REG - Ocado Group PLC - Half Yearly Report <Origin Href="QuoteRef">OCDO.L</Origin> - Part 2
28/06/2016 07:06
- Part 2: For the preceding part double click ID:nRSb4464Ca
capital premium
£m £m £m £m £m £m £m
Balance at 29 November 2015 (audited) 12.6 258.7 (50.9) (116.2) (0.8) 138.5 241.9
Profit for the period - - - - - 8.6 8.6
Other comprehensive income:
Cash flow hedges
- Gains arising on hedging contracts - - - - 0.8 - 0.8
Translation of foreign subsidiary - - - - 0.2 - 0.2
Total comprehensive income for the period - - - - 1.0 8.6 9.6
Transactions with owners:
- Issue of ordinary shares - 0.4 - - - - 0.4
- Movement in treasury shares - (2.9) 2.8 - - - (0.1)
- Share-based payments charge - - - - - 3.4 3.4
Total transactions with owners - (2.5) 2.8 - - 3.4 3.7
Balance at 15 May 2016 (unaudited) 12.6 256.2 (48.1) (116.2) 0.2 150.5 255.2
Share Share Treasury shares reserve Reverse acquisition reserve Other reserves Retained earnings Total equity
capital premium
£m £m £m £m £m £m £m
Balance at 30 November 2014 (audited) 12.5 255.1 (51.8) (116.2) (0.3) 118.9 218.2
Profit for the period - - - - - 7.2 7.2
Other comprehensive income:
Cash flow hedges
- Gains arising on forward commodity contracts - - - - 0.1 - 0.1
- Gains transferred to property, plant and equipment - - - - (0.1) - (0.1)
Translation of foreign subsidiary - - - - 0.1 - 0.1
Total comprehensive income for the period - - - - 0.1 7.2 7.3
Transactions with owners:
- Issue of ordinary shares - 2.8 - - - - 2.8
- Movement in treasury shares - - 0.1 - - - 0.1
- Share-based payments charge - - - - - 3.3 3.3
Total transactions with owners - 2.8 0.1 - - 3.3 6.2
Balance at 17 May 2015 12.5 257.9 (51.7) (116.2) (0.2) 129.4 231.7
Notes to the consolidated interim financial information
1 General information
Ocado Group plc (hereafter "the Company") is incorporated and domiciled in
England and Wales (registration number
07098618). The address of its registered office is Titan Court, 3 Bishops
Square, Hatfield, Hertfordshire, AL10 9NE. The consolidated interim financial
information (hereafter "financial information") comprises the results of the
Company and its subsidiaries (hereafter "the Group").
The financial period represents the 24 weeks ended 15 May 2016 (prior period
24 weeks ended 17 May 2015; prior financial year 52 weeks ended 29 November
2015).
2 Basis of preparation
The financial information has been prepared in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the
European Union and the Disclosure Rules and Transparency Rules of the UK
Financial Conduct Authority.
The financial information does not amount to full statutory accounts within
the meaning of section 434 of the Companies Act
2006 and does not include all of the information and disclosures required for
full annual financial statements. It should be read in conjunction with the
Annual Report and Accounts of Ocado Group plc for the 52 weeks ended 29
November 2015 which was prepared in accordance with IFRS as adopted by the
European Union and were filed with the Registrar of Companies. This report is
available either on request from the Company's registered office or to
download from www.ocadogroup.com. The auditors' report on these accounts was
unqualified, did not contain an emphasis of matter paragraph and did not
contain any statement under section 498 of the Companies Act 2006.
The financial information is presented in sterling, rounded to the nearest
hundred thousand unless otherwise stated. It has been prepared under the
historical cost convention, except for derivative financial instruments, which
have been measured at fair value.
The financial information has been prepared on the going concern basis, which
assumes that the Company will continue to be able to meet its liabilities as
they fall due for the foreseeable future.
3 Accounting policies
The accounting policies applied by the Group in these interim financial
statements are substantially the same as those applied by the Group in its
consolidated financial statements for the 52 weeks ended 29 November 2015.
Whilst there have been a number of minor changes to standards which will
become applicable for the financial year ending 27 November 2016, none have
been assessed as having a significant impact on the Group.
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual earnings.
The preparation of interim financial information requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates. In preparing
these interim financial statements, the significant judgements made by
management in applying the Group's accounting policies and the key sources of
estimation were the same as those that applied to the Annual Report and
Accounts for the 52 weeks ended 29 November 2015.
4 Segmental reporting
The Group's principal activity is grocery retailing and the development of
Intellectual Property ("IP") and technology used for the online retailing,
logistics and distribution of grocery and consumer goods for our UK business
and other partners. The Group is not reliant on any major customer for 10% or
more of its revenue.
In accordance with IFRS 8 "Operating Segments", an operating segment is
defined as a business activity whose operating results are reviewed by the
chief operating decision-maker and for which discrete information is
available. Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker, as required
by IFRS 8. The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating segments, has
been identified as the Executive Directors.
The principal activities of the Group are currently managed as one segment.
Consequently, all activities relate to this segment.
