FY20 Results

FY20 Results 1 Forward-looking statements 2 Chairman’s Overview Lord Rose 3 2020 in review Tim Steiner CEO 21 Changing the way the world shops, for good ‘We are online shopping pioneers. We continue to make the delivery of consumer’s essential groceries fit for modern lives and businesses. Our technologies, combined knowledge and 20 years of experience provide our client partners with exceptional efficiency and economics, and their consumers customer service that is among the best. Achieving this responsibly is at the very core of how we have solved complex challenges and how we will continually improve. This is achieved with minimal impact on the environment and a positive influence on the communities we serve. We are able to offer this proven ability to our client partners and deliver on shared ambitions.’ 5 21 Financial Review Andrew Page Deputy CFO 6 Financial Summary £m FY 2020 FY 2019 Var (%) Group Revenue 2,331.8 1,756.6 32.7% Group EBITDA 73.1 43.3 68.8% Depreciation, amortisation, (168.9) (136.1) 24.1% impairment Net Finance costs (52.8) (27.6) 91.3% Loss before tax (148.6) (120.4) Exceptionals 104.6 (94.1) Loss before tax (44.0) (214.5) post exceptionals 1. Revenue is online sales (net of returns) including charges for delivery but excluding relevant vouchers/oﬀers and value added tax. The recharge of costs and associated fees to our UK Solutions clients and International Solutions clients are also included in revenue with the exception of recharges to Ocado Retail which are eliminated on consolidation 2. EBITDA excludes exceptional items. Group EBITDA in FY20 includes the EBITDA impact of IFRS 16 of £27.1m (FY19 £25.4m) Segmental Summary Revenue1 EBITDA1 2 Var Var £m FY 2020 FY 2019 FY 2020 FY 2019 % % Retail 2,188.6 1,618.1 35.3% 148.5 40.6 265.8% UK Solutions & 654.3 576.0 13.6% 44.4 72.1 (38.4)% Logistics International Solutions 16.6 0.5 - (83.3) (54.9) (51.7)% Other3 - 9.8 - (36.5) (14.2) (157.0)% Total 2,331.8 1,756.6 32.7% 73.1 43.3 68.8% ● FY19 EBITDA for UK and International Solutions and Other have been re-presented following a review of Group administrative costs. Nil impact to Group EBITDA. Further detail is contained in the Appendix. 1. Group totals include eliminations 2. EBITDA excludes exceptional items and includes the impact of IFRS 16 3. Other segment represents revenue and costs which do not relate to the other three segments. This includes Board costs, the results of the Fabled business that was divested during FY19 and the consolidated results of Jones Food Company 8 Ocado Retail: Covid-19 impact on operations Change in customer behaviour impacts KPIs Contextualising the impact on financials UPH (mature CFCs2) benefits from recent trends Operating leverage from capacity +5% benefit in CFCs on same fixed cost base Smoothed week; More items per basket, better total utilisation better commonality Smoothed week 161 169 better total utilisation FY19 FY20 Underlying growth success scaling Erith Higher Bigger Impact FY20 growth in volumes baskets to KPIs normalised OPW (6%) Bigger baskets drive increased van fill, lower delivery cost +19% 196 184 total eaches per van More volumes and cash but shift in FY20 vs FY19 fewer orders per van FY19 FY20 Whilst DPV reflects shift towards larger baskets further impact on marketing and supplier income lines Note: (1) An each is an individual unit of product (2) units dispatched from the CFC per variable hour worked by Hatfield CFC, Dordon CFC and Erith CFC operational personnel 9 Ocado Retail performance FY 20201 FY 20191,2 bps (% Retail Revenue) Product mix and ending of Waitrose Gross margin (incl. media) 34.2 32.9 130 sourcing agreement Trunking and delivery costs (10.8) (12.1) 130 Continued underlying progress, Erith now above average UPH; benefit of CFC costs (7.7) (9.1) 140 higher throughput from existing CFCs Other operating costs (0.6) (0.8) 20 during COVID-19 crisis Marketing costs3 (1.0) (1.2) 20 Reduced acquisition costs Fees (3.4) (3.9) 50 Leverage benefit Operating contribution 10.8 5.9 490 Full year of Retail head office costs Admin costs (4.0) (3.4) (60) (including strengthening the buying team; a full year of Board costs; and 6.8 2.5 430 EBITDA establishment of bonus schemes) 1. Excluding exceptionals. 