy

Key risks
• Retention and rewards
• Attraction
• Training and development
• Diversity and inclusion
• Succession planning
• Culture and wellbeing
• Organisational structure

Risk owner
Claire Ainscough

Movement

Link to Strategy

Key risks
• Deliberate destruction of systems
• Commercial data loss
• Third party compromise
• Infrastructure outage
• Personal data loss

Risk owner
James Matthews

Movement

Link to Strategy

Responsible business

How we manage this risk
• The Technology Solutions Committee and Risk Committee

provide overarching governance.

• Our design development (or engineering) teams undertake
quarterly product planning meetings within each stream
that are presented to the Executive Committee for oversight
and approval.

• Our research teams continually monitor the market and actively
participate in funded research with academic institutions, and
we are currently involved in three parallel Horizon projects
where Ocado Technology is funded to undertake state of the
art research.

• Our IP team conducts freedom to operate searches and IP

filing monitoring.

• Our specialist patent attorneys work with product developer
teams to ensure we protect not just the systems we build but
also the other ideas and concepts that are generated during
the innovation and development lifecycle. For example,
in 2023 we had a successful outcome in the AutoStore
litigation (see page 25 for more information).

• Innovation development lifecycle including: ideation sessions

with IP; mergers and acquisitions strategy; integration of AI into
our systems; and partner conferences to demonstrate our latest
technology innovations. For example at our Beyond Conference
we presented the latest iteration of the OGRP system.
• Our “Build Right, Run Right” initiative embeds product

industrialisation within the development lifecycle for our
ASRS product to meet the needs of our OIA client base.

How we manage this risk
• Improved internal forecasting of product demand and client
requirements in 2023 has helped better manage Ocado’s
requirements.

• Governance is provided by the Sales and Operations Planning

executive review meetings.

• Management KPI reporting packs are reviewed to align supply

and demand.

• We are embedding strategic sourcing and supplier relationship

management into the business.

• Supplier assessments, due diligence and site audits are
undertaken during the product development process.

• We are deploying materials resource planning across new
categories which helps manage the areas of higher global
supply chain volatility.

• The Responsible Sourcing Working Group monitors multiple

work streams and reports to the ESG Committee.

• Combining the above capability we are now better able to review

our supply chain suitability, developing deeper strategic
relationships and systematically aligning scale of supply with
demand to maintain confidence in our delivery. In addition, our
enhancements in our people capability, systems, data and root
cause analysis allow us to provide greater insight to the business
to underpin strategic decision-making.

How we manage this risk
• Refer to the Responsible Business Report (page 68) for

How we manage this risk
• Our security strategy defines priorities and is agreed with the

additional information.

Ocado Board.

• We launched new Technology Solutions values and measured

• Regular governance and oversight of our security programme

these in our regular employee survey.

• We also have very transparent communication processes

(e.g. open Q&A tools and Slack) and we prioritise our goals
process to ensure it is highly aligned between our commercial
and technical teams.

• We continue to work with our employees to create lifestyle
policies to support our culture and launched Fertility and
Menopause community groups.

• Governance is provided by the Risk Committee

and People Committee.

• We conduct periodic reviews of remuneration and incentive
plans to align with market trends and internal and external
fairness.

• We continue to undertake employee surveys to analyse opinions

and engagement levels.

is provided by the Information Security Committee.

• Our Information Security function is led by our Chief Information
Security Officer who is responsible for the management of our
security strategy, the security programme and security risks.

• Our dedicated Security Operations team, supported by
a 24/7 specialist security partner, detects and responds
to security incidents.

• We regularly test our cyber incident response plan, including

annual cyber simulations for the Executive Committee.
• We have developed secure build standards for our core

IT assets.

• Security patching is in place for our core IT assets and

is measured each month.

• Regular penetration testing is carried out for the Ocado Platform.
• Our zero trust solution provides employees with secure access

• We launched a talent and performance framework to help us

to Ocado’s systems.

differentiate, develop and deploy the talent we have, supporting
future business growth and high performance.

• We launched two new learning platforms, LinkedIn Learning and
Learnerbly, to better support our people in developing the skills
they need to grow their careers.

• Each year the security controls environment for the Ocado

Platform is externally audited as part of our SOC2 certification.
• The Ocado Platform is PCI compliant and is externally audited
every year. No payment card data is processed directly by the
Ocado Platform.

• We have invested in developing management capabilities by

• Cyber insurance is in place to reduce the cost impact of a major

launching a signature programme focused on critical practices
for leading a team, including creating a feedback culture.

• We have launched DE&I and wellbeing learning programmes
to build awareness of unconscious bias and how to create an
inclusive culture with practical tools, guidance and resources.

cyber incident.

• Immutable backups have been set up to help protect the Ocado

Platform from deliberate destruction.

• Our Data Protection Officer oversees the Group’s privacy

compliance programme.

108

109

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

How we manage our risks continued

Risk movement key:

Decreasing

No change

Increasing

Link to strategy key:

1. Grow our revenue

2. Optimise OSP economics

3. Deliver transformational technology

4. Drive success for our partners

5. Embed a responsible
business approach

Responsible business key:

Our people and
skills for the future

Environment and
natural resources

Platform
resilience
and
innovation

Fire & safety

Regulatory & compliance

Climate, environment
& geopolitical

Liquidity & cash management

What is the risk?
Fire, or injury to a worker or customer, caused by product
design or operating failures could result in business
disruption, loss of assets and reputational loss.

What is the risk?
Failure to comply with local and international regulations
could lead to loss of trust, penalties and personal liability
for our employees, and undermine our ability to operate.

What is the risk?
Transformation pressures and adverse external events
could increase cost, disrupt our supply chain and
operations, and the demand for our product.

What is the risk?
Insufficient liquidity (cash balances plus undrawn facilities)
to deliver our business goals and/or settle our liabilities.

Key risks
• Fire safety
• Product safety
• Food safety
• People safety (construction, operation and logistics)

Key risks
• Statutory compliance across jurisdictions of operation
• Fraud, bribery, sanctions and industry specific

compliance

• New geographies
• Accelerating pace of global regulatory change
(mandatory climate-related disclosures, wider
sustainability reporting and supply chain requirements)

• Governance

Key risks
• Internal combustion engine vehicles ban
• Energy usage
• Natural resources
• Net Zero Challenge
• Extreme weather
• War, conflict and sanctions
• Civil unrest and activism
• Societal disruption (pandemic, cost of living)

Key risks
• Inability to access the capital markets to refinance our

debt as it approaches maturity

• Inability to extend or access our RCF including due to

failure to comply with its financial covenants

• Deterioration in financial performance (profitability and

cash flow generation) that causes refinancing of existing
debt to become difficult

• Poor cash management forecasting processes leading

to unanticipated shortfalls in liquidity which compromise
our ability to meet our commitments

Risk owner
James Matthews

Movement

Link to Strategy

Risk owner
Neill Abrams

Movement

Link to Strategy

Risk owner
Stephen Daintith, Neill Abrams

Movement

Link to Strategy

Risk owner
Stephen Daintith

Movement

Link to Strategy

Responsible business

How we manage this risk
• Our governance programme is overseen by the

Safety Committee.

• Our team of technical experts monitors and audits compliance
against regulations, policies and procedures in safety areas
including food, product, occupational health, fire and construction.

• We deploy training and carry out risk and safe systems of
work assessments to raise awareness and knowledge.

• We monitor regulatory change, leveraging third-party expert

advice to introduce appropriate mitigations.

• This year we continued our programme of fire insight days for

local authorities; and introduced an expert third-party Fire Risk
Assessment programme for UK premises. This is supplemented
by our annual programme of risk engineering surveys.
• Following the Andover CFC fire, we started to investigate
fire retardant tote designs. The activity involved lengthy
investigations supported by FM Global and its fire research
campus. This has resulted in the current metal tote design
which is anticipated to significantly reduce our fire risk
These are currently being deployed at significant cost across
our global footprint.

• Please see page 71 for further information on safety.

How we manage this risk
• Governance is provided by the Risk Committee.
• Coordinated by the Regulatory & Compliance team, the business
tracks global regulatory changes, leveraging third-party advice
as needed to inform our actions and respond to new
requirements. The business has had to respond rapidly in 2023
to minimise disruption to our operations and supply chain and
ensure we operate in a compliant manner with the dynamic
changes to sanctions and export control laws in particular.
• In 2023 our global regulations tracking process broadened
to encompass wider ESG requirements and was aimed at
supporting the business to prepare to meet multiple new
non-financial reporting requirements.

• Our Due Diligence and Territory Research teams conduct

extensive research and engage specialist advice to understand
local market regulatory issues when exploring new territories
and new partners to ensure we understand and fully cost the
potential risks.

• We have deployed and continue to develop a compliance

framework of policies and procedures underpinned by employee
training, guidance and tailored awareness campaigns, refreshing
policies where needed to reflect evolving standards, including
updating our Human Rights Policy, and we are also implementing
a new Sanctions and Export Control Policy.

• We conduct periodic risk assessments on core compliance

topics to ensure that we identify and close gaps arising from
organisational change and evolving standards. This year we
refreshed our anti-bribery risk assessment and next year we
will focus on our fraud risk assessment to account for new
legislation on this topic.

How we manage this risk
• Governance is provided by our ESG Committee and Risk

Committee, with other relevant forums such as our
Environmental Sustainability Compliance and Reporting Working
Group coordinating environmental sustainability risk, compliance
and reporting activities.

• We are involved in several vehicle manufacturer

engagement programmes to aid the development of zero-
emission vehicle alternatives.

• We use various energy supply monitoring and diversification

initiatives, including the use of an anaerobic digester. Refer to
pages 77 and 98 to read more about this.

• Our MHE stock levels provide resilience in construction

and operation.

• Our global client footprint provides resilience from local shocks.
• We conduct risk assessments prior to entering new geographical

markets or undertaking new ventures.

• We maintain financial and physical reserves to cushion any

operational impact.

• This year we engaged external experts to support our physical
climate risk assessment using third-party scenario-based data.

• In 2023 we formally established our Net Zero Programme

(see page 75).

How we manage this risk
• We ensure that we carry out our refinancing activities well in

advance of our maturity dates.

• We monitor the capital markets carefully and, with the assistance
of our advisors, assess the accessibility of the capital markets on
a regular basis (at least monthly).

• We prepare robust five-year cash flow forecasts (which are
updated annually and are tested on a regular basis for their
integrity).

• We have also prepared a five-year cash flow forecast that

includes various downside scenarios and used this to determine
future cash requirements, liquidity levels and covenant
compliance metrics under these scenarios.

• The five-year cash flow forecasts include all investment plans.
These are reviewed by the Board (subject to materiality tests)
and approved only after meeting strict return requirements.
• Over the course of the year we have enhanced our cash flow

forecasts to include quarterly compliance with financial
covenants. This helps us assess our ability to access the RCF
on a quarter-by-quarter basis. This gives us further comfort
in our testing of sufficient liquidity headroom.

• We engage regularly with our relationship banking group to

maintain the strong relations that we have with them. We also
ensure that they are well informed of our cash flows and liquidity.

• We have recently appointed a new Head of Capital Markets to
work alongside the CFO and the Group FD to maintain these
strong working relationships with our relationship banks.

• We continue to monitor the capital markets and our refinancing
strategy and update the Board on these matters at each Board
meeting. These Board discussions will also include a review
of the optimal time to carry out any refinancing activities.
• Please refer to the Going Concern and Viability Statements

on page 112 for more information.

110

111

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Going Concern
and Viability Statements

Context for going concern
and viability
The Directors have assessed the
Group’s prospects both as a going
concern, covering a period of at least
12 months from the date of this report,
and its viability over a period of three
years. Understanding of our business
model, our strategy and our principal
risks is a key element in the
assessment of the Group’s prospects,
as well as the formal consideration
of viability. The Group’s strategy
is detailed on pages 21 to 23, and
our risk management framework
is described on pages 103 to 111.

The Group’s planning cycle is the
primary annual strategic and financial
planning activity through which the
Board assesses the prospects of the
Group, covering the five successive
financial years from FY24 to FY28.

The planning process involves
modelling under a series of
assumptions surrounding both
internal and external parameters,
with key assumptions including new
partnerships, increased capacity and
volume growth and cost base of the
business (logistics, technology and
corporate functions), combined with
the effects of major capital initiatives.

The robust planning process is led by
the Chief Executive Officer, the Chief
Financial Officer and other members of
the Executive Committee. The Board
undertook a detailed review of the plan
during its annual Strategy Meeting in
June 2023, which was approved by the
Board. The plan was then updated to
reflect the outcome of the FY24
Budget, which was approved by the
Board in November 2023.

In preparing the plan the Board
considered the impact of the cost-of-
living crisis and inflation environment,
along with other factors such as the
availability and cost of labour and other
key requirements for the business.

The Group’s trading performance is
reviewed by senior management and
the Board in the context of the
objectives and targets of the forecast,
within which the Group’s strategy
remains embedded.

Liquidity and
financing position
The Group has cash and cash
equivalents of £0.9bn and net debt
of £1.1bn as at the end of the period,
compared with cash and cash
equivalents of £1.3bn and net debt of
£0.6bn at the end of FY22. The Group
also has access to additional liquidity
through its £300m revolving credit
facility (“RCF”) until June 2025, subject
to meeting certain covenants, with
options to extend for an additional
two years to June 2027 subject to
agreement with the banking group.

The RCF contains a net leverage
covenant, which needs to be met in
order to be able to draw down under
the facility. The net leverage covenant
applies to the Restricted Group – the
consolidated group excluding Ocado
Retail, Jones Food and the results of
the Group’s captive insurance entity.
It is assumed that the option to extend
the RCF is exercised to cover the full
viability assessment period.

The Group’s senior unsecured notes
(“SUNs”) contain typical high-yield
covenants, including a Fixed Charge
Coverage Ratio (“FCCR”) which
provides greater financial flexibility
when greater than 2.0x, and a
Consolidated Net Leverage Ratio
which governs the Group’s ability to
make certain restricted distributions. In
both cases, the covenants are only
tested on an “incurrence” basis (i.e.
when accessing additional funding)
and apply to the Restricted Group.
Whilst no additional funding
requirement is indicated in the
modelling below, we expect the FCCR
to be maintained above 2.0x
throughout the assessment period,
maintaining our ability to access
additional funding if required.

Current borrowing facilities mature in
FY26 and FY27 with repayment due in
December 2025 (£600m convertible
bond), October 2026 (£500m SUNs)
and January 2027 (£350m convertible
bond). As these maturities fall within,
or just outside, the viability assessment
period, a key assumption in this
exercise is that replacement funding

would be obtainable as required to
refinance existing facilities. In line with
normal practice it is anticipated that
any refinancing would take place in
advance of the ultimate maturity date
and would therefore all fall within
the viability assessment period.
In addition, the coupon rates on
any refinancing are expected to be
significantly higher than the coupon
rates on current facilities.

Assessment of
longer-term viability
In accordance with the UK Corporate
Governance Code, the Directors have
considered the appropriate time
horizon to adopt when assessing
the longer-term viability of the Group.
In prior years, we have adopted a
three-year time horizon for the
viability period.

Whilst there are a number of factors
which could support a longer-term
time horizon – notably the five-year
duration of the Group’s annual
strategic planning process; the
open-ended duration of our Solutions
contracts; and the Group’s financing
profile which extends out to 2026
(SUNs) and 2025 and 2027
respectively (convertible bonds) –
the rapid pace of strategic and
technological development for
the Group, both in the UK and
Internationally, is a strong indicator that
would support a shorter time horizon.

Given the pace of change and delivery,
the Directors have therefore concluded
that a three-year time horizon remains
appropriate for the viability review.

Financial modelling
The Group has modelled three cases in
its assessment of going concern and
viability. These are:

• the base case;
• a downside stress test; and
• a severe downside stress test.

The table below shows how the
downside and severe downside
scenarios have reflected the
crystallisation of one or more of the
Group’s principal risks.

Group principal risks and impact

Downside

Severe downside

Market proposition –
OSP and OIA and Product innovation,
protection and performance – OSP
and OIA: inability to attract new clients

Limiting growth in the acquisition of new
OSP Partners and OIA Clients with a
corresponding impact on upfront fees
and OIA cash margin.

Removing growth in international OSP
Partners with a corresponding impact
on upfront fees.

Limiting growth in the acquisition of
new OIA Clients with corresponding
impact on OIA cash margin.

Partner success – OSP: inability to
support OSP Partners expansion plans

Reduction of growth in modules from
existing clients and Partners with a
corresponding impact on fees.

Further reduction in growth in modules
from existing clients and partners with
a corresponding impact on fees.

Product innovation, protection
and performance – OSP and OIA:
inability to support existing client
and partner requirements

Limiting growth in the acquisition of new
OIA Clients.

Limiting growth in the acquisition
of new OIA Clients.

Supply chain, Talent & capability and
Climate, environment and geopolitical –
increasing costs of solution delivery

Increase in direct operating costs
compared with the base case scenario
(i.e. reduced efficiencies obtained).

Further increase in direct operating
costs compared with the base case
scenario to maintain at FY23 exit
level across the assessment period
(i.e. no additional efficiencies obtained).

Liquidity and Cash Management –
increase in coupon rates for refinancing

Increase in coupon rates for refinancing
existing debt by 1ppt.

Increase in coupon rates for refinancing
existing debt by 2ppt.

The principal risks of Cybersecurity &
data, Fire & safety and Regulatory &
compliance have not specifically been
referenced in the downside and severe
downside modelling. These risks are
considered insurable and the primary
impact likely to be reputational.
As such any significant impact from
these risks is covered by the reduction
in growth of new clients and partners
in the downside and severe
downside scenarios.

The scenarios modelled do not make
allowance for other mitigating actions
available to the Board that could be
taken in response to the crystallisation
of one or more of the significant risks.
These mitigating actions include:

• reducing or temporarily slowing

down our investment in technology;

• disposing of all or part of our 50%

holding in Ocado Retail;

• disposing of some or all of our

strategic ventures investments; and

• enforcement of contractual terms

with clients and partners in relation
to underperformance.

The base case
The Going Concern and Viability
assessments use as their base the
five-year strategic plan approved by
the Board, updated to reflect the FY23
outturn financial performance and the
FY24 Budget.

The Group has a cash position of
£0.9bn as at the end of FY23, and
under the base case is forecast
to retain positive cash headroom
of at least £560m throughout the
assessment period, together with
access to additional RCF liquidity
should it be required.

The base case assumes a continuation
of the trends seen in FY23, including
growth in customers and orders as well
as heightened input cost pressures in
the UK Retail business. Growth is
forecast to continue in the UK through
utilisation of existing capacity, and
internationally with CFC and module
orders from both existing and new
clients as well as the expansion in
the Group’s ASRS business.

Capital expenditure is assumed to
continue to deliver the roll-out of the
CFC programme, as well as continued
investment in our technology and the
OSP platform.

Based on the operational cash flows
assumed in the plan, our expectation
is that no further fundraise would be
required within the viability period in
order to support ongoing capital
expenditure requirements, although
it is assumed that existing debt due
to mature in the viability assessment
period is able to be refinanced at
appropriate market rates.

The Directors have therefore
concluded that going concern and
viability would be maintained under
the base case scenario.

112

113

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONGoing Concern Statement
Accounting standards require that
Directors satisfy themselves that it
is reasonable for them to conclude
whether it is appropriate to prepare
financial statements on a going
concern basis.

In assessing going concern, the
Directors take into account the
financial position of the Group, its cash
flows, liquidity position and borrowing
facilities, which are set out in the
Financial Review on pages 40 to 59.
In addition, the Directors consider the
Group’s business activities, together
with factors that are likely to affect
its future development and position,
as set out in the Strategic Report
on pages 1 to 115, and the Group’s
principal risks and the likely
effectiveness of any mitigating actions
and controls available to the Directors
as set out on pages 107 to 111.

After reviewing the Group’s liquidity
and financial positions, the Directors
considered it appropriate to adopt the
going concern basis of accounting,
with no material uncertainty identified,
in the preparation of the Company’s
and Group’s financial statements.

Going Concern and Viability Statements continued

Downside stress tests
A downside stress scenario was
undertaken to determine the sensitivity
to going concern and viability, as noted
in the table above.

Under the downside scenario, the
negative impact on fees as a result
of reduced new and existing client and
partner growth, and the increase in
direct operating costs, is partially
offset by a reduction in capital
expenditure resulting in a small decline
in the Group’s cash position over the
viability period when compared with
the base case. Despite the decline,
the Group retains positive cash
headroom of at least £480m
throughout the assessment period
under the downside scenario.

Additionally, as a result of the reduced
fee income, the Group would fail to
meet the net leverage ratio covenant
to enable it to draw down on the
RCF at the end of FY24. However,
the modelling indicates that no such
drawdown would be required over
the going concern and viability
assessment periods. As part of the
upcoming expected refinancing of
existing debt and RCF extension we
would aim to ensure compliance with
all covenants, such that the RCF could
be drawn at all times.

The Directors have therefore
concluded that going concern and
viability would be maintained under
the downside stress test.

The severe downside case
This case applies more severe impacts
of the principal risks modelled in the
downside stress test as noted above,
including no new OSP Partners being
signed over the assessment period
and a 50% reduction in modules going
live from the downside case. Direct
operating costs have been modelled
by assuming that there will be no
further reduction in costs beyond
those currently being achieved
at our mature sites. This would
represent a significant increase
in the cost base of the business.

Under this scenario, there is a more
significant decrease in the cash
position of the Group compared with
the base case. However, the Group
retains positive cash headroom of
at least £400m throughout the
assessment period.

Additionally, as a result of the reduced
fee income, the Group would fail to
meet the net leverage ratio to enable
it to draw down on the RCF at the
end of FY24 and FY25. However,
the modelling indicates that no such
drawdown would be required over
the going concern and viability
assessment periods. As part of the
upcoming expected refinancing of
existing debt and RCF extension we
would aim to ensure compliance with
all covenants, such that the RCF could
be drawn at all times.

The Directors have therefore
concluded that going concern and
viability would be maintained under
the severe downside case.

Confirmation of viability
The assessment of the Group’s viability
considers severe but plausible
scenarios aligned to the principal risks
and uncertainties set out on pages 107
to 111 where the realisation of these
risks is considered remote, considering
the effectiveness of the Group’s
internal control and risk management
system and current risk appetite.

The degree of severity applied in these
scenarios was based on management’s
experience and knowledge of the
industry to determine plausible
movements in assumptions.

The Directors have also considered
mitigating actions available to the
Group and have assumed that these
mitigating actions can be applied on
a timely basis.

Based on the analysis, the Directors
have a reasonable expectation that
the Group will be able to continue in
operation and meet its liabilities as
they fall due over the viability
assessment period.

Non-Financial and Sustainability
Information Statement

The following table sets out where stakeholders can find relevant non-financial information within this Annual Report,
further to the Financial Reporting Directive requirements contained in Sections 414CA and 414CB of the Companies Act 2006.
Where possible, it also states where additional information can be found that support these requirements.

Reporting requirement

Relevant Ocado policies and procedures

Business model

2 Principal risks
and impact of
business activity

3 Non-financial KPIs

Our ERM Policy covers the management of risks.

4 Our employees

Our Code of Conduct sets out the principles of how we expect
our employees to conduct themselves.

Our Whistleblowing Policy provides guidance on how to report
suspected wrongdoing.

Our Equal Opportunities Policy sets out our commitment to treat
all our employees fairly and equally.

Our Work from Anywhere Policy provides flexibility for our
employees to work remotely in another country or location.

Our Board Diversity Policy confirms the Board’s
commitment to support and promote diversity and
inclusion across the Group.

Our Health and Wellbeing Strategy is focused on
supporting and enhancing the wellbeing of our employees.

Additional information

Our Business Model,
pages 18 and 19

How We Manage Our Risks,
pages 103 to 111
Audit Committee Report,
pages 144 to 153

Our Strategy, pages 21 to 23
Key Performance Indicators,
pages 8 to 11

Responsible Business Report,
pages 80 to 81
People Committee Report,
pages 137 to 143
Directors’ Remuneration Report,
pages 154 to 203

5 Respect for
human rights

Our Human Rights Policy sets out requirements for all persons
working for us or on our behalf to ensure their human rights
are respected.

Responsible Business Report,
pages 67 to 81

Our Modern Slavery Act Statement confirms our commitment
to human rights and safe and secure working environments.

6 Social matters

Our Code of Conduct guides our behaviour in line with our values
and provides a framework for responsible business practices.

Responsible Business Report,
pages 67 to 81

7 Anti-bribery and
anti-corruption

Our Anti-Bribery Policy and Anti-Money Laundering
Policy set out expected standards of behaviour and
guidance on how to deal with bribery and corruption issues.

Responsible Business Report,
pages 80 to 81 and
132 to 133

Our Conflicts of Interest Policy provides guidance
regarding the management of conflicts of interests.

Our Responsible Business Strategy sets out our objectives
with respect to our impact on the environment, including
reducing the climate impact of our operations.

8 Environmental

matters, including
climate-related
disclosures

Responsible Business Report,
pages 67 to 81
TCFD Report, pages 82
to 102

Strategic Report approval
The Company’s Strategic Report is set out on pages 1 to 115.

The Strategic Report is approved by the Board and signed on its behalf by

Neill Abrams
Group General Counsel and Company Secretary

29 February 2024

114

115

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONGovernance
at a glance

Number of Board meetings

Board meeting attendance

95%

Non-Executive to Executive Director ratio*

8:4

Board time spent on strategy**

45%

Chair’s Governance Statement

Rick Haythornthwaite
Chair

Board ethnic diversity*

Board gender diversity*

Key:

White – 9
Ethnic minority – 3

Key:

Male – 7
Female – 5

Board highlights

Key Board updates

• Ocado Intelligent Automation (“OIA”) deal with

• Appointment of Julia M. Brown as Non-Executive

McKesson Canada

• New Luton Customer Fulfilment Centre (“CFC”) opened
• Operations ceased at Hatfield CFC
• Closed two spokes
• Cost reduction and cash flow efficiency exercise
• Acquisition of 6 River Systems (“6RS”)
• Net Zero Roadmap approved
• Development of the Partner Success programme
• AutoStore litigation settlement
• Approval of the five year plan

Director, 1 January 2023

• Resignation of Michael Sherman as Non-Executive

Director, 26 June 2023

• Appointment of Rachel Osborne as Non-Executive

Director, 1 September 2023

• Appointment of John Martin as CEO, Ocado Solutions

and resignation as Non-Executive Director,
1 September 2023

• Resignation of Luke Jensen as Executive Director,

30 September 2023

• Resignations of Neill Abrams and Mark Richardson

as Executive Directors, 2 February 2024

This year the Board continued to put strategy front
and centre in its business to ensure the decisions and
actions taken focus on furthering our strategic objectives.
We continually monitor progress against our strategy and
during our three-day annual Board strategy meeting we took
the opportunity to stand back and review all areas of the
business, including external factors impacting the Group,
and further tailor short- and medium-term plans to meet
our objectives, including driving partner success,
technology development and aligning across the
business on our five year plan.

We increased the role and remit of our Board Committees
in operational oversight with reporting on key issues to the
full Board. This enabled more discussion and time to focus
on delivering on our strategy in Board meetings.

An additional area of focus in FY23 was the Group’s
responsible business strategy that considers all our
environmental, social and governance (“ESG”) impacts
across the Group. As these evolve we need to ensure we
are able to apply the increasing sustainability reporting
requirements in a manner that offers real insights into
potential business opportunities and risks. We are improving
our data collection and moving our focus to ensuring we
integrate responsible business into our daily operational
decision-making and, over time, increasingly to be at the
heart of our strategy.

In particular, the Board spent time focusing on talent
attraction, development and diversity. There were a number
of initiatives implemented this year to develop talent across
the business. These included mapping career pathways,
leadership and management programmes, graduate and
retraining opportunities and the introduction of new senior
leader DE&I targets, for gender during FY23 and for ethnicity
in early 2024. It is important the Board understands the
talent coming through the Group and reviews Non-Executive
Director succession planning and executive roles regularly.
We naturally look at the current and future composition
of the Board to ensure we have the diversity and skills
to support the delivery of our strategic objectives.

As detailed in the Chair’s Letter on page 6 the composition of
our Board has changed with two new members replacing the
five members stepping down and reducing in size from 13 to
10 (12 as at year end), with an improved balance of gender
and independence. I am pleased that John Martin took on
the role of CEO, Ocado Solutions, stepping down from the
Board. His knowledge and experience of the Group will be
key to the future development of our Company and offer.

Rick Haythornthwaite
Chair

29 February 2024

* As at 3 December 2023
** Based on allocated discussion time in Board meetings, with other discussion time spent on matters including performance, operations, governance, people, finance,

risk and responsible business

116

117

OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOCADO GROUP PLC Annual Report and Accounts 2023Board of Directors

Key:

Chair

Executive Director

Non-Executive Director

Group General Counsel and
Company Secretary

Key to Committee membership

A Audit Committee

R Remuneration Committee

P People Committee

Committee Chair

Rick Haythornthwaite
Chair

Tim Steiner OBE
Chief Executive Officer

Stephen Daintith
Chief Financial Officer

Andrew Harrison
Senior Independent Director
and Designated Non-Executive
Director (“DNED”)

Jörn Rausing
Non-Executive Director;
Independent

Emma Lloyd
Non-Executive Director;
Independent

Appointed: 1 January 2021

Tenure: 3 years

Appointed: 13 April 2000

Appointed: 22 March 2021

Appointed: 1 March 2016

Appointed: 13 March 2003

Appointed: 1 December 2016

Skills and competencies:

Tenure: 23 years

Tenure: 2 years

Tenure: 7 years

Tenure: 20 years

Tenure: 7 years

Rick joined the Board of Ocado Group as
Non-Executive Chair in 2021 and is also a
Non-Executive Director of NatWest Group
plc, where he will take over as Chairman on
15 April 2024. He is a graduate of Oxford
University and MIT and spent his early
career at BP, latterly becoming CEO
of Blue Circle and Invensys and a Partner
of Star Capital. Rick’s non-executive career
has been extensive – he was previously
Chair of Mastercard Inc., Chair of Railsr,
an embedded finance technology company,
Xynteo, an ESG consulting company,
Centrica plc and Network Rail Limited.
He is co-founder of QiO Technologies
(he was also previously Chair), an industrial
AI company, and has held non-executive
directorships at Globant SA, Land Securities
Group plc, Imperial Chemical Industries plc,
Lafarge SA and Cookson Group plc.

Rick’s skills and previous experience in
a wide range of industries make him an
exceptional Chair for Ocado. He has strong
business acumen and brings a blend of
strategic vision and operational expertise
to the role. His ability to navigate complex
challenges, drive innovation and adapt to
changing market dynamics aligns perfectly
with Ocado’s position as a pioneer in online
grocery and robotics.

External appointments:

• Non-Executive Director of NatWest
Group plc (will become Chairman in
April 2024)

• Chairman of the AA*

Committee membership:

* Rick will step down as Chairman and become a

Non-Executive Director when he becomes Chairman
at NatWest Group plc in April 2024.

118

Skills and competencies:

Tim is the founding Chief Executive Officer
of Ocado, which he established with two
former colleagues from Goldman Sachs in
2000, and has been an Executive Director
ever since. He started his career as a
bond trader at Goldman Sachs in London,
New York and Hong Kong. He is one of
an elite group of founders to have built
a FTSE 100 business from scratch.

As CEO, Tim leads on the implementation
of the Group’s strategy and ensures the
Executive Committee is aligned on the
Group’s strategy and vision. Tim’s ability
to drive strategic partnerships, navigate
complex supply chain logistics and leverage
cutting-edge technology demonstrates his
effectiveness in steering Ocado’s growth.
As a founder of Ocado, he plays an
important role in leading Ocado’s culture
of openness, innovation and collaboration.

External appointments:

• Non-Executive Director of Ocado

Retail Limited

Stephen joined the Ocado Group Board
as Chief Financial Officer from Rolls-Royce
in 2021, bringing with him a deep
understanding and experience of UK-listed
and international business across a range
of sectors. He graduated from the
University of Leeds with a BA in
Economics and Accounting and
qualified as a Chartered Accountant at
PricewaterhouseCoopers (now PwC) in
1988. Stephen has held many executive
roles including Finance Director of Daily Mail
and General Trust plc, Chief Operating
Officer and Chief Financial Officer of Dow
Jones & Co, and CFO of News International.
He has extensive financial expertise and
a strategic mindset gained over his career.
Stephen’s financial stewardship makes
him a valuable asset in shaping Ocado’s
financial strategy and ensuring its
continued success.

External appointments:

• Non-Executive Director of 3i Group plc
• Non-Executive Director of Ocado

Retail Limited

Jörn has been a Non-Executive Director
of Ocado Group since 2003, when he made
a significant investment in the business
and before the Group was listed. He holds
a degree in Business Administration from
Lund University, Sweden and has over
30 years’ experience in corporate
development and international mergers
and acquisitions.

Jörn’s extensive background in business
and investments equips him with strong
skills in assessing investment opportunities,
evaluating risk and providing a broader
perspective on business strategy. This
aligns well with Ocado’s ambition in the
competitive online grocery and technology
sectors and his significant knowledge of the
history of the business is extremely valuable
in providing context and continuity for new
members. He is considered independent
by the Board. Read more about the
consideration of Jörn’s independence
on page 132.

Emma joined the Board of Ocado Group
as a Non-Executive Director in 2016.
She is also Vice President, Partnerships
EMEA at Netflix. Emma graduated with a
BA Joint Hons in Management Studies and
Geography from the University of Leeds
in 1992 and has an extensive background
in technology, innovation and digital
transformation, spanning leadership roles
in renowned technology companies and
venture capital firms. She spent 15 years at
Sky Group overseeing the creation of Sky’s
start-up venture investment function and
US presence, leading to investment in over
30 technology start-ups. Prior to leaving
she held the position of Chief Business
Development Officer of the group.

Emma’s experience in innovation, business
development and leadership bring
a dynamic dimension to the Board.
Her forward-thinking approach and ability
to navigate complex landscapes position
her as a strategic asset.

External appointments:

• Group Board Member of Tetra Laval
• Board Member of Alfa Laval AB
• Board Member of DeLaval Holding AB

Committee membership:

• VP, Partnerships EMEA, Netflix

Committee membership:
R P

Andrew joined the Ocado Group Board
as a Non-Executive Director in 2016. He
graduated from the University of Leeds with
a BA (Hons) in Management Studies in 1992
and is currently a partner at Freston Road
Ventures, which invests in consumer brands
that challenge the status quo. He chairs
a number of the investments, including
Purplebricks, and advises and works
with others such as Five Guys. Andrew
previously served as Chair of Carphone
Warehouse Ltd and was formerly Group
CEO of Carphone Warehouse Group PLC
before its merger which he led with Dixons
Group plc.

Andrew has an extensive background
in leadership and governance and brings
a wealth of strategic knowledge and
corporate governance expertise to the
Board. His ability to provide independent
oversight and offer valuable insights
enables him to contribute to, and
constructively challenge, a wide range
of Board debates. His roles as DNED and
Chair of the People Committee are pivotal
in ensuring both the succession and
composition of the Board and senior
management align to the culture and
strategy of Ocado, and that employees
feel their voice is heard in the boardroom.

During his career, he has successfully
grown numerous new businesses,
has international retail experience
and developed and ran a global
services business.

External appointments:

• Chair of Trustees of The Mix
• Chair of Purplebricks (Strike Ltd)
• Partner of Freston Ventures

Investments LLP

• Chair of Chicken Shop (Chik’n Ltd)
• Non-Executive Director of Dr. Martens plc
• Director of Smiles and Smiles Holding Ltd

Committee membership:
A R P

119

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Board of Directors continued

Key:

Chair

Executive Director

Non-Executive Director

Group General Counsel and
Company Secretary

Key to Committee membership

A Audit Committee

R Remuneration Committee

P People Committee

Committee Chair

Julie Southern
Non-Executive Director;
Independent

Nadia Shouraboura
Non-Executive Director;
Independent

Julia M. Brown
Non-Executive Director;
Independent

Rachel Osborne
Non-Executive Director;
Independent

Neill Abrams
Group General Counsel and
Company Secretary

Appointed: 1 September 2018

Appointed: 1 September 2021

Appointed: 1 January 2023

Appointed: 1 September 2023

Appointed: 8 September 2000

Tenure: 5 years

Tenure: 2 years

Tenure: 1 year

Tenure: 6 months

Tenure: 23 years

Skills and competencies:

Julie joined the Board of Ocado Group as
a Non-Executive Director in 2018 and is
Chair of the Remuneration Committee.
She is also a Non-Executive Chair of RWS
Holdings and NXP Semiconductors. Julie
holds a BA (Hons) in Economics from the
University of Cambridge and is a qualified
chartered accountant. Her previous
executive roles included Group Finance
Director at Porsche Cars, CFO and
CCO at Virgin Atlantic and Finance and
Operations Director at WH Smith. Her
former non-executive roles included Chair
of the Audit Committees at Rentokil Initial
plc, DFS Furniture Company and Cineworld
plc. She was also Non-Executive Director
and SID at easyJet plc and Chair of the
Nomination and Compensation
Committee at Gategroup.

Julie’s extensive experience in finance
and strategic leadership across technology,
aviation and finance sectors bring financial
acumen, risk assessment skills and a
proven track record of guiding organisations
through growth and transformation to the
Board. She provides valuable insights,
significant board experience in public
companies and financial expertise to
effectively chair the Remuneration
Committee and provide valuable
experience to the Audit Committee.

External appointments:

• Non-Executive Director at
NXP Semiconductors N.V.
• Non-Executive Director of
Shilton Midco 2 Limited
• Non-Executive Director at

RWS Holdings plc

Committee membership:
A R P

Nadia joined the Board of Ocado Group
as a Non-Executive Director in 2021. She
is an industry leader in the field of machine
learning and robotics, and holds a PhD in
Mathematics from Princeton University.
Her previous roles include Vice President,
Technology, Worldwide Supply Chain
and Fulfilment at Amazon, Non-Executive
Director of Cimpress plc, Director of X5
Retail Group, and CEO and founder of
Hointer, a start-up retail technology
company aiming to change the physical
retail experience with smart solutions
and analytics.

Nadia’s extensive knowledge in technology,
supply chain efficiency and innovation
brings a profound understanding of
ecommerce, automation, logistics and
strategies focused on meeting customer
needs to the Board. She provides
focused insight and valuable know-how
to Board discussions.

External appointments:

• Non-Executive Director of Ferguson plc
• Senior Advisor to New Mountain

Capital LLC

• Non-Executive Director of
Mobile TeleSystems PJSC

Committee membership:
A P

Julia joined the Ocado board as Non-
Executive Director in January 2023. She
has more than 30 years’ experience in the
fields of supply chain, procurement and
operations. She has served as Chief
Procurement officer for several of the
world’s largest global companies including
Clorox, Kraft, Mondelez, Mars-Wrigley and
Carnival Corporation and plc. She has also
worked in key leadership positions at
Procter & Gamble, Diageo and Gillette.
She has led significant operational and
organizational transformation initiatives
primarily in the consumer products and
hospitality sectors. She has also led the
creation of multi-billion dollar contracts
and supplier relationships and global
teams in every region of the world.

Julia has an extensive background in
mergers & acquisitions and sustainability.
She also advises on non-profit boards
and has served on finance, audit and
governance for those organisations. She
currently serves as a trustee for the Perez
Art Museum (Miami) and the Chartered
Institute for Purchasing and Supply (UK).

Julia’s qualifications and experience make
her an outstanding Non-Executive Director
at Ocado, largely owing to her vast
experience across her roles.

External appointments:

• Board Member of Molson Coors

Beverage Company

• Board Member of Solo Brands, Inc
• Board Member of Perrigo Company PLC

Committee membership:
R P

Rachel is the newest member of the Ocado
Group Board, joining as a Non-Executive
Director and Chair of the Audit Committee
in 2023. She was most recently the CEO
of Ted Baker, stepping down in June 2023,
and was previously CFO of Debenhams plc,
Domino’s Pizza Group plc and Finance
Director of the John Lewis Division within
the John Lewis Partnership. Rachel holds
an MA in Veterinary Medicine from the
University of Cambridge and is a qualified
chartered accountant.

Rachel is a highly qualified Non-Executive
Director and she possesses in-depth
comprehension of financial management,
strategic planning, and customer-centric
business approaches. Her background and
extensive financial expertise allow her to
chair the Audit Committee effectively and
her background and insight into consumer
experience and retail are very valuable.

External appointments:

• Non-Executive Director of Marston’s PLC

Committee membership:
A P

Neill was on the founding team of Ocado,
joining the Board as an Executive Director
in September 2000. He resigned from the
Board in February 2024. He has Board
responsibility for the Group Operations
departments covering Legal, Governance,
Intellectual Property, Real Estate and ESG.
Prior to Ocado, he was a barrister in
practice at One Essex Court and spent nine
years at Goldman Sachs in London in the
investment banking and legal divisions.
Neill holds degrees in industrial psychology
and law from the University of the
Witwatersrand in Johannesburg and a
Masters in Law from Sidney Sussex College,
Cambridge. He is admitted as a barrister in
England and Wales, an attorney in New York
and an advocate in South Africa.

Neill has extensive legal expertise and
corporate governance acumen as well
as significant knowledge of Ocado Group
and the markets we serve. His background
in law and experience serving in legal
leadership positions bring a deep
and valuable understanding of regulatory
compliance and legal intricacies to
the Group.

Changes to the Board

During the period and up to the
date of signing of the financial
statements the following changes to
the composition of the Board took place:

• Michael Sherman resigned as

Non-Executive Director, effective
26 June 2023.

• Rachel Osborne was appointed
as Non-Executive Director and
Chair of the Audit Committee on
1 September 2023.

• John Martin resigned from the Board,
effective 31 August 2023, to become
CEO, Ocado Solutions from
1 September 2023.

• Luke Jensen resigned from the

Board and from his position as CEO,
Ocado Solutions, effective
30 September 2023;

• Neill Abrams resigned from the Board,
effective 2 February 2024, continuing
as Group General Counsel and
Company Secretary.

• Mark Richardson resigned from the
Board, effective 2 February 2024,
continuing as CEO, Ocado Intelligent
Automation.

120

121

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Corporate Governance Statement 2023

Board Leadership and Company Purpose

Ocado Group was subject to the UK Corporate Governance
Code 2018 (the “Code”) for the year ended 3 December
2023. This Corporate Governance Statement as required
by the Financial Conduct Authority’s (“FCA”) Disclosure
Guidance and Transparency Rules (“DTR”) forms part of the
Directors’ Report, and has been prepared in accordance with
the principles of the Code. A copy of the Code and further
information on the Code can be found on the Financial
Reporting Council’s website, www.frc.org.uk.

This Corporate Governance Statement 2023, together with
the rest of the Corporate Governance Report and the
Committee Reports, provides information on how the Group
applied and complied with the principles and provisions of
the Code and meets other relevant requirements, including
provisions of the Listing Rules and the DTR of the FCA.

Compliance with the Code
For the financial year ended 3 December 2023, the Board
considers that it has applied all the principles and complied
with all provisions of the Code.

The key requirements under DTR 7.2 are covered in greater
detail throughout the Annual Report. Additional information
can be found here:

• The Group’s risk management and internal control systems

are described on pages 103 to 111.

• Share capital information is in the Directors’ Report on

pages 204 to 213.

• Information on Board and Committee composition can
be found on pages 134 to 137 and information on their
operation is included across the Corporate Governance
Report and in the individual Committee reports.

• The Board Diversity Policy is discussed on pages 142

and 143 with further information on diversity on pages 135
to 136 and 70 to 71.

Board approval
This separate Corporate Governance Statement 2023
is approved by the Board and signed on behalf of the
Board by its Chair and the Group General Counsel
and Company Secretary.

Rick Haythornthwaite
Chair

Neill Abrams
Group General Counsel and Company Secretary

29 February 2024

Code principles
The layout of the Corporate Governance Report follows the structure of the principles of the Code and illustrates how the
Code principles have been applied by Ocado.

Board Leadership
and Company
Purpose

Division of
Responsibilities

Composition,
Succession
and Evaluation

Audit, Risk and
Internal Control

Remuneration

A. Effective Board

page 124

F. Board roles
page 131

J. Appointments to

M. Effectiveness of

the Board
page 134

external auditor and
internal audit and
integrity of accounts
page 151

N. Fair, balanced, and
understandable
assessment of
Company prospects
page 146

O. Internal financial
controls and risk
management
page 150

P. Linking remuneration
with purpose and
strategy
page 186

Q. A formal and

transparent procedure
for developing policy
page 186

R. Independent judgement

and discretion
page 202

B. Purpose, strategy,
values and culture
page 124

G. Independence

page 132

K. Board composition

page 135

C. Prudent and effective
controls and Board
resources
page 127

H. External commitments

L. Annual Board evaluation

and conflicts of interest
page 132

page 137

D. Stakeholder

engagement
page 128

I. Board efficiency

page 123

E. Workforce policies

and practices
pages 128 to 129

122

Key Board focus areas during the year

Link to strategy key:

1. Grow our revenue

2. Optimise OSP economics

3. Deliver transformational technology

4. Drive success for our Partners

5. Embed a responsible business approach

Stakeholders considered key:

People

Investors

Partners

Suppliers

Environment and society

Link to
strategy

Stakeholders
considered

Strategy
and
financing

Held a three-day strategy meeting to discuss medium- and long-term
strategy and growth opportunities, including challenges and risks, and
determined Ocado Group’s key strategic priorities.

Reviewed and approved the updated five year plan.

Approved ceasing operations at the Hatfield CFC, the closure of two
spokes and the opening of the Luton CFC.

Approved the agreement between pharmaceutical distributor McKesson
Canada and OIA to provide our automated fulfilment technology.

Approved the acquisition of 6RS, a collaborative autonomous mobile
robot fulfilment solutions provider to the logistics and non-grocery retail
sectors.

Considered the Marks and Spencer Group plc (“M&S”) contingent
consideration payment regarding our joint venture agreement.

Approved an increased loan facility to Ocado Retail Limited, our joint
venture with M&S.

Monitored the progress of litigation with AutoStore and the successful
settlement of all claims.

Performance
and operations

Received reports from the CEO and CFO at each Board meeting,
including progress against strategic objectives, and throughout the year
from the CEO of each business unit, including Ocado Retail, on trading,
business performance, financing and strategy implementation.

Received regular reports on OSP Partner operations and the
implementation of CFC projects, including regular reports from the
Partner Success teams on the evolving plans to support our Partners.

Received regular reports on the development of OIA, the business unit
focused on providing our product offering in new market sectors
outside of grocery.

Following his appointment as CEO, Ocado Solutions, John Martin provided
a deep dive on the Ocado Solutions business, including an assessment
on current partners, CFC status and his priorities for the business.

Received progress updates on the project to migrate our UK partners
to OSP.

Reviewed and approved the annual Group budget and business plan.

Reviewed and approved individual capital expenditure projects,
including funding the development of metal totes and 600 series bots.

Reviewed and approved OSP capital expenditure projects, including
CFC builds for OSP Partners Kroger and Coles.

Risk
management
and internal
control

Completed the annual review of principal and emerging risks and
consideration of the risk appetite, including the approval of a new risk
for Liquidity and Cash Management.

Reviewed the effectiveness of the Group’s systems of internal control
and risk management.

Approved the Group’s cybersecurity strategy and reviewed updates
on cybersecurity, including risks and mitigation, and the Group’s
cybersecurity programme.

123

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Link to
strategy

Stakeholders
considered

Board Leadership and Company Purpose continued

Leadership
and
people

Governance
and
responsible
business

Appointment of John Martin as CEO, Ocado Solutions.

Reviewed and discussed the outcomes of the internal Board
effectiveness review and creation of the action plan for 2024.
Reviewed progress against the 2022 Board evaluation action plan.

Considered the composition and effectiveness of the Board,
including approval of the appointment of Rachel Osborne.

Approved the Group’s Net Zero Roadmap.

Reviewed various ESG-related matters, including the annual stakeholder
engagement analysis and corporate responsibility update.

Reviewed the ESG strategy and data collection and reporting, including
the Task Force on Climate-Related Financial Disclosures Report.

Reviewed and approved corporate statements including the Gender
Pay Gap Statement, Modern Slavery Act Statement and the Basis of
Reporting 2023.

Effective Board
The principal role of the Board is to promote the long-term
sustainable success of the Group, to generate and preserve
value for investors and other stakeholders and to contribute
to the wider society. The Board defines the Group’s purpose
and strategy, in line with our values, and ensures that the
business model and culture support the delivery of the
Group’s strategic priorities to generate sustainable growth.

For information on our purpose, strategy and values see

pages 18, 21 and 22

The Board considers strong governance essential
to delivering our strategy and ensuring the Group’s
long-term success. A system based on accountability
and responsibility, transparency and effective controls
is necessary for the Board to be able to provide effective
strategic leadership. Our governance framework provides
for clearly defined roles and responsibilities and is supported
by strong systems of risk management and internal control.

See our governance framework on page 127

For more information on risk management and internal

controls see pages 103 to 111

The Board recognises the importance of monitoring the
composition of the Board to ensure it has the skills and
experience required to enable sustainable success.
The Board recruits and develops Directors who will provide
a positive contribution to the business. The culture of the
Board facilitates an open and inclusive environment where
the Directors can have open and honest discussions and feel
able to provide constructive challenge. The Board meeting
agendas are set to allow sufficient time for discussion
and the Chair actively encourages participation from
all Board members.

For more on Board composition see page 135

The Board Committees are utilised to ensure the Board has
sufficient time for discussion and is able to focus on strategic
matters. As a result the Board Committees’ role in operational
oversight has increased in 2023, with Committee chairs
continuing to provide reports at Board meetings to ensure
informed decision-making by the Board.

Purpose, strategy, values and culture
The Board is responsible for setting the strategic direction
of the Group, establishing the Group’s purpose and
values and taking a leading role in laying the foundations
of the Group’s culture. The Board recognises that a clearly
established purpose and strategy, alongside strong values
and a positive culture that support these, are essential for
the Group’s long-term sustainability and success. This year
our purpose was redefined to state clearly what we are
seeking to achieve through our technology.

Our purpose and strategy are key considerations in
the actions and decision-making of the Board and the
oversight of the implementation of these by the business.
Our “strategy on a page” document is included in each
Board meeting pack to ensure these objectives are central
to discussions. The Board undertakes an in-depth annual
review of the strategy to ensure it remains fit for purpose
and the short- and medium-term goals to progress our
objectives are in place. The goals are then monitored
throughout the year with an update on progress included
in each Board meeting.

Board strategy meeting
During the 2023 strategy meeting, held across three
days, Board discussions focused on the delivery of our
strategic objectives and five year plan. In-depth reports
from across the business, as well as a review of the
external market where the Board heard from external
advisers and one of our OSP Partners, enabled informed
discussions on the challenges and opportunities for
the Group (and partners) to deliver its short- and
long-term objectives.

The Board agreed the key priorities for the business
for the next year to further the strategy, including
the continued development of the Partner Success
programme, prioritisation in technology development,
and ensuring the actions required are fully funded and
aligned with the five year plan. The Board also
highlighted the need to ensure the Group organisation
and structure is in place to achieve these priorities and
in turn deliver the strategy, with objectives set to ensure
this. At the following Board meeting the Board approved
for each priority area the key deliverables, roadmap
to achieve these and the KPIs to measure progress.

The Board is responsible for ensuring the necessary
resources are in place to be able to deliver the strategy.
This year the Board monitored and reviewed the ongoing
Group-wide reorganisation and focused on the prioritisation
of investment in technology to ensure this. The Executive
Directors and senior management are responsible for the
implementation of strategic objectives, with decision-making
further dispersed across the business. Therefore it is
essential that, across the Group, there is an understanding
of our strategy and how individuals contribute to this. In
order to increase employee understanding of the strategy
and provide short-term measurable steps we launched our
Technology Solutions Goals for the year, in January 2023.
This provided clear short-term goals, which then informed
goal-setting in individual teams within Technology Solutions,
to ensure alignment with the strategic direction of the Group.

The links between the Group strategy and the Board’s
actions and decisions this year are shown in the table
on pages 123 to 124. Examples include:

• the development of the OIA business to deliver

on diversifying and growing our revenue streams,
including approving the first OIA deal to provide
automated fulfilment solutions to McKesson Canada;
• ceasing operations at the Hatfield CFC and the opening
of the Luton CFC to further our strategy of optimising
OSP economics;

• approving investment in 600 series bots development
to continue to deliver transformational technology; and

• the continued development of the Partner Success
programme to deliver on our Partner commitments.

Our values guide how the Board and workforce behave,
individually and collectively, and help underpin our culture.
This year we set specific values for both Ocado Logistics and
Technology Solutions, as described on page 22, to reflect
the separate business segments. However, these values
remain focused around similar themes. Our people are key
to realising our purpose and through our values of innovation,
inclusivity and collaboration we are able to deliver on
our strategy. More details on our values can be found
on page 22.

Our values underpin our culture, which is open and
collegiate, engaged, innovative and entrepreneurial. In order
to continue to deliver new technology and develop new and
efficient solutions we need our people to be curious and
innovative and to work together in an inclusive environment
where they can fulfil their potential and perform at their best.

The Directors strive through their own conduct to set the
right tone from the top for senior management and the wider
workforce. This is shown in the Board’s commitment to high
standards of corporate governance and ethical behaviour,
open and transparent reporting, engagement with our
people and entrepreneurial leadership. The Board ensures
that the necessary policies and procedures are in place
to maintain the culture and promote our values.
Any new policies or procedures, and any subsequent
significant changes thereof, are brought to the Board
for discussion and approval.

The Board ensures that our culture and values support
our strategy and purpose. Our culture influences
decision-making and business conduct so in order to deliver
on our strategic objectives it is vital these remain aligned.
The Board monitors the culture through various qualitative
and quantitative measures that provide insight into the
culture of the Group. This includes metrics such as our
employee Net Promoter Scores (eNPS), OSP Partner
scorecards, employee training completion rates, and
whistleblowing reports; as well as reports on employee
matters, compliance, and health and safety. As the business
continues to grow and evolve this oversight is vital to ensure
our culture is retained across all areas of the business. The
ongoing reorganisation of the Group, ceasing operations at
the Hatfield CFC and the acquisition of 6RS all provided
potential challenges this year to maintaining our culture,
as well as our increasingly global workforce. Following the
reorganisation of the business and reporting lines in Ocado
Logistics and Technology Solutions it is important to maintain
a cohesive culture across the whole Group. To ensure the
culture is embedded Group-wide there is a focus on
communication and access to information, including a new
online information platform launched this year, and ensuring
tools and processes to enable collaboration are in place.

The table on the following page demonstrates how the Board
monitored and assessed the culture of the Group this year.

124

125

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONBoard Leadership and Company Purpose continued

Our culture and decision-making

Governance framework

Board action

Link to culture

Board of Directors

Provided with updates from the People team on employee matters
including engagement, recruitment, retention, diversity and
mental wellbeing.

Provided information on recruitment and retention and feedback
from employees through the Peakon employee listening tool
regarding the employee experience at Ocado to enable a broad
assessment of the culture in line with our values.

Reviewed quarterly Reputation Dashboard, including eNPS scores
and OSP Partner scorecards.

Provided information on employee engagement levels, for both
Ocado Logistics and Technology Solutions, and the external
perspective of our OSP Partners on how our employees operate.

Reviewed and approved workforce-related policies,
including updated policies on data protection and
employee share dealing.

Enabled assessment and oversight to ensure the policies continue
to reflect our values and the desired behaviours that help to embed
the culture.

Andrew Harrison, as DNED, reported to every Board meeting on
workforce issues raised, initiatives being undertaken and other
matters from his engagement across various employee platforms.
He also updated the People Committee on topics discussed
with employees.

For more about our DNED see page 128

Provided direct updates on concerns and issues raised
by employees to assist in monitoring the culture, including the cost
of living crisis, the impact of ceasing operations at the Hatfield CFC
and Group reorganisation.

Reviewed biannual compliance reports, including statistics
on compliance training completion, use of compliance tools,
and whistleblowing reports received through the Speak Up
hotline or management.

Provided information on workforce engagement with regulatory
requirements and compliance, including risks and concerns
identified across the workforce.

Reviewed health, safety and wellbeing metrics and reports,
including injury rates, safety incidents and risk assessment results.

Enabled the assessment of the effectiveness of safety practices
and behaviours and possible risks, and any actions required.

Reviewed and approved the Gender Pay Gap Statement and the
Remuneration Committee reviewed the annual Group-wide Report
on Remuneration, including share plans and benefits.

Enabled oversight to ensure remuneration reflects and supports
a culture where our people feel valued and motivated to achieve
our objectives.

Reviewed and approved the Group’s Modern Slavery Act Statement.

Provided oversight of steps taken to prevent modern slavery and
human trafficking within the Group and our supply chain.

The People Committee received reports on senior management
and leadership development, including training on diversity
and inclusion-related matters.

Enabled assessment of the support provided to management to
enable them to take an appropriate lead on the expected behaviours
that promote a culture that reflects our values.

Reviewed the report and recommendations from the Board
effectiveness review undertaken by an external evaluator.

Enabled assessment of the Board in fulfilling its role to lead by
example to promote a positive culture in line with our values.

126

The Board is primarily responsible for setting the Group’s strategy to deliver sustainable long-term
value to our investors and other stakeholders, providing effective oversight and challenge to
senior management regarding the implementation of the strategy and ensuring effective
risk management and internal control systems are in place.

Board Committees

The Board delegates certain matters to three Board Committees to enable
effective oversight whilst allowing the Board to focus on strategic matters.

Audit Committee

Remuneration Committee

People Committee

Oversees the Group’s financial
reporting, risk management and
internal control systems,
the relationship with the external
auditor and the effectiveness
of the Internal Audit function.

Establishes and manages the
Group’s Remuneration Policy
and oversees remuneration
and workforce policies.

Oversees composition and
succession planning for the Board,
senior management succession
planning and people
engagement issues.

See pages 144 to 153

See pages 154 to 203

See pages 138 to 143

Executive Committee

The Executive Committee is responsible for the day-to-day management of the business,
carrying out and overseeing operational management and implementing
the strategic objectives set by the Board.

The governance committees provide oversight on key business activities and risks and
report to the Executive Committee and the Board or Board Committees as appropriate.

Governance Committees

Risk Committee

Global HSE Committee

Personal Data Committee

Information Security Committee

Disclosure Committee

IT Operating Committee

Treasury Committee

Capital Expenditure Group

ESG Committee

Effective controls
Our governance framework provides the structure to make
decisions and achieve our strategic objectives within an
established framework of prudent and effective controls.
The framework of Board and governance Committees
and clearly stated levels of authority creates clear lines of
accountability and effective oversight. This also facilitates
timely decision-making at the correct level and ensures
responsibilities are clear. Through the facilitation of
information sharing, the Board is able to exercise effective
oversight, monitor performance and take informed decisions.
This also ensures an understanding across the business of
the strategic objectives to enable effective decision-making
at all levels of the organisation aligned with strategy.

The framework has established reporting channels to ensure
the Board is able to conduct effective discussions and
informed decision-making. The Committee Chairs report at
Board meetings on the discussions that have taken place at
Committee meetings, including any issues that require Board
input, any matters for Board approval and any actions taken.

The Executive Directors, and other members of senior
management as appropriate, provide reports covering all
areas of the business at Board meetings. Through reporting,
including the use of both financial and non-financial metrics,
the Board is able to evaluate and guide the progress and
performance of the Group.

The Board maintains a formal schedule of matters reserved
for the Board, including decisions regarding strategy,
financing, capital structure and risk appetite, and a
Delegations of Authority Policy. During the year, the Board
reviewed and approved an updated Delegations of Authority
Policy and Schedule of Matters Reserved for the Board.

There are robust risk management and internal control
systems in place which allow the Board to assess and
manage risks to the business.

For more information on internal controls see page 150

For more information on risk management see pages 103
to 111

127

Board resources
The Chair is responsible for ensuring that Directors are
properly briefed on issues arising at Board meetings and
that they have full and timely access to accurate, relevant
information. To enable the Board to discharge its duties,
Directors receive appropriate information, including briefing
papers distributed in advance of the Board meetings.
The Directors access Board papers and other relevant
documents using a secure electronic platform. Board
materials and the quality of information and resources
as a whole are reviewed each year as part of the annual
effectiveness review. This year new Board paper templates
were developed, alongside effective paper writing guidance,
for contributors to improve the quality of papers and
information provided to the Board. This contributed to
better-informed decision-making.

Directors can, where they judge it to be necessary
to discharge their responsibilities as Directors, obtain
independent professional advice at the Company’s expense.
The Board Committees have access to sufficient resources
to discharge their duties, including external consultants
and advisors, and access to internal resources and
relevant personnel.

During the year, no Directors raised any concerns about the
operation of the Board or the management of the Company.

Stakeholder engagement
The Board recognises the role of its key stakeholders in the
long-term success of the Group and undertakes an annual
review of stakeholder engagement to ensure it remains
effective. The engagement mechanisms used are assessed
to ensure that they provide opportunities for a two-way
dialogue, for example through participation in stakeholder
events where the Group is able to provide updates on
the business and listen to and discuss stakeholder views.
In addition, it is considered whether the outcome of
engagement, both direct and as reported from across the
business, provides the Board with a good understanding
of the views of a wide range of stakeholders.

Employee engagement
The Board understands the central role our people have
in the long-term success of the business and is committed
to ensuring that it understands the composition and views
of employees. Direct and indirect engagement methods
are used to understand employee views and the Board
takes these into account in its decision-making.

Information regarding engagement with our key
stakeholders, and the consideration of stakeholders
in Board activities, can be found in the Stakeholder
Engagement section on pages 60 to 63, the Section
172(1) Statement on pages 64 to 66 and the Key Board
focus areas during the year table on pages 123 and 124.

Designated Non-Executive Director
for Workforce Engagement –
Andrew Harrison

The Board continues to consider the DNED the most
appropriate method of workforce engagement.

Andrew Harrison has been the DNED since 2019 and
was appointed Chair of the People Committee in 2022.
His experience and knowledge as DNED have been
invaluable to the People Committee’s consideration
of people engagement issues, part of the Committee’s
expanded remit since 2022.

Through active engagement with a range of employee
forums and the People team the DNED is an important
link between the Board and the wider workforce.
Andrew meets monthly with the Heads of the People and
Global Listening, Culture and Engagement teams to
review listening insights and feedback and support
plans for proactive engagement. He also met with
department heads this year to review feedback from
Peakon employee surveys. Andrew chairs the biannual
Ocado Logistics Council meetings and meets
biannually with the Inclusion Committee chairs.
This year Andrew moderated a panel event marking
International Women’s Day and made several site visits.

DNED reports on employee feedback, issues and
concerns raised are a standing item at every Board
meeting. The issues that Andrew brought to the
Board’s attention this year include the impact of the
ongoing cost-of-living crisis, positive feedback regarding
improvements in payroll processes and the impact
of ceasing operations at the Hatfield CFC. He also
supported and highlighted a deep dive exercise looking
at significantly lower engagement of female managers
compared with male managers in Technology Solutions,
indicated through eNPS scores.

Workforce policies and practices
The Board takes responsibility for all workforce policies
and practices to ensure they are consistent with the Group’s
values and support its long-term sustainable success.

Our people bring a diverse range of experience, expertise
and perspectives that contribute to the values and culture
of Ocado and are essential for the delivery of our strategic
objectives. A positive environment where our people feel
valued, motivated and able to thrive is key to the Group’s
continued success.

The Board recognises the value of, and supports, the
significant investment of time and resources in our workforce
to allow the Group to attract and retain talent and develop
the skills of our employees. A new talent and performance
framework was developed this year which, as we continue
to roll it out over the next year, will further support the
development of our employees. More information on
the Group’s investment in our people is included in the
Responsible Business Report section on pages 67 to 81.

The Board reviews and approves all significant policies that
impact our workforce to ensure that policies and practices
support the Group’s purpose and reflect our values.
Employees undertake mandatory training on key policies
to ensure that they are properly read and understood
and to help embed the principles as part of our culture.
The Board is updated biannually on completion rates
for mandatory training.

The Board is responsible for overseeing the Group’s
arrangements for the workforce to be able to raise matters
of concern and seeks to foster an environment where
individuals can be confident about speaking up about
concerns without fear of retaliation. The Company operates
an externally facilitated system, Speak Up, where reports can
be made anonymously. The Board receives biannual reports
on submissions through the system, and raised outside the
system through management, including the issues raised,
investigations undertaken and outcomes, including actions
taken.

Engagement with suppliers,
partners and clients
Delivering our strategy requires strong, mutually beneficial
relationships with all of our stakeholders and in particular
our partners and suppliers. This year the Board approved a
new Supplier Code of Conduct setting out clear expectations
for standards of conduct. The Board also monitored the
ongoing development of the Partner Success function
and the OIA business to ensure positive engagement
with existing and potential new partners and clients.

Engagement with investors
The Board is committed to engaging with investors to inform
and aid understanding of our business and strategy and,
through dialogue, to understand the views and concerns
of investors.

Key questions on Ocado investors’ minds
• How the Group is working with OSP Partners to get the

best out of OSP.

• The rate of module and CFC growth over the coming years.
• The path to cash flow positive, liquidity and plans for

refinancing existing debt.

• Opportunities and the model for OIA.
• Actions being taken and planned regarding

environmental issues.

• Governance issues including Board composition

and remuneration.

• The Group’s approach to improving talent, retention,

diversity, equity and inclusion.

Engagement with our investors and understanding their
views has informed the Board’s focus on the composition
of the Board, detailed further on page 135, the proposed
2024 Directors’ Remuneration Policy, and furthering our
ESG strategy including approving the Net Zero Roadmap
and introducing new initiatives focused on talent growth
(see pages 68 and 69). Positive feedback also demonstrates
that investors are supportive of the development of our
Partner Success programme and our move into non-grocery
markets through OIA. We also welcome the opportunities
to explain our strategic objectives and business model
to enable investors to better understand our business.

Shareholder voting at the
2023 Annual General Meeting
At the 2023 Annual General Meeting, all resolutions
were passed with votes in support ranging from 69.86%
to 99.99%.

There was a significant minority vote (30.14%) against
Resolution 2 (Directors’ Remuneration Report). The Company
understands that this outcome was broadly attributable to
the outturn of the FY22 Annual Incentive Plan (“AIP”) in the
context of the Group’s financial performance and mix of
performance measures, and the hurdles under the third
tranche of the Value Creation Plan (“VCP”).

A statement explaining the basis of the AIP performance
measures and targets and the creation of the third VCP
tranche was published following this result. In October 2023
we wrote to our largest shareholders, detailing our proposed
approach to the FY24 AIP, and welcomed any feedback
on the proposals.

Following a review of the Company’s remuneration structure
at the end of FY23, the Remuneration Committee developed
the proposed 2024 Directors’ Remuneration Policy.
An extensive shareholder consultation exercise was then
carried out to seek feedback on the proposed changes.
This is detailed in the Remuneration Committee Report
on pages 154 to 203.

In keeping with Investment Association guidance, an update
statement on the Company’s response to the outcome of the
2023 Annual General Meeting significant votes against was
sent to the Investment Association and can be found on the
corporate website, www.ocadogroup.com.

128

129

Division of Responsibilities

Investor activity this year
Throughout the year Directors held one-to-one and group meetings and calls and hosted group investor tours around
UK CFCs. Additional specific meetings included the following:

January

February

Participated in Goldman Sachs Global Strategy Conference.

FY22 results presentation followed by a series of in-person meetings with around 70 institutional
investors, including all major Ocado Group shareholders, in London, New York, Chicago and Dublin.

March

Held CEO fireside chat at JP Morgan European Internet Days Conference.

April

May

June

July

September

October

November

Chair-hosted governance breakfast. Chair investor roadshow.

2023 Annual General Meeting.

Held CEO fireside chat at the BNP Paribas Exane CEO Conference in Paris.

FY23 half-year results presentation followed by an investor roadshow including one-to-one
meetings and group calls with over 110 institutional investors.

Chair investor roadshow. Held CFO fireside chat at the annual Bernstein Pan European Strategic
Decisions Conference.

Investor roadshow in Poland.

Participated in Barclays European Retail Conference and JP Morgan Stanley European Technology,
Media & Telecom Conference in Barcelona. Held fireside CFO chat at JP Morgan UK Leaders
Conference. CEO fireside chat with Bank of America.

Shareholders by type

Shareholders by geography

Key:

Private shareholders – 0.31%

Banks and nominees – 80.53%

Companies – 16.36%

Other institutions – 2.80%

Key:

United Kingdom – 89.69%

Europe – 0.02%

United States – 0.02%

Rest of the world – 10.27%

Board roles
The role descriptions for the CEO, Chair, Senior Independent Director and Designated Non-Executive Director for
Workforce Engagement are set out in writing and provide a system of checks and balances to ensure no individual
has unfettered decision-making power.

Non-Executive

Executive

Non-Executive Directors
• Provide support and constructive challenge to the

Executive Committee
• Oversee the day-to-day management of the

Executive Directors.

Group’s operations.

• Monitor the delivery of the Group’s strategy within
the risk and control framework set by the Board.

• Provide an external perspective and bring a diverse

range of skills and experience to the Board’s
decision-making.

• Oversee the appointment and removal of, and
determine appropriate levels of remuneration
for, the Executive Directors.

Chair
• Provide effective leadership of the Board.
• Promote high standards of governance and ensure

the effectiveness of the Board in directing the Group.
• Set the Board’s agenda to ensure sufficient time for

discussions and effective decision-making.
• Ensure that all Directors make an effective

contribution to the Board.

• Promote a culture of openness, constructive debate

and challenge on the Board.

• Execute the strategic objectives agreed by the Board
and develop plans in collaboration with the Board to
implement strategy.

• Ensure the Board is properly informed of important

and strategic issues within the business.
• Undertake certain aspects of the Board’s

responsibilities as delegated.

Chief Executive Officer
• Responsible for the day-to-day running of the
Group and the performance of the business.
• Responsible for the implementation of strategy

and decisions of the Board.

• Provide clear and visible leadership.
• Represent management on the Board.

Senior Independent Director
• Support and act as a sounding board for the Chair.
• Be available to shareholders if they have concerns.
• Meet, at least annually, with the other Non-Executive
Directors, without the Chair present, to appraise the
performance of the Chair.

