Prospectus

Ocado Group plc

A copy of this document, which comprises a prospectus relating to Ordinary Shares prepared in accordance with the Prospectus Rules made under section 73A of FSMA, has been approved by the Financial Services Authority in accordance with section 87A of FSMA and made available to the public as required by section 3.2 of the Prospectus Rules. The Directors, whose names appear on page 32 of this Prospectus, and the Company accept responsibility for the information contained in this Prospectus. To the best of the knowledge of the Directors and the Company (who have taken all reasonable care to ensure that such is the case) such information is in accordance with the facts and this Prospectus does not omit anything likely to affect the import of such information. Application will be made to the UK Listing Authority for all of the Ordinary Shares (including the 32,476,700 Ordinary Shares held by the EBT Trustee) to be admitted to the premium listing segment of the Official List and to the London Stock Exchange for the Ordinary Shares to be admitted to trading on the London Stock Exchanges market for listed securities (Admission), which together will constitute official listing on a stock exchange under the Listing Rules. No application has been made or is currently intended to be made for the Ordinary Shares to be admitted to listing or dealt on any other exchange. Conditional dealings in the Ordinary Shares (on a when issued basis) are expected to commence on 21 July 2010. It is expected that Admission will become effective and that unconditional dealings in the Ordinary Shares will commence at 8.00 a.m. (London time) on 26 July 2010 (International Security Identification Number: GB00B3MBS747). Dealings on the London Stock Exchange before Admission will only be settled if Admission takes place. All dealings before the commencement of unconditional dealings will be of no effect if Admission does not take place and such dealings will be at the sole risk of the parties concerned. Applicants who purchase or subscribe for Ordinary Shares should note that dealings in the Ordinary Shares will commence prior to their Share Account Statements being made available online. Applicants who purchase or subscribe for Ordinary Shares and who deal prior to their Share Account Statements being made available online, do so at the risk of selling Ordinary Shares for which they will not have received an allocation. Share Account Statements will be made available online to successful applicants by 4 August 2010. Prospective investors should read the whole of this document, including the discussion of certain risks and other factors that should be considered in connection with an investment in the Ordinary Shares as set out in the Risk Factors section. Prospective investors should be aware that an investment in the Company involves a degree of risk and that, if certain of the risks described in the Prospectus occur, investors may find their investment materially adversely affected. Accordingly, an investment in the Ordinary Shares is only suitable for investors who are particularly knowledgeable in investment matters and who are able to bear the loss of the whole or part of their investment.

15JUN201018262606

OCADO GROUP PLC

(incorporated and registered in England and Wales under the Companies Act 2006, registered number 7098618)

Offers of up to 257,666,236 Ordinary Shares of 2 pence each at a price expected to be between 200p and 275p per Ordinary Share and admission to the premium listing segment of the Official List and to trading on the London Stock Exchange
Joint Sponsor, Joint Global Co-ordinator and Joint Bookrunner Joint Sponsor, Joint Global Co-ordinator and Joint Bookrunner Joint Sponsor, Joint Global Co-ordinator and Joint Bookrunner

Goldman Sachs International

J.P. Morgan Cazenove

UBS Investment Bank

Co-Bookrunner

Co-Bookrunner

Barclays Capital
Co-Lead Manager Co-Lead Manager

HSBC Bank plc

Co-Lead Manager

Jefferies International Limited

Lloyds TSB Corporate Markets

Numis Securities Limited

EXPECTED ORDINARY SHARE CAPITAL IMMEDIATELY FOLLOWING ADMISSION (ASSUMING THE OFFER PRICE IS SET AT THE BOTTOM OF THE PRICE RANGE)
Up to (number) 546,129,814 Up to (number) 513,653,114

Issued and fully paid

Ordinary Shares of 2 pence each

Up to (amount) 10,922,596 Up to (amount) 10,273,062

Issued and fully paid and excluding 32,476,700 Ordinary Shares held by the EBT Trustee
Ordinary Shares of 2 pence each

This document does not constitute an offer of, or the solicitation of an offer to buy or to subscribe for, Ordinary Shares to any person in any jurisdiction to whom or in which jurisdiction such offer or solicitation is unlawful and, in particular, is not for distribution in Australia, Canada or Japan. The offer, sale and/or issue of the Ordinary Shares has not been and will not be registered under the US Securities Act of 1933, as amended (the US Securities Act) or qualified for sale under the laws of any state of the United States or under any applicable securities laws of Australia, Canada or Japan. Subject to certain exceptions, the Ordinary Shares may not be offered, sold or delivered within Australia, Canada, Japan or the United States or to, or for the benefit of, any national, resident or citizen of Australia, Canada or Japan. The Ordinary Shares are being offered and sold within the United States only to qualified institutional buyers (QIBs) (as defined in Rule 144A under the US Securities Act (Rule 144A)) and in reliance on Rule 144A or another exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and outside the United States in reliance on Regulation S under the US Securities Act (Regulation S).

The Price Range is indicative only, it may change during the course of the Offers and the Offer Price may be set within, above or below the Price Range. A number of factors will be considered in determining the Offer Price and basis of allocation, including the level and nature of demand for Offer Shares during the book building process, prevailing market conditions and the objective of establishing an orderly after-market in the Ordinary Shares. If the Price Range does change during the course of the Offers the Company would not envisage making an announcement until determination of the Offer Price, unless required to do so by law or regulation. The Company expects to announce the Offer Price and publish the Pricing Statement on or about 21 July 2010. Further details of how the Offer Price is to be determined are contained in Part IX (Information about the Offers). The number of Ordinary Shares to be made available by the Selling Shareholders pursuant to the Offers is indicative only. Although that number of Ordinary Shares cannot be increased it can decrease, including, in theory, to nil. The selling indications of Major Selling Shareholders described in this document are non-binding. That means that although a Major Selling Shareholder may not sell any more Existing Shares pursuant to the Offers than he or it has indicated he or it may sell, he or it may decide, at his or its absolute discretion, to sell fewer or none at all. The Company has established a facility through which Minor Selling Shareholders may sell some or all of their Existing Shares pursuant to the Offers. As at the date of this document, the Company does not know with certainty whether any such persons will sell any or all such Existing Shares pursuant to the Offers, however, the Company has received non-binding indications from Minor Selling Shareholders holding 28,861,700 Existing Shares, in aggregate, that they do not intend to sell any Existing Shares pursuant to the Offers. The Company has also established a facility through which Selling Optionholders may sell, pursuant to the Offers, some or all of the New Ordinary Shares which will be issued to them if they exercise their exercisable options or warrants prior to Admission. Subject to the Offer Price being not less than 1.90, Ranelagh Nominees Limited has irrevocably committed to exercise certain warrants held by it provided that it may sell the resulting 5,611,200 New Ordinary Shares issued to it or its nominee pursuant to the Offers. As at the date of this document, the Company does not know whether any other such persons will exercise any or all of their exercisable options, or, if they do so, whether such persons will sell, pursuant to the Offers, any or all of the New Ordinary Shares issued as a result. The Ordinary Shares to be made available pursuant to the Offers will, on Admission, rank pari passu in all respects with all other Ordinary Shares, including for all dividends and other distributions declared, made or paid on the Ordinary Shares after Admission. The distribution of this document and the offer, sale and/or issue of Ordinary Shares in certain jurisdictions may be restricted by law. No action has been or will be taken by the Company, the Directors, or the Joint Global Co-ordinators, the Co-Bookrunners or the Co-Lead Managers to permit a public offer of Ordinary Shares or possession or distribution of this document (or any other offering or publicity material or application form relating to the Ordinary Shares) in any jurisdiction, other than in the United Kingdom. Persons into whose possession this document comes are required by the Company, the Directors, the Joint Global Co-ordinators, the CoBookrunners or the Co-Lead Managers to inform themselves about and to observe any such restrictions. This document does not constitute or form part of an offer to sell, or the solicitation of an offer to buy, Ordinary Shares to any person in any jurisdiction to whom or in which such offer or solicitation is unlawful. NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED STATES The Ordinary Shares offered pursuant to the Offers have not been and will not be registered under the US Securities Act, and may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in compliance with any applicable state securities laws. Prospective investors are hereby notified that sales of Ordinary Shares may be made in reliance on an exemption from the provisions of Section 5 of the US Securities Act. The Underwriters, through their respective selling agents, may arrange for the Offers and resale of the Ordinary Shares in the United States only to persons reasonably believed to be QIBs in reliance on Rule 144A or another exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in offshore transactions outside the United States in reliance on Regulation S. Any offer or sale of shares in reliance on Rule 144A will be made by broker-dealers who are registered as such under the US Securities Exchange Act of 1934, as amended (the US Exchange Act). For a description of these and certain further restrictions on the offer, sale and transfer of the Ordinary Shares and distribution of this document, see section 28 of Part XIII (Additional Information). Please note that by receiving this document, purchasers shall be deemed to have made certain representations, acknowledgements and agreements set out herein including, without limitation, those set out in section 28.2 of Part XIII (Additional Information). THE ORDINARY SHARES OFFERED BY THIS DOCUMENT HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE US SECURITIES AND EXCHANGE COMMISSION (THE SEC), ANY STATE SECURITIES COMMISSION IN THE UNITED STATES OR ANY OTHER US REGULATORY AUTHORITY, NOR HAVE SUCH AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OF ORDINARY SHARES OR THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES. NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENCE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES (RSA 421-B) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF THE STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT ANY EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE OF THE STATE OF NEW HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL, TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT, ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. AVAILABLE INFORMATION FOR INVESTORS IN THE UNITED STATES Neither the Company nor any of its subsidiaries is required to file periodic reports under Section 13 or Section 15(d) of the US Exchange Act. For so long as any Ordinary Shares are restricted securities within the meaning of Rule 144(a)(3) of the US

Securities Act, the Company will, during any period in which it is neither subject to Section 13 or 15(d) of the US Exchange Act nor exempt from reporting pursuant to Rule 12g3-2(b) of the US Exchange Act, provide, upon written request, to holders of Ordinary Shares, any owner of any beneficial interest in Ordinary Shares or to any prospective purchaser designated by such holder or owner, the information required to be delivered pursuant to Rule 144A(d)(4) under the US Securities Act. This document is being furnished by the Company in connection with an offering exempt from the registration requirements of the US Securities Act, solely for the purpose of enabling a prospective investor to consider the subscription for or acquisition of Ordinary Shares described herein. The information contained in this document has been provided by the Company and other sources identified herein or therein. This document is being furnished on a confidential basis only to persons reasonably believed to be QIBs in the United States. Any reproduction or distribution of this document, in whole or in part, in the United States and any disclosure of their contents or use of any information herein or therein in the United States for any purpose, other than in considering an investment by the recipient in the Ordinary Shares offered hereby or thereby, is prohibited. Each potential investor in the Ordinary Shares, by accepting delivery of this document agrees to the foregoing. DEFINED TERMS Certain terms used in this document are defined in the Definitions section of this document. The date of this document is 6 July 2010.

CONTENTS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS . . . . . . . . . EXPECTED TIMETABLE FOR THE OFFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OFFER STATISTICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART I PART II PART III PART IV PART V PART VI PART VII PART VIII PART IX PART X PART XI PART XII PART XIII INFORMATION ABOUT THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SELECTED HISTORICAL FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . OPERATING AND FINANCIAL REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HISTORICAL FINANCIAL INFORMATION RELATING TO THE GROUP . . . . . . . UNAUDITED PRO FORMA FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . UNAUDITED INTERIM FINANCIAL INFORMATION RELATING TO THE GROUP FOR THE 24 WEEKS ENDED 16 MAY 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . CAPITALISATION AND INDEBTEDNESS STATEMENT . . . . . . . . . . . . . . . . . . . INFORMATION ABOUT THE OFFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TERMS AND CONDITIONS OF THE CUSTOMER AND EMPLOYEE OFFER . . . TERMS AND CONDITIONS OF THE OCADO SHARE ACCOUNT . . . . . . . . . . . TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 11 32 34 35 36 62 64 69 99 158 161 177 178 187 195 214 220 275

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SUMMARY THE FOLLOWING INFORMATION SHOULD BE READ AS AN INTRODUCTION TO THIS PROSPECTUS Any decision as to whether to invest in Ordinary Shares should be based on consideration of this document as a whole. Where a claim relating to the information contained in this document is brought before a court, you might, under the national legislation of the European Economic Area member states, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches to the Directors and the Company, who are responsible for this summary, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of this document. Unless stated otherwise, all financial information quoted in this summary has been audited save that none of the financial information in this summary relating to the Group for P1-3 2009, P1-6 2009 or P1-6 2010 has been audited, nor has any financial information not relating to the Group (unless indicated otherwise). Certain figures contained in this summary, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances (i) the sum or percentage change of such numbers may not conform exactly with the total figure given; and (ii) the sum of the numbers in a column or a row in certain tables may not conform exactly with the total figure given for that column or row. 1. Information about the Company

1.1 Overview Ocado is the only dedicated online supermarket in the UK and the largest dedicated online supermarket by turnover in the world. Ocado: provides a market leading customer offering; offers delivery of grocery products to customers centrally picked from a single, state-of-the-art, highly automated warehouse (the customer fulfilment centre or CFC); sells more than 20,000 different products, the vast majority of which are sourced through Waitrose, a leading high quality UK supermarket. Approximately 4,300 of the products sold by Ocado are Waitrose own-label products. Ocados product range includes a small but expanding range of Ocado own-label products; generated gross sales of 427 million in FYE 2009 and has delivered significant year-on-year growth in gross sales since it started trading. Ocados gross sales have grown at a CAGR of 21 per cent. between FYE 2007 and FYE 2009. Ocados gross sales in P1-6 2010 were 246 million (unaudited), an increase of 30 per cent. from P1-6 2009; has achieved positive and growing EBITDA since FYE 2008 and generated 9.2 million of EBITDA in FYE 2009 and 8.0 million of EBITDA in P1-6 2010 (unaudited). The Directors believe that Ocado has greater EBITDA margin potential than its store-based competitors; and is well placed, the Directors believe, to benefit from the growing demand for ordering groceries online. Strengths of the Ocado Business

2.

2.1 Significant market opportunity The UK grocery market is by far the largest of the UK retail segments, yet the Directors believe it has the lowest online penetration of all the core UK consumer markets and online penetration is expected to grow rapidly. The Directors believe that Ocado is well placed to take advantage of this growth, and to increase its share of the UK online grocery market from its current estimated 14 per cent. market share. 2.2 Unique, attractive business model with structural advantages over traditional grocery retailers Ocado is the only UK online supermarket that provides all of its services from a dedicated warehouse, the CFC. Ocados competitors supply chains operate through a network of regional distribution centres which deliver produce to their stores, where the majority of online orders are then picked for customers.

Summary The Directors believe that Ocados aggregation of scale, removal of a layer of the supply chain and automation of the CFC provide clear service and cost benefits to the Business and its customers. The customer benefits include greater availability, a wider range of products and improved freshness. The cost benefits include the elimination of store staff costs, store property costs and regional distribution centres costs as well as lower utility costs and reduced wastage. 2.3 Superior customer offer in online food retailing driving market share Ocado prides itself on having developed and sustained a market-leading customer offering in online grocery retailing, as shown by the consumer and industry awards it has received to date and continues to receive. Ocado focuses on the following areas in achieving these high levels of satisfaction: Product offering Range: Ocado offers an extensive product range of more than 20,000 products. Quality and freshness: Ocado is the only UK online grocer to state use-by dates for the majority of its fresh produce on the Website and guarantees to match or better them. Environmental credentials: Ocado prides itself on the environmental efficiency with which the Business is run as recognised by the awards it has won such as Green Retailer of the Year 2009 at the Grocer Gold Awards.

Price Ocado aims to price competitively in order to provide customers with value for money.

Customer service Website: The Website is designed to be attractive and helpful for customers and includes features such as displaying product use-by dates and nutritional information, generating instant orders, prompting customers to see if they have forgotten to add items to their orders (based on past orders), recommending items to customers and providing recipe suggestions. Accuracy and Availability: Ocados availability system ensured that in FYE 2009 (and P1-3 2010), approximately 99 per cent. of items ordered were delivered as ordered. Delivery service: Ocado strives to deliver to customers exactly what they have ordered, at the time they have requested.

2.4 Proprietary intellectual property has created significant barriers to entry Ocados current IT systems are predominantly bespoke (there often being no suitable alternatives available commercially) and most have been developed in-house by Ocados IT team. Much of the machinery employed in the CFC is also bespoke. Ocados proprietary intellectual property is integral to the functionality of all aspects of its operations and, the Directors believe, has had a direct and positive impact on the Business. 2.5 Strong track record of growth delivered by entrepreneurial Executive Directors Ocado has generated strong revenue growth delivered by its experienced, stable team of entrepreneurial Directors. Gross sales have consistently increased year on year, growing from 291 million in FYE 2007 to 427 million in FYE 2009, a CAGR of 21 per cent. Ocados consistent gross sales growth combined with the operational leverage in the Businesss cost base has led to Ocado achieving significant improvement in EBITDA. 2.6 Considerable operational leverage with margin potential The Directors believe that Ocado can achieve higher sales volumes and that further increases in sales should improve the EBITDA margin of the Business given the economies of scale within the CFC and delivery structure. In addition, the Directors have identified opportunities to increase further the efficiency and effectiveness of the CFC and delivery operations, without compromising Ocados customer offering or its value proposition. In particular, these efficiencies are expected to be achieved through increased

Summary CFC labour productivity as a result of an enhanced technology mix and increased automation, and increased delivery productivity as a result of more efficient allocation of driver resources and optimised delivery route planning. The Directors believe that as a result of these opportunities and efficiencies Ocado can achieve a higher EBITDA margin than a typical store-based competitor. 2.7 Significant opportunity for continued expansion Ocados business model presents it with growth opportunities outside its core business. These include the possibility of further expansion into non-grocery products such as baby products, health and beauty and kitchenware and replicating the Groups business model overseas. 3. Ocados strategy

Ocado intends to continue with the areas of strategic focus that have delivered strong revenue growth and improving EBITDA margin to date, and investigate additional adjacent growth opportunities by: Improving the customer offering continually through maintaining and improving the customer experience; increasing its core product range; and continuing to offer value for money to customers. Improving cost efficiency through continued innovation to maximise profitability without compromising Ocados customer offering or value for money proposition. Expanding CFC capacity (including building the second CFC) and the Spoke network. Exploring further growth opportunities by, where appropriate, extending the product range further into non-grocery products and exploring other opportunities including the possibility of replicating the business model overseas. Information about the Offers

4.

The Offers comprise: the Institutional Offer to institutional investors in the UK, the United States, the EU and elsewhere; and the Customer and Employee Offer to Eligible Customers and Eligible Employees.

The Customer and Employee Offer will comprise approximately 15 per cent. of the total number of Ordinary Shares comprised in the Offers, although the Company reserves the right to adjust the size depending on demand. The Ordinary Shares which are the subject of the Offers comprise: approximately 205 million of New Ordinary Shares to be issued by the Company, raising primary proceeds net of fees and expenses (but including cash received on the exercise of options and warrants) of 200 million. If the Offer Price is set at the mid-point in the Price Range, this will result in the issue of approximately 86,273,616 New Ordinary Shares pursuant to the Offers and up to a further 10,134,074 New Ordinary Shares to Selling Optionholders pursuant to the exercise of options or warrants; and up to 155,216,316 Ordinary Shares that may be sold by the Selling Shareholders pursuant to the Offers. This figure is based on the maximum number of Ordinary Shares that each Major Selling Shareholder has indicated he or it may sell, the Minor Selling Shareholders potentially selling all of their Ordinary Shares and the maximum number of Ordinary Shares which Selling Optionholders may sell.

If, the Company is not able to agree pricing or if it is unable to raise net proceeds of 200 million, Admission will not occur. The Underwriting and Selling Shareholders Agreements are conditional on Admission. The selling indications of Major Selling Shareholders are non-binding. That means that although a Major Selling Shareholder may not sell any more Ordinary Shares pursuant to the Offers than he or it has indicated, he or it may decide, at his or its absolute discretion, to sell fewer or none. The Company has provided a facility through which Minor Selling Shareholders and Selling Optionholders may sell some or

Summary all of their Ordinary Shares pursuant to the Offers. As at the date of this document, the Company does not know with certainty whether any such persons will sell any or all such Ordinary Shares. However, the Company has received non-binding indications from Minor Selling Shareholders holding 28,861,700 Ordinary Shares, in aggregate, that they do not intend to sell any Ordinary Shares pursuant to the Offers. The JGCs will solicit bids from prospective institutional investors to acquire Ordinary Shares in the Institutional Offer. The Company is offering Eligible Customers and Eligible Employees the opportunity to subscribe for or purchase Ordinary Shares in the Customer and Employee Offer at the Offer Price. 5. Reasons for the Offers and use of proceeds and other resources

The Directors believe that the Offers and Admission will assist in positioning the Company for its next stage of development. The Company expects to receive primary proceeds net of fees and expenses (but including cash received from the exercise of options and warrants) of 200 million from the issue of New Ordinary Shares at the Offer Price pursuant to the Offers and from the issue of New Ordinary Shares to Selling Optionholders. All of the funds received from the issue of New Ordinary Shares will initially be held on deposit, with approximately 45 million expected to be used within six months of Admission to repay some of the Groups existing debt. On Admission, the Company will have total credit facilities (including the New Facility) of approximately 197 million, excluding the expected repayments of approximately 45 million. This includes 177 million of committed credit facilities, of which the 100 million of debt funding available under the New Facility will be undrawn and available for investment, and approximately 20 million of undrawn credit lines available for asset financing. In the medium term, the balance of the net proceeds of the Offers of approximately 155 million received by the Company, together with the undrawn debt facilities and credit lines of approximately 120 million and the cash flow generated by its operations will be used: to invest approximately 80 million in the existing CFC in order to increase effective capacity from approximately 105,000 to approximately 180,000 orders per week; to develop existing Spokes and to invest between 2 million and 10 million per year in the medium term to establish new ones; to purchase a site and fund the estimated total construction cost and related fit-out and machinery spend of approximately 210 million to build the second CFC (costed at a sterling : euro exchange rate of 1 = e1.10). If required, the Company believes that it will be able to procure additional funding for completion of the construction and fit-out of the second CFC through additional finance leases and other forms of debt; and for general corporate purposes. Summary of financial information

6.

Summary consolidated income statement

FYE 2007 million FYE 2008 million FYE 2009 million P1-3 2009 (unaudited) million P1-3 2010 million

Revenue . . . . . . . . . . . . . . . . . . Gross profit . . . . . . . . . . . . . . . Operating profit/(loss) before administrative expenses . . . . Operating loss . . . . . . . . . . . . . Loss before tax . . . . . . . . . . . . .

272.9 88.0 (4.9) (30.1) (40.2)

321.3 102.8 3.5 (21.6) (33.3)

402.0 122.8 15.1 (14.4) (25.5)

84.6 25.7 1.6 (4.6) (7.2)

110.2 33.3 6.2 (1.9) (4.0)

Summary In P1-6 2010, revenue was 230.3 million (P1-6 2009: 178.3 million) and gross profit was 70.7 million (P1-6 2009: 54.6 million). Operating loss in P1-6 2010 was (2.7) million (P1-6 2009: (7.4) million). Ocado has not made any corporation tax payments to date, reflecting the losses it has incurred. Ocado had approximately 270 million of unutilised carried forward tax losses as at the end of FYE 2009 which may be carried forward against future profits. As at 16 May 2010, Ocado had net debt of approximately 110.2 million comprising 54.6 million of borrowings, 65.6 million of finance leases and 10.0 million of cash and cash equivalents. Other operating information The table below sets out Ocados gross sales and EBITDA for P1-3 2010, P1-3 2009, FYE 2009, FYE 2008 and FYE 2007.(1)
FYE 2007 million FYE 2008 million FYE 2009 million P1-3 2009 (unaudited) million P1-3 2010 million

Gross sales(1) . . . . . . . . . . . . . . . EBITDA(2) . . . . . . . . . . . . . . . . . .

291.4 (9.5)

341.0 2.2

427.3 9.2

89.6 0.5

117.2 3.4

In P1-6 2010, gross sales were 245.6 million (P1-6 2009: 189.1 million) and EBITDA was 8.0 million (P1-6 2009: 2.8 million).
(1) The Group defines gross sales as sales (net of returns), including charges for delivery, before deducting relevant vouchers/ offers and value added tax. Gross sales is not a measure of operating performance under IFRS-EU and an investor should not consider it as an alternative to any other measure of performance under generally accepted accounting principles. The Group defines EBITDA as operating profit/(loss) before amortisation expenses, impairment of property, plant and equipment, depreciation of property, plant and equipment, net finance cost and taxation. The Directors believe that EBITDA is useful in evaluating its operating performance because a number of companies also publish these figures as key performance indicators. EBITDA is not a measure of operating performance in accordance with IFRS-EU. EBITDA should not be considered a substitute for gross profit/(loss), operating profit/(loss), profit/(loss) before tax, cash flow from operating activities or other income or cash flow statement data as determined in accordance with IFRS-EU, or as a measure of profitability or liquidity.

(2)

The following table sets out selected operating information for the Business.
FYE 2007 (unaudited) FYE 2008 (unaudited) FYE 2009 (unaudited) P1-3 2009 (unaudited) P1-3 2010 (unaudited)

Average order size ()(1) . . . . . . . Average orders per week . . . . . . CFC efficiency (units per hour)(2) . Average deliveries per van per week . . . . . . . . . . . . . . . . . . . Average number of operational staff (full time equivalent) . . . . . Average product wastage (per cent. of gross sales)(3) . . . . Items delivered exactly as ordered (per cent.)(4) . . . . . . . . . . . . . .

112.17 49,968 95 99 2,033(5) 1.15 98.59

116.30 56,384 114 106 2,730 0.78 99.11

115.94 70,873 124 121 3,151 0.57 99.41

122.81 60,769 114 107 3,119 0.64 99.35

119.38 81,823 124 126 3,610 0.65 98.76

Source: The information in the table above is derived from information extracted from management accounts and internal financial and operating reporting systems and is unaudited. (1) (2) (3) (4) (5) Average retail value of goods a customer receives (including VAT and delivery charge) per order. Measured as units dispatched from the CFC per hour worked by CFC operational personnel. Value of products purged for having passed Ocados use by life guarantee and stock adjustments (net of sales to the company shop), divided by gross sales. Percentage of all items delivered exactly as ordered, i.e. the percentage of items neither missing nor substituted. Excludes, for the period prior to their transfer to Ocado, staff working for a third-party logistics contractor who transferred to Ocado in April 2007.

Summary Weekly orders exceeded 100,000 for the first time in the week commencing 10 May 2010 and the average number of weekly orders in P1-6 2010 was 88,407 (P1-6 2009: 66,132). The average order size was 115.77 (P1-6 2009: 119.15). During the same period, CFC efficiency was 123 and average deliveries per van per week was 131. 7. Summary of the Risk Factors

Prospective investors should consider carefully the risks that relate to the Group, its industry and an investment in Ordinary Shares, which could adversely affect the Groups business, results of operations, financial condition and prospects and the value of the Ordinary Shares, included but not limited to the risks summarised below. The online grocery industry in the UK may not sustain or improve upon current levels of demand Ocado has a relatively short operating history and operates in a new and evolving market Ocado has incurred substantial net losses to date and anticipates possible future losses The Groups relationship with Waitrose exposes it to a number of risks: The Group relies on the Waitrose brand and Waitrose own-label products The arrangements contain provisions restricting the operation of WaitroseDeliver inside the M25 which will expire in June 2011 The 2010 Agreement contains minimum sourcing provisions which may restrict the Groups growth The Sourcing Agreement and Branding Arrangements could be terminated early following a UK competitor of Waitrose acquiring control of the Group

The Group is dependent on the existing single CFC in Hatfield The Group may fail to compete effectively with traditional online retailers of groceries The Group is dependent on its Executive Directors The Group may not successfully replicate its business system to new CFCs on time and within budget The Group will be reliant on the New Facility The Group may need to raise substantial additional funding from 2012 and a failure to do so may restrict its development The Group relies on its Spokes There are limitations on the current CFC and Spokes The Group may not have adequate protection for its intellectual property rights Growth may place significant demands on the Groups infrastructure and management The Group may be affected by new entrants to the online market The Group may face unexpected increases in operating and other expenses The Group is dependent on UK and global economic conditions The Group may face online security breaches including hacking and vandalism The number of Ordinary Shares to be made available by the Selling Shareholders pursuant to the Offers is indicative only The price of the Ordinary Shares may fluctuate The Company does not expect that dividends will be declared or paid in the foreseeable future

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RISK FACTORS In addition to all other information set out in this document, investors should carefully consider the risk factors below. If any of the following risks were to materialise, the business, financial condition and future prospects of the Group could be materially and adversely affected. In such circumstances, the price of the Ordinary Shares could decline and investors could lose all or part of their investment. If investors are in any doubt about the action they should take, they should consult a professional adviser authorised under the FSMA if they are in the United Kingdom or, if not, another appropriately authorised independent financial adviser. The risks and uncertainties described below represent those known to the Directors at the date of this document which the Directors consider to be material. However, these risks and uncertainties do not necessarily comprise all of those associated with an investment in the Company and are not set out in any order of priority. Additional risks and uncertainties currently unknown to the Directors and/or the Group, or which the Directors and/or the Group currently believe are immaterial, may also have a material adverse effect on its business, financial condition or future prospects or the trading price of the Ordinary Shares. 1. Risks relating to the Group

1.1 The online grocery industry in the UK may not sustain or improve upon current levels of demand and customer acceptance in line with the expectations of the Group The Business has no physical locations at which customers can purchase goods. It relies solely on orders received through the Website and, more recently, Ocado On the Go (an application for iPhones, iPads and Android smart phones) for sales. Although the Directors expect the online grocery market to continue to grow, the online grocery industry in the UK is nevertheless relatively new and rapidly evolving. It is still uncertain whether the Business will sustain and improve on current levels of demand and customer acceptance. The Groups success will depend to a substantial extent on the willingness of consumers to increase their use of online services as a method of buying groceries and other products and services. If the online grocery industry in the UK does not improve upon current levels of demand and customer acceptance does not increase in line with the expectations of the Directors, then this would have an adverse effect on the Groups business strategy, results of operations, financial condition and future prospects. 1.2 Ocado has a relatively short operating history and operates in a new and evolving market Ocado began commercial operations in 2000. The Group has a comparatively short operating history which makes an evaluation of the Groups business and prospects difficult. In addition, the UK online grocery industry is new and rapidly evolving. The Groups business and prospects must, therefore, be considered in light of the risks and difficulties the Group encounters operating in the relatively new and evolving online grocery industry. These risks and difficulties include: difficulties in managing rapid growth in personnel and operations; a complex business system unproven at the expected maximum capacity of the CFC; lack of profitability to date; and high capital expenditures associated with expanding the capacity of the Business particularly in building and fitting-out the second CFC.

The Group cannot be certain that its business strategy will be successful or that it will successfully address these risks. The Groups failure to address any of the risks described above could have an adverse effect on the Business. In particular, Ocado has experienced significant revenue growth in recent periods. Such growth rates may not be sustainable and may decrease in the future. In view of the rapidly evolving nature of the Business and Ocados rate of growth in prior years, the Directors believe that period-to-period comparisons of its operating results, including the Groups EBITDA margin and cost of sales as a percentage of revenue, are not necessarily meaningful and should not be relied upon as an indication of future performance.

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Risk Factors 1.3 Ocado has incurred substantial net losses since inception to date and anticipates possible future losses Ocado has incurred substantial net losses since inception in 2000 which aggregated to approximately 341 million (Group: 347 million) at the end of P1-3 2010. To date, Ocado has been financed by capital contributions from its investors and debt financing. Ocado has not achieved a profit on its ordinary activities before taxation in any financial year, and may continue to make losses on its ordinary activities before taxation in the future while it pursues the Groups growth strategy. The Group will continue to incur significant capital and operating expenses in coming years in connection with its planned expansion. Over the next few years such expenses will include investment in the existing CFC to increase operational efficiency and capacity, the construction and related fit-out of the second CFC (assuming that the Business grows at the rate the Directors expect it to and, to the extent necessary, appropriate financing is obtained) at an estimated cost of approximately 210 million (costed at a sterling : euro exchange rate of 1 = e1.10), to develop existing Spokes and establish new ones, together with brand development and marketing activities, increases in personnel at the existing and proposed future CFC and its head office and continued development of the Groups IT systems (including the warehouse management and order fulfilment systems) and delivery infrastructure. In order to become profitable, the Business will need to increase its sales or reduce costs and expenses as a proportion of such sales. There is no certainty that the Company will be able to achieve efficiency targets and reduce such costs and expenses as a proportion of sales. 1.4 The Groups relationship with Waitrose exposes it to a number of risks Details of the arrangements under which Waitrose sources and supplies products for the Group are set out in section 7.4 of Part I (Information about the Company) and section 17.1 of Part XIII (Additional Information). The Group relies on the Waitrose brand and Waitrose own-label products Ocados reputation as a supplier of high quality products is based, at least in part, on its relationship with Waitrose and its ability to supply Waitrose own-label products. If, for any reason, Waitrose ceased to supply the Group with such products during the term of the Sourcing Agreement or the Sourcing Agreement or Branding Arrangements were to terminate or expire, or if Waitrose were to suffer reputational damage which impacted on the Waitrose brand, there could be an adverse effect on the Groups financial condition and future prospects. In FYE 2009 46 per cent. of Ocados product sales constituted sales of Waitrose own-label products. Ocado is precluded from selling the own-label products of any UK competitor of Waitrose for the duration of the Sourcing Agreement. If the Sourcing Agreement were to end and Ocado wished to replace the Waitrose own-label products in its range it would need to find or create a replacement range of own-label products. Ocado currently stocks approximately 70 Ocado own-label products, and is in the process of extending this range, but there is nevertheless no assurance that it will be able independently to develop a sufficient Ocado own-label range or be able to obtain an alternative own-label range from another supermarket or supplier. Such a failure to develop a sufficient Ocado own-label range or to offer an alternative own-label range could adversely affect the Groups financial condition and future prospects. The 2008 Agreement and the 2010 Agreement contain various exclusivity provisions which bind Waitrose. These provisions will be progressively relaxed from 1 January 2011 and expire at the end of June 2011, and in any event the Group is likely to face ongoing or increased competition from Waitroses internet delivery arm WaitroseDeliver Waitroses own online grocery business, WaitroseDeliver, competes directly with Ocado. The 2008 Agreement and the 2010 Agreement currently include certain exclusivity provisions which limit the extent to which the WaitroseDeliver service may compete with the Group in the Greater London area (the area bounded by the M25 motorway). Approximately 50 per cent. of Ocados gross sales in FYE 2009 were derived from the area bounded by the M25. If Waitrose expands the WaitroseDeliver service both within and outside the M25, there could be an adverse impact on the ability of the Business to win new and retain existing customers.

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Risk Factors The success or otherwise of WaitroseDeliver may affect the willingness of Waitrose to extend or renew the Sourcing Agreement and Branding Arrangements beyond their scheduled expiry. Moreover, such success or otherwise may result in Waitrose being less willing to cooperate under the Sourcing Agreement because it may consider that to do so will compromise its own business. While Waitrose would remain subject to contractual obligations under the Sourcing Agreement, the failure of the Groups key supplier to cooperate fully in its relationship with the Group could have an adverse effect on the Groups financial condition and future operations. The 2010 Agreement contains minimum sourcing provisions which may restrict the Groups growth The 2010 Agreement contains provisions which restrict the extent to which Ocado can source products other than from Waitrose, and the extent to which Ocados range of Ocado own-label products may be expanded. While the Directors do not believe that these restrictions will have a significant impact on the growth of the Business or their intended expansion of the range of products stocked by Ocado, to the extent that, in this respect, the Business develops in a way other than the Directors currently expect, the minimum sourcing restrictions may have an adverse effect on the Groups financial position and prospects. The Sourcing Agreement and Branding Arrangements could be terminated early by John Lewis following a change of control of the Group after Admission (and in certain other circumstances) The 2010 Agreement allows any of the parties to terminate the Sourcing Agreement and Branding Arrangements by giving three months notice if certain competitors of Waitrose or John Lewis gain control of the Ocado Board or acquire 50 per cent. or more of the issued share capital of the Company. Following Admission, the Company will have no control over the acquisition and disposal of the Ordinary Shares. Accordingly, a relevant competitor of Waitrose or John Lewis could acquire 50 per cent. or more of the issued share capital of the Company, which could result in the early termination of the Sourcing Agreement and Branding Arrangements by John Lewis or Waitrose. Following termination in these circumstances, Ocado is obliged to pay Waitrose 40 million. If Waitrose fails to source products for the Group, the Group may be unable to replace the Waitrose Sourcing Agreement and Branding Arrangements on acceptable terms or at all Under the Sourcing Agreement Waitrose negotiates terms of supply (primarily product specification and cost prices) with various suppliers on behalf of both itself and Ocado. If the arrangements with Waitrose come to an end, Ocado will have to agree new terms (for example, as to branding of products) with existing suppliers or find appropriate suppliers itself, as well as negotiate prices itself. This will require it to engage a substantial number of additional personnel in, at a minimum, its retail and buying teams and its food technology team. While certain suppliers will continue to supply Ocado without Waitrose as an intermediary, there can be no assurance that a sufficient number will agree to do so nor that Ocado will be able to find an adequate number of alternative suppliers. In addition, Ocado may not be able to obtain prices that are equivalent to the prices obtained by Waitrose. Currently, approximately 15 per cent. by volume of the goods that Ocado sells were delivered to it via the Waitrose logistics infrastructure. This is provided for in the Sourcing Agreement. The balance of products are delivered directly to the CFC by the relevant supplier or manufacturer. If the Sourcing Agreement were to end, or if Waitrose were unable or unwilling to source products for the Group during the course of the current term of the Sourcing Agreement (if, for example, there were a failure in Waitroses logistical infrastructure), the Group would have no immediately available infrastructure for sourcing directly those products sourced via the Waitrose infrastructure. Any disruption to the Waitrose supply system may disrupt the availability of the Groups products to its customers. This has happened infrequently in the past; for example the H5N1 bird flu epidemic in 2008 had little effect on the Group, doing little more than disrupting Waitroses supply of organic turkeys. Nevertheless, it remains a risk to which the Group is exposed. Although the Sourcing Agreement provides that on the occurrence of a failure in the Waitrose supply system those goods that are available must be apportioned between Waitrose and Ocado pro rata to their good faith requirements, there can be no guarantee that any such supply will be sufficient to meet Ocados requirements or that such supply will occur in a timely manner, on acceptable terms or at all.

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Risk Factors Therefore, any failure of Waitrose to supply goods to the Group could cause a temporary or, in the case of certain products, permanent, inability for the Group to stock and sell those goods, which could have an adverse effect on the Groups financial condition, results of operations and future prospects. The Sourcing Agreement may not be renewed following its ultimate expiry The Sourcing Agreement will expire on 1 September 2020, although it may be terminated from 1 March 2017 onwards by either party giving the other requisite notice. Although the Group would have considerable notice of Waitroses intention to cease sourcing products for it in these circumstances, and would have the opportunity to develop its own relationships with suppliers (which to some extent it has done already), the termination or the expiry of the Sourcing Agreement would, at the very least, result in the Group ceasing to be able to supply Waitrose own-label products which, for the reasons described above, could have an adverse effect on the Groups financial condition and future prospects. Even if the Sourcing Agreement were renewed or extended so that it did not expire on 1 September 2020, the Group may not be able to agree terms with Waitrose which are as favourable to it as the terms on which the current arrangements were concluded. Any deterioration in the terms on which the Group and Waitrose contract could have an adverse effect on the Groups financial condition and future prospects. 1.5 The Groups Business currently depends entirely on a single CFC in Hatfield The Business currently operates from a single CFC which is located in Hatfield (in South East England). It is therefore entirely dependent on the continued efficient operation of the existing CFC, the ability to increase the capacity of the existing CFC in order to continue to satisfy any increase in the number of customer orders, and the ability to maintain a high level of accuracy in fulfilling these orders. Any disruption to the efficient operation of the existing CFC may therefore have an adverse effect on the Groups financial condition and future prospects. The CFC may suffer prolonged power or equipment failures, refrigeration failures, failures in its IT systems or networks or damage from fires, floods, other disasters or other unforeseen events which may not be covered by or may be in excess of its insurance coverage. Damage resulting from any of these events may take considerable time to repair. The direct effect of the events described above and a prolonged period before rectification could have an adverse effect on the Groups financial condition and future prospects. Moreover, the complete destruction of the CFC through a single catastrophic event would have an adverse impact on the operation of the Business and the Groups financial condition and prospects for a significant period of time. As described in more detail in section 7.5 of Part I (Information about the Company), a higher number of orders are placed to arrive on Mondays, Fridays and Saturdays than on other days. In order to keep effective capacity of the CFC as high as possible, steps are taken to smooth the delivery profile across the week, such as offering cheaper (or free) deliveries at certain times. If the steps taken to prevent the daily spikes in delivery numbers cease to have the effect on customer buying habits that the Directors currently believe they do, the effective capacity of the CFC would be reduced, which would have a material adverse effect on the Groups financial condition and future prospects. 1.6 The Group is dependent on its Executive Directors The future success of the Group is, to an extent, dependent upon the specialist skills of its Executive Directors. The unexpected departure or loss of any of its Executive Directors could have an adverse effect on the financial condition and results of operations of the Group, and there can be no assurance that the Group will be able to attract or retain suitable replacements for such Executive Directors. 1.7 The Group may fail to compete effectively with traditional and online retailers of grocery products The Group competes primarily with traditional grocery retailers and with other online grocers. Its main online competitors are Tesco.com, Sainsburys.co.uk, ASDA.com and WaitroseDeliver, each of whom currently has financial resources substantially greater than those of the Group. The traditional grocery retailers may also have brands that are more widely recognised by grocery shoppers throughout the UK than the Ocado brand. The relative size and established nature of the Groups competitors could mean that the Business may lose its current market share if the online grocery market becomes increasingly

14

Risk Factors important to the grocery industry and its competitors invest heavily in their online operations. In addition, further operating losses may put the Group at a competitive disadvantage in what is a comparatively new and evolving market. The principal competitive factors that currently affect the Business are availability and breadth of product range, geographic reach, product quality, order accuracy, service, price, promotional activities and customer loyalty to traditional and other online grocery retailers. If the Group fails to compete effectively in any one of these areas it may lose existing customers and fail to attract new customers, which may have an adverse effect on the Groups financial condition and future prospects. 1.8 The Group may not successfully replicate its business systems to new CFCs on time and within budget A critical part of the Groups business strategy is to expand its operations by building at least one additional CFC in the UK in the medium term to increase the capacity of the Business to service customers. The Group is yet to acquire a site for the second CFC and, even if the Group grows at the rate that the Directors expect, the Group will not begin operating the second CFC until the end of 2012 at the earliest (assuming that construction begins in the first quarter of 2011 and, to the extent necessary, appropriate financing is obtained). Moreover, if the Group grows at a slower rate than the Directors expect, the Group may not commence operating the second CFC until later, if at all. While the Directors are confident that the business systems of the existing CFC can be replicated in the second CFC (and in any further CFCs in the future), the Groups ability to replicate its business model in new CFCs generally (and the second CFC in particular), cost-effectively and in a timely fashion will depend upon a variety of factors. These include: fluctuations in the cost of particular commodities (in particular, steel) required to build a CFC and the currency (principally euro) in which plant and machinery for a CFC would be purchased; the availability of appropriate and affordable sites that can accommodate a CFC, which in turn depends on a combination of physical and geographical factors; the Groups ability to obtain necessary planning consents; the Groups ability successfully and cost-effectively to hire and train employees to operate any new CFC; the Groups ability to roll out the business systems in any new CFC; finding suitable, reliable and trustworthy developers; the availability of appropriate material handling equipment and the contractors to design and install such equipment; and management resources.

Significant overruns of the predicted budget of building and fitting-out the second CFC might make such building and fit-out economically unviable. If the replication strategy fails, Ocado could be forced to delay expansion. If the Group successfully builds the second CFC, there is no guarantee that it or any other additional CFCs will achieve a sufficient level of operational efficiency, market penetration or customer orders to ensure that such CFC will become commercially viable. If the replication of the Groups business systems fails for any reason, or is more expensive or slower than planned, then this may have an adverse effect on the Groups financial condition and future prospects. 1.9 The Group will be reliant on the New Facility The funds to be borrowed by the Group under the New Facility will be substantially relied upon by the Group to fund its planned development of the Business in the medium term. The New Facility may be terminated by the lenders in circumstances customary for such a facility. The New Facility may also be terminated by the lenders if the Branding Arrangements and Sourcing Agreement with Waitrose and John

15

Risk Factors Lewis are terminated for any reason or if notice of termination is served. However, with the exception of the change of control termination right described in paragraph 1.4 above (which is customary for an agreement of that type), the Company is in control of whether any such termination rights will arise. In the unlikely event that the New Facility is terminated, the Group may not be able to obtain equivalent financing on similar terms or at all. Termination of the New Facility may, therefore, adversely affect the financial condition and future prospects of the Group. 1.10 The Group may need to raise substantial additional funding from 2012 and a failure to do so may restrict its development The Groups growth and profitability from 2012 may depend on its ability to access funding for further development. The Groups funding requirements and ability to raise funding will depend on numerous factors, including its profitability, cash generation and levels of investment and its ability to maintain and expand its penetration of the markets in which it operates. The Groups ability to raise funding will also be dependent on the general availability of credit. The Group will continue to incur significant capital and operating expenses in coming years in connection with its planned expansion. These expenses include: costs of additional expansion (including plant and machinery) to increase capacity at the existing CFC; land acquisition costs for new CFCs and Spokes and the related site preparation and external works costs; all of the costs associated with developing new CFCs and Spokes, such as professional fees, building and related fit-out costs, IT costs and the costs of plant and machinery; increased vehicle costs as the delivery fleet is expanded; and increased staff costs as the staff headcount grows to meet the demands of the expanded Business.

The Groups longer term capital needs will be dependent on the actual cost of its expansion programme, especially the second CFC and any additional CFCs the Group builds, the timing of the start of operations at additional CFCs and their success. The Group may need to raise capital in addition to that currently anticipated to fund its expansion. Any such required additional funding may not be available to the Group on favourable terms when required, or at all. If the Group is unable to obtain sufficient capital when needed, the Group may be forced to alter its business strategy, or delay or abandon some or all of its planned expansion. Any of these events would have an adverse effect on the Groups development, growth, financial condition and prospects. Furthermore, any additional equity fundraising in the capital markets may be dilutive for Shareholders and additional debt-based funding may bind the Group to restrictive covenants and curb its operating activities and ability to pay potential future dividends even when profitable. 1.11 The Group may suffer from exchange rate fluctuations A significant amount of the machinery used at the CFC is sourced from suppliers located in countries that have adopted the euro, and most of the competing suppliers that the Group has investigated are also in countries that have adopted the euro. The Directors expect to contract with these suppliers for the supply of machinery to develop the second CFC and expand the capacity of the current CFC. These suppliers will generally be paid either in euro or at a spot sterling rate for euro, while the Groups revenues are in sterling. The total construction costs of the second CFC are currently estimated at approximately 210 million. This figure was costed at a sterling : euro exchange rate of 1 = e1.10. Any depreciation of sterling in relation to the euro will increase the sterling equivalent of the price paid for such imports and may have an impact on the Groups financial condition and future prospects. 1.12 The Group relies on its Spoke sites The Group relies on Spoke sites to deliver orders to customers that cannot be efficiently fulfilled directly from the existing CFC in Hatfield. Spokes are able, to some extent, to serve geographies of neighbouring Spokes provided they have the vans available to do so; however, they are unlikely to be able to deliver to these geographies as economically as they can deliver to their own. Therefore, any disruption to the efficient operation of a Spoke may affect the ability of the Business to deliver products to certain customers, or to do so economically, which may have an adverse effect on the Groups financial condition and future prospects. 16

Risk Factors In addition, a Spoke may suffer prolonged power or equipment failures, refrigeration failures, or damage from fires, floods, other natural disasters or other unforeseen events which may not be covered by insurance coverage. Damage resulting from any of these events may also take considerable time to repair. A number of Spokes are leased by Ocado (as opposed to owned). Ocado could breach the terms of such leases inadvertently through the day-to-day operation of the Business. Any breach of the terms of the leases on which they are held could result, if not waived or deemed waived by the relevant landlord, in the early termination of the lease. The prolonged shutdown of a Spoke or the early termination of a lease on which a Spoke is held could have an adverse effect on the Groups financial condition and future prospects. The Group is reliant on developing new Spokes in order to increase the breadth and depth of the Business penetration. Developing new Spokes is considerably less complicated than developing new CFCs. However, to the extent the Group is unable to develop new Spokes, for example, if it is unable to find suitable sites in which to locate them, the Groups expansion will be adversely affected. 1.13 There are limitations on the current CFC and Spokes The current CFC and Spokes can together only provide Ocados service to approximately 66 per cent. of UK households. Increasing the geographic reach of the Business would require the Group to establish more Spokes and there is a limit to the number of additional Spokes that can be efficiently served from the existing CFC. The Directors believe that, with further capital investment, the existing CFCs effective capacity could be increased to approximately 180,000 orders per week from approximately 105,000 orders per week that it is currently capable of processing. The second CFC is required to increase the capacity at which the Business operates as well as to limit, in part, the effect of any catastrophic failure at the current CFC. Failure to expand the capacity of the existing CFC or to develop new CFCs and Spokes may adversely affect the future prospects and financial condition of the Group, in particular if customer demand for the Groups services is greater than the Groups capacity to process such demand. Without further capital expenditure, either to increase the capacity of existing Spokes or to develop new ones, the Business will not be able to grow beyond a certain size, which may adversely affect the Groups financial position and future prospects. 1.14 The Business may not be able to deliver products to its customers The Business is subject to the risks associated with its ability to provide delivery services. In particular, the Business is entirely reliant on deliveries by road: from suppliers to the CFC, from the CFC to the Spokes and from the Spokes or the CFC to customers. In addition the Business relies on the ability of employees to be able to get to their place of work, either at the CFC or the Spokes. This leaves the Business exposed to traffic congestion, road works, congestion charging and inclement weather, particularly snow, all of which could render deliveries difficult or even impossible. For example, the unusually snowy periods in December 2009 and January 2010 caused some deliveries during that period to be delayed, and some to be cancelled. The Business is also subject to regulations governing the number of hours that drivers can work on consecutive days, and as a result, the Business may not have enough drivers available to work during periods of very high demand or adverse weather conditions. Regulations also govern the weight limits of the loads each van can take. For instance, other than the electric van currently in testing, all of the Ocado delivery vans are limited to a loaded weight of 3.5 tonnes. This affects the operational efficiency of the Groups delivery infrastructure and any changes to these regulations may have a negative effect on its financial prospects; further changes to the regulatory regime may increase this adverse effect.

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Risk Factors 1.15 The Group may be unable to develop and reinforce consumer trust in the Ocado brand, or may attract negative publicity Maintaining the reputation of, and value associated with, the Ocado brand is of central importance to the success of the Group. Brand identity is a critical factor in retaining existing and attracting new customers. Promotion and enhancement of the Ocado brand is expected to depend on Ocados success in providing a high quality customer experience for buying groceries and other products. Brand loyalty will be especially important if the Groups branding arrangements with Waitrose end and/or competition from Waitrose increases. Furthermore, the importance of brand loyalty may increase as new online grocery retailers join the market. From time to time the Group has received complaints about advertising campaigns it has run, including complaints from the Advertising Standards Authority (the ASA). For example, it was unsuccessful in defending a complaint brought by the ASA regarding the advertising of its Tesco Price Match policy, and it is currently providing information to the ASA regarding statements made regarding the Groups environmental credentials. A successful complaint against one of the Groups advertising campaigns could generate negative publicity or result in a cost to the Business were it required to change any of its advertising. Unfavourable publicity concerning the Group or the industry sector could damage the Groups brand and if future branding efforts are not successful, the Groups sales and ability to attract customers will be unfavourably impacted, which may have an adverse effect on the Groups financial condition and future prospects. 1.16 The Group is subject to payments-related risks The Group accepts payments using credit, debit and John Lewiss account cards. If the Group offers new payment options to customers, it may be subject to additional regulations and compliance requirements and may be increasingly exposed to fraud (although fraud is not currently a significant concern). The Group pays interchange and other fees for these card payments, which may increase over time and raise operating costs and lower margins. The Group relies on third parties to provide payment processing services, and it could disrupt the Groups operations if these companies become unwilling or unable to provide these services. The Group is also subject to payment card association operating rules, certification requirements, Payment Card Industry Data Security Standards (PCI-DSS) and rules governing electronic funds transfers, which could change or be reinterpreted to make them difficult or impossible to comply with. If the Group fails to comply with these rules or requirements, it may be subject to fines and/or higher transactions fees and in extreme cases may lose its ability to accept credit, debit or John Lewiss account card payments from customers, process electronic funds transfers or facilitate other types of online payments. As part of its merchant obligations Ocado submitted a level 2 self assessment under the PCI-DSS in April 2009. Ocado did not fully comply with this standard and it is in the process of implementing a remediation plan to ensure compliance before the end of 2010. The most significant part of that plan is to outsource payment processing to a significant third party service provider. No guarantee can be given that such plans to outsource payment processing will be successful or will complete on schedule. Compliance difficulties with the PCI-DSS are common to a range of business sectors: analyst research published in March 2010 indicated that 89 per cent. of businesses in retail, financial services and hospitality sectors were not certified as compliant with the PCI-DSS. Non-compliance with these standards can lead to increased customer payment processing fees or, should a security breach occur and customer data be accessed or stolen, then Ocado could be liable for losses associated with the breach. Any failure of the Groups payment processing systems, whether caused by a systems failure or otherwise, will adversely affect the Groups income in the short term and may result in it losing customers which may have an adverse effect on the Groups financial condition and future prospects. In addition, there can be no assurance that advances in computer capabilities, new discoveries in the field of cryptography, or other events or developments will not result in a compromise or breach of the processes used by the Group to protect customer transaction data. If any such compromise or breach were to occur, it could have an adverse effect on the Groups reputation, business, future prospects, financial condition and results of operations.

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Risk Factors 1.17 The Group may not have adequate protection for its intellectual property rights The business and IT systems operating in the CFC and other key proprietary intellectual property are not protected by patents or registered design rights which means that the Group cannot preclude or inhibit competitors from entering the same market if they develop the same or similar technology independently. The Group is therefore particularly reliant on copyright, trade secret protection and confidentiality and license agreements with its employees, customers, suppliers, consultants and others to protect its intellectual property rights. Although the Group has taken steps consistent with industry practice to reduce these risks, such steps may be inadequate. In addition, third parties may independently discover Ocados trade secrets and proprietary information or systems, and, in such cases, Ocado may not be able to rely on any intellectual property rights to prevent the use of such trade secrets, information or systems by such parties. Costly and time-consuming litigation could be necessary to determine and enforce the scope of Ocados proprietary rights and the outcome of such litigation could not be guaranteed. Failure to prevent the use of such secrets, information or systems by such third parties could adversely affect Ocados competitive business position, financial condition and future prospects. 1.18 The Groups use of open source software may restrict its ability to exploit its proprietary software and IT systems and exposes it to certain risks The Groups key proprietary software and critical IT systems incorporate significant elements of open source software, the use of which by Ocado is subject to the terms of applicable licences. Open source software is typically licensed for use at no initial charge on terms which allow modification and distribution of the software by the licensee. However, licence terms may impose on the user compliance requirements and obligations to disclose modifications Ocado has made to the software to third parties. Ocados ability to realise fully the commercial benefits of any such software may be restricted because: open source licences may be drafted in legally ambiguous language and may result in unanticipated consequences or obligations regarding Ocados software; due to the requirements to licence modified software, Ocados competitors or licensees may have access to information which may help them to develop competitive products; open source software is available to the public for anyone to access and utilise, including Ocados competitors; and it may be difficult for Ocado to identify accurately the developers of the open source code (who may be licensors of the software) and whether the licensed software infringes third party intellectual property rights.

Furthermore, to the extent Ocado uses open source software it faces certain more general risks which apply to any organisation making use of such software. For example, the scope and requirements of the most common open source software licence, the GNU General Public Licence (GPL) have not been interpreted in a court of law. Use of GPL software could subject certain portions of Ocados proprietary software to GPL requirements, including an obligation on Ocado to disclose that software to third parties and to permit them to use the software free of charge. Finally, open source licences typically present onerous compliance risks, and failure to observe these may result in litigation or the loss of the right to use the software which may have an adverse effect on the Groups financial condition and future prospects. Ocado is not aware that it has breached any of these compliance requirements nor has any third party claimed that software owned by Ocado should be made available on an open source basis. Any of the risks or restrictions relating to open source software mentioned above could have an adverse impact on the Groups financial condition and future prospects. 1.19 The Groups IT systems depend on each other and a failure in one may disrupt the efficiency and functioning of the Groups operations The Groups business model relies on the complex integration of the Website (through which all customer orders (other than those placed via the Ocado on the Go applications) are placed), the highly automated CFC and goods handling equipment and the order fulfilment and delivery operations. The Business is therefore reliant on numerous systems to manage the entire process from the receipt and processing of

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Risk Factors goods at the CFC to the picking, packing and delivery of these goods to customers in one-hour delivery slots. The different IT systems are dependent on each other to be able to complete their processes. Therefore, a failure of any of the core IT systems may result in failures of other IT systems as well, which in turn could result in customer orders being unable to be captured on the Website or processed through the CFC. The Group relies to a significant degree on the efficient and uninterrupted operation of its computer and communications systems and those of third parties, including the internet. Customer access to the Website and the speed with which a customer navigates and makes purchases on the Website affects the sales of the Group and the attractiveness of its services. Any failure of the internet generally or any failure of current or new computer and communication systems could impair the value of orders, the processing and storage of data and the day-to-day management of the Groups business. While the Group does have normal disaster recovery and business continuity contingency plans, no assurance can be given that, if a serious disaster affecting the Business, systems or operations occurred such plans would be sufficient to enable the Group to recommence trading without loss of business. Furthermore, the Group has, from time to time, experienced operational bugs in its systems and technologies which have resulted in order errors such as missing items and delays in deliveries. The Group expects operational bugs to continue to occur from time to time due to a combination of one or more of the following: electro-mechanical equipment failures, computer server or system failures, network outages, software performance problems or power failures. The efficient operation of the Groups business systems and IT is critical to attracting and retaining customers. If the Group is unable to meet customer demand or service expectations due to one or more of the aforementioned issues arising, a deterioration in the Groups financial condition and future prospects may occur. 1.20 The Group may not keep pace with new technological developments The Groups success depends in part upon its ability to store, retrieve, process and manage substantial amounts of information. To achieve its strategic objectives and remain competitive, the Group must continue to develop and enhance its information systems. This may require the acquisition of equipment and software and the development, either internally or through independent consultants, of new proprietary software. No assurance can be given that the Group will be able to continue to design, develop, implement or utilise, in a cost-effective manner, information systems that provide the capabilities necessary for the Group to compete effectively. Any failure to adapt to technological developments could mean that the Group fails to capture what may become an increasingly important part of the online grocery market and this may have an adverse effect on the Groups financial condition and future prospects. 1.21 The Group is dependent on relations with other third party suppliers In addition to its relationship with Waitrose, the Group is dependent on relations with third party suppliers, landlords and distributors. Ocado is also dependent upon the manufacturers, suppliers and maintenance providers of its machinery, including the machinery used within the CFC, its Spokes and its delivery vehicles. A reduction in availability or level of service offered by these providers could restrict the ability of the Group to conduct its business and thereby adversely impact its financial condition and future prospects. For example, Ocado has formed a long term relationship with Mercedes and Paneltex for the manufacture and customisation of its vans. Although Ocado would be able to source customised vans elsewhere if either Mercedes or Paneltex ceased to be able to supply it, the end of the relationship with either could adversely affect the Groups operations or financial condition while a new solution was being found, and there could be no guarantee that any new solution would be as satisfactory as the existing arrangements. 1.22 Growth may place significant demands on the Groups management and infrastructure The growth of the Business to date, and its future growth (in particular through the development of the second CFC), has placed and is expected to continue to place significant demands on the Groups

20

Risk Factors management and its operational and financial infrastructure. As the Groups operations grow further, it will need to continue to improve and upgrade its systems and infrastructure. This expansion will require the Group to commit substantial financial, operational and technical resources in advance of an increase in the size of the Business, with no assurance that the volume of business will increase. Continued growth could also strain the Groups ability to maintain reliable service levels for its customers, develop and improve its operational, financial and management controls, enhance its reporting systems and procedures and recruit, train and retain employees. Managing growth will require significant expenditure and allocation of management resources, as well as an expansion in headcount. If the Group fails to achieve the necessary level of efficiency as it grows, there could be an adverse effect on the Business and its operating results and financial condition. Ocados business systems may be unable to accommodate a significant increase in the number of customers or orders as the existing CFC or any new CFC begin to operate at or near capacity. If Ocado is unable to accommodate a substantial increase in customer orders, its growth strategy may be adversely affected. 1.23 Any expansion by the Group through joint ventures or other collaborative activities may not be successful The Group may expand through joint ventures and other collaborative activities with third parties. Participation in joint projects contains an inherent risk in their management and it can be difficult to guarantee the achievement of joint goals. Similarly, cooperating in this way with third parties may require the Group to rely on its partners to help achieve its aims and maintain the Groups reputation. Joint ventures, including the difficulties involved in integrating companies, businesses or assets, may divert financial and management resources from the Groups core business, which could have an adverse effect on the Groups financial condition and future prospects. 1.24 Any expansion by the Group through merger and acquisition activity may be unsuccessful The Group may expand through mergers and acquisitions. In identifying potential merger and acquisition targets, the Group would make every effort to ensure appropriate due diligence is carried out, but acquisitions would necessarily leave the Group exposed, at least to some degree, to any operational failings of the target company and potentially to overpaying for any such target. Any payment for such target company with Ordinary Shares could dilute the interests of Shareholders. Merger and acquisition activity, including the difficulties involved in integrating companies, businesses or assets, may divert financial and management resources from the Groups core business, which could have an adverse effect on the Groups financial condition and future prospects. In addition, there can never be a guarantee that mergers or acquisitions will successfully achieve their aims. 1.25 The Group is reliant on its staff The Group is reliant on its staff for the management, operation, creation, maintenance, repair and upgrading of its business, operations and systems. The Groups ability to recruit or adequately replace, retain and motivate suitably qualified and experienced staff is important for the Groups ongoing success. An inability to recruit and retain sufficient personnel of the right calibre or the incurring of significant costs in order to do so may have an adverse effect on the Groups financial condition and future prospects. The Business has had good relations with its workforce to date and a works council has recently been established with a remit to discuss, amongst other things, the terms and conditions of employment for the workforce. This may further improve the relationship between the Group and its workforce but could also lead to disputes between the workforce and management and even strike action. This may be exacerbated by the workforce, which is not currently unionised, becoming unionised. The Company is currently in negotiations with Usdaw over its request for recognition as the trade union for all non-managerial Ocado employees at the CFC. The Group is aware of other trade unions having informally approached its employees at some of its Spoke sites, although has received no direct communications from them.

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Risk Factors Any significant disagreements between the Group and its employees could have an adverse effect on the Groups financial condition and future prospects. 1.26 The Groups entry into new business areas may not be successful The Group may choose to expand its operations by offering different services to existing and new customers, promoting new or complementary products or sales formats, expanding the breadth of products offered or expanding its market presence through relationships with third parties (either in the UK or overseas). The Group may not be able to do this in a cost-effective or timely manner. Furthermore, any new business or website launched by the Group that is not favourably received by consumers could damage the Groups reputation or brand. Such expansion of the Groups operations would also be likely to require significant additional investment, together with operations and resources, which would strain the Groups management, financial and operational resources. The lack of market acceptance of such efforts or the Groups inability to generate satisfactory revenues from such expanded services or products to offset their costs could have an adverse effect on the Groups financial condition and future prospects. 1.27 The Group may suffer if taxation rates or law change Changes in taxation rates or law, or misinterpretation of the law or any failure to manage tax risks adequately could result in increased charges, financial loss, including penalties, and reputational damage, which may have an adverse effect on the Groups financial condition and future prospects. Various products sold by the Group, including, in particular, alcohol and tobacco, are subject to varying types of taxes including VAT and duty. The level of these taxes and duties can be changed by the government at very short notice. A material change in the level of taxes and duties levied on these products could have a significant adverse effect on the sales, profits and financial condition of the Group. On 22 June 2010, the UK Government announced its intention to increase the standard rate of VAT from 17.5 per cent. to 20 per cent. for any supply made on or after 4 January 2011. The Company agrees with HMRC, on an annual basis, a blended rate of VAT payable by it on its delivery charges. Any failure to continue to make such an agreement with HMRC, or a failure to agree a rate that meets the Groups expectations, may have an adverse effect on the Groups financial condition and future prospects. As described in more detail in section 7 of Part XIII (Additional Information) below, Ocado has granted its wholly owned subsidiary, Ocado Information Technology Limited (which is incorporated in the Republic of Ireland), the exclusive rights to use and sub-licence Ocados IT and IP to third parties for use outside the UK. This licence was granted at what the Directors considered (based on an independent valuation) to be a market rate and Ocado Information Technology Limited is yet to grant, and is not in discussions with any person concerning the grant of, any such sub-licences. However, to the extent that HMRC (or any other relevant tax authorities) do not consider that the licence was granted at a market rate, Ocado could be subject to a tax charge. If significant, such tax charge may have an adverse impact on Ocados financial condition. 1.28 Ocado has considerable carried forward tax losses which could be lost Ocado had approximately 270 million of unutilised carried forward tax losses as at the end of FYE 2009. Tax rules exist which prevent the use of such losses where there is a major change in the nature or conduct of a trade carried on by a company in the three years before or after a change in ownership of the company. The recent reorganisation of the Group involved a change in ownership and the issue and sale of Ordinary Shares pursuant to the Offers may constitute a change in ownership too. However, the Directors do not consider that there has been a major change in the nature or conduct of Ocados trade since, or in the three years before, the recent reorganisation. To date Ocado has not paid corporation tax as it has not had taxable profits. The carried forward tax losses may have a material effect on the future tax charge of Ocado by reducing the amount of tax

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Risk Factors payable. Therefore, if there were a major change in the nature or conduct of Ocados trade, there may be an adverse impact on the future tax charge of Ocado. 2. Risks relating to the industry

2.1 The Group may be affected by new entrants to the online grocery market The Group may be adversely affected by the entrance of new competitors in the online grocery market. In particular, Marks & Spencer, Morrisons, Somerfield and The Co-op have not yet entered this market. The growth of the Business in recent years has shown that, despite grocery retail being a mature market, the barriers to entry into the UK online grocery market are high but not insurmountable. The Groups competitors may also merge or form strategic partnerships, which could cause significant additional competition for the Group. If the market becomes more competitive between similar products and services, especially in the Groups target areas, then the Groups effectiveness in winning new and retaining existing customers may be diminished, which may have an adverse effect on the Groups financial condition and future prospects. 2.2 The Group may face unexpected increases in operating and other expenses The Groups operating and other expenses could increase without a corresponding increase in revenue. Factors which could increase operating and other expenses include unforeseen increases in: interest rates affecting the cost of Ocados debt and equipment leases; costs associated with the Company being listed; rental costs; business rates; payroll expenses (for example, due to increases in the minimum wage or National Insurance); the costs of energy; food costs (and the costs of other products stocked by Ocado) which cannot be fully passed on to customers; fuel costs which will increase the costs of deliveries; new vehicle costs relating to the delivery fleet; property taxes and other statutory charges; insurance premiums; increased tax charges; and the rate of general inflation,

together with changes in laws, regulations or government policies (including those relating to health and safety, planning and environmental compliance) which increase the costs of compliance with such laws, regulations or policies. To the extent that such increases in operating and other expenses exceed or are not in line with increases in the Groups revenues, the Groups profitability will be reduced further and any such reduction could have an adverse effect on the Groups financial condition and future prospects. 2.3 The Group is dependent on UK and global economic conditions Adverse developments in the macro-economic situation, such as the on-going UK and global economic slowdown, could adversely impact the Groups business and operating results. The global economy has recently been experiencing a period of significant turbulence and uncertainty. The Groups performance depends to a certain extent on a number of macro-economic factors outside the control of the Group which impact on UK consumer spending, including political, financial and economic conditions. Factors which impact on disposable consumer income and terms of trade include, among other things, gross domestic product growth, unemployment rates, consumer confidence, social and industrial unrest, the

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Risk Factors availability and cost of credit, interest rates, taxation, regulatory changes, oil and utility prices and terrorist attacks. Each of these factors could have an adverse effect on the Groups financial condition and future prospects. The future and long-term impact that the UK and global financial slowdown will have on the Group is difficult to predict. The recessionary conditions in the UK have led to a deterioration in consumer confidence and commercial spending which could in the future reduce the level of demand for, and supply of, the Groups products and services. There can be no assurance as to levels of future economic growth and further significant deterioration in the UKs economy could have an adverse impact on the future results of operations of the Group. Moreover, any future economic growth may be modest. The rate at which deterioration of the global and UK economies has occurred has proven very difficult to predict and this will apply to any further deterioration or any recovery. The exact nature of the risks faced by the Group is difficult to predict and guard against in view of the severity of the global financial crisis and difficulties in predicting the rate at which further economic deterioration may occur and the duration of any such deterioration. In addition, due to the current economic slowdown in both the UK and globally, there is an increased risk that third parties may face financial difficulties, become insolvent and/or cease trading which may result in disruption to the provision of products or services by them to the Group. Further, the slowdown has severely impacted the availability of credit and the terms on which credit is available which may have the same effect. If there is any interruption to the products or services provided by third parties, the Business may be adversely affected and the Group may be unable to find adequate replacement products or services acceptable to the Group or its customers on a timely basis, or at all. This could result in a loss of customers, which may have an adverse effect on the Groups financial condition and future prospects. 2.4 The Group may face product recalls and product liability claims The sale of food or other products for human consumption involves the risk of injury to the Groups customers or others. While the Group is subject to inspection and regulations and the Directors believe that the Groups facilities and operations comply in all material respects with all applicable laws and regulations, the actual or perceived sale of contaminated food or other products by the Group could result in product recalls or product liability claims, the settlement or outcome of which could have an adverse effect on the Groups financial condition and future prospects. Even if an event causing a product recall proves to be unfounded or if a product liability claim against the Group is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that the products supplied by the Group caused illness or injury, or any product recall, could adversely affect both the Groups reputation with existing and potential new customers and the Groups corporate and brand image. An additional risk is that the Group may incur liability for mislabelling products, even if the mislabelled information was supplied by the product supplier. Any such event could, therefore, have an adverse effect on the Groups financial condition and future prospects. 2.5 The Group is required to comply with health and safety law and regulations A violation of health and safety laws or regulations relating to the Groups operations or a failure to comply with the instructions of the relevant health and safety authorities could lead to, among other things, negative publicity and reputational damage, fines, costly compliance procedures and, in extremis, a temporary shutdown of all or part of the Business. Such violations could, therefore, have an adverse effect on the Groups financial condition and future prospects. 2.6 The Group may incur additional costs or delays in complying with new regulations applicable to the sale of food products The handling of raw food items in the CFC, such as meat and fish, is subject to strict regulations. There are also regulations concerning the preparation and packaging of prepared meals and other food items. Modification of existing legislation or regulation, or the introduction of new legislative or regulatory initiatives may lead to increased compliance costs or delay the availability of a number of items and may also affect the market for such products, the Groups operations and the conduct of the Business.

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Risk Factors In addition, any inquiry or investigation from a food regulatory authority could have a negative impact on the Groups reputation. Any of these events may have an adverse effect on the Groups financial condition and future prospects. 2.7 The Group may face increased environmental costs Environmental sustainability is likely to be of continuing importance to governments, regulators and other interested or influential bodies. There may be changes to existing legislation or regulation or the introduction of new legislation, regulation or government policies or practice, which could adversely affect the Groups operations and conduct of its business, particularly in relation to the packaging and labelling of products, the use of energy, emission charges and the delivery of customers groceries in plastic bags. If there is a change to environmental legislation there may be a decrease in demand for the Groups products and services, or an increase in the Groups costs, which may adversely affect the Groups financial condition and future prospects. 2.8 The Group may face increased costs in relation to regulated or restricted products and the regulation of its other activities The sale of, and storage requirement for, certain products including tobacco, alcohol, medicines, aerosols and razor blades is subject to extensive regulation, including in some instances the requirement to obtain and comply with licences, restrictions on the quantity of items that can be sold at one time and restrictions on the minimum age of customers. Further modification to existing legislation and/or regulation or the introduction of new legislative or regulatory initiatives could have a significant adverse effect on markets and demand for such products, the Groups operations and the conduct of its business. The cost and/or the effect of complying with such modified and/or new legislation or regulation may have an adverse effect on the Groups financial condition and future prospects. 2.9 There may be a decrease in demand for the Groups products in the event of health concerns and pandemics In recent years there have been outbreaks of a number of diseases that have had the potential to spread rapidly over very large geographic areas and/or other health-related concerns which have been, or have been perceived to be, associated with food products (for example, Bovine Spongiform Encephalopathy (BSE), Foot and Mouth, avian flu, swine flu and salmonella). Any outbreak of one or more of these diseases and/or other widespread health-related food concerns could increase costs for the Group in sourcing alternative suppliers and/or have an adverse impact on consumer preferences and spending. A widespread outbreak of any such disease or concerns in the UK or elsewhere could have an adverse effect on the Groups suppliers and customers and on the economy in general, with a consequential adverse effect on the demand for products sold by the Group, the Groups financial condition and future prospects. 2.10 The Group may face online security breaches including hacking and vandalism The Group relies on encryption and authentication technology to provide the security necessary to effect the secure transmission of information from its customers, such as credit or debit card numbers. The Group cannot guarantee absolute protection against unauthorised attempts to access its IT systems, including malicious third party applications that may interfere with or exploit security flaws in its products and services. Viruses, worms and other malicious software programs could, among other things, jeopardise the security of information stored in a users computer or in the Groups computer systems or attempt to change the internet experience of users by interfering with the Groups ability to connect with its users. If any compromise in the Groups security measures were to occur and the Groups efforts to combat this breach are unsuccessful, the Groups reputation may be harmed leading to an adverse effect on the Groups financial condition and future prospects. The Group also processes personal data (some of which may be sensitive) as part of its business. There is a risk that such data could become public if there were a security breach in respect of such data and, if one were to occur, the Group could face liability under data protection laws and lose the goodwill of its customers, which may have an adverse effect on the Groups financial condition and future prospects.

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Risk Factors 2.11 The Group may be affected by an increase in governmental regulation of the internet and/or online retail The application or modification of existing laws or regulations, or adoption of new laws and regulations relating to the internet and online retail operations could adversely affect the manner in which the Group currently conducts its business. The law of the internet remains largely unsettled, even in areas where there has been some legislative action. In addition, the growth and development of the market for online retail may lead to more stringent customer protection laws which may impose additional burdens on the Group, all of which may have an adverse effect on the Groups financial condition and future prospects. 3. Risks relating to the Offers and the Ordinary Shares

3.1 A competitor of Waitrose or John Lewis acquiring 50 per cent. or more of the Ordinary Shares could result in the termination of the Sourcing Agreement and Branding Arrangements The 2010 Agreement allows any of the parties to it to terminate the Sourcing Agreement and Branding Arrangements by giving three months notice if certain competitors of Waitrose or John Lewis acquire 50 per cent. or more of the issued share capital of the Company, in which case the Company will be obliged to pay Waitrose 40 million. This may have an adverse effect on the value of the Ordinary Shares. 3.2 The Directors and other Major Shareholders will retain a significant interest in the Company. Their interests may conflict with those of other Shareholders Following Admission, the Directors and Major Shareholders and their related interests will collectively own approximately half of the share capital of the Company (assuming the Offer Price is set at the midpoint of the Price Range). Accordingly, these Shareholders may (were they to act in concert with each other) be in a position to exert significant influence over the outcome of matters relating to the Company, including appointments to the Board and the approval of significant transactions, including change of control transactions. The interests of these Shareholders may be different from the interests of the Company or the other Shareholders. In particular, this control may have the effect of making certain transactions more difficult without the support of the Directors and Major Shareholders and may have the effect of delaying or preventing an acquisition or other change in control of the Company. It is noted, however, that no one Major Shareholder currently acts in concert with any other Major Shareholder. Full details of the Directors and Major Shareholders shareholdings are set out in sections 8 and 9.3 of Part XIII (Additional Information). 3.3 When the lock-up arrangements to which the Directors and certain Shareholders are subject, and the undertakings to which the Company is subject, expire, more Ordinary Shares may become available on the market Subject to certain limited exceptions, the Directors and certain Shareholders will be prevented from selling Ordinary Shares held by them for a period of 365 and 180 days, respectively, following Admission. Similarly, the Company will be restricted, subject to certain limited exceptions, for six months from Admission from issuing Ordinary Shares. On the expiry of these periods, the Company may issue Ordinary Shares and the Directors and relevant Shareholders will be free (subject to applicable law) to sell the Ordinary Shares held by them. The potentially increased supply of Ordinary Shares on the market may have an adverse effect on the market price of the Ordinary Shares. Similarly, Directors or significant Shareholders selling additional Ordinary Shares, or the Company issuing additional Ordinary Shares, may affect the confidence of the market in the Ordinary Shares and cause the market price of the Ordinary Shares to fall. 3.4 The number of Ordinary Shares to be made available by the Selling Shareholders pursuant to the Offers is indicative only The number of Ordinary Shares to be made available by the Selling Shareholders pursuant to the Offers is indicative only. Although that number of Ordinary Shares cannot be increased it can decrease, including, in theory, to nil. The selling indications of Major Selling Shareholders described in this document are non-binding. That means that although a Major Selling Shareholder may not sell any more Existing Shares pursuant to the Offers than he or it has indicated he or it may sell, he or it may decide, at

26

Risk Factors his or its absolute discretion, to sell fewer or none at all. The Company has established a facility through which Minor Selling Shareholders may sell some or all of their Existing Shares pursuant to the Offers. As at the date of this document, the Company does not know with certainty whether any or all such persons will sell any such Existing Shares pursuant to the Offers, however, the Company has received nonbinding indications from Minor Selling Shareholders holding 28,861,700 Existing Shares, in aggregate, that they do not intend to sell any Existing Shares pursuant to the Offers. The Company has also established a facility through which Selling Optionholders may sell, pursuant to the Offers, some or all of the Ordinary Shares which will be issued to them if they exercise their exercisable options prior to Admission. As at the date of this document, the Company does not know whether any such person will exercise any or all of their exercisable options, or, if he does so, whether such person will sell, pursuant to the Offers, any or all of the New Ordinary Shares issued as a result. If the Major Selling Shareholders sell fewer Existing Shares than they have indicated they may do and, to a lesser extent, the Minor Selling Shareholders and the Selling Optionholders sell fewer Existing Shares or New Ordinary Shares (respectively) than set out in the Offer Statistics section (or, indeed, none at all), the liquidity of the Ordinary Shares after Admission may be reduced and there may be increased selling pressure on the Ordinary Shares, particularly after the expiry of the lock-up arrangements described in section 10 of Part IX (Information about the Offers). This may have an adverse affect on the market value of the Ordinary Shares. 3.5 There may be no active trading market for the Ordinary Shares There has been no public market for the Ordinary Shares to date. After the Offers, there can be no assurance that an active trading market for the Ordinary Shares will develop or, if developed, that it will be maintained. Although investments in shares traded on the main market of the London Stock Exchange are perceived to involve a lesser degree of risk and to be more liquid than investments in shares traded on certain other exchanges, investors may have difficulty selling their Ordinary Shares. 3.6 The price of the Ordinary Shares may fluctuate Following Admission, the trading price of the Ordinary Shares may be subject to wide fluctuations in response to many factors, including those referred to in this section, as well as stock market fluctuations and general economic conditions that may adversely affect the market price of the Ordinary Shares. Publicly traded securities from time to time experience significant price and volume fluctuations that may be unrelated to the operating performance of the companies that have issued them. In addition, the market price of the Ordinary Shares may prove to be highly volatile. The market price of the Ordinary Shares may fluctuate significantly in response to a number of factors, some of which are beyond the Companys control, including: variations in operating results in the Groups reporting periods; any shortfall in revenue or net profit or any increase in losses from levels expected by market commentators; increases in capital expenditure compared to expectations; failure to make efficiency improvements; changes in financial estimates by securities analysts; changes in market valuations of similar companies; announcements by the Group of significant contract gains or losses, acquisitions, strategic alliances, joint ventures, new initiatives, new products or new product ranges; regulatory matters; additions or departures of key personnel; and future issues or sales of Ordinary Shares.

Any or all of these events could result in material fluctuations in the price of Ordinary Shares which could lead to investors getting back less than they invested or a total loss of their investment.

27

Risk Factors The Offer Price might not be indicative of prices that will prevail in the trading market and investors may not be able to resell the Ordinary Shares at or above the price paid. A public perception that the Company is an internet, e-commerce or technology company may result in the price of the Ordinary Shares moving in line with other shares in companies of this nature. Traditionally, the share prices of internet, e-commerce and technology companies have tended to be more volatile than share prices of companies operating in other industries. 3.7 The Company does not expect that dividends will be declared or paid in the foreseeable future Neither Ocado nor the Company has ever declared or paid a dividend. The Business may continue to make operating losses while it continues to make capital investments. In addition, the Company currently intends to retain any future earnings of the Business to invest in the Business and fund its future growth. The Directors do not, therefore, anticipate declaring or paying a dividend in the foreseeable future. 3.8 Future issues of Ordinary Shares may dilute the holdings of Shareholders Other than the proposed offering of Ordinary Shares, the Company has no current plans for an offering of Ordinary Shares and, as described above, will be unable to do so for a fixed period after Admission (subject to certain limited exceptions). However, it is possible that the Company may decide to offer additional Ordinary Shares in the future, either to raise capital or for other purposes. Subject to any applicable statutory pre-emption rights, an additional offering may have a dilutive effect on the holdings of Shareholders and could have an adverse effect on the market price of Ordinary Shares as a whole. 3.9 An investment in Ordinary Shares by an investor whose principal currency is not sterling may be affected by exchange rate fluctuations The Ordinary Shares are, and any dividends to be paid in respect of them will be, denominated in sterling. An investment in Ordinary Shares by an investor whose principal currency is not sterling exposes the investor to foreign currency exchange rate risk. Any depreciation of sterling in relation to such foreign currency will reduce the value of the investment in the Ordinary Shares or any dividends in relation to such foreign currency. 3.10 There may be an unavailability of pre-emption rights for US and other non-EU holders of Ordinary Shares In the case of certain increases in the Companys share capital, existing holders of the Ordinary Shares are generally entitled to pre-emption rights to subscribe for such shares, unless Shareholders waive such rights by a resolution at a Shareholders meeting, or in certain other circumstances as stated in the Final Articles. US and other non-EU holders of the Ordinary Shares are customarily excluded from exercising any such pre-emption rights they may have, unless exemptions from any overseas securities law requirements are available. The Company cannot assure prospective investors that any exemption from such overseas securities law requirements would be available to enable US or other non-EU holders to exercise such pre-emption rights or, if available, that the Company will utilise any such exemption.

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STABILISATION
In connection with the Offers, the Stabilising Manager (or any of its agents), may (but will be under no obligation to), to the extent permitted by law and for stabilisation purposes, effect transactions (on any securities market, over-the-counter market, stock exchange or otherwise) with a view to supporting the market price of the Ordinary Shares at a level higher than that which might otherwise prevail in the open market, including over-allotting Ordinary Shares up to a maximum of approximately 18.1 million Ordinary Shares or 10 per cent. of the total number of Ordinary Shares comprised in the Offers (assuming no exercise of the Over-allotment Option). The Stabilising Manager will enter into the Stock Lending Agreement in order, amongst other things, to satisfy any such over-allotment of Ordinary Shares. The Stabilising Manager has entered into the Over-allotment Option with UBS Holdings Cayman Limited pursuant to which it may purchase or nominate purchasers for Ordinary Shares (the Over-allotment Shares) at the Offer Price representing up to a maximum of approximately 18.1 million Ordinary Shares or 10 per cent. of the number of Ordinary Shares comprised in the Offers (assuming there is no exercise of the Over-allotment Option), for the purposes of redelivering equivalent securities under the Stock Lending Agreement, to the extent that it is unable to do so using Ordinary Shares acquired by it for the purposes of stabilisation. The Over-allotment Option may be exercised in whole or in part upon notice by the Stabilising Manager, at any time during the period beginning on the commencement of conditional dealings and ending 30 days thereafter. The Over-allotment Shares made available pursuant to the Over-allotment Option will be sold at the Offer Price on the same terms and conditions as, and will rank pari passu with, the Ordinary Shares, including for all dividends and other distributions declared, made or paid on the Ordinary Shares after Admission and will form a single class for all purposes with the Ordinary Shares. In no event will measures be taken to stabilise the market price of the Ordinary Shares above the Offer Price. Save as required by law or regulation, neither the Stabilising Manager nor any of its agents intends to disclose the extent of any over-allotments and/or stabilisation transactions under the Offers.

THE JOINT GLOBAL CO-ORDINATORS, CO-BOOK-RUNNERS AND CO-LEAD MANAGERS

Each of Goldman Sachs International, J.P. Morgan Cazenove, Barclays Capital, HSBC Bank plc, Jefferies International Limited, Lloyds TSB Corporate Markets and Numis Securities Limited is authorised and regulated in the United Kingdom by the FSA, and together with UBS Limited (together the Banks), are acting exclusively for the Company and no one else in connection with the Offers and none of them will regard any other person (whether or not a recipient of this document) as their respective clients in relation to the Offers and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients nor for giving advice in relation to the Offers or any transaction, arrangement or other matter referred to in this document. The Banks and any of their respective affiliates may have engaged in transactions with, and provided various investment banking, financial advisory and other services for, the Company and certain of the Selling Shareholders, for which they would have received customary fees. The Banks and any of their respective affiliates may provide such services to the Company and the Selling Shareholders and any of their respective affiliates in the future. In connection with the Offers, each of the Banks and any of their respective affiliates acting as an investor for its or their own account, may retain, purchase, sell, offer to sell or otherwise deal for its or their own account(s) in the Ordinary Shares, any other securities of the Company or other related investments in connection with the Offers or otherwise. Accordingly, references in this document to the Ordinary Shares being offered or otherwise dealt with should be read as including any offer to, or dealing by the Banks and any of their respective affiliates acting as an investor for its or their own account(s). The Banks do not intend to disclose the extent of any such investment or transaction otherwise than in accordance with any legal or regulatory obligation to do so. In addition, in connection with the Institutional Offer, certain of the Banks may enter into financing arrangements with investors, such as share swap arrangements or lending arrangements where Ordinary Shares are used as collateral, that could result in such Banks acquiring shareholdings in the Company. Certain of the Banks have the following interests in the Company: Goldman Sachs International holds 870,300 Ordinary Shares and 3,333,300 Preference Shares which it will not sell pursuant to the Offers; Michael Sherwood, who is Co-Chief Executive of Goldman Sachs International, holds 166,700 Preference Shares which he will not sell pursuant to the Offers; UBS Holdings Cayman Limited, an affiliate of UBS Limited holds 13,600 Ordinary Shares and 36,249,900 Preference Shares. UBS Holdings Cayman Limited has provided a non-binding indication that it may sell up to its entire holding pursuant to the Offers and the Over-allotment Option (it being the provider of the Over-allotment Option); UBS AG, an affiliate of UBS Limited, holds 2,980,100 Preference Shares. Subject to the Offer Price being set not lower than the bottom of the Price Range, UBS AG has committed to sell its entire holding pursuant to the Offers; Ranelagh Nominees Limited, an affiliate of Lloyds TSB Bank plc, holds warrants over 5,611,200 Ordinary Shares which, subject to the Offer Price being no less than 1.90, it has irrevocably committed to exercise prior to Admission provided that it may sell the resulting 5,611,200 Ordinary Shares that it or its nominee will be issued pursuant to the Offers; and Lloyds TSB Bank plc holds 17,800 Preference Shares which it may sell pursuant to the Offers.

All Preference Shares in existence will convert into Ordinary Shares immediately before Admission on a one for one basis.

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RELIANCE ON THIS DOCUMENT

Prospective investors should rely only on the information contained in this document. No person has been authorised to give any information or make any representations other than those contained in this document and, if given or made, such information or representations must not be relied on as having been so authorised by the Company, the Directors, Goldman Sachs International, J. P. Morgan Cazenove or UBS Limited. In particular, the content of the Website, the Offer Website and the Corporate Website do not form part of this document and prospective investors should not rely on it. Without prejudice to any legal or regulatory obligation on the Company to publish a supplementary prospectus pursuant to section 87G of FSMA and Rule 3.4 of the Prospectus Rules, neither the delivery of this document nor any sale made pursuant to it shall, under any circumstances, create any implication that there has been no change in the affairs of the Company or the Group taken as a whole since the date of this document or that the information contained herein is correct as of any time after the date of this document. The contents of this document are not to be construed as legal, business or tax advice. Each prospective investor should consult their own legal adviser, financial adviser or tax adviser for legal, financial or tax advice. Information in this document will be updated in accordance with the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules as appropriate.

ENFORCEMENT OF JUDGMENTS
The Company is a public company incorporated under the laws of England and Wales. The vast majority of the assets of the Company are located in England. None of the Directors or officers are citizens or residents of the United States. As a result, it may not be possible for investors to effect service of process within the United States upon the Company or such persons or to enforce outside the United States judgments obtained against the Company or such persons in US courts, including, without limitation, judgments based upon the civil liability provisions of US federal securities laws or the laws of any state or territory within the United States. In addition, awards of punitive damages in actions brought in the United States or elsewhere may be unenforceable in the United Kingdom. Investors may also have difficulties enforcing, in original actions brought in courts in jurisdictions outside the United States, liabilities under US federal securities laws.

