REG - Ocado Group PLC - Annual Financial Report
11/02/2022 08:40
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RNS Number : 4274B Ocado Group PLC 11 February 2022
ANNUAL FINANCIAL REPORT
OCADO GROUP PLC
11 February 2022
Ocado Group plc
Annual Financial Report 2021
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 28 November 2021 (as required by Listing Rules 9.6.1 and
9.6.3).
The annual report and accounts for the 52 weeks ended 28 November 2021 is
available to view on Ocado's website: www.ocadogroup.com
(http://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 28 November 2021
will also be available for viewing at the Financial Conduct Authority's
national storage mechanism at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
This announcement follows Ocado's announcement on 8 February 2022 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 28 November 2021. 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 28 November 2021. This
announcement and the preliminary results announcement are available to view on
Ocado's website: www.ocadogroup.com (http://www.ocadogroup.com/) .
Principal risks and uncertainties
We have identified 12 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 84 to 97 of the annual report and accounts for the 52 weeks
ended 28 November 2021.
Principal Risks What is the risk How we manage it Movement Target tolerance Emerging threats Owner ESG materiality reference Strategy reference
Talent and Capability Our business operations and growth plans could be at risk from a • Developing and implementing strategic and tactical resourcing → Flexible - To maintain our leadership position, we will take strongly We operate in a competitive environment and risk will continue from Chief People Officer Social - Talent Attraction and Development Deliver transformational technology
difficulty plans and monitoring the talent pipeline. justified risks and manage impact. existing
finding and retaining sufficient employees to support our growth, in
sources e.g. the retention of Technology and Ocado Logistics employees. Deliver on our client commitments
filling • Deploying talent development programmes and surveying employee We
key positions and critical roles, a loss of top performers, a opinions. anticipate threats will also evolve in areas such as integration of Develop global scale-up capabilities
potential
acquisitions.
shortfall of future leaders, and an inability to embed diversity and • Undertaking succession planning, periodically reviewing
inclusion. remuneration and incentives and proactively supporting diversity and
inclusion.
Cybersecurity and Data We risk the loss of critical assets and sensitive information as a • Structuring IT systems to operate reliably and securely. ↑ Minimal - We are extremely conservative in selecting options that Cyber risk is constantly evolving, driven by technology advances and CEO Ocado Technology Governance - Cybersecurity; Data Privacy Management Deliver transformational technology
result of a
impact this developments in the geopolitical environment. We anticipate continued
cyber-attack, insider threat, or a data breach. This could result in • Testing by third party. risk. We will only accept options that come with a limited possibility risk
business disruption, reputational damage, significant fines or the
of from existing sources and incrementally from areas such as supply
loss of • Overseeing an information security governance programme by the failure. chain, an
confidential business information. Information Security Committee.
increasingly remote workforce, the use of AI and machine learning.
• Monitoring security issues and responding to security incidents by
a dedicated information security team.
• No customer payment card data is held in Ocado Group's databases.
• Overseeing the Group's privacy compliance programme by the Data
Protection Officer.
• Planning Cyber incident contingency.
Safety and Wellbeing Health, safety and wellbeing risks that can lead to the harm, injury, • Overseeing a Health and Safety governance programme by the Safety → Minimal - We are extremely conservative in selecting options that We anticipate continued risk from existing sources, with incremental Group General Counsel Social, Governance - Occupational Health and Safety Deliver on our client commitments
death, Committee. impact this threats
or illness of a worker in a workplace or to a retail customer of our
risk. We will only accept options that come with a limited possibility arising directly and indirectly from the Covid-19 pandemic, increasing Develop global scale-up capabilities
product. • Monitoring and audit compliance by experienced technical experts of proximity of human and robot operations, and as a result of significant
against relevant safety regulations, policies and procedures in safety areas, failure. increase in CFC construction and installation activity across our
including food, product, occupational health, fire and construction.
regions.
• Preparing training, risk assessments and safe systems of work by
qualified staff to raise awareness and knowledge.
• Monitoring actively of regulatory changes supported by external
expertise and advice.
Legal and Regulatory Non-Compliance Ocado must comply with legislative and regulatory requirements both • Monitoring of regulatory developments to ensure that changes are → Minimal - We are extremely conservative in selecting options that Listed company compliance is likely to increase in future as a result Group General Counsel Governance - Business Ethics and Governance Develop global scale-up capabilities
locally identified. impact this of new
and internationally. Failure to comply could negatively impact our
risk. We will only accept options that come with a limited possibility corporate governance regulations and TCFD reporting.
business • Performing due diligence, territory research and seeking of
model, our ability to conduct business and the viability of our specialist advice for regulatory issues. failure.