• Act as an intermediary for the other Directors

when necessary.

Group General Counsel and
Company Secretary
• Ensure compliance with Board procedures.
• Implement and oversee the governance framework.
• Ensure that information flows between management,

the Board and its Committees.

• Advise the Directors, as required, on regulatory

compliance and corporate governance.

Designated Non-Executive Director for
Workforce Engagement
• Understand the views of the workforce and identify

any areas of concern.

• Provide regular updates to the Board on the views

of the workforce.

• Ensure the Board considers the workforce in

decision-making.

• Explain to the workforce the Company’s policy on

executive remuneration.

130

131

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONExternal commitments
The Company is mindful of the time commitment required
from Non-Executive Directors in order to effectively fulfil
their responsibilities on the Board, particularly providing
constructive challenge and holding management to account,
and utilising their diverse skills and experience to benefit
the Company and provide strategic guidance.

Prior to appointment, prospective directors provide details
of any other roles or significant obligations that may affect
the time available for them to commit to the Company.
Each Non-Executive Director’s appointment letter includes
the minimum time commitment required for the role.
The Chair and the Board are informed by each Director
of any proposed external appointments or other significant
commitments as they arise and these are monitored to
ensure they have sufficient time to fulfil their obligations.
Chair approval is required prior to a Director taking on any
additional external appointment. The Company monitors
and remains compliant with applicable shareholder advisory
groups’ guidance on “overboarding”.

Each Director’s biographical details, including any significant
external appointments, are set out on pages 118 to 121. Prior
to approving new appointments, consideration is given to the
additional time commitments of the roles, and the Chair (and
Board regarding any external appointments of the Chair)
was satisfied they would still have sufficient time to fulfil
their obligations to the Company. The People Committee’s
consideration of Rick Haythornthwaite’s appointment to
NatWest Group plc is detailed on page 140.

Conflicts of interest
Ocado Group has a Conflicts of Interest Policy in place
applicable to our workforce, including the Directors. In
addition, the Board has established formal procedures,
detailed in the Director Conflicts of Interest and Related
Parties Policy, for the declaration, review and authorisation
of any conflicts of interest of Board members.

Prior to their appointment, Julia Brown and Rachel Osborne
completed a questionnaire disclosing any conflicts of interest
or potential conflicts to the Company. Each Director is
required to disclose conflicts and potential conflicts to the
Chair and the Group General Counsel and Company
Secretary as and when they arise, with an opportunity to
disclose conflicts at the beginning of each Board and
Committee meeting based on the matters to be discussed.

Division of Responsibilities continued

Board independence
The Non-Executive Directors play a vital role in holding the
Executive Directors to account against agreed performance
objectives and scrutinising the performance of senior
management. In addition, independent insight and an
external perspective support better decision-making.
Therefore, it is of paramount importance that this
independence, and an appropriate balance of independent
to non-independent Directors on the Board, is maintained.

At 3 December 2023, the Board comprised 12 Directors
(which reduced to 10 after the year end), including seven
Non-Executive Directors, excluding the Chair (who was
independent on appointment), all determined by the Board
to be independent, and four Executive Directors (reduced to
two after year end). The independence of the Non-Executive
Directors is assessed annually, including the length of tenure
and relationships or other circumstances that are likely to,
or could appear to, impair a Director’s judgement. Similarly,
the composition of the People Committee, Audit Committee
and Remuneration Committee complied in all respects with
the independence provisions of the Code during the period.

The data from page 132 to 136 is as at 3 December 2023.

Board composition*

Key:

Executive Director – 4

Chair – 1

Non-Executive Director – 7

* Figures as at 3 December 2023

Jörn Rausing
The Board has continued to closely scrutinise the factors
relevant to its determination of the independence of
Non-Executive Director Jörn Rausing. This is due to the
length of tenure, as a Director for 20 years, and because
Jörn is a beneficiary of the Apple III Trust, which
owns Apple III Limited (together, “Apple”), a significant
(approximately 10%) shareholder of the Company.
Jörn is not a representative of Apple, nor does Apple
have any right to appoint a Director to the Board.

The Board considers Jörn’s continuing directorship to
benefit the Group due to his significant business experience
and international expertise. This is coupled with in-depth
knowledge of the Group and bringing a long-term
perspective to the Board’s decision-making. The Board
considers Jörn to be independent in character and
judgement, and does not believe the size of Apple’s
shareholding, nor the duration of Jörn’s tenure on the Board,
amounts to a relationship or circumstance which may affect
his judgement. Jörn has stood for re-election annually
since 2011 and on each occasion has been re-elected
by a substantial majority of shareholders.

132

Board and Committee meetings
and attendance
During the year, the Board and its Committees conducted
meetings in person, providing video conference facilities
if required by any Director, with some ad hoc meetings
added to the Board schedule to discuss and make time-
sensitive decisions. During the period, the Non-Executive
Directors held six scheduled meetings without the Executive
Directors present, as well as a number of informal sessions.
In the event a Director was unable to attend a meeting they
received all papers for the meeting and had the opportunity
to raise any points ahead of the meeting. In the year, there
were some additional meetings diarised and some Directors
were unable to join due to prior commitments and the short
notice of these meetings.

When a Director seeks to take on additional external
responsibilities, the Director discusses the potential position
with the Chair and approval will only be given once the
Chair is satisfied and the Director confirms that, as far as
they are aware, there are no conflicts of interest. A formal
annual review is undertaken to ensure the information is up
to date and a register is maintained by the Group General
Counsel and Company Secretary.

There were no actual or potential conflicts of interest
declared to the Company by the Directors between their
duties to the Company and their private interests and/or
other duties, except in the case of the Executive Directors,
each of whom holds the position of Director of the Company
and director of a number of Group subsidiary companies.

Ocado Retail Limited (“ORL”) and conflicts
of interest
Tim Steiner, Stephen Daintith and James Matthews
are Ocado-appointed directors on the ORL board.
Notwithstanding ORL’s Companies Act 2006 duties and
obligations under its Articles of Association, all three
directors are subject to the provisions of the ORL articles
of association and to the provisions within the ORL
shareholders’ agreement on conflicts of interest and related
party matters. For more information about the governance
framework of ORL see page 20.

Board and Committee meetings and attendance
Meetings attended/possible meetings the Director could have attended

Director

Rick Haythornthwaite (Chair)

Tim Steiner

Stephen Daintith

Mark Richardson**

Neill Abrams**

Andrew Harrison

Jörn Rausing

Julie Southern

Emma Lloyd

Nadia Shouraboura

Julia M. Brown

Rachel Osborne

Past Directors

Luke Jensen

John Martin

Michael Sherman

Board

Audit
Committee

People
Committee

Remuneration
Committee

13/13

12/13

13/13

12/13

13/13

11/13

13/13

10/12*

2/2*

11/12*

11/11*

6/8*

4/5

5/5

4/5

3/5

5/5

9/9

8/9

9/9

2/2*

7/7*

4/6*

2/3*

1/2*

7/7

6/7

5/6*

Luke Jensen resigned from the Board effective 30 September 2023. John Martin resigned from the Board, Audit Committee and People Committee effective 31 August 2023.
Michael Sherman resigned from the Board, Audit Committee and People Committee effective 27 June 2023. Julia M. Brown joined the Board, Remuneration Committee and
People Committee effective 1 January 2023. Rachel Osborne joined the Board, Audit Committee and People Committee effective 1 September 2023.

** Mark Richardson and Neill Abrams stepped down from the Board after the financial year end.

133

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONComposition, Succession and Evaluation

Appointments to the Board
The People Committee is responsible for overseeing the
selection of individuals to serve on the Board and provides
suggestions to the Board regarding these appointments.
The Committee also ensures there are succession plans
in place to ensure a smooth transition for the Board and
senior management when needed. Appointments and
succession plans are based on merit and assessed against
objective criteria with the promotion of diversity a central
consideration. The formal procedure for Board appointments
and succession planning is detailed on pages 138 to 143.

Director re-election
Each Director is required under the Articles of Association
to retire at every annual general meeting and submit
themselves for re-election by shareholders. At the
2023 Annual General Meeting, all the Directors stood
for appointment or reappointment, and were duly
elected or re-elected.

At the 2024 AGM, all of the current Directors, except Rachel
Osborne, will submit themselves for re-election by
shareholders. Rachel is subject to appointment by
shareholders, having joined the Board on 1 September 2023.
This report, and in particular the Board biographies on
pages 118 to 121, sets out the contribution of each Director to
the Company and on this basis the Board, and specifically
the Chair, believes each Director proposed for election or
re-election at the AGM should be reappointed or appointed.

Board development
During the year, the Board members enhanced their
professional development with the following training
and development opportunities:

Jörn Rausing has served as a Non-Executive Director
for 20 years, seven of which were before the Company’s
Admission to the London Stock Exchange. He is considered
independent by the Board. Accordingly, due to the length
of tenure, the recommendation of his reappointment to
the Board was subject to particular scrutiny (including
the importance of maintaining Board continuity).

Board induction, training and
professional development
On joining the Board, it is the responsibility of the Chair and
Group General Counsel and Company Secretary to ensure
the newly appointed Directors undergo a thorough and
personalised induction process, taking into consideration
their specific backgrounds and experiences and any
Committees they will be joining. This is demonstrated in the
induction programme undertaken by Rachel Osborne on
joining the Board in September 2023, as detailed below.

Rachel Osborne Board induction programme

Director role and responsibilities

• Met with the Group General Counsel and Company Secretary and Deputy
Company Secretary to discuss the role of director and responsibilities,
including our process for share dealing, insider lists, conflicts of interest
and related parties.

• Training session with the Group’s external legal advisors on director duties.

Strategy and business model

• Met with both the Chair and CEO to discuss Ocado’s strategy and

business model.

• Met with the CFO to discuss strategy and the business model, as well as

the Group’s financial performance and the five year plan.

• Met with senior management from across Technology Solutions and

Ocado Logistics including the CEO, Ocado Intelligent Automation, CEO,
Ocado Solutions, CEO, Ocado Technology, CFO and Managing Director,
Ocado Logistics.

APR

The Group’s external advisors provided
a session on ESG and value creation.

• Met with the CEO of ORL.

Corporate governance

MAY

The Group’s external advisors provided
a training session on corporate governance
updates and sustainability.

SEP

The Group’s external legal advisor provided
a training session on director duties for
Julia M. Brown and Rachel Osborne.

NOV

Senior management provided a technology
deep dive session focusing on last mile issues.

The Board has based its recommendations for election
or re-election, in part, on its review of the results from the
Board effectiveness process outlined on page 137, on the
reviews of the Executive Directors conducted at meetings
of the Non-Executive Directors, the Chair’s review of
individual Directors and on the basis that each Director
has demonstrated substantial commitment to their role,
taking into account a number of considerations including
outside commitments.

134

• Met with the Group General Counsel and Company Secretary and

Deputy Company Secretary to review Ocado’s governance framework,
Board and Committee procedures and stakeholder engagement.
• Met with the Group General Counsel and Company Secretary, Chief
Compliance Officer and Risk team on ESG matters, including TCFD
and regulatory reporting.

• Access to Company policies and procedures including Matters Reserved

for the Board, Committee Terms of Reference and policies regarding
anti-bribery, whistleblowing, fraud prevention and share dealing.

Culture

• Access to the online employee induction programme provided to all new
joiners, including information on the history of the Group, our solutions
and technology and our values and culture.
• Met with the Chief People Officer and team.
• Site visits to the Purfleet CFC, Ocado Technology Swiftfields campus and

Ocado Group head office.

• Met with various Non-Executive Directors and members of management.

Audit

• Met with the Head of Internal Audit and senior management in the

Finance team.

• Training session with the external auditor, including a refresher on

relevant accounting standards and FRC changes.

• Audit review with the external audit partner and team.
• Met with all current Audit Committee members and previous

Audit Committee chairs John Martin and Julie Southern.

• Audit Committee papers review with the CFO and senior management

from the Finance team.

• Met with the Head of Regulatory and Compliance to discuss the

Risk Committee and risk framework.

In the year, the Remuneration Committee received updates
from the Committee’s remuneration advisors covering
governance and developments in executive remuneration.
The Audit Committee received written technical updates
from the external auditor to keep them abreast of the latest
accounting, auditing, tax and reporting developments.
The Board also received briefings from external advisors
on a range of strategic matters detailed in the Board
development summary on the previous page.

Board composition
The composition of the Board and Board Committees is
continually assessed by the Chair and kept under review
by the People Committee, to ensure an appropriate balance
of skills and experience is maintained. The composition is
more formally reviewed annually by the People Committee
and as part of the Board effectiveness process. For more
information see pages 138 to 142. Each Board member is
asked to identify their own skills, experience and diversity
characteristics annually as part of the year-end process.
The results for 2023 are shown on page 136.

Board diversity
The Board believes that a diverse composition,
encompassing gender, ethnicity, and diverse social
backgrounds, leads to more favourable outcomes and
enhanced decision-making. Consequently, the Board is
dedicated to promoting DE&I within its own ranks and among
senior management. For more information on the Board’s
approach to DE&I, including the Board Diversity Policy, see
pages 142 and 143. For more information on how the Group
as a whole considers DE&I see the Responsible Business
Report section on pages 67 to 81 and the corporate website
www.ocadogroup.com/diversity-and-inclusion.

Board gender diversity

Key:

Female – 5

Male – 7

Senior management gender diversity

Key:

Female – 16

Male – 34

Length of tenure of Chair and
Non‑Executive Directors

Years

0-3

3-6

6-10

10+

135

Combination of skills and experience as
identified by the Board

Board diversity characteristics

Number of Directors with
the skill or experience

Highly competent

Chairship

4
Risk management

4
Climate governance

0
Workforce engagement

3
International board experience

7
Prior FTSE board experience

5
Financial acumen

6
Technology

3
Investor relations

3
Retail industry

6
Marketing

1
Governance

7
Grocery industry

3
Business development

5
Operations management

6
Change management

136

Annually, the Board confirms its own diversity
characteristics taking into account less tangible factors,
such as life experience and personal attitudes.

Sexual orientation

Key:

Heterosexual/Straight – 12

Disability

Key:

No – 12

Highest level of educational attainment

Key:

Bachelor’s degree – 7
Master’s degree – 3
Doctorate – 2

Ethnic group

Key:

White – 9
Black/African/Caribbean/
Black British – 1
Other ethnic group – 2

Educated outside of the UK

Key:

Yes – 4
No – 8

Key:

41-55 – 5
56-70 – 7

Age

Review of Board effectiveness
The Board undertakes an annual review of its own and its
Committees’ performance, with a formal externally facilitated
effectiveness review carried out at least every three years
in compliance with the Code.

The Directors consider the evaluation of the Board and its
Committees and members to be an important aspect of
corporate governance and it was agreed that the 2023
Board evaluation process should be internally facilitated.

The actions from the 2022 external evaluation were reviewed
in the year and taken into consideration in the 2023 internal
evaluation. Board members had the opportunity to assess
and discuss how these had been addressed in the year.

The next externally facilitated effectiveness review will take
place in 2024 and will be reported on next year.

Process for 2023

1. Effectiveness questionnaire issued

The 2023 questionnaire was issued in August 2023 and
completed by the Directors, our PDMRs and the Deputy
Company Secretary.

2. Content
The questionnaire covered:

1. progress against last year’s actions, including to what
extent the participant believed the actions had been
addressed and their top priorities for the coming year;

2. Board composition, dynamics and expertise;

3. strategic oversight;

4. risk management;

5. succession planning;

6. the Board’s agenda and meetings; particular focus was
paid to whether enough time had been spent on topics
such as ESG, climate change and cybersecurity;

7. governance of the Board and Board Committees; and

8. effectiveness of the Board Committees.

The participants were requested to score each question
on a five-point scale and add any additional commentary
to support their response.

Separate questionnaires were designed for each Board
Committee and Committee members were requested
to complete these, including whether they had any
specific comments on composition and effectiveness
of the Committee(s).

3. Review and discussion of the report and
recommended actions

The findings of the evaluation were presented to the
Board ahead of its September 2023 meeting. The Board
was invited to review and discuss the results of the
performance review and approve some actions to
take forward in the year.

Board Committees
The evaluation of Board Committee effectiveness
found that all Committees were considered to be chaired
and operating effectively. Further details of the composition,
role and activities of each Committee can be found on
pages 138 to 203.

Chair and individual Director evaluation
The SID reviewed the Chair’s performance as part of
the 2023 internal effectiveness review and the approach
taken involved the SID collecting feedback directly from
the Non-Executive Directors and Executive Directors.
In February 2024, the People Committee, without the
Chair present, discussed the feedback and deemed
him to continue to be effective and have the time to
commit to the role as Chair of Ocado Group.

The Committee reviewed the performance, tenure, skills,
diversity, external commitments and independence of each
Director in February 2024 and recommended to the Board
the re-election, or election, of each Director at the
2024 AGM, with the exception of Mark Richardson and
Neill Abrams who stepped down from the Board on
2 February 2024.

Identified effectiveness actions for 2024
The following outcomes arose from the 2023 internal
Board effectiveness review and were identified as
recommended strategic priorities which will be monitored
at each Board meeting:

• Becoming partner-centric, including ensuring technology

investments are aligned with our partners’ needs.

• OSP Partner success, including ensuring the success
and growth of existing partners and leveraging our
Partner Success teams.

• Supporting the success of OIA, including appropriate
scrutiny of progress on OIA prospects and balancing
investment with future possible business.

• Oversight of the ORL strategy, succession planning

and ESG.

137

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONPeople Committee Report

Committee membership
The current members of the
Committee are:
Andrew Harrison (Chair), Jörn Rausing, Emma Lloyd,
Rick Haythornthwaite, Julie Southern,
Nadia Shouraboura, Julia M. Brown,
Rachel Osborne (joined 1 September 2023)

Committee changes in the year:
Stepped down from the Board and People Committee:
John Martin (31 August 2023) and Michael Sherman
(27 June 2023).

Andrew
Harrison
Chair

Number of meetings during the year:

Committee membership, together with attendance
at meetings, is detailed on page 133

Biographies of the Directors are set out on pages 118
to 121

Terms of Reference:
investors/corporate-governance/

https://www.ocadogroup.com/

Key responsibilities
Board composition
• Reviewing the structure, size and composition of the

Board and its Committees.

• Evaluating the combination of skills, experience,
diversity, independence and knowledge on the
Board and its Committees.

Succession planning
• Reviewing the leadership needs of the organisation.
• Giving full consideration to succession planning for

the Board and senior management and overseeing the
development of a diverse pipeline for succession.
• Identifying and nominating potential candidates for
Board vacancies as and when they arise, in line with
succession planning and the Board Diversity Policy.

Board effectiveness
• Reviewing the independence and time commitment

of the Non-Executive Directors.

• Reviewing and acting upon the results of the Board

performance evaluation process and assess
how effectively members work together to
achieve objectives.

People engagement
• Considering people engagement-related issues

for the Group.

• Supporting workforce initiatives that promote a culture

of DE&I.

138

Dear Shareholder
On behalf of the Board, I am pleased to present the report
of the People Committee (the “Committee”) for FY23.

In FY22, the Committee underwent a transformation,
in name and scope. The change in name from the
Nomination Committee to the People Committee reflected
our commitment to a broader and more holistic approach
to shaping the workforce and culture of Ocado. Last year
I outlined a key priority for FY23: to embed the expanded
remit of the Committee and provide effective oversight
of engagement of the workforce. This expanded remit,
alongside my role as the DNED, which continues to further
strengthen the connection between the Board and our
people, has allowed us to consider views and priorities of the
wider workforce. In turn we have a deeper impact on the
wellbeing and culture of our people.

An ongoing and comprehensive review of our Board
and Committee composition underpinned the activity
of the Committee this year, focusing on skills, experience,
diversity and tenure of our Directors. This review now
provides the foundation of our succession and recruitment
planning, ensuring the Board has the knowledge and skills
essential for effective leadership and the delivery of our
strategy. It is vital our leadership reflects the diversity
of our people and communities and during the year the
Committee prioritised ways to advance diversity at Board
level. This commitment extends to monitoring and driving
initiatives to enhance DE&I across the entire organisation and
is reflected in the introduction of new Senior Leaders DE&I
targets for gender and ethnicity, and we are proud to have
achieved accreditation of the National Equality Standard
during the year.

Areas of focus and activities in 2023
Succession planning
As Ocado continues to evolve and grow, particularly with
significant change over the year in the Technology Solutions
business, we continued to monitor management succession
plans and the Committee was updated on the set of values
launched across the organisation to help shape and scale
the desired culture. We spent time with the People team
assessing the maturity of our current people processes and
discussing the future operating model, people engagement
and how to achieve a high-performance culture and we
support management on the key areas of focus to embed
the desired culture. We also had a deep dive into our
Logistics business with updates on what had been achieved
in the year and actions for 2024 in areas including leadership,
talent and succession; listening, culture and engagement;
DE&I; and reward and recognition.

Board and Committee refresh
During the year the Committee oversaw a number of
significant changes to the Board, part of the review
outlined above. Firstly, I would like to thank Luke Jensen,
John Martin and Michael Sherman, all of whom stepped
down from the Board (and John and Michael subsequently
stepped down from the Committee) during the year for
their dedication, hard work and significant contributions
made during their tenures. Following the financial year end
Neill Abrams and Mark Richardson stepped down from
the Board, while also continuing in their roles as part of the
Executive Committee.

While we wished Luke and Michael well as they departed
the Company, John was appointed CEO of Ocado Solutions
following a thorough handover before his predecessor
Luke retired at the end of September 2023. We undertook
a thorough search process for a new Non-Executive Director,
using an external executive search agency, resulting in
the appointment of Rachel Osborne with effect from
1 September 2023. A valuable addition to the Board,
Rachel brings a wealth of executive experience in large,
global organisations and has both strong retail and
consumer experience and business to business experience.
Rachel’s appointment adds to the Board’s existing breadth of
experience; you can read more about her appointment
process on page 134 and about the skills and expertise on
the Board on page 136. Finally, we spent time considering
the potential overboarding or conflict of Rick
Haythornthwaite’s new external appointment and determined
he had continued capacity to fulfil the role and no conflicts
were identified.

DE&I
Ocado’s ability to embrace diversity and foster an inclusive
culture is pivotal to our long-term success. We remain
dedicated to the ongoing development of our Board and
Committees, ensuring their composition aligns with our
culture and strategic priorities. This approach is central
to the role of the Committee in the year ahead.

Andrew Harrison
Committee Chair

29 February 2024

How the Committee spent its time during the year
The principal matters the Committee considered during the year were as follows:

Board composition

Review of Board and Committee composition, taking into
account diversity and independence.

Review of Board skills and competencies.

Committee composition and tenure review.

Appointments and resignations, overseeing: the recruitment
process for a new Non-Executive Director, resulting in
Rachel Osborne’s appointment to the Board; the resignations
of Luke Jensen and Michael Sherman from the Board as they
departed the Company and the resignation of John Martin
from the Board as he was appointed CEO, Ocado Solutions.

Reviewed and approved the Board Diversity Policy.

Embracing change:
Refreshing our Board and Committees
Adaptability is vital in the evolving world of corporate
governance and the changes to our Board and Committees
during the year champion diversity and fresh leadership,
enabling the Board to also evolve with the business.

The appointment of Rachel Osborne, along with
John Martin’s new role as CEO of Ocado Solutions and
the departure of Luke Jensen and Michael Sherman
followed by Neill Abrams and Mark Richardson stepping
down from the Board after the end of the financial year, has
contributed to the natural evolution of the Board, creating
a dynamic shift in its composition. These changes have
been instrumental in supporting one of the key objectives
of our Board Diversity Policy, which aims to have at least
40% female Board representation. Following these changes
we have now exceeded our aim with the Board now
comprising 50% female representation, creating a more
diverse and inclusive Board. Future succession planning
will continue to foster diversity and the need for a female
in one of the senior Board roles.

Further, the shift to having fewer Executive Directors on
the Board provides more independent oversight of all
Board matters and allows for more attention to be given
to strategic direction and governance oversight.

139

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
People Committee Report continued

Succession planning
(Board and senior management)

Continued to consider the framework for Board composition
and immediate succession priorities for moving towards the
desired framework, with regard to diversity targets skills
and expertise on the Board and areas of growing strategic
importance for the Group.

Review of management succession planning to meet the
needs of the Group as the organisation continues to evolve
and support the development of a diverse and engaged
pipeline, with a particular focus on the Technology Solutions
and Logistics businesses.

Board effectiveness

Overseeing the internally facilitated Board effectiveness
review. Details of the process and actions are included
in the Review of Board effectiveness section on page 137.

Assessing the appropriateness and impact of
Rick Haythornthwaite’s appointment as an independent
non-executive director, and subsequent appointment
as chairman, of NatWest Group plc.

Group workforce matters

Continuing to consider the Committee’s extended remit to
broader people and workforce-related issues predominantly
in the area of employee engagement, including standalone
deep dives into engagement across the separate Technology
Solutions and Logistics business areas.

Review of the gender balance of senior management.

Review of hiring metrics.

Maturity assessment of DE&I completed by EY using
accredited National Equality Standard framework; engaged
100 people across our UK Technology Solutions business
including 50 in-depth interviews and desk review of
hundreds of documents such as policies and processes.

Update on work undertaken and planned with regard
to people engagement in the UK Logistics business.

Considering the shaping of the Group strategy for
DE&I based on data insights from across the Group.

140

Another notable development was the transition of
John Martin’s role, stepping down from his role on the Board
and being appointed as CEO of Ocado Solutions, a strategic
move which seamlessly brings Board-level experience down
to the heart of a key business unit and helps to deepen
further the support of our OSP Partners as well as help
shape our strategic direction and performance culture
given his extensive strategic, operational and financial
management experience of running large
international businesses.

The refresh does not end at the Board level: we have
also made significant changes within the leadership of
our Board Committees. The Audit Committee welcomed
newly appointed Rachel Osborne as its new Chair,
bringing fresh direction and perspectives, and the
Remuneration Committee also saw a change in
leadership as Julie Southern assumed the role of Chair.

In the spotlight:
Our Chair’s external appointment
at NatWest Group plc
We believe it is essential to be transparent in addressing any
challenges relating to the appointment of our Chair to lead
another FTSE 100 company. Prior to Rick Haythornthwaite’s
appointment as the NatWest Group plc chairman,
the Committee carefully evaluated the potential
benefits and challenges of the appointment, ultimately
recommending to the Board that it approves the external
role. This recommendation stems from the strong belief that
it will broaden his experience and that any time constraints
can be managed effectively. We examined Board meeting
schedules for the next two years and we are pleased to
report no conflicts were identified. This will help to ensure
substantial time can be devoted to both roles.

We considered governance voting guidelines set out by
proxy advisors around overboarding and the Board
deliberated on time commitments and confirmed that our
Chair’s appointment adheres to those limits. We draw
further strength from the evidence that Rick
Haythornthwaite becomes one of eight individuals who
concurrently hold two FTSE 100 chairships, joining a select
group of individuals: leaders who bring additional
experience and unique insights to the boardroom.

Governance standards may evolve and we commit to
giving careful consideration as part of the annual Board
performance evaluation, ensuring our Chair can continue
to discharge his responsibilities at Ocado effectively
and appropriately.

We remain dedicated to ensuring our commitment to
high standards of governance excellence aligns with both
the expectations of our shareholders and the changing
landscape of corporate governance. Rick Haythornthwaite’s
external appointment will bolster his experience and we are
confident that a strong framework is in place to maintain
those high standards.

Board appointment process

Role requirements
Evaluate the combination of skills, experience, knowledge and diversity of the Board and the strategic
priorities of the business. Prepare a set of objective criteria for the role, including the capabilities,
experience and personal attributes required.

Candidate search
Facilitate the search by instructing external advisors. Identify a long-list of potential candidates based on the
role criteria, with consideration of the Board Diversity Policy.

Interview process
Narrow down to a short-list of candidates and undertake an interview process facilitated by a combination
of the Chair, Non-Executive and Executive Directors and senior management as appropriate.

People Committee approval
The People Committee reviews potential candidates, considering whether the required criteria are met,
feedback from the interview process, due diligence results and suitability for the business, culture and Board.
The Committee then selects and recommends the preferred candidate choice to the Board.

Board approval
The Board approves the formal appointment of the selected candidate and an announcement is made to
the market.

Board composition and
succession planning
The Committee seeks to ensure that the Board’s
composition, and that of its Committees, is appropriate to
discharge its duties effectively and lead the Group to deliver
our strategic objectives. During the year, the Committee
undertook a thorough review of the Board’s composition.
This review took into account various considerations
including the tenure of Directors, independence and
diversity. The Committee also reviewed a detailed skills
matrix, supported by a self-assessment analysis completed
by each Director, to examine current Board knowledge,
experience and skills and any perceived gaps. This
informed the criteria set for the recruitment of an additional
Non-Executive Director, which resulted in the appointment
of Rachel Osborne, with effect from 1 September 2023.

The Committee engaged executive search agency Heidrick &
Struggles to assist with Rachel’s appointment. The Company
and the Directors have no other connection with Heidrick &
Struggles. Heidrick & Struggles was requested to undertake
a broad search to allow for a wider pool of potential
candidates that would provide greater diversity. In line with
Board effectiveness review feedback, a candidate skills
matrix was created to assess potential candidates against
key criteria. Experience in a complex multinational company
was identified amongst other requirements as key to the role,
with increasing diversity on the Board an important
consideration. Following a thorough search, six candidates
were interviewed by a combination of the Chair, Committee
members, Executive Directors, the CEO and senior
management. The Committee recommended to the
Board the appointment of Rachel given that her
capabilities, skills and previous experience fulfilled
the role profile.

141

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONPeople Committee Report continued

The review of the composition of the Board Committees
and Director tenure resulted in several changes to refresh
membership and to support the development of our
Directors and the Board as a whole. Rachel Osborne joined
the Audit Committee, taking over as Chair from Julie
Southern, who remains on the Audit Committee. Rachel also
joined the People Committee. Julie Southern took over as
Chair of the Remuneration Committee from Andrew Harrison,
who remains on the Remuneration Committee. These
changes will bring fresh opinions and leadership. John Martin
and Michael Sherman left the Audit Committee and the
People Committee as they stepped down from the Board.

The Committee oversees succession planning for Directors
and senior management, as well as broader consideration
of the leadership needs of the business and senior
management development. As the organisation continues
to change, the composition of senior leadership and the
succession pipeline continued to be a key focus this year.
The Committee undertook a detailed review of the Executive
Director and senior management succession pipeline and
talent at the start of the year, with ongoing discussions on
succession planning and updates from the Chief People
Officer at each scheduled meeting. The Committee focused
on the need to ensure that the leadership and the structure
of the organisation remain appropriate to match the current
needs of the business and to be able to drive the business
forward. The succession plan includes monitoring internal
succession candidates and their level of readiness for the
role and the broader talent pool for future consideration
within the Group and setting priorities for leadership
development. In addition, Committee members attended
talent lunches and other events to meet and get to know the
talent pool and to form their own view on engagement and
key issues. The importance of diversity in the succession
pipeline is supported through the Group’s leadership
diversity initiatives – see pages 70 and 71 for more detail.

With regard to the development of the management team,
the Committee receives deep dives on each business
during the year and the Board has exposure to other
senior managers who present or report to the Board on
their business areas or particular projects. The Committee
receives regular updates on initiatives to support leadership
development such as the Leadership Academy and annual
executive talent reviews.

Board diversity
The Committee acknowledges the significance of DE&I,
not only within the boardroom but also across the entire
organisation. Inclusivity remains a core value as it fosters a
sense of belonging among our people, thereby empowering
them to contribute effectively to our shared objectives.
In its definition of diversity the Ocado Board encompasses
a wide range of factors, such as skills, backgrounds, gender,
race, age, knowledge, experience, sexual orientation,
socio-economic background and disability.

Last year we reviewed and updated the Board Diversity
Policy to reflect the new Listing Rule requirements for
increased disclosure on diversity. The Policy sets out the
approach to be taken to ensure there is diversity and
inclusion on the Board and across the Board Committees.

Our objectives were established with the aim of enhancing
diversity within the Board and Board Committees and
promoting greater inclusivity across the entire Group.
Striving for increased diversity will foster innovation and
fresh perspectives which in turn will contribute to the
achievement of our strategic goals and our purpose to
tackle complex challenges.

The Committee reviewed the Board Diversity Policy this year;
however, given the changes made last year, it was agreed
that the Policy was fit for purpose and no amendments
were necessary.

The objectives are set out in the table on the following
page with details of progress in the year. Since year-end,
both Neill Abrams and Mark Richardson have stepped down
from the Board. As a result, the percentage of Board female
representation at publication date is now 50%. The reduced
size of the Board will support the increase in diversity
through new appointments and the Committee continues
to acknowledge and discuss this with regard to succession
planning and tenure review.

You can read more about:

Diversity data below Board level on pages 70 and 71
in the Strategic Report

Gender diversity of the Board on page 135

Gender diversity of all employees on page 68

Self-identified diversity characteristics of the Board
on page 136

Board Diversity Policy

Objective

Progress

Ensure that the Board composition is sufficiently
diverse and reflects an appropriate balance of skills,
knowledge, independence and experience to enable
it to meet its responsibilities, duties and strategic
objectives effectively.

Ensure that both appointments and succession plans
should be based on merit and objective criteria and,
within this context, should promote diversity of gender,
social and ethnic backgrounds, cognitive and personal
strengths and the Board aims that there should be:

• at least 40% female Board representation;
• at least one Board member from a minority

ethnic background; and

• at least one senior Board position (being the Chair,

CEO, CFO and/or SID) being held by a woman.

Ensure that the Board will always seek to appoint the
best-qualified candidate, but between two candidates
of equal merit the Board intends that, in recognition of
any disproportionate under-representation of gender
diversity on the Board, preference is given to a female
candidate when making future appointments.

Ensure that when seeking to appoint a new director,
the search pool will be wide and where executive
search firms are used, Ocado will only engage
with those that have adopted the “Voluntary Code
of Conduct for Executive Search Firms”
or equivalent code.

Ensure that the Board will support workforce initiatives
that promote a culture of inclusion and diversity.

Ensure that the Board will support the Committee
in identifying women and other under-represented
groups for promotion into senior management roles.

The Committee undertakes an annual review of the composition
of the Board and its Committees, with further discussions during
the year. An assessment of the Board, including skills, knowledge,
independence and experience, and the strategic objectives of the
Group, informs the criteria for any new appointment to the Board.
This year the criteria for a new Non-Executive Director included
experience in a complex, multinational business, resulting in the
appointment of Rachel Osborne.

Appointments to the Board are made on merit with an objective
set of criteria based on the needs of the Board and the business,
and the value and importance of increased diversity on the Board.

At 3 December 2023, 42% of the Directors on the Board were
women and the last three appointments to the Board have been
women. Diversity will continue to be taken into account in all
recruitment processes and when we consider composition
of our Committees.

At 3 December 2023, there was one Director who self-identified
as being ‘Black’ and two Directors who self-identified as
‘Other minority ethnic group’.

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. This continues to be
addressed and factors into succession planning discussions,
particularly when considering succession for those Directors
nearing their nine-year term.

The Committee is committed to applying this principle.

This year the Committee engaged Heidrick & Struggles to assist
in recruiting a new Non-Executive Director and specifically
requested a wide search to provide a broader range of
candidates. The recruitment process considered a long-list of
34 candidates, which was then reduced to a short-list of six taken
forward to the interview process. Heidrick & Struggles adopts
the “Voluntary Code of Conduct for Executive Search Firms”.

The Board is closely connected to the Global Culture and
Inclusion team and supports the initiatives being undertaken
to promote inclusivity and diversity. This year the Committee
created a nine-point plan for DE&I; the plan will form part of
the Executive Directors’ goals for 2024.

The Committee reviewed and discussed the current talent
and succession pipeline and the Group’s plans and outcomes
regarding learning and career development programmes
designed to build a pipeline of diverse individuals in leadership
and senior management positions. Committee members also
met with female leaders and diverse emerging talent within
the business. Finally, all new senior hires and their diversity
status are reviewed on an ongoing basis.

142

For more information on diversity in respect of all the Group’s employees, see pages 68 to 71

143

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONAudit Committee Report

Committee membership
The current members of the
Committee are:
Rachel Osborne (Chair), Julie Southern,
Andrew Harrison, Nadia Shouraboura

Committee changes in the year:
Julie Southern stepped down as Committee Chair
on 2 May 2023 and has remained a member; John
Martin became Committee Chair on 2 May 2023 and
stepped down as Committee Chair on 31 August 2023;
Michael Sherman resigned from the Board on
27 June 2023, stepping down from the Committee,
and Rachel Osborne became Committee Chair on
1 September 2023.

Number of meetings during the year:

Committee membership, together with attendance
at meetings is detailed on page 133

Biographies of the Directors are set out on pages 118
to 121

Terms of Reference:
investors/corporate-governance/

https://www.ocadogroup.com/

Key responsibilities
• Monitoring the integrity of the financial statements

of the Company and Group.

• Reviewing the Company’s risk management

and internal control systems.

• Monitoring and reviewing the effectiveness
of the Company’s Internal Audit function.

• Reviewing the independence and effectiveness
of the external auditor, including engagement
to supply non-audit services.

• Advising the Board on the appointment,

reappointment and removal of the external auditor.
• Ensuring the Annual Report and Accounts, taken as

a whole, is fair, balanced and understandable.
• Reviewing any disclosures made by the Company
in relation to the Task Force on Climate-Related
Financial Disclosures (“TCFD”) and climate-related
emerging risks.

Rachel
Osborne
Chair

Dear Shareholder
I am pleased to present my first Audit Committee (the
“Committee”) Report for the 53 weeks ended 3 December
2023, following my appointment in September 2023. I would
like to take this opportunity to thank John Martin for his
chairship of the Committee and wish him well in his position
of CEO, Ocado Solutions, and to Julia Brown, as a previous
member of the Committee.

As part of my induction, there was a particular focus on
my role as Audit Chair and I met with key stakeholders and
regular attendees at Committee meetings, past and present,
including the CFO, Group General Counsel and Company
Secretary, Finance Directors, Head of Internal Audit,
Head of Risk and our external auditor, Deloitte. I have spent
the last few months getting to know the business and key
stakeholders, getting into the detail on key discussions that
have taken place at previous meetings and understanding
key judgements and estimates relating to the financial
statements. You can read more about my extensive
induction on page 134.

This report provides shareholders with an understanding
of the Committee’s role and the work that has been done
during the year. The Committee has a structured agenda
and met nine times during the year in order to discharge its
responsibilities and to enable it to play a vital role in assisting
the Board in its oversight responsibility and monitoring the
integrity of the financial statements of the Group and the
robustness of its risk management and internal control
systems. It has been a busy start in my role as Chair –
we have spent time focused on the integrity of the
Group’s financial reporting activities, including our areas
of judgement and uncertainty, as well as on ESG and
non-financial reporting, including financial internal controls.

With many new regulatory changes coming down the line,
we have introduced a regular review of the landscape to
ensure awareness and readiness. Management provided
a view ahead of the corporate governance reforms, including
changes to the Code and how we would need to respond
to these changes. The analysis identified areas to work
on for 2024 and beyond.

Internal controls
Given the increased complexity of the Group and the
finance transformation focus of the past two years
(the “Evolve” programme), it is pleasing to see significant
progress this year in building the team, reducing risks
and an improvement in the maturity of our financial
control environment. This will continue to be a key focus
for management and the Committee into 2024.

Internal Audit
During the year, the Committee continued to oversee the
transition to the reorganised Internal Audit function, which
was restructured to better align with the Group’s principal
risks and compliance aims. The Head of Internal Audit
continued to attend the meetings and provided updates on
progress against the agreed plan and on key Internal Audit
findings, including in relation to ESG targets and metrics
to assess the adequacy of our programme and the controls
put in place by management. We undertook the annual
effectiveness review of the function with feedback from
the Committee, key management, Deloitte, and the Head
of Internal Audit. Appropriate actions from this review will
be taken forward and monitored by me throughout 2024.

Priorities for 2024
The Committee is mindful of the evolving regulatory
environment and will continue to monitor guidance as it
is published. Management preparedness for compliance
with the Code changes and our roadmap to meet ESG
planning and reporting requirements over the next few years,
along with other regulatory developments, will remain a
priority for the Committee.

Areas of focus and activities in 2023
Group financial reporting
This year, management continued to focus on the integrity
of the Group’s financial reporting activities and, following
the year-end audit process, the Committee agreed that
continued focus on forecasting remained a key priority
to monitor and the Committee continued to support
management on improved ways of working, systems,
and financial and internal control processes. For 2023,
the key areas of focus were the management judgements
concerning the M&S joint venture contingent consideration
payment, the accounting for Solutions revenue and the
risk of impairment of Solutions contracts, consistent with
the prior year, and the disclosures around the AutoStore
settlement payments.

ESG reporting
As a Committee we have stepped up our focus on the
Company’s climate risk management framework, approach,
rigour and relevance and we have continued to monitor and
review the Group’s progress towards reporting on our TCFD
disclosures. A key learning from the 2022 year-end audit
process highlighted some improvements that could be made
to our ESG disclosures, and this year we have spent more
time on ESG plans, reporting, data and the surrounding
control environment. We also looked at our plans
for increased assurance over ESG data and reporting.

Discussions at the Committee covered appropriateness of
the Group’s ESG metrics with focus on the most strategically
significant and the ongoing need for business engagement
and data collection. We agreed to bring in third-party
expertise to speed up our physical risk assessment and
scenario analysis and ensure the Group would be able to
provide comprehensive TCFD recommended disclosures.
Gap analysis and benchmarking provided targeted
suggestions to help management achieve close to a
fully compliant disclosure and in February 2024 it was
pleasing to see that management had been able to close
the gaps in reporting to achieve this – you can read about
this on pages 82 to 102.

Regulatory horizon scanning
We have also spent time understanding the impact of
the new Code, published in January 2024, and any gaps in
our reporting and processes and how we will
achieve compliance in the coming years. We discussed
management’s analysis of what is on the ESG reporting and
regulatory horizon that is material to Ocado and the critical
deliverables for FY24; and we also had early sight of our
TCFD disclosures, including an external gap analysis
and benchmarking.

144

145

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
Audit Committee Report continued

Committee financial experience
The Board is satisfied that Rachel Osborne and Julie
Southern are suitably qualified with recent and relevant
financial experience and competence in accounting or
auditing or both. The Committee as a whole is deemed
to have competence relevant to the sector in which
the Company operates. Rachel Osborne is a chartered
accountant with the Institute of Chartered Accountants
in England and Wales and possesses in-depth
comprehension of financial management and has
extensive financial expertise allowing her to chair
the Audit Committee effectively. Julie Southern is a
chartered accountant with the Institute of Chartered
Accountants in England and Wales and has extensive
financial expertise and financial acumen.

Fair, balanced and understandable
As part of the year-end process, in February 2024,
the Committee reviewed the Annual Report and
Accounts, having previously had the opportunity to
review and comment on earlier drafts. The Committee
concluded that the Annual Report and Accounts,
taken as a whole, was fair, balanced and understandable
and provided the information necessary for
shareholders to assess the Group’s position,
performance, business model and strategy.

Significant issues, judgements
and estimates relating to the
financial statements
The Annual Report seeks to provide the information
necessary to enable an assessment of the Company’s
position and performance, business model, strategy
and principal risks. The Committee assists the Board with
the effective discharge of its responsibilities for financial
reporting, and for ensuring that appropriate accounting
policies have been adopted and that management has
made appropriate estimates and judgements.

The Committee reviewed and discussed reports from
management on accounting policies, current accounting
issues and the key judgements and estimates in relation
to this Annual Report. It assessed whether suitable
accounting policies had been adopted. This is not
a complete list of all the Group’s accounting issues,
judgements, estimates and policies, but highlights the
most significant ones for the period in the opinion of the
Committee. The accounting treatment of all significant issues
and judgements was subject to audit by the external auditor.

The significant issues and judgements for the year ended
3 December 2023 are set out below and are consistent
with the prior year.

Matters
considered

Consolidation
of Ocado Retail
Limited (“ORL”)

Key accounting policies,
judgements and key sources
of estimation uncertainty

ORL, in which the Group holds 50% of
the voting rights, requires
management to exercise judgement
on whether the rights granted to
the Group under the ORL shareholders’
agreement give the Group control
under IFRS 10.

Revenues from
contracts with
customers
– Solutions

The accounting for Solutions
contracts is complex. Key areas of
management judgement include
the timing of recognition of upfront
and ongoing fees payable under
the relevant contract.

Factors considered
and outcome

Disclosure in financial
statements

The Committee discussed the various
factors and reviewed and agreed
with management’s assessment that
the Group still retained control of
ORL.

Under the Group accounting policies,
the dispute resolution procedures
(in relation to approval of the
business plan and appointment and
removal of the ORL CEO) in the
shareholders’ agreement grants the
Group determinative rights.

This agreement remains unchanged
and there are no indicators that
control has changed.

This was supported by management
reports and reports from the external
auditor on its audit procedures in this
review area.

The Committee reviewed the report
outlining management’s approach in
revenue recognition and agreed with
management’s accounting treatment
in line with the Group’s accounting
policies, reviewing each Solutions
customer individually in light
of IFRS 15 guidance.

See Note 5.2 to the Consolidated
Financial Statements – page 292.

See Note 2.1 to the Consolidated
Financial Statements – pages 236
to 240.

Matters
considered

Capitalisation
of internal
development costs

Key accounting policies,
judgements and key sources
of estimation uncertainty

The capitalisation of internal costs
of product development requires
judgement in determining that the
costs meet the necessary criteria
for capitalisation under IAS 38 and IAS
16.

Provisions,
contingent
liabilities and
contingent assets
– litigation

This year we achieved a successful
settlement with AutoStore and each
party was taking steps to withdraw
their actions against the other party.
Consideration was given to the
accounting treatment of the
settlement value of £200m, which was
to be paid in instalments to Ocado.

Adjusting items

Fair value
measurement
– contingent
consideration
due from M&S

The payment of the remaining
contingent consideration on the
part disposal of ORL in August 2019,
totalling £190.7m in cash, is contingent
on certain contractually defined ORL
performance measures being
achieved for FY23.

Management judgement is applied in
determining the fair value which has
been estimated using the expected
present value technique and is based
on a number of probability-weighted
possible scenarios.

ORL’s FY23 performance is below the
target required for the automatic
payment of contingent consideration.
Management considered a range of
potential outcomes that the participant
would consider in valuing the contract.
These include a settlement between
two parties and also a litigation action
between two parties. Management
determined that the fair value of
the contingent consideration due
from M&S as at the reporting date is
£28m, which is a reduction in fair value
from prior periods.

Factors considered
and outcome

Disclosure in financial
statements

See Note 3.3 to the Consolidated
Financial Statements – pages 254
to 255.

See Note 2.5 to the Consolidated
Financial Statements – pages 244
to 246.

See Note 3.7 to the Consolidated
Financial Statements – pages 262
to 265.

The Committee considered the
management report concerning
management’s approach with regard
to the capitalisation of internal
development costs, which includes
judgements, processes and controls
in place. The Committee is satisfied
that internal development costs
are capitalised appropriately.

The Committee discussed and
reviewed management’s conclusion
on the accounting treatment to
recognise the £200m settlement
value as a financial asset based on
the application of IFRS 9 “Financial
Instruments”. The Committee also
reviewed management’s assessment
in classifying this together with the
associated costs as an adjusting item
after consideration of the Group’s
accounting policy on adjusting items.
The Committee was satisfied with the
accounting treatment applied and
classification as an adjusting item.
This treatment was supported by the
external auditor.

The Committee reviewed
management’s periodic reports
on items being treated as adjusting
items and agreed with the
treatment applied.

The Committee reviewed
management reports outlining the
methodology and inputs used in the
probability weighting of potential
outcomes. In this context, the
Committee took into account the
review undertaken by the external
auditor of the value of the contingent
consideration.

The Committee agreed that a
probability-weighted approach
to assessing the fair value of the
contingent consideration remains
appropriate. The Committee also
reviewed the proposed financial
statement disclosures and in
particular that they sufficiently
explained the estimation uncertainty,
the methodology used and the
potential that the ultimate
consideration that will be received
at the point of settlement may
be materially different to the
fair value recognised as at the
year-end.

146

147

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Audit Committee Report continued

Matters
considered

Impairment
assessment
– customer-level
CGUs

Key accounting policies,
judgements and key sources
of estimation uncertainty

The performance of the Group’s
impairment assessments requires
management to make judgements
in determining whether a cash-
generating unit (“CGU”) shows any
indicators of impairment that would
require an impairment test to be
carried out as well as identifying
the relevant CGUs to be assessed.
Management determined that assets
directly associated with individual
Solutions contracts (i.e. Partner by
Partner) represent the lowest-level
group of assets at which impairment
can be assessed.

The performance of impairment
testing requires management to
make a number of estimates and
assumptions in determining the
recoverable amount of the CGUs.
These include forecast future cash
flows estimated based on
management-approved financial
budgets and plans, long-term growth
rates and post-tax discount rate as
well as an assessment of the expected
growth profile of the respective CGU.

The sensitivity to changes in key
assumptions is also considered to
determine at what level any
headroom is eroded.

Factors considered
and outcome

Disclosure in financial
statements

See Note 3.4 to the Consolidated
Financial Statements – pages 256
to 258.

The Committee reviewed
management reports concerning the
review of customer contract CGUs for
indicators of impairment and
impairment testing, together with the
disclosures in the Notes to the
financial statements.

The Committee, in agreeing with
management’s approach and
conclusions with respect to the
customer contract CGUs, reviewed
and discussed the underlying
assumptions including the module
ramp-up profile over the relevant
contract life and the probability
weighting of possible scenarios.

The Committee agreed with
management’s approach in
identifying indicators of impairment
for Technology Solutions contract
CGUs as well as the approach,
assumptions, conclusions and
disclosures with regard to the
impairment review and considerations
of changes in key assumptions.

How the Committee spent its time during the year
Principal activities
In addition to the significant issues and judgements discussed by the Committee (above), the Committee also considered the
following matters during the financial year ended 3 December 2023 and following the year end.

The Committee received regular updates from management in relation to: key financial controls; treasury and tax; risk;
ESG; non-financial reporting; and internal audit.

Topic

Activity

Outcome/future actions

Financial statements
and narrative
reporting

• Monitored and reviewed the integrity of the Group’s
financial statements and other formal documents
relating to its financial performance, including the
appropriateness of accounting policies.

• Reviewed the progress of accounting matters including

Ocado Solutions revenue recognition.

• Reviewed the Annual Report and assessment of
whether it is fair, balanced and understandable.
• Reviewed the progress of the Evolve programme,

including risks and challenges.

• Reviewed progress of payroll improvement plan.
• Reviewed the process of capitalisation of internal

development costs.

• Reviewed the Adjusting Items Policy.

• The Committee was satisfied that this Annual Report
was fair, balanced and understandable and provided
the information necessary for shareholders to assess
the Company’s position, performance, business
model and strategy and recommended to the
Board the approval of the Annual Report,
including financial statements.

• The Committee was satisfied with the progress

of accounting matters and the significant issues,
judgements and estimates relating to the
financial statements as outlined in this
Committee Report.

• Approved the Adjusting Items Policy.

Risk management
and internal controls

• Received regular updates on actions being taken

• Introduction of a new Group principal risk:

to monitor and manage risk in line with the Group’s
risk appetite.

Liquidity and Cash Management (see page 106).

• Change to the scope and definitions of two

• Review of principal and emerging risks and the

other principal risks (see page 106).

approach to monitoring risk.

• Determined changes to the Enterprise Risk

Management framework.

• Discussed with management its programme of work

to strengthen the maturity of the Group’s risk
management and internal control framework.

• Advised the Board that the Group’s risk

management processes were effective and
provided sufficient assurance.

• No significant failings or weaknesses in the risk
management and internal control systems were
identified by the Committee.

• Continued focus on improving effectiveness of
internal control framework, in light of impending
regulatory changes.

148

Topic

Activity

Outcome/future actions

Going Concern and
Viability Statement

• Monitored the internal control processes and reviewed

and challenged the going concern and viability
statements, including key underlying assumptions
and scenario analysis.

• The Committee was satisfied that there was a
sound basis to provide the Going Concern and
Viability confirmations in this Annual Report
(see page 112 to 114).

ESG and
non-financial
reporting

• The Committee was kept informed of the regulatory
landscape, including reviewing a gap analysis and
actions needed to close the gaps to be fully compliant
with the changes to the Code.

• Noted additional work required to the gathering,
verification and reporting of non-financial data.
• Reviewed the gaps identified in the gap analysis

to achieve full compliance with the TCFD disclosures.

• Training from Deloitte on proposed corporate

• Approved the TCFD disclosure for inclusion in this

governance reforms and the sustainability landscape,
including market trends and challenges around
sustainability assurance.

• Discussed the compilation of ESG metrics for the Group

and focused on those most strategically significant.

• ESG regulatory horizon scanning.
• TCFD reporting update, including external gap analysis

and benchmarking undertaken.
• Financial internal controls review.

Annual Report.

• Regulatory horizon scanning oversight to remain on

agendas in 2024, including a review of the Company’s
material controls.

Internal Audit

• Reviewed the Group audit plan for 2023 and 2024

• Approved both Audit Plans – see page 151 for detail on

and monitored progress against the plan and
prioritisation of audit work.

the Internal Audit effectiveness review.

• Approved the Audit Charter which had been updated

• Received updates at all scheduled meetings covering

Internal Audit reviews, updates to the Internal
Audit Charter and the Internal Audit reviews for ORL.
• Received an update and early view on ESG assurance.
• Received an update on IT controls.
• Reviewed the effectiveness of the Internal

Audit function.

• The Committee met with the Head of Internal Audit.

to provide a clearer outline of responsibilities of
Internal Audit and management with consideration
to the Institute of Internal Auditors (IIA) standards
and Code changes.

• The Committee requested more information in relation

to specific Internal Audit reports and these were
subsequently discussed by the Committee.

External audit

• Received a report from Deloitte at each meeting,

• Recommended the reappointment of Deloitte as

including updates on the status of, and results from,
the annual audit process and scope of the external
audit plan.

• Considered Deloitte’s reports on the 2023 half-year

and full-year results.

the Company’s external auditor to the Board to be
recommended to shareholders at the 2024 AGM.
• Following discussion by Committee members and
management, confirmed the effectiveness and
independence of the external auditor.

• The Committee met with Deloitte separately to maintain

dialogue throughout the year.

• Assessed the effectiveness and independence

of Deloitte and the continued oversight of
non-audit services.

Tax and treasury
matters

Governance,
compliance and
disclosure matters

• Received an update on Tax and reviewed the

• Approved the Tax Strategy Statement, for publication

Group’s Tax Strategy Statement.

• Reviewed treasury controls and tax risks.

on the corporate website.

• Received biannual ethics and compliance reports

• Approved the changes to the Audit Committee Terms

and an update on the whistleblowing policy.

• Received an annual fraud update.
• Reviewed and updated the Terms of Reference

for the Committee.

• Received an update on data governance.
• Received regular updates on governance,

risk and compliance.

• Received reports on global data privacy compliance.

of Reference to reflect updates to regulation.

• Established a Data Enablement Group to identify the
data priorities, tooling implications and preferred
governance model.

• A data governance plan to be brought back to the

Committee in 2024.

149

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Audit Committee Report continued

Ocado Retail
There is an additional layer of review and oversight that
occurs in the ORL business, which has its own board
and Audit Committee, comprising ORL management and
representatives from the Group and M&S. That Audit
Committee receives reports from Group Internal Audit
on assurance reports on the ORL business and from the
external auditor, as well as from ORL management and
finance function. In turn, the Committee has visibility
of this largely via reports from Group management and
reports from Group Internal Audit and the external auditor.

Financial statements and
narrative reporting
Management is responsible for establishing and
maintaining adequate internal controls over financial
reporting. The Committee monitored the financial reporting
processes for the Group, which included reviewing reports
from, and discussing these with, the external auditor.
As part of the year-end reporting process, the Committee
reviewed this Annual Report, various management reports
on accounting estimates and judgements, the external
auditor’s reports on internal controls, accounting and
reporting matters, and management representation
letters concerning accounting and reporting matters.

In relation to the financial statements, the Committee
ensures that the Company provides accurate and timely
financial results, implements accounting standards and
applies judgements effectively. Monitoring the integrity
of the financial statements of the Company, the financial
reporting process and reviewing the significant accounting
issues are key roles of the Committee. The Board ensures
this Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s position,
performance, business model and strategy and the
Committee plays an important role in assisting the Board
in reaching those conclusions. In addition to monitoring
the statutory audit, the Committee also reviewed the
Company’s TCFD and ESG disclosures and gap analysis.

The form and content of the Annual Report and Accounts
was reviewed and approved, and the preparation and
verification process determined to be thorough and robust.
Following review, the Committee advised the Board that it
was satisfied that the 2023 Annual Report and Accounts,
taken as a whole, met its objectives and supported the Board
in making its Statement on page 212. The Committee also
monitors the financial reporting processes for the Group’s
Half-Year Report, which is a similar role to the one it carries
out for full-year reporting.

Reporting segments
For FY23, the Group changed the reporting of its business
segments to better reflect the Group’s three distinct
business models: Technology Solutions, ORL and Ocado
Logistics. The Committee discussed the move to the
refreshed segmental reporting to reflect the new operating
structure. The Company’s full-year results announcement
issued on 29 February 2024 reflected the new operating
structure and the comparatives were restated on this basis.

Risk management and internal controls
The Committee, under its delegated responsibility from the
Board, assessed the effectiveness of the Group’s systems
of risk management and internal control. The details of this
review are outlined in the ‘How we manage our risks’ section
on pages 103 to 111. In giving consideration to effectiveness,
the Committee noted the improvements made during
the year to the risk management and internal control
environment to help meet the growing complexity of the
Group. The Finance transformation focus of the past two
years through the Evolve programme meant that significant
progress has been made to build the necessary Finance
capabilities, reduce reporting risks and mature the financial
control environment. Further improvements in other key
areas including payroll, treasury and business planning and
forecasting processes has meant tighter oversight of
spending and liquidity management for the Group. The
Committee received regular updates from management
on the various improvement programmes being undertaken
in a range of areas. Some of the key projects were: an
upgrade of Oracle to deliver more automated management
reporting; a series of projects to remediate finance data
and embed data governance; and improved automation
and control of the purchasing and payments cycle.
The Committee also reviewed reports from management
on the finance risk register and finance controls environment
and discussed the planned improvements in these areas.
This will continue to be a key focus for management and
the Committee into 2024.

The Committee recognises that further enhancements will
be required to extend the control framework: into
procurement processes and controls with the planned
establishment of a cross-functional procurement board;
across the emerging non-financial reporting aspects
of the business; and in the medium term, to meet the
requirements of the Code.

ESG and non-financial reporting
This year the Committee placed strong focus on emerging
ESG and non-financial reporting requirements. The
Committee received updates on the regulatory horizon,
particularly in relation to climate-related and ESG regulatory
changes and the consultation and updates on the Code.
It also received regular updates on key compliance and
governance matters that could impact the Company.
Representatives from Risk, Compliance, ESG and Company
Secretariat attended the meetings in the year to keep the
Committee abreast of changes. The Committee received a
detailed update on the potential impact the Code could have
on the Company and what management deemed would need
to be the focus areas. As part of this update, the Committee
was updated on the work being undertaken on the financial
controls environment and the required controls maturity
needed to meet the proposed Code changes on internal
control. In the year, the Committee also received an overview
of the environmental regulatory changes, including the Code
implications of other material controls over reporting,
compliance and operational processes and discussed our
current state and the priorities to be compliant in the future.

Going Concern and Viability assessments
The Committee and the Board reviewed the Group’s Going
Concern and Viability Statements (as set out on pages 112
to 114) and the supporting assessment reports prepared by
management. The Going Concern and Viability Statements
were modelled on the Group’s five-year plan, as agreed by
the Board in June 2023. The report on the Going Concern
and Viability Statements included a downside and severe
downside scenario and sensitivities provided as part of the
five-year plan and potential mitigating actions that could be
taken. The Committee challenged management on the
scenario analysis.

The Committee gave careful consideration to the period
of assessment used for the Viability Statement. It took
into account a wide range of factors, including the Group’s
cash flows, solvency and liquidity positions and borrowing
facilities (see page 112), and concluded the time period
of three years remained appropriate.

Internal Audit
The Internal Audit function is responsible for providing
independent and objective assurance to the Committee
and is a key element of the Group’s corporate governance
framework. It helps the Group accomplish its objectives by
bringing a systematic and disciplined approach to evaluating
the design and effectiveness of the Group’s systems of risk
management, internal control and governance processes
through a risk-based approach. In addition to reviewing the
effectiveness of these areas and reporting on aspects of
the Group’s compliance with them, Internal Audit makes
recommendations to address any key issues and improve
processes and, as such, provides an indication of the culture
and behaviours exhibited by employees in the areas. The
Head of Internal Audit has responsibility for the Group’s
Internal Audit function, attends all Committee meetings
and also meets with the Committee periodically without
management present. The Committee has continued
to oversee the initiatives put in place to improve the
effectiveness of the function.

The Committee regularly reviews progress of the Internal
Audit Plan and prioritisation of audit work, including work for
ORL. The Internal Audit Charter was approved in November
2023, which had been significantly updated to make it more
robust, provide clearer accountabilities and to ensure
it aligned to forthcoming changes to the Global Internal
Audit Standards and to the Code.

Approach to setting the Internal Audit plan
Internal Audit’s approach to setting the Internal Audit plan
was to use a combination of stakeholder meetings, internal
papers, external briefing papers from industry, regulatory
and technical bodies, and results from previous audit work
to update the audit universe. Internal Audit met with key
stakeholders to discuss business objectives and associated
risks and to get feedback on possible audit activities. Audits
performed in 2023 took into account the Group’s principal
risks and were spread across the different business areas.
Internal Audit carried out reviews across these missions to
provide coverage against the principal risks. It does this in
order to add value by providing risk-based and objective
assurance, advice and insight.

2023 Internal Audit effectiveness
Internal Audit is usually subject to an external effectiveness
review every three years, and an internal review each year.
The effectiveness of the function is also continually
monitored using a variety of inputs, including the ongoing
audit reports received, the Committee’s interaction with the
Head of Internal Audit, and other key stakeholders.

An internal effectiveness assessment of the function was
conducted in October 2023.

The approach consisted of an effectiveness questionnaire
that assessed performance in a range of areas including
the Charter and structure, planning, skills and experience,
work programming, communication, reporting, performance
and its value as a function. The questionnaire was completed
by Committee members, including John Martin as a previous
Audit Committee chair and member, members of
management and operations, the audit partner at Deloitte
and a self-assessment from the Head of Internal Audit. The
results were reported to and discussed by the Committee at
the November 2023 Committee meeting, without the Head
of Internal Audit present.

Outcome: Following the discussion, the Committee
concluded the Internal Audit function was an effective
provider of assurance over our risks and controls and it was
agreed the Committee Chair would address any key actions
with the Head of Internal Audit to take forward into 2024.

External audit
The Committee is responsible for managing and overseeing
the relationship with the external auditor, including assessing
its performance, effectiveness and independence,
recommending to the Board its reappointment or removal
and agreeing terms of engagement.

• Deloitte is the external auditor to the Company.
• Deloitte was appointed in 2016 following a formal tender
process for the financial year ended 3 December 2017.

• Deloitte was reappointed for FY23 at the 2023 AGM.
• The current lead audit partner is Dave Griffin, appointed

at the end of the 2021 audit, with 2022 being his first year.

• The current plan is to undertake a competitive tender

process no later than the 2027 year-end audit, being 10
years after the original appointment. At this time, the
Committee considers this to be appropriate to ensure
Deloitte continues to work effectively with management
on its audit plan and longer-term actions.

Effectiveness, quality and performance
As part of the Committee’s responsibilities, the Committee
regularly reviews the role of the external auditor and the
scope of its work and gives consideration to the
effectiveness of the external auditor, including holding
sessions with management and without Deloitte to
determine that the right quality, challenge and output of the
audit process continue to be sufficient.

150

151

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONIndependence and objectivity
The independence of the external auditor is essential
to the provision of an objective opinion on the true and
fair view presented in the financial statements.

The Committee considered there were no relationships
between the external auditor and the Group that could
adversely affect its independence and objectivity. Further,
it monitors and assesses the safeguards in place, including
the annual review by the Internal Audit function to assess
independence. In February 2024, Deloitte confirmed to the
Committee that it remained independent in relation to the
Company’s audit and it complies with UK regulatory and
professional requirements, and that its objectivity is not
compromised. When considering its independence, the
Committee agreed this recommendation was free from
third-party influence and restrictive contractual clauses.

Reappointment of the external auditor
The Committee is satisfied that the external auditor remains
fully independent, objective and effective and that there
are no contractual restrictions of the Company’s choice
of external auditor. Deloitte has expressed its willingness
to continue as auditor of the Company. Separate resolutions
proposing Deloitte’s reappointment and the determination
of its remuneration by the Audit Committee will be put to
shareholders at the 2024 AGM.

Statement of Compliance with the Competition and
Markets Authority Order: The Company confirms that
it has complied with the Statutory Audit Services for
Large Companies Market Investigation (Mandatory Use
of Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014 (Article 7.1), including with
respect to the Audit Committee’s responsibilities for
agreeing the audit scope and fees and authorising
non-audit services.

Minimum Standard
The FRC’s “Audit Committees and the External Audit:
Minimum Standard” (the “Minimum Standard”) was published
in May 2023. In September 2023, the Committee noted
the introduction of the Minimum Standard and approved
changes to the Terms of Reference to align with the new
requirements. This Committee Report describes how the
Committee has met the requirements throughout the year.

Audit Committee Report continued

In assessing the effectiveness of the external auditor
the Committee:

• reviewed the quality of the audit planning process,
including audit work, scope, progress and fees;

• reviewed the resources, expertise and qualifications

of the auditor;

• considered the quality of the overall audit and outcome,

and the independence and objectivity of the
external auditor; and

• considered the approach to reviewing the Group control
environment, review of IT controls, the proposed audit
scope and materiality threshold, as well as the responses
of the auditor to questions from the Committee.

The Committee Chair meets with the external auditor prior
to every Committee meeting and the Committee meets
with the external auditor at various stages throughout
the period to discuss the remit and issues arising from the
work of the auditor. This periodic review process provides
the opportunity to check in with the auditor to assess
achievement of key deliverables and ensure that the audit
remains on track. To further facilitate open dialogue, the
Committee also meets with the external auditor without
management present.

2023 external audit effectiveness review
In assessing the effectiveness of the external auditor
the Committee reviewed the resources, expertise and
qualifications of the auditor, the planning and organisation
of the audit process, the quality of the overall audit and
outcome, and the independence and objectivity of the
external auditor. The Committee also reviewed and approved
the external audit plan, considering the extent to which it
was tailored to the Group’s business, and monitored whether
the agreed plan was met. The Committee reviewed the audit
plan and was content that the plan was sufficient to support
a robust and quality audit of the year-end financial
statements. In reviewing the audit plan the Committee
considered certain significant and elevated risk areas,
identified by the external auditor, which might give rise
to material financial reporting errors or those perceived
to be of higher risk thereby requiring further audit attention.
These risk areas include those set out in the Independent
Auditor’s Report from page 216. Throughout the year, the
external auditor also spent a significant amount of time
reviewing our control environment. A review of the
effectiveness of the year-end audit will take place
following the publication of this Annual Report.

Outcome: The Committee discussed Deloitte’s
effectiveness in February 2024, without the external
auditor present, and the Committee concluded that
Deloitte delivered a robust and quality audit, with
effective challenge and providing the appropriate
resources to the Company in the period and that,
therefore, Deloitte had remained effective in its role.

152

Non-audit services
In line with the FRC’s Ethical Standard 2019 and to maintain
the external auditor’s objectivity and independence, we have
a policy governing Deloitte’s provision of non-audit services.
The Group is required to cap the level of non-audit fees
paid to its external auditor at 70% of the average fees paid
(not including fees for audit-related services or for services
required by regulation) in the previous three consecutive
financial years.

The provision of any non-audit services by the external
auditor requires prior approval, as set out in the table below.
These thresholds are unchanged from the previous year.
During the year, the Committee conducted its annual review
of the Policy on Auditor Appointment and Independence,
which includes the policy on Non-Audit Services.

The Committee received a regular report from management
regarding the extent of non-audit services performed by the
external auditor to ensure that it is monitoring all non-audit
services provided. Approvals in the year related to
the interim audit review; audit procedures over the financial
information of ORL for the FY22 audit of M&S; and a TCFD
gap analysis.

Approval thresholds for non-audit work

Approver

Over £10,000 and up to
£30,000 per engagement

Over £30,000 and up to
£100,000 per engagement

Greater than £100,000 per engagement,
or if the value of non-audit fees to audit
fees reaches a ratio of 1:2 as a result of
a new engagement, regardless of value

Chief Financial Officer

Chief Financial Officer and
Audit Committee Chair

Audit Committee

External auditor fees
The total of non-audit fees, audit fees and audit-related
services fees paid to the external auditor during the
period is set out in Note 2.3 to the Consolidated
Financial Statements on page 243.

Audit fee
(exc. non-audit fees
for assurance services)

Non-audit fees

m
2
2
£

m
8
.
1
£

0
0
0
6
0
5
£

0
0
0
2
8
2
£

0
0
0
2
4
2
£

FY21

FY22

FY23

FY21

FY22

FY23

This Audit Committee Report is approved by the Board and
signed on its behalf by:

Rachel Osborne
Committee Chair

29 February 2024

153

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
Directors’ Remuneration Report

Committee membership
The current members of the
Committee are:
Julie Southern (Chair), Andrew Harrison, Emma Lloyd,
Julia M. Brown (joined 1 January 2023)

Committee changes in the year:
Andrew Harrison stepped down as Committee Chair
and became a member on 2 May 2023; Julie Southern
stepped up as Committee Chair on 2 May 2023.