FORWARD-LOOKING STATEMENTS
Certain statements contained in this document, including those in the Risk Factors section, Part I (Information about the Company) (and in particular the references in section 4.2 of that Part to the Directors long-term targets for CFC efficiency and the drops per van per week and the references in section 7.5 to the expected relative EBITDA margin of the second CFC), Part IV (Operating and Financial Review) (and in particular the references in section 1 of that part to the Directors long-term targets for CFC efficiency and the drops per van per week) and Part IX (Information about the Offers), constitute forward-looking statements. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms believes, estimates, forecasts, plans, prepares, anticipates, expects, intends, may, will or should or, in each case, their negative or other variations or comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. In particular, the following are forward-looking in nature: (i) certain statements in the Risk Factors section with regard to risks relating to regulations that may be or become applicable to the Group, regulatory or legal actions which might involve the Group, the Groups competitive position and its management and information systems and targets; (ii) certain statements in Part I (Information about the Company) with regard to strategy and management objectives, trends in market shares, prices, market standing and product volumes and the effects of changes or prospective changes in regulation; and (iii) certain statements in Part IV (Operating and Financial Review) with regard to trends in targets, results, prices, volumes, operations, margins, overall market trends, risk management and exchange rates and with regard to the effects of changes or prospective changes in regulation. It is strongly recommended that investors read the Risk Factors section for a more complete discussion of the factors that could affect the Groups future performance and the industry in which it operates. In light of these risks, uncertainties and assumptions, the forward-looking events described in this document may not occur. The forwardlooking statements referred to above speak only as at the date of this document. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this document, except as required by law or by any appropriate regulatory authority.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Unless otherwise indicated the financial information included into this document is based on International Financial Reporting Standards as adopted by the European Union and International Financial Reporting Interpretations Committee interpretations and those parts of the Companies Act applicable to companies reporting under International Financial Reporting Standards (IFRS-EU). IFRS-EU differs in certain aspects from international financial reporting standards, or IFRS, as published by the International Accounting Standards Board. The preparation of financial information in conformity with IFRS-EU requires the use of certain critical accounting estimates. Please refer to section 10, Critical accounting policies and estimates of Part IV (Operating and Financial Review). It also requires management to exercise its judgment in the process of applying the Groups accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial information are disclosed in the notes to the financial information set out in Part V (Historical Financial Information relating to the Group). Ocado prepared its financial statements in accordance with United Kingdom Generally Accepted Accounting Principles (UK GAAP) through FYE 2008. The financial statements for FYE 2009 are Ocados first financial statements prepared under IFRS-EU. Comparative information for FYE 2008 and FYE 2007, included in the financial statements for FYE 2009, and from which certain information set-out in this document has been extracted, was also prepared under IFRS-EU. Ocados unaudited financial information for P1-3 2009 and P1-6 2010 and its audited financial information for P1-3 2010 have also been prepared in accordance with IFRS-EU applied consistently with the FYE 2009 full-year financial statements. IFRS-EU differs in significant respects from UK GAAP. The financial information presented in this document was not prepared in accordance with US Generally Accepted Accounting Principles (US GAAP) or audited in accordance with US Generally Accepted Auditing Standards (US GAAS) or the standards of the Public Company Accounting Oversight Board (PCAOB Standards). No opinion or any other assurance with regard to any financial information was expressed under US GAAP, US GAAS or PCAOB Standards and the financial information is not intended to comply with SEC reporting requirements. Compliance with such requirements would require the modification, reformulation or exclusion of certain financial measures. In addition, changes would be required in the presentation of certain other information. In particular, no reconciliation to US GAAP is provided. Certain non-IFRS-EU measures such as gross sales and EBITDA have been reported as the Directors believe that these provide important alternative measures with which to assess the Groups performance. You should not consider gross sales or EBITDA as alternatives for Revenue and Operating Profit/(Loss) which are the IFRS-EU measures. Additionally, the Companys calculation of gross sales and EBITDA may be different from the calculation used by other companies and therefore comparability may be limited. The Groups activities are not segmented and the Group does not report any geographic segments because all of the Groups operations are within the United Kingdom which is one economic environment in the context of the Groups activities.

ROUNDING OF FIGURES
Certain figures contained in this document, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances (i) the sum or percentage change of such numbers may not conform exactly with the total figure given; and (ii) the sum of the numbers in a column or a row in certain tables may not conform exactly with the total figure given for that column or row.

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DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS Directors Michael Grade, Non-Executive Chairman David Grigson, Non-Executive Director and Senior Independent Director Tim Steiner, Chief Executive Officer Neill Abrams, Director of Legal and Business Affairs Andrew Bracey, Chief Financial Officer Jason Gissing, Director of People, Culture and Communications Ruth Anderson, Non-Executive Director Robert Gorrie, Non-Executive Director Jorn Rausing, Non-Executive Director David Young, Non-Executive Director Patrick Lewis, Non-Executive Director Michael Robarts, Non-Executive Director Neill Abrams Titan Court, 3 Bishops Square, Hatfield Business Park, Hatfield, Hertfordshire AL10 9NE Telephone No: +44 (0)1707 228 000 Goldman Sachs International, Peterborough Court, 133 Fleet Street, London EC4A 2BB

Company secretary Registered office

Joint Global Co-ordinator, Joint Sponsor and Joint Bookrunner Joint Global Co-ordinator, Joint Sponsor and Joint Bookrunner Joint Global Co-ordinator, Joint Sponsor and Joint Bookrunner Co-Bookrunner

J.P. Morgan Cazenove, 10 Aldermanbury, London EC2V 7RF

UBS Limited, 1 Finsbury Avenue, London EC2M 2PP

Barclays Capital, the investment banking division of Barclays Bank PLC, 5 The North Colonnade, London E14 4BB HSBC Bank plc, 8 Canada Square, London E14 5HQ Jefferies International Limited, Vintners Place, 68 Upper Thames Street, London EC4V 3BJ Lloyds TSB Corporate Markets, 25 Gresham Street, London EC2V 7HN Numis Securities Limited, 10 Paternoster Square, London EC4M 7LT Goldman Sachs International, Peterborough Court, 133 Fleet Street, London EC4A 2BB Slaughter and May, One Bunhill Row, London EC1Y 8YY

Co-Bookrunner Co-Lead Manager

Co-Lead Manager

Co-Lead Manager

Stabilising Manager

Legal adviser to the Company as to English law Legal adviser to the Company as to US law

Davis Polk & Wardwell LLP, 99 Gresham Street, London EC2V 7NG

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Directors, Company Secretary, Registered Office and Advisers Legal adviser to the Joint Sponsors, Joint Global Co-ordinators, Joint Bookrunners, Co-Bookrunners and Co-Lead Managers as to English and US law Auditors Allen & Overy LLP, One Bishops Square, London E1 6AD

PricewaterhouseCoopers LLP, 10 Bricket Road, St. Albans AL1 3JX PricewaterhouseCoopers LLP, 1 Embankment Place, London WC2N 6RH Capita Registrars Limited, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU Capita Registrars Limited, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU Brunswick Group LLP, 16 Lincolns Inn Fields, London WC2A 3ED

Reporting Accountants

Receiving Agent

Registrar

Public relations advisers to the Company

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EXPECTED TIMETABLE FOR THE OFFERS

2010

Commencement of the application period for the Customer and Employee Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Latest date and time for Minor Selling Shareholders and Selling Optionholders to confirm the number of Ordinary Shares they wish to sell pursuant to the Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Latest date and time for online receipt of completed Customer and Employee Offer Application Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Latest date for receipt of indications of interest in the Institutional Offer . . . . Announcement of the Offer Price, publication of Pricing Statement and notification of allocation of Ordinary Shares under the Customer and Employee Offer and the Institutional Offer . . . . . . . . . . . . . . . . . . . . . . . . Commencement of conditional dealings on the London Stock Exchange . . . Admission and commencement of unconditional dealings on the London Stock Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ordinary Shares credited to CREST accounts and the Ocado Share Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ocado Share Account Statements made available online
(1) (2)
(2) (1)

6 July

noon on 13 July 11.59 p.m. on 18 July 20 July

21 July 21 July 26 July 26 July 4 August

............

The Pricing Statement will not automatically be sent to persons who receive this document but it will be available on the Offer Website. Shareholders with Ordinary Shares in the Ocado Share Account will be able to buy and sell Ordinary Shares from Admission.

It should be noted that, if Admission does not occur, all conditional dealings will be of no effect and any such dealings will be at the sole risk of the parties concerned. All times are London times. Each of the times and dates in this table are indicative only and subject to change without further notice.

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OFFER STATISTICS Price Range(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 pence to 275 pence Total number of Ordinary Shares which may be comprised in the Offers(2), (3), (4), (5), (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . up to 257,666,236 Number of Existing Shares comprised in the Offers which may be sold by Major Selling Shareholders(2), (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . up to 82,377,000 Number of Existing Shares comprised in the Offers which may be sold by Minor Selling Shareholders(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . up to 62,705,242 Number of potential New Ordinary Shares comprised in the Offers which may be sold by Selling Optionholders(5) . . . . . . . . . . . . . . . . . . . . . . . . . . up to 10,134,074 Number of New Ordinary Shares comprised in the Offers to be issued and sold by the Company(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . up to 102,449,920 Ordinary Shares comprised in the Offers as a percentage of the Ordinary Shares (excluding the 32,476,700 Ordinary Shares held by the EBT Trustee) in issue on Admission(2), (3), (4), (5), (6) . . . . . . . . . . . . . . . . . . . 50% (2) Number of Ordinary Shares subject to the Over-allotment Arrangements . 18,131,750 Number of Ordinary Shares in issue on Admission (assuming the Offer Price is set at the mid-point of the Price Range) (excluding the 32,476,700 Ordinary Shares held by the EBT Trustee)(5), (7), (8) . . . . . . . . . . . . . . . . . . 497,476,810 Market capitalisation at the mid-point of the Price Range excluding the 1,182m 32,476,700 Ordinary Shares held by the EBT Trustee(1), (5), (7) (9) . . . . . . . . . (10), (11) Proceeds receivable by the Company after expenses ............ 200m
(1) It is currently expected that the Offer Price will be within the Price Range; however, this range is indicative only and may change during the course of the Offers. If the Price Range does change, the Company would not envisage making an announcement until determination of the Offer Price, unless required to do so by law or regulation. The Company expects to announce the Offer Price and publish the Pricing Statement on or about 21 July 2010. (2) Based on the maximum number of Existing Shares each Major Selling Shareholder has indicated he or it may sell pursuant to the Offers. The selling indications of Major Selling Shareholders are non-binding. That means that although a Major Selling Shareholder may not sell any more Existing Shares pursuant to the Offers than he or it has indicated he or it may sell, he or it may decide, at his or its absolute discretion, to sell fewer or none at all. This number excludes approximately 18.1 million Existing Shares that UBS Holdings Cayman Limited has committed to provide pursuant to the Over-allotment Option, but which may be sold pursuant to the Offers if and to the extent that the number of Ordinary Shares subject to the Over-allotment Arrangements is reduced from the maximum number set out in the table above. (3) Assumes that no Over-allotment Shares are sold pursuant to the Over-allotment Arrangements. (4) Based on the total number of Ordinary Shares held by Minor Selling Shareholders. The Company has established a facility through which Minor Selling Shareholders may sell some or all of their Existing Shares pursuant to the Offers. As at the date of this document, the Company does not know with certainty whether any such person will sell any or all such Ordinary Shares pursuant to the Offers, however, the Company has received non-binding indications from Minor Selling Shareholders holding 28,861,700 Existing Shares, in aggregate, that they do not intend to sell any Existing Shares pursuant to the Offers. (5) Based on the total number of shares that may be issued to Selling Optionholders prior to Admission pursuant to the exercise of options or warrants. The Company has established a facility through which Selling Optionholders may sell, pursuant to the Offers, some or all of the New Ordinary Shares which will be issued to them if they exercise their exercisable options or warrants prior to Admission. Subject to the Offer Price being not less than 1.90, Ranelagh Nominees Limited has irrevocably committed to exercise certain warrants held by it provided that it may sell the resulting 5,611,200 New Ordinary Shares that are issued to it or its nominee pursuant to the Offers. As at the date of this document, the Company does not know whether any other Selling Optionholder will exercise any or all of his or its exercisable options, or, if he or it does so, whether such person will sell, pursuant to the Offers, any or all of the Ordinary Shares issued as a result. (6) This assumes that the Offer Price is set at the bottom of the Price Range. If the Offer Price is set at the mid-point in the Price Range, the Company will issue 86,273,616 New Ordinary Shares and if the Offer Price is set at the top of the Price Range, the Company will issue 74,509,032 New Ordinary Shares. (7) This assumes that the Offer Price is set at the mid-point in the Price Range which would mean that the Company would issue 86,273,616 New Ordinary Shares. If the Offer Price is not set at the mid-point in the Price Range this figure will change. (8) All Preference Shares in existence will convert into Ordinary Shares immediately before Admission on a one for one basis. (9) The market capitalisation of the Company at any given time will depend on the market price of the Ordinary Shares at that time. There can be no assurance that the market price of an Ordinary Share will be equal to or exceed the Offer Price. (10) The estimated net proceeds receivable by the Company are stated after the deduction of underwriting commissions and other estimated fees and expenses incurred in connection with the Offers of approximately 15 million (excluding any amounts in respect of VAT) and includes cash of 10 million received pursuant to the exercise of warrants over 5,611,200 Ordinary Shares at a subscription price of 1.80 per share by Ranelagh Nominees Limited prior to Admission. (11) If the Company is not able to agree pricing or it is unable to raise net proceeds of 200 million (including amounts received by the exercise of options and warrants by holders of options and warrants), Admission will not occur.

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PART I INFORMATION ABOUT THE COMPANY Ocado is the operating company of the Group. The Company has, since 9 February 2010, been the holding company of the Group and Ocado is a wholly owned indirect subsidiary of it. All descriptions in this document of the Business and the financial performance of the Group will be by reference to the historic performance of Ocado. 1. Introduction

Ocado is the only dedicated online supermarket in the UK and the largest dedicated online supermarket in the world by turnover. Ocado: has, since inception, consistently sought to provide a market leading customer offering. Ocado has over 240,000 active customers and can process over 100,000 orders per week. In FYE 2009, 99.4 per cent. of items were delivered exactly as ordered and 95 per cent. of products were available for next day delivery. In P1-6 2010, 95 per cent. of deliveries were on time or early. This has been widely recognised with Ocado having been awarded numerous awards for the quality of the services it provides; offers delivery of grocery products to customers centrally picked from a single, state-of-the-art, highly-automated warehouse (the customer fulfilment centre or CFC); sells more than 20,000 different products, the majority of which are sourced through Waitrose under the Sourcing Agreement. Approximately 4,300 of the products sold by Ocado are Waitrose own-label products. Ocados product range also includes a small but expanding range of Ocado own-label products; has developed its own highly bespoke software systems which underpin its superior customer offering and the operations of the CFC; has generated significant year-on-year growth in gross sales since it started trading just over eight years ago. Ocado generated gross sales of 427 million in FYE 2009 and gross sales have grown at a CAGR of 21 per cent. between FYE 2007 and FYE 2009. Ocados gross sales in P1-6 2010 were 246 million (unaudited), an increase of 30 per cent from P1-6 2009; has achieved positive and growing EBITDA since FYE 2008 and generated 9.2 million of EBITDA in FYE 2009 and 8.0 million of EBITDA in P1-6 2010 (unaudited). The Directors believe that Ocado has greater EBITDA margin potential than its store-based competitors; approximately one million items are picked in the CFC every day, of which approximately 55 per cent. are ambient products, 40 per cent. are chilled products and 5 per cent. are frozen products; Ocado currently covers 66 per cent. of UK households, with half of all its customers living outside the M25 region. 85 per cent. of Ocados customers have not previously used Waitrose for their regular shop and the average household income of Ocados customers has lowered progressively; will, following Admission, be the largest listed dedicated European online retailer (by turnover); and is well placed, the Directors believe, to benefit from the growing demand for ordering groceries online.

The Directors believe that consumers are increasingly seeking an online grocery shopping proposition that allows them to save time and effort whilst still retaining the wide range, high quality and low cost that they expect from a store-based supermarket. Traditional supermarkets primarily satisfy this by providing online services out of their existing store network. The Directors believe that Ocados highly automated and purpose-built distribution system allows it to deliver a fresher and broader range of groceries in a more accurate and efficient manner than its competitors. Ocados mission statement is to revolutionise the way people shop, by giving them a uniquely innovative and greener alternative to traditional grocery shopping. It aims to achieve this through four key values: providing great value, great service, great choice and a more environmentally responsible way to shop.

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Part I 2. Industry overview

Information about the Company

General Food retailing is the single largest category of retail spend in the UK and every other major European market. In 2009, it represented approximately 146 billion in the UK (Source: The Institute of Grocery Distributors (IGD) Research 2009). Unlike many other categories of consumer spending, groceries comprise a necessary and regular retail spend rather than a discretionary item. For example, in 2008 and 2009, when the UK experienced negative real GDP growth, food sales in the UK continued to grow positively. Online food retailing Estimates of the size of the UK online grocery market for 2009 vary considerably, with estimates ranging from 2.8 billion to 5.3 billion. The Directors estimate the total market size to be closer to the lower end of this range at approximately 3 billion, and have used this figure as the benchmark for key statistics about the size of the UK online grocery market in this document. The only supermarkets in the UK offering an online grocery retailing service are Tesco.com (a division of Tesco plc), Sainsburys.co.uk (a division of J Sainsbury plc), ASDA.com (a division of ASDA Stores Limited, a subsidiary of Wal-Mart Stores, Inc.) and WaitroseDeliver (owned and operated by Waitrose). These are, with Ocado, also the only significant participants in the online grocery market. Iceland Foods Limited offers a store-based delivery service, but Icelands customers cannot shop online at Iceland.co.uk. Certain small specialists operate in sub-sections of the online market (such as Abel & Cole Limited which, through its website AbelandCole.co.uk, sells a range of organic foods). A number of supermarket chains in the UK do not currently run online grocery businesses. These include Marks & Spencer plc, Wm Morrison Supermarkets plc and the two food divisions of The Co-operative Group, The Co-op and Somerfield. Tesco.com, which is the largest UK online grocer by sales, had online grocery sales in the year ended February 2010 of approximately 1.7 billion. ASDA Stores Limited and J Sainsbury plc have reported online sales of over 500 million, although it is not possible to state comparative figures accurately because there is no consistent method by which supermarkets report online sales. Ocado currently offers its services to approximately 66 per cent. of UK households compared with 99 per cent. by Tesco.com, 90 per cent. by Sainsbury.co.uk, 97 per cent. by ASDA.com and 40 per cent. by WaitroseDeliver (Source: Relevant companies statutory filings and websites, TNS analysis). Growth of the UK online grocery market The Directors believe that the UK online grocery market comprises approximately two per cent. of the total UK grocery market. To the extent that UK grocery shoppers continue the trend of moving from the traditional grocery market to the online market, there is significant scope for continued growth of the online market, even if the traditional market does not grow (although Verdict expects total food and grocery expenditure to grow at an average annual growth rate of 3.4 per cent. in the period 2009 to 2013 (Source: UK Retailing Forecasts 2013)), and the Directors believe that the online market will continue to grow rapidly. There are a number of factors which may encourage this shift to the online market to take place. Internet usage generally is rising, with the percentage of the UK adult population shopping online also increasing. According to Verdict, UK e-Retail 2009, 45 per cent. of UK adults shopped online in 2007, rising to an estimated 59 per cent. in 2009. Waitrose Waitrose, through whom Ocado sources the vast majority of products it sells (and whose own-label products it sells), is a UK supermarket chain and the food division of the privately owned retailer John Lewis. It has over 220 branches across the UK. Waitrose sells high quality food and places an emphasis on the provenance and traceability of the food that it sells. In its last financial year (ended 30 January 2010) it had gross sales of 4.5 billion and made an operating profit of 268.4 million (Source: John Lewis Partnership plc unaudited results for the year ended 30 January 2010).

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Part I 3.

Information about the Company

Strengths of the Ocado Business

3.1 Significant market opportunity The UK grocery market is by far the largest of the UK retail segments, yet the Directors believe it has the lowest percentage online of all the core UK consumer markets and online penetration is expected to grow rapidly. The Directors believe that Ocado is well placed to take advantage of this growth, and to increase its share of the UK online grocery market from its current estimated 14 per cent. as it continues to invest in and improve its customer offering, and increase its penetration, the frequency with which customers place orders, the amount that they spend and, to some extent, geographic reach. By way of comparison, shifts in the UK retail market from conventional to online shopping have occurred in other sectors. For example, in 2000, the online UK book, news and stationery market comprised 1.6 per cent. of the total UK book, news and stationery market, rising to 6.4 per cent. in 2009 (Source: Verdict, UK Retail 2013). Similarly, in 2003, the online UK electricals market comprised 5.5 per cent. of the total UK electricals market, rising to 23.7 per cent. in 2009 (Source: Verdict, UK Retail 2013). 3.2 Unique, attractive business model with structural advantages over traditional grocery retailers Ocados business model has, since the Businesss inception, been predicated on delivering a superior customer offering in terms of quality and freshness of produce and convenience, reliability and accuracy of delivery. Ocado is the only UK online supermarket that provides all its services from a dedicated warehouse where all the picking and packing of products is performed centrally. The Directors believe that the automation of equivalent store operations in the CFC, the aggregation of stock and demand in one building, real-time control over stock, not having to rent or purchase sites in expensive locations, reduced staff costs and being less constrained by space (allowing Ocado to take direct deliveries to the CFC and cutting out the costs of regional distribution centres), all provide clear cost and service benefits to the Business. The state-of-the-art, highly-automated CFC is currently capable of picking over one million items per day and processing approximately 105,000 orders per week. These items are delivered to customers either directly from the CFC or via the Spokes (the trans-shipment points for deliveries not made directly from the CFC). The Directors believe that the maximum effective capacity of the CFC (after further capital investment) will be approximately 180,000 orders per week. Ocado had gross sales of 427 million in FYE 2009 (P1-6 2010: 246 million (unaudited)), all of which were picked and packed at the CFC. The Directors estimate the CFCs sales volumes to be equivalent to approximately 25 average sized Waitrose supermarkets. This, they believe, has a number of material scale and structural advantages compared to the model operated by its competitors (all of whom have store networks and regional distribution centres and predominantly provide their online services out of those stores), including the following: Customer proposition the eventual ability to stock a greater range of products (currently the CFC stocks in excess of 20,000), including a long-tail of slower moving products which a traditional supermarket might struggle to stock efficiently; greater availability and reduced product substitution (in FYE 2009, 99.4 per cent. of all items were delivered by Ocado as ordered); and improved product freshness for customers due to faster stock turn and reduced stockholding levels while nevertheless maintaining reduced levels of wastage (only 0.57 per cent. of gross sales in FYE 2009).

Cost efficiency it results in Ocado achieving a higher sales growth as a multiple of its capital expenditure. From FYE 2007 to FYE 2009, Ocados sales grew by 1.8 times its capital expenditure. In the same period,

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Tesco plcs sales grew at 1.0 times its capital expenditure, J Sainsbury plcs at 0.7 times and Wm Morrison Supermarkets plcs at 1.2 times (Source: statutory accounts of the relevant companies; this figure is calculated by dividing incremental sales for the period by capital expenditure in the same period); and it results in Ocado already achieving a higher revenue per employee. In FYE 2009, Ocado achieved annual sales of 128,000 per employee. In the same year, Tesco plc achieved annual sales per employee of 116,000, J Sainsbury plc achieved 127,000 and Wm Morrison Supermarkets plc achieved 116,000 (Source: statutory accounts of the relevant companies; this figure is calculated by dividing sales for the period by number of employees in the period).

The Directors believe that the structural advantages of Ocados business model become more apparent the more orders it processes. Between FYE 2007 and FYE 2009, Ocados average number of orders per week increased from 49,968 to 70,873, a CAGR of 19 per cent. Over the same period, CFC costs increased by a significantly lower CAGR of 3.4 per cent. as a result of increasing efficiency in inbound product receiving and decanting, picking of customer orders and outbound despatch of deliveries. 3.3 Superior customer offer in online food retailing driving market share Ocado prides itself on having developed and sustained a market-leading customer offering in online grocery retailing, as shown by the consumer and industry awards it has received and continues to receive. Ocado focuses on the following areas in achieving these high levels of satisfaction: Product offering: Range: Ocado offers an extensive product range of more than 20,000 products, a range that has increased by approximately 60 per cent. since the end of FYE 2007. The product range includes the majority of Waitroses product range (including approximately 4,300 Waitrose own-label products) as well as a small but growing range of Ocado own-label products. Therefore, over three quarters of the products stocked are not own-label products. In 2009, Ocado added an in-house butcher and fishmonger (called the Service Counter) allowing customers to select the size of meat and fish cuts and specify whether fish should be whole or filleted. Ocado also offers a growing range of non-grocery products, such as magazines, toys, flowers and homewares. The Directors believe that Ocados product range is larger than that currently found in the largest Waitrose supermarket. Quality and freshness: Product freshness, with a guarantee that use-by dates will match or better those displayed to customers on the Website further enhances the customer experience. No other UK online supermarket guarantees use-by dates in this way. The strict management of stock levels and visibility over customer ordering, together with direct deliveries to the CFC, ensure Ocado customers receive products which the Directors believe to be fresher than customers could typically buy in a supermarket. Environmental credentials: Ocado prides itself on the environmental efficiency with which the Business is run. For example, streamlining the Business through a CFC rather than a chain of physical stores saves on energy usage and associated costs. Equally, the route optimisation software ensures that fuel is used efficiently and keeps journey times and distances to a minimum. Ocado has extremely low wastage levels (which the Directors believe to be lower than those of any other supermarket) and offers to collect its plastic bags from customers in order to recycle them.

Price: Ocado aims to price competitively in order to provide customers with value for money. For example, through its Tesco Price Match policy which started in 2008, each week Ocado checks the prices on all identical branded products sold on the Tesco.com website and, if necessary, adjusts the Ocado price to match the standard Tesco price (this excludes temporary promotions, in respect of which Ocado typically follows the Waitrose promotional calendar). Ocados Tesco Price Match policy currently covers approximately 7,000 products stocked by Ocado. Ocado also continues to develop its own-brand range, which is tiered to the mainstream own-label brands of its competitors.

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Customer service Website: On logging onto the Website, customers can create or edit an order. The Directors believe that a number of features on the Website, such as displaying product use-by dates, generating instant orders and prompting customers to see if they have forgotten to add items to their orders (based on past orders), are unique to Ocado. The Directors further believe that these features result in the Website being attractive and helpful for customers to use (as do other features of the Website such as the display of nutritional information and recipe suggestions). Recently Ocado has introduced the Ocado on the Go application (for iPhone, iPad and Android smart phones) to increase further the ease with which customers are able to place and edit orders, in particular, while they are away from their computers. Accuracy and availability: Ocados availability system (referred to as Availability to Promise or ATP) calculates the expected stock position for every product into the future, so that once a customer has chosen their delivery slot the Website prevents them from ordering products which will be out of stock when the order is due to be picked in the CFC. This feature reduces the need to find substitutions for out-of-stock products at picking time and it is made possible by Ocados warehouse model and sophisticated inventory management system and is not offered by Ocados competitors. As a result, in FYE 2009 (and P1-3 2010), approximately 99 per cent. of items ordered were delivered exactly as ordered. Delivery service: Timely delivery within one-hour time slots (starting on the hour and half hour) chosen by the customer and direct delivery to the customers kitchen make for an attractive customer experience. In P1-6 2010, 95 per cent. of all deliveries were on time or early.

3.4 Proprietary intellectual property has created significant barriers to entry Each year since operations began, Ocado has implemented new IT systems and highly automated, often purpose-built, machinery which, together, reduce ongoing operating costs as a percentage of gross sales. The Directors believe that, as Ocados IT systems and machinery become ever more efficient and sophisticated, the barriers to entry for a potential competitor become greater. The majority of Ocados current IT systems are bespoke (there often being no suitable alternatives available commercially) and have predominantly been developed in-house by Ocados IT team. Ocados proprietary intellectual property is integral to the functionality of all aspects of its operations, including the Website, the stock management systems, the CFC, the customer delivery system and the van routing system. The Directors believe that the implementation of many of these IT systems, coupled with the plant and machinery at the CFC (much of which is also bespoke to the Business) together with the expertise to manage these operational processes have had a direct and positive impact on the Business, such as: the bespoke stock ordering system has increased product availability by using replenishment algorithms designed specifically for Ocados mix of SKUs and product categories while at the same time increasing efficiency of stock control but without materially increasing waste. Thus, while average orders per week grew by over 25 per cent. from FYE 2008 to FYE 2009, absolute stock levels remained relatively constant during the same period; the bespoke computer code that controls CFC machinery has increased the number of units dispatched from the CFC per hour by increasing throughput above the machinery manufacturers expectations. Outbound units per hour worked have increased by a CAGR of 14 per cent. since FYE 2007; and the bespoke route optimisation application, combined with increased customer density, has increased deliveries per van per week by a CAGR of 11 per cent. since FYE 2007. This has reduced delivery costs as a percentage of gross sales from 14.7 per cent. in FYE 2007 to 12.9 per cent. in FYE 2009 while serving a larger delivery area.

This bespoke IT, plant and machinery has underpinned the sustained incremental evolution of the CFC, the Website and distribution operations. The Directors believe that the systems required for such operations and the management know-how required to operate such systems and machinery amount to a significant barrier to entry. Accordingly, they believe that Ocados business model would be difficult to

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replicate to the same level of performance and specification without significant capital expenditure and time, given the considerable amount of technical and logistical expertise inherent in it. 3.5 Strong track record of growth delivered by entrepreneurial Executive Directors Ocado has generated strong revenue growth over each of the last three years. Gross sales have consistently increased year on year, growing from 291 million in FYE 2007 to 427 million in FYE 2009, a CAGR of 21 per cent. Gross sales in P1-3 2010 were 117 million, an increase of 31 per cent. over the same period in the previous financial year, and gross sales in P1-6 2010 were 246 million (unaudited), an increase of 30 per cent. over the same period in the previous financial year. Ocados strong track record of revenue growth has been delivered by its experienced and stable team of entrepreneurial Executive Directors, and demonstrates the success of its strategy of organic growth through customer focus, process and technological innovation and expanding regional penetration. Of the Companys four Executive Directors, Tim Steiner and Jason Gissing founded Ocado in 2000. Neill Abrams was an adviser to Ocado from the beginning and joined the founders later in 2000 (the same year as Ocado became operational). Andrew Bracey joined the Board in 2009 having provided substantial advice to Ocado in the preceding years. Andrew has considerable experience in the retail industry generally, including having been on the board of the company that owned the UK supermarket chain Somerfield. The Directors believe that the expertise and dedication of Ocados Executive Directors provide the Group with a strong foundation to pursue its future strategy. 3.6 Considerable operational leverage with margin potential The Directors believe that Ocado can achieve higher sales volumes and that further increases in sales should improve the EBITDA margin of the Business given the economies of scale within the CFC and delivery structure. In addition, the Directors have identified opportunities to increase further the efficiency and effectiveness of the CFC and delivery operations, without compromising Ocados customer offering or its value proposition. In particular, these efficiencies are expected to be achieved through increased CFC labour productivity as a result of an enhanced technology mix and increased automation, and increased delivery productivity as a result of more efficient allocation of driver resources and optimised delivery route planning. The Directors believe that as a result of such opportunities and efficiencies Ocado can achieve a higher EBITDA margin than a typical store-based competitor. In order to realise some of these efficiencies Ocado will need to undertake additional capital expenditure. This gross sales growth combined with the operational leverage in the cost base has led to Ocado achieving EBITDA of 2.2 million in FYE 2008 and 9.2 million in FYE 2009. In FYE 2009, Ocado had a positive cash inflow of 4.1 million at the operating cash flow level. EBITDA in P1-3 2010 was 3.4 million, and EBITDA in P1-6 2010 was 8.0 million (unaudited). As demonstrated by the key performance indicators below, as the scale of the Business has increased in the last three financial years, so has its efficiency:
FYE 2007 (unaudited) FYE 2008 (unaudited) FYE 2009 (unaudited) P1-3 2009 (unaudited) P1-3 2010 (unaudited)

Average order size ()(1) . . . . . . . Average orders per week . . . . . . CFC efficiency (units per hour)(2) . Average deliveries per van per week . . . . . . . . . . . . . . . . . . . Average number of operational staff (full time equivalent) . . . . . Average product wastage (per cent. of gross sales)(3). . . . Items delivered exactly as ordered (per cent.)(4) . . . . . . . . . . . . . .

112.17 49,968 95 99 2,033(5) 1.15 98.59

116.30 56,384 114 106 2,730 0.78 99.11

115.94 70,873 124 121 3,151 0.57 99.41

122.81 60,769 114 107 3,119 0.64 99.35

119.38 81,823 124 126 3,610 0.65 98.76

Source: The information in the table above is derived from information extracted from management accounts and internal financial and operating reporting systems and is unaudited.

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(1) (2) (3) (4) (5)

Information about the Company

Average retail value of goods a customer receives (including VAT and delivery charge) per order. Measured as units dispatched from the CFC per hour worked by CFC operational personnel. Value of products purged for having passed Ocados use by life guarantee and stock adjustments (net of sales to the company shop), divided by gross sales. Percentage of all items delivered exactly as ordered, i.e. the percentage of items neither missing nor substituted. Excludes, for the period prior to their transfer to Ocado, staff working for third-party logistics contractor who transferred to Ocado in April 2007.

3.7 Significant opportunity for continued expansion Ocados business model presents it with growth opportunities outside its core business. The Directors believe that Ocados brand recognition and superior delivery infrastructure provide opportunities for further expansion into non-grocery products such as baby products, health and beauty and kitchenware. In addition, the worldwide growth of online shopping provides possibilities for replicating the Groups business model overseas. 4. Ocados strategy

Ocado intends to continue with the areas of strategic focus that have delivered strong revenue growth and improving EBITDA margin to date, in particular through continued innovation of the customer offering and operational cost efficiencies. In order to successfully fulfil anticipated future demand, Ocado intends to continue to expand CFC capacity (including building and fitting out the second CFC) and the Spoke network. In addition, Ocado intends to investigate additional adjacent growth opportunities, leveraging its knowledge of its existing customer base, its proprietary intellectual property and its overall business model. This may be achieved through further expansion of its non-grocery range and/or international expansion, as appropriate. The four limbs of Ocados strategy are, therefore, to improve continually the customer offering driving sales growth; to improve cost efficiency through continued innovation to maximise profitability; to expand CFC capacity and the Spoke network; and to exploit further growth opportunities, including the possibility of replicating the business model overseas. 4.1 Continually improve the customer offering Ocado focuses on improving its customer offering in order to retain existing customers and encourage them to make greater use of the Ocado service, as well as attracting new customers. The Directors seek to achieve this through: Customer Service: Maintaining and improving the customer experience. The Directors believe that accuracy, product quality and freshness, product availability and convenient delivery service are fundamental to Ocados customer proposition and intend to continue to improve these aspects to provide superior customer service. Ocado also intends to continue to improve its customer interface, for example by adding further functionality to the Website, facilitating easier order placing with Ocado on the Go applications. Product Range: Increasing the core product range. The Directors intend to expand the range of SKUs sold by Ocado to approximately 23,000 products by the end of 2010 with eventual expansion thereafter to over 30,000 products. This will partly be achieved through the addition of branded products which are not currently stocked by Waitrose but are stocked by other major grocers. As a result of its centralised and automated distribution centre, the Ocado model is well suited to stocking a long-tail of slow moving grocery products. Ocado also plans to increase the range of Ocado ownlabel products, from the current range of approximately 70 products to approximately 250 to 300 products by the end of 2010 with further expansion thereafter. In this regard, Ocado has recently recruited a head of own-label with extensive experience in the industry, and plans to have a broader own-label range tiered in line with the mainstream own-label ranges of the major UK supermarkets. Value for Money: Continuing to offer value for money to customers and making use of the fact that online grocery shopping is attractive to a broad demographic of the population. This includes the use of loyalty programmes such as the Ocado Delivery Pass service and price initiatives such as Tesco 42

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Price Match. The expansion of the Ocado own-label range, as detailed above, will allow Ocado to increase the range of products in standard tier price points. Ocado continually seeks to improve its customer offering through innovation of new products and services. Since the beginning of 2008, Ocado has introduced a large number of innovations in all of the above categories. For example in Customer Service, Ocado has introduced Ocado on the Go allowing Ocado and its customers to interact directly through applications for the iPhone, iPad and Android smart phones; in Product Range, Ocado has introduced an in-house butcher and fishmonger (called the Service Counter) allowing customers to select the size of meat and fish cuts and specify whether fish should be whole or filleted; and in Value for Money, Ocado has introduced the Ocado Delivery Pass and Tesco Price Match. The Directors believe that all of these innovations promote customer satisfaction and drive order growth, and Ocado intends to continue to roll out further innovations in the future. 4.2 Improve cost efficiency through continued innovation to maximise profitability Without compromising Ocados customer offering or value for money proposition, the Directors strive consistently to increase the efficiency and effectiveness of Ocados operations from the Website and the CFC to customer delivery by continuing to improve its technology, systems and training. CFC productivity is measured by average units processed per labour hour (UPH). Ocado is targeting a long term increase in productivity at the existing CFC to 180 UPH, up from 124 in FYE 2009. This long-term target assumes that the existing CFC has reached and is operating at its maximum effective capacity of 180,000 orders per week. This will be influenced by a number of factors, including: improvement in technology mix through upgrading the existing equipment at the CFC and increased automation of the picking process; and continued development of more intelligent IT algorithms and code to increase efficiency of existing CFC operations.

Similarly, delivery productivity is measured by average drops per van per week (DVW). Ocado is targeting a long term increase in delivery productivity to 175 DVW, up from 121 in FYE 2009. This will be influenced by a number of factors, including: increasing customer density, thereby reducing time spent driving between customers; and continued development of more intelligent IT algorithms and code to allow efficient allocation of driver resources and optimised route planning.

4.3 Expand CFC capacity (including building the second CFC) and the Spoke network The Directors intend to increase the Businesss current capacity and geographic coverage by increasing the capacity of the existing CFC, adding new Spokes and building the second CFC, in order to satisfy the anticipated demand growth. Ocado intends to expand the effective capacity of the existing CFC from processing 105,000 orders per week to approximately 180,000 orders per week. Increases in the current capacity of the existing CFC will take place on a phased basis. A significant proportion of existing warehouse operations already has the capacity to process 150,000 orders per week, however, increasing capacity to 180,000 orders per week will require more significant capital expenditure across the CFC to utilise free space, upgrade existing machinery, purchase and install new machinery and improve the infrastructure of the site. Ocado plans to develop the second CFC to increase both the capacity at which the Business can operate and its geographic reach. The second CFC is expected ultimately to have an effective capacity to process approximately 180,000 orders per week once fully operational, although in the short to medium term is intended only to have an effective capacity of approximately 120,000 orders per week. Assuming the construction of the second CFC begins in the first quarter of 2011, and, to the extent necessary, appropriate financing is obtained, the Group would expect to begin operating the second CFC by the end of 2012 at the earliest. Further details about the increasing capacity of the existing CFC and the planned second CFC are set out in section 7.5 below. Ocado intends to open an average of two new Spokes per year in the medium term. These Spokes are primarily intended to increase delivery capacity and to improve the efficiency of deliveries in areas of high customer density. New Spokes may also be used to increase Ocados geographic coverage. Ocado 43

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expects to open a new Spoke in South West England in early 2011, increasing coverage by approximately 0.5 million households. There are no further plans for geographic expansion in the near future. 4.4 Explore further growth opportunities Ocado may, in the appropriate circumstances: extend its product range further into non-grocery products. Ocado already has a non-food range but typically focuses on general grocery merchandising and only a small percentage of the products sold by Ocado are items which fall outside the core grocery range (such as a limited amount of toys and cookware). The Directors recognise that many areas of non-grocery online retail are already well served, and do not currently intend to enter many of these markets. Nevertheless, Ocado has the distribution capacity and customer base to offer a more extensive range of non-grocery products such as baby products, health and beauty and kitchenware; and exploit and evaluate other opportunities including the possibility of replicating the Ocado business model overseas. Reasons for the Offers and use of proceeds and other resources

5.

The Directors believe that the Offers, and the admission of the Ordinary Shares to the premium listing segment of the Official List, will assist in positioning the Group for its next stage of development. The Company expects to receive primary proceeds net of fees and expenses (but including the cash received from the exercise of warrants and options) of 200 million from the issue of the New Ordinary Shares at the Offer Price pursuant to the Offers. All of the funds received from the issue of New Ordinary Shares will initially be held on deposit, with approximately 45 million expected to be used within six months of Admission to repay some of the Groups existing debt. On Admission, the Company will have total credit facilities (including the New Facility) of approximately 197 million, excluding the expected repayments of approximately 45 million. This includes 177 million of committed credit facilities, of which the 100 million of debt funding available under the New Facility will be undrawn and available for investment, and approximately 20 million of undrawn credit lines available for asset financing. In the medium term, the balance of the net proceeds of the Offers of approximately 155 million received by the Company, together with the undrawn debt facilities and credit lines of approximately 120 million and the cash flow generated by its operations, will be used: to invest approximately 80 million in the existing CFC in order to increase effective capacity from approximately 105,000 to approximately 180,000 orders per week; to develop existing Spokes and establish new ones. This is to increase Ocados capacity and, depending on the relevant Spokes location, either increase geographic penetration or improve delivery economics by increasing the number of deliveries per van per week. Based on CFC capacity and customer demand, Ocado expects to establish an average of two new Spokes per year at an average estimated cost of between 1 million and 5 million per Spoke per year in the medium term. Therefore the Group expects to invest between 2 million and 10 million per year in the medium term establishing new Spokes; to purchase a site and fund the estimated total construction cost and related fit-out spend of approximately 210 million to build the second CFC (costed at a sterling : euro exchange rate of 1 = e1.10). If required, the Company believes that it will be able to procure additional funding for completion of the construction and fit-out of the second CFC through additional finance leases and other forms of debt; and for general corporate purposes.

Furthermore, the Directors believe that Admission will: enhance the profile of the Group with existing and potential suppliers and customers; provide an additional incentivisation mechanism for retaining existing and attracting future employees and promote co-ownership amongst them; and

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give the Selling Shareholders an opportunity to realise some of their investment in the Group and provide all Shareholders with a market for their Ordinary Shares going forward.

If, the Company is not able to agree pricing or it is unable to raise net proceeds of 200 million, Admission will not occur. The Underwriting and Selling Shareholders Agreements are conditional on Admission. The auditors report on the Statutory Financial Statements of Ocado Limited for the 52 weeks ended 29 November 2009 was unqualified but included an emphasis of matter relating to going concern on the basis of the uncertainty of the Groups future funding, since the 200 million of net proceeds from the offers of shares (the Offers) and the ability of the Group to be able to draw down on the new bank facility (the New Facility) could not be taken into account when forming that opinion. That uncertainty will be resolved on the receipt by the Company of 200 million of net proceeds from the Offers and the Group being able to draw down on the New Facility and therefore there is no emphasis of matter contained in the Accountants Report on the Historical Financial Information contained in Part V(A) of this document. Financial impact of the Offers A pro forma statement of net assets illustrating the hypothetical effect of the Offers on the Groups net assets as at 16 May 2010 as if the net proceeds of 200 million from the Offers had been received at that date is set out in Part VI (A) (Unaudited Pro Forma Financial Information). This information is unaudited and has been prepared for illustrative purposes only. It shows that net proceeds from the Offers of 200 million would have led to a pro forma increase in net assets, from net liabilities of 36.9 million to net assets of 164.2 million as at 16 May 2010. Had the net proceeds of 200 million from the Offers been received on 30 November 2009, the resulting impact on earnings would have been to reduce losses for the 24 weeks ended 16 May 2010 by the amount the Group would have received as interest on the 200 million of net proceeds from the Offers. 6. History and development

Ocado was founded by Tim Steiner, Jason Gissing and Jonathan Faiman as L.M. Solutions (UK) Limited in January 2000 before changing its name to Ocado Limited in June 2001. In October 2000, Ocado entered into its first branding and sourcing arrangements with Waitrose. Ocado began to equip a temporary warehouse in May 2001, began pilot deliveries in October 2001 and started its commercial delivery service in January 2002, operating initially in the small Hertfordshire area of St. Albans and Hemel Hempstead. Ocados delivery area expanded rapidly, and by May 2002 Ocado began to deliver in North London. Over its first 12 months Ocados delivery area increased from an initial 100,000 households to approximately 2,200,000 households, and gross sales rose to 440,000 per week in December 2002. In September 2002, Ocado opened its CFC in Hatfield, and in January 2003 it centralised all warehousing operations within it. Ocados first Spoke was opened in Weybridge, Surrey in September 2002, followed by further Spokes in Aylesford, Kent in August 2003 and Rugby, Warwickshire in October 2003. These latter Spokes were subsequently replaced with Spokes in Dartford and Coventry respectively. During the period 2004 to 2009, Ocado opened additional Spokes in Manchester, Southampton, Leeds and White City (London). Since inception, Ocado has invested significant management, operational and financial resources in developing its business processes, infrastructure, brand and customer offering. Key recent developments include: increasing the available product range from approximately 8,500 SKUs in the financial year ended 1 December 2002 to over 20,000 currently; introducing Tesco Price Match and the Ocado own-label grocery range in 2008; introducing the Service Counter an online butcher and fishmonger in 2009; improving the delivery options available to customers in 2008 and 2009 by introducing one-hour delivery slots on the hour and half hour, the Ocado Delivery Pass, Ocado Reserved and Sunday deliveries; and

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launching the Ocado on the Go iPhone application in July 2009, the equivalent Android application in April 2010 and the iPad application in June 2010.

Investment to date has been financed through borrowings, equity investment and finance and operational leases. From FYE 2007 to FYE 2009, Ocados gross sales have grown at a CAGR of 21 per cent., to 427 million. As at March 2010, Ocado had a single CFC, seven Spokes, approximately 700 vans and 55 LGVs, and can provide its services to approximately 17.3 million households, being approximately 66 per cent. of UK households. Historical investment In 2000, in exchange for an investment of 35 million of capital, John Lewis acquired 40 per cent. of Ocados share capital and became its largest shareholder. On 5 November 2008, John Lewis transferred its shareholding in Ocado to the John Lewis Pension Fund. Responsibility for the shareholding now rests with the trustees of the John Lewis Pension Fund rather than the management of John Lewis and Waitrose. Since 2000, Ocado has raised more than 230 million of additional equity capital from a number of sources other than John Lewis. John Lewis participated in Ocados equity capital funding rounds between 2000 and 2004, and at one point held interests equivalent to approximately 45 per cent. of the capital of Ocado. As a result of not participating in any further funding rounds until 2009, and by redeeming a convertible instrument it held, the John Lewis Pension Fund currently holds a 26.5 per cent. shareholding in the Companys issued share capital as at 5 July 2010 (the latest practicable date prior to the publication of this document). Neither John Lewis nor Waitrose has any other direct or indirect equity interest in Ocado. 7. Ocados current operations

7.1 Customer offering Ocados customers Ocado had over 1 million registered accounts as at 16 May 2010, of whom over 240,000 were active customers (defined as having shopped within the previous 12 weeks). Over 134,000 of these customers placed orders in the previous two weeks. Ocados customers are independent of Waitrose, in that Waitrose has no access to Ocados customer information, and Ocado markets to them using its own brand name. There is likely to be a large crossover of customers who shop with both Ocado and Waitrose, however there is large crossover with other supermarket operators as well. Over 85 per cent. of Ocados new customers, when surveyed from 1 January 2010, indicated that they had previously shopped predominantly with supermarkets other than Waitrose. Ocado gathers relatively little demographic information about its customers through their ordinary use of Ocados service because it respects its customers privacy and to maintain as simple a customer interface as possible. Nevertheless, through voluntary surveys of customers conducted in 2009, Ocado has established that its typical customer is female, around 40 years old and has an above average household income. A significant number of Ocados customers also have families with young children. However, as Ocados product offering evolves and its geographic reach extends, these demographics are broadening. Ocados delivery footprint covers approximately 66 per cent. of UK households. Ocado started in the South East of England and therefore has the highest penetration levels in this area. Within the South East of England, some postcode sectors have penetration levels above seven per cent., which means that in an average week, over seven per cent. of all households in that area receive a delivery from Ocado. For example, in P1-6 2010, the average weekly penetration in the top five postcode sectors in which Ocado had the deepest customer penetration ranged from 6 to 9 per cent. of households in those sectors.
The Group defines gross sales as sales (net of returns), including charges for delivery, before deducting relevant vouchers/ offers and value added tax. Gross sales is not a measure of operating performance under IFRS-EU and an investor should not consider it as an alternative to any other measure of performance under generally accepted accounting principles. Ocado defines weekly penetration as the percentage of households in a given postcode sector who shopped with Ocado in a given week. The range shown represents the weekly penetration, averaged over the 24 weeks to 16 May 2010, for each of the households in the five postcode sectors.

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Moreover, Ocado has found that its sales in areas of high penetration continue to grow, notwithstanding their levels of penetration, due, amongst other things, to the ever improving customer proposition, the reinforcing effect of van presence, word-of-mouth and existing customers shopping more frequently. To date, there has been no evidence of areas reaching a ceiling on penetration. For example, in the top five postcode sectors, sales grew at between 22 and 27 per cent. during 2009. Ocado has expanded from the South East of England with Spokes in Coventry, Manchester, Southampton and Leeds. These Spokes have grown successfully and demonstrate strong demand outside the South East of England. For example, the growth in the average number of orders per week from FYE 2008 to FYE 2009 was 150 per cent. in a postcode sector in West Yorkshire and 284 per cent. in a postcode sector in North Yorkshire in the same period. Approximately half of Ocados orders in FYE 2009 were delivered outside the M25. From FYE 2007 to FYE 2009, the Directors estimate that Ocados delivery footprint (measured as households in Ocados delivery footprint as a percentage of households in the UK) increased from 57 per cent. to 66 per cent. In FYE 2009, a customers average order was 115.94 (unaudited) (119.38 in P1-3 2010 (unaudited)) and consisted of approximately 55 products. New customers typically have an average order size that is below the average for all customers, increasing to the average order size over a number of orders. The average order size varies across the Spokes, although the average order size delivered from any one Spoke is typically no more than 10 per cent. lower or higher than the average across the Business. Ocado prides itself on its customer service and has achieved high customer satisfaction levels. In recent surveys by Which? Magazine, Ocado has been ranked consistently highly in terms of quality, accuracy and delivery (Source: Which? Magazine June 2009 and February 2010). Ocado has received numerous awards, including: Online Retailer of the Year (2005, 2007, 2009 and 2010 Grocer Gold Awards), Customer Technology of the Year 2010 (BT Retail Week Technology Awards), Best Retail Website 2007 (Retail Systems Awards) and Company Driver Safety Award 2010 (Brake Road Safety Awards). Website The current version of the Website is its fourth iteration, with the fifth iteration currently under construction. On logging onto the Website, customers can create or edit an order. All product lines are easily searchable (with the Website displaying photographs of almost all products) and on searching for a type of product, particular items that the customer has ordered before are clearly displayed. A number of features on the Website make it an attractive and helpful website for customers to use. These features include: for almost every product, displaying back of packet details such as ingredients and allergy information and, where relevant, a use-by date and nutritional information; Your instant shop, is a list of grocery items generated automatically by the Website which a customer (with a shopping history) can order with one click or edit before ordering. Instant orders are an algorithm-generated prediction based on the customers historical ordering patterns; displaying all items that a customer has ordered before that are currently on promotion; Did you forget prompts to customers, before checking out, to add products which they may have neglected to order. These prompts are based on many of the same criteria on which instant shops are based, in particular, referring to a customers historical ordering patterns to anticipate which items a customer may be running or have run out of; Recommended to you are recommendations to customers based on (i) items ordered by other customers that regularly order similar items to them or (ii) which are connected to items that they have ordered before or which are in their current basket; allowing customers to review and rate products and displaying those reviews and ratings to other customers in the product information; and providing recipe suggestions for particular products, along with the ability to order all of the other ingredients required for that recipe with a single click.

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Part I

Information about the Company

All of these features help to improve customer satisfaction (and increase sales). It is extremely important for any internet retailer that its website be available as near to constantly as possible. Since FYE 2007, the Website has had over 99 per cent. up-time. Depending on the customers delivery address and time of intended delivery, a customer may amend an order at any time up to nine hours before delivery. In addition to placing orders through the Website, customers are also able to place and amend orders through the Ocado on the Go application (using an iPhone (or an iPod Touch device), iPad or Android smart phone). The iPhone application was launched in July 2009 and the Android application in April 2010. The Android mobile system supports the use of speech recognition and barcode scanning as alternative ways for a customer to search for products. These applications represent the most consumerfacing software developments created by Ocados in-house team since the Website, and are representative of Ocados efforts to improve and innovate customer service through the use of IT. The iPhone application has been downloaded over 170,000 times. Approximately 6 per cent. of orders during April 2010 were placed or amended using the Ocado on the Go application. No other UK online grocery retailer sells its products through a dedicated iPhone, iPad or Android application. In June 2010 Ocado won Customer Technology of the Year for Ocado on the Go at the BT Retail Week Technology Awards 2010. Delivery options Approximately 15 per cent. of Ocados customers are able to request same day delivery provided that their order is placed by approximately 10.30 a.m. that day; otherwise Ocado offers a next day delivery service. Customers may also place orders for delivery up to 21 days in advance. Deliveries are made on Mondays to Saturdays in the entire delivery area and, in respect of approximately 71 per cent. of the households served by Ocado, Sundays as well. Ocados service is only unavailable on six Sundays and three UK bank holidays (and occasional half days either side of certain UK bank holidays) each year which are reserved for carrying out maintenance to the CFC. All deliveries are made in one-hour time slots chosen by the customer: time slots are offered starting on the hour and on the half-hour. Deliveries start at either 6.00 a.m. or 7.00 a.m. (depending on the areas being delivered to) and continue until 11.30 p.m. (that is, for 16 and a half or 17 and a half hours per day), except on Sundays when deliveries are made between 6.00 a.m. and 3.00 p.m. (9 hours). By comparison, a sample conducted in London on 8 May 2010 showed that Tesco.com and ASDA.com only offered two hour time slots, in the case of Tesco.com from 9.00 a.m. until 11.00 pm (14 hours per day) and in the case of ASDA.com from 10.00 a.m. until 10.00 p.m. (12 hours per day). Sainsburys.co.uk did offer one-hour delivery slots, but delivered only from 10.00 a.m. until 10.00 p.m. (12 hours per day). WaitroseDeliver, which currently operates predominantly outside the M25, offered some one hour and some two hour delivery slots, from 9.00 a.m. until 10.00 p.m. (13 hours per day). This meant that Ocado offered 27 daily slots (except on Sundays), double that of any of its competitors. Ocado charges customers between nothing and 6.99 for deliveries (except in the week before Christmas when delivery charges are higher to manage demand), and customers must place a minimum order value of 40. In addition to placing orders on an ad hoc basis, customers are offered two options (which may be used together or independently): Ocado Delivery Pass, where instead of paying delivery fees on each order, customers can have all of their deliveries for a fixed regular fee (currently 9.99 per month or 109.99 for the year). If used regularly, Ocado Delivery Pass cuts the cost of deliveries for customers and encourages them to shop more frequently. The Directors believe that the Ocado Delivery Pass improves customer retention and has driven the frequency and total value of the orders of this customer set; and Ocado Reserved, which is a free service allowing customers to reserve permanently the weekly delivery slot of their choosing. The Directors believe that Ocado Reserved also improves customer retention and order frequency. The Ocado Reserved service also incorporates the instant order function, so a customer can opt for an entirely automated weekly shop.

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Part I Product freshness and stock control

Information About the Company

Key to Ocados customer offering is the availability of the products offered and their freshness when delivered to the customer. Customers receipts are arranged by use-by date to underpin the message of the guaranteed freshness of the products ordered. As described below, these are achieved through the aggregation of Ocados operations and its bespoke software operational systems. Aggregation refers to the centralised volumes of products which are processed for delivery at the CFC. As described above, the Directors believe that the CFC generates revenue equivalent to approximately 25 average sized Waitrose stores. Unlike 25 individual stores, however, the CFC operates a single stock control system. Ocados inventory system records all available stock in the CFC and the planned arrival times of future ordered stock. Since Ocado has only online customers, it has a record of all the items ordered at any given time, and is therefore able to indicate on the Website to other customers placing their orders which items will be in stock and available for the delivery slot selected by the customer. Ocado calls this feature Availability to Promise or ATP and believes that it significantly reduces the amount of substitution and non-availability of items ordered by customers. Ocados inventory system (including ATP) is managed by the in-house developed Utopia software system. Utopia generates sales forecasts for each product item and replenishment recommendations. It actively measures the performance of its own forecasts, the fulfilment level of suppliers and the product life received from suppliers, using these data to determine an optimum amount of contingency that should be ordered for each item. The more accurate a forecast becomes the less contingency Utopia will recommend; this increases product life for customers and the availability of products on the Website while at the same time ensures low stock levels in the CFC. High selling items such as certain fruits are often delivered to the CFC and on-delivered to customers on the same day. As described above, the efficiency of this system resulted in flat stock levels in FYE 2009 as compared with FYE 2008, despite the increase in order numbers from FYE 2008 and the increase in the range of SKUs stocked. As described, the centralisation of all inbound and outbound activities in the CFC means that Ocado does not need to receive interim deliveries to regional distribution centres before the on-delivery of products to stores for sale to customers. This reduces the amount of time it takes for a product to reach a customer from the supplier compared to a traditional supermarket and also goes, therefore, to improving product freshness. Combined, these factors allow Ocado to guarantee product freshness to its customers. 7.2 Product offering Ocado sells Waitrose own-label, Ocado own-label, John Lewis own-label and third party-branded products via the Website. Of the approximately 20,000 products sold by Ocado, over three-quarters are not supermarket own-label products. Of the remainder, approximately 4,300 are Waitrose own-label, and approximately 70 are Ocado own-label. The Sourcing Agreement with Waitrose allows Ocado to provide substantially the same product range as a Waitrose store (in fact, the Directors believe that the Ocado range is over 2,000 SKUs larger than the grocery offer in the largest Waitrose supermarket). The Ocado own-label products are currently predominantly basic grocery items. However, the Directors intend to expand this range considerably. The Ocado own-label range is priced around the level of the mainstream own-label brands of Ocados competitors. 41 per cent. of all orders placed in 2010 contained at least one Ocado own-label product, and this number increases to 61 per cent. for new customers placing an order with Ocado for the first time. Ocado introduced a new service called the Service Counter in 2009. The Service Counter is effectively an online butcher and fishmonger, through which customers are able to specify the size and specific cuts of meat and fish they would like to order. The Directors intend to expand the range of SKUs sold by Ocado to approximately 23,000 by the end of 2010 with eventual expansion thereafter to over 30,000 products by both increasing Ocados range of own-label core grocery products as well as its ranges of slower selling and specialist SKUs. Ocados range already includes certain speciality products such as regional ales, artisan breads and fresh kosher

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Part I

Information About the Company

meat, and the Directors intend to increase the range of slower selling and specialist SKUs to include products such as a wider range of oriental and Asian foodstuffs and other speciality products. Although these products may only comprise a small percentage of certain customers total orders, Ocado believes that by stocking such products, customers who wish to buy them are more likely to buy the rest of their groceries from Ocado as well. Ocados business model enables it to stock this long tail of slower moving items more efficiently than its competitors. Products tend to have to be stocked by supermarkets in minimum quantities because of the inefficiencies of breaking up a tray of products prior to their delivery to the store. If a traditional supermarket chain wants to stock a slow moving product in a store, it would have to stock that minimum quantity in that store, even if that quantity of product was likely to take a long time to sell in that one store. This often makes stocking slow moving items with a short shelf life (such as fresh kosher meat) uneconomic for stores in many supermarket chains. Ocado, on the other hand, needs to order that minimum quantity of slow moving product only once for the CFC to service its entire delivery area. As described above, the Directors believe that the revenue generated by the CFC is equivalent to approximately 25 average sized Waitrose stores. The effect of aggregating sales in a single CFC therefore allows Ocado to stock slow moving products efficiently and without the same risk of uneconomic wastage. 7.3 Marketing, promotion and pricing Ocados marketing activities focus on rewarding and incentivising existing customers and attracting new ones. Ocado has a good understanding of its existing customers buying habits through its web-based customer contact. This permits highly focused and cost-effective marketing, whilst respecting customers privacy. Ocado uses predominantly targeted (and often personalised) direct marketing, such as emails to existing and lapsed customers and vouchers to reward them. It also uses vouchers to entice new customers or reward existing ones. New customers are attracted through less targeted marketing, such as media advertising, although Ocado uses comparatively little of this as the proliferation of Ocados vans creates a significant visual presence. Ocado also attracts new customers by offering vouchers both to them and to existing customers who have recommended them. In FYE 2009, Ocado spent approximately 1 per cent. of gross sales on marketing (P1-3 2010: 1.1 per cent.). Ocado aims to price its goods competitively. To this end, it established Tesco Price Match in 2008. Under this policy, each week Ocado compares and price matches branded goods sold by Tesco plc on the Tesco.com website. This price match applies to the standard retail price of identical products only and excludes temporary promotions. Each price-matched product is flagged on the Website. These prices are re-checked, usually weekly, and the date and time when the most recent price check was begun is displayed. Data are collected for Ocado by an independent price comparison consultancy to produce a list of Tesco.com products and prices. As described above, the introduction of Ocado own-label groceries reflects Ocados aim of providing its customers with value for money. The Directors believe that the Ocado brand has been positioned to appeal to customers on a unified platform of quality, convenience, value, range and service. 7.4 Relationship with Waitrose and the sourcing of products Ocado, Waitrose and John Lewis first entered into the Sourcing Agreement and the Branding Agreement on 13 October 2000. The key benefit to Ocado of the Sourcing Agreement and Branding Arrangements has always been that they give Ocado access to Waitrose own-label and third party-branded products on the same terms (including cost price) as Waitrose sources them. Ocado also benefits from the premium and quality associations of the Waitrose brand. The arrangement allows Ocado to choose to participate in certain

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Part I

Information About the Company

promotional activities arranged by Waitrose with suppliers (although the parties are free to arrange their own promotional activities as well). The relationship is, the Directors believe, beneficial for Waitrose as well. Aggregating Ocados sales with its own gives Waitrose increased purchasing power and, as described below, Waitrose receives a sourcing fee in respect of Ocados sales of products that it sources through Waitrose. Since Ocado operates in a number of areas in which Waitrose has no stores, Ocado also extends the geographic reach of the Waitrose brand. In 2000, in exchange for these sourcing arrangements and an investment of capital, John Lewis acquired 40 per cent. of Ocados share capital and became its largest shareholder. Only Waitrose had the right to terminate the arrangements. The 2000 sourcing arrangements were subsequently renegotiated as follows: negotiations took place in 2005, as a result of which Ocado agreed to pay Waitrose a sourcing fee on the retail price (excluding VAT) of all products sourced through the Waitrose arrangements. Under this renegotiation Waitrose undertook not to exercise its termination rights for so long as the sourcing fee was being paid; a significant renegotiation took place in 2008 as part of the transfer by John Lewis of its shareholding to the John Lewis Pension Fund. Significant terms agreed in the 2008 Agreement included: the extension of the agreement to September 2013; the increase of the sourcing fee; the variation of various provisions restricting the operation of the WaitroseDeliver service inside the M25. These restrictions were varied from the terms previously contained in the shareholders agreement between the parties; and the ability for Ocado (but not for Waitrose) to terminate the sourcing arrangements early without cause if it wished; and

further negotiations to extend the term of and make further changes to the arrangements took place in May 2010 resulting in the 2010 Agreement. The current arrangements, resulting from these changes, are described below (and set out in more detail in section 17.1 of Part XIII (Additional Information)). Pursuant to the 2010 Agreement Ocado agreed to procure that the Company would pay John Lewis a fee of 850,000 following Admission in recognition of the support provided to the Business by John Lewis and in partial reimbursement for the costs incurred by the John Lewis Pension Fund (of which John Lewis is sponsor) in respect of the Offers.

Terms of the Sourcing Agreement and Branding Arrangements The Sourcing Agreement will expire on 1 September 2020, although either party may terminate the agreement early by giving the requisite notice, the earliest termination can take place in these circumstances is 1 March 2017. Under the Sourcing Agreement, Waitrose acts as Ocados sourcing agent for the negotiation and entry into of Ocados supply requirements. Ocado is then able to place its orders for goods with the relevant supplier on the terms obtained by Waitrose. In return, Ocado pays Waitrose a sourcing fee. Ocado has the right to stock and sell all goods and products in the assortment of grocery products stocked by Waitrose supermarkets (subject to certain limited exceptions) (the Waitrose assortment). If Ocado wishes to introduce a new product not included in the Waitrose assortment then it may develop the product itself or source it directly from a third party (provided that the product does not carry a brand of certain Waitrose competitors). The exception to this is where the product Ocado wishes to stock is not included in the Waitrose assortment but is a product in a range that is included, such as different flavours or varieties of a product range already stocked by Waitrose. In these circumstances Ocado must offer Waitrose a right of first refusal to source such products for it. Ocado is under no obligation to offer Waitrose a right of first refusal to source products for the Ocado own-label range. Ocado already stocks a number of Ocado own-label products which it sources directly

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Part I

Information About the Company

from suppliers and is in discussions with other third party suppliers for the supply of further Ocado own-label products. The mutual obligations on Ocado to source through Waitrose and on Waitrose to source for Ocado mean that approximately 98.5 per cent. of SKUs sold (by value) are currently sourced under the sourcing arrangements. Of these, currently approximately 85 per cent. of goods by volume are delivered to the CFC directly by the supplier, with whom Ocado agrees its own delivery and billing arrangements. This 85 per cent. comprises goods from approximately 350 different suppliers, of which 150 are suppliers of Waitrose own-label products. Only the remaining 15 per cent. are delivered to the CFC directly by Waitrose. Of the goods sold by Ocado, 10 suppliers (excluding Waitrose) make up approximately 23 per cent. of the goods sold by Ocado (by value) with 20 suppliers (excluding Waitrose) accounting for approximately 33 per cent. For the reasons described above, the Directors believe that the sourcing relationship is mutually beneficial for the parties. In addition, the Directors believe that the range of products sourced from Waitrose contributes to an attractive customer offering. If the relationship between the parties were to cease, through either the current agreements not being renewed or an earlier termination, the Directors believe that Ocado now has sufficient scale to operate autonomously, although clearly it would no longer be able to supply Waitrose own-label products. If this were to occur, the Directors recognise that Ocado would need adequate time to prepare by increasing the size of its current procurement team, approaching suppliers to build standalone relationships and carrying out necessary marketing work with customers which would involve an additional expense for the Business. It should be noted that the termination or notice of termination of the Sourcing Agreement and Branding Arrangements in any circumstances is an event of default under the New Facility. However, with the exception of the change of control termination right described in paragraph 1.4 of the Risk Factors section, which is customary for an agreement of that type, the Company is in control of whether any such termination rights will arise. 7.5 The CFC At present, Ocado has one CFC, based in Hatfield, which has a footprint of 295,000 square feet and an internal 4-floor mezzanine across more than half of the building. The CFC operations are divided between inbound and outbound activity. Inbound The inbound activities cover receiving goods from suppliers, checking volumes, weights, date-codes and quantities and physically putting products away in the correct locations for picking. These activities are the supermarket equivalent of delivering goods in bulk to a regional distribution centre, unpacking them and then delivering them in smaller quantities to the store room of individual stores, then putting them on to the supermarket shelves, and then replenishing the shelves from the back of the store whenever the supplies run low. A combination of barcode scanning and human input tells the warehouse management system (WMS) about the quantity and expiry date of each product received. Groceries may be stored on the same pallets on which they are received or decanted into smaller storage totes or trays. Except for a small minority of items, once received the products are not manually handled as they move from the inbound area to their final storage locations through a combination of automated conveyors and cranes. The precise location for each product is determined by a bespoke product layout system, which uses a neural network to predict picking speeds for individual products according to their location and physical characteristics, and thereby optimises the throughput of each picking aisle.

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Part I Outbound

Information About the Company

Each customers order is allocated a number of plastic crates or totes into which plastic bags are placed to receive the order. Each order comprises approximately four totes. The totes are transported through the CFC using automated conveyors, some of which run at up to 7,200 totes per hour. The totes stop at various points in the CFC for items to be placed in them to make up the order. Chilled and frozen goods are packed in separate totes so that they remain at the correct temperature until delivered to the customer. Each item is scanned before being put into a bag to ensure the accuracy of the order. The WMS also instructs the picker to place items in a specific bag within the tote ensuring that products likely to damage each other are separated and that Ocado complies with product segregation regulations. This removes the requirement for bags to be arranged by pickers manually. Scanning also allows the WMS to track which member of staff picked which items of a customers order, providing both a detailed audit trail for each customer order and statistics to drive picking speed and accuracy. The final stage within the CFC involves first buffering the totes so that all totes are lined up to be loaded onto the correct van, then loading the totes into delivery frames which fit into the back of the delivery van or long goods vehicle. Barcode scanning of each tote and delivery frame ensures that the correct orders are loaded into the correct vehicle for each route, and are arranged in the van to ensure correct weight distribution over the course of the delivery. The WMS also controls the workload at each picking station, and regulates staff breaks to ensure staffing optimisation. Ocado has, since 2008, operated an Order Storage and Retrieval (OSR) machine, which stores approximately 7,000 product lines in high racking that is not accessible to CFC staff, relying entirely on automation both to put away and retrieve the products. Further capacity The Directors believe that the CFC currently has the effective capacity to process approximately 105,000 orders per week. In FYE 2009, Ocado processed an average of 70,873 orders per week (P1-3 2010: 81,823). In the week commencing 10 May 2010, the CFC processed more than 100,000 orders for the first time in a single week. This requires the ability to pick over a million items at the CFC in a single day. To ensure efficient allocation of capital resources, the order processing capacity of the CFC has never been significantly higher than the maximum number of orders predicted in a given period. The Directors believe that the CFC will ultimately have the effective capacity to process approximately 180,000 orders per week (assuming similar trading hours and weekly delivery profiles currently experienced, and assuming also that the necessary capital expenditure can be made). The approximate expenditure required to achieve this expansion is an additional 80 million of which 30 million is required to reach a capacity of 150,000 orders per week. The CFCs capacity is described in terms of effective capacity. The CFCs daily output capacity is approximately 18,800 orders per day. Theoretically, therefore, the CFC has a current capacity in excess of 130,000 orders per week. However, a disproportionately high percentage of customer orders are for delivery on Mondays, Fridays and Saturdays. Therefore, the effective capacity of 105,000 assumes near maximum delivery numbers on Mondays and Fridays, and fewer deliveries during the rest of the week. To have an effective capacity of 130,000 orders per week, the CFC would in fact need to be able to process significantly more than 18,800 orders per day on peak days. Ocados estimates of future CFC capacity are based on the assumption that the shape of the distribution of customer orders across the week remains approximately the same as currently. The second CFC Ocado is in negotiations to purchase the land for, commission, build and fit out the second CFC to increase both the geographic reach of the Business and the capacity at which it operates. The Group does not expect to begin operating the second CFC until the end of 2012 at the earliest (assuming construction begins in the first quarter of 2011 and, to the extent necessary, appropriate financing is obtained).

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Part I

Information About the Company

The second CFC is expected to become fully operational over a number of years by gradually moving some volume from the existing CFC and serving new customer growth. The Directors expect that on becoming operational the second CFC will have an effective capacity of 120,000 orders per week (although it will not process this number of orders from opening). Once fully operational, the second CFC is expected to have an effective capacity of 180,000 orders per week, although moving from 120,000 to 180,000 orders will require further capital expenditure. The full cost of reaching effective capacity of 180,000 orders per week is currently estimated to be approximately 210 million (costed at a sterling : euro exchange rate of 1 = e1.10). The second CFC will be funded by the net proceeds of the Offers and the other resources available to the Company including the cash flow generated by its operations and the New Facility. If required, the Company believes that it will be able to procure additional funding for completion of the second CFC through finance leases and other forms of debt. Once the second CFC is fully operational, the fulfilment of customer orders will be distributed between the two CFCs. While Ocados overall capacity to fulfil customer orders will approximately double, each of the CFCs is expected initially to operate below its effective capacity, but at a level which enables each site to run efficiently. The second CFC will use substantially the same technology and software as found in the existing CFC. However, since this technology and software will represent the latest iterations of Ocados technology and software, and will not have to undergo years of iterations as they did in the current CFC, the development process is expected to be more efficient than developing the current CFC has been. Subject to the second CFC opening in line with the Directors expectations, the Directors expect that, on opening, orders delivered from the second CFC will have a two to three per cent. higher EBITDA margin (pre-CFC fixed costs) than the existing CFC. This, they believe, will be due to reduced trunking costs, minimal incremental administrative expenses and higher productivity (off-set by higher wastage). The Directors expect this margin to increase further as the number of orders delivered from it increases. The plans for the development of the second CFC are predicated on the Business growing at the rate that the Directors expect. To the extent that it does not grow as quickly as expected, the second CFC may not become operational until later than expected, or may never become operational. For a more detailed description of the capital expenditure required in developing the second CFC and the Directors expectations in respect of it, see section 6.3 of Part IV (Operating and Financial Review). 7.6 Spokes Deliveries in much of Greater London, Hertfordshire, Bedfordshire, Essex, South Cambridgeshire, Buckinghamshire, East Oxfordshire, East Berkshire, East Northamptonshire and a small section of North Surrey are mostly made directly from the CFC and the orders for customers in these areas are loaded directly onto delivery vans. Deliveries to these areas accounted for approximately 32 per cent. of all deliveries in P1-6 2010. Deliveries to customers in other areas are made via the Spokes. These orders are loaded from the CFC into LGVs. Each LGV carries either 7.5 or 12 vans worth of orders; they are arranged in delivery frames in the LGV so that they can be easily trans-shipped at the Spokes into delivery vans for the final delivery to the customer. This process is more efficient than individual delivery vans delivering to customers throughout the country from Hatfield. The Group intends to move, over time, from a fleet of predominantly single deck LGVs to one of double decks. This will allow for cost efficiency savings in fuel and direct labour as well as reducing the number of LGVs required since the double deck LGVs can hold more orders than single deck LGVs. The Spokes increase both the geographic range of the Ocado service and the efficiency with which deliveries can be made by allowing a single route driven by one van to encompass more deliveries. The Spokes themselves are small warehouses used as transhipment facilities, where the delivery vans for the local area are based. Each Spoke has refrigerated storage space so that arrival of the loaded LGV does not have to coincide precisely with the totes being picked up by the delivery vans, allowing deliveries to be made at the times requested by customers. Each Spoke covers deliveries within a certain area. To some extent, the boundaries between these areas can be adjusted to optimise the delivery loads on individual vans, to account for changes in demand and to try to minimise the effect on customers of disruption at any Spoke.

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Part I

Information About the Company

The CFC and the seven current Spokes (in Weybridge, Dartford, Coventry, Manchester, Leeds, Southampton and White City) are capable of serving approximately 17.3 million UK households (approximately 66 per cent. of UK households). Ocado intends to open two additional Spokes each year on average in the medium term to increase the capacity of the Business. This will be achieved either by building new Spokes in areas already served by the Business, thus increasing the capacity of the Business in those areas, or by building in areas not currently served by the Business. Typically, Ocado would expect each new Spoke to have the capacity for between 10,000 and 25,000 incremental weekly deliveries and cost between 1 million and 5 million depending, amongst other things, on its location, the infrastructure on the site and tenure. A number of the Spokes are approaching their current maximum capacities. The Group is taking various steps to address this to ensure that Spoke capacity grows with the Business and various development opportunities at existing Spokes and potential new Spoke sites have been identified. The total capacity of the existing Spoke network is approximately 130,000 orders per week. The Directors estimate that less than 1 million capital expenditure would be required to increase this to approximately 150,000 orders per week. The Group intends to open a new Spoke in South West England in early 2011, increasing coverage by approximately 0.5 million households. The map below illustrates the location of the CFC (Hatfield) and each of the Spokes, together with the geographic coverage of the Business.

2JUN201021422256

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Part I

Information About the Company

7.7 Delivery Routing systems Key to the efficiency of Ocados delivery solution is its in-house developed routing system. This software calculates an optimised delivery route for each van for each journey it makes. Included in its calculations are: the location and timing of each delivery; the weight and volume of each order being delivered; expected traffic conditions (for example, the software will know which roads are typically busier during the school run); the typical parking time at each customers location; the expected duration of the delivery itself; road speed adjustments for extreme weather conditions; the speed at which the vans can safely travel; and the need for each driver to take a break over the course of their delivery run.

In order to produce an optimised route, the software is capable of iterating approximately 2.5 million changes to the delivery schedule per second. The routing software continues to be improved. Recent developments have delivered significant improvements to the number of drops per route a driver can make, and reduced the time customers wait to be advised of available delivery slots during the ordering process on the Website. With Ocados vans travelling an average of over half a million miles each week, optimisation of the routing software is a significant driver of the overall efficiency of the Business. Each incremental improvement in routing has, therefore, the ability to drive considerable overall efficiencies. In the period from FYE 2007 to FYE 2009, average deliveries per van per week increased from 99 to 121 due in part to improved routing systems. This has meant that during that period, while the average number of weekly orders grew from 49,968 to 70,873, an increase of 42 per cent., the yearly average number of vans increased from 506 to 587, an increase of only 16 per cent. The routing software works in tandem with the Website to ensure that customers are offered delivery slots that ensure timely delivery and allow Ocado to make its deliveries as efficiently as possible. The routing systems allow Ocado to offer customers considerable choice over delivery slots, especially in areas of high penetration. In addition, customers will not be offered particular slots if the software calculates that it would be unable to deliver to that location at that time reliably or efficiently, and customers are encouraged to take particular slots through differential pricing. Customers are also offered green slots to help reduce Ocados carbon footprint by optimising the delivery route. Ocados Vans The Ocado fleet of over 700 vans uses the Mercedes Sprinter model, with various modifications. These modifications are unique to Ocado and have been developed by it in collaboration with a van customiser, Paneltex Limited (Paneltex), and Mercedes-Benz, over the last nine years. The back section of each van has two separate compartments, one of which is refrigerated, so that chilled, frozen and ambient food can be carried to the customer at the right temperature. Ocado owns 25 per cent. of the share capital of Paneltex and has the right to appoint (and has appointed) a director to its board. This enables the Group to gain a better understanding of developments in the light vehicle market and, in the past, to ensure that this key supplier is sufficiently funded. Ocado spends considerable amounts of time with engineers from Paneltex and Mercedes-Benz working, amongst other things, to improve the load-carrying capacity of its vans. Measures to improve the capacity have included removing the passenger seat and various unnecessary internal panels. The maximum weight that vans may carry is governed by law.

56

Part I

Information About the Company

Ocado leases all of its vans from either Mercedes-Benz Charterway or Lombard, other than a small number that it owns outright and uses for training purposes. Van leases typically last for five or six years and end on a staggered basis so that the van fleet is constantly being renewed. Newly leased vans (which tend to have a higher load capacity than the older ones) are rolled out at the busiest Spokes, with each Spokes vans then being sent down to the next busiest Spoke, the oldest vans being retired on reaching the end of their leases. Thus the vans at each Spoke are on a rolling programme of renewal. Separately, two electric vans are currently being trialled at the White City Spoke. Last mile solution All Ocado vans are equipped with a removable on-board computer (the Panasonic U1), referred to within the Business as the handheld device. The handheld device: includes a satellite navigation system which allows drivers to pinpoint the exact address of and find the quickest route to each customer on their route; functions as a tracking system allowing the Ocado customer services team to locate each van on a near real time basis; directs drivers to the position of the relevant totes in the van at each delivery; stores relevant customer and order details and provides bespoke functionality allowing the driver to offer excellent customer service. For example, if a customer has any complaints about their order (for instance, they are not happy with a substitution), the order can be edited and the total cost adjusted immediately by the driver using the handheld device, rather than the customer having to apply for a refund at a later date (Ocado does not charge customers until the drivers return to the Spoke, when the final order details are uploaded from the handheld device); and can be used to update a customers details (for example, with specific directions on finding a customers address or how long it takes to park outside the customers house).

All of these functions of the handheld device improve the efficiency of the service offered, reduce the scope for error and improve customer satisfaction. A combination of the dedication of Ocados delivery personnel and the functionality of the handheld device ensures that there is relatively little post-delivery adjustment to customers orders. According to Ocados management information, items delivered exactly as ordered was approximately 99 per cent. in each of FYE 2007, FYE 2008, FYE 2009 and P1-3 2010. An IT project is currently underway to develop further the software for the handheld device to enable dynamic tracking of the vans, provide advance warning of vans that are running behind schedule and improve functionality for the drivers, such as displaying potential parking places as they approach a customer location. December 2009 and January 2010 saw periods of prolonged and settled snow in much of the UK. During these periods, the Business coped well, with 98.7 per cent. of orders still being delivered on the day intended (compared to an average week of 99.99 per cent.). Subsequently, winter tyres have been acquired for the delivery fleet to try to ensure even better performance in future cold snaps. 8. Intellectual Property and Information Technology

IT Systems and interaction with the Business Ocado has a dedicated in-house software design and development team and uses increasingly less software supplied by third parties. Many of the IT systems that Ocado has developed provide solutions to problems for which off-the-shelf IT solutions either do not exist or are inadequate for the Business. Ocados 160-strong in-house IT team has written entire software packages such as the slot booking and delivery optimisation system, the package for the handheld device and the majority of the software for the WMS and the Website (including the Ocado On the Go applications). For this reason, IT research and development forms an important facet of Ocados strategy.

57

Part I

Information About the Company

Ocados in-house software development team continually improves Ocados software systems. One advantage of having an in-house team is that it can communicate directly and regularly with the staff using the software and tailor it precisely to the Businesss needs. In FYE 2009 there were almost daily new software releases developed by the in-house team. Many developments related to further improving the CFC control systems. The intellectual property for some software used within the Business is held by third parties. This includes commodity software, such as Oracle Financials and Microsoft Office, and software published under free and open source software licences, such as the GNU Public Licence or the Apache Licence. The Group also uses certain bespoke third party software, principally for historic reasons. This includes Dispatcher (the underlying software in the WMS), and parts of the database schemas underlying the Website and supply chain systems. Modifications made to the original Dispatcher source code by (i) Ocado; (ii) the software provider at Ocados request; or (iii) Ocado and the software provider together, are jointly owned by Ocado and the software provider. Charges over the IT Systems Ocados key IT Systems, including software and intellectual property, are subject to a charge in favour of Lloyds TSB Bank plc pursuant to Ocados facility with Lloyds TSB Bank plc. When that facility is repaid, those IT Systems will be subject to a charge in favour of Barclays Bank PLC as security trustee for the New Facility. Both facilities are more fully described in section 17.3 of Part XIII (Additional Information). Other intellectual property Ocados key brand is the Ocado name itself, which is used both as a plain word and in its stylised form together with the Ocado logo. Ocados portfolio of registered trade marks includes a series of UK and European marks which protect both the Ocado name and the Ocado name and logo in addition to a number of other trade marks. Ocado also owns a number of domain name registrations, including www.ocado.com but does not own any other registered rights (for example, patents or trade mark registrations outside the EU). Ocados sub-brands and other branding material, such as slogans, logos, colours and designs are also featured on the Website and in Ocado marketing. These materials are not protected by registered rights, but some protection may be afforded by unregistered design rights, unregistered trade marks and copyright. The Waitrose brand and Waitrose trade marks also feature in Ocado marketing and on the Website and are licensed by Waitrose under the Branding Arrangements, more fully described in section 17.1 of Part XIII (Additional Information). Charges over other intellectual property Ocados registered trade marks and future registrations, unregistered brands and the domain name www.ocado.com are subject to a mortgage under two separate security agreements both dated 11 September 2008, one in favour of Barclays Bank PLC and one in favour of Barclays Mercantile Business Finance Ltd. Data centre, resilience and disaster recovery Ocado has invested in building a data centre with standardised and scalable hardware, which provides onsite failover and an offsite disaster recovery facility located approximately 1 mile from the CFC. Ocado historically hosted the Website and applications offsite in a commercial data centre. In 2007 and 2008 Ocado invested 1.1 million in a new primary data centre located next to the CFC. This facility hosts all applications and the Website. The data centre is maintained by the in-house IT operations team. This facility has been designed so that a hardware failure on a live operational application will failover to either alternative hardware within the data centre or in the disaster recovery facility. Failover tests on the majority of databases were successfully completed during the first quarter of 2010.

58

Part I

Information About the Company

Resiliency to power failure is provided by uninterrupted power supplies, the CFCs diesel generators and a dedicated data centre generator. This power failure equipment is tested monthly and should support operations for at least two days. In the event of a disaster, Ocados business continuity plans will be invoked and the data centre applications can be hosted from an offsite IT room in the HQ building, which is approximately one mile from the CFC. This facility currently supports standby database servers, storage and network links, and is in the process of being expanded so that it can support all systems in the event of a disaster. In addition, the IT department operates an on-call rota to ensure that IT operational issues can be dealt with on a timely basis with minimal disruption to the Business. Ocados wide area network has three major locations (the CFC, head office site and the data centre). Each location has network connections to the other two, as a contingency against a failure in a single link or site. Ocado has dual internet connections: one provided by BT into the headquarters building and the other by NTL/Virgin into the CFC. Ocados network security employs common enterprise level hardware. In addition, Ocado contracts a third party to complete regular independent security testing on its network and systems. 9. Ocados people

Ocados staff are key to its Business and are the most visible part of the Business to its customers. Ocado aims, therefore, to achieve high levels of employee satisfaction in order to achieve high levels of performance. Ocado aims to do this in the following ways: Co-ownership: all of Ocados staff are granted share options in the Company (as described in more detail in section 11.1 of Part XIII (Additional Information)). To this end it is hoped that the Offers will prove attractive to employees, providing them with a liquid market for any Ordinary Shares they hold (or will hold when they exercise their share options). Empowerment: Ocados staff, in particular its van drivers (referred to as customer services team members or CSTMs) as the only face-to-face contact between customers and the Business, are empowered to make decisions, such as amending customer orders and invoices in the customers home, refunding damaged items and accepting rejections of substitutions. Training: Ocado staff are well trained. Pickers (referred to as personal shoppers), before starting work in the CFC, undertake a one-week training course and receive periodic refresher courses and training in new methods as necessary. CSTMs are fully trained by Ocado in-house and work to make sure the delivery process works smoothly and efficiently. The CSTM training is a customer-focused programme, which seeks to ensure that the face-to-face contact with customers at their homes exceeds customers expectations and provides an additional selling point for the Business. This includes factors such as delivering groceries into the customers kitchens, confirming whether the customer is satisfied with any substitutions and asking the customers whether they have any plastic bags for recycling. Incentivisation: In addition to co-ownership, personal shoppers are rewarded with higher pay the more productive they are. Similarly, CSTMs are given bonuses based on various factors including customer satisfaction. All weekly paid staff receive an increase in their hourly pay rate on each anniversary of the start of their employment for the first five years of their employment, which is aimed at encouraging staff loyalty. Engagement: A national Ocado Council and four subsidiary constituency Councils have been established to represent the views of Ocados staff to senior management. Ocado does not have recognition agreements with any trade union, although Ocado is currently in negotiations with Usdaw over its request for recognition as the trade union for all non-managerial Ocado employees employed at the CFC. These negotiations are taking place under the Trade Union and Labour Relations (Consolidation) Act 1992. The Group is aware of other trade unions having informally approached its employees at some of its Spoke sites, although has received no direct communications from them.

59

Part I

Information About the Company

The Directors would prefer the turnover of staff at Ocado to be lower, but do not consider staff turnover to be a cause for concern. The measures described above are all aimed at keeping staff turnover at a manageable level. For a breakdown of the number of staff employed by the Group in FYE 2007, FYE 2008 and FYE 2009, please see note 8 in Part V (Historical Financial Information relating to the Group). All of Ocados employees are employed in the UK. The average number of employees employed by Ocado during P1-6 2010 was 4,135. Ocado is committed to the principle of equal opportunity in employment. No applicant or employee receives less favourable treatment on the grounds of nationality, age, gender, religion, disability, race or sexual orientation. 10. Environmental awareness Ocado was voted Green Retailer of the Year 2009 in The Grocer Gold Awards, Large Retailer of the Year 2008 in the Online Green Awards and won Ethical/Green Practice 2009 at the IMRG E-Commerce Awards for Excellence. A traditional supermarket requires deliveries first to be made to a regional distribution centre and then to the supermarket itself. Customers then often drive to the supermarket in order to shop, and the supermarkets themselves require energy to be lit and heated and tend to have open fridges and freezers in an otherwise ambient environment. Ocado delivers straight from the CFC to a customers kitchen, which eliminates much of the carbon emissions generated by traditional supermarkets and their stores, and also reduces the number of cars on the road. Each Ocado delivery van replaces a significant number of car journeys every day. Other measures taken by Ocado to lower its carbon footprint and reduce its environmental impact include: closed-loop grocery bag recycling, whereby when making a delivery, drivers offer to collect used bags from customers which are recycled within the UK to make new Ocado grocery bags; wasting, the Directors believe, significantly less food as a percentage of gross sales than any of its competitors; and signing up to the Climate Change Agreement (with the Carbon Trust), which places certain obligations on management to monitor and lower carbon usage.

Ocado has co-developed two prototype electric powered vans, which are currently completing testing before being introduced into Ocados delivery fleet. 11. Research and development As described above, the Groups research and development primarily focus on IT and improvements to the CFC and the material handling equipment in it. In addition, the Company dedicates research and development resources to the other elements of the Business. The research and development team actively investigates ways of making the Business more efficient. The team regularly attends trade shows and tours the warehouse facilities of existing and potential goods suppliers and those of non-competing companies. The team also ensures that it maintains a close relationship with its goods suppliers and its facilities and technology suppliers, helping it to pick up on supplier innovations and, where relevant, carry out joint research on areas of mutual interest. For example, Ocado has worked actively with one of the suppliers of the conveyor systems used in the CFC to develop technology that allows tote traffic on two conveyors to merge onto a single conveyor at a rate of 3,600 totes per hour, approximately 50 per cent. higher than the industry standard.

60

Part I 12. Regulation

Information About the Company

Ocados obligations as an online grocer include the safe and careful handling of products from receipt at the CFC through to delivery to the customers home. Ocado has a health and safety department with managers dedicated to the CFC and the delivery operation, respectively. Ocado also has a food hygiene department, and procedures are monitored closely to ensure the protection of product safety, quality standards and compliance with all food law. Scheduled internal and external audits are conducted by qualified food technologists to ensure procedural compliance and adherence with Ocados Hazard Analysis Critical Control Point system. This is a system that identifies, evaluates, and controls hazards that are significant for food safety, taking account of the Food Safety Act 1990, the Food Hygiene (General) Regulations 1995 and the Food Hygiene (Temperature Control) Regulations 1995. Ocado operates a fleet of 55 LGV tractors and approximately 90 LGV trailers under its Operators Licence issued by the UK Vehicle and Operator Services Agency. Road Transport legislation and regulations determine the maximum load that the LGVs and vans can carry, and the maximum number of hours a driver can work in a 24 hour period.

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PART II DIRECTORS The Directors of the Company are: Michael Grade (Non-Executive Chairman) David Grigson (Non-Executive Director and Senior Independent Director) Tim Steiner (Chief Executive Officer) Neill Abrams (Director of Legal and Business Affairs) Andrew Bracey (Chief Financial Officer) Jason Gissing (Director of People, Culture and Communications) Ruth Anderson (Non-Executive Director) Robert Gorrie (Non-Executive Director) Jorn Rausing (Non-Executive Director) David Young (Non-Executive Director) Patrick Lewis (Non-Executive Director) Michael Robarts (Non-Executive Director)

The business address of each Director is Titan Court, 3 Bishops Square, Hatfield Business Park, Hatfield, Hertfordshire AL10 9NE. Michael Grade is non-executive chairman and joined the Board in 2006. He has had a long and distinguished career in broadcasting, encompassing ITV, BBC and 9 years as Chief Executive of Channel 4 Television. He is currently non-executive chairman of Pinewood and Shepperton Film Studios. Michael sits on the nomination committee. David Grigson is a non-executive Director and joined the Board in March 2010. He was Chief Financial Officer of Reuters Group PLC until May 2008. Prior to joining Reuters in 2000, he was group finance director of Emap PLC and chairman of Emap Digital. His current non-executive directorships include Standard Life PLC (which he joined in October 2009) and he is chairman of Creston PLC. Until March 2010 he was a non-executive director of Carphone Warehouse PLC. David is the Senior Independent Director on the Board and sits on the audit committee and chairs the nomination committee. Tim Steiner is the Chief Executive Officer and is a founding Director. As well as having general oversight of the Business, the IT, logistics and engineering, warehousing, operations, business planning and retail divisions of Ocado report directly to him. Prior to Ocado, Tim spent eight years as a banker at Goldman Sachs. During his time there, he was based in London, Hong Kong and New York in the Fixed Income division. Tim graduated from Manchester University with an honours degree in economics, finance and accountancy in 1992. Neill Abrams is Director of Legal and Business Affairs and has been a Director since September 2000. He is responsible for Ocados business support, including legal, insurance, risk management, and service delivery divisions. Prior to Ocado, Neill was a barrister in practice at One Essex Court and an executive director and counsel at Goldman Sachs in London. Neill graduated from Sidney Sussex College, Cambridge with a masters degree in law in 1989, having previously obtained BA and LLB degrees from the University of the Witwatersrand in Johannesburg. He is also admitted as a member of the New York Bar and as a South African Advocate. Andrew Bracey joined the Ocado Board as Chief Financial Officer in November 2009 and previously had an 18 year career in investment banking with a significant focus on the consumer and retail sector. Prior to Ocado, he was Head of Consumer and Retail Investment Banking at Jefferies International. Andrew was at Barclays Capital from 2003 as Managing Director, Principal Investments which undertook a number of consumer and retail investments, including Somerfield and Alliance Boots. Between 2000 and 2003 he was a Managing Director in the Investment Banking division of Credit Suisse. Andrew started his career at UBS in 1991, where he ran the Retail team in Corporate Finance and advised a number of retail companies including Kingfisher, Dairy Farm and Somerfield. He studied history of architecture at Magdalene College, Cambridge, having previously obtained a BA from the University of East Anglia.

