ANNUAL FINANCIAL REPORT
OCADO GROUP PLC
28 February 2023
Ocado Group plc
Annual Financial Report 2022
Ocado Group plc ("Ocado") has today submitted to the Financial Conduct Authority's national storage mechanism its annual report and accounts for the 52 weeks ended 27 November 2022 (as required by Listing Rules 9.6.1 and 9.6.3).
The annual report and accounts for the 52 weeks ended 27 November 2022 is available to view on Ocado's website: www.ocadogroup.com (in compliance with Disclosure Guidance and Transparency Rule 6.3.5(3)).
Ocado's annual report and accounts for the 52 weeks ended 27 November 2022 will also be available for viewing at the Financial Conduct Authority's national storage mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
This announcement follows Ocado's announcement today of its preliminary results for the same period. A condensed set of Ocado's financial statements and information on important events that have occurred during the year and their impact on the financial statements and related party information were included in Ocado's preliminary results announcement. That information together with the information set out below is the information provided in satisfaction of the requirements of Disclosure Guidance and Transparency Rule 6.3.5. The description of principal risks and uncertainties below is extracted in unedited full text from the annual report and accounts for the 52 weeks ended 27 November 2022. Reading this announcement and/or the preliminary results announcement should not be a substitute for reading the full annual report and accounts for the 52 weeks ended 27 November 2022. This announcement and the preliminary results announcement are available to view on Ocado's website: www.ocadogroup.com.
Principal risks and uncertainties
We have identified 11 principal risks and uncertainties facing Ocado. These risks, mitigations and changes during the year are summarised in the table below. They are not set out in priority order. Further information on risk is set out on pages 86 to 95 of the annual report and accounts for the 52 weeks ended 27 November 2022.
|
Principal Risks |
What is the risk? |
Key risk drivers |
How we manage it |
Movement |
Risk appetite |
Owner
|
Link with strategy |
Responsible business approach link |
|
Product Commercial Proposition |
Our OSP offer, pricing and contractual terms may not provide adequate and sustainable returns for us and our shareholders and an attractive commercial proposition for our clients. |
· Commercial viability · Commodity and cost inflation · Partner dependency · Partner market volatility · Food waste |
· Pricing model approved by Chief Commercial Officer, Ocado Solutions and Board. · All deals are modelled and reviewed before signing · Quarterly pricing review. · Monthly monitoring of project P&Ls undertaken by Finance. · Diversified pipeline of deals with new partners in new territories. |
↑ |
Cautious - Preference for safe delivery and will accept if trade-off is limited, and heavily outweighed by benefits. |
Luke Jensen |
Grow our revenue
Optimise OSP economics
Responsible business approach |
Environment and natural resources
Platform resilience and innovation |
|
Product Performance |
Failure to provide clients with timely, consistently reliable performance at a level of quality to meet the needs of their end customers. Partners may not have the necessary knowledge, guidance, or capabilities to operate OSP efficiently and cost-effectively. These issues could lead to increased costs, reduced revenue or penalties for Ocado and its clients. |
· Partner (operational) performance · Contractual obligation and change · Platform implementation delays · Product quality · Operational disruption (including technical and software failures) |
· Governance teams monitor individual projects. · Monthly reviews of partner performance undertaken, including KPIs and partner engagement. · Partner Success Teams share knowledge and advice on improved ways of working. · New products are tested at dedicated development sites. |
↓
|
Cautious - Preference for safe delivery and will accept if trade-off is limited, and heavily outweighed by benefits. |
James Matthews and Luke Jensen |
Grow our revenue
Deliver on our client commitments
Responsible business approach |
Platform resilience and innovation |
|
Product innovation |
Failure to respond to emerging technology or disruptive business models could undermine our ability to attract and retain clients. |
· Disruptive technology · Product strategy and roadmap |
· Quarterly product planning meetings assess product development against functionality, target KPIs, timelines and budget. · Ongoing market research to identify our partners' needs and market trends. · Establishing our identity as a technology business, international platform provider and innovation factory. |
→
|
