Ocado Group Plc · LSE:OCDO
Ocado — FY2014 Earnings Presentation
34 slides from Ocado's earnings presentation, Feb 3, 2015
Slide 1: Ocado Group plc 2014 Preliminary Results
Ocado Group plc 2014 Preliminary Results 3 February 2015
Slide 2: Forward-looking statements disclaimer
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 forw
Slide 3: Agenda
Agenda Introduction – Stuart Rose Financial Review – Duncan Tatton-Brown Strategic Review – Tim Steiner Q&A 3
Slide 4: Stuart Rose, Chairman
Stuart Rose Chairman 4
Slide 5: Introduction
Introduction Competitive market environment We delivered a robust trading performance Good progress on infrastructure and technology developments Well positioned for future platform opportunities 5
Slide 6: Duncan Tatton-Brown, CFO
Duncan Tatton-Brown CFO 6
Slide 7: Financial review introduction
Financial review introduction Good performance in a challenging market Continued operational improvements Investments for further UK capacity growth Strategic investments to utilise our platform 7
Slide 8: Financial summary
Financial summary FY14 FY131 Variance (£m) (£m) (%) Revenue 948.9 792.1 19.8 EBITDA 71.6 45.8 56.3 EBITDA % of revenue 7.5% 5.8% 1.7% Adjusted profit2 10.1 (3.8) Profit/(loss) before tax 7.2 (12.5) 1. FY 2013 exceptional items include exceptional finance costs 2. Adjusted profit excludes exceptional
Slide 9: EBITDA summary
EBITDA summary FY14 FY13 FY121 (£m) (£m) (£m) EBITDA 71.6 45.8 33.9 Morrisons MHE JV Co impact 11.3 3.9 0.0 Non-cash share based payments (5.0) (2.5) (0.9) Underlying EBITDA 65.3 44.4 34.8 Depreciation and amortisation2 (52.4) (42.6) (28.6) Financing costs (9.1) (7.0) (3.5) Adjusted profit3 10.1 (3.
Slide 10: Sales drivers (Retail)
Sales drivers (Retail) Revenue2, £m Average basket size3, £ 4 year CAGR 15.1% 15.3% 904 4 year CAGR (0.4)% (1.1)% 112.3 FY11 FY12 1 FY13 FY14 FY11 FY12 1 FY13 FY14 Average orders per week, 000 Active4 customers, 000 4 year CAGR 15.8% 4 year CAGR 14.6% 17.7% 453 16.8% 167 FY11 FY12 1 FY13 FY14 FY11 F
Slide 11: Customers
Customers Customer service improved Vouchering & marketing spend On time or early: 95.3% (2013: 95.2%) £20.0m £21.3m Items delivered as ordered: 99.3% (2013: 99.0%) 1.3% 1.1% Marketing Retention rates improved Vouchering New customer acquisitions up 12% with marketing costs 1.2% 1.2% (incl
Slide 12: Gross margin (Retail)
Gross margin (Retail) Gross margin1 (incl. commercial income), %) 33.0 33.0 32.6 Competitive environment impacted margins 2.5 2.4 3.03 LPP costs reduced 30.5 30.6 29.6 Growth in media income 2 FY12 FY13 FY14 Gross margin Other Commercial Income income 1. Expressed as a percentage of retail
Slide 13: Operating metrics
Operating metrics FY14 FY13 FY141 FY131 (% Retail (% Retail (£m) (£m) Revenue) Revenue) Trunking & delivery 106.7 90.7 11.8 11.6 CFC 75.6 68.7 8.4 8.8 Other operating costs2 10.9 9.2 1.2 1.2 Marketing (non vouchering) 10.0 10.1 1.1 1.3 Total Operating 203.2 178.7 22.5 22.8 Mature CFC efficiency3 145
Slide 14: Total Costs
Total Costs FY14 FY13 FY14 FY13 (% Group (% Group (£m) (£m) Revenue) Revenue) Total operating 203.2 178.7 21.4 22.6 Administrative expenses 52.1 44.6 5.5 5.6 Morrisons1 27.8 2.4 2.9 0.3 Depreciation and amortisation 52.4 42.6 5.5 5.4 Impairment 2.6 1.3 0.3 0.1 Total 338.1 269.6 35.6 34.0 1. Distribu
Slide 15: Capital investment
Capital investment1 FY14 FY13 (£m) (£m) Mature CFCs 23 100 New CFCs 16 - Delivery (vehicles, spokes) 22 11 Technology 17 14 Platform development 16 - Other 4 7 Total 98 132 Memo: NBV of internally generated intangible assets 29 25 1. Capital investment includes tangible and intangible assets and als
Slide 16: 2015 Outlook
2015 Outlook Market environment remains challenging Channel shift continuing Range, growth and efficiencies give protection Continued investments to drive long term value Technology and fulfilment Ocado Smart Platform deal Marie Claire beauty and wellbeing business 16
Slide 17: 2015 capital spend
2015 capital spend FY15 Notes (£m) New CFCs 50 CFC3 and CFC4 Mature CFCs 10 Bagging machines Delivery (vehicles, spokes) 35 New spokes, vehicles Technology 30 People and hardware Platform development 20 Fulfilment projects Other 5 Non-Food, Offices Total 150 17
Slide 18: Summary
Summary Robust performance in competitive environment Improvements in both customer offer and operational efficiency Capacity investments on track Investing for future platform opportunities 18