62

Part II

Directors

Jason Gissing is Director of People, Culture and Communications and is a founding Director. He has board responsibility for Ocados people, culture and communications and is a co-founder of Ocado. He leads customer and employee engagement, working on internal and external communication including brand and people motivation, retention and development. In addition, Jason leads Ocados green initiatives and some operational aspects of the business such as service delivery and product range. He was previously Chief Financial Officer. Prior to Ocado, Jason spent eight years as a banker at Goldman Sachs. He graduated from Worcester College, Oxford with an honours degree in jurisprudence in 1992. Ruth Anderson is a non-executive Director and joined the Board in March 2010. Until April 2009 she was a Vice-Chairman of KPMG in the UK. She joined KPMG in 1976 and became a partner in 1989. She has worked extensively as an adviser with UK and international businesses and is a fellow of the Institute of Chartered Accountants in England and Wales and a member of the Chartered Institute of Taxation. Ruth is a non-executive director of The Royal Parks, an executive agency of the Department of Culture, Media and Sport, a trustee of The Eve Appeal, a gynaecological cancer charity, and a trustee of the Duke of Edinburghs Award. Ruth chairs the audit committee and sits on the remuneration and nomination committees. Robert Gorrie is a non-executive Director. From April 2000 until early 2005, Robert was Ocados Logistics Director. He was previously Group Director of Information Technology at Transport Development Group PLC (TDG), reporting directly to the Group Chief Executive. He has a wealth of experience in IT and logistics services more generally. Robert spent 10 years with TDG, establishing e-business as a strategic business priority. Prior to that he spent 10 years in North America with the logistics service business Christian Salvesen PLC, where he reached the position of Director of Business Development before moving to TDG. Robert graduated from Corpus Christi College, Oxford with an honours degree in modern history and economics. Robert sits on the audit, remuneration and nomination committees. Jorn Rausing joined the Board in 2003 with the initial investment by Apple Trust (of which he is a beneficiary) in Ocado. He is a non-executive member of the Tetra Laval Group board, and a member of the boards of Alfa Laval AB and DeLaval Holdings AB. Jorn is also Tetra Laval Groups Head of Mergers and Acquisitions. He holds a degree in business administration from Lund University, Sweden. Jorn sits on the nomination and remuneration committees. David Young is a non-executive Director and joined the Ocado Board in 2000 with the initial investment in Ocado by John Lewis. He retired from John Lewis in 2002 where he was deputy chairman. David previously worked for the Ministry of Defence between 1963 and 1982 with a secondment to the Cabinet Office from 1975 to 1977. David joined John Lewis in February 1982, where he became finance director and a member of the board in 1987 and was appointed deputy chairman in February 1993. David served as an independent member of the steering board of Companies House from 1988 to 1993. He was treasurer of the Open University from 1997 until 2001, and a member of its council from 1996 until 2001. He was a trustee of the Royal Air Force Museum from 1999 until 2005, a trustee of the Textile Industry Childrens Trust from 2000 to 2008 and a member of the advisory panel of Greenwich Hospital from 2002 to 2007. David was the chairman of the Higher Education Funding Council for England from 2001 to 2007. He is currently the treasurer of the Soil Association and a member of the council of Sheffield University. David was appointed CBE in 2007. David chairs the remuneration committee and sits on the audit and nomination committees. Patrick Lewis is a non-executive Director and was appointed to the Board by the John Lewis Pension Fund. Patrick joined the Board in October 2009. Having previously worked for Bain & Company and Proctor & Gamble, Patrick joined the John Lewis Partnership in 1994. He has been Supply Chain Director and Retail Operations Director for John Lewis and is now Partners Counsellor on the John Lewis Partnership Board. Patrick sits on the nomination committee. Michael Robarts is a non-executive Director and was appointed to the Board by the John Lewis Pension Fund. Michael joined the Board in January 2010. Michael previously worked for Hewitt Associates, advising major occupational pension schemes, including the John Lewis Pension Fund. He was appointed a director of the John Lewis Pension Fund following his retirement from Hewitt in 2009. Prior to joining Hewitt in 1999, he was employed by N M Rothschild & Sons (as a director from 1977) and subsequently by Fleming Investment Management from 1989. He is a Chartered Accountant. Michael will step down from the Board following Admission. Michael currently sits on the nomination committee. Except as described in section 13.2 of Part XIII (Additional Information) all non-executive Directors are deemed by the Company to be independent.

63

PART III SELECTED HISTORICAL FINANCIAL INFORMATION The following selected historical consolidated financial information relating to the Group has been extracted without material adjustment from the historical financial information included in Part V of this Prospectus. Also included below is certain unaudited operating information which has been derived from information extracted from management accounts and internal financial and operating reporting systems and not from the historical financial information included in Part V of this document for the periods described. The selected financial and unaudited operating data set out below should also be read in conjunction with Part IV (Operating and Financial Review) and Part V (Historical Financial Information Relating to the Group) of this Prospectus. In this Selected Historical Financial Information, references to P1-3 2009 and P1-3 2010 refer to the 12 weeks ended 22 February 2009 and 21 February 2010, respectively. References to FYE 2007, FYE 2008 and FYE 2009 refer to the 52 weeks ended 2 December 2007, 30 November 2008 and 29 November 2009, respectively. Certain figures contained in this document, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances (i) the sum or percentage change of such numbers may not conform exactly with the total figure given; and (ii) the sum of the numbers in a column or a row in certain tables may not conform exactly with the total figure given for that column or row. 1. Consolidated income statement data of the Group

The table below sets out the consolidated income statement data of the Group for FYE 2007, FYE 2008, FYE 2009, P1-3 2009 and P1-3 2010:
FYE 2007 million FYE 2008 million FYE 2009 million P1-3 2009 (unaudited) million P1-3 2010 million

Continuing operations Revenue . . . . . . . . . . . . . . . . . . . . Cost of sales . . . . . . . . . . . . . . . . . Gross profit . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . Distribution costs . . . . . . . . . . . . . . Operating profit/(loss) before administrative expenses . . . . . . Administrative expenses . . . . . . . . . Operating loss . . . . . . . . . . . . . . . Finance income . . . . . . . . . . . . . . . Finance costs . . . . . . . . . . . . . . . . Loss before tax . . . . . . . . . . . . . . Taxation . . . . . . . . . . . . . . . . . . . . Loss for the period attributable to the owners of the Group . . . . . .

272.9 (184.9) 88.0 0.6 (93.5) (4.9) (25.1) (30.1) 0.8 (10.9) (40.2) (40.2)
pence

321.3 (218.5) 102.8 1.8 (101.1) 3.5 (25.2) (21.6) 0.1 (11.8) (33.3) (33.3)
pence

402.0 (279.2) 122.8 2.6 (110.3) 15.1 (29.5) (14.4) (11.1) (25.5) 2.3 (23.2)
pence

84.6 (58.9) 25.7 0.5 (24.6) 1.6 (6.2) (4.6) (2.7) (7.2) (7.2)
pence

110.2 (76.9) 33.3 1.2 (28.3) 6.2 (8.1) (1.9) (2.1) (4.0) (4.0)
pence

Loss per share Basic and diluted loss per share . . .

(1)

(1)

(12.12)

(9.77)

(6.05)

(1.92)

(0.99)

Loss per share is calculated by dividing the loss attributable to equity holders by the weighted average number of Ordinary Shares and Preference Shares in issue during the period excluding 32,476,700 Ordinary Shares held by the EBT Trustee, adjusted to reflect the conversion of Ocado Limited Ordinary Shares and Ocado Limited Preference Shares to Ordinary Shares and Preference Shares on a 1:100 basis on 9 February 2010.

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Part III 2. Consolidated balance sheet data of the Group

Selected Historical Financial Information

The table below sets out the consolidated historical balance sheets of the Group as at the dates indicated.
2 December 2007 million As at 30 November 21 November 2008 2009 million million 21 February 2010 million

Non-current assets Intangible assets . . . . . . . . . . . . Property, plant and equipment . . . Deferred tax asset . . . . . . . . . . . Available-for-sale financial assets

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

6.8 89.9 0.4 97.1

7.0 90.5 0.4 98.0 9.1 12.0 5.9 27.0 125.0 (40.3) (15.0) (14.5) (10.0) (79.8) (52.8) (28.4) (53.7) (1.1) (0.2) (83.4) (38.2) 281.6 1.1 (321.0) (38.2)

6.7 90.3 2.3 0.4 99.6 9.2 14.7 13.0 36.9 136.6 (47.2) (12.1) (19.7) (79.0) (42.0) (42.7) (45.7) (1.1) (0.4) (89.8) (32.2) 310.8 (343.0) (32.2)

6.9 90.1 2.3 0.4 99.8 9.5 15.5 10.4 35.4 135.2 (46.5) (27.8) (19.3) (93.5) (58.1) (28.2) (46.3) (1.1) (0.4) (76.0) (34.4) 8.7 (47.7) (116.2) 120.9 (34.4)

Current assets Inventories . . . . . . . . . . . . . . . . . . . . . . . Trade and other receivables . . . . . . . . . . Cash and cash equivalents . . . . . . . . . . . Total Assets . . . . . . . . . . . . . . . . . . . . . Current liabilities Trade and other payables . . . . . Borrowings . . . . . . . . . . . . . . . Convertible loan stock . . . . . . . Obligations under finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.3 9.2 10.9 28.4 125.6 (33.2) (0.9) (5.1) (39.2) (10.8) (46.3) (33.1) (49.7) (1.0) (0.2) (130.3) (43.9) 241.1 8.2 (293.2) (43.9)

Net current liabilities . . . . . . . . . . . . . . Non-current liabilities Borrowings . . . . . . . . . . . . . . . Convertible loan stock . . . . . . . Obligations under finance leases Derivative liability . . . . . . . . . . . Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net liabilities . . . . . . . . . . . . . . . . . . . . Equity Share capital . . . . . . . . . . . . . . Share premium account . . . . . . Treasury reserve . . . . . . . . . . . Reverse acquisition reserve . . . Convertible loan interest reserve Accumulative (deficit)/surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deficit attributable to equity holders . . .

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Part III 3.

Selected Historical Financial Information

Consolidated cash flow data of the Group

The table below sets out the consolidated cash flow statement data of the Group for FYE 2007, FYE 2008, FYE 2009, P1-3 2009 and P1-3 2010:
FYE 2007 million FYE 2008 million FYE 2009 million P1-3 2009 (unaudited) million P1-3 2010 million

Cash flow from operating activities Loss before income tax . . . . . . . . . . Adjustments for: Depreciation expense . . . . . . . . . . Amortisation expense . . . . . . . . . . Impairment of property, plant and equipment . . . . . . . . . . . . . . . . Provisions for dilapidations expense Share-based payments charge . . . . Finance costs . . . . . . . . . . . . . . . Finance income . . . . . . . . . . . . . . Changes in working capital: (Increase)/decrease in inventories . (Increase)/decrease in trade and other receivables . . . . . . . . . . . Increase/(decrease) in trade and other payables . . . . . . . . . . . . . Net cash inflow/(outflow) from operations . . . . . . . . . . . . . . . . . Finance costs paid . . . . . . . . . . . . . Net cash inflow/(outflow) from operating activities . . . . . . . . . . . Cash flow from investing activities Purchase of property, plant and equipment . . . . . . . . . . . . . . . . . Proceeds from sale of property, plant and equipment . . . . . . . . . . . . . . Purchase of intangible assets . . . . . . Finance income received . . . . . . . . . Net cash used in investing activities . . . . . . . . . . . . . . . . . . Cash flow from financing activities Proceeds from the issue of ordinary share capital . . . . . . . . . . . . . . . . Proceeds from borrowings . . . . . . . . Repayment of borrowings . . . . . . . . Proceeds from asset based financing arrangements . . . . . . . . . . . . . . . Repayment of obligations under finance leases . . . . . . . . . . . . . . . Net cash from/(used in) financing activities . . . . . . . . . . . . . . . . . . Net increase/(decrease) in cash and cash equivalents . . . . . . . . . . . . Cash and cash equivalents at beginning of period . . . . . . . . . . . Cash and cash equivalents/(debt) at end of period . . . . . . . . . . . . .

(40.2) 17.6 2.4 0.6 0.2 10.9 (0.8) (1.1) 1.9 (9.7) (18.1) (8.1) (26.2)

(33.3) 19.8 3.9 0.1 0.1 11.8 (0.1) (0.8) (2.8) 6.6 5.3 (9.0) (3.7)

(25.5) 17.9 4.7 1.0 0.2 0.1 11.1 (0.1) (2.7) 10.1 16.8 (12.7) 4.1

(7.2) 4.0 1.0 2.7 0.9 (1.2) (3.2) (3.0) (2.8) (5.8)

(4.0) 4.3 1.0 2.1 (0.3) (0.7) (0.8) 1.7 (2.1) (0.4)

(19.6) 0.2 (3.4) 2.0 (20.7)

(15.7) (4.1) 0.1 (19.8)

(15.2) (4.4) (19.6)

(5.5) (0.9) (6.3)

(1.6) (1.2) (2.8)

30.2 25.2 (10.6) 10.0 (7.9) 46.8 (0.1) 11.0 10.9

17.9 8.0 (11.1) 9.0 (5.3) 18.4 (5.0) 10.9 5.9

29.1 25.1 (28.4) 7.1 (10.3) 22.7 7.2 5.9 13.0

2.1 (0.6) 5.1 (1.6) 5.0 (7.2) 5.9 (1.3)

1.7 3.0 (1.8) 1.8 (4.1) 0.7 (2.6) 13.0 10.4

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Part III 4.

Selected Historical Financial Information

Non-IFRS performance measures and other operating information

The table below sets out the Groups gross sales and EBITDA for FYE 2007, FYE 2008, FYE 2009, P1-3 2009, P1-3 2010:
FYE 2007 million FYE 2008 million FYE 2009 million P1-3 2009 (unaudited) million P1-3 2010 million

Gross sales(1) . . . . . . . . . . . . . . . EBITDA(2) . . . . . . . . . . . . . . . . . .

(1)

291.4 (9.5)

341.0 2.2

427.3 9.2

89.6 0.5

117.2 3.4

The Group defines gross sales as sales (net of returns), including charges for delivery, before deducting relevant vouchers/ offers and value added tax. Gross sales is not a measure of operating performance under IFRS-EU and an investor should not consider it as an alternative to any other measure of performance under generally accepted accounting principles. Because other companies may calculate gross sales differently from the way in which the Group does, gross sales may be of limited usefulness as a comparative measure. The following table sets out the reconciliation of gross sales to revenue: FYE 2007 million 272.9 15.2 3.4 291.4 FYE 2008 million 321.3 17.1 2.5 341.0 FYE 2009 million 402.0 18.8 6.5 427.3 P1-3 2009 (unaudited) million 84.6 3.9 1.0 89.6 P1-3 2010 million 110.2 5.6 1.4 117.2

Revenue . . . . . . . . . . . . . . . . . . VAT . . . . . . . . . . . . . . . . . . . . . Marketing vouchers . . . . . . . . . . . Gross sales . . . . . . . . . . . . . . . . (2)

The Group defines EBITDA as operating profit/(loss) before amortisation expenses, impairment of property, plant and equipment, depreciation of property, plant and equipment, net finance cost and taxation. The Directors believe that EBITDA is useful in evaluating its operating performance because a number of companies also publish these figures as key performance indicators. EBITDA is not a measure of operating performance in accordance with IFRS-EU. EBITDA should not be considered a substitute for gross profit/(loss), operating profit/(loss), profit/(loss) before tax, cash flow from operating activities or other income or cash flow statement data as determined in accordance with IFRS-EU, or as a measure of profitability or liquidity. EBITDA is included herein as a supplemental disclosure, because the Directors believe that this measure, when considered in connection with cash flows from operating, investing and financing activities, provides useful comparative information to an investor and helps investors evaluate the performance of the underlying business as it removes the impact of (1) differences in capital structure, including the effects of finance income and expenses; (2) differences in tax regimes; (3) differences in the method of acquisition and approach to impairment testing of productive assets; and (4) differences in the historic timing of initial investments and the corresponding differences in depreciation and amortisation charges. However, because other companies may calculate EBITDA differently from the way in which the Group does, EBITDA may be of limited usefulness as a comparative measure. Other limitations are: (1) EBITDA does not reflect cash expenditures, or future requirements for capital expenditures or contractual commitments; (2) EBITDA does not reflect changes in, or cash requirements for, working capital needs for the Group; (3) EBITDA does not reflect the finance costs, or the cash requirements necessary to service the principal payments on the Groups debt; (4) EBITDA does not reflect taxation or the cash requirements for any tax payments; and (5) although impairment is a non-cash charge, the assets being impaired will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements. The following table sets out the reconciliation of EBITDA to operating loss: FYE 2007 million (30.1) FYE 2008 million (21.6) FYE 2009 million (14.4) P1-3 2009 (unaudited) million (4.6) P1-3 2010 million (1.9)

Operating loss . . . . . . . . . . . . Adjustments for: Depreciation of property, plant and equipment . . . . . . . . . . . . . . Impairment of property, plant and equipment . . . . . . . . . . . . . . Amortisation expense . . . . . . . .

. .

. . . . . .

17.6 0.6 2.4 (9.5)

19.8 0.1 3.9 2.2

17.9 1.0 4.7 9.2

4.0 1.0 0.5

4.3 1.0 3.4

EBITDA . . . . . . . . . . . . . . . . . . .

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Part III

Selected Historical Financial Information

The following table sets out a summary of selected unaudited operating information for the Business for FYE 2007, FYE 2008, FYE 2009, P1-3 2009 and P1-3 2010:
FYE 2007 (unaudited) FYE 2008 (unaudited) FYE 2009 (unaudited) P1-3 2009 (unaudited) P1-3 2010 (unaudited)

Average order size ()(1) . . . . . . . Average orders per week . . . . . . CFC efficiency (units per hour)(2) . Average deliveries per van per week . . . . . . . . . . . . . . . . . . . Average number of operational staff (full time equivalent) . . . . . Average product wastage (per cent. of gross sales)(3) . . . . . . . Items delivered exactly as ordered (per cent.)(4) . . . . . . . . . . . . . .

112.17 49,968 95 99 2,033(5) 1.15 98.59

116.30 56,384 114 106 2,730 0.78 99.11

115.94 70,873 124 121 3,151 0.57 99.41

122.81 60,769 114 107 3,119 0.64 99.35

119.38 81,823 124 126 3,610 0.65 98.76

Source: The information in the table above is derived from information extracted from management accounts and internal financial and operating reporting systems and is unaudited. (1) (2) (3) (4) (5) Average retail value of goods a customer receives (including VAT and delivery charge) per order. Measured as units dispatched from the CFC per hour worked by CFC operational personnel. Value of products purged for having passed Ocados use by life guarantee and stock adjustments (net of sales to the company shop), divided by gross sales. Percentage of all items delivered exactly as ordered, i.e. the percentage of items neither missing nor substituted. Excludes, for the period prior to their transfer to Ocado, staff working for a third-party logistics contractor who transferred to Ocado in April 2007.

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PART IV OPERATING AND FINANCIAL REVIEW The following operating and financial review is intended to convey managements perspective on the operating performance and financial condition of the Group during the period under review, as measured in accordance with IFRS-EU. This disclosure is intended to assist readers in understanding and interpreting the consolidated financial information of the Group included elsewhere in this Prospectus. The discussion should be read in conjunction with Part III (Selected Historical Financial Information) and Part V (Historical Financial Information relating to the Group). The Group is required to comply with IFRS-EU, and its accounting policies have been established accordingly. The following discussion contains forward-looking statements. The Group has based these forwardlooking statements on its current projections and expectations which the Directors consider reasonable about future events. The Groups actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors, including those set forth in the Risk Factors section in this Prospectus. See Forward-looking Statements. In this Operating and Financial Review, references to P1-3 2009 and P1-3 2010 refer to the 12 weeks ended 22 February 2009 and 21 February 2010, respectively, and references to P1-6 2009 and P1-6 2010 refer to the 24 weeks ended 17 May 2009 and 16 May 2010, respectively. References to FYE 2007, FYE 2008 and FYE 2009 refer to the 52 weeks ended 2 December 2007, 30 November 2008 and 29 November 2009, respectively. Certain figures contained in this Part IV, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, (i) the sum or percentage change of the numbers may not conform exactly with the total figure given; and (ii) the sum of the numbers in a column or row in certain tables may not conform exactly with the total figure given for that column or row. Unless stated otherwise, all financial information in Part IV that relates to the Group for FYE 2007, FYE 2008, FYE 2009 and P1-3 2010 has been audited. For the avoidance of doubt, such financial information relating to the Group does not include operating information relating to the Group, even where such operating information includes certain financial metrics. Such operating information which is not audited includes, without limitation, average order size and average product wastage. None of the financial information in this Part IV relating to the Group for P1-3 2009, P1-6 2009 or P1-6 2010 has been audited, nor has any financial information not relating to the Group. 1. Background

Ocado is the only dedicated online supermarket in the UK. Ocado provides its service from a single warehouse, the CFC, and seven Spokes, while its competitors provide online grocery services operating primarily out of existing stores. The Directors believe that Ocados business model offers a cost advantage compared to providing online grocery services out of existing stores due to savings generated by the automation of equivalent store operations in the CFC, the absence of regional distribution centres, direct delivery, real-time control over stock, higher stock turn, minimisation of wastage and greater anticipation of supply and demand. The Groups gross sales(1) increased from 291.4 million in FYE 2007 to 427.3 million in FYE 2009 and from 89.6 million in P1-3 2009 (unaudited) to 117.2 million in P1-3 2010. As the volume of gross sales has increased, the Group has been able to deliver significant improvements in the performance of both the CFC and the delivery operations. Although the Group is not profitable on an operating profit level, the Group achieved positive EBITDA(2) of 2.2 million and 9.2 million in FYE 2008 and FYE 2009, respectively (FYE 2007: (9.5) million), and 3.4 million in P1-3 2010. These improvements were delivered while managing the increasing complexity of the operation as a consequence of the extension of the range and services offered. The Group may continue to make losses before taxation in the future while it pursues its growth strategy. Ocado has operated and continuously expanded and upgraded the CFC and its delivery operations since September 2002. The Groups prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in new and rapidly evolving markets such as online commerce and in particular online grocery retail. In view of the rapidly evolving nature of the Business and Ocados rate of growth in prior years, the Directors believe that period-to-period comparisons of its operating results, including the Groups operating profit margin and cost of sales as a percentage of revenue, should not be relied upon as an indication of future performance.

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Operating and Financial Review

The following table sets out a summary of the Groups gross sales, revenue, operating loss and EBITDA for FYE 2007, FYE 2008, FYE 2009, P1-3 2009 and P1-3 2010:
FYE 2007 million FYE 2008 million FYE 2009 million P1-3 2009 (unaudited) million P1-3 2010 million

Gross sales(1) . Revenue . . . . Operating loss EBITDA(2) . . . .

(1)

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

291.4 272.9 (30.1) (9.5)

341.0 321.3 (21.6) 2.2

427.3 402.0 (14.4) 9.2

89.6 84.6 (4.6) 0.5

117.2 110.2 (1.9) 3.4

The Group defines gross sales as sales (net of returns), including charges for delivery, before deducting relevant vouchers/ offers and value added tax. Gross sales is not a measure of operating performance under IFRS-EU and an investor should not consider it as an alternative to any other measure of performance under generally accepted accounting principles. Because other companies may calculate gross sales differently from the way in which the Group does, gross sales may be of limited usefulness as a comparative measure. The following table sets out the reconciliation of gross sales to revenue:
FYE 2007 million FYE 2008 million FYE 2009 million P1-3 2009 (unaudited) million P1-3 2010 million

Revenue . . . . . . . . . . . . . . . . VAT . . . . . . . . . . . . . . . . . . . Marketing vouchers . . . . . . . . . Gross sales . . . . . . . . . . . . . . (2)

272.9 15.2 3.4 291.4

321.3 17.1 2.5 341.0

402.0 18.8 6.5 427.3

84.6 3.9 1.0 89.6

110.2 5.6 1.4 117.2

The Group defines EBITDA as operating profit/(loss) before amortisation expenses, impairment of property, plant and equipment, depreciation of property, plant and equipment, net finance cost and taxation. The Directors believe that EBITDA is useful in evaluating its operating performance because a number of companies also publish these figures as key performance indicators. EBITDA is not a measure of operating performance in accordance with IFRS-EU. EBITDA should not be considered a substitute for gross profit/(loss), operating profit/(loss), profit/(loss) before tax, cash flow from operating activities or other income or cash flow statement data as determined in accordance with IFRS-EU, or as a measure of profitability or liquidity. EBITDA is included herein as a supplemental disclosure, because the Directors believe that this measure, when considered in connection with cash flows from operating, investing and financing activities, provides useful comparative information to an investor and helps investors evaluate the performance of the underlying business as it removes the impact of (1) differences in capital structure, including the effects of finance income and expenses; (2) differences in tax regimes; (3) differences in the method of acquisition and approach to impairment testing of productive assets; and (4) differences in the historic timing of initial investments and the corresponding differences in depreciation and amortisation charges. However, because other companies may calculate EBITDA differently from the way in which the Group does, EBITDA may be of limited usefulness as a comparative measure. Other limitations are: (1) EBITDA does not reflect cash expenditures, or future requirements for capital expenditures or contractual commitments; (2) EBITDA does not reflect changes in, or cash requirements for, working capital needs for the Group; (3) EBITDA does not reflect the finance costs, or the cash requirements necessary to service the principal payments on the Groups debt; (4) EBITDA does not reflect taxation or the cash requirements for any tax payments; and (5) although impairment is a non-cash charge, the assets being impaired will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements. The following table sets out the reconciliation of EBITDA to operating loss: FYE 2007 million (30.1) FYE 2008 million (21.6) FYE 2009 million (14.4) P1-3 2009 (unaudited) million (4.6) P1-3 2010 million (1.9)

Operating loss . . . . . . . . . . . . Adjustments for: Depreciation of property, plant and equipment . . . . . . . . . . . Impairment of property, plant and equipment . . . . . . . . . . . . . . Amortisation expense . . . . . . . . EBITDA . . . . . . . . . . . . . . . .

17.6 0.6 2.4 (9.5)

19.8 0.1 3.9 2.2

17.9 1.0 4.7 9.2

4.0 1.0 0.5

4.3 1.0 3.4

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Operating and Financial Review

The following table sets out a summary of selected unaudited operating information for the Business for FYE 2007, FYE 2008, FYE 2009, P1-3 2009 and P1-3 2010:
FYE 2007 (unaudited) FYE 2008 (unaudited) FYE 2009 (unaudited) P1-3 2009 (unaudited) P1-3 2010 (unaudited)

Average order size ()(1) . . . . . Average orders per week . . . . . CFC efficiency (units per hour)(2) . . . . . . . . . . . . . . . . Average deliveries per van per week . . . . . . . . . . . . . . . . . Average number of operational staff (full-time equivalent) . . . Average product wastage (per cent. of gross sales)(3). . Items delivered exactly as ordered (per cent.)(4) . . . . . .

112.17 49,968 95 99 2,033(5) 1.15 98.59

116.30 56,384 114 106 2,730 0.78 99.11

115.94 70,873 124 121 3,151 0.57 99.41

122.81 60,769 114 107 3,119 0.64 99.35

119.38 81,823 124 126 3,610 0.65 98.76

Source: The information in the table above is derived from information extracted from management accounts and internal financial and operating reporting systems and is unaudited. (1) (2) (3) (4) (5) Average retail value of goods a customer receives (including VAT and delivery charge) per order. Measured as units dispatched from the CFC per hour worked by CFC operational personnel. Value of products purged for having passed Ocados use by life guarantee and stock adjustments (net of sales to the company shop), divided by gross sales. Percentage of all items delivered exactly as ordered, i.e. the percentage of items neither missing nor substituted. Excludes, for the period prior to their transfer to Ocado, staff working for a third-party logistics contractor who transferred to Ocado in April 2007.

The Directors use this unaudited information to provide insight into the underlying trends in the Business. The Directors believe that trends in gross sales and revenue are explained by the size of customer baskets (average order size) and the number of purchases in a given week (average orders per week). The key operational trends are explained by examining productivity of the CFC staff (CFC efficiency) and of the delivery vehicles (average deliveries per van per week). Changes in these operational metrics reflect changes in operational efficiency due to both operational leverage and process improvements. Both operational metrics have shown significant improvement in recent years. The Directors have a long-term target for efficiency of the existing CFC of approximately 180 units per hour (compared to 124 units per hour achieved in FYE 2009) and approximately 175 average deliveries per van per week (compared to 121 deliveries per van per week achieved in FYE 2009). These long-term targets assume that the existing CFC has reached and is operating at its maximum effective capacity of 180,000 orders per week. The targeted improvements in CFC efficiency are expected to be driven by improvements in technology mix through upgrading the existing equipment at the CFC and increased automation of the picking process and continued development of more intelligent IT algorithms to increase the efficiency of existing CFC operations. Increases in deliveries per van per week are expected to be driven primarily by increasing efficiency due to increasing customer density (the number of Ocado customers in any given postcode), continued development of more intelligent IT algorithms to allow efficient allocation of driver resources and optimised route planning. These forward-looking statements may be affected by the factors set forth in Risk Factors. The Groups activities consist solely of the retailing and distribution of groceries and related products within the UK. Consequently all activities relate to this one segment. 2. Principal factors affecting results of operations

The Groups operating and financial results are affected by a number of factors. These factors have materially influenced the Groups financial condition and results of operations during the periods under review and are expected to continue to influence the Groups financial condition and results of operations.

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Operating and Financial Review

2.1 Growth of the online grocery market in the UK Estimates of the size of the UK online grocery market for 2009 vary considerably, with estimates ranging from 2.8 billion to 5.3 billion. The Directors estimate the total market size to be closer to the lower end of this range at approximately 3 billion. The Directors believe that the UK online grocery market has grown and will continue to grow substantially over the next five years, fuelled by a general trend of shoppers spending more online. See section 2 of Part I (Information about the Company) for further detail. 2.2 Increasing capacity of the Business Ocado has expanded the effective capacity of the CFC, from early FYE 2007, when Ocado was processing fewer than 55,000 orders per week, to the current effective capacity of approximately 105,000 orders per week. The CFCs effective capacity takes into account Ocados order profile, which varies on a daily basis with delivery peaks typically occurring on Mondays, Fridays and Saturdays. The effective capacity of the CFC is lower than its maximum capacity, which assumes full utilisation of the CFC throughout the week. Ocado is continuing to expand the capacity of the CFC and plans to further expand the effective capacity to approximately 150,000 orders per week and further to approximately 180,000 orders per week, subject to suitable growth in order volumes and incurring necessary additional capital expenditure. Ocado also plans to develop a second CFC to increase both the geographic reach of the Business and the overall capacity at which it operates. The second CFC is expected to have an effective capacity to process approximately 180,000 orders per week once fully operational and in the short to medium term it is intended to have an effective capacity of approximately 120,000 orders per week (although it will not process this number of orders from opening). The Group does not expect to begin operating the second CFC until the end of 2012 at the earliest (assuming construction begins in the first quarter of 2011 and, to the extent necessary, appropriate financing is obtained). The second CFC is expected to become fully operational over several months by gradually moving some volume from the existing CFC and serving new customer growth, during which time Ocados distribution costs as a percentage of gross sales are expected to increase. Once the second CFC is fully operational, the fulfilment of customer orders will be distributed between the two CFCs. While Ocados overall capacity to fulfil customer orders will approximately double, each of the CFCs is expected to initially operate below its effective capacity, but at a level which enables each site to run efficiently in terms of the distribution costs as a percentage of gross sales and allows the Group to benefit from lower trunking and delivery costs as a percentage of gross sales as a result of the second CFC. In connection with the second CFC, the Groups distribution costs as a percentage of gross sales are therefore expected to increase initially and subsequently decrease with further growth in gross sales enabled by increased effective capacity. Ocado expects to establish an average of two new Spokes per year in the medium term. Typically, Ocado would expect each new Spoke to have the capacity for between 10,000 and 25,000 incremental weekly deliveries. Depending on the relevant Spokes location, it is expected either to expand the geographic reach of the Business or improve the efficiency of deliveries in areas of higher customer density by increasing the number of drops per van per week. The Groups plans to increase the capacity of the Business, especially the building and fitting-out of the second CFC, and the timing and cost of achieving planned increases in capacity face various uncertainties. See section 2.6 and section 6.3 of this Part IV for additional detail regarding the Groups planned capital investment. 2.3 Increased number of customers, orders and order size leading to revenue growth The Group has experienced significant revenue growth due to increases in the number of customers, orders and order size. The Groups gross sales increased from 291.4 million in FYE 2007 to 427.3 million in FYE 2009 and from 89.6 million in P1-3 2009 (unaudited) to 117.2 million in P1-3 2010 as a result of competitive pricing initiatives, product range extension and improved product mix. The average number of active customers, which Ocado defines as customers who have placed at least one order in the preceding 12 weeks, increased by 5.8 per cent. in FYE 2008 and by 13.9 per

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Operating and Financial Review

cent. in FYE 2009. This was driven primarily by increased penetration in Ocados existing delivery areas. As of 16 May 2010, Ocado had over 240,000 active customers. There is a substantial long-term retention rate of the new customers who complete several orders with Ocado following their initial order. The average number of orders per week increased from 49,968 in FYE 2007 to 70,873 in FYE 2009, and from 60,769 in P1-3 2009 to 81,823 in P1-3 2010, with the highest number in any one week exceeding 100,000 in the week commencing 10 May 2010. The average order size, which is measured as the average retail value of goods a customer receives including the delivery charge and value added tax, increased from 112.17 in FYE 2007 to 116.30 in FYE 2008 and declined slightly to 115.94 in FYE 2009. The average order size decreased from 122.81 in P1-3 2009 to 119.38 in P1-3 2010. These numbers are unaudited. The increase in FYE 2008 and first half of FYE 2009 was driven primarily by improved product mix and price inflation. The average order size decreased in FYE 2009 and P1-3 2010 due primarily to the popularity of the Ocado Delivery Pass, which enables customers to obtain deliveries without paying delivery charges in exchange for either a fixed annual payment or monthly subscription payments, and which encouraged customers to shop more frequently. Customer data collected by Ocado indicates that the order size typically increases substantially between a customers first and tenth order, due to several factors, including increased confidence in online grocery shopping with Ocado.

Ocado has implemented and will continue to implement a strategy of continually improving its offering to customers to attract long-term customers and increase gross sales: Ocado has initiated competitive pricing strategies, such as Tesco Price Match in March 2008, which have had a positive effect on gross sales, but put downward pressure on gross margin. Ocado has expanded its product range from approximately 12,500 products at the end of FYE 2007 to over 20,000 products at the end of FYE 2009. Approximately 4,300 products in Ocados range as of the end of P1-3 2010 were Waitrose own-label products. Sales of Waitrose own-label products represented approximately 46 per cent. of the Groups product sales in FYE 2009. In December 2008, Ocado launched Ocado own-label products. As of the end of P1-3 2010, Ocado offered approximately 70 Ocado own-label products. Approximately 41 per cent. of all orders during 2010 contained at least one Ocado own-label product and approximately 61 per cent. of all first time orders contained at least one Ocado own-label product. Ocado own-label products represented 3.4 per cent. of the value of first time orders.

2.4 Increased operational efficiency and scale leading to decreasing CFC and trunking and delivery costs as percentage of gross sales The Group currently provides its service from a single warehouse, the CFC, unlike its competitors, which provide online grocery services primarily out of existing stores. The Directors believe that this business model offers a significant cost advantage compared to online grocery services out of existing stores. The Directors believe that the cost advantage of Ocados business model will, over time, more than offset the higher warehouse and delivery costs, both of which have historically declined, and the Directors believe will decline further, as a percentage of gross sales. The Directors also believe the business model enables Ocado to operate with higher stock turnover than its competitors. As the volume of gross sales has increased, Ocado has been able to significantly decrease costs, including CFC and trunking and delivery costs, as a percentage of gross sales, whilst improving service quality and inventory performance. The improvements cover primarily operational costs, such as labour productivity, delivery efficiency and waste. The improvements have been delivered through a mixture of capital expenditure projects, mainly aimed at: reducing labour requirements and enabling more intensive use of the advanced technological platform supporting the Business; work process and staff rostering developments to enable more efficient use of staff; and a series of IT system improvements, mainly developed in-house, that have supported the operational improvements.

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Part IV

Operating and Financial Review

Approximately 44 per cent. of CFC costs were variable employment costs in FYE 2009, with the balance primarily representing depreciation and amortisation and other fixed costs. Excluding depreciation and amortisation costs, approximately 58 per cent. of CFC costs were variable employment costs in FYE 2009. On a per order basis, CFC employment costs are a function of the number of units in an order and have an inverse relationship with CFC efficiency. Delivery costs are mostly variable and are primarily a function of the number of deliveries made and the efficiency with which these orders are delivered. On a per order basis, delivery costs generally have an inverse relationship with the average deliveries per van per week. Ocado increased CFC efficiency from 95 units per hour in FYE 2007 to 124 units per hour in FYE 2009, an increase of 30.5 per cent. The average number of deliveries per van per week increased from 99 in FYE 2007 to 121 in FYE 2009, an increase of 22.2 per cent. as a result of increases in drops per route and routes per van per week. Distribution costs, which include costs relating to the CFC and the delivery operations, as a percentage of gross sales decreased from 32.1 per cent. in FYE 2007 to 25.8 per cent. in FYE 2009 primarily as a function of the benefits of scale; increasing customer density; the implementation of more efficient routing software; and increasing the number of orders that can fit in a van. These improvements were delivered while the complexity of Ocados operations increased as a consequence of the extension of the range and services offered (such as the introduction of the Service Counter) as well as the geographic reach of the Business. 2.5 Increased geographical penetration and coverage and broadening of customer base Ocado has increased its geographical coverage from approximately 53 per cent. of households in the UK at the beginning of FYE 2007 to approximately 65 per cent. of households in October 2008. In March 2010, Ocado further increased its geographical coverage by approximately 0.5 million households (to approximately 17.3 million households). Ocado has also increased customer penetration and ordering frequency in its existing delivery areas, which were the main drivers of the recent growth in gross sales. Ocados penetration is highest in areas where Ocado has operated the longest. To date, Ocados penetration has continued to grow both in areas with low and with high penetration and there has been no evidence of areas reaching a ceiling on penetration. According to voluntary surveys of active customers conducted in 2009, Ocado has established that its typical customer is female, has an average age of around 40 and has an above average household income. A significant number of Ocados customers also have families with young children. However, as Ocados product range increases and its geographic reach extends, these demographics are broadening. Ocados price initiatives, targeted marketing and the introduction of Ocados own-label products contributed to the broadening of Ocados customer demographics. 2.6 Significant and continuing capital expenditure and investment in the Business From 2000 through to the end of FYE 2009, the Group has made investments totalling over 200 million to develop and expand its Business to its current scale. Over the medium term, the Group anticipates significant capital expenditure needs for the building and fitting-out of the second CFC; continued investment in the existing CFC to expand its capacity and increase operational efficiency; development of new Spokes; expansion of the vehicle fleet; continued development of IT systems; and maintenance and capital expenditure. See section 6.3 of this Part IV for additional detail. In addition, Ocado continues to invest in developing its brand and marketing to new customers. The Group has historically funded, and expects to continue to fund capital expenditure using its cash flow from operations, equity, debt and lease financing. See section 6.3 of this Part IV for additional detail. As the Group incurs more debt in connection with financing its capital expenditure, its finance costs will increase, which will be offset at least in part by the reduction in interest expense payable on the debt repaid with the proceeds from the Offers.

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Part IV 2.7 Relationship with Waitrose

Operating and Financial Review

Ocado is party to Sourcing Agreement and Branding Arrangements with Waitrose and John Lewis. Under these arrangements, Waitrose acts as Ocados sourcing agent for the negotiation and entry into of the pricing terms of Ocados supply commitments. Waitrose is obliged to use its reasonable endeavours to procure terms for Ocado which are comparable to those obtained by Waitrose itself, including volume discounts and availability of support for promotions. Nearly all of the products Ocado currently offers to its customers are sourced through Waitrose. During the periods under review, the sourcing fee payable by Ocado to Waitrose, which is included in cost of sales and therefore reduces the Groups gross profit, was 1.3 million in FYE 2007, 1.1 million in FYE 2008, 4.7 million in FYE 2009 and 1.4 million in P1-3 2010. The parties agreed a new sourcing fee under the 2010 Agreement to take effect from 1 December 2010. Unlike the fee currently paid, the new sourcing fee will vary according to whether the product sold is third party-branded, Waitrose own-label, John Lewis own-label or sourced from John Lewis (the percentage being higher in respect of the latter categories than the former). Accordingly, the new sourcing fee will rise to the extent that Ocado sells a higher percentage of products that are Waitrose own-label, John Lewis own-label or sourced from John Lewis, and (subject to the minimum sourcing fee described below) will fall to the extent that Ocado sells a higher percentage of Ocado own-label, third party-branded products and products not sourced through Waitrose. The Directors estimate that the sourcing fee of 4.7 million paid by Ocado to Waitrose in FYE 2009 would have increased to 6.4 million had the sourcing fee payable from 1 December 2010 been payable in FYE 2009. From 1 December 2010, there will also be a minimum annual sourcing fee payable by Ocado to Waitrose. The Directors expect that this minimum fee will be broadly equivalent, as a percentage of the Groups revenue (exclusive of delivery charges, certain refunds and VAT) generated from sales of grocery products, to the fee paid in FYE 2009. Ocado receives deliveries of approximately 15 per cent. of goods by volume from the Waitrose network with the remaining 85 per cent. being delivered and invoiced directly from suppliers. With respect to products delivered through Waitrose, Ocado pays an additional logistics fee, which varies by item and averaged 0.6 per cent. of gross sales in FYE 2009. The Sourcing Agreement will expire on 1 September 2020, unless terminated earlier by any party giving written notice. The earliest the agreement may expire is 1 March 2017. To terminate by notice with effect from 1 March 2017, at least 18 months written notice must be given; such notice period reduces on a sliding scale so that to terminate by notice with effect from 1 September 2017 onwards, only 12 months notice need be given. For a detailed description of the terms of the Branding Arrangements and Sourcing Agreement, the termination and other provisions, see section 17.1 of Part XIII (Additional Information). Termination or notice of termination of the Branding Arrangements and Sourcing Agreement would be an event of default under the New Facility. However, with the exception of the change of control termination right described in paragraph 1.4 of the Risk Factors, which is customary for an agreement of that type, the Company is in control of whether any such termination rights will arise. 2.8 Seasonality Family groups represent a significant proportion of Ocados customer base. As a result, the Groups revenue has historically been lower during UK summer and Easter school holidays with peaks during the Christmas period. In addition, adverse weather conditions, such as snow or flooding, can increase customer demand, although they can also adversely affect Ocados ability to deliver products to customers. Ocado has implemented a series of operational steps (such as the scheduling of staff vacation periods and setting the timing of delivery of new vans replacing old vans to take into account seasonality), which have had the effect of lowering variable costs during seasonal periods with lower demand. In addition, Ocado has undertaken steps to improve its ability to make deliveries in adverse weather conditions (such as fitting its delivery vans with winter tyres).

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Part IV 3.

Operating and Financial Review

Recent developments, current trading and prospects

In P1-6 2010, the Group has continued to grow at a strong rate in terms of orders, revenue and EBITDA. In P1-6 2010, gross sales increased by 29.9 per cent. to 245.6 million (P1-6 2009: 189.1 million) and revenue increased by 29.2 per cent. to 230.3 million (P1-6 2009: 178.3 million). During the same period, gross profit increased by 29.5 per cent. to 70.7 million (P1-6 2009: 54.6 million). Gross margin (gross profit as a percentage of gross sales) remained constant at 28.8 per cent. Distribution costs increased by 18.7 per cent. to 58.7 million (P1-6 2009: 49.4 million), comprising 26.5 million of CFC costs (P1-6 2009: 22.5 million), 29.9 million of trunking and delivery costs (P1-6 2009: 25.1 million) and 2.3 million of other costs (P1-6 2009: 1.8 million). EBITDA increased by 180.7 per cent. to 8.0 million (P1-6 2009: 2.8 million) and operating loss was reduced by 63.0 per cent. to (2.7) million (P1-6 2009: (7.4) million). Loss before tax was reduced by 47.1 per cent. to (6.7) million (P1-6 2009: (12.7) million). Weekly orders exceeded 100,000 for the first time in the week commencing 10 May 2010 and the average number of weekly orders in P1-6 2010 increased 33.7 per cent. to 88,407 (P1-6 2009: 66,132). Average order size declined by 2.8 per cent. to 115.77 (P1-6 2009: 119.15). During the same period, CFC efficiency, as measured by units per hour, increased by 3.3 per cent. from 119 to 123 and delivery efficiency, as measured by average deliveries per van per week, also increased by 14.3 per cent. from 115 to 131. Average product wastage (as a percentage of gross sales) was 0.69 per cent. in P1-6 2010 (P1-6 2009: 0.63 per cent.). The number of items delivered exactly as ordered in P1-6 2010 was 99.07 per cent. (P1-6 2009: 99.47 per cent.). All financial and operational information for the periods P1-6 2009 and P1-6 2010 is unaudited. On 25 May 2010, Ocado, Waitrose and John Lewis entered into the 2010 Agreement. Further information about this agreement can be found in section 17.1 of Part XIII (Additional Information). On 5 July 2010, Ocado (as original borrower) entered into a sterling term loan facility (the New Facility) between, among others, Barclays Bank PLC, HSBC Bank plc and Lloyds TSB Bank plc (as mandated lead arrangers and lenders) and Barclays Bank PLC (as agent and security trustee). The lenders have agreed to make available 100 million to the borrowers under the New Facility. The New Facility has an accordion feature which allows for the amount available under the New Facility to be increased up to 130 million, subject to lenders (existing or additional) agreeing to make the additional amount available. The New Facility contains customary warranties, representations and covenants (including restrictions on debt incurrence and financial covenants, as further described in Part XIII) and events of default (including on a material adverse change). In May and July 2010, Ocado also entered into arrangements for an additional 18.4 million for the finance leasing of its future vehicle requirements. On 26 May 2010, Ocado entered into with Lloyds TSB Bank plc as lender a new three year term loan in an aggregate principal amount of 7.5 million and a revolving credit facility in an aggregate principal amount of 7.5 million. For additional information on these facilities, see section 6.2 of this Part IV. On 23 June 2010, the Company re-registered as a public limited company.

The following table sets out the reconciliation of EBITDA to operating loss for P1-6 2009 and P1-6 2010: P1-6 2009 (unaudited) million P1-6 2010 (unaudited) million

Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustment for: Depreciation of property, plant and equipment . . . . . . . . . . . . . . . . . . . . Amortisation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7.4) 8.1 2.1 2.8

(2.7) 8.7 2.0 8.0

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Operating and Financial Review

The Company does not intend to publish a financial report for P1-6 2010. However, financial information for this period is included in Part VII (Unaudited Interim Financial Information relating to the Group for the 24 Weeks Ended 16 May 2010). 4. Description of key income statement items

Revenue consists of online sales (net of returns) through the Website and mobile applications, including charges for delivery, but excluding relevant vouchers/offers and value added tax. Relevant vouchers/ offers include money-off coupons, conditional spend vouchers and multi-buy offers, such as buy three for the price of two. Cost of sales consists of the cost of groceries and other products the Group sells, any associated license fees which are linked to the volume of sales of specific products or product groups, including the branding and sourcing fees payable to Waitrose, adjustments to inventory, and charges for transportation of goods from a supplier to the CFC. Distribution costs include all costs to the point of sale, which is usually the customers home. There are two main components, CFC costs and delivery costs: CFC costs include employment and operating costs relating to the CFC (inbound product receiving and decanting into the picking area or to storage, outbound product picking and packing for customer orders and loading of orders for despatch) and all associated depreciation and amortisation. Delivery costs include costs relating to the trunking of customer orders from the CFC to the Spokes, where required, and van delivery to customers homes, including employment costs of LGV and delivery van drivers and operational management, fuel, tolls, insurance and maintenance of vehicles, the operating costs of the Spokes, including operating lease rentals and all associated depreciation, amortisation, impairment and any losses on disposal of assets.

Distribution costs also include costs relating to the call centre and payment processing. Other income consists primarily of advertising revenue for advertising services provided by Ocado to suppliers and other third parties on the Website, commission income received and sublease payments received. Other income is recognised in the period to which it relates on an accruals basis. Administrative expenses consist of all IT costs, advertising and marketing expenditure, employment costs of all head office functions, which include legal, finance, human resources, marketing and procurement, rent and other property-related costs for the head office, all fees for professional services and the depreciation, amortisation and impairment associated with head office IT equipment, software, fixtures and fittings and expenses relating to the ESOS and the JSOS. Net finance costs consist of finance income and finance costs. Finance income is comprised principally of bank interest receivable and other interest. Finance costs are comprised of interest payable on bank loans and overdrafts, interest on finance leases and interest on other financing arrangements. 5. Results of operations

The financial information in this section relates to the Groups results from continuing operations.

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Operating and Financial Review

5.1 Comparison of the financial results of the Group for P1-3 2009 (unaudited) and P1-3 2010 The following table sets out the Groups consolidated statement of comprehensive income for P1-3 2009 (unaudited) and P1-3 2010:
P1-3 2009 (unaudited) million P1-3 2010 million Change %

Continuing operations Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distribution costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating profit before administrative expenses . . . . . . . Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss for the period attributable to the owners of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

84.6 (58.9) 25.7 0.5 (24.6) 1.6 (6.2) (4.6) (2.7) (7.2) (7.2)

110.2 (76.9) 33.3 1.2 (28.3) 6.2 (8.1) (1.9) (2.1) (4.0) (4.0)

30.3 30.5 29.7 115.1 14.9 282.5 30.8 (58.9) (21.7) (45.2) (45.2)

The following table sets out selected unaudited operating information for the Business for P1-3 2009 and P1-3 2010:
P1-3 2009 (unaudited) P1-3 2010 (unaudited) Change %

Average order size ()(1) . . . . . . . . . . . . . . . . . . . . . . . Average orders per week . . . . . . . . . . . . . . . . . . . . . . . CFC efficiency (units per hour)(2) . . . . . . . . . . . . . . . . . Average deliveries per van per week . . . . . . . . . . . . . . Average number of operational staff (full-time equivalent) Average product wastage (per cent. of gross sales)(3) . . . Items delivered exactly as ordered (per cent.)(4) . . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

122.81 60,769 114 107 3,119 0.64 99.35

119.38 81,823 124 126 3,610 0.65 98.76

(2.8) 34.6 8.0 18.0 15.7 1.5 0.6

Source: The information in the table is derived from and extracted from management accounts and internal financial and operating reporting systems and is unaudited. (1) (2) (3) (4) Average retail value of goods a customer receives (including VAT and delivery charge) per order. Measured as units dispatched from the CFC per hour worked by CFC operational personnel. Value of products purged because passed Ocados use by life guarantee and stock adjustments (net of sales to the company shop), divided by gross sales. Percentage of all items delivered exactly as ordered, i.e. the percentage of items ordered neither missing nor substituted.

(A) Gross sales and revenue Gross sales increased from 89.6 million in P1-3 2009 (unaudited) to 117.2 million in P1-3 2010, an increase of 27.7 million, or 30.9 per cent. Like-for-like gross sales, a non-IFRS measure used to remove the impact of Ocados increase in geographic coverage, when compared with the previous period, increased by the same amount, because the geographical reach of the Business was not extended during the period. Revenue increased from 84.6 million in P1-3 2009 (unaudited) to 110.2 million in P1-3 2010, an increase of 25.6 million, or 30.3 per cent. Gross sales and revenue increased primarily as a result of the increase in the number of customers and the average number of orders per week from 60,769 in P1-3 2009 to 81,823 in P1-3 2010. The 34.6 per

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Operating and Financial Review

cent. increase in the average number of orders per week was due to increased frequency of ordering by existing customers and new customer gains in existing delivery areas. The average order size was 122.81 in P1-3 2009 (unaudited) and decreased by 2.8 per cent to 119.38 in P1-3 2010 (unaudited). The change was due to the increase in the number of customers subscribing to the Ocado Delivery Pass and placing a smaller weekly grocery order rather than a larger, less frequent shop. The average basket size for customers not using the Ocado Delivery Pass increased in the same period. Marketing vouchers, which are money-off coupons that reduce the amount a customer pays for their order, increased from 1.0 million in P1-3 2009 (unaudited) to 1.4 million in P1-3 2010. This promotional tool is used to acquire new customers and encourage existing customers to shop more frequently or on days which have lower demand, thereby ensuring a more efficient asset utilisation for Ocado and reduced pressure on the more popular shopping days. This promotional tool is also used to introduce customers to and encourage uptake of the Ocado Delivery Pass. The increase in marketing vouchers in P1-3 2010 mainly reflected increased use of marketing vouchers during the period to promote deliveries on days with lower demand, increasing Ocados operating efficiency on such days. (B) Gross profit Cost of sales increased from 58.9 million in P1-3 2009 (unaudited) to 76.9 million in P1-3 2010, an increase of 18.0 million, or 30.5 per cent., broadly in line with overall growth in gross sales. Gross profit increased from 25.7 million in P1-3 2009 (unaudited) to 33.3 million in P1-3 2010, an increase of 7.6 million, or 29.7 per cent. Gross margin, expressed as gross profit as a percentage of gross sales, remained relatively stable at 28.7 per cent. in P1-3 2009 and 28.4 per cent. in P1-3 2010 as a result of positive changes in input prices, retail price inflation and changes in product mix, offset by the impact of the internet only prices for most Waitrose own-label products introduced in May 2009 (and discontinued in May 2010). (C) Other income Other income increased from 0.5 million in P1-3 2009 (unaudited) to 1.2 million in P1-3 2010. The increase was primarily due to the increase in advertising revenue to 1.0 million in P1-3 2010 from 0.5 million in P1-3 2009 (unaudited). (D) Distribution costs Distribution costs increased from 24.6 million in P1-3 2009 (unaudited) to 28.3 million in P1-3 2010, an increase of 3.7 million, or 14.9 per cent. During the same period, the average number of orders per week increased by 34.6 per cent., whilst CFC efficiency increased by 8.0 per cent. and average deliveries per van per week increased by 18.0 per cent. Distribution costs as a percentage of gross sales decreased from 27.5 per cent. in P1-3 2009 to 24.1 per cent. in P1-3 2010 as a result of operational leverage, increasing efficiency in both inbound product receiving and decanting and in outbound customer order picking and as a result of increasing drop density and a range of further operational efficiency initiatives. The following table sets out the Groups distribution costs for P1-3 2009 and P1-3 2010:
P1-3 2009 (unaudited) million P1-3 2010 million Change %

Employment costs . . . . . . . . . . . . Depreciation of property, plant and Operating lease rentals . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . .

........ equipment ........ ........

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

14.4 3.5 0.4 6.3 24.6

17.1 3.7 0.4 7.1 28.3

18.5 4.6 2.5 13.2 14.9

Total distribution costs . . . . . . . . . . . . . . . . . . . . . . . . . .

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Operating and Financial Review

Employment costs increased from 14.4 million in P1-3 2009 (unaudited) to 17.1 million in P1-3 2010, an increase of 2.7 million or 18.5 per cent. The increase was primarily due to the increased number of employees in the CFC and delivery operations required for the increased volume of orders. The rate of increase of 18.5 per cent was less than the rate of growth in revenue, 30.3 per cent, due to the increased efficiency in the CFC and trunking and delivery operations. Depreciation of property, plant and equipment increased from 3.5 million in P1-3 2009 (unaudited) to 3.7 million in P1-3 2010, an increase of 0.2 million, or 4.6 per cent. The increase was primarily due to the additional depreciation charges on new capital investment to increase operational capacity and efficiency. Other distribution costs (which include vehicle fuel and other vehicle operating costs, credit card processing charges, order related costs and facility costs related to operational sites) increased from 6.3 million in P1-3 2009 (unaudited) to 7.1 million in P1-3 2010. This increase was due to the higher volume of orders, but partially offset by the impact of operational efficiencies achieved in each business area. The following table sets out the Groups distribution costs for P1-3 2009 and P1-3 2010 as they relate to CFC costs, trunking and delivery costs, and other costs:
P1-3 2009 (unaudited) million P1-3 2010 (unaudited) million Change %

CFC costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trunking and delivery costs . . . . . . . . . . . . . . . . . . . . . . . . Other costs (call centre and payment processing) . . . . . . . . Total distribution costs . . . . . . . . . . . . . . . . . . . . . . . . . .

11.3 12.5 0.9 24.6

12.7 14.4 1.1 28.3

13.0 15.4 31.6 14.9

CFC costs increased from 11.3 million in P1-3 2009 (unaudited) to 12.7 million in P1-3 2010 (unaudited), an increase of 13.0 per cent. CFC costs as a percentage of gross sales decreased from 12.6 per cent. in P1-3 2009 to 10.9 per cent. in P1-3 2010. CFC efficiency (measured as units dispatched from the CFC per hour worked by CFC operational personnel) increased by 8.0 per cent. due to the benefits from higher volumes and a number of operational improvement projects. Employment costs relating to CFC direct and indirect staff increased marginally while CFC throughput grew significantly. Trunking and delivery costs increased from 12.5 million in P1-3 2009 (unaudited) to 14.4 million in P1-3 2010 (unaudited), an increase of 15.4 per cent. Trunking and delivery costs as a percentage of gross sales decreased from 13.9 per cent. in P1-3 2009 to 12.3 per cent. in P1-3 2010. The improved efficiency of the delivery operation is primarily due to the continued development of Ocados bespoke system for route optimisation and increased customer density, as well as a number of other small improvement projects. Each of these efficiency gains contributed to improvements in the average number of deliveries per van per week from 107 in P1-3 2009 to 126 in P1-3 2010 and reduced the delivery cost per order. (E) Operating profit before administrative expenses As a result of the foregoing, operating profit before administrative expenses increased from 1.6 million in P1-3 2009 (unaudited) to 6.2 million in P1-3 2010, an increase of 4.6 million. (F) Administrative expenses Administrative expenses increased from 6.2 million in P1-3 2009 (unaudited) to 8.1 million in P1-3 2010, an increase of 1.9 million, or 30.8 per cent.

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The following table sets out the Groups administrative expenses for P1-3 2009 and P1-3 2010:
P1-3 2009 (unaudited) million P1-3 2010 million Change %

Employment costs . . . . . . . . . . . . . . . Marketing costs (excluding promotional Depreciation and amortisation . . . . . . Operating lease rentals . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . .

........ vouchers) ........ ........ ........

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

3.7 0.6 1.6 0.3 6.2

4.3 1.3 1.6 0.2 0.6 8.1

18.1 120.7 3.1 N.M. 103.3 30.8

Total administrative expenses . . . . . . . . . . . . . . . . . . . . .

N.M.: Not meaningful.

Employment costs increased from 3.7 million (unaudited) to 4.3 million, or 18.1 per cent., due to an increase in the average number of operational staff from 3,119 in P1-3 2009 to 3,610 in P1-3 2010 and an increase in the average number of support staff from 336 in P1-3 2009 to 393 in P1-3 2010, which was required to support the growth of revenue, product range and IT capability. Marketing costs (excluding promotional vouchers) increased from 0.6 million in P1-3 2009 (unaudited) to 1.3 million in P1-3 2010, an increase of 0.7 million. This increase included an increase of approximately 0.5 million in direct mail spend mainly due to invoice timing and an increase of approximately 0.3 million in spend on broadcast media. The spend on broadcast media related to brand building activity on radio and a limited number of unsuccessful direct TV initiatives. (G) Operating loss Operating loss decreased from (4.6) million in P1-3 2009 (unaudited) to (1.9) million in P1-3 2010, a decrease of 2.7 million, or 58.9 per cent. The decrease was primarily due to the growth in revenue coupled with greater cost efficiencies within the Business. (H) Net finance costs Net finance costs decreased from 2.7 million in P1-3 2009 (unaudited) to 2.1 million in P1-3 2010, a decrease of 0.6 million, or 21.7 per cent. There was no finance income in P1-3 2009 (unaudited) or P1-3 2010. The decrease in finance costs was primarily due to a decrease in interest related to finance leases as interest is charged on a reducing balance basis as those leases age. The decrease also reflects a decrease in interest on other loans due to refinancing of a convertible loan and a reduction in interest rates. (I) Loss before tax

As a consequence of the above, loss before tax decreased from (7.2) million in P1-3 2009 (unaudited) to (4.0) million in P1-3 2010, a decrease of 3.3 million, or 45.2 per cent. (J) Taxation The statutory rate of tax applicable was 28 per cent. in P1-3 2009 and P1-3 2010. No current or deferred tax or charge credit was recognised in P1-3 2009 or P1-3 2010. (K) Loss for the period attributable to the owners of the Group The Group recorded a (7.2) million loss in P1-3 2009 (unaudited) which decreased to a (4.0) million loss in P1-3 2010, a 3.3 million or 45.2 per cent. decrease.

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5.2 Comparison of the financial results of the Group for FYE 2007, FYE 2008 and FYE 2009 The following table sets out the Groups consolidated statements of comprehensive income for FYE 2007, FYE 2008 and FYE 2009:
FYE 2007 million FYE 2008 million FYE 2009 million Change FYE 2007FYE 2008 % Change FYE 2008FYE 2009 %

Continuing operations Revenue . . . . . . . . . . . . . . . . . . Cost of sales . . . . . . . . . . . . . . . Gross profit . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . Distribution costs . . . . . . . . . . . . Operating profit/(loss) before administrative expenses . . . . Administrative expenses . . . . . . . Operating loss . . . . . . . . . . . . . Finance income . . . . . . . . . . . . . Finance costs . . . . . . . . . . . . . . . Loss before tax . . . . . . . . . . . . . Taxation . . . . . . . . . . . . . . . . . . . Loss for the period attributable to the owners of the Company . . . . . . . . . . . . . . . .
N.M.: Not meaningful.

272.9 (184.9) 88.0 0.6 (93.5) (4.9) (25.1) (30.1) 0.8 (10.9) (40.2)

321.3 (218.5) 102.8 1.8 (101.1) 3.5 (25.2) (21.6) 0.1 (11.8) (33.3)

402.0 (279.2) 122.8 2.6 (110.3) 15.1 (29.5) (14.4) (11.1) (25.5) 2.3

17.8 18.2 16.8 195.4 8.1 N.M. 0.0 (28.2) (88.0) 8.2 (17.1)

25.1 27.8 19.5 46.1 9.2 327.9 17.5 (33.4) (87.9) (5.7) (23.4) N.M.

(40.2)

(33.3)

(23.2)

(17.1)

(30.3)

The following table sets out selected unaudited operating information for the Business for FYE 2007, FYE 2008 and FYE 2009:
FYE 2007 (unaudited) million FYE 2008 (unaudited) million FYE 2009 (unaudited) million Change FYE 2007FYE 2008 % Change FYE 2008FYE 2009 %

Average order size ()(1) . . . . . . . Average orders per week . . . . . . CFC efficiency (units per hour)(2) . Average deliveries per van per week . . . . . . . . . . . . . . . . . . . Average number of operational staff (full time equivalent) . . . . . Average product wastage (per cent. of gross sales)(3) . . . . . . . Items delivered exactly as ordered (per cent.)(4) . . . . . . . . . . . . . .

112.17 49,968 95 99 2,033(5) 1.15 98.59

116.30 56,384 114 106 2,730 0.78 99.11

115.94 70,873 124 121 3,151 0.57 99.41

3.7 12.8 20.7 7.7 34.3 (32.2) 0.5

(0.3) 25.7 8.6 13.5 15.4 (26.9) 0.3

Source: The information in the table above is derived from information extracted from management accounts and internal financial and operating reporting systems and is unaudited. (1) (2) (3) (4) (5) Average retail value of goods a customer receives (including VAT and delivery charge) per order. Measured as units dispatched from the CFC per hour worked by CFC operational personnel. Value of products purged for having passed Ocados use by life guarantee and stock adjustments (net of sales to the company shop), divided by the gross sales. Percentage of all items delivered exactly as ordered, i.e. the percentage of items neither missing nor substituted. Excludes, for the period prior to their transfer to Ocado, staff working for a third-party logistics contractor who transferred to Ocado in April 2007.

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Part IV (A) Gross sales and revenue

Operating and Financial Review

Gross sales increased from 291.4 million in FYE 2007 to 341.0 million in FYE 2008, an increase of 49.6 million, or 17.0 per cent and to 427.3 million in FYE 2009, an increase of 86.3 million, or 25.3 per cent. Like-for-like gross sales increased by 15.3 per cent from FYE 2007 to FYE 2008 and by 22.3 per cent from FYE 2008 to FYE 2009. Revenue for FYE 2007 was 272.9 million and increased to 321.3 million in FYE 2008, an increase of 48.5 million, or 17.8 per cent and to 402.0 million in FYE 2009, an increase of 80.7 million, or 25.1 per cent. The average number of orders per week increased from 49,968 in FYE 2007 to 56,384 in FYE 2008 and to 70,873 in FYE 2009. The average order size was 112.17 in FYE 2007, 116.30 in FYE 2008 and 115.94 in FYE 2009. These numbers are unaudited. Revenue increased from FYE 2007 to FYE 2008 primarily as a result of increased frequency of ordering by customers due to competitive pricing initiatives, product range extension from approximately 12,500 at the end of FYE 2007 to 16,000 at the end of FYE 2008 and improved product mix. The average number of active customers increased by 5.8 per cent. in FYE 2008 compared to FYE 2007. Ocado introduced the Tesco Price Match scheme in March 2008, which made a significant contribution to revenue growth in the second half of FYE 2008. Ocado also introduced same-day delivery in part of its delivery area starting in July 2008, 30-minute intervals for the one hour delivery slots in August 2008, and individual product life information on the Website. The effect of Tesco Price Match on an average item price was countered by changes in product mix and general price inflation. Revenue increased from FYE 2008 to FYE 2009 primarily as a result of increased spend and frequency of ordering by existing customers and new customer gains in existing delivery areas (including the delivery area served by the Leeds Spoke which became operational in October 2008 and increased the range of areas in which its service is provided by approximately 1.8 million households to a total of approximately 16.8 million households). The average number of active customers increased by 13.9 per cent. in FYE 2009 compared to FYE 2008. This was also a result of competitive pricing initiatives including the launch in December 2008 of Ocados own-label product range; increase in the number of products sold by Ocado from approximately 16,000 as at the end of FYE 2008 to over 20,000 as at the end of FYE 2009; improved product mix; the introduction of the Ocado Delivery Pass in November 2008; and to a lesser extent as a result of price inflation. Additional factors contributing to the increase in revenue included the continued increase in popularity of internet grocery shopping, the launch of the Ocado iPhone application in April 2009 and the commencement in September 2009 of Sunday deliveries in approximately 45 per cent. of the households in the delivery area in which Ocado operated. Currently, approximately 70 per cent. of Ocados delivery area has a Sunday delivery service, which is expected to be rolled out to the remainder of Ocados delivery area in 2010. Ocado did not expand its geographic reach in FYE 2009. However, in FYE 2009, Ocado opened two new Spokes, one in Dartford (replacing the smaller Aylesford site) and one in White City, increasing the capacity in the Groups existing delivery area. The average order size increased in FYE 2008 primarily due to increased product range, improved product mix, price inflation and increased delivery income. The average order size declined slightly in FYE 2009 as a result of the introduction of the Ocado Delivery Pass, which was largely offset by price inflation and changes in product price. Although the introduction of the Ocado Delivery Pass encouraged holders to shop more frequently, the average order size of these customers decreased, while the average order size for customers without an Ocado Delivery Pass increased. Delivery income increased in FYE 2008 due to the full-year effect of the introduction in the summer of 2007 of dynamic delivery charges to reflect customer demand and in FYE 2009 due to the introduction of the Ocado Delivery Pass. Marketing vouchers, which are money-off coupons that reduce the amount a customer pays for their order, decreased from 3.4 million in FYE 2007 to 2.5 million in FYE 2008 and increased to 6.5 million in FYE 2009. This promotional tool is used to acquire new customers, encourage customers to purchase the Ocado Delivery Pass and to encourage customers to shop more frequently and on days with lower demand, increasing Ocados operating efficiency on such days.

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Operating and Financial Review

(B) Gross profit Cost of sales increased from 184.9 million in FYE 2007 to 218.5 million in FYE 2008, an increase of 33.6 million, or 18.2 per cent. and to 279.2 million in FYE 2009, an increase of 60.7 million, or 27.8 per cent, in each case broadly in line with the overall growth in gross sales. Gross profit increased from 88.0 million in FYE 2007 to 102.8 million in FYE 2008, an increase of 14.8 million or 16.8 per cent. and increased to 122.8 million in FYE 2009, an increase of 20.0 million, or 19.5 per cent. Gross margin (gross profit as percentage of gross sales) decreased slightly from 30.2 per cent. in FYE 2007 to 30.1 per cent. in FYE 2008 and decreased further to 28.7 per cent. for FYE 2009. Gross margin decreased in FYE 2008 as a result of input cost inflation and product mix changes, partially offset by a lower branding and sourcing fee paid during the period. The reduction in gross margin in FYE 2009 was predominantly due to the full year effect of the increased branding and sourcing fee on sales of goods sourced by Waitrose from September 2008 and the internet only prices for most Waitrose ownlabel products introduced in May 2009. The branding and sourcing fee decreased from 1.3 million in FYE 2007 to 1.1 million in FYE 2008 and increased to 4.7 million in FYE 2009. (C) Other income Other income increased from 0.6 million in FYE 2007 to 1.8 million in FYE 2008, an increase of 1.2 million, and to 2.6 million in FYE 2009, an increase of 0.8 million. The increase was primarily due to the increase in advertising revenue from zero in FYE 2007 to 1.0 million in FYE 2008 and 2.0 million in FYE 2009. (D) Distribution costs Distribution costs increased from 93.5 million in FYE 2007 to 101.1 million in FYE 2008, an increase of 7.5 million, or 8.1 per cent., and to 110.3 million in FYE 2009, an increase of 9.3 million, or 9.2 per cent. From FYE 2007 to FYE 2008 to FYE 2009 the average number of orders per week increased by 12.8 per cent. and 25.7 per cent., respectively, CFC efficiency increased by 20.7 and 8.6 per cent., respectively, and average deliveries per van per week increased by 7.7 per cent. and 13.5 per cent., respectively. Distribution costs as a percentage of gross sales decreased from 32.1 per cent. in FYE 2007 to 29.6 per cent. in FYE 2008 and to 25.8 per cent. in FYE 2009 as a result of operational leverage, increasing efficiency in both inbound product receiving and decanting and in outbound customer order picking as well as a result of increasing drop density, routing improvements stemming from the implementation of new routing software, and a range of operational efficiency initiatives. The following table sets out the Groups distribution costs for FYE 2007, FYE 2008 and FYE 2009:
FYE 2007 million FYE 2008 million FYE 2009 million Change FYE 2007FYE 2008 % Change FYE 2008FYE 2009 %

Employment costs . . . . . . . . . . Depreciation of property, plant and equipment . . . . . . . . . . . Impairment of property, plant and equipment . . . . . . . . . . . . . . . Operating lease rentals . . . . . . . Other . . . . . . . . . . . . . . . . . . . .

. . . . .

46.6 16.2 0.6 1.5 28.5 93.5

56.5 17.8 0.1 1.8 24.9 101.1

65.3 15.3 1.0 1.7 27.0 110.3

21.1 10.0 (89.2) 15.3 (12.7) 8.1

15.5 (14.1) N.M. (2.0) 8.3 9.2

Total distribution costs . . . . . . .

N.M.: Not meaningful.

Employment costs increased from 46.6 million in FYE 2007 to 56.5 million in FYE 2008, an increase of 9.9 million, or 21.1 per cent. and to 65.3 million in FYE 2009, an increase of 8.8 million, or 15.5 per cent. The increase was primarily due to the increase in wages and salaries and related costs relating to an additional 697 operational FTE staff in FYE 2008, an increase of 34.3 per cent., and a further 421 additional FTE staff in FYE 2009, an increase of 15.4 per cent. raising the total operational FTE staff to

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Part IV

Operating and Financial Review

3,151 at the end of FYE 2009. During FYE 2007, a third-party logistics contract for workers in the CFC ended at which point each worker joined Ocado and became an Ocado employee. The costs relating to this contract for the part year in FYE 2007 prior to the termination of the contract were 7.3 million (unaudited) and were categorised under other costs. Subsequently, these costs were categorised as employment costs. Excluding this change, the increase in employment costs in FYE 2008 was an increase of 2.6 million (unaudited), or 4.8 per cent., which primarily reflected additional personnel hired to support the increased volume of orders. The relative increase in the number of staff hired has been lower than the relative growth in gross sales due to increased productivity of the CFC and delivery operations. Depreciation of property, plant and equipment increased from 16.2 million in FYE 2007 to 17.8 million in FYE 2008, an increase of 1.6 million, or 10.0 per cent., and decreased to 15.3 million in FYE 2009, a decrease of 2.5 million, or 14.1 per cent. The majority of depreciation is attributable to the CFC with approximately 4 million (unaudited) in each year being due to the trunking and delivery operations. The increase from FYE 2007 to FYE 2008 was primarily due to higher charges arising from continued investment in the CFC offset in part by the increase in the estimated useful life of certain assets resulting in a reduction of the depreciation charge by 0.9 million. In October 2008, the Group revised the estimated useful life of certain assets, due to the increased resilience of the CFC and greater certainty of the long-term picking solutions. The change was only applied from October 2008, and saw a decrease of the depreciation charge for FYE 2008 of 0.9 million. If the change had been applied from the beginning of FYE 2008, depreciation would have fallen by a further 2.4 million. For the majority of assets revised, this doubled the estimated useful life from 5 to 10 years, although a small number of higher value assets had their life halved from 20 years. If the useful lives of the assets had not been revised, the depreciation charge in FYE 2009 would have been 4.9 million higher. Other distribution costs (which include vehicle fuel and other vehicle operating costs, credit card processing charges, order related costs and facility costs related to operational sites) decreased from 28.5 million in FYE 2007 to 24.9 million in FYE 2008, a 12.7 per cent. decrease, and increased to 27.0 million in FYE 2009, an 8.3 per cent. increase. The decrease from FYE 2007 to FYE 2008 was primarily the result of the termination of the third-party logistics contract described above. Excluding this change, other distribution costs for FYE 2007 would have been 21.3 million (unaudited) and would have increased by 3.6 million to 24.9 million in FYE 2008, an increase of 17.1 per cent, primarily due to the growth in the volume of orders. The increase from FYE 2008 to FYE 2009 was primarily the result of the growth in the volume of orders. The following table sets out the Groups distribution costs for FYE 2007, FYE 2008 and FYE 2009 as they relate to CFC costs, trunking and delivery and other costs:
FYE 2007 (unaudited) million FYE 2008 (unaudited) million FYE 2009 (unaudited) million Change FYE 2007FYE 2008 % Change FYE 2008FYE 2009 %

CFC costs . . . . . . . . . . . . . . . . . Trunking and delivery costs . . . . . Other costs (call centre and payment processing) . . . . . . . . Total distribution costs . . . . . . .

47.5 42.9 3.1 93.5

49.5 48.3 3.3 101.1

50.8 55.3 4.2 110.3

4.1 12.6 5.6 8.1

2.7 14.4 29.2 9.2

Costs relating to the CFC increased from 47.5 million in FYE 2007 (unaudited) to 49.5 million in FYE 2008 (unaudited), an increase of 4.1 per cent., and to 50.8 million in FYE 2009 (unaudited), an increase of 2.7 per cent. Costs relating to the CFC as a percentage of gross sales decreased from 16.3 per cent. in FYE 2007 to 14.5 per cent. in FYE 2008 and to 11.9 per cent. in FYE 2009. CFC efficiency increased from 95 units per hour in FYE 2007 to 114 in FYE 2008 and to 124 in FYE 2009. These increases were due to the benefits from higher volumes and a number of improvement projects. These overall efficiency gains were offset in part by other business initiatives, such as the introduction of the Service Counter in September 2009. In FYE 2009, variable employment costs were the largest component of CFC costs, representing approximately 44 per cent. of the total CFC costs (or 58 per cent. of total CFC costs excluding depreciation and amortisation), with the balance of CFC costs being primarily fixed.

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Operating and Financial Review

Trunking and delivery costs increased from 42.9 million in FYE 2007 to 48.3 million in FYE 2008, an increase of 12.6 per cent., and to 55.3 million in FYE 2009, an increase of 14.4 per cent. Trunking and delivery costs as a percentage of gross sales decreased from 14.7 per cent. in FYE 2007 to 14.2 per cent. in FYE 2008 and to 12.9 per cent. in FYE 2009. The improved efficiency of the delivery operation was primarily due to the continued development of Ocados bespoke system for route optimisation and increased customer density, as well as a number of other small improvement projects, which contributed to improvements in the number of deliveries per van per week from 99 in FYE 2007 to 106 in FYE 2008 to 121 in FYE 2009, reducing the delivery cost per order. (E) Operating profit/(loss) before administrative expenses As a result of the foregoing, operating profit/(loss) before administrative expenses moved from an operating loss of (4.9) million in FYE 2007 to an operating profit of 3.5 million in FYE 2008, an improvement of 8.5 million and to an operating profit of 15.1 million in FYE 2009, an increase of 11.6 million. (F) Administrative expenses Administrative expenses were 25.1 million in FYE 2007, 25.2 million in FYE 2008 and increased to 29.5 million in FYE 2009, an increase of 4.4 million, or 17.5 per cent., as the Group invested in additional central costs to serve the higher demand. The following table sets out the Groups administrative expenses for FYE 2007, FYE 2008 and FYE 2009:
FYE 2007 million FYE 2008 million FYE 2009 million Change FYE 2007FYE 2008 % Change FYE 2008FYE 2009 %

Employment costs . . . . . . . . Marketing costs (excluding promotional vouchers) . . . . Depreciation and amortisation Operating lease rentals . . . . . Other . . . . . . . . . . . . . . . . . .

... . . . . . . . . . . . .

11.8 6.8 3.8 0.2 2.5 25.1

14.0 3.6 5.9 0.2 1.5 25.2

17.0 4.3 7.3 0.1 0.8 29.5

18.4 (47.1) 55.3 (3.9) (41.8)

21.5 21.4 23.5 (23.5) (47.9) 17.5

Total administrative expenses . .

Employment costs increased from 11.8 million in FYE 2007 to 14.0 million in FYE 2008 to 17.0 million in FYE 2009, resulting from an increase in the average number of IT and head office staff from 256 in FYE 2007 to 293 in FYE 2008 and to 343 in FYE 2009. The increase also reflected an increase in remuneration of the board of directors from 0.7 million in FYE 2008 to 1.7 million in FYE 2009. Marketing costs (excluding promotional vouchers) decreased from 6.8 million in FYE 2007 to 3.6 million in FYE 2008, a 3.2 million or 47.1 per cent. decrease, and increased to 4.3 million in FYE 2009, a 0.8 million or 21.4 per cent. increase. The decrease from FYE 2007 to FYE 2008 was primarily due to the change in marketing strategy away from TV and radio advertising to focus on e-mail marketing activities, including vouchers, to existing and lapsed customers and to invest in reducing retail prices rather than generic marketing activities designed to attract new customers. The increase from FYE 2008 to FYE 2009 reflected increased direct mail and other promotional activities. Depreciation and amortisation increased from 3.8 million in FYE 2007 to 5.9 million in FYE 2008, a 2.1 million or 55.3 per cent increase, and to 7.3 million in FYE 2009, a 1.4 million or 23.5 per cent. increase due to an increase in the value of IT asset purchases and the value of internal IT development costs that have been capitalised. (G) Operating loss Operating loss decreased from (30.1) million in FYE 2007 to (21.6) million in FYE 2008, a decrease of 8.5 million, or 28.2 per cent. and to (14.4) million in FYE 2009, a decrease of 7.2 million, or 33.4 per cent. The decrease was primarily due to the growth in revenue which enabled greater operating efficiencies within the Business, as described above.

86

Part IV (H) Net finance costs

Operating and Financial Review

Net finance costs increased from 10.1 million in FYE 2007 to 11.7 million in FYE 2008, an increase of 1.6 million, or 16.1 per cent., and decreased to 11.1 million in FYE 2009, a decrease of 0.6 million, or 5.0 per cent. Finance income decreased from 0.8 million in FYE 2007 to 0.1 million in FYE 2008 to nil in FYE 2009 primarily due to lower average cash balances. Within finance costs, interest on finance leases increased from 3.3 million in FYE 2007 to 3.8 million in FYE 2008 to 5.0 million in FYE 2009 due to an increase in the level of borrowing through finance leases. Interest on convertible loans increased from 2.0 million in FYE 2007 to 2.4 million in FYE 2008 but decreased to 0.3 million in FYE 2009 due to repayment of certain convertible loan notes in FYE 2008 and FYE 2009. (I) Loss before tax

As a consequence of the above, the Group recorded a loss before tax of (40.2) million in FYE 2007 which decreased to a loss before tax of (33.3) million for FYE 2008, a decrease of 6.9 million or 17.1 per cent., and further decreased to a loss before tax of (25.5) million in FYE 2009, a decrease of 7.8 million, or 23.4 per cent. The decrease was primarily due to the improved operating result year on year. (J) Taxation The statutory rate of tax applicable was 30 per cent. in FYE 2007, 28.71 per cent. in FYE 2008 and 28 per cent. in FYE 2009. No current or deferred tax charges were recognised in FYE 2007 or FYE 2008. A deferred tax credit of 2.3 million was recognised in FYE 2009. Ocado had approximately 270 million of unutilised carried forward tax losses as at the end of FYE 2009. (K) Loss for the period attributable to the owners of the Group The Group recorded a loss of (40.2) million in FYE 2007 which decreased to a loss of (33.3) million in FYE 2008, a 6.9 million decrease, and further decreased to a loss of (23.2) million in FYE 2009, a 10.1 million or 30.3 per cent. decrease. 6. Liquidity and capital resources

Since inception, the Group has financed its operations primarily through private placements of loan notes convertible into preference shares and private placements of ordinary and preference shares as well as secured and unsecured bank and other loans and finance leases. The Groups principal uses of cash have been for capital expenditure, operating expenses, working capital requirements as well as the payment of interest and repayment of principal on borrowings. 6.1 Cash flow analysis for FYE 2007, FYE 2008, FYE 2009, P1-3 2009, and P1-3 2010 The following table sets out selected cash flow information for the Group for FYE 2007, FYE 2008, FYE 2009, P1-3 2009 (unaudited) and P1-3 2010:
FYE 2007 million FYE 2008 million FYE 2009 million P1-3 2009 (unaudited) million P1-3 2010 million

Net cash inflow/(outflow) from operating activities . . . . . . . . . . Net cash used in investing activities . . . . . . . . . . . . . . . . . Net cash from financing activities . Net (decrease)/increase in cash and cash equivalents . . . . . . .

(26.2) (20.7) 46.8 (0.1)

(3.7) (19.8) 18.4 (5.0)

4.1 (19.6) 22.7 7.2

(5.8) (6.3) 5.0 (7.2)

(0.4) (2.8) 0.7 (2.6)

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Part IV

Operating and Financial Review

(A) Operating activities

FYE 2007 million FYE 2008 million FYE 2009 million P1-3 2009 (unaudited) million P1-3 2010 million

Loss before income tax . . . . . . . Adjustments for: Depreciation expense . . . . . . . . Amortisation expense . . . . . . . . Impairment of property, plant and equipment . . . . . . . . . . . . . . . Provision for dilapidations expense . . . . . . . . . . . . . . . . Share based payments charge . . Finance costs . . . . . . . . . . . . . . Finance income . . . . . . . . . . . . Changes in working capital: (Increase)/decrease in inventories . . . . . . . . . . . . . (Increase)/decrease in trade and other receivables . . . . . Increase/(decrease) in trade and other payables . . . . . . .

. . . . . . . .

(40.2) 17.6 2.4 0.6 0.2 10.9 (0.8)

(33.3) 19.8 3.9 0.1 0.1 11.8 (0.1)

(25.5) 17.9 4.7 1.0 0.2 0.1 11.0

(7.2) 4.0 1.0 2.7

(4.0) 4.3 1.0 2.1

. . .

(1.1) 1.9 (9.7) (18.1) (8.0) (26.2)

(0.8) (2.8) 6.6 5.3 (9.0) (3.7)

(0.1) (2.7) 10.1 16.8 (12.7) 4.1

0.9 (1.2) (3.2) (3.0) (2.8) (5.8)

(0.3) (0.7) (0.8) 1.7 (2.1) (0.4)

Net cash inflow/(outflow) from operations . . . . . . . . . . . . . . . Finance costs paid . . . . . . . . . . . Net cash inflow/(outflow) from operating activities . . . . . . . .

The Groups net cash flow from operating activities decreased to an outflow of 0.4 million in P1-3 2010 from an outflow of 5.8 million in P1-3 2009 (unaudited). The movement is primarily the result of a decrease in the operating loss from 4.6 million in P1-3 2009 (unaudited) to 1.9 million in P1-3 2010 and an improvement in changes to working capital, which comprise movements in inventories, trade and other receivables, and trade and other payables. Trade and other receivables comprise mainly monies due from suppliers. Trade receivables in respect of consumer sales are low due to the nature of the Groups business. Trade and other payables includes balances due to suppliers of products sold by Ocado, balances due to non-trading creditors (such as fuel, insurance and marketing costs) and other accruals, including CFC costs. The Groups net cash outflow from operating activities decreased from an outflow of 26.2 million in FYE 2007 to an outflow of 3.7 million in FYE 2008 and moved to an inflow of 4.1 million in FYE 2009. The decrease from FYE 2007 to FYE 2008 primarily reflects a decrease in operating loss of 8.5 million and movement in working capital of 3.0 million. The decrease in trade and other payables in FYE 2007 reflects primarily the termination of the third-party logistics contract for workers in the CFC, following which those workers became Ocado employees. These movements were offset in part by an increase in finance costs paid of 0.9 million. The movement from FYE 2008 to FYE 2009 is primarily the result of the decrease in operating loss of 7.2 million and positive movement in working capital of 7.3 million. These movements were offset in part by a decrease of finance costs paid of 3.7 million and a decrease in depreciation of property, plant and equipment of 2.0 million primarily due to the increase in the estimated useful life of certain assets adopted in October 2008.

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Part IV (B) Investing activities

FYE 2007 million FYE 2008 million

Operating and Financial Review

FYE 2009 million

P1-3 2009 (unaudited) million

P1-3 2010 million

Purchase of property, plant and equipment . Proceeds from sale of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . Purchase of intangible assets . . . . . . . . . . Finance income received . . . . . . . . . . . . . Net cash used in investing activities . . .

(19.6) 0.2 (3.4) 2.0 (20.7)

(15.7) (4.1) 0.1 (19.8)

(15.2) (4.4) (19.6)

(5.5) (0.9) (6.3)

(1.6) (1.2) (2.8)

The Groups net cash used in investing activities decreased from 6.3 million in P1-3 2009 (unaudited) to 2.8 million in P1-3 2010. The movement is primarily a result of lower capital expenditure on property, plant and equipment and offset in part by increased expenditure on intangible assets. The Groups net cash used in investing activities was 20.7 million in FYE 2007, 19.8 million in FYE 2008 and 19.6 million in FYE 2009. The difference between the capital expenditure set out in section 6.3 of this Part IV and cash used in investing activities set out in the table above is due to the accounting treatment of assets being financed by financing leases and the timing of the payment of invoices received but unpaid at the end of the financial year. Net cash used for investing activities is a cash flow measure and excludes any assets which are lease financed in the relevant financial year or invoices related to capital expenditure which are unpaid at the end of the financial year. (C) Financing activities
FYE 2007 million FYE 2008 million FYE 2009 million P1-3 2009 (unaudited) million P1-3 2010 million

Proceeds from the issue of ordinary share capital . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from borrowings . . . . . . . . . . . Repayment of borrowings . . . . . . . . . . . . Proceeds from asset-based financing arrangements . . . . . . . . . . . . . . . . . . . Repayment of obligations under finance leases . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .

30.2 25.2 (10.6) 10.0 (7.9) 46.8

17.9 8.0 (11.1) 9.0 (5.3) 18.4

29.1 25.1 (28.4) 7.1 (10.3) 22.7

2.1 (0.6) 5.1 (1.6) 5.0

1.7 3.0 (1.8) 1.8 (4.1) 0.7

Net cash from financing activities . . . . .

Financing activities represent the net proceeds from loan advances, loan repayments (including new finance leases) and equity injections. The Groups net cash from financing activities decreased from an inflow of 5.0 million in P1-3 2009 (unaudited) to an inflow of 0.7 million in P1-3 2010. The movement is primarily a result of the increase in the repayment of obligations under finance leases and other borrowings and a reduction in the level of new finance lease income offset in part by an increase in new borrowings and the receipt of equity proceeds following the setting up of the employee benefit trust which was established for the purposes of the JSOS. During FYE 2007, the Group raised 30.2 million in equity from new and existing investors and 35.1 million new borrowings and proceeds from asset based financing. The repayment of existing leases and borrowings was 18.5 million. During FYE 2008, the Group raised 17.9 million in equity from new and existing investors, and 17.0 million in new borrowings and proceeds from asset based financing. The repayment of existing leases and borrowings was 16.5 million. During FYE 2009, the Group raised 29.1 million in new equity from existing and new investors and 32.2 million in new borrowings and proceeds from asset based financing. The repayment of existing leases and borrowings was 38.7 million.

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Operating and Financial Review

As a result, the Groups net cash from financing activities decreased from 46.8 million in FYE 2007 to 18.4 million in FYE 2008 and increased to 22.7 million in FYE 2009. 6.2 External sources of funding, financing and indebtedness Ocado closely manages its trading capital, which it defines as its net assets plus net debt. Net debt is calculated as total debt (finance leases, convertible loan stock and borrowings as shown in the balance sheet), less cash and cash equivalents. The main areas of capital management revolve around the management of the components of working capital, including monitoring stock turn, age of stock, age of debtors, debtor days, creditor days, balance sheet re-forecasting, period projected loss, weekly cash flow forecasts, and daily cash balances. The Business typically has a negative working capital position (in line with other food retailers) as a result of low inventory days and minimal debtors. In periods of growth the Business benefits from cash inflows as a result of creditors days being longer than those of inventory and receivables. Major investment decisions are based on reviewing the expected future cash flows and all major capital expenditure requires approval from the Board. The Groups net debt decreased from 124.2 million at the end of FYE 2007 to 115.7 million at the end of FYE 2008 and to 107.0 million at the end of FYE 2009. The Groups net debt was 111.1 million as at the end of P1-3 2010, 110.2 million as at the end of P1-6 2010 (unaudited) and 113.7 million as at 13 June 2010 (unaudited). Since the end of P1-6 2010, the Group repaid a 5 million loan from Barclays Bank PLC and incurred additional 7.5 million in debt under a new revolving credit facility from Lloyds TSB Bank plc, as described below. The borrowing requirements of the Group are not subject to seasonality. Headroom available (defined as aggregate funds available to be borrowed under the Groups existing facilities available minus net debt) was 30.9 million, 16.3 million and 30.9 million at the end of FYE 2007, FYE 2008 and FYE 2009, respectively. Headroom available was 30.4 million as at the end of P1-3 2010 and 27.7 million as at 13 June 2010 (unaudited). The Group had cash and cash equivalents of 10.9 million, 5.9 million and 13.0 million as at the end of FYE 2007, FYE 2008 and FYE 2009, respectively. The Group had cash and cash equivalents of 10.4 million, 10.0 million and 8.2 million as at the end of P1-3 2010, P1-6 2010 (unaudited) and as of 13 June 2010 (unaudited), respectively.
Lender Original facility amount million Principal amount outstanding Maturity Interest rate As at end of P1-6 2010 (unaudited) million As at 13 June 2010 (unaudited) million

Secured loans Barclays Bank PLC(4) . . . . . Barclays Bank PLC(5) . . . . . Barclays Bank PLC(6) . . . . . Barclays Bank PLC(6) . . . . . Barclays Bank PLC(6) . . . . . Lloyds TSB Bank plc(4) . . . . Lloyds TSB Bank plc(4) . . . . Unsecured loans Arlington Property Developments Ltd . . . . . Bank of London and the Middle East plc . . . . . . . Premium credit . . . . . . . . . Obligations under finance leases Material handling equipment Vehicle leases . . . . . . . . . Capitalised element of CFC lease for IFRS . . . . . . . .