Open - Will take justified risks to achieve highest return and accept possibility of failure. |
James Matthews |
Optimise OSP economics
Deliver transformational technology
Responsible business approach |
Our people and skills for the future
Environment and natural resources
Platform resilience and innovation |
|
Intellectual Property |
Third party IP infringement or failure to protect our own IP could result in loss of use of the Group's assets, financial damages or harm to the Company's reputation or relationships. |
· Infringement · Protection |
· Conduct Freedom to Operate searches on relevant technologies and in selected jurisdictions. · Monitor IP filings and grants by a large number of competitor companies. · Specialist patent attorneys work with the development streams to identify new innovations and provide training and guidance. · Combine internal and external legal counsel management of litigation and other IP proceedings. |
↓
|
Cautious - Preference for safe delivery and will accept if trade-off is limited, and heavily outweighed by benefits. |
Neill Abrams |
Deliver transformational technology
Responsible business approach |
Platform resilience and innovation |
|
Supply Chain |
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. |
· Contract performance · Responsible sourcing · Supplier dependency · Power shortages/blackouts · CO2 shortage |
· Steering group monitors supply chain demand against supplier capacity constraints. · Dedicated procurement teams with specific market and product knowledge. · Supplier assessments, due diligence and site audits undertaken during product development process. · Quarterly business review of all major suppliers covers performance, product quality, cost and market assessment. · Responsible Sourcing Working Group monitors multiple work streams, reporting to the ESG Committee. |
↑ |
Cautious - Preference for safe delivery and will accept if trade-off is limited, and heavily outweighed by benefits. |
James Matthews |
Grow our revenue
Optimise OSP economics
Deliver on our client commitments
Responsible business approach |
Our people and skills for the future
Platform resilience and innovation |
|
Talent & Capability |
Difficulty in filling key positions, a loss of top performers and an inability to embed diversity could undermine business operations and growth plans. |
· Retention and rewards · Attraction · Training and development · Diversity and inclusion · Succession planning · Culture and wellbeing (employee engagement and relations) · Organisational structures |
· Workforce planning undertaken to identify current and future landscape. · Periodic review of remuneration and incentive plans to align with market trends. · Talent development programmes implemented to support resourcing plans. · Employee surveys to analyse opinions · Succession plan developed. |
→
|
Flexible - Will take strongly justified risks and will manage impact of possible failure. |
Claire Ainscough |
Deliver transformational technology
Deliver on our client commitments
Responsible business approach |
Our people and skills for the future |
|
Cybersecurity |
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 disruption, reputational damage and regulatory impacts, for us and our clients. |
· Cybersecurity breach · Commercial data loss · Personal data loss · Infrastructure outage · Third party compromise |
· IT infrastructure established to operate with resilience and security. · Regular testing by third parties and cyber incident contingency planning. · Data Protection Officer oversees Group's privacy compliance programme. · No customer payment card data is held in Ocado Group's databases. · Dedicated Information Security team monitors security issues and responds to security incidents. |
↑ |
Minimal - Extremely conservative and will accept only if essential and limited possibility of failure. |
James Matthews |
Deliver transformational technology
Responsible business approach |
Platform resilience and innovation |
|
Fire & Safety |
Fire, or harm to a worker or customer, caused by product design or operating failures could result in business disruption, loss of assets and reputational loss. |
· Fire safety · Product safety · Food safety · People safety (construction and logistics) |
· Health and safety governance programme overseen by the Safety Committee. · Experienced technical experts monitor and audit compliance against relevant safety regulations, policies and procedures in safety areas, including food, product, occupational health, fire and construction. · Training, risk assessments and safe systems of work undertaken by qualified staff to raise awareness and knowledge. · Regulatory changes actively monitored and supported by external expertise and advice. |
→
|
Minimal - Extremely conservative and will accept only if essential and limited possibility of failure. |