Number of meetings during the year:

Committee membership, together with attendance
at meetings, is detailed on page 133

Biographies of the Directors are set out on pages
118 to 121

Terms of Reference:
investors/corporate-governance/

https://www.ocadogroup.com/

Julie
Southern
Chair

Letter from the Chair of the
Remuneration Committee

Dear Shareholder
I am pleased to present the Directors’ Remuneration Report
for the year ended 3 December 2023 on behalf of the
Remuneration Committee, my first as the Chair of the
Committee, having taken over from Andrew Harrison in May.

As you will be aware, for the past five years we have
operated a bespoke VCP, and two years ago shareholders
voted to give us the option to extend participation in this plan
for a further three years beyond the initial five year term.
Ahead of the end-point of the original VCP in March 2024,
the Committee felt it important to give careful consideration
to whether this plan remains as motivational and retentive
as it once was – particularly for the group of leaders who
were not among the founders of the business, and also
as we think about continuing to attract talent to our
growing management team in the future.

To that end, over the past year, the Committee conducted a
review focussed on ensuring the remuneration structure in
place going forward is properly motivational and retentive in
the context of a business which has matured since the VCP
was first conceived, but which very much retains its
entrepreneurial and growth-focussed DNA. We concluded
that a structure that focuses on the actionable drivers of
financial success is likely to be more effective and desirable
to the management team. We therefore decided not to
proceed with the extension of the VCP, and the plan will
cease following the final Measurement Date in March 2024.

In place of the VCP, we are proposing to introduce a
Performance Share Plan (“PSP”), with annual rolling grants
and a three-year performance period, in which both
Executive Directors will participate. In addition, as part of the
proposed Policy, we plan to reduce opportunity levels under
the AIP to tilt the balance of pay towards the long term.
Furthermore, following feedback from shareholders at the
2023 AGM on the pay-for-performance link of the FY22 AIP
outturns, we have reduced the overall number of metrics on
our AIP scorecard for FY24, with financial metrics (including
Group-wide measures) now representing the majority.

My belief, and that of the Committee, is that these new
proposals preserve a focus on the level of ambition which is
so important to Ocado, while continuing to ensure our
remuneration structures align the interests of our senior
management team directly with those of our shareholders.
They offer substantial comparative reward for
transformational performance while migrating to a structure
that will be more motivating and retentive for executives,
better suited to attracting senior new hires, and acceptable
to a wider group of our shareholders.

Consultation on the 2024 Directors’
Remuneration Policy
In preparing the proposed Policy, the Committee carried out
an extensive shareholder consultation exercise with our
largest shareholders and representative bodies to seek
feedback on the proposed changes. What was clear to me
from all my conversations with investors is that we had a
shared understanding of Ocado’s aims and its overall
remuneration philosophy; there were some differences of
view on detailed questions of design, but I believe we have
managed to solve many of these. The resulting proposal
represents a significant move towards the type of structure
that many of our shareholders have indicated they would
prefer, while recognising the unique circumstances of Ocado
and its founder. Full details of the proposed Remuneration
Policy can be found in the relevant section of this report
on pages 186 to 203, and I summarise the key points below.

Enhancing alignment with our
remuneration philosophy
Our overall remuneration philosophy remains to offer
substantial comparative reward for transformational
performance. To further enhance our alignment with this,
we propose to rebalance the remuneration structure such
that the fixed and short-term portions of remuneration
are positioned lower against the market and a new
performance-based long-term incentive plan is
introduced which offers upper decile payout only
for upper decile performance.

Lowering our AIP opportunities
In the third year of the proposed Policy, we propose to
further align the structure to our philosophy by reducing
the AIP opportunities from 275% of salary to 200% of salary
for our CEO, and from 250% of salary to 175% of salary for
our CFO. This further reduces the total target cash (i.e. salary
plus target AIP) to median (for the CFO) or below median (for
the CEO) of the market. Half of any payout under the AIP is
deferred into shares for three years.

Introducing a new PSP – a leveraged plan within
the conventional construct
We propose to introduce a PSP, with annual rolling grants
and a three-year performance period. Under the PSP, there
will be a “base” level of award with a maximum opportunity
level aligned with the upper quartile of the market and
achievable only for stretching performance. For the CEO this
will be 400% of salary, and for the CFO 350% of salary. The
first award will be based on adjusted earnings per share
improvement over the period and underlying cashflow
pre-growth capital expenditure in FY26; this underscores our
belief in the importance of these KPIs over the long term.

In line with our philosophy and in order to retain a portion of
the high leverage that the VCP offers, there will be a relative
Total Shareholder Return (“TSR”) multiplier of up to 1.5x the
base award which is attainable only for achieving upper
decile (or above) TSR performance against the FTSE 100
(excluding investment trusts) over the performance period.
For TSR performance up to and including upper quartile, the
relative TSR multiplier will be 1x (i.e. no enhancement to the
base award outcome) with a straight line calculation in
between upper quartile and upper decile. This ensures the
executives receive above-market payouts only for delivering
exceptional returns to our shareholders.

The Committee remains very mindful of our CEO Tim
Steiner’s unique position as a founder and his longer-term
focus and strategic vision, as it is this which the VCP was
originally intended to reinforce. Tim’s circumstances and
shareholding also mean his risk profile and perspective on
the long term is different to the other members of the
management team and the VCP is motivational for him in a
way it is not for others. We are therefore keen to preserve
the key features of the VCP for the individual for whom it
manifestly has a positive influence and believe that
shareholders should welcome Tim’s undimmed aspirations
for Ocado’s future value. At the same time, we remain of the
belief that it is essential that Tim participates in the PSP to
ensure he is aligned with the metrics on which his leadership
team are assessed. To do otherwise would risk setting up an
unhelpful misalignment among the Executive Committee.

To that end, our initial proposal was that Tim should remain
as the sole participant in the VCP while also participating in
the new PSP. However, while most shareholders understood
why we considered it appropriate to treat our founder CEO
differently to other executives, they were not all comfortable
that he should participate in two separate plans. Some
shareholders, particularly those who were not supportive of
the VCP extension in 2022, urged us to terminate the VCP
entirely and adapt our new plan so it could accommodate a
bespoke arrangement for the CEO. We listened carefully to
this feedback and amended our proposal to accommodate it.

Accordingly, we have incorporated the potential upside of
the VCP into the PSP, solely for the CEO and for the first
cycle only. For his 2024 PSP award, there will be an
enhanced multiplier that aims to deliver a similar payout as
the VCP extension would have delivered on the achievement
of exceptional share price growth over the period, whilst also
being subject to strong underlying financial performance.
Further details of the operation of this multiplier can be
found on page 184.

154

155

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
Directors’ Remuneration Report continued

We believe that what we have proposed represents a simpler
solution to our original proposal and a significant move
towards the type of structure that many of our shareholders
have indicated they would prefer, while recognising the
unique circumstances of Ocado and its founder.

Relationship between pay and
performance in FY23
Ocado has made significant financial, operational and
strategic progress during the year and I am particularly
encouraged that each of our three businesses delivered
positive EBITDA, alongside significantly improving Group
underlying cash flow. The financial performance from
Technology Solutions was a key achievement in the year
with EBITDA turning positive, driven by strong growth in
recurring fees from live modules. Ocado Logistics delivered
significantly improved productivity and EBITDA, while Ocado
Retail returned to positive volume growth and positive
EBITDA in what has been a tough grocery market. You can
read more about our financial performance in the year in
the Financial Review on pages 41 to 59. Our incentive
outcomes reflect this solid performance in the context
of a challenging environment.

FY23 AIP
As I indicated above, we received shareholder feedback at
the 2023 AGM regarding the proportion of the award linked
to financial performance and the number or measures used.
We have made changes to our FY24 measures to simplify
the structure and to place a greater emphasis on financial
and Group-wide measures. Although FY23 was already
well underway when this feedback was received, we had
already taken action to change the balance of the measures
to be more directly linked to our strategic KPIs and overall
long-term success of the Company, with the vast majority
of measures being quantifiable. All of this is disclosed fully
within this report.

Although we performed well across the majority of our KPIs,
some fell short of the challenging targets we set and hence
we approved bonus payments to the Executive Directors
of between 48% and 61% of maximum, based on
achievement against objectives under the AIP for the period.
The Committee carefully considered the outcome under the
AIP measures, assessing the extent to which the measures
reflect the underlying performance of the business, and
applying downward discretion to the CFC capital expenditure
cost and the environmental roadmap outcomes. Particularly
noting our strong performance against our financial metrics,
we believe that the overall AIP outcomes are a fair reflection
of performance in the year. Further information on the FY23
AIP outturn can be found on pages 167 to 169.

VCP
The fourth Measurement Date for the VCP was 30 March
2023. The Measurement Price (£4.86) was below the
minimum hurdle/threshold TSR for tranches 1, 2 or 3
required to bank awards and therefore no nil-cost options
were banked by the Executive Directors in FY23. As the TSR
underpin was not met, no previously banked options were
capable of vesting.

The fifth VCP Measurement Date will be in March 2024.
Based on where our share price is at the time of writing, it is
expected that no nil-cost options will be banked under any of
Tranches 1, 2 or 3 at the fifth Measurement Date, nor will any
vest. Further information on the VCP can be found on pages
169 to 170. As mentioned above, we have decided not to
proceed with the extension of the VCP and the plan will
cease following the final Measurement Date in March 2024.

Implementation in FY24
Changes to base salaries from April 2024
The Committee determined that the base salary increase
for the Executive Directors would be 3.8%, in line with the
budgeted increase provided to the UK workforce. The
increases were considered holistically, as part of the wider
review of the Policy while taking into account the general
principles for the 2024 pay review and recommendations for
wider workforce pay reviews. Changes to base salaries for
the Executive Directors will take effect from 1 April 2024.

Wider workforce pay
When making decisions on executive remuneration, the
Committee considers a number of factors related to the
wider workforce, including policies and practices throughout
the Company, as well as feedback from our Designated
Non-Executive Director (“DNED”) on workforce remuneration
and our all-employee remuneration report.

We are committed to ensuring that our people are rewarded
fairly and competitively for their contribution to our success.
In Logistics, in FY23 we made significant investments in pay
and saw pay settlements ranging from 5.4% to 6.5% for our
warehouse and Customer Service Team Members (“CSTM”).
We also continued to invest in pay for our Technology
Solutions business, with average increases in employee
salaries of 6.1% in FY23 (compared to increases of 4%
for Executive Directors). Beyond this, it is important to us
that our people feel supported in a holistic way, not just
in their rate of pay. Further details on wider workforce
considerations and our approach to fairness is set out
on page 172.

Changes to Non-Executive Director remuneration
Changes to fees (including Non-Executive Director base
fees, Committee Chair and membership fees, and fees for
the Senior Independent Director) for the Non-Executive
Directors were agreed by the Executive Directors and Chair
of the Board in February 2023. Changes to the fees for the
Chair of the Board were also agreed by the Committee.
Non-Executive fees will be increased by 3.8% in line with
the Executive Directors and the budgeted increase provided
to the UK workforce, to take effect in April 2024.

Changes to the Board during the year
Luke Jensen retired from his position as CEO, Ocado Solutions
on 30 September 2023. In recognition of his long service and
the manner of his leaving, we treated him as a good leaver for
parts of his remuneration; details are set out on pages 177 to
178. John Martin stepped down from the Board and his
Non-Executive Director role on 31 August 2023, becoming
CEO, Ocado Solutions from 1 September 2023.

Mark Richardson and Neill Abrams stepped down as
Executive Directors with effect from 2 February 2024. Mark
and Neill will remain members of the Executive Committee,
the executive management team for Ocado Group led by the
Chief Executive Officer.

I hope you find our report to be a comprehensive account
of the Committee’s activities and the decisions we have
made over the year. I also hope you will support the
proposed new policy which makes substantial change in the
direction which a number of shareholders have indicated
they would welcome. I shall be available at the upcoming
AGM to answer any questions about the work of the
Remuneration Committee, and thank you again for your
continued support of Ocado.

Julie Southern
Committee Chair

29 February 2024

156

157

Description of the Remuneration Committee
This section of the Directors’ Remuneration Report describes the membership of the Committee, its advisers and principal
activities during the period. It forms part of the Annual Report on Remuneration section of the Directors’ Remuneration Report.

Attendees at Committee meetings during the year included the Chair of the Board, the Chief Executive Officer (“CEO”),
the Chief Financial Officer (“CFO”), the Group General Counsel and Company Secretary, the Chief People Officer and
the external advisor to the Committee. The Chair of the Board, Executive Directors and other attendees are not involved
in any decisions of the Committee and are not present at any discussions regarding their own remuneration. The Deputy
Company Secretary is secretary to the Committee.

External advice
During the period, the Committee and the Company retained independent external advisors to assist them on various aspects
of the Company’s remuneration and share schemes as set out below:

Advisor

Retained by

PricewaterhouseCoopers LLP (“PwC”)

Remuneration Committee

Services provided to the Remuneration Committee

Other services provided by PwC

Advice on a range of remuneration issues including attendance
at Remuneration Committee meetings, assistance with drafting
of the new PSP plan and proposed Policy, information on market
practice in relation to various aspects of remuneration,
market trends and benchmarking of Executive Director and Chair
of the Board remuneration.

Other PwC advisory teams advised the Group on a range of
matters during the period including deal and litigation support,
tax structuring, Environmental, Social and Governance (“ESG”)
matters, accounting and overseas tax advice. PwC also provide
independent System and Organisation Controls (“SOC”)
assurance reports for the Group’s Ocado Smart Platform
(“OSP”) services.

PwC reappointment and review
The Committee carried out its annual review of and considered the reappointment of PwC. This review took into account
PwC’s effectiveness, independence, period of appointment and fees. PwC was initially appointed by the Committee in 2017
following a tender process and has been reappointed each year since.

During the year the Committee reviewed the performance of PwC based on feedback from members of the Committee and
senior management. The criteria for assessing PwC’s effectiveness included its understanding of business issues and risks,
its knowledge and expertise, and its ability to manage expectations. The Committee concluded that the performance of
PwC remained effective.

The Committee considered the independence and objectivity of PwC. PwC has assured the Committee that it has effective
internal processes in place to ensure that it is able to provide remuneration consultancy services independently and
objectively. PwC confirmed to the Company that it remains a member of the Remuneration Consultants Group and as such,
operates under the code of conduct in relation to executive remuneration consulting in the UK. PwC has no other connection
with the Company or any of its Directors. Following its annual review, the Committee remains satisfied that PwC has continued
to maintain independence and objectivity.

For the period, £258,233 (FY22: £92,000) in fees were paid or payable to PwC for advisory services provided to the
Committee. The basis for this is a fixed retainer fee and a time-based fee for additional work, including support with
reviewing our proposed Policy this year.

Following discussion by the Committee, it was agreed that PwC should be reappointed.

Other support for the Remuneration Committee
In addition to the external advice received, the Committee consulted and received reports from the Company’s CEO, the CFO,
the Chair of the Board, the Chief People Officer and the Deputy Company Secretary. The Committee is mindful of the need to
recognise and manage conflicts of interest when receiving views and reports from, or consulting with, the Executive Directors
or members of senior management.

How the Committee spent its time in FY23
The Committee has, under its Terms of Reference, been delegated responsibility for setting remuneration for the Executive
Directors, the Chair of the Board, the Group General Counsel and Company Secretary and senior management. In line with
its Terms of Reference, the Committee’s work during the period is set out below.

Key agenda
items

Approved the Directors’ Remuneration Report for FY22.

Reviewed and approved a response statement regarding the shareholder consultation following the
2023 Annual General Meeting (“AGM”).

Commenced a review of the Directors’ Remuneration Policy.

Approved the Group’s Gender Pay Gap Report for FY22.

Reviewed a report from the CEO and Chair of the Board on performance and remuneration of the Executive Directors.

Approved the pay increases for the Executive Directors and Chair of the Board.

Reviewed performance under the FY22 AIP and consideration of any bonuses payable.

Reviewed performance under the VCP as at the fourth Measurement Date.

Approved the FY23 AIP performance targets and reviewed the design and measures for the FY24 AIP.

Received regular reports on Group-wide remuneration for FY23 and reports from the DNED on workforce
remuneration arrangements and issues.

Received a report on the Group’s share schemes and plans for FY24.

Approved incentive payments and salary changes for senior management.

Reviewed and approved various senior management arrangements on joining and leaving the Company.

Received reports and advice from advisors on a range of matters including senior management pay, market themes
and trends and new governance requirements.

Reviewed the performance of advisers.

Reviewed Committee composition, Terms of Reference and performance.

The Executive Directors and the Chair of the Board reviewed the remuneration arrangements of the Non-Executive Directors.

158

159

Remuneration summary for FY23
Executive pay at Ocado
The components of remuneration
The different components of remuneration for FY23 in this report are as follows:

Fixed

Variable

Salary

Benefits

Pension

Aligns with all
other employee
arrangements

Reflects the value
of the individual,
their role, skills,
experience and
contribution to
the business

Provides an
appropriate level
of retirement
benefits. All
Executive
Directors are
aligned with
employee pension
contributions

AIP cash +
deferred bonus

Incentivises
achievement of
annual objectives
and aligns
Director and
shareholder
interests by
delivering a
proportion in
AIP shares

VCP

Total

Motivates key
individuals to
achieve long-term
targets and
exceptional levels
of performance

Sum of the fixed
and variable
components
of remuneration

Single figure for FY23
The table below provides a summary total single figure of remuneration for those who were Executive Directors in FY23.
Further details are set out on page 166 in the Annual Report on Remuneration.

Executive Director

Tim Steiner, CEO

Stephen Daintith, CFO

Mark Richardson, CEO Ocado Intelligent Automation

Neill Abrams, Group General Counsel and Company Secretary

Luke Jensen, CEO Ocado Solutions1

1 Luke Jensen resigned from the Board with effect from 30 September 2023.

Outcomes for FY23
Fixed components

Total FY23
(£’000)

Total FY22
(£’000)

1,957

1,497

1,112

1,273

602

2,004

1,391

1,151

1,181

1,161

Tim
Steiner

Stephen
Daintith

Mark
Richardson

Neill
Abrams

Luke
Jensen1

Salary (£’000)

Benefits (include car allowance, private medical and other
benefits) (£’000)

Pension – up to 7% of salary (£’000)

Total (£’000)

784

847

584

626

479

521

479

521

412

452

1. Luke Jensen resigned from the Board with effect from 30 September 2023.

Pay for performance at a glance
FY23 Annual Incentive Plan
In respect of FY23, the CEO had a maximum bonus opportunity of 275% of salary, and the other Executive Directors had
a maximum opportunity of 250% of salary. A summary of the outcomes is as follows and further details can be found
on pages 167 to 169:

Performance conditions

Financial and cost-related metrics

Ocado Retail adjusted EBITDA

Ocado Retail revenue

UK OSP implementation

Client cost per order

CFC capital expenditure cost

Direct operating costs

Group operating costs

ESG-related metrics

Environmental roadmap

Employee eNPS

Other strategic metrics

Total live modules

Modules ordered

Non-grocery deals signed

Solutions deals signed

Success in corporate litigation

Total (% of maximum)

Actual performance achieved

Total

Total (£’000s)

Weightings of performance conditions

Tim
Steiner

Stephen
Daintith

Mark
Richardson

Neill
Abrams

Percentage
of maximum
performance
achieved

7.5%

5.0%

10.0%

5.0%

10.0%

5.0%

–

100%

50.6%

1,106

10.25%

5.25%

3.5%

7.0%

12.0%

7.0%

22.0%

8.5%

3.5%

7.0%

3.5%

–

100%

58.9%

871

5.25%

3.5%

7.0%

3.5%

7.0%

33.5%

3.5%

–

100%

48.3%

587

5.25%

3.5%

7.0%

12.0%

8.5%

3.5%

7.0%

8.5%

3.5%

15.0%

100%

61.6%

748

63%

100%

66%

25%

100%

80%

62.5%

43%

100%

50.6%

1 Luke Jensen resigned from the Board with effect from 30 September 2023. Details about his payout under the FY23 AIP can be found on page 178.

Value Creation Plan
The fourth Measurement Date under the VCP was 30 March 2023. No nil-cost options were banked by Executive Directors
on the fourth Measurement Date and no awards have vested under the plan. The following table sets out the number of awards
granted on the first to fourth Measurement Dates under the VCP:

Hurdle price/
Threshold TSR

Measurement
price

Number of nil-cost options granted
Mark
Richardson

Stephen
Daintith

Tim
Steiner

Measurement Date

12 March 2020

11 March 2021

10 March 2022

30 March 2023

Neill
Abrams

–

514,780

–

£11.23

£23.28

£12.86

£4.68

–

2,059,123

–

£15.16

Tranche 1: £16.68
Tranche 2: £21.06

Group 1 –
Tranche 1: £23.28
Tranche 2: £23.28

Group 2 –
Tranche 1: £18.34
Tranche 2: £23.16

Group 1 –
Tranche 1: £23.28
Tranche 2: £25.61
Tranche 3: £8.56

Group 2 –
Tranche 1: £20.28
Tranche 2: £25.61
Tranche 3: £8.56

160

161

1 Tim Steiner, Neill Abrams and Mark Richardson are all “Group 1” participants, as they joined the VCP prior to the second Measurement Date. As Stephen Daintith joined the

Board in March 2021, following the second Measurement Date, he joined the VCP as a “Group 2“ participant.

Summary of policy table for Executive Directors and implementation
The table below sets out the key changes between the current Policy (“current Policy”) and proposed Policy and how the
proposed Policy would be implemented. Implementation is shown for individuals who are Executive Directors at the time of
writing. The proposed Policy was designed taking into consideration our remuneration principles (which can be found on page
186) and shareholder feedback. Full details of the proposed Policy can be found on pages 186 to 203. The full current Policy
can be found on pages 177 to 200 of the 2021 Annual Report.

Base salary
Minimum level of pay to attract and retain the right calibre of senior executives required to support the long-term interests
of the business. We continue to aim to position salaries towards the lower quartile of the market.

Key features of current Policy

Proposed Policy changes

Operation in the year ended
3 December 2023

Paid monthly in cash.

No change.

As at 1 April 2023:

Proposed implementation
of Policy in the year ending
1 December 2024

As at 1 April 2024 salaries will
increase as follows:

• Tim Steiner (CEO):

£794,383

• Stephen Daintith (CFO):

£824,570

£592,020

• Stephen Daintith (CFO):

• Mark Richardson (CEO OIA):

£614,517

£485,456

• Neill Abrams (Group GC &

CoSec): £485,456

• Luke Jensen (CEO Ocado

Solutions): £485,456

These reflect an increase
of 3.8% which is in line with
the budgeted increases
for the wider UK
employee workforce.

Reviewed annually or
when there is a change in
position or responsibility.

No prescribed maximum;
however, normally maximum
salary increases will be within
the normal percentage range
applied to the UK-based
monthly paid employees
of the Company in that year.

Larger increases may be
awarded in exceptional
circumstances, for example
if the role has increased
significantly in scope or
complexity or to bring a
recently appointed executive
in line with the market and
the other executives in the
Company where their salary
at appointment has been
positioned below the market.

Benefits
To attract and retain the right calibre of senior executives required to support the long-term interests of the business.

Key features of current Policy

Proposed Policy changes

No change.

Benefits provided are aligned
with those provided to all
employees under our
flexible benefits policy.

Benefits are set at a level
which is considered to be
appropriate against market
data for comparable roles for
companies of equivalent size
and complexity in similar
sectors and geographical
locations to the Company.

Proposed implementation
of Policy in the year ending
1 December 2024

No planned change.

Operation in the year ended
3 December 2023

Includes car allowance,
private medical insurance,
life assurance and
other discounts.

Any business travel costs
will be paid by the Company.
Additional benefits or
payments in lieu of benefits
may also be provided in
certain circumstances, if
required for business needs.

The Company provides
Directors’ and Officers’
liability insurance and may
provide an indemnity to the
fullest extent permitted by the
Companies Act 2006.

Pension
To attract and retain the right calibre of senior executives required to support the long-term interests of the business.

Proposed implementation
of Policy in the year ending
1 December 2024

No planned change.

Key features of current Policy

Proposed Policy changes

No change.

Executive Directors can
choose to participate in the
defined contribution Group
personal pension scheme
or an occupational money
purchase scheme.

Where lifetime or pension
allowances have been met,
the balance of employer
contributions may be
paid as a cash allowance
or into a personal
pension arrangement.

Operation in the year ended
3 December 2023

In order to ensure continued
alignment between Executive
Director and wider workforce
pension contributions,
the contribution rate for
UK-based Executive Directors
is 7% of salary, in line with
the workforce.

For any Executive Directors
outside the UK, provision for
an executive pension will be
set taking into account local
market rates.

Annual Incentive Plan
To provide a direct link between measurable and predictable annual Company and/or role specific performance and reward.

To incentivise the achievement of outstanding results aligned to the business strategy.

Operation in the year ended
3 December 2023

Proposed implementation
of Policy in the year ending
1 December 2024

Maximum potential for FY23
(as % of salary):

Maximum potential for FY24
(as % of salary):

• CEO: 275%
• Other Executive
Directors: 250%

The AIP was measured
against the Corporate
Scorecard which was
measured against the
following strategic pillars:

• UK Client Delivery (20%);
• Environmental, Social and

Governance (10%);

• Partner Success (30%);
• Costs (30%);
• New Business (10%); and
• Legal (Neill Abrams only).

• CEO: 275%
• CFO: 250%

The Corporate Scorecard will
be measured against the
following strategic pillars:

• Financial Measures (65%);
• Growth (25%); and
• ESG (10%).

The measures are
individually weighted for
each Executive Director.
For further information
see page 183.

Key features of current Policy

Proposed Policy changes

Maximum opportunity of
275% of salary.

Up to 50% of any bonus
will be paid in cash (up to a
maximum of 100% of salary)
and at least 50% will be
deferred into shares.

Lowering the maximum
bonus level from FY26,
such that the maximum
bonus level will be:

• FY24 and FY25: 275%

of salary; and

• FY26: 200% of salary.

Main terms of
deferred shares:

• Minimum deferral period
of three years from the
date of grant.

• Additional two-year

post-vesting holding period.

• Continued employment

to the end of the deferral
period (unless
“good leaver”).

Dividend equivalents may be
awarded on deferred shares
to the extent that they vest
until the end of any relevant
post-vesting holding period.

Up to 50% of any bonus
earned will be paid in cash
and at least 50% will be
deferred into shares.

Main terms of
deferred shares:

• Minimum deferral period
of three years from the
date of grant.

• Continued employment

to the end of the deferral
period (unless deemed
a “good leaver”).

Cap on cash payment and
additional two year post-
vesting holding period
removed under the
new structure.

Dividend equivalents may be
awarded on deferred shares
to the extent that they vest.

162

163

Performance Share Plan
To attract, retain and incentivise senior executives to deliver the Company’s business strategy and sustainable value
for shareholders.

Operation in the year ended
3 December 2023

N/A – plan to be
implemented from year
ending 1 December
2024, subject to
shareholder approval.

Key features of current Policy Proposed Policy changes

Not in current Policy.

A PSP will operate under which
the Committee may make an
annual award of shares to each
Executive Director.

PSP awards will typically have a
vesting period of three years
followed by a holding period of two
years. During the holding period,
vested awards cannot be sold
except for tax purposes on exercise.

The Remuneration Committee may
award dividend equivalents on
deferred shares to Executive
Directors to the extent that
they vest.

The PSP awards will consist of a
“base” award, with a relative TSR
multiplier on the vesting outcome
of the base award.

The maximum base award level for
Executive Directors is 400% of base
salary. A relative TSR multiplier will
operate such that the maximum
opportunity is 1.5x the base award
i.e. 600% of base salary.

25% of the base award will vest
for threshold performance,
increasing to 100% of the base
award for maximum performance.
Performance measures and targets
will be aligned to strategy and set
on grant, with at least 70% of the
base award linked to stretching
financial metrics.

For the CEO’s FY24 PSP award only,
an enhanced multiplier will operate
such that the maximum opportunity
is 4.5x the base award i.e. 1800% of
base salary.

If the enhanced multiplier is
triggered, vesting of the award will
be in three equal tranches (in 2027,
2028 and 2029) and holding periods
will apply such that, in normal
circumstances, no awards will be
released prior to the fifth anniversary
of the grant.

Proposed implementation
of Policy in the year ending
1 December 2024

The maximum opportunity
for each Executive Director,
as a percentage of base
salary, is as follows:

• CEO: 400% base award

(1800% with multiplier for
FY24 only – 600% with
relative TSR multiplier in
future years); and

• CFO: 350% base award
(525% with relative TSR
multiplier).

For the FY24 grant, the base
award will be based 100% on
financial metrics, with
adjusted earnings per share
(“EPS”) and underlying cash
flow pre-growth capital
expenditure weighted
equally.

The relative TSR multiplier
will be assessed based on
Ocado’s relative TSR against
the FTSE 100 (excluding
investment trusts) as follows:

• Up to and including upper
quartile performance = 1 x
base award outcome;

• Upper decile performance

or above = 1.5 x base
award outcome; and
• Straight-line vesting in

between these two points.

For the CEO’s FY24 PSP
award only, if the share price
hits £29.69 in March 2027,
an enhanced multiplier of
4.5x (instead of 1.5x) the
base award (of 400% of
salary) will apply.

Shareholding requirements
To align Executive Directors and shareholders.

Key features of current Policy

Proposed Policy changes

Operation in the year ended
3 December 2023

Shareholding requirement for
Executive Directors:

No change to minimum
shareholding requirements.

See page 179 for Director
shareholdings.

• CEO: 400% of salary
• Other Executive Directors:

300% of salary

Post-cessation shareholding
requirement of 100% of
pre-cessation shareholding
requirement for two years
from leaving the Company.

Proposed implementation
of Policy in the year ending
1 December 2024

To enforce the post-cessation
requirement, any departing
Executive Director to whom
this applies will sign a
certificate of compliance
agreeing to retain the
required number of shares
for two years from leaving
the Company.

The required number of
shares will be fixed based
on the share price at the
date of cessation.

Other remuneration
During the period, the Executive Directors continued their participation in the all-employee Sharesave and Share Incentive Plan
Schemes. It is expected that in 2024 the Executive Directors will carry on their participation in the schemes.

Chair of the Board and Non-Executive Fees
The remuneration arrangements for the Non-Executive Directors (except the Chair of the Board) were reviewed by the
Executive Directors and the Chair of the Board in February 2024. From 1 April 2024, the basic fees for Non-Executive Directors,
the fee for chairing a Committee, the fee for the role of Senior Independent Director and the fee for being a member of the
Remuneration Committee or the Audit Committee will increase by 3.8%.

In February 2024, the Committee reviewed the Chair of the Board’s fees and approved an increase of 3.8% from 1 April 2024.
In addition, the Chair of the Board is entitled to receive an expense allowance each year in respect of office support costs,
which will also increase by 3.8%.

Other remuneration for the Non-Executive Directors (Audited)
In addition to their fees, the Non-Executive Directors are entitled to a staff shopping discount consistent with the
Group’s employees.

The Company has obtained a written confirmation from each Non-Executive Director that they have not received any other
items in the nature of remuneration from the Group, other than those already referred to in this report.

164

165

Annual Report on Remuneration – FY23
This part of the Directors’ Remuneration Report sets out the Directors’ remuneration paid in respect of FY23. It details the
payments to Directors and the link between Company performance and remuneration of the CEO. This part, together with
the “Description of the Remuneration Committee” section on pages 158 and 159 and the “Proposed Implementation of Policy
in FY24” section on pages 183 to 185, constitutes the Annual Report on Remuneration, and will be put to an advisory
shareholder vote at the Company’s AGM.

Single Total Figure of Remuneration (Audited)
The total remuneration for the period for each of the Executive Directors is set out in the table below.

Stephen Daintith

Mark Richardson

Director

Tim Steiner
FY23
£’000

FY22
£’000

FY23
£’000

Salary

784

755

584

Taxable benefits1

Pensions

FY22
£’000

563

FY23
£’000

479

FY22
£’000

462

Neill Abrams
FY23
£’000

FY22
£’000

479

462

Luke Jensen5
FY23
£’000

FY22
£’000

Total

FY23
£’000

FY22
£’000

412

462

2,738

2,704

218

188

Total fixed pay

847

809

626

603

521

495

521

495

452

502

2,967

2,904

Variable pay

AIP2

SIP3

Sharesave

VCP4

1,106

1,191

871

–

788

N/A

–

587

652

748

682

150

655

3,462

3,968

–

Total variable pay

1,110

1,195

871

788

591

656

752

686

150

659

3,474

3,984

Recovery of
sums paid

Total
remuneration

–

1,957

2,004

1,497

1,391

1,112

1,151

1,273

1,181

602

1,161

6,441

6,888

1. Taxable benefits includes one or more of: private healthcare; life assurance; or a car allowance.
2. Up to 50% of the AIP payment is paid in cash (up to a maximum of 100% of salary) and at least 50% will be deferred in shares for a period of three years. There are no

performance conditions attached to the deferred element, only service conditions.

3. Under the SIP, awards of Free Shares and Matching Shares became unrestricted during the period. These awards are explained on page 181 of this report.
4. No figures are stated for the VCP to show that although vesting was capable of occurring during the third and fourth years of the VCP in March 2022 and March 2023

respectively, the minimum TSR underpin was not met in either year and therefore no nil-cost options vested in FY22 or FY23.

5. Luke Jensen resigned from the Board with effect from 30 September 2023.

An explanation of each element of total remuneration paid in the table above is set out in the following section.

Base salary (Audited)
During the year, the Committee reviewed the salaries of the Executive Directors. After taking into account a number of
relevant factors which are discussed in more detail below, the Committee recommended that all basic salaries be increased.
The following table shows the change in each Executive Director’s salary.

Year

Tim Steiner

Stephen Daintith

Mark Richardson

Neill Abrams

Luke Jensen1

Salary 2023
(£)

Salary 2022
(£)

Effective
from

794,383

592,020

485,456

763,830

569,250

466,785

1 April 2023

1. Luke Jensen resigned from the Board with effect from 30 September 2023.

The changes to base salary were made in line with the current Policy. The Executive Directors received an increase in base pay
of 3.8%, which was below the overall percentage salary increases for FY23 for monthly paid employees (6.1%).

Taxable benefits (Audited)
The Executive Directors received taxable benefits during the period, notably private medical insurance. They also received
other benefits which are not taxable, including income protection insurance, life assurance and Group-wide employee benefits,
such as an employee discount. The taxable benefits shown in the Single Total Figure of Remuneration table on page 166
include a car allowance for Luke Jensen. These benefit arrangements were made in line with the current Policy which allows
the Company to provide a broad range of employee benefits.

Pensions (Audited)
The Company made pension contributions on behalf of the Executive Directors to the defined contribution Group personal
pension scheme. The employer contributions to the pension scheme in respect of each Executive Director are made in line
with the Group personal pension scheme for all employees. In order to ensure continued alignment between Executive Director
and wider workforce pension contributions, all Executive Directors have received a contribution rate of 7% of salary since
April 2020.

Pension contributions can be made to the Executive Directors (and any other employee) as a cash allowance where the
Executive Director (or employee) has reached the HMRC tax free annual allowance limit for pension contributions as provided
for in the current Policy. In accordance with the current Policy, Tim Steiner, Stephen Daintith, Mark Richardson, Neill Abrams
and Luke Jensen elected or have elected to receive part of their pension contributions as an equivalent cash allowance.

Annual Incentive Plan (Audited)
The FY23 AIP was based on the performance targets and weightings set out on the following page. Noting shareholder
feedback from last year around the pay for performance link, we aim to transparently disclose our detailed performance
against targets below. All metrics are directly linked to our strategic KPIs and overall long-term success of the Company, with
12 of the 14 measures having quantifiable performance metrics. Details of the two qualitative measures (“Environmental
roadmap” and “Success in corporate litigation”) are fully disclosed. Note that the “Success in corporate litigation” measure
applies to Neill Abrams only.

When reviewing final outcomes, the Committee has carefully considered overall business and individual performance to
ensure an appropriate pay for performance link. As part of this, the Committee has taken into account that the Ocado Retail
revenue target was exceeded in FY23, despite the inflation assumptions built into the targets exceeding actual inflation rates
over the period, and adjusted EBITDA was broadly on target.

The CEO had a maximum bonus opportunity of 275% of salary and the other Executive Directors had a maximum opportunity
of 250% of salary. Luke Jensen resigned from the Company with effect from 30 September 2023 and was paid a cash payment
of £150,000 in September 2023 in lieu of his FY23 AIP vesting. See page 178 for more information.

166

167

Weightings of performance condition

Performance targets

Performance outcome

Tim
Steiner

Stephen
Daintith

Mark
Richardson

Neill
Abrams

Threshold

Maximum

Actual
performance

Percentage
of maximum
performance
achieved

Performance conditions

Financial and cost-related metrics

Ocado Retail adjusted EBITDA

Ocado Retail revenue1

7.5%

10.25%

5.25%

£5m

£20m

£12.7m

5.25% £2,250m £2,350m

£2,358m

UK OSP implementation

Client cost per order reduction

CFC capital expenditure cost

Direct operating costs

Group operating costs

ESG-related metrics

5.0%

10.0%

3.5%

7.0%

12.0%

7.0%

22.0%

3.5%

7.0%

3.5%

7.0%

12.0%

Environmental roadmap

5.0%

8.5%

3.5%

8.5%

Employee eNPS

5.0%

3.5%

Other strategic metrics

Total live modules

Modules ordered

Non-grocery deals signed

Solutions deals signed

10.0%

5.0%

7.0%

3.5%

7.0%

33.5%

3.5%

7.0%

8.5%

3.5%

Success in corporate litigation

–

15.0%

Performance outcome

Total achieved (% of maximum)

50.6%

58.9%

48.3%

61.6%

Total payout (£’000)2

1,106

871

587

748

70% of
customers
on OSP

100% of
customers
on OSP

Not
expected to
be delivered

10%

30%

20.9%

£11m

(1.95)%

(20)%

£8.3m (see
note below)

(1.7)%

(25)%

£9m

(1.7)%

(25)%

Delivery of Group-wide
emissions roadmap

See note
below

Industry
benchmark

Industry
benchmark
+6

Industry
benchmark
+3

11.5

£50m

£70m

£54.8m

–

See note
below

63%

100%

66%

25%

100%

80%

62.5%

43%

100%

1. The Ocado Retail Revenue targets include inflation for adjusted EBITDA.
2. The applicable salary used for calculating the bonus payment under the rules of the FY23 AIP is the applicable base salary on the date of payment.

Performance under the FY23 AIP was measured against 14 performance measures over FY23. Of the 14 measures, all except
measures 8 and 14 have quantifiable performance targets with “minimum” and “maximum” conditions. 25% of an award vests
for minimum performance rising on a straight-line basis to 100% for maximum performance.

Measure 2 (Ocado Retail Revenue) the Committee gave consideration to whether the achievement of this measure had been
positively affected by higher UK prices but notes that the inflationary environment was known at the time targets were set and
was therefore assumed in the target.

Measure 5 (CFC capital expenditure cost) required assessment of the CFC capital expenditure costs against the performance
target. The Remuneration Committee considered the significant progress made in respect of reducing future CFC capital
expenditure and although the stretch target was technically exceeded at £8.3m, the Committee determined to exercise
downward discretion given that there had been no formal new CFC capital expenditure approval submissions during the year,
and awarded the target at the threshold of 25%.

Measure 8 (Environmental roadmap) required management to produce and agree a Group-wide emissions environmental
roadmap to Net Zero by 2035 for Scope 1 and 2, including options and scenarios to illustrate how we may progress from our
current position to achieve the published commitments. For Scope 3, this includes producing a detailed outline of current
Scope 3 emissions, setting out recommendations for reducing Scope 3 emissions, and identifying both the carbon reduction
value and business impact for each one of these recommendations. The environmental roadmap as outlined on page 75 of this
report was approved by the Board. Whilst the formulaic outturn was 100%, in assessing performance the Committee took into
account the extent to which the Net Zero plan had been adopted by the business in FY23 and applied discretion to agree an
outcome of 80% of maximum for this environmental roadmap target.

Measure 14 (Success in corporate litigation), a measure in Neill Abrams’ scorecard, focused on Ocado’s freedom to use OSP
technology and license it to Solutions Partners without having to make any material payments to AutoStore, winning at least
one significant case in our key markets and making commercial decisions accordingly. In relation to this performance measure

168

a settlement of the AutoStore litigation was reached in July 2023, which resulted in all claims by both parties being withdrawn,
a cross-license of certain patents being entered into and AutoStore agreeing to pay Ocado £200m over a two-year period.
Additionally, Ocado was awarded costs by the UK High Court of £6.7m after defeating AutoStore’s claims. See page 25
for more information. Given the significance of this settlement to Ocado, the Committee considers 100% achievement
against this goal.

Overall this resulted in bonus payments to Executive Directors based on 48.3% – 61.6% of maximum achievement.
The Committee carefully discussed the outcome of each AIP measure, assessing business factors and broader
considerations outside of Ocado, and is confident that outcomes are consistent with the underlying performance of
the business. Therefore, the Committee determined that no overriding discretion will be applied to the bonus outcome,
except to the measures outlined above.

In agreeing to pay the bonus, the Committee applied the rules, which stipulate that 50% of the AIP achieved in the year
will be deferred into shares for three years (subject to a two-year holding period on vesting).

Value Creation Plan (Audited)
The VCP will cease following the final measurement date in March 2024. No nil-cost options were banked or vested in FY23.
Based on where our share price is at the time of writing, it is expected that no nil-cost options will be banked under any of
Tranches 1, 2 or 3 at the fifth Measurement Date, nor will any vest

The initial price for the VCP is £13.97 for Tranche 1 (being the average price over the 30-day period prior to the 2019 annual
general meeting), £19.60 for Tranche 2 (being the price at which equity was raised by the Company on 10 June 2020) and
£7.95 for Tranche 3 (being the price at which equity was raised by the Company on 20 June 2022). At the end of each year of
the performance period, the participating Executive Directors will receive the right to share awards with a value proportionate
to the difference between the Company’s Total Shareholder Return (“Measurement TSR”) and the Threshold TSR at the
relevant Measurement Date.

The Threshold TSR or hurdle, which has to be exceeded before share awards can be earned by the Executive Directors,
is the higher of:

• the highest previous Measurement TSR at which the individual banked awards; and
• the Initial Price (£13.97 for Tranche 1; £19.60 for Tranche 2; and £7.95 for Tranche 3) compounded by 10% per annum.

If the value created at the end of a given year does not exceed the Threshold TSR, nothing will accrue in that year under the VCP.

The vesting schedule for the original five-year VCP provides that 50% of the cumulative number of share awards will vest
following the third Measurement Date and 50% of the cumulative balance following the fourth Measurement Date, with 100% of
the cumulative number of share awards vesting following the fifth Measurement Date. The VCP extension will not be utilised
for any Executive Director, however, for information the revised vesting schedule for the extended VCP allowed for 50% of the
cumulative number of share awards to vest following the third to seventh Measurement Dates (inclusive), with 100% of the
cumulative number of share awards vesting following the eighth Measurement Date in 2027. At each vesting date, vesting of
awards is subject to:

• a minimum TSR underpin of 10% Compound Annual Growth Rate (“CAGR”) being maintained;
• any shares vesting cannot be sold prior to the fifth anniversary from grant;
• an annual cap on vesting of £20m for the CEO and £5m for other Executive Directors; and
• Remuneration Committee discretion (as set out in the current Policy) to adjust the formulaic vesting outcome if it is not a fair

and accurate reflection of performance.

Measurement Dates
The first, second, third and fourth VCP Measurement Dates were 12 March 2020, 11 March 2021, 10 March 2022 and
30 March 2023, 30 days after the publication of the FY19, FY20, FY21 and FY22 financial results respectively.

Following the capital raise that was undertaken by the Company in June 2020, a new Tranche of award under the VCP
was created. The newly issued equity (Tranche 2) was created at the date that the equity was raised and its Initial
Price is the share price at which the equity was issued (£19.60). Further details on this approach are set out in the
2020 Annual Report on page 165.

A second capital raise was undertaken by the Company in June 2022 and as a result, a third Tranche of award under the VCP
was created. The newly issued equity (Tranche 3) was also created at the date that the equity was raised and its Initial Price
is the share price at which the equity was issued (£7.95).

Noting the price at which the Company raised equity in June 2022, when approving the creation of Tranche 3 the Committee
agreed that it would review overall business performance at the point of any future banking or vesting of awards under
Tranche 3. Specifically, the Committee would take into considerations factors such as (but not limited to):

• changes in Company shareholder value over the period;
• broader changes in the technology market; and
• underlying business performance as context for deciding whether any banking or vesting of awards under the new

Tranche is appropriate.

169

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Directors’ Remuneration Report continued

For both Tranches 2 and 3, the newly issued equity must be grown at the same rates (10% per annum) at each corresponding
Measurement Date as the initial equity (Tranche 1).

Recovery of sums paid (Audited)
No sums paid or payable to the Executive Directors were sought to be recovered by the Group.

For all three Tranches, VCP participants will be entitled to the same share of the new equity as the initial equity, above a
Threshold TSR. Performance will be tested for all Tranches at the same date. This approach ensures that any vesting under
the VCP is fully attributable to management’s performance in growing the value of shareholder funds provided and for
delivering value to existing shareholders.

The following table sets out the number of nil-cost options (“NCOs”) that were granted to Executive Directors in office at the
first, second, third and fourth Measurement Dates under the VCP.

It should be noted that the nil-cost options in the table below have only been conditionally allocated to Executive Directors
at this point in time. On the first vesting date under the plan in March 2022, the 10% CAGR TSR underpin was not met for
either Tranches 1 or 2 and therefore no vesting occurred. Additionally, on the second vesting date in March 2023, the 10%
CAGR TSR underpin was not met for any of Tranches 1, 2 or 3 and therefore no vesting occurred. For the avoidance of doubt,
the Committee did not apply discretion to these outcomes. The granted nil-cost options did not lapse and will be capable of
vesting on the fifth Measurement Date in March 2024, again subject to the 10% CAGR TSR underpin being met. The Committee
retains discretion to vary the level of vesting where it is considered that the formulaic vesting would not be a fair and accurate
reflection of performance.

Year 1

Year 2

Year 3

Year 4

Year

Tranche 1

Tranche 2

Tranche 1

Tranche 2

Tranche 1

Tranche 2

Tranche 3

Measurement Date

12 March
2020

11 March
2021

10 March
2022

30 March
2023

Threshold TSR
(per share)

£10.6bn
£(15.16)

£11.9bn
£(16.68)

£0.71bn
£(21.06)

Measurement TSR
(Measurement Price1)

£7.9bn
£(11.23)

£16.6bn
£(23.28)

£0.78bn
£(23.28)

Group 1:
£16.7bn
£(23.28)

Group 2:
£13.2bn
£(18.34)

£9.2bn
£(12.86)

Group 1:
£0.78bn
£(23.28)

Group 2:
£0.78bn
£(23.16)

£0.43bn
£(12.86)

Group 1:
£16.8bn
£(23.28)

Group 2:
£14.6bn
£(20.28)

£3.4bn
£(4.68)

Group 1:
£0.86bn
£(25.61)

Group 2:
£0.86bn
£(25.61)

£0.16bn
£(4.68)

Group 1:
£0.62bn
£(8.56)

Group 2:
£0.62bn
£(8.56)

£0.34bn
£(4.68)

Cumulative
total

–

Aggregate number
of NCOs granted to
Executive Directors

Tim Steiner
(NCOs granted)

Stephen Daintith
(NCOs granted)

Mark Richardson
(NCOs granted)

Neill Abrams
(NCOs granted)

–

3,547,602

55,861

2,027,202

31,921

–

506,800

7,980

506,800

7,980

–

3,603,463

2,059,123

–

514,780

1. The Measurement Price is the 30-day average closing share price for the 30 days following the announcement of the results for the relevant financial year. This is £11.23,

£23.28, £12.86 and £4.68 for the first, second, third and fourth Measurement Dates respectively.

2. For Tranche 1 the Threshold TSR is the higher of the highest previous Measurement Price at which the individual banked awards under this Tranche and the Initial Price

compounded by 10% per annum between 1 May 2019 and 30 March 2023, being the start of the VCP performance period and the fourth Measurement Date. For Tranche 2
the Threshold TSR is the higher of the highest previous Measurement Price at which the individual banked awards under this Tranche and the Placing Price (£19.60)
compounded by 10% per annum between 10 June 2020 and 30 March 2023, being the date of the capital raise and the fourth Measurement Date. For Tranche 3 the
Threshold TSR is the higher of the highest previous Measurement Price at which the individual banked awards under this Tranche and the Placing Price (£7.95) compounded
by 10% per annum between 20 June 2022 and 30 March 2023, being the date of the capital raise and the fourth Measurement Date.

3. Tim Steiner, Neill Abrams and Mark Richardson are all Group 1 participants, as they joined the VCP prior to the second Measurement Date. As Stephen Daintith joined

the Board in March 2021, following the second Measurement Date, he joined the VCP as a Group 2 participant. The threshold TSR for Group 1 participants is the second
Measurement Price of £23.28 at which they banked awards in March 2021. Group 2 participants are not subject to the threshold of £23.28 at which Group 1 participants
banked awards in the second year of the VCP.

Share Incentive Plan (“SIP”) (Audited)
The 2020 award of Free Shares made under the SIP became unrestricted during the period on 23 September 2023. Certain
Matching Shares also became unrestricted during the period. Free Shares and Matching Shares awarded under the SIP are
subject to a three-year forfeiture period starting from the date of grant. This means that if an Executive Director ceases to be
employed by the Group during the three-year period, the Free Shares and Matching Shares will be forfeited. Partnership
Shares purchased under the SIP are not included in the total remuneration table as these are purchased by the Executive
Directors from their salary, rather than granted by the Company as an element of remuneration. Only the value of Free Shares
and Matching Shares that became unrestricted during the period are shown in the total remuneration table. The value shown is
the value of the shares on the date that they became unrestricted. Unrestricted shares can be held in trust under the SIP for as
long as the Executive Director remains an employee of the Company.

170

Non-Executive Directors
Total fees (Audited)
The fees paid to the Non-Executive Directors and the Chair of the Board during the period ended 3 December 2023 and the
period ended 27 November 2022 are set out in the table below.

Fees

Taxable
benefits

Non-Executive
Director

FY23
£’000

FY22
£’000

FY23
£’000

FY22
£’000

Pension
entitlements
FY23
£’000

FY22
£’000

Annual
bonus

FY23
£’000

FY22
£’000

Long-term
incentives
FY23
£’000

FY22
£’000

Recovery
of sums paid
FY23
£’000

FY22
£’000

Total
remuneration

FY23
£’000

FY22
£’000

Rick Haythornthwaite

398

384

Jörn Rausing

Andrew Harrison

Emma Lloyd

Julie Southern

Nadia Shouraboura

Julia M. Brown

Rachel Osborne

John Martin

Michael Sherman

143

108

132

104

–

Total

1,126

1,025

–

398

384

143

108

132

104

–

1,126

1,025

1. Julia M. Brown joined the Board with effect from 1 January 2023.
2. Rachel Osborne joined the Board with effect from 1 September 2023.
3. John Martin resigned from the Board with effect from 1 September 2023.
4. Michael Sherman resigned from the Board with effect from 27 June 2023.

Non-Executive Directors receive a basic fee and additional fees for chairing the People Committee, Remuneration Committee
or Audit Committee, for being a member of the Remuneration Committee or Audit Committee, or holding the position of Senior
Independent Director. There is currently no additional fee payable to the DNED. The Chair of the Board also receives an
expense allowance.

The remuneration arrangements for the Non-Executive Directors (except the Chair of the Board) were reviewed by the
Executive Directors and the Chair of the Board during the period and the basic fees for Non-Executive Directors were
increased in FY23 to £79,664 (FY22: £76,600), whilst the fee for chairing a Committee was increased to £21,528
(FY22: £20,700). The fee for the role of Senior Independent Director was also increased to £21,528 (FY22: £20,700) and the
fee for being a member of the Remuneration Committee or the Audit Committee was increased to £8,112 (FY22: £7,800).

The Remuneration Committee reviewed the Chair of the Board’s fees during the period, increasing the annual fee to £403,650
(FY22: £388,125). In addition, he is entitled to receive an expense allowance of £53,820 (FY22: £51,750) per annum in respect
of office support costs.

Additional context on Executive Director pay
Overall link to remuneration and equity of the Executive Directors
The table below sets out, for each Executive Director, the single figure for FY23, the number of shares held by the Director
at the beginning and end of the financial year and the impact on the value of these shares taking the opening price and
closing price for the year. It is the Committee’s view that the total exposure of the Executive Directors to the Company is
more relevant to their focus on the long-term sustainable performance of the Company than the single figure of remuneration
for a particular year.

Tim Steiner

Stephen Daintith

Mark Richardson

Neill Abrams

FY23
single figure
(£’000)

Shares held
at start of year

Shares held
at end of year

Value of shares
at start of year
(£’000)

Value of shares
at end of year
(£’000)

Difference
(£’000)

1,957

1,497

1,112

1,273

19,795,014

19,833,326

128,628

117,850

(10,778)

13,427

14,536

1,451,108

1,469,521

3,683,642

3,700,830

9,429

23,936

8,732

21,990

(1)

(697)

(1,946)

1. Stephen Daintith joined the Board with effect from 22 March 2021 and hence has had less time than the other Executive Directors to build up his shareholding.
2. Luke Jensen resigned from the Board with effect from 30 September 2023 and therefore is excluded from the table.

The closing market price of the Company’s shares as of 1 December 2023, being the last trading day in the period ended
3 December 2023, was 594.2 pence per ordinary share (FY22: 649.8 pence), and the share price range applicable during
the period was 343.4 pence to 976.4 pence per ordinary share.

171

Wider workforce considerations and our approach to fairness
We are committed to ensuring our people are rewarded fairly and competitively for their contribution to our success and that
they feel supported in a holistic way, not just in their rate of pay.

• In Logistics, in FY23 we made significant investments in pay and saw pay settlements ranging from 5.4% to 6.5%

for our warehouse and CSTM employees. While Ocado is not seeking accreditation by the Living Wage Foundation,
9,458 employees earned at a level above the 2023 real Living Wage rates; all employees working in Logistics have the ability
to earn above this rate. We also continued to invest in pay for our Technology Solutions business, with average increases
in employee salaries of 6.1% in FY23 (compared with increases of 4% for Executive Directors).

• From a benefits perspective, Ocado Group has invested in a comprehensive benefits programme, which employees value

as part of their overall package.

• An advanced salary product is offered which allows all eligible employees in the UK to withdraw 50% of their earned

basic pay up to three times over the course of one payroll period. This gives employees greater autonomy over finances.
4,352 people visited salary finance in October 2023 and we had 17,839 advances between January and September 2023.
• In FY23 we introduced specialist menopause support for employees and their families, giving all employees in the UK free

access to a menopause nurse, specialist doctor and tailored advice. In addition we launched Care Concierge through
Legal & General, a free support and information service for our employees who care for elders. We continue to promote
our wide suite of financial wellbeing tools including a free service that puts an employee’s previous pensions into one place,
making understanding pensions easier.

• In FY23 we launched Charitable Giving, enabling employees to donate to charities directly from their pay.
• We introduced Dashly, a free financial wellbeing solution that helps our employees save money on their mortgages by

checking thousands of products to help them find a better deal.

• Our Company Shop Group is the UK’s leading redistributor of surplus food and household products. Employees can shop
products from well-known brands at amazing prices, helping stretched budgets go further. Membership is available to all
employees and stores are located across the UK.

• Our Mental Wellbeing Champions provide an added layer of support for our employees – as well as a voice that can help
to cascade the messaging and focus we have centrally. Over 85 Champions have been trained to support our employees
by providing a safe, unbiased and confidential space. This is in addition to our existing wellbeing support package which
includes access to digital support to help people self-manage their mental health, access to our Employee Assistance
phone line and training for all managers on how to support mental health in the workplace.

• We continue to develop our employee benefits globally, with the objective of offering our diverse population choice and
flexibility so employees can access benefits that are valuable and relevant to their individual lifestyles. Our core benefits
include life and sickness protection, retirement advice, and a mental health support service. Our benefits platform,
Benefits+, is now available in 80% of our countries and allows employees to select benefits that matter most to them.
Discounts+ offers retail savings and is live in 65% of our countries which enables our employees to save money on
everything from bills to household necessities and lifestyle products. We continue to promote our retail discount
in the UK on Ocado.com.

Group-wide remuneration report
A regular report from management on Group-wide remuneration is reviewed by the Committee. This review covers changes
to pay, benefits, pensions and share schemes for all employees in the Group, including the percentage increases in base
pay for monthly- and hourly-paid employees. The DNED is Andrew Harrison. He advocates and directly represents the
employee voice during Board and Committee discussions. The DNED reports to the Committee on insights from activities
undertaken across the year with regard to DNED responsibilities. For more details of what Andrew Harrison has done
in FY23, see page 128. The Committee carefully considers the relevant parts of these reports when making decisions
on executive remuneration.

Share Schemes
A key remuneration principle for the Group is that share awards be used to recognise and reward good performance and
attract and retain employees.

To help support alignment across the Group with the interests of shareholders and reward for Company performance,
all employees in the Group receive share incentives. All UK employees are eligible to participate in the Group’s SIP and
Sharesave Scheme and employees located outside the UK are eligible to participate in the international equivalent
share schemes.

Cascade of remuneration through the Company
All UK staff in the Company are eligible to participate in the Company’s all-employee share schemes, pension scheme and
life assurance arrangements. In line with the UK Corporate Governance Code, the current Policy ensures that pension
contributions for existing and any future Executive Directors are fully aligned with the level currently offered to all employees to
ensure greater fairness across the Company.

The remuneration arrangements for employees below Board level reflect the seniority of the role and individual performance.
The components and levels of remuneration for different employees differ from the remuneration framework for the Executive
Directors. The Group operates some tailored bonus and long-term incentive arrangements for certain groups of employees.

The all-employee remuneration report produced by the Company is considered by the Committee when making decisions
on pay for both Executive Directors and the wider workforce population.

Employment at Ocado
Ocado Group believes a diverse and inclusive workforce is a key factor in being a successful business. Our Equal Opportunities
Policy is dedicated to creating an environment for our employees that is free from discrimination, harassment and victimisation,
which reflects our commitment to create a diverse workforce, environment and pay strategy that support all individuals
irrespective of their gender, age, race, disability, sexual orientation or religion.

Gender pay gap
Ocado is committed to pay parity and aims to ensure we provide equal opportunity for all. We are proud of the work we have
done around diversity and inclusion during the year and want to continue to improve retention and attract the best female
talent as well as other under-represented groups.

The Company reports specific information about the difference in average pay for its male and female employees as required
by gender pay gap legislation. The Company’s gender pay gap metrics are submitted by the Group’s main employing entity,
Ocado Central Services Limited, and the headline gender pay metric is the difference in the median hourly pay received by
men and women. Our FY23 results continue to show a balanced position between the genders, with the headline metric
(median pay gap) slightly favouring men by 0.6%, having slightly favoured women in FY22. The mean gender pay gap
continues to favour female employees, with a pay gap of 4.1%.

We are committed to paying fairly and we are focused on providing an equal opportunity for all employees. For more
information and to view the full metrics see the Government gender pay gap service portal or our corporate website,
www.ocadogroup.com.

Chief Executive Officer pay ratio
The tables below set out the total pay of the Group Chief Executive Officer and UK employee population as a whole at median,
lower quartile and upper quartile using the methodology applied to the single figure of remuneration at the end of the period.
We set this out on the following bases:

• The 2022, 2021, 2020, and 2019 pay ratio.
• This year’s 2023 pay ratio.

The CEO pay ratio, when calculated in line with the Regulations, has fallen versus the figures for 2022 (72:1 versus 80:1 last
year). This is due to the fact that, as was the case in FY2022, there were no long-term incentive awards vesting during FY22;
at the fourth VCP Measurement Date the 10% CAGR TSR underpin was not met hence no banked nil-cost options vested.

Executive Director pay is more at risk than wider employee pay due to the use of variable pay, resulting in a total pay ratio
that can change significantly from year-to-year. Details on the differences between the remuneration of Executive Directors
and the wider workforce can be found on page 176. The Committee is satisfied that its policies on reward drive the right
behaviours at Ocado and ensure that our employees are rewarded fairly and competitively for their contribution to our
success. Therefore, the Committee believes that the median pay ratio is consistent with the Group’s pay, reward and
progression policies.

Year

2022/23 – reported figures

2021/22 – reported figures

2020/21 – reported figures

2019/20 – reported figures – restated

2018/19 – reported figures – restated

2018/19 – without GIP payment – restated

CEO
remuneration
(£’000)

25th
percentile pay
ratio

Median
pay ratio

75th
percentile pay
ratio

1,957

2,004

1,968

6,211

59,038

4,918

75:1

85:1

88:1

283:1

2,834:1

236:1

72:1

80:1

82:1

278:1

2,619:1

218:1

60:1

68:1

67:1

217:1

2,349:1

196:1

Method

Option B

1. Option B was selected to calculate CEO pay ratios as a proportionate, sustainable and repeatable approach given the size and structure of the Ocado workforce.
2. From the information used to calculate the most recent gender pay gap at each of the 25th, 50th and 75th percentiles, 20 employees were identified as comparators and
their remuneration calculated (the remuneration figures for each employee were determined with reference to the financial year ended 3 December 2023). The median
remuneration for each group of 20 employees is reported as the comparator value for CEO pay ratio calculations. Using the median value from groups of employees at
each of the 25th, 50th and 75th percentiles provides a more representative estimate than if based on an individual employee, reducing the influence of an outlier value.

3. No components of pay have been omitted and no estimates or adjustments were made.

UK employees (full-time equivalents)

Chief Executive Officer

Total pay and benefits (£’000)

Salary (£’000)

Year

2022/23

Total pay
and benefits
(£’000)

£1,957

Salary
(£’000)

£794.4

25th
percentile

£26.0

Median

£27.3

75th
percentile

25th
percentile

£32.5

£24.3

Median

£25.8

75th
percentile

£30.8

172

173

Chief Executive Officer historical remuneration
The table below summarises, in respect of the Chief Executive Officer, the single figure of total remuneration, the AIP or bonus
plan payment as a percentage of maximum opportunity, and the long-term incentive payout as a percentage of maximum
opportunity for the current period and the previous 10 financial years.

Year

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

Chief Executive Officer
total remuneration
(£’000)

AIP or bonus payment as a
percentage of maximum
target achievement
(% of maximum)

Long-term incentives
as a percentage of
maximum opportunity
(% of maximum)

1,957

2,004

1,968

6,211

59,038

3,996

1,337

1,141

5,098

6,483

50.6

56.7

57.9

94.2

57.0

70.5

41.8

43.6

65.0

56.0

–

79.9

94.5

33.4

43.2

90.8

100

1. From 2010, the Company had the Joint Share Ownership Scheme (“JSOS”) as the main form of long-term incentive plan. For the 2013 financial year, the JSOS interests did
not have any value at the vesting date. In 2014, the final Tranche of JSOS shares vested in that period (the value of such remuneration is noted in the single total figure of
remuneration above). The LTIP was implemented in 2013 and the first award had a performance period ending in 2015 and a vesting date in 2016. The Growth Incentive Plan
(“GIP”) and SIP were both implemented in 2014, but had vesting dates in 2019 and 2017 respectively. Since 2019 the VCP has been the main form of long-term incentive plan.

2. The 2017 LTIP vested at 46.1% of maximum and the GIP vested at 100% of maximum. The 2019 long-term Incentive value is a weighted average of the 2017 LTIP and the GIP.
3. The 2018 LTIP vested at 79.9% of maximum. There was no vesting in the first year of the VCP, therefore, the 2020 long-term incentive value is the same as the 2018 LTIP

vesting percentage.

4. There was no vesting capable of occurring in the second year of the VCP in March 2021 and the 2018 LTIP was the last award under this scheme, therefore the 2021

long-term incentive value is N/A.

5. Vesting was capable of occurring during the third and fourth years of the VCP in March 2022 and March 2023 respectively. However, the minimum TSR underpin was not met

in either year and therefore no nil-cost options vested in 2022 or 2023.

Total Shareholder Return
The following graph shows the TSR performance of an investment of £100 in Ocado shares compared with an equivalent
investment in the FTSE 100 and FTSE 250 Indices over the past 10 years. These indices were chosen as Ocado has historically
been a constituent of the FTSE 250 Index, and entered the FTSE 100 in 2018. Both represent a broad equity market index
against which the Company can be compared historically. The Company has not paid a dividend since its Admission so the
Company’s TSR does not factor in dividends reinvested in shares.

0
0
1
£
f
o
t
n
e
m
t
s
e
v
n

n
a
f
o
e
c
n
a
m
r
o
f
r
e
p
R
S
T

600

500

400

300

200

100

29 Nov 2013 28 Nov 2014 27 Nov 2015 25 Nov 2016 01 Dec 2017 30 Nov 2018

29 Nov 2019 27 Nov 2020

26 Nov 2021

25 Nov 2022

01 Dec 2023

Ocado TSR

FTSE 100 TSR

FTSE 250 TSR

174

175

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Directors’ Remuneration Report continued

Director salary/fee percentage change versus employees of Group
The table below shows how the percentage change in each Director’s salary/fees, taxable benefits and annual incentive
plan between FY22 and FY23 compares with the average percentage increase in each of those components of pay for the
UK-based employees of the Group as a whole on a full-time equivalent basis. For the fourth year, disclosure for all Directors in
addition to the CEO has been included; over time a five-year comparison will be built up. Ocado Group plc has no employees
and therefore a subset of the Group’s employees, UK employees, has been used.

Year-on-year increase in pay for Directors compared with the average employee increase:

Salary/
Fees

2022/23
Taxable
benefits

(2)%

10%

–

Director

Tim Steiner

Stephen Daintith

Mark Richardson

Neill Abrams

Rick
Haythornthwaite

Jörn Rausing

Andrew Harrison

Emma Lloyd

Julie Southern

Nadia
Shouraboura

Julia M. Brown

Rachel Osborne

Average
percentage
increase for
UK employees1

Salary/
Fees

2021/22
Taxable
benefits

3.5% (35.6)%

3.5% (20.1)%

AIP

(7)%

10%

(10)%

3.5% (20.1)%

10%

3.5% (20.1)%

–

2.3%

5.2%

12.6%

4.6%

N/A

Salary/
Fees

2020/21
Taxable
benefits

Salary/
Fees

AIP

2019/20
Taxable
benefits

2.5% (83)% (37)%

7% (33)%

AIP

69%

17%

20%

–

N/A

2.5%

N/A

12.5%

21%

30%

N/A

–

(38)%

(28)%

N/A

–

N/A

12%

N/A

10%

21%

15%

N/A

AIP

74%

N/A

82%

72%

N/A

–

N/A

6.1% (0.3)% (3.7)%

5.7% (3.1)%

–

2.5% (2.1)% (27.8)%

100%

1 The change in salary data for the Group’s employees is on a per capita basis. The increase of 6.1% is the change in average percentage increase for UK employees as at

1 April 2023 to allow a direct comparison with the Executive Directors at a single point in time. It is not the year-on-year change in base pay.

2 The change in salary for the Executive Directors is based on the base salary review set out on page 166.
3 The change in taxable benefits for the Executive Directors is as set out on pages 166 and 167.
4 The change in fees for the Non-Executive Directors is based on the change in total fees during the period, as set out on page 171; where a Director has not served a full

prior year, the comparison is based on an annualised monthly fee.

5 UK employees have been chosen as the majority of our workforce is UK based.
6 Julia M. Brown and Rachel Osborne were appointed to the Board on 1 January 2023 and 1 September 2023 respectively.

The Committee monitors the changes year-on-year between our Director pay and the average employee increase, shown
in the table. For FY23, salary increases for the Executive Directors were below those received by the wider workforce.
See page 176 for further details.

Relative importance of spend on pay
The following table shows the Company’s loss and total Group-wide expenditure on pay for all employees for the period and
last financial year. The Company has not paid a dividend or carried out a share buyback in the current year or previous year.
The information shown in this table is:

• Loss – Group loss before tax as set out in the Consolidated Income Statement on page 228.
• Total gross employee pay – total gross employment costs for the Group (including pension, variable pay, share-based

payments and social security) as set out in Note 2.4 to the Consolidated Financial Statements on page 245.

Year ending

Loss before tax

Total gross employee pay

3 December 2023
(£m)

27 November 2022
(£m)

(403.2)

967.2

(500.8)

872.0

N/A

Payment for loss of office No payment for loss of office or other remuneration payment was made or is expected to be

Director retirement arrangements and payments for loss of office (Audited)
It was determined in accordance with the current Policy that the arrangements set out below should apply in relation to the
remuneration on retirement of Luke Jensen, John Martin and Michael Sherman.

Luke Jensen and Michael Sherman retired from the Board with effect from 30 September 2023 and 26 June 2023 respectively.

John Martin retired from the Board with effect from 31 August 2023, remaining as an employee of the Group and becoming
CEO of Ocado Solutions from 1 September 2023.

Mark Richardson and Neill Abrams stepped down from their positions as Executive Directors on 2 February 2024.
Their remuneration will be reported in next year’s Annual Report for the portion of the year that they served as
Executive Directors. They remain employees of the Group.

Element of remuneration

Treatment

Luke Jensen

Remuneration payments

All outstanding salary, benefits and pension entitlements were paid to Luke Jensen up to
30 September 2023, in accordance with the terms of his Service Agreement. No payments are
expected after the date of retirement for Luke Jensen.

made to Luke Jensen.

Incentive Schemes

In line with Ocado’s policy for loss of office in force at that time, and the rules of the AIP, the VCP
and the Executive Share Option Scheme, the Remuneration Committee determined that Luke
Jensen is a good leaver. Therefore, the following arrangements should apply in relation to Luke
Jensen’s outstanding incentive awards:

2020 AIP

2021 AIP

2022 AIP

2023 AIP

VCP

SIP Free Shares

Mr Jensen was awarded a payout of £440,000
pursuant to the 2020 AIP. 50% of the AIP
achieved was deferred into shares for three
years with a further two-year holding period on
vesting. Mr Jensen retains his 21,671 deferred
2020 AIP shares.