2. The costs of Ocado Retail’s operation in 2019, prior to the formation of the joint venture with M&S, have been allocated between the Retail Segment and UK & Logistics segment in order to be broadly comparable to the current contractual arrangements now in place 3. Marketing costs, excluding voucher spend 10 UK Solutions: Strong client volume growth offset by continued Andover impact and investment FY 2020 FY 2019 Var % Fee revenue 117.1 105.9 10.6% Cost recharges 537.2 470.1 14.3% Revenue 654.3 576.0 13.6% EBITDA 44.4 72.1 (38.4)% ● Strong client volume growth ● Revenue growth impacted by Andover (Erith “holiday”) ● Continued reduction in engineering costs per order at Erith, though higher than other mature CFCs ● EBITDA impacted by Andover revenue and extra investment in platform 11 International Solutions: revenue building, fees invoiced point to strong future growth FY 2020 FY 2019 Var £m £m % Revenue1 16.6 0.5 - EBITDA (83.3) (54.9) (51.7)% Fees invoiced 123.9 81.4 52.2% ● Revenue building following go-live of CFCs in France and Canada in FY20 ● Cumulative unrecognised invoiced fees of £256m ● Growth in costs to support accelerating client requirements 1. FY20 Revenue includes £7.0m of equipment sales to a retail partner recognised as revenue under IFRS 15. The impact on EBITDA is nil. 12 Group net cash flow development £m FY19 Cash position 641 751 inc. £110m Treasury Deposits EBITDA 73 Strong Contract Liabilities 98 operating Insurance proceeds 40 cash flow Working capital 32 1 Finance costs + other (18) Capex split Net debt/finance obligations 882 Share issues 658 Financial Capex1 (452) flexibility to capitalise on the Other treasury deposits (260) full opportunity UK Intl. Platform Insurance proceeds 25 CFCs Dev set over the medium term Other (12) FY20 Cash position 1,707 2,077 inc. £370m Treasury Deposits 1. Variance is the diﬀerence between accrued capital expenditure and cash capital expenditure. UK includes share of MHE JVCo capex 13 Outlook for 2021 ● Revenue growth: ○ Retail highly dependent on COVID restrictions. New capacity ramp up over the course of the year from 3 new UK CFCs ■ Bristol to open in 1Q21 ■ Andover and Purfleet to open in 4Q21 ○ UK Solutions & Logistics double digit growth ■ ramp-up of new UK capacity ○ International Solutions fees from OSP partners expected to increase to around £50m ■ full year revenues from 2 CFC sites opened in FY20, for Casino and Sobeys ■ partial year operations of 2 new Kroger CFCs expected to open in 1H21 ● International Solutions fees invoiced around 30% growth 14 Outlook for 2021 ● EBITDA: ○ Covid-19 will continue to have a significant impact ○ £30m additional costs due to accelerated investment in technology and platform, including acquisitions of Haddington Dynamics and Kindred Systems ○ Retail dependent on COVID restrictions and impacted by additional capacity fees on new sites ○ UK Solutions & Logistics: additional capacity fees from new sites to return EBITDA to FY19 levels ○ International Solutions: expected to be lower, as investment more than offsets increase in revenue ● Capex forecast around £700m ○ Broadly 40% UK CFCs; 40% International CFCs; 20% Development and Other 15 Ocado Group in a post Covid-19 world Tim Steiner CEO 16 Millions of new customers now shop for grocery online Channel shift to online grocery is sticky Customers will look for the best experience Many customers that have tried online Globally, consumers value similar things, grocery intend to continue post pandemic though relative emphasis may vary Convenience 70% format flexibility - speed - reliability US consumers buying produce online who expect to continue Quality and Choice freshness - range - availability - health/hygiene 66% Value range of pricing substitutes - delivery costs - promos first time online grocery users in Western Europe who expect to continue And shop around for a better service 55% 28% 34% 28% of European in US have tried in China of consumers in China are likely to consumers would a new retailer, switched continue buying groceries online consider a switch store or website to a new store To win in online grocery requires serving all customers missions with the best offer Sources: CH Robinson Consumer survey, October 2020, GS report November 2020, McKinsey & Company report, November 2020, McKinsey & Company Covid-19 digital sentiments survey, 17 McKinsey & Company COVID-19 US Consumer Pulse Survey 11/9-11/13/2020 OSP is setting the benchmark for customer experience Ocado.com sets the bar in Our partners are replicating Strong customer metrics lead terms of customer service these metrics in their markets to strong customer retention A leading customer offer Early NPS scores are a positive Customer satisfaction clear in indicator for future growth stable Ocado.com cohort spend Range 87 45k+ SKUs Voila by Sobeys Service ‘highest I have seen in my career’ CEO, Michael Medline Sept 2020 99% order accuracy 95% on time delivery 50+ Monoprix Plus, Groupe Casino Value (MA) spend Cohort flexibility to price range and most weeks it exceeds 50, even delivery to offer most value reaching a score of 65 2002 2020 - LSA, Sept 2020 Importance of the customer offer Retention will be a long With market leading profitability will only increase in the future term differentiator for growth OSP enables an unparalleled customer offer, facilitating partners’ long term success in online grocery Source: Company information.

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