Bringing the best together

Transforming UK online grocery shopping

101 Bringing the best together Transforming UK online grocery shopping

Unparalleled UK online grocery retail proposition

Access to M&S own- food offering attracting M&S’s 12.3m Food customers

Over 50,000 products, with M&S own-brand available as part of a full shop for the first time

JV to benefit from Ocado’s proprietary technology including new developments (e.g. Zoom)

Covering geographies comprising 74% of UK households with the opportunity for further growth

2 Evolution of ’s strategy Compelling financial and strategic rationale

A new, large-scale Ocado Solutions partner with strong embedded growth from committed capacity rollout

Further validation of Ocado Solutions’ platform by a global retailer

JV remains an important test-bed for new technology

Significant cash proceeds, large and growing solutions earnings stream and ongoing joint ownership of the JV

Attractive terms in new sourcing partnership

3 Complementary strengths and assets

Best service in UK online grocery Ocado brings: 94.9% Delivery Punctuality • UK’s leading with sales of £1.5bn, over 50,000 products and 720k active customers 98.8% Order accuracy • UK’s best service; order accuracy, punctuality and lower waste >50K Product range • Globally validated, end-to-end automated OSP technology 0.8% Product waste

Ratings of UK retailers for quality food M&S brings: % ranks “best” 2018 M&S • Highest ranked Food brand on quality • Strong product innovation and market leading ‘eat now’ proposition SAINSBURY’S • >12m Food shoppers with c.7m “Sparks” loyalty programme members and c.3m active bank customers • M&S customers estimated spending power equivalent to CO-OP

approximately one third of UK online grocery spend Source: Kantar Millward Brown (Multiple choices allowed)

4 Fully aligned, stand-alone JV set up for success

• Contributes existing UK online grocery retail • Provides all M&S’s fresh, chilled, frozen and business ambient own-brand at cost once Waitrose • New solutions contract in-line with other global sourcing agreement terminates OSP partners • Develops new products and categories • Management and other services also provided • Shares customer data and insight

JV • Manages pricing, category mix, branded and own-label sourcing and marketing • Invests in buildings for new CFCs and home delivery vans • Service agreements with Ocado and M&S

5 Summary transaction terms

• Ocado 50%; M&S 50% • Ocado to receive £750m total consideration for M&S’s 50% share Consideration o Upfront cash payment of £562.5m o Deferred consideration of £187.5m, plus interest, payable up to five years after completion based on satisfaction of certain operational and financial conditions

JV Solutions • New large-scale partner for Ocado Solutions Partnership • Expected annual income stream for Ocado Solutions to be >£50m

• JV to have access to full range of M&S’s own-brand offering at cost • Expand UK’s largest consumer grocery range with over 50,000 products Sourcing • JV will no longer incur Waitrose sourcing fees (from contract expiry), which were over £15m in FY18

6 Summary transaction terms

• Fully fund the development of all CFCs currently committed with Ocado Use of Proceeds Solutions partners

Financials • Ocado will continue to consolidate the JV in its Group financials

• Equal shareholder representation on the Board • For at least five years: Governance o Ocado has the ultimate right to appoint CEO o M&S has the right to appoint one of the JV directors as Chair

• Creation of JV constitutes a Class 1 transaction for Ocado requiring Completion and approval of Ocado shareholders at a General Meeting timing • Other customary completion conditions • Current expectation for completion in Q3 2019

7 Bringing the best together Transforming UK online grocery shopping

Best for Best for Best for Best for CUSTOMERS COLLEAGUES SUPPLIERS SHAREHOLDERS

• Best service • Stronger business • Larger customer base • Compelling value • Quality and innovation • More opportunities for • Better showcase for new • A new large, growing • Broadest range development and growth and innovative products income stream • Higher growth potential • Cash to support growth in Solutions

Shared values across Ocado, M&S and the JV

8 Q&A

109 Forward-looking statements DISCLAIMER

This presentation contains oral and written statements that are or may be “forward-looking statements” with respect to certain of Ocado’s plans and its current goals and expectations relating to its future financial condition, performance and results. These forward-looking statements are usually identified by words such as ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’ or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they are based on current expectations and assumptions but relate to future events and circumstances which may be beyond Ocado’s control. There are important factors that could cause Ocado’s actual financial condition, performance and results to differ materially from those expressed or implied by these forward-looking statements, including, among other things, UK domestic and global political, social, economic and business conditions, market- related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, the possible effects of inflation or deflation, variations in commodity prices and other costs, the ability of Ocado to manage supply chain sources and its offering to customers, the effect of any acquisitions by Ocado, combinations within relevant industries and the impact of changes to tax and other legislation in the jurisdictions in which Ocado and its affiliates operate. Further details of certain risks and uncertainties are set out in our Annual Report for 2018 which can be found at www.ocadogroup.com. Ocado expressly disclaims any undertaking or obligation to update the forward-looking statements made in this presentation or any other forward-looking statements we may make except as required by law. Persons receiving this presentation should not place undue reliance on forward-looking statements which are current only as of the date on which such statements are made. No statement in this document is intended as a profit forecast or profit estimate

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