Solutions
deals, and also risks damage to our reputation, loss of stakeholder • Implementing a compliance framework of policies and procedures and
support employee training.
and financial penalties.
Supply Chain Risks causing disruption to our extended and complex supply chain. • Reviewing the risk matrix by supply chain and procurement areas to ↑ Flexible - We take strongly justified risks, accept some uncertainty The threat is continuing to increase, as a result of the ongoing impact Chief Operations Officer Social, Governance - Responsible Sourcing Grow our revenue
Impacting manage key suppliers and components. and of the
responsible sourcing and adversely affecting product availability,
manage the impact. Covid 19 pandemic, increasing demand and complexity of the supply Optimise OSP economics
delivery, • Taking an agile approach to manufactured products, including the
network and
reliability and cost, resulting in delays to contractual commitments ability to divert any product to sites with the most pressing requirements. regulations, and shortages in key components. Deliver on our client commitments
and loss
of revenue. • Undertaking supplier assessments, due diligence and site audits Develop global scale-up capabilities
during the development process.
• Monitoring supply chain demand against supply capacity constraints
by the steering group.
Business Interruption and Catastrophic Events Major service disruption, customer confidence and increased costs • Structuring IT systems to operate reliably and securely. → Flexible - We will only take risks that are strongly justified and we Potentially arising from our operations, suppliers, customers or CEO Ocado Technology and Chief Operations Officer N/A Deliver on our client commitments
arising from
expect service
a failure at key locations caused by physical events, such as fire, or • Providing dedicated engineering teams on site with daily some periods of uncertainty. providers, with increased interdependence across multiple sites and
technical events, such as an IT outage or mechanical failure through maintenance programmes to support the continued operation of equipment.
geographies, there is an increased complexity and scope for disruption.
malicious
or accidental means. • Progressing and updating our disaster recovery and business
continuity plans.
• Providing for a high level of protection for CFCs and equipment,
combined with business interruption insurance to transfer residual risks.
Product (OSP) Proposition and Commercial Viability Our OSP offer, pricing and contractual terms do not provide adequate • Undertaking a full review of projected financial impact before ↓ Cautious - We accept a limited tolerance for uncertainty in the Threat levels are being heightened by increasing raw material and CEO Ocado Solutions N/A Grow our revenue
and signing any new partnerships.
management of component
sustainable returns for us and our shareholders and an attractive
our Commercial Viability and the selection of commercial terms. We scarcity, lead times and costs. This is compounded by demand for Optimise OSP economics
commercial • Monitoring periodically the financial model and delivery costs will only incremental
proposition for our clients. plus close relationship with our partners. Controlling the capital invested in accept risk if limited and heavily outweighed by benefits. functionality, risking early assumptions on efficiency gains. This is
our platform to carefully manage costs.
compensated by increased maturity of modelling and operational
experience.
• Reviewing regularly the rate of software development via platform
steering meetings.
• Scaling and reallocating our resources and capabilities to help
meet Ocado Solutions project deadlines.
• Ongoing programme of design improvements for the platform.
Product (OSP) Delivery and Service Implementation and service delivery do not provide the client with • Ongoing monitoring of the key performance indicators and regular → Cautious - we have a preference for safe delivery. We accept a limited The threat evolves with our growth and the requirement to deploy Chief Operations Officer N/A Deliver on our client commitments
timely, review meetings with Operational Management and the end customer.
tolerance for uncertainty, in selecting options that risk our ability improvements
consistently reliable performance at a level of quality to meet the
to across a larger footprint, increasingly balanced product obsolescence, Develop global scale-up capabilities
needs of • Continuing initiatives to improve operational performance of the deliver on our service levels. We will only accept change if heavily and a
their end customers. This could lead to increased costs, reduced CFCs and scaling of operations. outweighed by benefits. dependency on acquiring and retaining skilled employees in a
revenue and
competitive
penalties. recruitment market. This is balanced by our increased experience in
delivery.