Slide 19: Tim Steiner, CEO
Tim Steiner CEO 19
Slide 20: Steady progress on strategic objectives
Steady progress on strategic objectives Driving Proposition improvements growth Customer acquisition and retention encouraging Operational efficiency improvements Maximising CFC3 and CFC4 capacity plans using proprietary efficiency fulfilment solution Technology replatforming on track Util
Slide 21: Online grocery market development continues
Online grocery market development continues “…online will be the fastest growing channel over the next five years…” 4% >8% UK Online Grocery Market Size (£bn, inc VAT) 20 IGD1 Grocery 55% Other 16 45% online 12 8 4 2014 Grocery 2019 Grocery 0 UK retail sales (2014) Market c £175bn Market c £203bn 20
Slide 22: Driving growth: Constantly improving proposition to customers
Driving growth: Constantly improving proposition to customers Retail sales up 15.3% Active1 customers now 453,000 Average basket2 down 1.1% Proposition development Service Range Price • Highest and improved • Wider range • More promotions service levels • Expanding own label • Better value • Quick a
Slide 23: Strengthening our consumer brands with broader marketing activity
Strengthening our …with broader consumer brands… marketing activity 23
Slide 24: Beauty and wellbeing opportunity – Marie Claire
Beauty and wellbeing opportunity – Marie Claire Attractive segment with high margin per kg Combines our technology and fulfilment operations with well known and respected brand Led by capable MD with excellent industry experience 24
Slide 25: Customer trends encouraging
Customer trends encouraging Sales by year of customer New customers to 5th shop acquisition (£m) in 12 weeks 2013 £ % 2014 Time Time 25
Slide 26: Ever more efficient infrastructure solution
Ever more efficient infrastructure solution Infrastructure Operational capital/Planned peak UPH sales capacity Achieved Target1 Hatfield Not disclosed >145 Dordon £155m / £1bn >150 180 Andover £45m / £350m - 180+ Erith £135m / £1.2bn - 200+ 1 Target UPH figures expected 3-4 years after opening 26
Slide 27: Enhancing our end-to-end technology systems to develop Ocado Smart Platform
Enhancing our end-to-end technology systems to develop Ocado Smart Platform Fulfilment asset solution IT Systems Proprietary infrastructure solution with multiple patents filed Modularising software and Scaleable services Modular Faster to deploy Refreshing technology stacks More capex e
Slide 28: Enable Morrisons and future partners' online business
Enable Morrisons and future partners’ online business Launched January 2014 Ramp up progress continues well Better customer proposition Reduced capex and risk Shorter time frames Inbound partner interest continues More detailed discussions started with several potential partners Anti
Slide 29: Conclusion
Conclusion Trading robustly in challenging and competitive market Continued focus on proposition improvements Significant progress in capacity projects Ocado Smart Platform discussions progressing 29
Slide 30: Q&A
30 Q&A Mocado The online supermarket
Slide 31: Appendices
Appendices 1. Balance sheet 2. Capital spend, accruals v cash, Morrisons adjusted 3. Statutory cashflow 31
Slide 32: Appendix 1: Balance Sheet
Appendix 1 Balance Sheet FY14 FY13 (£m) (£m) Non-current assets Property, plant and equipment 275.2 224.3 Other 116.0 94.2 Total 391.2 318.5 Current assets Cash and cash equivalents 76.3 110.5 Other current assets 70.7 69.1 Total 147.0 179.6 Total Assets 538.2 498.1 Current Liabilities Trade and o
Slide 33: Appendix 2: Capital spend, accruals v cash, Morrisons adjusted
Appendix 2 Capital spend, accruals v cash, Morrisons adjusted FY14 FY13 (£m) (£m) Reported capital investments 118.3 76.3 Non cash additions of finance leases (44.9) (9.3) Net movement in provisions and reserves (0.3) (0.5) Net movement in invoices received, not paid 3.9 12.3 Net movement in accru
Slide 34: Appendix 3: Statutory cashflow
Appendix 3 Statutory cashflow FY14 FY13 (£m) (£m) EBITDA 71.6 45.8 Working capital movement 1 8.7 23.5 Exceptional items (0.3) (4.6) Other non-cash items 2 4.0 2.8 Finance costs paid 1 (9.7) (7.1) Operating cash flow 74.3 60.4 Capital investment 2 (78.8) (77.5) (Decrease)/Increase in net debt/fina