. . . . . . . . . . . . .

5.0 8.0 1.5 1.5 2.9 35.0 7.5 6.8 10.0 1.9

On demand Feb 2015 Dec 2011 Feb 2012 Dec 2012 Dec 2010/Dec 2011(3) May 2013 Mar 2012 Jul 2012 Sep 2010 5 year leases 5 year leases

LIBOR(2) + 2.75% BOEBR(1) + 3.0% BOEBR(1) + 1.5% LIBOR(2) + 2.25% LIBOR(2) + 3.5% LIBOR(2) + 6% LIBOR(2) + 5% 14.2% 8% equivalent 7.4% Various Various

5.0 7.5 1.0 1.3 2.7 27.1 1.7 7.7 0.5 40.6 13.0 12.0 120.2

7.5 1.0 1.3 2.7 27.1 7.4 1.7 7.7 0.5 39.1 13.8 12.0 121.9

Total borrowings and leases .

(1) (2) (3) (4) (5) (6) Bank of England Base Rate. London Inter-Bank Offer Rate.

Of the principal amount outstanding, 15.6 million is due in December 2010 and the balance is due in December 2011. Secured over warehouse assets and intellectual property. Secured over warehouse assets. Secured over freehold property.

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Ocado is also party to a standby overdraft facility with Barclays Bank PLC of up to 5.0 million. Some of Ocados loan agreements contain restrictions on the payment of dividends and redemption of shares and change of control provisions providing for full payment of all monies owed upon change of control as defined by the individual agreement. Under the 35 million and the new 7.5 million term loan and 7.5 million revolving credit facilities with Lloyds TSB Bank plc, Ocado is not permitted to declare, make or pay any dividend or other distribution on or in respect of its share capital, repay or distribute any dividend or share premium reserve or redeem, repurchase, retire or repay any of its share capital or resolve to do so. Ocado also may not enter into any demerger, merger or corporate reconstruction. Under the same agreement, Ocado will owe all monies drawn if control over more than 50 per cent. of voting power at a general meeting, the power to appoint or remove all or the majority of directors or equivalent officers of Ocado or the beneficial holding of more than 50 per cent. of Ocado passes to a party, other than John Lewis, without the prior written consent of the lending bank. The 10 million loan agreement with Bank of London and the Middle East plc restricts the distribution of dividends unless the Group is current with all payments under the agreement and provided that such distribution does not exceed 50 per cent. of Ocados net profit for the period on which the distribution is being made. Under the 6.8 million Arlington Properties Development Ltd loan, Ocado will owe all monies drawn if control of Ocado passes to a party, other than John Lewis, without the prior written consent of the lending bank. In addition, certain of the loan agreements with Barclays Bank PLC contain change of control provisions. For more information on the 35 million Lloyds TSB Bank plc facility and the Bank of London and the Middle East plc facility, see section 17.3 of Part XIII (Additional Information) On 5 July 2010 Ocado, (as original borrower) entered into a sterling term loan facility (the New Facility) between, among others, Barclays Bank PLC, HSBC Bank plc and Lloyds TSB Bank plc (as mandated lead arrangers and lenders), and Barclays Bank PLC (as agent and security trustee). The lenders have agreed to make available 100 million to the borrowers under the New Facility. All amounts borrowed under the New Facility shall be applied towards: (i) the acquisition of land located in England and Wales; (ii) the acquisition of building materials, fixtures and buildings attached to land located in England and Wales; and/or (iii) the acquisition of plant, machinery, equipment, fittings and/or any other tangible movable property to be located at the existing CFC, the second CFC and the Spokes located in England and Wales. The New Facility has an accordion feature which allows for the amount available under it to be increased up to 130 million, subject to the lenders (existing or additional) agreeing to make the additional amount available. The borrowers may only draw down under the New Facility if certain customary conditions precedent are satisfied and Admission takes place. The New Facility is secured against the LOKI/Fenrir software program and the assets financed by the New Facility. The New Facility is guaranteed by the Company and Ocado Holdings Limited and Ocado in the event of an additional borrower drawing down under it. Any of the Companys subsidiaries whose EBITDA, gross assets or turnover account for 5 per cent. or more of the Groups EBITDA, gross assets or turnover (calculated on a consolidated basis) shall become additional guarantors, and the guarantors (taken together) must account for at least 90 per cent. of the Groups EBITDA, gross assets and turnover. The agreement also contains customary warranties, representations, financial and other covenants and events of default. Loans drawn under the New Facility bear interest at the London Inter-Bank Offer Rate (LIBOR) plus a margin of 3.5 per cent. per year together with a sum for certain mandatory costs (if any). Repayment is due on the termination date of the New Facility, 6 January 2014. The New Facility may be terminated if the Sourcing Agreement and Branding Arrangements are terminated in any circumstances. However, with the exception of the change of control termination right described in paragraph 1.4 of the Risk Factors, which is customary for an agreement of that type, the Company is in control of whether any such termination rights will arise. For a detailed description of the New Facility, see section 17.3 of Part XIII (Additional Information). On 20 May 2010, Ocado received an additional 3.4 million of finance leasing for vans from Mercedes-Benz Charterway. On 2 July 2010, Ocado entered into arrangements with Santander UK plc for the extension of credit lines for finance leasing of future delivery vans up to the amount of 15 million. Together, this provides Ocado with a credit line of 18.4 million for the finance leasing of its future vehicle requirements.

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On 26 May 2010, Ocado entered into with Lloyds TSB Bank plc as lender a new three year term loan in an aggregate principal amount of 7.5 million and a revolving credit facility in an aggregate principal amount of 7.5 million. The term loan is repayable in three equal instalments, the payments being due on 26 May 2011, 2012 and 2013. Both facilities will mature in May 2013. Borrowings under the term loan and revolving credit facility bear an interest rate of LIBOR plus a margin of 5 per cent. per year and LIBOR plus a margin of 7 per cent. per year, respectively, and are secured against certain of Ocados intellectual property. The term loan was fully drawn at 28 May 2010. The term loan and revolving credit facility are otherwise entered into on the same terms as Ocados 35 million loan with Lloyds TSB Bank plc. Approximately 45 million of the net proceeds from the Offers received by the Company is expected to be used within six months of Admission to repay amounts drawn by the Group under certain of the existing borrowing facilities. 6.3 Capital expenditure The Groups capital expenditure has focused on four main areas supporting the Groups long-term growth, which included increasing the capacity and operating efficiency of the CFC, increasing the capacity of the distribution network, growing the van fleet and replacing vehicles as they age and ongoing development of IT capabilities and infrastructure. The amount of capital expenditure has remained relatively stable over the period FYE 2007 to FYE 2009 and declined as a percentage of gross sales, however the focus of the expenditure has changed. In FYE 2007 and FYE 2008, the Group focused its capital expenditure on projects to increase capacity and efficiency in the CFC with the focus moving to the development of the Spoke network and delivery fleet and continued investment in IT capability in FYE 2009. Ocado achieved an increase of effective capacity of the CFC from fewer than 55,000 orders per week in early 2007 to the current effective capacity of approximately 105,000 orders per week with capital expenditure of 31.3 million over the period FYE 2007-FYE 2009. The following table sets out the Groups capital expenditure (unaudited) for FYE 2007, FYE 2008, FYE 2009, P1-3 2009, and P1-3 2010:
FYE 2007 (unaudited) million FYE 2008 (unaudited) million FYE 2009 (unaudited) million P1-3 2009 (unaudited) million P1-3 2010 (unaudited) million

CFC . . . . . . . . . . . . . . . Vehicles . . . . . . . . . . . . . Distribution sites (Spokes) IT Hardware & Software . Other . . . . . . . . . . . . . . .

. . . . .

. . . . .

. . . . .

. . . . .

16.3 3.2 0.1 5.4 1.0 26.0

10.1 3.4 3.6 6.6 1.0 24.7

4.9 4.7 5.4 7.5 0.5 23.0

1.2 1.0 2.9 1.7 0.1 6.9

1.3 2.5 0.1 1.4 0.1 5.4

Total . . . . . . . . . . . . . . . . . . .

The above table includes amounts invoiced in respect of capital expenditure which were unpaid at the period end and assets financed using finance leases. Over the medium term, the Group anticipates significant capital expenditure for the building and fitting out of the second CFC; continued investment in the existing CFC to expand its capacity and increase its operational efficiency; development of new Spokes; expansion of the vehicle fleet; continued development of IT systems; and maintenance capital expenditure. The timing and amount of these planned capital expenditures are subject to ongoing review by the Directors and may be affected by various factors, including the level of demand for Ocados services, opportunities for additional improvements of the capacity and efficiency of the operations, and the availability of required financing on terms acceptable to Ocado. The total construction costs of the second CFC are currently estimated at approximately 210 million (costed at a sterling : euro exchange rate of 1 = e1.10). This includes costs of site acquisition and preparation, construction of the external building and internal fit-out (approximately 90 million) and the acquisition and installation of material handling equipment (approximately 120 million). The Directors believe that Ocado has a degree of flexibility to adjust the timing of the fit-out of the second CFC and the installation of the material handling equipment to match customer demand and required capacity. While

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site acquisition costs are expected to be committed at the time of the acquisition and the building costs are expected to be committed at the point of the commencement of construction, the costs relating to material handling equipment are expected to be committed at the time of the order of the equipment, with the full cost being paid in stages up to the full installation of the equipment. The Directors expect that the expenditure on material handling equipment, and therefore expansion of effective capacity, will be staged, with an initial estimated effective capacity of the second CFC of approximately 120,000 orders per week, with subsequent expansion to approximately 180,000 orders per week. The total actual spend on the second CFC will be subject to several factors and uncertainties outside of Ocados control. These include the market price of steel (due to approximately one-third of the cost of material handling equipment being linked to steel prices) and changes in the euro/sterling exchange rate (as the material handling equipment is expected to be priced in euro). In addition to the construction and related fit-out of the second CFC, the planned capital expenditure over the medium term comprises: Continued investment in the existing CFC. Ocado plans to continue investing in the existing CFC to expand its capacity from approximately 105,000 orders per week to approximately 150,000 orders per week (estimated capital expenditure of approximately 30 million) and subsequently to approximately 180,000 orders per week (estimated capital expenditure of approximately 50 million). As the majority of the existing material handling equipment in the CFC is already capable of a throughput of approximately 150,000 orders per week, the capital expenditure required to achieve this level for the existing CFC is relatively small compared to the capital expenditure required to further increase the effective capacity of the CFC to approximately 180,000 orders per week. The increase of effective capacity from 150,000 to 180,000 orders per week will require additional capital expenditure across the CFC to upgrade existing machinery and install new machinery. Development of new Spokes. Ocado expects to establish an average of two new Spokes per year in the medium term at an estimated cost ranging from 1 million to 5 million (expected to be 2.5 million on average) per Spoke. The cost of developing a new Spoke depends on its location, the condition of the existing site and whether Ocado acquires a freehold or leasehold for the Spoke. Expansion of the delivery vehicle fleet. Ocado expects to increase its delivery vehicle fleet in line with the number of orders per week and deliveries per van per week achieved by the Business. Continued development of IT systems.

Ocado expects to fund the planned capital expenditure with the balance of the net proceeds of the Offers of approximately 155 million, together with the undrawn debt facilities of approximately 100 million, credit lines available for asset financing of approximately 20 million and the cash flow generated by its operations. Ocado expects to fund the majority of the investment in the second CFC and the existing CFC through borrowings under the New Facility, finance leases and other forms of debt. Ocados financing needs will be highly dependent on the actual cost of the second CFC and other capital expenditure, the timing of the start of operations at the second CFC and the success of the second CFC in operating at designed or planned capacity. Ocado may need to raise additional capital from 2012 to that currently anticipated to fund its planned capital expenditure. Any such required additional funding may not be available to the Group on favourable terms when required, or at all. These forward-looking statements may be affected by the factors set forth in Risk Factors. 7. Contingencies and commitments

The following table sets out an analysis of the Groups contractual obligations as at the end of P1-3 2010 into their relevant maturity groups based on the remaining period at the end date of the financial period to the contractual maturity date. The amounts reflect the carrying value and undiscounted contractual cash flows.

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Secured loans . . . . . . . . Unsecured loans . . . . . . Trade and other payables(1) . . . . . . . . Operating lease obligations(2) . . . . . . . Financial lease obligations Derivative financial instruments . . . . . . . . Capital commitments(3) . . Total . . . . . . . . . . . . . (1) (2) (3)

Carrying value (unaudited) ( million) (44.3) (11.7) (42.3) (46.8) (65.6) (1.1) (11.1) (222.9)

Contractual cash flows (unaudited) ( million) (47.8) (13.0) (42.3) (46.8) (77.4) (1.1) (11.1) (239.4)

As at end of P1-3 2010 Less than Between 1 1 year and 2 years (unaudited) (unaudited) ( million) ( million) (24.4) (16.0) (6.3) (4.8) (42.3) (2.6) (23.3) (11.1) (110.0) (2.3) (21.3) (1.1) (45.5)

Between 2 and 5 years (unaudited) ( million) (7.4) (1.9) (5.9) (22.3) (37.5)

More than 5 years (unaudited) ( million) (36.0) (10.4) (46.5)

Does not include other taxation and deferred income. Minimum lease payments under non-cancellable operating leases. Contracts placed for future capital expenditure not provided in the financial statements.

8.

Off balance sheet arrangements and contingent liabilities

The Group has no off balance sheet arrangements, as determined for purposes of IFRS-EU. As part of its financing arrangements, Ocado granted Lloyds TSB Bank plc and Ranelagh Nominees Limited (an affiliate of Lloyds TSB Bank plc) warrants to subscribe for 56,112 shares in Ocado. Lloyds TSB Bank plc subsequently transferred all of its warrants to Ranelagh Nominees Limited. Following the reorganisation that resulted in the Company becoming the holding company of the Group, the warrants are now warrants to subscribe for 5,611,200 Ordinary Shares in the Company at a price of 1.80 per Ordinary Share. Subject to the Offer Price being not less than 1.90, Ranelagh Nominees Limited has irrevocably committed to exercise its remaining warrants in full on Admission provided that it may sell the resulting 5,611,200 Ordinary Shares pursuant to the Offers. 9. Quantitative and qualitative disclosure on market risk

The Groups operations and financing arrangements expose it to a variety of financial risks that include the effects of changes in debt market prices, credit risks, liquidity risks and interest rates. 9.1 Liquidity To manage the working capital needs, the Group maintains a mixture of short- and medium-term debt, including a revolving credit facility, and finance lease arrangements that are designed to ensure it has sufficient available funds for operations. In addition, the Group maintains a committed standby bank overdraft facility of 5.0 million with Barclays Bank PLC. The Group monitors cash flow as part of its day-to-day control procedures and the Executive Board receives cash flow projections on a monthly basis indicating the facilities available to be drawn upon as necessary. Additional information on the Groups contractual obligations analysed into their relevant maturity groups is provided in section 7 of this Part IV. 9.2 Credit risk The Groups exposures to credit risk arise from holdings of cash and cash equivalents, trade and other receivables (excluding prepayments) and available for sale financial assets.

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Part IV (A) Cash and cash equivalents

Operating and Financial Review

The Groups exposure to credit risk in cash and cash equivalents is managed by dealing only with banks and financial institutions which carry Moodys ratings of Aa3/P1 for long-term and short-term deposits. The Group therefore regards the risk around cash and cash equivalents as minimal. (B) Trade and other receivables Trade and other receivables are, due to the nature of Ocados business, managed by spreading the risk over a large number of individuals with relatively small balances. Payments from customers are collected upon delivery of an order to the customer. Payments are collected by charging the customers credit or banking card on file, which is checked by the Group upon initial submission, and the funds are typically received within 7 days. A small number of card payments fail each week (less than 0.2 per cent. in P1-3 2010) and are followed up by the finance department. 9.3 Market risk (A) Currency risk The Group is exposed to currency risk in connection with its trade payables, principally arising on purchases of plant and equipment. The Group had exposure of less than 0.1 million in respect of foreign currency assets and liabilities at the end of P1-3 2010. The Group expects to enter into significant purchase commitments relating to equipment for the second CFC, among others, denominated in euro, which will increase its currency risk exposure. The Company expects to reduce this currency exposure by entering into forward currency contracts for these purchases. (B) Interest rate risk The Group is exposed to interest rate risk on its interest bearing borrowings. The Groups interest rate policy seeks to minimise interest expense and volatility by structuring the interest rate profile into a diversified portfolio of fixed rate and floating rate liabilities. An increase of 100 basis points (1.0 per cent.) in interest rates at the balance sheet date would have decreased equity and profit or loss by the amounts shown below. This calculation assumes that the change occurred at the balance sheet date and had been applied to risk exposures existing at that date. This analysis assumes that all other variables remain constant and considers the effect on financial instruments with variable interest rates and financial instruments at fair value through profit or loss. The analysis is performed on the same basis for each period.
FYE 2007 million FYE 2008 million As at end of FYE 2009 million P1-3 2009 (unaudited) million P1-3 2010 million

Equity Gain/(loss) . . . . . . . . . . . . . . . . . Income Gain/(loss) . . . . . . . . . . . . . . . . .

(0.5) (0.5)

(0.5) (0.5)

(0.5) (0.5)

(0.2) (0.2)

(0.2) (0.2)

10. Critical accounting policies and estimates The preparation of the Groups historical financial information requires estimates and assumptions that affect the application of policies and reported amounts. Estimates and assumptions are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

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Critical accounting policies are those accounting estimates that require management to make assumptions about matters that are uncertain at the time the estimates are made and would have resulted in material changes to the historical financial information if different estimates, which management reasonably could have used, were made. The Groups critical accounting policies are discussed below. For a full discussion of the Groups accounting policies, see Note 2 (Accounting policies) in the Historical Financial Information in Part V (Historical Financial Information Relating to the Group). 10.1 Revenue recognition Revenue is recognised at the point when the significant risks and rewards of products have been passed to the buyer and can be reliably measured. In general, this is deemed to occur when customers take delivery of the goods and the driver of the delivery van has returned to the Spoke. Income from Ocado Delivery Pass, which enables customers to obtain virtually unlimited deliveries without paying any delivery charges in exchange for either a fixed annual payment or monthly subscription payments, is recognised in the period to which it relates on an accruals basis. 10.2 Intangible assetscapitalised software Computer software is carried at cost less accumulated amortisation and any impairment loss. Externally acquired computer software and software licences are capitalised and amortised on a straight-line basis over their useful economic lives of three to five years. Costs relating to development of computer software for internal use are capitalised once all development phase recognition criteria of IAS 38 Intangible Assets are met. When the software is available for its intended use, these costs are amortised in equal annual amounts over the estimated useful life of the software. Any impairment of computer software or licenses is charged to operating profit in the period in which it arises. Capitalised cost includes the labour costs associated with the Groups own employees, based on time recorded, to the extent that they are directly attributable to development construction costs, or where they comprise a proportion of an IT team directly engaged in the development and installation of a software application. Management judgement is involved in determining the appropriate internal costs to capitalise and the amounts involved. For P1-3 2010, internal development costs capitalised were 0.9 million (FYE 2009: 4.1 million; FYE 2008: 3.9 million; FYE 2007: 2.7 million) and represented approximately 71 per cent. (FYE 2009: 93 per cent.; FYE 2008: 95 per cent.; FYE 2007: 81 per cent.) of expenditure on intangible assets and 16 per cent. (FYE 2009: 18 per cent.; FYE 2008: 16 per cent.; FYE 2007: 10 per cent.) of total capital spend including property, plant and equipment. The useful life of internally developed software is three years, based on historical experience with similar products as well as anticipation of future events, which may impact their life, such as changes in technology. Historically, changes in useful lives of software have not resulted in material changes to the amortisation charge. 10.3 Depreciation of property, plant, and equipment Property, plant and equipment represent a significant proportion of the asset base of the Group, representing 66 per cent., 72 per cent. and 72 per cent. of the total assets in FYE 2009, FYE 2008 and FYE 2007, respectively. Therefore, the estimates and assumptions made to determine their carrying value and related depreciation are critical to the Groups financial position and performance. In accounting for property, plant and equipment, the Group must make estimates about the expected useful lives of the assets, the expected residual values of the assets and the potential for impairment based on the fair value of the assets and the cash flows they generate. The charge in respect of periodic depreciation is derived after determining an estimate of an assets expected useful life and the expected residual value at the end of its life. Increasing an assets expected life or its residual value would result in a reduced depreciation charge in the statement of comprehensive income.

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The useful lives of the Groups assets are determined by management at the time the asset is acquired and reviewed at least annually for appropriateness. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology. 10.4 Impairment testing The Group does not have any assets that have an indefinite useful life and are not subject to an annual amortisation or depreciation charge. All non-financial assets are tested annually for impairment in respect of changes in residual value or remaining life. Factors that would indicate potential impairment of property, plant and equipment would include, but are not limited to, significant decreases in the market value of property, plant and equipment, a significant change in property, plant and equipments physical condition, a change in the operating procedures that alters the purpose for which the asset was brought into use, and operating or cash-flow losses associated with the use of property, plant and equipment. The Group is required to undergo an assessment of the future viability of assets grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Given the Groups current operating structure, the lowest level at which cash flows can reasonably be assessed is for the Group as a whole. The Group is continuing to invest in future growth and has not yet reached a stage where it delivers positive post-tax earnings. 10.5 Going concern basis for the preparation of the financial information The historical financial information has been prepared on the going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The going concern basis relies on the receipt of 200 million of net proceeds from the Offers and the New Facility being available to the Group. See Note 2(b) in Part V (Historical Financial Information relating to the Group) for additional detail. The Group maintains a mixture of long-term and short-term debt finance that is designed to ensure it has sufficient available funds for operations and its planned expansions. The Group monitors cash flow as part of its day-to-day control procedures and management consider cash flow projections on a monthly basis ensuring that appropriate facilities are available to be drawn upon as necessary. The Group also prepares detailed forward projections for future periods which are constantly updated and refined. As a consequence, the Group is satisfied that it is able to obtain sufficient resources to continue in operation for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in preparing the financial statements. This assumption has a significant effect on the Group and affects the way assets and liabilities are valued. If management were unable to justify accounting on a going concern basis, the valuation of the Groups assets and liabilities would be affected. An impairment review would be required to be conducted and it is likely that assets would have to be measured at their net realisable value based on the sale of assets on an asset by asset basis. Liabilities would also have to be increased to take account of future non-cancellable operating lease commitments. 10.6 Recognition of deferred tax assets The Groups tax charge on ordinary activities is the sum of the total current and deferred tax charges. The calculation of the total tax charge necessarily involves a degree of estimation and judgement in respect of certain items. The final outcome of some of these items may give rise to material profit and loss and/or cash flow variances. A deferred tax asset is recognised when it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Recognition, therefore, involves judgement regarding the prudent forecasting of future taxable profits of the business and in applying an appropriate risk adjustment factor. 10.7 Classification of leases (including sale and leaseback transactions) The Group has a number of complex high-value lease arrangements. The Group follows the guidance of IAS 17 to determine the classification of leases as operating or finance leases. The classification of a

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lease as a finance lease, as opposed to an operating lease, will change EBITDA and operating profit/ (loss) as the charge made by the lessor will pass through finance charges and depreciation. Retained earnings may also be temporarily affected depending on the relative size of the amounts apportioned to capital repayments and depreciation. IAS 17 requires the Group to consider property leases split into their component parts (i.e., land and building elements) separately. As only the buildings elements could be considered as a finance lease management must make a judgment, based on advice from suitable experts, as to the relative value of the land and buildings. Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards of ownership to the Group or where the substance of the transaction does not meet the criteria of a sale and leaseback. All other leases are classified as operating leases. For property leases, the land and building elements are treated separately to determine the appropriate lease classification. Finance leases Assets funded through finance leases are capitalised either as property, plant and equipment, or intangible assets as appropriate and depreciated/amortised over their estimated useful lives or the lease term, whichever is shorter. The amount capitalised is the lower of the fair value of the asset or the present value of the minimum lease payments during the lease term at the inception of the lease. The resulting lease obligations are included in liabilities net of finance charges. Finance costs on finance leases are charged directly to the statement of comprehensive income on an effective interest rate basis. Operating leases Assets leased under operating leases are not recorded on the balance sheet. Rental payments are charged directly to the income statement. Lease incentives Lease incentives primarily include up-front cash payments or rent-free periods. Lease incentives are capitalised and spread over the period of the lease term.

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PART V HISTORICAL FINANCIAL INFORMATION RELATING TO THE GROUP (A) Accountants report on the historical financial information relating to the Group

PricewaterhouseCoopers LLP 1 Embankment Place London WC2N 6RH

7DEC200517132980

The Directors Ocado Group plc Titan Court 3 Bishops Square Hatfield Business Park Hatfield AL10 9NE Goldman Sachs International Peterborough Court 133 Fleet Street London EC4A 2BB J.P. Morgan Securities Ltd. 125 London Wall London EC2Y 5AJ UBS Limited 1 Finsbury Avenue London EC2M 2PP 6 July 2010 Dear Sirs Ocado Group plc We report on the financial information set out in Part (B) of this Part V (the Historical Financial Information relating to the Group). The Historical Financial Information relating to the Group has been prepared for inclusion in the prospectus dated 6 July 2010 (the Prospectus) of Ocado Group plc (the Company) on the basis of the accounting policies set out in paragraph 2. This report is required by item 20.1 of Annex I to the PD Regulation and is given for the purpose of complying with that item and for no other purpose. We have not audited the financial information for the 12 weeks ended 22 February 2009 and accordingly do not express an opinion thereon. Responsibilities The Directors of the Company are responsible for preparing the Historical Financial Information relating to the Group in accordance with International Financial Reporting Standards as adopted by the European Union.
PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Services Authority for designated investment business.

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Part V

Historical Financial Information relating to the Group

It is our responsibility to form an opinion on the Historical Financial Information relating to the Group and to report our opinion to you. Save for any responsibility which we may have to those persons to whom this report is expressly addressed and for any responsibility arising under item 5.5.3R(2)(f) of the Prospectus Rules to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with item 23.1 of Annex I to the PD Regulation, consenting to its inclusion in the Prospectus. Basis of opinion We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the Historical Financial Information relating to the Group. It also included an assessment of significant estimates and judgments made by those responsible for the preparation of the Historical Financial Information relating to the Group and whether the accounting policies are appropriate to the Companys circumstances, consistently applied and adequately disclosed. We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Historical Financial Information relating to the Group is free from material misstatement whether caused by fraud or other irregularity or error. Our work has not been carried out in accordance with auditing standards generally accepted in the United States of America or auditing standards of the Public Company Accounting Oversight Board (United States) and accordingly should not be relied upon as if it had been carried out in accordance with those standards. Opinion In our opinion, the Historical Financial Information relating to the Group gives, for the purposes of the Prospectus dated 6 July 2010, a true and fair view of the state of affairs of the Company as at the dates stated and of its losses, cash flows and changes in equity for the periods then ended in accordance with International Financial Reporting Standards as adopted by the European Union. Declaration For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of the Prospectus and declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with item 1.2 of Annex I to the PD Regulation. Yours faithfully

PricewaterhouseCoopers LLP Chartered Accountants

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Historical Financial Information relating to the Group

(B) Historical financial information relating to the Group Consolidated statements of comprehensive income
For the 52 weeks ended 2 December 2007 000 For the 52 weeks ended 30 November 2008 000 For the 52 weeks ended 29 November 2009 000 For the 12 weeks ended 22 February 2009 (unaudited) 000 For the 12 weeks ended 21 February 2010 000

Continuing operations

Notes

Revenue . . . . . . . . . . . . . . . . Cost of sales . . . . . . . . . . . . . Gross profit . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . Distribution costs . . . . . . . . . . . Operating profit/(loss) before administrative expenses . . . . . Administrative expenses . . . . . . Operating loss . . . . . . . . . . . . Finance income . . . . . . . . . . . . Finance costs . . . . . . . . . . . . . Loss before tax . . . . . . . . . . . Taxation . . . . . . . . . . . . . . . . . Loss for the period attributable to the owners of the Group . . . . . . . . . . . . . . Total comprehensive income for the period attributable to the owners of the Group . . . Loss per share . . . . . . . . . . . Basic and diluted loss per share

2 2 6 2

272,856 (184,874) 87,982 612 (93,536) (4,942) (25,148)

321,314 (218,515) 102,799 1,808 (101,069) 3,538 (25,151) (21,613) 99 (11,784) (33,298)

401,997 (279,168) 122,829 2,641 (110,331) 15,139 (29,542) (14,403) 12 (11,118) (25,509) 2,300

84,622 (58,942) 25,680 542 (24,594) 1,628 (6,200) (4,572) (2,663) (7,235)

110,238 (76,927) 33,311 1,166 (28,250) 6,227 (8,107) (1,880) 2 (2,085) (3,963)

7 9 9 10

(30,090) 824 (10,888) (40,154)

(40,154)

(33,298)

(23,209)

(7,235)

(3,963)

(40,154) 28 pence (12.12)

(33,298) pence (9.77)

(23,209) pence (6.05)

(7,235) pence (1.92)

(3,963) pence (0.99)

Non-GAAP measure: Earnings/(loss) before interest, taxation, depreciation, amortisation and impairment (EBITDA)
For the 52 weeks ended 2 December 2007 000 For the 52 weeks ended 30 November 2008 000 For the 52 weeks ended 29 November 2009 000 For the 12 weeks ended 22 February 2009 (unaudited) 000 For the 12 weeks ended 21 February 2010 000

Notes

Loss for the period attributable to the owners of the Group . . . . Adjustments for: Finance income . . . . . . . . . . Finance costs . . . . . . . . . . . Depreciation of property, plant and equipment . . . . . . . . . Impairment of property, plant and equipment . . . . . . . . . Amortisation expense . . . . . . Taxation . . . . . . . . . . . . . . . .. .. .. .. .. .. 9 9 12 12 11 10

(40,154) (824) 10,888 17,621 612 2,395

(33,298) (99) 11,784 19,820 66 3,917

(23,209) (12) 11,118 17,865 1,023 4,743 (2,300)

(7,235) 2,663 4,048 1,025

(3,963) (2) 2,085 4,301 979

Earnings/(loss) before interest, taxation, depreciation, amortisation and impairment EBITDA . . . . . . . . . . . . . .

(9,462)

2,190

9,228

501

3,400

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Consolidated balance sheets

As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Notes

Non-current assets Intangible assets . . . . . . . . . . . Property, plant and equipment . . Deferred tax asset . . . . . . . . . . Available-for-sale financial asset

. . . .

. . . .

. . . .

. . . .

. . . .

11 12 10 13

6,818 89,931 395 97,144

7,038 90,531 395 97,964 9,107 12,033 5,857 26,997 124,961 (40,303) (15,016) (14,506) (9,989) (79,814) (52,817) (28,429) (53,650) (1,079) (197) (83,355) (38,208) 38 281,649 1,139 (321,034) (38,208)

6,684 90,252 2,300 395 99,631 9,213 14,740 13,017 36,970 136,601 (47,237) (12,087) (19,669) (78,993) (42,023) (42,658) (45,651) (1,083) (366) (89,758) (32,150) 40 310,836 (343,026) (32,150)

6,941 90,126 2,300 395 99,762 9,494 15,468 10,445 35,407 135,169 (46,462) (27,773) (19,314) (93,549) (58,142) (28,218) (46,266) (1,126) (384) (75,994) (34,374) 8,663 (47,741) (116,230) 120,934 (34,374)

Current assets Inventories . . . . . . . . . . . . . . . . . . . . . Trade and other receivables . . . . . . . . Cash and cash equivalents . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . Current liabilities Trade and other payables . . . . . Borrowings . . . . . . . . . . . . . . . Convertible loan stock . . . . . . . . Obligations under finance leases . . . . . . . . . . . . . . . . . . . .

14 15 16

8,300 9,222 10,891 28,413 125,557

17 18 18 18

(33,232) (876) (5,066) (39,174) (10,761)

Net current liabilities . . . . . . . . . . . . Non-current liabilities Borrowings . . . . . . . . . . . . . . . Convertible loan stock . . . . . . . . Obligations under finance leases Derivative liability . . . . . . . . . . . Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 18 18 23 22

(46,345) (33,101) (49,688) (967) (175) (130,276) (43,893)

Net liabilities . . . . . . . . . . . . . . . . . . . Equity Share capital . . . . . . . . . . . . . . Share premium account . . . . . . Treasury reserve . . . . . . . . . . . Reverse acquisition reserve . . . . Convertible loan interest reserve Accumulated (deficit)/surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 24 24 24 20

34 241,109 8,150 (293,186) (43,893)

Deficit attributable to equity holders .

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Historical Financial Information relating to the Group

Consolidated statements of changes in equity

Share capital 000 Share premium 000 Treasury Reserve 000 Reverse Acquisition Reserve 000 Convertible Accumulated loan interest (deficit)/ reserves surplus 000 000 Deficit attributable to equity holders 000

Notes

Balance at 4 December 2006 . . . . . . . . Loss for the period . . . . . . . . . . . . . . Total comprehensive income for the period . . . . . . . . . . . . . . . . . . . . Transactions with owners: Equity component on convertible loan . . . . Issue of Ordinary shares . . . . . . . . . . . Share-based payments charge . . . . . . . . Total transactions with owners . . . . . . Balance at 2 December 2007 . . . . . . . . Balance at 3 December 2007 . . . . . . . . Loss for the period . . . . . . . . . . . . . . Total comprehensive income for the period . . . . . . . . . . . . . . . . . . . . Transactions with owners: Issue of Ordinary shares . . . . . . . . . Issue of Convertible preference shares . Transfer of equity on conversion of loan stocks . . . . . . . . . . . . . . . . . . Share-based payments charge . . . . . . Total transactions with owners Balance at 30 November 2008 . . . . . . . Balance at 1 December 2008 . . . . . . . . Loss for the period . . . . . . . . . . . . . . Total comprehensive income for the period . . . . . . . . . . . . . . . . . . . . Transactions with owners: Issue of Ordinary shares . . . . . . . . . Transaction costs on issue of Ordinary shares . . . . . . . . . . . . . . . . . . Issue of Convertible preference shares . Transfer of equity on conversion of loan stock . . . . . . . . . . . . . . . . . . . Transfer of equity on repayment of loan stock . . . . . . . . . . . . . . . . . . . Share-based payments charge . . . . . . . . . . . . . . 24 24 20 20 24

32 2 2 34 34 1 3 4 38 38

210,897 30,212 30,212 241,109 241,109 17,910 22,630 40,540 281,649 281,649

6,882 1,268 1,268 8,150 8,150 (7,011) (7,011) 1,139 1,139

(253,213) (40,154) (40,154) 181 181 (293,186) (293,186) (33,298) (33,298) 5,389 61 5,450 (321,034) (321,034) (23,209) (23,209)

(35,402) (40,154) (40,154) 1,268 30,214 181 31,663 (43,893) (43,893) (33,298) (33,298) 17,911 22,633 (1,622) 61 38,983 (38,208) (38,208) (23,209) (23,209)

. . . . . . . . . . . .

24 24 24 20 20

2 2 40 40

30,072 (945) 60 29,187 310,836 310,836

(5) (1,134) (1,139)

5 1,134 78 1,217 (343,026) (343,026) (3,963) (3,963)

30,074 (945) 60 78 29,267 (32,150) (32,150) (3,963) (3,963)

Total transactions with owners . . . . . . Balance at 29 November 2009 . . . . . . . Balance at 30 November 2009 . . . . . . . Loss for the period . . . . . . . . . . . . . . Total comprehensive income for the period . . . . . . . . . . . . . . . . . . . . Transactions with owners: Issue of Ordinary shares in Ocado Limited Cancellation of shares in Ocado Limited . Issue of ordinary and convertible preference shares by Ocado Group plc Ocado Group plc capital reduction . . . . . Reverse acquisition of Ocado Limited by Ocado Group plc . . . . . . . . . . . . . Share-based payments charge . . . . . . .

. . . . . .

24 24 24 24 24

3 (43) 476,509 (467,846) 8,623 8,663

49,443 (360,279) (310,836)

(47,741) (47,741) (47,741)

(476,509) 360,279 (116,230) (116,230)

43 467,846 34 467,923 120,934

1,705 34 1,739 (34,374)

Total transactions with owners . . . . . . Balance at 21 February 2010 . . . . . . . .

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Historical Financial Information relating to the Group

Consolidated statement of cash flows

For the 52 weeks ended 2 December 2007 000 For the 52 weeks ended 30 November 2008 000 For the 52 weeks ended 29 November 2009 000 For the 12 weeks ended 22 February 2009 (unaudited) 000 For the 12 weeks ended 21 February 2010 000

Notes

Cash flow from operating activities Loss before income tax . . . . . . Adjustments for: Depreciation expense . . . . . . Amortisation expense . . . . . . Impairment of property, plant and equipment . . . . . . . . . . Loss on disposal of property, plant and equipment . . . . . . . Provision for dilapidations expense . . . . . . . . . . . . . . Share-based payments charge Finance costs . . . . . . . . . . . Finance income . . . . . . . . . Changes in working capital: (Increase)/decrease in inventories . . . . . . . . . . . . . (Increase)/decrease in trade and other receivables . . . . . . Increase/(decrease) in trade and other payables . . . . . . . Net cash inflow/(outflow) from operations . . . . . . . . . . . . Finance costs paid . . . . . . . . . Net cash inflow/(outflow) from operating activities . . . . . . . Cash flows from investing activities Purchase of property, plant and equipment . . . . . . . . . . . . Proceeds from sale of property, plant and equipment . . . . . . Purchase of intangible assets . Finance income received . . . . 12 11 12 7 22 8 9 9

(40,154) 17,621 2,395 612 43 181 10,888 (824)

(33,298) 19,820 3,917 66 31 22 61 11,784 (99)

(25,509) 17,865 4,743 1,023 33 169 78 11,118 (12)

(7,235) 4,048 1,025 18 18 2,663

(3,963) 4,301 979 18 34 2,085 (2)

(1,122) 1,868 (9,655) (18,147) (8,063) (26,210)

(807) (2,811) 6,637 5,323 (8,994) (3,671)

(106) (2,707) 10,135 16,830 (12,740) 4,090

861 (1,188) (3,227) (3,017) (2,793) (5,810)

(281) (728) (765) 1,678 (2,104) (426)

. . . .

(19,558) 214 (3,366) 1,970 (20,740)

(15,744) 4 (4,137) 99 (19,778)

(15,215) (4,389) 12 (19,592)

(5,471) (875) (6,346)

(1,593) (1,220) 2 (2,811)

Net cash used in investing activities . . . . . . . . . . . . . Cash flows from financing activities Proceeds from the issue of Ordinary share capital . . . . . Proceeds from borrowings . . . . Repayment of borrowings . . . . . Proceeds from asset based financing arrangements . . . . . Repayments of obligations under finance leases . . . . . . . . . . Net cash from financing activities . . . . . . . . . . . . . Net increase/(decrease) in cash and cash equivalents . Cash and cash equivalents at beginning of period . . . . . . . Cash and cash/(debt) equivalents at end of period 16

24

30,214 25,153 (10,555) 9,950 (7,926) 46,836

17,911 8,022 (11,120) 8,950 (5,348) 18,415

29,129 25,052 (28,374) 7,135 (10,280) 22,662

12 2,054 (602) 5,124 (1,612) 4,976

1,705 3,009 (1,763) 1,812 (4,098) 665

(114) 11,005 10,891

(5,034) 10,891 5,857

7,160 5,857 13,017

(7,180) 5,857 (1,323)

(2,572) 13,017 10,445

104

Part V 1. General Information

Historical Financial Information relating to the Group

The principal activity of Ocado Group plc (the Company) and its subsidiaries (together, the Group or the Ocado Group) is that of retailing and distribution of groceries and consumer goods. The financial information presented is as at and for the 52 weeks to 2 December 2007, the 52 weeks to 30 November 2008, the 52 weeks to 29 November 2009, the 12 weeks to 21 February 2010 and the 12 weeks to 22 February 2009 which is unaudited. 2. Accounting policies

(a) Statement of compliance The Ocado Group historical financial information has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and International Financial Reporting Interpretations Committee (IFRIC) interpretations and with those parts of the Companies Act 2006 as applicable to companies reporting under IFRS-EU. (b) Basis of preparation and development of the Ocado Group The Company was incorporated on 8 December 2009 and on 9 February 2010 acquired the entire share capital of Ocado Limited. As a result of this transaction, the ultimate shareholders in Ocado Limited received shares in the Company in direct proportion to their original shareholdings in Ocado Limited. On 23 June 2010 the Company re-registered as a public limited company and changed its name to Ocado Group plc. Under IFRS 3 Revised Business Combinations, the acquisition of Ocado Limited by the Company has been accounted for as a reverse acquisition and the consolidated IFRS-EU financial Information of the Company is therefore a continuation of the financial information of Ocado Limited. As a result any financial information after 9 February 2010 represents consolidated financial information of the Ocado Group. Prior to this date the historical financial information represents the financial information of the Companys only operating subsidiary, Ocado Limited (see Note 24). The financial information is presented in sterling, rounded to the nearest thousand (000) unless otherwise stated. It has been prepared under the historical cost convention, except for financial instruments which have been measured at fair value. This Historical Financial Information relating to the Group set out in this Part V (B) has been prepared on the going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The use of the going concern basis relies on the receipt of the 200 million of net proceeds from the offers of shares (the Offers) and the new bank facility (the New Facility), as discussed in Note 33, being available to the Group. The auditors report on the Statutory Financial Statements of Ocado Limited for the 52 weeks ended 29 November 2009 was unqualified but included an emphasis of matter relating to going concern on the basis of the uncertainty of the Groups future funding, since the 200 million of net proceeds from the Offers and the ability of the Group to be able to draw down on the New Facility could not be taken into account when forming that opinion. That uncertainty will be resolved on the receipt by the Company of 200 million of net proceeds from the Offers and the Group being able to draw down on the New Facility. Use of assumptions and estimates The preparation of historical financial information in conformity with IFRS-EU requires the use of judgements, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the historical financial information and the reported amounts of revenues and expenses during the reporting period. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that

105

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period or in the period of the revision and future periods if the revision affects both current and future periods. Please see note 3 for further details. Standards, amendments and interpretations effective for 2009/10 or issued and early adopted: Certain new and revised standards and interpretations have been published that are mandatory for the Groups accounting periods beginning on or after 1 January 2009 and which the Group has adopted. Amendments to IFRS 1 First-time Adoption of IFRSs and IAS 27 Consolidated and Separate Historical financial informationCost of an Investment of a Subsidiary, Jointly Controlled Entity or Associate, effective for annual periods beginning on or after 1 July 2009. The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised in profit or loss. Amendments to IFRS 1 First-time Adoption of IFRSs and IAS 27 Consolidated and Separate Historical financial informationCost of an Investment of a Subsidiary, Jointly Controlled Entity or Associated, effective for annual reporting periods beginning on or after 1 January 2009. Amendment to IFRS 2 Share-Based PaymentVesting Conditions and Cancellations, effective for annual periods beginning on or after 1 January 2009 deals with vesting conditions and cancellations. It clarifies that vesting conditions are service conditions and performance conditions only. Other features of share based payments would have to be included in the fair value at the grant date. IFRS 8 Operating Segments, effective for annual periods beginning on or after 1 January 2009. This new standard replaces IAS 14 Segment Reporting and requires segmental information to be presented on the same basis that management uses to evaluate performance of its reporting segments in its management reporting. The Group only uses one segment to assess performance and so there is no effect on the Group. IFRIC 13 Customer Loyalty Programmes, effective for annual periods beginning on or after 1 July 2008. This interpretation requires customer loyalty award credits to be accounted for as a separate component of the sales transaction in which they are granted and therefore part of the fair value of the consideration received is allocated to the award credits and deferred over the period that the award credits are fulfilled. The Group does not currently operate such a scheme and hence the adoption of IFRIC 13 has had no impact on the results or net assets of the Group. IFRIC 17 Distribution of non-cash assets to owners effective for annual periods beginning on or after 1 July 2009. This interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends. IFRS 5 has also been amended to require that assets are classified as held for distribution only when they are available for distribution in their present condition and the distribution is highly probable. The Group currently has no such arrangements. IFRIC 18 Transfers of Assets from Customers, effective for transfers of assets from customers received on or after 1 July 2009. IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments, effective for annual periods beginning on or after 1 July 2010. This standard clarifies the requirements of accounting for debt for equity swaps. Amendments to IAS 1 Presentation of Historical financial information, effective for annual periods beginning on or after 1 January 2009. This revised standard requires non-owner changes in equity to be presented separately from owner changes in equity in the statement of comprehensive income. Amendments to IAS 1 Presentation of Historical financial information, effective for annual periods beginning on or after 1 January 2010. This amendment provides clarification that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non-current.

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Amendment to IAS 23 Borrowing Costs, effective for annual periods beginning on or after 1 January 2009. The standard has been revised and now requires an entity to capitalise borrowing costs directly attributable to an acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs has been removed. Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures, effective for annual periods beginning on or after 1 July 2008. These amendments permit the reclassification of financial assets in particular circumstances.

The accounting policies have been applied consistently by the Group to all periods presented in the historical financial information. (c) Consolidation The financial information comprises a consolidation of the financial information of Ocado Group plc and all its subsidiaries. The financial year ends of all entities in the Group are coterminus. The financial information of subsidiaries are included in the consolidated financial information from the date on which control over the operating and financial decisions is obtained and cease to be consolidated from the date on which control is transferred out of the Group. Control exists when the Company has the power, directly, or indirectly, to govern the financial and operating policies of an entity so as to obtain economic benefits from its activities. On 9 February 2010, the Group, previously headed by Ocado Limited, underwent a reorganisation by virtue of which Ocado Limiteds shareholders in their entirety exchanged their shares for shares in Ocado Group plc, a newly formed company, which then became the ultimate parent company of the Group. Notwithstanding the change in the legal parent of the Group, this transaction has been accounted for as a reverse acquisition and the consolidated financial information has been prepared on the basis of the new legal parent having been acquired by the existing Group. All inter-company balances and transactions, including recognised gains arising from inter-group transaction, have been eliminated in full. Unrealised losses are eliminated in the same manner as recognised gains except to the extent that they provide evidence of impairment. (d) Revenue Revenue consists of income generated from online sales through the Webshop and includes charges for delivery. Online sales are shown net of returns, relevant marketing vouchers/offers and value added taxes. Relevant vouchers/offers include: money-off coupons, conditional spend vouchers and offers such as buy three for the price of two. Revenue is recognised at the point when the significant risks and rewards of products have been passed to the buyer and can be reliably measured; in general this is deemed to occur when customers take delivery of the goods. Income from Ocado Delivery Pass, the discounted pre-pay delivery scheme, is recognised in the period to which it relates on an accruals basis. (e) Cost of sales Costs of sales represent the cost to the Group of the product sold. It consists of all external costs incurred in procuring goods for resale and delivering them to the Customer Fulfilment Centre as well any adjustments to inventories. (f) Distribution costs

Distribution costs consist of all the costs incurred, excluding product costs, to the point of sale, usually the customers home. This includes the payroll-related expenses for the picking, dispatch and delivery of product sold to the point of sale, the cost of making those deliveries, including fuel, tolls, maintenance of vehicles, the operating costs of the properties required for the picking, dispatch and onward delivery operations and all associated depreciation, amortisation and impairment charges.

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Historical Financial Information relating to the Group

(g) Administrative expenses Administrative expenses consist of all advertising and marketing expenditure, the payroll-related expenses of all marketing, IT and other Head Office functions, costs of annual software maintenance contracts, property-related costs for the Head Office, all fees for professional services and depreciation, amortisation and impairment of IT equipment and fixtures and fittings. (h) Other income Advertising revenue, commission income received, income from other services to suppliers and sub-lease payments received are recognised in the period to which they relate on an accruals basis. (i) Property, plant and equipment

Property, plant and equipment excluding land are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is provided at rates estimated to write off the cost of the relevant assets less their estimated residual values by equal annual amounts over their expected useful economic lives. Residual values and expected useful economic lives are reviewed and adjusted if appropriate at the end of each reporting period. Land is not depreciated. Depreciation on other fixed assets is calculated based on the useful economic life indicated below: Freehold buildings and leasehold properties Fixtures and fittings Plant and machinery Computer hardware Motor vehicles 25 years, or the lease term if shorter 5-10 years 3-20 years (97% between 5 and 10 years) 2-5 years 2-5 years

Capital work-in-progress is not depreciated until it is available for use. Gains and losses on disposal are determined by comparing proceeds with the assets carrying amount and are recognised within operating profit. (j) Intangible assetsComputer software

Computer software is carried at cost less accumulated amortisation and any recognised impairment loss. Externally acquired computer software and software licences are capitalised and amortised on a straight-line basis over their useful economic lives of three to five years. Costs relating to the development of computer software for internal use are capitalised once all the development phase recognition criteria of IAS 38 Intangible Assets are met. When the software is available for its intended use, these costs are amortised in equal annual amounts over the estimated useful life of the software. Any impairment of computer software or licenses is charged to operating profit in the period in which it arises. (k) Impairment of non-financial assets The Group does not have any assets that have an indefinite useful life and so are not subject to an annual amortisation or depreciation charge. Assets that are subject to an annual amortisation or depreciation charge are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less cost to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. Given the Groups current operating structure the lowest level at which cash flows can reasonably be assessed is for the Group as a whole. The Group is still investing in its future growth and so has not yet

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Historical Financial Information relating to the Group

reached a stage where it delivers positive post tax earnings. The Group prepares detailed forward projections which are constantly updated and refined. Based on these projections the Board does not consider that any further impairment of assets is required. (l) Borrowing costs

Borrowing costs which are directly attributable to the acquisition or construction of qualifying assets are capitalised. They are defined as the borrowing costs that would have been avoided if the expenditure on the qualifying asset had not been made. All other borrowing costs are charged to finance costs, using the effective interest rate method. (m) Leased Assets Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards of ownership to the Group. All other leases are classified as operating leases. For property leases, the land and building elements are treated separately to determine the appropriate lease classification. Finance leases

Assets funded through finance leases are capitalised either as property, plant and equipment, or intangible assets, as appropriate, and are depreciated/amortised over their estimated useful lives or the lease term, whichever is shorter. The amount capitalised is the lower of the fair value of the asset or the present value of the minimum lease payments during the lease term at the inception of the lease. The resulting lease obligations are included in liabilities net of finance charges. Finance costs on finance leases are charged directly to the statement of comprehensive income on an effective interest rate basis. Operating leases

Assets leased under operating leases are not recorded on the balance sheet. Rental payments are charged directly to the statement of comprehensive income on a straight line basis. Lease incentives

Lease incentives primarily include up-front cash payments or rent-free periods. Lease incentives are capitalised and spread over the period of the lease term. (n) Inventories Inventories comprise goods held for resale, fuel and other consumable goods made up principally of spares. Inventories are valued at the lower of cost and net realisable value. Goods held for resale and consumables are initially valued on a current cost basis and adjustments are made at the financial period end to bring this to an average cost basis. Fuel stocks are valued at calculated average cost. Costs include all direct expenditure and other appropriate attributable costs incurred in bringing inventories to their present location and condition. (o) Taxation The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity respectively. Current taxation

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted by the balance sheet date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

109

Part V

Historical Financial Information relating to the Group

Deferred taxation

Deferred tax is recognised using the balance sheet liability method, on temporary differences arising between the tax base of assets and liabilities and their carrying amount in the historical financial information. Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date. Deferred tax assets and liabilities are offset against each other when there is a legally enforceable right to set-off current taxation assets against current taxation liabilities and it is the intention to settle these on a net basis. Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also recognised in equity. (p) Provisions Provisions are recognised when: the Group has a present legal or constructive obligation as a result of a past event; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Dilapidations

Provisions for dilapidations are recognised on a lease by lease basis and are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and risks specific to the obligation. The increase in the provision due to passage of time is recognised as a finance cost. Onerous leases

Provisions for onerous leases are recognised if the Group believes that the unavoidable costs of meeting the lease obligations exceed the economic benefits expected to be received under the lease. (q) Employee benefits Pensions

The Group contributes to the personal pension plans of its staff through a defined contribution personal pension scheme which is administered by Standard Life. Employer contributions to the scheme are calculated as a percentage of salary based on length of service. Contributions are charged to the statement of comprehensive income in the period in which they arise. Share-based payments

Employees (including Directors) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services in exchange for rights over shares (equity-settled transactions).The cost of equity settled transactions with employees is measured by reference to the fair value at the date at which they are granted. Fair value is measured by use of the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on managements best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. In valuing equity-settled transactions, no account is taken of any performance conditions. The Group operates an equity settled Executive Share Option Scheme (ESOS) and a Joint Share Ownership Scheme (JSOS).

110

Part V Equity settled share-based transactions:

Historical Financial Information relating to the Group

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the years in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date). The vesting period for the ESOS is three years. If the options remain unexercised after a period of 10 years from the date of grant or the employee leaves the Company, the options expire (subject to a limited number of exceptions). The shares in the JSOS vest in four annual tranches with the first tranche vesting on the first anniversary of the date of grant. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which both the vesting period has expired and the number of awards, in the opinion of the directors of the Company based on the best available estimate at that date, that will ultimately vest. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied. Cash settled share-based transactions: The Group has exposure in respect of cash-settled share-based payment transactions and share-based payment transactions with cash alternatives as defined by IFRS 2 Share-based payment only in respect of bad leaver provisions in the JSOS. For details of the share options see Note 25. (r) Foreign currency translation Functional and presentation currency

Items included in the historical financial information of each of the Groups entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial information is presented in sterling, rounded to the nearest thousand (000) unless otherwise stated, which is the companys functional and the Groups presentation currency. Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the statement of comprehensive income within finance income or finance costs. All other foreign exchange gains and losses are presented in the statement of comprehensive income within Operating loss. Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in equity. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale are included in the available-for-sale reserve in equity.

111

Part V

Historical Financial Information relating to the Group

Group companies The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; income and expenses for each income statement are translated at average exchange rates (unless average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale. (s) Financial instruments Financial assets and financial liabilities are recognised on the balance sheet when the Company becomes a party to the contractual provisions of the instrument. The Group classifies its financial instruments in the following categories: Available-for-sale; Loans and receivables; Other financial liabilities at amortised costs; Liabilities at fair value through the profit and loss.

The classification depends on the purpose for which the financial assets and liabilities were acquired. Management determines the classification of its financial instruments at initial recognition or in certain circumstances on modification. Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period. Management considers that the Groups investments fall within this category as explain below. Investments: Investments are classified as either held for trading or available-for-sale. There are currently no investments classified as held for trading. Available-for-sale investments are held at fair value if this can be reliably measured. If the equity instruments are not quoted in an active market and their fair value cannot be reliably measured the available-for-sale investment is carried at cost, less impairment. Unless the valuation falls below its original cost, gains and losses arising from changes in fair value of available-for-sale assets are recognised directly in equity. On disposal the cumulative net gain or loss is transferred to the statement of comprehensive income. Impairments and valuations below costs are also transferred to the statement of comprehensive income. Dividends are recognised in the statement of comprehensive income when the right to receive payment is established.

112

Part V Loans and receivables

Historical Financial Information relating to the Group

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Groups loans and receivables comprise Trade and other receivables and Cash and cash equivalents in the balance sheet. Trade and other receivables: Trade receivables are non-interest bearing and are recognised initially at fair value, and subsequently at amortised cost, reduced by appropriate allowances for estimated irrecoverable amounts. Cash and cash equivalents: Cash and cash equivalents comprise cash in hand and bank overdrafts. Bank overdrafts are repayable on demand and form an integral part of the Groups cash management. They are therefore included as a component of cash and cash equivalents. Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that gives a residual interest in the assets of the Group after deducting all of its liabilities. Trade and other payables: Trade and other payables are non-interest bearing and are stated at amortised cost. Interest-bearing borrowings: Interest-bearing bank loans and overdrafts are initially recorded at fair value, net of attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the statement of comprehensive income over the period of the borrowings on an effective interest basis. On the balance sheet, interest bearing borrowings have been subcategorised as: borrowings, convertible loan stock and obligations under finance leases. Compound instruments: Compound financial instruments issued by the Group comprise convertible loan stock that can be converted to convertible preference shares at the option of the holder. The liability component of the compound financial instrument is recognised on the date or inception or modification at the fair value of a similar liability that does not have an equity conversion option. The equity element is recognised as the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the equity and liability components in proportion to their initial carrying amounts. Subsequently, the liability component of a compound financial instrument is measured at amortised cost using the effective interest rate method. Derivative financial instruments: Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Cash flow hedging: The Group does not hold and has not held derivative instruments that qualifying for cash flow hedging and so all gains or losses are recognised immediately within the statement of comprehensive income.

113

Part V

Historical Financial Information relating to the Group

Equity instruments: Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs. (t) Impairment of financial assets Assets carried at amortised cost

The Group assesses whether there is objective evidence that a financial asset is impaired at the end of each reporting period. A financial asset is impaired and an impairment loss recognised if there is objective evidence of impairment as a result of a loss event that occurred after the initial recognition of the asset and the loss event has an impact on the estimated future cash flows of the financial assets that can be reliably estimated. The criterion that the Group uses to determine that there is objective evidence of an impairment loss includes but is not limited to: Financial difficulty indicators; Breach of contract such as missed payments; Fraud; Bankruptcy; Disappearance of an active market.

The amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the financial assets original effective interest rate. The assets carrying value is reduced and the loss recognised in the statement of comprehensive income. If, in a subsequent period, the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised the reversal of the previously recognised impairment loss is recognised in the statement of comprehensive income. Available-for-sale financial assets

Equity investments classified as available-for-sale and held at cost are reviewed annually to indentify if an impairment loss has occurred. The amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Impairment losses recognised in the statement of comprehensive income on equity investments are not reversed. 3. Critical accounting estimates and assumptions

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are addressed below: (a) Intangible assetscapitalised software Cost capitalisation

Amounts capitalised include the total cost of any external products of services and labour costs directly attributable to development. Management judgement is involved in determining the appropriate internal costs to capitalise and the amounts involved.

114

Part V Useful life

Historical Financial Information relating to the Group

The useful life is determined by management at the time the software is acquired and brought into use and is regularly reviewed for appropriateness. For computer software licences, the useful life represents managements view of the expected period over which the Group will receive benefits from the software, but not exceeding the licence term. For unique software products controlled and developed by the Group, the life is based on historical experience with similar products as well as anticipation of future events, which may impact their useful economic life, such as changes in technology. (b) Property, plant and equipment Property, plant and equipment represents a significant proportion of the asset base of the Group being 66 per cent. as at 21 February 2010 (2009: 66 per cent.) (2008: 72 per cent.) (2007: 72 per cent.) of the Companys total assets. Therefore, the estimates and assumptions made to determine their carrying value and related depreciation are critical to the Groups financial position and performance. Estimation of useful life

The charge in respect of periodic depreciation is derived after determining an estimate of an assets expected useful life and the expected residual value at the end of its life. Increasing an assets expected life or its residual value would result in a reduced depreciation charge in the statement of comprehensive income. The useful lives of the Groups assets are determined by management at the time the asset is acquired and reviewed at least annually for appropriateness. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology. During the 2008 financial period the Group revised the life of certain plant and machinery, due to the increased resilience of the CFC and greater certainty of the long-term picking solutions. For the majority of assets revised this doubled the estimated useful life from 5 to 10 years, although a small number of higher value assets had their life halved from 20 years. The change was only applied from the date the decision was ratified, and saw a decrease in the depreciation charge for the 2008 period of 852,000. If the change had been backdated to the beginning of the financial period depreciation would have fallen by a further 2,389,000. If the useful lives of the assets had not been revised the depreciation charge in 2009 would have been 4,914,000 (27.5 per cent.) higher. (c) Going concern basis including its effect on the impairment of assets The financial information has been prepared on the going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The going concern basis relies on the receipt of 200 million of net proceeds from the Offers and the New Facility being available to the Group. The Group maintains a mixture of long-term and short-term debt finance that is designed to ensure the Group has sufficient available funds for its operations and its planned expansion. The Group monitors cash flow as part of its day to day control procedures and management consider cash flow projections on a monthly basis ensuring that appropriate facilities are available to be drawn upon as necessary. The Group also prepares detailed forward projections for future periods which are constantly updated and refined. As a consequence the Directors are satisfied that the Group is able to obtain sufficient resources to continue in operation for the foreseeable future. Accordingly, they have adopted the going concern basis in preparing the historical financial information. The above assumption has a profound effect on the Group as it greatly affects the way it must value its assets and liabilities. If management were unable to justify accounting on a going concern basis, the Group would have to completely revisit the valuation of assets and liabilities on the balance sheet. An additional impairment review would be required and it is likely that assets would have to be measured at their net realisable value base on the sale of assets on an asset by asset basis. Liabilities would also have to be increased to take account of future non-cancellable operating lease commitments, all employee redundancies and other similar costs.

115

Part V

Historical Financial Information relating to the Group

Impairment of assets based on the separation of the business into cash generating units The Group is required to undergo an assessment of the future viability of assets grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Given the Groups current operating structure, the lowest level at which cash flows can reasonably be assessed is for the Group as a whole. The Group is still investing in its future growth and so has not yet reached a stage where it delivers positive post tax earnings. Based on the future projections referred to above, the Board do not consider that any further impairment of assets is required. There are a large number of assumptions and estimates involved in calculating these future projections, including managements expectations of: Increase in the number of customers, and frequency of service; Growth of gross margin percentages; Growth in EBITDA; Timing and quantum of future capital expenditure; The estimation of future funding and the cost of such funding.

(d) Leases The Group has a number of complex high value lease arrangements. The Group follows the guidance of IAS 17 to determine the classification of leases as operating leases versus finance leases. The classification of a lease as a finance lease as opposed to an operating lease will change EBITDA and operating profit/(loss) as the charge made by the lessor will pass through finance charges and depreciation will be charged on the capitalised asset. Retained earnings may also be temporarily affected depending on the relative size of the amounts apportioned to capital repayments and depreciation. IAS 17 requires the Group to consider property leases split into their component parts (i.e. land and building elements) separately. As only the buildings elements could be considered as a finance lease management must make a judgement, based on advice from suitable experts, as to the relative value of the land and buildings. (e) Recognition of deferred tax assets The Groups tax charge on ordinary activities is the sum of the total current and deferred tax charges. The calculation of the total tax charge necessarily involves a degree of estimation and judgement in respect of certain items. The final outcome of some of these items may give rise to material profit and loss and/or cash flow variances. A deferred tax asset is recognised when it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Recognition, therefore, involves judgement regarding the prudent forecasting of future taxable profits of the business and in applying an appropriate risk adjustment factor. At the balance sheet date management has forecast that the Group would generate future taxable profits against which existing tax losses and accelerated capital allowance could be relieved. As a result the Group has recognised a deferred tax asset for 2.4 per cent. of its available tax losses and accelerated capital allowance at the period end. 4. Segmental reporting

The Groups activities consist solely of the retailing of food and groceries within the United Kingdom. It is managed as one entity and does not split its activities into any further regional or product subdivisions in its internal management reporting, as any such split would not provide the Groups management with any meaningful information. Consequently all activities relate to this one segment. The Company is domiciled in the UK. All of the result of its revenue is from UK external customers. All non-current assets other than financial instruments and deferred tax assets are located in the UK.

116

Part V 5. Gross sales

For the 52 weeks ended 2 December 2007 000

Historical Financial Information relating to the Group

For the 52 weeks ended 30 November 2008 000

For the 52 weeks ended 29 November 2009 000

For the 12 weeks ended 22 February 2009 (unaudited) 000

For the 12 weeks ended 21 February 2010 000

Revenue . . . . . . . . . . . . . . . . . . VAT . . . . . . . . . . . . . . . . . . . . . . Marketing vouchers . . . . . . . . . . . Gross sales . . . . . . . . . . . . . . . 6. Other income

272,856 15,240 3,350 291,446

321,314 17,136 2,547 340,997

401,997 18,788 6,493 427,278

84,622 3,937 995 89,554

110,238 5,607 1,375 117,220

Other income is made up as follows:

For the 52 weeks ended 2 December 2007 000 For the 52 weeks ended 30 November 2008 000 For the 52 weeks ended 29 November 2009 000 For the 12 weeks ended 22 February 2009 (unaudited) 000 For the 12 weeks ended 21 February 2010 000

Advertising revenue . . . . . . . Commission income received . Other services provided to suppliers . . . . . . . . . . . . . . Sublease payments received .

... ... ... ...

185 340 87 612

994 226 584 4 1,808

2,038 233 370 2,641

466 54 22 542

997 24 145 1,166

Other income . . . . . . . . . . . . . . 7. Operating loss

Notes

For the 52 weeks ended 2 December 2007 000

For the 52 weeks ended 30 November 2008 000

For the 52 weeks ended 29 November 2009 000

For the 12 weeks ended 22 February 2009 (unaudited) 000

For the 12 weeks ended 21 February 2010 000

Operating loss is stated after charging/(crediting) the following: Cost of inventories recognised as an expense Employment costs . . . . . . . Amortisation expense . . . . . Depreciation of property, plant and equipment . . . . Impairment of property, plant and equipment . . . . . . . . Loss on disposal of property, plant and equipment . . . . (Credit)/charges relating to the impairment of receivables . . . . . . . . . . . Operating lease rentals land and buildings . . . . . . other leases . . . . . . . . . . Net foreign exchange losses .

8 11 12 12

181,889 55,739 2,395 17,621 612

215,575 66,567 3,917 19,820 66 31

271,613 78,181 4,743 17,865 1,023 33

57,405 17,174 1,025 4,048

74,759 20,529 979 4,301

26

(228) 1,746 5 126

198 1,946 70 56

(30) 1,815 191 72

40 473 48 (43)

40 533 86 38

117

Part V

Historical Financial Information relating to the Group

During the period, the Group obtained the following services from its auditors:
For the 52 weeks ended 2 December 2007 000 For the 52 weeks ended 30 November 2008 000 For the 52 weeks ended 29 November 2009 000 For the 12 weeks ended 22 February 2009 (unaudited) 000 For the 12 weeks ended 21 February 2010 000

Audit services Fees payable to Groups auditor for the statutory audit of the financial statements . . . . . . . . . . . . . . . . . Non-audit services Fees payable to the Groups auditor and its associate for other services as detailed below: Taxation services . . . . . . . . . . . . . . Other services pursuant to legislation and compliance . . . . . . . . . . . . . .

65

65

90

18

32

15 20 100

65

7 97

18

276 308

8.

Employee information

Employment costs during the financial period were as follows:

For the 52 weeks ended 2 December 2007 000 For the 52 Weeks ended 30 November 2008 000 For the 52 Weeks ended 29 November 2009 000 For the 12 Weeks ended 22 February 2009 (unaudited) 000 For the 12 Weeks ended 21 February 2010 000

Notes

Staff costs during the period: Wages and salaries . . Social security costs . . Pension costsdefined contribution plans . . Share-based payments expense . . . . . . . . .

.... .... .... .... 11

52,528 4,989 755 181 58,453 (2,714) 55,739

63,466 6,072 884 61 70,483 (3,916) 66,567

74,116 7,015 1,067 78 82,276 (4,095) 78,181

16,212 1,600 245 18 18,075 (901) 17,174

19,231 1,880 259 34 21,404 (875) 20,529

Total employment costs . . . . Staff costs capitalised . . . . . Total employment cost expense . . . . . . . . . . . . Average number of employees (including Executive Directors) by role: Operational staff . . . . . . . . . Support staff . . . . . . . . . . .

Number 2,033 256 2,289

Number 2,730 293 3,023

Number 3,151 343 3,494

Number (unaudited) 3,119 336 3,455

Number 3,610 393 4,003

At the end of March 2007 a five year contract for the provision of third party logistics services ended. The 1,214 people employed under this contract became employees of the Group under the Transfer of Undertakings (Protection of Employment) Regulations. The costs recognised above for the share option scheme relate to equity settled schemes only (see Note 25).

118

Part V

Historical Financial Information relating to the Group

The key management comprises the Executive and Non Executive Directors. The key management personal compensation is as follows:
For the 52 weeks ended 2 December 2007 000 For the 52 Weeks ended 30 November 2008 000 For the 52 Weeks ended 29 November 2009 000 For the 12 Weeks ended 22 February 2009 (unaudited) 000 For the 12 Weeks ended 21 February 2010 000

Salaries, fees and other short-term employee benefits . . . . . . . . . . . . Pension costsdefined contribution plans . . . . . . . . . . . . . . . . . . . . . Equity settled share-based payments granted under the JSOS . . . . . . . .

686 28 714

672 28 700

1,640 75 1,715

471 30 501

315 15 6 336

Directors personal compensation increased significantly in the period due to performance criteria dependent remuneration being achieved. The table below gives the number of share options issued under the executive share option scheme to the Directors during the period. During the period a Director exercised 2,750 (2009: nil), (2008: nil), (2007: nil), of share options in Ocado Limited which were issued under the executive share option scheme. The exercise prices were between 90 and 100. No other Directors have exercised any option during the periods presented nor have there been any lapses.
For the 52 weeks ended 2 December 2007 For the 52 Weeks ended 30 November 2008 For the 52 Weeks ended 29 November 2009 For the 12 Weeks ended 22 February 2009 (unaudited) For the 12 Weeks ended 21 February 2010

Number of share options issued in the financial period . . . . . . . . . . . . . . Exercise price () . . . . . . . . . . . . . .

463 135

The highest paid Director is as follows: The table below gives the number of equity instruments issued under the joint share ownership scheme to the Directors during the period.
For the 52 weeks ended 2 December 2007 For the 52 Weeks ended 30 November 2008 For the 52 Weeks ended 29 November 2009 For the 12 Weeks ended 22 February 2009 (unaudited) For the 12 Weeks ended 21 February 2010

Number of jointly held shares issued in the financial period . . . Hurdle price () . . . . . . . . . . . . .

27,524,000 1.73 to 2.28

119

Part V

Historical Financial Information relating to the Group

The highest paid Directors compensation is as follows:

For the 52 weeks ended 2 December 2007 000 For the 52 Weeks ended 30 November 2008 000 For the 52 Weeks ended 29 November 2009 000 For the 12 Weeks ended 22 February 2009 (unaudited) 000 For the 12 Weeks ended 21 February 2010 000

Salaries, fees and other short-term employee benefits . . . . . . . . . . . . Pension costsdefined contribution plans . . . . . . . . . . . . . . . . . . . . . Equity settled share-based payments granted under the JSOS . . . . . . . .

171 12 183

178 12 190

618 34 652

207 15 222

91 6 2 99

Service contracts The four Executive Directors, Tim Steiner, Neill Abrams, Andrew Bracey and Jason Gissing have service contracts which can be terminated by giving Ocado Limited 12 months written notice or can be terminated by the Director by giving 6 months written notice. If their service contracts are terminated without cause, Ocado Limited can request that they work their notice period, take a period of garden leave or can pay an amount in lieu of notice equal to one times basic salary for the remainder of the notice period. These payments would be subject to deductions for tax and national insurance. The contracts contain restrictive covenants, which continue for 12 months after termination. The contracts do not contain any specific provisions relating to a change of control of the business. The Executive Directors current service contracts became effective on the following dates: Tim Steiner . . . Jason Gissing . Neill Abrams . . Andrew Bracey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 22 22 22 June June June June 2010 2010 2010 2010

Directors remuneration Summary of Directors remuneration for the 52 weeks ended 2 December 2007
Salaries and fees Benefits in kind Annual Bonus Personal Pension Contributions Total for 2007

Neill Abrams . . . . Tom Clayton . . . . Jonathan Faiman Jeremy Frampton Jason Gissing . . . Robert Gorrie . . . Michael Grade . . Patrick Lewis . . . Brian Lynas . . . . Alistair McKay . . . Jorn Rausing . . . Tim Steiner . . . . David Young . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

168,289 24,321 116,079 112,696 32,568 112,131 112,696 678,780

2,311 1,379 1,771 1,771 7,232

12,000 8,040 8,040 28,080

182,600 24,321 117,458 122,507 32,568 112,131 122,507 714,092

Total for 2007 . . . . . . . . . . . . .

120

Part V

Historical Financial Information relating to the Group

Summary of Directors remuneration for the 52 weeks ended 30 November 2008

Personal Pension Contributions

Salaries and fees

Benefits in kind

Annual Bonus

Total for 2008

Neill Abrams . . . . . Tom Clayton . . . . . Jonathan Faiman(1) Jeremy Frampton . Jason Gissing . . . . Robert Gorrie . . . . Michael Grade . . . Patrick Lewis . . . . Brian Lynas . . . . . Alistair McKay(2) . . Jorn Rausing . . . . Tim Steiner . . . . . David Young . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

176,512 17,567 86,866 120,709 33,650 112,104 120,709 668,117

1,031 529 898 898 3,356

12,000 8,040 8,040 28,080

189,543 17,567 87,395 129,647 33,650 112,104 129,647 699,553

Total for 2008 . . . . . . . . . . . . .

(1) (2)

Non-Executive director from 1 September 2008. Resigned 11 November 2008.

Summary of Directors remuneration for the 52 weeks ended 29 November 2009

Personal Pension Contributions

Salaries and fees

Benefits in kind

Annual Bonus

Total 2009

Neill Abrams . . . . Andrew Bracey(1) . Tom Clayton . . . . Jonathan Faiman Jeremy Frampton Jason Gissing . . . Robert Gorrie . . . Michael Grade . . Patrick Lewis(2) . . Brian Lynas(3) . . . Jorn Rausing . . . Tim Steiner . . . . David Young . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

216,913 23,439 14,267 268,144 33,950 111,764 19,978 352,411 27,539 1,068,405

2,313 246 2,634 3,275 8,468

110,416 191,208 262,040 563,664

16,500 24,630 33,630 74,760

346,142 23,685 14,267 486,616 33,950 111,764 19,978 651,356 27,539 1,715,297

Total for 2009 . . . . . . . . . . . . .

(1) (2) (3) Appointed 3 November 2009.

Appointed 21 October 2009 as non-executive Director. Resigned 10 August 2009.

The Apple Trust (of which Jorn Rausing is a beneficiary) underwrote Ocados last funding round in September 2009 for which it was paid a fee of e387,500 under the terms of an agreement dated 1 July 2009 and a variation letter dated 20 August 2009.

121

Part V

Historical Financial Information relating to the Group

Summary of Directors remuneration for the 12 weeks ending 21 February 2010

Total for Total for Personal 12 weeks to 12 weeks to Pension 21 February 22 February Contributions 2010 2009 (unaudited)

Salaries and fees

Benefits in kind

Annual Bonus

Neill Abrams . . . . . Andrew Bracey . . . Tom Clayton(1) . . . Jonathan Faiman(1) Jeremy Frampton(1) Jason Gissing . . . . Robert Gorrie . . . . Michael Grade . . . Patrick Lewis . . . . Brian Lynas . . . . . Jorn Rausing . . . . Michael Robarts(2) . Tim Steiner . . . . . . David Young . . . . .

. . . . . . . . . . . . . .

. . . . . . . . . . . . . .

. . . . . . . . . . . . . .

. . . . . . . . . . . . . .

. . . . . . . . . . . . . .

51,614 64,458 64,625 9,825 25,683 90,475 6,295 312,975

568 678 678 898 2,822

3,667 4,583 6,417 14,667

55,849 65,136 69,886 9,825 25,683 97,790 6,295 330,464

73,581 2,329 156,932 7,450 25,850 6,303 221,638 6,356

Total for 12 weeks to 21 February 2010 . . . . Total for 12 weeks to 22 February 2009 (unaudited) . . . . . . . . .
(1) (2)

238,566

1,759

230,237

29,877

500,439

Tom Clayton, Jonathan Faiman and Jeremy Frampton resigned on 9 March 2010. Appointed 19 January 2010 as a non-executive Director.

In addition to his role as a Non-Executive Director, Robert Gorrie provides consultancy services to the Group and chairs the meetings of the Ocado employee council. Robert Gorrie provides these services through Robert Gorrie Limited (of which Robert Gorrie is the sole shareholder) and it is paid a per diem fee for these services (see Note 31). These fees are included in salaries and fees above. In addition to his role as a non-executive Director, Tom Clayton provides consultancy services to the Group. Tom Clayton is paid a per diem fee for these services (see Note 31). These fees are included in salaries and fees above.

122

Part V Directors interests

Historical Financial Information relating to the Group

The Directors beneficial interests in the Ordinary Shares and Preference Shares of the Company at the beginning and end of the financial year or date of appointment are as stated below: Directors shareholdings
Number of Ordinary Shares of 1p each in Ocado Limited As at As at As at 2 December 30 November 29 November 2007 2008 2009 Number of Ordinary Shares of 2p each in Ocado Group Limited as at 21 February 2010

Neill Abrams . . . Andrew Bracey . Jonathan Faiman Jeremy Frampton Jason Gissing . . Robert Gorrie . . . Michael Grade . . Tim Steiner . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

4,356 304,376 2,522 96,576 13,529 667 143,964

4,356 304,376 2,522 96,576 13,529 667 143,964

4,356 7,500 30,000 2,522 96,576 13,529 780 143,964

435,600 750,000 3,000,000 252,200 9,657,600 1,627,900 78,000 14,396,400

On 9 February 2010 the ordinary shares in Ocado Limited were exchanged for Ordinary Shares in the Company on a 1:100 basis with a par value of 2p per Ordinary Share. Jeremy Frampton held 5,000 Preference Shares in the Company as at 21 February 2010 (2009: 50 shares in Ocado Limited), (2008: 50 in Ocado Limited), (2007: 50 in Ocado Limited). No other past or current director has a direct interest in the Ordinary or Preference shares of the Company. In addition to the above holdings: Neill Abrams is a discretionary beneficiary of Neill Abrams 2000 Life Interest Trust which holds 1,200,800 ordinary shares in the Company (2009: 12,008 ordinary shares in Ocado Limited) (2008: 12,008 ordinary shares in Ocado Limited) (2007: 12,008 ordinary shares in Ocado Limited). Jason Gissing is a discretionary beneficiary of The Jason Gissing Life Settlement II Trust which holds 9,583,400 Ordinary Shares in the Company (2009: 95,834 ordinary shares in Ocado Limited) (2008: 106,946 ordinary shares in Ocado Limited) (2007: 106,946 ordinary shares in Ocado Limited). Tim Steiner is a discretionary beneficiary of Steiner 2008 Millennium Trust which holds 15,291,200 ordinary shares in the Company (2009: 152,912 ordinary shares in Ocado Limited) (2008: 160,412 ordinary shares in Ocado Limited) (2007: 160,412 ordinary shares in Ocado Limited). Jorn Rausing is a discretionary beneficiary of the Apple Trust which holds 26,207,700 ordinary shares in the Company (2009: 262,077 ordinary shares in Ocado Limited) (2008: 219,845 ordinary shares in Ocado Limited) (2007: 136,512 ordinary shares in Ocado Limited) and 32,872,400 preference shares in the Company (2009: 328,724 preference shares in Ocado Limited) (2008: 328,724 preference shares in Ocado Limited) (2007: 328,724 preference shares in Ocado Limited). Caryn Abrams (wife of Neill Abrams) is a discretionary beneficiary of a trust holding 74,100 ordinary shares in the Company (2009: 741 ordinary shares in Ocado Limited) (2008: nil ordinary shares in Ocado Limited) (2007: nil ordinary shares in Ocado Limited). Kira Faiman (wife of Jonathan Faiman) holds 24,437,400 ordinary shares in the Company (2009: 244,374 ordinary shares in Ocado Limited) (2008: nil ordinary shares in Ocado Limited) (2007: nil ordinary shares in Ocado Limited). Share options On 9 February 2010 the ordinary shares and convertible preference shares in Ocado Limited were exchanged for Ordinary Shares and Preference Shares in the Company on a 1:100 basis with a par value of 2 pence per share.

123

Part V

Historical Financial Information relating to the Group

The Directors have the following options over Ordinary Shares in Ocado the Company (as at 21 February 2010) and over Ordinary Shares in Ocado Limited (2007, 2008 and 2009) pursuant to the Ocado 2001 Executive Share Option Scheme:
Date of Issue Exercise Price () As at 21 February 2010 Exercise Price ()

2007

2008

2009

Exercise Period

Neill Abrams . . . . . .

May-02 May-02 Nov-03 May-05 Nov-09 May-05 May-05 May-02 May-02 Nov-03 May-05

1,750 1,750 1,000 1,000 2,000 2,000 1,750 1,750 1,000 2,000 16,000

1,750 1,750 1,000 1,000 2,000 2,000 1,750 1,750 1,000 2,000 16,000

1,750 1,750 1,000 1,000 463 2,000 2,000 1,750 1,750 1,000 2,000 16,463

100 150 90 115 135 115 115 100 150 90 115

175,000 175,000 100,000 100,000 46,296 200,000 200,000 175,000 200,000 1,371,296

1.00 1.50 0.90 1.15 1.35 1.15 1.15 1.00 1.50 0.90 1.15

07/02/05-06/02/12 07/02/05-06/02/12 30/11/06-29/11/13 16/05/08-15/05/15 16/11/12-15/11/19 16/05/08-15/05/15 16/05/08-15/05/15 07/02/05-06/02/12 07/02/05-06/02/12 30/11/06-29/11/13 16/05/08-15/05/15

Andrew Bracey . . . . . Jonathan Faiman . . . . Jason Gissing . . . . . . Robert Gorrie . . . . . .

Tim Steiner . . . . . . . Total share options of Directors . . . . . . .

Additionally in February 2002 Tom Clayton was issued 943 options over ordinary shares at an exercise price of 53 outside of the Ocado 2001 Executive Share Option Scheme. These were converted into options over ordinary shares in the Company on 9 February 2010 on a 1:100 basis such that as at 21 February 2010 he held 94,300 options with an exercise price of 0.53 (2009: 943, 2008: 943, 2007: 943). These options are exercisable from 7 February 2002 to 6 February 2012. Jonathan Faimans options granted under the ESOS lapsed when he retired from the Board. In addition to the options over Ordinary Shares pursuant to the Ocado 2001 Executive Share Option Scheme detailed above, Andrew Bracey has the following options in the Company as at 21 February 2010 and options in Ocado Limited as at 29 November 2009 over Preference Shares.
Date of Issue Exercise Price () As at 21 February 2010 Exercise Price ()

2007

2008

2009

Exercise Period

Andrew Bracey . . . . .

Feb-02 Jan-04

8,867 4,353

8,867 4,353

8,867 4,353

90 103

886,700 435,300

0.90 1.03

04/02/02-04/02/17 03/01/04-03/01/18

No other directors have options over the share capital of the Company. There are no performance criteria attached to these options. The number and exercise price for any options granted to directors is set by the remuneration committee. Interests in Ordinary Shares under the JSOS Each of Neill Abrams, Andrew Bracey, Jason Gissing and Tim Steiner has the following interests in Ordinary Shares in the Company pursuant to the Joint Share Ownership Scheme. See note 25(b) for more details.

124

Part V

Historical Financial Information relating to the Group

as at 21 February 2010 Hurdle Price ()

Date of Issue

Vesting Period

Neill Abrams . . . . . . . . . . . . . . . .

03/02/2010 03/02/2010 03/02/2010 03/02/2010 03/02/2010 03/02/2010 03/02/2010 03/02/2010 03/02/2010 03/02/2010 03/02/2010 03/02/2010 03/02/2010 03/02/2010 03/02/2010 03/02/2010

1,017,200 1,017,200 1,017,200 1,017,100 1,675,400 1,675,400 1,675,400 1,675,300 1,675,400 1,675,400 1,675,400 1,675,300 2,513,100 2,513,100 2,513,100 2,513,000

1.73 1.91 2.08 2.28 1.73 1.91 2.08 2.28 1.73 1.91 2.08 2.28 1.73 1.91 2.08 2.28

01/01/2011-01/01/2019 01/01/2012-01/01/2019 01/01/2013-01/01/2019 01/01/2014-01/01/2019 01/01/2011-01/01/2019 01/01/2012-01/01/2019 01/01/2013-01/01/2019 01/01/2014-01/01/2019 01/01/2011-01/01/2019 01/01/2012-01/01/2019 01/01/2013-01/01/2019 01/01/2014-01/01/2019 01/01/2011-01/01/2019 01/01/2012-01/01/2019 01/01/2013-01/01/2019 01/01/2014-01/01/2019

Andrew Bracey . . . . . . . . . . . . . . .

Jason Gissing . . . . . . . . . . . . . . .

Tim Steiner . . . . . . . . . . . . . . . . .

9.

Finance income and costs

For the 52 weeks ended 2 December 2007 000 For the 52 Weeks ended 30 November 2008 000 For the 52 Weeks ended 29 November 2009 000 For the 12 Weeks ended 22 February 2009 (unaudited) 000 For the 12 Weeks ended 21 February 2010 000

Notes

Bank interest receivable . . . . Other interest . . . . . . . . . . . Finance income . . . . . . . . Interest payable on bank loans and overdrafts . . . Interest on finance leases . Interest on borrowings . . . . Capitalised borrowing costs Interest on convertible loan Fair value movement in derivative liability . . . . . . . . . . . .

824 824 (64) (3,287) (5,327) (2,048) (162) (10,888) (10,064)

99 99 (158) (3,770) (5,507) 147 (2,384) (112) (11,784) (11,685)

5 7 12 (41) (5,009) (5,717) (347) (4) (11,118) (11,106)

(15) (1,345) (1,027) (275) (1) (2,663) (2,663)

2 2 (1,047) (995) (43) (2,085) (2,083)

12 20

Finance costs . . . . . . . . . . Net finance costs . . . . . . .

125

Part V

Historical Financial Information relating to the Group

10. Tax on loss on ordinary activities

For the 52 weeks ended 2 December 2007 000 For the 52 Weeks ended 30 November 2008 000 For the 52 Weeks ended 29 November 2009 000 For the 12 Weeks ended 22 February 2009 (unaudited) 000 For the 12 Weeks ended 21 February 2010 000

Recognised in the statement of comprehensive income Current tax: UK corporate tax on profits of the period . . . . . . . . . . . . . . . . . . . . Adjustments in respect of prior periods . . . . . . . . . . . . . . . . . . . Total current tax . . . . . . . . . . . . . . Deferred tax: Origination and reversal of temporary differences . . . . . . . . . . . . . . . . . Recognition of tax losses . . . . . . . . . Total deferred tax . . . . . . . . . . . . . Income tax credit . . . . . . . . . . . . .

(2,300) (2,300) (2,300)

Reconciliation of effective tax charge

For the 52 weeks ended 2 December 2007 000 For the 52 Weeks ended 30 November 2008 000 For the 52 Weeks ended 29 November 2009 000 For the 12 Weeks ended 22 February 2009 (unaudited) 000 For the 12 Weeks ended 21 February 2010 000

Loss before tax . . . . . . . . . . . . . . . Effective tax charge at the UK rate of 28% (2009: 28%) (2008: 28.71%) (2007: 30%) . . . . . . . . . . . . . . . . Effect of: Permanent differences . . . . . . . . . . . Tax losses for which no deferred tax asset recognised . . . . . . . . . . . . . Temporary differences on which no deferred tax recognised . . . . . . . . Income tax credit for the period . . .

(40,154)

(33,298)

(25,509)

(7,235)

(3,963)

(12,046) 521 8,672 2,853

(9,560) 1,034 5,799 2,727

(7,143) 332 1,793 2,718 (2,300)

(2,026) (49) 1,453 622

(1,110) (44) 588 566

Movement in deferred tax assets

Tax losses carryforwards 000 Accelerated capital allowances 000 Share based payments 000

Total 000

At 1 December 2008 . . . . . . . . . . . . . . . . . . . . . . Tax losses recognised in period through the statement of comprehensive income . . . . . . . . . . As at 29 November 2009 . . . . . . . . . . . . . . . . . . Tax losses recognised in period through the statement of comprehensive income . . . . . . . . . . As at 21 February 2010 . . . . . . . . . . . . . . . . . . .

2,300 2,300 2,300

2,300 2,300 2,300

126

Part V

Historical Financial Information relating to the Group

The unrecognised deferred tax asset available at the period end is analysed below:
Tax losses carryforwards 000 Accelerated capital allowances 000 Share based payments 000

Total 000

As at 3 December 2006 . . . . . . . . . . . . . . . . Potential movement in the period unrecognised through the Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . Potential movement in the period unrecognised through equity . . . . . . . . . . . . . . . . . . . . . . As at 2 December 2007 . . . . . . . . . . . . . . . . Potential movement in the period unrecognised through the Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . Potential movement in the period unrecognised through equity . . . . . . . . . . . . . . . . . . . . . . Tax rate adjustment . . . . . . . . . . . . . . . . . . . . As at 30 November 2008 . . . . . . . . . . . . . . . Potential movement in the period unrecognised through the Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . Potential movement in the period unrecognised through equity . . . . . . . . . . . . . . . . . . . . . . As at 29 November 2009 . . . . . . . . . . . . . . . Potential movement in the period unrecognised through the Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . Potential movement in the period unrecognised through equity . . . . . . . . . . . . . . . . . . . . . . As at 21 February 2010 . . . . . . . . . . . . . . . . 11. Intangible assetsComputer software

65,752

9,765

523

76,040

8,672 74,424

2,879 12,644

(26) 107 604

11,525 107 87,672

5,799 (5,106) 75,117

2,736 (771) 14,609

(9) 58 (42) 611

8,526 58 (5,919) 90,337

1,793 76,910

2,725 17,334

(7) 177 781

4,511 177 95,025

588 77,498

652 17,986

(86) (11) 684

1,154 (11) 96,168

As at 2 December 2007 000

As at 30 November 2008 000

As at 29 November 2009 000

As at 21 February 2010 000

Cost or valuation At beginning of period . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . Internal development costs . . . . . . . . . . . . . . . At end of period . . . . . . . . . . . . . . . . . . . . . . . Accumulated amortisation At beginning of period . . . . . . . . . . . . . . . . . . Charge for the period . . . . . . . . . . . . . . . . . . . At end of period . . . . . . . . . . . . . . . . . . . . . . . Net book value At end of period . . . . . . . . . . . . . . . . . . . . . . .

16,611 652 2,714 19,977 (10,764) (2,395) (13,159) 6,818

19,977 221 3,916 24,114 (13,159) (3,917) (17,076) 7,038

24,114 294 4,095 28,503 (17,076) (4,743) (21,819) 6,684

28,503 361 875 29,739 (21,819) (979) (22,798) 6,941

127

Part V

Historical Financial Information relating to the Group

Net book value of computer software held under finance leases is analysed below:
As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Cost or valuation . . . . . . . . . . . . . . . . . . . . . . Accumulated amortisation . . . . . . . . . . . . . . . . Net book value . . . . . . . . . . . . . . . . . . . . . . .