Mr Jensen was awarded a payout of £273,732
pursuant to the 2021 AIP. 50% of the AIP
achieved was deferred into shares for three
years with a further two-year holding period on
vesting. Mr Jensen retains his 22,896 deferred
2021 AIP shares.

Mr Jensen was awarded a payout of £326,683
pursuant to the 2022 AIP. 50% of the AIP
achieved was deferred into shares for three
years with a further two-year holding period on
vesting. Mr Jensen retains his 73,988 deferred
2022 AIP shares.

As a good leaver, Mr Jensen was eligible for
a cash payment which was pro-rated to his
retirement date. This was based on an interim
assessment of the measures of the AIP taking
into account his personal contribution towards
the outcome of the targets. See below for
more information.

Mr Jensen’s VCP awards lapsed on retirement
from the Company.

Free Share awards are subject to a three-year
forfeiture period from date of grant and
therefore those that are yet to meet that
three-year forfeiture period lapsed on
retirement from the Company.

176

177

Element of remuneration

Treatment

SIP Partnership and Matching Shares

Matching Shares are subject to a three-year
forfeiture period from date of grant and
therefore those that are yet to meet that
three-year forfeiture period lapsed on
retirement from the Company. Partnership
Shares are purchased from salary rather than
granted as an element of remuneration and are
not subject to forfeiture.

Post-cessation
shareholding requirement

Luke Jensen has a post-cessation shareholding requirement of 300% of his final salary for
24 months from leaving the Company.

Luke Jensen was treated as a good leaver and was eligible for a cash payment which was pro-rated to his retirement date. An
interim assessment of the measures of the FY23 AIP which took into account his personal contribution was carried out, which
was determined to be 30% of maximum. Pro-rated by time, this would result in a payout of £300,000. The Committee
determined that, particularly in light of the payment being in cash only, that Luke Jensen would receive a total payout of
£150,000.

John Martin

Remuneration payments

All outstanding fees up to 31 August 2023 were paid to John Martin in accordance with the
terms of his letter of appointment. No payments are expected after the date of retirement from
the Board for John Martin.

Payment for loss of office No payment for loss of office or other remuneration payment was made or is expected to be

made to John Martin.

Share Schemes

At the time of his retirement from the Board, John Martin did not participate in a Company
share scheme.

Michael Sherman

Remuneration payments

All outstanding fees up to 26 June 2023 were paid to Michael Sherman in accordance with the
terms of his letter of appointment. No payments are expected after the date of retirement for
Michael Sherman.

Payment for loss of office No payment for loss of office or other remuneration payment was made or is expected to be

made to Michael Sherman.

Share Schemes

At the time of his retirement, Michael Sherman did not participate in a Company share scheme.

Director appointment arrangements (Audited)
As announced on 27 June 2023, Rachel Osborne was appointed to the Board as a Non-Executive Director with effect from
1 September 2023. Rachel Osborne’s remuneration was agreed by the Board in line with the current Policy. On appointment,
the Board approved an annual fee for Rachel Osborne of £87,776 which was in line with the other Non-Executive Directors.
Rachel Osborne was appointed Chair of the Audit Committee on assumption of her role, and is therefore additionally paid the
fee to chair that committee. Rachel Osborne will not receive any other benefits or payments, in line with the current Policy.

Payments to past Directors (Audited)
None.

External Appointments for Executive Directors
As at 3 December 2023:

• In addition to his role as Executive Director of the Company, Neill Abrams is an alternate non-executive director of Mr Price

Group Limited, a company listed on the Johannesburg Stock Exchange.

• In addition to his role as Executive Director of the Company, Mark Richardson is a non-executive director of Paneltex Limited.
• In addition to his role as Executive Director of the Company, Stephen Daintith is a non-executive director of 3i Group plc,

listed on the Main Market of the London Stock Exchange.

Director shareholdings (Audited)
The table below shows the beneficial interests in the Company’s shares of Directors serving during the period, and their
connected persons, as shareholders and as discretionary beneficiaries under trusts. The table also shows compliance
with the Director shareholding requirements in the current Policy as at 3 December 2023.

Shares held
at 3 December 2023

Shares held
at 27 November 2022

Name

Direct holding Indirect holding Direct holding

Indirect holding

Executive Directors

Tim Steiner1

Stephen Daintith2

Mark Richardson

Neill Abrams

Non-Executive Directors

19,822,993

10,289

19,785,745

12,579

1,445,797

1,957

23,724

2,130,928

1,569,902

12,579

1,427,774

2,114,848

9,269

848

23,334

1,568,794

Rick Haythornthwaite

31,575

–

22,075

–

Jörn Rausing3

Andrew Harrison

Emma Lloyd

Julie Southern4

Nadia Shouraboura5

Julia M. Brown5

Rachel Osborne5

–

83,879,642

–

83,879,642

25,000

17,300

6,493

–

18,166

17,300

5,493

–

Minimum
shareholding
requirement
(% of Base Salary
or Fee)

Met minimum
shareholding
requirement?

400

300

100

Yes

N/A

Yes

N/A

1. Tim Steiner entered into various contracts for the transfer of shares on 21 June 2010, as described on page 238 of the Prospectus issued by the Company on 6 July 2010.
As previously reported on 24 July 2023, the parties agreed again to extend the date for completion for the third and fourth contracts to 24 July 2024, or other such date
as the parties may agree.

2. Stephen Daintith was appointed on 22 March 2021. Executive Directors (excluding the CEO) are expected to hold shares equivalent to 300% of salary. This holding can

be built up over five years from appointment. Therefore, while Stephen Daintith does not hold the requisite number of shares to comply with the shareholding requirement
currently, he is compliant with the current Policy.

3. Jörn Rausing is a beneficiary of the Apple III Trust, which owns Apple III Limited (together, “Apple”), a significant (approximately 10%) shareholder of the Company.

Jörn is not a representative of Apple, nor does Apple have any right to appoint a Director to the Board of the Company.

4. Although Julie Southern held shares during the year in excess of the guidelines, the fall in the Company share price meant that, at the end of the financial year,

her shareholding was below the guideline.

5. Nadia Shouraboura, Julia M. Brown and Rachel Osborne were appointed on 1 September 2021, 1 January 2023 and 1 September 2023 respectively. Non-Executive Directors

are expected to hold shares equivalent to one year’s annual fee. This holding can be built up over three years from appointment. Therefore, while Nadia Shouraboura,
Julia M. Brown and Rachel Osborne do not hold the requisite number of shares to comply with the shareholding requirement currently, they are compliant with the
current Policy.

6. Michael Sherman, John Martin and Luke Jensen resigned from the Board with effect from 27 June 2023, 1 September 2023 and 30 September 2023 respectively.

Michael Sherman, John Martin and Luke Jensen were compliant with the minimum shareholding requirement throughout the period.

7. The assessment for shareholding compliance is based on the current annualised salary or fee (as set out on pages 166 and 171) which applied on 3 December 2023 and the

higher of the original purchase price(s) or the current market price (being 594 pence per share on 3 December 2023) of the relevant shareholdings.

8. Where applicable, the above indirect holdings include SIP Partnership and Free Shares held under the SIP, which are held in trust.
9. No Director had an interest in any of the Company’s subsidiaries at the beginning or end of the period.
10. There have been no changes in the Directors’ interests in the shares issued or options granted by the Company and its subsidiaries between the end of the period and the

date of this Annual Report, except shares held pursuant to the SIP, as set out on page 181.

178

179

Director interests in share schemes (Audited)
Annual Incentive Plan (Audited)
At least 50% of the AIP payout is deferred into shares (up to a maximum of 100% of salary). At the end of the period, interests in
shares held by the Executive Directors under the AIP were as follows:

Type of interest

Date of grant

Number of
share options

Face value
(£’000)

Date of vest

Share price
used for grant
calculations

Director

Tim Steiner

Deferred bonus

Stephen Daintith

Deferred bonus

Mark Richardson

Deferred bonus

Neill Abrams

Deferred bonus

20/03/20

19/03/21

17/03/22

29/03/23

17/03/22

29/03/23

20/03/20

19/03/21

17/03/22

29/03/23

20/03/20

19/03/21

17/03/22

29/03/23

37,107

55,711

49,128

134,507

19,512

88,954

17,163

22,591

23,245

73,646

15,940

19,237

23,699

76,939

590

1,145

587

596

233

394

274

464

278

326

253

395

283

341

20/03/23

19/03/24

17/03/25

29/03/26

17/03/25

29/03/26

20/03/23

19/03/24

17/03/25

29/03/26

20/03/23

19/03/24

17/03/25

29/03/26

£15.89

£20.56

£11.96

£4.43

£11.96

£4.43

£15.89

£20.56

£11.96

£4.43

£15.89

£20.56

£11.96

£4.43

Value Creation Plan (Audited)
The VCP was approved by shareholders on 1 May 2019. The scheme aligns the remuneration of Executive Directors with the
value generated for shareholders. As mentioned, we have decided not to proceed with the extension of the VCP will cease
following the final Measurement Date in March 2024. Based on where our share price is at the time of writing, it is expected
that no nil-cost options will be banked under any of Tranches 1, 2 or 3 at the fifth Measurement Date, nor will any vest.

No nil-cost options were awarded to Executive Directors in respect of the first VCP Measurement Date on 12 March 2020.
This is because the Measurement Price (£11.23) was below the Threshold TSR (£15.16). The Measurement Price at the second
Measurement Date (£23.28) was higher than the Threshold TSR for both Tranches 1 and 2 (£16.68 and £21.06 respectively). As
such, Executive Directors (excluding Stephen Daintith who joined the Company after the second Measurement Date) were
eligible to bank awards at the second VCP Measurement Date. The number of nil-cost options that were awarded to Executive
Directors in respect of the second VCP Measurement Date on 11 March 2021 is set out below. No nil-cost options were
awarded to the Executive Directors in respect of the third Measurement Date on 10 March 2022. This is because the
Measurement Price at the third Measurement Date (£12.86) was below the Threshold TSR for both Tranche 1 and 2 for all
participants. The VCP vesting schedule provides that the first point at which banked awards could have vested was following
the third Measurement Date on 10 March 2022. Given that the minimum TSR underpin of 10% CAGR was £18.34 and £23.16 for
Tranches 1 and 2 respectively and the Measurement Price was £12.86, no awards banked under Tranche 1 or Tranche 2
were capable of vesting on 10 March 2022.

No nil-cost options were awarded to the Executive Directors in respect of the fourth Measurement Date on 30 March 2023.
This is because the Measurement Price at the fourth Measurement Date (£4.68) was below the Threshold TSR for each of
Tranches 1, 2 and 3 for all participants.

The VCP vesting schedule provides that the second point at which banked awards could have vested was following the fourth
Measurement Date on 30 March 2023. Given that the minimum TSR underpin of 10% CAGR was £20.28 and £25.61 and £8.56
for Tranches 1, 2 and 3 respectively and the Measurement Price was £4.68, no awards banked under Tranche 1 or Tranche 2
were capable of vesting on 30 March 2023 (noting that no awards had yet been banked under Tranche 3).

Individual

Tim Steiner

Stephen Daintith2

Mark Richardson

Neill Abrams

Total number of nil-cost options awarded (banked) to date

Tranche 1

2,027,202

–

506,800

Tranche 2

Tranche 3

31,921

–

7,980

–

Total

2,059,123

–

514,780

1 Stephen Daintith joined the Board with effect from 22 March 2021. He was not eligible to participate in the VCP at the second Measurement Date.
2 No nil-cost options have vested to date.

Share Incentive Plan (Audited)
At the end of the period, interests in shares held by the Executive Directors under the SIP were as follows:

Partnership
Shares
acquired in
the year

Matching
Shares
awarded in
the year

Free Shares
awarded in
the year

Total face value
of Free Shares
and Matching
Shares
awarded in
the year
(£)

Total SIP
shares held
3/12/2023

SIP shares
that became
unrestricted in
the year

Total
unrestricted
SIP shares held
at 3/12/2023

318

746

745

744

3,597

3,598

10,724

1,957

10,525

9,744

141

–

142

141

9,045

598

9,038

8,257

Director

Tim Steiner

Stephen Daintith

Mark Richardson

Neill Abrams

1. Unrestricted shares are those which have been held beyond the three-year forfeiture period.
2. The value of the share awards made under the SIP is based on the middle market quotation of a share on the trading day immediately preceding the date of grant.

The Directors continued their SIP participation during the period. The SIP scheme is made available to all employees. The SIP
allows for the grant of a number of different forms of awards. An award of Free Shares was made to the Executive Directors in
April and October 2023 under the terms of the SIP and the current Policy. Free Shares of up to £3,600 of ordinary shares may
be allocated to any employee in any year. Free Shares are allocated to employees equally on the basis of salary, as permitted
by the relevant legislation.

An award of Matching Shares was made to those Executive Directors who purchased Partnership Shares (using deductions
taken from their gross basic pay) under the terms of the SIP and in accordance with the current Policy.

The Executive Directors continued their membership in the SIP after the end of the period and were, therefore, awarded
further Matching Shares pursuant to the SIP rules. Between the end of the period and 14 February 2024, being the last
practicable date prior to the publication of this Annual Report, the Executive Directors acquired or were awarded further
shares under the SIP as set out in the table below:

Director

Tim Steiner

Stephen Daintith

Mark Richardson

Neill Abrams

Partnership
Shares
acquired

Matching
Shares
awarded

Total face value
of Free Shares
and Matching
Shares
(£)

Free
Shares
awarded

Total
SIP shares
held at
14/02/2023

–

10,775

2,007

10,575

9,794

1. The value of the share awards made under the SIP is based on the middle market quotation of a share on the trading day immediately preceding the date of grant.

Vested: For details of Free Shares and Matching Shares that became unrestricted in the period, see page 170.

Sharesave Scheme (Audited)
At the end of the period, the Executive Directors’ option interests in the Sharesave, Scheme were as follows:

Director

Tim Steiner

Stephen Daintith

Neill Abrams

Type of
interest

Options

Date of
grant

Number of
share options

Exercise
price (£)

Face value
(£)

Exercise period

29/03/23

4,043

4.45

17,991 01/05/26 – 01/10/26

180

181

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Directors’ Remuneration Report continued

Dilution
Dilution limits
Awards granted under the Company’s Sharesave and SIP schemes are met by the issue of new shares when the options are
exercised or shares granted. Awards granted under the VCP may be met by the issue of new shares, the transfer of shares
from treasury, or the purchase or transfer of existing shares by the Employee Benefit Trust (where available).

There are limits on the number of shares that may be allocated under the Company’s share plans. These dilution limits were
recommended by the Committee and incorporated into the rules of the various share schemes, which have been approved
by the Company’s shareholders.

The dilution limits restrict the commitment to issue new ordinary shares or reissue treasury shares under all share schemes of
the Group to 10% of the nominal amount of the Company’s issued share capital and under the LTIP and the VCP (and any other
selective share scheme) to 5% of the nominal amount of the issued share capital of the Company in any rolling 10-year period.
These limits are consistent with the guidelines of institutional shareholders.

Impact on dilution
The Company monitors the number of shares issued under these schemes and their impact on dilution. The charts below show
the Company’s commitment, as at the last practicable date prior to the publication date of this Annual Report being
14 February 2024, to issue new shares in respect of its share schemes assuming all performance conditions are met,
all award holders remain in employment to the vesting date and all awards are settled in newly issued shares. For these
purposes, no account is taken of ordinary shares allocated prior to the Company’s Admission.

All share plans

Executive share plans

Actual

5.04%

Actual

3.27%

Proposed implementation of Policy in FY24
Base salary
As at 1 April 2024 salaries for Executive Directors will increase as follows:

• Tim Steiner (CEO): £824,570
• Stephen Daintith (CFO): £614,517

These reflect an increase of 3.8% which is aligned to the budgeted increase for the wider UK employee population.

Pension
The Executive Directors will continue to receive a pension contribution rate of 7% of salary, in line with the wider workforce.

Annual Incentive Plan
The maximum AIP opportunity for FY24 will be 275% (as a percentage of salary) for the CEO and 250% for the CFO.

The Corporate Scorecard will be measured against the following strategic pillars:

• Financial measures (65%)
• Growth (25%)
• Environmental, Social and Governance (10%)

The objectives for the FY24 AIP are contained in a single Corporate Scorecard model, applicable to both participants.
The CEO and CFO’s performance is measured against the same set of metrics, but the weightings differ to reflect their
roles. In response to shareholder feedback received at the 2023 AGM, we have reduced the overall number of metrics,
with financial metrics, including Group metrics, making up the majority of the FY24 scorecard. Our response to shareholder
feedback is further detailed on pages 188 to 189. The below table outlines the FY24 AIP measures and the individual
weighting for each Executive Director.

The specific performance targets for the AIP are not disclosed for FY24 on the basis the Committee considers that these
targets are commercially sensitive to the Company and if disclosed could damage the Company’s commercial interests
at this stage. These targets will be disclosed in greater detail at the end of FY24.

Limit

10%

Limit

Corporate measure

Financial metrics

Direct operating costs as % of sales capacity

Improvement in underlying cash flow

Technology Solutions adjusted EBITDA

ORL adjusted EBITDA

Growth

International site utilisation

ORL OPW growth

Value of new ASRS deals signed

eNPS

People – diversity

Environment

ESG

Total

Weighting

Tim Steiner

Stephen Daintith

20%

15%

10%

15%

2.5%

100%

19%

24%

15.5%

12%

10.5%

3.5%

1.75%

8.5%

100%

1 Neill Abrams and Mark Richardson stepped down from the Board on 2 February 2024 and so we have not detailed their AIP measures for FY24.

182

183

Performance Share Plan
The FY24 award levels for each Executive Director, as a percentage of base salary, is as follows:

• CEO: 400% base award (600% with relative TSR multiplier, 1800% with enhanced multiplier for the FY24 award only)
• CFO: 350% base award (525% with relative TSR multiplier)

When determining the appropriate measures and targets for the FY24 PSP, the Committee was cognisant of the need to set
performance targets which are sufficiently stretching, meet shareholders’ expectations and are aligned with the Company’s
strategy and five-year plan.

Various potential measures were considered by the Committee and discussed in the shareholder consultation exercise; the
Committee agreed that the most appropriate performance conditions to use for the FY24 PSP base award are:

• Absolute improvement in adjusted EPS (pence per share) when comparing the FY26 outcome vs the baseline of reported

adjusted EPS in FY23; and

• Underlying cash flow pre-growth capital expenditure in FY26

Our targets have been carefully set in line with our long-term plan and in particular our aim to become cash flow positive by
FY26, such that we are generating sufficient cash flow to finance future growth capital expenditure.

These are set out in the table below.

Measure

Absolute improvement in adjusted EPS, FY26 vs FY23
(pence per share)

Underlying cash flow pre-growth capital expenditure
in FY26 (£m)

Weighting

Threshold (25% of
maximum vesting)

Maximum (100% of
maximum vesting)

50%

7 pence per share
improvement

21 pence per share
improvement

£65m

£240m

1. Targets are based on Ocado Retail being equity accounted for as a joint venture.
2. Adjusted EPS is defined as the adjusted earnings after tax attributable to owners divided by the weighted average number of shares in issue during the year.
3. Underlying cash flow pre-growth capital expenditure is defined as the movement in cash and cash equivalents before any investment in growth capital expenditure. This
includes capital expenditure in relation to installing MHE for a new CFC, installing incremental MHE to increase the number of live modules in a CFC or for new products,
replacement, advance purchases for future CFC construction and any preparatory material for new CFCs, revisits and retrofits. Underlying cash flow excludes the impact of
any adjusting (exceptional) items, transaction costs of any refinancing activities, any mergers and acquisitions activity and any foreign exchange movements.

Relative TSR multiplier
The relative TSR multiplier will be assessed based on Ocado’s relative Total Shareholder Return (“TSR”) against the FTSE 100
(excluding Investment trusts) over the three-year performance period, as follows:

• Up to and including upper quartile performance = 1 x base award outcome
• Upper decile performance or above = 1.5 x base award outcome
• Straight-line vesting in between these points.

The FTSE 100 was considered the most appropriate peer group, being the index in which Ocado sits. Further details are set out
on page 189.

Enhanced multiplier (FY24 award for CEO only)
Additionally, for the CEO’s FY24 PSP award only, an “enhanced multiplier” will operate which delivers a similar payout to what
the VCP would have delivered on the achievement of the same exceptional share price growth hurdle that tranche 1 would
have required in 2027. Specifically, if the share price hits £29.69 (which is the 2027 hurdle under tranche 1 of the VCP) in
March 2027, an enhanced multiplier of 4.5x of the base award (of up to 400% of salary, tested against the base performance
conditions) will apply. For the avoidance of doubt, if upper decile relative TSR is achieved but the share price at the end of the
performance period is below £29.69 then only the 1.5x relative TSR multiplier will apply – the enhanced multiplier only comes
into effect if the target share price is hit.

If the enhanced multiplier is triggered, vesting of the award will be in three equal tranches (in 2027, 2028 and 2029)
and holding periods will apply such that, in normal circumstances, no awards will be released prior to the fifth anniversary
of the grant.

The Committee will have overriding discretion to change formulaic outcomes of PSP awards if it does not believe that these
are reflective of overall performance. When assessing performance outcomes, the Committee will take into account holistic
performance across the period, noting Company and individual performance, wider economic conditions and shareholder
experience. Notably, taking into account shareholder feedback, we will assess whether the Company has achieved positive
underlying cashflow pre-growth capital expenditure by the end of FY26, whether measures have been achieved in a manner
compatible with the long-term sustainability of the business, as well as reviewing absolute and relative TSR performance, as
well as reviewing absolute and relative TSR, particularly where the outcome is below the upper quartile of the peer group. The
EPS and cash flow targets have been set on the basis of the current 5 year plan. Higher than planned growth rates may cause
either or both of these targets to be missed. In the event that such a circumstance combines with growth-driven share price
appreciation sufficient to trigger the application of the enhanced modifier, the Remuneration Committee may exercise
pragmatic discretion to ensure that perverse investment disincentives are avoided during the life of the schemes.
If such a situation arose, we would intend to consult on any such decision.

Chair of the Board and Non-Executive fees
The remuneration arrangements for the Non-Executive Directors (except the Chair of the Board) were reviewed by the
Executive Directors and the Chair of the Board in February 2024. From 1 April 2024, the basic fees for Non-Executive Directors,
the fee for chairing a Committee, the fee for the role of Senior Independent Director and the fee for being a member of the
Remuneration Committee or the Audit Committee will increase by 3.8%.

In February 2024, the Remuneration Committee reviewed the Chair of the Board’s fees and approved an increase of 3.8%
from 1 April 2024. In addition, the Chair of the Board is entitled to receive an expense allowance each year in respect
of office support costs, which will also increase by 3.8%.

Shareholder approval and votes at the AGM
The 2023 Directors’ Remuneration Report will be subject to a shareholder vote at the AGM on 29 April 2024.

The table below sets out the actual voting in respect of the resolutions regarding the Remuneration Report at the 2023 annual
general meeting and Remuneration Report and Policy at the 2022 annual general meeting.

Votes for

% for Votes against

% against

Total votes Votes withheld

2023 Annual General Meeting
Approve the 2022 Directors’
Remuneration Report

2022 Annual General Meeting
Approve the 2022 Directors’
Remuneration Policy

492,647,838

69.86 212,534,897

30.14 705,182,735

2,537,710

446,931,547

70.73 184,973,188

29.27 631,904,735

20,983

1. A withheld vote is not a vote in law and is not counted in the calculation of the proportion of votes cast for and against a resolution.

184

185

Directors’ Remuneration Policy
Introduction
Ocado is seeking shareholder approval for a new Directors’ Remuneration Policy (the “2024 Policy”) at the AGM. If approved,
it will apply to payments made from this date. The 2024 Policy is intended to apply for a period of three years from the AGM.
This section, from pages 186 to 203, forms the 2024 Directors’ Remuneration Policy to be voted on at the AGM.

The current Policy was approved by shareholders at the 2022 Annual General Meeting. The Remuneration Committee has
listened to the feedback received from shareholders both in previous years on matters related to remuneration and
governance, and also in respect of the extensive shareholder consultation carried out in advance of putting this 2024 Policy
to shareholders for approval.

Our remuneration principles, which we also aim to cascade throughout the business, underpin our 2024 Policy.
These principles are that our remuneration should:

• support the long-term success of the business and sustainable long-term shareholder value;
• be relevant and aligned to the business strategy and achievement of planned business goals;
• reflect and support the entrepreneurial and high-performance culture of the business;
• be compatible with the Group’s risk policies and systems;
• link above-market payouts only to outstanding results;
• ensure that performance-related pay constitutes a proportion of the overall package appropriate to each level of

the organisation;

• provide a balance between attracting, retaining and motivating the right calibre of candidates and supporting equal

opportunity and diversity of talent; and

• be clear and explainable to appropriate stakeholders.

Development of the 2024 Directors’ Remuneration Policy
Background and rationale for change
As we approach the end of the original VCP, for which the last measurement date is in March 2024, we have given very careful
consideration to whether the VCP remains motivational and retentive as it once was. The VCP aimed to focus management on
generating substantial and sustained total shareholder return over the period, and has been an effective tool at retaining and
motivating the senior management team to drive long-term sustainable growth in the business. However, the unprecedented
volatility we have seen in Ocado’s share price in recent history has served to undermine the impact of the VCP scheme to the
extent that it is no longer motivating or retentive to many of its participants.

Link with strategy and remuneration philosophy
Ocado has a long-standing remuneration philosophy that aims to align the interests of our senior management team directly
with those of our shareholders, and offer substantial comparative reward for transformational performance. This philosophy
has served us well for many years, as we have grown from a pioneering online grocery retailer to a global leader in technology
and ecommerce solutions. Our overall remuneration philosophy remains to offer substantial comparative reward for
transformational performance. To further enhance our alignment with this, we propose to rebalance the remuneration
structure such that the fixed and short-term portions of remuneration are reduced further below median, with the CEO salary
in particular towards market lower quartile and a new performance-based long-term incentive plan, the PSP, is introduced
which offers upper decile payout only for upper decile performance. The Committee carried out an extensive shareholder
consultation exercise with our largest shareholders and representative bodies to seek feedback on the proposed changes.

Lowering our AIP opportunities
It is currently the case that the fixed pay (salary, benefits and pension) for our Executive Directors is towards the lower quartile
of the market for the CEO and around median for the CFO. By the end of the three-year period covered by the 2024 Policy, we
propose to further align the structure to our philosophy by reducing the AIP opportunities from 275% of salary for our CEO and
250% of salary for our CFO to 200% of salary and 175% of salary respectively in FY26. This reduces the total target cash (i.e.
salary plus target AIP) of our Executive Directors to median (for the CFO) or below median (for the CEO) of the market.

Introducing a new PSP – a leveraged plan within the conventional construct
In addition to the AIP, we propose to introduce a PSP, with annual rolling grants and a three-year performance period, in which
all Executive Directors will participate. Under the PSP, there will be a “base” level of award with a maximum opportunity level
aligned with the upper quartile of the market and achievable only for stretching performance. For the CEO, this will be 400% of
salary and for the CFO 350% of salary.

In line with our philosophy and in order to retain a portion of the high leverage that the VCP offers, there will be a relative Total
Shareholder Return (“TSR”) multiplier operated of up to 1.5x the base award which is only attainable for achieving upper decile
TSR performance against the FTSE 100 (excluding investment trusts) over the performance period. For TSR performance up to
and including upper quartile, the relative TSR multiplier will be 1x (with straight-line calculations in between upper quartile and
upper decile). This ensures the Executives receive only above-market payouts for delivering exceptional returns to our
shareholders.

Enhanced multiplier – for the CEO’s FY24 award only
As explained in the Chair’s letter, the Committee remains very mindful of our CEO Tim Steiner’s unique position as a founder
and his longer-term focus and strategic vision, as it is this which the VCP was originally intended to reinforce. Whilst our initial
proposal was that Tim should remain as the sole participant in the VCP while also participating in the new PSP, we listened
carefully to shareholder feedback during the consultation and amended our proposal to accommodate it. Accordingly, no
Executive Director will partake in the VCP extension that was approved by shareholders in 2022, and we have incorporated the
potential upside of the VCP into the PSP, solely for the CEO and for the first cycle only.

We are proposing that, for the CEO’s FY24 PSP award only, there will be an enhanced multiplier that aims to deliver a similar
payout to what the VCP extension, which was approved by shareholders at our 2022 AGM, would have delivered on the
achievement of exceptional share price growth over the period. If the share price hits £29.69 in March 2027 (which is the 2027
hurdle under tranche 1 of the VCP), an enhanced multiplier of 4.5x (instead of 1.5x) the base award (of 400% of salary) will
apply. For the avoidance of doubt, if upper decile relative TSR is achieved but the share price at the end of the performance
period is below £29.69 then only the 1.5x relative TSR multiplier will apply – the enhanced multiplier only comes into effect if
the target share price is hit.

If the enhanced multiplier is triggered, vesting of the award will be in three equal tranches (in 2027, 2028 and 2029) and
holding periods will apply such that, in normal circumstances, no awards will be released prior to the fifth anniversary
of the grant.

Whilst continuing to drive truly exceptional share price growth in line with the VCP tranche 1 2027 hurdle, the new proposal has
a number of features which we believe are positive for shareholders:

• It proposes a single plan for all executives rather than two operating in parallel
• The amount that can be earned under the enhanced multiplier is contingent on achievement under the base award (just as
it is for the relative TSR multiplier) – this ensures strong underlying financial performance is required over the performance
period before any award can pay out.

• Beyond the point at which the share price target for the enhanced multiplier is achieved (£29.69), this new proposal delivers
a lower payout. The ability to “bank” awards in years 2025 and 2026 and any additional payout for achieving the tranche 2
or 3 hurdles are removed and, unlike the VCP, the number of shares vesting overall is capped by the award size.

We believe that what we have proposed represents a significant move towards the type of structure that many of our
shareholders have indicated they would prefer, while recognising the unique circumstances of Ocado and its founder.

Approach during interim transition period
We propose to grant the first award under the new PSP in FY24, meaning this will vest subject to performance conditions
in FY27. The Committee does not wish to penalise management by reducing their overall payout opportunity during this
interim period as a result of the policy change prior to the PSP vesting and therefore we propose to maintain the current AIP
opportunities for our Executive Directors for FY24 and FY25. For the year prior to the first PSP award being due to vest (FY26),
the AIP opportunities will be lowered as described above.

186

187

Other views obtained during the consultation
As part of the consultation, in addition to the feedback described above and in the Chair’s letter, the following feedback was
received:

Key proposed
change

Overall
approach to
move to a PSP

Rationale, shareholder feedback and Committee response

The significant majority of shareholders consulted understood the rationale for the proposals and the
introduction of a scheme that is properly motivational and retentive in the context of a business which
has matured since the VCP was first conceived, but which very much retains its entrepreneurial and
growth-focused DNA.

A small number of shareholders raised questions with regard to the remuneration philosophy – some stated
a preference for a different philosophy with a move towards higher base pay, with one shareholder stating
that the proposed structure in general was too much of a deviation from the VCP. The Committee considered
this feedback carefully, in particular the appropriateness of the philosophy at this time.

The VCP was well suited to the business as it stood in 2019 – led mostly by a team who were founders and
with the business seeking to open up international markets. At that stage, the range of options as to how the
business might scale up was so broad that share price was the only reliable measure of long-term success.
Now, in 2024, the business has moved forward significantly and the challenges are different. We are now
better able to define the longer-term metrics of success; moreover, experience over the last five years is that
tying rewards to a volatile share price is not motivating for the team.

Our challenge was therefore to develop a proposal which reflects the business’s long-term priorities,
maintains a clear link to share price growth (but not as the exclusive driver of success), retains Ocado’s
philosophy of low fixed pay balanced with higher upside from variable pay, and allows a flexible approach
which is more suited to a growing team.

We believe that improving performance under the measures we have selected to drive the plan – underlying
cash flow pre-growth capital expenditure and adjusted earnings per share – are key to our success, and the
addition of a stretching TSR multiplier reinforces the focus on the end outcome of value growth.

The Committee therefore maintains that the proposal of implementing a PSP remains appropriate.

Key proposed
change

Rationale, shareholder feedback and Committee response

Peer group
for assessing
relative TSR

In our original proposal, the peer group for the relative TSR multiplier on the PSP award, where up to 1.5x the
base award is attainable for achieving between upper quartile and upper decile TSR performance was
proposed as the FTSE 100 (excluding investment trusts) (“FTSE 100xIT”).

Some shareholders raised questions with regard to the choice of peer group under this measure, with some
asking us to consider whether a sector peer group might be more appropriate. We originally selected the
FTSE 100xIT since we believed that any TSR test should contain a hurdle, reflecting the opportunity cost of
invested capital, before rewards are generated (the current VCP has a simple 10% per annum hurdle) and the
FTSE 100xIT provides a reliable benchmark and is the index of which we are part.

In response to shareholder feedback, we have carried out a detailed analysis to establish whether there is a
robust alternative to a general market index.

The Company is cognisant that Ocado has relatively few close peers globally, and where they exist they are
mostly traded on foreign exchanges, which brings its own challenges. That said, one shareholder proposed a
list of nine companies for this purpose, which was used as a starting point for further analysis. We also looked
for possible global peers in sectors that were directly or partly related to our business (including grocers and
online non-grocers, retail automation companies, other technology companies, food delivery companies and
logistics companies). We analysed the extent to which their share price behaved similarly to ours (looking at
historical volatility and correlation analysis) to test whether they would be suitable as peers for Ocado in
order to get to a peer group that would isolate true outperformance of the market.

Whilst we found some 10 – 12 companies that would serve as good peers, we concluded that such a group
would be too small to provide a robust basis for comparison (especially given our focus on upper decile
measurement for the maximum relative TSR multiplier), particularly if there were any consolidation over the
three-year period.

Ultimately the Committee determined that there was unlikely to be a perfect group against which to measure
Ocado’s TSR performance, and therefore that the FTSE 100 remains the best option, and is a fair and stable
“evergreen” benchmark to use, reflecting the index in which Ocado sits.

That said, it was agreed that the peer group will remain under review for future awards.

Some shareholders sought clarity on the exact definition of the measures that would determine outcomes
under the PSP and how they would be treated under various scenarios. It was also mentioned by some
shareholders the need to ensure that targets are appropriate and meaningful. Full details of targets and
measures are on page 184.

In response to shareholder feedback, we have specified some of the factors that the Committee will consider
when determining the appropriateness of vesting outcomes.

For the FY24 awards, these include consideration with regard to whether the Company has achieved positive
underlying cash flow (pre-growth capex) by the end of FY26 and TSR performance, both absolute and
relative, particularly where the outcome is below the upper quartile of the group.

Definition
of PSP
measures
and approach
to target
setting

188

189

Alignment of proposed 2024 Policy with the requirements under the
UK Corporate Governance Code 2018
Our remuneration principles are wholly aligned with the factors of clarity, simplicity, risk, predictability, proportionality and
alignment to culture (Provision 40 of the 2018 Code), as set out in the table below. The Remuneration Committee ensured that
it took all of these elements into account when establishing the 2024 Policy, as well as its application to Executive Directors
during the period.

2018 Code provision

Commentary

Clarity: remuneration arrangements should be transparent
and promote effective engagement with shareholders and
the workforce.

• Under the AIP, the Company is able to set meaningful
and robust one-year annual performance targets,
which can be fully disclosed retrospectively.

Simplicity: remuneration structures should avoid
complexity and their rationale and operation should
be easy to understand.

Risk: remuneration arrangements should ensure reputational
and other risks from excessive rewards, and behavioural
risks that can arise from target-based incentive plans,
are identified and mitigated.

Predictability: the range of possible values of rewards to
individual Directors and any other limits or discretions
should be identified and explained at the time of approving
the Policy.

Proportionality: the link between individual awards, the
delivery of strategy and the long-term performance of the
Company should be clear. Outcomes should not reward
poor performance.

Alignment to culture: incentive schemes should drive
behaviours consistent with company purpose, values
and strategy.

• Performance conditions under both the AIP and PSP are

based on the core strategic objectives, ensuring a clear link
to all stakeholders between delivery of strategy and reward
provided to management.

• Structures are market aligned and designed to be easily
understood by internal and external stakeholders. The
performance conditions for the AIP and PSP are based on
the Company’s strategic objectives.

• The 2024 Policy includes defined limits on the maximum

awards which can be earned under newly granted awards.
• There is an ability to override formulaic outcomes produced
by the performance conditions where in the Remuneration
Committee’s opinion they do not reflect the true
performance of the business over the period, individual
performance or where the outcome will not deliver the
intentions of the 2024 Policy.

• At least 50% of bonus earned under the AIP must be

deferred into shares for at least three years; and vested
PSP awards must be held for at least two years.

• In addition, malus and clawback provisions are contained

in all variable incentive plans.

• The 2024 Policy sets out clearly the range of values, limits
and discretions in respect of management remuneration.

• Incentives are linked to clearly defined performance

measures and targets, which are aligned with Company
strategy and KPIs.

• Incentives are clearly linked to performance measures.
• Significant proportions of incentives are delivered in
shares, with long-term vesting and holding periods
ensuring payouts are inherently linked to long-term
Company performance.

• The Remuneration Committee has the ability to override
formulaic outcomes if it believes that they do not reflect
true performance of the business over the period, individual
performance or where the outcome will not deliver the
intentions of the 2024 Policy.

• The AIP and PSP are linked to performance conditions that

are intended to drive behaviours consistent with the
Company’s purpose and values which are focused on the
long-term future of the business.

• The Remuneration Committee will consider individual
performance and behaviours, as well as Company
performance and achievement of strategy, when
determining final outcomes under the incentive plans.

2024 Directors’ Remuneration Policy table: elements of Executive Director remuneration
The following table sets out the core elements of remuneration for the Executive Directors.

Purpose and
link to strategy

Fixed pay
Base salary
Minimum level of pay
to attract and retain the right
calibre of senior executive
required to support the
long-term interests of
the business.

How it operates

Paid monthly in cash.
Reviewed annually, or when
there is a change in position
or responsibility, by the
Remuneration Committee,
with any changes normally
becoming effective in April
each year.
The review takes into
account a number of
factors including:
• the Group’s annual review

process;

• business performance;
• total remuneration;
• appropriate market data
for comparable roles for
companies of equivalent
size and complexity
in similar sectors and
geographical locations
to the Company; and

• an individual’s

contribution to the Group.

Changes from current Policy
None.

Performance
conditions

Maximum
opportunity

Recovery or
withholding

Not performance linked.

No contractual provisions
for malus or clawback.

To avoid setting the
expectations of Executive
Directors and other
employees, no maximum
salary is set under
the Policy.
Normally, maximum salary
increases for Executive
Directors will be within the
normal percentage range
and guidelines that are
applied to the UK-based
monthly paid employees of
the Company in that year.
Where appropriate
and necessary, larger
increases may be
awarded in exceptional
circumstances; for example,
if a role has increased
significantly in scope
or complexity.
Larger increases may also
be considered appropriate
and necessary to bring
a recently appointed
executive in line with
the market and the other
executives in the Company
where their salary at
appointment has been
positioned below
the market.

190

191

Purpose and
link to strategy

Benefits
To attract and retain the
right calibre of senior
executive required to
support the long-term
interests of the business.

Changes from current Policy
None.

Pension
To attract and retain the right
calibre of senior executive
required to support the
long-term interests of
the business.

Changes from current Policy
None.

How it operates

Any benefits allowances will
be paid in cash monthly and
will not form part of
pensionable salary.
The Company provides a
range of benefits which are
aligned with those provided
to monthly paid employees
under the Company’s
flexible benefits policy.
Benefits include private
medical insurance and
health assessments, life
assurance, travel insurance,
income protection, travel/
car allowance, free parking,
access to financial and
legal advice, staff product
discount, subsidised staff
restaurants and other
discounts.
Any business travel costs
will be paid by the Company.
Additional benefits or
payments in lieu of benefits
may also be provided in
certain circumstances, if
required for business needs.
The Company provides
Directors’ and officers’
liability insurance and may
provide an indemnity to
the fullest extent permitted
by the Companies Act 2006.

Contributions, allowances
and pension choices for the
Executive Directors are on
the same terms as for other
employees.
Executive Directors can
choose to participate in the
defined contribution Group
personal pension scheme
or an occupational money
purchase scheme.
Where lifetime or annual
pension allowances have
been met, the balance of
employer contributions may
be paid as a cash allowance
or into a personal pension
arrangement.

Performance
conditions

Maximum
opportunity

Recovery or
withholding

Not performance linked.

No contractual provisions
for malus or clawback.

Benefits for Executive
Directors are set at a level
which the Remuneration
Committee considers to be
appropriate against market
data for comparable roles
for companies of equivalent
size and complexity
in similar sectors and
geographical locations
to the Company.
The maximum value of the
Directors’ and officers’
liability insurance and the
Company’s indemnity is the
cost at the relevant time.

Purpose and
link to strategy

Variable pay
Annual Incentive Plan
(“AIP”)
To provide a direct link
between measurable and
predictable annual Company
and/or role specific
performance and reward.
To incentivise the
achievement of outstanding
results aligned to the
business strategy.
To support long-term
shareholder alignment
through deferral into shares
and holding periods.

How it operates

Measures and targets are
set annually and bonus
payments are determined
by the Remuneration
Committee following
the year end based on
performance against
the targets.
Up to 50% of any bonus
earned will be paid in cash
and at least 50% will be
deferred into shares.
The main terms of the
deferred shares are:
• minimum deferral period
of three years from the
date of grant; and

• the Executive Director’s
continued employment
to the end of the deferral
period unless they
are a “good leaver”
(see section titled Loss of
Service or Termination
Policy below). Read more
on pages 199 to 200.

The Remuneration
Committee may award
dividend equivalents
on deferred shares to
Executive Directors to the
extent that they vest.

Performance
conditions

Maximum
opportunity

Recovery or
withholding

The maximum bonus level
will be:
• FY24 and FY25: 275%

of salary

• FY26: 200% of salary

The maximum bonus
payable for the relevant
financial year for each
Executive Director is
described in the Annual
Report on Remuneration.

Malus and clawback
provisions will apply
to the AIP.
Malus will apply to the cash
payments up to the date of
payment of a cash bonus.
Malus will apply to the
deferred share award for
three years (or longer, if the
Remuneration Committee
determines) from the date of
grant of a deferred award.
Clawback will apply to cash
payments for three years (or
longer, if the Remuneration
Committee determines)
from the date of payment.
Clawback will apply to the
deferred share award for
two years from the date
of vesting.
Read more on page 198.

The Remuneration
Committee sets annual
targets that are closely
aligned to the delivery of the
Group’s strategic objectives
for that year. Targets are set
taking into account a range
of factors, including internal
forecasts and plans and
external reference points.
These will be a mix of
financial targets, and
operational and
strategic objectives.
For threshold performance,
no more than 25% of the
maximum opportunity will
be earned. For stretch
performance, the maximum
opportunity will be earned.
Details of the performance
conditions, targets and their
level of satisfaction for the
year being reported on will
be set out in the Annual
Report on Remuneration.
The Company will set out
the nature of the targets
and their weighting in
the section titled
Implementation of Policy
for the upcoming year.

No contractual provisions
for malus or clawback.

Changes from current Policy
By the end of the three-year period covered by the 2024 Policy, we propose to further align the structure to our philosophy by reducing the AIP
opportunities, therefore the maximum bonus level will be 275% of salary for FY24 and FY25 and will reduce to 200% of salary for FY26.
It will remain the case that up to 50% of any bonus earned will be paid in cash and at least 50% will be deferred into shares. We have removed the
clause that states up to a maximum of 100% of salary will be paid in cash. The two-year holding period will no longer apply to the AIP but will apply
to the PSP (see below), in line with the market-standard approach.

Not performance linked.

Contributions to the defined
contribution pension
scheme for the Executive
Directors will normally be in
line with the other scheme
participants.
Pension contributions for
UK-based Executive
Directors will not exceed 7%
of annual base salary, in line
with the other scheme
participants.
For Executive Directors
outside the UK, provision for
an executive pension will be
set taking into account local
market rates.

192

193

Performance Share Plan
(“PSP”)
To attract, retain and
incentivise senior executives
to deliver the Company’s
business strategy and
sustainable value for
shareholders.

A PSP will operate under
which the Committee may
make an annual award of
shares to each Executive
Director in the form of
nil-cost options.
PSP awards will have a
vesting period of three
years followed by a holding
period of two years. During
the holding period, vested
awards cannot be sold
except for tax purposes
on exercise.
The Remuneration
Committee may award
dividend equivalents on
deferred shares to
Executive Directors to the
extent that they vest.
The PSP awards will consist
of a “base” award, with a
relative TSR multiplier on
the vesting outcome of the
base award.

The performance measures,
weightings and targets
will be set on an annual
basis considering the
Company’s long-term
business strategy.
All targets will be measured
over a three-year
performance period.
Where possible, the
performance measures,
weightings and targets for
the following year’s LTIP
award will be disclosed
prospectively in the
Implementation of Policy
section of the annual report
on remuneration.
The base award will
be assessed based on
stretching metrics.
Performance measures and
targets will be aligned to
strategy and set on grant,
with at least 70% of the
base award linked to
stretching financial metrics.

Changes from current Policy
New Performance Share Plan will be introduced from FY24.

Malus and clawback
provisions will apply to
the PSP.
Malus will apply up to the
vesting date.
Clawback will apply during
the two-year holding period.

The maximum base award
level for Executive Directors
is 400% of base salary.
A relative TSR multiplier will
operate such that the
maximum opportunity is
1.5x the base award, i.e.
600% of base salary. For the
CEO’s FY24 PSP award only,
if the share price hits
£29.69 in March 2027, an
enhanced multiplier of 4.5x
the base award (of 400% of
salary) will apply, meaning a
maximum of 1800% of
salary.
25% of the base award
will vest for threshold
performance, increasing
to 100% of the base award
for maximum performance.
The relative TSR multiplier
will be based on relative
TSR, with maximum payout
linked to upper decile
performance against the
peer group.
If the enhanced multiplier is
triggered, vesting of the
award will be in three equal
tranches (in 2027, 2028 and
2029) and holding periods
will apply such that, in
normal circumstances, no
awards will be released
prior to the fifth anniversary
of the grant.
The Committee will have
overriding discretion to
change formulaic outcomes
of PSP awards (both
downwards and upwards)
if they are out of line with
the underlying performance
of the Company.

All-Employee Share Plans
The table below summarises the all-employee share plans operated by the Group, and which the Executive Directors are able
to participate in.

Performance
conditions

Maximum
opportunity

Recovery or
withholding

Not performance linked.

Options are usually granted
at a discount to the market
price at the time of grant up
to the maximum discount
under HMRC limits.
Employees are limited to
saving a maximum amount
under HMRC limits.

The scheme rules do not
provide for malus or
clawback provisions in
line with the Regulations
governing the operation
of these schemes.

Not performance linked.

Maximum opportunities
for awards and purchases
are kept in line with
HMRC limits.

The scheme rules do not
provide for malus or
clawback provisions in
line with the Regulations
governing the operation
of these schemes.

Purpose and
link to strategy

Sharesave
To provide all employees,
including Executive
Directors, the opportunity to
voluntarily invest in Company
shares and be aligned with
the interests of shareholders.

Changes from current Policy
None.

Share Incentive Plan (“SIP”)
To provide all employees,
including Executive
Directors, the opportunity
to receive and invest in
Company shares and be
aligned with the interests
of shareholders.

Changes from current Policy
None.

How it operates

All employees, including
Executive Directors, are
eligible to participate in
this all-employee tax
advantaged share scheme.
The Company grants
options over shares in the
Company to employees.
To obtain an option an
eligible individual must
agree to save a fixed
monthly amount for three
or five years up to the
maximum monthly amount
under HMRC limits.
The amount saved will
determine the number
of shares over which the
option is granted. Options
may be exercised in a
six-month period at the
maturity of a three-
or five-year savings
period, subject to
continued service.

All employees are eligible
to participate in this all
employee share scheme.
The SIP allows:
• the Company to grant

free shares to all
employees allocated on
an equal basis;

• all employees to buy
partnership shares
monthly from their gross
salary; and

• that the Company may

offer matching shares to
employees who purchase
partnership shares.

Dividend shares are also
covered by the SIP
arrangements.

194

195

Non-Executive Directors
The following table sets out the key elements of remuneration for the Non-Executive Directors.

Performance
conditions

Maximum
opportunity

Recovery or
withholding

Not performance linked.

No contractual provisions
for malus or clawback.

The maximum aggregate
amount of basic fees
payable to all Directors shall
not exceed the £1m limit set
in the Company’s Articles
of Association.
Normally, any increases
will be within the normal
percentage range and
guidelines that are applied
to the UK-based monthly
paid employees of the
Company in that year.

Purpose and
link to strategy

Chair fee
To attract and retain
an individual with the
appropriate degree of
expertise and experience.

Changes from current Policy
None.

Non-Executive Director fee
To attract and retain expert
people with the appropriate
degree of expertise
and experience.

Changes from current Policy
None.

How it operates

The fee is paid monthly
in cash, shares or a mix
of cash and shares,
as determined by the
Remuneration Committee.
Reviewed annually by the
Remuneration Committee,
with any changes normally
becoming effective in April
each year.
The review takes into
account a number of factors
including: the Group’s
annual review process;
business performance ;and
appropriate market data for
comparable roles for
companies of equivalent
size and complexity in
similar sectors and
geographical locations
to the Company.

The fee is paid monthly
in cash, shares or a mix
of cash and shares,
as determined by the
Remuneration Committee.
Fee structure includes an
annual base fee for a
Non-Executive Director and
may include additional fees
for being the Senior
Independent Director, a
Board Committee Chair, a
Board Committee member
or other additional
responsibility.
Reviewed annually by the
Executive Directors and the
Chair of the Board, with any
changes normally becoming
effective in April each year.
The review takes into
account a number of factors
including: the Group’s
annual review process;
business performance; and
appropriate market data for
comparable roles for
companies of equivalent
size and complexity in
similar sectors and
geographical locations
to the Company.

No contractual provisions
for malus or clawback.

Changes from current Policy
None.

Not performance linked.

Purpose and
link to strategy

Travel and expenses
To support the Directors in
the fulfilment of their duties.

Changes from current Policy
None.

Other arrangements

Performance
conditions

Maximum
opportunity

Recovery or
withholding

Not performance linked.

The maximum
reimbursement is
expenses reasonably
incurred, together
with any taxes thereon.

No contractual provisions
for malus or clawback.

Not applicable.

The maximum staff product
discount is that offered to
any Group employees.
The maximum value of the
Directors’ and officers’
liability insurance and the
Company’s indemnity is the
cost at the relevant time.

How it operates

The Company may
reimburse expenses and
travel costs reasonably
incurred by the Chair
of the Board and the
Non-Executive Directors in
fulfilment of the Company’s
business, together with any
taxes thereon.

The Chair of the Board and
the Non-Executive
Directors are not usually
eligible for annual bonus,
share incentive schemes,
pensions or other benefits,
with the exception of the
staff product discount and
free delivery offered to
all employees.
The Company provides
the Chair of the Board and
the Non-Executive
Directors with Directors’
and officers’ liability
insurance and may provide
an indemnity to the fullest
extent permitted by the
Companies Act 2006.

Notes to the Policy tables
Other than as described in the 2024 Policy table, there are no components of the Executive Directors’ remuneration that are
not subject to performance conditions.

While the Group has a policy of remunerating its employees through share scheme participation, it does not have formal
remuneration arrangements for all employees akin to all of the components of Directors’ remuneration.

The Company may make any remuneration payment or payment for loss of office (including exercising any discretion in
connection with such payments) notwithstanding that they are not in line with the Policy table set out above if the terms of
that payment were agreed (i) before the Company’s first shareholder-approved directors’ remuneration policy came into effect;
(ii) before the 2024 Policy came into effect provided that those terms were in line with the directors’ remuneration policy in
force at the time; or (iii) at a time when the individual was not a Director of the Company and the Remuneration Committee
determines that the payment was not in consideration for the individual becoming a Director. For these purposes, payments
include awards of variable remuneration and the terms of such a payment are “agreed” when the award is granted.

196

197

Malus and clawback provisions
The AIP and PSP scheme rules contain malus and/or clawback provisions that allow the Remuneration Committee to reduce
or retrieve a payment or an award.

Loss of Service or Termination Policy
When considering compensation for loss of office, the Remuneration Committee will always seek to minimise the cost to the
Company while applying the following philosophy:

Remuneration element Treatment on cessation of employment

General

Malus is the adjustment of the AIP payments, unvested AIP deferred shares or unvested PSP awards because of the
occurrence of one or more circumstances listed below. The adjustment may result in the value being reduced to nil. Clawback
is the recovery of cash payments made under the AIP, deferred AIP and PSP awards as a result of the occurrence of one or
more circumstances listed below. Clawback may apply to all or part of an Executive Director’s payment under the AIP and PSP
award and may be effected, among other means, by requiring the transfer of shares, payment of cash or reduction of awards
or bonuses.

The Remuneration Committee may apply malus/clawback when there are exceptional circumstances. Such exceptional
circumstances include (without limitation):

• a material mis-statement in the published results of the Group or one of its members;
• an error in assessing any applicable performance condition or target and/or the number of shares subject to an award;
• the assessment of any applicable performance condition or target and/or the number of shares subject to an award being

based on inaccurate or misleading information;

• misconduct on the part of the Executive Director concerned;
• where, as a result of an appropriate review of accountability, the Remuneration Committee determines that the Executive
Director has caused wholly or in part a material loss for the Group as a result of (i) reckless, negligent or wilful actions
or omissions or (ii) inappropriate values or behaviour;

• the Company or entities representing a material proportion of the Group become insolvent or otherwise suffer a corporate

failure; and

• a Group member being censured by a regulatory body or suffering, in the Remuneration Committee’s opinion, a significant

detrimental impact on its reputation.

AIP – Cash awards

All seven triggers are applicable to the AIP and PSP. The following table summarises the application of malus and clawback
in respect of the incentive plans.

Malus

Clawback

Annual Incentive Plan (Cash)

Annual Incentive Plan (Deferred
shares)

Up to the date of payment of a
cash bonus.

Three years from the grant of a
deferred award.

Three years from the date of payment
of a bonus.

Two years following the vesting
of an award.

Performance Share Plan

Up to the vesting date.

During the two-year holding period.

AIP – Deferred share
awards

Each of the Executive Directors is employed pursuant to a service contract with Ocado Central Services Limited.
An Executive Directors’ employment may be terminated by the Company giving to the Executive Director not less than 12
months’ notice or by the Executive Director giving to the Company not less than six or 12 months’ notice, dependent on the
Director’s service contract. If an Executive Director’s service contract is terminated without cause, Ocado Central Services
Limited can request that the Executive Director work their notice period, take a period of garden leave or pay an amount in
lieu of notice equal to 1x their basic salary, benefits and pension for the remainder of their notice period.
The Company’s remuneration principles provide that any payments should be reduced in certain circumstances where the
Executive Director’s loss has been mitigated, for example where they move to other employment.
If employment is terminated by the Company, the Remuneration Committee retains a discretion to settle any other amounts
reasonably payable to the Executive Director including but not limited to:
• legal fees incurred by the Executive Director in connection with the termination of employment and obtaining independent

legal advice on a settlement or compromise agreement; and

• outplacement and relocation costs for returning the departing Executive Director and his family.

Other than described above, there are no relevant contractual provisions that are, or are proposed to be, contained in any
Executive Director service contract that could give rise to remuneration payments or payments for loss of office, but which
are not disclosed elsewhere in the 2024 Policy.
The Remuneration Committee generally has discretion to determine the treatment of a leaver, but will be conscious of the
remuneration principle that it should not reward poor performance or behaviour.
In addition to the discretion listed below, in each case the Remuneration Committee has the discretion to determine that an
Executive Director is a good leaver (see Note at the bottom of the table). It is the Remuneration Committee’s intention to use
this discretion only in circumstances where appropriate, which will be explained to shareholders.

Good leaver

Bad leaver

Discretion

The Executive Director service contracts
do not oblige the Company to pay a
bonus if the Executive Director is under
notice of termination.
However, under the rules of the AIP, the
Executive Director may receive a bonus
that the Remuneration Committee
determines would otherwise have been
payable or granted to them under the
rules reduced pro-rata reflecting the
proportion of the year that has elapsed
to the date of cessation.
The award will normally be paid at the
usual payment date and may be made
in such proportions of cash and shares
as the Remuneration Committee
may determine.
In the event of death, the award will
be determined as soon as reasonably
practicable after the date of death
and will, unless the Remuneration
Committee determines otherwise,
be satisfied as a cash payment
as soon as reasonably practicable.

The Executive Director will normally
receive the award at the usual vesting
date on the same timetable as if they
had not left, subject to Remuneration
Committee discretion.
In the event of death, any outstanding
deferred shares will vest and be
released from any holding periods as
soon as reasonably practicable after the
date of death.

No payment of cash bonus for that year. The Remuneration Committee has the
following elements of discretion for a
good leaver:
• Determine that an award be made.
• Determine whether the awards
should be reduced pro-rata.

• Determine the timing of the payment.

Lapse of any unvested deferred share
awards on the date the Executive
Director ceases to be an employee.

The Remuneration Committee has the
following elements of discretion for a
good leaver:
• Determine that the individual is a

good leaver.

• Determine the timing of the payment.

198

199

Remuneration element Treatment on cessation of employment

PSP

Pro-rated to time and performance for
each award.
Pro-rating will normally be based on the
number of whole months served up to
the date of cessation over the vesting
period
Awards vest at the original vesting date.

Lapse of any unvested awards.

The Remuneration Committee has
the following elements of discretion for
a good leaver:
• Not pro-rate awards.
• Measure performance to the end of
performance period or at the date of
cessation.

• Allow awards to vest at date

of cessation or at original vesting
date.

• Determine whether the holding period

should apply.

All-employee share
plans

Leavers will be treated as set out within the scheme rules.

A good leaver reason is defined as cessation in the following circumstances:
1. a transfer of the undertaking, or part of the undertaking, in which the Executive Director works to a person which is neither under the control of the sale of the Executive

Director’s employing company or business out of the Group.

2. death, ill health, injury or disability.
3. the employing company ceasing to be a Group company.
4. any other reason determined at the discretion of the Remuneration Committee.

Cessation of employment in circumstances other than those set out above is normally deemed a bad leaver reason, unless the Remuneration Committee determines otherwise.

Change of control
The incentive schemes contain change of control provisions, as set out in the relevant scheme rules. These are summarised
in the table below. Executive Director service contracts do not contain any specific provisions relating to a change of control
of the business.

If other corporate events occur such as a winding-up of the Company, demerger, special dividend or other event which,
in the Remuneration Committee’s opinion, may materially affect the value of shares, and the Remuneration Committee
determines it would not be appropriate or practicable to adjust awards, the Remuneration Committee may determine
that awards will vest (and be released from any holding periods) on the same basis as for a change of control.

Name of
incentive plan

AIP – Cash awards

AIP – Deferred
share awards

PSP

Change of control

Discretion

Pro-rated for time and performance to the date
of the change of control.

The Remuneration Committee has discretion to determine otherwise.

Subsisting deferred share awards will vest early
on a change of control, and any awards subject
to a holding period will be released.

The Remuneration Committee has discretion to not release the award early
and instead roll the award into an equivalent award in the acquiring
company.

Pro-rated for time and performance to the date
of the change of control.

The Remuneration Committee has the discretion to determine,
in exceptional circumstances, whether to pro-rate the award including for
time served as an employee. In the event of an internal corporate
reorganisation, the Committee may decide to replace unvested awards with
equivalent new awards over shares in the acquiring company.

Recruitment Policy
The Remuneration Committee will seek to align the remuneration package of a newly appointed Executive Director with
the Directors’ Remuneration Policy that is in force at the time of appointment. However, the Committee retains the discretion
to include any other remuneration component or award in the remuneration package which it considers to be appropriate.

In determining the remuneration arrangements for a new Executive Director, the Remuneration Committee will take into
account all relevant factors including (but not limited to) the specific circumstances, the calibre of the individual, the market
practice for the candidate’s location, the nature of the role they are being recruited to fulfil and any relevant market factors,
including any competing offers the candidate may be considering. The Remuneration Committee is at all times conscious
of the need to pay no more than is necessary.

Where promotion to an Executive Director role is from within the Company, prevailing elements of the remuneration package
for an existing employee would be honoured and form part of the ongoing remuneration of the person concerned, provided
such element (if not otherwise within the terms of this 2024 Policy) was not made in contemplation of such person becoming
an Executive Director.

The Company’s detailed policy when setting remuneration for the appointment of new Executive Directors is summarised
in the table below:

Remuneration element

Recruitment Policy

Salary, benefits and
pension

AIP

PSP

“Buyout” of incentives
forfeited on cessation
of employment

Relocation Policy

Salary, benefits and pension will be set in line with the proposed Policy for existing Executive Directors.

Maximum annual participation will be set in line with the proposed Policy.

Maximum annual participation will be set in line with the proposed Policy at 400% of salary, with an additional relative
TSR multiplier such that the maximum opportunity is 1.5x the base award i.e. 600% of base salary.

To facilitate recruitment, the Remuneration Committee may, to the extent permitted by relevant plan rules or Listing
Rules, make a one-off award to “buy out” incentives or any other compensation arrangements forfeited by the
appointee on leaving a previous employer.
In doing so the Remuneration Committee will ensure that any such awards offered should be on a comparable basis,
taking into account all relevant factors including:
• any performance conditions;
• the likelihood of those conditions being met;
• the proportion of the vesting or performance period remaining; and
• the form of the award.

In determining whether it is appropriate to use such judgement, the Remuneration Committee will ensure that any
awards made are in the best interests of both the Company and its shareholders.

In instances where the new Executive Director is required to relocate or spend significant time away from their normal
residence, the Company may provide one-off compensation to reflect the cost of relocation for the Executive Director.
However, these payments must reflect actual financial loss or cost of moving the Executive Director, their family or
assets, and the market practice in the geographical location to which the Executive Director is moving to or from.
The Company may provide relocation costs by funding services or a cash payment or a combination of both.
It should be noted that the maximum period during which relocation payments shall be made will not exceed two years
from appointment.

200

201

Recruitment of Non-Executive Directors
The remuneration package for newly appointed Non-Executive Directors will be in line with the structure set out in the
Remuneration Policy table for Non-Executive Directors.

Illustration of the proposed Directors’ Remuneration Policy
The charts below provide estimates of the potential future reward opportunity for each of the Executive Directors based on the
proposed Policy.

Service contracts
Executive Directors’ service contracts
Each of the Executive Directors has a service contract with the Group. The principal terms of these contracts are as follows:

Executive Director

Position

Tim Steiner

Chief Executive Officer

Stephen Daintith

Chief Financial Officer

Effective date of
contract

Notice period
from Company

Notice period
from Director

23 June 2010

22 March 2021

12 months

6 months

12 months

The service contracts for Executive Directors have no fixed duration. The contracts provide for payment in lieu of notice of
1x basic salary only (and do not include other fixed elements of pay, which are permitted by the current Policy). There are no
further obligations which give rise to a remuneration or loss of office payment other than those set out in the current Policy.

Non-Executive Directors’ letters of appointment
The Chair of the Board and the Non-Executive Directors were appointed by letter of appointment for an initial period of
three years, subject to annual reappointment at the Annual General Meeting and usually for a maximum of nine years.
Copies of the letters of appointment and the service contracts of the Directors are available for inspection at the Company’s
registered office.

Director

Date of original appointment

Date of reappointment

Notice period Expiry of nine-year term

Maximum
(with 50% share price growth)

Maximum

On-target

12%

19%

17%

22%

20%

61%

74%

66%

£4,840

£7,479

£9,953

r
e
n
e
t
S
m
T

Minimum

100%

£882

Maximum
(with 50% share price growth)

Maximum

10%

13%

16%

22%

74%

£6,572

65%

£4,959

On-target

20%

60%

£3,239

Minimum

100%

£658

h
t
i
t
n
a
D
n
e
h
p
e
t
S

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Fixed pay

Annual bonus

PSP

Assumptions used in determining the level of payout under given scenarios are as follows:

Element

Minimum

On-target

Maximum

Maximum with LTIP share price
growth of 50% over three years

Base salary as at 1 April 2024

Fixed element

Pension of 7% of salary

6 months

January 2030

Benefits in line with value in year to 3 December 2023

Rick Haythornthwaite

1 January 2021

Andrew Harrison

1 March 2016

Emma Lloyd

Jörn Rausing

Julie Southern

1 December 2016

13 March 2003

1 September 2018

Nadia Shouraboura

1 September 2021

Julia M. Brown

Rachel Osborne

1 January 2023

1 September 2023

2 May 2023

N/A

1 month

March 2025

December 2025

N/A

September 2027

September 2030

January 2032

September 2032

Remuneration Committee discretion and judgement
The Remuneration Committee has formulated the proposed Policy to provide operational flexibility over Director remuneration
for the next three years over which the proposed Policy is intended to operate. While the proposed Policy sets the boundaries
for the remuneration arrangements, it also allows the Remuneration Committee to exercise some discretion in specific
circumstances relating to particular components of remuneration. The Committee may not use any discretion outside the 2024
Policy without separate shareholder approval.

The Remuneration Committee operates the share schemes according to their respective rules and in accordance with the
Listing Rules and other rules and regulations, where relevant. The Committee retains discretion in several areas regarding
the operation and administration of these plans, including those listed in the table below.

Area of discretion

The participants

The size of an award (up to a predetermined maximum)

The determination of vesting, holding periods or payment

Discretion required when dealing with a change of control or restructuring of the Group including whether awards should
be time pro-rated

Determination of the treatment of leavers based on the rules of the plan and the appropriate treatment chosen including
whether awards should be time pro-rated

Adjustments to terms of awards required in certain corporate circumstances (for example capital raising,
rights issues, corporate restructuring events and dividends)

Adjust or change the performance conditions if anything happens which reasonably causes the Remuneration Committee
to consider it appropriate (for example Board-approved strategic initiative or transaction) provided that any amended
performance condition will be equally difficult to satisfy as the original condition would have been, had such circumstances
not arisen

The annual review of performance measures and weighting, and targets from year to year

Adjustment to the level of payments or formulaic scheme outcomes, both upwards and downwards, including to ensure the
scheme outcomes reflect individual or Company performance over the performance period, or to take account of unforeseen
circumstances outside the Company’s control

Application of malus and clawback

202

AIP

PSP

AIP

PSP

Nil

60% of maximum

100% of maximum

60% vesting of Base award
(relative TSR multiplier of 1x)

100% vesting of base award,
maximum relative TSR multiplier
achieved (1.5x)

100% vesting of base award,
maximum relative TSR multiplier
achieved (1.5x), with 50% share
price growth

The charts are intended to demonstrate normal implementation of our proposed Policy i.e. using the intended future AIP levels,
and excluding the one-off enhanced multiplier for the CEO in respect of the FY24 PSP grant. It is also noted that the share
price appreciation of 50% would not be sufficient to trigger this enhanced multiplier.

Basis of preparation and audit
This report is a Directors’ Remuneration Report for the 53 weeks ended 3 December 2023, prepared for the purposes
of satisfying Section 420(1) and Section 421(2A) of the Companies Act 2006. It has been drawn up in accordance with
the Companies Act 2006 and the Code, the Regulations and the Listing Rules.

In accordance with Section 497 of the Companies Act 2006 and the Regulations, certain parts of this Directors’ Remuneration
Report (where indicated) have been audited by the Company’s auditor, Deloitte LLP.

A copy of this Directors’ Remuneration Report will be available on the corporate website, www.ocadogroup.com.
This Directors’ Remuneration Report is approved by the Board and signed on its behalf by:

Julie Southern
Remuneration Committee Chair
Ocado Group plc

29 February 2024

203

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Directors’ Report

Introduction
This Directors’ Report should be read
in conjunction with the Strategic Report
(pages 1 to 115), which includes the
Responsible Business Report (pages 67 to 81)
and the Corporate Governance Statement
(page 122), which are incorporated
by reference into this Directors’ Report.

Directors’ Report disclosures
The Company has chosen in accordance with Section
414C(11) of the Companies Act 2006 to provide disclosures
and information in relation to a number of matters which are
covered elsewhere in this Annual Report. These matters,
together with those required under the Large and Medium-
sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013, are cross-referenced
in the table below.

Topic

Fair review of the
Company’s business

Section of the Report

• Management Report, as defined in the

Directors’ Report

Principal risks and uncertainties

• Management Report, as defined in the

Strategy

Business model

Diversity statistics (gender and ethnicity)

Directors’ Report

• Strategic Report

• Responsible Business Report
• Corporate Governance Report

Important events impacting the business

Likely future developments

• Strategic Report

Financial key performance indicators

• Key Performance Indicators

Non-financial key performance indicators

• Key Performance Indicators

Financial instruments

Environmental matters

Employees with disabilities

Employee engagement

Engagement with suppliers, customers and other
stakeholders in a business relationship with the Company

• Note 4.4 to the Consolidated Financial Statements

• Responsible Business Report

• Directors’ Report

• Responsible Business Report
• Stakeholder Engagement
• Section 172(1) Statement
• Corporate Governance Report

• Corporate Governance Report
• Stakeholder Engagement
• Section 172(1) Statement

Social, community and human rights issues

• Responsible Business Report

Natural resources

Board activity and culture

Board diversity

• Responsible Business Report

• Corporate Governance Report

• Corporate Governance Report
• People Committee Report

Directors’ induction and training

• Corporate Governance Report

Page

205

70
135 & 136

1 to 115

8 to 11

274

211

67
60
64
126

129
62 & 63
64

123

135
142

134

204

Information required by Listing Rules

Listing Rule
requirement Topic

Section of the Report

• Directors’

interests in shares

Remuneration Report

Page

179

9.8.4R

• Going Concern
and Viability
Statements

• Strategic Report

112

The information that fulfils the Strategic Report requirements
is set out in the Strategic Report on pages 1 to 115.
The Strategic Report and the Directors’ Report, together with
the sections of this Annual Report incorporated by reference,
have been drawn up and presented in accordance with and
in reliance upon applicable English company law and the
liabilities of the Directors in connection with that report shall
be subject to the limitations and restrictions provided by
such law.

