TIDMOCDO

RNS Number : 6470E

Ocado Group PLC

12 February 2015

ANNUAL FINANCIAL REPORT

OCADO GROUP PLC

12 February 2015

Ocado Group plc

Annual Financial Report 2014

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 30 November 2014 (as required by Listing Rules 9.6.1 and 9.6.3).

The annual report and accounts for the 52 weeks ended 30 November 2014 is available to view on Ocado's website: www.ocadogroup.com (in compliance with Disclosure and Transparency Rule 6.3.5(3)).

Ocado's annual report and accounts for the 52 weeks ended 30 November 2014 will also be available for viewing at the Financial Conduct Authority's national storage mechanism at www.morningstar.co.uk/uk/NSM.

This announcement follows Ocado's announcement on 3 February 2015 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 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 30 November 2014. 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 30 November 2014. 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 12 principal risks and uncertainties facing Ocado. These are considered by the Board to be material to the development, performance, position or future prospects of 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 32 to 35 of the annual report and accounts for the 52 weeks ended 30 November 2014.

 
 Objective        Risks               Mitigation Action/Control                                          Change During 
                                                                                                          The Year 
===============  ==================  =================================================================  ============== 
 DRIVING GROWTH   Failure to 
                  maintain              *    Continuation of our LPP basket matching price                   é 
                  competitive                comparison 
                  pricing position                                                                           Due to 
                                                                                                           increased 
                                        *    Maintaining a competitive number of promotional              competition 
                                             offers and increased availability of free delivery              in the 
                                             slots for price sensitive customers                             market 
 
 
                                        *    Creation of a choice of tiered price points within 
                                             each category 
---------------  ------------------  -----------------------------------------------------------------  -------------- 
                  A risk of decline 
                   in high service      *    Weekly monitoring of the key indicators and the                 ê 
                   levels                    underlying drivers against published targets 
                                                                                                           Successful 
                                                                                                            increase 
                                        *    Installation of additional capacity to reduce the                 in 
                                             pressure on the business and resiliency work in CFC1          operations 
                                                                                                            of CFC2 
                                                                                                             means 
                                                                                                           that both 
                                                                                                              CFCs 
                                                                                                              are 
                                                                                                           operating 
                                                                                                              with 
                                                                                                           sufficient 
                                                                                                            capacity 
                                                                                                            headroom 
---------------  ------------------  -----------------------------------------------------------------  -------------- 
                  Failure to 
                  maintain                   *    Growth of the Ocado own label range alongside              ê 
                  a compelling                    continued provision of the Waitrose range 
                  product range                                                                            Range and 
                                                                                                             supply 
                                             *    Growth of branded ranges and expansion of supplier       base have 
                                                  base                                                     increased 
                                                                                                           during the 
                                                                                                              year 
                                             *    Alternative sourcing scenarios planned in the event 
                                                  that the Waitrose sourcing relationship terminates 
---------------  ------------------  -----------------------------------------------------------------  -------------- 
                  Failure to 
                  continue              *    Continuation of investment and optimisation of the              ê 
                  to recruit                 marketing channels to acquire new customers 
                  increasing                                                                                 Active 
                  numbers of new                                                                           customers 
                  customers and                                                                             grew and 
                  retain existing                                                                          retention 
                  customers                                                                                  rates 
                                                                                                            improved 
                                                                                                           during the 
                                                                                                              year 
===============  ==================  =================================================================  ============== 
 MAXIMISING       A risk of delays 
  EFFICIENCY      in the                     *    Dedication of resources to the modularisation of           é 
                  implementation                  technology and logistics systems to enable faster 
                  of new capacity                 replication                                              Future new 
                  for both Ocado                                                                            capacity 
                  and Morrisons                                                                            is reliant 
                                             *    Preparation of plans for new capacity at CFC3 and            on 
                                                  CFC4                                                        new, 
                                                                                                           unproven, 
                                                                                                           technology 
===============  ==================  =================================================================  ============== 
 UTILISING        Failure to 
  KNOWLEDGE       develop                   *    Engagement with a wide number of international           çè 
                  a                              grocers to understand market needs 
                  competitive                                                                             Significant 
                  model for further                                                                         progress 
                  commercialisation         *    Experienced teams in place who understand the current         in 
                                                 solutions and are aware of global alternatives used       developing 
                                                 in other industries                                          the 
                                                                                                           commercial 
                                                                                                           offer but 
                                                                                                             higher 
                                                                                                          risks remain 
                                                                                                          until first 
                                                                                                          OSP deal is 
                                                                                                             signed 
 MONETISING       Failure to 
  PROPRIETARY     protect               *    Processes are operating to identify patentable               çè 
  KNOWLEDGE       current                    inventions and to apply for patents 
                  technology                                                                                Multiple 
                  and process                                                                               patents 
                  and failure           *    Conducting extensive "freedom to operate" searches on         now filed 
                  to ensure that             selected technologies                                            but 
                  our technology                                                                          the value of 
                  can be freely                                                                              IP has 
                  operated without                                                                         increased 
                  infringing a                                                                                 so 
                  third party's                                                                            increasing 
                  IP                                                                                      the value to 
                                                                                                             others 
===============  ==================  =================================================================  ============== 
 OPERATIONAL      A risk of a 
                   food or product           *    Experienced legal, food technology and health and          é 
                   safety incident                safety professionals monitor compliance against 
                                                  policies and procedures                                 Supplier and 
                                                                                                            product 
                                                                                                            numbers 
                                             *    Supplier approval and certification process                 have 
                                                                                                           increased 
                                                                                                            and the 
                                             *    Health and safety policies with appropriate                market 
                                                  operational procedures                                   has become 
                                                                                                              more 
                                                                                                          sensitive to 
                                                                                                            product 
                                                                                                             issues 
---------------  ------------------  -----------------------------------------------------------------  -------------- 
                  A risk of changes 
                  in regulations             *    Regular monitoring of regulatory developments to        çè 
                  impacting our                   ensure that changes are identified 
                  business 
                  operations 
                                             *    Monitoring operational performance to minimise 
                                                  environmental impact 
---------------  ------------------  -----------------------------------------------------------------  -------------- 
                  Failure of 
                  technology                *    IT systems are structured to operate reliably and        çè 
                  or data loss                   securely 
 