James Matthews |
Deliver on our client commitments
Responsible business approach |
Our people and skills for the future
Platform resilience and innovation |
|
Regulatory & Compliance |
Failure to comply with local and international regulations could lead to loss of trust, penalties, and undermine our ability to operate. |
· Statutory compliance · Fraud, bribery and industry specific compliance · New geographies · Governance
|
· UK, EU and rest of world regulatory monitoring tracker. · Perform due diligence and territory research and seek specialist advice for regulatory issues. · Monitor regulatory developments to ensure that changes are identified. · Implement compliance framework of policies and procedures and employee training. |
→
|
Minimal - Extremely conservative and will accept only if essential and limited possibility of failure. |
Neill Abrams |
Responsible business approach |
Platform resilience and innovation |
|
Geopolitical & Economic Uncertainty |
Global economic and political crises may undermine customer demand, our access to skills and our supply chain. This could impair operations and delivery of new capacity. |
· Sanctions · War and conflict · Cost of living · Pandemic · Civil unrest/activism |
· Risk assessments prior to entering new geographical markets or undertaking new ventures. · Scan of government and media channels for emerging threats. · Maintain financial and physical reserves to cushion any operational impact for an extended period. · Update business continuity management plans in response to threats. |
↑ |
Flexible - Will take strongly justified risks and will manage impact of possible failure. |
Stephen Daintith |
Optimise OSP economics
Deliver on our client commitments
Responsible business approach |
Our people and skills for the future
Platform resilience and innovation |
|
Climate |
Extreme weather events and climate-related regulation could disrupt our supply chain, operations and demand for our products. |
· Climate reporting · Fleet transformation · Energy costs · Climate impact on supply chain · Natural disasters |
· ESG Committee oversight of ESG and climate programmes. · Risk workshops and scenario analysis to identify financial impact, and mitigations over extended timeframe (see TCFD disclosure note - pages 47-55). · KPI monitoring. · Climate and Net Zero roadmap planning. · Horizon scanning to identify regulatory developments. |
→
|
Flexible - Will take strongly justified risks and will manage impact of possible failure. |
Neill Abrams |
Deliver transformational technology
Deliver on our client commitments
Responsible business approach |
Environment and natural resources
Platform resilience and innovation |
Key: ↑ Risk has increased ↓ Risk has decreased → No change
For further information on the financial risks see pages 96 to 99 and 243 to 245 of the notes to the consolidated financial statements in the annual report and accounts for the 52 weeks ended 27 November 2022.
Directors' Responsibility Statement
Ocado's annual report and accounts for the 52 weeks ended 27 November 2022 contains the following statements regarding responsibility for the financial statements and the annual report in compliance with DTR 4.1.12. This responsibility statement is repeated here (below) solely for the purposes of complying with Disclosure Guidance and Transparency Rule 6.3.5. It is not connected to the extracted information presented in the preliminary results announcement or this announcement.
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 106 to 109) confirms, to the best of his or her knowledge, that:
· the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and
· the "Management Report" (as defined in the Directors' Report on page 171 to 172) includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
The Directors of Ocado Group plc are listed on pages 106 to 109 of the annual report and accounts for the 52 weeks ended 27 November 2022 and are listed on the Ocado Group's corporate website: www.ocadogroup.com. The Directors of Ocado Group plc as at the date of this announcement are as follows:
Rick Haythornthwaite;
Tim Steiner;
Neill Abrams;
Stephen Daintith;
Mark Richardson;
Luke Jensen;
Jörn Rausing;
Andrew Harrison;
Emma Lloyd;
Julie Southern;
Michael Sherman;
Nadia Shouraboura;
John Martin; and
Julia M. Brown.
Enquiries
For further information contact:
|
Company Secretary Neill Abrams |
Chief Reputation Officer +44 1707 228 000 investor.relations@ocadogroup.com
|
Person responsible for arranging the release of this announcement:
Neill Abrams
Group General Counsel & Company Secretary
Ocado Group plc
Buildings One & Two
Trident Place
Mosquito Way
Hatfield
Hertfordshire AL10 9UL
Fax: +44 (0)1707 227 997
email: company.secretary@ocadogroup.com
Ocado Group plc LEI: 213800LO8F61YB8MBC74
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