154
to
203

82
to
102

70,
116,
143

• Long-term

• Directors’

incentive schemes

Remuneration Report

• Climate-related

• Strategic Report

9.8.6R (8)

financial
disclosures

9.8.6R (9)

9.8.6R (10)

9.8.6R (11)

• Provisions on
diversity and
inclusion

• Strategic Report
• Corporate

Governance Report

• Diversity

• Strategic Report

numerical data

• Statement on
approach to
collecting data

• Strategic Report

Information required by Disclosure
Guidance and Transparency Rule 7.2
Topic

Section of the Report

Corporate
Governance Statement

• Corporate

Governance Report

Other disclosures
Topic

In accordance with Provision
31 of the UK Corporate
Governance Code 2018 –
Long-term viability

Section of the Report

• Strategic Report

Page

122

Page

112

Information required by the Disclosure
Guidance and Transparency Rule 4.1.8
The Strategic Report and the Directors’ Report (or parts
thereof), together with sections of this Annual Report
incorporated by reference, are the “Management Report”
for the purposes of DTR 4.1.8.

This Annual Report
The Directors are required under the Companies Act 2006
to prepare a Strategic Report for the Company and Group.
The Strategic Report contains the Directors’ explanation
of the basis on which the Group preserves and creates
value over the longer term and the strategy for delivering
the objectives of the Group. The Companies Act 2006
requires that the Strategic Report must:

• contain a fair review of the Group’s business and contain

a description of the principal risks and uncertainties facing
the Group; and

• be a balanced and comprehensive analysis of the

development and performance of the Group’s business
during the financial year and the position of the Group’s
business at the end of that year, consistent with the size
and complexity of the business.

Board of Directors
Details of the Directors of the Company who held office
during the year, and up to the date of the signing of the
financial statements, are set out on pages 118 to 121.
During the period, the following changes took place:

• Michael Sherman resigned from his position as Non-
Executive Director with effect from 26 June 2023.

• John Martin resigned from his position as Non-Executive
Director with effect from 31 August 2023 in order to take
up the role of CEO of Ocado Solutions.

• Rachel Osborne was appointed as Non-Executive Director

with effect from 1 September 2023.

• Luke Jensen resigned from his position as CEO of Ocado
Solutions and from his position as Executive Director with
effect from 30 September 2023.

• Mark Richardson resigned from his position as Executive

Director with effect from 2 February 2024.

• Neill Abrams resigned from his position as Executive

Director with effect from 2 February 2024.

Details of Directors’ direct and indirect interests in the shares
of the Company are shown on page 179.

Powers of the Directors
Subject to the Company’s Articles of Association
(the “Articles”), the Companies Act 2006 and any special
resolution of the Company, the business of the Company
is managed by the Board, which may exercise all the powers
of the Company. In particular, the Board may exercise
all the powers of the Company to borrow money, to
guarantee, to indemnify, to mortgage or charge any of its
undertakings, property, assets and uncalled capital and to
issue debentures and other securities and to give security
for any debt, liability or obligation of the Company or of
any third party.

Appointment and replacement of Directors
The appointment and replacement of Directors is
governed by the Articles, the UK Corporate Governance
Code 2018 (the “Code”), the Companies Act 2006 and
related legislation.

Appointment of Directors: A Director may be appointed by
the Company by ordinary resolution of the shareholders or
by the Board. The Board or any Committee authorised by the
Board may from time to time appoint one or more Directors
to hold any employment or executive office for such period
and on such terms as they may determine and may also
revoke or terminate any such appointment. A Director
appointed by the Board holds office only until the next
annual general meeting of the Company and is then
eligible for reappointment.

205

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONDirectors’ Report continued

Retirement of Directors: At every annual general meeting of
the Company, each Director shall retire from office and may
offer themselves for reappointment by the members.

Removal of Directors by special resolution: The Company
may, by special resolution, remove any Director before the
expiration of their period of office.

Vacation of office: The office of a Director shall be vacated
if: (i) they resign; (ii) their resignation is requested by all
of the other Directors (not fewer than three in number);
(iii) they have been suffering from mental or physical ill
health and the Board resolves that their office be vacated;
(iv) they are absent without the permission of the Board from
meetings of the Board (whether or not an alternate Director
appointed by them attends) for six consecutive months
and the Board resolves that their office is vacated;
(v) they become bankrupt; (vi) they are prohibited by law
from being a Director; (vii) they cease to be a Director
by virtue of the Companies Act 2006; or (viii) they are
removed from office pursuant to the Articles.

Directors’ insurance and indemnities
The Company maintains Directors’ and officers’ liability
insurance cover for its Directors and officers as permitted
under the Articles and the Companies Act 2006. Such
insurance policies were renewed during the period and
remain in force as at the date of this Annual Report.
The Company also agrees to indemnify the Directors
under an indemnity deed with each Director, which
contains provisions that are permitted by the director liability
provisions of the Companies Act 2006 and the Articles.
An indemnity deed is usually entered into by a Director
at the time of their appointment to the Board. There were
no qualifying pension scheme indemnity provisions in force
during the year for the benefit of Directors of the Company
or directors of associated companies.

Share capital
The Company’s authorised and issued ordinary share capital
as at 3 December 2023 comprised a single class of ordinary
shares. The shares have a nominal value of 2 pence each.
The ISIN of the shares is GB00B3MBS747. The LEI of the
Company is 213800LO8F61YB8MBC74.

As at 14 February 2024, being the last practicable date prior
to publication of this report, the Company’s issued share
capital consisted of 828,648,533 issued ordinary shares,
compared with 826,029,395 issued ordinary shares per
the 2022 Annual Report. Details of movements in the
Company’s issued share capital can be found in Note 4.6
to the Consolidated Financial Statements.

During the period, shares in the Company were issued
to satisfy options and awards under the Company’s
share and incentive schemes, as set out in Note 4.7
to the Consolidated Financial Statements.

Rights attached to shares
The Company’s shares when issued are credited as fully paid
and free from all liens, equities, charges, encumbrances and
other interests. All shares have the same rights (including
voting and dividend rights and rights on a return of capital)
and restrictions as set out in the Articles, described below.

Except in relation to dividends that may have been declared
and rights on a liquidation of the Company, the shareholders
have no rights to share in the profits of the Company.

The Company’s shares are not redeemable. However,
the Company may purchase or contract to purchase any
of the shares on or off-market, subject to the Companies
Act 2006 and the requirements of the Listing Rules,
as described below.

No shareholder holds shares in the Company which carry
special rights with regard to control of the Company. There
are no shares relating to an employee share scheme which
have rights with regard to control of the Company that are
not exercisable directly and solely by the employees, other
than in the case of the Joint Share Ownership Scheme
(“JSOS”), where share interests can be transferred to a
spouse, civil partner or lineal descendant of a participant
in the JSOS or certain trusts under the rules of the JSOS
(as noted below).

Voting rights
Each ordinary share carries one right to vote at a
general meeting of the Company. At any general meeting,
a resolution put to the vote of the meeting shall be decided
on a show of hands unless a poll is demanded. On a show
of hands, every member who is present in person or by
proxy at a general meeting of the Company shall have one
vote. On a poll, every member who is present in person or
by proxy shall have one vote for every share of which they
are a holder. The Articles provide a deadline for submission
of proxy forms of no less than 48 hours before the
time appointed for the holding of the meeting or
adjourned meeting.

No shareholder shall be entitled to vote in respect of a
share held by themselves if any call or sum then payable
by themselves in respect of such share remains unpaid
or if a member has been served a restriction notice,
described on the following page.

JSOS voting rights: Of the issued ordinary shares, as at
3 December 2023, 563,738 (FY22: 564,988) were held by
Wealth Nominees Limited and 9,917,035 (FY22: 9,873,087)
were held by Numis Nominees (Client) Ltd, both on behalf of
Ocorian Limited, the independent company which is the
trustee of Ocado’s Employee Benefit Trust (the “EBT
Trustee”). The EBT Trustee has waived its right to exercise its
voting rights in respect of 9,917,035 of these ordinary shares,
although it may at the request of a participant vote in respect
of 563,738 ordinary shares which have vested under the
JSOS and remain in the trust at period end. The total of
10,480,773 ordinary shares held by the EBT Trustee are
treated as treasury shares in the Group’s Consolidated
Balance Sheet in accordance with IAS 32 “Financial
Instruments: Presentation.” As such, calculations of earnings
per share for Ocado exclude the ordinary shares held by the
EBT Trustee. Note 4.6 to the Consolidated Financial
Statements provides more information on the Group’s
accounting treatment of treasury shares.

Restrictions on transfer of securities
The Company’s shares are freely transferable, save as set
out below. The transferor of a share is deemed to remain the
holder until the transferee’s name is entered in the register.
The Board can decline to register any transfer of any share
that is not a fully paid share. The Company does not
currently have any partially paid shares.

The Board may also decline to register a transfer of
a certificated share unless the instrument of transfer:
(i) is duly stamped or certified or otherwise shown to be
exempt from stamp duty and is accompanied by the relevant
share certificate; (ii) is in respect of only one class of share;
and (iii) if to joint transferees, is in favour of not more than
four such transferees.

Registration of a transfer of an uncertificated share may
be refused in the circumstances set out in the uncertificated
securities rules (as defined in the Articles) and where, in the
case of a transfer to joint holders, the number of joint holders
to whom the uncertificated share is to be transferred
exceeds four.

Restriction on transfer of JSOS interests: Participants’
interests under the JSOS are generally non-transferable
during the period beginning on acquisition of the interest
and ending at the expiry of the relevant restricted period
as set out in the JSOS rules. However, interests can be
transferred to a spouse, civil partner or lineal descendant
of a participant; a trust under which no person other than
the participant or their spouse, civil partner or lineal
descendant has a vested beneficial interest; or any other
person approved by the EBT Trustee. If a participant
purports to transfer, assign or charge their interest other
than as set out above, the EBT Trustee may acquire the
participant’s interest for a total price of £1.

Other than as described above and on page 179 with respect
to agreements concerning the Directors’ shareholdings, the
Company is not aware of any agreements existing at the end
of the period between holders of securities that may result
in restrictions on the transfer of securities or that may result
in restrictions on voting rights.

Powers for the Company to buy back
its shares
The Company was authorised by shareholders at the 2023
AGM to purchase in the market up to 10% of its issued
ordinary shares (excluding any treasury shares), subject
to certain conditions laid out in the authorising resolution.
This standard authority is renewable annually; the
Directors will seek to renew this authority at the 2024 AGM.
The Directors did not exercise their authority to buy back
any shares during the period.

Powers for the Company to issue its shares
The Directors were granted authority at the 2023 AGM to
allot shares in the Company under two separate resolutions:
(i) up to one-third of the Company’s issued share capital; and
(ii) up to two-thirds of the Company’s issued share capital in
connection with a pre-emptive offer only. These authorities
apply until the end of the 2024 AGM (or, if earlier,
until 2 August 2024).

The Directors were also granted authority at the 2023 AGM
to disapply pre-emption rights. This resolution sought the
authority to disapply pre-emption rights over 10% of the
Company’s issued ordinary share capital, plus a further
authority of up to an aggregate nominal amount equal to
20% of any allotments or sales made under this authority
to disapply pre-emption rights.

A further authority was granted to the Directors to disapply
pre-emption rights for an additional 10% for certain
acquisitions or specified capital investments, plus a further
authority of up to an aggregate nominal amount equal to
20% of any allotments or sales made under this authority
to disapply pre-emption rights, as allowed in accordance
with the guidance issued by the Pre-Emption Group.
The Company sought similar authorities at the 2022 AGM.

The Company will, at the 2024 AGM, seek authority to allot
shares on the basis of the new guidance issued by the
Pre-Emption Group to disapply pre-emption rights over 10%
of the Company’s issued ordinary share capital and a further
2% follow-on offer. A further authority will be sought to
disapply pre-emption rights for an additional 10% for certain
acquisitions or specified capital investments and a further
2% follow-on offer. The Company believes such an approach
is appropriate given that it follows the guidance set by the
Pre-Emption Group and Investment Association on the
allotment of shares.

206

207

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONDirectors’ Report continued

Significant shareholders
During the period, the Company has received notifications,
in accordance with DTR 5.1.2R, of interests in 3% or more
of the voting rights attaching to the Company’s issued
share capital, as set out in the table below:

Number
of ordinary
shares/
voting rights

Percentage
of issued
share
capital

Date of
notification
of interest

40,573,097

4.909%

11 April 2023

Below 5%

21 April 2023

Below 5%

8 June 2023

42,091,631

5.08% 5 October 2023

91,064,254

10.99%

1 December
2023

Topic

Generation Investment
Management LLP
indirect holding

Citigroup*
direct holding

BlackRock, Inc
indirect holding

Lingotto Investment
Management LLP
indirect holding

The Capital Group
Companies
indirect holding

These figures represent the number of shares and percentage held as at the date
of notification to the Company.
*

Citigroup had a previous holding of 5.18%; there was then a disposal of below 5%
during the period

Changes have been disclosed in accordance with DTR 5.1.2R
in the period between 3 December 2023 and 14 February
2024 and are outlined in the table below.

Number
of ordinary
shares/
voting rights

Percentage
of issued
share
capital

Date of
notification
of interest

76,443,336

9.23% 17 January 2024

99,273,107

11.98% 5 February 2024

Topic

The Capital Group
Companies
indirect holding

Baillie Gifford & Co
indirect holding

American Depositary Receipt programme
The Company has a sponsored level 1 American Depositary
Receipt (“ADR”) programme with The Bank of New York
Mellon as depositary bank. Each ADR represents two
ordinary shares of the Company. The ADRs trade on
the over-the-counter (“OTC”) market in the US. The CUSIP
number for the ADRs is 674488101, the ISIN is US6744881011
and the symbol is OCDDY. An ADR is a security that has been
created to permit US investors to hold shares in non-US
companies and, in a level 1 programme, to trade them on the
OTC market in the US. In contrast to underlying ordinary
shares, ADRs permit US investors to trade securities
denominated in US dollars in the US OTC market with US
securities dealers. Were the Company to pay a dividend on
its ordinary shares, ADR holders would receive dividend
payments in respect of their ADRs in US dollars.

Convertible bonds due 2025 listed on
the unregulated open market of the
Frankfurt Stock Exchange (Freiverkehr)
The Company issued £600m of guaranteed senior
unsecured convertible bonds due 2025 (the “2025 Bonds”)
on 9 December 2019. The net proceeds of the 2025 Bonds
will be used by the Company to fund capital expenditure
in relation to Ocado Solutions’ commitments and general
corporate purposes. The 2025 Bonds are currently
guaranteed by certain members of Ocado Group.

The 2025 Bonds were issued at par and carry a coupon
of 0.875% per annum payable semi-annually in arrears in
equal instalments on 9 June and 9 December, with the first
payment on 9 June 2020. The 2025 Bonds will be convertible
into ordinary shares of the Company (the “Ordinary Shares”).
The initial conversion price shall be £17.9308, representing
a premium of 45.0% above the reference price of £12.3661,
being the volume weighted average price of an Ordinary
Share on the London Stock Exchange between the
opening and pricing of the offering on 2 December 2019.
The conversion price will be subject to adjustment in certain
circumstances in line with market practice.

The conversion period commenced on 19 January 2020 and
shall end on the 10th calendar day prior to the maturity date
or, if earlier, on the 10th calendar day prior to any earlier date
fixed for redemption of the 2025 Bonds. Unless previously
redeemed, or purchased and cancelled, the 2025 Bonds will
be convertible at the option of the bondholders on any day
during the conversion period. The Company has the option
to redeem all, but not some only, of the 2025 Bonds on or
after 30 December 2023, at par plus accrued but unpaid
interest, if the parity value (as described in the Terms and
Conditions relating to the 2025 Bonds) on each of at least 20
dealing days in a period of 30 consecutive dealing days shall
have exceeded 130% of the principal amount. The Company
also has the option to redeem all outstanding 2025 Bonds, at
par plus any accrued but unpaid interest, at any time if 85%
or more of the principal amount of the 2025 Bonds shall have
been previously converted or repurchased and cancelled.

Senior unsecured notes due 2026 listed
on the Irish Stock Exchange
On 8 October 2021, the Company issued £500m of senior
unsecured notes due 2026 (the “Notes”) listed on the Irish
Stock Exchange and trading on the Global Exchange Market,
which is the exchange regulated market of the Irish Stock
Exchange. The ISIN of the Notes under Reg. S is
XS2393761692 and under 144A is XS2393969170. Interest
on the notes is payable semi-annually in arrears. The Notes
will mature on 8 October 2026. In addition to funding the
redemption of the 2024 senior secured notes, the net
proceeds of the 2026 Notes will be used by the Company
to fund capital expenditure in relation to Ocado Solutions’
commitments and general corporate purposes. The 2026
Notes are currently guaranteed by certain members of
Ocado Group.

The Company has been able to redeem the Notes in whole or
in part at any time since 8 October 2023, in each case,
at the redemption prices set out as part of the offering.

Convertible bonds due 2027 listed on
the unregulated open market of the
Frankfurt Stock Exchange (Freiverkehr)
The Company issued £350m of guaranteed senior
unsecured convertible bonds due 2027 (the “2027 Bonds”)
on 18 June 2020. The net proceeds of the 2027 Bonds will
be used by the Company to give it the financial flexibility
to capitalise on opportunities arising from the significant
acceleration in online adoption and grow faster over the
medium term. The 2027 Bonds are currently guaranteed
by certain members of Ocado Group.

The 2027 Bonds were issued at par and carry a coupon of
0.75% per annum payable semi-annually in arrears in equal
instalments on 18 January and 18 July, with the first payment
on 18 January 2021. The 2027 Bonds will be convertible into
Ordinary Shares of the Company. The initial conversion price
shall be £26.46, representing a premium of 35% above the
reference price of £19.60, being the placing price determined
in the concurrent placing bookbuild. The conversion price
will be subject to adjustment in certain circumstances in line
with market practice. The conversion period commenced on
29 July 2020 and shall end on the 10th calendar day prior
to the maturity date or, if earlier, on the 10th calendar day
prior to any earlier date fixed for the redemption of the
2027 Bonds. Unless previously redeemed, or purchased
and cancelled, the 2027 Bonds will be convertible at the
option of the bondholders on any day during the conversion
period. The Company has the option to redeem all, but not
some only, of the 2027 Bonds on or after 8 February 2025,
at par plus accrued interest, if the parity value (as described
in the Terms and Conditions relating to the 2027 Bonds)
on each of the at least 20 dealing days in a period of
30 consecutive dealing days shall have exceeded 130%
of the principal amount. The Company also has the option
to redeem all outstanding 2027 Bonds, at par plus accrued
interest, at any time if 85% or more of the principal amount
of the 2027 Bonds shall have been previously converted or
repurchased and cancelled.

Revolving credit facility
On 20 June 2022, the Company entered into a £300m
committed, multi-currency revolving credit facility, provided
by a syndicate of leading international banks (the “RCF”).
Interest is payable on loans made pursuant to the RCF at
a rate of SONIA (or EURIBOR or SOFR, for EUR or USD) plus
a margin. The RCF expires in June 2025, with an option
to extend, subject to bank agreement, up to June 2027.
The RCF is currently guaranteed by certain members
of Ocado Group. As at 3 December 2023, the RCF
was undrawn.

Significant related party agreements
There were no contracts of significance during the period
between the Company or any Group company and: (i) a
Director of the Company; (ii) a close member of a Director’s
family; or (iii) a controlling shareholder of the Company.

Change of control
The Company does not have any agreements with any
Director or employee that would provide compensation for
loss of office or employment resulting from a takeover bid
except that it should be noted that: (i) provisions of the
Company’s share schemes may cause options and awards
granted to employees under such schemes to vest on a
takeover; and (ii) certain members of senior management
(not including the Directors) who were employed prior
to 2010 are entitled to a payment contingent on a change
of control of the Company or merger of the Company
(irrespective of loss of employment) as set out in their
respective employment contracts.

Significant agreements
There are a number of key agreements to which the Group
is a party that contain certain rights triggered on the change
of control of the Company. Details of the change of control
provisions of these agreements are summarised below.

Solutions agreements: The Group has a number
of agreements to provide retailers with access to the Ocado
Smart Platform (“OSP”) (comprising the Ocado Group’s
proprietary material handling equipment (“MHE”) and end-
to-end software platform). The key Solutions agreements are
those with Aeon, Alcampo, Auchan Retail Poland, Bon Preu,
Coles, Groupe Casino, ICA, Kroger, Lotte Shopping, Ocado
Retail and Sobeys.

Under those agreements (save for those with Ocado Retail
and Kroger), the retailer is generally entitled to terminate
for convenience at any time following the commencement
date of the relevant services. On termination in these
circumstances the client would be obliged to pay Ocado
termination fees calculated relative to the length of time for
which the service has been live. However, such termination
fees are not payable should the client terminate within a
certain period following the Company coming under the
control of certain of the retailer’s competitors (or certain
controllers with whom the client has a strategic conflict)
or if there is a marked deterioration in service levels following
the Company coming under the control of any person.

208

209

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONDirectors’ Report continued

Morrisons agreements: The Group has a number of
commercial arrangements with Morrisons, including for
access to certain elements of OSP. If certain competitors of
Morrisons acquire more than 50% of the voting rights in the
Company’s shares or take control of the composition of the
Board, or acquire all or substantially all of the Group’s
business and undertakings, then Morrisons would be entitled
to give notice to terminate the agreements by giving not less
than four (but not more than four and a half) years’ notice.
Following Morrisons giving such a notice, Morrisons would
be entitled to procure equivalent services from third parties,
the Company losing its remaining exclusivity rights to be
Morrisons’ supplier of online grocery fulfilment services.
Similarly, all restrictions within those agreements on the UK
retail grocers to whom the Company is entitled to provide
certain services would cease to apply. At the end of the four
to four and a half years’ notice period, the Company would
be required to purchase Morrisons’ shares in MHE JVCo
Limited (the owner of the mechanical handling equipment
in the Dordon CFC).

Ocado Intelligent Automation (“OIA”) agreements: OIA and
certain Ocado Group entities have signed the first agreement
to provide warehouse automation products and services
to non-grocery customers. This OIA agreement is with
McKesson Canada Corporation (the “customer”). Under this
agreement, neither party is able to terminate for convenience
The agreement includes the supply of certain equipment
(including MHE) to the customer and will largely expire
following successful acceptance testing and handover of
that equipment. Subject to payment by the customer, we will
continue to provide a licence to our software and provide
Software as a Service (“SaaS”) services and maintenance
and support services unless the customer chooses to
terminate on expiry of the natural term of each service.
We have the ability to buy back the equipment in the event
of termination or expiry (subject to certain conditions).
Ocado can also terminate the agreements for a change
of control of the customer to an Ocado competitor.

Convertible bonds due 2025: Following a change of control
of the Company, the holder of each 2025 Bond will have the
right to require the Company to redeem that 2025 Bond at its
principal amount, together with accrued and unpaid interest
or the bondholders may exercise their conversion right using
the formula as described in the Terms and Conditions
relating to the 2025 Bonds.

Senior unsecured notes due 2026: Following a change of
control of the Company, holders of the Notes may require
the Company to repurchase all or part of their holding at
a purchase price in cash equal to 101% of the aggregate
principal amount of their holding, plus accrued and
unpaid interest.

Convertible bonds due 2027: Following a change of control
of the Company, the holder of each 2027 Bond will have the
right to require the Company to redeem that 2027 Bond at its
principal amount, together with accrued and unpaid interest
or the bondholders may exercise their conversion right using
the formula as described in the Terms and Conditions
relating to the 2027 Bonds.

Revolving credit facility: Following a change of control of the
Company, no lender under the RCF is obliged to fund further
utilisations of the facility. Each lender will have the right
to cancel its commitment and declare its participation
in all loans and accrued interest pursuant to the facility
immediately due and repayable.

Shareholders’ agreement relating to Ocado Retail Limited
(“ORL”): If there is a change of control of Ocado Holdings
and/or the Company where the person having control
following the change of control is a competitor of M&S,
this would amount to an event of default and M&S could
elect to purchase all shares held in ORL at a price
prescribed in the agreement.

Solutions and third-party logistics agreement with ORL:
If there is a competitor change of control of Ocado
Operating Limited, ORL may terminate the third-party
logistics agreement by giving six months’ written notice
within three months of the competitor change of control
becoming effective. In addition, if there is a change of
control (whether or not a competitor change of control)
and there is a marked deterioration in the service levels
thereafter, ORL may terminate the third-party logistics
agreement and the Solutions agreement.

Research and development activities
The Group has dedicated in-house software, logistics and
engineering design and development teams with primary
focus on IT and improvements to the customer interfaces,
the CFCs and the automation equipment used in them.
Costs relating to the development of computer software
are capitalised if it is probable that the future economic
benefits that are attributable to the asset will accrue to the
entity and the costs can be measured reliably. The Company
is carrying out a number of IT and engineering design and
build projects with the intention of developing new and
improved automation equipment and processes for
its warehouses.

Greenhouse gas emissions methodology
Our approach to calculating greenhouse gas emissions is set
out in the TCFD Report on pages 82 to 102. To calculate our
greenhouse gas (“GHG”) emissions, we use an operational
control approach, in accordance with selected aspects of the
GHG Protocol by the World Business Council for Sustainable
Development and World Resources Institute (“WBCSD/WRI”).
The following sources of information have been considered:
government GHG conversion factors for company reporting,
published by the Department for Business, Energy &
Industrial Strategy (2022 and 2023); IPCC fourth assessment
report: climate change 2007; IPCC guidelines for national
greenhouse gas inventories: reference manual (2006); US
Environmental Protection Agency emissions and generation
resource integrated database (“eGRID”) (2023); Environment
Canada National Inventory Report, Greenhouse Gas Sources
and Sinks in Canada: 1990-2021 (2023); European
Commission (2021) Integrating renewable and waste heat
and cold sources into district heating and cooling systems;
United Nations (2023) UN Statistics Division; Energy Balance
Visualizations and EPA (2023) GHG Emission Factors Hub;
Centre for Corporate Climate Leadership.

We also include more information on our carbon emission
calculations in our Basis of Reporting document, which can
be found on our corporate website, www.ocadogroup.com.

Future developments of the business
The Group’s likely future developments including its strategy
are described in the Strategic Report on pages 1 to 115.

Statement of engagement with employees
Details on engagement with employees by the Board and
the Group and the mechanisms employed to consult
and communicate with employees can be found in the
Stakeholder Engagement section on page 60 and
the Responsible Business section on pages 67 to 81.

Employees with disabilities
Applications for employment by people with disabilities
are given full and fair consideration bearing in mind the
respective aptitudes and abilities of the applicant concerned
and our ability to make reasonable adjustments to the
role and the work environment. In the event of existing
employees becoming disabled, all reasonable effort is
made to ensure that appropriate training is given and their
employment within the Group continues. Training, career
development and promotion of a disabled person are, as far
as possible, identical to that of a non-disabled person.

Statement of engagement with suppliers,
customers and other stakeholders
Details on the methods used to build strong business
relationships with the Group’s suppliers, customers and
partners and the effect of those interests on decision-
making can be found in the Stakeholder Engagement section
on page 60, the Section 172(1) Statement on page 64 and
the Key Board focus areas table on pages 123 and 124.

Profit/loss and dividends
The Group’s results for the period are set out in the
Consolidated Income Statement on page 226. The Group’s
loss before tax for the period amounted to £403.2m
(FY22: £500.8m). The Group did not declare a dividend
(FY22: £nil).

Branches
There are no branches of the Company.

Post-Balance Sheet events
See Note 5.5 on page 294 for details of post-Balance
Sheet events.

Political donations
No donations were made by the Group to any political party,
organisation or candidate during the period (FY22: nil).

Disclosure of information to auditor
In accordance with Section 418 of the Companies Act 2006,
each Director who held office at the date of the approval
of this Directors’ Report (included in the biographies of the
Directors on pages 118 to 121) confirms that, so far as they
are aware, there is no relevant audit information of which the
Group’s auditor is unaware, and that each Director has taken
all of the relevant steps that they ought to have taken as a
Director to ascertain any relevant audit information and
ensure the auditor is aware of such information.

How the Directors formally report to
shareholders and take responsibility
for this Annual Report
Communication and shareholder engagement are important
to the Board. Therefore, the Group follows a regular reporting
and announcement agenda, including the formal regulatory
news service announcements, in accordance with the
Group’s reporting obligations. The Group reports trading
performance, including information on the growth of the
Retail revenue and average order numbers and size, on a
quarterly basis; recognising that it is important to regularly
update the market due to the emphasis shareholders place
on receiving regular communications about sales and the
current competitive pressures in the market.

Other announcements include the Half-Year Report, the
preliminary announcement of annual results, the Annual
Report, and investor presentation slides and videos. These
documents are available on the Group’s corporate website.
Shareholders can choose to receive the Annual Report in
paper or electronic form.

The Directors take responsibility for preparing this Annual
Report and make a statement to shareholders to this effect.
The Statement of Directors’ Responsibilities below is made
at the conclusion of a robust and effective process
undertaken by the Group for the preparation and review
of this Annual Report.

The Directors believe that these well-established
arrangements enable them to ensure that the information
presented in this Annual Report complies with regulatory
requirements, including those in the Companies Act 2006,
and is fair, balanced and understandable, and provides
the information necessary for shareholders to assess the
Group’s position, performance, business model and strategy.
In addition to this Annual Report, the Group’s internal
processes cover (to the extent necessary) the preliminary
announcement, the Half-Year Report, Trading Statements
and other financial reporting.

210

211

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONDirectors’ Report continued

Report preparation
The Group’s internal processes in the preparation and review
of this Annual Report (and other financial reporting) include:

• review of and feedback on iterations of this Annual Report

by the Executive Directors and the full Board;

• in-depth review of specific sections of this Annual Report

by the relevant Board Committees;

• Audit Committee review of a management report on
accounting estimates and judgements, auditor and
management reports on internal controls and risk
management, accounting and reporting matters and a
management representation letter concerning accounting
and reporting matters;

• Board and Audit Committee review of a supporting paper
specifically highlighting the parts of this Annual Report
that best evidenced how this Annual Report was fair,
balanced and understandable;

• paper from management highlighting how reporting,

regulatory and governance issues had been addressed
in this Annual Report; the strategic report includes a fair
review of the development and performance of the
business and the position of the company and the
undertakings included in the consolidation taken as a
whole, together with a description of the principal risks and
uncertainties that they face; and

• Board and Audit Committee review of management reports
on assessments of going concern and viability; present
information, including accounting policies, in a manner that
provides relevant, reliable, comparable and
understandable information

• the Audit Committee regularly reporting to the Board on

the discharge of its responsibilities;

• input from both internal and external legal advisors and
other advisors to cover relevant regulatory, governance
and disclosure obligations;

• discussions between contributors and management to

identify relevant and material information;

• detailed debates and discussions concerning the principal

risks and uncertainties;

• checking of factual statements and financial information

against source materials;

• checking of report electronic tagging;
• specific Board review of Directors’ belief statements and

key statements; and

• separate approval by the Group General Counsel and

Company Secretary, the Board Committees and the Board.

The statement by the external auditor on its reporting
responsibilities is set out in the Independent Auditor’s Report
from page 214.

The Group receives reporting and information from the
Ocado Retail joint venture. The Ocado Retail board and
Audit Committee review and approve financial information
and reporting regarding Ocado Retail, which is then
consolidated into the Group.

In addition to this Annual Report, the Group provides other
statements to its shareholders regarding the Group and its
operations, including the Modern Slavery Act Statement,
Tax Strategy Statement, Gender Pay Gap Statement and
supplier payments.

Statement of Directors’ Responsibilities
The Directors are responsible for preparing this Annual
Report, the Directors’ Remuneration Report and the
financial statements in accordance with applicable law and
regulations. Company law requires the Directors to prepare
financial statements for each financial year. Under that law
the Directors have prepared the Group financial statements
in accordance with UK-adopted International Financial
Reporting Standards (“UK-adopted IFRSs”). The Directors
have also chosen to prepare the parent company financial
statements in accordance with Financial Reporting Standard
101 Reduced Disclosure Framework. Under company law the
Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the
state of affairs of the Company and the Group and of the
result of the Company and the Group for that period. In
preparing these financial statements, International
Accounting Standard 1 requires that directors:

• properly select and apply accounting policies;
• present information, including accounting policies, in a

manner that provides relevant, reliable, comparable and
understandable information;

• provide additional disclosures when compliance with the

specific requirements of the UK-adopted IFRSs is
insufficient to enable users to understand the impact of
particular transactions, other events and conditions on the
entity’s financial position and financial performance; and
• make an assessment of the company’s ability to continue

as a going concern.

The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and the Group and to enable them to ensure that the
financial statements and the Directors’ Remuneration Report
comply with the Companies Act 2006 and, as regards the
Group financial statements, in accordance with international
accounting standards in conformity with the requirements
of the Companies Act 2006 and UK-adopted IFRSs. They are
also responsible for safeguarding the assets of the Company
and the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate website. Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in
other jurisdictions.

As is required under the Code, the Directors consider that
this Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s position and
performance, business model and strategy.

Each of the Directors who held office at the date of the
approval of this Annual Report (included in the biographies
of the Directors on pages 118 to 121) confirms, to the best of
their knowledge, that:

• the financial statements, prepared in accordance with

UK-adopted IFRSs, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the
company and the undertakings included in the
consolidation taken as a whole;

• the strategic report includes a fair review of the

development and performance of the business and the
position of the company and the undertakings included in
the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that
they face; and

• the annual report and financial statements, taken as a

whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the
company’s position and performance, business model and
strategy.

The Company’s Annual General Meeting
2024
The Company’s 2024 AGM will be held on 29 April 2024 at
1.30 pm at Deutsche Numis, 45 Gresham Street, London,
EC2V 7BF. This will be an in-person meeting. Shareholders
will have the opportunity to ask questions and to submit
questions in advance of the meeting.

A detailed explanation of each item of business to be
considered at the AGM is included with the Notice of
Meeting. Shareholders who are unable to attend the AGM
are encouraged to vote in advance of the meeting, either
online at www.ocadoshares.com or by using the proxy card
which is sent with the Notice of Meeting (if sent by post)
or can be downloaded from the corporate website,
www.ocadogroup.com.

The outcome of the resolutions put to the AGM will
be published on the London Stock Exchange and
our corporate website once the AGM has concluded.

The Directors’ Report is approved by the Board and signed
on its behalf by:

Neill Abrams
Group General Counsel and Company Secretary
29 February 2024

Ocado Group plc

Registered Number: 07098618

Registered Office Address: Buildings One & Two, Trident
Place, Mosquito Way, Hatfield, Hertfordshire, AL10 9UL,
United Kingdom

Country of Incorporation:
England and Wales

Type: Public Limited Company

212

213

Report on the audit of the financial statements

3. Summary of our audit approach

1. Opinion

In our opinion:

• the financial statements of Ocado Group plc (the ‘parent company’) and its subsidiaries (the ‘group’) give a true and fair

view of the state of the group’s and of the parent company’s affairs as at 3 December 2023 and of the group’s loss for the
53-week period then ended;

• the group financial statements have been properly prepared in accordance with United Kingdom adopted international

accounting standards;

• the parent company financial statements have been properly prepared in accordance with United Kingdom Generally

Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements which comprise:

• the consolidated income statement;
• the consolidated statement of comprehensive income;
• the consolidated and parent company balance sheets;
• the consolidated and parent company statements of changes in equity;
• the consolidated statements of cash flows; and
• the related notes 1.1 to 5.5 of the consolidated financial statements and 1.1 to 5.2 of the parent company financial statements.

The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law
and United Kingdom adopted international accounting standards. The financial reporting framework that has been applied in
the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards,
including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).

2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial
statements section of our report.

We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the Financial Reporting Council’s (the “FRC”’s) Ethical Standard as applied
to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
The non-audit services provided to the group and parent company for the year are disclosed in note 2.3 to the financial
statements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical Standard to the
group or the parent company.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

The key audit matters that we identified in the current year were:

• Capitalisation of labour costs;
• Valuation of contingent consideration receivable from Marks and Spencer Group plc (“M&S”)
• Ocado Retail: accounting for promotional allowances

Within this report, key audit matters are identified as follows:

Newly identified

Increased level of risk

Similar level of risk

Decreased level of risk

Materiality

Scoping

The materiality that we used for the group financial statements was £27.0m (FY22: £25.0m) which
was determined on the basis of an asset metric equating to 0.6% (FY22: 0.5%) of total assets
excluding goodwill.

We also applied a lower materiality threshold of £8.1m when auditing revenue from the
Technology Solutions business, at 1.9% of its amount.

We performed analytical procedures on residual balances.

Significant changes
in our approach

In the current period, in addition to applying a lower materiality threshold to our audit of
Technology Solutions revenue, we also determined components based on common IT and control
environments, rather than by legal entity.

4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.

Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going concern
basis of accounting included:

• understanding the detailed steps of the forecasting process through enquiries with management and inspection of the

underlying models, including obtaining a detailed understanding of key controls over the budget and forecast;

• assessing the arithmetic accuracy of the models used to prepare the group’s base case forecast and related scenarios;
• challenging the reasonableness of the detailed assumptions underpinning the group’s forecasts including considering the

current economic environment;

• comparing and assessing the historical accuracy of forecasts against previous performance;
• assessing management’s considerations of reasonably possible scenarios and their impact on the group’s forecasts and

performing additional sensitivity scenario analysis;

• considering the timing of repayments for existing bonds;
• considering the impact of mitigating actions available, such as reducing capital expenditure; and
• assessing the appropriateness of the group’s disclosure concerning going concern.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group’s and parent company’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.

In relation to the reporting on how the group has applied the UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.

214

215

Key audit matters

5.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.

5.1. Capitalisation of labour costs

Key audit matter description The group continues to invest in the development of the Ocado Smart Platform and associated

software, as well as in establishing Customer Fulfilment Centres (“CFCs”) for Technology
Solutions customers. In doing so, significant internal labour costs are incurred which are
capitalised as internally-generated intangible assets or as a component of property, plant
and equipment as directly attributable costs. As described in note 3.3 and 3.4 of the financial
statements, £167.8m (FY22: £117.5m) and £32.7m (FY22: £63.9m) of internal labour costs were
capitalised in the period as intangible assets and property, plant and equipment, respectively.

Determining whether a particular project or activity meets capitalisation criteria involves
judgement based on the requirements of IAS 38 Intangible Assets and IAS 16 Property, Plant
and Equipment. The amount being capitalised is largely due to the development of new
technologies and the continued construction of CFCs for customers.

In addition, Adjusted EBITDA is an alternative performance measure of interest to the users of
the financial statements. There is therefore a potential incentive for management to exhibit
bias in considering whether to capitalise internal labour costs given that the amortisation and
depreciation of such costs are excluded from its calculation, whereas items which are not
capital in nature must be expensed as costs are incurred. We therefore consider the
inappropriate capitalisation of labour costs to be a potential fraud risk as well as a key audit
matter. Further information related to this area is set out in the Audit Committee report on page
147, and in notes 3.3 and 3.4 to the group financial statements.

To address the risk of inappropriate capitalisation of labour costs, our audit procedures
included:

• obtaining a detailed understanding of relevant controls, such as those which are designed to
ensure that only projects and associated labour costs that meet capitalisation criteria under
IAS 38 or IAS 16 are approved as capital in nature;

• selecting a sample of internal projects with capitalised labour costs and challenging whether

these projects meet the requirements of IAS 38 or IAS 16, including obtaining a detailed
understanding of the nature of the sampled projects, their purpose and future economic
benefit;

• for each selected project, sampling labour costs incurred on the project and assessing

whether the corresponding amount capitalised in respect of the associated effort was both
attributable to the project and capitalised appropriately and according to the applicable
accounting standards; and

• challenging and corroborating the methods and calculations adopted in determining the
labour costs to be capitalised as directly attributable costs as defined in IAS 38 or IAS 16.

How the scope of our
audit responded to the
key audit matter

Key observations

We are satisfied that the capitalisation of labour costs during the period is appropriate.

5.2. Valuation of contingent consideration receivable from M&S

Key audit matter description As described in note 3.7 to the financial statements, the sale of 50% of Ocado Retail Limited

(“ORL”) to M&S in August 2019 included deferred consideration equal to £156.3m, plus interest,
that is contingent on ORL achieving certain performance targets (“the Target”) in the financial
year to November 2023. This is based on the contractual terms and the outcome is binary: if
the measure is not met or exceeded, no amount is payable by M&S to the group. The
measurement period has ended with the Target not met and management has commenced
negotiations, as permitted under the contract, to agree adjustments to the Target based on
decisions and actions taken by ORL subsequent to the agreement of the performance
conditions in 2019 (see page 262).

The receivable represents a financial asset and is accounted for in accordance with IFRS 9
Financial Instruments and measured at fair value under IFRS 13 Fair Value Measurement. The
group has valued the receivable at £28.0m (FY22: £95.0m).

As described on page 263, management has estimated the fair value using the expected
present value technique that is based on a number of probability-weighted possible scenarios
that a market participant would consider in valuing the contract. These include a settlement
between the two parties and the potential outcomes associated with litigation action between
the two parties.

There is significant complexity and judgement in determining the fair value due to:

• the absence of an active market for such financial assets;
• the inherent uncertainty regarding the agreement of adjustments between the two parties

including the likelihood and value of any settlement;

• the subjectivity involved in determining the likelihood of success from an arbitration or

litigation process; and

• the unusual nature and circumstances of this financial asset.

In addition, there is a potential incentive for management to overstate the value of the asset to
influence ongoing negotiations with M&S regarding the settlement of this contingent
consideration.

Further information related to this area is set out in the Audit Committee report on page 144,
and in notes 1.4 and 3.7 to the group financial statements.

216

217

5.2. Valuation of contingent consideration receivable from M&S

5.3. Ocado Retail: accounting for promotional allowances

How the scope of our
audit responded to the
key audit matter

Key observations

To address the risk that the contingent consideration receivable is materially overstated, our
procedures included:

• inspecting the terms of the share purchase agreement and shareholders’ agreement to

identify and consider clauses that are relevant to determining a fair value of the contingent
consideration receivable;

• holding partner-led enquiries with senior management and the group’s external advisors to
enhance our understanding and interpretation of the contracts, to challenge and to search
for contradictory evidence for the estimates and judgements adopted by management in
their assessment, and to obtain relevant views and opinions on how the ongoing negotiations
might progress;

• assessing the competence, capabilities and objectivity of management’s advisors;
• inspecting evidence for the estimates and judgements adopted by management in their
qualitative and quantitative assessment of the fair value of the receivable, for example
analysis prepared by management’s advisors, relevant accounting breakdowns and records,
and correspondence between the group and M&S;

• involving internal technical, valuations, retail industry and disputes specialists to enable us to

challenge management’s methodology and assumptions and to search for potential
contradictory evidence to the judgements adopted by management. This included critically
assessing changes to the group’s valuation when key assumptions were revised;

• developing an independent range using probability-weighted scenario-based models and

comparing this with the group’s valuation. The assumptions and inputs we applied reflected
a balanced consideration of several sources including analysis from internal valuations
specialists, relevant third party data and research, and the views of management’s advisors
and internal legal specialists;

• assessing whether the estimates and judgements adopted by management in the current

year cast doubt on the valuation and conclusions reached in prior years; and

• assessing the group’s disclosures, with reference to the requirements relating to estimation

uncertainty in IAS 1 Presentation of Financial Statements and the fair value disclosures
required under IFRS 13.

The valuation of £28.0m is within our independent range and we concluded that the receivable
was not materially overstated. We consider the corresponding disclosures made around the
requirements and application of IFRS 13 to be appropriate.

Key audit matter description As described in note 2.3 of the financial statements, the group has agreements with suppliers

How the scope of our
audit responded to the
key audit matter

whereby promotional allowances are received in connection with the purchase of goods for
resale from those suppliers. The group received £124.9m (FY22: £113.7m) of commercial
income from promotional allowances during the period, which is recorded as a deduction to
operating costs.

Determining when to recognise income from such agreements requires judgement in
estimating the satisfaction of related performance obligations, which is complex due to the
variety of terms and volume of transactions.

As these attributes create an opportunity for bias and manipulation, we have identified a key
audit matter related to the potential risk of fraud.

To address the risk that promotional allowances have not been appropriately and accurately
recorded, our procedures included:

• obtaining an understanding of controls relevant to the accounting for promotional

allowances;

• requesting a sample of supplier confirmations to validate the amounts recorded throughout
the period and on the balance sheet at period end. Where responses were not received, we
performed alternative audit procedures including inspecting management’s correspondence
with the supplier, recalculating the amount of commercial income from the arrangement,
and assessing the volume and value of credit notes raised post-period end;

• testing a sample of amounts transferred from accounts receivables to accounts

payable during the netting process to assess whether the group has obtained the
rights to settlement;

• assessing the recoverability of a sample of unsettled balances included on the balance sheet

for valuation and allocation; and

• conducting enquiries with senior personnel outside the finance function, for example legal
counsel, on matters relating to compliance with the Groceries Supply Code of Practice
(“GSCOP”) and controls in the commercial income process, in order to identify any areas
where further investigation may be required.

Key observations

We are satisfied that the accounting for promotional allowances during the period is appropriate.

218

219

6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the
scope of our audit work and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Group financial statements

Parent company financial statements

Materiality

£27.0m (FY22: £25.0m)

£24.3m (FY22: £22.5m)

Basis for
determining
materiality

We determined materiality primarily based on
an asset metric equating to 0.6% (FY22: 0.5%)
of total assets excluding goodwill.

Parent company materiality is determined as a
percentage of net assets, capped at 90% (FY22: 90%) of
group materiality.

We also considered revenue as a supporting
benchmark (FY23: 1.0%, FY22: 1.0%).

Rationale for the
benchmark
applied

We consider an asset metric to be the most
relevant proxy for the expansion and rollout of
the Technology Solutions business.

Revenue was also considered as a supporting
benchmark as this measure reflects current
group performance, particularly that of ORL.

The principal activities of the parent company include
holding investments in other group companies and
incurring costs and liabilities on behalf of the group,
including borrowings. As a result, we considered net
assets to be the most relevant benchmark on which to
base materiality.

Since it is an area of investor focus, we exercised professional judgement in applying a lower level of materiality of £8.1m to
revenue from the Technology Solutions business, which represented 1.9% of the reported amount. We adopted this approach
for the first time in FY23.

6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the financial statements as a whole.

Performance
materiality

Basis and
rationale for
determining
performance
materiality

Group financial statements

Parent company financial statements

70% (FY22: 65%) of group materiality.

70% (FY22: 65%) of parent company materiality.

In determining performance materiality, we considered the following factors:

• the ongoing finance transformation programmes implemented by management to enhance the quality,

consistency and timeliness of the financial reporting and closing processes;

• the continuity of key management personnel;
• our risk assessment, built on our understanding of the group and its environment; and
• management’s continued willingness to investigate and correct misstatements identified in the audit.

6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £1.35m
(FY22: £1.25m), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation
of the financial statements.

7. An overview of the scope of our audit
7.1. Identification and scoping of components and working with other auditors
Our audit was scoped by obtaining an understanding of the group and its environment, including group-wide controls, and
assessing the risks of material misstatement at the group and at ORL, which is controlled and consolidated by the group.

In the current period we identified components based on common IT and control environments, rather than by legal entity as in
previous years. Two significant components were identified: the group component on a single common IT environment; and
ORL. Both components were subject to full-scope audit procedures performed by the group and ORL audit teams respectively
based in London using a performance materiality of £16.0m (85% of group performance materiality). To ensure appropriate
direction and supervision of the component audit work, there was extensive interaction between the group and component
audit team. The group audit team issued the ORL component audit team with detailed instructions and reviewed their audit file
and related reporting.

Components subject to full-scope audit contribute 99% (FY22: 99%) of the group’s revenue and 99% (FY22: 98%) of the
group’s property, plant and equipment, right-of-use assets and intangible assets excluding goodwill. At the group level,
we tested the consolidation and performed analytical procedures over residual balances.

The parent company was audited by the group engagement team.

7.2. Our consideration of the control environment
The group has continued its plan to evolve and improve the financial control environment through the Evolve programme,
which we have considered in our audit plan. Further details are included in the Audit Committee Report on page 144. The
group’s implementation of Oracle Fusion in prior years and continued centralisation of control processes has facilitated the
change in how we identify components this year. ORL implemented a separate instance of Oracle Fusion during the year.

We involved IT specialists to obtain an understanding of relevant general IT controls across the group and ORL audits, which
included Oracle Fusion, Oracle R12, Webshop and key warehouse management systems. Members of the ORL component
audit team visited three CFCs and one General Merchandise Distribution Centre (“GMDC”) to test controls relevant to the
existence of grocery inventory. Our IT specialists assisted in evaluating controls over the key warehouse IT systems as well as
relevant automated controls. Members of the group audit team also visited CFCs in the UK during the period.

We tested the operating effectiveness of controls in certain business processes, for example Solutions revenue, and obtained
an understanding of certain IT systems, applications and databases, to provide feedback to management with a view to relying
on these controls in future periods.

7.3. Our consideration of climate-related risks
As set out in management’s TCFD report on pages 82 to 102 and the principal risks on pages 103 to 111, the group is exposed
to the impacts of climate change. As part of our audit planning procedures, we obtained management’s climate-related risk
assessment and, together with our climate change specialists, held discussions with management to understand the process
of identifying climate-related risks and determining their potential impact on the operations of the group and its financial
statements. We also read the related disclosures in note 1.4 to the financial statements.

We performed our own qualitative risk assessment of the potential impact of climate change on the group financial statements,
this included performing an audit team climate risk brainstorming session. We did not identify a risk of material misstatement.

We have further involved climate change specialists in reading the climate-related disclosures within the Annual Report to
consider whether they are materially consistent with the financial statements and our knowledge from our audit.

Our responsibility over other information is further described in the “Other information” section of our report. We have not been
engaged to provide assurance over the accuracy of these disclosures.

220

221

8. Other information
The other information comprises the information included in the annual report, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated.

If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability
to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have
no realistic alternative but to do so.

10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

11. Extent to which the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to
which our procedures are capable of detecting irregularities, including fraud is detailed below.

11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with
laws and regulations, we considered the following:

• the nature of the industry and sector, control environment and business performance including the design of the group’s

remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;

• the group’s own assessment of the risks that irregularities may occur either as a result of fraud or error that was approved by

the board on 1 February 2024;

• results of our enquiries of management, internal audit, the legal function including the group’s General Counsel and Chief

Compliance Officer, the Chief Executive Officer and Chief Financial Officer of the group and ORL, the directors and the Audit
Committees of the group and ORL about their own identification and assessment of the risks of irregularities, including those
that are specific to the group’s sector;

• any matters we identified having obtained and reviewed the group’s documentation of their policies and procedures

relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances

of non-compliance;

– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected

or alleged fraud;

– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and

• the matters discussed among the audit engagement team and component audit team and relevant internal specialists,

including tax, valuations, IT, impairment and industry specialists regarding how and where fraud might occur in the financial
statements and any potential indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for
fraud and identified the greatest potential for fraud in the following areas: inappropriate capitalisation of labour costs; valuation
of contingent consideration receivable from M&S; and the accounting for promotional allowances. In common with all audits
under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.

We also obtained an understanding of the legal and regulatory framework that the group operates in, focusing on provisions of
those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial
statements. The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules and
relevant tax legislation.

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements
but compliance with which may be fundamental to the group’s ability to operate or to avoid a material penalty. These included
the Groceries Supply Code of Practice.

222

223

11.2. Audit response to risks identified
As a result of performing the above, we identified the capitalisation of labour costs; the valuation of contingent consideration
receivable from M&S; and the accounting for promotional allowances as key audit matters related to the potential risk of fraud.
The key audit matters section of our report explains the matters in more detail and also describes the specific procedures we
performed in response to those key audit matters.

In addition to the above, our procedures to respond to risks identified included the following:

14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been

received from branches not visited by us; or

• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions

• the parent company financial statements are not in agreement with the accounting records and returns.

of relevant laws and regulations described as having a direct effect on the financial statements;

• enquiring of management, the Audit Committee and in-house and external legal counsel concerning actual and potential

We have nothing to report in this regard.

litigation and claims;

• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material

misstatement due to fraud;

• reading minutes of meetings of those charged with governance and reviewing internal audit reports; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and
other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential
bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course
of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members
including internal specialists and component audit team, and remained alert to any indications of fraud or non-compliance
with laws and regulations throughout the audit.

Report on other legal and regulatory requirements

12. Opinions on other matters prescribed by the Companies Act 2006

In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with
the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors’ report for the financial year for which the financial

statements are prepared is consistent with the financial statements; and

• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the
course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.

13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of
the Corporate Governance Statement relating to the group’s compliance with the provisions of the UK Corporate Governance
Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit:

• the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any

material uncertainties identified set out on page 114;

• the directors’ explanation as to its assessment of the group’s prospects, the period this assessment covers and why the

period is appropriate set out on pages 112 to 114;

• the directors’ statement on fair, balanced and understandable set out on page 212;
• the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on

pages 103 to 111;

• the section of the annual report that describes the review of effectiveness of risk management and internal control

systems set out on pages 103 to 111; and

• the section describing the work of the Audit Committee set out on pages 144 to 153.

14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration
have not been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting
records and returns.

We have nothing to report in this regard.

15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by the Board of Directors on 3 May 2017 to audit
the financial statements for the 52-week period ending 3 December 2017 and subsequent financial periods. The period of total
uninterrupted engagement including previous renewals and reappointments of the firm is seven years, covering the 52-week
period ending 3 December 2017 to the 53-week period ending 3 December 2023.

15.2. Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with
ISAs (UK).

16. Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.

As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R,
these financial statements will form part of the Electronic Format Annual Financial Report filed on the National Storage
Mechanism of the FCA in accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over whether
the Electronic Format Annual Financial Report has been prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.

David Griffin FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
29 February 2024

224

225

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONConsolidated Income Statement
for the 53 weeks ended 3 December 2023

Consolidated Statement
of Comprehensive Income
for the 53 weeks ended 3 December 2023

Revenue

Insurance and legal settlement proceeds

Notes

2.1

2.5

53 weeks ended
3 December 2023

Results
before
adjusting

items*
£m

2,825.0

Adjusting
items*
(Note 2.5)
£m

Total
£m

52 weeks ended
27 November 2022 (restated1)
Results
before
adjusting
items*
£m

Adjusting
items*
(Note 2.5)
£m

Total
£m

–

2,825.0

2,516.8

–

2,516.8

–

180.4

–

73.8

Operating costs

(3,175.1)

(162.6)

(3,337.7)

(2,938.1)

(103.7)

(3,041.8)

Loss for the period

Other comprehensive income

Items that may be reclassified to profit or loss in subsequent periods:

Fair value movements in cash flow hedges

Items reclassified from cash flow hedge reserve

Operating (loss)/profit before results
of joint ventures and associate

Share of results of joint venture
and associate

Operating (loss)/profit

Finance income

Finance costs

Other finance gains and losses

(Loss)/profit before tax

Income tax credit

(Loss)/profit for the period

Attributable to:

Owners of Ocado Group plc

Non-controlling interests

3.6

2.6

2.7

5.2

(350.1)

17.8

(332.3)

(421.3)

(29.9)

(451.2)

Foreign exchange (loss)/gain on translation of foreign subsidiaries

(0.9)

(351.0)

40.7

(97.0)

(19.8)

–

17.8

6.1

–

(0.9)

(1.4)

–

(1.4)

(333.2)

(422.7)

(29.9)

(452.6)

46.8

(97.0)

(19.8)

13.5

(90.0)

28.3

–

13.5

(90.0)

28.3

(427.1)

23.9

(403.2)

(470.9)

(29.9)

(500.8)

16.2

–

16.2

18.7

0.8

19.5

(410.9)

23.9

(387.0)

(452.2)

(29.1)

(481.3)

(314.0)

(73.0)

(387.0)

(455.5)

(25.8)

(481.3)

Share of change in net assets of associate through other comprehensive income

Net other comprehensive (expense)/income that may be reclassified to profit or loss in
subsequent periods

Items that will not be reclassified to profit or loss in subsequent periods:

(Loss)/gain on equity investments designated as at fair value through other
comprehensive income

Income tax relating to items that will not be reclassified subsequently to profit or loss

Net other comprehensive (expense)/income that will not be reclassified to profit and
loss in subsequent periods

Other comprehensive (expense)/income for the period, net of income tax

Total comprehensive expense for the period

Attributable to:

Owners of Ocado Group plc

Non-controlling interests

1. During the period, the Group changed the presentation of its expenses and other income. Consequently, the prior year comparatives have been restated. See Note 1.2 for

the details.

Loss per share

Basic and diluted loss per share

2.8

pence

(38.44)

pence

(58.93)

Adjusted earnings before interest, taxation, depreciation, amortisation, impairment and adjusting items (Adjusted EBITDA) A

Operating loss

Adjustments for:

Adjusting items A

Amortisation of intangible assets

Impairment of intangible assets

Depreciation of property, plant and equipment

Impairment of property, plant and equipment

Depreciation of right-of-use assets

Impairment of right-of-use assets

Adjusted EBITDA A

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

(333.2)

(452.6)

(17.8)

125.0

0.2

187.9

21.7

70.4

–

54.2

29.9

114.7

3.6

154.4

9.3

66.0

0.6

(74.1)

Notes

2.5

3.3

3.4

3.5

A See Alternative Performance Measures on pages 302 and 303. Adjusting items include impairment charges in respect of other intangible assets of £0.3m (FY22: £nil),

property, plant and equipment of £19.5m (FY22: £nil) and right-of-use assets of £27.7m (FY22: £nil).

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

(387.0)

(481.3)

Notes

4.3

4.6

3.6

4.4

2.7

(0.4)

1.1

(53.0)

–

7.7

(8.8)

69.1

0.4

(52.3)

68.4

(16.5)

(4.6)

(21.1)

(73.4)

33.3

(7.2)

26.1

94.5

(460.4)

(386.8)

(387.4)

(361.0)

5.2

(73.0)

(25.8)

(460.4)

(386.8)

226

227

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Consolidated Balance Sheet
as at 3 December 2023

Consolidated Balance Sheet continued
as at 3 December 2023

Non-current assets

Goodwill

Other intangible assets

Property, plant and equipment

Right-of-use assets

Investment in joint venture and associate

Other financial assets

Trade and other receivables

Deferred tax assets

Derivative financial assets

Current assets

Other financial assets

Inventories

Trade and other receivables

Current tax assets

Cash and cash equivalents

Derivative financial assets

Asset held for sale

Total assets

Current liabilities

Contract liabilities

Trade and other payables

Current tax liabilities

Borrowings

Provisions

Lease liabilities

Derivative financial liabilities

Net current assets

Non-current liabilities

Contract liabilities

Provisions

Borrowings

Lease liabilities

Trade and other payables

Deferred tax liabilities

Net assets

Equity

Share capital

Share premium

Treasury shares reserve

Other reserves

Retained earnings

Equity attributable to owners of Ocado Group plc

Non-controlling interests

Total equity

3 December
2023
£m

27 November
2022
£m

Notes

860.7

1,166.3

2.1

3.13

4.1

3.5

3.12

2.7

4.6

(408.1)

(393.8)

(27.6)

(25.4)

(1,459.5)

(1,362.6)

(444.9)

(473.7)

(1.1)

–

(1.9)

(14.7)

(2,341.2)

(2,272.1)

1,511.0

1,934.3

16.6

16.5

1,942.9

1,939.3

(112.9)

90.6

164.0

(449.8)

(169.0)

1,487.4

1,837.9

5.2

23.6

96.4

1,511.0

1,934.3

The consolidated financial statements on pages 226 to 294 were authorised for issue by the Board of Directors and signed
on its behalf by:

Tim Steiner
Chief Executive Officer
29 February 2024

Stephen Daintith
Chief Financial Officer

3 December
2023
£m

27 November
2022
£m

Notes

3.2

3.3

3.4

3.5

3.6

3.7

3.10

2.7

4.3

3.7

3.9

3.10

2.7

3.11

4.3

158.6

461.3

1,794.9

428.1

9.5

84.0

50.9

0.9

3.3

164.7

377.2

1,777.8

493.9

15.6

181.6

–

1.9

27.4

2,991.5

3,040.1

43.7

127.1

375.4

1.5

3.8

106.8

329.3

–

884.8

1,328.0

0.1

0.8

1,432.6

1,768.7

3.8

4.9

4.4

1,437.5

1,773.1

4,429.0

4,813.2

2.1

3.12

2.7

4.1

3.13

3.5

4.3

(38.6)

(29.1)

(468.4)

(506.3)

(0.9)

(2.6)

(13.2)

(52.9)

(0.2)

–

(10.2)

(1.0)

(58.6)

(1.6)

(576.8)

(606.8)

228

229

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Consolidated Statement of Changes in Equity
for the 53 weeks ended 3 December 2023

Consolidated Statement of Cash Flows
for the 53 weeks ended 3 December 2023

Equity attributable to owners of Ocado Group plc

Share
capital
£m

Share
premium
£m

Notes

Treasury
shares
reserve
£m

Other
reserves
£m

Retained
earnings
£m

Non-
controlling
interests
£m

Total
£m

Total
equity
£m

Balance at 28 November 2021

15.0

1,372.0

(113.0)

69.9

244.3

1,588.2

121.2

1,709.4

Loss for the period

Other comprehensive income

Total comprehensive income/
(expense) for the period

Transactions with owners

Issue of ordinary shares

Allotted in respect of share
option schemes

Disposal of unallocated
treasury shares

Share-based payments charge

Tax on share-based
payments charge

Reduction in investment in
Jones Food Company Limited

–

1.5

565.0

–

2.3

–

0.1

–

4.6

4.7

2.7

5.2

Total transactions with owners

1.5

567.3

0.1

–

(455.5)

(25.8)

(481.3)

94.1

0.4

94.5

–

94.5

94.1

(455.1)

(361.0)

(25.8)

(386.8)

–

(0.1)

42.0

566.5

2.3

–

42.0

0.9

–

(1.0)

41.8

(1.0)

610.7

1.0

566.5

2.3

–

42.0

0.9

–

611.7

Balance at 27 November 2022

16.5

1,939.3

(112.9)

164.0

(169.0)

1,837.9

96.4

1,934.3

Loss for the period

Other comprehensive expense

Total comprehensive expense for
the period

Transactions with owners

Issue of ordinary shares

Allotted in respect of share
option schemes

Share-based payments charge

Tax on share-based
payments charge

Additional investment in
Jones Food Company Limited

4.6

4.7

2.7

5.2

–

0.1

–

2.1

1.5

–

Total transactions with owners

0.1

3.6

–

(314.0)

(73.0)

(387.0)

(73.4)

–

(73.4)

–

(73.4)

(314.0)

(387.4)

(73.0)

(460.4)

–

33.3

2.2

1.5

33.3

0.1

–

(0.2)

33.2

(0.2)

36.9

0.2

2.2

1.5

33.3

0.1

–

37.1

Balance at 3 December 2023

16.6 1,942.9

(112.9)

90.6

(449.8) 1,487.4

23.6 1,511.0

Cash generated from/(used in) operations

Insurance proceeds relating to business interruption and stock losses

Cash received from the AutoStore settlement

Corporation tax received

Interest paid

Net cash flow from operating activities

Cash flows from investing activities

Insurance proceeds relating to Erith claim

Insurance proceeds relating to rebuilding Andover Customer Fulfilment Centre (“CFC”)

Acquisition of subsidiaries, net of cash acquired

Purchase of intangible assets

Purchase of property, plant and equipment

Dividend received from joint venture

Purchase of unlisted equity investments

Loans paid to joint ventures, associates and investee companies

Proceeds from disposal of asset held for sale

Cash received in respect of contingent consideration receivable

Interest received

Net cash flow used in investing activities

Cash flows from financing activities

Proceeds from issue of ordinary share capital

Proceeds from allotment of share options

Proceeds from interest-bearing loans and borrowings

Transaction costs on issue of borrowings

Repayment of borrowings

Repayment of principal element of lease liabilities

Net cash flow (used in)/generated from financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

Effect of changes in foreign exchange rates

Cash and cash equivalents at end of period

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

86.9

–

41.7

9.9

(56.3)

82.2

–

(11.4)

(205.1)

(331.3)

5.1

(10.0)

–

9.4

1.5

41.7

(4.0)

54.3

–

13.4

(55.8)

7.9

2.5

54.5

(5.5)

(137.1)

(648.8)

8.0

–

(0.6)

–

9.6

(500.1)

(717.4)

2.1

0.5

64.4

–

(10.3)

(66.8)

(10.1)

566.5

0.8

40.6

(3.4)

–

(57.4)

547.1

Notes

4.9

2.5

3.1

3.6

3.7

3.8

3.7

4.2

(428.0)

(162.4)

1,328.0

1,468.6

(15.2)

21.8

3.11

884.8

1,328.0

230

231

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Notes to the consolidated financial statements

Section 1 – Basis of preparation
1.1 General information
Ocado Group plc (hereafter the “Company”) is a listed company, limited by shares, incorporated in England and Wales under
the Companies Act 2006 (company number: 07098618). The Company is the parent and the ultimate parent of the Group.
The address of its registered office is Buildings One & Two Trident Place, Mosquito Way, Hatfield, Hertfordshire,
United Kingdom, AL10 9UL. The financial statements comprise the results of the Company and its subsidiaries (hereafter the
“Group”) (see Note 5.1 for a full list of the subsidiaries). The financial period represents the 53 weeks ended 3 December 2023.
The prior financial period represents the 52 weeks ended 27 November 2022. The principal activities of the Group are
described in the Strategic Report on pages 1 to 11.

1.2 Basis of preparation
The financial statements have been prepared in accordance with the Listing Rules and the Disclosure Guidance and
Transparency Rules of the United Kingdom Financial Conduct Authority (where applicable), International Accounting Standards
in conformity with the requirements of the Companies Act 2006 and UK-adopted International Financial Reporting Standards
(“IFRSs”), including the interpretations issued by IFRS Interpretations Committee (“IFRIC”). Unless otherwise stated, the
accounting policies have been applied consistently to all periods presented in these consolidated financial statements.

The financial statements are presented in pounds sterling, rounded to the nearest hundred thousand unless otherwise stated,
and have been prepared under the historical cost convention, as modified by the revaluation of financial asset investments
and certain other financial assets and liabilities, which are held at fair value.

The Directors consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements
of the Group. See Note 1.5 for further details.

New standards, amendments and interpretations adopted by the Group
The Group has considered the following new standards, interpretations and amendments to published standards that are
effective for the Group for the period beginning 28 November 2022, and concluded either that they are not relevant to the
Group nor would they have a significant effect on the Group’s financial statements other than on disclosures:

IAS 16 Property, Plant and Equipment – proceeds before intended use

IAS 37 Onerous Contracts – cost of fulfilling a contract

IFRS 3 Reference to the Conceptual Framework

Annual Improvements to IFRS, 2018-2020 Cycle Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41

Effective date

1 January 2022

New standards, amendments and interpretations not yet adopted by the Group
The following new standards, interpretations and amendments to published standards and interpretations that are relevant
to the Group have been issued but are not effective for the period beginning 28 November 2022, and have not been
adopted early:

IFRS 17 Insurance Contracts

IAS 1 Classification of Liabilities as Current or Non-Current

IAS 1 Disclosure of Accounting Policies (amendments)

IAS 8 Disclosure of Accounting Estimates (amendments)

IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction (amendments)

IAS 1 Non-current Liabilities with Covenants

IAS 12 Income taxes – International Tax Reform – Pillar Two Model Rules (amendments)

IFRS 10 Consolidated Financial Statements (amendments)

IAS 28 Investments in Associates and Joint Ventures (amendments)

Effective date

1 January 2023

1 January 2024

1 January 2023

Deferred

These standards, interpretations and amendments to published standards and interpretations are not expected to have
a material effect on the Group’s financial statements.

The Group has applied the exemption to recognising and disclosing information about deferred tax in relation to the IAS 12
amendment for FY23.

Change in presentation of expenses in the Consolidated Income Statement
Following the change of the Group’s operating segments during the period (see Note 2.2 for details), the Group has also
adopted a revised presentation of the Income Statement, replacing Cost of Sales (FY22: £1,549.5m), Distribution Expenses
(FY22: £831.8m) and Administrative Expenses (FY22: £758.2m) with a single item for Operating Costs. The Group also
reassessed the classification amounts previously reported as Other Income, resulting in amounts of £3.0m being reported
within Revenue and £97.7m being offset within Operating Costs (principally in relation to media and other income of £87.3m). In
addition, the Group reclassified gains and losses relating to foreign exchange and on revaluation of financial instruments from
Finance Income and Finance Costs to Other Finance Gains and Losses. This resulted in £28.3m being reclassified from Finance
Income to Other Finance Gains and Losses.

The revised presentation provides an Income Statement that is more relevant for the Group, reflecting the increased impact
of the Technology Solutions business where the nature of the associated costs does not have the typical cost of sales,
distribution and administrative expenses.

1.3 Basis of consolidation
The Group’s consolidated financial statements consist of the accounts of the Company, all entities controlled by the Company
(its subsidiaries) and the Group’s share of its interests in joint ventures and associates.

Subsidiaries
The accounts of subsidiaries are included in the consolidated financial statements from the date on which the Company
obtains control, and excluded when the Company loses control over them. Control is achieved when the Company has
power over a subsidiary, exposure or rights to variable returns from it, and the ability to use its power to affect these returns.
This ability enables the Company to affect the amount of economic benefit generated from the entity’s activities.

All subsidiaries have a reporting date of 3 December 2023 except for the following:

JFC Hydroponics Ltd

Jones Food Company Limited

Haddington Dynamics II LLC

Kindred Inc.

Kindred Systems II Inc.

Myrmex Inc.

Ocado Bulgaria EOOD

Ocado Solutions (US) ProCo LLC

Ocado Spain S.L.U.

Ocado US Holdings Inc.

6 River Systems GmbH

6 River Systems LLC

6 River Systems Ltd

Reporting date

30 April

31 December

All these companies have prepared additional financial information for the 53 weeks ended 3 December 2023
to enable consolidation.

All intercompany balances and transactions, including recognised gains arising from intra-Group transactions, have been
eliminated in full. Unrealised losses are eliminated in the same manner as the recognised gains.