2,205 (1,019) 1,186

2,205 (1,435) 770

2,470 (2,113) 357

2,470 (2,203) 267

The movement in cost or valuation includes assets of nil (2009: 265,000) (2008: nil) (2007: nil) reclassified from owned assets to assets held under finance leases following asset based financing arrangements. For the 12 week period ended 21 February 2010, internal development costs capitalised were 875,000 (52 week period ended 29 November 2009: 4,095,000) (52 week period ended 30 November 2008: 3,916,000) (52 week period ended 2 December 2007: 2,714,000) and represented approximately 71% (2009: 93%) (2008: 95%) (2007: 81%) of expenditure on intangible assets and 16% (2009: 18%) (2008: 16%) (2007: 10%) of total capital spend including property, plant and equipment.

128

Part V 12. Property, plant and equipment

Historical Financial Information relating to the Group

Land and buildings 000

Fixtures, fittings, plant and machinery 000

Motor vehicles 000

Total 000

Cost or valuation At 4 December 2006 . . . . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At 2 December 2007 . . . . . . . . . . . . . . . . . . . . . . At 3 December 2007 . . . . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At 30 November 2008 . . . . . . . . . . . . . . . . . . . . . At 1 December 2008 . . . . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At 29 November 2009 . . . . . . . . . . . . . . . . . . . . . At 30 November 2009 . . . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At 21 February 2010 . . . . . . . . . . . . . . . . . . . . . . Accumulated depreciation and At 4 December 2006 . . . . . . . . Charge for the period . . . . . . . Impairment . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . At 3 December 2007 . Charge for the period Impairment . . . . . . . Disposals . . . . . . . . At 1 December 2008 . Charge for the period Impairment . . . . . . . Disposals . . . . . . . . At 30 November 2009 Charge for the period Impairment . . . . . . . Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . impairment ......... ......... ......... ......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,404 27,404 27,404 3,053 30,457 30,457 4,944 (66) 35,335 35,335 35,335

74,266 19,608 (6) 93,868 93,868 14,165 (50) 107,983 107,983 8,896 (4,401) 112,478 112,478 1,625 114,103

21,483 3,003 (2,219) 22,267 22,267 3,303 (1,448) 24,122 24,122 4,802 (6,286) 22,638 22,638 2,550 (1,372) 23,816

123,153 22,611 (2,225) 143,539 143,539 20,521 (1,498) 162,562 162,562 18,642 (10,753) 170,451 170,451 4,175 (1,372) 173,254

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

(5,598) (1,337) (6,935) (6,935) (1,274) (8,209) (8,209) (1,511) (92) 66 (9,746) (9,746) (345) (10,091)

(22,229) (11,902) (590) (34,721) (34,721) (14,399) (66) 16 (49,170) (49,170) (12,227) (931) 4,401 (57,927) (57,927) (2,992) (60,919)

(9,559) (4,382) (22) 2,011 (11,952) (11,952) (4,147) 1,447 (14,652) (14,652) (4,127) 6,253 (12,526) (12,526) (964) 1,372 (12,118)

(37,386) (17,621) (612) 2,011 (53,608) (53,608) (19,820) (66) 1,463 (72,031) (72,031) (17,865) (1,023) 10,720 (80,199) (80,199) (4,301) 1,372 (83,128)

At 2 December 2007 . . . . . . . . . . . . . . . . . . . . . .

At 30 November 2008 . . . . . . . . . . . . . . . . . . . . .

At 29 November 2009 . . . . . . . . . . . . . . . . . . . . .

At 21 February 2010 . . . . . . . . . . . . . . . . . . . . . . Net book value At 2 December 2007 . . . . . . . . . . . . . . . . . . . . . At 30 November 2008 . . . . . . . . . . . . . . . . . . . . At 29 November 2009 . . . . . . . . . . . . . . . . . . . . At 21 February 2010 . . . . . . . . . . . . . . . . . . . . .

20,469 22,248 25,589 25,244

59,147 58,813 54,551 53,184

10,315 9,470 10,112 11,698

89,931 90,531 90,252 90,126

Additions include interest capitalised at nil in the period to 21 February 2010 (2009: nil) (2008: 147,000) (2007: nil), relating to plant and machinery. The capitalisation rate used to determine the amount of finance costs capitalised during the period was nil as at 21 February 2010 (2009: nil) (2008: 6.8 per cent) (2007: nil). Net book value includes capitalised interest of 147,000 as at 21 February 2010 (2009: 147,000) (2008: 147,000) (2007: nil).

129

Part V

Historical Financial Information relating to the Group

The net carrying value of land and buildings comprises:

As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Freehold . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short leaseholdless than 50 years . . . . . . . .

1,863 18,606 20,469

4,872 17,376 22,248

9,645 15,944 25,589

9,593 15,651 25,244

The net book value of property, plant and equipment held under finance leases are analysed below:
Fixtures, fittings, plant and machinery 000

Land and buildings 000

Motor vehicles 000

Total 000

At 2 December 2007 Cost or valuation . . . . . . . . . . . . . . . . . . . . . . Accumulated depreciation and impairment . . . . Net book value . . . . . . . . . . . . . . . . . . . . . . . At 30 November 2008 Cost or valuation . . . . . . . . . . . . . . . . . . . . . . Accumulated depreciation and impairment . . . . Net book value . . . . . . . . . . . . . . . . . . . . . . . At 29 November 2009 Cost or valuation . . . . . . . . . . . . . . . . . . . . . . Accumulated depreciation and impairment . . . . Net book value . . . . . . . . . . . . . . . . . . . . . . . At 21 February 2010 Cost or valuation . . . . . . . . . . . . . . . . . . . . . . Accumulated depreciation and impairment . . . . Net book value . . . . . . . . . . . . . . . . . . . . . . .

25,485 (6,879) 18,606 25,525 (8,149) 17,376 25,459 (9,515) 15,944 25,459 (9,808) 15,651

38,420 (14,635) 23,785 49,658 (21,361) 28,297 55,869 (26,332) 29,537 57,687 (27,754) 29,933

21,112 (11,098) 10,014 22,758 (13,646) 9,112 20,872 (11,247) 9,625 22,040 (10,795) 11,245

85,017 (32,612) 52,405 97,941 (43,156) 54,785 102,200 (47,094) 55,106 105,186 (48,357) 56,829

The movement in cost or valuation includes assets of 1,812,000 (2009: 6,870,000) (2008: 8,950,000) (2007: 9,950,000) reclassified from owned assets to assets held under finance leases following asset based financing arrangements. During the 2008 financial period the Group revised the life of certain plant and machinery, due to the increased resilience of the CFC and greater certainty of the long-term picking solutions. For the majority of assets impacted by this change this doubled the estimated useful life from 5 to 10 years, although a small number of higher value assets had their life halved from 20 years. The change was only applied from the date the decision was ratified, and saw a decrease of the depreciation charge for the 2008 period of 852,000. If the change had been backdated to the beginning of the 2008 financial period depreciation would have fallen by a further 2,389,000. If the useful lives of the assets had not been revised in 2008 the depreciation charge in 2009 would have increased by 4,914,000. The impairment charge for fixtures, fittings, plant and machinery in all financial periods is in respect of superseded assets written off during the period. The charge against land and buildings in 2009 was in respect of Portacabins written off as they were no longer fit for use. Included within tangible fixed assets is capital work-in-progress for fixtures, fittings, plant and machinery of 125,000 as at 21 February 2010 (2009: 39,000) (2008: 269,000) (2007: 9,390,000).

130

Part V 13. Available-for-sale financial asset

Historical Financial Information relating to the Group

As at 2 December 2007 000

As at 30 November 2008 000

As at 29 November 2009 000

As at 21 February 2010 000

Non-current Unlisted equity investment . . . . . . . . . . . . . . .

395

395

395

395

The unlisted equity investment comprises a 25% interest in Paneltex Limited whose registered office is at Paneltex House, Somerden Road, Hull. This stake was acquired in June 2001 at a cost of 395,000. Payment for the shares was partly in cash (237,000) and partly in equity (1,975 Convertible preference shares). The Groups 25% interest in Paneltex Limited has not been treated as an associated undertaking as the Group does not have significant influence over Paneltex. In arriving at this decision the Board has reviewed the conditions set out in IAS 28 (Investments in Associates) and concluded that despite the size of its holding the Group is unable to participate in the financial and operating policy decisions of Paneltex due to the position of the majority shareholder as executive managing director and the insignificant size and arms length nature of the relationship between the two companies. The shares of Paneltex Limited are not quoted in an active market and their fair value cannot be reliably measured. As such the Group has measured its investment in Paneltex Limited at cost less impairment. The Group does not intend to dispose of this investment in the foreseeable future. If the Group did intend to dispose of this investment then the anticipated exit route would be the sale of shares to the existing shareholder or another connected party of Paneltex Limited. Further details of the relationship with Paneltex Limited are included in Note 31. 14. Inventories
As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Goods for resale . . . . . . . . . . . . . . . . . . . . . . Consumables . . . . . . . . . . . . . . . . . . . . . . . .

7,735 565 8,300

8,187 920 9,107

8,270 943 9,213

8,196 1,298 9,494

No security has been granted over inventories. 15. Trade and other receivables
Notes As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Current Trade receivables . . . . . . . . . . . . . . . . Less: provision for impairment of trade receivables . . . . . . . . . . . . . . . . . . . Net trade receivables Other receivables . . . Prepayments . . . . . . Accrued income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,094 26 (21) 1,073 5,349 2,325 475 9,222

3,223 (219) 3,004 5,159 3,453 417 12,033

5,896 (189) 5,707 4,072 4,411 550 14,740

5,236 (229) 5,007 6,374 3,499 588 15,468

No security has been granted over trade and other receivables. Other receivables include 5,216,000 as at 21 February 2010 (2009: 3,058,000) (2008: 4,021,000) (2007: 3,465,000) due from suppliers in relation to supplier funded promotional activity.

131

Part V

Historical Financial Information relating to the Group

16. Cash and cash equivalents

As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Cash at bank and in hand . . . . . . . . . . . . . . . Bank overdraft . . . . . . . . . . . . . . . . . . . . . . . .

11,286 (395) 10,891

6,163 (306) 5,857

13,157 (140) 13,017

14,218 (3,773) 10,445

The bank overdraft is repayable on demand and forms an integral part of the Groups cash management so is included as a component of cash and cash equivalents. The Group renewed its bank overdraft facility of 5m with Barclays Bank PLC in January 2010. The current facility is due for renewal in November 2010. 17. Current liabilitiesTrade and other payables
As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Trade payables . . Other taxation and Accruals . . . . . . . Deferred income .

........... social security ........... ...........

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

20,142 2,681 10,409 33,232

25,900 4,563 9,840 40,303

33,839 3,130 9,519 749 47,237

28,127 3,300 14,151 884 46,462

Deferred income represents the value of delivery income received under the Ocado Delivery Pass scheme allocated to future periods. 18. Loan stock, leases and borrowings
As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Notes

Current liabilities Borrowings . . . . . . . . . . . . . . . . . . . . Convertible loan stock . . . . . . . . . . . . . Obligations under finance leases . . . . . Non-current liabilities Borrowings . . . . . . . . . . . . . . . . . . . . Convertible loan stock . . . . . . . . . . . . . Obligations under finance leases . . . . . Total loan stock, leases and borrowings . . . . . . . . . . . . . . . . . .

19 20 21

876 5,066 5,942

15,016 14,506 9,989 39,511 28,429 53,650 82,079 121,590

12,087 19,669 31,756 42,658 45,651 88,309 120,065

27,773 19,314 47,087 28,218 46,266 74,484 121,571

19 20 21

46,345 33,101 49,688 129,134 135,076

132

Part V 19. Borrowings

Total 000

Historical Financial Information relating to the Group

Less than one year 000

Between one year and two years 000

Between two years and five years 000

Over five years 000

As at 2 December 2007 Secured loans . . . . . . . . . . . . . . Unsecured loans . . . . . . . . . . . . . Total borrowings . . . . . . . . . . . . . As at 30 November 2008 Secured loans . . . . . . . . . . . . . . Unsecured loans . . . . . . . . . . . . . Total borrowings . . . . . . . . . . . . . As at 29 November 2009 Secured loans . . . . . . . . . . . . . . Unsecured loans . . . . . . . . . . . . . Total borrowings . . . . . . . . . . . . . As at 21 February 2010 Secured loans . . . . . . . . . . . . . . Unsecured loans . . . . . . . . . . . . . Total borrowings . . . . . . . . . . . . . Secured Loans (i)

43,330 3,891 47,221 39,157 4,288 43,445 41,350 13,395 54,745 44,311 11,680 55,991

97 779 876 12,944 2,072 15,016 5,998 6,089 12,087 22,295 5,478 27,773

5,596 896 6,492 10,402 1,031 11,433 17,463 4,579 22,042 14,969 4,366 19,335

35,644 2,216 37,860 15,411 1,185 16,596 17,489 2,727 20,216 7,047 1,836 8,883

1,993 1,993 400 400 400 400

The Group entered into a loan of 5m in September 2008 secured over certain warehouse assets, software and intellectual property, initially repayable in instalments or in full on or before September 2009. Interest is charged at LIBOR plus 2.8%. The loan was extended until January 2010 on the same terms after which date it is reviewed on a month by month basis.

(ii) The Group entered into a loan of 8m in May 2007 of which 5.6m was used to repay an existing loan. The loan is secured over certain warehouse assets. Interest was charged at Barclays Base Rate plus 2.5% and was repayable in equal quarterly instalments each quarter commencing in May 2009 and ending in May 2014. In May 2009, after the first capital instalment was paid, the remaining capital instalments were deferred. Repayments will commence in August 2010, with equal instalments paid quarterly ending in February 2015. The interest rate was reset to Barclays Base Rate plus 3.0%. (iii) The Group entered into a loan of 1.5m in December 2006 which is secured on a freehold property. Interest is charged at Barclays Base Rate plus 1.5%. It is repayable in fixed quarterly instalments from March 2007 with a final payment in December 2011. (iv) The Group entered into a loan of 1.5m in February 2009 which is secured on a freehold property. Interest is charged at LIBOR plus 2.3%. It is repayable in fixed quarterly instalments from May 2009 with a final payment in February 2012. (v) The Group entered into a loan of 20.0m in December 2004 which was extended by a further 15.0m in February 2007. The loan is secured over certain warehouse assets, software and intellectual property. It is repayable in instalments from November 2007 to December 2011. Interest is charged at LIBOR plus 6.0% of which 2.0% is due biannually and 4.0% is capitalised into the loan and paid at the end of the loan term. A repayment of 10.0m was made in November 2008. (vi) The Group entered into a loan of 2.9m in December 2009 which is secured on a freehold property. Interest is charged at LIBOR plus 3.5%. It is repayable in fixed quarterly instalments from April 2010 with a final bullet payment in December 2012.

133

Part V

Historical Financial Information relating to the Group

Unsecured loans (vii) The Group entered into a loan of 6.8m in April 2002, with the then landlord of the customer fulfilment centre. It is repayable in fixed quarterly instalments with a final payment in March 2012. Interest is charged at 14.2% and the Group has a right to repay the loan without penalty at any time on six months notice. (viii) The Group entered into a Murabaha facility agreement in July 2009 to raise funds of 10.0m. It is repayable in quarterly instalments from October 2009 to July 2012 totalling 11.3m. It has been estimated that this will supply the bank with an overall yield of 8.0%. (ix) In both 2009 and 2008 the Group entered into an agreement to defer the payment of its insurance premium over 10 months. Interest was charged at 7.2%. They are repayable in fixed monthly instalments with final payments in July 2010 and July 2009 respectively. 20. Convertible loan stock
Between one year and two years 000 Between two years and five years 000

Total 000

Less than one year 000

Over five years 000

As at 2 December 2007 Convertible loan stock . . . . . . . . . . . Total convertible loan stock . . . . . . . As at 30 November 2008 Convertible loan stock . . . . . . . . . . . Total convertible loan stock . . . . . . . As at 29 November 2009 Convertible loan stock . . . . . . . . . . . Total convertible loan stock . . . . . . . As at 21 February 2010 Convertible loan stock . . . . . . . . . . . Total convertible loan stock . . . . . . .

33,101 33,101 14,506 14,506

14,506 14,506

14,874 14,874

18,227 18,227

(i)

The Group issued 12.5m in A convertible loan stock to Goldman Sachs International in March 2004 which was repayable in full in March 2009 after having been extended at the option of the loan stock holder in March 2007 on payment of a premium by the loan stock holder of 8.34 per share. This entitled the loan stock holder to convert the loan stock (including capitalised interest) and accrued interest into 132,244 Convertible preference shares at a price of 115 per share any time up to March 2009. The loan interest rate was 4% p.a. and was capitalised annually. The loan matured on 17 March 2009 and Goldman Sachs International chose not to convert the loan stock to Convertible preference shares. The loan principal and the accrued interest outstanding were rolled up into a short term loan. The loan was paid off in agreed instalments between June 2009 and September 2009.

(ii) The Group issued 12.3m in B convertible loan stock to John Lewis in January 2003 which was repayable in full in January 2010. The B convertible loan stock was not interest bearing but conferred the right to subscribe for up to 145,271 Convertible preference shares at a price of 84.70 per share on the occurrence of certain trigger events (including, amongst other things, an issue of new shares in the Group). In November 2008 the loan stock holder exercised their right to subscribe for the 145,271 Convertible preference shares. (iii) The Group issued 8.6m in C convertible loan stock to John Lewis in February 2004 which was repayable in full in February 2011. The C convertible loan stock was not interest bearing but conferred the right to subscribe for up to 91,143 Convertible preference shares at a price of 94.49 per share on the occurrence of certain trigger events (including, amongst other things, an issue of new shares in the Group). In November 2008 the loan stock holder exercised their right to subscribe for the 91,143 Convertible preference shares.

134

Part V

Historical Financial Information relating to the Group

(iv) The Group issued 1.5m in A convertible loan stock to John Lewis in July 2005 which was repayable in full in March 2009 after having been extended at the option of the loan stock holder in March 2007 on payment of a premium by the loan stock holder of 8.87 per share. This entitled the loan stock holder to convert the loan stock (including capitalised interest) and accrued interest into 14,919 Convertible preference shares at a price of 115 per share any time up to March 2009. The loan interest rate was 4% p.a. and was capitalised annually. In November 2008 the loan stock holder exercised their right to convert the loan stock and accrued interest into 14,919 Convertible preference shares. (v) The Group issued 50,000 in A convertible loan stock to a private investor in March 2004 which was repayable in full in March 2009 after having been extended at the option of the loan stock holder in March 2007 on payment of a premium by the loan stock holder of 8.34 per share. This entitled the loan stock holder to convert the loan stock (including capitalised interest) and accrued interest into 529 Convertible preference shares at a price of 115 per share any time up to March 2009, The loan interest rate was 4% p.a. and was capitalised annually. In March 2009 the loan stock holder exercised their right to convert the loan stock and accrued interest into 529 Convertible preference shares. In accordance with IAS 32 the principal values of the convertible loan stock were bifurcated into their liability and equity components. For the John Lewis B and C convertible loan stock this was performed at initial inception. The convertible loan stock as described in notes (i), (iv) and (v) which had extension options were also bifurcated on the date of the extension, when the criteria for bifurcating the components into liability and equity component parts were met. In November 2008 John Lewis exercised their right to convert loan stock held in Convertible preference shares. This resulted in the transfer of the 7.0m equity component previously recognised in the compound financial instruments reserve in respect of these being transferred into the accumulated deficit reserve. An adjustment of 1.6m was made, at the time, in respect of the unrecognised interest charge due to these options being exercised before the maturity date. In March 2009 on expiry of the Goldman Sachs International and the individual investors convertible loan stock financial instruments 1.1m previously recognised in the compound financial instrument reserve, in respect of these, was transferred to the accumulated deficit reserve.

135

Part V

Historical Financial Information relating to the Group

The total convertible loan stock liability and equity components recognised in the balance sheet are as follows:
Fair value adjustment charged/ (credited) as interest 000 Carrying value of liability component 000

Face value at inception/ Notes modification 000

Equity component 000

Interest capitalised 000

Loan Rate interest due to holder 000

Total liability and interest due 000

At 4 December 2006 . Interest charge in the period . . . . . . . . . Interest capitalised into the face value on modification . . . . . . Equity component recognised on modification . . . . . .

. . 9

34,967

(6,882)

3,183 1,431

31,268 1,431

1,500 617

32,768 2,048

1,670

1,670

(1,670)

36,637 36,637 9

(1,268) (8,150) (8,150)

631

4,614 4,614 1,738

(1,268) 33,101 33,101 1,738 631

447 447 646 (631)

(1,268) 33.548 33,548 2,384

At 2 December 2007 . . At 3 December 2007 . . Interest charge in the period . . . . . . . . . . Interest capitalised into the liability component Conversion of convertible loan stock: derecognition of liability component . equity component release to retained earnings . . . . . . . unrecognised interest charge on early conversion . . At 30 November 2008 . At 1 December 2008 . . Interest charge in the period . . . . . . . . . . Interest capitalised into the liability component Conversion of convertible loan stock: derecognition of liability component . equity component release to retained earnings . . . . . . . Repayment of convertible loan stock: derecognition of liability component . equity component release to retained earnings . . . . . . . As at 29 November 2009 . . . . . . . . . . .

24

(22,522)

(64)

(22,586)

(47)

(22,633)

5,389

(5,389)

14,115 14,115 9

1,622 (1,139) (1,139)

567 567 586

963 963 176

1,622 14,506 14,506 176 586

415 415 171 (586)

1,622 14,921 14,921 347

24

(55)

(5)

(60)

(60)

(5)

(14,060)

(1,148)

(15,208)

(15,208)

1,134

(1,134)

The interest charge for the financial period is calculated by applying an effective interest rate of 6.0% for John Lewis B and John Lewis C convertible loan stock and 9.3% for remaining convertible loans stocks to their respective liability components for the period since the convertible loans were bifurcated. The liability component is measured at amortised cost. The difference between the carrying amount of the liability at the date of inception/modification and the amount reported in the balance sheet at the period end represents the effective interest rate less interest accrued (un-capitalised at the period end) to that date.

136

Part V 21. Finance leases

Historical Financial Information relating to the Group

As at 2 December 2007 000

As at 30 November 2008 000

As at 29 November 2009 000

As at 21 February 2010 000

Obligations under finance leases Within one year . . . . . . . . . . . . Between one and two years . . . Between two and five years . . . After five years . . . . . . . . . . . .

due: .... .... .... ....

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

5,066 7,953 31,315 10,420 54,754

As at 2 December 2007 000

9,989 16,738 27,419 9,493 63,639

As at 30 November 2008 000

19,669 16,392 20,698 8,561 65,320

As at 29 November 2009 000

19,314 18,609 19,385 8,272 65,580

As at 21 February 2010 000

Total obligations under finance leases . . . . .

Notes

Minimum lease payments due: Within one year . . . . . . . . . . . Between one and two years . . Between two and five years . . . After five years . . . . . . . . . . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

8,448 11,041 36,391 13,832 69,712 (14,958) 54,754 18 18 5,066 49,688 54,754

13,957 20,021 31,707 12,275 77,960 (14,321) 63,639 9,989 53,650 63,639

23,705 19,180 23,779 10,773 77,437 (12,117) 65,320 19,669 45,651 65,320

23,287 21,314 22,332 10,418 77,351 (11,771) 65,580 19,314 46,266 65,580

Less: future finance charges . . . . . . . . Present value of finance lease liabilities . . . . . . . . . . . . . . . . . . . . Disclosed as: Current . . . . . . . . . . . . . . . . . . . . . . . Non-current . . . . . . . . . . . . . . . . . . . .

137

Part V

Historical Financial Information relating to the Group

22. Provisions
Dilapidations 000 Total 000

As at 3 December 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Charged/(credited) to statement of comprehensive income additional provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . unused amounts reversed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . used during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . As at 30 November 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Charged/(credited) to statement of comprehensive income additional provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . unused amounts reversed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . used during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . As at 29 November 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Charged/(credited) to statement of comprehensive income additional provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . unused amounts reversed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . used during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . As at 21 February 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

175

175

104 (15) (67) 197

104 (15) (67) 197

212 (3) (40) 366

212 (3) (40) 366

44 (26) 384

44 (26) 384

The dilapidations provision is based on the future expected repair costs required to restore the leased assets to their fair condition at the end of the lease term. 23. Derivative liability
As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Derivative liability designated as fair value through the profit or loss Warrant agreements . . . . . . . . . . . . . . . .

967

1,079

1,083

1,126

The Group issued to Ranelagh Nominees Limited (an affiliate of Lloyds TSB Bank plc) and to Lloyds TSB Bank plc warrants to subscribe for up to 5,611,200 Ordinary shares at 1.80 per share. Lloyds TSB Bank plc subsequently transferred its warrants to Ranelagh Nominees Limited. The warrants provide Ranelagh Nominees Limited with the opportunity to benefit in the equity upside of the Group. The fair value of the warrants has been determined using the Black-Scholes Option Pricing Model. Further details of the derivative financial instrument are provided in note 26.

138

Part V 24. Share capital and reserves

Historical Financial Information relating to the Group

Movements in called up share capital are set out below:

As at 2 December 2007 Number of shares 000 Ocado Limited As at 30 November 2008 Number of shares 000 As at 29 November 2009 Number of shares 000

Authorised Ordinary shares of 1p each . . . . . . . . . . . . . . . . . Convertible preference shares of 1p each . . . . . . . .

3,000,000 3,000,000 6,000,000

30 3,000,000 30 3,000,000 60 6,000,000 12 1,302,690 22 2,474,220 34 3,776,910

30 3,000,000 30 3,000,000 60 6,000,000 13 1,525,757 25 2,474,749 38 4,000,506

30 30 60 15 25 40

Allotted, called up and fully paid Ordinary shares of 1p each . . . . . . . . . . . . . . . . . Convertible preference shares of 1p each . . . . . . . .

1,153,186 2,222,887 3,376,073

Ocado Group plc As at 21 February 2010 Number of shares 000

Authorised Ordinary shares of 2p each . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Convertible preference shares of 2p each . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,000,000 3,000,000 6,000,000

6,000 6,000 12,000 3,714 4,949 8,663

Allotted, called up and fully paid Ordinary shares of 2p each . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Convertible preference shares of 2p each . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allotted, called-up, and fully paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Ordinary shares held by the Groups employee benefit trust . . . . . . . . . . . . . . . . . Allotted, called-up, and fully paid excluding Ordinary Shares held by the EBT Trustee . . . . .

185,715,900 247,474,900 433,190,800 (32,476,700) 400,714,100

On 9 February 2010 the Company acquired the entire share capital of Ocado Limited. As a result of this transaction, the ultimate shareholders in Ocado Limited received shares in the Company in direct proportion to their original shareholdings in Ocado Limited. Shareholders were issued 100 shares in the Company for every 1 share in Ocado Limited. The shares in Ocado Group plc have a par value of 2 pence each. Therefore as at 21 February 2010 share capital represents that of Ocado Group plc. Prior periods presented represent that of Ocado Limited. Convertible preference shares are only convertible in to the same number of Ordinary shares either at the option of the holder or on the occurrence of certain trigger events including a public listing. The Convertible preference shares rank pari passu with Ordinary shares with the exception that on return of assets on a liquidation, reduction of capital or otherwise, the holders of the Convertible preference shares shall be entitled in respect of their preference shares (in proportion to the number of such shares held by each of them) in priority to all other shareholders, to be paid out of the surplus assets of the Group remaining after payment of its liabilities, the subscription price for their preference shares together with a sum equal to any arrear of dividends calculated down to the date of the return of assets. The Ordinary Shares held by the EBT Trustee pursuant to the Joint Share Ownership Scheme are treated as treasury shares in the Groups consolidated balance sheet in accordance with IAS 32 Financial instruments: Presentation. These Ordinary Shares have voting rights but these have been waived by the EBT Trustee. Further details of the Joint Share Ownership Scheme are provided in Note 25. The number of allotted, called up and fully paid shares, excluding treasury shares, at the end of each period differs from that used in the loss per share calculation in Note 28 as loss per share is calculated using the weighted average number of ordinary shares and convertible preference shares in issue during the period, excluding treasury shares.

139

Part V

Historical Financial Information relating to the Group

Movements in called up share capital and reserves are set out below:
Ordinary shares (number) 951,171 200,667 Convertible preference shares (number) 2,222,887 Ordinary shares 000 10 2 Convertible preference shares 000 22 Share premium 000 210,897 30,098 Reverse Treasury acquisition reserve reserve 000 000

Notes At 4 December 2006 . . Issue of Ordinary shares Allotted in respect of executive share option scheme . . . . . At 2 December 2007 . . At 3 December 2007 . . Issue of Ordinary shares Allotted in respect of executive share option scheme . . . . . Issue of Convertible preference shares . . . At 30 November 2008 . At 1 December 2008 . . Issue of Ordinary shares Ordinary shares issue costs . . . . . . . . . . . Allotted in respect of executive share option scheme . . . . . Issue of Convertible preference shares . . . At 29 November 2009 . At 30 November 2009 . Allotted in respect of executive share option scheme . . . . . Allotted in respect of joint share ownership scheme . . . . . . . . . Cancellation of Ocado Limiteds shares . . . . Issue of Ordinary and Convertible preference shares by Ocado Group plc . . . Ocado Group plc capital reduction . . . . . . . . Reverse acquisition of Ocado Limited by Ocado Group plc . . . At 21 February 2010 . .

25

1,348 1,153,186 1,153,186 148,693

2,222,887 2,222,887

12 12 1

22 22

114 241,109 241,109 17,842

25 20

811 1,302,690 1,302,690 222,281

251,333 2,474,220 2,474,220

13 13 2

3 25 25

68 22,630 281,649 281,649 30,005 (945)

25 20

786 1,525,757 1,525,757

529 2,474,749 2,474,749

15 15

25 25

67 60 310,836 310,836

25

6,635

731

24(a) 24(b)

324,767 (1,857,159)

(2,474,749)

3 (18)

(25)

48,712

(47,741)

24(b) 185,715,900 247,474,900 24(b)

204,287 (200,573)

272,222 (267,273)

(476,509)

24(c)

3,714

4,949

(360,279)

(47,741)

360,279 (116,230)

185,715,900 247,474,900

(a) Treasury reserve This reserve arose when the Group issued equity share capital under its Joint Share Ownership Scheme, which is held in trust by the Groups employee benefit trust, the consideration paid is deducted from total shareholders equity and classified as treasury shares on consolidation. Further details of the Joint Ownership Scheme are provided in Note 25. (b) Scheme of Arrangement and Capital Reduction On 9 February 2010, pursuant to a Scheme of Arrangement, all of Ocado Limiteds Ordinary and Preference Shares were cancelled. Subsequently, Ocado Limited issued 100 ordinary shares to the Company for 1 and in consideration of the cancellation of Ocado Limiteds Ordinary and Preference Shares, the Company issued 185,715,900 Ordinary Shares and 247,474,900 Preference Shares on the basis of 1:100 Ordinary and Preference Shares for each Ocado Limited Share held. The effect of the

140

Part V

Historical Financial Information relating to the Group

Scheme of Arrangement was to replicate the shareholders register of Ocado Limited at the Company level. On 16 February 2010, pursuant to an order of the Court confirming the reduction of capital of the Company, the Companys share capital was reduced by decreasing the nominal value of each Ordinary and Preference Share issued pursuant to the Scheme of Arrangement from 110 pence to 2 pence. This created distributable reserves of 467.8 million. (c) Reverse acquisition reserve As detailed in Notes 2(a) and 2(b), the acquisition by the Company of the entire issued share capital of Ocado Limited has been accounted for as a reverse acquisition under IFRS3R. Consequently the previously recognised book values and assets and liabilities have been retained and the consolidated historical financial information has been presented as if the Company had always been the parent company of the Group. The share capital for the period covered by the historical financial information and the comparative periods is stated at the nominal value of the shares issued pursuant to the share swap arrangement. Any differences between the nominal value of these shares and previously reported nominal values of shares and applicable share premium issued by Ocado Limited has been transferred to the reverse acquisition reserve. 25. Share options and other equity instruments (a) Employee share options On 9 February 2010 the Ordinary Shares and Convertible Preference Shares in Ocado Limited were converted into Ordinary Shares and Convertible Preference Shares in the Company on a 1:100 basis with a par value of 2 pence per share. Options to subscribe for Ordinary shares have been granted, pursuant to the Groups approved and unapproved employee share option schemes. At each respective balance sheet date the outstanding options were as follows:
Year of Issue As at 2 December 2007 Number As at 30 November 2008 Number As at 29 November 2009 Number Exercise Price () As at 21 February 2010 Number Exercise Price () Exercise Period

Ocado Limited 2001 Inland Revenue . Approved Employee . . . . . . . . . . . Share Ownership Scheme . . . . . . .

2001 2001 2002 2003 2004 2005 2005 2006 2006 2007 2008 2008 2009 2009

14,920 268 4,252 2,705 3,803 7,978 944 2,420 2,402 9,721 49,413

14,393 268 4,118 2,289 3,328 6,977 944 2,088 1,830 7,595 3,341 7,428 54,599 1,188 872 1,243 3,500 3,500 2,000 20 12,492 508 25,323 79,922

13,940 268 4,104 2,127 3,147 6,599 944 1,918 1,627 6,768 2,721 5,661 3,519 18,100 71,443 1,094 777 1,243 3,500 3,500 2,000 19 12,242 508 9,369 241 34,493 105,936

80 90 90 90 90 100 115 140 150 150 135 120 120 135

875,607 23,044 314,436 164,927 259,904 513,229 94,424 172,078 145,140 629,863 251,010 493,531 284,357 1,623,229 5,844,779

0.80 0.90 0.90 0.90 0.90 1.00 1.15 1.40 1.50 1.50 1.35 1.20 1.20 1.35

24/02/03-29/11/11 30/11/04-29/11/11 31/05/05-29/11/12 31/05/06-29/11/13 31/05/07-29/11/14 31/05/08-29/11/15 31/05/08-29/11/15 31/05/09-30/05/16 30/11/09-29/11/16 31/05/10-29/11/17 31/05/11-29/05/18 30/11/11-29/11/18 31/05/12-30/05/19 02/11/12-29/11/19

Total approved options . . . . . . . . . Ocado Limited 2001 Inland Revenue . Non-Approved . . . . . . . . . . . . . . Employee Share Ownership Scheme . 2001 2001 2002 2002 2002 2003 2005 2005 2007 2009 2009

1,188 872 1,243 3,500 3,500 2,000 20 12,492 508 25,323 74,736

80 90 90 100 150 90 100 115 150 120 135

70,626 35,856 94,533 175,000 350,000 100,000 1,900 1,206,050 50,833 267,500 24,074 2,376,372 8,221,151

0.80 0.90 0.90 1.00 1.50 0.90 1.00 1.15 1.50 1.20 1.35

01/08/03-29/11/11 30/11/04-29/11/11 31/05/05-29/11/12 07/02/05-06/02/12 07/02/05-06/02/12 31/05/06-29/11/13 31/05/08-29/11/15 16/05/08-29/11/15 31/05/10-30/05/17 31/05/12-30/05/19 16/11/12-15/11/19

Total unapproved

. . . . . . . . . . . .

Total employee options . . . . . . . . .

141

Part V

Historical Financial Information relating to the Group

Of the total employee share options above, the following options were subject to performance criteria in relation to the average contribution by basket and EBITDA:
Year of Issue As at 2 December 2007 Number As at 30 November 2008 Number As at 29 November 2009 Number Exercise Price () As at 21 February 2010 Number Exercise Price () Exercise Period

2005 2009 Total options subject to performance criteria . . . . . . . . . . . . . . . . . . .

2,913 2,913

2,913 2,913

2,913 9,550 12,463

115 120

276,017 254,000 530,017

1.15 1.20

31/05/08-29/11/15 31/05/12-30/05/19

Details of the share options outstanding during each financial period are as follows.
As at 2 December 2007 Number of Share Options Weighted average price () As at 30 November 2008 Number of Share Options As at 29 November 2009 Weighted average price () As at 21 February 2010 Number of Share Options Weighted average price ()

Weighted Number of average Share price () Options

Outstanding at beginning of period . . . . . . . . . Granted during the period . . . . . . . . . . . Forfeitedgranted in the period . . . . . . . . . . . Forfeitedgranted in prior periods . . . . . . . Exercised during the period . . . . . . . . . . . Expired during the period . . . . . . . . . . . Outstanding during the period . . . . . . . . . . . Exercisable at the end of the period . . . . . . . . .

71,658 10,928 (699) (5,803) (1,348) 74,736 38,251

103 150 150 121 85 108 92

74,736 11,649 (880) (4,772) (811) 79,922 57,132

108 125 135 129 84 110 99

79,922 33,164 (1,935) (4,429) (786) 105,936 57,422

110 10,593,611 129 124 126 85 115 100 (1,708,960) (663,500) 8,221,151 4,596,754

1.15 1.04 1.10 1.17 1.05

The market value of the Groups shares was derived based on the market value of similar companies and by taking into account transactions conducted with shareholders during the period. The Share Valuation Office of the Inland Revenue has confirmed in correspondence dated November 2009 that in respect of 2009 grants 135 per share was not less than the market value of the Groups shares. Similar confirmation has been obtained for the share valuations at each option grant date. In determining the fair value of the share options, the Black-Scholes Option Pricing Model was used with the following inputs:
2007 2008 2009 2010

Weighted average share price . . Weighted average exercise price Expected volatility . . . . . . . . . . Weighted expected life . . . . . . . Risk-free interest rate . . . . . . . . Expected dividend yield . . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

150.00 108.45 0.50 5.28 5.0% 0.0%

143.40 109.63 0.50 5.18 5.0% 0.0%

126.60 114.78 0.50 4.19 5.0% 0.0%

1.27 1.17 0.50 4.19 5.0% 0.0%

Expected volatility was determined by comparing the Group to others of a similar size or which operate in similar markets, and adjusted to reflect the private company status. The expected life used in the model has been adjusted, based on managements best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. All share awards are equity settled. The charge to the statement of comprehensive income is detailed in Note 8.

142

Part V (b) Joint Share Ownership Scheme

Historical Financial Information relating to the Group

The set up of the Joint Share Ownership Scheme (JSOS) was approved by resolution of the board of directors on 13 January 2010 following recommendations made by the Groups remuneration committee that a new executive incentivisation scheme be established to incentivise and retain its four Executive Directors and select members of senior management of the Group (the Participants). The scheme was approved by shareholders by written resolution on 18 February 2010. The terms of the JSOS have been approved by the Groups remuneration committee who will supervise the operation of the scheme. Participants Following consultation with the Groups lawyers, financial advisers and independent executive remuneration consultants and the board of directors approval, awards were granted to the Executive Board and a select group of senior management. In total they acquired interests in 32.5m Ordinary shares with an issue price of 1.50 per share (historically the maximum share price recorded for the Groups shares). Nature of interests Interests will take the form of a restricted interest in Ordinary shares in the Company (Interest). An Interest permits a participant to benefit from the increase (if any) in the value of a number of Ordinary shares in the Company (Shares) over which the Interest is acquired. In order to acquire an Interest, a participant must enter into a joint ownership agreement with the trustees of an employee benefit trust under which the participant and the trustee jointly acquire the Shares and agree that when the Shares are sold the participant has a right to receive a proportion of the sale proceeds in so far as the value of the Shares exceeds a threshold amount. For the initial Interests acquired by the Participants, there are four tranches each with their own threshold or Hurdle Value as follows:
Tranche Hurdle Value % above issue price

1 2 3 4

(2011) (2012) (2013) (2014)

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

1.7250 1.9075 2.0829 2.2813

15 27 39 52

A participant is required to provide up front funding to the employee benefit trust equal to 2% of the issue price on the acquisition of their interests, amounting to 0.03 per share (the Entry Price). When an Interest vests, the trustees will on request transfer shares to the participant of equal value to the participants Interest or the Shares will be sold and the trustee will account to the participant for the balance i.e. the difference between the sale proceeds (less expenses) and the Hurdle Value. Vesting conditions The vesting of Interests granted to Participants are subject to a time vesting condition with one-quarter of the Interest in the Shares vesting on the first anniversary of acquisition, one-quarter on the second anniversary, one-quarter on the third anniversary and the final one-quarter on the fourth anniversary. The fair value of interests awarded under the Joint Share Ownership Scheme was determined using the Black-Scholes Option Pricing Model. As per IFRS 2 Share-based Payment market based vesting conditions and the share price target conditions in the Joint Share Ownership Scheme have been taken in to account in establishing the fair value of the equity instruments granted. Other non-market or performance related conditions were not taken into account in establishing the fair value of equity instruments granted, instead these non-market vesting conditions are taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately the amount recognised for services received as consideration for the equity instruments granted is based

143

Part V

Historical Financial Information relating to the Group

on the number of equity instruments that eventually vest. The following inputs were used in the BlackScholes Option Pricing Model:
Tranche 1 Tranche 2 Tranche 3 Tranche 4

Weighted average share price . . . Weighted average exercise price . Expected volatility . . . . . . . . . . . Weighted Expected life . . . . . . . . Risk-free interest rate . . . . . . . . . Expected dividend yield . . . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

1.35 1.73 0.25 0.91 3.5% 0.0%

1.35 1.90 0.25 1.91 3.5% 0.0%

1.35 2.08 0.25 2.91 3.5% 0.0%

1.35 2.28 0.25 3.91 3.5% 0.0%

(c) Non-employee share options On 9 February 2010 the ordinary shares and convertible preference shares in Ocado Limited were converted into Ordinary Shares and Preference Shares in the Company on a 1:100 basis with a par value of 2 pence per share. Options to subscribe for ordinary shares and convertible preference shares have been granted by the Company to non-employees. At each respective balance sheet date the options granted to non employees at the date of their grant were as follows.
Date of Issue As at As at As at 2 December 30 November 29 November Exercise 2007 2008 2009 Price () Number Number Number As at 21 February Exercise 2010 Price () Number

Exercise Period

Non-employee share options . . .

Feb-02 Feb-02 Feb-02 Jan-04 Apr-04

943 74 8,867 4,353 477 14,714

943 74 8,867 4,353 477 14,714

943 74 8,867 4,353 477 14,714

53 90 90 103 103

94,300 7,400 886,700 435,300 47,700 1,471,400

0.53 0.90 0.90 1.03 1.03

07/02/02-06/02/12 04/02/04-03/02/14 04/02/04-04/02/17 03/01/04-03/01/18 30/04/04-29/05/14

26. Financial instruments The fair value of financial instruments is measured by using the following fair value hierarchy: Quoted priced (unadjusted) in active markets for identical assets or liabilities (level 1) Inputs other than quoted prices included within level 1 that are observable for the asset and liability, either directly or indirectly (level 2) Inputs for the assets or liability that are not based on observable market data (that is unobservable inputs) (level 3)

The Group recognises a derivative liability in respect of warrants issued. The fair values of which are determined using the Black-Scholes Option Pricing Model. This is categorised as level 3. The measurement of fair values of other financial instruments is detailed in the note below. (a) Fair value of financial instruments Set out below is a comparison by category of carrying amounts and fair values of all financial instruments that are carried in the historical financial information. The fair value of financial assets and liabilities are based on prices available from the market on which the instruments are traded where available. The fair values of short-term deposits, receivables, overdrafts, payables and loans of a maturity of less than one financial period are assumed to approximate to their carrying values but for completeness are included in the analysis below. The fair value of all other financial assets and liabilities have been calculated by discounting expected future cash flows at prevailing market interest rates. The interest rate used to discount borrowings is based on a LIBOR plus margin measure blended for the type of security offered and were calculated as 5.6% as at 21 February 2010 (2009: 6.4%) (2008: 8.5%) (2007: 10.3%).

144

Part V

Historical Financial Information relating to the Group

The carrying value of financial assets and liabilities at the end of the period:
As at 2 December 2007 Notes Carrying value 000 Fair Value 000 As at 30 November 2008 Carrying value 000 Fair Value 000 As at 29 November 2009 Carrying value 000 Fair Value 000 As at 21 February 2010 Carrying value 000 Fair Value 000

Assets Cash and cash equivalents . . . . . . Trade receivables . . . Other receivables (incl. accrued income) . . . . . . . . Total financial assets . Liabilities Trade payables . Accruals . . . . . . Borrowings . . . . Convertible loan notes . . . . . . . Finance lease obligations . . . Derivative liability ... ... ... ... ... ...

16 15

10,891 1,073

10,891 1,073

5,857 3,004

5,857 3,004

13,017 5,707

13,017 5,707

10,445 5,007

10,445 5,007

15

5,824 17,788

5,824 17,788

5,576 14,437

5,576 14,437

4,622 23,346

4,622 23,346

6,962 22,414

6,962 22,414

17 17 19 20 21 23

(20,142) (20,142) (25,900) (25,900) (33,839) (33,839) (10,409) (10,409) (9,840) (9,840) (9,519) (9,519) (47,221) (47,857) (43,445) (43,797) (54,745) (55,075) (33,101) (33,453) (14,506) (15,269)

(28,127) (28,127) (14,151) (14,151) (55,991) (56,159)

(54,754) (54,754) (63,639) (63,639) (65,320) (65,320) (967) (967) (1,079) (1,079) (1,083) (1,083)

(65,580) (65,580) (1,126) (1,126)

Total financial liabilities . . . . . . . .

(166,594) (167,582) (158,409) (159,524) (164,506) (164,836) (164,975) (165,143)

(b) Credit risk The Groups exposures to credit risk arise from holdings of cash and cash equivalents and trade and other receivables (excluding prepayments). Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. This is shown in the table in Note 26(a) above. Cash and cash equivalents The Groups exposure to credit risk on cash and cash equivalents is managed by cash deposits only being placed with banks and financial institutions which carry Moodys ratings of Aa3/P1 for long term and short term deposits. Trade and other receivables Trade and other receivables at the period end comprise mainly monies due from suppliers. Trade receivables in respect of consumer sales are low due to the nature of the Groups business and its effective controls over this area. The Group has provided for doubtful receivables in respect of consumer sales by reviewing the aging profile and, based on period experience, assessing the recoverability of over due balances. The Group also provides for receivables in respect of monies due from suppliers. Management provide when there are indicators that a balance may not be recoverable.

145

Part V

Historical Financial Information relating to the Group

The aging of trade and other receivables (excluding prepayments) at the balance sheet date was:
As at 2 December 2007 Notes Gross 000 Impairment 000 As at 30 November 2008 Gross 000 Impairment 000 As at 29 November 2009 Gross 000 Impairment 000 As at 21 February 2010 Gross 000 Impairment 000

Not past due . Past due 0-3 months . Past due 3-6 months . Past due over 6 months . .

... ... ... ... 15

6,359 365 145 49 6,918

(8) (8) (5) (21)

7,634 773 207 185 8,799

(46) (50) (123) (219)

7,807 2,395 115 201 10,518

(47) (26) (116) (189)

9,156 2,165 663 214 12,198

(53) (34) (142) (229)

There were no unimpaired balances at the period end where the Group had renegotiated the terms of the trade receivables (2009: nil) (2008: nil) (2007: nil). Movements in the provision for impairment of trade and other receivables are as follows:
As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Notes

At the beginning of the period . . . . . Provision for receivables impairment Uncollectible amounts written off . . . Recoveries of amounts previously provided . . . . . . . . . . . . . . . . . . .

. . . . 15

(249) (20) 83 165 (21)

(21) (199) 1 (219)

(219) (115) 114 31 (189)

(189) (59) 19 (229)

At the end of the period . . . . . . . . . .

The provisions account for trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible; at that point the amounts considered irrecoverable are written off against the trade receivables directly. (c) Liquidity risk The Group maintains a mixture of short and medium term debt and lease finance arrangements that are designed to ensure the Group has sufficient available funds to finance its operations. In addition the Group maintains a committed standby bank overdraft facility of 5m as at 21 February 2010 (2009: 5m) (2008: 5m) (2007: 5m). The Group monitors cash flow as part of its day to day control procedures and the Board considers cash flow projections on a monthly basis ensuring that appropriate facilities are available to be drawn upon as necessary. For further details see Note 27.

146

Part V

Historical Financial Information relating to the Group

The table below analysis the Groups non-derivative financial liabilities into their relevant maturity groups based on the remaining period at the financial period end dates to the contractual maturity date. The amounts disclosed in the table are the carry value and undiscounted contractual cash flows.
2 December 2007 Notes Carrying value 000 Contractual cash flows 000 1 year or less 000 1-2 years 000 2-5 years 000 More than 5 years 000

Non-derivative financial liabilities Trade payables . . . . . . . Accruals . . . . . . . . . . . . Secured loans . . . . . . . . Unsecured loans . . . . . . Convertible loan notes . . Finance lease obligations . . . . . . . . .

17 17 19 19 20 21

(20,142) (10,409) (43,330) (3,891) (33,101) (54,754) (165,627)

Carrying value 000

(20,142) (10,409) (60,301) (5,169) (35,230) (69,712) (200,963)

Contractual cash flows 000

(20,142) (10,409) (4,595) (1,292) (8,448) (44,886)

1 year or less 000

(9,022) (1,292) (17,003) (11,041) (38,358)

(44,564) (2,585) (18,227) (36,391) (101,767)

(2,120) (13,832) (15,952)

More than 5 years 000

30 November 2008

Notes

1-2 years 000

2-5 years 000

Non-derivative financial liabilities Trade payables . . . . . . . Accruals . . . . . . . . . . . . Secured loans . . . . . . . . Unsecured loans . . . . . . Convertible loan notes . . Finance lease obligations . . . . . . . . .

17 17 19 19 20 21

(25,900) (9,840) (39,157) (4,288) (14,506) (63,639) (157,330)

Carrying value 000

(25,900) (9,840) (48,722) (5,053) (15,269) (77,960) (182,744)

Contractual cash flows 000

(25,900) (9,840) (17,123) (2,468) (15,269) (13,957) (84,557)

1 year or less 000

(12,173) (1,293) (20,021) (33,487)

(19,022) (1,292) (31,707) (52,021)

(404) (12,275) (12,679)

More than 5 years 000

29 November 2009

Notes

1-2 years 000

2-5 years 000

Non-derivative financial liabilities Trade payables . . . . . . . Accruals . . . . . . . . . . . . Secured loans . . . . . . . . Unsecured loans . . . . . . Finance lease obligations . . . . . . . . .

17 17 19 19 21

(33,839) (9,519) (41,350) (13,395) (65,320) (163,423)

Carrying value 000

(33,839) (9,519) (45,185) (14,959) (77,437) (180,939)

Contractual cash flows 000

(33,839) (9,519) (7,517) (7,047) (23,705) (81,627)

1 year or less 000

(19,428) (5,075) (19,180) (43,683)

(17,837) (2,837) (23,779) (44,453)

(403) (10,773) (11,176)

More than 5 years 000

21 February 2010

Notes

1-2 years 000

2-5 years 000

Non-derivative financial liabilities Trade payables . . . . . . . Accruals . . . . . . . . . . . . Secured loans . . . . . . . . Unsecured loans . . . . . . . Finance lease obligations

17 17 19 19 21

(28,127) (14,151) (44,311) (11,680) (65,580) (163,849)

(28,127) (14,151) (47,810) (12,952) (77,351) (180,391)

(28,127) (14,151) (24,369) (6,309) (23,287) (96,243)

(15,998) (4,752) (21,314) (42,064)

(7,443) (1,891) (22,332) (31,666)

(10,418) (10,418)

147

Part V

Historical Financial Information relating to the Group

Currency risk The Group only has foreign currency transactions in relation to its trade payables, principally arising on purchases of plant and equipment. The Groups exposure to currency risk is as follows:
As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Trade payables at the period end: Euros . . . . . . . . . . . . . . . . . . . . . . . . . . . . US dollar . . . . . . . . . . . . . . . . . . . . . . . . . . Swedish krona . . . . . . . . . . . . . . . . . . . . . .

1,423 1,423

901 901

41 2 43

15 5 20

Due to the Groups minimal exposure to currency risk no sensitivity analysis has been performed. Interest rate risk The Group is exposed to interest rate risk on its interest bearing borrowings. The Groups interest rate policy seeks to minimise interest expense and volatility by structuring the interest rate profile into a diversified portfolio of fixed rate and floating rate liabilities. At the balance sheet date the interest rate profile of the Groups interest bearing financial instruments was:
As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Notes

Fixed rate financial instruments Financial liabilities . . . . . . . . . . . . . . Variable rate instruments Financial assets . . . . . . . . . . . . . . . Financial liabilities . . . . . . . . . . . . . . Sensitivity analysis

18 16 18

(91,746) 10,891 (43,330)

(82,433) 5,857 (39,157)

(78,715) 13,017 (41,350)

(77,260) 10,445 (44,311)

An increase of 100 basis points (1.0%) in interest rates at the balance sheet date would have decreased equity and profit or loss by the amounts shown below. This calculation assumes that the change occurred at the balance sheet date and had been applied to risk exposures existing at that date. This analysis assumes that all other variables remain constant and considers the effect on financial instruments with variable interest rates and financial instruments at fair value through profit or loss.
As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Equity Gain/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . Income Gain/(loss) . . . . . . . . . . . . . . . . . . . . . . . . .

(454) (454)

(489) (489)

(492) (492)

(152) (152)

148

Part V (e) Financial instruments by category

Historical Financial Information relating to the Group

The Group has categorised its financial instruments as follows:

Other financial liabilities at amortised cost 000 Liabilities at fair value through the profit and loss 000

Notes

Availablefor-sale 000

Loans and receivables 000

Total 000

As at 2 December 2007 Assets as per balance sheet Cash and cash equivalents . . . . . . . Trade and other receivables (excluding prepayments) . . . . . . . . Available for-sale financial assets . . . Total . . . . . . . . . . . . . . . . . . . . . . Liabilities as per balance Trade payables . . . . . . . Accruals . . . . . . . . . . . . Borrowings . . . . . . . . . . Convertible loan stock . . . Financial lease liabilities . Derivative liability . . . . . . sheet ..... ..... ..... ..... ..... ..... . . . . . . . . . . . . . . . . . .

16 15 13

395 395

10,891 6,897 17,788

20,142 10,409 47,221 33,101 54,754 165,627

967 967
Liabilities at fair value through the profit and loss 000

10,891 6,897 395 18,183 20,142 10,409 47,221 33,101 54,754 967 166,594

17 17 19 20 21 23

Total . . . . . . . . . . . . . . . . . . . . . .

Notes

Availablefor-sale 000

Loans and receivables 000

Other financial liabilities at amortised cost 000

Total 000

As at 30 November 2008 Assets as per balance sheet Cash and cash equivalents . . . . . . . Trade and other receivables (excluding prepayments) . . . . . . . . Available for-sale financial assets . . . Total . . . . . . . . . . . . . . . . . . . . . . Liabilities as per balance Trade payables . . . . . . . Accruals . . . . . . . . . . . . Borrowings . . . . . . . . . . Convertible loan stock . . . Financial lease liabilities . Derivative liability . . . . . . sheet ..... ..... ..... ..... ..... ..... . . . . . . . . . . . . . . . . . .

16 15 13

395 395

5,857 8,580 14,437

25,900 9,840 43,445 14,506 63,639 157,330

1,079 1,079

5,857 8,580 395 14,832 25,900 9,840 43,445 14,506 63,639 1,079 158,409

17 17 19 20 21 23

Total . . . . . . . . . . . . . . . . . . . . . .

149

Part V

Historical Financial Information relating to the Group

Other financial liabilities at amortised cost 000 Liabilities at fair value through the profit and loss 000

Notes

Available for-sale 000

Loans and receivables 000

Total 000

As at 29 November 2009 Assets as per balance sheet Cash and cash equivalents . . . . . . . Trade and other receivables (excluding prepayments) . . . . . . . . Available for sale financial assets . . . Total . . . . . . . . . . . . . . . . . . . . . . Liabilities as per balance Trade payables . . . . . . . Accruals . . . . . . . . . . . . Borrowings . . . . . . . . . . Finance lease liabilities . . Derivative liability . . . . . . sheet ..... ..... ..... ..... ..... . . . . . . . . . . . . . . .

16 15 13

395 395

13,017 10,329 23,346

33,839 9,519 54,745 65,320 163,423

1,083 1,083
Liabilities at fair value through the profit and loss 000

13,017 10,329 395 23,741 33,839 9,519 54,745 65,320 1,083 164,506

17 17 19 21 23

Total . . . . . . . . . . . . . . . . . . . . . .

Notes

Available for sale 000

Loans and receivables 000

Other financial liabilities at amortised cost 000

Total 000

As at 21 February 2010 Assets as per balance sheet Cash and cash equivalents . . . . . . . Trade and other receivables (excluding prepayments) . . . . . . . . Available for sale financial assets . . . Total . . . . . . . . . . . . . . . . . . . . . . Liabilities as per balance Trade payables . . . . . . . Accruals . . . . . . . . . . . . Borrowings . . . . . . . . . . Finance lease liabilities . . Derivative liability . . . . . . sheet ..... ..... ..... ..... ..... . . . . . . . . . . . . . . .

16 15 13

395 395

10,445 11,969 22,414

28,127 14,151 55,991 65,580 163,849

1,126 1,126

10,445 11,969 395 22,809 28,127 14,151 55,991 65,580 1,126 164,975

17 17 19 21 23

Total . . . . . . . . . . . . . . . . . . . . . .

27. Capital management The Boards policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Group is currently dependent on the continuing support of its lending banks for its current working capital facilities. The Boards objectives are to keep borrowings within existing facilities and to negotiate and obtain additional resources required to fund the Companys working capital requirements for the foreseeable future. The Board closely manages its trading capital, which it defines as its net assets plus net debt. Net debt is calculated as total debt (finance leases, convertible loan stock and borrowings as shown in the balance sheet), less cash and cash equivalents. The Group has performance based loan covenants in place over certain borrowings. Management monitor the performance targets on a periodic basis considering actual and forecast results. Management ensure constant communication with all its lenders and those lenders with covenants have indicated their satisfaction with the progress of the Group. The main areas of capital management revolve around the management of the components of working capital including monitoring stock turn, age of stock, age of debtors, debtor days, creditor days, balance sheet re-forecasting, period

150

Part V

Historical Financial Information relating to the Group

projected loss, weekly cash flow forecasts and daily cash balances. Major investment decisions are based on reviewing the expected future cash flows and all major capital expenditure requires approval from the Board. There were no major changes in the Groups approach to capital management during the period. The Groups performance in remaining within its borrowing facilities, including standby overdraft facilities and at the period ends as measured by the headroom available is as follows:
As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Notes

Total facilities available . . . . . . . . . . Facilities drawn down . . . . . . . . . . . Undrawn facilities at end of period . . Cash and cash equivalents gross of drawn overdraft facility . . . . . . . . . Total undrawn facilities and cash available at the end of the period . 28. Loss per share (a) Basic

18

154,681 (135,076) 19,605

131,684 (121,590) 10,094 6,163 16,257

137,775 (120,065) 17,710 13,157 30,867

137,798 (121,571) 16,227 14,218 30,445

16

11,286 30,891

Basic loss per share is calculated by dividing the loss attributable to equity holders by the weighted average number of Ordinary shares and Convertible preference shares in issue during the period excluding Ordinary shares purchased by the Group and held as treasury shares, adjusted to reflect the conversion of the Ordinary shares and the Convertible preference shares in Ocado Limited to Ordinary shares and Convertible preference shares in the Company on a 1:100 basis on 9 February 2010. The loss for the period is equally attributable to the shareholders of Ordinary shares and Convertible preference shares. For more information see Note 24. All operations are continuing for the financial periods presented.
For the 52 weeks ended 2 December 2007 Number 000s Issued ordinary shares and preference shares at beginning of period . . . . . Effect of share options exercised in the period . . . . . . . . . . . . . . . . . Effect of shares issued in the period . . Weighted average number of shares at the end of the period . . . . . . . . 317,406 83 13,874 331,363 000 Loss attributable to shareholder . . . . . (40,154) pence Basic loss per share . . . . . . . . . . . . (12.12) For the 52 weeks ended 30 November 2008 Number 000s 337,607 53 3,077 340,737 000 (33,298) pence (9.77) For the 52 weeks ended 29 November 2009 Number 000s 377,691 47 5,619 383,357 000 (23,209) pence (6.05) For the 12 weeks ended 22 February 2009 (Unaudited) Number 000s 377,691 6 377,697 000 (7,235) pence (1.92) For the 12 weeks ended 21 February 2010 Number 000s 400,051 229 400,280 000 (3,963) pence (0.99)

(b) Diluted Diluted loss per share is calculated by adjusting the weighted average number of Ordinary shares and Convertible preference shares outstanding to assume conversion of all dilutive potential shares, adjusted to reflect the conversion of the Ordinary shares and the Convertible preference shares in Ocado Limited to Ordinary shares and Convertible preference shares on a 1:100 basis on 9 February 2010. The Group has four categories of potentially dilutive shares: convertible loan stock, share options, shares held pursuant to the JSOS and warrants.

151

Part V

Historical Financial Information relating to the Group

There was no difference in the weighted average number of shares used for basic and diluted loss per share as the effect of all potentially dilutive shares outstanding was anti-dilutive. 29. Subsidiary Ocado Holdings Limited is a 100 per cent. owned subsidiary of Ocado Group plc. It was incorporated in the UK on 5 February 2010 with registration number 07148670. Ocado Limited is a 100 per cent. owned subsidiary of Ocado Holdings Limited. It is incorporated in the UK with registration number 3875000. Ocado Information Technology Limited is a 100 per cent. owned subsidiary of Ocado Holdings Limited. It was incorporated in Ireland on 19 January 2010 with a registration number 479792. On 21 January 2010 Ocado Limited granted Ocado Information Technology Limited a license to use the Groups intellectual property outside of the UK, and in consideration Ocado Information Technology Limited issued a promissory note which was settled by the issue of 5,075,840 ordinary shares of 1 Euro each. Jalapeno Partners Limited is a 100 per cent. owned subsidiary of Ocado Limited. It is incorporated in the UK with registration number 4204963. It is a dormant Company as defined by section 250 of the Companies Act 2006 Section 250. The only balances in the accounts of Jalapeno Partners are share capital of 1 and an inter-company creditor of 1. 30. Commitments Capital commitments Contracts placed for future capital expenditure not provided in the historical financial information are as follows:
As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Property, plant and equipment . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . Total capital expenditure committed at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . Operating lease commitments

7,270 7,270

6,481 49 6,530

5,636 5,636

11,116 26 11,142

The Group leases a number of offices, facilities and equipment under non-cancellable operating leases. The leases have varying terms, escalation clauses and renewal rights: The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Amounts payables: Within one year . . . . . . . . . . . . . . . . . . . . . Within two to five years . . . . . . . . . . . . . . . After five years . . . . . . . . . . . . . . . . . . . . . Total commitment . . . . . . . . . . . . . . . . . . .

2,114 6,507 10,224 18,845

2,151 6,041 36,683 44,875

2,535 8,399 36,392 47,326

2,595 8,153 36,039 46,787

152

Part V 31. Related party transactions Key management personnel

Historical Financial Information relating to the Group

Only the Executive and Non-Executive Directors are deemed to be key management personnel. It is the Board who have responsibility for planning, directing and controlling the activities of the Group. Key management personnel compensation is disclosed in Note 8. Other related party transactions with key management made during the period are as follows:
For the 52 weeks ended 2 December 2007 000 Purchase of goodscompany of a close family member of an Executive Director . . . . . . . . . . . . Purchase of professional services Non-Executive Directors . . . . . . . . For the 52 weeks ended 30 November 2008 000 For the 52 weeks ended 29 November 2009 000 For the 12 weeks ended 22 February 2009 (unaudited) 000 For the 12 weeks ended 21 February 2010 000

62 57 119

196 51 247

116 48 164

86 10 96

13 13

All transactions are on an arms length basis and no financial period end balances have arisen as a result of these transactions. At the end of the financial period key management owed the Group 2,000 as at 21 February 2010 (2009: 4,000) (2008: 42,000) (2007: 11,000) in respect of personal expenses incurred on the company credit card that were reimbursed in the normal course of business. These balances were repaid after the financial period end. In 2007 the Chairman owed the Group 100,000 which arose shortly before the period end due to him exercising the right in his contract to purchase 667 Ordinary shares at their market value of 100,000. The purchase price was outstanding at the financial period end but was paid subsequent to the financial period end. There were no other material transactions or balances between the Group and its key management personnel or members of their close family.

153

Part V

Historical Financial Information relating to the Group

Major shareholders Prior to November 2008 John Lewis plc was a 28 per cent. shareholder in Ocado Limited. During that time the Group acquired goods for resale and professional services from affiliates of John Lewis plc and charged affiliates in connection with other services. These transactions and the period end balances arising from these transactions are given below. In November 2008 the John Lewis Partnership Pension Trust Limited acquired from John Lewis plc the investment in Ocado Limited. The John Lewis Partnership Pension Trust Limited is the corporate trustee of the John Lewis Trust for Pensions, of which John Lewis plc is the principal employer, accordingly John Lewis plc and Waitrose no longer meet the criteria of a related party.
For the 52 weeks ended 2 December 2007 000 For the 52 weeks ended 30 November 2008 000

Sales of services John Lewis and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Professional Services Waitrose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John Lewis and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goods for Resale Waitrose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amounts receivable at the period end Waitrose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John Lewis and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amounts payable at the period end Waitrose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John Lewis and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

185 185 1,301 211 35,174 36,686 3,479 418 3,897 5,612 21 5,633

226 226 1,111 231 40,505 41,847

Since 2002 John Lewis plc has acted as guarantor for the obligations of the Group under a lease for the Hatfield site. The maximum liability of John Lewis plc under the guarantee is 6.75m. The Group pays John Lewis plc a fee of 150,000 per annum in consideration for the guarantee being provided in accordance with the terms of an agreement entered into in September 2005. This is included in professional services above. John Lewis plc previously held three financial instruments in the Group, which formed part of the Groups borrowings and details are given in Note 20. An associated entity of S. N. Roditi (who as at 21 February 2010 held 10.4 per cent. of the Companys issued share capital), underwrote Ocados last funding round in September 2009, for which it was paid a fee of 387,500 pursuant to the terms of the agreement dated 1 July 2009 and variation letter dated 20 August 2009. The Apple Trust, of which Jorn Rausing is a beneficiary (who at 21 February 2010 held 13.63 per cent. of the Companys issued share capital), underwrote Ocados last funding round in September 2009, for which it was paid a fee of 387,500 pursuant to the terms of the agreement dated 1 July 2009 and variation letter dated 20 August 2009.

154

Part V

Historical Financial Information relating to the Group

In March 2007 John Lewis plc exercised the option to extend the conversion of the 1.5m (1.6m including capitalised interest) until March 2009 for a premium totalling 122,000. In November 2008 John Lewis plc converted all convertible loan stock (including capitalised and accrued interest to that date) for a total of 251,333 Convertible preference shares. The transactions are given below:
For the 52 weeks ended 2 December 2007 000 For the 52 weeks ended 30 November 2008 000

Convertible loan A loan stock B loan stock C loan stock

stock issued and accrued ................... ................... ...................

interest ...................... ...................... ......................

1,586 12,305 8,613 22,504 63 22,567 46 22,521

Total owed at the beginning of the period . . . . . . . . . . . . . . . . . . . . . . . Interest charged at 4% on A convertible loan stock . . . . . . . . . . . . . . . Total owed at the period end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Split Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capitalised loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment

The following transactions were carried out with Paneltex Ltd, further details of the investment in Paneltex Limited are provided in Note 13 to this historical financial information.
For the 52 weeks ended 2 December 2007 000 For the 52 weeks ended 30 November 2008 000 For the 52 weeks ended 29 November 2009 000 For the 12 weeks ended 22 February 2009 (Unaudited) 000 For the 12 weeks ended 21 February 2010 000

Purchase of goods Plant and machinery . . . . Consumables . . . . . . . . . Total purchase of goods . . . . . Amounts payable at the period end . . . . . . . . . . . . . . . . . .

133 165 298 66

3 160 163 7

289 160 449 19

13 34 47 16

11 27 38 11

155

Part V

Historical Financial Information relating to the Group

32. Analysis of net debt (a) Net debt

As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Notes

Current assets Cash and cash equivalents . . . . . . . Current liabilities Borrowings . . . . . . . . . . . . . . . . . . . Convertible loan stock . . . . . . . . . . . Obligations under finance leases . . . Non current liabilities Borrowings . . . . . . . . . . . . . . . . . . . Convertible loan stock . . . . . . . . . . . Obligations under finance leases . . . Total net debt . . . . . . . . . . . . . . . .

16

10,891 10,891

5,857 5,857 (15,016) (14,506) (9,989) (39,511) (28,429) (53,650) (82,079) (115,733)

13,017 13,017 (12,087) (19,669) (31,756) (42,658) (45,651) (88,309) (107,048)

10,445 10,445 (27,773) (19,314) (47,087) (28,218) (46,266) (74,484) (111,126)

18 18 18

(876) (5,066) (5,942)

18 18 18

(46,345) (33,101) (49,688) (129,134) (124,185)

Net debt is calculated as total debt (finance leases, convertible loan stock and borrowings as shown on the balance sheet), less cash and cash equivalents. (b) Reconciliation of net cash flow to movement in net debt
As at 2 December 2007 000 As at 30 November 2008 000 As at 29 November 2009 000 As at 21 February 2010 000

Notes

Net increase/(decrease) in cash and cash equivalents . . . . . . . . . . . . . Net cash outflow/(inflow) from debt and lease financing . . . . . . . . . . . Non-cash movements: Exercise of convertible loan notes to equity . . . . . . . . . . . . . . . . . . . Fair value movements on convertible loan notes . . . . . . . . . Assets acquired under finance lease . . . . . . . . . . . . . . . . . . . . . Decrease/(increase) in net debt in the period . . . . . . . . . . . . . . . . . Opening net debt . . . . . . . . . . . . . . Closing net debt . . . . . . . . . . . . . . 33. Post balance sheet events

(114) (16,622)

(5,034) (504)

7,160 6,467

(2,572) 1,040

20

(163) (5,335) (22,234) (101,951) (124,185)

22,633 (3,360) (5,283) 8,452 (124,185) (115,733)

60 (176) (4,826) 8,685 (115,733) (107,048)

(2,546) (4,078) (107,048) (111,126)

In March 2010 the Chairman and Non-Executive Directors resigned as Directors of the Ocado Limited. In March 2010 the Chairman and certain of the Non-Executive Directors were appointed to the Board of Ocado Group Limited. In May 2010 the Company repaid a loan of 5m secured over certain warehouse assets, software and intellectual property that was renewable on a month by month basis.

156

Part V

Historical Financial Information relating to the Group

In May 2010 the Company agreed a new loan facility for 7.5m from an existing lender which is repayable over 3 years in equal annual instalments. Interest is charged at LIBOR plus 5%. In addition the Company agreed a new revolving credit facility for 7.5m from the same lender. These facilities are secured over certain warehouse assets, software and intellectual property. In May 2010 the Company signed a new 10 year agreement with Waitrose giving the Company the right to continue to sell Waitrose goods and use Waitrose brands on its website and vans as it has had since 2000. In May 2010 the Company agreed an extension of 3.4m to a credit facility with an existing lender for vehicle finance leasing. In June 2010 the Company agreed a 15m credit facility with a new lender for vehicle finance leasing. On 23 June 2010 Ocado Group Limited re-registered as a public company and changed its name from Ocado Group Limited to Ocado Group plc. On 24 June 2010 Ocado Group plc announced its intention to list on the London Stock Exchange. On 5 July 2010 the Company entered into a facility agreement (the New Facility) between, amongst others, Barclays Bank PLC, HSBC Bank plc and Lloyds TSB Bank plc. The lenders have agreed to make available 100m to the Company under the New Facility. All amounts borrowed under the New Facility shall be applied towards the acquisition of certain land, buildings, fixtures and tangible movable property. The New Facility has an accordion feature which allows for the amount available under it to be increased up to 130m, subject to lenders (existing or additional) agreeing to make available the additional amounts. First utilisation under the New Facility is conditional on certain customary conditions precedent and on Admission.

157

PART VI UNAUDITED PRO FORMA FINANCIAL INFORMATION (A) Unaudited pro forma statement of net assets The unaudited pro forma statement of net assets set out below has been prepared to illustrate the effect of the Offers on the Groups net assets as if the Offers had taken place on 16 May 2010. This unaudited pro forma statement of net assets has been prepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and, therefore, does not represent the Groups actual financial position or results. The unaudited pro forma statement of net assets is compiled on the basis set out below from the IFRS-EU consolidated balance sheet of the Company as at 16 May 2010, as set out in Part VII (Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010). It may not, therefore, give a true picture of the Groups financial position or results nor is it indicative of the results that may, or may not, be expected to be achieved in the future. The pro forma financial information has been prepared on the basis set out in the notes below and in accordance with Annex II to the Prospectus Directive Regulation.
As at 16 May 2010 (Note 1) million Adjustments IPO proceeds (Note 2) million

Unaudited pro forma total (Notes 3 and 4) million

Non current assets Intangible assets . . . . . . . . . . . . Property, plant and equipment . . . Deferred tax asset . . . . . . . . . . . Available-for-sale financial assets

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

7.2 90.5 2.3 0.4 100.4 9.1 15.3 10.0 34.4 134.8 (49.9) (27.6) (19.7) (97.2) (62.9) (27.0) (45.9) (1.1) (0.4) (74.4) (36.9)

200.0 200.0 200.0 1.1 1.1 201.1

7.2 90.5 2.3 0.4 100.4 9.1 15.3 210.0 234.4 334.8 (49.9) (27.6) (19.7) (97.2) (62.9) (27.0) (45.9) (0.4) (73.3) 164.2

Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . Current assets Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current liabilities Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Obligations under finance leases . . . . . . . . . . . . . . . . . . . Net current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current liabilities Borrowings . . . . . . . . . . . . . . . Obligations under finance leases Derivative liability . . . . . . . . . . . Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net (liabilities)/assets . . . . . . . . . . . . . . . . . . . . . . . . . .
(1)

The financial information has been extracted, without material adjustments, from the financial information set out in Part VII (Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010) prepared in accordance with IFRS-EU. IPO proceeds: adjustment to reflect the net proceeds of the Offers receivable by the Group, of 200 million, being gross proceeds (including cash received on the exercise of 5,611,200 warrants on Admission by Ranelagh Nominees Limited at 1.80 per share) of 215 million less estimated fees and expenses of 15 million (exclusive of VAT). The 1.1 million derivative liability as at 16 May 2010 represents the fair value of these warrants which reverses when these warrants are exercised on IPO. This IFRS pro forma statement of net assets does not constitute financial statements within the meaning of section 434 of the Companies Act 2006. The unaudited pro forma statement of net assets does not reflect any trading or other transactions undertaken by the Group since 16 May 2010.

(2)

(3) (4)

158

Part VI

Unaudited Pro Forma Financial Information

(B) Accountants report on unaudited pro forma statement of net assets

PricewaterhouseCoopers LLP 1 Embankment Place London WC2N 6RH

7DEC200517132980

The Directors Ocado Group plc Titan Court 3 Bishops Square Hatfield Business Park Hatfield AL10 9NE Goldman Sachs International Peterborough Court 133 Fleet Street London EC4A 2BB J.P. Morgan Securities Ltd. 125 London Wall London EC2Y 5AJ UBS Limited 1 Finsbury Avenue London EC2M 2PP 6 July 2010 Dear Sirs Ocado Group plc (the Company) We report on the unaudited pro forma statement of net assets (the Pro forma financial information) set out in Part (A) of this Part VI of the Companys prospectus dated 6 July 2010 (the Prospectus) which has been prepared on the basis described in the notes to the Pro forma financial information, for illustrative purposes only, to provide information about how the Offer might have affected the financial information presented on the basis of the accounting policies adopted by the Company in preparing the unaudited financial information for the period ended 16 May 2010. This report is required by item 20.2 of Annex I to the PD Regulation and is given for the purpose of complying with that PD Regulation and for no other purpose. Responsibilities It is the responsibility of the directors of the Company to prepare the Pro forma financial information in accordance with item 20.2 of Annex I to the PD Regulation. It is our responsibility to form an opinion, as required by item 7 of Annex II to the PD Regulation as to the proper compilation of the Pro forma financial information and to report our opinion to you.

PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Services Authority for designated investment business.

159

Part VI

Unaudited Pro Forma Financial Information

In providing this opinion we are not updating or refreshing any reports or opinions previously made by us on any financial information used in the compilation of the Pro forma financial information, nor do we accept responsibility for such reports or opinions beyond that owed to those to whom those reports or opinions were addressed by us at the dates of their issue. Save for any responsibility which we may have to those persons to whom this report is expressly addressed and for any responsibility arising under item 5.5.3R(2)(f) of the Prospectus Rules to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with item 23.1 of Annex I to the PD Regulation, consenting to its inclusion in the Prospectus. Basis of opinion We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. The work that we performed for the purpose of making this report, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Pro forma financial information with the directors of the Company. We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Pro forma financial information has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the Company. Our work has not been carried out in accordance with auditing standards or other standards and practices generally accepted in the United States of America or auditing standards of the Public Company Accounting Oversight Board (United States) and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices. Opinion In our opinion: (A) the Pro forma financial information has been properly compiled on the basis stated; and (B) such basis is consistent with the accounting policies of the Company. Declaration For the purposes of Prospectus Rule 5.5.3 R(2)(f), we are responsible for this report as part of the Prospectus and we declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with Item 1.2 of Annex I to the PD Regulation. Yours faithfully

PricewaterhouseCoopers LLP Chartered Accountants

160

PART VII UNAUDITED INTERIM FINANCIAL INFORMATION RELATING TO THE GROUP FOR THE 24 WEEKS ENDED 16 MAY 2010 Consolidated statement of comprehensive income for the 24 weeks ended 16 May 2010
24 weeks ended 16 May 2010 (unaudited) 000 24 weeks ended 17 May 2009 (unaudited) 000

Notes

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distribution costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating profit before administrative expenses . . . . . . . . . . . Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss for the period attributable to the owners of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss per share Basic and diluted loss per share . . . . . . . . . . . . . . . . . . . . . . . . All operations are continuing. 12 7 7

230,331 (159,662) 70,669 1,887 (58,692) 13,864 (16,590) (2,726) 3 (3,987) (6,710) (6,710) pence (1.68)

178,337 (123,784) 54,553 736 (49,438) 5,851 (13,216) (7,365) 3 (5,313) (12,675) (12,675) pence (3.36)

Non-GAAP measure: Earnings/(loss) before interest taxation, depreciation, amortisation and impairment (EBITDA)

Notes

24 weeks ended 16 May 2010 (unaudited) 000

24 weeks ended 17 May 2009 (unaudited) 000

Loss for the period attributable to the owners of the Company Adjustments for: Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation of property, plant and equipment . . . . . . . . . . . . Amortisation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

... . . . . . . . . . . . . 7 7 9 8

(6,710) (3) 3,987 8,713 2,005 7,992

(12,675) (3) 5,313 8,121 2,091 2,847

Earnings/(loss) before interest taxation, depreciation, amortisation and impairment (EBITDA) . . . . . . . . . . . . . . .

161

Part VII Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010 Consolidated balance sheet as at 16 May 2010
Notes 16 May 2010 (unaudited) 000 29 November 2009 000

Non-current assets Intangible assets . . . . . . . . . . . Property, plant and equipment . Deferred tax asset . . . . . . . . . . Available-for-sale financial asset

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

8 9

7,247 90,466 2,300 395 100,408

6,684 90,252 2,300 395 99,631 9,213 14,740 13,017 36,970 136,601 (47,237) (12,087) (19,669) (78,993) (42,023) (42,658) (45,651) (1,083) (366) (89,758) (32,150) 40 310,836 (343,026) (32,150)

Current assets Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current liabilities Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Obligations under finance leases . . . . . . . . . . . . . . . . . . . . . . . . Net current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current liabilities Borrowings . . . . . . . . . . Obligations under finance Derivative liability . . . . . . Provisions . . . . . . . . . . . ...... leases . ...... ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 10

9,149 15,256 9,965 34,370 134,778 (49,936) (27,564) (19,735) (97,235) (62,865) (27,013) (45,872) (1,126) (430) (74,441) (36,898) 11 11 11 11 8,666 167 (47,741) (116,230) 118,240 (36,898)

10 10

Net liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity Share capital . . . . . . . . . . . . . . . . . . . Share premium account . . . . . . . . . . . Treasury reserve . . . . . . . . . . . . . . . . Reverse acquisition reserve . . . . . . . . Retained earnings/(accumulated deficit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deficit attributable to equity holders . . . . . . . . . . . . . . . . . . .

162

Part VII

Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010

Consolidated statement of changes in equity for the 24 weeks ended 16 May 2010
Share capital 000 Share premium 000 Treasury Reserve 000 Reverse Acquisition Reserve 000 Convertible loan interest reserves 000 Accumulated (deficit)/ surplus 000 Deficit attributable to equity holders 000

Balance at 1 December 2008 . . . . . . . Loss for the period . . . . . . . . . . . . . . Total comprehensive income for the period . . . . . . . . . . . . . . . . . . . . Transactions with owners: Issue of Ordinary shares . . . . . . . . . Transaction costs on issue of Ordinary shares . . . . . . . . . . . . . . . . . . . Issue of Convertible preference shares . Transfer of equity on conversion of loan stock . . . . . . . . . . . . . . . . . . . . Transfer of equity on repayment of loan stock . . . . . . . . . . . . . . . . . . . . Share-based payments charge . . . . . . . . . . . .

38 2 2 40 40

281,649 30,072 (945) 60 29,187 310,836 310,836

1,139 (5) (1,134) (1,139)

(321,034) (23,209) (23,209) 5 1,134 78 1,217 (343,026) (343,026) (6,710) (6,710)

(38,208) (23,209) (23,209) 30,074 (945) 60 78 29,267 (32,150) (32,150) (6,710) (6,710)

Total transactions with owners . . . . . Balance at 29 November 2009 . . . . . . Balance at 30 November 2009 . . . . . . Loss for the period . . . . . . . . . . . . . . Total comprehensive income for the period . . . . . . . . . . . . . . . . . . . . Transactions with owners: Issue of Ordinary shares in Ocado Limited . . . . . . . . . . . . . . . . . . . . Cancellation of Shares in Ocado Limited . Issue of ordinary and convertible preference shares by Ocado Group plc Ocado Group plc capital reduction . . . . Reverse acquisition of Ocado Limited by Ocado Group plc . . . . . . . . . . . . . . Issue of Ordinary shares in Ocado Group plc . . . . . . . . . . . . . . . . . . . . . . . Share-based payments charge . . . . . . . Total transactions with owners . . . . . Balance at 16 May 2010 (unaudited) . .

3 (43) 476,509 (467,846) 3 8,626 8,666

49,443 (360,279) 167 (310,669) 167

(47,741) (47,741) (47,741)

(476,509) 360,279 (116,230) (116,230)

43 467,846 87 467,976 118,240

1,705 170 87 1,962 (36,898)

163

Part VII Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010 Consolidated statement of cash flows for the 24 weeks ended 16 May 2010
24 weeks ended 16 May 2010 (unaudited) 000 24 weeks ended 17 May 2009 (unaudited) 000

Notes

Cash flow from operating activities Loss before income tax . . . . . . . . . . . . . Adjustments for: Depreciation expense . . . . . . . . . . . . Amortisation expense . . . . . . . . . . . . . Provision for dilapidations expense . . . Share-based payments charge . . . . . . Finance costs . . . . . . . . . . . . . . . . . . Finance income . . . . . . . . . . . . . . . . . Changes in working capital: Decrease in inventories . . . . . . . . . . . Increase in trade and other receivables Increase in trade and other payables . .

.................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 8

(6,710) 8,713 2,005 64 87 3,987 (3) 64 (516) 2,722 10,413 (4,300) 6,113 (3,440) (2,568) 3 (6,005) 11 1,875 3,429 (3,597) 2,046 (6,913) (3,160) (3,052) 13,017 9,965

(12,675) 8,121 2,091 34 36 5,313 (3) 1,497 (2,138) 5,051 7,327 (6,768) 559 (8,145) (2,011) 3 (10,153) 50 12,359 (1,077) 6,994 (3,945) 14,381 4,787 5,857 10,644

7 7

.................. .................. ..................

Net cash inflow from operations . . . . . . . . . . . . . . . . . . . . . . . Finance costs paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash inflow from operating activities . . . . . . . . . . . . . . . . Cash flows from investing activities Purchase of property, plant and equipment . . . . . . . . . . . . . . . . . Purchase of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . Finance income received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . Cash flows from financing activities Proceeds from the issue of Ordinary share capital . . Proceeds from borrowings . . . . . . . . . . . . . . . . . . . Repayment of borrowings . . . . . . . . . . . . . . . . . . . Proceeds from asset based financing arrangements . Repayments of obligations under finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash from financing activities . . . . . . . . . . . . . . . . . . . . . . Net (decrease)/increase in cash and cash equivalents . . . . . . . Cash and cash equivalents at beginning of period . . . . . . . . . . . . Cash and cash equivalents at end of period . . . . . . . . . . . . . .

164

Part VII

Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010

Notes to the consolidated interim financial information 1. General information

Ocado Group plc (hereafter the Company) is incorporated and domiciled in the United Kingdom (Registration number 07098618). On 23 June 2010 the Company was re-registered as a public limited company and changed its name to Ocado Group plc. The address of its registered office is Titan Court, 3 Bishops Square, Hatfield Business Park, Hatfield, Hertfordshire, AL10 9NE. The financial information comprises the results of Ocado Group plc and its subsidiaries (hereafter the Group) (see Note 2(b)). The financial information herein does not amount to full statutory accounts within the meaning of Section 434 of the Companies Act 2006. The financial period represents the 24 weeks ending 16 May 2010 (prior period 24 weeks ending 17 May 2009). 2. Basis of preparation and development of Ocado Group plc

(a) Statement of compliance This financial information is the unaudited condensed consolidated interim financial information (hereafter the Interim Financial Information) of the Group. The Interim Financial Information has been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the Annual Report and Financial Statements of Ocado Limited for the 52 weeks ended 29 November 2009 which have been filed with the Registrar of Companies. The auditors report on the financial statements of Ocado Limited for the 52 weeks ended 29 November 2009 was unqualified but included an emphasis of matter relating to going concern on the basis of the uncertainty of the Groups future funding. That uncertainty will be resolved on the receipt by the Company of 200 million of net proceeds from the offers of shares (the Offers) and the Group being able to draw down on the new bank facilities (the New Facility), (see Note 15). (b) Development of Ocado Group plc The Company was incorporated on 8 December 2009 and on 9 February 2010 acquired the entire share capital of Ocado Limited. As a result of this transaction, the ultimate shareholders in Ocado Limited received shares in the Company in direct proportion to their original shareholdings in Ocado Limited. On 23 June 2010 the Company was re-registered as a public limited company and changed its name to Ocado Group plc. Under IFRS 3R Business Combinations, the acquisition of Ocado Limited by the Company has been accounted for as a reverse acquisition and the consolidated IFRS financial information of the Company is therefore a continuation of the financial information of Ocado Limited. As a result any financial information after 9 February 2010 represents consolidated financial information of the Group. Prior to this date the historical financial information represents the financial information of the Companys only operating subsidiary, Ocado Limited (see Note 11). The financial information is presented in sterling, rounded to the nearest thousand (000) unless otherwise stated. It has been prepared under the historical cost convention, except for financial instruments that have been measured at fair value. The financial information has been prepared on the going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The going concern basis relies on the receipt of 200 million of net proceeds from the Offers and the New Facility being available to the Group. 3. Accounting policies

Except as described below, the accounting policies applied are consistent with those of the Annual Report and Financial Statements of Ocado Limited for the 52 week period ending 29 November 2009. Set

165

Part VII Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010 out below are additional accounting policies that did not apply as at 29 November 2009 but apply to this Interim Financial Information. (a) Basis of consolidation The consolidated financial information includes the financial information of all subsidiaries. The financial year ends of all entities in the Group are coterminous. The financial information of subsidiaries are included in the consolidated financial information from the date on which control over the operating and financial decisions is obtained and cease to be consolidated from the date on which control is transferred out of the Group. Control exists when the Company has the power, directly, or indirectly, to govern the financial and operating policies of an entity so as to obtain economic benefits from its activities. On 9 February 2010, the Group, previously headed by Ocado Limited, underwent a re-organisation by virtue of which Ocado Limiteds shareholders in their entirety exchanged their shares for shares in the Company, which was a newly formed company and which then became the ultimate parent company of the Group. Notwithstanding the change in the legal parent of the Group, this transaction has been accounted for a reverse acquisition and the consolidated financial information is prepared on the basis of the new legal parent having been acquired by the existing Group. All inter-company balances and transactions, including recognised gains arising from inter-group transactions, have been eliminated in full. Unrealised losses are eliminated in the same manner as recognised gains except to the extent that they provide evidence of impairment. (b) Foreign currency translation Functional and presentation currency

Items included in the financial information of each of the groups entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial information is presented in sterling, rounded to the nearest thousand (000) unless otherwise stated, which is the Companys functional and the Groups presentation currency. Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within finance income or finance costs. All other foreign exchange gains and losses are presented in the income statement within Operating loss. Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in equity. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale are included in the available-for-sale reserve in equity.

166

Part VII

Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010

Group companies

The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; (b) income and expenses for each income statement are translated at average exchange rates (unless average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and (c) all resulting exchange differences are recognised as a separate component of equity. On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale. (c) Employee benefits Share-based payments Employees (including Directors) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services in exchange for rights over shares (equity-settled transactions).The cost of equity settled transactions with employees is measured by reference to the fair value at the date at which they are granted. Fair value is measured by use of the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on managements best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. In valuing equity-settled transactions, no account is taken of any performance conditions. The Group operates an equity settled employee share option scheme (the Ocado 2001 Executive Share Option Scheme or ESOS) and a Joint Share Ownership Scheme (JSOS). Equity settled share-based transactions:

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the years in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date). The vesting period for the ESOS is three years. If the options remain unexercised after a period of 10 years from the date of grant or the employee leaves the Company, the options expire (subject to a limited number of exceptions). The shares in the JSOS vest in four annual tranches with the first tranche vesting on the first anniversary of the date of grant. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which both the vesting period has expired and the number of awards, in the opinion of the directors of the Company based on the best available estimate at that date that will ultimately vest. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied. Cash settled share-based transactions:

The Group has exposure in respect of cash-settled share-based payment transactions and share-based payment transactions with cash alternatives as defined by IFRS 2 Share-based Payment only in respect of the bad leaver provisions of the JSOS.

167

Part VII Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010 4. Significant accounting policies

The accounting policies applied by the Group in this condensed consolidated interim financial information are consistent with those set out in the Ocado Limited Annual report and financial statements for the 52 weeks ended 29 November 2009. In preparing the condensed consolidated interim financial information, management is required to make accounting assumptions and estimates. The assumptions and estimation methods were consistent with those applied to the Ocado Limited Annual report and financial statements for the 52 weeks ended 29 November 2009. 5. Segmental reporting

IFRS 8 Operating Segments requires that segments should be reported on the same basis as the internal reporting information that is provided to the chief operating decision-maker. The Groups chief operating decision-maker has been identified as the chief executive officer (CEO). The Directors consider there to be one business segment, being that of retailing and distribution of groceries and consumer goods. The Groups main activity is supermarket retailing and the CEOs focus is on the performance and growth of this activity. Internal reports reviewed regularly by the CEO provide information to allow the chief operating decision-maker to allocate resources and make decisions about the operations. The internal reporting focuses on the operations of the Group as a whole and does not identify individual operating segments. Consequently all activities relate to this one segment. 6. Gross sales
24 weeks ended 16 May 2010 (unaudited) 000 24 weeks ended 17 May 2009 (unaudited) 000

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Marketing vouchers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. Finance income and costs

230,331 11,869 3,432 245,632

178,337 8,185 2,597 189,119

24 weeks ended 16 May 2010 (unaudited) 000

24 weeks ended 17 May 2009 (unaudited) 000

Bank interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest payable on bank loans and overdrafts Interest on finance leases . . . . . . . . . . . . . . . Interest on borrowings . . . . . . . . . . . . . . . . . Interest on convertible loan . . . . . . . . . . . . . . Fair value movement in derivative liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 3 (3) (2,084) (1,857) (43) (3,987) (3,984)

3 3 (29) (2,429) (2,506) (347) (2) (5,313) (5,310)

Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

168

Part VII

Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010

8.