Product (OSP) Innovation, Quality and Safety Failure to build a quality product in terms of performance, security, • Establishing our identity as a technology business, international → Open - We will take justified risks to maintain our pace of Threat levels are rising with increased competition driving alternative CEO Ocado Technology Environment, Social - Product Quality and Safety, Equipment Lifecycle Optimise OSP economics
availability, safety and overall OSP economic model. Failure to meet platform provider and innovation factory. innovation, and solutions, and the drive to balance headline performance and financial
and
emerging
choose options delivering highest returns, accepting the possibility improvements with reliability. Circularity Deliver transformational technology
client needs or support growth in client operational volumes. Risk • Engaging with a wide number of international grocers to understand of some
that market needs. failure.
technological innovation supersedes our own and offers improved
methods of • Understanding the current solutions and awareness of
distribution to consumers. global alternatives used in other industries.
Intellectual Property Failure to protect Ocado Group's own IP or risk of infringing a third • Conducting Freedom to Operate searches on relevant technologies → Cautious - We accept a limited tolerance for uncertainty in the The threat is increasing with increased Ocado development work and Group General Counsel N/A Deliver transformational technology
party's and in selected jurisdictions. management of investment.
IP (including the risk of an adverse outcome in current litigation or
our IP. We will only accept risk if limited and heavily outweighed by The visibility of the Autostore litigation also raises our profile with
patent • Monitoring IP filings and grants by a large number of competitor benefits. other
office opposition/review proceedings), which could result in loss of companies.
competitors, compensated by greater proactive protection at an earlier
use of
stage.
the Group's assets, financial damages or harm to the Company's • Continuing to develop and innovate and protecting the results
reputation or through specialist patent attorneys dedicated to individual business areas.
relationship.
• Expanding the IP team thereby helping to protect the output of
research and development work and training of all staff.
• Protecting our IP from unauthorised use.
• Obtaining specialist or legal advice, including to help ensure our
ability to use our IP is not restricted by infringement claims.
• Combining internal and external legal counsel management of
litigation and other IP proceedings.
Geopolitical and Economic Uncertainty Our UK and international operations are dependent on access to a range • Performing extensive risk assessments prior to entering new → Flexible - We will only take risks that are strongly justified and This is an externally driven risk and the threat is continually Chief Financial Officer N/A Optimise OSP economics
of geographic markets or undertaking new ventures. expect some changing,
people, resources, markets and suppliers. Economic and political
periods of uncertainty. increased operations in new territories compounds the risk. Deliver on our client commitments
disruption • Scanning the horizon for emerging threats.
and uncertainty could disrupt our business model, preventing the
Develop global scale-up capabilities
delivery of • Maintaining financial reserves to cushion the operational impact
new capacity or undermining our operations. for an extended period.
Climate Change - Transition and Physical Climate change and governmental actions to reduce such changes may • Overseeing our ESG and Climate programmes by our ESG Committee. ↑ Flexible - We take strongly justified risks, accept some uncertainty The threat level is increasing, driven in the short term by increasing Chief Financial Officer, Group General Counsel Environment - Energy Efficiency and Carbon Emissions Deliver transformational technology
increase
and regulation. Our assessment of physical climate risk is in progress.
our costs and/or disrupt our operations. • Reducing our climate change contributions through a roadmap of manage the impact.
Deliver on our client commitments
activities and achieving our emission reduction targets.
Further detail can be found on this risk within the TCFD disclosure
Develop global scale-up capabilities
section • Monitoring governmental developments and taking proactive steps to
above. minimise the impact on our operations.
Key: ↑ Risk has increased ↓ Risk has decreased → No change
For further information on the financial risks see pages 278 to 282 of the
notes to the consolidated financial statements in the annual report and
accounts for the 52 weeks ended 28 November 2021.
Directors' Responsibility Statement
Ocado's annual report and accounts for the 52 weeks ended 28 November 2021
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 102 to
105) 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 202) 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 102 to 105 of the annual
report and accounts for the 52 weeks ended 28 November 2021 and are listed on
the Ocado Group's corporate website: www.ocadogroup.com
(http://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; and
John Martin.
Enquiries
For further information contact:
Ocado Group plc Investor Relations
Company Secretary David Shriver
Neill Abrams +44 1707 228 000
email: company.secretary@ocadogroup.com investor.relations@ocadogroup.com (mailto:investor.relations@ocadogroup.com)
(mailto:company.secretary@ocadogroup.com)
Person responsible for arranging the release of this announcement:
Neill Abrams
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
(mailto:company.secretary@ocadogroup.com)
Ocado Group plc LEI: 213800LO8F61YB8MBC74
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