The Group allocates the total comprehensive income or expense of subsidiaries to the owners of the Company and
non-controlling interests, based on their respective ownership interests.

Joint ventures and associates
The Group’s share of the results of joint ventures and associates is included in the Consolidated Income Statement using the
equity method of accounting. Investments in joint ventures and associates are held on the Consolidated Balance Sheet at cost,
plus post-acquisition changes in the Group’s share of the net assets of the entities, less any impairment in value and dividends
received. The carrying values of the investments in joint ventures and associates include implicit goodwill.

If the Group’s share of losses in a joint venture or associate equals or exceeds its initial investment in the joint venture or
associate, the Group does not recognise further losses, unless it has incurred obligations to do so or made payments on
behalf of the joint venture or associate. Unrealised gains arising from transactions with joint ventures and associates are
eliminated to the extent of the Group’s interest in the entity.

232

233

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONNotes to the consolidated financial statements
continued

1.3 Basis of consolidation continued
Accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out in the relevant notes to
the financial statements. Accounting policies not specifically attributable to a note are set out below. These policies have been
applied consistently to all the periods presented unless stated otherwise.

Functional and presentational currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (the “functional currency”). The pound sterling is the Company’s functional
and the Group’s presentational currency.

Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into functional currency at the rates of
exchange quoted at the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as at the dates of the initial transactions.

Transactions in foreign currencies are recorded in the functional currency at an average rate for the period in which those
transactions take place, which is used as a reasonable approximation to the exchange rates prevailing at the dates of the
transactions. Translation differences on monetary items are taken to the Consolidated Income Statement.

A number of subsidiaries within the Group have a non-sterling functional currency. The financial performance and end
position of these entities are translated into sterling in the consolidated financial statements. Balance sheet items are
translated at the closing rate at the date of the balance sheet. Income and expenses are translated using an average rate
for the month in which they occur.

Exchange differences arising on the translation of the net investment in overseas subsidiaries are recorded through
other comprehensive income. On disposal of the net investment, the cumulative exchange difference is reclassified
from equity to the Consolidated Income Statement. All other currency gains and losses are dealt with in the
Consolidated Income Statement.

1.4 Critical accounting judgements and key sources of estimation uncertainty
The preparation of the Group’s financial statements requires the use of certain judgements, estimates and assumptions that
affect the reported amounts of assets, liabilities, income and expenses. Judgements and estimates are evaluated regularly,
and represent management’s best estimates based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. However, events or actions may mean that actual results
ultimately differ from those estimates, and the differences may be material.

Critical accounting judgements
Critical accounting judgements are those that the Group has made in the process of applying the Group’s accounting policies
and that have the most significant effect on the amounts recognised in the financial statements.

Area

Judgement

Consolidation of
Ocado Retail
Limited (“Ocado
Retail”)

Revenue from
contracts with
customers

Management reviews if the Group continues to have control over Ocado Retail in accordance
with IFRS 10. Management has concluded that the Group controls Ocado Retail, since it holds
50.0% of the voting rights of the company, and an agreement signed by the shareholders
grants the Group determinative rights, after agreed dispute-resolution procedures, in relation
to the approval of Ocado Retail’s business plan and budget and the appointment and removal
of Ocado Retail’s Chief Executive Officer who is responsible for directing the relevant activities
of the business. On the timing of deconsolidation, refer to Note 5.2.

Due to the size and complexity of some of Technology Solutions’ contracts, there are
significant judgements that must be made. The identification of performance obligations
in a contract is a significant judgement, since it determines when revenue is recognised.
Management has judged that each fulfilment channel is independent of each other and the
provision of the use of the Ocado Smart Platform (“OSP”) in each fulfilment channel represents
a separate performance obligation, and that revenue should begin to be recognised when
a working solution relevant to the fulfilment channel is operational for a customer. The
identification of consideration and material rights in a contract is another significant judgement,
since it determines the period over which upfront fees are recognised as revenue. Alternative
judgements would result in different amounts of revenue being recognised at different times.

Capitalisation
of internal
development costs

The Group capitalises internal costs directly attributable to the development of both intangible
and tangible assets. Management judgement is exercised in determining whether the projects
meet the criteria for capitalisation. During the period, the Group has capitalised internal
development costs amounting to £167.8m (FY22: £117.5m) and £32.7m (FY22: £63.9m) on
intangible and tangible assets respectively.

Notes

5.1,
5.2

2.1

3.3
3.4

Adjusting items

Management believes that separate presentation of the adjusting items provides useful
information in the understanding of the financial performance of the Group and its businesses.
Management exercises judgement in determining the classification of certain transactions as
adjusting items by considering the nature, occurrence and materiality of amounts involved in
those transactions. Note 2.5 provides information on amounts disclosed as adjusting items in
the current and comparative financial statements together with the Group’s definition of
adjusting items. These definitions have been applied consistently over the periods.

2.5

Key estimation uncertainties
Key areas of estimation uncertainty are the key assumptions concerning the future and other data points at the reporting
date that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next period.

Area

Estimation uncertainty

Fair value
measurement
– contingent
consideration
due from M&S

Impairment
assessment
– customer-level
CGUs

At the reporting date, the fair value of contingent consideration due from Marks and Spencer
Holdings Limited (“M&S”), agreed on the disposal of 50% of Ocado Retail Limited (“Ocado
Retail”) to M&S in August 2019 is £28.0m.

Under the terms of the disposal, a final 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 payment in full of £190.7m (£156.3m plus £34.4m of interest, assuming a payment
date of August 2024). 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.

The contractual arrangement with M&S expressly provides 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.

The actual FY23 performance is below the Target required for automatic payment of the
Contingent Consideration. However, the Group has identified a number of significant decisions
and actions taken by Ocado Retail management that it believes require adjustment to the
Target under the terms of the contractual agreement with M&S. The adoption of these
adjustments, if established, would result in Ocado Retail achieving the Target (as adjusted) and
the full payment of £190.7m.

The contract requires the shareholders to engage in good faith discussions concerning
possible adjustments, and we intend to pursue that process, however there can be no
assurance that an adjustment proposed by one party will be eventually accepted by another or
that a wider agreement will be reached and if so formal legal proceedings may well result. It
would be prudent to assume that in any negotiation or legal proceedings M&S would propose
adjustments to the Target of their own.

The fair value of £28.0m recorded in respect of the Contingent Consideration under IFRS 13
has been estimated using the expected present value technique and is based on a number of
probability-weighted possible scenarios that a market participant would consider in valuing the
contract reflecting the facts and circumstances that existed at the balance sheet date. It is
management’s belief that the fair value currently recorded is significantly lower than the
amount that Ocado may receive at the point of settlement.

The performance of the Group’s impairment assessments requires management to make
judgements in determining whether an asset or cash-generating unit (“CGU”) shows any
indicators of impairment that would require an impairment test to be carried out as well as
identifying the relevant CGUs to be assessed. The Group has determined that assets directly
associated with individual Solutions contracts (i.e. partner by partner) represent the lowest-
level group of assets at which impairment can be assessed, i.e. the CGU. The performance of
impairment testing requires management to make a number of estimates and assumptions in
determining the recoverable amount of the CGUs. These include forecast future cash flows
estimated based on management-approved financial budgets and plans, long-term growth
rates, and post-tax discount rate as well as an assessment of the expected growth profile of
the respective CGU. Key estimates used in the impairment test and sensitivities are disclosed
in Note 3.4.

Notes

3.7
4.4

3.4

234

235

1.4 Critical accounting judgements and key sources of estimation uncertainty continued
Climate-related risks
The Group has considered the impact of climate change, particularly in the context of the climate-related risks identified in the
TCFD disclosures as set out on pages 82 to 102, on its financial performance and position. There has been no material impact
identified on the financial reporting judgements and estimates. In particular, the Group considered the impact of climate
change in respect of going concern and viability of the Group over the next three years, forecast cash flows for the purposes
of impairment assessments of non-current assets, and the useful lives of certain assets. Whilst there is currently little short to
medium-term impact expected from climate change, the Directors are aware of the changing nature of risks associated with
climate change and will regularly assess these risks against judgements and estimates made in preparation of the Group’s
financial statements.

1.5 Going concern basis
Accounting standards require that Directors satisfy themselves that it is reasonable for them to conclude on whether or not it
is appropriate to prepare financial statements on the going concern basis.

In assessing going concern, the Directors take into account the financial position of the Group, its cash flows, liquidity position
and borrowing facilities, which are set out in the Financial Review on pages 40 to 59. In addition, the Directors consider the
Group’s business activities, together with factors that are likely to affect its future development and position, as set out in the
Strategic Report on pages 1 to 115, and the Group’s principal risks and the likely effectiveness of any mitigating actions and
controls available to the Directors as set out on pages 103 to 111.

At the reporting date, the Group had cash and cash equivalents of £884.8m (FY22: £1,328.0m), external gross debt of
£1,943.4m (FY22: £1,887.6m) (excluding lease liabilities payable to MHE JVCo Limited of £16.5m (FY22: £17.5m)) and net
current assets of £860.7m (FY22: £1,166.3m). The Group has a mixture of medium-term financing arrangements, including
£600.0m of senior unsecured convertible bonds due in 2025, £500.0m of senior unsecured notes due in 2026 and £350.0m
of senior unsecured convertible bonds due in 2027. The Group forecasts its liquidity and working capital requirements,
and ensures it maintains sufficient headroom so as not to breach any financial covenants in its borrowing facilities,
as well as maintaining sufficient liquidity over the forecast period.

Having had consideration for these areas, the Directors have concluded that it is appropriate to continue to adopt the going
concern basis in preparing the financial statements. Further details of the Group’s considerations are provided in the Viability
Statement and Going Concern Statement on page 112.

Section 2 – Results for the period
2.1 Revenue
Accounting policies
Revenue represents the transaction prices to which the Group expects to be entitled in return for delivering goods or services
to its customers. The amount of revenue recognised in any period is based on a judgement of when the customer is able to
benefit from the goods or services provided, and an assessment of the progress made towards completely satisfying each
performance obligation. The following provides information about the nature and timing of the satisfaction of performance
obligations in contracts with customers and the related revenue recognition policies for each of the by reportable segments.
For information about reportable segments, see Note 2.2.

Retail segment
Revenue from online grocery orders
Revenue from online grocery orders is recognised at a point in time when the customer obtains control of the goods.
For deliveries performed by the Group this usually occurs when the goods are delivered to and have been accepted at the
customer’s home. For goods that are delivered by third-party couriers, revenue is recognised when the items have been
transferred to the third party for onward delivery to the customer. In both instances, there is a single performance obligation,
which is the delivery of goods, and the total transaction price is allocated to the performance obligation.

Revenue from online grocery orders is presented net of returns, relevant marketing vouchers and offers, and value added
taxes. Relevant vouchers and offers include money-off coupons, conditional spend vouchers and offers such as buy three for
the price of two. At the end of each reporting period, management reviews and adjusts the transaction price for elements of
variable consideration such as expected refunds or expected voucher redemptions.

Revenue from Ocado Smart Pass
Ocado Smart Pass, the Group’s discounted pre-pay membership scheme, is a separate contract with a customer and has a
separate single performance obligation which is to provide delivery services for an agreed period of time. The Group applies
the practical expedient allowed under IFRS 15 “Revenue from Contracts with Customers” to apply the standard requirements
to a portfolio of contracts, rather than individual contracts, as it believes the characteristics of each sale are similar, and that
doing so does not materially affect the financial statements.

Revenue from Ocado Smart Pass is recognised over the duration of the membership on a time-elapsed, straight-line basis.

Logistics segment
Revenues in the Logistics segment relate to the operation of automated warehouses and provision of associated supply chain
and delivery services to our UK Partners, Wm Morrison Supermarkets Limited (“Morrisons”) and Ocado Retail.

Revenue is earned from cost recharges, which are the recharge of variable and fixed costs incurred to provide fulfilment and
delivery services. Additionally, a management fee is earned on the rechargeable costs. The business also generates revenue
from capital recharges relating to certain material handling equipment (“MHE”) assets used to provide logistics services to
Ocado Retail which are eliminated on consolidation of the Group.

There is a single performance obligation, which is the provision of fulfilment and delivery services, and the total transaction
price is allocated to the performance obligation.

Revenue is recognised as the services are provided to the UK Partners.

Technology Solutions segment
Revenues in the Technology Solutions segment relate to provision of the Ocado Smart Platform (“OSP”) as a managed service
to the Group’s grocery retail Partners.

Identification of performance obligations
Each contract is considered on a case-by-case basis. A typical Ocado Solutions contract has a single performance obligation:
“to enable the client to access the Ocado Smart Platform (“OSP”) end-to-end online grocery platform from the go-live date,
with an agreed physical capacity, from a CFC for example, for the use of its retail brands”. The ability to derive independent
benefit is a key determinant. For example, there are several critical contractual milestones that occur before the service is
operational, such as the design of the CFC for the customer or preparation of the OSP. However, management has concluded
that the customer is not able to derive any benefit from these individual elements until the service is operational and they are
able to fulfil an order. Depending on the individual customer, fulfilment of an order may include the delivery of goods to the
final consumer, and this would make up part of the obligation.

Consequently, designing the CFC or building the customer OSP is not a separate performance obligation and no revenue can
be assigned to satisfying these aspects of the contract. Some contracts, however, have multiple components, for example
the addition of in-store fulfilment (“ISF”) services or additional CFCs, which lead to additional distinct performance obligations.
In these situations, management uses its judgement to determine whether there are separable performance obligations from
which the customer is able to benefit independently.

Determining transaction prices
At the inception of a contract, the total transaction price is estimated, being the amount to which the Group expects to be
entitled over the expected duration of the contract, based on the rights it has under the present contract. Such expected
amounts are only included to the extent that it is highly probable that no revenue reversal will occur.

Typically, contracts include both upfront fees, paid by the customer in the period prior to the solution going live, and
subsequent annual amounts that are either recurring or variable. The upfront fees are one-off payments and are included
in the transaction price and recognised over the expected customer life.

Expected customer life is a key judgement as it affects the amount of deferred upfront fees that are released as revenue each
period, and the factors considered in reaching the judgement on expected customer life include the nature of the performance
obligation, the scale of current and future planned investment, performance against contractual service-level agreements
(“SLAs”), the evolving technology and competitive landscape. The judgements made for contract duration may be different to
those judgements for expected customer life.

Variable amounts are annual fees whereby typically the variability relates to the volume of sales transactions processed or
variable costs associated with providing the service to the customer. It has been determined that these variable amounts
should be recognised in the period in which they arise, because they relate to the services provided in that period.

Taken together, it is considered that the above approach represents a suitably conservative view of future estimated revenue
in the disclosures of unsatisfied performance obligations as required by IFRS 15.

For each contract an assessment has been made by the Group as to whether there is a significant finance benefit arising from
the timing of payments required from the customer. Judgement is required to choose an appropriate interest rate used in the
assessment and to set a reasonable threshold for determining whether any finance benefit is significant.

Allocation of transaction prices to performance obligations
Single component contracts have a single performance obligation and the whole transaction price is assigned to that single
deliverable. Multiple component contracts will have more than one obligation, each with its own contract duration as adjudged
by management. Each contract clearly states the fees relating to each component. This provides management with a basis for
allocation of the calculated transaction price to each performance obligation based on the standalone selling price.

236

237

Revenue recognition
For each performance obligation and its allocated transaction price, revenue is recognised from the point at which the
customer starts to benefit from the services, and over the period the services are provided.

The nature of the services provided, that is the ability to fulfil online grocery orders, represents equal value to the customer
every day that the service is provided. This uniformity of value to the customer over time has led the Group to decide that the
most appropriate way of measuring the satisfaction of obligations is by using a straight-line, time-elapsed basis. IFRS 15
defines this as an “output method”, which recognises revenue by reference to the value to the customer.

Judgement is applied in relation to contract and customer lives, as typically contracts have no end date. Depending on the
expected customer life, the amount and timing of revenue recognised may be different in different accounting periods. As the
Solutions contracts with the international Partners are in the early stages of operation, the Directors have limited relevant
historical information on which to base their assumptions on expected customer life. Therefore, in making their judgements,
the Directors have considered qualitative and quantitative reasonable and supportable information such as market evidence
and certain clauses contained within Solutions contracts.

Contract modifications
The Group’s contracts may be amended for changes to specifications and requirements. Contract modifications exist when
the amendment creates new, or changes existing, enforceable rights and obligations. The effect of a contract modification on
the transaction price and the Group’s measure of progress for the performance obligation to which it relates is recognised as
an adjustment to revenue in one of the following ways:

a. Prospectively as an additional separate contract.

b. Prospectively as a termination of the existing contract and creation of a new contract.

c. As part of the original contract using a cumulative catch-up.

d. As a combination of b and c.

For contracts for which the Group has decided there is a series of distinct goods and services that are substantially the same
and have the same pattern of transfer where revenue is recognised over time, the modification will always be treated under
a or b.

Judgement is applied in relation to the accounting for such modifications where the final terms or legal contracts have not
been agreed prior to the reporting date, since management needs to determine if a modification has been approved and, if so,
whether it creates new, or changes existing, enforceable rights and obligations of the parties. Depending upon the outcome of
such negotiations, the timing and amount of revenue recognised may be different in different accounting periods. Modification
and amendments to contracts are undertaken via an agreed formal process. For example, if a change in scope has been
approved but the corresponding change in price is still being negotiated, management uses its judgement to estimate the
change to the total transaction price. Importantly, any variable consideration is only recognised to the extent that it is highly
probable that no revenue reversal will occur.

Contract-related assets and liabilities
As a result of the contracts into which the Group enters with its customers, a number of different assets and liabilities are
recognised on the Consolidated Balance Sheet. These include contract assets and liabilities.

Contract assets and liabilities
The Group’s contracts with customers include a diverse range of payment schedules, depending upon the nature and type of
goods and services being provided. The Group often agrees payment schedules at the inception of long-term contracts under
which it receives payments throughout the terms of the contracts. These payment schedules may include performance-based
payments or progress payments as well as regular monthly or quarterly payments for ongoing service delivery. Payments for
transactional goods and services may be made at the delivery dates, in arrears or through part-payments in advance. Where
cumulative payments made (or when the Group has an unconditional right to payment) at the reporting date are greater than
the cumulative revenues recognised, the Group recognises the differences as contract liabilities. Where cumulative payments
made at the reporting date are less than the cumulative revenues recognised, and the Group has an unconditional right to
payment, the Group recognises the differences as contract assets or accrued income.

For the summary of revenue recognised by segment, refer to Note 2.2.

Below is a summary of timing of revenue recognition:

At a point in time

Over time

Revenue split by geographical area:

Overseas

1. Refer to Note 1.2 for details.

No individual overseas region or country contributed more than 10% of total revenue.

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
(restated1)
£m

2,386.7

2,179.9

438.3

336.9

2,825.0

2,516.8

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
(restated1)
£m

2,449.4

2,369.0

375.6

147.8

2,825.0

2,516.8

238

239

2.1 Revenue continued
Contract balances

Trade receivables

Accrued income

Contract liabilities – current

Contract liabilities – non-current

3 December
2023
£m

27 November
2022
£m

62.7

4.4

(38.6)

59.6

14.2

(29.1)

(408.1)

(393.8)

Contract liabilities
The contract liabilities relate primarily to consideration received from Solutions customers in advance, for which revenue
is recognised as the performance obligation is satisfied. The movement in contract liabilities during the current and prior
period is:

Balance at beginning of period

Recognised on acquisition of subsidiaries

Amount invoiced

Amount recognised as revenue

Balance at end of period

Note

3.1

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

(422.9)

(378.5)

(9.2)

(47.6)

33.0

–

(69.1)

24.7

(446.7)

(422.9)

£28.6m (FY22: £24.7m) of revenue recognised during the period was included in contract liabilities at the beginning
of the period and £4.4m relates to revenue recognised from acquisition in the year (FY22: £nil).

Future transaction price
As well as the amounts currently held as contract liabilities, the Group anticipates receiving £172.2m (FY22: £152.4m) over the
next four years in respect of upfront fees that are contracted but not yet due. These amounts represent the aggregate amount
of contracted transaction price allocated to the committed performance obligations that are unsatisfied or partially satisfied as
at the period end. The amounts received and to be received in respect of these performance obligations will be recognised in
revenue from the go-live date over the estimated customer life. The total transaction price that the Group will earn over the
estimated customer life also includes ongoing fees. These fees have been excluded from the disclosure as the Group has
taken the practical expedient under IFRS 15.121(b) for revenues recognised in line with the invoicing.

2.2 Segmental reporting
In accordance with IFRS 8 “Operating Segments”, an operating segment is defined as a business activity whose operating
results are reviewed by the chief operating decision maker (“CODM”), for which discrete information is available. Operating
segments are reported in a manner consistent with the internal reporting provided to the CODM. The CODM, who is
responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board.

To better reflect the structure of the Group’s businesses, commencing FY23, the Group changed the reporting structure of its
operating segments to align with the three underlying business models: Retail, Logistics and Technology Solutions:

• The Retail segment provides online grocery and general merchandise offerings to customers within the United Kingdom,

and relates entirely to the Ocado Retail joint venture.

• The Logistics segment provides the CFCs and logistics services for customers in the United Kingdom (Wm Morrison

Supermarkets Limited and Ocado Retail Limited).

• The Technology Solutions segment provides end-to-end online retail and automated storage and retrieval solutions

for general merchandise to corporate customers both in and outside of the United Kingdom.

The 2023 segmental disclosures have been prepared to reflect the above structure, with the prior period comparatives
restated on this basis.

Inter-segment eliminations relate to revenues and costs arising from inter-segment transactions, and are required to reconcile
segmental results to the consolidated Group results.

Any transactions between the segments are subject to normal commercial terms and market conditions. Segmental results
include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

The Group is not currently reliant on any major customer for 10% or more of its revenue.

53 weeks ended 3 December 2023

Revenue

Adjusted EBITDA*

52 weeks ended 27 November 2022 – restated

Revenue

Adjusted EBITDA*

Retail
£m

Logistics
£m

Technology
Solutions
£m

Group
eliminations
£m

Total
£m

2,408.8

12.1

2,203.0

(4.0)

680.5

30.8

662.9

33.6

429.0

(693.3)

2,825.0

15.6

(4.3)

54.2

291.4

(101.5)

(640.5)

2,516.8

(2.2)

(74.1)

* See Alternative Performance Measures on pages 302 and 303 for further information.

No measure of total assets and total liabilities is reported for each reportable segment, as such amounts are not provided to
the CODM.

2.3 Operating costs
Accounting policies
The accounting policies for key items included within Operating Costs are set out below.

Commercial income
The Group has agreements with suppliers whereby (i) promotional allowances and (ii) volume-related rebates are received in
connection with the promotion or purchase of goods for resale from those suppliers. The allowances and rebates are included
in the operating costs. For the period, promotional allowances are £124.9m or 85% (FY22: £113.7m or 88%) of commercial
income, with rebates of £22.6m or 15% (FY22: £16.2m or 12%).

(i) Promotional allowances
Operating costs includes monies received from suppliers in relation to the agreed funding of selected items that are sold by
the Group on promotion, and these are recognised once the promotional activity has taken place in the period to which it
relates on an accruals basis. The estimates required for this source of income are limited because the time periods of
promotional activity, in most cases, are less than one month and the invoicing for the activity occurs on a regular basis
shortly after the promotions have ended.

During the period, the Group has reassessed the classification of media and other income, previously reported as Other
Income. As some of the income is earned through supplier promotions, management has determined that it is appropriate to
net it against related costs. Therefore, all of these balances are now reported within operating costs.

240

241

2.3 Operating costs continued
(ii) Volume-related rebates
At the reporting date, the Group is required to estimate supplier income due from annual agreements for volume-related
rebates that cross the reporting date. Estimates are required since confirmation of some amounts due is often only received
three to six months after the reporting date. Where estimates are required, these are based on current performance, historical
data for prior periods and a review of significant supplier contracts.

Some of the media and other income which has been reassessed by management during the period relates to receipts of a
volume discount. Management is now reporting all of these balances within operating costs.

(iii) Uncollected commercial income
Uncollected commercial income at the reporting date is recognised within trade and other receivables. Where commercial
income has been earned, but not invoiced at the reporting date, the amount is recorded in accrued income.

Operating costs include:

Cost of inventories recognised as an expense

Employment costs

Amortisation of intangible assets

Impairment of intangible assets1

Depreciation of property, plant and equipment

Impairment of property, plant and equipment1

Gain on disposal of asset held for sale

Depreciation of right-of-use assets

Impairment of right-of-use assets1

Increase in expected credit loss of trade receivables

Expense relating to short-term leases and leases of low-value assets

Net foreign exchange (gain)/loss

Rental income

Notes

2.4

3.3

3.4

3.8

3.5

3.10

3.5

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

1,802.4

1,650.9

766.7

125.0

0.5

187.9

41.2

(5.0)

70.4

27.7

0.8

3.3

(0.3)

(6.8)

690.6

114.7

3.6

154.4

9.3

–

66.0

0.6

3.8

3.2

1.4

(10.4)

During the period, the Group paid the following to its auditor:

Audit of the Company’s annual financial statements

Audit of the Company’s subsidiaries

Total audit fees

Audit-related assurance services

Other assurance services

Total non-audit fees

Total fees

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

0.1

2.1

2.2

0.2

0.1

0.3

2.5

0.1

2.1

2.2

0.2

–

0.2

2.4

2.4 Employee information
Accounting policies
The Group contributes to the personal pension plans of its employees through Group Personal Pension Plans administered
by Legal & General. Contributions are charged to the Consolidated Income Statement in the period to which they relate.
The Group has no further payment obligations once its contributions have been paid.

Wages and salaries

Social security costs

Defined contribution pension costs

Share-based payment charge1

Gross employment costs

Staff costs capitalised as intangible assets

Staff costs capitalised as property, plant and equipment

Employment costs

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

830.9

759.9

76.0

24.6

35.7

967.2

(167.8)

(32.7)

766.7

73.0

23.2

15.9

872.0

(117.5)

(63.9)

690.6

Notes

4.7

3.3

3.4

1. The amount disclosed includes impairment charges in respect of other intangible assets of £0.3m (FY22: £nil), property, plant and equipment of £19.5m (FY22: £nil) and

right-of-use assets of £27.7m (FY22: £nil), which are included in adjusting items.

1. Included in the share-based payment charge is an equity-settled charge of £33.3m (FY22: £42.0m) and a net increase of provisions of £2.4m (FY22: £26.1m net release

in provisions) for the payment of employer’s National Insurance contributions (“NIC”) on taxable employee incentive schemes.

Average monthly number of employees (including Executive Directors) by function

Operational staff

Support staff

16,483

4,769

21,252

16,712

4,687

21,399

242

243

2.5 Adjusting items*
Accounting policies
Adjusting items, as disclosed on the face of the Consolidated Income Statement, 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. They have been classified separately in order to draw them to
the attention of the readers of the financial statements, and facilitate comparison with prior periods to assess trends in the
financial performance more readily. The Group applies judgement in identifying the items of income and expense that are
recognised as adjusting.

Andover CFC

• Insurance reimbursement income

• Other adjusting costs

Erith CFC insurance reimbursement income

Litigation costs net of recoveries

Litigation settlement

Ocado Group Finance transformation

Ocado Retail IT and Finance systems transformation

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

Change of fair value of contingent consideration receivable and related costs

Organisational restructure

UK network capacity review

Zoom by Ocado network capacity and strategy review

Ocado Group HR system transformation

Acquisition costs of 6 River Systems LLC (“6RS”)

Net adjusting income/(expense)

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

–

(5.0)

186.5

(7.6)

(2.6)

–

(68.1)

(15.5)

(32.2)

(27.4)

(2.0)

(2.2)

23.9

67.4

(3.4)

64.0

6.4

(26.5)

–

(7.0)

(4.0)

(1.4)

(58.4)

(3.0)

–

(29.9)

Ref.

* Adjusting items are alternative performance measures. See Alternative Performance Measures on pages 302 to 303.

A. Andover CFC
In February 2019, a fire destroyed the Andover CFC, including the building, machinery and all inventory held on site. The Group
has comprehensive insurance and claims were formally accepted by the insurers.

Insurance reimbursement comprises reimbursement for the costs of rebuilding the CFC and business interruption losses.

During the prior period, the Group reached an agreement with the insurers for the final settlement of the insurance claim for a
total of £273.8m, which resulted in an additional insurance reimbursement income of £67.4m in the prior period. This
concluded the Andover insurance fire claim.

Other adjusting costs include, but are not limited to, write-off of certain assets, professional fees relating to the insurance
claims process, business rates, temporary costs of transporting employees to other warehouses to work and redundancy
costs. The cumulative adjusting costs recognised, across all periods, totalled £124.9m.

B. Erith CFC
In July 2021, a fire damaged part of the Erith CFC, including some machinery and inventory held on site. The Group has
comprehensive insurance and claims were formally accepted by the insurer.

During the prior period, an agreement was reached with the insurers for the final settlement in respect of the claims relating
to the Erith fire for a total of £8.3m. A final payment of £6.4m was received during the prior period and was recognised as an
insurance reimbursement income in FY22. The receipt of the £6.4m concluded the Erith fire claim.

C. Litigation costs and litigation settlement
Litigation costs are costs incurred on patent infringement litigation between the Group and AutoStore Technology AS
(“AutoStore”). The gross costs during the period amount to £11.7m (FY22: £26.5m), which have been offset by £6.7m
(FY22: £nil) received in relation 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, on 29 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 also ordered
AutoStore to pay Ocado £6.7m in costs in relation to the UK High Court trial. As usual in patent cases, AutoStore was given
leave to appeal. The amount received was £6.7m and is included in the net litigation costs for the period. The net cumulative
costs to date amount to £62.2m.

Furthermore, on 22 July 2023, the Group reached an agreement with AutoStore to settle all patent litigation and cross-licence
pre-2020 patents, for which AutoStore undertook to pay the Group a total of £200m in 24 monthly instalments, beginning July
2023. The settlement has been recorded as a receivable measured initially at fair value and subsequently at amortised cost.
The settlement receivable initially recognised was £180.4m and has been recorded within Insurance and Legal Settlement
Proceeds in the Consolidated Income Statement. The unwinding of the discount over the life of the receivable is recorded as
finance income with £6.1m recorded in the current period. During the period, payments totalling £41.7m have been received. All
amounts are classified as adjusting items, in line with the Group’s adjusting items policy, as the amounts are material, and
represent income unrelated to operating activities of the Group.

D. Ocado Group Finance transformation
Subsequent to the Group’s implementation of various Software as a Service (“SaaS”) solutions in FY21, the Group has
undertaken a multi-year programme which focuses on optimising and enhancing the existing SaaS solutions and related
finance processes to improve efficiency across the business. This programme is expected to complete in 1H24. The cumulative
finance transformation costs expensed to date amount to £14.6m and include £7.6m in FY23 which largely relate to spend
on external consultants and contractors. These amounts have been disclosed as adjusting items because the total costs
associated with this programme are significant and arise from a strategic project that is not considered by the Group to be
part of the normal operating costs of the business.

E. Ocado Retail IT and Finance systems transformation
In FY21, Ocado Retail initiated its IT Roadmap programme, which focuses on delivering IT systems and services that will enable
Ocado Retail to meet its obligation to transition away from Ocado Group IT services, tools and support. The IT Roadmap
programme, which is expected to run until FY24, includes the development of both on-premises and SaaS solutions. IT
Roadmap programme costs that meet assets recognition criteria will be recognised as intangible assets and implementation
costs that do not meet assets recognition criteria will be expensed. The costs incurred during the current period amount to
£1.5m (FY22: £4.0m), and the cumulative costs expensed to date total to £10.1m. These costs have been classified as adjusting
because they are expected to be significant and result from a transformational activity which is considered only incremental to
the core activities of the Group.

In the current period, Ocado Retail implemented a finance system transformation programme as part of which it replaced the
current Enterprise Resource Planning (“ERP”) with Oracle Fusion. The cumulative costs incurred to date are £1.1m and the
programme will continue into FY24.

F. (Loss)/gain on disposal of Speciality Stores Limited (“Fetch”)
On 31 January 2021, Ocado Retail completed the sale of the entire share capital of Speciality Stores Limited, its wholly-owned
pets business trading as Fetch, to Paws Holdings Limited, resulting in a gain on disposal of £1.0m in FY21.

During the prior period, a provision of £1.4m was made against the deferred consideration based on the likelihood of receipt.

G. Change in fair value of contingent consideration and related costs
In 2019, the Group sold Marie Claire Beauty Limited (“Fabled”) to Next plc and 50% of Ocado Retail to Marks & Spencer
Holdings Limited (“M&S”). Part of the consideration for these transactions was contingent on future events. The Group holds
contingent consideration at fair value through profit or loss (“FVTPL”), and revalues it at each reporting date. A loss on
revaluation of £67.4m (FY22: £58.4m loss) is reported through adjusting items, primarily driven by the reduction in the
contingent consideration receivable from M&S. Refer to Note 3.7 for details.

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.

H. Organisational restructure
During the period, the Group undertook a partial reorganisation of its head office and support functions resulting in
redundancies and related costs of £15.5m. This followed an initial reorganisation in FY22 which incurred costs of £3.0m,
with net cumulative costs to date of £18.5m.

These costs have been classified as adjusting on the basis that the aggregate costs are considered to be significant and
resulted from a strategic restructuring which is not part of the normal operating activities of the Group.

244

245

2.5 Adjusting items* continued
I. UK network capacity review
On 25 April 2023, the Group announced the plan to cease operations at its CFC in Hatfield as part of a wider review of UK
network capacity.

As a result, the Group has recorded impairment charges of £20.3m, of which £7.0m relates to property, plant and equipment,
£13.2m to right-of-use assets and £0.1m to other intangible assets. Total costs recorded also include restructuring costs
of £6.8m and other related costs of closure of £5.1m, which were provided for. Refer to Note 3.13 for further details.

These costs have been classified as adjusting on the basis that they are material and relate primarily to a site where
no ongoing trading activities will take place.

J. Zoom by Ocado network capacity and strategy review
During the period, Ocado Retail undertook a strategy and capacity review for the Zoom network, which resulted in
the Group recording impairment charges totalling £27.2m, of which £12.5m relates to property, plant and equipment,
£14.5m to right-of-use assets and £0.2m to 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.

K. Ocado Group HR system transformation
Following a review of the Group’s Human Capital Management (“HCM”) and payroll systems the Group has commenced a plan
to implement new HCM and payroll systems for its Logistics business and to optimise and enhance its existing payroll solutions
for the Technology Solutions business.

This programme is expected to complete in 1H25. The cumulative HR systems transformation costs expensed to date amount
to £2.0m which largely relate to spend on external consultants and contractors. These amounts have been disclosed as
adjusting items because the total costs associated with this programme are expected to be in the region of £15.0m and arise
from a strategic project that is not considered by the Group to be part of the normal operating costs of the business.

L. Acquisition costs of 6 River Systems LLC
On 4 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); refer to Note 3.1 for further details.

A total of £2.2m acquisition-related costs have been incurred and treated as adjusting 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 impacts on adjusting items
The change in 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.

2.6 Finance income and costs
Accounting policies
Finance income and costs
Interest income is accounted for on an accruals basis using the effective interest method. Finance costs comprise interest
expenses on borrowings, lease liabilities and provisions. The interest expense on borrowings is recognised using the effective
interest method. The interest expense on lease liabilities is recognised over the lease periods so as to produce constant
periodic rates of interest on the remaining balances of the liabilities.

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

Notes

Interest income on cash balances

Interest income on loans receivable

Unwind of discount on AutoStore receivable

2.5, 3.10

Other finance income

Finance income

Interest expense on borrowings

Interest expense on lease liabilities

Interest expense on provisions

Other finance costs

Finance costs

(Loss)/gain on revaluation of financial instruments designated at FVTPL

(Loss)/gain on foreign exchange

Other finance gains and losses

Net finance cost

39.6

1.0

6.1

0.1

46.8

(69.8)

(25.7)

(1.2)

(0.3)

(97.0)

(6.5)

(13.3)

(19.8)

(70.0)

12.5

1.0

–

13.5

(61.3)

(28.3)

(0.4)

–

(90.0)

11.9

16.4

28.3

(48.2)

246

247

2.7 Income tax
Accounting policies
The tax charge for the period comprises current and deferred tax. Tax is recognised in the Consolidated Income Statement,
except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case the
tax is also recognised in other comprehensive income or directly in equity respectively.

Current tax
Current tax is the expected tax payable on the taxable income for the period, calculated using tax rates enacted or
substantively enacted by the reporting date. Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where it is considered
probable that there will be a future outflow of funds to a tax authority. The provisions are based on management’s
best judgement.

Deferred tax
Deferred tax is recognised using the balance sheet method on temporary differences arising between the tax base of assets
and liabilities and their carrying amount in the financial statements. Deferred tax is calculated at the tax rates that have been
enacted or substantively enacted by the reporting date and are expected to apply when the related deferred tax asset is
realised or the deferred tax liability is settled. Deferred tax is provided on temporary differences arising on investments in
subsidiaries, except where the timing of reversal of the temporary differences is controlled by the Group and it is probable
that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against
which the temporary differences can be utilised. The recognition of deferred tax assets is supported by management’s
forecast of the future profitability of the relevant countries. Judgement is used when assessing the extent to which deferred
tax assets should be recognised, and the final outcome of some of these judgements may give rise to material profit and loss
and/or cash flow variances. The carrying amount of deferred tax assets is reviewed at each reporting date.

Deferred tax assets and liabilities are offset against each other when there is a legally enforceable right to offset current tax
assets against current tax liabilities and it is the intention to settle these on a net basis.

Factors that may affect future tax charges
Factors that may affect future tax charges include the level and mix of profitability in different countries, changes in tax
legislation and tax rates, and transfer pricing regulations.

Income tax – Consolidated Income Statement
The major components of income tax (credit)/charge are as follows:

Current tax

Current year

Current tax charge/(credit) on adjusting items

Adjustment in respect of prior years

Total current tax

Deferred tax

Origination and reversal of temporary differences

Effect of change in tax rate

Adjustments in respect of prior years

Total deferred tax

Total tax (credit)/charge

53 weeks ended 3 December 2023 £m

52 weeks ended 27 November 2022 £m

United

Kingdom Rest of world

Total

Kingdom Rest of world

Total

3.2

–

3.2

(1.8)

–

(2.1)

(3.9)

(0.7)

1.5

–

0.7

2.2

4.7

–

0.7

5.4

(8.0)

(0.8)

0.4

(8.4)

0.8

–

(0.6)

0.2

(7.2)

(0.8)

(0.2)

(8.2)

(18.1)

(19.9)

(13.2)

(0.8)

(14.0)

–

0.4

(17.7)

(15.5)

–

(1.7)

(21.6)

(16.2)

–

(1.2)

(14.4)

(22.8)

0.1

3.8

3.1

3.3

0.1

2.6

(11.3)

(19.5)

The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the UK tax rate as follows:

Loss before tax

Effective tax credit at United Kingdom tax rate of 23.0% (FY22: 19.0%)

Effect of:

Differences in overseas tax rates

Losses arising in period on which no deferred tax is recognised

Temporary differences on which no deferred tax is recognised

Recognised tax losses from prior periods

Permanent differences

Impact of tax rate changes

Adjustments in respect of prior periods

Income tax credit

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

(403.2)

(500.8)

(92.7)

(95.2)

(3.2)

30.6

26.8

–

28.7

(5.4)

(1.0)

(16.2)

0.3

38.7

16.0

(0.4)

33.5

(14.9)

2.5

(19.5)

The adjustments in respect of prior periods arise from revising the prior period’s tax provision to reflect the tax returns
subsequently filed.

Income tax – Consolidated Balance Sheet

Deferred tax assets

Deferred tax liabilities

Net deferred tax assets/(liabilities)

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

0.9

–

0.9

1.9

(14.7)

(12.8)

The major deferred tax (liabilities)/assets recognised by the Group and movements thereon during the current and prior
financial years are as follows:

Balance at 29 November 2021

Foreign exchange movements

Effect of change in rate of UK corporation tax

Credited/(charged) to Consolidated
Income Statement

Charged to Other Comprehensive Income

Credited to equity

Acquisition of subsidiaries

Balance at 28 November 2022

Foreign exchange movements

Credited/(charged) to Consolidated
Income Statement

Charged to Other Comprehensive Income

Credited to equity

Acquisition of subsidiaries

Balance at 3 December 2023

Tax losses
carried
forward
£m

Accelerated
capital
allowances
£m

Intangibles
£m

Share-based
payments
£m

30.5

0.8

(1.4)

2.0

–

1.3

(50.7)

(1.8)

–

6.2

0.1

–

30.5

(28.7)

10.3

(5.1)

–

0.3

60.7

(3.6)

–

(25.4)

(42.2)

3.3

0.8

–

0.9

–

2.1

–

38.8

(15.6)

(1.4)

(1.6)

–

95.9

(37.7)

(42.8)

–

0.1

–

0.6

Other
short-term
temporary
differences
£m

(5.2)

–

4.4

(7.2)

–

(8.0)

0.1

0.8

(4.6)

–

(3.4)

(15.1)

Total
£m

(17.2)

(0.9)

(0.1)

11.4

(7.2)

0.9

0.3

(12.8)

0.6

21.0

(4.6)

0.1

(3.4)

0.9

248

249

2.7 Income tax continued
Other short-term timing differences include temporary differences in respect of provisions and fair value of investments.

Deferred tax has been recognised at 25%, as this is the rate of UK corporation tax with effect from 1 April 2023.

At the reporting date, the Group had £1,550.1m of unutilised tax losses (FY22: £973.9m) available to offset against future
profits. Deferred tax assets of £95.9m (FY22: £60.7m) have been recognised in respect of £383.7m (FY22: £244.2m)
of such losses, the recovery of which is supported by the expected level of future profits of the Group. The recognition
of the deferred tax assets is based on forecast operating results calculated in approved business plans and a review
of tax planning opportunities.

In addition, the Group had £449.3m (FY22: £374.0m) of other gross deductible temporary differences for which no deferred
tax asset is recognised.

No deferred tax asset has been recognised in respect of the remaining losses on the basis that their future economic benefit
is uncertain given the unpredictability of future profit streams. With the exception of £29.8m which expire in 2041 and £11.0m
which expire in 2042, all tax losses, both recognised and unrecognised, can be carried forward indefinitely.

Management has concluded that there is sufficient evidence for the recognition of the deferred tax assets of £0.9m
(FY22: £1.9m).

The amount of temporary differences associated with overseas subsidiaries for which no deferred tax has been provided
is not material.

Section 3 – Assets and liabilities
3.1 Business combinations
Accounting policies
The acquisition method of accounting is used for the acquisition of businesses. The cost of the acquisition is measured at the
aggregate fair value of the consideration given. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet
the conditions for recognition under IFRS 3 “Business Combinations” are recognised at their fair values at the date the Group
assumes control of the acquiree.

Acquisition-related costs are recognised in the Consolidated Income Statement as incurred and are included
in operating costs.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from agreed contingent
consideration measured at fair value at the date control is achieved. Subsequent changes in fair value are adjusted against
the cost of acquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair value
of contingent consideration classified as an asset or liability are accounted for in accordance with relevant IFRSs.

Business combinations in the current period
6 River Systems LLC
On 30 June 2023, the Group acquired 100% of the issued share capital of 6RS, a collaborative AMR fulfilment solutions
provider to the logistics and non-grocery retail sectors, based in the US. The acquisition brings new IP and possibilities to the
wider Ocado technology estate, as well as valuable commercial and R&D expertise in non-grocery retail segments.

Deferred tax assets of £0.3m (FY22: £4.2m) have been recognised in countries that reported a tax loss in either the current
or preceding year. The majority arises overseas (FY22: the majority arose overseas).

The total consideration was $12.7m (£10.0m). Goodwill represents the future benefit of new technology, combined talent and
cost saving synergies with the AMR solutions.

The current period amount for current tax assets is £1.5m and current tax payable is £0.9m. In the prior period, current tax
asset of £12.3m was presented within trade and other receivables. See Note 3.10 for details.

Changes in tax law or its interpretation
The Group is aware of the upcoming Global Anti-Base Erosion Model Rules (“GloBE Rules”) in relation to Base Erosion and
Profit Shifting (“BEPS”) Pillar Two. The rules will apply from January 2024, at which time the Group is expected to fall within
scope. To date, the Group does not materially operate in low tax jurisdictions and will continue to monitor application of the
rules and the potential impact on the Group. An initial review of the rules indicates that we would not expect a material impact
to the Group tax charge.

The Group has applied the exemption to recognising and disclosing information about deferred tax in relation to Pillar Two.

2.8 Loss per share
The basic loss per share is calculated by dividing the loss attributable to the owners of the Company by the weighted average
number of ordinary shares in issue during the period, excluding ordinary shares held pursuant to the Group’s Joint Share
Ownership Scheme (“JSOS”) and linked jointly owned equity (“JOE”) awards under the Ocado Group Value Creation Plan
(“Group VCP”), which are accounted for as treasury shares.

The diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion or vesting of all potentially dilutive shares. The Company has five classes of instruments that are potentially dilutive:
share options; share interests held pursuant to the Group’s JSOS; linked JOE awards under the Group VCP; and shares under
the Group’s staff incentive plans; and convertible bonds.

There was no difference in the weighted average number of shares used for the calculation of the basic and diluted loss per
share since the effect of all potentially dilutive shares outstanding was anti-dilutive.

The basic and diluted loss per share has been calculated as follows:

Weighted average number of shares at end of period

Loss attributable to owners of the Company

Basic and diluted loss per share

53 weeks
ended
3 December
2023
million

52 weeks
ended
27 November
2022
million

816.5

£m

772.9

£m

(314.0)

(455.5)

pence

(38.44)

(58.93)

Consideration transferred

Cash paid

Fair value of assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of 6RS as at the date of acquisition were:

Assets

Intangible assets

Property, plant and equipment

Right-of-use assets

Trade and other receivables

Other current assets

Liabilities

Deferred tax liabilities

Trade and other payables

Contract liabilities

Contingent liabilities

Total identifiable net assets at fair value

Consideration transferred

Less fair value of identifiable net assets

Goodwill

£m

10.0

£m

2.0

5.2

0.3

10.2

11.2

28.9

(3.4)

(6.1)

(9.2)

(1.0)

(19.7)

9.2

10.0

(9.2)

0.8

The amount of gross trade receivables acquired was £10.6m. Management’s best estimate at acquisition date of contractual
cash flows not expected to be collected was £1.9m. The fair value of these trade receivables at acquisition date was £8.7m.

Acquisition-related costs
A total of £2.2m acquisition-related costs were incurred for the acquisition of 6RS which has been recognised within operating
costs in the Consolidated Income Statement.

250

251

3.1 Business combinations continued
Contribution to Consolidated Income Statement
The contribution of the business to revenue and loss before tax were £10.4m and £0.3m respectively. If the acquisition had
occurred at the start of the current period, the Group’s revenue and loss before tax would have increased by £20.8m and
£0.6m respectively.

Analysis of cash flow on acquisition of 6RS
Cash flows on acquisition amounted to the £10.0m of consideration paid. Cash flows in relation to acquisition costs have been
recognised in operating cash flows.

Business combinations in the prior period
Myrmex Inc.
On 6 June 2022, the Group acquired 100% of the issued share capital of Myrmex Inc. (“Myrmex”), a materials handling robotics
start-up incorporated in the US that combines the use of intelligent robotics to industry standard assets to enhance order
fulfilment. The Group previously acquired a 12.2% minority stake in Myrmex in October 2020 and appointed it to design and
develop a proprietary solution that automates the loading of totes containing customer orders onto frames ready for dispatch
(“Automated Frameload” or “AFL”).

Fair value of assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of Myrmex as at the date of acquisitions were:

Assets

Intangible assets

Property, plant and equipment

Deferred tax assets

Trade and other receivables

Cash and cash equivalents

Liabilities

Trade and other payables

Total identifiable net assets at fair value

Consideration transferred

Fair value of investment previously held at FVTPL

Less fair value of identifiable net assets

Goodwill

£m

1.6

0.1

0.4

0.2

0.4

2.7

(0.2)

2.5

7.3

0.9

(2.5)

5.7

During the period, deferred consideration of £1.4m was paid. This comprises part of the £7.3m consideration transferred
together with the £5.9m cash paid in the prior period.

3.2 Goodwill
Accounting policies
Goodwill arises on the acquisition of a business when the fair value of the consideration exceeds the fair value attributed to
the net assets acquired (including contingent liabilities). Goodwill is not amortised but subject to annual impairment reviews.
Goodwill generated from an acquisition is allocated to and monitored at an operating segment level.

Following initial recognition, goodwill is stated at costs less any accumulated impairment losses. Goodwill is reviewed annually
for impairment and the recoverability of goodwill assessed by comparing the carrying amount of the CGU with the expected
recoverable amount. Impairment is recognised where there is a difference between the carrying value of the CGU and the
estimated recoverable amount of the CGU to which that goodwill has been allocated. Impairment is recognised immediately
in the Consolidated Income Statement and is not subsequently reversed.

Impairment loss is first allocated to the carrying value of the goodwill and then to the other assets within the CGU. Recoverable
amount is defined as the higher of fair value less costs of disposal and value in use at the date the impairment review is
undertaken. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.

Carrying amount of goodwill as at 3 December 2023 is as follows:

Cost

At 28 November 2021

Additions

Effect of changes in foreign exchange rates

At 27 November 2022

Additions

Effect of changes in foreign exchange rates

At 3 December 2023

Note

Goodwill
£m

3.1

144.8

5.7

14.2

164.7

0.8

(6.9)

158.6

Goodwill – Impairment testing
Goodwill generated from an acquisition is allocated to an operating segment level as this represents the lowest level at which
goodwill is monitored by management. Management considers each segment to represent a group of CGUs.

During the year, the Group changed the reporting structure of its operating segments to align with the three underlying
business models: Retail, Logistics and Technology Solutions (see Note 2.2 for details). As a result of the change in segments,
goodwill is now allocated to a single segment, Technology Solutions.

The recoverable amounts of the group of CGUs is the higher of fair value less costs of disposal (“FVLCD”) and value in use.
Management concluded that FVLCD was more appropriate for determining the recoverable amount of the group of CGUs
because the Group’s cash flows are mainly based on future growth expectation from CFC commitments/expected
capital investments.

FVLCD has been estimated using present value techniques using a discounted cash flow method. The fair value method relies
on unobservable inputs where there is little market activity for the asset and are therefore categorised at level 3 in the fair
value hierarchy. However, those unobservable inputs are determined using market participants’ view.

The key assumptions used by management in estimating FVLCD were:

• Discount rates – based on the Weighted Average Cost of Capital (“WACC”) of a typical market participant. The post-tax

discount rate used was 11.7% (FY22: 11.0%). The discount rate has increased, reflecting market volatility in risk-free rate and
equity risk premium inputs.

• Forecast cash flows – based on assumptions from the approved budget and 5-year plan, with projections extending to 10

years for the Technology Solutions segment. The projections, which incorporate the Directors’ best estimates of future cash
flows and take into account future growth and price increases, and the Directors believe the estimates are appropriate.

• Long-term growth rates – A long-term growth rate of 2.0% (FY22: 2.0%) was used for cash flows outside the

plan projections.

The impairment assessment resulted in a significant headroom in the group of CGUs that comprise the Technology Solutions
segment and no impairment has been recognised. Any reasonably possible change in any of the key assumptions does not
erode the headroom.

252

253

3.3 Other intangible assets
Accounting policies
Other intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses. Other intangible
assets are amortised using the straight-line method over the useful lives from the time they are first available for use.
The estimated useful lives vary according to the specific assets, but are typically:

Internally generated intangible assets

Other intangible assets

3 – 15 years

Amortisation periods and methods are reviewed annually and adjusted if appropriate.

Cost capitalisation
The cost of an internally generated intangible asset is capitalised as an intangible asset where management determines
that the ability to develop the asset is technically feasible, will be completed, and that the asset will generate economic benefit
that outweighs its cost. Management determines whether the nature of the projects meets the recognition criteria to allow for
the capitalisation of internal costs, which include the total cost of any external products or services and labour costs directly
attributable to development. During the period, management has considered whether costs in relation to the time spent on
specific software projects can be capitalised. Time spent that was eligible for capitalisation included time, which was intrinsic
to the development of new assets, CFCs, and the enhancement and efficiency improvements of existing warehouse system
capabilities to accommodate expanding capacity and scalable opportunities. Time has also been spent on the ongoing
implementation and integration of the functionality of OSP used by the Group’s Partners/customers.

Other development costs that do not meet the above criteria are recognised as expenses as incurred. Development costs
previously recognised as an expense are never capitalised in subsequent periods.

Research costs are recognised as expenses as incurred. These are costs that contribute to gaining new knowledge, which
management assesses as not satisfying the capitalisation criteria. Examples of research costs include the following: salaries
and benefits of employees assessing and analysing future technologies and their likely viability, and professional fees such as
marketing costs and the cost of third-party consultancy.

Internally generated intangible assets consist primarily of costs relating to intangible assets that provide economic benefit
independent of other assets, and intangible assets that are utilised in the operation of property, plant and equipment. These
intangible assets are required for certain tangible assets to operate as intended by management. Management assesses each
material addition of an internally generated intangible asset and considers whether it is integral to the successful operation of a
related item of hardware, can be used across a number of applications and, therefore, whether the asset should be recognised
as an intangible asset. If the asset could be used on other existing or future projects it will be recognised as an intangible
asset. For example, should an internally generated intangible asset, such as the software code to enhance the operation of
existing equipment in a CFC, be expected to form the foundation or a substantial element of future software development,
it will be recognised as an intangible asset.

Estimation of useful life
The periodic amortisation charge is derived by estimating an asset’s expected useful life and the expected residual value at
the end of its life. Increasing an asset’s expected life or its residual value would result in a reduced amortisation charge in the
Consolidated Income Statement.

The useful life is determined by management at the time software is acquired and brought into use, and is reviewed for
appropriateness regularly. For computer software licences, the useful life represents management’s view of the expected
period over which the Group will receive benefits from the software.

For unique software products developed and controlled by the Group, useful life is based on historical experience with similar
products as well as anticipation of future events that may affect their useful life, such as changes in technology.

Impairment of intangible assets
For intangible assets the Group performs impairment testing where indicators of impairment are identified. Impairment testing
is performed at the individual asset level. Where an asset does not generate cash flows that are separately identifiable from
other assets, the Group estimates the recoverable amount of the CGU to which the asset belongs.

The recoverable amount is the higher of fair value less costs of disposal and value in use. When the recoverable amount is less
than the carrying amount, an impairment loss is recognised immediately in the Consolidated Income Statement.

When an impairment charge is subsequently reversed, the carrying amount of the asset or CGU is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would
have existed had no impairment charge been recognised for the asset in prior periods. A reversal of an impairment charge is
recognised immediately as income.

Carrying amount of other intangible assets as at 3 December 2023 is as follows:

Cost

At 28 November 2021

Additions

Internal development costs capitalised

On acquisition of subsidiaries (Note 3.1)

Reclassification

Disposals

Effect of changes in foreign exchange rates

At 27 November 2022

Additions

Internal development costs capitalised

On acquisition of subsidiaries (Note 3.1)

Effect of changes in foreign exchange rates

At 3 December 2023

Accumulated amortisation

At 28 November 2021

Charge for the period

Impairment charge

Effects of changes in foreign exchange rates

At 27 November 2022

Charge for the period

Impairment charge

Effect of changes in foreign exchange rates

At 3 December 2023

Net book value

At 27 November 2022

At 3 December 2023

Internally
generated
intangible
assets
£m

Other
intangible
assets
£m

452.1

24.2

116.4

1.6

(3.6)

(0.1)

0.3

590.9

16.4

166.4

2.0

0.1

78.8

3.2

1.1

–

0.8

–

7.6

91.5

21.8

1.4

–

0.6

Total
£m

530.9

27.4

117.5

1.6

(2.8)

(0.1)

7.9

682.4

38.2

167.8

2.0

0.7

775.8

115.3

891.1

(155.4)

(98.2)

(3.4)

–

(257.0)

(109.9)

(0.3)

0.1

(30.3)

(16.5)

(0.2)

(1.2)

(48.2)

(15.1)

(0.2)

0.8

(185.7)

(114.7)

(3.6)

(1.2)

(305.2)

(125.0)

(0.5)

0.9

(367.1)

(62.7)

(429.8)

333.9

408.7

43.3

52.6

377.2

461.3

At the end of the period, included within intangible assets is capital work-in-progress for internally generated intangible assets
of £153.3m (FY22: £72.8m) and £6.5m (FY22: £4.1m) for other intangible assets.

254

255

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Notes to the consolidated financial statements
continued

3.4 Property, plant and equipment
Accounting policies
Property, plant and equipment (excluding land) are stated at cost, less accumulated depreciation and impairment losses. Cost
includes the original purchase price of the asset, any costs attributable to bringing the asset to its working condition for its
intended use, and major spares.

Depreciation is provided to write off the cost of property, plant and equipment less estimated residual value, on a
straight-line basis over their estimated useful lives, is charged to operating costs and is calculated based on the useful
lives indicated below:

Freehold buildings

up to 30 years

Fixtures and fittings

5 – 10 years

Plant and machinery

3 – 20 years

Motor vehicles

2 – 7 years

Land is held at cost and not depreciated.

Assets in the course of construction are held at cost, less any recognised impairment charge. Cost includes professional fees
and other directly attributable costs. Depreciation of these assets commences when the assets are ready for their intended
use, on the same basis as other assets.

Gains and losses on disposal are determined by comparing proceeds with the asset’s carrying amount, and are recognised
within operating profit.

Estimation of useful life
The charge in respect of periodic depreciation is derived by estimating an asset’s expected useful life and the expected
residual value at the end of its life. The useful lives and residual values of the Group’s assets are determined by management at
the time the assets are acquired, and reviewed at least once a year for appropriateness. Increasing an asset’s expected life or
its residual value would result in a reduced depreciation charge in the Consolidated Income Statement.

Management also assesses the useful lives based on historical experience with similar assets, as well as anticipation of future
events that may affect their useful lives, such as changes in technology. A review of useful lives took place during the period,
and no change in useful lives was required.

Impairment of property, plant and equipment
For property, plant and equipment the Group performs impairment testing where indicators of impairment are identified.
Impairment testing is performed at the individual asset level. Where an asset does not generate cash flows that are separately
identifiable from other assets, the Group estimates the recoverable amount of the CGU to which the asset belongs.

The recoverable amount is the higher of fair value less costs of disposal, and value in use. When the recoverable amount is less
than the carrying amount, an impairment loss is recognised immediately in the Consolidated Income Statement.

Cost

At 28 November 2021

Additions

Internal development costs capitalised

Recognised on acquisition of subsidiaries

Reclassification

Disposals

Effect of changes in foreign exchange rates

At 27 November 2022

Additions

Internal development costs capitalised

Recognised on acquisition of subsidiaries

Reclassification1

Disposals

Reclassified to asset held for sale

Effect of changes in foreign exchange rates

At 3 December 2023

Accumulated depreciation

At 28 November 2021

Charge for the period

Impairment charge

Disposals

Effects of changes in foreign exchange rates

At 27 November 2022

Charge for the period

Impairment charge

Reclassified to asset held for sale

Effect of changes in foreign exchange rates

At 3 December 2023

Net book value

At 27 November 2022

At 3 December 2023

Fixtures,
fittings,
plant and
machinery
£m

Land and
buildings
£m

Motor
vehicles
£m

122.6

92.5

–

1.3

(3.7)

0.1

1,431.9

494.4

63.9

0.1

0.6

(7.5)

39.4

212.8

2,022.8

19.1

–

(2.4)

(5.7)

261.3

32.7

5.2

(12.5)

(6.3)

–

(53.1)

8.8

1.6

–

0.9

–

11.3

1.2

–

Total
£m

1,563.3

588.5

63.9

0.1

2.8

(11.2)

39.5

2,246.9

281.6

32.7

5.2

(12.5)

(8.7)

(5.7)

(53.1)

223.8

2,250.1

12.5

2,486.4

(9.5)

(5.7)

(0.1)

–

(15.3)

(3.3)

–

0.8

–

(288.0)

(148.5)

(9.2)

2.2

(2.1)

(445.6)

(182.9)

(41.2)

–

5.9

(8.0)

(0.2)

(305.5)

(154.4)

–

(8.2)

(1.7)

–

(9.3)

2.2

(2.1)

(469.1)

(187.9)

(41.2)

0.8

5.9

(17.8)

(663.8)

(9.9)

(691.5)

197.5

1,577.2

206.0

1,586.3

3.1

2.6

1,777.8

1,794.9

1. These amounts relate to reclassification of certain capital-work-in-progress items to inventory. Refer to Note 3.9 for further details.

At the end of the period, included within property, plant and equipment is capital work-in-progress for land and buildings of
£36.3m (FY22: £84.5m), fixtures, fittings, plant and machinery of £347.7m (FY22: £382.0m) and motor vehicles of £1.4m
(FY22: £1.0m).

The impairment charges during the period include amounts relating to the fixed assets held in the CFC in Hatfield of £7.0m
and certain Ocado Retail Zoom sites of £12.5m. Refer to Note 2.5 for further details.

256

257

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
Notes to the consolidated financial statements
continued

3.4 Property, plant and equipment continued
Impairment assessment – customer-level CGU
The Group has determined that assets directly associated with individual Technology Solutions contracts (i.e. partner by
partner) represent the lowest-level group of assets at which impairment can be assessed, i.e. the CGU. The Group has
undertaken a review for indicators of impairment for each Technology Solutions contract and, where indicators of impairment
exist, a full asset impairment review was carried out comparing carrying value to fair value less cost to dispose (“FVLCD”).
FVLCD has been estimated using present value techniques using a discounted cashflow method. The fair value method relies
on unobservable inputs where there is little market activity for the asset and are therefore categorised at Level-3 in the fair
value hierarchy. However, those unobservable inputs are determined using market participants’ view.

The key inputs and assumptions in arriving at the FVLCD are:

• a probability-weighted approach of possible scenarios using the expected future cash flows from the contract based on

management forecasts for a 10-year period, including an assessment of ramp-up of capacity, ongoing operating costs and
associated increase in fees and capital expenditure;

• discount rate that specifically takes into account the risk pertaining to the customer specific cash flows – 10.7% to 11.5%

(FY22: 10.8%); and

• long-term growth rate to reflect growth outside of the forecast period – 2.0% (FY22: 2.0%).

Based on the outcome of the assessment, an impairment of £15.2m (FY22: £nil) has been recognised for Groupe Casino CGU
(“Casino”), which prior to this impairment had a carrying value of £54.4m as at the end of FY23 (FY22: £59.0m). An increase in
discount rate of 1ppt or a decrease in long-term growth rate of 1 ppt will result in a further impairment of £1.6m and £0.3m,
respectively.

Over recent years Casino has not invested in the marketing resources required to fulfil the full potential their online grocery
retail business, which has led to a slow module ramp in their CFC and so impacted our estimate of the fair value of the contract
(the FVLCD). This has required the Group to record a partial impairment of the related assets as described above. In the
background, Casino is engaged in a corporate restructuring and it is envisaged that there will be a new majority owner of
Casino and an injection of new equity in due course. We are working with Casino management to determine how to best move
forward together with their online grocery retail business.

For another CGU (a single partner contract with no live CFC), there are a number of factors that could impact the fair value
assessment going forward, therefore no impairment has been recognised in FY23. However, a 0.1 ppt increase in discount rate
or a 0.3 ppt decrease in long-term growth rate would result in the headroom being fully eroded. The CGU currently has a
carrying value of £121.6m.

3.5 Right-of-use assets and lease liabilities
Accounting policies
The Group leases properties, vehicles and other items of equipment. The leases have varying terms, escalation clauses and
renewal rights. At the commencement date of a lease, the Group recognises a right-of-use asset and a lease liability on the
Consolidated Balance Sheet. The Group has elected to account for short-term leases and leases of low-value items using
practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments relating to these leases are
recognised as expenses in the Consolidated Income Statement on a straight-line basis over the lease term.

Right-of-use assets
Right-of-use assets are measured at cost, which is the initial measurement of the lease liabilities, adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to
dismantle and remove the assets at the ends of the leases, less any lease incentives received.

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier
of the end of the useful life of the right-of-use asset or the lease term. The Group also assesses the right-of-use assets
for impairment when such indicators exist.

Lease liabilities
The Group measures the lease liability at the present value of the lease payments that have not been paid at that date,
discounted using the interest rate implicit in the lease (if that rate is readily available) or the Group’s incremental borrowing
rate. Subsequent to initial measurement, the liability is reduced for payments made, and increased for interest charged.
If required, it is remeasured to reflect modifications, with corresponding adjustments reflected in the right-of-use asset.

An analysis of the Group’s right-of-use assets and lease liabilities is as follows:

Right-of-use assets

At 28 November 2021

Additions

Disposals

Impairment charge

Depreciation charge

At 27 November 2022

Additions

Recognised on acquisition of subsidiaries

Disposals

Impairment charge

Depreciation charge

Asset reclassification

Effect of changes in foreign exchange rates

At 3 December 2023

Fixtures,
fittings,
plant and
machinery
£m

Land and
buildings
£m

Motor
vehicles
£m

409.0

43.4

(4.0)

(0.6)

(32.8)

415.0

8.9

0.3

(0.1)

(27.7)

(36.8)

0.5

(0.2)

359.9

25.5

2.2

(0.1)

–

(11.8)

15.8

13.4

–

(0.1)

–

(10.9)

(0.5)

–

17.7

60.1

24.9

(0.5)

–

(21.4)

63.1

10.4

–

(0.3)

–

(22.7)

–

50.5

Total
£m

494.6

70.5

(4.6)

(0.6)

(66.0)

493.9

32.7

0.3

(0.5)

(27.7)

(70.4)

–

(0.2)

428.1

During the period, the Group recognised impairment charges in respect of the existing leases held in the CFC in Hatfield
following its closure and certain Ocado Retail Zoom sites on the basis of the strategic review of the Zoom network.
Refer to Note 2.5 for further details.

Lease liabilities

At 28 November 2021

Additions

Terminations

Interest

Payments

At 27 November 2022

Additions

Recognised on acquisition of subsidiaries

Terminations

Interest

Payments

Effects of changes in foreign exchange rates

At 3 December 2023

Disclosed as:

Current

Non-current

Fixtures,
fittings,
plant and
machinery
£m

Land and
buildings
£m

431.7

34.6

37.7

(2.9)

24.7

(43.9)

447.3

9.3

0.3

(0.1)

22.9

(52.6)

(0.2)

426.9

Motor
vehicles
£m

62.1

24.5

–

2.2

2.0

–

1.4

(18.5)

(23.3)

19.5

13.2

–

0.7

(14.1)

–

19.3

65.5

10.4

–

(0.6)

2.1

(25.8)

–

51.6

Total
£m

528.4

64.2

(2.9)

28.3

(85.7)

532.3

32.9

0.3

(0.7)

25.7

(92.5)

(0.2)

497.8

3 December
2023
£m

27 November
2022
£m

52.9

444.9

497.8

58.6

473.7

532.3

258

259

External obligations under lease liabilities are £481.3m (FY22: £514.8m), excluding £16.5m (FY22: £17.5m) payable to MHE
JVCo Limited, a company incorporated in England and Wales in which the Group holds a 50% interest.

3.5 Right-of-use assets and lease liabilities continued
The existing lease arrangements entered into by the Group contain no restrictions concerning dividends, additional debt and
further leasing. Furthermore, no material leasing arrangements exist relating to contingent rent payable, renewal or purchase
options and escalation clauses.

The expenses relating to short-term leases and leases of low-value items not included in the measurement of the lease liability
are as follows:

Short-term leases

Leases of low-value items

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

2.9

0.4

3.3

3.2

–

3.2

3.6 Investment in joint venture and associate
Accounting policies
The Group’s share of the results of joint ventures and associates is included in the Consolidated Income Statement,
and is accounted for using the equity method of accounting. Investments in joint ventures and associates are held on
the Consolidated Balance Sheet at cost, plus post-acquisition changes in the Group’s share of the net assets of the entity,
less any impairment in value. On transfer of assets to joint ventures and associates, the Group recognises only its share
of any profits or losses, namely that proportion sold outside the Group.

If the Group’s share of losses of a joint venture or associate equals or exceeds its investment in the joint venture or associate,
the Group does not recognise further losses, unless it has incurred obligations to do so or made payments on behalf of the
joint venture or associate.

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the Group’s
interest in the entity.

Investment in joint venture and associate
The Group’s principal joint ventures and associates are:

MHE JVCo
Limited

Karakuri
Limited1

Nature of
relationship

Joint venture

Year end

3 Dec

Business
activity

% of interest
held (FY23)

% of interest
held (FY22)

Country of
incorporation

Principal area
of operation

Lessor of
assets to the
Group

50.0%

United
Kingdom

Associate

31 Mar Development
and building of
robots

26.3%

United
Kingdom

1. In May 2023, RSM was appointed to advise Karakuri on financing options. Following discussions with investors, Karakuri was unable to secure additional funding and on

28 July 2023 Ocado was advised that Karakuri had appointed administrators.

The Group holds a 25% interest investment in Paneltex Limited that has not been treated as an associate since the Group does
not have significant influence over the company. Further detail is disclosed in Note 3.7.

The carrying amounts of the investments at the beginning and end of the period can be reconciled as follows:

MHE JVCo

Karakuri

Total

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

Investment at beginning of period

14.8

23.0

0.8

Allocation of initial acquisition price to warrants

Share of change in net assets through other
comprehensive income

Share of total comprehensive income/(expense)
attributable to Group

Dividend received

Investment at end of period

–

(0.1)

(5.1)

9.6

–

(0.2)

(8.0)

14.8

–

(0.8)

–

3.5

(1.9)

0.4

(1.2)

–

0.8

15.6

–

(0.9)

(5.1)

9.6

26.5

(1.9)

0.4

(1.4)

(8.0)

15.6

The tables below provide summarised financial information of the Group’s joint ventures and associates. The information
disclosed reconciles the amounts presented in the financial statements of the relevant joint ventures and associates with the
Group’s share of those amounts.