Intangible assetsComputer software

16 May 2010 (unaudited) 000 29 November 2009 000

Cost or valuation At beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Internal development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated amortisation At beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Charge for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net book value At end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. Property, plant and equipment
Fixtures, fittings, plant and machinery 000

28,503 470 2,098 31,071 (21,819) (2,005) (23,824) 7,247

24,114 294 4,095 28,503 (17,076) (4,743) (21,819) 6,684

Land and buildings 000

Motor vehicles 000

Total 000

Cost or valuation At 1 December 2008 . . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . At 29 November 2009 . . . . . . . . . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . At 16 May 2010 (unaudited) . . . . . . . . . . . . . . Accumulated depreciation and At 1 December 2008 . . . . . . . . Charge for the period . . . . . . . . Impairment . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . impairment .......... .......... .......... .......... . . . .

30,457 4,944 (66) 35,335 33 35,368 (8,209) (1,511) (92) 66 (9,746) (689) (10,435) 25,589 24,933

107,983 8,896 (4,401) 112,478 3,749 116,227 (49,170) (12,227) (931) 4,401 (57,927) (5,996) (63,923) 54,551 52,304

24,122 4,802 (6,286) 22,638 5,145 (2,389) 25,394 (14,652) (4,127) 6,253 (12,526) (2,028) 2,389 (12,165) 10,112 13,229

162,562 18,642 (10,753) 170,451 8,927 (2,389) 176,989 (72,031) (17,865) (1,023) 10,720 (80,199) (8,713) 2,389 (86,523) 90,252 90,466

At 29 November 2009 . . . . . . . . . . . . . . . . . . Charge for the period . . . . . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . At 16 May 2010 (unaudited) . . . . . . . . . . . . . . Net book value At 29 November 2009 . . . . . . . . . . . . . . . . . . At 16 May 2010 (unaudited) . . . . . . . . . . . . . .

Capital commitments contracted, but not provided for by the Group, amounted to 11,420,000 as at 16 May 2010 (unaudited) (29 November 2009: 5,636,000).

169

Part VII Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010 10. Finance leases and borrowings
16 May 2010 (unaudited) 000 29 November 2009 000

Current liabilities Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Obligations under finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current liabilities Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Obligations under finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total finance leases and borrowings . . . . . . . . . . . . . . . . . . . . . . .

27,564 19,735 47,299 27,013 45,872 72,885 120,184

12,087 19,669 31,756 42,658 45,651 88,309 120,065

(unaudited) 000

Opening amount as at 30 November 2009 . . . . . Proceeds from borrowings . . . . . . . . . . . . . . . . . . Repayment of borrowings . . . . . . . . . . . . . . . . . . Proceeds from asset based financing arrangements Assets acquired under finance lease . . . . . . . . . . . Repayments of obligations under finance leases . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

120,065 3,429 (3,597) 2,046 5,154 (6,913) 120,184

Closing amount as at 16 May 2010 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . .

In January 2010 the Group entered into a loan of 2.9m which is secured on a freehold property. Interest is charged at LIBOR plus 3.5%. It is repayable in fixed quarterly instalments from April 2010 with a final bullet payment in January 2013. 11. Share capital and reserves The movements in the called up share capital are set out below:
Ocado Limited 29 November 2009 Number of shares 000

Authorised Ordinary shares of 1p each . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Convertible preference shares of 1p each . . . . . . . . . . . . . . . . . . . . . . Allotted, called up and fully paid Ordinary shares of 1p each . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Convertible preference shares of 1p each . . . . . . . . . . . . . . . . . . . . . .

3,000,000 3,000,000 6,000,000 1,525,757 2,474,749 4,000,506

30 30 60 15 25 40

170

Part VII

Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010
Ocado Group plc As at 16 May 2010 (unaudited) Number of shares 000

Authorised Ordinary shares of 2p each . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Convertible preference shares of 2p each . . . . . . . . . . . . . . . . . . . . . . Allotted, called up and fully paid Ordinary shares of 2p each . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Convertible preference shares of 2p each . . . . . . . . . . . . . . . . . . . . . . Allotted, called up and fully paid . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Ordinary shares of 2p each held by the Groups employee benefit trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allotted, called up and fully paid, excluding Ordinary shares held by the Groups employee benefit trust . . . . . . . . . . . . . . . . . . . . . . . . . . . .

300,000,000 300,000,000 600,000,000 185,874,125 247,474,900 433,349,025 (32,476,700) 400,872,325

6,000 6,000 12,000 3,717 4,949 8,666

On 9 February 2010 the Company acquired the entire share capital of Ocado Limited. As a result of this transaction, the ultimate shareholders in Ocado Limited received shares in the Company in direct proportion to their original shareholdings in Ocado Limited. Shareholders were issued 100 shares in the Company for every 1 share in Ocado Limited. The shares in the Company have a par value of 2 pence each. Therefore as at 16 May 2010 share capital represents that of the Company. Prior periods presented represent the share capital of Ocado Limited. Convertible preference shares are only convertible in to the same number of Ordinary shares either at the option of the holder or on the occurrence of certain trigger events including a public listing. The Convertible preference shares rank pari passu with Ordinary shares with the exception that on return of assets on a liquidation, reduction of capital or otherwise, the holders of the Convertible preference shares shall be entitled in respect of their preference shares (in proportion to the number of such shares held by each of them) in priority to all other shareholders, to be paid out of the surplus assets of the Company remaining after payment of its liabilities, the subscription price for their preference shares together with a sum equal to any arrear of dividends declared calculated down to the date of the return of assets. The Ordinary Shares held by the EBT Trustee pursuant to the Joint Share Ownership Scheme (JSOS) are treated as treasury shares in the Groups consolidated balance sheet in accordance with IAS 32 Financial instruments: Presentation. These shares have voting rights but these have been waived by the EBT Trustee. The set-up of the JSOS was approved by resolution of the board of Directors on 13 January 2010 and approved by Shareholders by written resolution on 18 February 2010. Awards to the Executive Directors and a select group of senior management were made through the acquisition of 32.5 million Ordinary Shares with an issue price of 1.50 per share, as set out above. The number of allotted, called up and fully paid shares, excluding treasury shares, at the end of each period differs from that used in the loss per share calculation in Note 12 as loss per share is calculated using the weighted average number of ordinary shares and convertible preference shares in issue during the period, excluding treasury shares.

171

Part VII Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010 The movements in the called up share capital and reserves are set out below:
Ordinary shares number Convertible preference shares number Ordinary shares 000 Convertible preference shares 000 Share Treasury premium reserve 000 000 Reverse acquisition reserve 000

Notes

At 29 November 2009 . 1,525,757 2,474,749 Allotted in respect of the employee share option scheme . . . . . . . . . . 6,635 Allotted in respect of the joint share ownership scheme . . . . . . . . . . 11(a) 324,767 Cancellation of Ocado Limited shares . . . . . 11(b) (1,857,159) (2,474,749) Issue of ordinary and convertible preference shares by Ocado Group Limited . . . . . . 185,715,900 247,474,900 Capital reduction by the Company . . . . . . . . . Reverse acquisition of Ocado Limited by the Company . . . . . . . . . 11(c) Allotted in respect of the employee share option scheme . . . . . . . . . . 158,225 Balance at 16 May 2010 (unaudited) . . .
(a) Treasury reserve

15

25

310,836

731

3 (18)

(25)

48,712

(47,741)

204,287 (200,573)

272,222 (267,273)

(476,509)

(360,279)

360,279

3 3,717

4,949

167 167

(47,741)

(116,230)

185,874,125 247,474,900

This reserve arose when the Company issued equity share capital under its Joint Share Ownership Scheme, which are held in trust by the Groups Employee Benefit Trust. The consideration paid is deducted from total shareholders equity and classified as treasury shares on consolidation. (b) Scheme of Arrangement and Capital Reduction On 9 February 2010, pursuant to a Scheme of Arrangement, all of Ocado Limiteds Ordinary and Preference Shares were cancelled. Subsequently, Ocado Limited issued 100 ordinary shares to the Company for 1 and in consideration of the cancellation of Ocado Limiteds Ordinary and Preference Shares, the Company issued 185,715,900 Ordinary Shares and 247,474,900 Preference Shares on the basis of 1:100 Ordinary and Preference Shares for each Ocado Limited Share held. The effect of the Scheme of Arrangement was to replicate the shareholders register of Ocado Limited at the Company level. On 16 February 2010, pursuant to an order of the Court confirming the reduction of capital of the Company, the Companys share capital was reduced by decreasing the nominal value of each Ordinary and Preference Share issued pursuant to the Scheme of Arrangement from 110 pence to 2 pence. This created distributable reserves of 467.8 million. (c) Reverse acquisition reserve As detailed in Notes 2(a) and 2(b) to the Interim Financial Information, the acquisition by the Company of the entire issued share capital of Ocado Limited has been accounted for as a reverse acquisition under IFRS3R. Consequently the previously recognised book values and assets and liabilities have been retained and the consolidated interim financial information have been presented as if the Company had always been the parent company of the Group. The share capital for the period covered by the Interim Financial Information and the comparative periods is stated at the nominal value of the shares issued pursuant to the share swap arrangement. Any difference between the nominal value of these shares and previously reported nominal values of shares and applicable share premium issued by Ocado Limited has been transferred to the reverse acquisition reserve.

12. Loss per share (a) Basic Basic loss per share is calculated by dividing the loss attributable to equity holders by the weighted average number of Ordinary shares and Convertible preference shares in issue during the period excluding Ordinary shares purchased by the Group and held as treasury shares, adjusted to reflect the

172

Part VII

Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010

conversion of the Ordinary shares and the Convertible preference shares from Ocado Limited to the Company on a 1:100 basis on 9 February 2010. The loss for the period is equally attributable to the shareholders of Ordinary shares and Convertible preference share. For more information see Note 11. All operations are continuing for the financial periods presented.
24 weeks ended 16 May 2010 (unaudited) Number (000s) 24 weeks ended 17 May 2009 (unaudited) Number (000s)

Issued Ordinary shares and Convertible preference shares at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effect of share options exercised in the period . . . . . . . . . . . . . . . . . . . . Effect of shares issued in the period . . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted average number of shares at the end of the period . . . . . . . . . .

400,051 510 400,561

000

377,691 28 377,719
000

Loss attributable to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6,710)
pence

(12,675)
pence

Basic loss per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Diluted

(1.68)

(3.36)

Diluted loss per share is calculated by adjusting the weighted average number of Ordinary shares and Convertible preference shares outstanding to assume conversion of all dilutive potential shares, adjusted to reflect the conversion of the Ordinary shares and the Convertible preference shares from Ocado Limited to the Company on a 1:100 basis on 9 February 2010. The Company has three categories of potentially dilutive shares: share options, share held pursuant to the JSOS and warrants. There was no difference in the weighted average number of shares used for basic and diluted loss per share as the effect of all potentially dilutive shares outstanding was anti-dilutive. 13. Related party transactions Key management personnel Only the Executive and Non-Executive Directors are deemed to be key management personnel. It is the Board who have responsibility for planning, directing and controlling the activities of the Group. The key management personal compensation is follows:
24 weeks ended 16 May 2010 (unaudited) 000 24 weeks ended 17 May 2009 (unaudited) 000

Salaries, fees and other short-term employee benefits . . . . . . . . . . . . . . . Pension costsdefined contribution plans . . . . . . . . . . . . . . . . . . . . . . . Equity settled share based payments granted under the joint share ownership scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

635 29 27 664

696 42 738

173

Part VII Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010 Other related party transactions with key management made during the period are as follows:
24 weeks ended 16 May 2010 (unaudited) 000 24 weeks ended 17 May 2009 (unaudited) 000

Purchase of goods company of a close family member of an Executive Director . . . . . . . . . Purchase of professional services Non-Executive Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13 13

86 18 104

All transactions are on an arms length basis and no financial period end balances have arisen as a result of these transactions. At the end of the financial period key management owed the Group 5,000 (unaudited) (17 May 2009: 4,000 (unaudited)) (29 November 2009: 4,000) in respect of personal expenses incurred on the company credit card that were reimbursed in the normal course of business. These balances were repaid after the financial period end. 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. This stake was acquired in June 2001 at a cost of 395,000. Payment for the shares was partly in cash (237,000) and partly in equity (1,975 Convertible preference shares). The Groups 25% interest in Paneltex Limited has not been treated as an associated undertaking as the Company does not have significant influence over Paneltex Limited. The following transactions were carried out with Paneltex Ltd:
24 weeks ended 16 May 2010 (unaudited) 000 24 weeks ended 17 May 2009 (unaudited) 000

Purchase of goods Plant and machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total purchase of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amounts payable at the period end . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11 55 66 15

13 69 82

174

Part VII

Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010

14. Analysis of net debt (a) Net debt

16 May 2010 (unaudited) 000 29 November 2009 000

Current assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current liabilities Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Obligations under finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non current liabilities Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Obligations under finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Reconciliation of net cash flow to movement in net debt
24 weeks ended 16 May 2010 (unaudited) 000

9,965 9,965 (27,564) (19,735) (47,299) (27,013) (45,872) (72,885) (110,219)

13,017 13,017 (12,087) (19,669) (31,756) (42,658) (45,651) (88,309) (107,048)

24 weeks ended 17 May 2009 (unaudited) 000

52 weeks ended 29 November 2009 000

Net increase/(decrease) in cash and cash equivalents . Net cash outflow/(inflow) from debt and lease financing Non-cash movements: Exercise of convertible loan notes to equity . . . . . Fair value movements on convertible loan notes . . Assets acquired under finance lease . . . . . . . . . .

.... .... .... .... ....

(3,052) 5,035 (5,154) (3,171) (107,048) (110,219)

4,787 (14,331) 60 (176) (1,861) (11,521) (115,733) (127,254)

7,160 6,467 60 (176) (4,826) 8,685 (115,733) (107,048)

Decrease/(increase) in net debt in the period . . . . . . . . . Opening net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Closing net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. Events occurring after the reporting period

In May 2010 the Company repaid a loan of 5m secured over certain warehouse assets, software and intellectual property that was renewable on a month by month basis. In May 2010 the Company agreed a new loan facility for 7.5m from an existing lender which is repayable over 3 years in equal annual instalments. Interest is charged at LIBOR plus 5%. In addition the Company agreed a new revolving credit facility for 7.5m from the same lender. These facilities are secured over certain warehouse assets, software and intellectual property. In May 2010 the Company signed a new 10 year agreement with Waitrose giving the Company the right to continue to sell Waitrose goods and use Waitrose brands on its website and vans as it has had since 2000. In May 2010 the Company agreed an extension of 3.4m to a credit facility with an existing lender for vehicle finance leasing. In June 2010 the Company agreed a 15m credit facility with a new lender for vehicle finance leasing.

175

Part VII Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010 In 23 June 2010 Ocado Group Limited re-registered as a public company and changed its name from Ocado Group Limited to Ocado Group plc. The Company continues to operate the same business and operations as it did immediately prior to the implementation of the Scheme. On 24 June 2010 Ocado Group plc announced its intention to list on the London Stock Exchange. On 5 July 2010 the Company entered into a facility agreement (the New Facility) between, amongst others, Barclays Bank PLC, HSBC Bank plc and Lloyds TSB Bank plc. The lenders have agreed to make available 100m to the Company under the New Facility. All amounts borrowed under the New Facility shall be applied towards the acquisition of certain land, buildings, fixtures and tangible movable property. The New Facility has an accordion feature which allows for the amount available under it to be increased up to 130m, subject to lenders (existing or additional) agreeing to make available the additional amounts. First utilisation under the New Facility is conditional on certain customary conditions precedent and on Admission. Principal risks and uncertainties Risk is an inherent part of doing business. The board has overall responsibility for the management of the principal risks and internal control of the Group. The principal risks and uncertainties set out in Ocado Limiteds Annual Report and Financial Statements for the 52 week period ended 29 November 2009 remain the same for this interim financial information. Those risks and uncertainties can be summarised as follows: Business continuity and disaster recovery Reliance on Waitrose Competition Health and safety Fraud Regulatory environment Ongoing financing

Statement of Directors responsibility The Directors confirm that, to the best of their knowledge, this condensed consolidated Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010 has been prepared in accordance with IAS 34 as adopted by the European Union. The Group Interim Financial Information includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R under the Disclosure and Transparency Rules.

176

PART VIII CAPITALISATION AND INDEBTEDNESS STATEMENT The following tables set out the capitalisation and indebtedness of the Group as at 16 May 2010. The information below has been extracted without material adjustment from the unaudited interim financial information for the 24 weeks ended 16 May 2010 included in Part VII (Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010).
Capitalisation and indebtedness(1)(2) million

Current debt Guaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Secured(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unguaranteed/unsecured(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current debt (excluding current portion of the long term debt) Guaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Secured(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unguaranteed/unsecured(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity Share capital . . . . . . . Share premium account Other reserves . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(42.4) (4.9) (47.3) (67.8) (5.1) (72.9) 8.7 0.2 (164.0) 118.2 (36.9)

Total non-current debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total capitalisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) (2) (3)

This statement of indebtedness has been prepared under IFRS using policies which are consistent with those used in preparing the Historical Financial Information of the Group set out in Part V. The Groups debt is shown net of unamortised issue costs. The Groups secured debt includes secured bank loans which are secured over certain warehouse assets, software and intellectual property and certain freehold properties together with its finance leases which are secured on the assets to which they relate. Unguaranteed/unsecured debt relates to the Groups Murabaha facility agreement with the Bank of London and the Middle East plc, the Arlington Properties Development Ltd loan, and its unsecured credit agreement with Premium Credit in relation to the deferral of the payment of its insurance premiums.

(4)

The following table sets out the unaudited net indebtedness of the Group as at 16 May 2010.(1)
million

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current financial debt Current bank debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current portion of non current debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current financial debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current financial debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net current financial indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current financial indebtedness Non-current bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non-current financial debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non current financial indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net financial indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) The Group has no indirect or contingent indebtedness as at 16 May 2010.

11.1 11.1 (1.1) (27.6) (19.7) (48.4) (37.3) (27.0) (45.9) (72.9) (110.2)

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PART IX INFORMATION ABOUT THE OFFERS 1. Reasons for the Offers and use of proceeds

For the reasons for the Offers and the use of proceeds, please see section 5 of Part I (Information about the Company). 2. Summary structure of the Offers

The Offers comprise: the Institutional Offer, being an offer to institutional investors in the UK, the United States, the EU and elsewhere; and the Customer and Employee Offer, being an offer to Eligible Customers and Eligible Employees.

The Customer and Employee Offer will comprise approximately 15 per cent. of the total number of Ordinary Shares comprised in the Offers, although the Company reserves the right to adjust the size depending on actual demand. The Ordinary Shares which are the subject of the Offers comprise: approximately 205 million of New Ordinary Shares to be issued by the Company, raising primary proceeds net of fees and expenses (but including cash received on the exercise of warrants and options) of 200 million. If the Offer Price is set at the mid-point in the Price Range, this will result in approximately 86,273,616 New Ordinary Shares being issued pursuant to the Offers and up to further 10,134,074 New Ordinary Shares potentially to be issued to Selling Optionholders pursuant to the exercise of options or warrants; and up to 155,216,316 Ordinary Shares that may be sold by the Selling Shareholders pursuant to the Offers. This figure also assumes that each Major Selling Shareholder sells the maximum number of Ordinary Shares he has indicated he may sell, each Minor Selling Shareholder sells all of his Ordinary Shares and each Selling Optionholder sells all of the Ordinary Shares which will be issued to him if he exercises all of his options.

If the Company is not able to agree pricing or is unable to raise net proceeds of 200 million, Admission will not occur. The Underwriting and Selling Shareholders Agreements are conditional on Admission. The selling intentions of Major Selling Shareholders are non-binding. That means that although a Major Selling Shareholder may not sell any more Ordinary Shares pursuant to the Offers than noted below, he may decide, in his absolute discretion to sell fewer or none. In addition, the Company has provided a facility through which Minor Selling Shareholders and Selling Optionholders may sell some or all of their Ordinary Shares pursuant to the Offers. However, as at the date of this document, the Company does not know the extent to which such persons will sell any such Ordinary Shares pursuant to the Offers. The number of Existing Shares held and the maximum number each of the Major Selling Shareholders has indicated he may sell is set out below. The total number of Existing Shares held by all Minor Selling Shareholders is shown below. This is the maximum number of Existing Shares which the Minor Selling Shareholders may offer to sell pursuant to the Offers. As at the date of this document, the Company does not know with certainty the extent to which other such persons will sell any or all such Ordinary Shares pursuant to the Offers. However, the Company has received non-binding indications from Minor Selling Shareholders holding 28,861,700 Existing Shares, in aggregate, that they do not intend to sell any Existing Shares pursuant to the Offers. The total number of New Ordinary Shares which may be issued to Selling Optionholders and sold on their behalf pursuant to the Offers is shown below. Subject to the Offer Price being not less than 1.90, Ranelagh Nominees Limited has irrevocably committed to exercise certain warrants held by it provided that it may sell the resulting 5,611,200 New Ordinary Shares issued to it or its nominee pursuant to the Offers. As at the date of this document, the Company does not know whether any other Selling Optionholder will exercise any of his or its exercisable options or warrants, or, if he or it does so, whether any such Selling Optionholder will sell any Ordinary Shares issued as a result pursuant to the Offers.

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Selling Shareholder

Number of Ordinary Shares and Preference Shares held(1)

Maximum number of Ordinary Shares which may be sold(1)

John Lewis Pension Fund, the business address of which is Partnership House, Carlisle Place, London, SW1P 1BX . . . . . . . . UBS Holdings Cayman Limited, the business address of which is UBS House, 227 Elgin Avenue, PO Box 852, Grand Cayman, Cayman Islands(5), (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arthur Seligman as Trustee of the Steiner Trust 2008 Millennium Trust c/o Arthur Seligman, Lennox Paton, P.O. BOX N4875, Nassau, Bahamas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trident Trust Co (BVI) Limited as Trustee of the Jason Gissing Life Settlement II, the business address of which is Trident Chambers, Wickham Cay, P.O. BOX 146, Road Town, Tortola, VG-1110, British Virgin Islands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jonathan Faiman c/o Tempest Capital AG, Schulhausstrasse 12, 8002 Zurich, Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Apollo Nominees Ltd. on behalf of the Minor Selling Shareholders(2), (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Apollo Nominees Ltd. on behalf of the Selling Optionholders(2), (4) . . .
(1) (2) (3)

114,642,300

57,321,150

36,263,500

36,263,500

15,291,200

2,000,000

9,583,400 3,000,000 62,705,242 10,134,074

1,924,100 3,000,000 62,705,242 10,134,074

All Preference Shares in existence will convert into Ordinary Shares immediately before Admission on a one for one basis. Apollo Nominees Ltd.s business address is 1 Finsbury Avenue, London EC2M 2PP. If a Minor Selling Shareholder decides to sell any Ordinary Shares pursuant to the Offers he or it will transfer legal title to (but retain the entire beneficial interest in) his or its Ordinary Shares to Apollo Nominees Ltd. with effect from the date of Admission in order for Apollo Nominees Ltd. to sell such Ordinary Shares on his or its behalf as part of the Offers. Prior to the date of Admission, if a Selling Optionholder (including Ranelagh Nominees Limited) decides to exercise his or its options or warrants and sell the Ordinary Shares issued as a result pursuant to the Offers, such Ordinary Shares will be issued to Apollo Nominees Ltd. with effect from the date of Admission as nominee for such Selling Optionholders in order for Apollo Nominees Ltd. to sell such Ordinary Shares on his or its behalf as part of the Offers. Comprised in the Ordinary Shares that UBS Holdings Cayman Limited may sell are up to 18,131,750 Ordinary Shares that it may sell pursuant to the Over-allotment Arrangements to the extent that they are not sold in the Offers. UBS AG, an affiliate of UBS Holdings Cayman Limited, is a Minor Selling Shareholder. It has stated that it will sell its entire shareholding of 2,980,100 Preference Shares, provided that the Offer Price is set above the lowest point in the Price Range.

(4)

(5) (6)

The Ordinary Shares offered pursuant to the Offers will rank pari passu in all respects with all of the other Ordinary Shares in issue and will carry the right to receive all dividends and other distributions declared, made or paid on the Ordinary Shares after Admission. 3. Price and size of the Offers

The price payable per Ordinary Share under the Institutional Offer and the Customer and is expected to be announced on or around 21 July 2010. The Pricing Statement will be published in printed form and available free of charge at the registered office of the Company and at the offices of the JGCs. In addition, the Pricing Statement will be published in electronic form and available on the Offer Website. It is expected that the Offer Price will be in the range of 200 pence to 275 pence per Ordinary Share but the Offer Price eventually determined may be within, above or below this indicative range. If the Price Range changes prior to announcement of the final Offer Price, the Company would not envisage making an announcement until determination of the Offer Price, unless required to do so by law or regulation. Among the factors which may be considered in determining the Offer Price are the prevailing market conditions, the level and nature of demand for Ordinary Shares under the Offers, the prices bid to acquire Ordinary Shares under the Institutional Offer and the objective of encouraging the development of an orderly after-market in the Ordinary Shares. Accordingly, the Offer Price will not necessarily be the highest price at which all of the Ordinary Shares subject to the Offers could be sold.

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The Ordinary Shares that are the subject of the Offers will together comprise 50 per cent. of the issued share capital of the Company on Admission. This percentage assumes that the Offer Price is at the mid-point of the Price Range, the Company raises 200 million after costs and expenses (but including cash received on the exercise of warrants and options) and each Selling Shareholder sells the maximum number of Existing Shares he or it has indicated he may sell. The percentage is calculated disregarding 32,476,700 Existing Shares issued to the EBT Trustee pursuant to the JSOS. 4. Allocation under the Offers

The allocation of Ordinary Shares between the Institutional Offer and the Customer and Employee Offer will be determined at the Companys discretion, in consultation with the JGCs. A number of factors will be considered in determining the basis of allocation, including the level and nature of demand for Ordinary Shares in the Offers and the objective of encouraging the development of an orderly and liquid aftermarket in the Ordinary Shares. Applicants may be allocated Ordinary Shares having a value which is less than the sum applied for. If applications in respect of the Customer and Employee Offer are greater than the portion of the Offers allocated to the Customer and Employee Offer, the amount an Eligible Customer has offered to invest may be scaled down or balloted or both. Valid applications from Eligible Employees will be allocated in full. The rights attaching to the Ordinary Shares will be uniform in all respects and the Ordinary Shares will form a single class for all purposes. The rights attaching to Ordinary Shares are described in section 5 of Part XIII (Additional Information). 5. Application procedure

5.1 The Institutional Offer The JGCs will solicit bids from prospective institutional investors (in the UK, the US, the EU and elsewhere) to subscribe for or purchase Ordinary Shares in the Institutional Offer. Prospective investors will be required to specify the number of Ordinary Shares which they would be prepared to acquire or subscribe for either at prices specified by them or at the Offer Price eventually determined by the Company. This process is known as book building. Prospective investors will be required to submit bids for Ordinary Shares in the Institutional Offer on 20 July 2010, although this may be extended at the discretion of the JGCs (with the agreement of the Company). 5.2 The Customer and Employee Offer This section should be read in conjunction with the terms and conditions set out in Part X (Terms and Conditions of the Customer and Employee Offer). The Company is offering Eligible Customers and Eligible Employees the opportunity to subscribe for or purchase Ordinary Shares in the Customer and Employee Offer at the Offer Price. Eligible Customers and Eligible Employees who wish to apply for Ordinary Shares in the Customer and Employee Offer should download this document from the Offer Website and read this document and then complete and submit the Customer and Employee Offer Application Form on the Offer Website, together with their payment details as soon as possible. The latest time for receipt of applications in the Customer and Employee Offer is 11.59 p.m. (London time) on 18 July 2010. Applications may not be made by post. Applications for Ordinary Shares must be based on the monetary amount which applicants wish to invest in Ordinary Shares, rather than on a number of Ordinary Shares. The minimum application amount under the Customer and Employee Offer is 500 for Eligible Employees and 1,000 for Eligible Customers. The maximum limit on the monetary amount that any applicant may apply to invest in the Customer and Employee Offer is 12,000. The amount for which an Eligible Customer offers to invest may, however, be scaled down or balloted or both as described above. The basis of allocation for applications will be determined by the Company in consultation with the JGCs. All applications under the Customer and Employee Offer will be made on the terms and conditions of application set out in Part X (Terms and Conditions of the Customer and Employee Offer) and Part XI (Terms and Conditions of the Ocado Share Account). If no part of an application is accepted no amount will be debited from the applicant. If an application is accepted in part, an amount in respect of the

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successful application will be debited from the applicant. If more is debited from an applicant than is required to pay for the Ordinary Shares allocated to that applicant, the excess amount will be returned to the applicant, unless the excess amount is less than 5.00 in which case it will be returned to the Company and donated to charity. Persons under the age of 18 may not apply for Ordinary Shares in the Customer and Employee Offer. Applicants who have any questions about how to complete their Customer and Employee Offer Application Form should visit the Offer Website. If this does not provide the answer to their question, they should contact the Ocado IPO Helpline, the telephone number for which is 0800 141 2954. There will be no charge for calls from UK landlines. Lines are open from 9 a.m. to 5.30 p.m. Monday to Friday except UK bank holidays. The Ocado IPO Helpline cannot provide advice on the merits of an investment in Ordinary Shares nor give any financial, legal or tax advice. All applicants who successfully apply for Ordinary Shares in the Customer and Employee Offer will initially be required to hold their Ordinary Shares in the Ocado Share Account, which the Directors believe to be a convenient way of holding Ordinary Shares. 6. Withdrawal rights

If the Company is required to publish a supplementary prospectus, applicants who have applied to invest in Ordinary Shares in the Offers shall have at least two clear Business Days following the publication of the supplementary prospectus within which to withdraw their application in its entirety. If the application is not withdrawn within the stipulated period, any application for Ordinary Shares in the Offers will remain valid and binding. If a supplementary prospectus is published, applicants will be sent an email notifying them and explaining to them how they may withdraw their applications; such withdrawals will be effected by email only. Details of how to withdraw an application will also be available if a supplementary prospectus is published on the Offer Website or at the offices of the Registrar (Capita Registrars Limited, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU) and the registered office of the Company. Any supplementary prospectus will not be automatically distributed to applicants but will be published on the Offer Website and will be available in printed form free of charge at the registered office of the Company and at the offices of the JGCs. 7. Over-allotment and stabilisation

In connection with the Offers, the Stabilising Manager (or any of its agents) may (but will be under no obligation to), to the extent permitted by law, over-allot or effect other transactions with a view to supporting the market price of the Ordinary Shares at a level higher than that which might otherwise prevail in the open market. The Stabilising Manager is not required to enter into such transactions and such transactions may be effected on any securities market, over-the-counter market, stock exchange or otherwise. Such stabilising transactions, if commenced, may be discontinued at any time and may only be taken during the period beginning on the commencement of conditional dealings of the Ordinary Shares on the London Stock Exchange and ending 30 days thereafter. However, there is no obligation on the Stabilising Manager or any of its agents to effect stabilising transactions and there is no assurance that stabilising transactions will be undertaken. In no event will measures be taken to stabilise the market price of the Ordinary Shares above the Offer Price. Save as required by law or regulation, neither the Stabilising Manager nor any of its agents intends to disclose the extent of any over-allotments or stabilisation transactions under the Offers. In connection with the Offers, the Stabilising Manager may, for stabilisation purposes, over-allot Ordinary Shares up to a maximum of 10 per cent. of the total number of Ordinary Shares comprised in the Offers (assuming no exercise of the Over-allotment Option). The Stabilising Manager will be able to borrow an equivalent number of Ordinary Shares under the Stock Lending Agreement in order, amongst other things to settle over-allotments (if any) at Admission. For the purposes of allowing the Stabilising Manager to redeliver equivalent securities under the Stock Lending Agreement (to the extent that it is unable to do so using Ordinary Shares acquired by it for the purposes of stabilisation), the Stabilising Manager has entered into the Over-allotment Option with UBS Holdings Cayman Limited, pursuant to which it may purchase or nominate purchasers for Ordinary Shares (Over-allotment Shares) up to the lower of

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10 per cent. of the total number of Ordinary Shares comprised in the Offers or up to approximately 18.1 million Ordinary Shares at the Offer Price. The Over-allotment Option may be exercised in whole or in part from time to time and on one or more occasions, upon notice by the Stabilising Manager at any time during the period beginning on the commencement of conditional dealings and ending 30 days thereafter. The Over-allotment Shares made available pursuant to the Over-allotment Option will be sold at the Offer Price on the same terms and conditions as, and will rank pari passu with, the Ordinary Shares, including for all dividends and other distributions declared, made or paid on the Ordinary Shares after Admission and will form a single class for all purposes with the Ordinary Shares. 8. Listing, dealing and settlement

Application will be made to the FSA, in its capacity as the UK Listing Authority, for all of the Ordinary Shares (including the 32,476,700 Ordinary Shares held by the EBT Trustee pursuant to the JSOS) to be admitted to the premium listing segment of the Official List and application will be made to the main market of the London Stock Exchange for those Ordinary Shares to be admitted to trading on the London Stock Exchange. It is expected that admission to the Official List will become effective, and dealings will commence on the London Stock Exchange, on 26 July 2010. Each investor in the Institutional Offer will be required to undertake to pay the Offer Price for the Ordinary Shares sold to it in such manner as shall be directed by the JGCs. Each investor in the Customer and Employee Offer will be required to undertake to pay the amount specified by that investor on its Customer and Employee Offer Application Form or such lesser amount following any scaling back of their application. The Final Articles will permit the holding of Ordinary Shares under the CREST system. CREST is a paperless settlement system allowing securities to be transferred from one persons CREST account to anothers without the need to use share certificates or written instruments of transfer. Application will be made for the Ordinary Shares to be admitted to CREST with effect from Admission. Accordingly, settlement of transactions in the Ordinary Shares following Admission may take place within the CREST system if any Shareholder so wishes. CREST is a voluntary system and holders of Ordinary Shares who wish to receive and retain share certificates will be able to do so. An investor applying for Ordinary Shares in the Institutional Offer may, however, elect to receive shares in uncertificated form if such investor is a system-member (as defined in the CREST Regulations) in relation to CREST. Applicants in the Customer and Employee Offer should note that, except in the circumstances described below, dealings in the Ordinary Shares will commence prior to Share Account Statements being made available online. It is intended that Share Account Statements will be made available online to persons entitled thereto by 4 August 2010. Unless and until Admission occurs the Share Account Statement will be of no value. Settlement of the issue and sale of Ordinary Shares in the Offers is intended to take place on the settlement date, which will be the day of Admission. 9. Underwriting arrangements

The Underwriting and Selling Shareholders Agreements were entered into on 6 July 2010. A full description of them and the Stock Lending Agreement is set out in section 17.4 of Part XIII (Additional Information). 10. Lock-up arrangements Pursuant to the terms of the Underwriting and Selling Shareholders Agreements and certain stand-alone lock-up deeds of the same date, the following arrangements are in place: The Company Pursuant to the Underwriting Agreement, the Company has undertaken with each of the Underwriters that, for a period ending 180 days after the date of the Pricing Statement (the Company Lock-up Period), it will not, and will procure that none of its affiliates (as defined in the Underwriting Agreement) will: directly or indirectly, issue, offer, lend, sell, contract to sell or issue, grant any option, right or warrant to subscribe or purchase or allow any encumbrance (as defined in the Underwriting Agreement) to be

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created over or otherwise dispose of, directly or indirectly, any Ordinary Shares (or any securities convertible into or exchangeable for Ordinary Shares or which carry rights to subscribe or purchase Ordinary Shares) or any interest (within the meaning of section 820 of the Companies Act) in any Ordinary Shares or enter into any transaction with the same economic effect as, or agree to do, any of such things (the Company Lock-up Actions); or publicly announce any intention to do any of such things,

in each case without the prior written consent of the JGCs, on behalf of themselves and the other Underwriters, provided that this undertaking shall not apply in respect of: (i) the issue of New Ordinary Shares pursuant to the Offers; (ii) Ordinary Shares to be issued upon exercise of warrants or options to purchase or subscribe for Ordinary Shares, or upon conversion of securities convertible into Ordinary Shares, in each case, outstanding on the date of the Underwriting Agreement; (iii) shares to be issued to other members of the Group; and (iv) the grant, in accordance with normal practice, or exercise of options from time to time under the Companys share option and incentive schemes in existence on the date of Admission and described in section 11 of Part XIII (Additional Information). For the first 45 days of the Company Lock-up Period, the JGCs may withhold their consent to any of the Company Lock-up Actions at their sole discretion. From day 46 to day 180 (inclusive) of the Company Lock-up Period, the JGCs consent to such Actions shall not be unreasonably withheld or delayed. Directors Pursuant to the Underwriting Agreement, each of the Directors has undertaken with the Underwriters that, for a period ending 365 days after the date of the Underwriting Agreement, he will not, and will procure that none of his connected persons (as defined in the Underwriting Agreement) or persons acting on his or their behalf will: directly or indirectly, offer, lend, sell, contract to sell, grant any option, right or warrant to purchase or allow any encumbrance (as defined in the Underwriting Agreement) to be created over or otherwise dispose of, directly or indirectly, any Ordinary Shares (or any securities convertible into or exchangeable for Ordinary Shares or which carry rights to subscribe or purchase Ordinary Shares) or any interest (within the meaning of section 820 of the Companies Act) in any Ordinary Shares or enter into any transaction with the same economic effect as, or agree to do, any of such things; or deposit any Ordinary Shares (or any securities convertible into or exchangeable for Ordinary Shares or which carry rights to subscribe or purchase Ordinary Shares) in any depositary receipt facility; or publicly announce any intention to do any of such things,

in each case without the prior written consent of the JGCs, on behalf of themselves and the other Underwriters, provided that this undertaking shall not apply in respect of: (i) Ordinary Shares issued to him (or his connected persons) upon the exercise of options to purchase or subscribe for Ordinary Shares outstanding on the date of the Underwriting Agreement; (ii) the exercise of options from time to time under the Companys share option and incentive schemes in existence on the date of Admission and described in section 11 of Part XIII (Additional Information); (iii) the granting of an encumbrance (as defined in the Underwriting Agreement) over the deposit of Ordinary Shares in a margin account (as defined in the Underwriting Agreement) by a Director (or his connected persons) after the date of Admission, provided that, in the event of a margin call or default on the margin account, the Director (or his connected persons) will not settle that margin call or default by selling or permitting the sale of the Ordinary Shares (or otherwise breaching the undertaking described above); (iv) Ordinary Shares sold by such Director (or his connected persons) in the Offers (or as otherwise agreed by the JGCs); and (v) Ordinary Shares purchased in the market by a Director (or his connected persons) after Admission. These undertakings do not prohibit the Directors, or any of their connected persons (as defined in the Underwriting Agreement), from: accepting a general offer (a Take-over Offer) made to all the holders of the issued and allotted shares of the Company for the time being (other than shares held or contracted to be acquired by the offeror or its associates within the meaning of section 988 of the Companies Act) made in

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accordance with the City Code on Takeovers and Mergers on terms which treat all such holder alike and which has: (i) become or been declared unconditional in all respects; or

(ii) been recommended for acceptance by the directors for the time being of the Company; executing and delivering an irrevocable commitment or undertaking to accept a Take-over Offer (without any further agreement to transfer or dispose of any shares in the Company or any interest therein); selling or otherwise disposing of Ordinary Shares pursuant to any offer by the Company to purchase its own Ordinary Shares which is made on identical terms to all holders of Ordinary Shares in the Company; transferring or disposing of Ordinary Shares pursuant to a scheme of reconstruction under section 110 of the Insolvency Act 1986 or pursuant to a compromise or arrangement between the Company and its creditors or any class of them or between the Company and its members or any class of them which is agreed to by the creditors or members and (where required) sanctioned by the court under Part 26 of the Companies Act; taking up or disposing of any rights granted in respect of a rights issue or other pre-emptive share offering by the Company; voting on (and any disposal directly or indirectly arising in respect of) a scheme of arrangement or analogous procedure in respect of the Ordinary Share capital of the Company; disposing of Ordinary Shares in accordance with any order made by a court of competent jurisdiction or required by law or to or by personal representatives of a Director who dies; or effecting any transfer to any connected person (as defined in section 252 of the Companies Act on the basis that this exception shall apply to the connected person of a Director as if he were a director) of the relevant Director (or his connected persons), provided that in each case prior to making such transfer, the relevant transferee gives an undertaking to the Underwriters on substantially the same terms to that described above.

Selling Shareholders Pursuant to the Selling Shareholders Agreement, each of the Major Selling Shareholders has severally undertaken with the Underwriters that, for a period ending 180 days after the date of the Selling Shareholders Agreement, he or it will not, and will procure that none of his or its connected persons (as defined in the Selling Shareholders Agreement) or persons acting on his, its or their behalf will: directly or indirectly, offer, lend, sell, contract to sell, or grant any option, right or warrant to purchase or allow any encumbrance (as defined in the Selling Shareholders Agreement) to be created over or otherwise dispose of, directly or indirectly, any Ordinary Shares (or any securities convertible into or exchangeable for Ordinary Shares or which carry rights to subscribe or purchase Ordinary Shares) or any interest (within the meaning of section 820 of the Companies Act) in any Ordinary Shares or enter into any transaction with the same economic effect as, or agree to do, any of such things; or deposit any Ordinary Shares (or any securities convertible into or exchangeable for Ordinary Shares or which carry rights to subscribe or purchase Ordinary Shares) in any depositary receipt facility; or publicly announce any intention to do any of such things,

in each case without the prior written consent of the JGCs, on behalf of themselves and the other Underwriters, provided that this undertaking shall not apply in respect of: (i) Ordinary Shares issued a Major Selling Shareholder (or his or its connected persons) upon the exercise of options to purchase or subscribe for Ordinary Shares outstanding on the date of the Selling Shareholders Agreement; (ii) the exercise of options from time to time under the Companys share option and incentive schemes in existence on the date of Admission and described section 11 of Part XIII (Additional Information); (iii) the granting of an encumbrance (as defined in the Selling Shareholders Agreement) over the deposit of Ordinary Shares in a margin account (as defined in the Selling Shareholders Agreement) by a Selling Shareholder (or his connected persons) after the date of Admission, provided that, in the event of a

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margin call or default on the margin account, the Selling Shareholder (or his connected persons) will not settle that margin call or default by selling or permitting the sale of the Ordinary Shares (or otherwise breaching the undertaking described above); (iv) Ordinary Shares sold by a Major Selling Shareholder (or his or its connected persons) in the Offers and/or under the Over-allotment Arrangements (or as otherwise agreed by the JGCs); and (v) Ordinary Shares purchased in the market by a Major Selling Shareholder (or his or its connected persons) after Admission (other than any Ordinary Shares purchased pursuant to the Over-allotment Arrangements). These undertakings do not prohibit the Lock-up Selling Shareholders, or any of their connected persons (as defined in the Selling Shareholders Agreement), from: accepting a Take-over Offer; executing and delivering an irrevocable commitment or undertaking to accept a Take-over Offer; selling or otherwise disposing of Ordinary Shares pursuant to any offer by the Company to purchase its own Ordinary Shares which is made on identical terms to all holders of Ordinary Shares in the Company; transferring or disposing of Ordinary Shares pursuant to a scheme of reconstruction under section 110 of the Insolvency Act 1986 or pursuant to a compromise or arrangement between the Company and its creditors or any class of them or between the Company and its members or any class of them which is agreed to by the creditors or members and (where required) sanctioned by the court under Part 26 of the Companies Act; taking up or disposing of any rights granted in respect of a rights issue or other pre-emptive share offering by the Company; voting on (and any disposal directly or indirectly arising in respect of) a scheme of arrangement or analogous procedure in respect of the Ordinary Share capital of the Company; disposing of Ordinary Shares in accordance with any order made by a court of competent jurisdiction or required by law or to or by personal representatives of a Lock-up Selling Shareholder who dies; or effecting any transfer of Ordinary Shares to any person with whom the Major Selling Shareholder (or his connected persons) is connected (the question of whether any such person is so connected falling to be determined for this purpose in accordance with the provisions of section 839 of the Income and Corporation Taxes Act 1988 and/or section 252 of the Companies Act and, in the latter case, on the basis this exception shall apply to each Major Selling Shareholder (or his or its connected persons) as if he (or it) were a director) or any transfer of Ordinary Shares in which only legal, but not the beneficial, interest in the Ordinary Shares is transferred, provided that, in each case, prior to any such transfer, the relevant transferee has given an undertaking to the Underwriters on substantially the same terms to that described above.

Other Shareholders Pursuant to certain stand-alone lock-up deeds entered into on the same date as the Selling Shareholders Agreement, Spencer Nicholas Roditi, the Apple Trust, Mingulay Holdings Limited, Rovida Holdings Limited, Sayro Ventures Limited and Trident Nominees (Guernsey) Limited and certain other persons who have, or may come to have, interests in Ordinary Shares, who together hold (as at 5 July 2010, the latest practicable date prior to the publication of this document) approximately 37 per cent. of the issued share capital of the Company, have each given undertakings in favour of the Company and the Underwriters on identical terms to those given by the Lock-up Selling Shareholders and which are subject to the same exceptions. 11. Costs and expenses The total costs and expenses of, and incidental to, the Offers which are to be borne by the Company are estimated to amount to 15 million (excluding any amounts in respect of VAT) (assuming the Company pays the discretionary part of the Underwriters commission referred to in section 17.4 of Part XIII (Additional Information) and the discretionary elements of its other advisers fees). Each Selling Shareholder will bear the amount of any stamp duty or SDRT chargeable on the sale of his Ordinary Shares and his pro rata share of any selling commissions.

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Part IX

Information about the Offers

12. Employee share schemes Eligible Employees will also be entitled to participate in the Customer and Employee Offer irrespective of their participation in any of the employee share schemes operated by the Group. 13. Holding and dealing in Ordinary Shares It is a condition of participating in the Customer and Employee Offer that all successful applicants agree, on allocation, to hold their Ordinary Shares in the Ocado Share Account. The Ocado Share Account, a Company-sponsored nominee arrangement, provides a convenient way of holding Ordinary Shares, which removes the need to have a share certificate which has to be kept safe and secure. In addition, individuals names will not appear on the Companys shareholder register, which is a public register, so their details remain confidential. Instead, the Ordinary Shares will be held on behalf of those individuals in the name of the Share Nominee. The Ocado Share Account has been set up exclusively for persons who hold Ordinary Shares in the Company and hold those Ordinary Shares electronically in a system managed and administered by the Registrar. Persons holding Ordinary Shares in the Ocado Share Account: have the right to receive the annual and other financial information that is sent to the shareholders of any company should they wish to receive it, and are entitled to attend, speak and vote on a show of hands and on a poll at general meetings of the Company; will receive Share Account Statements showing the number of Ordinary Shares held on the anniversary of them becoming a member and each anniversary thereafter; and are entitled to leave the Ocado Share Account at any time and obtain a share certificate instead or have their Ordinary Shares transferred into another nominee arrangement or deposit account. However, there will be an administration charge for removing Ordinary Shares from the Ocado Share Account. Share Account Statements are valuable documents and should be looked after carefully. If a Share Account Statement or share certificate is lost, damaged or defaced, a charge may be made for its replacement.

14. Interests of the Underwriters in the Offers Certain of the Underwriters have the following interests in the Offers: Goldman Sachs International holds 870,300 Ordinary Shares and 3,333,300 Preference Shares; Michael Sherwood, who is Co-Chief Executive of Goldman Sachs International, holds 166,700 Preference Shares; UBS Holdings Cayman Limited, an affiliate of UBS Limited holds 13,600 Ordinary Shares and 36,249,900 Preference Shares. UBS Holdings Cayman Limited has provided a non-binding indication that it may sell up to its entire holding pursuant to the Offers and the Over-allotment Arrangements, (it being the provider of the Over-allotment Option); UBS AG, an affiliate of UBS Limited, holds 2,980,100 Preference Shares. Subject to the Offer Price being set not lower than the bottom of the Price Range, UBS AG has committed to sell its entire holding pursuant to the Offers; Ranelagh Nominees Limited, an affiliate of Lloyds TSB Bank plc, holds warrants over 5,611,200 Ordinary Shares. Subject to the Offer Price being not less than 1.90, it has irrevocably committed to exercise prior to Admission provided that it may sell the resulting 5,611,200 New Ordinary Shares issued to it or its nominee pursuant to the Offers; and Lloyds TSB Bank plc holds 17,800 Preference Shares which it may sell pursuant to the Offers.

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PART X TERMS AND CONDITIONS OF THE CUSTOMER AND EMPLOYEE OFFER This Part X contains the terms and conditions of the Customer and Employee Offer, pursuant to which terms Eligible Employees and Eligible Customers may apply to buy Ordinary Shares in the Customer and Employee Offer. Introduction 1. For the purposes of these terms and conditions only, references to you are to the person applying online to buy Ordinary Shares in the Customer and Employee Offer using the Customer and Employee Offer Application Form. If you apply for Ordinary Shares in the Customer and Employee Offer you will be agreeing with the Company, the Directors, the Banks and the Receiving Agent to the terms and conditions set out below.

2.

Offer to purchase Ordinary Shares 3. Applications must be made online on a Customer and Employee Offer Application Form. By completing and submitting a Customer and Employee Offer Application Form, you, as the applicant: a. offer to acquire at the Offer Price the maximum number of Ordinary Shares (rounded down to the nearest whole Ordinary Share) that may be acquired with the amount that you have specified in your Customer and Employee Offer Application Form as the amount which you wish to invest (or any smaller amount in respect of which your application to acquire Ordinary Shares in the Customer and Employee Offer is accepted), subject to the provisions of the Prospectus, these terms and conditions, the terms of the Customer and Employee Offer Application Form, the Pricing Statement, any supplementary prospectus and the Final Articles; agree that your application to acquire Ordinary Shares in the Customer and Employee Offer must be for a minimum investment in Ordinary Shares of 500 (if you are an Eligible Employee) or 1,000 (if you are an Eligible Customer) at the Offer Price and for a maximum investment in Ordinary Shares of 12,000 at the Offer Price; agree that there is no minimum allocation of Ordinary Shares for Eligible Customers in the Customer and Employee Offer and that, in the event your application is scaled back, you may not receive the full value of Ordinary Shares you applied to invest in and you may receive no Ordinary Shares; agree that the Ordinary Shares allocated to you will be held in the Ocado Share Account and you authorise the Company to send you a statement of entitlement by email, at your risk, to your email address as set out in the Customer and Employee Offer Application Form submitted by you online and to ensure that the Share Nominee, as nominee for you, is placed on the register of members of the Company in respect of the Ordinary Shares for which your application is accepted; in consideration of the Company, the Directors, the Banks and the Receiving Agent agreeing that they will not, prior to the date of Admission (or such later date as the Company and the JGCs may agree), sell to any person or assist in the sale to any person of any of the Ordinary Shares comprised in the Offers other than by means of the procedures referred to in the Prospectus and as a collateral contract between you, the Company, the Directors, the Banks and the Receiving Agent which will become binding on you on the online submission by you of your Customer and Employee Offer Application Form, you: i. agree that, subject to any statutory rights of withdrawal, your application may not be revoked or withdrawn by you until after 31 August 2010 in the event that Admission has not taken place by that date; undertake to pay the Offer Price for the Ordinary Shares (which is payable in full and shall be debited from your bank account via your debit card when requested by the Company) in respect of which your application is accepted and acknowledge and agree that such

b.

c.

d.

e.

ii.

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Terms and Conditions of the Customer and Employee Offer amount may be debited from your bank account up to 4 Business Days before the Ordinary Shares allocated to you are credited to the Ocado Share Account; iii. warrant that your payment, the details of which you will provide on your Customer and Employee Offer Application Form, will be honoured on first presentation and agree that, if such remittance is not so honoured, notwithstanding that the Share Nominee may have been entered on the register of members of the Company (as nominee for you) made available online, neither you nor the Share Nominee will be entitled to a Share Account Statement in respect of the Ordinary Shares applied for or to enjoy or receive any rights, dividend, distribution or other payment in respect of such Ordinary Shares unless and until you make payment in cleared funds for such Ordinary Shares and such payment is accepted by the Receiving Agent (which acceptance shall be in its absolute discretion and on the basis that you indemnify the Company, the Directors, the Receiving Agent and the JGCs and each other Bank against all costs, damages, losses, expenses and liabilities arising out of, or in connection with, the failure of your remittance to be honoured on first presentation); agree that, at any time prior to unconditional acceptance by the Receiving Agent of such late payment pursuant to sub-paragraph 3(e)(iii) above, the Receiving Agent may (on behalf of the Company, the Directors and the Banks and without prejudice to any other rights) terminate the agreement (if any) to allocate such Ordinary Shares to the Share Nominee (as nominee for you) without liability to you and may reallocate the Ordinary Shares to some other person, in which case you will not be entitled to any refund or payment in respect of such Ordinary Shares and, in the event of termination, any Ordinary Shares which have been issued to you will be sold as soon as is reasonably practicable (and for which purpose you hereby irrevocably authorise the Company, or any person appointed by it for this purpose, to execute on your behalf any instrument of transfer which may be necessary to effect such sale) and consent to the proceeds of such sale being paid to and retained by the Company and you will pay the Receiving Agent (on behalf of itself, the Company, the Directors and the JGCs (on behalf of themselves and the other Banks)), on demand, such amount as may be necessary to compensate the Receiving Agent, the Company, the Directors and the JGCs (on behalf of themselves and the other Banks) for any losses, costs and expenses incurred or expected to be incurred as a result of the remittance not being honoured on first presentation or as a result of termination of the agreement. Any decision by the Receiving Agent to accept payment shall be without prejudice to the decision of the Company to accept the whole or any part of your application as described in paragraph 8 below; agree that any Share Account Statement to which you may become entitled may not be made available online pending clearance of your remittance or pending investigation of any suspected breach of any of the warranties contained in paragraph 13 below; agree, on request by any of the Receiving Agent, the Company, the Directors and the JGCs on behalf of themselves and the other Banks, to disclose promptly in writing to such requesting person such information as they may request in connection with your application and authorise the Receiving Agent, the Company, the Directors and the JGCs to disclose any information relating to your application which they may consider appropriate;

iv.

v.

vi.

vii. agree that any Share Account Statement in respect of any Ordinary Shares to which the Share Nominee may become entitled may not be made available online pending clearance of your remittance, investigation of any suspected breach of these terms and conditions and any verification of identity which is, or which the Receiving Agent, the Company or the JGCs on behalf of themselves and the other Banks consider may be, required for the purposes of the Money Laundering Regulations 2007; viii. agree that, if evidence of identity satisfactory to the Company, the Directors, the JGCs on behalf of themselves and the other Banks and the Receiving Agent is not provided to the Receiving Agent on or before 11.59 p.m. (London time) on 18 July 2010 (or such later date as the Company and the JGCs (on behalf of themselves and the other Banks) may agree),

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Terms and Conditions of the Customer and Employee Offer

the Company, the Directors, the Receiving Agent or the JGCs (on behalf of themselves and the other Banks) may terminate your contract of allocation and, in such case, an amount may be debited from your bank account via your debit card by the Company (or its agents) as compensation for breach of contract and you agree that, in such event, you will have no claim against any Bank, the Receiving Agent, the Directors, the Company or any of their respective officers, agents or employees in respect of the amount so debited by the Company (or its agents) or otherwise in connection therewith; ix. agree that your Customer and Employee Offer Application Form is addressed to the Company, the Directors, the Receiving Agent and the JGCs (on behalf of themselves and the other Banks); agree that you are not engaged in nor applying on behalf of a person engaged in, or whom you know or have reason to believe is engaged in, money laundering; agree that any future communications sent by the Company to you in your capacity as a shareholder of the Company will be in the English language and in electronic form to the email address supplied in your application. Your consent to receiving all communications in electronic form may be revoked at any time and will not affect your right to receive a document or information in hard copy in accordance with section 1145 of the Companies Act;

x. xi.

xii. agree that the Company has absolute discretion in determining whether or not you qualify as an Eligible Customer or an Eligible Employee, as the case may be; xiii. agree that the Company, the Directors and the JGCs (on behalf of themselves and the other Banks) reserve jointly the right to alter any arrangements in connection with the Customer and Employee Offer (including the timetable and terms and conditions of application); and xiv. agree that the contract arising from acceptance of all or part of your application under the Customer and Employee Offer will be, or will be deemed to be, entered into by you, the Company, the Directors, the Banks and the Receiving Agent on these terms and conditions (subject to paragraph 3(xii) above) and that any changes, additions or alterations made by you will have no effect. 4. If your Customer and Employee Offer Application Form is not completed correctly or is submitted after 11.59 p.m. (London time) on 18 July 2010, or if the payment details supplied with it are incorrect or invalid, it is liable to be rejected. In these circumstances, the Companys decision whether to reject or treat your application as valid shall be final and binding on you. None of the Company, the Directors, the Banks, the Receiving Agent nor any of their respective officers, agents or employees will accept any liability for any such decision and no claim will be made against any such persons in respect of your non-receipt of Ordinary Shares, or for any loss resulting from the above. Any application may be rejected in whole or in part by the Company in its absolute discretion. The Company and its agents reserve the right to treat as valid any application not complying fully with these terms and conditions or not in all respects completed and submitted in accordance with the instructions on the Customer and Employee Offer Application Form. The Company and its agents reserve the right to waive in whole or in part any of the provisions of these terms and conditions, either generally or in respect of one or more applications. In these circumstances, the decision of the Company as to whether to treat the application as valid and how to construe, amend or complete it shall be final. You will not, however, be treated as having offered to invest a higher amount than is indicated in your Customer and Employee Offer Application Form.

5. 6.

Acceptance of your offer 7. The Company may accept your application if your application is submitted and validated (or treated as valid, processed and not rejected) either: a. by notifying, publishing or announcing the final Offer Price, size of the Offers and the basis of allocation (in which case the acceptance will be on that basis); or

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Part X b. 8.

Terms and Conditions of the Customer and Employee Offer by notifying acceptance to the Receiving Agent.

The acceptance may (at the absolute discretion of the Company, in consultation with the JGCs (on behalf of themselves and the other Banks)) be of the whole or any part of your application and the amount you have offered to invest may be scaled down or balloted or both if you are an Eligible Customer. Valid applications from Eligible Employees will be allocated in full. The basis of allocation for applications from Eligible Customers will be determined by the Company, in consultation with the JGCs (on behalf of themselves and the other Banks). The Company, in consultation with the JGCs (on behalf of themselves and the other Banks) reserves the right to scale down or ballot (or both) applications from Eligible Customers as it, in its absolute discretion, considers appropriate. Accordingly, if you are an Eligible Customer you may not receive the full value of Ordinary Shares you applied to invest in and you may receive no Ordinary Shares.

Condition 9. The contract arising from acceptance of applications (in whole or in part) in the Customer and Employee Offer will be entered into by you (if you are a successful applicant) and the Company. Under this contract, you will be required to acquire the Ordinary Shares at the Offer Price. This contract will be conditional upon the Underwriting and Selling Shareholder Agreements becoming wholly unconditional and not having been terminated before Admission, and Admission becoming effective on or before 31 August 2010 (or such later date as the Company and the Receiving Agent may agree with the JGCs (on behalf of themselves and the other Banks).

10. Subject to applicable law, you will not be entitled to exercise any remedy of rescission for innocent misrepresentation (including pre-contractual representations) at any time after acceptance. This does not affect any other rights you may have, including, for the avoidance of doubt, any statutory withdrawal rights. Return of application monies 11. In the event of a high volume of applications and before allocations are announced, the Receiving Agent may debit from your bank account via your debit card an amount up to the full amount that you have specified in your Customer and Employee Offer Application Form. In such circumstances, if any application is not accepted in whole or is accepted in part only or if any contract created by acceptance does not become unconditional, your bank account will be refunded via your debit card. In the meantime, application monies will be retained by the Receiving Agent in an account designated for the purpose of the Customer and Employee Offer to which no interest is credited. The proceeds of this payment will be held pending acceptance and, if the application is accepted and the conditions of the Customer and Employee Offer as set out in paragraphs 9 and 10 above are satisfied, will be applied in discharging the total amount due for the Ordinary Shares allocated to you. No fractional entitlements to Ordinary Shares will be allocated and refunds will not be made for amounts below 5, and any such amounts shall be donated to a charity or charities of the Companys choice. Applications 12. The number of Ordinary Shares to be allocated in the Customer and Employee Offer will be at the absolute discretion of the Company in consultation with the JGCs (on behalf of themselves and the other Banks). The Company has absolute discretion to decide in any individual case whether the conditions of eligibility for the Customer and Employee Offer have been satisfied. To participate in the Customer and Employee Offer, individuals must complete a Customer and Employee Offer Application Form online. No person may apply jointly with others in the Customer and Employee Offer.

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Part X Warranties

Terms and Conditions of the Customer and Employee Offer

13. By completing and submitting a Customer and Employee Offer Application Form, you: a. confirm that, in making an application, you are not making the application on behalf of any other person and you are not relying on any information or representation other than as is contained in the Prospectus, the Pricing Statement and any supplementary prospectus; agree that none of the Company, the Banks, the Receiving Agent, any Selling Shareholder, the Directors or any employee of or person acting on behalf of them or any person responsible solely or jointly for the Prospectus, the Pricing Statement and/or any supplementary prospectus, or any part of any of them, shall have any liability for any such information or representation (excluding for fraudulent misrepresentation); agree that you have read and understood the Prospectus and you agree to be bound by these terms and conditions and the terms and conditions of your Customer and Employee Offer Application Form; acknowledge that any investment decision you take in relation to the Ordinary Shares should be based on consideration of the Prospectus; agree that, having had the opportunity to obtain and read the Prospectus, the Pricing Statement and any supplementary prospectus, you shall be deemed to have noted all information and representations (including all matters identified in the Risk Factors section of the Prospectus) contained in the Prospectus, the Pricing Statement and/or any supplementary prospectus; agree that no person is authorised in connection with the Offers to give any information or make any representation other than as contained in the Prospectus, the Pricing Statement and any supplementary prospectus and, if given or made, any information or representation must not be relied upon as having been authorised by the Banks, the Company, the Directors or any other person; agree to the fullest extent permitted by applicable law that you waive any right you may have under any law or regulation, other than English law or regulation, to bring an action or claim in any jurisdiction, other than in England, against any person in relation to any and all information, representations, statements or omissions contained in the Prospectus, Pricing Statement and/or any supplementary prospectus or in relation to your application in this Customer and Employee Offer; confirm that you have reviewed the restrictions contained in paragraph 15 below and warrant, to the extent relevant, that you comply or have complied with the provisions of that paragraph below; warrant that you are not a person who is under 18 on the date of your application; agree that all documents in connection with the Customer and Employee Offer may be sent to you by post or email (at the Companys absolute discretion) at your postal or email address set out in your Customer and Employee Offer Application Form and that any such documents will be sent at your own risk; warrant that (i) you are eligible to participate in the Customer and Employee Offer as an Eligible Customer resident in the UK or an Eligible Employee resident in the UK or the Republic of Ireland and (ii), subject as hereinafter provided, the Customer and Employee Offer Application Form is completed and submitted online solely for and on behalf of the applicant and not directly or indirectly, in whole or in part, for or on behalf of any other person; warrant and undertake that you are not applying as, or as nominee or agent for, a person who is or may be a person mentioned in any of sections 67, 70, 93 or 96 of the Finance Act 1986 (concerning depositary receipts and clearance services);

b.

c.

d. e.

f.

g.

h.

i. j.

k.

l.

m. warrant that you are not a person or other entity in the United States and that the Customer and Employee Offer was not made to you (or persons for whom you are acting on a non-discretionary basis) in or into the United States whether through viewing the Offer Website

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Part X

Terms and Conditions of the Customer and Employee Offer from the United States or by the receipt of an email regarding the Customer and Employee Offer, the Prospectus or any related offering documents in the United States or otherwise, and that you are offering to acquire Ordinary Shares in the Customer and Employee Offer from outside the United States and not for the account or benefit, on a non-discretionary basis, of a person in the United States or with a view to the offer, sale or delivery, directly or indirectly, of the Ordinary Shares to any person in the United States;

n. o.

warrant and undertake that you are not engaged in nor applying on behalf of a person engaged in, or whom you know or have reason to believe is engaged in, money laundering; and agree that any material downloaded from the Offer Website, in relation to the Customer and Employee Offer, is done at your own risk and that you will be solely responsible for any damage or loss of data that results from the download of any material.

Money laundering 14. You agree that, in order to ensure compliance with any applicable money laundering regulations (including, without limitation, the Money Laundering Regulations 2007), the Receiving Agent may, at its absolute discretion, require verification of identity from any person completing a Customer and Employee Offer Application Form. Failure to provide the necessary evidence of identity may result in application(s) being rejected or delays in the despatch of documents. Overseas investors 15. No person (other than an Eligible Employee resident in the Republic of Ireland) receiving a copy of the Prospectus or accessing the Offer Website in any territory outside the UK may treat the same as constituting an invitation or offer to him nor should he in any event apply online using the Customer and Employee Offer Application Form. None of the contents of the Offer Website or the Prospectus has been submitted to the clearance procedures of any authorities other than the UK Listing Authority, as the competent authority in the UK. Any application made by an Eligible Customer outside the UK will be rejected. Any application made by an Eligible Employee outside the UK or the Republic of Ireland will be rejected. General 16. To the fullest extent permitted by law, any liability for representations, warranties and conditions, express or implied and whether statutory or otherwise (including, without limitation, precontractual representations but excluding any fraudulent misrepresentations) are expressly excluded in relation to the Ordinary Shares and the Offers, by the Company, the Directors, each Selling Shareholder, the Banks and the Receiving Agent. 17. Save where otherwise stated or where the context otherwise requires, terms used in these terms and conditions are as defined in the Prospectus (as supplemented by any supplementary prospectus issued by the Company in relation to the Offers and the Pricing Statement). 18. The rights and remedies of the Company, the Directors, the Selling Shareholders, the Receiving Agent and the Banks under these terms and conditions are in addition to any rights and remedies which would otherwise be available to any of them, and the exercise or partial exercise of any one will not prevent the exercise of others or full exercise. 19. The Company (with the consent of the JGCs (on behalf of themselves and the other Banks)) reserves the right to delay the closing time of the Customer and Employee Offer from 11.59 p.m. (London time) on 18 July 2010 by giving notice through a Regulatory Information Service. In this event, the revised closing time will be published in such manner as the Company in its absolute discretion determines subject, and having regard, to the requirements of the UK Listing Authority. 20. The Company may terminate the Offers without any obligation to you whatsoever at any time prior to Admission. If such right is exercised, the Offers will lapse and no money will be debited from your account.

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Terms and Conditions of the Customer and Employee Offer

21. If a supplementary prospectus is published by the Company in relation to the Offers, you will have a period of at least two clear Business Days within which you may withdraw your application to buy Ordinary Shares in the Customer and Employee Offer. If a supplementary prospectus is published, you will be sent an email notifying you of this fact and setting out how to withdraw your application should you wish to. Such withdrawals will be effected by email only. Any supplementary prospectus will be made available (along with information as to how you can withdraw your application) in the same manner in which the Prospectus is being made available, including at the following places: a. b. c. on the Offer Website; at the registered office of the Company (Titan Court, 3 Bishops Square, Hatfield Business Park, Hatfield, Hertfordshire AL10 9NE); and at the offices of the Receiving Agent (The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU).

If you do not notify the Company of your intention to withdraw in the required manner within the stipulated period your application to buy Ordinary Shares in the Customer and Employee Offer will remain valid and binding upon you. 22. Your Share Account Statement will be made available online on or before 4 August 2010. If you do not receive notification of your Share Account Statement being available online on or before 4 August 2010, you should contact the Registrar. Once the Registrar is satisfied as to such a request, they will arrange for you to be sent a replacement Share Account Statement free of charge. If at any point you require a replacement Share Account Statement, you should contact the Registrar, who will arrange for you to be sent a replacement Share Account Statement at a small cost. 23. You agree that all applications, acceptances of applications and contracts resulting from them under the Customer and Employee Offer shall be exclusively governed by and construed in accordance with English law and that you irrevocably submit to the exclusive jurisdiction of the English courts and agree that nothing shall limit the right of the Banks, the Directors, the Receiving Agent or the Company to bring any action, suit or proceedings arising out of or in connection with any such application, acceptances or contracts in any other manner permitted by law or in any court of competent jurisdiction. 24. You authorise the Banks and their agents, on your behalf, to make any appropriate returns to HMRC in relation to stamp duty or stamp duty reserve tax (SDRT) (if any) on any contract arising on acceptance of your application and in relation to stamp duty or SDRT (if any) payable on any transfer of Ordinary Shares as a result of such contract. 25. You agree and acknowledge that: a. the Banks do not act for you and will not treat you as their customer by virtue of an application being accepted under the Customer and Employee Offer and you agree that the Banks will not be responsible for providing to you the protections afforded to their customers and that the Banks do not owe you any duties or responsibilities concerning the price of the Ordinary Shares or concerning the suitability of the Ordinary Shares for you as an investment or (save as expressly set out in these terms and conditions) otherwise in connection with the Offers or any transaction, arrangement or other matter referred to in the Prospectus; and the Banks and any of their respective affiliates may have engaged in transactions with, and provided various investment banking, financial advisory and other services for, the Company and certain of the Selling Shareholders, for which they received customary fees. The Banks and any of their respective affiliates may provide such services to the Company and the Selling Shareholders and any of their respective affiliates in the future.

b.

26. You authorise the Company or the Receiving Agent and/or their agents to do all things necessary to effect registration into your name (or the name of the Share Nominee) (as applicable) of any Ordinary Shares acquired by you and authorise any representative of the Company or the Receiving Agent to execute and/or complete any document of title required therefor.

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Terms and Conditions of the Customer and Employee Offer

27. Only persons applying for Ordinary Shares under the Offers may rely on the information and representations contained in the Prospectus, the Pricing Statement and/or any supplementary prospectus and, to the fullest extent permitted by law, any liability for the Prospectus, the Pricing Statement and/or any supplementary prospectus to any other person is hereby excluded by the Company, the Directors, any Selling Shareholder and the Banks and any person responsible solely or jointly for the Prospectus, the Pricing Statement and any supplementary prospectus or any part of any such document. 28. The dates and times referred to in these terms and conditions are based on the expectation that Admission will occur on 26 July 2010 and may be altered by the Company in its absolute discretion (in consultation with the JGCs (on behalf of themselves and the other Banks)) where the Company considers it necessary to do so. 29. You consent to: a. b. holding your Ordinary Shares in the Ocado Share Account in accordance with the terms and conditions set out in Part XI (Terms and Conditions of the Ocado Share Account); and the terms and conditions of the Offer Website.

194

PART XI TERMS AND CONDITIONS OF THE OCADO SHARE ACCOUNT The Nominee Service is a convenient way to hold shares in a Company without needing share certificates. Your shares are held by Capita IRG Trustees Limited on trust for you. You will remain the beneficial owner of your shares and will still be able to benefit from shareholder rights, as described in this document. This Part XI sets out all the terms and conditions (Terms and Conditions) of the Nominee Service provided by Capita IRG Trustees Limited (CIRGT). It replaces any previous terms and conditions which you may have received. These Terms and Conditions together with your signed Application Form or Form of Acknowledgement constitute an agreement which is legally binding on CIRGT and you. For your own benefit and protection you should read these Terms and Conditions carefully. If you do not understand any point please ask for further information. Please note that you may remove all or part of your Shares from the Nominee Service at any time. The procedure to follow is set out in clause 19. These Terms and Conditions will only take effect following the scaling and allocation of shares by Ocado Group plc, when the underlying Shares are delivered to the Nominee. The Nominee Service is administered by CIRGT, or any successor administrator that may be appointed. CIRGT is authorised and regulated by the Financial Services Authority (FSA) and is entered on the FSA register with registration number 184113. Further information may be obtained from the FSAs Register by visiting the FSAs website http://www.fsa.gov.uk/register or by contacting the FSA on 0845 606 1234. The FSAs current address is 25 The North Colonnade, Canary Wharf, London E14 5HS. The main business of CIRGT is the provision of nominee, administration and trustee services. Enquiries about the Nominee Service, or these Terms and Conditions, should be addressed to CIRGT either by post to Capita IRG Trustees Limited, Nominee Service, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by e-mail to: custodymgt@capitaregistrars.com TERMS AND CONDITIONS 1. 1.1 Definitions and interpretation In these Terms and Conditions only the following words and expressions have the meanings and interpretation set out below: means a company in the same group of companies as CIRGT; means the legally binding agreement between us and you, incorporating these Terms and Conditions; means all the statutory and other rules (including FSA Rules and FSMA), regulations and provisions in force from time to time, applicable to us or to the provision of the Nominee Service, including the rules, principles and codes of practice stipulated by any regulatory authority to which we are subject; means an application form to be completed by a person requesting to become a Member; means any day which is not a Saturday or Sunday and on which the banks are open for business in London and in any other city where the Shares are listed; means the corporate client of CIRGT whose Shares you elect to hold through the Nominee Service;

Affiliated Company Agreement Applicable Regulations

Application Form Business Day

Company

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Part XI CIRGT

Terms and Conditions of the Ocado Share Account means Capita IRG Trustees Limited, a company registered in England with registration number 2729260 and its registered office as above, which is authorised and regulated by the Financial Services Authority and is entered on the FSA register with registration number 184113; the computer based system operated by Euroclear UK & Ireland Limited (a subsidiary of Euroclear SA) for the transfer of uncertificated securities; means the Financial Services Authority; means the Financial Services and Markets Act 2000 (as amended from time to time); means principles, guidance and rules issued by the FSA from time to time; means the unique reference number given to every Nominee Account; means Capita IRG Trustees (Nominees) Limited (a whollyowned subsidiary of CIRGT). Where Shares are not held by Capita IRG Trustees (Nominees) Limited, they will be held by CIRGT in a suitably designated account or by any other nominee appointed from time to time by CIRGT; means the client account, which we open for each Member, in order for that Member to have access to the Nominee Service; the register of beneficial holders of Shares held through the Nominee Service maintained by CIRGT showing, amongst other things, the name, address and number of Shares held on your behalf together with similar details in respect of every other Member; means the share nominee custody service as described in these Terms and Conditions; means the prospectus published by Ocado Group plc in respect of the initial public offering of the Shares; means a person who is authorised to act on your behalf in relation to your Nominee Account and who has provided us with such proof of their authority to act, as we may reasonably require. Proof may include but shall not be limited to a duly executed Power of Attorney, Court of Protection Order and Grant of Representation; means the shares or other securities of the Company held or to be held on your behalf through the Nominee Service; means any of the events listed in clause 21.1; means Capita IRG Trustees Limited and, where relevant, the Nominee, or any successor company appointed to replace us; and the person(s) on whose behalf we are holding the Shares or, if appropriate, your Representative(s) and your and yourself shall be construed accordingly.

CREST

FSA FSMA FSA Rules Investor Code Nominee

Nominee Account Nominee Register

Nominee Service Prospectus Representative

Share Specified Event we/us

you or Member

1.2

The headings to the clauses are for convenience only and shall not affect the interpretation or construction of these Terms and Conditions. References to clauses are references to clauses of these Terms and Conditions.

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Reference to any statute or statutory provision includes a reference to that statute or statutory provision as from time to time amended extended or re-enacted and FSA Rules as amended from time to time. Any phrase introduced by the terms including, include, in particular, for example or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms. Terms not otherwise defined in these Terms and Conditions shall have the same meaning given to them as in the Prospectus. How to join the Nominee Service Who is eligible to become a Member (a) The Nominee Service is only available to individuals (including Representatives) over the age of 18, who are resident in the United Kingdom (excluding the Channel Islands and Isle of Man) or the Republic of Ireland; or Any individual over the age of 18 located in a relevant jurisdiction, other than those specified in 2.1(a), as agreed between CIRGT and the Company, in which case you must satisfy yourself that under your local law you are eligible to participate in the Nominee Service.

1.4

1.5

2. 2.1

(b)

2.2

How to become a Member (a) You will become a Member of the Nominee Service if you make a successful application for Ordinary Shares under the Customer and Employee Offer. You will also become a Member of the Nominee Service if you (i) hold, as at 24 June 2010, vested options issued under the Ocado 2001 Executive Share Option Scheme; and (ii) elect to hold in the Nominee Service, any Shares not sold on your behalf to meet the costs and expenses of the exercise of such options. If such application or election is successful, you agree to be bound by these Terms and Conditions. If we agree to hold your Shares in the Nominee Service, we will open a Nominee Account in your name. When the Nominee Account is opened for you, you will be provided with an Investor Code. You are responsible for keeping your account details secure and you must not disclose details to any other person (who is not your Representative). As the Nominee Service includes regulated activities, in accordance with the requirements of the FSA Rules, we are required first, to classify our customers and secondly, to notify our customers as to the client category in which we have classified them. For the purposes of the FSA Rules, we are classifying you as a Retail Client. These Terms and Conditions, the Customer and Employee Offer Application Form and any other Application Form will, for the purposes of satisfying the FSA Rules, be regarded as the Client Agreement. The Nominee Services are provided by us to you and not the Company. We are not acting as agent for the Company in providing the Nominee Service although we have been requested to provide a nominee service to Members by the Company. We are not acting as principal in relation to any transactions with you.

(b) (c)

(d)

(e)

2.3

Verification of Identity and Account Opening (a) To comply with Applicable Regulations (including compliance with the UK Money Laundering Regulations), we are required to verify the identity of our customers. You authorise us to make credit reference, identity (including searching the electoral roll), fraud and other such searches (including the use of any electronic database(s)) and enquiries that may be necessary for these purposes of opening the Nominee Account with us. The credit reference agency may check the details you supply against any particulars on any database (public or otherwise) to which they have access. They may also use your details in the future to assist other companies for verification purposes. You also authorise us to

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Terms and Conditions of the Ocado Share Account undertake further similar searches at regular intervals. A record of the search will be retained. You may also be required to provide additional information.

(b)

You may be required to provide additional information such as a recent (i.e. not older than three months) original council tax bill, utility bill or bank statement. In such instances, having made a record of this information, we will return such documents to you. Account opening and registration is always at our discretion. We may therefore refuse to open the Nominee Account for you without informing you of our reasons for doing so and you agree that we will have no liability to you for any loss you may incur if we decide not to open a Nominee Account in your name.

(c)

2.4

Joint holdings (a) Shares held jointly must be held in a joint Nominee Account. We will open joint Nominee Accounts for up to four joint holders, and all references in these Terms and Conditions to you or a Member apply to each joint holder individually, except where the context otherwise requires. We will only accept transfer instructions completed by or on behalf of all the joint holders. Each joint holder agrees that: (i) all obligations, undertakings and agreements on our part are given to the joint holders taken together and not separately to each of them; and (ii) all obligations, undertakings, agreements and liabilities arising out of or pursuant to these Terms and Conditions constitute joint and several obligations of each joint holder.

(b) (c)

3. 3.1

How the Nominee Service works We will hold your Shares in the name of the Nominee in uncertificated form on your behalf as trustee subject to the provisions of the Companys Articles of Association and any other document governing the terms on which the Shares are issued or transferred. Although we will therefore be the legal owner of the Shares, you will remain the beneficial owner of the Shares which means that, subject to our legal obligations, we will treat the Shares as if they belonged to you. The Shares will be registered in the name of the Nominee and we will hold the Shares as you direct. Neither CIRGT nor the Nominee will have or claim any interest in your Shares except under clauses 10.6, 18.5 and 21.2 of these Terms and Conditions or under any separate arrangement which you may have with CIRGT. CIRGT will be responsible to you for any acts or omissions of the Nominee in connection with your Shares. We will maintain the Nominee Register. In connection with your holding of Shares, you agree to provide promptly any information which the Company is entitled to request from the Nominee in respect of those Shares registered in the Nominees name (for example, this may include information required to satisfy nationality declaration requirements or the disclosure of information relating to beneficial ownership of the Companys share capital). You can obtain the appropriate forms to transfer Shares or to provide us with instructions by writing to Capita IRG Trustees Limited, Nominee Service, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU, or, by emailing custodymgt@capitaregistrars.com. You should state the name of the Company and quote your Investor Code. Except where otherwise stated in these Terms and Conditions, we will only act on written instructions which contain your Investor Code. Your Investor Code is shown on your personal statement which will be sent to you by us in accordance with clause 9. We will only accept transfers of Shares into the name of the Nominee and to be held in your Nominee Account if there is no change of beneficial owner in the Shares being transferred and all applicable stamp duty and/or stamp duty reserve tax has been paid.

3.2

3.3

3.4

3.5

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Part XI 3.6

Terms and Conditions of the Ocado Share Account

You may instruct us to hold your Shares in the name of another person (provided they are over 18 years of age and eligible) by issuing written instructions on the appropriate form stating that such a transfer is by way of a gift to another person (for example, a family member). The proposed recipient must complete the Application Form to indicate his or her agreement to the Terms and Conditions. You should seek independent tax advice if you are in any doubt as to the tax treatment of such a gift. Other than pursuant to such an instruction, you cannot transfer your Shares to another person in the Nominee Service. Except for any transfer pursuant to clause 3.6, if you wish to transfer your Shares you must first either: (a) (b) ask for your Shares to be transferred into your own name in certificated form; or instruct us to transfer your Shares to a third party in CREST (for example, a broker through which you wish to sell) if this option is available.

3.7

We will arrange for this on receipt of your written instruction to do so on the appropriate form and payment of any applicable charges (including stamp duty and/or stamp duty reserve tax). If you ask for your Shares to be transferred into your name, they will be registered in your name on the main register of shareholders of the Company and a share certificate will be issued to you in accordance with the relevant provisions of its Articles of Association. If all your Shares are transferred into your name or to a third party in CREST, this means that you will leave the Nominee Service. 3.8 All movements of Shares, which may include sales, purchases and transfers to and from the Nominee Account are subject to any applicable rules of the London Stock Exchange plc or other market on which the transaction is effected. You may not cancel or change any instructions in relation to a transfer of Shares once they have been sent to us. We may refuse to act on instructions from you: (a) (b) (c) which are not given on the correct form or given on a form that has been incorrectly completed; which are not given in writing or are incomplete; or if we believe that complying with such instructions would breach the FSMA, the FSA Rules or any other applicable legal requirement.

3.9

We may also delay acting on your instructions if we reasonably feel that it is necessary (i) to obtain additional information from you to comply with any legal or regulatory requirement (including compliance with the UK Money Laundering Regulations) or (ii) to investigate any concerns we may have as to the validity of your instructions. Where further enquiries are required, you authorise us to make credit reference, identity (including searching the electoral roll and any other electoral databases), fraud and other enquiries that we reasonably deem necessary for these purposes. We accept no liability for any financial loss arising from such a delay. Instructions that are not accepted will be returned to you, where appropriate. 3.10 Instructions to transfer are acknowledged by the issue of a statement. Any other instructions will only be acknowledged by us acting on them and are not otherwise acknowledged. Our service We will not conduct investment business with you on our premises or in person. We offer the Nominee Service, only in relation to the Shares in the Company on these terms. Unless otherwise agreed in writing, there are no restrictions on the markets or types of investment in which we may carry on business on your behalf. We will deal with you on an execution-only basis at all times. This means that our services are limited to the execution of your instructions. We shall not provide you with any advice on the merits or suitability of you holding your Shares or deciding to have your Shares held through the Nominee Service, or any transaction contemplated by these Terms and Conditions.

4. 4.1

4.2

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Part XI 4.3

Terms and Conditions of the Ocado Share Account

We will never provide you with any investment, trading, tax or financial advice or any investment management services. Nothing in these Terms and Conditions should be taken as a recommendation to buy, sell or hold shares in any company. You should rely on your own judgment when deciding whether or not to enter into any transaction contemplated by this Agreement or seek any advice or assistance you may need from an appropriate independent professional adviser. CIRGT provides only a Nominee Service to you in relation to the Companys Shares, which are traded on a regulated market. CIRGT will not assess the suitability of the instrument or the service provided or offered to you. As a result, the FSA rules on assessing suitability do not apply. Therefore, we will not assess whether: (a) (b) (c) the relevant product or service meets your investment objectives; you would be able financially to bear the risk of any loss that the product or service may cause; or you have the necessary knowledge and experience to understand the risks involved.

4.4

CIRGT is also not required to assess the appropriateness for you of the Nominee Service or any transaction connected to the Nominee Service. 5. 5.1 Communications between you and us General (a) You may give us instructions by email, via a designated web portal (where the Company has agreed to this service) or by post. All communications between you and us, pursuant to these Terms and Conditions, must be in English. Except as otherwise stated in these Terms and Conditions, all communications sent by you under these Terms and Conditions must be given in writing and sent to: Capita IRG Trustees Limited, Nominee Service The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU (c) You should quote: the name of the Company whose Shares you hold through the Nominee Service; your full name; and your Investor Code (which can be found on your personal statement)

(b)

in all communications with us relating to your Nominee Account. You should quote your Investor Code in all communications with us relating to your Nominee Account (for example any change of address or instructions about receipt of dividends). (d) We do not have to establish the authority of anyone quoting or using your Investor Code provided that we have acted with all due care in accepting those instructions. We shall not be liable for forged or fraudulent instructions. If you are aware or suspect that your Investor Code is no longer confidential then you should contact us as soon as possible. You will be responsible for all instructions in respect of transactions contemplated by these Terms and Conditions and for the accuracy of all information given to us.

(e) 5.2

Representatives (a) You may also appoint a Representative in writing to give us instructions on your behalf. You may change your Representative or cancel the appointment of your Representative by written notice to us, but we shall not be bound by any such variation until we have actually received your written notice and obtained such proof of his authority to act as we may reasonably require. Proof may include but shall not be limited to a duly executed Power of Attorney, Court of Protection Order and Grant of Representation.

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Part XI (b)

Terms and Conditions of the Ocado Share Account

We shall be entitled to act upon the instructions of your Representative unless and until we have been sent written notice by you that their authority has been revoked. We shall be entitled to act upon any instructions or orders transmitted using your Investor Code. You agree that all instructions received from your Representative shall be treated as your instructions and you accept full responsibility in respect of any instruction or any error in any instruction given by you or a Representative.

5.3

Communications with you (a) (b) You authorise us to communicate with you by letter or email, unless specifically requested otherwise by you in writing. All communications sent by us will be sent to your last address as recorded on the Nominee Register or sent by electronic means to your last email address notified to us. Communications sent to you by post will be treated as received by you on the second Business Day following the day they were sent in the case of an address in the United Kingdom, or on the fifth Business Day following the day they were sent in the case of an address outside of the United Kingdom. It is the responsibility of any joint holder who has been sent the communication or payment to inform and account to the other joint holders. You are responsible for keeping your details on the Nominee Register up-to-date, by notifying us in writing of any change of name, address, bank account details, telephone number or email address and providing us with the supporting documentation where required (e.g. in the case of a change of name, the deed poll or marriage certificate). Any documents or cheques sent to you by us and any documents or cheques sent by you to us will be sent at your risk and we accept no liability prior to receipt by us of any document or cheque or, where relevant, after despatch of any document or cheque to you.

(c)

(d)

6. 6.1

Company meetings We will send you information about shareholder meetings of the Company every time we receive notice that a shareholder meeting is being convened. We will also provide an instruction form (Form of Instruction) and you will be to able use this to instruct the Nominee how to cast votes in respect of the Shares held in your Nominee Account on any poll called at the meeting. In such case, we must have received the relevant instructions from you on a correctly completed form before the deadline notified to you on the relevant form. In the absence of your instructions, no votes will be exercised in respect of your Shares. Depending on the Articles of Association of the Company, you may also be able to instruct the Nominee to appoint yourself or another person of your choice, including the chairman of the meeting, as your proxy in respect of the Shares held in the Nominee Account. This will enable you or the proxy to attend and vote on a poll and, provided this is possible legally and is permitted by the Articles of Association of the Company, on a show of hands. Please note that the procedures described in this clause 6 will be subject to any matters regarding voting, attendance at meetings etc provided for in the Companys Articles of Association and any policy decisions implemented by the Company in respect of the conduct of general meetings. Except as provided for in this clause 6 and when you provide instructions to us, we shall have no duty or responsibility to attend shareholders meetings on your behalf or to vote in respect of your Shares. Information from the company We will ensure that, any copies of summary financial statements and interim accounts sent by the Company to its registered shareholders and received by CIRGT are also sent to you (or made available to you electronically unless you specifically request otherwise). If you wish to receive a copy of the full annual report and accounts of the Company, you should notify us in writing.

6.2

6.3

6.4

7. 7.1

7.2

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Part XI 7.3

Terms and Conditions of the Ocado Share Account

All other documents issued by the Company to registered holders generally will be forwarded by us to Members, at or around the same time as registered holders electronically unless you specifically request otherwise. Dividends, payments and corporate actions Subject to clause 8.4, we will on your behalf claim and receive cash dividends and other entitlements accruing on your Shares. Cash dividends and other entitlements will be distributed to Members as soon as reasonably practicable after receipt by us from the Company, by means of cheque or, at our discretion, electronic payment. Bank fees in respect of electronic payment or telegraphic transfer shall be charged to the Members account. Payments will be made in the currency in which dividends are normally paid in accordance with the Companys dividend policy from time to time. If required to do so to comply with any legal or regulatory requirements, we may deduct or withhold for such purposes sums on account of tax and pay the net amount to you. If a payment made to you in respect of your Shares is returned to us and after reasonable enquiry we cannot find your current address, we will not send you another payment until you notify us in writing of your new address. If the Company offers its shareholders (including any Members) the right to choose to receive further Shares instead of a cash dividend pursuant to the terms of a dividend reinvestment plan and if you wish to participate in the plan and validly elect to receive further Shares, we will ensure that we receive the relevant Shares and hold them on your behalf in the Nominee Account and any cash residue that arises will be held by us in accordance with clause 11. In the event of a takeover, a capital reorganisation, conversion or other corporate action relating to the Company, we will endeavour to notify you promptly and implement any instructions you give us provided that the Company gives us adequate notice of the proposals and also that we receive your instructions in good time so as to allow us to take appropriate action (however we will not be liable if, for any reason, any notification by us does not reach you in time). We will however not be obliged to do anything in such an event unless the Company gives us adequate notice and we receive written instructions from you in reasonable time to allow us to take action in respect of the Shares held in your Nominee Account. We will not accept a takeover offer or other offer for any of the Shares held in your Nominee Account in the absence of your instructions except where your Shares are compulsorily acquired. In the event of a compulsory acquisition, we will accept the basic terms of the acquisition on your behalf, but will not exercise choices or elections, in the absence of your specific instructions received before relevant deadline. Where the Company issues offer documents in respect of an optional corporate action (for example, a tender offer, rights issue, placing and open offer, merger, scheme of arrangement or amalgamation or reconstruction) we are not obliged to forward such documents to you. Where appropriate you should contact the Company directly to obtain offer documents. We will not be responsible for taking any corporate action in respect of the Shares held in your Nominee Account and may allow the event to lapse if your instructions: (a) (b) (c) are not received by us by the stated time; are incomplete or given by a third party who does not have the relevant authority; or require payment on your behalf and you have insufficient funds in your Nominee Account.