The chief operating decision-maker's main indicator of performance of the
segment is EBITDA, which is reconciled to operating profit below the income
statement.
5 Gross sales
24 weeks ended 15 May 2016 24 weeks ended 17 May 2015 52 weeks ended 29 November 2015
£m £m £m
(unaudited) (unaudited) (audited)
Revenue 584.2 507.7 1,107.6
VAT 44.2 37.0 82.4
Marketing vouchers 7.4 6.1 14.4
Gross sales 635.8 550.8 1,204.4
6 Finance income and costs
24 weeks ended 15 May 2016 24 weeks ended 17 May 2015 52 weeks ended 29 November 2015
£m £m £m
(unaudited) (unaudited) (audited)
Interest on cash balances 0.1 0.1 0.2
Finance income 0.1 0.1 0.2
Borrowing costs
- Obligations under finance leases (4.2) (4.2) (8.8)
- Borrowings (0.2) (0.5) (0.6)
Fair value movement on derivative financial instruments - - (0.2)
Fair value movement on provisions - - (0.1)
Finance costs (4.4) (4.7) (9.7)
Net finance costs (4.3) (4.6) (9.5)
7 Capital expenditure and commitments
During the period the Group acquired property, plant and equipment of £41.4
million (1H 2015: £40.0 million). During the period, the Group acquired
intangible assets of £1.8 million (1H 2015: £1.7 million) and internal
development costs capitalised were £13.4 million (1H 2015: £10.1 million).
In the period the Group disposed of property, plant and equipment with a net
book value of £Nil (1H 2015: £Nil). During the period, the Group did not
dispose of intangible assets (1H 2015: £Nil). At 15 May 2016, capital
commitments contracted, but not provided for by the Group, amounted to
£18.6million (1H 2015: £35.3 million).
8 Borrowings and obligations under finance leases
15 May 2016 17 May 2015 29 November 2015
£m £m £m
(unaudited) (unaudited) (audited)
Current liabilities
Borrowings 11.4 3.6 1.6
Obligations under finance leases 34.6 32.9 26.5
46.0 36.5 28.1
Non-current liabilities
Borrowings 6.8 0.8 7.7
Obligations under finance leases 136.1 138.1 137.0
142.9 138.9 144.7
Total Group borrowings and finance leases 188.9 175.4 172.8
9 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company by the weighted average number of ordinary
shares in issue during the period, excluding ordinary shares held pursuant to
the Group's Joint Share Ownership Scheme which are accounted for as treasury
shares.
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all potentially
dilutive shares. The Company has three categories of potentially dilutive
shares, namely share options, shares held pursuant to the Group's Joint Share
Ownership Scheme and shares under the Group's staff incentive plans.
Basic and diluted earnings per share have been calculated as follows:
24 weeks ended 15 May 2016 24 weeks ended 17 May 2015 52 weeks ended 29 November 2015
million million million
(unaudited) (unaudited) (audited)
Number of shares
Issued shares at the beginning of the period 590.6 586.1 586.1
Weighted average effect of share options exercised in the period 0.8 0.4 2.2
Weighted average effect of treasury shares disposed of in the period 0.5 - -
Weighted average number of shares at the end of the period for the purposes of basic earnings per share 591.9 586.5 588.3
Potentially dilutive share options and shares 26.9 31.1 31.1
Weighted average numbers of diluted ordinary shares 618.8 617.6 619.4
Earnings £m £m £m
Profit for the period 8.6 7.2 11.8
pence pence pence
Basic earnings per share 1.45 1.23 2.01
Diluted earnings per share 1.40 1.17 1.91
10 Related party transactions
Key management personnel
Only the Executive and Non-Executive Directors are deemed to be key management
personnel. It is the Board which has responsibility for planning, directing
and controlling the activities of the Group. Other related party transactions
with key management personnel made during the period related to the purchase
of professional services and amounted to £750 (1H 2015: £3,000). All
transactions with Directors are on an arm's length basis and no period end
balances have arisen as a result of these transactions.
At the end of the period, key management personnel did not owe the Group any
amounts (1H 2015: £nil). There were no other material transactions or balances
between the Group and its key management personnel or members of their close
family.
Investment
The Group holds a 25% interest in Paneltex Limited whose registered office is
at Paneltex House, Somerden Road, Hull, HU9
5PE. The Group's interest in Paneltex Limited has not been treated as an
associated undertaking as Ocado does not have significant influence over
Paneltex Limited.
The following direct transactions were carried out with Paneltex Limited:
24 weeks ended 15 May 2016 24 weeks ended 17 May 2015 52 weeks ended 29 November 2015
£m £m £m
(unaudited) (unaudited) (audited)
Purchase of goods
- Plant and machinery - 0.1 0.1
- Consumables 0.2 0.1 0.5
0.2 0.2 0.6
Indirect transactions, consisting of the purchase of plant and machinery
through some of the Group's finance lease counterparties, were carried out
with Paneltex Limited to the value of £3.6 million (1H 2015: £3.8 million).
At period end, the Group owed £45,000 to Paneltex and is owed £6,000 from
Paneltex (1H 2015: Group was owed £25,000 by Paneltex).