 
                                            *    Denial of service protection service is in place 
 
 
                                            *    The security of our IT systems is regularly tested by 
                                                 third parties 
 
 
                                            *    No customer payment card data is held on Ocado's 
                                                 databases 
 
 
                                            *    Access to customer personal data is restricted to 
                                                 those who need this information as part of their job 
---------------  ------------------  -----------------------------------------------------------------  -------------- 
                  Business 
                  interruption              *    Dedicated engineering teams on site with daily              ê 
                                                 maintenance programmes to support the continued 
                                                 operation of equipment                                    Opening of 
                                                                                                              more 
                                                                                                             spokes 
                                            *    Insurers advise on engineering and risk management in      reduces 
                                                 the design and operation of the CFCs                     reliance on 
                                                                                                            any one 
                                                                                                           particular 
                                            *    High level of protection for CFCs and equipment             spoke 
                  A risk of 
                  unintentional             *    Issued a revised competition compliance policy in        çè 
                  infringement                   2014 
                  of competition 
                  legislation 
                                            *    Conducted training of key personnel and deployed an 
                                                 e-learning tool for all personnel in every department 
                                                 having access to trading data 
 
 
                                            *    Physical and technical firewalls installed to 
                                                 separate those teams who need to deal with 
 
 
                                           sensitive Morrisons' 
                                           data, in order to provide 
                                           the services to Morrisons, 
                                           from those running the 
                                           Ocado offer 
---------------  ------------------  -----------------------------------------------------------------  -------------- 
 

The risk that future efficiency improvements may be limited, previously reported in last year's annual report, is no longer considered to be a principal risk because Ocado has reached a level of efficiency sufficient to ensure the viability of the business.

For further information on the financial risks see page 172 of the notes to the financial statements.

Directors' Responsibility Statement

Ocado's annual report and accounts for the 52 weeks ended 30 November 2014 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 and Transparency Rule 6.3.5. It is not connected to the extracted information presented in the preliminary results announcement.

Each of the Directors who held office at the date of the approval of this Annual Report (whose names and functions are listed on pages 62 to 63 of this Annual Report) 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 83) 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 in the annual report and accounts for the 52 weeks ended 30 November 2014 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:

Stuart Rose;

David Grigson;

Tim Steiner;

Neill Abrams;

Duncan Tatton-Brown;

Mark Richardson;

Ruth Anderson;

Robert Gorrie;

Jörn Rausing;

Alex Mahon; and

Douglas McCallum.

Enquiries

For further information contact:

 
 Ocado Group plc 
  Company Secretary                      Investor Relations 
  Neill Abrams                           David Hardiman-Evans +44 1707 
  Titan Court                            228 000 
  3 Bishops Square                       investor.relations@ocado.com 
  Hatfield Business Park 
  Hatfield, Hertfordshire AL10 
  9NE 
  Fax: +44 (0)1707 227 997 
  email: company.secretary@ocado.com 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

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