8. 8.1

8.2 8.3

8.4

8.5

8.6

8.7

8.8

8.9

Unless we receive instructions to the contrary, you authorise us to take all actions described below: 8.9.1 make payments to ourselves or others for properly incurred expenses in handling your Shares (for example costs of translation of foreign documents, foreign currency conversion or bank charges) or other matters relating to our duties under these Terms and Conditions;

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Terms and Conditions of the Ocado Share Account

8.9.2 receive and collect all income with respect to Shares and to credit cash receipts to your Nominee Account; 8.9.3 execute in your name such ownership and other certificates as may be required to obtain the payment of income from the Shares; 8.9.4 pay or cause to be paid from your Nominee Account any and all taxes, levies or withholdings imposed on the Shares by any governmental authority in connection with custody of and transactions in such Shares; 8.9.5 use reasonable efforts to promptly reclaim any foreign withholding tax relating to the Shares; and 8.9.6 make payments to ourselves for our reasonable fees if we are required by any Applicable Regulation to carry out additional services to those set out in these Terms and Conditions. 9. 9.1 Statements You will receive an opening balance statement on joining the Nominee Service showing the number of Shares you have. Further statements will be sent to you at least once a year (usually, at the same time as the Companys Annual Report and Accounts is despatched to shareholders), together with details of the composition of your Nominee Account as at the end of the period covered by the statement. You will also receive a statement after a change in the number of your Shares showing your new balance. If you sell or transfer all of your Shares or in the event that the Nominee Service ceases to be provided to you for any reason, a closing statement will be issued to you. These statements are provided free of charge. If you require an interim statement or duplicate statement of your holding in writing, we may make a charge to supply it (see clause 10.1). It is your responsibility to check any statement which you receive from us. If you have any query or concern in relation to the matters disclosed in the statement you must contact us as soon as possible but, in any event, within two months of receipt of the statement. We shall correct any mistaken credits or debits to the records maintained for your Nominee Account and will notify you of any changes relevant to you. If we have sent documents to your address on two separate occasions and they have been returned and, after making all reasonable enquiries, we cannot find your current address, we will not send any more documentation to you until you provide us with your correct address. Charges, expenses and payments There is no initial charge for becoming a Member of the Nominee Service. We may make charges in respect of other operations, for example, the transfer of Shares and the issue of duplicate documentation. Duplicate documentation includes duplicate dividend warrants and duplicate annual statements. A copy of our charges are set out at the end of these Terms and Conditions and additional copies may be obtained on request by writing to Capita IRG Trustees Limited, Nominee Service, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU. Our charges are subject to review and modification from time to time in the future for the following reasons: 10.3.1 to reflect reasonable changes in the way we provide the Service to you; 10.3.2 as a result of new services which we may make available to you; 10.3.3 where reasonably required as a result of changes in market conditions or market practice; 10.3.4 to take account of changes or anticipated changes to, or to comply better with, applicable laws or the interpretation of those laws, regulatory requirements, industry guidance or codes of practice that we follow, or the way that we are regulated; 10.3.5 to reflect a decision or recommendation of a court, ombudsman, regulator or similar body which is relevant to us or to the Service; or

9.2

9.3

10. 10.1

10.2

10.3

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Terms and Conditions of the Ocado Share Account

10.3.6 to take account of, in a proportionate manner, the cost to us of providing the Service. 10.4 We will give you at least 30 days prior notice of any increase in our charges payable by you. If you are unhappy with such increase, you may cancel your agreement with us at any time without charge within 30 days of our sending you the notice of such increase. In addition to the above charges, you will be charged Value Added Tax (VAT) on any fees and charges payable by you (for example, brokers fees). In addition to our fees and charges, you are responsible for paying any stamp duty and/or stamp duty reserve tax applicable to share transactions, VAT, other duties and taxes in respect of your Shares, where applicable. You should note that there may be other taxes or costs that may exist that are not paid through us or imposed by us. You may make any payments due to us under this Agreement as follows: (a) by authorising us to deduct the charges from your Nominee Account or annual dividends, if any by indicating this on the Customer and Employee Offer Application Form or subsequently to us in writing; or if no such authority is provided under (a) above, you may pay by personal cheque crossed and made payable to Capita IRG Trustees Limited, drawn on a United Kingdom bank or building society account.

10.5 10.6

10.7

(b)

10.8

If any payment is not received by us on the due date for payment then, without limitation of any other rights which we may have, we will be entitled to charge interest on the overdue amount (both before and after judgment) at the rate of 1 per cent. above the sterling base rate from time to time of our main UK bank from the due date until the actual date of payment. Subject to clause 10.8 and 21.2 below, we and our agents will not have any lien (right to keep possession of) or claim security interest in your Shares.

10.9

10.10 We do however reserve the right to sell any of your Shares or connected rights and to retain the value of the amount which at any time is due and payable to us in respect of the provision of the Nominee Service. In these circumstances, you authorise us to execute any stock transfer form or other document or give any instruction necessary to give effect to any such sale and, by appointing us to provide the Nominee Service under these Terms and Conditions, you acknowledge and declare that in these circumstances we shall have a legal charge over your Shares and your rights and interests in or in relation to your Nominee Account. If you owe us money in respect of the provision of the Nominee Service, we reserve the right not to act on instructions from you until you have paid us in full. 11. 11.1 Client money We will treat all money, including dividend payments and other entitlements of a similar nature, awaiting distribution to you as client money in accordance with the requirements of the FSA Rules on client money. Your money will be segregated from our own funds. We will hold all money held in sterling in a client bank account in the United Kingdom, with an approved bank in the United Kingdom. Client Money in a foreign currency will be held in a client bank account denominated in the relevant foreign currency with an approved bank in the United Kingdom. No interest shall be payable to you in respect of such client money. The money will not be used by us in any transactions other than as specified in these Terms and Conditions. Please note that, whilst the cash balance for each Member will be recorded separately, it will be pooled with the funds of other Members. Where a pooling event occurs, such as a default by CIRGT or the Nominee or their bankers, you will not have a claim against a specific sum of money in a specific account; your claim would be against the client money pool, held by us in general. The funds may then be distributed on a pro rata basis to all Members which could result in each Member receiving less back than that which is held on their behalf before such an event. You agree that we may from time to time transfer your money to an intermediate broker, a settlement agent, an exchange or a clearing house located in the United Kingdom or in a

11.2

11.3

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Terms and Conditions of the Ocado Share Account

jurisdiction outside the United Kingdom to pay sums due in respect of transactions effected with or through such persons on your behalf. Where your money is transferred to an intermediate broker, a settlement agent, an exchange or a clearing house located outside the United Kingdom, the legal and regulatory requirements applying to them will be different from that of the United Kingdom and, in the event of their failure, this money may be treated in a different manner from that which would apply if the money was held by an intermediate broker, settlement agent, an exchange or a clearing house in the United Kingdom. We shall not be liable for any failure whatsoever, and however caused, by such persons to return your money which is held by them unless it was caused by our fraud, wilful default, negligence or breach of the FSA Rules or FSMA. 11.4 You agree that any balance due to you which is unclaimed after six years will cease to be treated as Client Money, as defined under the FSA Rules, and we shall be entitled to remove any such balance from your Nominee Account and retain it subject to us having taken reasonable steps to locate you and to give you at least 28 days from the date of notification to make a claim. We undertake to make good any valid claim which may subsequently be made against any balances retained in this way and reserve the right to request such evidence as we feel reasonably necessary to confirm the identity of the person claiming these funds in order to validate any claim prior to settlement in respect of funds so removed from the Client Money account. We will not be liable for any losses or claims for interest whatsoever in respect of such amounts unless such losses or claims were caused by our fraud, wilful default, negligence or breach of the FSA Rules or FSMA. Fractional benefits Due to us holding your investments in the Nominee Account on a pooled basis, additional amounts may arise that would not otherwise have occurred had such investments been registered in your own name, (for example, following certain corporate actions). You consent that we shall determine in our sole discretion, having regard to the size of the balance and the number of participants, whether we shall distribute the balance to you or retain the balance for our own account. Consequently, you may not be entitled to these additional amounts. 13. Pooling While details of your Shares are recorded in your Nominee Account, we will pool your Shares with other customers Shares and as a result individual entitlements may not be identifiable by separate certificates or other physical documents of title or equivalent electronic record. In the event of an unreconcilable shortfall following any default by a custodian appointed by us, you may not receive your full entitlement and any shortfall may be shared by all persons in proportion to their original holdings in the pool. 14. 14.1 Risks There are risks involved in investing in and holding Shares. As we only provide a Nominee Service, we take no responsibility for the decision of a Member to buy, sell, hold or exercise rights in relation to Shares. A share is a portion of the capital stock of a company which typically entitles the holder to vote at general meetings, receive income in the form of dividends and to share in the surplus assets of the company in the event of winding up. The market information relating to the past performance of Shares is not an indication to their future performance. The value of Shares or income from them may go down as well as up. As Shares are valued from second to second, their bid and offer value fluctuates, sometimes widely. The value of Shares may rise or fall due to the volatility of world markets, interest rates and capital values or, for Shares held in overseas markets, due to changes in the exchange rate in the currency in which the investments are denominated. You may not necessarily get back the amount you invested. Instructions given by you or on your behalf constitute a binding contract and cannot be amended or cancelled after they have been given.

12.

14.2

14.3

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Terms and Conditions of the Ocado Share Account

Taxes may affect the net value of your investments and income received from them. Levels and bases of, and relief from, taxation depend on the individual circumstances of each customer and are subject to change as UK tax legislation may change from time to time. As we only provide a Nominee Service, we do not accept any responsibility for tax advice. There are risks involved in the transactions in Shares with which we may be involved. In the case that your money is transferred to an intermediate broker, a settlement agent, an exchange or clearing house located outside the United Kingdom, your money might not be as well protected as would be the case if held by a bank or other financial institution in the United Kingdom. Compliance with applicable regulations The Terms and Conditions and all transactions between you and us are subject to Applicable Regulations. If there is any conflict between these Terms and Conditions and any Applicable Regulations, the Applicable Regulations will prevail to the extent necessary to avoid the conflict. Nothing in these Terms and Conditions will exclude or restrict any obligations which we have to you under the Applicable Regulations. We may refrain from doing anything which could or might, in our reasonable opinion, be contrary to any Applicable Regulations which would or might otherwise in our reasonable opinion render us liable to any person. We may do anything which, in our reasonable opinion, is necessary to comply with any such Applicable Regulations or to avoid any such liability. CIRGT is authorised and regulated by the FSA to provide the Nominee Service in the United Kingdom and nothing in these Terms and Conditions requires or implies that such services will be provided in any territory in which CIRGT is not appropriately authorised. Representations and warranties By applying to become a Member, you warrant and represent to us that: (a) (b) (c) all information that you supply to us is complete, true, accurate and not misleading in any material respect; you enter into this Agreement and any transactions contemplated by this Agreement as principal and not as another persons agent or representative; you are not under any legal disability with respect to, and are not subject to any law or regulation which prevents your performance of, this Agreement and any transactions contemplated by this Agreement; you are the legal and beneficial owner of all property provided by you to us under this Agreement and you are entitled to pass to us full legal ownership of such property, free from all liens, charges and encumbrances whatsoever and you will not create any security interest of any kind over such property; you have obtained all necessary consents and have the authority to enter into this Agreement and any transaction contemplated by this Agreement; and you are in compliance with all Applicable Regulations to which you are subject including, without limitation, all tax laws and regulations, exchange control requirements and registration requirements.

14.5

15. 15.1

15.2

15.3

16. 16.1

(d)

(e) (f)

16.2 16.3

The above warranties and representations shall be deemed to be repeated each time you provide us with instructions or enter into any transaction contemplated by this Agreement. You undertake that, throughout the duration of this Agreement, you will promptly notify us of any change to the details supplied by you or any change or anticipated change in your financial circumstances (including any actual or threatened litigation) which may affect the basis upon which we undertake business with you.

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Part XI 17. 17.1 Crest and other clearing systems

Terms and Conditions of the Ocado Share Account

Neither CIRGT nor the Nominee accepts responsibility for any delays or liabilities suffered by you as a result of the operation, failure or suspension of the CREST System, the insolvency or other default of Euroclear UK and Ireland Limited or of any participants in the CREST System or any other clearing system used by us or the failure by any CREST settlement bank to make, receive, credit or debit any payment. Neither CIRGT nor the Nominee accept responsibility for any delays and liabilities suffered by you as a result of the suspension or removal of the sponsor by CREST as a CREST sponsor, unless the suspension or removal is due to negligence, wilful default or fraud on the part of CIRGT or the Nominee. You will pay our reasonable costs or liabilities incurred in connection with an instruction to transfer your Shares (whether or not involving Euroclear UK and Ireland Limited) that cannot be completed for any reason caused by you. You undertake to notify us if you know of any person (e.g. a bank) who has the right to prevent you from transferring your Shares. Where an overseas Companys Shares are held in uncertificated form by a clearing house, other than Euroclear UK and Ireland Limited, the legal and regulatory regime applying to such a clearing house may be different to that of the United Kingdom. In such a case, you agree that CIRGTs and the Nominees liabilities in respect of the activities of the overseas clearing house will be limited to the extent as set out in section 17.1. If we arrange your Shares to be held in one or more jurisdictions outside of the United Kingdom, there may be different settlement, legal and regulatory requirements in overseas jurisdictions from those applying in the United Kingdom and there may be different practices for the separate identification of the Shares. Limitation of liability and indemnity We will take all reasonable care and skill in the set up and administration of the Nominee Service. If we cannot provide the Nominee Service due to circumstances beyond our reasonable control (for example, because of failure of computer systems or telecommunications links or overriding emergency procedures, postal delays, flood, fire, storm, labour disputes, accident, vandalism, malicious damage, war or terrorism, failure of third parties to carry out their obligations, the suspension of trading by any exchange or clearing house, the acts of governmental or regulatory authority (including changes to Applicable Regulations), the absence of, or inaccuracy in any information provided to us by you or on your behalf) we will, where possible, take such reasonable steps as we can to provide the Nominee Service as soon as possible following any delay or failure. Subject to this clause 18, our liability to you for providing the Nominee Service is limited to any losses directly associated with the act or omission that gave rise to the liability. We will not be liable for any damage or loss suffered by you which we could not reasonably have foreseen (for example the loss of an alternative investment opportunity or any tax benefit). Neither CIRGT nor the Nominee is acting as agent for the Company and they accept no responsibility for the Companys acts and omissions, including any decision by the Company to suspend or terminate the Nominee Service. Neither CIRGT nor the Nominee will be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties or in the exercise of any of its rights or powers under these Terms and Conditions. If, notwithstanding this provision, either CIRGT or the Nominee does so, CIRGT will be entitled upon notice to you to make such deductions from the Shares or any income or capital arising from them or to sell all or any of the Shares and make such deductions from the proceeds of sale as may be required to reimburse any loss or liability suffered. We will not be responsible for any acts or omissions of the Company, or any broker, settlement agent, depository, clearing or settlement agent or system. We may employ agents and delegates on such terms as we think fit to carry out any part of our obligations or discretions in connection with the Nominee Service and, save as otherwise provided

17.2

17.3

17.4

18. 18.1 18.2

18.3

18.4

18.5

18.6 18.7

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in these Terms and Conditions, we shall be liable for the acts and omissions of such agents and delegates as if they were our acts or omissions. 18.8 Nothing in this Agreement shall exclude or limit: (a) (b) (c) our liability for death or personal injury resulting from the negligence caused by us or the Nominee; or liability for any losses or expenses (including loss of Shares) suffered by you as a direct result of the negligence, wilful default or fraud of either CIRGT or the Nominee; or any other liability which cannot be excluded or limited by law, including FSA Rules and FSMA.

19.

Termination

By you: 19.1 You may remove all or part of your Shares from the Nominee Service at any time by notifying us on the appropriate form at the address provided in clause 5.1(b). Your instructions will take immediate effect on receipt but will not cancel or amend any instructions you have already sent to us. If you remove all of your Shares from the Nominee Service, your Agreement with us on these Terms and Conditions will terminate. If we cease to hold Shares for you, you will need to enter into a new agreement if, at a later date, you acquire Shares which are to be held through the Nominee Service. Removing all or part of your Shares from the Nominee Service will not affect any of your rights or obligations arising prior to the date of such removal or which arise in consequence of such removal or which relate to our provision of the Nominee Service to you and all such rights and obligations shall continue to be subject to the Terms and Conditions prevailing at the time of the removal. You will be required to pay any charges that are reasonably incurred for transferring Shares from the Nominee Service (see also clause 10.2), but will not be required to make any additional payment to us in respect of the termination of your Agreement with us. The Nominee Service will automatically terminate if you die. If we receive adequate proof of your death and: (a) you are the only person registered on the Nominee Register in respect of Shares we hold, we will follow the instructions of your personal representative (appointed pursuant to a grant of probate, letters of administration or other legally effective appointment (or overseas equivalent)); or Shares are registered on the Nominee Register as a joint holding by you and one or more other Members, we will hold such Shares only in the name of such other Member(s) and only take instruction from such other Member(s) and this Agreement between you and us shall remain in force, but only between us and the other Member(s).

19.2

19.3

19.4

(b)

By us: 19.5 We may withdraw the Nominee Service from you and terminate our Agreement with you on not less than 30 days written notice if, in our opinion, you are in material breach of these Terms and Conditions or the Nominee is unable to comply with any obligations to which it may be subject in respect of your Shares under the Companys Articles of Association or under any applicable laws or regulations. The provision of the Nominee Service is at the discretion of the Company. If the agreement between the Company and CIRGT for the provision of the Nominee Service terminates, our Agreement with you will automatically terminate and we will notify you of this in writing. Subject to the fees in the fee Schedule, no penalty will be payable by either party on termination of these Terms and Conditions. On termination by either party and after the relevant notice period, we will arrange for your Shares to be transferred into your name on the register of shareholders as

19.6

19.7

208

Part XI

Terms and Conditions of the Ocado Share Account

soon as practicable and shall with immediate effect (but subject to clause 19.8) cease to process instructions from you. You will be sent a share certificate by the Company in respect of your holding of Shares. We may deduct all amounts due to us before transferring to you any credit balances on your Nominee Account. 19.8 Termination of your Agreement with us will be without prejudice to the completion of transactions already initiated. All transactions in progress will be executed in accordance with your instructions and such transactions will be subject to our current charges (see clause 10). Conflicts of interest You acknowledge and agree that when we (or our agents or delegates) enter into a transaction for you, we may: (a) share charges with our Affiliated Company and other third parties, or receive and retain remuneration from them in respect of transactions carried out on your behalf. Details of any such remuneration or sharing arrangements are available to you on request; be acting as agent or making arrangements for you on your instructions in relation to transactions in which we are also acting for other customers; or be in a position where we have some other material interest in relation to the transaction.

20. 20.1

(b) (c) 20.2

In accordance with FSA Rules, CIRGT has in place arrangements, which may be updated from time to time, to manage conflicts of interest that arise between itself and its clients or between its clients. CIRGT will deal with potential conflicts of interest in accordance with its Conflicts of Interests Policy which provides that it will identify and manage conflicts of interest to ensure fair treatment of all clients and ensure that it acts in the clients best interests. If it is not possible to manage or avoid a potential conflict of interest then CIRGT may seek to disclose the general nature and/or sources of conflict to you before undertaking business for you. CIRGT will provide full details of the Conflicts of Interest Policy upon receipt of a written request from you. Default We may in our absolute discretion refuse to accept any further orders or instructions from you and/or terminate this Agreement upon any of the following Specified Events: (a) (b) (c) (d) (e) you do not perform your obligations to us under this Agreement or any transaction contemplated by this Agreement; any warranty or representation made by you as set out at clause 16 is or becomes incomplete, untrue, inaccurate or misleading; a bankruptcy petition is presented to the Court in respect of you; any regulator of our business or its rules so requires; or we reasonably believe that any of the circumstances set out in 21.1.(a) to 21.1(d) above are likely to happen and we reasonably believe that such action would be necessary or desirable to protect our position.

21. 21.1

21.2

Upon the happening of a Specified Event and without prejudice to CIRGTs other rights, we may at our discretion, without notice: (a) (b) refuse to perform or reverse any outstanding transaction between us; sell any of your investments or other assets held by us (the time, place and method of any sale and the price shall be at our discretion and we shall inform you of the outcome of the sale); buy in investments, bring any claim for damages or exercise any other right which we may have at law or otherwise or take any other action which appears appropriate to avoid or reduce our risk of loss; and/or

(c)

209

Part XI

Terms and Conditions of the Ocado Share Account combine, close or consolidate all or any of your accounts with us or any of our Affiliated Companies and off-set any and all amounts owed to, or by, us or any of our Affiliated Companies in such manner as we may reasonably determine.

(d)

21.3

You will bear any costs or associated costs of sale and for reasonable costs, losses, damages or expenses (including without limitation any legal fees) incurred or suffered by us as a direct consequence of a Specified Event or our taking any action as a consequence of such Specified Event. Protection of information The Data Protection Act 1998 provides protection to individuals by governing, amongst other things, the way in which personal information is held and used. Individuals are also afforded rights of access to such information held about them. CIRGT hereby warrants that it will comply with its notification obligations under the Data Protection (Notification and Notification Fees) Regulations 2000 and that it will protect your personal information in accordance with the principles of the Data Protection Act 1998. By becoming a Member of the Nominee Service, you agree that we may: (a) keep personal details which you or others have provided to us, and any information we know from running your account on a database, and use such information to carry out the Nominee Service described in these Terms and Conditions and to deal with your enquiries and requests connected with the Nominee Service; and may disclose information concerning you to the Company, the Nominee, the companys registrar, Euroclear UK and Ireland Limited (if entitled to such information) all of which may disclose the information to regulatory, tax or governmental authorities as appropriate; to any person with legal, administrative or regulatory power over us in respect of the Nominee Service; to the broker, or Affiliated Companies who are involved in carrying out functions related to the Nominee Service administration including such Affiliated Companies which are outside of the EEA in countries (including India) which do not have similar protections in place regarding your personal information and its use. However, we are committed to protecting the confidentiality and security of information we collect about you and we will ensure that such transfers are made in accordance with the requirements of the Data Protection Act 1998.

22. 22.1

22.2

22.3

(b)

22.4

You agree that the purposes for which we may process your personal information may be amended from time to time to include other uses or disclosures of personal information subject to us notifying you of such amendment. Under the Data Protection Act 1998, you are entitled, on payment of a fee (of 10 currently), to a copy of the information we hold about you. If you believe that any information held about you is incorrect or incomplete, you may request it to be completed or corrected. Please address any requests for information under this clause to the Data Protection Officer, Capita IRG Trustees Limited, Nominee Service, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU and quoting your full name and address, the name of the Company and your Investor Code which may be found on your personal statement. By using the Nominee Service you agree that information relating to you may be disclosed to other Affiliated Companies so that you may be told about any products or services which might be of interest to you. You may request that information is not used for this purpose by writing to the Data Protection Officer, Capita IRG Trustees Limited, Nominee Service, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU and quoting your full name and address, the name of the Company and your Investor Code which may be found on your personal statement. Tape recording of conversations and record keeping You agree that we may: (a) record all telephone conversations between you and us; and

22.5

22.6

23. 23.1

210

Part XI (b) 23.2

Terms and Conditions of the Ocado Share Account

use such recordings, or transcripts from such recordings, as evidence in any dispute or anticipated dispute between you and us.

Recordings or transcripts made by us may be destroyed under our normal practice (usually, but not necessarily, two (2) calendar months from the date of the conversation). We may deliver copies or transcripts of such recordings to any court or regulatory body. We strongly recommend that you keep your own records of all communications between you and us (such as instructions and orders) including details of the times, dates and nature of your instructions as these details will be important if there is a dispute between you and us. Complaints and compensation scheme If you think that you have reason to make a complaint please write in the first instance to: Capita IRG Trustees Limited Nominee Service The Registry 34 Beckenham Road, Beckenham, Kent, BR3 4TU. Your complaint will be fully investigated and a full resolution sought. Our complaints procedure is available upon request, but a copy will be provided automatically to you in the event of a complaint being received.

23.3

24. 24.1

24.2

If you are unhappy or dissatisfied with our handling or findings in relation to your dispute or complaint you may be eligible to refer the matter to the Financial Ombudsman Service for further investigation at: Financial Ombudsman Service, South Quay Plaza,183 Marsh Wall, London E14 9SR. We reserve the right to take any action necessary, which is the subject of a dispute or complaint notified to us, for the purpose of limiting the amounts involved in such dispute or complaint. We will inform you if we exercise this right, which shall be without prejudice to either your rights and remedies or our rights and remedies. Any action taken by us pursuant to this clause 24.3 will not be deemed to be an admission on our part. CIRGT is a member of the Financial Services Compensation Scheme (Scheme). If we cannot meet our obligations you may be entitled to compensation from the Scheme. This depends on the type of business and the circumstances of the claim. Most types of investment business are covered for 100% of the first 50,000 (a maximum of 50,000) as at the date of these Terms and Conditions. The amounts of compensation may be changed from time to time and you should check your entitlement with the Scheme. Further information about compensation arrangements is available from the Scheme. You can contact the Scheme by calling their Helpline on 0207 892 7300, logging onto their website at www.fscs.org.uk or writing to the Financial Services Compensation Scheme, 7th Floor, Lloyds Chambers, 1 Portsoken Street, London E1 8BN. You may request further information concerning the conditions governing compensation and the formalities which must be completed to obtain compensation by writing to Capita IRG Trustees Limited, Nominee Service, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU or by email to: custodymgt@capitaregistrars.com. Transfer of the nominee service We may transfer our duties to any other company at the request of the Company. If the new company writes to you confirming that it will undertake all of our duties, we will cease to have any duties and obligations in relation to the Service.

24.3

24.4

25.

211

Part XI 26. 26.1

Terms and Conditions of the Ocado Share Account

Variation/replacement of these terms and conditions We may change these terms and conditions in the future for the following reasons: 26.1.1 26.1.2 26.1.3 26.1.4 26.1.5 to reflect reasonable changes in the way we provide the Service to you; as a result of new services which we may make available to you; to take account of any corporate restructuring within the Capita group of companies; where reasonably required as a result of changes in market conditions or market practice; to take account of changes or anticipated changes to, or to comply better with, applicable laws or the interpretation of those laws, regulatory requirements, industry guidance or codes of practice that we follow, or the way that we are regulated; to reflect a decision or recommendation of a court, ombudsman, regulator or similar body which is relevant to us or to the Service; to reflect changes in the Bank of England base rate, other specified market rates or indices or tax rates; to rectify errors, inaccuracies or ambiguities; to reflect alterations in the scope and nature of the Nominee Service provided to you under these Terms and Conditions resulting from the alterations made to our agreement with the Company or our system capabilities or administration procedures;

26.1.6 26.1.7 26.1.8 26.1.9

26.1.10 to prevent misuse of the Service; 26.1.11 to take account of, in a proportionate manner, the cost to us of providing the Service; 26.1.12 to prevent fraud or to enhance the security of the Service; or 26.1.13 to make these Conditions easier to understand, fairer to you, or to correct mistakes. 26.2 We will give you at least 30 days prior notice of any change to these Terms and Conditions that is to your disadvantage. You may cancel your agreement with us at any time without charge within 30 days of our sending you notice of such change. If you do not cancel your agreement with us within this 30 day period then you will be deemed to have been accepted such change. We may, as mentioned in clause 10.3, review and notify you of revised charging rates from time to time. If you have received our written notice and do not agree with the proposed changes, you may terminate our Agreement at any time without charge (see clause 19 above). Any change will be deemed to have been accepted by you if you have already instructed us to trade on your behalf after the change has taken effect. General We will not take notice of any trust affecting the Shares whether express, implied or constructive. No conduct or delay on our part shall be taken as a waiver or variation of any rights which we may have unless we waive or vary a particular right in writing. No waiver or variation on a particular occasion will operate as a waiver or variation of our rights in respect of any other matter. If any of the provisions of these Terms and Conditions is held invalid, illegal or unenforceable for any reason, such provision shall be severed and the remainder of the provisions in these Terms and Conditions shall continue in full force and effect as if they had been executed with the invalid provision eliminated. The Nominee has the right to enforce these Terms and Conditions in accordance with the provisions of the Contracts (Rights of Third Parties) Act 1999. Except for the Nominee, nothing in these Terms and Conditions shall confer or is intended to confer on any third party any benefit or the right to enforce any terms contained herein for the purposes of the Contracts (Rights of Third Parties) Act 1999.

26.3 26.4

27. 27.1 27.2

27.3

27.4

212

Part XI 27.5

Terms and Conditions of the Ocado Share Account

This Agreement is subject to English law and you submit to the exclusive jurisdiction of the English courts. Fee Schedule (as at the date of this document)

Certificate withdrawals into own name11.75 Transfer to another CREST account11.75 Duplicate Cheque value between 30 and 10012.75 Duplicate Cheque value over 10016.00 Duplicate Tax Voucher17.00 Each additional Tax Voucher3.00 Duplicate Statement11.75 Small Estates (value of shares between 100 and 15,000) (Administration fee)37.50 plus indemnity 37.75

213

PART XII TAXATION 1. United Kingdom taxation

The following statements do not constitute tax advice and are intended only as a general guide to current UK law and HMRC published practice (which are both subject to change at any time, possibly with retrospective effect). They relate only to certain limited aspects of the UK taxation treatment of holders of the Ordinary Shares and are intended to apply only, except to the extent stated below, to persons who are resident and, if individuals, ordinarily resident in the UK for UK tax purposes, and who are absolute beneficial owners of the Ordinary Shares (otherwise than through an Individual Savings Account or a Self Invested Personal Pension) and who hold them as investments (and not as securities to be realised in the course of a trade). They may not apply to certain Shareholders, such as dealers in securities, insurance companies and collective investment schemes, Shareholders who are exempt from taxation and Shareholders who have (or are deemed to have) acquired their Ordinary Shares by virtue of an office or employment. Such persons may be subject to special rules. Any person who is in any doubt as to their tax position, or who is subject to taxation in any jurisdiction other than the UK, should consult their own professional adviser without delay. 1.1 Taxation of chargeable gains Shareholders who are individuals, trustees or personal representatives of deceased persons A disposal of Ordinary Shares may give rise to a chargeable gain (or allowable loss) for the purposes of UK capital gains tax, depending on the circumstances and subject to any available exemption or relief. On 22 June 2010, the UK Government announced its intention to change the rate at which capital gains tax is charged for individuals, trustees and personal representatives (which, absent such change, would be a flat rate of 18 per cent.). The following two paragraphs are based on the Companys understanding of what is proposed in the Budget delivered on 22 June 2010 and the Finance Bill printed on 28 June 2010. For individuals, capital gains tax will be charged at 18 per cent. where the total chargeable gains (save for any chargeable gains actually arising before 23 June 2010) and, generally, total taxable income arising in a tax year, after all allowable deductions (including losses, the income tax personal allowance and the capital gains tax annual exempt amount, which is currently 10,100), are less than the upper limit of the income tax basic rate band (which is currently 37,400). Subject to the following paragraph, to the extent that any chargeable gains (or part of any chargeable gains) arising in a tax year exceed the upper limit of the income tax basic rate band when aggregated with any such income (in the manner referred to above), capital gains tax will be charged at 28 per cent. For trustees and personal representatives of deceased persons, it is intended that capital gains tax will be charged at a flat rate of 28 per cent. Chargeable gains arising in the current tax year before 23 June 2010 will continue to be liable to capital gains tax at 18 per cent and will not be taken into account in determining the rate at which gains arising after that date should be charged. In working out the capital gains tax payable in the current tax year, taxpayers will generally be able to deduct losses and the annual exempt amount in the way which minimises the capital gains tax due. Corporate Shareholders Where a Shareholder is within the charge to corporation tax, a disposal of Ordinary Shares may give rise to a chargeable gain (or allowable loss) for the purposes of UK corporation tax, depending on the circumstances and subject to any available exemption or relief. Corporation tax is charged on chargeable gains at the rate applicable to that company. Indexation allowance may reduce the amount of chargeable gain that is subject to corporation tax but may not create or increase any allowable loss. Non-UK Resident Shareholders A Shareholder who is an individual and who is only temporarily resident outside the UK for UK tax purposes at the date of a disposal of the Ordinary Shares may be liable to UK tax on chargeable gains on becoming resident or ordinarily resident in the United Kingdom again, in respect of disposals made while he was temporarily resident outside the United Kingdom, subject to any available exemption or relief.

214

Part XII

Taxation

A Shareholder who is neither resident nor, in the case of an individual, ordinarily resident in the United Kingdom (and is not temporarily resident outside the UK) will not be liable for UK tax on chargeable gains realised on a disposal of Ordinary Shares unless such Shareholder carries on: (in the case of a Shareholder who is an individual) a trade, profession or vocation in the UK through a branch or agency and the Ordinary Shares either have been used in or for the purposes of the trade, profession or vocation, or have been used or held for the purposes of the branch or agency, or acquired for use by or for the purposes of the branch or agency; or (in the case of a Shareholder which is a company) a trade in the UK through a permanent establishment and the Ordinary Shares either have been used in or for the purposes of the trade carried on through the permanent establishment, or, have been used or held for the purposes of the permanent establishment or acquired for use by or for the purposes of the permanent establishment.

1.2 Stamp Duty and SDRT The comments in this section relating to stamp duty and SDRT apply whether or not a Shareholder is resident or ordinarily resident in the UK. Issue of Ordinary Shares and sale of Existing Shares Except in relation to the issue of Ordinary Shares to persons providing clearance services or issuing depositary receipts (or, in either case, their nominee or agent), referred to below, no stamp duty or SDRT will generally arise on the issue of Ordinary Shares. Notwithstanding that stamp duty or SDRT may technically be payable by Investors on the sale to them by Selling Shareholders of Existing Shares, separate arrangements have been made, and Investors other than persons providing clearance services or issuing depositary receipts (or, in either case, their nominee or agent) should have no liability in this regard. Subject to certain exemptions, a charge to stamp duty or SDRT will arise on the transfer of Ordinary Shares to particular persons providing a clearance service, their nominees or agents, or to an issuer of depositary receipts, its nominee or agent. The rate of stamp duty or SDRT, as the case may be, in such circumstances will generally be 1.5 per cent. of the amount or value of the consideration for the transfer or, in some circumstances, the value of the Ordinary Shares concerned, in the case of stamp duty rounded up, if necessary, to the nearest multiple of 5. Under applicable legislation, there would also be a 1.5 per cent. SDRT charge on the issue of Ordinary Shares to persons providing clearance services or issuing depositary receipts (or, in either case, their nominee or agent). However, in October 2009 the European Court of Justice held that such a charge on the issue of shares to a clearance service is contrary to Council Directive 69/335/EEC. HMRC have accepted that no such charge can be imposed where the clearance service is located in the EU. HMRC have also confirmed that they will not seek to levy a 1.5 per cent. SDRT charge on an issue of shares to a depositary receipt issuer located within the EU. HMRC do not, however, agree that the reasoning of the European Court of Justice extends to the issue of shares to a clearance service or a depositary receipt issuer located outside the EU and maintain that a 1.5 per cent. SDRT charge on the issue price of the shares should apply in those circumstances. It is recommended that, should this charge arise and Shareholders be responsible for it, they consult their own professional adviser without delay. There are certain exemptions with the aim of preventing a double charge arising when shares in respect of which there has already been a 1.5 per cent. stamp duty or SDRT charge move between clearance services, between depositary receipt issuers, or from one to the other (in either direction). Where shares enter an EU clearance service or depositary receipt scheme without charge, in accordance with the recent ruling by the European Court of Justice, a subsequent transfer of those shares to a clearance service or depositary receipt issuer located outside the EU will not, however, benefit from those exemptions. Subsequent dealings in Ordinary Shares Any subsequent dealings in Ordinary Shares will generally be subject to stamp duty or SDRT in the normal way. An instrument effecting the transfer on sale of Ordinary Shares will generally be liable to

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stamp duty at the rate of 0.5 per cent. (rounded up to the nearest multiple of 5) of the amount or value of the consideration payable. An unconditional agreement to transfer such shares will generally be liable to SDRT at the rate of 0.5 per cent. of the amount or value of the consideration payable, but such liability will be cancelled, or a right to a repayment (generally, with interest) in respect of the payment of such SDRT liability will arise, if the agreement is completed by a duly stamped transfer within six years of the agreement having become unconditional. Stamp duty and SDRT are normally the liability of the purchaser. No stamp duty or SDRT will arise on a transfer of Ordinary Shares into the CREST system provided that, in the case of SDRT, the transfer is not for money or moneys worth. Paperless transfers of Ordinary Shares within CREST are liable to SDRT (at a rate of 0.5 per cent. of the amount or value of the consideration payable) rather than stamp duty, and SDRT on relevant transactions settled within the system or reported through it for regulatory purposes will be collected by CREST. It should be noted that certain categories of person, including specified market intermediaries, are entitled to an exemption from stamp duty and SDRT in respect of purchases of securities in specified circumstances. Certain other persons, being mainly persons providing clearance services or issuing depositary receipts (or, in either case, their nominee or agent), may be liable to account for stamp duty or SDRT at a higher rate of 1.5 per cent. on securities issued or transferred to them. See above for the position with respect to issues and transfers to such persons. 1.3 Taxation of dividends General There is no UK withholding tax on dividends. Individual Shareholders within the charge to UK Income Tax When the Company pays a dividend to a Shareholder who is an individual resident (for tax purposes) in the UK, the Shareholder will be entitled to a tax credit equal to one-ninth of the dividend received. The dividend received plus the related tax credit (the gross dividend) will be part of the Shareholders total income for UK income tax purposes and will be regarded as the top slice of that income. However, in calculating the Shareholders liability to income tax in respect of the gross dividend, the tax credit (which equates to 10 per cent. of the gross dividend) is set off against the tax chargeable on the gross dividend. Basic Rate Taxpayers In the case of a Shareholder who is liable to income tax at the basic rate, the Shareholder will be subject to tax on the gross dividend at the rate of 10 per cent. The tax credit will, in consequence, satisfy in full the Shareholders liability to income tax on the gross dividend. Higher Rate Taxpayers In the case of a Shareholder who is liable to income tax at the higher rate, the Shareholder will be subject to tax on the gross dividend at the rate of 32.5 per cent., to the extent that the gross dividend falls above the threshold for the higher rate of income tax but below the threshold for the additional rate of income tax when it is treated (as mentioned above) as the top slice of the Shareholders income. This means that the tax credit will satisfy only part of the Shareholders liability to income tax on the gross dividend, so that the Shareholder will have to account for income tax equal to 22.5 per cent. of the gross dividend (which equates to 25 per cent. of the dividend received). For example, a dividend of 90 from the Company would represent a gross dividend of 100 (after the addition of the tax credit of 10 (being one-ninth of 90)) and the Shareholder would be required to account for income tax of 22.50 on the dividend, being 32.50 (i.e. 32.5 per cent. of 100) less 10 (the amount of the tax credit). Additional Rate Taxpayers In the case of a Shareholder who is liable to income tax at the additional rate, the Shareholder will be subject to tax on the gross dividend at the rate of 42.5 per cent., to the extent that the gross dividend falls

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above the threshold for the additional rate of income tax when it is treated (as mentioned above) as the top slice of the Shareholders income. This means that the tax credit will satisfy only part of the Shareholders liability to income tax on the gross dividend, so that the Shareholder will have to account for income tax equal to 32.5 per cent. of the gross dividend (which equates to approximately 36.1 per cent. of the dividend received). For example, a dividend of 90 from the Company would represent a gross dividend of 100 (after the addition of the tax credit of 10 (being one-ninth of 90)) and the Shareholder would be required to account for income tax of 32.50 on the dividend, being 42.50 (i.e. 42.5 per cent. of 100) less 10 (the amount of the tax credit). Corporate Shareholders within the charge to UK Corporation Tax Shareholders within the charge to UK corporation tax which are small companies (for the purposes of UK taxation of dividends) will not generally expect to be subject to tax on dividends from the Company. Other Shareholders within the charge to UK corporation tax will not be subject to tax on dividends (including dividends from the Company) so long as the dividends fall within an exempt class and certain conditions are met. In general, dividends paid on shares that are ordinary share capital for UK tax purposes and are not redeemable, and dividends paid to a person holding less than 10 per cent. of the issued share capital of the payer (or any class of that share capital) are examples of dividends that fall within an exempt class. No Payment of Tax Credit A Shareholder (whether an individual or a company) who is not liable to tax on dividends from the Company will not be entitled to claim payment of the tax credit in respect of those dividends. Non-Residents The right of a Shareholder who is not resident (for tax purposes) in the UK to a tax credit in respect of a dividend received from the Company and to claim payment of any part of that tax credit will depend on the existence and terms of any double taxation convention between the UK and the country in which the holder is resident, although generally no such payment will be available. Distributions following a reduction in share capital On 22 June 2010, the UK Government issued draft legislation which is intended to make it clear that distributions made out of reserves arising from a reduction in capital by a UK company are subject to the same rules described for dividends above. The draft legislation is expected to be enacted this year. 2. United States taxation

This disclosure is limited to the US federal tax issues addressed herein. Additional issues may exist that are not addressed in this disclosure and that could affect the US federal tax treatment of the Ordinary Shares. This tax disclosure was written in connection with the promotion or marketing of the Ordinary Shares by the Company and it cannot be used by any person for the purpose of avoiding penalties that may be asserted against the person under the Internal Revenue Code of 1986, as amended (the Code). Shareholders should seek their own advice based on their particular circumstances from an independent tax adviser. The following is a description of certain US federal income tax consequences to the US Shareholders described below of owning and disposing of Ordinary Shares, but it does not purport to be a comprehensive description of all tax considerations that may be relevant to a particular persons decision to acquire the Ordinary Shares. This discussion applies only to a US Shareholder who owns Ordinary Shares as capital assets for tax purposes. In addition, it does not describe all of the tax consequences that may be relevant in light of the US Shareholders particular circumstances, including alternative minimum tax consequences and tax consequences applicable to US Shareholders subject to special rules, such as: certain financial institutions; dealers or traders in securities who use a mark-to-market method of tax accounting;

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persons holding Ordinary Shares as part of a hedging transaction, straddle, wash sale, conversion transaction or integrated transaction or persons entering into a constructive sale with respect to the Ordinary Shares; persons whose functional currency for US federal income tax purposes is not the US dollar; entities classified as partnerships for US federal income tax purposes; tax-exempt entities, including individual retirement accounts or Roth IRAs; persons who own or are deemed to own 10 per cent. or more of the Company by value or of the Companys voting shares; or persons holding Ordinary Shares in connection with a trade or business conducted outside of the United States.

If an entity that is classified as a partnership for US federal income tax purposes holds Ordinary Shares, the US federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding Ordinary Shares and partners in such partnerships should consult their tax advisers as to the particular US federal income tax consequences of holding and disposing of the Ordinary Shares. This discussion is based on the Code, administrative pronouncements, judicial decisions, final, temporary and proposed US Treasury regulations, all as of the date hereof, any of which is subject to change, possibly with retroactive effect. A US Shareholder is a person who, for US federal income tax purposes, is a beneficial owner of Ordinary Shares and is: a citizen or resident of the United States; a corporation, or other entity taxable as a corporation, created or organised in or under the laws of the United States, any state therein or the District of Columbia; or an estate or trust the income of which is subject to US federal income taxation regardless of its source.

US Shareholders should consult their tax advisers concerning the US federal, state, local and non-US tax consequences of owning and disposing of Ordinary Shares in their particular circumstances. This discussion assumes that the Company is not, and will not become, a passive foreign investment company, as described below. Taxation of distributions Distributions paid on Ordinary Shares, other than certain pro rata distributions of Ordinary Shares, will be treated as dividends to the extent paid out of the Companys current or accumulated earnings and profits (as determined under US federal income tax principles). Because the Company does not maintain calculations of its earnings and profits under US federal income tax principles, it is expected that distributions generally will be reported to US Shareholders as dividends. Subject to applicable limitations, dividends paid to certain non-corporate US Shareholders in taxable years beginning before 1 January 2011 may be taxable at favourable rates, up to a maximum rate of 15 per cent. US Shareholders should consult their tax advisers regarding the availability of the reduced tax rate on dividends in their particular circumstances. Dividends will be treated as foreign-source dividend income to US Shareholders and will not be eligible for the dividends-received deduction generally available to US corporations under the Code. Dividends will be included in a US Shareholders income on the date of the US Shareholders receipt of the dividend. The amount of any dividend paid in pounds sterling will be the US dollar amount calculated by reference to the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into US dollars. If the dividend is converted into US dollars on the date of receipt, a US Shareholder should not be required to recognise foreign currency gain or loss in respect of the dividend income. A US Shareholder may have foreign currency gain or loss if the dividend is converted into US dollars after the date of receipt. Foreign currency income or losses generally will be

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Taxation

treated as ordinary income or losses to such US Shareholder and generally will be income or losses from sources within the United States. Sale or other disposition of Ordinary Shares For US federal income tax purposes, gain or loss realised on the sale or other disposition of Ordinary Shares will be capital gain or loss, and will be long-term capital gain or loss if the US Shareholder held the Ordinary Shares for more than one year. The amount of the gain or loss will equal the difference between the US Shareholders tax basis in the shares disposed of and the amount realised on the disposition, in each case as determined in US dollars. This gain or loss will generally be US-source gain or loss for foreign tax credit purposes. Passive foreign investment company rules The Company does not believe that it was a passive foreign investment company (a PFIC) for US federal income tax purposes for its most recent taxable year and does not expect to become a PFIC in the foreseeable future. However, since PFIC status depends on the composition of the Companys income and assets and the market value of its assets from time to time, which in turn may be determined in part by reference to the market price of the Ordinary Shares, there can be no assurance that the Company will not be a PFIC for any taxable year. In general, a non-US corporation will be considered a PFIC for any taxable year in which (i) 75 per cent. or more of its gross income consists of passive income or (ii) 50 per cent. or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income. For purposes of the above calculations, a non-US corporation that directly or indirectly owns at least 25 per cent. by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Passive income generally includes dividends, interest, rents, royalties and capital gains. If the Company were a PFIC for any taxable year during which a US Shareholder held Ordinary Shares, gains recognised by a US Shareholder on a sale or other disposition (including certain pledges) of Ordinary Shares would be allocated rateably over the US Shareholders holding period for the Ordinary Shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before the Company became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed on the amount of such tax. Further, to the extent that any distribution received by a US Shareholder on its Ordinary Shares exceeds 125 per cent. of the average of the annual distributions on the Ordinary Shares received during the preceding three years or the US Shareholders holding period, whichever is shorter, that distribution would be subject to taxation in the same manner as gains, described immediately above. Certain elections may be available that would result in alternative treatments (such as mark-to-market treatment) of the Ordinary Shares. US Shareholders should consult their tax advisers to determine whether any of these elections would be available and, if so, what the consequences of the alternative treatments would be in their particular circumstances. In addition, if the Company were a PFIC, the 15 per cent. dividend rate discussed above with respect to dividends paid to certain non-corporate US Shareholders would not apply. Information reporting and backup withholding Payments of dividends and sales proceeds that are made within the United States or through certain US-related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (i) the US Shareholder is an exempt recipient, or (ii) in the case of backup withholding, the US Shareholder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding. The amount of any backup withholding from a payment to a US Shareholder will be allowed as a credit against the holders US federal income tax liability and may entitle it to a refund, provided that the required information is furnished to the Internal Revenue Service in a timely fashion.

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PART XIII ADDITIONAL INFORMATION 1. Persons responsible

The Directors, whose names appear on page 32, and the Company accept responsibility for the information contained in this document. To the best of the knowledge of the Directors and the Company (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information. 2. Incorporation and activity of the Company

The Company was incorporated and registered in England and Wales under the Companies Act as a private company limited by shares on 8 December 2009 with the name Ocado Group Limited and the registered number 7098618. The principal legislation under which the Company operates is the Companies Act and regulations made thereunder. On 23 June 2010, by members written resolutions: (A) (B) (C) (D) the Company resolved to be re-registered as a public limited company; the Company resolved to change its name from Ocado Group Limited to Ocado Group plc; the Company adopted the Articles in substitution for the Old Articles; and the Company resolved that, subject to, and with effect upon Admission, the Final Articles be adopted in substitution for the Articles.

The Company is domiciled in the UK with its registered and head office at Titan Court, 3 Bishops Square, Hatfield Business Park, Hatfield, Hertfordshire AL10 9NE. Its telephone number is +44 (0)1707 228000. The Company has, since 9 February 2010, been the holding company of the Group and Ocado, the operating company of the Group, is a wholly-owned subsidiary of the Company. 3. 3.1 Share capital of the Company Incorporation

The Company was incorporated with one ordinary share of 110 pence which was subscribed for (nil paid) by the subscriber to the memorandum of association of the Company, Trusec Limited. On 10 December 2009, the subscriber share in the capital of the Company held by Trusec Limited was transferred to Neill Abrams, a current Director of the Company and Neill Abrams extinguished the liability to pay 1.10 for the share. By members written resolutions passed on 19 December 2009: (A) (B) 3.2 the Company adopted the Old Articles; and the subscriber share in the capital of the Company was reclassified as a Subscriber Ordinary Share. Resolutions to give effect to the Scheme

Also on 19 December 2009, it was resolved by written resolutions that: (A) subject to and conditional on the Scheme becoming effective, the Directors be generally and unconditionally authorised to exercise all the powers of the Company to allot shares in the Company and to grant rights for or to convert security into shares in the Company: (i) (ii) up to an aggregate nominal amount of 450,000,000 as required for the purposes of the Scheme; up to an aggregate nominal amount of 19,390,140 as required for the purposes of arrangements requiring the Company to satisfy the entitlements of optionholders, warrantholders and participants in the ESOS who had entitlements to Ordinary Shares and/or Preference Shares following implementation of the Scheme; and

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Additional Information

up to an aggregate nominal amount of 244,409,000 (representing the equivalent subsisting authority in Ocado as at the date of the resolution),

for a period expiring (unless previously revoked or varied by the Company in general meeting) five years from the date of the resolution, save that, in each case, the Company may before such expiry make an offer or agreement which would or might require shares in the Company to be allotted or rights to subscribe for or convert security into shares to be granted after such expiry and the Board may allot shares or grant rights to subscribe for or convert security into shares in pursuance of such an offer or agreement as if the authority conferred by the resolution had not expired; (B) subject to and conditional on the Scheme becoming effective and the passing of the resolution described in paragraph (A) above, the Directors be empowered, pursuant to section 571 of the Companies Act 2006, to allot equity securities (as defined in section 560 of the Companies Act) for cash pursuant to the authority conferred by the resolution described in paragraph (A) above and/or where such allotment constitutes an allotment of equity securities by virtue of section 560(2)(b) of the Companies Act, as if section 561(1) of the Companies Act did not apply to any such allotment, provided that this power shall be limited to: (i) the allotment of equity securities in connection with a rights issue, open offer or any other pre-emptive offer in favour of holders of Ordinary Shares and/or Preference Shares in proportion (as nearly as may be practicable) to their respective holdings of such shares, but subject in each case to such exclusion or other arrangements as the Directors may deem necessary or expedient to deal with fractional entitlements or legal or practical problems arising in any overseas territory, the requirements of any regulatory body or stock exchange or any other matter whatsoever; and otherwise than pursuant to sub-paragraph (i) above up to an aggregate nominal amount of 244,409,000 (representing the equivalent subsisting authority in Ocado at the date of the resolution),

(ii)

and shall expire five years from the date of the resolution, save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Board may allot equity securities in pursuance of such an offer or agreement as if the power conferred by the resolution had not expired; and (C) subject to and conditional upon: (a) the Ordinary Shares and the Preference Shares required to be allotted and issued by the Company pursuant to the Scheme, by which the Company would be bound, having been allotted and issued and registered in the names of the persons entitled to such Ordinary Shares and/or Preference Shares in the Companys register of members; in respect of sub-paragraph (ii) below only, implementation of the Scheme involving the cancellation of the entire issued share capital of Ocado and the subsequent issue of shares in Ocado to the Company; and the Scheme becoming effective and fully implemented,

(b)

(c)

the share capital of the Company be reduced by: (i) cancelling paid up share capital to the extent of 108 pence on each Ordinary Share and each Preference Share in the capital of the Company issued pursuant to the Scheme and reducing the nominal value of each such Ordinary Share and each such Preference Share from 110 pence to 2 pence; and cancelling and extinguishing the Subscriber Ordinary Share.

(ii) 3.3

The Scheme

On the Scheme effective date, being 9 February 2010, pursuant to the Scheme, all of the Ocado Limited Ordinary Shares and the Ocado Limited Preference Shares held at the Scheme record time, being 6pm on 8 February 2010, were cancelled and, forthwith, Ocado issued 100 Ocado Limited Ordinary Shares to the Company for 1 in aggregate, credited as fully paid, and, in consideration of the cancellation of the

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Additional Information

Ocado Limited Ordinary Shares and the Ocado Limited Preference Shares and the issue of 100 Ocado Limited Ordinary Shares to the Company, the Company issued, in aggregate, 185,715,900 Ordinary Shares and 247,474,900 Preference Shares to holders of such Ocado Limited Ordinary Shares and/or Ocado Limited Preference Shares (as applicable) at the Scheme record time, credited as fully paid, on the basis of one hundred Ordinary Shares and/or one hundred Preference Shares for each Ocado Limited Ordinary Share and/or Ocado Limited Preference Share held (as applicable). The effect of the Scheme was therefore to replicate the shareholders register of Ocado at the level of the Company. Details of the Companys Major Shareholders are set out in section 8 of this Part XIII. On 16 February 2010, pursuant to an order of the Court confirming the reduction of capital of the Company which was registered by the Registrar of Companies on that date, the Companys share capital was reduced by decreasing the nominal value of each Ordinary Share and each Preference Share issued pursuant to the Scheme from 110 pence to 2 pence. As part of the same reduction of capital, the Subscriber Ordinary Share was cancelled and extinguished. 3.4 The Preference Shares

The Preference Shares have certain conversion rights under the Articles. The holders of the Preference Shares are entitled at any time and from time to time to convert any of the Preference Shares held by them into the same number of Ordinary Shares. All of the Preference Shares shall automatically convert into the same number of Ordinary Shares on Admission and the Ordinary Shares resulting from the exercise of such a conversion shall, as from the date of conversion, rank pari passu in all respects with the existing Ordinary Shares in the capital of the Company. 3.5 Total issued share capital

As at 5 July 2010, the latest practicable date prior to the publication of this document, the share capital of the Company was 8,670,916, comprising 186,070,920 Ordinary Shares of 2 pence each (of which 32,476,700 were held by the EBT Trustee pursuant to the JSOS) and 247,474,900 Preference Shares of 2 pence each. 3.6 Corporate steps taken prior to the publication of this document

By written resolutions of the Companys shareholders passed on 23 June 2010, it was resolved that: (A) subject to and conditional upon (in the case of the authorities described in paragaphs (ii) to (iv) below) Admission, the Board be generally and unconditionally authorised, in substitution for (with effect from Admission) all subsisting authorities, to exercise all powers of the Company to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in the Company: (i) (ii) up to an aggregate nominal amount of 5,000,000 in connection with the Offers; up to an aggregate nominal amount of 50,000 as required for the purposes of arrangements requiring the Company to satisfy the entitlements of non-employee optionholders who have entitlements to Ordinary Shares following Admission; up to an aggregate nominal amount of 6,666,666 (such amount to be reduced by the nominal amount of any shares in the Company allotted or rights to subscribe for or to convert any security into shares in the Company granted under sub-paragraph (iv) below in excess of such sum); and comprising equity securities (as defined in section 560(1) of the Companies Act) up to an aggregate nominal amount of 13,333,333 (such amount to be reduced by any allotments of any shares in the Company or grants of rights to subscribe for or to convert any security into shares in the Company made under sub-paragraph (iii) above) in connection with an offer by way of a rights issue: (a) to holders of Ordinary Shares in proportion (as nearly as may be practicable) to their existing holdings; and

(iii)

(iv)

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Part XIII (b)

Additional Information

to holders of other equity securities as required by the rights of those securities or as the Board otherwise considers necessary,

and so that the Board may impose any limits or restrictions and make any arrangements which it considers necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter, such authorities to apply until the end of the next annual general meeting of the Company (or, if earlier, until the close of business on 19 September 2011) but, in each case, during this period the Company may make offers and enter into agreements which would, or might, require shares to be allotted or rights to subscribe for or convert securities into shares to be granted after the authority ends and the Board may allot shares or grant rights to subscribe for or convert securities into shares in the Company under any such offer or agreement as if the authority had not ended; (B) subject to and conditional upon the passing of the resolution described in section 3.6(A) above, the Board be given power, in substitution for all subsisting powers, to allot equity securities (as defined in the Companies Act) for cash under the authority given by the resolution described in section 3.6(A) above and/or to sell Ordinary Shares held by the Company as treasury shares for cash as if section 561 of the Companies Act did not apply to any such allotment or sale, such power to be limited: (i) (ii) to the allotment of equity securities up to an aggregate nominal amount of 5 million in connection with the Offers; to the allotment of equity securities and sale of treasury shares for cash in connection with an offer of, or invitation to apply for, equity securities (but in the case of the authority granted under paragraph (iv) of the resolution described at section 3.6(A) above, by way of a rights issue only): (a) (b) to holders of Ordinary Shares in proportion (as nearly as may be practicable) to their existing holdings; and to holders of other equity securities, as required by the rights of those securities, or as the Board otherwise considers necessary as permitted by the rights of those securities,

and so that the Board may impose any limits or restrictions and make any arrangements which it considers necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter; and (iii) in the case of the authority granted under sub-paragraph (iii) of the resolution described at section 3.6(A) above and/or in the case of any sale of treasury shares for cash, to the allotment (otherwise than under paragraph (ii) above) of equity securities or sale of treasury shares up to a nominal amount of 1 million,

such power to apply until the end of the next annual general meeting of the Company (or, if earlier, until the close of business on 19 September 2011 but, in each case, during this period the Company may make offers, and enter into agreements, which would, or might, require equity securities to be allotted (and treasury shares to be sold) after the power ends and the Board may allot equity securities (and sell treasury shares) under any such offer or agreement as if the power had not ended; and (C) subject to and conditional upon Admission, the Company be authorised for the purposes of section 701 of the Companies Act to make one or more market purchases (as defined in section 693(4) of the Companies Act) of its Ordinary Shares, such power to be limited: (i) to a maximum number of 100,000,000 Ordinary Shares;

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Part XIII (ii)

Additional Information by the condition that the minimum price which may be paid for an Ordinary Share is 2 pence and the maximum price which may be paid for an Ordinary Share is the highest of: (a) an amount equal to 5 per cent. above the average market value of an Ordinary Share for the five Business Days immediately preceding the day on which that Ordinary Share is contracted to be purchased; and the higher of the price of the last independent trade and the highest current independent bid on the trading venues where the purchase is carried out,

(b)

in each case, exclusive of expenses; such power to apply until the end of the next annual general meeting of the Company (or, if earlier, 19 September 2011) but in each case so that the Company may enter into a contract to purchase Ordinary Shares which will or may be completed or executed wholly or partly after the power ends and the Company may purchase Ordinary Shares pursuant to any such contract as if the power had not ended. The Directors undertake that, to the extent that the authority conferred under sub-paragraph (iii) of the resolution described in section 3.6(A) above is in respect of an aggregate nominal amount which exceeds the aggregate of (a) the aggregate nominal amount of the Companys issued ordinary share capital immediately following Admission (the Admission Capital) and (b) one-third of the Admission Capital, they will not exercise that authority in respect of such excess. The Directors undertake that, to the extent that the authority conferred under sub-paragraph (iv) of the resolution described in section 3.6(A) above is in respect of an aggregate nominal amount which exceeds the aggregate of (a) the aggregate nominal amount of the Admission Capital and (b) two-thirds of the Admission Capital, they will not exercise that authority in respect of such excess. The Directors undertake to limit the exercise of the power conferred by the resolution described in section 3.6(B) above, as limited by sub-paragraph (iii) of that paragraph, to an aggregate nominal amount which is not more than the aggregate of (a) the aggregate nominal amount of the Admission Capital and (b) 5 per cent. of the Admission Capital. The Directors undertake that, to the extent that the authority conferred by the resolution referred to in section 3.6(C) above is in respect of an aggregate number of shares which exceeds the aggregate of (a) the aggregate number of Ordinary Shares in issue immediately following Admission (the Aggregate Number) and (b) 10 per cent. of the Aggregate Number, they will not exercise that authority in respect of such excess. 3.7 Confirmations

At the date of this document (and save as disclosed in sections 3, 9.3, 11, 12 and 17.4 of this Part XIII): (A) no share or loan capital of the Company has, since the incorporation of the Company, been issued or agreed to be issued, or is now proposed to be issued, fully or partly paid, either for cash or for a consideration other than cash, to any person; no commission, discounts, brokerages or other special terms have been granted by the Company in connection with the issue or sale of any share or loan capital; and no share or loan capital of the Company is under option or agreed, conditionally or unconditionally, to be put under option.

(B) (C)

All of the Offer Shares have been marketed and will be available to the public in the UK. Under the Final Articles and, in the case of the New Ordinary Shares, following their being issued, the Ordinary Shares will be in registered form and capable of being held in Certificated and Uncertificated form. No temporary documents of title have been or will be issued in respect of the Ordinary Shares. The Ordinary Shares will rank pari passu for dividends. As at 5 July 2010, being the last practicable date prior to the date of this document, the Company held no treasury shares (as defined in the Companies Act 2006). However, the 32,476,700 Existing Shares held

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by the EBT Trustee pursuant to the JSOS are treated as treasury shares in the Groups consolidated balance sheet in accordance with IAS 32 Financial Instruments: Presentation. No Ordinary Shares have been issued other than fully paid. Immediately following Admission, the Companys share capital is expected to be as follows: Number of Ordinary Shares expected to be in issue immediately following Admission(1),(2)
(1) (2)

497,476,810

Assumes that the Offer Price is set at the mid-point of the Price Range. This figure excludes the 32,476,700 Ordinary Shares held by the EBT Trustee pursuant to the JSOS. Assumes that all Selling Optionholders exercise their exercisable options.

Further information about the Ordinary Shares and the rights attaching to them is set out in sections 4 and 5 below, and further information on dealing arrangements and CREST is set out in section 21. 4. 4.1 Information about the Ordinary Shares Description of the type and class of securities being offered

The Ordinary Shares have a nominal value of 2 pence each. Following the Offers, the Company will have one class of Ordinary Shares, the rights of which are set out in the Final Articles, a summary of which is set out in section 5 of this Part XIII. When admitted to trading, the ISIN of the Ordinary Shares will be GB00B3MBS747. The Existing Shares are, and the New Ordinary Shares will be, credited as fully paid and free from all liens, equities, charges, encumbrances and other interests. The Existing Shares rank, and the New Ordinary Shares will rank, in full for all dividends and distributions on Ordinary Shares of the Company declared, made or paid after their issue. 4.2 Legislation under which the Ordinary Shares are created

The Existing Shares have been, and the New Ordinary Shares will be, created under the Companies Act. 4.3 Listing

Application will be made to the UK Listing Authority for all of the Ordinary Shares to be admitted to the premium listing segment of the Official List. Application will also be made to the London Stock Exchange for the Ordinary Shares to be admitted to trading on its main market for listed securities. It is expected that Admission will become effective and that dealings in the Ordinary Shares will commence on the London Stock Exchange by no later than 8.00 a.m. on 26 July 2010. Listing of the Ordinary Shares is not being sought on any stock exchange other than the London Stock Exchange. Conditional dealings in the Ordinary Shares (on a when issued basis) are expected to commence on 21 July 2010. It is expected that Admission will become effective and that unconditional dealings in the Ordinary Shares will commence at 8.00 a.m. (London time) on 26 July 2010. Dealings on the London Stock Exchange before Admission will only be settled if Admission takes place. All dealings before the commencement of unconditional dealings will be of no effect if Admission does not take place and such dealings will be at the sole risk of the parties concerned. 4.4 Form and currency of the Ordinary Shares

The Ordinary Shares will be in registered form and will be capable of being held in Certificated and Uncertificated form. The Registrar of the Company is Capita Registrars Limited of The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU. Title to the Certificated Ordinary Shares (if any) will be evidenced by entry in the register of members of the Company and title to Uncertificated Ordinary Shares will be evidenced by entry in the operator register maintained by Euroclear UK (which will form part of the register of members of the Company).

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No share certificates will be issued in respect of the Ordinary Shares in Uncertificated form. If any such shares are converted to be held in Certificated form, share certificates will be issued in respect of those shares in accordance with applicable legislation. The Ordinary Shares are denominated in pounds sterling. 4.5 Rights attached to the Ordinary Shares

Each New Ordinary Share will, when issued and fully paid, rank pari passu in all respects with each Existing Share and will have the same rights (including voting and dividend rights and rights on a return of capital) and restrictions as each Existing Share, as set out in the Final Articles. Subject to the provisions of the Companies Act, any equity securities issued by the Company for cash must first be offered to Shareholders in proportion to their holdings of Ordinary Shares. The Companies Acts and the Listing Rules allow for the disapplication of pre-emption rights which may be waived by a special resolution of the Shareholders, either generally or specifically, for a maximum period not exceeding five years. Except in relation to dividends which have been declared and rights on a liquidation of the Company, the Shareholders have no rights to share in the profits of the Company. The Ordinary Shares are not redeemable. However, the Company may purchase or contract to purchase any of the Ordinary Shares on or off-market, subject to the Companies Act and the requirements of the Listing Rules. The Company may purchase Ordinary Shares only out of distributable reserves or the proceeds of a new issue of shares made for the purpose of funding the repurchase. Further details of the rights attached to the Ordinary Shares in relation to attendance and voting at general meetings, entitlements on a winding-up of the Company and transferability of shares are set out in section 5 of this Part XIII. Further details of the voting and dividend rights attaching to Ordinary Shares issued pursuant to the JSOS are set out in section 11.3 of this Part XIII. 4.6 Authorities relating to the New Ordinary Shares

Please refer to section 3 of this Part XIII for a description of the authorities in place relating to the Ordinary Shares. 4.7 Description of restrictions on free transferability

Save as set out below and in section 11.3 of this Part XIII, the Ordinary Shares will be freely transferable. The Company may, under the Companies Act, send out statutory notices to those it knows or has reasonable cause to believe have an interest in its shares, asking for details of those who have an interest and the extent of their interest in a particular holding of shares. When a person receives a statutory notice and fails to provide any information required by the notice within the time specified in it, the Company can apply to the court for an order directing, among other things, that any transfer of shares which are the subject of the statutory notice is void. 4.8 Taxation

Certain information on taxation in the UK and the United States with regard to the Offers is set out in Part XII (Taxation). The information contained in Part XII (Taxation) is intended only as a general guide to the current tax position in the UK and the United States for the Shareholders described therein. Prospective Shareholders should consult their own tax advisers regarding the tax treatment of the ownership and disposition of Ordinary Shares in light of their own circumstances. Prospective Shareholders who are in any doubt as to their tax position or who are subject to tax in any other jurisdiction should consult an appropriate professional adviser immediately.

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Mandatory bids, squeeze-out and sell-out rules relating to the Ordinary Shares

Please refer to section 6 of this Part XIII for information relating to mandatory bids, squeeze-out and sell-out rules which are relevant to holders of Ordinary Shares. 5. Summary of the Final Articles

The Final Articles, which were adopted on 23 June 2010 subject to and with effect upon Admission, contain (amongst others) provisions to the following effect. 5.1 Unrestricted objects

The objects of the Company are unrestricted. 5.2 Limited Liability

The liability of the Companys members is limited to any unpaid amount on the shares in the Company held by them. 5.3 Change of Name

The Final Articles allow the Company to change its name by resolution of the Directors. This is in addition to the Companys statutory ability to change its name by special resolution under the Companies Act. 5.4 Share rights

Subject to applicable statutes (in this section the Companies Acts), any resolution passed by the Company under the Companies Acts and other Shareholders rights, shares may be issued with such rights and restrictions as the Company may by ordinary resolution decide, or (if there is no such resolution or so far as it does not make specific provision) as the Board may decide. These rights and restrictions will apply as if they were set out in the Final Articles. Redeemable shares may be issued. The Directors can decide on the terms and conditons and the manner of redemption of any redeemable shares. These terms and conditons will apply as if they were set out in the Final Articles. Subject to the Final Articles, the Companies Acts and other Shareholders rights, the shares in the Company are at the disposal of the Board. 5.5 Voting rights

Shareholders will be entitled to vote at a general meeting or class meeting whether on a show of hands or a poll, as provided in the Companies Acts. The Companies Act 2006 provides that: (A) on a show of hands every member present in person has one vote and every proxy present who has been duly appointed by one or more members will have one vote, except that a proxy has one vote for and one vote against if the proxy has been duly appointed by more than one member and the proxy has been instructed by one or more members to vote for and by one or more other members to vote against. For this purpose the Final Articles provide that, where a proxy is given discretion as to how to vote on a show of hands, this will be treated as an instruction by the relevant Shareholder to vote in the way that the proxy decides to exercise that discretion; and on a poll every member has one vote per share held by him and he may vote in person or by one or more proxies. Where he appoints more than one proxy, the proxies appointed by him taken together shall not have more extensive voting rights than he could exercise in person.

(B)

This is subject to any rights or restrictions which are given to any shares or on which shares are held. If more than one joint Shareholder votes (including voting by proxy), the only vote which will count is the vote of the person whose name is listed before the other voters on the register for the share. 5.6 Restrictions

No Shareholder shall be entitled to vote at any general meeting or class meeting in respect of any share held by him if any call or other sum then payable by him in respect of that share remains unpaid or if a

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member has been served with a restriction notice (as defined in the Final Articles) after failure to provide the Company with information concerning interests in those shares required to be provided under the Companies Acts. 5.7 Dividends and other distributions

The Company may by ordinary resolution from time to time declare dividends not exceeding the amount recommended by the Board. Subject to the Companies Acts, the Board may pay interim dividends, and also any fixed rate dividend, whenever the financial position of the Company, in the opinion of the Board, justifies its payment. If the Board acts in good faith, it is not liable to holders of shares with preferred or pari passu rights for losses arising from the payment of interim or fixed dividends on other shares. The Board may withhold payment of all or any part of any dividends or other monies payable in respect of the Companys shares from a person with a 0.25 per cent. interest (as defined in the Final Articles) if such a person has been served with a restriction notice (as defined in the Final Articles) after failure to provide the Company with information concerning interests in those shares required to be provided under the Companies Acts. Except insofar as the rights attaching to, or the terms of issue of, any share otherwise provide, all dividends shall be apportioned and paid pro rata according to the amounts paid up on the share during any portion of the period in respect of which the dividend is paid. Except as set out above, dividends may be declared or paid in any currency. The Board may if authorised by an ordinary resolution of the Company offer ordinary Shareholders (excluding any member holding shares as treasury shares) in respect of any dividend the right to elect to receive ordinary shares by way of scrip dividend instead of cash. Any dividend unclaimed after a period of 12 years from the date when it was declared or became due for payment shall be forfeited and revert to the Company. The Company may stop sending cheques, warrants or similar financial instruments in payment of dividends by post in respect of any shares or may cease to employ any other means of payment, including payment by means of a relevant system, for dividends if either (i) at least two consecutive payments have remained uncashed or are returned undelivered or that means of payment has failed or (ii) one payment remains uncashed or is returned undelivered or that means of payment has failed and reasonable enquiries have failed to establish any new postal address or account of the holder. The Company may resume sending dividend cheques, warrants or similar financial instruments or employing that means of payment if the holder requests such resumption in writing. 5.8 Variation of rights

Subject to the Companies Acts, rights attached to any class of shares may be varied with the written consent of the holders of not less than three-fourths in nominal value of the issued shares of that class (calculated excluding any shares held as treasury shares), or with the sanction of a special resolution passed at a separate general meeting of the holders of those shares. At every such separate general meeting (except an adjourned meeting) the quorum shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of the class (calculated excluding any shares held as treasury shares). The rights conferred upon the holders of any shares shall not, unless otherwise expressly provided in the rights attaching to those shares, be deemed to be varied by the creation or issue of further shares ranking pari passu with them. 5.9 Transfer of shares

The shares are in registered form. Any shares in the Company may be held in Uncertificated form and, subject to the Final Articles, title to Uncertificated shares may be transferred by means of a relevant system. Provisions of the Final Articles do not apply to any Uncertificated shares to the extent that such provisions are inconsistent with the holding of shares in Uncertificated form or with the transfer of shares by means of a relevant system.

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Subject to the restrictions contained in the Final Articles described in this section 5.9, any member may transfer all or any of his Certificated shares by an instrument of transfer in any usual form or in any other form which the Board may approve. The instrument of transfer must be signed by or on behalf of the transferor and (in the case of a partly paid share) the transferee. The transferor of a share is deemed to remain the holder until the transferees name is entered in the register. The Board can decline to register any transfer of any share which is not a fully paid share. The Board may also decline to register a transfer of a Certificated share unless the instrument of transfer: (A) is duly stamped or certified or otherwise shown to the satisfaction of the Board to be exempt from stamp duty and is accompanied by the relevant share certificate or such other evidence of the right to transfer as the Board may reasonably require; is in respect of only one class of share; and if to joint transferees, is in favour of not more than four such transferees.

(B) (C)

Registration of a transfer of an Uncertificated share may be refused in the circumstances set out in the uncertificated securities rules (as defined in the Final Articles) and where, in the case of a transfer to joint holders, the number of joint holders to whom the Uncertificated share is to be transferred exceeds four. The Board may decline to register a transfer of any of the Companys Certificated shares by a person with a 0.25 per cent. interest (as defined in the Final Articles) if such a person has been served with a restriction notice (as defined in the Final Articles) after failure to provide the Company with information concerning interests in those shares required to be provided under the Companies Acts, unless the transfer is shown to the Board to be pursuant to an arms length sale (as defined in the Final Articles). 5.10 Sub-division of share capital Any resolution authorising the Company to sub-divide any of its shares can provide that, as between the holders of the divided shares, different rights and restrictions of a kind which the Company can apply to new shares can apply to different dividend shares. 5.11 General meetings The Final Articles rely on the Companies Act provisions dealing with the calling of general meetings. The Companies Act provides that a general meeting (other than an adjourned meeting) must be called by notice of at least 21 days in the case of an annual general meeting and at least 14 days in any other case. Notice of a general meeting must be given in hard copy form, in electronic form, or by means of a website and must be sent to every member and every Director. It must state the time and date and the place of the meeting and the general nature of the business to be dealt with at the meeting. A notice calling an annual general meeting must state that the meeting is an annual general meeting. Each Director shall be entitled to attend and speak at any general meeting. The chairman of the meeting may invite any person to attend and speak at any general meeting where he considers that this will assist in the deliberations of the meeting. 5.12 Directors (A) Number of Directors

The Directors shall be not less than two and not more than 15 in number. The Company may by ordinary resolution vary the minimum and/or maximum number of Directors. (B) Directors shareholding qualification

A Director shall not be required to hold any shares in the Company.

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Appointment of Directors

Directors may be appointed by the Company by ordinary resolution or by the Board. A Director appointed by the Board holds office only until the next following annual general meeting of the Company and is then eligible for re-appointment. The Board or any committee authorised by the Board may from time to time appoint one or more Directors to hold any employment or executive office for such period and on such terms as they may determine and may also revoke or terminate any such appointment. (D) Retirement of Directors

At every annual general meeting of the Company, each Director shall retire from office and may offer himself for re-appointment by the members. (E) Removal of Directors by special resolution

The Company may by special resolution remove any Director before the expiration of his period of office. (F) Vacation of office

The office of a Director shall be vacated if: (i) (ii) (iii) (iv) he resigns or offers to resign and the Board resolve to accept such offer; his resignation is requested by all of the other Directors and all of the other Directors are not less than three in number; he is or has been suffering from mental or physical ill-health and the Board resolves that his office be vacated; he is absent without the permission of the Board from meetings of the Board (whether or not an alternate Director appointed by him attends) for six consecutive months and the Board resolves that his office is vacated; he becomes bankrupt or compounds with his creditors generally; he is prohibited by law from being a Director;

(v) (vi)

(vii) he ceases to be a Director by virtue of the Companies Acts; or (viii) he is removed from office pursuant to the Final Articles. If the office of a Director is vacated for any reason, he must cease to be a member of any committee or sub-committee of the Board. (G) Alternate Directors Any Director may appoint any person to be his alternate and may at his discretion remove such an alternate Director. If the alternate Director is not already a Director, the appointment, unless previously approved by the Board, shall have effect only upon and subject to being so approved. (H) Proceedings of the Board

Subject to the provisions of the Final Articles, the Board may meet for the despatch of business, adjourn and otherwise regulate its meetings as it thinks fit. The quorum necessary for the transaction of the business of the Board may be fixed by the Board and, unless so fixed at any other number, shall be two. A meeting of the Board at which a quorum is present shall be competent to exercise all the powers, authorities and discretions vested in or exercisable by the Board. The Board may appoint a Director to be the chairman or a deputy chairman and may at any time remove him from that office. Questions arising at any meeting of the Board shall be determined by a majority of votes. In the case of an equality of votes the chairman of the meeting shall have a second or casting vote.

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All or any of the members of the Board may participate in a meeting of the Board by means of a conference telephone or any communication equipment which allows all persons participating in the meeting to speak to and hear each other. A person so participating shall be deemed to be present at the meeting and shall be entitled to vote and to be counted in the quorum. The Board may delegate any of its powers, authorities and discretions (with power to sub-delegate) to any committee, consisting of such person or persons as it thinks fit, provided that the majority of persons on any committee or sub-committee must be Directors. The meetings and proceedings of any committee consisting of two or more members shall be governed by the provisions contained in the Final Articles for regulating the meetings and proceedings of the Board so far as the same are applicable and are not superseded by any regulations imposed by the Board. (I) Remuneration of Directors

Each of the Directors shall be paid a fee at such rate as may from time to time be determined by the Board, but the aggregate of all such fees so paid to the Directors shall not exceed 1,000,000 per annum or such higher amount as may from time to time be decided by ordinary resolution of the Company. Any Director who is appointed to any executive office shall be entitled to receive such remuneration (whether by way of salary, commission, participation in profits or otherwise) as the Board or any committee authorised by the Board may decide, either in addition to or in lieu of his remuneration as a Director. In addition, any Director who performs services which in the opinion of the Board or any committee authorised by the Board go beyond the ordinary duties of a Director, may be paid such extra remuneration as the Board or any committee authorised by the Board may determine. Each Director may be paid his reasonable travelling, hotel and incidental expenses of attending and returning from meetings of the Board, or committees of the Board or of the Company or any other meeting which as a Director he is entitled to attend, and shall be paid all other costs and expenses properly and reasonably incurred by him in the conduct of the Companys business or in the discharge of his duties as a Director. The Company may also fund a Directors or former Directors expenditure and that of a Director or former Director of any holding company of the Company for the purposes permitted under the Companies Acts and may do anything to enable a Director or former Director or a Director or former Director of any holding company of the Company to avoid incurring such expenditure as provided in the Companies Acts. (J) Pensions and gratuities for Directors

The Board or any committee authorised by the Board may exercise the powers of the Company to provide benefits by the payment of gratuities or pensions or by insurance or in any other manner for any Director or former Director or his relations, dependants or persons connected to him, but no benefits (except those provided for by the Final Articles) may be granted to or in respect of a Director or former Director who has not been employed by or held an executive office or place of profit under the Company or any of its subsidiary undertakings or their respective predecessors in business without the approval of an ordinary resolution of the Company. (K) Directors interests

The Board may, subject to the provisions of the Final Articles, authorise any matter which would otherwise involve a Director breaching his duty under the Companies Acts to avoid conflicts of interest. Where the Board gives authority in relation to a conflict of interest, or where any of the situations described in (i) to (v) below applies in relation to a Director, the Board may (a) require the relevant Director to be excluded from the receipt of information, the participation in discussion and/or the making of decisions related to the conflict of interest or situation; (b) impose upon the relevant Director such other terms for the purpose of dealing with the conflict of interest or situation as it may determine; and (c) provide that the relevant Director will not be obliged to disclose information obtained otherwise than through his position as a Director of the Company and that is confidential to a third party or to use or apply the information in relation to the Companys affairs, where to do so would amount to a breach of that confidence. The Board may revoke or vary such authority at any time.

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Subject to the provisions of the Companies Acts, and provided he has declared the nature and extent of his interest to the Board as required by the Companies Acts, a Director may: (i) (ii) be party to, or otherwise interested in, any contract with the Company or in which the Company has a direct or indirect interest; hold any other office or place of profit with the Company (except that of auditor) in conjunction with his office of Director for such period and upon such terms, including remuneration, as the Board may decide; act by himself or through a firm with which he is associated in a professional capacity for the Company or any other company in which the Company may be interested (otherwise than as auditor); be or become a Director or other officer of, or employed by or otherwise be interested in any holding company or subsidiary company of the Company or any other company in which the Company may be interested; and be or become a Director of any other company in which the Company does not have an interest and which cannot reasonably be regarded as giving rise to a conflict of interest at the time of his appointment as a Director of that other company.

(iii)

(iv)

(v)

A Director shall not, by reason of his office be liable to account to the Company or its members for any benefit realised by reason of having an interest permitted as described above or by reason of having a conflict of interest authorised by the Board and no contract shall be liable to be avoided on the grounds of a Director having any such interest. (L) Restrictions on voting

No Director may vote on or be counted in the quorum in relation to any resolution of the Board concerning his own appointment, or the settlement or variation of the terms or the termination of his own appointment, as the holder of any office or place of profit with the Company or any other company in which the Company is interested save to the extent permitted specifically in the Final Articles. Subject to certain exceptions set out in the Final Articles, no Director may vote on, or be counted in a quorum in relation to, any resolution of the Board in respect of any contract in which he has an interest and, if he does so, his vote shall not be counted. Subject to the Companies Acts, the Company may by ordinary resolution suspend or relax to any extent the provisions relating to Directors interests or the restrictions on voting or ratify any transaction not duly authorised by reason of a contravention of such provisions. (M) Borrowing powers Subject to the Final Articles, the Companies Acts and any directions given by the Company by special resolution, the business of the Company will be managed by the Board who may exercise all the powers of the Company, whether relating to the management of the business of the Company or not. In particular, the Board may exercise all the powers of the Company to borrow money, to guarantee, to indemnify, to mortgage or charge any of its undertaking, property, assets (present and future) and uncalled capital and to issue debentures and other securities and to give security for any debt, liability or obligation of the Company or of any third party. The Board must restrict the borrowings of the Company and exercise all voting and other rights or powers of control exercisable by the Company in relation to its subsidiary undertakings so as to secure that the aggregate principal amount of all borrowings (as defined in the Final Articles) of the group (as defined in the Final Articles) (exclusive of borrowings owing by one member of the group to another) does not exceed, or would as a result of such borrowing exceed, a sum equal to 750,000,000. However, the Shareholders may pass an ordinary resolution allowing borrowings to exceed such limit. (N) Indemnity of Directors

To the extent permitted by the Companies Acts, the Company may indemnify any Director or former Director of the Company or any associated company against any liability and the Company has entered into a deed of indemnity with each of the Directors. In addition, the Company may purchase and maintain for any Director or former Director of the Company or any associated company insurance against any liability.

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Additional Information

Any notice, document (including a share certificate or a Share Account Statement) or other information may be served on or sent or supplied to any Shareholder by the Company personally, by post, by means of a relevant system, by sending or supplying it in electronic form to an address notified by the Shareholder to the Company for that purpose, where appropriate, by making it available on a website and notifying the Shareholder of its availability, or by any other means authorised in writing by the Shareholder. The Company has served notice on its existing Shareholders of its intention to communicate with them via the Website and has sought their acceptance to communicate with them by way of other electronic means. A successful applicant under the Customer and Employee Offer will have consented to receiving all communications from the Company in electronic form to the email address supplied on the Customer and Employee Offer Application Form. Such consent may be revoked at any time and will not affect a Shareholders right to receive a document or information in hard copy in accordance with section 1145 of the Companies Act. 6. Mandatory bids and compulsory acquisition rules relating to Ordinary Shares

Other than as provided by the Takeover Code and Chapter 28 of the Companies Act, there are no rules or provisions relating to mandatory bids and/or squeeze-out and sell-out rules relating to the Company. 6.1 Mandatory bid

The Takeover Code applies to the Company. Under the Takeover Code, if an acquisition of interests in shares were to increase the aggregate holding of the acquirer and its concert parties to interests in shares carrying 30 per cent. or more of the voting rights in the Company, the acquirer and, depending on circumstances, its concert parties would be required (except with the consent of the Panel on Takeovers and Mergers) to make a cash offer for the outstanding shares in the Company at a price not less than the highest price paid for interests in shares by the acquirer or its concert parties during the previous 12 months. This requirement would also be triggered by any acquisition of interests in shares by a person holding (together with its concert parties) shares carrying between 30 per cent. and 50 per cent. of the voting rights in the Company if the effect of such acquisition were to increase that persons percentage of the total voting rights in the Company. 6.2 Squeeze-out

Under the Companies Act, if an offeror were to make an offer to acquire all of the shares in the Company not already owned by it and were to acquire 90 per cent. of the shares to which such offer related it could then compulsorily acquire the remaining 10 per cent. The offeror would do so by sending a notice to outstanding members telling them that it will compulsorily acquire their shares and then, six weeks later, it would deliver a transfer of the outstanding shares in its favour to the Company which would execute the transfers on behalf of the relevant members, and pay the consideration to the Company which would hold the consideration on trust for outstanding members. The consideration offered to the members whose shares are compulsorily acquired under this procedure must, in general, be the same as the consideration that was available under the original offer unless a member can show that the offer value is unfair. 6.3 Sell-out

The Companies Act also gives minority members a right to be bought out in certain circumstances by an offeror who has made a takeover offer. If a takeover offer related to all the shares in the Company and, at any time before the end of the period within which the Offers could be accepted, the offeror held or had agreed to acquire not less than 90 per cent. of the shares, any holder of shares to which the offer related who had not accepted the offer could by a written communication to the offeror require it to acquire those shares. The offeror would be required to give any member notice of his/her right to be bought out within one month of that right arising. The offeror may impose a time limit on the rights of minority members to be bought out, but that period cannot end less than three months after the end of the acceptance period or, if

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later, three months from the date on which notice is served on members notifying them of their sell-out rights. If a member exercises his/her rights, the offeror is entitled and bound to acquire those shares on the terms of the offer or on such other terms as may be agreed. 7. Organisational Structure

The Group comprises the Company and its subsidiary undertakings. The Company has the following subsidiaries, all of which are directly or indirectly 100 per cent. owned by it:
Company name Place of incorporation Principal activity

Ocado Holdings Limited Ocado Limited Ocado Information Technology Limited

England and Wales England and Wales The Republic of Ireland

Intermediate holding company Principal operating company of the Group Ownership and licensing of Ocado intellectual property for use outside the UK Dormant

Jalapeno Partners Limited

England and Wales

The Company owns directly the entire issued share capital of Ocado Holdings Limited which holds the entire issued share capital of Ocado and Ocado Information Technology Limited. The Company and Ocado Holdings Limited are holding companies. Ocado is the operating company of the Group and holds the intellectual property necessary to operate the Business in the UK. Ocado Information Technology Limited holds the intellectual property rights to operate the Business outside the UK; if the Group were to operate the Business or otherwise licence its technology outside the UK, the relevant operating company would licence these rights from Ocado Information Technology Limited. Ocado has one wholly owned subsidiary, Jalapeno Partners Limited, which is dormant. In addition, Ocado holds 25 per cent. of the issued share capital of Paneltex Limited, which is incorporated in England and Wales. The principal activity of Paneltex Limited is engineering (including the customisation of the Groups vans).

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Part XIII 8. Major Shareholders

Additional Information

As at 5 July 2010 (the latest practicable date prior to the publication of this document) and insofar as is known to the Company, the following persons are, directly or indirectly, interested in 3 per cent. or more of the issued share capital of the Company, and will have the following interests immediately after Admission:
Percentage of issued share capital as at 5 July 2010 Percentage of issued share capital immediately following Admission(2)

Shareholder

Shareholding(1)
(3)

John Lewis Pension Fund

..................

114,642,300 59,080,100 45,230,900 39,243,600

26.44% 13.63% 10.43% 9.05%

10.82% 11.15% 8.53% 3.42%

The Apple Trust(4) . . . . . . . . . . . . . . . . . . . . . . . . . S. N. Roditi and associated holdings . . . . . . . . . . . . UBS Holdings Cayman Limited and UBS AG . . . . . . Appleby Trust (Jersey) Limited (as trustee of the employee benefit trust established for the purposes of the JSOS)(5) . . . . . . . . . . . . . . . . . . . Tim Steiner and the Steiner 2008 Millennium Trust(6) Kira Faiman and Jonathan Faiman
(7)

32,476,700 29,687,600 27,437,400 19,241,000

7.49% 6.85% 6.33% 4.44%

6.13% 5.22% 4.61% 3.27%

............

Jason Gissing and The Jason Gissing Life Settlement II(8) . . . . . . . . . . . . . . . . . . . . . . . . . .

(1)

This figure is an aggregate of the number of Ordinary Shares and the Preference Shares held by each Shareholder as at 5 July 2010 for comparative purposes. On Admission all Preference Shares will convert on a one for one basis into Ordinary Shares and the Company will have a single class of shares. The percentage of issued share capital immediately following Admission assumes that the Company issues 86,273,616 New Ordinary Shares pursuant to the Offers (which itself assumes that the Offer Price is set at the mid-point in the Price Range and the exercise of options and warrants prior to Admission), and that each Major Shareholder which is a Major Selling Shareholder sells the maximum number of Existing Shares in the Offers which he or it has indicated, on a non-binding basis, it may sell. The Apple Trust, S.N. Roditi and associated holdings and Appleby Trust (Jersey) Limited (as trustsee for the employee benefit trust established for the purposes of the JSOS are not selling any Existing Shares pursuant to the Offers. The percentage includes those shares held by the EBT Trusteesee footnote (5) below. Patrick Lewis is a pensioner of the John Lewis Partnership Trust for Pensions. Patrick Lewis and Michael Robarts are directors of the John Lewis Pension Fund. Jorn Rausing and his immediate family are the beneficiaries of the Apple Trust. Its trustees are Pascal Picci and David Way. On 21 June 2010 the trustees of the Apple Trust entered into a contract for the transfer of the Ordinary Shares held by them to Hamilton Trust Company Limited, the trustee of the Apple II Trust. The beneficiaries of the Apple II Trust are the same as the beneficiaries of the Apple Trust. Completion of the transfer will take place on 5 April 2011 unless the parties decide otherwise. The Apple II Trust will be locked-up to the same extent as the Apple Trust. Appleby Trust (Jersey) Limited is the EBT Trustee. The Ordinary Shares held by it are treated as treasury shares in the Groups consolidated balance sheet and are, in certain places in this document, excluded from the calculations of the Companys issued share capital. On 21 June 2010 Tim Steiner entered into contracts for the transfer of 14,000,000 Ordinary Shares in aggregate held in his name to his father, in consideration of 100 and 97 per cent. of the market value of the Ordinary Shares on completion (which amount may be paid over three years). Completion is due to take place on 30 June 2013 or such other date as the parties may agree. Tim Steiner will retain a beneficial interest in the transferring Ordinary Shares until completion. Tim Steiners fathers interest in these shares will be locked-up to the same extent as Tims own interests. On the day this document was published Kira Faiman entered into a contract for the transfer of 24,437,400 Ordinary Shares held in her name to Walker Fund Services Limited as trustee of the Tempest Trust, a trust of which she is the beneficiary. The consideration payable per Ordinary Share by the Tempest Trust was the bottom of the Price Range and completion is the same day. Walker Fund Services Limiteds interests in these shares will be locked-up to the same extent as Kiras own interests. On 21 June 2010 Jason Gissing entered into five contracts for the transfer of 1,840,000 Ordinary Shares (9,200,000 Ordinary Shares in aggregate) held in his name to his mother, in consideration, per contract, of 100 and 98 per cent. of the market

(2)

(3) (4)

(5)

(6)

(7)

(8)

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Additional Information

value of the Ordinary Shares transferred on completion (which amount may be paid over five years). Completion is due to take place on 30 June 2013 or such other date as the parties may agree. Jason Gissing will retain a beneficial interest in the transferring Ordinary Shares until completion. Jason Gissings mothers interest in these shares will be locked-up to the same extent as Jasons own interests.

As at 5 July 2010 (the latest practicable date prior to the publication of this document) and immediately after Admission: (A) (B) the Company is not aware of any persons who, directly or indirectly, jointly or severally, will exercise or could exercise control over the Company; and none of the Major Shareholders has or will have different voting rights.