Non-current assets

Current assets

• Cash and cash equivalents

• Other current assets

Current liabilities

• Other current liabilities

Non-current liabilities

• Non-current financial liabilities (excluding trade

and other payables)

Net assets

Share of net assets attributable to Group

Legal costs capitalised on acquisition

Implicit goodwill

Investment at end of period

Revenue

Cost of sales

Gross profit

Administrative expenses

Depreciation, amortisation and impairment charges

Interest income

Loss and total comprehensive expense for the period

Share of total comprehensive expense attributable
to Group

Foreign exchange loss recognised in other income

Dividends received

MHE JVCo

Karakuri

Total

3 December
2023
£m

27 November
2022
£m

3 December
2023
£m

27 November
2022
£m

3 December
2023
£m

27 November
2022
£m

12.6

15.0

1.0

5.9

3.5

14.2

(0.4)

(3.2)

–

19.1

9.6

–

9.6

–

29.5

14.8

–

14.8

–

2.2

2.9

0.2

12.6

17.2

1.0

5.9

6.4

14.4

(0.4)

(3.6)

(6.9)

(2.0)

(0.5)

0.1

1.2

0.8

–

19.1

9.6

–

9.6

(6.9)

27.5

14.3

0.1

1.2

15.6

MHE JVCo

Karakuri

Total

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

–

2.0

(2.7)

0.5

(0.2)

(0.1)

–

5.1

–

(0.1)

(1.6)

1.3

(0.4)

(0.2)

–

8.0

–

(2.1)

(0.8)

–

(2.9)

0.4

–

0.4

(2.0)

(3.3)

–

(4.9)

–

(0.1)

(3.5)

0.5

(3.1)

(0.8)

(1.2)

(0.9)

–

5.1

0.4

–

0.4

(2.1)

(4.9)

1.3

(5.3)

(1.4)

–

8.0

The joint ventures and associates have no significant contingent liabilities to which the Group is exposed. The Group does not
have any commitments that have been made to the joint ventures or associates and not recognised at the reporting date.

There are no significant restrictions on the ability of joint ventures and associates to transfer funds to the owners, other than
those imposed by the Companies Act 2006 or equivalent local regulations.

260

261

3.7 Other financial assets
Accounting policies
Other financial assets comprise contingent consideration receivable, unlisted equity investments, loans receivable and
contributions towards dilapidations costs receivable.

Contingent consideration receivable is initially measured at the fair value at the date of disposal of the Group’s shareholdings
and is remeasured to fair value at each reporting date with the changes in fair value recognised in profit or loss.

Where unlisted equity investments represent strategic investments that the Group intends to hold indefinitely, they have
been designated as at fair value through other comprehensive income (“FVTOCI”). They are held at fair value with gains
and losses arising from changes in fair value recognised in other comprehensive income and accumulated in other reserves.
The cumulative gains or losses will not be reclassified to profit or loss on disposal of the investments; instead, they will
be transferred directly to retained earnings. Dividends on these investments are recognised as other income in the
Consolidated Income Statement. All other unlisted equity investments are held at fair value through profit or loss (“FVTPL”).

Loans receivable held at FVTPL were initially recognised at the amount of cash lent. Accrued interest is added to the carrying
amount. They are held at fair value and revalued at each reporting date.

Loans receivable held at amortised cost were initially recognised at the fair value of the cash lent. Accrued interest is added to
the carrying amount. They are held at amortised cost, reduced by the provision for expected credit losses. For the purposes
of impairment assessment, loans receivable held at amortised cost are considered low credit risk and therefore the Group
measures the provision for expected credit losses at an amount equal to 12-month credit losses. The provision for expected
credit losses in the current year is immaterial.

Contingent consideration receivable

Unlisted equity investments held at FVTOCI

Loans receivable held at FVTPL

Loan receivable held at amortised cost

Contributions towards dilapidations costs receivable

Other financial assets

Disclosed as:

Current

Non-current

3 December
2023
£m

27 November
2022
£m

29.4

82.7

0.5

14.4

0.7

127.7

43.7

84.0

127.7

98.3

69.8

2.4

14.2

0.7

185.4

3.8

181.6

185.4

Contingent consideration receivable
Total contingent consideration receivable at the balance sheet date is £29.4m (FY22: £98.3m), and comprises two amounts:
£28.0m (FY22: £95.0m) due from Marks & Spencer Holdings Limited (“M&S”) relating to the part-disposal of Ocado Retail
Limited (“Ocado Retail”) in August 2019; and £1.4m (FY22: £3.3m) due from Next Holdings Limited (“Next”) relating to the
disposal of Marie Claire Beauty Limited (“Fabled”) in July 2019. Refer to Note 1.4 for details on the estimation uncertainty
in relation to the fair value measurement of contingent consideration receivable and Note 4.4 for changes in the fair value
during the period.

Contingent consideration due from M&S
Under the terms of the disposal of 50% of Ocado Retail to M&S that took place during 2019, a final 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 payment in full of £190.7m (£156.3m
plus £34.4m of interest, assuming a payment date of August 2024). 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.

The contractual arrangement with M&S expressly provides 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 a number of significant decisions and actions taken by Ocado Retail management that require
adjustment to the Target under the terms of the contractual agreement with M&S. The adoption of these adjustments, if
established, would result in Ocado Retail achieving the Target (as adjusted) and the full payment of £190.7m. It may be that a
legal process is required for this outcome to be assessed. The precise outcome of a legal process is inherently uncertain but
would be binary – payment of either the £190.7m in full, or no payment. This creates a risk for both us and M&S and an
incentive to reach a negotiated settlement to avoid the legal route. We believe a negotiated settlement will reflect a significant
proportion of the full amount of the contingent consideration of £190.7m – particularly given the wider JV relationship.

262

Accounting treatment
While the contractual outcome is a binary one, the Group is required to apply 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 not consider any non-contract specific factors
at the measurement date. In valuing this asset, a market participant would also exclude broader facts, circumstances and
commercial arrangements pertaining to the ongoing relationship with M&S.

Under IFRS 13 there is judgement required in selecting and applying the appropriate measurement basis as viewed from the
perspective of a market participant. There is no directly observable market for this financial instrument. We are therefore
required to theoretically determine a market participant and have considered entities such as litigation funders, vulture funds
and hedge funds in this determination. We have also assumed that the market participant would price into the valuation the
inherent risk associated with the outcome and would also include consideration of the margin they would seek in acquiring the
asset.

In the prior reporting period, the fair value of the Contingent Consideration was estimated using an expected present value
technique based on a number of probability-weighted scenarios for the FY23 performance outturn and applying an
appropriate discount rate to reflect the time value of the possible payment. The Group considered a range of scenarios
reflecting market uncertainty at the time, the impact of likely adjustments to the Target, and Ocado Retail’s expected trading
performance. With the FY23 year now closed, the end of the measurement period for the Target has been reached and the
valuation of the Contingent Consideration has been revisited.

The actual FY23 performance is below the Target required for automatic payment of the Contingent Consideration. However,
as stated above, the contract includes a mechanism for adjusting the Target.

The contract requires the shareholders to engage in good faith discussions concerning possible adjustments, and we intend to
pursue that process, however there can be no assurance that an adjustment proposed by one party will be eventually
accepted by another or that a wider agreement will be reached and if so formal legal proceedings may well result.

The Group has identified a number of material adjustments that it considers to result from decisions taken by Ocado Retail
management, and which should be reflected in determining whether the Target has been met. These adjustments include the
impact of significant decisions taken in 2020 and 2021 during the COVID pandemic, particularly in the way in which Ocado
Retail management chose to limit access to the website and ration delivery slots. Ocado Retail’s management chose to
prioritise vulnerable customers and certain existing customers at the expense of other existing customers and to stop the
registration of new customers. These were decisions that differed from the business plan assumptions underpinning the
formulation of the Target in the original sale agreement with M&S. We believe that the impact of these decisions, whether
intended or not, was to maximise earnings in 2020 and 2021 at the expense of later years, for example:

• In February 2020, just before the onset of COVID, Ocado Retail had just over 850,000 active customers, having grown
consistently at a compound annual growth rate (“CAGR”) of around 11% over the previous 5 years. Within 12 months of
making these decisions, active customers had declined to just less than 650,000 customers, a loss of approximately
200,000 active customers. Post-COVID Ocado Retail resumed its historical performance of growing active customers
at around 11%. Ocado Group management believes that the loss of around 200,000 active customers during COVID
significantly and negatively impacted the average number of active customers during the FY23 measurement year,
particularly compared with that envisaged in the long-term plan that underpinned the Target measure. The lower
number of average customers consequently lowered profitability in FY23 compared with the original business plan.

• Ocado Retail management decisions were taken to expand CFC capacity during COVID significantly ahead of previous plans,
which resulted in excess capacity and excess overheads throughout FY23 that were not included in the original business
plan.

The financial impact of these, and other decisions by Ocado Retail’s management are, in our assessment of the contractual
arrangements with M&S, valid and appropriate adjustments in determining the payment of the Contingent Consideration. If
successfully established, the application of these adjustments would result in the Target being achieved and the full amount of
Contingent Consideration becoming due.

It would be prudent to assume that in any negotiation or legal proceedings M&S would propose adjustments to the Target of
their own.

As at the year end, the fair value has been estimated using the expected present value technique and is based on a number of
probability-weighted possible scenarios that a market participant would consider in valuing the contract reflecting our current
understanding of the matter. We have estimated the risk and return on investment that a market participant would require in its
valuation of a contingent contractual claim. The year-end fair value is based on the information available at the end of the
financial year and has been determined to be £28.0m (FY22: £95.0m).

The financial reporting estimate of £28.0m for 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).

263

3.7 Other financial assets continued
Summary
There remains significant uncertainty regarding the conclusion of the amount due from M&S in respect of the Contingent
Consideration. Management is fully committed to ensuring the amount of the Contingent Consideration due is maximised and
intends to use all contractual or legal means available in order to achieve this aim.

Management believes that there is a greater likelihood that the amount to be paid in respect of the Contingent Consideration
will be agreed through a negotiated settlement between the two shareholders. This settlement may also include other matters.
Under IFRS 13, however, any broader commercial issues cannot be taken into account in determining the fair value of the
Contingent Consideration for financial reporting purposes at the year end date.

The fair value of £28.0m recorded in respect of the Contingent Consideration under IFRS 13, reflects the facts and
circumstances that existed at the balance sheet date. It is management’s belief that the fair value currently recorded is
significantly lower than the amount that Ocado may receive at the point of settlement.

Contingent consideration due from Next
The consideration due from Next is a percentage of the sales of Fabled for the period to July 2024. The total cash still
receivable under the earn-out arrangement is estimated to be £1.4m (FY22: £3.7m), payable in tranches in March and
September each year. During the period, cash received totalled £1.5m (FY22: £nil).

Unlisted equity investments held at FVTOCI

Company

Principal activity

Country of incorporation

80 Acres Urban
Agriculture Inc.

Vertical farming

United States of America

Inkbit Corporation

3D printing

United States of America

% of share capital held

Carrying amount

3 December
2023

27 November
2022

3 December
2023
£m

27 November
2022
£m

2.0%

5.0%

2.5%

5.5%

11.8

0.1

10.2

3.5

Oxa Autonomy Ltd

Paneltex Limited

Sanctuary Cognitive
Systems Corporation

Autonomous vehicle
technology

Manufacturing
refrigerated vehicles

England and Wales

12.2%

8.8%

56.4

36.8

England and Wales

25.0%

2.5

1.8

10.1

82.7

7.6

1.0

10.7

69.8

Artificial intelligence

Canada

1.5%

1.6%

Wayve Technologies
Limited

Autonomous vehicle
technology

Unlisted equity investments held at FVTOCI

England and Wales

2.5%

2.6%

In December 2022, Oxa Autonomy Ltd (“Oxa Autonomy”), previously Oxbotica Limited, successfully completed its Series C
Fundraising, which resulted in the Group’s warrants being exercised to acquire 21,934 B shares for £10.0m. The fair value of
the warrants prior to the transaction was £19.4m (see Note 4.3), which together with the exercise cost of £10.0m resulted in a
£29.4m increase in the Group’s equity investment in Oxa Autonomy. At the FY23 period end, the unlisted equity investment in
Oxa Autonomy has been revalued to £56.4m (FY22: £36.8m); refer to Note 4.4 for further details. Following exercise of the
warrants and the Series C Fundraising, the Group now holds a 12.2% interest in Oxa Autonomy.

The investment in Paneltex Limited (“Paneltex”) has not been treated as an associate since the Group does not have significant
influence over the company. In arriving at this decision, the Board has reviewed the conditions set out in IAS 28 “Investments
in Associates and Joint Ventures” and concluded that, despite the size of the Group’s holding, it is unable to participate in the
financial and operating policy decisions of Paneltex due to the position of the majority shareholder as Executive Managing
Director. The relationship between the Group and the company is at arm’s length.

Loans receivable held at FVTPL

Borrower

Karakuri Limited

Inkbit Corporation

Loans receivable held at FVTPL

Coupon
rate

Carrying amount

Repayment
due

3 December
2023
£m

27 November
2022
£m

Principal
amount

£1.7m

October 2023

US$0.6m

6% November 2024

–

0.5

1.8

0.6

2.4

Loan receivable held at amortised cost
The loan receivable held at amortised cost is a US$15.0m loan to Infinite Acres Holding B.V. In October 2021, following the
Group’s divestment in Infinite Acres, 80 Acres Urban Agriculture, Inc. (“80 Acres”) became a guarantor to the loan. Interest is
chargeable on the US$15.0m principal at 5% per annum to December 2021, and 7% thereafter. The loan is repayable in full in
September 2024, along with any unpaid accrued interest.

Contributions towards dilapidations costs receivable
Contributions towards dilapidation costs are due from the former tenant of two properties whose leases the Group took over
in 2017, and will be paid when the dilapidations costs are incurred on expiry of the leases.

3.8 Asset held for sale
Accounting policies
Assets and disposal groups classified as held for sale are measured at the lower of carrying amount and fair value less costs
to sell.

Assets and disposal groups are classified as held for sale if their carrying amount will be recovered through sale rather than
through continuing use. This condition is regarded as met only when the sale is highly probable, and the asset or disposal
group is available for immediate sale in its present condition. Management must be committed to the sale, which should be
expected to qualify for recognition as a completed sale within one year from the date of classification.

Where there are events or circumstances that extend the period to complete the sale beyond one year, and those events
or circumstances are beyond the Group’s control, the Group will continue to classify an asset or disposal group as held for
sale where there is sufficient evidence that the Group remains committed to its plan to sell the asset or disposal group.

Asset held for sale
The asset held for sale at the end of FY23 (£4.9m) is a property in the United Kingdom, previously used in the Group’s
distribution network, which the Group was in the process of selling at the period end. On 20 December 2023, the sale
of the asset was completed with net proceeds of £16.0m.

The asset held for sale at the end of FY22 (£4.4m) was a property in the United Kingdom, previously used in the Group’s
distribution network, which the Group was in the process of selling at the prior period end. During the current period,
the asset was sold for net proceeds of £9.4m, resulting in a gain on disposal of £5.0m.

3.9 Inventories
Accounting policies
Inventories comprise goods held for resale and consumables (including fuel). Inventories are valued at the lower of cost
(using the first-in-first-out basis) and net realisable value. Costs include all direct expenditure and other appropriate
attributable costs incurred in bringing inventories to their present location and condition. Net realisable value represents the
estimated selling price, less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
It also takes into account slow-moving, obsolete and defective inventory.

During the period, the Group reclassified £12.5m worth of assets, majority of which relate to inventory spares greater than
£500 from capital work-in-progress to inventory. This was done to align with the inventory accounting policy adopted in
the prior year, which capitalises low-value inventory spares (items below £500) instead of these items being expensed
upon purchase.

The value of such spares in the prior year was £12.7m. The prior year financial statements have not been restated as the
amounts are deemed immaterial by the Group and do not impact the total value of assets reported.

Goods for resale

Consumables

Inventories

3 December
2023
£m

27 November
2022
£m

84.1

43.0

127.1

89.2

17.6

106.8

The provision for slow-moving, obsolete and defective stock as at 3 December 2023 is £5.7m (FY22: £6.1m). The decrease
of £0.4m from the prior period (FY22: £2.5m increase) has been recognised in the Consolidated Income Statement.

Loans receivable held at FVTPL previously included a convertible loan to Karakuri, a company in which the Group holds a
26.3% interest. Refer to Note 5.4 for further details.

264

265

3.10 Trade and other receivables
Accounting policies
Trade receivables are not interest bearing and are due on commercial terms. Trade receivables are recognised initially at
their transaction price and subsequently measured at amortised cost using the effective interest method, less expected credit
loss (“ECL”).

Other receivables are also not interest bearing and are recognised initially at their fair value, which generally coincides with
their transaction price, and subsequently at amortised cost, reduced by appropriate ECL.

Certain trade receivables and trade payables are subject to counterparty offsetting or enforceable master netting
arrangements. Each agreement with a counterparty allows for net settlement of the relevant financial assets and liabilities
when both the Group and the counterparty elect to settle on a net basis. The master netting agreements regulate settlement
amounts in the event a party defaults on their obligations.

Provision for expected credit loss (“ECL”)
The Group applies the simplified approach to measuring ECL, segmenting its trade receivables based on shared
characteristics and recognising a loss allowance for the lifetime ECL for each segment of trade receivables.

The expected loss rates are based on the Group’s historical credit losses, adjusted for reasonable and supportable information
that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.

Trade receivables, net of ECL allowance

Other receivables1

Prepayments

Accrued income

Trade and other receivables

Disclosed as:

Current

Non-current

3 December
2023
£m

27 November
2022
£m

126.8

188.9

55.8

54.8

426.3

375.4

50.9

426.3

124.2

82.7

76.5

45.9

329.3

–

329.3

1. Included within other receivables in the prior period is a current tax asset of £12.3m. In the current period, current tax assets have been separately presented on the
Consolidated Balance Sheet and as such are not included within other receivables for FY23. As the amounts are not material in either period, the prior period has
not been restated.

At 3 December 2023, the Group had an ECL allowance of £12.5m (FY22: £15.5m) against an outstanding trade receivable
balance of £139.3m (FY22: £139.7m). The movement in ECL allowance included a £1.0m provision (FY22: £7.8m) which was
recorded against revenue in relation to a minor contractual dispute regarding specific terms, which were under negotiation at
the end of the period. See Note 4.5 for further details on ECL allowance.

Movements in the provision for ECL of trade receivables are as follows:

Included in other receivables is £144.8m (FY22: £nil) due from the AutoStore settlement, of which £94.2m (FY22: £nil) is
current and £50.6m (FY22: £nil) is non-current. The receivable was initially recognised at fair value of £180.4m using the
income approach and is subsequently measured at amortised cost. The balance will be reduced by monthly instalments
received and increased by the unwinding of the discounting as the receivable moves towards maturity. See Note 2.5 for
further details on the settlement agreement. The other receivables also include VAT receivable of £21.3m (FY22: £21.4m).

Of the total trade receivables balance at the end of period, £33.3m (FY22: £31.9m) will be subject to future netting
arrangements.

The ECLs relating to accrued income and other receivables were immaterial as at 3 December 2023 (FY22: immaterial).
Refer to Note 4.5 for the related discussion.

Refer to Note 5.4 for details on related party balances within trade and other receivables.

3.11 Cash and cash equivalents
Accounting policies
Cash and cash equivalents comprise cash at bank and in hand, money-market funds, and short-term deposits with banks
with a maturity of three months or less at the date of acquisition. Cash at bank and in hand includes customers’ credit card
payments received within five working days of the reporting date where notification of a chargeback or reserve fund has not
been received from the payment service provider at the reporting date. Cash and cash equivalents are classified as current
assets on the Consolidated Balance Sheet. The carrying amount of these assets approximates to their fair value.

Cash at bank and in hand

Money-market funds

Short-term deposits

Cash and cash equivalents

3 December
2023
£m

27 November
2022
£m

265.8

619.0

–

304.3

623.7

400.0

884.8

1,328.0

Included in cash at bank and in hand are customers’ credit card payments of £19.9m (FY22: £21.9m) received within five
working days of the reporting date.

Of the Group’s cash and cash equivalents, £1.1m (FY22: £1.4m) is held by the Group’s captive insurance company to maintain
its solvency requirements. A further £1.0m (FY22: £1.5m) is held by the Trustee of the Group’s Employee Benefit Trust relating
to the Sharesave scheme for employees in Poland. These funds are restricted and are not available to circulate within the
Group on demand.

3.12 Trade and other payables
Accounting policies
Trade and other payables are initially recognised at their transaction price, which is deemed to equal to their fair value, and
subsequently at amortised cost, using the effective interest method.

Balance at beginning of period

Provision for ECL of receivables

Uncollectible amounts written off

Recovery of amounts previously provided for

Effect of changes in foreign exchange rate

Balance at end of period

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

(15.5)

(1.8)

3.2

1.3

0.3

(3.9)

(12.0)

–

0.4

–

(12.5)

(15.5)

Trade payables

Taxation and social security

Accruals and other payables

Deferred income

Trade and other payables

Disclosed as:

Current

Non-current

3 December
2023
£m

27 November
2022
£m

181.0

60.2

213.3

15.0

176.9

32.5

287.8

11.0

469.5

508.2

468.4

1.1

469.5

506.3

1.9

508.2

Included in trade receivables and accrued income are £62.7m and £4.4m respectively (FY22: £59.6m and £14.2m) relating
to contract balances outstanding for Solutions contracts. See Note 2.1 for more detail.

Accruals and other payables includes £46.6m of employment cost accruals (FY22: £65.0m), £58.0m of goods received not
invoiced (FY22: £58.1m) and £18.3m of capital project accruals (FY22: £42.4m).

Included in trade receivables is £59.1m (FY22: £52.5m) due from suppliers in relation to commercial and media income.
As at 26 January 2024, £42.3m had been received.

Deferred income includes the value of delivery income received under the Ocado Smart Pass scheme, lease incentives and
media income from suppliers, which all relate to future periods.

Included in accrued income is £21.5m (FY22: £12.5m) to be invoiced to suppliers in relation to supplier-funded promotional
activity, and £10.9m (FY22: £6.2m) to be invoiced to suppliers in relation to volume-related rebates. As at 26 January 2024,
£29.8m of this accrued income had been invoiced.

266

The amount of pension payable in respect of defined contributions schemes at the end of the period is £4.8m (FY22: £8.2m).

267

3.13 Provisions
Accounting policies
Provisions are recognised on the Consolidated Balance Sheet when the Group has a present legal or constructive obligation
as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and the amount
can be estimated reliably.

The amount recognised as provisions are management’s best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation and historical
experience. Provisions are determined by discounting the expected future cash flows by a rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised
as a finance cost in the Consolidated Income Statement.

Onerous contracts
Provisions for onerous contracts are recognised when the unavoidable costs of meeting the obligations under the contract
exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net
cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from
failure to fulfil it.

Dilapidations
Provisions for dilapidations are made for properties and vehicles where there are obligations to return the assets to the
condition and state they were in when the Group obtained the right to use them. Amounts are recognised on an asset-by-asset
basis, and are based on the present value of future expected costs required to restore the Group’s leased buildings and
vehicles to their fair condition at the end of their lease terms.

Employee incentives schemes
Provisions for employee incentive schemes relate to employer’s NIC on taxable equity-settled schemes and cash-settled
employee long-term incentive schemes. For all taxable schemes, the Group is liable to pay employer’s NIC upon exercise
of the share awards.

Taxable schemes are the unapproved Executive Share Option Scheme (“ESOS”), the Ocado Group Value Creation Plan
(“Group VCP”), the Long-Term Operating Plan, the Annual Incentive Plan (“AIP”) and the Restricted Share Plan (“RSP”).
For more details on these schemes, refer to Note 4.7.

Restructuring
A restructuring provision is recognised when the Group has developed a detailed formal plan and has raised a valid
expectation in those affected that it will carry out the restructuring. The measurement of a restructuring provision includes
only the direct expenditures arising from the restructuring. Provisions for restructuring mainly relate to the closure of the CFC
in Hatfield and related costs.

Balance at 28 November 2021

Charged to Consolidated Income Statement

• Additional provision

• Unwinding of discounting

• Unused amounts reversed

Recognition of right-of-use assets

Recognised on acquisition

Used during the period

Balance at 27 November 2022

Charged to Consolidated Income Statement

• Additional provision

• Unwinding of discounting

• Unused amounts reversed

Remeasurement of right-of-use assets

Used during the period

Balance at 3 December 2023

Onerous
contracts
£m

Dilapidations
£m

Employee
incentive
schemes
£m

Restructuring
£m

–

6.6

–

6.6

21.5

27.7

–

0.4

(2.9)

5.3

–

24.3

–

1.2

–

(0.2)

–

25.3

0.6

–

(26.6)

–

(0.2)

1.5

3.6

–

(1.0)

4.1

–

18.0

–

(6.1)

–

(8.0)

3.9

Other
£m

0.5

–

0.2

(0.1)

0.6

0.3

–

0.9

Total
£m

49.7

0.6

0.4

(29.5)

5.3

0.2

(0.3)

26.4

28.5

1.2

(6.1)

(0.2)

(9.0)

40.8

3 December 2023

Current

Non-current

27 November 2022

Current

Non-current

Onerous
contracts
£m

Dilapidations
£m

6.6

–

6.6

0.9

24.4

25.3

Onerous
contracts
£m

Dilapidations
£m

Restructuring
£m

3.9

–

3.9

Employee
incentive
schemes
£m

1.1

3.0

4.1

Employee
incentive
schemes

£m Restructuring

–

0.3

24.0

24.3

0.3

1.2

1.5

–

Other
£m

0.7

0.2

0.9

Other
£m

0.4

0.2

0.6

Total
£m

13.2

27.6

40.8

Total
£m

1.0

25.4

26.4

Onerous contracts
During the period, a provision of £6.6m was recognised in relation to unavoidable costs expected to be incurred in exiting
manufacturing contracts as a result of changes to design and production. Amounts are expected to be utilised in the next
12 months.

Dilapidations
During the period, dilapidation provisions increased as a result of the unwinding of discount of £1.2m (FY22: £0.4m). No
amounts were utilised in the current or prior period.

Property leases expire between 2024 and 2092 with contractual amounts due to be incurred at the end of the lease term.

Leases for vehicles run for an average of five years, with the contractual obligation per vehicle payable at the end of the lease
term. If a non-contractual option to extend individual leases is exercised by the Group, the contractual obligation remains the
same but is deferred by six months.

Restructuring
Following the Group’s announcement of its plan to cease operations at its CFC in Hatfield as part of a wider review of UK
network capacity, a provision of £18.0m was recognised for redundancies and other related costs of closure. During the
period, £8.0m has been utilised primarily relating to redundancy costs, and £6.1m has been released upon reassessment of the
remaining costs provided for. For more details, refer to Note 2.5.

Employee incentive schemes
During the period, an additional provision of £3.6m (FY22: £0.6m) has been recognised primarily in relation to estimated
employer’s NIC on taxable equity-settled schemes (£2.4m) and cash-settled employee incentive schemes (£1.2m). Also during
the period, £1.0m (FY22: £0.2m) has been utilised primarily as a result of exercises of taxable equity-settled share awards.
There were no releases in the period of amounts previously provided. Releases in the prior period included £7.0m in relation to
employer’s NIC on the Group VCP and £19.0m for the Retail VCP following the cancellation of the scheme.

The provision will be utilised once the share awards under each of the schemes have vested and been allotted to participants
on exercise. Vesting will occur between 2024 and 2028, and allotment will take place between 2024 and 2033. Refer to Note
4.7 for further details.

Other provisions
Other provisions include amounts related to potential motor insurance claims and potential public liability claims where
accidents have occurred but a claim has yet to be made.

3.14 Contingent liabilities
Accounting policies
Contingent liabilities are potential future cash outflows, where the likelihood of payment is considered more than remote
but is not considered probable or cannot be measured reliably.

Claims and litigation
The Group has contingent liabilities in respect of other legal claims arising in the ordinary course of business, all of which the
Group expects will either be covered by its insurance or will not have a material effect on the Group’s financial statements.

268

269

3.14 Contingent liabilities continued
Subsidiary audit exemptions
The following UK subsidiary undertakings are exempt from the requirements of the Companies Act 2006 (the “Act”) relating
to the audit of individual accounts by virtue of Section 479A of the Act:

• Ocado Ventures Holdings Limited (09887250)
• Ocado Ventures (80 Acres) Limited (12075378)
• Ocado Ventures (Myrmex) Limited (12774138)
• Ocado Ventures (Inkbit) Limited (12103334)
• Ocado Ventures (Oxbotica) Limited (12796767)
• Ocado Ventures (JFC) Limited (12035120)
• Ocado Ventures (Wayve) Limited (13536254)
• Ocado Ventures (Karakuri) Limited (11512054)
• Ocado Finco 1 Limited (12996937)
• Ocado Finco 2 Limited (13007767)
• Ocado Intelligent Automation Limited (14744957)
• 6 River Systems Limited (12070197)

Ocado Group plc will guarantee all outstanding liabilities that these subsidiaries are subject to as at the financial period
ended 3 December 2023 in accordance with Section 479C of the Act, as amended by the Companies and Limited Liability
Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012. In addition,
Ocado Group plc will guarantee any contingent and prospective liability that these subsidiaries are subject to.

Section 4 – Capital structure and financial instruments
4.1 Borrowings
Accounting policies
Interest-bearing loans and bank overdrafts are initially recorded at fair value, net of transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised cost, with any difference between cost and redemption
value being recognised in the Consolidated Income Statement over the period to redemption using the effective interest
method, or capitalised as part of the cost of qualifying assets.

Convertible bonds are compound financial instruments, and so their liability and equity components are presented separately
in accordance with IAS 32 “Financial Instruments: Presentation”. At the date of issue, the liability component is valued by
reference to a similar liability that does not have an associated equity component, and is recognised as borrowings. The
difference between the proceeds received and the liability component is recognised in the convertible bonds reserve, directly
in reserves. The liability and equity components are recorded net of transaction costs. The liability component is then held at
amortised cost, with any difference between initial fair value and redemption value being recognised in the Consolidated
Income Statement over the period to redemption using the effective interest method, or capitalised as part of the cost of
qualifying assets. The carrying amount of the equity component does not change until the liability component is redeemed
through repayment or conversion into ordinary shares.

Senior unsecured convertible bonds

Senior unsecured notes

Revolving credit facility

Other borrowings

Borrowings

Disclosed as:

Current

Non-current

3 December
2023
£m

27 November
2022
£m

868.0

498.2

–

95.9

835.9

496.3

10.0

30.6

1,462.1

1,372.8

2.6

1,459.5

1,462.1

10.2

1,362.6

1,372.8

Senior unsecured convertible bonds and senior unsecured notes

Facility

Inception

Coupon rate

Maturity

£600m senior unsecured convertible bonds

December 2019

0.875%

December 2025

£350m senior unsecured convertible bonds

June 2020

£500m senior unsecured notes

October 2021

0.750%

3.875%

January 2027

October 2026

Carrying amount

53 weeks
ended
3 December
2022
£m

52 weeks
ended
27 November
2022
£m

560.2

307.8

498.2

540.7

295.2

496.3

The £600.0m of senior unsecured convertible bonds (the “2025 Bonds”) were issued in December 2019, raising £592.1m, net
of transaction fees. At the date of issue, the liability component was valued at £485.0m, with the remaining £107.1m recognised
in the convertible bonds reserve. The bonds are convertible into ordinary shares of the Company at a conversion price of
£17.93. The conversion period commenced on 19 January 2020 and shall end on the 10th calendar day prior to the maturity
date. Unless previously redeemed, or purchased and cancelled, the 2025 Bonds will be convertible at the option of the
bondholders on any day during the conversion period. The Company has the option to redeem all, but not some only, of the
2025 Bonds on or after 30 December 2023, at par plus accrued but unpaid interest, if the parity value (as described in the
Terms and Conditions relating to the 2025 Bonds) on each of at least 20 dealing days in a period of 30 consecutive dealing
days shall have exceeded 130% of the principal amount. The Company also has the option to redeem all outstanding 2025
Bonds, at par plus any accrued but unpaid interest, at any time if 85% or more of the principal amount of the 2025 Bonds shall
have been previously converted or repurchased and cancelled.

The £350.0m of senior unsecured convertible bonds (the “2027 Bonds”) were issued in June 2020, raising £343.4m, net of
transaction fees. At the date of issue, the liability component was valued at £266.0m, with the remaining £77.4m recognised in
the convertible bonds reserve. The bonds are convertible into ordinary shares of the Company at a conversion price of £26.46.
The conversion period commenced on 29 July 2020 and shall end on the 10th calendar day prior to the maturity date. Unless
previously redeemed, or purchased and cancelled, the 2027 Bonds will be convertible at the option of the bondholders on
any day during the conversion period. The Company has the option to redeem all, but not some only, of the 2027 Bonds on or
after 8 February 2025, at par plus accrued interest, if the parity value (as described in the Terms and Conditions relating to the
2027 Bonds) on each of the at least 20 dealing days in a period of 30 consecutive dealing days shall have exceeded 130% of
the principal amount. The Company also has the option to redeem all outstanding 2027 Bonds, at par plus accrued interest,
at any time if 85% or more of the principal amount of the 2027 Bonds shall have been previously converted or repurchased
and cancelled.

The £500.0m of senior unsecured notes were issued in October 2021, raising £491.6m, net of transaction fees.

Revolving credit facility
In June 2022, the Group entered into a three-year multi-currency Revolving Credit Facility (“RCF”) of £300m with a syndicate
of international banks. The RCF is due to mature on 20 June 2025. As at 3 December 2023, the facility remains undrawn.
Interest is payable on the amounts drawn down at a margin of 2.25% plus the applicable reference rate depending on the
currency of the amounts drawn down. The Group is subject to a springing covenant under this facility which is required
to be met when drawing down and subsequent quarters if a loan is outstanding.

Transaction costs of £3.4m relating to the RCF were capitalised in the prior period and are being amortised in the
Consolidated Income Statement on a straight-line basis over the term of the RCF.

The Group also had an existing RCF of £10.0m at the prior period end that was repaid upon expiration of the facility
in December 2022.

270

271

4.1 Borrowings continued
Other borrowings
Other borrowings include a shareholder loan of £90.0m (2022: £30.0m) provided to Ocado Retail from the non-controlling
interest. The loan has a termination date of August 2039 and incurs interest at SONIA + 4% per annum.

3 December 2023

Senior unsecured convertible bonds

Senior unsecured notes

Revolving credit facility

Other borrowings

Borrowings

27 November 2022

Senior unsecured convertible bonds

Senior unsecured notes

Revolving credit facility

Other borrowings

Borrowings

Due in less
than one
year
£m

Due in
between one
and two
years
£m

Due in
between two
and five
years
£m

Due in more
than five
years
£m

–

2.6

–

0.4

868.0

498.2

–

0.3

1,366.5

–

92.6

Due in
between one
and two
years
£m

Due in
between two
and five
years
£m

Due in more
than five
years
£m

Due in less
than one year
£m

–

10.0

0.2

10.2

–

0.1

835.9

496.3

–

0.3

1,332.5

–

30.0

Total
£m

868.0

498.2

–

95.9

1,462. 1

Total
£m

835.9

496.3

10.0

30.6

1,372.8

The Group reviews its financing arrangements regularly. The senior unsecured notes and senior unsecured convertible bonds
contain typical restrictions concerning dividend payments and additional debt and leases.

4.2 Movements in net debt*

Cash movements

Non-cash movements

27
November
2022
£m

Cash
flows
excluding
interest
£m

Notes

Interest
received
£m

Interest
paid
£m

Interest
income/
(charge)
£m

Net new
lease
liabilities
£m

Foreign
exchange
£m

3
December
2023
£m

Cash and cash equivalents

3.11

1,328.0

(469.7)

41.7

–

(15.2)

884.8

Liabilities from financing
activities:

Borrowings

Lease liabilities

Gross debt*

4.1

(1,372.8)

(54.1)

3.5

(532.3)

(1,905.1)

66.8

12.7

–

30.6

25.7

56.3

(65.8)

–

– (1,462.1)

(25.7)

(32.5)

0.2

(497.8)

(91.5)

(32.5)

0.2 (1,959.9)

Net debt*

(577.1)

(457.0)

41.7

56.3

(91.5)

(32.5)

(15.0) (1,075.1)

* Gross debt and net debt are alternative performance measures. See Alternative Performance Measures on pages 302 to 303.

Cash movements

Non-cash movements

28
November
2021
£m

Cash flows
excluding
interest
£m

Notes

Interest
received
£m

Interest
paid
£m

Interest
income/
(charge)
£m

Net new
lease
liabilities
£m

Foreign
exchange
£m

27
November
20221
£m

Cash and cash equivalents

3.11

1,468.6

(172.0)

9.6

–

Liabilities from financing
activities:

Borrowings

Lease liabilities

Gross debt*

4.1

(1,300.0)

(40.6)

3.5

(528.4)

(1,828.4)

57.4

16.8

–

27.5

28.3

55.8

(59.7)

(28.3)

(88.0)

–

(61.3)

21.8

1,328.0

–

(1,372.8)

(532.3)

(1,905.1)

Net debt*

(359.8)

(155.2)

9.6

55.8

(88.0)

(61.3)

21.8

(577.1)

* Gross debt and net debt are alternative performance measures. See Alternative Performance Measures on pages 302 to 303.
1. The prior year balances have been amended to provide additional information on the cash and non-cash movements during the period.

4.3 Derivative financial instruments
Accounting policies
Derivative financial instruments are initially recognised at fair value on the contract date, and are subsequently measured at
their fair value at each reporting date. The method of recognising the resulting fair value gain or loss depends on whether or
not the derivative is designated as a hedging instrument, and on the nature of the item being hedged. At 3 December 2023
and 27 November 2022, the Group’s derivative financial instruments consisted of warrants to subscribe for additional
shares of investee companies and commodity swap contracts, which are designated as cash flow hedges of highly
probable transactions.

The Group documents at the inception of the hedge the relationship between hedging instruments and hedged items, the risk
management objectives and strategy, and its assessment of whether the derivatives that are used in hedging transactions are
highly effective in offsetting changes in fair values or cash flows of hedged items.

This assessment is performed retrospectively at the end of each financial reporting period. Movements in the hedging reserve
within reserves are shown in the Consolidated Statement of Comprehensive Income. The fair value of hedging derivatives is
classified as current when the remaining maturity of the hedged item is less than 12 months.

The effective portion of changes in the fair value of derivatives that are designated as cash flow hedging instruments
and qualify for hedge accounting is recognised in other comprehensive income. Amounts accumulated through other
comprehensive income are recycled in the Consolidated Income Statement in the periods in which the hedged items
affect profit or loss.

Non-current assets

Warrants

Current assets

Commodity swap contracts

Current liabilities

Commodity swap contracts

Net derivative assets

3 December
2023
£m

27 November
2022
£m

3.3

0.1

(0.2)

3.2

27.4

0.8

(1.6)

26.6

Commodity swap contracts
The Group uses commodity swap contracts to hedge the cost of future purchases of diesel fuel to be used in the logistics
business. The cash flows are expected to occur within one year of the reporting date, and hedges cover 50% to 80% of
expected risk.

272

273

4.3 Derivative financial instruments continued
The notional principal amounts of the outstanding commodity swap contracts were £7.9m (FY22: £13.4m). The weighted
average strike price of the outstanding commodity swap contracts relating to the future purchase of fuel at the reporting date
was 52.32 pence per litre of diesel (FY22: 66.13 pence per litre of diesel). The hedged highly probable forecast transactions
are expected to occur at various dates during the next 12 months. The fair value movements in cash flow hedges resulted in
a loss of £0.4m (FY22: £7.7m gain) for the period, whilst a £1.1m gain (FY22: £8.8m loss) has been reclassified from the cash
flow hedge reserve to the Consolidated Income Statement on settlement of the swap contracts. The cumulative gain/(loss)
held in the cash flow hedge reserve will be recognised in profit or loss in the periods during which the hedged forecast
transactions affect the Consolidated Income Statement.

Throughout the period, all of the Group’s cash flow hedges were effective, and there is, therefore, no ineffective portion
recognised in profit or loss.

Warrants

Investee company

Oxa Autonomy Limited1

80 Acres Urban Agriculture, Inc.

Karakuri Limited2

Wayve Technologies Limited

Warrants

Expiry date

April 2024

September 2026

April 2024

January 2026

Carrying amount

3 December
2023
£m

27 November
2022
£m

–

3.0

–

0.3

3.3

19.5

4.0

2.1

1.8

27.4

1. In December 2022, Oxa Autonomy Limited successfully completed its Series C Fundraising, which resulted in the Group’s warrants being exercised. Refer to Note 3.7 for

further details.

2. In July 2023, Karakuri entered into administration and as such, the fair value of the warrants has been adjusted to £nil. Refer to Note 3.6 for further details.

Warrants are measured at fair value each year end, taking into account a variety of inputs, sensitivities and probabilities based
on underlying forecasts and financial information of the investee company. Any fair value gains or losses on remeasurement
are recognised through the Consolidated Income Statement.

4.4 Financial instruments
Accounting policies
Financial assets and financial liabilities are recognised on the Consolidated Balance Sheet when the Group becomes a party
to the contractual provisions of the instruments. Financial instruments are derecognised from the Consolidated Balance Sheet
when the contractual cash flows expire or when the Group no longer retains control of substantially all the risks and rewards
under the instrument.

The Group classifies its financial assets using the following categories:

• Amortised cost.
• Fair value through profit or loss (“FVTPL”).
• Fair value through other comprehensive income (“FVTOCI”).

The classification depends on the characteristics of the contractual cash flows, and the Group’s business model for
managing them.

Refer to Note 3.10 for the Group’s accounting policy for expected credit losses.

Financial liabilities are measured at amortised cost, except for derivatives that are measured at fair value with gains or
losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging
instruments). Classification depends on the purpose for which the liability was acquired.

Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that gives a residual interest in the assets of the Group, after deducting
all of its liabilities.

The Group has categorised its financial instruments as follows:

3 December 2023

Financial assets

Other financial assets

Trade receivables

Other receivables and accrued income1

Cash and cash equivalents

Derivative assets

Total financial assets

Financial liabilities

Trade payables

Accruals and other payables2

Borrowings

Lease liabilities

Derivative liabilities

Total financial liabilities

27 November 2022

Financial assets

Other financial assets

Trade receivables

Other receivables and accrued income1

Cash and cash equivalents

Derivative assets

Total financial assets

Financial liabilities

Trade payables

Accruals and other payables2

Borrowings

Lease liabilities

Derivative liabilities

Total financial liabilities

Amortised
cost
£m

Notes

FVTPL
£m

FVTOCI
£m

Total
£m

29.9

82.7

3.7

3.10

3.11

4.3

3.12

4.1

3.5

4.3

Notes

3.7

3.10

3.11

4.3

3.12

4.1

3.5

4.3

15.1

126.8

222.4

884.8

–

1,249.1

(181.0)

(166.7)

(1,462.1)

(497.8)

–

(2,307.6)

Amortised
cost
£m

14.9

124.2

107.2

1,328.0

–

1,574.3

(176.9)

(222.8)

(1,372.8)

(532.3)

–

(2,304.8)

–

3.4

33.3

–

(0.2)

–

28.2

128.9

–

(1.6)

–

127.7

126.8

222.4

884.8

3.4

82.7

1,365.1

–

(181.0)

(166.7)

(1,462.1)

(497.8)

(0.2)

(2,307.8)

185.4

124.2

107.2

1,328.0

28.2

69.8

1,773.0

–

(176.9)

(222.8)

(1,372.8)

(532.3)

(1.6)

(2,306.4)

FVTPL
£m

FVTOCI
£m

Total
£m

100.7

69.8

1. Excluded from the other receivables and accrued income balance compared with Note 3.10 is a VAT receivable balance of £21.3m (FY22: £21.4m), which is not a financial

asset in scope of IFRS 9. Prior year balances have been restated accordingly.

2. Excluded from the accruals and other payables balance compared with Note 3.12 is £46.6m (FY22: £65.0m) of employee cost accruals, which are not a financial instrument

in scope of IFRS 9. Prior year balances have been restated accordingly.

Derivative financial instruments are held at FVTPL, but where they are hedging instruments, related gains and losses are
recognised in other comprehensive income.

274

275

4.4 Financial instruments continued
Fair value measurement of financial assets and liabilities
The Group uses the following hierarchy for determining and disclosing the fair value of its financial instruments:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
• Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly (level 2).
• Inputs for the assets or liabilities that are not based on observable market data (level 3).

Set out below is a comparison by category of carrying amounts and fair values of all financial instruments that are included in
the financial statements:

Financial assets

Other financial assets

Trade receivables

Other receivables and accrued income1

Cash and cash equivalents

Derivative assets

Total financial assets

Financial liabilities

Trade payables

Accruals and other payables2

Senior unsecured notes

Senior unsecured convertible bonds

Other borrowings

Derivative liabilities

Total financial liabilities

3 December 2023
Carrying
amount
£m

Fair value
£m

27 November 2022
Carrying
amount
£m

Fair value
£m

127.7

126.8

222.4

884.8

3.4

127.7

126.8

222.4

884.8

3.4

185.4

124.2

94.9

185.4

124.2

94.9

1,328.0

28.2

1,365.1

1,760.7

(181.0)

(166.7)

(181.0)

(166.7)

(498.2)

(418.0)

(868.0)

(782.4)

(95.9)

(0.2)

(95.9)

(0.2)

(176.9)

(222.8)

(496.3)

(835.9)

(40.6)

(1.6)

(176.9)

(222.8)

(392.5)

(700.4)

(40.6)

(1.6)

(1,810.0)

(1,644.2)

(1,774.1)

(1,534.8)

Notes

3.7

3.10

3.11

4.3

3.12

4.1

4.3

1. Excluded from the other receivables and accrued income compared with Note 3.10 is a VAT receivable balance of £21.3m (FY22: £21.4m), which is not a financial asset in
scope of IFRS 9. Prior year balances have been restated accordingly. Current tax assets have also been separated from other receivables in order to present current tax
assets separately on the Consolidated Balance Sheet.

2. Excluded from the accruals and other payables balance compared with Note 3.12 is £46.6m (FY22: £65.0m) of employee cost accruals, which are not a financial instrument

in scope of IFRS 9. Prior year balances have been restated accordingly.

The fair values of other financial assets, trade receivables, other receivables and accrued income, cash and cash equivalents,
trade payables and accruals and other payables are assumed to approximate to their carrying values but for completeness are
included in the above analysis.

The fair values of the senior unsecured notes and senior unsecured convertible bonds are determined based on the quoted
price in the active market.

The fair values of all other financial assets and liabilities have been calculated using discounted cash flows or the probability
expected return method or the option pricing model.

Financial assets and liabilities held at fair value have been valued as follows:

3 December 2023

Financial assets held at fair value

Contingent consideration receivable

Unlisted equity investments

Loans receivable held at FVTPL

Derivative assets

Total financial assets held at fair value

Financial liabilities held at fair value

Derivative liabilities

Total financial liabilities held at fair value

Notes

Level 1
£m

Level 2
£m

Level 3
£m

Total
£m

3.7

4.3

–

0.1

29.4

82.7

0.5

3.3

29.4

82.7

0.5

3.4

115.9

116.0

(0.2)

–

(0.2)

27 November 2022

Financial assets held at fair value

Contingent consideration receivable

Unlisted equity investments

Loans receivable held at FVTPL

Derivative assets

Total financial assets held at fair value

Financial liabilities held at fair value

Derivative liabilities

Total financial liabilities held at fair value

Notes

Level 1
£m

Level 2
£m

Level 3
£m

Total
£m

3.7

4.3

–

0.8

(1.6)

98.3

69.8

2.4

27.4

197.9

–

98.3

69.8

2.4

28.2

198.7

(1.6)

During the current and prior period, there were no transfers between level 1 and level 2 fair value measurements, nor were
there transfers from or to level 3.

Changes in the fair values of financial instruments categorised in level 3 are as follows:

Contingent
consideration
receivable
£m

Unlisted
equity
investments
£m

Notes

Loans
receivable
£m

Derivative
assets
£m

Balance at 28 November 2021

Recognised/(derecognised) during the period

Cash paid/(received)

156.7

–

(Losses)/gains recognised in profit or loss

2.5, 2.6

(58.4)

Interest recognised in finance income

Gains recognised in other comprehensive income

Balance at 27 November 2022

Recognised/(derecognised) during the period

Cash (received)/paid

2.6

4.6

3.7

(Losses)/gains recognised in profit or loss

2.5, 2.6

Interest recognised in finance income

Losses recognised in other comprehensive income

2.6

4.6

Balance at 3 December 2023

–

98.3

–

(1.5)

(67.4)

–

29.4

31.4

8.9

–

(3.8)

–

33.3

69.8

19.4

10.0

–

(16.5)

82.7

10.9

(9.0)

0.5

(0.2)

0.2

–

2.4

–

(2.0)

0.1

–

0.5

9.6

1.9

–

15.9

–

27.4

(19.4)

–

(4.7)

–

3.3

Total
£m

208.6

1.8

0.5

(46.5)

0.2

33.3

197.9

–

8.5

(74.1)

0.1

(16.5)

115.9

The following table provides information about how the significant fair values of financial instruments categorised in level 3
are determined:

Description

Valuation techniques and key inputs

Unlisted equity
investments

Probability weighted expected
return method

• Oxa Autonomy Ltd

Forecasted revenue, revenue
multiples, exit date, discount rate
and probabilities

Significant
unobservable inputs Sensitivity of the fair value measurement to input

Probabilities of
expected revenue
in five different
scenarios

• An increase/decrease in the discount rate
by 5% decreases/increases the fair value
by £11.8m and £15.7m respectively.

• An increase/decrease in the exit date by

Discount rate

Exit date

one year decreases/increases the fair value
by £11.2m and £14.1m respectively.
• An increase in probability weighting

towards the higher case scenarios would
increase the fair value. In turn, an increase
in weighting towards the lower case
scenarios would decrease the fair value.

For more details on the other financial assets and derivative financial assets, refer to Notes 3.7 and 4.3 respectively.

276

277

4.5 Financial risk management
Overview
The Group’s financial instruments comprise cash and cash equivalents, trade and other receivables and payables, borrowings,
lease liabilities, derivatives and unlisted investments. The main financial risks faced by the Group relate to the risk of default by
counterparties following financial transactions, to the availability of funds for the Group to meet its obligations as they fall due,
and to fluctuations in interest and foreign exchange rates.

The management of these risks is set out below:

Credit risk
The Group’s exposure to credit risk arises from holdings of cash and cash equivalents, trade and other receivables, and
derivative assets. The carrying amounts of these financial assets, as set out in Note 4.4, represent the maximum credit
exposure. No collateral is held as security against these assets.

Management does not believe that the credit risk of any financial instrument has increased significantly since its
initial recognition.

Cash and cash equivalents
The Group’s exposure to credit risk on cash and cash equivalents is managed by using banks and financial institutions with the
appropriate geographical presence and suitable credit ratings. Money market investments are made in accordance with
internal treasury policies and the funds invested in have AAA ratings by either Fitch or S&P.

Trade and other receivables
Trade and other receivables that are financial instruments at the reporting date comprise amounts due from Retail customers,
Solutions customers, Logistics customers and monies due from suppliers in relation to commercial and media income, which
are considered of a good credit quality. The Group recognises expected credit losses in respect of amounts due from
customers and monies due from suppliers.

In relation to Retail customers and suppliers, the Group has very low retail credit risk due to transactions being principally of a
high volume, low value and short maturity. Therefore, it also has very low concentration risk. The Group has effective controls
over this area. The Group provides for 30% of amounts due from supplier income that are between 61 and 360 days overdue,
and 100% of amounts more than 360 days overdue. It provides for 100% of amounts due from Retail customers which are more
than 30 days overdue.

For Solutions customers, amounts due from each customer are treated on a case-by-case basis, depending on the credit
risk assigned to the counterparty, the amount outstanding, and the length of time to or from the due date. Further, where a
customer is known to be in financial difficulty, the Group considers the need for an increased or specific provision compared
with historical averages.

The ECLs relating to Logistics customers are immaterial.

The Group’s other receivables held at amortised cost are considered to have low credit risk, and the loss allowance, if any, is
limited to 12 months’ expected losses. These are considered to be low credit risk as they have a low risk of default and the
debtor has the capacity to meet its contractual obligations in the near term.

The Group’s definition of default differs between suppliers and customers. A supplier is deemed to have defaulted if they have
not paid an amount due within 360 days of the due date. A Retail customer is deemed to have defaulted if they have not paid
an amount due within 30 days of the due date. Solutions customers are treated on a case-by-case basis, and the definition
of default varies.

Receivables are written off when there is no realistic prospect of recovery. This is generally the case when the Group
determines that the counterparty does not have sufficient assets or sources of income to repay the relevant amounts.
However, receivables that have been written off may still be subject to enforcement activity. The recovery of an amount
previously written off is recognised as a gain in the Consolidated Income Statement.

Refer to Note 3.10 for movements in the provision for ECL of trade and other receivables during the period.

Liquidity risk
The Group has adequate cash resources to manage the short-term working capital needs of the business. The Group regularly
reviews its financing arrangements to ensure an adequate level of headroom is maintained. For further details of the review
see the Viability Statement on page 112.

The Group monitors its liquidity requirements to ensure it has sufficient cash to meet operational needs and has not changed
from the previous year. Furthermore, the Group utilises its cash resources which are either held in bank accounts or highly
liquid money market funds to manage its short-term liquidity. For further details, see Note 4.8.

The table below analyses the Group’s financial liabilities based on the period remaining to the contractual maturity dates at the
reporting date. The amounts disclosed in the contractual cash flows are gross and undiscounted, and include future interest
payments, so will not necessarily reconcile to the carrying amounts.

3 December 2023

Trade payables

Accruals and other payables1

Borrowings2

Lease liabilities

Derivative financial liabilities3

27 November 2022

Trade payables

Accruals and other payables1

Borrowings2

Lease liabilities

Derivative financial liabilities3

Carrying
amount
£m

181.0

166.7

Total
£m

181.0

166.7

1,462.1

1,768.1

497.8

0.2

726.2

0.2

Contractual cash flows

Due in
less than
one year
£m

Due in
between one
and two
years
£m

Due in
between two
and five
years
£m

Due in more
than five
years
£m

181.0

166.7

35.9

76.9

0.2

–

40.0

67.8

–

1,501.4

156.9

–

190.8

424.6

–

2,307.8

2,842.2

460.7

107.8

1,658.3

615.4

Carrying
amount
£m

176.9

222.8

Total
£m

176.9

222.8

1,372.8

1,640.6

532.3

1.6

779.9

1.6

2,306.4

2,821.8

Contractual cash flows

Due in
less than
one year
£m

Due in
between one
and two
years
£m

Due in
between two
and five
years
£m

Due in more
than five
years
£m

176.9

222.8

40.7

84.1

1.6

526.1

–

29.8

72.1

–

1,511.3

165.3

–

101.9

1,676.6

–

58.8

458.4

–

517.2

Notes

3.12

4.1

3.5

4.3

Notes

3.12

4.1

3.5

4.3

1. Employee cost accruals of £46.6m (FY22: £65.0m) have been excluded from the accruals and other payables balance compared with Note 3.12 as they are not a financial

instrument in scope of IFRS 9.

2. Amounts due in less than one year primarily reflect payments of interest. The borrowings are classified as non-current as they are not due for repayment until at least

December 2025.

3. The current and prior year disclosures have been restated to include derivative financial liabilities.

Currency risk
The Group has exposure to foreign currency risk through trade receivables, trade payables and lease liabilities denominated
in foreign currencies and a portion of its cash and cash equivalents.

Foreign currency trade receivables arise principally on amounts invoiced under Solutions contracts and foreign currency trade
payables arise principally on purchases of plant and machinery. Trade receivables and payables arise principally in Australian
dollars, Canadian dollars, euros, Japanese yen, Swedish krona and US dollars. Bank accounts are maintained in these foreign
currencies in order to minimise the Group’s exposure to fluctuations in foreign currencies relating to current and future
revenue, salaries and purchases of plant and equipment.

The table below shows the Group’s sensitivity to changes in foreign exchange rates on its financial instruments denominated
in foreign currencies:

10.0% appreciation of above foreign currencies against sterling

10.0% depreciation of above foreign currencies against sterling

3 December 2023
Increase/
(decrease)
in income
£m

Increase/
(decrease)
in equity
£m

27 November 2022
Increase/
(decrease)
in income
£m

Increase/
(decrease)
in equity
£m

10.7

(10.7)

–

14.7

(14.7)

–

During the period, the currencies to which the Group is exposed appreciated and depreciated against sterling by between
8.1% and (9.6)%. Given these historical movements, a 10.0% appreciation or depreciation of foreign currencies is deemed
reasonably likely to occur, and so has been used for the above analysis. The analysis assumes that all other variables
remain constant.

278

279

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
Notes to the consolidated financial statements
continued

4.5 Financial risk management continued
Interest rate risk
The Group is exposed to interest rate risk on its variable rate cash and cash equivalents. The Group’s interest rate risk policy
seeks to minimise finance charges and volatility by structuring the interest rate profile into a diversified portfolio of fixed rate
and variable rate financial assets and liabilities.

At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was as follows:

Treasury shares reserve
The treasury shares reserve arose when the Group issued equity share capital under its JSOS. In 2019, the Group issued share
capital relating to the linked JOE awards under the Group VCP. The shares under both plans are held in trust by the Trustee of
the Group’s Employee Benefit Trust. Treasury shares cease to be accounted for as such when they are sold outside the Group
or the interest is transferred in full to the participant pursuant to the terms of the JSOS and Group VCP. Participants’ interests in
unexercised shares held by participants are not included in the calculation of treasury shares. See Note 4.7 for more
information on the JSOS and Group VCP.

Fixed rate instruments

Financial assets

Financial liabilities

Variable rate instruments

Financial assets

Financial liabilities

3 December
2023
£m

27 November
2022
£m

12.3

414.7

(1,869.8)

(1,865.1)

884.8

(90.0)

928.0

(40.0)

Sensitivity analysis
Based on the Group’s variable rate interest-bearing borrowings and cash and cash equivalents existing at the end of the
period, a 2% increase and 2% decrease in interest rates would result in an increase of £15.9m and a decrease of £15.9m
in profit, respectively.

4.6 Share capital and reserves
Accounting policy
Equity instruments issued by the Group are recorded as the proceeds received, net of direct issue costs.

Share capital and share premium
At the reporting date, the number of ordinary shares available for issue under the Block Listing Facilities was 9,588,329
(FY22: 9,447,982). These ordinary shares will only be issued and allotted when the shares under the relevant share plan have
vested, or the share options have been exercised. They are, therefore, not included in the total number of ordinary shares
outstanding below.

The movements in called-up share capital and share premium are set out below:

Balance at 28 November 2021

Issue of ordinary shares

Allotted in respect of share option schemes

Balance at 27 November 2022

Issue of ordinary shares

Allotted in respect of share option schemes

Balance at 3 December 2023

Ordinary
shares
million

751.4

73.9

0.6

825.9

2.1

0.4

Share
capital
£m

Share
premium
£m

15.0

1,372.0

1.5

–

565.0

2.3

16.5

1,939.3

0.1

–

2.1

1.5

828.4

16.6

1,942.9

In June 2022, Ocado Group plc successfully completed the placing of 72,327,044 new ordinary shares of 2 pence each (the
“Placing Shares”), at a price of £7.95 per Placing Share (the “Placing Price”), with existing and new institutional investors. In
addition, retail investors subscribed for a total of 246,405 new ordinary shares at the Placing Price (the “Retail Offer Shares”)
and the Group CEO, CFO and General Counsel and Company Secretary subscribed for an aggregate of 150,944 new ordinary
shares at the Placing Price (the “Subscription Shares”).

In aggregate, the Placing Shares, the Retail Offer Shares and the Subscription Shares comprise 72,724,393 new ordinary
shares, which raised proceeds of £564.1m net of qualifying transaction costs directly related to the issuance of shares
amounting to £14.1m, which were deducted from the share premium.

Included in the total number of ordinary shares outstanding above are 10,480,773 (FY22: 10,438,075) ordinary shares held by
the Group’s Employee Benefit Trust (see Note 4.7). The ordinary shares held by the Trustee of the Group’s Employee Benefit
Trust pursuant to the Joint Share Ownership Scheme (“JSOS”), and the linked jointly owned equity (“JOE”) awards under the
Ocado Group Value Creation Plan (“Group VCP”) are treated as treasury shares on the Consolidated Balance Sheet. These
ordinary shares have voting rights but these have been waived by the Trustee (although the Trustee may vote in respect of
shares that have vested and remain in the Trust). The number of allotted, called-up and fully paid shares, excluding treasury
shares, at the end of each period differs from that used in the basic loss per share calculation in Note 2.8, since the basic
loss per share is calculated using the weighted average number of ordinary shares in issue during the period, excluding
treasury shares.

280

Other reserves
The movements in other reserves are set out below:

Other reserves

Reverse
acquisition
reserve
£m

Convertible
bonds
reserve
£m

Merger
reserve
£m

Translation
reserve
£m

Fair value
reserve
£m

Hedging
reserve
£m

Balance at 28 November 2021

(116.2)

184.5

6.2

Net gain arising on cash flow hedges

Foreign exchange gain on translation of
foreign subsidiaries

Gain on equity investments designated
as at fair value through other
comprehensive income

Tax on gain on equity investments

–

Balance at 27 November 2022

(116.2)

184.5

6.2

Net gain arising on cash flow hedges

Foreign exchange loss on translation
of foreign subsidiaries

Loss on equity investments designated
as at fair value through other
comprehensive income

Tax on loss on equity investments

–

Balance at 3 December 2023

(116.2)

184.5

6.2

(11.0)

–

69.1

–

58.1

–

(53.0)

–

5.1

6.1

–

33.3

(7.2)

32.2

–

(16.5)

(4.6)

11.1

0.3

(1.1)

–

(0.8)

0.7

–

(0.1)

Total
£m

69.9

(1.1)

69.1

33.3

(7.2)

164.0

0.7

(53.0)

(16.5)

(4.6)

90.6

Reverse acquisition reserve
The acquisition by the Company of the entire issued share capital in 2010 of Ocado Holdings Limited was accounted for as a
reverse acquisition under IFRS 3 “Business Combinations”. Consequently, the previously recognised book values and assets
and liabilities have been retained, and the consolidated financial information for the period to 3 December 2023 has been
presented as if the Company had always been the parent company of the Group.

Convertible bonds reserve
The convertible bonds reserve contains the equity components of convertible bonds issued by the Group, net of apportioned
transaction costs. The carrying amounts of the equity components will not change until the liability components are redeemed
through repayment or conversion into ordinary shares.

Refer to Note 4.1 for further details on the senior unsecured convertible bonds issued by the Group.

Merger reserve
The merger reserve comprises shares issued as consideration for Haddington Dynamics Inc.

Translation reserve
The translation reserve comprises cumulative foreign exchange differences on the translation of foreign subsidiaries.

Fair value reserve
The fair value reserve comprises cumulative changes in the fair value of assets and liabilities recognised through other
comprehensive income.

Hedging reserve
The hedging reserve comprises cumulative gains and losses on movements in the Group’s hedging arrangements
(see Note 4.3).

281

4.7 Share options and other equity instruments
Accounting policies
Employee benefits
Employees (including Directors) of the Group receive part of their remuneration in the form of share-based payments,
whereby, depending on the scheme, employees render services in exchange for rights over shares (“equity-settled
transactions”) or entitlement to future cash payments (“cash-settled transactions”).

The cost of equity-settled transactions with employees is measured, where appropriate, with reference to the fair value of the
equity instruments at the date on which they are granted. Where options need to be valued, an appropriate valuation model is
applied. The expected lives used in the models have been adjusted, based on management’s best estimates, for the effects of
non-transferability, exercise restrictions and behavioural considerations.

The cost of cash-settled transactions, including the cost of associated employer’s NIC on certain taxable equity-settled
transactions, is measured with reference to the fair value of the amounts payable, which is taken to be the closing price of the
Company’s shares at the measurement date. Until a liability is settled, it is remeasured at the end of each reporting period and
at the date of settlement, with any changes in fair value being recognised in the Consolidated Income Statement for the
relevant period. For more details, see Note 3.13.

The cost of equity-settled transactions is recognised, along with a corresponding increase in equity, over the periods in which
the service and performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled
to the award (the “vesting date”). The cost of associated employer taxes is recognised, along with a corresponding provision
for the expected cash settlement, over the vesting period.

At each reporting date, the cumulative expense recognised for equity-settled transactions reflects the extent to which the
vesting period has elapsed, and the number of awards that, in the opinion of management, will ultimately vest. Management’s
estimates are based on the best available information at that date.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market
condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other
performance conditions are satisfied.

Share options and other equity instruments
The total expense for the period relating to all share-based payment transactions is as follows:

Executive Share Option Scheme

Joint Share Ownership Scheme

Sharesave scheme

Share Incentive Plan

Ocado Group Value Creation Plan

Ocado Retail Value Creation Plan

Long-Term Operating Plan

Annual Incentive Plan

Employee Share Purchase Plan

Ocado Restricted Share Plan

Consultant Option Plan

Deferred Consideration Shares

Total expense

Of which:

Equity-settled expense

Cash-settled expense

Total expense

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

1.1

–

2.5

2.6

5.1

–

4.1

0.5

17.8

0.3

1.7

35.7

33.3

2.4

35.7

1.3

–

3.1

2.2

11.3

(19.0)

–

2.6

0.2

11.6

0.2

2.4

15.9

42.0

(26.1)

15.9

The Group had the following schemes in operation during the financial period:

(a) Executive Share Option Scheme (“ESOS”)
The Group’s Executive Share Option Scheme (“ESOS”) was established in 2001 and is an equity-settled share option scheme
approved by HMRC. Options have also been granted under the terms of HMRC’s schedule, which are not approved and also
under the terms of the Internal Revenue Service which are both qualified and non-qualified. All share awards under the ESOS
are equity-settled, apart from employer’s NIC due on unapproved ESOS awards, which are treated as cash-settled.

Under the ESOS, the Group or the trustees of an employee trust may grant options over shares of the Company to eligible
employees and may impose performance targets or any further conditions determined to be appropriate on the exercise
of an option. In most cases, any performance target must be measured over a period of at least three years.

With the exception of replacement options, the vesting period for the ESOS is three years. If the options remain unexercised
after a period of 10 years from the date of grant or the employee leaves the Group, the options expire (subject to a limited
number of exceptions).

In 2021, on acquisition of a subsidiary, its existing unvested options were cancelled and replaced by options of the Company
granted under the ESOS. Replacement options shall vest in three equal instalments on the first three anniversaries of the
closing date of acquisition, subject to the option holder’s continued employment within the Group.

Details of the movement of the number of share options outstanding during each period are as follows:

Outstanding at beginning of period

Granted during period

Forfeited during period

Exercised during period

Outstanding at end of period

Exercisable at end of period

53 weeks ended
3 December 2023

52 weeks ended
27 November 2022

Weighted
average
exercise
price
(£)

Number
of share
options

1,930,355

8.34 2,074,654

4,545

(282,274)

(155,195)

1,497,431

1,147,728

6.66

9.35

275,528

(164,020)

3.18

(255,807)

8.67 1,930,355

6.86 1,083,446

Weighted
average
exercise
price
(£)

7.43

12.04

11.51

2.97

8.34

5.25

At the reporting date, the Group had 1,180,810 (FY22: 1,440,504) approved options outstanding and 316,621 (FY22: 489,851)
unapproved options outstanding. At the end of the period, the range of exercise prices for approved options outstanding was
£2.56 to £25.08 (FY22: £1.28 to £25.08) and for unapproved options outstanding was £2.56 to £14.47 (FY22: £2.56 to £14.47).

The weighted average remaining contractual life for the ESOS share options outstanding as at 3 December 2023 was 5.0 years
(FY22: 6.1 years).

For exercises during the period, the weighted average share price at the date of exercise was £6.62 (FY22: £11.71).

In determining the fair value of the share options granted during the period, the Black Scholes option pricing model was used
with the following inputs:

Weighted average share price

Weighted average exercise price

Expected volatility

Weighted expected life, years

Weighted average risk-free interest rate

Expected dividend yield

3 December
2023

27 November
2022

£6.66

50.0%

3.0

4.0%

0.0%

£12.04

50.0%

3.0

1.3%

0.0%

The expected volatility was determined by considering the historical performance of the Company’s shares. The expected life
used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.

282

283

4.7 Share options and other equity instruments continued
(b) Joint Share Ownership Scheme (“JSOS”)
The Joint Share Ownership Scheme (“JSOS”) is an executive incentive scheme that was introduced to incentivise and retain
the Executive Directors and senior managers of the Group (“Participants”). It is a share ownership scheme permitting a
Participant to benefit from the increase (if any) in the value of a number of ordinary shares of the Company (“Shares”) over
specified threshold amounts. To acquire an interest a Participant enters into a joint share ownership agreement with Ocorian
Limited, Trustee of the Employee Benefit Trust (“Trustee”), whereby the Participant and the Trustee jointly acquire the Shares
and agree that once all vesting conditions have been satisfied, the Participant is awarded a specific number of Shares
equivalent to the benefit achieved, or at their discretion, when the Shares are sold, the Participant has a right to receive
a proportion of the sale proceeds insofar as the value of the Shares exceeds the threshold amount.

At the reporting date the Participants and Trustee held separate beneficial interests in 1,191,224 (FY22: 1,192,474)
ordinary shares, which represents 0.1% (FY22: 0.1%) of the issued share capital of the Company. Of these shares,
627,486 (FY22: 627,486) are held by the Employee Benefit Trust on an unallocated basis.

The charges to the scheme stopped when the vesting conditions were met.

Details of the movement of the number of allocated interests in shares during the current and prior periods are as follows:

Outstanding at beginning of period

Exercised during period

Outstanding at end of period

Exercisable at end of period

53 weeks ended
3 December 2023

52 weeks ended
27 November 2022

Weighted
average
exercise
price
(£)

2.24

2.15

2.24

Number of
interests in
shares

564,988

–

564,988

Weighted
average
exercise
price
(£)

2.24

–

2.24

Number of
interests in
shares

564,988

(1,250)

563,738

(c) Sharesave scheme
The Sharesave scheme (“SAYE”) is an HMRC-approved scheme that is open to all United Kingdom employees of the Group.
Under the scheme, members save a fixed amount each month for three years. At the end of the three-year period, they are
entitled to use these savings to buy shares of the Company at 90% of the market value at launch date.