Joint Venture
The following transactions were carried out with MHE JVCo, a joint venture
company in which the Group holds a 50% interest:
24 weeks ended 15 May 2016 24 weeks ended 17 May 2015 52 weeks ended 29 November 2015
£m £m £m
Sale and Leaseback Transaction
Capital contributions made to MHE JVCo - - -
Dividend received from MHE JVCo - - 8.1
Reimbursement of supplier invoices paid on behalf of MHE JVCo 3.5 2.3 6.1
Lease of assets from MHE JVCo 3.1 - 3.0
Capital element of finance lease instalments paid to MHE JVCo - 1.0 14.3
Interest element of finance lease instalments accrued or paid to MHE JVCo 2.7 2.9 6.2
Included within trade and other receivables is a balance of £5.3 million owed
by MHE JVCo (1H 2015: £4.3 million). Included within trade and other payables
is a balance of £3.9 million owed to MHE JVCo (1H 2015: £5.3 million).
Included within obligations under finance leases is a balance of £121.6
million owed to MHE JVCo (1H 2015: £129.8 million).
No other transactions that require disclosure under IAS 24 have occurred
during the current financial period.
11 Analysis of net debt
(a) Net debt
15 May 2016 17 May 2015 29 November 2015
£m £m £m
(unaudited) (unaudited) (audited)
Current assets
Cash and cash equivalents 52.7 70.4 45.8
52.7 70.4 45.8
Current liabilities
Borrowings (11.4) (3.6) (1.6)
Obligations under finance leases (34.6) (32.9) (26.5)
(46.0) (36.5) (28.1)
Non-current liabilities
Borrowings (6.8) (0.8) (7.7)
Obligations under finance leases (136.1) (138.1) (137.0)
(142.9) (138.9) (144.7)
Total net debt (136.2) (105.0) (127.0)
Net external debt at the period end was £14.6 million (1H 2015: net cash £24.9
million).
(b) Reconciliation of net cash flow to movement in net debt
24 weeks ended 15 May 2016 24 weeks ended 17 May 2015 52 weeks ended 29 November 2015
£m £m £m
(unaudited) (unaudited) (audited)
Net increase/(decrease) in cash and cash equivalents 6.9 (5.9) (30.5)
Net decrease/(increase) in debt and lease financing (2.2) 9.0 24.3
Non-cash movements:
- Assets acquired under finance lease (13.9) (8.7) (21.4)
Movement in net debt in the period (9.2) (5.6) (27.6)
Opening net debt (127.0) (99.4) (99.4)
Closing net debt (136.2) (105.0) (127.0)
12 Post balance sheet events
There were no events after the balance sheet date which require adjustment to
or disclosure in the financial information.
Principal risks and uncertainties
The Group faces a number of risks and uncertainties that may have an adverse
impact on the Group's operation, performance or future prospects. The Board
has identified the following principal risks and uncertainties to the
successful operation of the business. These risks, along with the events in
the financial markets and their potential impacts on the wider economy, remain
those most likely to affect the Group in the second half of the year.
· Failure to maintain competitive pricing position
· A risk of decline in high service levels
· Failure to develop retail proposition to appeal to broader customer
base and sustain growth rates
· Failure to develop sufficient management and technology capability or
bandwidth to deliver on all our strategic priorities
· Risk of not signing multiple OSP deals in the medium term
· A risk of delays in the implementation of new capacity for both Ocado
and Morrisons
· Technological innovation supersedes our own and offers improved methods
of food distribution to consumers
· Failure to protect our IP
· Failure to ensure that our technology can be freely operated without
infringing a third party's IP
· A risk of a food or product safety incident
· A risk of changes in regulations impacting our retail business model or
the viability of OSP deals
· Risk of major cyber-attack or data loss
· Business interruption
· A risk of unintentional infringement of competition legislation
More information on most of these principal risks and uncertainties together
with an explanation of the Group's approach to risk management is set out in
Ocado Group plc's Annual Report and Accounts for the 52 weeks ended 29
November 2015 on pages 38 to 41, a copy of which is available on the Group's
corporate website, www.ocadogroup.com.
Statement of Directors' responsibilities
The Directors confirm that, to the best of their knowledge, this condensed set
of consolidated financial statements have been prepared in accordance with IAS
34 ('Interim Financial Reporting') as adopted by the European Union, and that
the interim management report includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R of the Disclosure Rules and Transparency
Rules.
The Directors of Ocado Group plc as at the date of this announcement are as
follows:
Executive Directors
Tim Steiner, Chief Executive Officer;
Neill Abrams, Group General Counsel & Company Secretary;
Duncan Tatton-Brown, Chief Financial Officer;
Mark Richardson, Chief Operations Officer;
Non-Executive Directors
Lord Rose, Chairman;
Alex Mahon, Senior Independent Director;
Ruth Anderson;
Robert Gorrie;
Jörn Rausing;
Douglas McCallum; and
Andrew Harrison (appointed 1 March 2016).
Approved by the Board and signed on its behalf by
Duncan Tatton-Brown
Chief Financial Officer
Neill Abrams
Group General Counsel & Company Secretary
28 June 2016
This information is provided by RNS
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