At the reporting date, employees of the Company’s subsidiaries held 3,389 (FY22: 4,394) contracts in respect of options over
4,759,371 shares (FY22: 2,114,080).

Details of the movement of the number of Sharesave options outstanding during the current and prior periods are as follows:

53 weeks ended
3 December 2023

52 weeks ended
27 November 2022

Outstanding at beginning of period

Granted during period

Forfeited during period

Exercised during period

Outstanding at end of period

Exercisable at end of period

Number
of share
options

2,114,080

5,073,768

Weighted
average
exercise
price
(£)

Number
of share
options

12.14

1,970,813

4.45

1,887,609

(2,422,861)

10.13 (1,725,049)

(5,616)

4,759,371

379,544

4.45

4.98

4.96

(19,293)

2,114,080

12,191

15.10

12.00

15.44

5.53

12.14

12.39

(d) Share Incentive Plan
In 2014, the Group introduced the Share Incentive Plan (“SIP”). This HMRC-approved scheme provides United Kingdom
employees, including Executive Directors, the opportunity to receive and invest in the Company’s shares. All SIP shares are
held in a SIP Trust, administered by Solium Trustee (UK) Limited.

There are two elements to the plan: the Buy As You Earn (“BAYE”) arrangement and the Free Share Award. Under the BAYE
arrangement, participants can purchase shares of the Company (“Partnership Shares”) each month using contributions from
pre-tax pay, subject to an upper limit. For every seven shares purchased, the Company gifts the participant one free share
(a “Matching Share”).

Under the Free Share Award, shares are given to eligible employees, as a proportion of their annual base pay, subject to a
maximum. Eligible employees are those with six months’ service at the grant date.

For Partnership Shares, eligible employees are those with three months’ service. Partnership shares can be withdrawn from
the Plan Trust at any time, but Matching Shares and Free Shares are subject to a three-year holding period, during which
continuous employment within the Group is required. The Matching Shares and Free Shares will be forfeited if any
corresponding Partnership Shares are removed from the Plan Trust within this three-year period, or if the participant leaves
the Group.

Outstanding shares held under the SIP at the beginning and end of the period can be reconciled as follows:

Outstanding at 27 November 2022

Awarded during period

Forfeited during period

Released during period

Outstanding at 3 December 2023

Unrestricted at 3 December 2023

Outstanding at 28 November 2021

Awarded during period

Forfeited during period

Released during period

Outstanding at 27 November 2022

Unrestricted at 27 November 2022

Partnership
Shares

Matching
Shares

Free
Shares

Total

569,839

80,629 1,495,979 2,146,447

366,453

51,985

906,145 1,324,583

–

(17,748)

(220,869)

(238,617)

(230,167)

(15,356)

(314,443)

(559,966)

706,125

99,510 1,866,812 2,672,447

706,125

31,162

553,495 1,290,782

Partnership
Shares

Matching
Shares

Free
Shares

Total

388,285

54,749

1,045,977

1,489,011

268,140

37,743

640,043

945,926

–

(8,091)

(84,311)

(92,402)

(86,586)

(3,772)

(105,730)

(196,088)

569,839

80,629 1,495,979 2,146,447

569,839

34,225

691,525 1,295,589

(e) Ocado Group Value Creation Plan
Under the Ocado Group VCP, participants are granted a conditional award giving the potential right to earn nil-cost options
based on the absolute Total Shareholder Return generated over the VCP period. The award gives participants the opportunity
to share in a proportion of the total value created for shareholders above a hurdle (“Threshold Total Shareholder Return”) at the
end of each plan year (“Measurement Date”) over the five-year Group VCP period. Participants will receive the right at the end
of each year of the five-year performance period to share awards with a value representing the level of the Company’s Total
Shareholder Return (“Measurement Total Shareholder Return”) above the Threshold Total Shareholder Return at the relevant
Measurement Date. The share price used at the Measurement Date will be the 30-day average following the announcement
of the Group’s results for the relevant financial year, plus any dividends in respect of the plan.

At each Measurement Date, up to 3.25% (FY22: 3.25%) of the value created above the hurdle will be “banked” in the form
of share awards which will be released in line with the vesting schedule.

The Threshold Total Shareholder Return or hurdle that has to be exceeded before share awards can be earned by Participants
is the higher of:

• the highest previous Measurement Total Shareholder Return; and
• the Initial Price compounded by 10% per annum (Initial Price – Tranche 1 £13.97; Tranche 2 £19.60; Tranche 3 £7.95).

If the value created at the Measurement Date does not exceed the hurdle, nothing will accrue in that year under the VCP.

As at 3 December 2023, 4,839,781 (2022: 4,839,781) nil-cost options had been banked. The next Measurement Date will
be 30 days after the publication of these financial statements.

284

285

4.7 Share options and other equity instruments continued
Vesting conditions
The vesting schedule provides that 50% of the cumulative number of share awards will vest following the third Measurement
Date and 50% of the cumulative balance following the fourth Measurement Date, with 100% of the cumulative number of share
awards vesting following the fifth Measurement Date. At each vesting date, vesting of awards is subject to the following:

a. A minimum TSR of 10.0% CAGR being maintained:

• Where the TSR has been achieved at the third Measurement Date, 50% of the cumulative balance will vest. If the

TSR has not been achieved, no share awards will vest at this point but they will not lapse.

• Where the TSR has been achieved at the fourth Measurement Date, 50% of the cumulative balance will vest. If the

TSR has not been achieved, no share awards will vest at this point but they will not lapse.

• Where the TSR has been achieved at the fifth Measurement Date, 100% of the cumulative balance will vest. If the

TSR has not been achieved, no share awards will vest at this point and the remaining cumulative balance will lapse.

b. Any shares vesting cannot be sold prior to the fifth anniversary of the date of the implementation of the VCP.

c. An annual cap on vesting of £20m for the CEO and a proportionate limit for other participants:

• In the event that in any year vesting as described above would exceed the annual cap, any share awards above

the cap will be rolled forward and allowed to vest in subsequent years provided the cap is not exceeded in those
years, until the VCP is fully paid out or after five years after the fifth Measurement Date when any unvested share
awards will automatically vest. Share awards rolled forward will not be subject to further underpins, performance
or service conditions

Valuation of awards
In 2019, 2.55% of the original maximum 2.75% was awarded in total to participants, of which 0.45% lapsed and 0.55% was
subsequently granted during the prior periods. In the current period, a further 0.95% lapsed and 0.15% was awarded to
participants. Also, in FY20, Tranche 2 of the VCP award was created following the June 2020 capital raise and in the prior
period Tranche 3 was created following the June 2022 capital raise. As such, Tranche 1 is based on the total number of shares
in issue, less the number of shares under Tranche 2 and Tranche 3. Tranches 2 and 3 are based on the total number of shares
issued in the June 2020 and June 2022 capital raise respectively.

The fair value of awards granted net of lapses under the Group VCP to date is £66.0m (FY22: £71.9m) spread over the five-year
period. In determining the fair value of the VCP awards granted in the current and prior period, a Monte Carlo model was used
with the following inputs:

53 weeks ended 3 December 2023

Tranche 1

Tranche 2

Tranche 3

Tranche 1

Tranche 2

Tranche 3

Date of grant

Portion of VCP granted

Share price at grant

Expected volatility

Expected life from date of grant – years

Risk-free interest rate

Expected dividend yield

52 weeks ended 27 November 2022

Date of grant

Portion of VCP granted

Share price at grant

Expected volatility

09.12.2022 09.12.2022 09.12.2022 24.08.2023 24.08.2023 24.08.2023

0.05%

£6.86

50.0%

0.3/1.3

3.39%

0.0%

0.05%

£6.86

50.0%

0.3/1.3

3.39%

0.0%

0.05%

£6.86

50.0%

0.10%

£7.51

50.0%

0.10%

£7.51

50.0%

0.10%

£7.51

50.0%

0.3/1.3 2.6/3.6/4.6 2.6/3.6/4.6 2.6/3.6/4.6

3.39%

0.0%

4.52%

0.0%

4.52%

0.0%

4.52%

0.0%

Tranche 1

Tranche 2

Tranche 3
(G1)

Tranche 3
(G2)

04.08.2022 04.08.2022 07.09.2022 07.09.2022

0.20%

£9.40

50.0%

0.20%

£9.40

50.0%

2.55%

£7.34

50.0%

0.20%

£7.34

50.0%

Expected life from date of grant – years

2.6/3.6/4.6 2.6/3.6/4.6

0.5/1.5 2.5/3.5/4.5

Risk-free interest rate

Expected dividend yield

1.8%

0.0%

1.8%

0.0%

3.0%

0.0%

2.9%

0.0%

Linked JOE awards
Under the terms of the Group VCP, at the time a VCP award is made, the participant may acquire a linked jointly owned equity
(“JOE”) award with Ocorian Limited, the Trustee of the Employee Benefit Trust. The JOE award permits participants to benefit
from the increase (if any) in the value of a number of ordinary shares above a hurdle of 10.0% per annum cumulative annual
growth rate (which reflects the Group VCP Threshold Total Shareholder Return) over a time period matching the performance
period of the VCP. Participants acquired JOE awards over a total of 9,245,601 shares. The value of these JOE awards (if any)
will be applied to deliver part of the total value of the participants’ Group VCP awards on realisation of these VCP awards.

JOE award participants pay an initial cost for the JOE awards, which is not repayable to them even if no value is delivered
under these JOE awards.

(f) Ocado Retail Value Creation Plan
The Ocado Retail Value Creation Plan (“Retail VCP”) was established in 2019 for the senior leadership team of Ocado Retail
Limited (“Ocado Retail”). Grants under the Retail VCP were to be cash-settled and included a market-based performance
condition relating to the value of Ocado Retail.

During the prior period, the decision was taken to cancel the Retail VCP on the basis that valuation at the first measurement
date indicated no amounts would vest. As such, amounts previously recognised were released in the prior period
(refer to Note 3.13).

(g) Long-Term Operating Plan
In 2019, the Group granted shares to selected employees. The number of awards issued was calculated based on a
percentage of the participants’ salaries. The awards will vest in three equal tranches over three years. Upon vesting, each
tranche is subject to an additional two-year holding period after which the shares will be released to the participants. The
vesting of each tranche is conditional on continued employment within the Group and subject to the Company’s share price
exceeding a predetermined minimum.

Outstanding share awards under the Long-Term Operating Plan at the beginning and end of the period can be reconciled
as follows:

Outstanding at beginning of period

Released during period

Outstanding at end of period

Exercisable at end of period

53 weeks
ended
3 December
2023

52 weeks
ended
27 November
2022

124,198

179,815

(59,939)

(55,617)

64,259

124,198

–

(h) Annual Incentive Plan
Under the Annual Incentive Plan (“AIP”), awards are granted annually in the form of nil-cost options over shares of the
Company and conditional awards of shares to the Executive Directors and selected members of senior management.
The number of share awards granted is dependent on performance against targets and subject to threshold and maximum
conditions (refer to the Directors’ Remuneration Report on pages 154 to 203). Nil-cost options will vest in full three years
from grant date, with a further two-year holding period for the Executive Directors only, during which time they cannot be sold.
Conditional awards will vest over a period of four years from grant date. An award will lapse if a participant ceases to be
employed by the Group before the vesting date.

Outstanding share awards under the AIP at the beginning and end of the period can be reconciled as follows:

Outstanding at beginning of period

Granted during period

Lapsed during period

Released during period

Outstanding at end of period

Exercisable at end of period

53 weeks
ended
3 December
2023

52 weeks
ended
27 November
2022

599,226

365,552

986,896

251,286

(18,381)

(17,612)

(17,632)

–

1,550,109

599,226

–

The expense recognised in a given financial year relates to all unvested AIP awards granted in prior periods, and also to awards
yet to be granted for the current period. The performance period for the 2023 AIP is the 53 weeks ended 3 December 2023.
The expectation of meeting the 2023 AIP performance targets was taken into account when calculating this expense.

286

287

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONAt the reporting date, employees of the Group held 963 (FY22: 906) contracts in respect of granted SPP Options.

Restricted at beginning of period

Notes to the consolidated financial statements
continued

4.7 Share options and other equity instruments continued
(i) Employee Share Purchase Plan
The Employee Share Purchase Plan (“SPP”) is a non-United Kingdom “all-employee” share purchase plan under which eligible
employees are awarded options (“SPP Options”) over shares of the Company. SPP Options are granted at the beginning of a
specific offering period, which will not normally exceed 24 months. Participants enrol in the SPP by authorising payroll
deductions from their salary during the relevant offering period.

At the end of an offering period, employees are entitled to use these savings to buy shares of the Company at 90% of the
market value on the date of grant or at the end of the offering period, whichever is lower. During the period, employees
purchased 245,789 (FY22: 352,517) shares of the Company at an exercise price of £4.19.

There were nil SPP Options exercisable at the reporting date (FY22: nil).

(j) Ocado Restricted Share Plan
The Ocado Restricted Share Plan (“RSP”) is used for two key purposes:

(a) to allow all-employee Free Share Awards outside the United Kingdom, similar to the Group’s Share Incentive Plan; and

(b) to give the Group the flexibility to make Discretionary Share Awards.

RSP Free Share Awards are conditional awards of shares granted to eligible non-UK employees, as a proportion of their
annual base pay. Eligible employees are those with six month’s service at the grant date. Awards are subject to a three-year
vesting period.

RSP Discretionary Share Awards can either be nil-cost options over shares of the Company or conditional awards of shares.
These awards may be granted subject to performance conditions, and an additional holding period following vesting. The
vesting period and profile are award specific.

Unvested RSP awards will lapse upon a participant ceasing to hold office or employment within the Group.

Outstanding share awards under the RSP at the beginning and end of the period can be reconciled as follows:

53 weeks ended
3 December 2023

52 weeks ended
27 November 2022

RSP – Free
Shares

RSP –
Discretionary
Shares

Total

RSP – Free
Shares

RSP –
Discretionary
Shares

Total

Outstanding at beginning of period

148,234 2,571,785 2,720,019

34,846

351,808

386,654

Granted during period

Forfeited during period

Exercised during period

210,478 4,857,288 5,067,766

127,056 2,592,352 2,719,408

(41,875)

(331,047)

(372,922)

(13,668)

(209,998)

(223,666)

(7,041)

(919,315)

(926,356)

–

(162,377)

Outstanding at end of period

309,796

6,178,711 6,488,507

148,234

2,571,785

2,720,019

There were no awards exercisable as at 3 December 2023.

(k) Consultant Option Plan
Under the rules of the Consultant Option Plan, options over shares of the Company can be granted to non-employees, both
individuals and companies engaged to provide services to the Group.

The option exercise price is determined with reference to the closing share price of the shares on the day of, or day prior to,
issuance. The options vest over a range of 18 months to three years depending on the award, and may be exercised once and
in full anytime during a three-year exercise period.

Any unvested options will lapse on cessation of the engagement to provide services to the Group.

Outstanding share awards under the Consultant Option Plan at the beginning and end of the period can be reconciled
as follows:

Outstanding at beginning of period

Granted during period

Outstanding at end of period

Exercisable at end of period

288

53 weeks
ended
3 December
2023

52 weeks
ended
27 November
2022

465,000

225,000

–

240,000

465,000

185,000

(l) Deferred Consideration Shares
In 2021, shares were issued to select employees of a subsidiary on acquisition. These shares will be held in trust until such time
as the agreement allows the shareholders to access them. On each of the first three anniversaries of the closing date of
acquisition, one-third of these shares will be released from transfer restrictions subject to achievement of performance
conditions and continued employment.

Restricted Deferred Consideration Shares at the beginning and end of the period can be reconciled as follows:

53 weeks
ended
3 December
2023

52 weeks
ended
27 November
2022

196,319

294,472

–

(2,303)

(97,009)

(98,153)

97,007

196,319

Issued during period

Forfeited during period

Released from transfer restrictions during period

Restricted at end of period

4.8 Capital management
The Board’s objective is to maintain an appropriate balance of debt and equity financing to enable the Group to continue as a
going concern, to sustain future development of the business, and to maximise returns to shareholders and benefits to other
stakeholders.

The Board closely manages trading capital, defined as net assets, plus net debt*.

Net debt* is calculated as cash and cash equivalents, less gross debt (borrowings and lease liabilities as shown on the
Consolidated Balance Sheet). The Group’s net assets at the reporting date were £1,511.0m (FY22: £1,934.3m), and it had
net debt* of £1,075.1m (FY22: net debt £577.1m).

The main areas of capital management revolve around working capital and compliance with externally imposed financial
covenants. The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, and to
allow the Group to grow, whilst operating with sufficient headroom within its covenants. The components of working capital
management include monitoring inventory turnover, age of inventory, age of receivables, receivables days, payables days,
Balance Sheet re-forecasting, period projected profit or loss, weekly cash flow forecasts and daily cash balances. Major
investment decisions are based on reviewing the expected future cash flows, and all major capital expenditure requires
approval by the Board. There were no changes in the Group’s approach to capital management during the period.

In June 2022, the Group successfully completed a capital raise generating £564.1m to fund growth (refer to Note 4.6 for
details) and secured additional liquidity through a three-year multi-currency revolving credit facility (“RCF”) of £300.0m with a
syndicate of international banks.

The Group reviews its financing arrangements regularly. Throughout the period, the Group has complied with all covenants
imposed by lenders.

Given the Group’s commitment to expand the business and the investment required to complete future CFCs, the declaration
and payment of a dividend is not part of the short-term capital management strategy of the Group.

At the reporting date, the Group’s undrawn facilities and cash and cash equivalents were as follows:

Total facilities available

Facilities drawn down

Undrawn facilities

Cash and cash equivalents

Undrawn facilities, cash and cash equivalents and other treasury deposits

3 December
2023
£m

27 November
2022
£m

Notes

2,398.2

2,381.9

(2,043.7)

(2,022.9)

354.5

884.8

1,239.3

359.0

1,328.0

1,687.0

3.11

289

4.9 Cash generated from operations
A reconciliation from loss before tax to cash generated from operations is as follows:

Cash flows from operating activities

Loss before tax

Adjustments for:

• Revenue recognised from long-term contracts

• Depreciation, amortisation and impairment losses1

• Property, plant and equipment write-off

• Gain on disposal of asset held for sale

• Insurance proceeds income

• Litigation settlement income and interest unwind

• Other non-cash adjusting items

• Share of results of joint ventures and associate

• Movement of provisions

• Net finance cost2

• Share-based payments charge

Changes in working capital

• Movement in contract assets

• Cash received from contract liabilities (upfront fees)

• Movement of inventories

• Movement of trade and other receivables

• Movement of trade and other payables

Cash generated from/(used in) operations

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

Notes

(403.2)

(500.8)

2.1

2.3

3.8

2.5

3.6

2.6

4.7

(33.0)

452.7

2.9

(5.0)

–

(186.5)

67.4

0.9

13.5

76.1

33.3

–

47.9

3.1

36.6

(19.8)

86.9

(24.7)

348.6

10.8

–

(73.8)

–

59.8

1.4

(26.2)

48.2

42.0

0.3

78.7

(10.9)

(50.7)

93.3

(4.0)

1. Included within depreciation, amortisation and impairment losses are impairment charges of £20.3m and £27.2m, relating to the UK network capacity review and Zoom by

Ocado network capacity and strategy review, respectively, which are included in the adjusting items. Refer to Note 2.5 for further details.
2. Excludes £6.1m interest unwind on AutoStore litigation settlement, which is included within litigation settlement income and interest unwind.

Section 5 – Other notes
5.1 Related undertakings
In accordance with Section 409 of the Companies Act 2006, a full list of related undertakings, their countries of incorporation,
and the effective percentage of equity owned at the reporting date is disclosed below. All undertakings are indirectly owned
by the Company unless otherwise stated.

Name

Country of incorporation

Principal activity

Share class

% of share
capital held

Haddington Dynamics II LLC

JFC Hydroponics Ltd

Jones Food Company Limited

Karakuri Limited

Kindred Inc.
Kindred Systems II Inc.†
Last Mile Technology Limited

MHE JVCo Limited

Myrmex Inc

O’Logistics SAS

Ocado Bulgaria EOOD

Ocado Central Services Limited
Ocado Finco 1 Limited†
Ocado Finco 2 Limited†
Ocado Holdings Limited†
Ocado Innovation Limited†

United States of America13
United Kingdom1
United Kingdom22
United Kingdom2
United States of America13
Canada9
United Kingdom3
United Kingdom3
USA13
France14
Bulgaria4
United Kingdom3
United Kingdom3
United Kingdom3
United Kingdom3
United Kingdom3

Holding company

Ordinary shares

100.0%

Non-trading company

Ordinary shares

Vertical farming

Ordinary shares

Robotics

Preference shares

Holding company

Ordinary shares

Holding company

Ordinary shares

Non-trading company

Ordinary shares

Leasing

Technology

“B” shares

Ordinary shares

Business services

Ordinary shares

Technology

Ordinary shares

Business services

Ordinary shares

Financing

Ordinary shares

Holding company

Ordinary shares

Technology

Ordinary shares

54.6%

26.3%

100.0%

50.0%

100.0%

50.0%

100.0%

290

Name

Country of incorporation

Principal activity

Share class

% of share
capital held

Ocado Intelligent Automation Limited† United Kingdom3
United Kingdom3
Ocado Operating Limited
Poland6
United Kingdom7

Ocado Polska Sp. z.o.o.

Ocado Spain S.L.U.

Ocado Solutions USA Inc.

Ocado Solutions Spain S.L.

Ocado Solutions Japan K.K.

Ocado Solutions Sweden AB

Ocado Solutions France SAS

Ocado Solutions (US) ProCo LLC

Ocado Solutions Korea Limited
Ocado Solutions Limited†
Ocado Solutions Polska sp z.o.o.

Ocado Retail Limited
Ocado Solutions Australia Pty Limited Australia8
Canada5
Ocado Solutions Canada Inc.
France10
Japan11
South Korea21
United Kingdom3
Poland17
Spain18
Sweden12
United States of America13
United States of America13
Spain18
Sweden15
United States of America13
United Kingdom3
United Kingdom3
United Kingdom3
United Kingdom3
United Kingdom3
United Kingdom3
United Kingdom3
United Kingdom3
United States of America13
United Kingdom16
United States of America19
United Kingdom3
Germany20

Ocado Sweden AB
Ocado US Holdings Inc.†
Ocado Ventures Holdings Limited†
Ocado Ventures (80 Acres) Limited

Ocado Ventures (Oxbotica) Limited

Ocado Ventures (Karakuri) Limited

Ocado Ventures (Myrmex) Limited

Ocado Ventures (Wayve) Limited

Ocado Ventures (Inkbit) Limited

Ocado Ventures (JFC) Limited

6 River Systems GmbH

6 River Systems LLC

6 River Systems Ltd

Paneltex Limited

Oxford US LLC

Business services

Ordinary shares

Logistics and distributionOrdinary shares

Technology

Retail

Ordinary shares

Business services

Ordinary shares

Business services

Ordinary shares

Business services

Ordinary shares

Business services

Ordinary shares

Business services

Ordinary shares

Business services

Ordinary shares

Business services

Ordinary shares

Business services

Ordinary shares

Business services

Ordinary shares

Business services

Ordinary shares

Business services

Ordinary shares

Technology

Ordinary shares

Holding company

Ordinary shares

Holding company

Ordinary shares

Holding company

Ordinary shares

Holding company

Ordinary shares

Holding company

Ordinary shares

Holding company

Ordinary shares

Holding company

Ordinary shares

Holding company

Ordinary shares

Holding company

Ordinary shares

Non-trading company

Ordinary shares

Manufacturing

Robotics

Ordinary shares

100.0%

50.0%

100.0%

25.0%

100.0%

† Interest held directly by Ocado Group plc.

The registered offices of the above companies are as follows:

1. Phase 2 Celsius Parc, Cupola Way, Scunthorpe, United Kingdom, DN15 9YJ
2. RSM Restructuring Advisory LLP, 25 Farringdon Street, London, United Kingdom, EC4A 4AB
3. Buildings One & Two Trident Place, Mosquito Way, Hatfield, Hertfordshire, United Kingdom, AL10 9UL
4. 7th Floor, 13 Henrik Ibsen Street, Lozenets District, Sofia 1407, Bulgaria
5. Suite 1300, 1969 Upper Water Street, McInnes Cooper Tower-Purdy Wharf, Halifax, NS B3J 3R7, Canada
6. High5ive Building, Pawia 21st, 31-154, Kraków, Poland
7. Apollo Court 2 Bishop Square, Hatfield Business Park, Hatfield, Hertfordshire, United Kingdom, AL10 9EX
8. Level 9, 63 Exhibition Street, Melbourne, VIC 3000, Australia
9. Suite 1700, Park Place, 666 Burrard Street, Vancouver BC, V6C 2X8, Canada
10. 3-5 Rue Saint-Georges, 75009 Paris, France
11. Hibiya Fort Tower 10F, 1-1-1 Nishi Shinbashi, Minato-Ku, Tokyo, Japan
12. Mätarvägen 30, 196 37 Kungsängen, Sweden
13. 251 Little Falls Drive, New Castle, Wilmington, DE, 19808, United States of America
14. 1 cours Antoine Guichard, 42000 Saint-Etienne, France
15. Mälarvarvsbacken 8, 117 33, Stockholm, Sweden
16. Paneltex House, Somerden Road, Hull, United Kingdom, HU9 5PE
17. ul. Grzybowska 2 Lok 29, 00-131, Warsaw, Poland
18. calle Badajoz 112, 08018, Barcelona, Spain
19. 251 Little Falls Drive, New Castle, Wilmington, DE, 19808, United States of America
20. TMF Deutschland AG, Wiesenhuttenstr. 11, 60329 Frankfurt am Main, Germany
21. 4th Floor, LS Yongsan Tower, Hangangdaero 92, Yongsan-gu, Seoul, South Korea
22. Old Forge Place, Lydney, United Kingdom, GL15 5SA

The Group has effective control over the financial and operating activities of the Ocado Cell in Atlas Insurance PCC Limited,
an insurance company incorporated in Malta and, therefore, consolidates the Ocado Cell in its financial statements.

291

5.2 Non-controlling interests
Accounting policies
Non-controlling interests are measured initially at their proportionate share of the acquiree’s identifiable net assets at the
date of acquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for
as equity transactions.

Non-controlling interests
The proportion of equity interest held by non-controlling interests is provided below:

Name

Ocado Retail Limited (“Ocado Retail”)

Jones Food Company Limited (“Jones Food Company”)

1 The entity’s place of business as its country of incorporation.

Country of
incorporation1

United Kingdom

3 December
2023
%

27 November
2022
%

50.0%

45.4%

50.0%

51.9%

In January 2022, Jones Food Company issued additional shares to three individuals, which resulted in the Group’s
shareholding decreasing to 48.1%. However, the Group had existing warrants (potential voting rights), which entitled the Group
to acquire 2.3 million shares and therefore, the Group’s shareholdings on a fully diluted basis amounted to 52.4%. As such, the
Group retained control of Jones Food Company.

In April 2023, the Group exercised the warrants in Jones Food Company to acquire 2.3 million shares for £3.7m bringing the
Group’s shareholdings in Jones Food Company to 54.6%, which is reflected as the £0.2m movement between retained
earnings and non-controlling interests within the Consolidated Statement of Changes in Equity during the year. The Group
retains control of Jones Food Company.

The table below provides summarised financial information of Ocado Retail and Jones Food Company. The information
disclosed reconciles the amounts presented in the financial statements of the relevant companies (adjusted for differences
in fair values on acquisition) with the non-controlling interests’ share of those amounts.

Non-current assets

Current assets

Current liabilities

Non-current liabilities

Net assets at end of period

Non-controlling interests at end of period

Revenue

Loss and total comprehensive expense for period

Share of total comprehensive expense attributable to non-controlling interests

Net increase/(decrease) in cash and cash equivalents

No dividends were paid to non-controlling interests during the current or prior period.

53 weeks ended 3 December 2023

Ocado
Retail
£m

Jones Food
Company
£m

527.8

313.0

(311.3)

(498.5)

31.0

15.5

2,408.8

(139.0)

(69.5)

51.8

25.5

1.5

(2.4)

(6.6)

18.0

8.1

0.2

(7.7)

(3.5)

(5.0)

Total
£m

553.3

314.5

(313.7)

(505.1)

49.0

23.6

2,409.0

(146.7)

(73.0)

46.8

Deconsolidation of Ocado Retail
At present, the results of Ocado Retail are consolidated into the results of Ocado Group plc as Ocado Group plc are deemed to
be the controlling shareholder via certain tie-breaking rights. The Group’s current intention is to give up its tie-breaking rights
to M&S in early April 2025. There will be no change in economic interest of both shareholders in Ocado Retail Limited, or any
consideration paid by M&S, as a result of this proposed change. After giving up the tie-breaking rights we expect that the
results of Ocado Retail Limited will cease to be consolidated into the results of Ocado Group plc and will instead be equity
accounted for as an investment from this point onwards.

5.3 Commitments
Capital commitments
Contracts placed for future capital expenditure but not provided for in the financial statements are as follows:

Land and buildings

Property, plant and equipment

Capital commitments

3 December
2023
£m

27 November
2022
£m

0.1

104.9

105.0

0.4

275.1

275.5

Of the total capital expenditure committed at the end of the period, £66.5m relates to new CFCs (FY22: £232.4m), £2.3m to
existing CFCs (FY22: £1.3m), £nil to fleet costs (FY22: £7.6m) and £34.7m to technology projects (FY22: £26.5m).

5.4 Related party transactions
Key management personnel
Only members of the Board (the Executive and Non-Executive Directors) are recognised as being key management personnel.
It is the Board that has responsibility for planning, directing and controlling the activities of the Group. The aggregate
emoluments of key management personnel are as follows:

Salaries and other short-term employee benefits

Post-employment benefits

Share-based payments

Aggregate emoluments

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

5.9

0.2

4.9

11.0

5.8

0.2

11.4

17.4

Further information on the remuneration of Directors and Directors’ interests in ordinary shares of the Company is disclosed
in the Directors’ Remuneration Report on pages 154 to 203.

Due to restrictions in place during the Covid-19 pandemic, chartered flights were required on a small number of occasions
in order for key management personnel to be able to visit the Group’s global sites and undertake client meetings. The Group
chartered aircraft through accessing flying hours owned by a family member of one of the key management personnel.
The price paid was at the open market rate and amounted to £nil (FY22: £32,100). At the end of the period, no amounts were
owed in relation to the purchase of these flights.

Other related party transactions with key management personnel made during the period amount to £nil (FY22: £nil).
All transactions were on an arm’s length basis. At the reporting date, no amounts were owed by key management personnel
to the Group (FY22: £nil). During the period, there were no other material transactions or balances between the Group and
its key management personnel or members of their close family.

292

293

Company Balance Sheet
as at 3 December 2023

5.4 Related party transactions continued
Joint venture
MHE JVCo Limited
The following transactions were carried out with MHE JVCo:

Dividend received from MHE JVCo

Reimbursement of supplier invoices paid on behalf of MHE JVCo

Lease liability additions from MHE JVCo

Capital element of lease liability instalments paid to MHE JVCo

Capital element of lease liability instalments due to MHE JVCo

Interest element of lease liability instalments accrued or paid to MHE JVCo

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

5.1

4.1

11.4

12.0

0.5

8.0

1.1

–

15.1

1.4

1.3

During the period, the Group incurred lease instalments (including interest) of £13.0m (FY22: £17.8m) to MHE JVCo.

Of the lease instalments incurred, £6.8m was recovered directly from Wm Morrison Supermarkets Limited in the form of other
income (FY22: £8.2m).

Included within trade and other receivables is a balance of £0.7m due from MHE JVCo (FY22: £2.3m), which primarily relates
to capital recharges.

Included within trade and other payables is a balance of £0.7m due to MHE JVCo (FY22: £1.8m).

Included within lease liabilities is a balance of £16.5m due to MHE JVCo (FY22: £17.5m).

Associate
Karakuri Limited
During a prior period, the Group lent £1.7m to Karakuri, a company in which the Group holds a 26.3% interest. The loan is held
at fair value through profit or loss within other financial assets. However, following Karakuri entering into administration during
the period, a write-down of £1.9m was recognised, reducing the carrying amount to £nil (FY22: £1.8m). During the period,
£0.1m (FY22: £0.2m) of interest was recognised within finance income.

No other transactions that require disclosure under IAS 24 “Related Party Disclosures” have occurred during the period.

5.5 Post-Balance Sheet events
There have been no post balance sheet events requiring disclosure in these financial statements other than those already
disclosed in the notes to the financial statements.

Non-current assets

Investments

Amounts due from subsidiaries

Current assets

Other receivables

Cash and cash equivalents

Total assets

Current liabilities

Trade and other payables

Provisions

Net current liabilities

Non-current liabilities

Provisions

Borrowings

Net assets

Equity

Share capital

Share premium

Merger reserve

Convertible bonds reserve

Retained earnings

Total equity

3 December
2023
£m

27 November
2022
£m

Notes

3.1

3.2

3.3

3.4

3.5

4.1

885.9

850.5

3,251.6

3,286.2

4,137.5

4,136.7

2.9

1.9

4.8

3.5

7.5

11.0

4,142.3

4,147.7

(277.1)

(0.8)

(277.9)

(273.1)

(291.1)

(0.2)

(291.3)

(280.3)

(1.5)

(1.1)

(1,366.2)

(1,332.2)

(1,367.7)

(1,333.3)

2,496.7

2,523.1

4.2

16.6

16.5

1,942.9

1,939.3

6.2

184.5

346.5

6.2

184.5

376.6

2,496.7

2,523.1

The Company’s loss for the period was £63.4m (FY22: £56.5m).

The notes on pages 297 to 301 form part of these financial statements.

The Company financial statements on pages 295 to 301 were authorised for issue by the Board of Directors and signed
on its behalf by:

Tim Steiner
Chief Executive Officer

Stephen Daintith
Chief Financial Officer

Ocado Group plc

Company number: 07098618 (England and Wales)

29 February 2024

294

295

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Company Statement of Changes in Equity
for the 53 weeks ended 3 December 2023

Notes to the Company financial statements
for the 53 weeks ended 3 December 2023

Balance at 28 November 2021

Loss for the period

Total comprehensive expense for the period

Transactions with owners

Issue of ordinary shares

Allotted in respect of share option schemes

Share-based payments charge

Total transactions with owners

Balance at 27 November 2022

Loss for the period

Total comprehensive expense for the period

Transactions with owners

Issue of ordinary shares

Allotted in respect of share option schemes

Share-based payments charge

Total transactions with owners

Balance at 3 December 2023

Share
capital
£m

Share
premium
£m

Notes

Merger
reserve
£m

Convertible
bonds
reserve
£m

Retained
earnings
£m

Total
£m

15.0

1,372.0

6.2

184.5

391.1

1,968.8

–

1.5

565.0

–

1.5

16.5

–

0.1

–

0.1

2.3

–

567.3

1,939.3

–

2.1

1.5

–

3.6

4.2

2.2

4.2

2.2

–

(56.5)

–

42.0

566.5

2.3

42.0

610.8

6.2

184.5

376.6

2,523.1

–

(63.4)

–

33.3

2.2

1.5

33.3

37.0

16.6

1,942.9

6.2

184.5

346.5

2,496.7

The notes on pages 297 to 301 form part of these financial statements.

Section 1 – Basis of preparation
1.1 General information
Ocado Group plc (“the Company”) is incorporated in England and Wales. The Company is the parent and the ultimate parent of
the Group. The address of its registered office is Buildings One & Two Trident Place, Mosquito Way, Hatfield, Hertfordshire,
United Kingdom, AL10 9UL. The financial period represents the 53 weeks ended 3 December 2023. The prior financial period
represents the 52 weeks ended 27 November 2022.

1.2 Basis of preparation
The Company meets the definition of a qualifying entity under FRS 100 “Application of Financial Reporting Requirements”
issued by the Financial Reporting Council (“FRC”). The Company has undergone a transition from preparing financial
statements under UK-adopted International Financial Reporting Standards to Financial Reporting Standard 101 “Reduced
Disclosure Framework”. Accordingly, these financial statements are prepared in accordance with FRS 101 and the Companies
Act 2006 (the “Act”) for all periods presented.

The transition has not had an impact on the values of balances previously presented and therefore no changes are required
in the presentation of the prior period balances.

The financial statements are presented in pounds sterling, rounded to the nearest hundred thousand unless otherwise stated.
They have been prepared under the historical cost convention, except for certain financial instruments and share-based
payments that have been measured at fair value.

As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in
relation to financial instruments, capital management, presentation of comparative information in respect of certain assets,
presentation of a cash flow statement, impairment of assets, share-based payments and related party transactions.
The Company has also taken advantage of the exemption in relation to disclosure of the possible impact of the application of
a new IFRS that has been issued but is not yet effective. Where required, equivalent disclosures are given in the consolidated
financial statements of the Group.

The Directors consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements of
the Company. Further details of the Group’s considerations are provided in the Group Viability Statement and Going Concern
Statement on page 112.

The Directors have taken advantage of the exemption available under Section 408 of the Companies Act 2006 and not
presented an income statement or a statement of comprehensive income for the Company alone.

New standards, amendments and interpretations adopted by the Company
The Company has considered the following new standards, interpretations and amendments to published standards that are
effective for the Company for the period beginning 28 November 2022, and concluded either that they are not relevant to the
Company or that they would not have a significant effect on the Company’s financial statements other than on disclosures:

IAS 16

IAS 37
IFRS 3
Annual Improvements to IFRS, 2018-2020 Cycle

Property, Plant and Equipment –
proceeds before intended use
Onerous Contracts – cost of fulfilling a contract
Reference to the Conceptual Framework
Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41

Effective date
1 January 2022

1 January 2022
1 January 2022
1 January 2022

Accounting policies
Foreign currency translation
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions or, where items are remeasured, at the dates of the remeasurements. Foreign exchange gains or losses
resulting from the settlement of such transactions, and from the translation at period-end exchange rates of monetary assets
and liabilities denominated in foreign currencies, are recognised in the Income Statement.

Income tax
Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity
respectively.

Current tax is the expected tax payable on the taxable income for the period, calculated using tax rates enacted by the
reporting date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be
paid to the tax authorities.

296

297

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION

Notes to the Company financial statements
continued

1.2 Basis of preparation continued
Share-based payments
The issuance by the Company to its subsidiaries of a grant over the Company’s shares, represents additional capital
contributions by the Company in its subsidiaries. An additional investment in subsidiaries results in a corresponding increase
in shareholders’ equity. The additional capital contribution is based on the fair value of the grant issued, allocated over the
underlying grant’s vesting period.

1.3 Critical accounting judgements and key sources of estimation uncertainty
The preparation of the Company’s financial statements requires the use of certain judgements, estimates and assumptions
that affect the reported amounts of assets, liabilities, income and expenses. Judgements and estimates are evaluated
regularly, and represent management’s best estimates based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. However, events or actions
may mean that actual results ultimately differ from those estimates, and the differences may be material.

Critical accounting judgements
Critical accounting judgements are those that the Company has made in the process of applying the Company’s accounting
policies and that have the most significant effect on the amounts recognised in the financial statements.

There are no critical accounting judgements noted for the period.

Key estimation uncertainties
Key areas of estimation uncertainty are the key assumptions concerning the future and other data points at the reporting date
that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next period.

Amounts due from subsidiaries
The Company uses estimates of future cash flows in assessing whether amounts due from subsidiaries are impaired. The
Company performed an impairment review as at the reporting date and recognised a provision for expected credit losses of
£10.0m (FY22: £nil). A change in the estimate of future cash flows could lead to a material change in carrying value within the
next 12 months.

Section 2 – Results for the period
2.1 Operating results
During the period, the Company obtained audit services from its auditor, Deloitte LLP, amounting to £0.1m (FY22: £0.1m).

2.2 Employee information
The Company does not incur direct staff costs as the Group’s employees are employed by its subsidiaries.

For information on share-based payments, refer to Note 4.7 of the Consolidated Financial Statements.

Section 3 – Assets and liabilities
3.1 Investments
Accounting policies
Investments in subsidiaries are carried at cost, less any impairment in value. Where the recoverable amount of an investment
is less than its carrying amount, impairment is recognised. Impairment reviews are undertaken whenever there is an indication
of impairment, and at least once a year.

Opening investments

Contributions to subsidiaries in respect of share-based payments

Investments

3 December
2023
£m

27 November
2022
£m

850.5

35.4

885.9

815.8

34.7

850.5

A list of subsidiaries held by the Company is disclosed in Note 5.1 to the consolidated financial statements.

Share-based payments relating to awards to employees are recognised as a capital contribution in the Company with the
relating expense recognised within the relevant subsidiary, in accordance with IFRS 2 “Share-based Payment”. For details of
the share-based payments that increased the Company’s investments, see Note 4.7 to the Consolidated Financial Statements.

During the annual impairment review as at the reporting date, no indicators of impairment were identified.

3.2 Amounts due from subsidiaries
Accounting policies
Amounts due from subsidiaries are stated at amortised cost less provision for expected credit losses. These balances are
considered low credit risk and therefore the Company measures the provision at an amount equal to 12-month expected
credit losses.

Amounts due from subsidiaries, net of expected credit losses

During the period, the Company recognised expected credit losses of £10.0m (FY22: £nil).

3 December
2023
£m

27 November
2022
£m

3,251.6

3,286.2

The amounts due from subsidiaries are unsecured, interest free, have no fixed date of repayment and are repayable on
demand. Whilst the amount is repayable on demand, no expectation exists that the balance will be recovered within 12 months
of the period end date and as such has been classified as non-current.

3.3 Cash and cash equivalents
Accounting policies
Cash and cash equivalents comprise cash at bank and in hand and are classified as current assets on the Balance Sheet.
The carrying amount of these assets approximates to their fair value.

Cash at bank and in hand

Cash and cash equivalents

3 December
2023
£m

27 November
2022
£m

1.9

7.5

3.4 Trade and other payables
Accounting policies
Trade and other payables are initially recognised at their transaction price, which is deemed to equal their fair value,
and subsequently at amortised cost, using the effective interest method.

Amounts due to subsidiaries

Accruals and other payables

Trade and other payables

3 December
2023
£m

27 November
2022
£m

272.7

4.4

277.1

285.8

5.3

291.1

Amounts due to subsidiaries are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
As such, these balances have been recorded as current.

298

299

3.5 Provisions
Accounting policies
Employee incentive schemes
Provisions for employee incentive schemes relate to employer’s NIC on taxable equity-settled schemes. For all unapproved
schemes, the Company is liable to pay employer’s NIC upon exercise of the share awards.

Taxable schemes are the unapproved Executive Share Option Scheme (“ESOS”), the Ocado Group Value Creation Plan (“Group
VCP”), the Long-Term Operating Plan, the Annual Incentive Plan (“AIP”) and the Restricted Share Plan (“RSP”). For further
details, refer to Note 4.7 of the Consolidated Financial Statements.

Balance at 28 November 2021

Charged to Income Statement

• Additional provision

• Unused amounts reversed

Used during period

Balance at 27 November 2022

Charged to Income Statement

• Additional provision

• Unused amounts reversed

Used during period

Balance at 3 December 2023

Provisions for employee incentive schemes as at 3 December 2023 can be analysed as follows:

Current

Non-current

Provisions for employee incentive schemes as at 27 November 2022 can be analysed as follows:

Current

Non-current

Employee
incentive
schemes
£m

8.6

0.6

(7.7)

(0.2)

1.3

2.0

–

(1.0)

2.3

£m

0.8

1.5

2.3

£m

0.2

1.1

1.3

Employee incentive schemes
During the period, an additional provision of £2.0m (FY22: £0.6m) has been recognised primarily in relation to employer’s
NIC on taxable equity-settled schemes and £1.0m (FY22: £0.2m) has been utilised primarily as a result of exercises of taxable
equity-settled share awards. There were no releases in the period of amounts previously provided. Releases in the prior period
included £7.0m in relation to employer’s NIC on the Ocado Group VCP.

Section 4 – Capital structure and financing costs
4.1 Borrowings

Facility

Inception

Coupon rate

Maturity

£600m senior unsecured convertible bonds December 2019

0.875%

December 2025

£350m senior unsecured convertible bonds

June 2020

£500m senior unsecured notes

October 2021

0.750%

3.875%

January 2027

October 2026

Borrowings

Disclosed as:

Non-current

Carrying amount

3 December
2023
£m

27 November
2022
£m

560.2

307.8

498.2

540.7

295.2

496.3

1,366.2

1,332.2

1,366.2

1,332.2

Please refer to Note 4.1 to the Consolidated Financial Statements for details.

4.2 Share capital and premium
Accounting policies
Refer to Note 4.6 to the Consolidated Financial Statements. The movements in called-up share capital and share premium are
set out below:

Balance at 28 November 2021

Issue of ordinary shares

Allotted in respect of share option schemes

Balance at 27 November 2022

Issue of ordinary shares

Allotted in respect of share option schemes

Balance at 3 December 2023

Ordinary
shares
million

751.4

73.9

0.6

825.9

2.1

0.4

Share
capital
£m

Share
premium
£m

15.0

1,372.0

1.5

–

565.0

2.3

16.5

1,939.3

0.1

–

2.1

1.5

828.4

16.6

1,942.9

4.3 Capital management
The Board’s objectives and policies for the Company are consistent with those of the Group. Full details are provided
in Note 4.8 to the Consolidated Financial Statements.

Section 5 – Other notes
5.1 Related party transactions
Key management personnel
Only members of the Board (the Executive and Non-Executive Directors) are recognised as being key management personnel.
It is the Board that has responsibility for planning, directing and controlling the activities of the Company. The Executive and
Non-Executive Directors did not receive any remuneration for their services to the Company.

Directors’ interests in ordinary shares of the Company are disclosed in the Directors’ Remuneration Report on page 154.

During the period, there were no transactions between the Company and its key management personnel or members of their
close family. At the reporting date, key management personnel did not owe the Company any amounts.

Subsidiaries
The entity has taken advantage of the exemption permitted by FRS 101 not to disclose related party transactions with entities
that are wholly owned by the Company.

5.2 Post-Balance Sheet events
There have been no post balance sheet events requiring disclosure in these financial statements.

300

301

OCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONAlternative Performance Measures

The Group assesses its performance using a variety of alternative performance measures (“APMS”), which are not defined
under IFRS and are, therefore, termed “non-GAAP” measures. These measures provide additional useful information on the
underlying trends, performance and position of the Group. The APMS used are:

Net debt
Net debt is calculated as cash and cash equivalents, less gross debt (borrowings plus lease liabilities).

• Adjusting items;
• Adjusted EBITDA;
• Adjusted EBITDA %;
• Gross debt and external gross debt;

• Net debt;
• Technology solutions fees invoiced;
• Underlying cash flow; and
• 52-week income statement.

Definitions of these APMs, together with reconciliation of these APMs with the nearest measures prepared in accordance
with IFRS are presented below. The APMs used may not be directly comparable with similarly titled measures used
by other companies.

Adjusting items
The Consolidated Income Statement separately identifies trading results before adjusting items. 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. They have been classified separately
in order to draw them to the attention of the readers of the financial statements, and facilitate comparison with prior periods
to assess trends in the financial performance more readily.

The Directors believe that presentation of the Group’s results in this way is important for understanding the Group’s financial
performance. This presentation is consistent with the way that financial performance is measured by management and
reported to the Board.

The Group applies judgement in identifying items of income and expense that are recognised as adjusting to help provide
an indication of the Group’s underlying business. In determining whether an event or transaction is adjusting in nature,
management considers quantitative as well as qualitative factors such as the frequency or predictability of occurrence.

Examples of items that the Group considers adjusting include corporate reorganisations, material litigation, and any other
material costs outside of the normal course of business as determined by management.

The Group has adopted a three-columned approach to the Consolidated Income Statement to aid clarity and allow users of the
financial statements to understand more easily the performance of the underlying business and the effect of adjusting items.

Adjusting items are disclosed in Note 2.5 to the consolidated financial statements.

Adjusted EBITDA
In addition to measuring its financial performance based on operating profit, the Group measures performance based on
Adjusted EBITDA. Adjusted EBITDA is defined as the Group’s earnings before depreciation, amortisation, impairment, net
finance cost, taxation and adjusting items. EBITDA is a common measure used by investors and analysts to evaluate the
operating financial performance of companies. A reconciliation of operating profit to Adjusted EBITDA can be found on
the face of the Consolidated Income Statement.

The Group considers Adjusted EBITDA to be a useful measure of its operating performance because it approximates the
underlying operating cash flow by eliminating depreciation and amortisation. Adjusted EBITDA is not a direct measure of
liquidity, which is shown by the Consolidated Statement of Cash Flows, and needs to be considered in the context of the
Group’s financial commitments.

The financial performance of the Group’s segments is measured based on EBITDA, as reported internally. A reconciliation
of the Adjusted EBITDA of the Group with the Adjusted EBITDA for segment is disclosed in Note 2.2 to the consolidated
financial statements.

Adjusted EBITDA %
Adjusted EBITDA % is calculated as the adjusted EBITDA divided by revenue.

Gross debt and external gross debt
Gross debt is calculated as borrowings and lease liabilities as disclosed in Note 4.2 to the consolidated financial statements.
External gross debt is calculated as gross debt less lease liabilities payable to joint ventures of the Group. External gross debt
is a measure of the Group’s indebtedness to third parties which are not considered related parties of the Group.

A reconciliation of gross debt with external gross debt is set out below:

Gross debt

Lease liabilities payable to joint ventures

External gross debt

302

Notes

4.2

3.5

3 December
2023
£m

27 November
2022
£m

1,959.9

(16.5)

1,943.4

1,905.1

(17.5)

1,887.6

Net debt is a measure of the Group’s net indebtedness that provides an indicator of the overall strength of the Consolidated
Balance Sheet. It is also a single measure that can be used to assess the combined effect of the Group’s cash position and
its indebtedness.

Net debt is considered to be an alternative performance measure as it is not defined in IFRS. The most directly comparable
IFRS measure is the aggregate of borrowings and lease liabilities (current and non-current) and cash and cash equivalents.
A reconciliation of these measures with net debt can be found in Note 4.2 to the consolidated financial statements.

Technology Solutions fees invoiced
Technology Solutions fees invoiced is used as a key measure of performance of the Technology Solutions business as an
alternative to revenue and represents design and capacity fees invoiced during the period for existing and future CFC and
in-store fulfilment commitments.

Underlying cash flow
Underlying cash flow is the movement in cash and cash equivalents excluding the impact of adjusting items, costs of financing,
purchase of unlisted equity investments and foreign exchange movements. A reconciliation of the movement in cash and cash
equivalents to underlying cash outflow is detailed within the Financial Review: FY23 on pages 40 to 59.

52-week income statement
In order to provide comparability with the prior year results for the 52 weeks ended 27 November 2022, the tables below
present the Group’s statutory results and Adjusted EBITDA on a 53-week basis to 3 December 2023, adjusted to remove the
results of week 53 to separately present the Consolidated Income Statement on a 52-week basis to 26 November 2023. In
determining the week 53 adjustment, revenue represents the actual trading performance in that week, with operating costs
allocated on a reasonable basis to reflect an estimate of costs for that week, unless a split was not deemed to sufficiently
represent the actual costs incurred during week 53.

Revenue

Insurance and legal settlement proceeds

Operating costs

Operating loss before results of joint ventures and associate

Share of results of joint ventures and associate

Operating loss

Finance income

Finance costs

Other finance gains and losses

Loss before tax

Income tax credit

Loss for the period

Notes

2.1

2.5

3.6

2.6

2.7

2023 as
reported on a
53-week basis
£m

2,825.0

180.4

(3,337.7)

(332.3)

(0.9)

(333.2)

46.8

(97.0)

(19.8)

(403.2)

16.2

(387.0)

2023 as
reported on a
53-week basis
£m

Notes

Exclude
week 53
£m

APM 2023
52-week basis
£m

59.4

–

(66.1)

(6.7)

–

(6.7)

0.7

(1.9)

(1.7)

(9.6)

–

2,765.6

180.4

(3,271.6)

(325.6)

(0.9)

(326.5)

46.1

(95.1)

(18.1)

(393.6)

16.2

(9.6)

(377.4)

Exclude
week 53
£m

APM 2023 on a
52-week basis
£m

Operating loss

Adjustments for:

Adjusting items A

Amortisation of intangible assets

Impairment of intangible assets

Depreciation of property, plant and equipment

Impairment of property, plant and equipment

Depreciation of right-of-use assets

Impairment of right-of-use assets

Adjusted EBITDA

(333.2)

(6.7)

(326.5)

2.5

3.3

3.4

3.5

(17.8)

125.0

0.2

187.9

21.7

70.4

–

54.2

–

2.9

–

5.1

–

1.3

–

2.6

(17.8)

122.1

0.2

182.8

21.7

69.1

–

51.6

A Adjusting items include Impairment charges in respect of other intangible assets of £0.3m (FY22: £nil), property, plant and equipment of £19.5m (FY22: £nil) and

right-of-use assets of £27.7m (FY22: £nil).

303

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023
Five-Year Summary

Glossary

Revenue
Adjusted EBITDA A

Loss before tax

53 weeks
ended
3 December
2023
£m

52 weeks
ended
27 November
2022
£m

52 weeks
ended
28 November
2021
£m

52 weeks
ended
29 November
2020
£m

52 weeks
ended
1 December
2019
£m

2,825.0

2,516.8

2,498.8

2,331.8

1,756.6

54.2

(74.1)

61.0

73.1

43.3

(403.2)

(500.8)

(176.9)

(52.3)

(214.5)

2022 Directors’ Remuneration Policy
or 2022 Policy – means the Directors’
Remuneration Policy which was
approved by shareholders at the
2019 Annual General Meeting.

6 River Systems or 6RS – means
6 River Systems LLC, a company
incorporated in Massachusetts,
United States of America, acquired
by the Group on 30 June 2023.

Active customer – means a customer
who has shopped with Ocado Retail
at Ocado.com within the previous
12 weeks.

Adjusting items – means items
considered significant due to their size/
nature, not in the normal course of
business, or are consistent with items
treated as adjusting in the prior periods
or that may span multiple financial
periods. These have been classified
separately to draw them to the
attention of the reader of the
financial statements.

AEON – means AEON Co., Ltd., a
company incorporated in Japan,
whose registered office is at 1–5–1
Nakase, Mihama-ku, Chiba-shi,
Chiba, 261–8515.

AGM – means the Annual General
Meeting of the Company, which will be
held on 29 April 2024 at 1.30 pm at
Deutsche Numis , 45 Gresham Street,
London, EC2V 7BF.

AIP – means the Annual Incentive Plan
for the Executive Directors and
selected senior managers.

Alcampo – means Alcampo S.A., a
company incorporated in Spain under
registered company number C.I.F.
A-28581882 whose registered office is
at Madrid, c/ Santiago Compostela Sur,
s/n (Edificio de Oficinas la Vaguada)
CP.28029 Madrid.

American Depositary Receipts
– means securities that have been
created to permit US investors to hold
shares in non-US companies and, in a
Level 1 programme, to trade them on
the over-the-counter market in the US.

Articles – means the Articles
of Association of the Company.

ASRS – means automated storage
retrieval systems.

Auchan – means Auchan Polska Sp.
z.o.o., a company incorporated in
Poland, whose registered office is at ul.
Puławska 46, 05-500 Piaseczno.

AutoStore – means AutoStore
Technology AS, a company
incorporated in Norway,
whose registered office is at
Stokkastrandvegen 85, 5578,
Nedre Vats, Rogaland, Norway.

Auto Frame Load or AFL – means the
part of the MHE that transfers delivery
totes which have been filled with
products ordered by a customer from
the picking operation into delivery
frames.

Average basket value – means the
average amount shoppers spend in
one transaction.

Average live modules – means the
weighted average number of modules
that were fully installed and available
for use by our client partners during
the period.

Average orders per week – means
the average number of orders per
week processed within CFCs for
Ocado Retail.

Average selling price – means product
sales divided by total eaches.

Board – means the Board of Directors
of the Company or its subsidiaries
from time to time as the context
may require.

Bon Preu – means Bon Preu SA,
a company incorporated in Spain,
whose registered office is at Carrer C,
17, 08040 Barcelona.

Carbon Disclosure Project or CDP –
a non-profit organisation asking
companies to disclose their climate
impact.

Client – means a client of Ocado
Group that has purchased warehouse
automation products and services
offered to non-grocery customers.

Code – means the UK Corporate
Governance Code published by
the FRC in 2018.

Coles – means Coles Supermarkets
Australia Pty Ltd, a company
incorporated in Australia, whose
registered office is at 800 Toorak
Road, Hawthorn East, VIC 3123.

Companies Act – means the
Companies Act 2006.

Company – means Ocado Group plc,
a company incorporated in England
and Wales with company number
07098618, whose registered office is
at Buildings One & Two Trident Place,
Mosquito Way, Hatfield, Hertfordshire,
United Kingdom, AL10 9UL.

Contribution – means Technology
Solutions revenue less Technology
Solutions direct operating costs.

Contribution margin – means
Technology Solutions contribution
divided by Technology
Solutions revenue.

Corporate website – means
www.ocadogroup.com.

CSDDD – means the EU Corporate
Sustainability Due Diligence Directive.

CSRD – means the EU Corporate
Sustainability Reporting Directive.

Customer Fulfilment Centre or CFC
– means a dedicated, highly automated
warehouse used for the operation of
the business.

DE&I – means Diversity, Equity
and Inclusion.

Deloitte – means Deloitte LLP, the
Group’s statutory auditor and advisor
in respect of non-audit services.

Direct operating costs (% of site sales
capacity) – means the direct costs
of running our OSP CFC estate within
Technology Solutions. Direct operating
costs include engineering, cloud and
other technology direct costs.

CO2e – means the amount of the
different greenhouse gases, expressed
in terms of the equivalent global
warming potential as carbon dioxide
(usually expressed as a weight
in tonnes).

Directors – means the Directors of
the Company, whose names and
biographies are set out on pages 118 to
121, or the Directors of the Company’s
subsidiaries from time to time as the
context may require.

304

305

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023Glossary continued

Disclosure Guidance and
Transparency Rules or DTR –
means the disclosure guidance and
transparency rules made under Part VI
of the Financial Services and Markets
Act 2000 (as amended).

Financial year or FY – see
financial period.

Flex – means Flex Ltd, a company
incorporated in Singapore, whose
registered office is 2 Changi
South Lane, 486123, Singapore.

DNED – means the Designated
Non-Executive Director for
Workforce Engagement.

DP8 – means customer deliveries per
standardised eight-hour shift.

EBT Trustee – means the Trustee from
time to time of the Employee Benefit
Trust, currently Ocorian Limited.

eNPS – means employee Net
Promoter Score.

ESG – means environmental, social
and governance.

Executive Directors – means Tim
Steiner, Stephen Daintith, Mark
Richardson, Luke Jensen, and Neill
Abrams. Luke Jensen resigned from
the Board with effect from
30 September 2023. Neill Abrams and
Mark Richardson resigned from their
positions as Executive Directors after
the period end with effect from
2 February 2024.

Fabled or Fabled.com – means the
Group’s premium beauty online store
in collaboration with Marie Claire
and Time Inc., sold to Next Holdings
Limited in 2019.

FCA – means the Financial
Conduct Authority.

Fetch or Fetch.co.uk – means the
Group’s dedicated online pet store,
sold to Paws Holdings Limited in
January 2021.

Financial period – means the 52-week
period, or 53-week period where
relevant, ending on the Sunday
closest to 30 November.

FRC – means the Financial Reporting
Council.

GAAP – means generally accepted
accounting principles.

GHG Protocol – means Green House
Gas protocol. A global standard that
was first published in 2001 to establish
a global framework for companies to
measure and report on their direct and
indirect greenhouse gas emissions.

Gross liquidity – means cash and cash
equivalents plus unused availability of
revolving credit facility.

Group – means Ocado Group plc, its
subsidiaries, significant undertakings
and affiliated companies under its
control or common control.

Groupe Casino or Casino – means
Casino Guichard Perrachon SA,
a company incorporated in France,
whose registered office is at
24 Rue de la Montat, Saint-Etienne.

Haddington Dynamics – means
Haddington Dynamics Inc., a company
incorporated in Delaware, United
States of America, acquired by the
Group on 21 December 2020.

HMRC – means His Majesty’s Revenue
and Customs.

Hot House Word Scenario – a climate
scenario defined by the Network for
Greening the Financial System where
surface temperature is predicted to
increase within a range of 3-5 C.

IAS – means International
Accounting Standards.

ICA – means ICA Gruppen AB, a
company incorporated in Sweden,
whose registered office is at
Svetsarvägen 16, Solna.

IFRS – means International Financial
Reporting Standards.

Inkbit – means Inkbit Corporation,
a company incorporated in Delaware,
United States of America, whose
business address is 200 Boston Ave
#1875, Medford, MA, 02155.

ISA (UK & Ireland) – means
International Standard on Auditing
in the United Kingdom and Ireland.

ISF – means in-store fulfilment.

Jones Food Company or JFC – means
Jones Food Company Limited, a
company incorporated in England
and Wales with company number
10504047, whose registered office is
at Old Forge Place, Lydney GL15 5SA.

Karakuri – means Karakuri Limited, a
company incorporated in England and
Wales with company number 11228129,
whose registered office is at 25
Farringdon Street, London, England,
EC4A 4AB.

Kindred – means Kindred, Inc., a
company incorporated in Delaware,
United States of America, acquired
by the Group on 15 December 2020.

KPI – means key performance indicator.

Kroger – means The Kroger Co.,
a company incorporated in the United
States of America, whose registered
office is at 1014 Vine Street,
Cincinnati, Ohio.

Listing Rules – means the Listing Rules
made by the UK Listing Authority under
Part VI of the Financial Services and
Markets Act 2000 (as amended).

Lotte – means Lotte Shopping Co.,
Ltd, a company incorporated and
registered in the Republic of Korea with
registered number 5298500774 whose
registered office is at Lotte World
Tower, 26th floor, 300, Olympic Street,
Songpagu, Seoul, Republic of Korea.

Marks & Spencer or M&S – means
Marks & Spencer Group plc, a company
incorporated in England and Wales
with company number 04256886,
whose registered office is at Waterside
House, 35 North Wharf Road, London,
W2 1NW, or one of its subsidiaries.

McKesson or McKesson Canada –
means McKesson Canada Corporation,
a company incorporated in Canada
and whose registered office is at
4705 Dobrin Street, Montreal,
Quebec, H4R 2P7.

MHE – means mechanical
handling equipment.

MHE JVCo – means MHE JVCo
Limited, a company incorporated
in England and Wales with company
number 08576462, jointly owned by
Ocado Holdings and Morrisons, whose
registered office is at Buildings One
& Two Trident Place, Mosquito Way,
Hatfield, Hertfordshire, United
Kingdom, AL10 9UL.

Modules ordered – 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.

Morrisons – means Wm Morrison
Supermarkets Limited, a company
incorporated in England and Wales
with company number 00353949,
whose registered office is at Hilmore
House, Gain Lane, Bradford, West
Yorkshire, BD3 7DL.

Myrmex – means Myrmex, Inc., a
company incorporated in Delaware,
United States of America, whose
registered address is 251 Little Falls
Drive, Wilmington, New Castle,
Delaware 19808.

Net finance cost – means finance
costs less finance income. Finance
costs are composed primarily of
interest on borrowings and lease
liabilities. Finance income is composed
principally of bank interest.

Net Zero – means a target to
completely negate greenhouse gases
produced by an organisation,
predominantly through the actual
reduction of the emissions, but with a
small amount covered by other
methods such as offsetting.

Net Zero Roadmap or Net Zero
Programme – means the key
programmes of work needed for
the business to achieve net zero
GHG emissions.

Non-Executive Directors – means
the Non–Executive Directors of
the Company whose names and
biographies are set out on pages
118 to 121.

Notice of Meeting – means the
Notice of the Company’s AGM.

NPS – means net promoter score.

Number of modules live – means
modules that are fully installed and
available for use by our partners..

Ocado.com – means the Group’s online
retail business serviced from the
Ocado.com website and excludes the
Zoom by Ocado business.

Ocado Council – means a network of
elected employee representatives who
feedback on challenges and successes
to senior management and cascade
information to their employees.

Ocado Re:Imagined or Re:Imagined
– means a series of innovations and
changes to the technology powering
our Ocado Smart Platform (OSP).

Ocado Retail or ORL – means Ocado
Retail Limited, a joint venture between
Ocado Holdings Limited and Marks
& Spencer Holdings Limited, which
is incorporated in England and Wales,
and whose registered office is at
Apollo Court, 2 Bishop Square, Hatfield
Business Park, Hatfield, Hertfordshire,
United Kingdom, AL10 9NE.

Ocado Smart Platform or OSP –
means the end-to-end solution
for operating online in the grocery
market, which has been developed
by the Group.

Operating costs – means all costs
incurred in the continuing operations
of the group.

Orderly Transition Scenario – means
a climate scenario defined by the
Network for Greening the Financial
System which assumes climate policies
are introduced early and become
gradually more stringent, and both
physical and transition risks are
relatively subdued.

OSP leadership club – means the
collective group of Ocado Group
and its global Solutions Partners.

Participants – means eligible staff
who participate in one of the Groups’
employee share schemes.

Partner – means a client of Ocado
Group that has purchased the Ocado
Smart Platform Solution or part
of the OSP Solution to deliver
their operations.

PDMRs – means persons discharging
managerial responsibility.

PwC – means PricewaterhouseCoopers
LLP, the Group’s external advisor
on remuneration.

RCF – means revolving credit facility.

RSP – means the Restricted Share Plan.

Senior unsecured convertible bonds
or convertible bonds – means the
Company’s offerings of £600m senior
unsecured convertible bonds due 2025
at a coupon of 0.875% and an issue
price of 100.0%, and of £350m senior
unsecured convertible bonds due 2027
at a coupon of 0.750% and an issue
price of 100.0%.

Senior unsecured notes or notes –
means the Company’s offering of
£500m senior secured notes due 2026.

Shareholder – means a holder of
ordinary shares of the Company.

306

307

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023Glossary continued

Shareholder information

SID – means Senior Independent
Director.

SIP – means the Share Incentive Plan.

SPP – means the Employee Share
Purchase Plan.

SKU – means stock-keeping unit;
that is, a line of stock.

SOC – means System and Organisation
Controls, as defined under the
Association of International Certified
Professional Accountants Trust
Services Principles and Criteria.

Sobeys – means Sobeys Inc.,
a wholly-owned subsidiary of Empire
Company Limited incorporated in
Canada, whose registered office is at
115 King Street, Stellarton, Nova Scotia.

TSR – means Total Shareholder Return,
the growth in value of a shareholding
over a specified period, assuming that
dividends are reinvested to purchase
additional units of the stock.

Spoke – means the trans-shipment
sites used for the intermediate
handling of customers’ orders.

Substitution – means an alternative
product provided in place of
the original product ordered
by a customer.

TCFD – means the Task Force on
Climate-Related Financial Disclosures.

UPH – means average units picked
per labour hour.

VCP – means the Value Creation Plan.

Webshop – means the customer-
facing internet-based virtual shop
accessible via the website
www.ocado.com.

Zoom by Ocado or Zoom – means
Zoom by Ocado, the Group’s
immediacy delivery offering.

Analysis of share register at 3 December 2023

By type of holder

Individual

Institutions and others

By size of holding

1 – 500

501 – 1,000

1,001 – 10,000

10,001 – 100,000

Over 100,000

Total

Total no. of holdings

Percentage of holders

Total no. of shares

Percentage of issued
share capital

989

931

606

192

566

308

248

1920

51.51

48.49

31.56

10.00

29.48

16.04

12.92

100

2,478,732

825,945,652

105,387

146,671

2,077,036

10,925,611

815,169,679

828,424,384

0.30

99.70

0.01

0.02

0.25

1.32

98.40

100

AGM
The AGM will be held at Deutsche Numis, 45 Gresham Street, London, EC2V 7BF at 1.30 pm on 29 April 2024. Further details
can be found in the Notice of Meeting sent to shareholders, which is also available at www.ocadogroup.com.

Shareholder queries
Please contact our Registrar, Computershare, directly for all enquiries about your shareholding:

Online:

www.investorcentre.co.uk (you will need your shareholder reference number which can be found on your
share certificate)

By telephone: 0370 707 1080. (Calls are charged at the standard geographic rate and will vary by provider. Calls outside

the United Kingdom will be charged at the applicable international rate. Lines are open 8.30 am to 5.30 pm GMT,
Monday to Friday excluding public holidays in England and Wales.)

By post: Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ, United Kingdom.

Electronic shareholder communication
We encourage our shareholders to opt for electronic communications as opposed to hard-copy documents by post.
This has a number of advantages for the Company and its shareholders. Increased use of electronic communications will
deliver savings to the Company in terms of administration, printing and postage costs, as well as increasing the speed of
communication and provision of information in a convenient form. Less paper also reduces our impact on the environment.

If you would like to receive notifications by email, you can register an account via www.investorcentre.co.uk and add your
email address or notify our registrars by post by writing to Computershare using the address above. Please note that if you
hold your shares corporately or in a CREST account, you are not able to use Investor Centre to inform us of your preferred
method of communication.

308

309

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONOCADO GROUP PLC Annual Report and Accounts 2023OCADO GROUP PLC Annual Report and Accounts 2023Shareholder information continued

ADR administration
Ocado Group plc operates an American Depositary Receipts programme. ADRs are traded on the over-the-counter market
under the symbol OCDDY. One ADR represents two ordinary Ocado shares. BNY Mellon maintains the Company’s ADR register.
If you have any enquiries about your holding of Ocado ADRs, you should contact BNY Mellon by post at 240 Greenwich Street,
Floor 8W, New York, NY 10286.

Financial calendar*

26 March 2024

Q1 Trading Statement

29 April 2024

16 July 2024

Annual General Meeting

Half-Year Results Announcement

19 September 2024

Q3 Trading Statement

14 January 2025

Q4 Trading Statement

27 February 2025

* Dates are provisional

Final Results Announcement