Certain of the Banks have interests in the Company. Please refer to the Joint Global Co-ordinators, Co-Book Runners and Co-Lead Managers on page 29 above for details. 9. 9.1 Directors Other directorships and partnerships

The details of those companies and partnerships outside the Group of which the Directors are currently directors or partners, or have been directors or partners at any time during the previous five years prior to the date of this document, are as follows:
Name of Director Michael Grade Current directorships and partnerships Society of Stars Pinewood Shepperton PLC National Angels Limited Lymington Charter Limited James Grant Group Limited The Gradelinnit Company Limited Tudor Films LLP Ingenious Film Partners 2 LLP Phoenix Film Partners LLP Previous directorships and partnerships AKL Technologies Limited Society of Stars (Events) Limited Carnage and Gold Limited Bushwacker Productions Limited The David Lean Bafta Foundation ITV PLC Charlton Athletic PLC AKL Technologies Limited Hemscott Limited Studiolink Limited Pinewood Studios Limited Reuters Group PLC The Carphone Warehouse Group PLC Nations Healthcare (Burton) Limited Nations Healthcare (North Bradford) Limited Nations Healthcare (Nottingham) Limited Nations Healthcare Limited Natural Farming Limited (a Jersey company) Returnshare Property Management Limited Skyline Balloons Limited Date of resignation/ companys dissolution (resigned 23/3/09) (resigned 12/3/09) (dissolved 7/3/09) (dissolved 25/7/05) (resigned 3/12/09) (resigned (resigned (resigned (resigned (resigned (resigned 31/12/09) 25/9/09) 23/3/09) 25/9/06) 5/5/06) 13/2/06)

David Grigson

Creston PLC Standard Life PLC Z 2010 Limited 49 Wellington Street (Management) Limited Dolma Development Fund

(resigned 31/7/08) (resigned 31/03/10) (resigned 13/4/09) (resigned 13/4/09) (resigned 13/4/09) (resigned 13/4/09) (resigned 19/8/09) (resigned 14/11/05) (dissolved 28/5/05 following insolvency)

Tim Steiner Neill Abrams

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Part XIII
Name of Director Andrew Bracey Current directorships and partnerships Previous directorships and partnerships Mars Bidco Limited Mars Holdings Limited Mars Issuer Limited Mars UK Holdco Limited Domum Properties Limited Compton Manor Shoot Limited Violet Acquisitions Limited Violet Equityco Limited Violet Opholdco Limited Violet Pikco Limited Violet S Propco Limited Violet Seniorco Limited KPMG LLP

Additional Information
Date of resignation/ companys dissolution (resigned 2/12/07) (resigned 2/12/07) (resigned 2/12/07) (resigned 2/12/07) (dissolved 4/4/06) (dissolved 21/2/06) (resigned 20/3/06) (resigned 20/3/06) (resigned 20/3/06) (resigned 20/3/06) (resigned 20/3/06) (resigned 20/3/06)

Jason Gissing Ruth Anderson

The Gynaecology Cancer Research Fund (The Eve Appeal) The Royal Parks The Duke of Edinburghs Award Hornsey Town Hall Creative Trust Robert Gorrie Limited Tetra Laval Group Alfa Laval AB DeLaval Holdings AB The Soil Association Limited John Lewis Partnership plc John Lewis Pension Fund Margrange Investments Limited

(resigned 3/4/09)

Robert Gorrie Jorn Rausing

David Young Patrick Lewis

J.H. Birtwistle & Company Limited (now called LUPFAWJHB Limited) Stead, McAlpine & Company Limited (now called LUPFAWSMA Limited) (resigned 14/9/07)

(resigned 14/9/07)

Michael Robarts

John Lewis Pension Fund PF Consultants 2009 Limited

As well as being a Director of the Company, Patrick Lewis is also a director of John Lewis Partnership plc. Waitrose is an indirect wholly-owned subsidiary of John Lewis Partnership plc and, as described in this document, is the Groups key supplier and also a competitor. Other than Patrick Lewis, no Director has any actual or potential conflicts of interest between any of his duties to the Company and his private interests and/or other duties. 9.2 Confirmations

As at the date of this document, no Director has during the last five years: (A) (B) (C) (D) any convictions in relation to fraudulent offences; been associated with any bankruptcies, receiverships or liquidations acting in the capacity of any of the positions set out against the name of the Director in section 9.1 of this Part XIII; been subject to any official public incrimination and/or sanctions by any statutory or regulatory authorities (including designated professional bodies); or been disqualified by a court from acting as a member of the administrative management or supervisory bodies of an issuer or from acting in the management or conduct of the affairs of any issuer.

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Part XIII 9.3

Additional Information

Interests of Directors in Ordinary Shares

Interests in shares in the Company Set out below are the direct and indirect interests of the Directors in the issued share capital of the Company (including interests in the issued share capital of the Company held in discretionery trusts and Shares in which the Directors have only certain beneficial interests) as at 5 July 2010, being the latest practicable date prior to the publication of this document, and as they are expected to be on Admission:
Interests of the Directors in the issued share capital of the Company as at 5 July 2010(1) Percentage of issued share capital of the Shareholding(1) Company Interests of the Directors in the issued share capital of the Company immediately following Admission(2) Percentage of issued share capital of the Shareholding Company

Director

Michael Grade(3) . . David Grigson . . . . Tim Steiner(4) . . . . Neill Abrams(5) . . . Andrew Bracey . . . Jason Gissing(6) . . . Ruth Anderson . . . Robert Gorrie(7) . . . Jorn Rausing(8) . . . David Young . . . . . Patrick Lewis(9) . . . Michael Robarts(10)

. . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . .

78,000 29,687,600 1,710,500 750,000 19,241,000 1,627,900 59,080,100 112,175,100

0.02% 6.85% 0.39% 0.17% 4.44% 0.38% 13.63% 25.87%

120,105 27,687,600 1,210,500 750,000 17,316,900 627,900 59,080,100 106,793,105

0.02% 5.22% 0.23% 0.14% 3.27% 0.12% 11.15% 20.15%

Total . . . . . . . . . . . . . . .
(1)

This figure is an aggregate of the number of Ordinary Shares and the Preference Shares held by each Director as at 5 July 2010 for comparative purposes. On Admission all Preference Shares will convert on a one for one basis into Ordinary Shares and the Company will have a single class of shares, the Ordinary Shares. This figure includes the 32,476,000 Ordinary Shares held by the EBT Trustee pursuant to the JSOS. This percentage assumes that the Company issues 86,273,616 New Ordinary Shares pursuant to the Offers (which itself assumes that the Offer Price is set at the mid-point in the Price Range) and the exercise of options and warrants prior to Admission, and the figure and the percentage assume that each Director which is a Major Selling Shareholder sells the maximum number of Existing Shares in the Offer which he has indicated, on a non-binding basis, he may sell. This figure includes the 32,476,700 Ordinary Shares held by the EBT Trustee pursuant to the JSOS. Michael Grade is entitled to a single bonus of 100,000 payable on Admission which he has elected to receive in Ordinary Shares at the Offer Price in accordance with the terms of his letter of appointment. Assuming that the Offer Price is set at the mid-point in the Price Range, this would mean that he would receive 42,105 Ordinary Shares. On 21 June 2010 Tim Steiner entered into contracts for the transfer of 14,000,000 Ordinary Shares in aggregate held in his name to his father, in consideration of 100 and 97 per cent. of the market value of the Ordinary Shares on completion (which amount may be paid over three years). Completion is due to take place on 30 June 2013 or such other date as the parties may agree. Tim Steiner will retain a beneficial interest in the transferring Ordinary Shares until completion. Tim Steiners fathers interests in such shares shall be locked-up to the same extent as Tims own interests. On 22 June 2010 Neill Abrams transferred 75,000 Ordinary Shares held in his name to his wife by way of a gift. He retains no beneficial interest in these shares. He also entered into three contracts on 22 June 2010. Each contract was for the transfer of 100,000 Ordinary Shares held in his name to his wife, as bare trustee, for each of his three children, in consideration of 100 and 97 per cent. of the market value of the Ordinary Shares on completion (which amount may be paid over five years). Completion is due to take place on 30 June 2013 or such other date as the parties may agree. Neill Abrams will retain a beneficial interest in the transferring Ordinary Shares until completion. Neills wifes and childrens interests in such shares will be locked-up to the same extent as Neills own interests. On 21 June 2010 Jason Gissing entered into five contracts for the transfer of 1,840,000 Ordinary Shares (9,200,000 Ordinary Shares in aggregate) held in his name to his mother, in consideration, per contract, of 100 and 98 per cent. of the market value of the Ordinary Shares transferred on completion (which amount may be paid over five years). Completion is due to take place on 30 June 2013 or such other date as the parties may agree. Jason Gissing will retain a beneficial interest in the transferring Ordinary Shares until completion. Jason Gissings mothers interests in such shares will be locked-up to the same extent as Jasons own interests. On 22 June 2010 Robert Gorrie entered into two contracts each for the transfer of 500,000 Ordinary Shares held in his name to his wife, as bare trustee for each of his two children, in consideration of 100 and 97 per cent. of the market value of the

(2)

(3)

(4)

(5)

(6)

(7)

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Additional Information

Ordinary Shares on completion (which amount may be paid over five years). Completion is due to take place on Admission or such other date as the parties may agree. Robert Gorrie will retain a beneficial interest in the transferring Ordinary Shares until completion. Robert Gorries childrens interests in such shares will be locked-up to the same extent as Roberts own interests. (8) Jorn Rausing and his immediate family are beneficiaries of the Apple Trust which is a Major Shareholder. The trustees of the Apple Trust are Pascal Picci and David Way. On 21 June 2010 the trustees of the Apple Trust entered into a contract for the transfer of the Ordinary Shares held by them to Hamilton Trust Company Limited, the trustee of the Apple II Trust. The beneficiaries of the Apple II Trust are the same as the beneficiaries of the Apple Trust. Completion of the transfer will take place on 5 April 2011 unless the parties decide otherwise. The Apple II Trust will be locked-up to the same extent as the Apple Trust. Patrick Lewis is a pensioner of the John Lewis Trust for Pensions and a director of John Lewis Pension Fund which is a Major Shareholder. Michael Robarts is a director of the John Lewis Pension Fund which is a Major Shareholder.

(9) (10)

Options over Ordinary Shares Each of Tim Steiner, Neill Abrams, Andrew Bracey, Jason Gissing and Robert Gorrie has, as at 5 July 2010 (being the latest practicable date prior to the publication of this document), the following options over Ordinary Shares pursuant to the ESOS:
Number of options over Ordinary Shares

Director

Date of issue

Option price ()

Exercise/vesting period

Tim Steiner . . . . . . . . . . . . . Neill Abrams . . . . . . . . . . . . .

May 2005 May 2002 May 2002 November 2003 May 2005

200,000 175,000 175,000 100,000 100,000 46,296 200,000 175,000

1.15 1.00 1.50 0.90 1.15 1.35 1.15 1.50

16 May 2008 15 May 2015 7 February 2005 6 February 2012 7 February 2005 6 February 2012 30 November 2006 29 November 2013 16 May 2008 15 May 2015 16 November 2012 15 November 2019 16 May 2008 15 May 2015 7 February 2005 6 February 2012

Andrew Bracey . . . . . . . . . . . Jason Gissing . . . . . . . . . . . . Robert Gorrie . . . . . . . . . . . .

November 2009 May 2005 May 2002

In addition to the options over Ordinary Shares pursuant to the ESOS detailed above, Andrew Bracey has the following options over Ordinary Shares:
Number of options over Ordinary Shares

Director

Date of issue

Option price ()

Exercise/vesting period

Andrew Bracey . . . . . . . . . .

4 February 2002 3 January 2004

886,700 435,300

0.90 1.03

4 4 3 3

February 2002 February 2017 January 2004 January 2018

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Additional Information

Interests in Ordinary Shares under the JSOS Each of Tim Steiner, Jason Gissing, Neill Abrams and Andrew Bracey has, as at 5 July 2010 (being the latest practicable date prior to the publication of this document), the following interests in Ordinary Shares pursuant to the JSOS:
Vesting on 1 January 2011 Vesting on 1 January 2012 Vesting on 1 January 2013 Vesting on 1 January 2014 Total

Tim Steiner . . . Neill Abrams . . Andrew Bracey Jason Gissing . General

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

2,513,100 1,017,200 1,675,400 1,675,400

2,513,100 1,017,200 1,675,400 1,675,400

2,513,100 1,017,200 1,675,400 1,675,400

2,513,000 1,017,100 1,675,300 1,675,300

10,052,300 4,068,700 6,701,500 6,701,500

Save as set out above, no Director has any interests (beneficial or non-beneficial) in the share capital of the Company. Save as set out above, no Director holds an interest in any other securities of the Company. 9.4 Transactions with Directors

Save as described below, none of the Directors: has or has had any interest in any transaction which is or was unusual in its nature or conditions or significant to the Business which was effected by any member of the Group during the current or immediately preceding financial year, or which was effected during an earlier financial year and remains in any respect outstanding or unperformed; and has or had a beneficial interest in any contract to which any member of the Group was a party during the current or immediately preceding financial year.

Robert Gorrie provides consultancy services to the Group and chairs the meetings of the Ocado employee council. Robert Gorrie provides these services through Robert Gorrie Limited (of which Robert Gorrie is the sole shareholder) and it is paid a per diem fee for these services. The Apple Trust (of which Jorn Rausing is a beneficiary) underwrote Ocados last funding round in September 2009, for which it was paid a fee of 387,500 under the terms of an agreement dated 1 July 2009 and a side letter dated 20 August 2009. Payment of that fee was set off against the subscription amount payable by the Apple Trust for the shares it subscribed for in that funding round. There are no outstanding loans or guarantees granted or provided by any member of the Group for the benefit of any of the Directors. 9.5 Executive Directors service contracts, remuneration and emoluments

Ocado has entered into service contracts with each of the Executive Directors for the provision of services to the Group. Each of the contracts was entered into on 22 June 2010. The terms of these contracts, together with the dates on which each Executive Director joined Ocado and the Company, are set out below:

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Additional Information

Director

Date of appointment by the Company

Date of appointment by Ocado

Unexpired term (months)

Notice Notice periods by periods by Company Director (months) (months)

Tim Steiner

9 March 2010

13 April 2000

Continuous employment until terminated by either party. Ends automatically on retirement age of 65. Continuous employment until terminated by either party. Ends automatically on retirement age of 65. Continuous employment until terminated by either party. Ends automatically on retirement age of 65. Continuous employment until terminated by either party. Ends automatically on retirement age of 65.

12

Neill Abrams

10 December 2009

8 September 2000

12

Andrew Bracey

10 December 2009

3 November 2009

12

Jason Gissing

9 March 2010

2 February 2000

12

The remuneration (including salary and other benefits and any contingent or deferred compensation) payable by Ocado to the Directors for services in all capacities to Ocado by any person in FYE 2009 are set out below.
Director Basic salary or fees Bonus Benefits in kind Pension contributions 2009 Total

Tim Steiner . . . Neill Abrams . . Andrew Bracey Jason Gissing .

*

. . . .

. . . .

. . . .

. . . .

352,411 216,913 23,439 268,144

262,040 110,416 191,208

3,275 2,313 246 2,634

33,630 16,500 24,630

651,356 346,142 23,685 486,616

Andrew Bracey was appointed to the Board of Ocado on 3 November 2009. His annual salary is 250,000. He was not paid any cash bonuses in FYE 2009.

9.6

Non-executive Directors letters of appointment and fees

The Chairman and the non-executive Directors do not have service contracts and are appointed by letter of appointment, the details of which are set out in the table below:
Date of appointment to the board of Ocado Date of appointment to the Board Current Term Notice period Current age

Michael Grade . . David Grigson . . . Ruth Anderson . . Robert Gorrie(1) . . Jorn Rausing . . . David Young . . . . Patrick Lewis(2) . . Michael Robarts(2)
(1)

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

15 September 2006 3 February 2010 1 April 2000 13 March 2003 13 October 2000 21 October 2009 19 January 2010

9 9 9 9 9 9 9 9

March March March March March March March March

2010 2010 2010 2010 2010 2010 2010 2010

3 3 3 3 3 3 3 3

years years years years years years years years

6 months 1 month 1 month 1 month 1 month 1 month 1 month 1 month

67 55 56 51 50 68 44 65

From April 2000 to April 2006, Robert Gorrie was the logistics director of Ocado. On 1 May 2006 he became a non-executive Director. In addition to his role as a non-executive Director, Robert Gorrie provides consultancy services to the Group and chairs the meetings of the Ocado employee council. Robert Gorrie provides these services through Robert Gorrie Limited (of which Robert Gorrie is the sole shareholder) and is paid a per diem fee for these services. These fees are included in additional remuneration above. Patrick Lewis and Michael Robarts were appointed by John Lewis Pension Fund pursuant to its right to appoint two directors under the shareholders agreement that, from 2000, governed the relationship between Ocado and its shareholders (and which expires on Admission).

(2)

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Additional Information

Details of the fees and other remuneration payable annually to each of the non-executive Directors for FYE 2009 are set out below:
Additional remuneration (annual unless specified)

Basic annual salary/fees

FYE 2009 Total

Michael Grade . Robert Gorrie . . Jorn Rausing . . David Young . . Patrick Lewis . . Michael Robarts

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

111,764 15,000 27,539

18,950

111,764 33,950 27,539

In addition to his role as a non-executive Director, Robert Gorrie provides consulting services to the Group and chairs the meetings of the Ocado employee council. Robert Gorrie provides these services through Robert Gorrie Limited (of which Robert Gorrie is the Sole Shareholder) and is paid a per diem fee for these services. These fees are included in additional remuneration above. Michael Grade is entitled to a single bonus of 100,000 payable on Admission which he has elected to receive in Ordinary Shares at the Offer Price in accordance with the terms of his letter of appointment. Ruth Anderson and David Grigson were appointed after the end of FYE 2009. As at Admission, the non-executive Directors receive the following annual fees from the Company: 9.7 Michael Grade: 100,000; David Grigson: 55,000, plus 6,500 for chairing the nomination committee; Ruth Anderson: 40,000, plus 10,000 for chairing the audit committee; Robert Gorrie: 40,000; Jorn Rausing: 40,000; David Young: 40,000, plus 8,000 for chairing the remuneration committee; Patrick Lewis: 40,000; and Michael Robarts: 40,000. Recent share dealings by Directors

Ocados last funding round took place in September 2009, at which both the Fidelity Investment Fund (Fidelity) and Generation IM Climate Solutions Fund, L.P. (Generation) acquired shares in Ocado. This funding round ascribed an enterprise value to Ocado of approximately 650 million. Immediately after this funding round, a discretionary trust of which Jason Gissing is a beneficiary sold shares to several other shareholders (including Fidelity, Generation and the John Lewis Pension Fund) and a discretionary trust of which Tim Steiner is a beneficiary sold shares to Andrew Bracey. All shares were issued and transfers made at the same share price. 9.8 John Lewis Pension Fund right to appoint a director

Pursuant to an agreement dated 6 July 2010 with the Company, the John Lewis Pension Fund has agreed to procure that Patrick Lewis will immediately offer his resignation from the Board: if at any time the John Lewis Pension Funds holding of Ordinary Shares falls below 10 per cent. of the issued Ordinary Share capital of the Company (disregarding, for these purposes, Ordinary Shares issued to the EBT Trustee for so long as the same have not vested); or if he ceases to be a trustee or director of the John Lewis Pension Fund unless, at or before such time he also ceases or had ceased to have any office, employment or consultancy arrangement with any member of the John Lewis group.

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Additional Information

Under the terms of the same agreement, if Patrick Lewis were to leave the Board then, provided the John Lewis Pension Fund continues to hold 10 per cent. or more of the issued Ordinary Share capital of the Company (disregarding, for these purposes, Ordinary Shares issued to the EBT Trustee for so long as the same have not vested), the John Lewis Pension Fund shall have the right: if Patrick Lewis departure occurs during the period ending 18 months from the date of Admission, to appoint a replacement director to the Board provided the Board gives its consent to such appointment (such consent not to be unreasonably withheld or delayed); and if Patrick Lewis departure occurs after the period ending 18 months from the date of Admission, to nominate a replacement director. The nomination committee of the Company is obliged to consider such nomination in good faith, but may approve or reject the proposed nomination in its discretion. Related party transactions

10.

Save as disclosed in section 9.4 of this Part XIII and in the financial information set out in the related party transactions note (note 31) to the historical financial information of the Group for FYE 2007, FYE 2008, FYE 2009 and P1-3 2010 contained in Part V (Historical Financial Information relating to the Group) and the equivalent note (note 13) to the unaudited financial information for the Group for P1-6 2010 contained in Part VII (Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010), Ocado entered into no transactions with related parties during FYE 2007, FYE 2008, FYE 2009 and P1-6 2010. For the period between 16 May 2010 and the date of this document, the Group entered into the following related party transactions: Key management personnel
2 July 2010 000s

Purchase of professional services -Non-Executive Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 4

All transactions are on an arms length basis and no financial period end balances have arisen as a result of these transactions. At 2 July 2010 key management owed the Company 1,000 in respect of personal expenses incurred on the company credit card that were reimbursed in the normal course of business. Investment
2 July 2010 000s

Purchase of goods Plant and machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total purchase of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amounts payable at the period end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. Share plans and employee incentive schemes

0 10 10 7

The Group currently operates two employee share incentive schemes, both of which will continue to operate after Admission. These are the Ocado 2001 Executive Share Option Scheme (the ESOS) and the Joint Share Ownership Scheme (the JSOS). The Company intends to operate an additional all-employee share scheme, the Ocado Sharesave Scheme, after listing, subject to HMRC approval.

243

Part XIII

Additional Information

11.1 The Ocado 2001 Executive Share Option Scheme Subject to HMRC approval, the Company intends to amend the rules of the ESOS so that following Admission they will operate as set out below. Status The ESOS is a company share option scheme approved by HMRC. Options may also be granted under the terms of a schedule, which is not so approved. The ESOS was established by Ocado in 2001. Prior to the Scheme, Ocado granted options over shares in Ocado to eligible employees (which in practice was all employees in the Group). In conjunction with the Scheme, the ESOS rules were amended to permit the existing option holders to exchange their options over shares in Ocado for options over Ordinary Shares in the Company. Under the ESOS, Ocado or the trustees of an employee trust may grant options over shares in the Company to eligible employees. The eligible employees to whom options are granted and the terms of such options will be determined by the directors of Ocado or the trustees. Eligibility The employees who are eligible to participate in the ESOS are all Ocados Executive Directors and employees, including the employees of Ocados subsidiaries. Directors and employees may not participate if, in the period of 12 months before grant of the option, they had a material interest (broadly owning or controlling 25 per cent. of its share capital) in Ocado or a company which owns or controls Ocado and that company was a close company. Options are not transferable and will lapse if the option holder purports to transfer, charge or alienate the option. The Board has resolved that options will not be granted to Directors under the ESOS without first setting appropriate performance targets. Exercise price The exercise price of options may not be less than the market value of the Companys shares on the date of grant. If the trustees or the directors of Ocado have determined that the exercise of an option will be satisfied by the issue of Ordinary Shares, the exercise price may also not be less than the nominal value of Ordinary Shares. Limitations on grant The ESOS is subject to limits so that no more than 10 per cent. of the issued ordinary share capital of the Company may be placed under option or issued under any employee share scheme in any ten year period and no more than 5 per cent. of the issued ordinary share capital of the Company may be placed under option or issued under any discretionary employee share scheme in any ten year period. For this purpose a discretionary scheme is one in which those taking part are senior employees and directors chosen at the discretion of the body administering the scheme. Ordinary Shares issued or placed under option prior to Admission are disregarded. Options may not be granted under the ESOS to any employee if, as a result, the aggregate market value of shares granted to him and subject to outstanding options under the ESOS or any other HMRC-approved share option scheme (other than a savings-related share option scheme) established by Ocado or an associated company, would exceed 30,000 (or such other limit as may be specified in the tax legislation). Except in exceptional circumstances, options may only be granted in the six weeks following an announcement of the Companys results to the London Stock Exchange. Options may not be granted after 30 June 2020.

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Part XIII Ability to exercise

Additional Information

The directors of Ocado or trustees may impose a performance target and any further condition determined to be appropriate on the exercise of an option. Any performance target must generally be measured over a period of at least three years. The directors or trustees may substitute, vary or waive any performance target if they consider that the target is no longer appropriate in such manner as is reasonable in the circumstances and produces a fairer measure of performance and is neither materially more nor less difficult to satisfy. There are currently no options granted which are subject to performance targets that have not yet been met. Options may be exercised from the date of grant, subject to any performance target being satisfied. Options will lapse on the earlier of the tenth anniversary of grant, the Ocado directors determining that a performance target can no longer be satisfied or the option holder ceasing to be an employee. Options may be exercised in whole or in part. Where, in relation to an option granted after Admission, Ocado or any member of the Group is liable to account for tax or social security, the option holder must pay an amount sufficient to discharge the liability or he will be taken to have authorised the disposal of such number of shares as he is entitled to on exercise as is necessary to meet the amount due. The grantor may determine that the exercise of an option is conditional on the payment of employers national insurance contributions by the option holder in respect of the exercise. Leaving service If an option holder dies before the tenth anniversary of grant, his personal representative may exercise his options at any time in the 12 month period following his death, subject to any performance target being satisfied. If not so exercised, the options lapse. If an option holder ceases to be employed before the tenth anniversary of grant by reason of ill-health, injury, disability, redundancy, retirement at the age under which he is bound to retire under his contract of employment, early retirement with agreement of Ocado or the business in which he is engaged ceasing to be part of the Ocado group, the option holder may exercise the option during whichever is the longer of 12 months after cessation of employment, 42 months after date of grant of the option and (in the case of options granted before Admission) 42 months after the last time the option holder exercised an option so as to qualify for tax relief, subject to any performance target being satisfied. If not so exercised, the option shall lapse immediately. The directors or trustees may determine that an option holder who ceases to be employed for any other reason may also exercise the option within such period. In the case of options granted after Admission, options will only become exercisable in respect of a proportion of the shares subject to the option, determined by the amount of the performance period which has expired on cessation of employment. Change of control If there is a change of control of the Company as a result of a general offer to acquire shares or a person acquiring over 50 per cent. of the Companys issued ordinary share capital, all options may be exercised at any time during the period of six months beginning with the time of change of control, subject to any performance target being satisfied. If not so exercised, the options lapse unless the directors or trustees determine otherwise. If there is a compulsory acquisition of shares in the Company, all options may be exercised at any time during the period beginning with the date a notice is served to compulsorily acquire shares and ending seven clear days before the date on which entitlement to serve such a notice ceases, subject to any performance target being satisfied. If not so exercised, the options lapse when entitlement to serve the notice ceases. If a person proposes to obtain control of the Company through a compromise or arrangement approved by the court, all options may be exercised during the period beginning with the court meeting of the Companys members and ending on the earlier of six months thereafter and seven clear days before the court sanctions the compromise or arrangement. Exercise is subject to the compromise or arrangement

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Additional Information

becoming effective and any performance target being satisfied. Options not so exercised lapse if the compromise or arrangement becomes effective. In the case of options granted after Admission, options will only become exercisable in respect of a proportion of the shares subject to the option, determined by the amount of the performance period which has expired on change of control. If a company acquires control of the Company, an option holder may by agreement with that company release his option in whole or in part consideration of the grant to him of a new equivalent option relating to the shares in the acquiring company or a company which has control over the acquiring company. The period allowed for doing so is (depending on whether the acquiring company makes a general offer for the Company shares, compulsorily acquires the Company or obtains the Company through a compromise or arrangement) either six months beginning with the time of change of control, the period during which the acquiring company remains bound to compulsorily acquire shares or six months beginning with the time the court sanctions the compromise or arrangement. The directors of Ocado may determine that an option holder will be deemed to have agreed to the release of his option in return for a new equivalent option if there is a scheme of arrangement under which a company obtains control of the Company, the option holder does not object to the exchange of his option and HMRC agrees to the exchange in relation to the particular transaction. Winding up If notice is given of voluntary winding up of the Company, all options may be exercised during the period beginning with the date the notice is given and ending seven clear days before the resolution is passed or defeated. Exercise is conditional on the resolution being passed and any performance target being satisfied. If the resolution is passed, all options not so exercised lapse. In the case of options granted after Admission, options will only become exercisable in respect of a proportion of the shares subject to the option, determined by the amount of the performance period which has expired on notice being given of the resolution for winding up. Adjustments Ocado may adjust options following any variation in the Companys share capital, including capitalisations or rights issues. Any such adjustment will require the consent of HMRC. Amendments Ocado may amend the rules of the ESOS, except that an amendment shall not have effect until it has been approved by HMRC. An amendment may not adversely affect the rights of an existing option holder except where the amendment has been approved by a class meeting of the existing option holders. Shareholder approval is required for any amendment to the provisions dealing with eligibility, individual or scheme limits, terms of options, adjustment of options or changing and ending the ESOS where the amendment is to the advantage of employees. Notwithstanding the restrictions listed above, amendments may be made to take account of changes in the law or keep or get favourable tax/regulatory treatment. Ocado may make minor amendments to ease administration of the ESOS or correct clerical errors. Non-HMRC Approved Schedule The terms of the schedule are broadly the same as those of the tax-approved part of the ESOS, subject to the following principal differences: Certain restrictions on operation of the ESOS, required to be included by HMRC in a tax approved plan, do not apply. In particular options may be granted to employees of the Company or any of its subsidiaries. Other than in exceptional circumstances, an option may not be granted to an individual if the result would be that the aggregate market value of the shares subject to options granted to him in any financial year of the Company under the ESOS would exceed three times the individuals pay. If an option holder dies before the tenth anniversary of grant, his personal representative may exercise his option in the three-year period following his death but no later than 10 years after the date of grant.

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Part XIII 11.2 The Ocado Sharesave Scheme (the Sharesave Scheme)

Additional Information

The Sharesave Scheme was approved by a written resolution of the Shareholders on 23 June 2010. Status The Sharesave Scheme is a savings-related share option plan which is intended to be approved by HMRC. Under the Sharesave Scheme, the Company or the trustees of an employee trust may grant options over shares in the Company to eligible employees. All eligible employees must be invited to participate in the Sharesave Scheme each time the Sharesave Scheme is operated. To obtain an option an eligible employee must agree to save a fixed monthly amount for three, five or seven years with an approved savings institution. The amount saved will determine the number of shares over which the option is granted. Eligibility The employees who are eligible to participate in the Sharesave Scheme are all the Company and its subsidiaries employees, and those directors who are required to work for the Company or any of its subsidiaries for at least 25 hours per week, provided that the employee/directors earnings are general earnings to which section 15 of the Income Tax (Earnings and Pensions) Act (ITEPA) 2003 applies and the employee/director is ordinarily resident in the UK. The employee/director must have been an employee/director at all times during the period of five years ending on the grant date (or such shorter period as the Board may determine). The Board may also allow any other employee of the Company or its subsidiaries to participate in the Sharesave Scheme. Options are non transferable and will lapse if the participant transfers the option or creates any interest in the option in favour of a third party, or if a bankruptcy order is made in respect of him. Exercise price The exercise price of options may not be less than 80 per cent of the average market values of the Companys shares for the five days before the date selected by the board of the Company (provided this date is not earlier than the most recent date that the Company announced its results to the Stock Exchange or the 30th day before the grant date). In the case of an option to subscribe for shares, the exercise price may not be less than the nominal value of the Companys shares on the grant date. Options must be granted within 30 days of the first of the dealing days used to calculate the exercise price. This period may be extended to 42 days if applications must be scaled down. Limitations on grant The Sharesave Scheme is subject to limits so that no more than 10 per cent. of the Companys equity share capital may be placed under option or allocated under any employee share scheme in any ten year period. No account will be taken of shares allocated or remaining to be allocated in respect of options or awards granted prior to Admission. If applications are received for more shares than are available because of this limit (or any other limit chosen by the board of the Company) then applications must be scaled down. If the applications, after scaling down, are still for more shares than are available, the board of the Company may decide that no options will be granted or options will be granted to applicants chosen by lot. The monthly contribution which an eligible employee may pay under his savings contract may not exceed the maximum allowed by paragraph 25 of Schedule 3 to the ITEPA 2003, currently 250 (or such lower maximum as the Board may decide), or be less than the minimum monthly contribution allowed under a savings contract at that time, currently 5 (or such higher amount, which may not exceed 10, as the Board may decide). Except in exceptional circumstances, invitations to participate in the Sharesave Scheme may only be issued during the six weeks following HMRC approval of the Sharesave Scheme, the period starting three

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Additional Information

weeks before and ending six weeks after the Company announces its results to the London Stock Exchange and the 90 days following the date on which the Ordinary Shares are first admitted to trading on the London Stock Exchange. No options may be granted under the Sharesave Scheme after 30 June 2020. Ability to exercise Options may be exercised at any time in the period of six months starting with the maturity date (which will be three, five or seven years from the date of grant). If not exercised within this period, the option will lapse. If a participant continues to hold employment with the Company or any of its subsidiaries after reaching the age of 65, he may exercise his option in the six-month period starting with the day after he reaches the age of 65. Options may be exercised in whole or in part. If exercised in part an option will lapse in respect of the balance. Exercise date Unless a later date is agreed between the Company and the participant, the exercise date of an option will be the earlier of the second dealing day after the date on which notice of exercise is received and the date on which the board of the Company approves exercise of the option. The board of the Company may limit the number of exercise dates but there must be at least two in every month. Leaving service A participants option will generally lapse when he is no longer an employee or director of the Company or any of its subsidiaries. If a participants employment ends for a permitted reason (injury, disability, redundancy, retirement on reaching age 60 or the age at which he is bound to retire under his employment contract, the business in which he is engaged ceasing to be part of the Companys group or any other reason in relation to options which he has held for over three years at the date his employment ends, except his misconduct, impropriety or death), he may exercise his option in the period of six months starting on the day after his employment ends. If not so exercised his option will lapse unless he dies during that period. If a participant dies before the maturity date, his personal representatives may exercise his option in the period of 12 months starting on the day after his death. If a participant dies on or within six months after the maturity date, his personal representatives may exercise his option in the period of 12 months starting on the maturity date. If not so exercised the option will lapse. The personal representatives of a participant may not however exercise his option unless he was employed by the Company or any of its subsidiaries when he died or he died during a period when he was allowed under the rules to exercise his option. Change of control If any person obtains control of the Company as a result of a general offer to buy all of the issued ordinary share capital of the Company, a participant may exercise his option in the period of six months after the change of control or the date on which any conditions to the offer are met or waived. If the general offer is made by means of compromise/arrangement or the court approves a compromise/ arrangement between the Company and its members, a participant may exercise his option during such period as the Board may decide starting not earlier than the date that the compromise/arrangement is sanctioned and ending not later than six months after the date on which it becomes effective. If any person who has control of the Company gives notice to compulsorily acquire shares of the Company, a participant may exercise his option in the period of 30 days starting on the date the notice is given. Options will lapse if not exercised during the periods above, unless they are exchanged for new options. With the agreement of the acquiring company, a participant may release his option in return for the grant to him of a new option, provided the new option is over shares which meet the conditions of Schedule 3 to the ITEPA 2003, the new option is over shares in the acquiring company or another company that meets

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Additional Information

the requirements of Schedule 3 to the ITEPA 2003 and the total exercise price of the new option and market value of the new shares is equal to the total exercise price of the old option and market value of the old shares (or is otherwise agreed by HMRC). The release and grant of a new option must occur in the period of six months starting on the date of change of control or court approval of a compromise/ arrangement or, in the case of compulsory acquisition of shares, in the period during which the acquiring company remains bound or entitled to acquire shares. Winding up If a resolution is passed for winding up of the Company or an order is made for compulsory winding up of the Company, a participant may exercise his option during the period of 60 days starting on the date the resolution or order is passed or made. The participant is then entitled to share in the Companys assets along with other shareholders. Adjustments The Company may adjust options following a variation in the Companys share capital. The adjustment must be on the basis that there is no material change (as far as possible) to the total exercise price of the option and must be approved by HMRC. Amendments The Company may amend the Sharesave Scheme in any way, including the creation of sub-schemes. However, shareholder approval is required for any amendment to the provisions dealing with eligibility, individual or scheme limits, terms of options, adjustment of options or changing and ending the scheme where the amendment is to the advantage of employees. No amendment may be made which would adversely affect a participants subsisting rights without his written consent or the consent of the majority of the participants affected by the amendment. While the Sharesave Scheme is intended to be approved by HMRC, no amendment to a feature of the Sharesave Scheme which is necessary to meet the requirements of Schedule 3 to the ITEPA 2003 shall have effect unless it is approved by HMRC. Notwithstanding the restrictions listed above, the Company may make amendments to allow the Sharesave Scheme to keep or get approval under the ITEPA 2003, take account of changes in the law or keep or get favourable tax/regulatory treatment. The Company may make minor amendments to ease administration of the Sharesave Scheme or correct clerical errors. 11.3 The Companys Joint Share Ownership Scheme (JSOS) Status The JSOS is a share ownership scheme under which its participants and Appleby Trust (Jersey) Limited (the EBT Trustee) acquired separate beneficial interests in 32,476,700 Ordinary Shares which represented, at the time of issue, 7.5 per cent. of the then issued share capital of the Company. As at 5 July 2010, being the latest practicable date prior to the publication of this document, these shares comprised 7.49 per cent. of the issued share capital of the Company, and following Admission, and assuming that the Offer Price is set at the mid-point in the Price Range, are expected to comprise 6.1 per cent. of the issued share capital of the Company. These Ordinary Shares were divided into four tranches, vesting over four years. Eligible employees The employees eligible to participate in the JSOS are all bona fide employees of the Company or its subsidiaries. Participants interests are generally non-transferable during the period beginning on acquisition of the interest and ending on 31 December 2013. However, interests can be transferred to a spouse, civil partner or lineal descendant of a participant; a trust under which no person other than the participant or their spouse, civil partner or lineal descendant has a vested beneficial interest or any other person approved by the EBT Trustee. If a participant purports to transfer, assign or charge his interest other than as set out above, the EBT Trustee may acquire the participants interest for a total price of 1.

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Additional Information

Respective interests The EBT Trustee and the participants together paid 1.50 per Ordinary Share acquired, apportioned in relation to the value of their respective beneficial interests. The Companys remuneration committee is responsible for deciding the identity of the participants and the number of Ordinary Shares that may be acquired. The EBT Trustees interest in each Ordinary Share held under the JSOS is the value up to a specified price for the tranche of which that share forms part (the Hurdle). The participants interest is the excess in value over the Hurdle. Each tranche vests in the year indicated, normally only if the relevant participant remains employed by the Company, and the Hurdles for each tranche are as follows:
Tranche Vesting date Hurdle

1 2 3 4

1 1 1 1

January January January January

2011 2012 2013 2014

1.73 1.91 2.08 2.28

Once the relevant vesting date is reached a tranche will vest even if the share price has not exceeded the Hurdle. A participant may elect to leave his vested interests in the JSOS. Alternatively he may request that the EBT Trustee deliver to him his vested interest, either in cash (after deduction of any personal loan and brokers commission and other costs of sale of the shares) or in Ordinary Shares. A participant may request the EBT Trustee to sell to the participant the EBT Trustees interest in a tranche, after the tranche has vested. The EBT Trustee is not bound to agree to this request. Where, in relation to any Ordinary Share held under the JSOS or any participant interest, the Company or a member of the Companys group is liable to account for tax or social security in respect of a participant, the EBT Trustee is entitled to sell any Ordinary Shares held under the JSOS and deduct from the sale proceeds an amount necessary to discharge such liability, unless the participant has paid an amount sufficient to discharge the liability beforehand. Subscription for the Ordinary Shares As described above, the subscription price for the Ordinary Shares acquired for the purposes of the JSOS was apportioned between the participants and the EBT Trustee proportionately to the value of their respective beneficial interests. This meant that the majority of the subscription amount was borne by the EBT Trustee. The participants who were not Directors were granted loans by Ocado on arms length terms in order to fund their subscription; the participants who were Directors were not. The EBT Trustee funded its subscription by way of a loan from Ocado. When the EBT Trustee sells jointly owned Ordinary Shares held pursuant to the JSOS, it will apply the proceeds that represent its beneficial interest to repay that loan. Ocado has no recourse under the loan to the assets of the EBT Trustee other than the proceeds of the sales of jointly held shares. To the extent that the Hurdles are not met, the proceeds of sale may not be sufficient for the EBT Trustee to repay the loan in full. If the proceeds of the sale of its beneficial interest are greater than the amount the EBT Trustee is required to repay under the loan, the EBT Trustee may apply any surplus for future employee incentivisation arrangements. Voting rights The EBT Trustee will not normally exercise the voting rights of unvested Ordinary Shares held under the JSOS but may exercise such rights on vested Ordinary Shares at the request of the relevant participants. Similarly, Ordinary Shares held under the JSOS will not receive any dividends paid, but the Hurdles will be reduced proportionally so as not to distort the value of the participants interests in the Ordinary Shares.

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Part XIII Leaving employment

Additional Information

If a participant leaves during the currency of the scheme, he may lose all or part of his beneficial interest, depending on the circumstances in which he leaves: if he is a very bad leaver (i.e., he has been or could have been dismissed by the Company for cause or he has been in material breach of an obligation binding on him after termination), his vested and unvested interests in Ordinary Shares held under the JSOS may be acquired by the EBT Trustee for the lower of their market value and the initial subscription price; if he is a bad leaver (i.e., he is neither a good leaver nor a very bad leaver), he would retain his vested interests but unvested interests may be acquired by the EBT Trustee for the lower of the market value and the initial subscription price. If he subsequently goes to work for a competitor of the Company, his vested interests may also be acquired by the EBT Trustee at market value; and if he is a good leaver (i.e., he left employment as a result of illness, injury, disability, redundancy, retirement on or after his contractual retirement date, early retirement by agreement with the Company or the business in which he is engaged ceasing to be part of the Companys group), he would continue to participate in the JSOS although the EBT Trustee may offer to buy out his vested and unvested interests. However, if a good leaver subsequently goes to work for a competitor of the Company, his vested and unvested interests may be acquired by the EBT Trustee at market value.

Where the EBT Trustee acquires an unvested interest, that interest may be redistributed to benefit other employees or among the remaining participants in the JSOS. If a participant dies while in employment or after having left as a good leaver, then this interest will vest entirely on the date of his death. Change of control If a general offer is made which would result in the offeror obtaining control of the Company, a participant may request the EBT Trustee to accept the offer with respect to Ordinary Shares that have vested under the JSOS. If the Company is subject to a compromise or arrangement approved by the court, a participant may request the EBT Trustee to vote in accordance with his directions at any shareholder meeting in respect of Ordinary Shares that have vested under the JSOS. Where any consideration is received by the EBT Trustee as a result of such compromise or arrangement (other than consideration in the form of shares of a company that has obtained control of the Company, where 90 per cent. of that companys shares are held in substantially the same proportions by substantially the same persons who previously held shares in the Company) the EBT Trustee must pay a proportion of the consideration to a participant that is equivalent to his interest, and the participant will then have no further interest in the Ordinary Shares under the JSOS. Shares which are unvested because the vesting date has not yet been reached shall be treated for this purpose as if they have vested. Repurchase The Company may require the EBT Trustee to sell to it Ordinary Shares held under the JSOS at any time after 1 January 2019 or where the EBT Trustee has acquired a participants interest as a result of a participant ceasing to be employed. Limitations on grant The aggregate number of Ordinary Shares held for the purposes of the JSOS cannot exceed 7.5 per cent. of the Companys issued ordinary share capital. Amendment The board of the Company may amend the rules of the JSOS from time to time. However, an amendment may not be made to the definition of eligible employee, the restrictions on transfer of a participants interest or the limit of the aggregate number of Ordinary Shares that can be acquired through the JSOS without shareholder approval, unless the amendment is minor and benefits

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Additional Information

the administration of the JSOS, or is necessary for tax reasons or to take account of a change in legislation. An amendment may not adversely affect the rights of a participant who already has a beneficial interest in Ordinary Shares under the JSOS except where the amendment has been approved by the participant or is of a minor nature and benefits the administration of the JSOS. 12. Options and warrants over Ordinary Shares

12.1 Option granted to Anthony ONeill Ocado granted an option to subscribe for 74 shares in Ocado for 90.42 per share on 4 February 2002. This option will expire on 4 February 2012. Following the reorganisation that resulted in the Company becoming the holding company of the Group, this option is now an option to subscribe for 7,400 Ordinary Shares at a price of 0.9042 per Ordinary Share. 12.2 Option granted to Tom Clayton Ocado granted an option to subscribe for 943 shares in Ocado for 53 per share on 7 February 2002. This option will expire on 7 February 2012. Following the reorganisation that resulted in the Company becoming the holding company of the Group, this option is now an option to subscribe for 94,300 Ordinary Shares at a price of 0.53 per Ordinary Share. 12.3 Option granted to Compton Overseas International Limited Ocado granted an option to Compton Overseas International Limited to subscribe for 477 Ocado Limited Preference Shares for 103.37 per share on 30 April 2004. This option will expire 30 days after Admission. Following the reorganisation that resulted in the Company becoming the holding company of the Group, this option is now an option to subscribe for 47,700 Preference Shares at a price of 1.0337 per Preference Share. 12.4 Option granted to The Apple Trust Ocado granted an option to The Apple Trust on 3 January 2003 to subscribe for such number of shares in Ocado (and following the reorganisation that resulted in the Company becoming the holding company of the Group, in the Company) at the Offer Price as are required to ensure that The Apple Trust will hold 5.68 per cent. of the issued share capital of Ocado on Admission. Following the reorganisation that resulted in the Company becoming the holding company of the Group, this option is now an option in respect of Ordinary Shares. 12.5 Option granted to Hawkeye Capital Partners Limited (Hawkeye) The Company documented an option to Hawkeye on 21 June 2010 to subscribe for 38,700 Ordinary Shares at a price of 1.0337 per share. This option was granted to Hawkeye for investor introduction services performed by it in 2003. This option will expire 30 days after Admission. 12.6 Non-dilution right granted to Generation IM Climate Solution Fund, L.P. (Generation) Ocado and Generation entered into a subscription agreement on 28 August 2009 which granted Generation the right to subscribe for such number of shares at the Offer Price as it elects in Ocado (following the reorganisation that resulted in the Company becoming the holding company of the Group, in the Company) up to an aggregate amount which would result in its percentage shareholding being equal to the percentage shareholding of Generation prior to Admission. 12.7 Pre-emption right of FIL Investments International (FIL Int) and FIL Investment Services (UK) Limited (FIL UK) Ocado, FIL Int and FIL UK entered into a subscription agreement on 29 August 2009 which, as amended by a letter agreement dated 22 June 2010, granted FIL Int and FIL UK a pre-emption right in proportion to their holding of Ordinary Shares over any Ordinary Shares issued by the Company if the offer price for such shares is lower than 1.35. The pre-emption right will expire immediately prior to Admission.

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Part XIII 12.8 Warrants granted to Lloyds TSB Bank plc

Additional Information

Ocado granted warrants to Lloyds TSB Bank plc to subscribe for 28,612 shares in Ocado for 180 per share on 3 December 2004. These warrants were transferred to Ranelagh Nominees Limited (an affiliate of Lloyds TSB Bank plc) on 4 August 2006. Following the reorganisation that resulted in the Company becoming the holding company of the Group, the warrants are now warrants to subscribe for 2,861,200 Ordinary Shares in the Company at a price of 1.80 per Ordinary Share. In addition, Ocado granted warrants to Lloyds TSB Bank plc to subscribe for 20,833 shares in Ocado for 180 per share on 30 May 2006. These warrants were transferred to Ranelagh Nominees Limited on 4 August 2006. Following the reorganisation that resulted in the Company becoming the holding company of the Group, the warrants are now warrants to subscribe for 2,083,300 Ordinary Shares in the Company at a price of 1.80 per Ordinary Share. Subject to the Offer Price being no less than 1.90, Ranelagh Nominees Limited has irrevocably committed to exercise all warrants transferred to it by Lloyds TSB Bank plc prior to Admission provided that it may sell the resulting 4,244,500 New Ordinary Shares issued to it or its nominee pursuant to the Offers. Please also see section 12.9 below. 12.9 Warrants granted to Ranelagh Nominees Limited Ocado granted warrants to Ranelagh Nominees Limited to subscribe for 6,667 shares in Ocado for 180 per share on 6 February 2007. Following the reorganisation that resulted in the Company becoming the holding company of the Group, the warrants are now warrants to subscribe for 666,700 Ordinary Shares in the Company at a price of 1.80 per Ordinary Share. Subject to the Offer Price being no less than 1.90, Ranelagh Nominees Limited has irrevocably committed to exercise all its warrants prior to Admission provided that it may sell the resulting 667,600 New Ordinary Shares issued to it or its nominee pursuant to the Offers. Please also see section 12.8 above. 12.10 Confirmation The total issued warrants and options to subscribe for Ordinary Shares (as described in section 11.1 of this Part XIII and this section 12) will not, if all were exercised, exceed 20 per cent. of the issued share capital of the Company at Admission. Additional information on the intentions of Ranelagh Nominees Limited with regard to the warrants it holds to subscribe for 5,611,200 Ordinary Shares are provided in sections 12.8 and 12.9 above. 13. Corporate governance

13.1 Compliance with the UK Corporate Governance Code In anticipation of Admission, the Board has implemented a number of changes to its governance arrangements to give further assurance to Shareholders that the Board is committed to the highest standards of corporate governance. From Admission, the Company will apply the principles and comply with the provisions of the UK Corporate Governance Code save as described in sections 13.2 to 13.4 below. 13.2 The Board The Company is led and controlled by the Board. The names, responsibilities and details of the current Directors appointed to the Board are set out above in Part II (Directors). The UK Corporate Governance Code recommends that at least half the board of directors of a UK listed company, excluding the chairman, should comprise non-executive directors determined by the Board to be independent in character and judgement and free from relationships or circumstances which may affect, or could appear to affect, the directors judgement. As at the date of this document, the Board comprises 12 members, including the chairman, two independent non-executive Directors, four

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Executive Directors and five non-executive Directors who are not deemed to be independent for the purposes of the UK Corporate Governance Code. The Company will not therefore comply with the relevant requirements of the Code in relation to the balance of executive and independent non-executive Directors. Of the eight non-executive Directors on the Board, the chairman, David Grigson and Ruth Anderson are independent as defined in the UK Corporate Governance Code. However: Robert Gorrie is not deemed independent for the purposes of the UK Corporate Governance Code because he was an executive director of Ocado from April 2000 until April 2006 and a non-executive director from May 2006 until March 2010 when, along with some of the other members of the Ocado Board, he became a Director of the Company. He also provides consulting services to the Group under a separate consulting agreement. The Board considers Robert to be independent; Jorn Rausing is not deemed independent for the purposes of the UK Corporate Governance Code because the Apple Trust (of which he is a beneficiary) is a Major Shareholder. Details of his shareholding are set out in section 8 of this Part XIII. The Board considers Jorn to be independent; David Young is not deemed independent for the purposes of the UK Corporate Governance Code because he was a Director of Ocado from October 2000 to March 2010 when, along with all of the other then members of Ocado Board, he became a Director of the Company. The Board considers David to be independent; Patrick Lewis is a director of John Lewis Partnership plc. John Lewis Partnership plc is the ultimate holding company of Waitrose which, as described in this document, is the Groups key supplier and also a competitor. Patrick is also a director of and was appointed to the Board by the John Lewis Pension Fund which is a Major Shareholder. Accordingly Patrick Lewis is not deemed independent for the purposes of the UK Corporate Governance Code; and Michael Robarts was appointed to the Board by the John Lewis Pension Fund which is a Major Shareholder. Accordingly Michael is not deemed independent for the purposes of the UK Corporate Governance Code.

The Company has no immediate intention to appoint further independent non-executive Directors (although it does expect to appoint at least one in the six months following Admission), nor to remove from the Board any of the current Directors, to comply with the relevant provisions of the UK Corporate Governance Code save that Michael Robarts is expected to stand down from the Board shortly after Admission). However, the Company expects that as existing members of the Board step down and new Directors are appointed, the Company will become compliant with the UK Corporate Governance Code in this respect. In order to maintain high standards of corporate governance, the Final Articles require each Director to retire at every annual general meeting (each Director may offer himself for reappointment by the members at such meeting). The UK Corporate Governance Code does not yet require the Company to implement such a procedure. 13.3 Board responsibilities The Board has authority for the conduct of the business of the Group. There are a number of matters that have been specifically reserved for the Board. 13.4 Board committees As envisaged by the UK Corporate Governance Code, the Board has established three committees: an audit committee, a nomination committee and a remuneration committee. If the need should arise, the Board may set up additional committees as appropriate. Audit committee The audit committees role is to assist the Board in fulfilling its oversight responsibilities, including the review of the financial reporting process, the system of internal control and risk management, the audit

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process and the Companys process for monitoring compliance with laws and regulations and its own code of business conduct. The audit committee will normally meet no fewer than three times a year. The audit committee is chaired by Ruth Anderson, and its other members are David Grigson, David Young and Robert Gorrie. As required by the UK Corporate Governance Code, one member of the audit committee (Ruth Anderson) is considered by the Board to have recent and relevant financial experience. The UK Corporate Governance Code also requires a board to establish an audit committee of at least three independent non-executive directors. As explained above, while the Board considers each of its non-executive Directors on the audit committee to be independent, from the perspective of the UK Corporate Governance Code only two of the four members of the audit committee (Ruth Anderson and David Grigson) are independent. Therefore the Company does not comply with the UK Corporate Governance Code in this respect. The Group does not have a dedicated internal audit function, although internal reviews of the Groups operations are undertaken periodically by senior financial staff. The audit committee and the Board have considered the need for an internal audit function and concluded that, given the Groups size and structure, it is not necessary at this time. The need for an internal audit function will be monitored and developed as the size and complexity of the Group increases. Nomination committee The nomination committees principal responsibility is to keep the composition and balance of the Board under review, consider succession planning, lead the process for Board appointments and make recommendations to the Board on all new appointments and re-appointments of non-executive Directors. The nomination committee will normally meet no fewer than two times a year. The nomination committee is chaired by David Grigson, and all of the other non-executive Directors (including Michael Grade) are members. The UK Corporate Governance Code requires a majority of the members of the nomination committee to be independent non-executive directors. As explained above, while the Board considers six of its non-executive Directors on the nomination committee to be independent, from the perspective of the UK Corporate Governance Code only three of the members of the nomination committee (David Grigson, Michael Grade and Ruth Anderson) are independent. Therefore the Company does not comply with the UK Corporate Governance Code in this respect. Remuneration committee The purpose of the remuneration committee is to determine and agree with the Board the remuneration policy and salary market position for the chairman of the Board and the Executive Directors, to monitor the structure and levels of remuneration for the next most senior category of executives and make recommendations if appropriate and to review and administer all aspects of any share scheme operated by or to be established by the Company. This includes base salary, annual and long-term incentive entitlements and awards and pension arrangements. No Director or executive shall be involved in any decisions as to his or her remuneration. The remuneration committee will also generate an annual report of the Companys remuneration policy and practices which will form part of the Companys annual report and ensure that each year it is put to the Companys shareholders for approval. The remuneration committee will normally meet no fewer than two times a year. The remuneration committee is chaired by David Young, and its other members are Ruth Anderson, Robert Gorrie and Jorn Rausing. The UK Corporate Governance Code requires a board to establish a remuneration committee of at least three independent non-executive directors. As explained above, while the Board considers each of its non-executive Directors on the remuneration committee to be independent, from the perspective of the UK Corporate Governance Code the only member of the remuneration committee who is independent is Ruth Anderson. Therefore the Company does not comply with the UK Corporate Governance Code in this respect. 13.5 Model Code From Admission, the Company shall require the Directors and other persons discharging managerial responsibilities within the Group to comply with the Model Code as published in the Listing Rules, and shall take all proper and reasonable steps to secure their compliance.

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Pensions

Ocado contributes to the personal pension plans of its staff through a defined contribution company personal pension scheme which is administered by Standard Life. Employer contributions to the scheme are a percentage of salary based on length of service. 15. Significant change

There has been no significant change in the financial or trading position of the Group since 16 May 2010 being the date to which the historical financial information in Part VII (Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010) was prepared. 16. Litigation

There are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) which may have, or have had during the 12 months preceding the date of this document, a significant effect on the Group or its financial position or profitability. 17. Material contracts

Set out below is a summary of (a) each material contract (other than a contract in the ordinary course of business) to which Ocado or the Company is a party which has been entered into within the two years immediately preceding the date of this document; and (b) any other contract (other than a contract in the ordinary course of business) entered into by any member of the Group which contains a provision under which any member of the Group has any obligation or entitlement which is material to the Group as at the date of this document. 17.1 Branding Arrangements and Sourcing Agreement with Waitrose and John Lewis Various agreements have been entered into between Ocado and John Lewis and Waitrose. The original Sourcing and Branding Agreements (and the shareholders agreement that, from 2000, governed the relationship between Ocado and its shareholders) were progressively amended, superseded or otherwise updated, most recently by the 2008 Agreement and the 2010 Agreement. Such changes built on the strengths and continuing mutual benefits of the original deal between the parties and reflected also the development of both Ocados and Waitroses own online operations. The current relationship between Waitrose (as a sourcing agent and brand owner) and Ocado is set out in this suite of agreements to which the 2010 Agreement is the most recent addition, and is a newly extended arms length commercial arrangement which takes into account the historic relationship between the parties and other relevant factors. 2010 Agreement Under the 2010 Agreement, Ocado and Waitrose agreed to extend the term of their relationship and reached further agreement on certain other key elements. As a result of the 2010 Agreement, the Sourcing Agreement will now expire on 1 September 2020, unless terminated earlier by any party giving written notice. The earliest such notice may expire is 1 March 2017. To terminate by notice with effect from 1 March 2017, at least 18 months written notice must be given; such notice period reduces on a sliding scale so that to terminate by notice with effect from 1 September 2017 onwards, only 12 months notice need be given. Sourcing Agreement Under the Sourcing Agreement, Waitrose acts as Ocados sourcing agent for the negotiation and entry into of Ocados supply commitments. In the majority of cases where Waitrose sources products for Ocado in this way, Ocado is then able to place its orders for goods directly with the supplier at the prices obtained by Waitrose, but must deal with all logistics, handling and billing matters itself. Currently approximately 85 per cent. (by volume) of the goods sold by Ocado stocks (supplied by approximately 350 different suppliers) are sourced through Waitrose in this way. In other cases, Ocado places orders with Waitrose for the relevant products, and these orders are

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aggregated with the requirements of Waitroses branches, delivered by the supplier to the Waitrose regional distribution centre, and then forwarded to Ocado. Waitrose then bills Ocado for the relevant products. In all cases Waitrose is obliged to use its reasonable endeavours to procure terms for Ocado which are comparable to those obtained by Waitrose itself, including volume discounts and availability of support for promotions. Ocado pays Waitrose a fee for these services in all cases. The 2010 Agreement amended or clarified some important elements of the Sourcing Agreement and Branding Arrangements. These included: Sourcing fee

The sourcing fee is calculated as a percentage of Ocados net sales (exclusive of delivery charges, certain refunds, and VAT) of products sourced through Waitrose. The parties agreed a new sourcing fee under the 2010 Agreement to take effect from 1 December 2010; unlike the fee currently paid, the new sourcing fee will vary according to whether the product sold is third partybranded, Waitrose own-label, John Lewis own-label or sourced from John Lewis (the percentage being higher in respect of the latter categories than the former). Accordingly, the new sourcing fee will rise to the extent that Ocado sells a higher percentage of products that are Waitrose own-label, John Lewis own-label or sourced from John Lewis, and (subject to the minimum sourcing fee described below) will fall to the extent that Ocado sells a higher percentage of Ocado own-label, third party-branded products and products not sourced through Waitrose. In FYE 2009, Ocado paid Waitrose a sourcing fee of 4.7 million in accordance with the terms of the 2008 Agreement. The Directors estimate that this would have increased to 6.4 million had the sourcing fee payable from 1 December 2010 been payable in FYE 2009. From 1 December 2010 there will also be a minimum annual sourcing fee payable by Ocado to Waitrose. The Directors expect that this minimum fee will be broadly equivalent, as a percentage of Ocados net sales (exclusive of delivery charges and VAT) of grocery products, to the fee paid in FYE 2009. Scope of products covered

Ocado has the right to stock and sell (and must not source elsewhere) all grocery products in the assortment of grocery products stocked by Waitrose supermarkets (subject to certain exclusions such as where Waitrose is unable to procure such supply for Ocado, either at all or in sufficient quantities). If Ocado wishes to introduce a product not comprised in the Waitrose assortment then Waitrose has a right of first refusal on whether to supply that product if it is a product from a range that is already stocked by Waitrose supermarkets; otherwise Ocado may source the product directly from a third party, although Ocado is not permitted to stock and sell any products that carry the brand of certain Waitrose competitors. This provision, contained in the 2010 Agreement, was a significant change from the equivalent provision in the 2008 Agreement which had required Ocado to offer Waitrose a right of first refusal to source for it any products it wished to stock. The Sourcing Agreement treats differently the various non-grocery products that are either branded John Lewis or sourced by Waitrose from John Lewis. Ocado also has the right to source certain of these non-grocery products. Either party may give the other three months notice to cease the supply of any or all of these products. Sales of these non-grocery products accounted for approximately 0.5 per cent. of Ocados gross sales in FYE 2009 (P1-3 2010: 0.8 per cent.). Ocado and John Lewis are in discussions as to whether they can agree a separate agreement for Ocado to source non-grocery products from John Lewis on a long term basis, and Ocado has agreed not to source these products from certain John Lewis competitors until 1 January 2011 (unless the negotiations terminate unsuccessfully before that date). Ocado is not otherwise restricted as to whom it may source non-grocery products from.

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Additional Information Minimum Sourcing Requirements Minimum sourcing of third party-branded groceries: in each quarter, at least 80 per cent. of Ocados sales of third party-branded groceries must be sourced through Waitrose (subject to certain exceptions designed to protect Ocado from Waitroses suppliers ceasing to be willing to supply Ocado). Ocado will have three months, following notice from Waitrose, to remedy any breach of this provision. If Ocado fails to rectify the breach Waitrose may terminate the Sourcing Agreement and Branding Arrangements on six months notice (and may terminate immediately, if Ocado breaches the provision three times in any rolling 24 month period). Following termination in these circumstances, Ocado is obliged to pay Waitrose a termination fee of 40 million. These minimum sourcing provisions cease to bind the parties once any party has given valid notice to terminate the agreements. Minimum sourcing of own-label groceries: in each quarter up to 25 May 2013, no more than 20 per cent. of Ocados net grocery sales of Waitrose own-label and Ocado own-label groceries may comprise net sales of Ocado own-label groceries. Thereafter, the threshold rises to 30 per cent. The same termination provisions (including the termination fee) apply as apply to the minimum sourcing of third party-branded products, save that if in the 12 months prior to termination, no more than 20 per cent. (or, following 25 May 2013, 30 per cent.) of the total number of own-label SKUs were Ocado own-label, the termination fee will be 10 million. These minimum sourcing provisions cease to bind the parties once any party has given notice to terminate the agreements.

By way of illustration, in FYE 2009 99.5 per cent. of Ocados sales of third party-branded groceries were sourced from Waitrose (P1-3 2010: 99.2 per cent.) and 1.5 per cent. of Ocados sales of own-label groceries comprised sales of Ocado own-label groceries (P1-3 2010: 2.4 per cent.). The Directors believe, therefore, that the minimum sourcing provisions in the 2010 Agreement do not, realistically, place a significant restriction on the independent growth of the Business. The minimum sourcing requirements do not affect Ocados sales of non-grocery products. Termination

Waitrose may terminate the Sourcing Agreement on six months written notice if Ocado fails to pay sums due under the agreement within a set time period, commits certain material breaches (and fails to cure them within 30 business days), or the Branding Arrangements are terminated other than as a result of breach by Waitrose. Waitrose may also terminate the Sourcing Agreement immediately by giving Ocado written notice on Ocados insolvency or ceasing to operate its online home delivery grocery service. Ocado may terminate the Sourcing Agreement on six months notice following a failure to pay by Waitrose or a material breach and immediately on Waitroses insolvency. In addition, either party may terminate the agreement on three months notice following a competitor of Waitrose or John Lewis acquiring 50 per cent. or more of the Ordinary Shares or control of the Companys board. Following termination in these circumstances, Ocado will pay Waitrose the lower of 40 million and 4 per cent. of the market capitalisation of the Company. This change of control provision will cease to bind the parties if, prior to the change of control, any party has already given a valid notice of termination. Branding Arrangements Under the Branding Arrangements Ocado has a non-exclusive arrangement with Waitrose under which Ocado may, in accordance with set operating procedures and a style guide and subject to Waitroses prior approval, use the Waitrose brand and trademarks in the UK for its online grocery retailing and delivery service in return for a nominal royalty fee. The Branding Arrangements will terminate upon Ocado and Waitrose entering into a new branding agreement, and may terminate upon material breach by either party (and failure to cure such breach within 30 business days), insolvency of either party, or the bringing of the Ocado, John Lewis and/or Waitrose brands into

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disrepute, or termination of the Sourcing Agreement. On termination, Ocado is required to cease using the Waitrose brand and the Waitrose trade marks immediately. The 2010 Agreement strengthened some of the brand protection provisions. In particular, specific mention was made to the reputation for excellence of the Waitrose, John Lewis and the John Lewis Partnership brands, and Ocado undertook on behalf of itself and any future controllers of Ocado not to do anything which would diminish or would be likely to diminish that reputation. Ocado also undertook not to position its offering as a whole to be similar to that of a discount retailer. If Ocado (or any future controllers of it) breach these brand protection provisions, it would have 90 days following notice from Waitrose or John Lewis to rectify the breach. If Ocado (or such controller) fails to rectify the breach, or if it breaches the provisions three times in any rolling 24 month period, Waitrose and John Lewis may terminate the Sourcing Agreement and Branding Arrangements on 30 days notice (or immediately following three breaches in a 24 month period). Following termination in these circumstances, Ocado is obliged to pay Waitrose 40 million. Restrictions on WaitroseDeliver In addition to amending the Sourcing Agreement and replacing the Branding Agreement with the Branding Arrangements, Waitrose and Ocado agreed in the 2008 Agreement to relax the non-compete provision applying to the WaitroseDeliver service which had been contained in the shareholders agreement. This provision was relaxed further under the 2010 Agreement. As a result, until 31 December 2010, Waitrose is prevented from offering the WaitroseDeliver service to any person living within the area bounded by the M25 motorway. This prohibition does not extend to a limited number of deliveries made from five Waitrose stores within the M25 to customers in certain postcode areas. Between 1 January 2011 and 30 June 2011 Waitrose may effect a phased extension of the WaitroseDeliver service within the M25, so that by July 2011 it may provide the service without contractual limitations. IPO Fee Pursuant to the 2010 Agreement Ocado agreed to procure that the Company would pay John Lewis a fee of 850,000 following Admission in recognition of the support provided to the Business by John Lewis and in partial reimbursement for the costs incurred by the John Lewis Pension Fund (of which John Lewis is sponsor) in respect of the Offers. Termination or notice of termination of the Sourcing Agreement and Branding Arrangements in any circumstances would be an event of default under the New Facility. However, with the exception of the change of control termination right described in paragraph 1.4 of the Risk Factors, which is customary for an agreement of that type, the Company is in control of whether any such termination rights will arise. 17.2 CFC Leases Ocado entered into a lease of the CFC on 12 June 2002 for an initial term of 20 years to expire on 28 September 2021. Certain obligations of the Company as tenant under this lease were guaranteed by John Lewis. Ocado later entered into a reversionary lease of the CFC on 6 March 2008, which granted the Company a further lease of the CFC for a term of 11 years which effectively extends the term of the initial lease of the CFC, to expire on 27 September 2032. There was no guarantor to this reversionary lease. Ocado also entered into a further lease of an additional storage yard at the CFC on 6 March 2008, for a term expiring on 28 September 2032. For the purposes of this section the leases of the CFC are collectively referred to as the CFC Leases. Under the CFC Leases, Ocado currently pays an annual rent of 2,528,984 comprising: 2,209,398 per annum for the principal warehouse; 294,586 per annum for a car park; and 25,000 per annum for the additional storage yard. The rents will next be reviewed on 28 September 2011 and every fifth year thereafter during the term, in each case on an upwards only open market basis. In addition to the rent, Ocado pays a service charge towards the general upkeep and maintenance of the Hatfield Business Park (originally the Hatfield Aerodrome) on which the CFC is situated. This service

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charge is paid in common with other occupiers of that business park and is calculated as a fair and reasonably proportion of the total service charge properly attributable to the CFC site. In each case, Ocado has been granted a full structural demise of the relevant premises and the CFC Leases restrict Ocados use of the CFC site to storage and distribution with ancillary offices and staff facilities. The CFC Leases permit Ocado to assign, underlet, charge and part with possession of the leases, subject to certain conditions which are set out in the CFC Leases. The CFC Leases do not contain any break rights in favour of either the landlord or the tenant of those leases. John Lewis currently guarantees Ocados obligations under the CFC Leases. Ocado pays John Lewis a fee of 150,000 per annum in consideration for the guarantee being provided in accordance with the terms of an agreement entered into in September 2005. Under the 2008 Agreement, Ocado is required to procure John Lewiss release from this guarantee upon Admission. In consideration for John Lewis agreeing to continue to guarantee Ocados obligations under the CFC Leases for a period of up to 18 months from Admission, Ocado has agreed to increase the fee payable to fee equivalent to 240,000 per annum for the first six months from Admission and fee equivalent to 220,000 per annum for the twelve months thereafter. 17.3 Key financing arrangements Lloyds TSB Bank plc

On 22 November 2004 Ocado (as borrower) and Lloyds TSB Bank plc (as lender) entered into a term loan agreement which was amended and restated on 30 May 2006, 6 February 2007, 15 August 2008 and 26 May 2010. The facility consists of three sterling term loan facilities of 11,219,494.92 (the A Facility), 15,887,267.50 (the B Facility) and 7,500,000 (the C Facility) and a sterling revolving credit facility of 7,500,000 (the RCF) and is for Ocados general corporate purposes. The facility is secured against the delivery management system software and the LOKI/Fenrir software program. The facility is guaranteed by the Company and Ocado Holdings Limited and by Ocado in the event of an additional borrower drawing down under the facility. Loans drawn under the A Facility and B Facility bear interest at the London Inter-Bank Offer Rate plus a margin of 2 per cent. per annum together with a sum for certain mandatory costs (if any). In addition, interest at a margin of 4 per cent. per annum is accrued, capitalised and added to the outstanding principal amount. Loans drawn under the C Facility bear interest at the London Inter-Bank Offer Rate plus a margin of 5 per cent. per annum together with a sum for certain mandatory costs (if any). Loans drawn under the RCF bear interest at the London Inter-Bank Offer Rate plus a margin of 7 per cent. per annum together with a sum for certain mandatory costs (if any). Interest on overdue amounts is charged at a rate of 1 per cent. above the rate which would have been payable. Repayment of 15,625,000 is due pro-rata on the A Facility and B Facility on 1 December 2010 with the balance due on 1 December 2011. Repayments of the C Facility are due in three instalments of 2,500,000 on 26 May 2011, 26 May 2012 and 26 May 2013. The agreement contains customary warranties, representations, covenants and events of default. The financial covenants require that Ocados cumulative EBITDA be not less than specified incremental amounts in specified quarterly test periods, that the ratio of EBITDA to net interest at the end of each such quarter period be greater than one for one on 31 August 2010, two to one until 31 May 2011 and three to one for 31 August 2011 and for each quarter period thereafter and that Ocado maintain certain cash flow levels in relation to debt service. Any material changes to the Sourcing Agreement and Branding Arrangements must be agreed in advance by Lloyds TSB Bank plc acting reasonably. The Company, Ocado and Ocado Holdings Limited may not acquire any company, business or undertaking without the prior written consent of Lloyds TSB Bank plc acting reasonably and may not enter into, invest in or acquire any interest in a joint venture. The agreement restricts the payments of dividends or any distributions by Ocado. Termination or notice of termination of the Sourcing Agreement and Branding Arrangements with Waitrose or John Lewis or an adverse change in Ocados, the Companys or Ocado Holdings Limiteds financial or trading position or prospects which, in the opinion of Lloyds TSB Bank plc, is likely to materially affect their ability to comply with their obligations under the agreement constitute an event of default and all outstanding amounts would become repayable on demand.

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Additional Information

On 27 July 2009 Ocado (as borrower) and Bank of London and the Middle East plc (as lender) entered into a murabaha facility agreement. The facility is governed under Shariah law and the facility amount is 10 million. In place of interest, Ocado makes repayments to a principal sum in excess of the borrowed amount following an exchange of metal commodities contract. This excess sum is calculated by multiplying the commodity cost price by 8 per cent and again by N/365, where N is the number of days to elapse from the settlement date to maturity. Repayments are made quarterly and all outstanding sums must be paid on the maturity date, being 27 July 2012. The agreement contains customary warranties, representations, covenants and events of default, with certain financial covenants requiring that EBITDA must remain positive and that total borrowings and liabilities must not exceed 160 million. The agreement restricts the distribution of dividends unless the Group is current with all payments under the agreement and provided that such distribution does not exceed 50 per cent. of Ocados net profit for the period on which the distribution is being made. If there is an adverse change in Ocados financial or trading position or prospects which, in the banks opinion is likely to materially affect its ability to comply with its obligations under the agreement, an event of default would be triggered and all outstanding amounts would become repayable on demand. HSBC Equipment Finance (UK) Limited

On 22 July 2004 Ocado (as lessee) and HSBC Equipment Finance (UK) Limited (as lessor) entered into a master sale and leaseback agreement. The agreement may be terminated on one months notice by either party but without prejudice to rights accrued under any leasing agreements made thereunder. Under the agreement, Ocado may purchase and install plant equipment and subsequently sell and leaseback the equipment. There have been 24 such sale and leaseback agreements covering the majority of the conveyor systems and associated capital goods that have been added to the CFC since August 2004, with outstanding sums totalling 31,580,000. Barclays Bank PLC, HSBC Bank plc and Lloyds TSB Bank plc

On 5 July 2010 Ocado (as original borrower) entered into a sterling term loan facility (the New Facility) between, among others, Barclays Bank PLC, HSBC Bank plc and Lloyds TSB Bank plc (as mandated lead arrangers and lenders), and Barclays Bank PLC (as agent and security trustee). The lenders have agreed to make available 100 million to the borrowers under the New Facility. All amounts borrowed under the New Facility shall be applied towards (i) the acquisition of land located in England and Wales; (ii) the acquisition of building materials, fixtures and buildings attached to land located in England and Wales; and/or (iii) the acquisition of plant, machinery, equipment, fittings and/or any other tangible movable property to be located at the existing CFC, the second CFC and the Spokes located in England and Wales. The New Facility has an accordion feature which allows for the amount available under it to be increased up to 130 million, subject to lenders (existing or additional) agreeing to make the additional amount available. The borrowers may only draw down under the New Facility if certain customary conditions precedent are satisfied and Admission takes place. The New Facility is secured against the LOKI/Fenrir software program and the assets financed by the New Facility. The New Facility is guaranteed by the Company, Ocado Holdings Limited and Ocado in the event of an additional borrower drawing down under it. Any of the Companys subsidiaries whose EBITDA, gross assets or turnover account for 5 per cent. or more of the Groups EBITDA, gross assets or turnover (calculated on a consolidated basis) shall become additional guarantors, and the guarantors (taken together) must account for at least 90 per cent. of the Groups EBITDA, gross assets and turnover. Loans drawn under the New Facility bear interest at the London Inter-Bank Offer Rate plus a margin of 3.5 per cent. per annum together with a sum for certain mandatory costs (if any). Repayment is due on the termination date of the New Facility, 6 January 2014. The New Facility contains customary warranties, representations, covenants and events of default. The financial covenants require that the ratio of EBITDA to net interest at the end of each quarter period be not

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less than 3:1 until the test date falling in May 2011, not less than 3.5:1 thereafter until the test date falling in August 2011 and 4:1 thereafter. The financial covenants also require that the ratio of net debt to EBITDA must not exceed 3:1, and that the ratio of gross debt to EBITDA must not exceed 5.5:1 for any covenant test period in respect of which EBITDA is less than 35 million. The New Facility contains an undertaking from Ocado that it shall ensure that there are no changes, amendments or waivers to the terms of the Sourcing Agreement and Branding Arrangements which are reasonably likely to have a material adverse effect on: (i) the ability of the borrowers and the guarantors (taken as a whole) to perform or comply with their payment obligations under the New Facility and/or the financial covenants and the guarantor cover test; or (ii) the validity or enforceability of, or the effectiveness or ranking of any security granted pursuant to the New Facility. If either Ocado, Waitrose or John Lewis gives notice to terminate the Sourcing Agreement and Branding Arrangements it will be an event of default under the New Facility. However, with the exception of the change of control termination right described in paragraph 1.4 of the Risk Factors, which is customary for an agreement of that type, the Company is in control of whether any such termination rights will arise. Subject to exceptions for certain permitted acquisitions and permitted joint ventures, the borrowers and the guarantors may not acquire any company, business or undertaking and may not enter into, invest in or acquire any interest in a joint venture. The terms of the New Facility also require that Ocado must ensure that at all times when at least 10,000,000 is outstanding under the New Facility interest payments in respect of at least 50 per cent. but not more than 100 per cent. of the amounts drawn under it (from time to time) are hedged for a minimum duration of three years or until the termination date of the New Facility (whichever is shorter). 17.4 Underwriting and Selling Shareholder Agreements The Company, the Directors, the Major Selling Shareholders and the Underwriters have entered into the Underwriting and Selling Shareholder Agreements dated 6 July 2010. Pursuant to these Agreements: the Company has agreed, subject to certain conditions (the last condition being Admission), to allot and issue, at the Offer Price, the New Ordinary Shares to be issued in connection with the Offers; the Selling Shareholders have agreed, subject to certain conditions (the last condition being Admission), to sell, at the Offer Price, the Ordinary Shares to be sold by them in connection with the Offers; the Underwriters have severally agreed, subject to certain conditions including Admission, to procure subscribers and purchasers for (or, failing which, to subscribe or purchase themselves) the Offer Shares (in such proportions as set out in the Agreements) pursuant to the Offers; in consideration for their services under the Underwriting Agreement and subject to Admission occurring, the Company has agreed to pay to the Underwriters a commission of two per cent. of the amount equal to the product of the Offer Price and the aggregate number of New Ordinary Shares issued and sold by the Company pursuant to the Offers; each Selling Shareholder has agreed to pay to the Underwriters a commission of two per cent. of the amount equal to the product of the Offer Price and the aggregate number of Ordinary Shares sold by them pursuant to the Offers. UBS Holdings Cayman Limited, as provider of the Over-allotment Option, has also agreed to pay to the Underwriters a commission of two per cent. of the amount equal to the product of the Offer Price and the aggregate number of Ordinary Shares sold pursuant to the Over-allotment Arrangements; subject to Admission occurring, the Company may also, in its discretion, decide to award to some or all of the Underwriters an incentive commission in aggregate at a level to be determined by the Company of up to 1 per cent. of the amount equal to the product of the Offer Price and the aggregate number of Offer Shares (including Ordinary Shares sold pursuant to the Over-allotment Arrangements) (the Incentive Commission). Any Incentive Commission shall be borne by the Company and the Selling Shareholders (which includes UBS Holdings Cayman Limited, as provider of the Over-allotment Option, and Ranelagh Nominees Limited but does not include Selling Optionholders and Minor Selling Shareholders selling fewer than 50,000 Ordinary Shares in the Offers) pro rata to the number of Offer Shares being sold or allotted by them or on their behalf;

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the obligations of the Underwriters to procure subscribers and purchasers for or, failing which, themselves to subscribe for and purchase the Ordinary Shares to be issued and sold in connection with the Offers on the terms of the Underwriting and Selling Shareholder Agreements are subject to certain conditions. These conditions include the absence of any breach of representation or warranty under the Underwriting and Selling Shareholder Agreements, there having been no material adverse change since the date of the Underwriting and Selling Shareholder Agreements and Admission having occurred not later than 8.00 a.m. on 26 July 2010 or such later time and/or such date (not later than 8.00 a.m. (London time) on 31 August 2010) as the Company may agree with the JGCs (on behalf of themselves and the other Underwriters). In addition, any of the JGCs (on behalf of themselves and the other Underwriters) has the right to terminate the Underwriting and Selling Shareholders Agreements, exercisable in certain circumstances prior to Admission. These circumstances, which are typical for agreements of this nature, include the occurrence of certain significant changes in the condition (financial or otherwise), business prospects or earnings of the Group and certain changes in financial, political or economic conditions; subject to the Underwriters bearing their own out-of-pocket costs and expenses and certain additional expenses, the Company has agreed to pay the costs, charges, fees and expenses (other than any amount in respect of tax) incurred by the Underwriters in connection with the Offers, Admission and the arrangements contemplated by the Underwriting and Selling Shareholder Agreements; the Major Selling Shareholders have agreed to pay to and reimburse the Underwriters in respect of any stamp duty and/or SDRT arising on the initial sale of the Ordinary Shares by Major Selling Shareholders under the Offers (including the Sale of Ordinary Shares pursuant to the Over-allotment Option), subject to certain limitations; each of the Company, the Major Selling Shareholders and the Directors has given certain representations, warranties and undertakings to the Underwriters. The liabilities of the Company under the Underwriting Agreement are not limited as to amount or by time. The liabilities of the Directors and the Major Selling Shareholders under the Underwriting and Selling Shareholders Agreements are limited as to time and amount; pursuant to the Underwriting Agreement, the Company has given an indemnity to the Underwriters in a form that is typical for an agreement of this nature; the parties to the Underwriting and Selling Shareholder Agreements have given certain covenants to each other regarding compliance with laws and regulations affecting the making of the Offers in relevant jurisdictions; the Company, the Major Selling Shareholders, the Directors and, pursuant to certain stand-alone lock-up deeds entered into on the same date as the Underwriting and Selling Shareholder Agreements, certain Shareholders who between them hold more than 37 per cent. of the issued share capital of the Company have agreed to be subject to certain lock-up arrangements further details of which are set out in section 10 of Part IX (Information about the Offers); and the Selling Shareholders Agreement also contains the terms of the Over-allotment Arrangements more fully described in section 7 of Part IX (Information about the Offers).

17.5 Stock Lending Agreement In connection with the Over-allotment Arrangements, the Stabilising Manager will enter into the Stock Lending Agreement with Tim Steiner and Jason Gissing, pursuant to which the Stabilising Manager, on Admission, will be able to borrow up to 18,131,750 Ordinary Shares for the purposes, among other things, of allowing the Stabilising Manager to settle, at Admission, over-allotments, if any, made in connection with the Offers pursuant to the Over-allotment Arrangements. If the Stabilising Manager borrows any Shares pursuant to the Stock Lending Agreement, it will be required to return equivalent securities to the relevant lender in accordance with the terms of the Stock Lending Agreement.

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Additional Information

Property

The Group has the following property interests, all of which are held by Ocado:
Property CFC Location Gypsy Moth Avenue, Hatfield Business Park, Hatfield, Herts AL10 9BD Tenure Leasehold Purchase Price/ Rent (exc. VAT) 2,528,984 per annum comprising: 2,209,398 per annum (warehouse) 294,586 per annum (car park) 25,000 per annum Lease for yard (additional yard) commenced on 6 March 2008 until Rent reviews in 28 September September 2011 2032 and every five years thereafter Titan Court Ground Titan Court Ground Leasehold Floor Floor, 3 Bishops Square, Hatfield Business Park, Hatfield, Herts AL10 9NE 8 month rent-free period until June 2010 137,627.48 (first year rent) 197,627.50 per annum (subject to rent review in October 2014 but benefitting from further 4 month rent-free period if the tenant break option at fifth anniversary of lease date is not exercised) Titan Court Top Titan Court, Top Floor (Head Office) Floor, 3 Bishops Square, Hatfield Business Park, Hatfield, Herts AL10 9NE Leasehold 8 months rent free period until June 2010 323,068 per annum (subject to rent review in October 2014 but benefitting from further 4 month rent-free period if the tenant break option at fifth anniversary of lease date is not exercised) 10 years ending on N/A 20 October 2019 N/A Term Major Encumbrances

20 years ending on N/A 27 September 2021, reversionary lease extending term until 27 September 2032

10 years ending on N/A 20 October 2019

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Property Weybridge Spoke Location Canada House, Canada Road, Byfleet, West Byfleet, Surrey KT14 7HQ Tenure Leasehold Note: Ocado is currently negotiating a reversionary lease of this Spoke to include the warehouse, offices and yard and the car park. It is proposed that the lease will be for a term of 10 years commencing on 20 February 2011 at the same rent as the existing lease with a 7 month rent free period from 20 February 2011, subject to an upwards only open market rent review on the fifth anniversary of the lease with a tenant break right exercisable on 20 February 2016 subject to 6 months notice. Licence Purchase Price/ Rent (exc. VAT) Term

Additional Information
Major Encumbrances N/A

275,000 per 5 years ending on annum and including (warehouse, offices 19 February 2011 and yard) 75,000 per annum 24 June 2007 until (car park and 19 February 2011 pathways) No rent review

N/A

50 additional car parking spaces at Canada Road, Byfleet, Surrey KT14 Coventry Spoke 5 Crondal Road, Exhall, Coventry CV7 9NH

10,000 per annum 12 September 2007 until 19 February 2011 No review of licence fee

N/A

Freehold

2,115,000

N/A

Subject to a charge dated 30 November 2006 in favour of Barclays Bank PLC Subject to a charge dated 11 September 2008 in favour of Barclays Mercantile Business Finance Limited

Manchester Spoke

Units D4 & D5 Stanley Green Trading Estate, Commercial Avenue, Cheadle Hulme, Cheadle SK8 6QH

Leasehold

100,000 per annum No rent review

5 years ending on May 18 2014

N/A

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Additional Information
Location Unit B5, Normandy Way, Marchwood Industrial Park, Marchwood, Southampton, Hampshire SO40 4BX Tenure Leasehold Purchase Price/ Rent (exc. VAT) Term Major Encumbrances

Southampton Spoke

84,150 per annum 10 years ending on N/A for B5 (Main 1 December 2015 Building) subject to rent review on 2 December 2010 13,850 per annum 18 January 2007 to N/A for D1 (Additional 1 December 2015 Yard Area) subject to review on 2 December 2010 12,000 per annum for B4.4 (Car Park) 4 years ending on N/A 24 December 2011

Dartford Spoke

Zone A, Plots 2 and 3, Littlebrook Business Park, Manor Way, Dartford, Kent DA1 5PZ

Freehold

2,475,000

N/A

Subject to a charge dated 17 February 2010 in favour of Barclays Bank PLC Subject to a charge dated 2 March 2010 in favour of Barclays Mercantile Business Finance Limited

Leeds Spoke

Unit J, Springwell 27, Dark Lane, Birstall, Leeds

Freehold

254,000

N/A

Subject to a charge dated 30 December 2008 in favour of Barclays Bank PLC Subject to a charge dated 21 January 2009 in favour of Barclays Mercantile Business Finance Limited

White City Spoke

White City Spoke, 5 & 7 Ariel Way, White City Industrial Park, Wood Lane, Hammersmith, London W12 7SL Note: Ocado proposes to take a further lease of a third unit at White City with the intention of it being operational in September 2010. Negotiations for that lease are at an early stage and terms have not yet been agreed.

Leasehold

147,598.50 per annum subject to review on 25 June 2014

25 June 2009 to N/A 31 December 2019

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Property Aylesford (Former Spoke, now used to store old equipment only) Location Newsprint House, New Hythe Industrial Estate, Bellingham Way, Aylesford, Kent ME20 7DL Tenure Leasehold (Periodic Tenancy) Purchase Price/ Rent (exc. VAT) 1,000 per month subject to review on a rolling monthly basis Term

Additional Information
Major Encumbrances N/A

Rolling monthly basis

19.

Working capital statement

The Company is of the opinion that, taking into account the net proceeds of the Offers and the facilities available to the Group, the Group has sufficient working capital for its present requirements, that is, for at least the next twelve months from the date of the publication of this document. 20. Dividend policy

Neither Ocado nor the Company has ever declared or paid a dividend. The Company currently intends to retain any future earnings of the Business and therefore the Directors do not anticipate declaring or paying dividends in the foreseeable future. 21. Information on the CREST settlement system

CREST, the computerised paperless system for settlement of sales and purchases of shares in the London securities markets, commenced operations in July 1996. The CREST Regulations provide for the transfer of shares in the UK without stock transfer forms, and the evidencing of title to shares without share certificates, through a computer-based system and procedures, defined in the CREST Regulations as a relevant system and is operated by CRESTCo. The Final Articles contain specific provisions to enable the Ordinary Shares to be dematerialised into a relevant system, including CREST. A copy of the Final Articles is available for inspection. The Board has resolved to enable any or all of the Ordinary Shares to join CREST and, accordingly, Shareholders will be able to hold the Ordinary Shares to which they become entitled in electronic form in an account on the CREST system or in the physical form of certificates. Each Shareholder will be able to choose whether or not to convert his Ordinary Shares into Uncertificated form and the Registrar will continue to register written instructions of transfer and issue Share Account Statements in respect of the Ordinary Shares held in Certificated form. It is currently anticipated that the Ordinary Shares will be eligible to join CREST with effect immediately upon their admission to trading on the London Stock Exchange. 22. Consents

PricewaterhouseCoopers LLP has given and has not withdrawn its written consent to the inclusion in this document of its reports in Part (A) of Part V (Financial Information Relating to the Group and Part (B) of Part VI (Unaudited Pro Forma Financial Information) and the references thereto in the form and context in which they appear and has authorised the contents of its reports for the purposes of item 5.5.3R(2)(f) of the Prospectus Rules. A written consent under the Prospectus Rules is different from a consent filed with the SEC under section 7 of the US Securities Act. As the offered Ordinary Shares have not been and will not be registered under the US Securities Act, PricewaterhouseCoopers LLP has not filed a consent under section 7 of the US Securities Act. 23. Expenses of the Offers

The total expenses of, or incidental to, the Offers to be borne by the Company are estimated to be approximately 15 million (assuming the discretionary part of the Underwriters commission described in section 17.4 of this Part XIII and the discretionary elements of the fees of the Companys other advisers are paid) (exclusive of amounts in respect of VAT). This amount includes the IPO fee referred to in section 17.1 of this Part XIII.

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Each Selling Shareholder will bear the amount of any stamp duty or SDRT chargeable on the sale of his Ordinary Shares and his pro rata share of any selling commissions. 24. Auditor

PricewaterhouseCoopers LLP whose registered office is 10 Bricket Road, St. Albans AL1 3JX, are the auditors of Ocado and audited the financial statements for Ocado for the three 52 week periods ended 29 November 2009, 30 November 2008 and 2 December 2007. The reports in respect of the financial statements for Ocado for the three 52 week periods ended 29 November 2009, 30 November 2008 and 2 December 2007, respectively, were unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985 or section 498(2) or (3) of the Companies Act. PricewaterhouseCoopers LLP is a member of the Institute of Chartered Accountants in England and Wales. 25. No incorporation of website information

The contents of the Website, the Offer Website and the Corporate Website do not form part of this document. 26. Sources of information

26.1 Financial information Unless otherwise stated, in this document financial information in relation to the Group referred to in the Prospectus has been extracted without material adjustment from, in respect of financial information relating to FYE 2007, FYE 2008, FYE 2009, P1-3 2009 and P1-3 2010, Part V (Financial Information relating to the Group), and, in relation to P1-6 2010, from Part VII (Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010) or, in either case, has been extracted from those of the Groups accounting records which have been used to prepare that financial information. Investors should ensure that they read the whole of this document and not only rely on the key information or information summarised within them. Unless stated otherwise, all financial information in this document relating to the Group for FYE 2007, FYE 2008, FYE 2009 and P1-3 2010 has been audited. For the avoidance of doubt, such financial information relating to the Group does not include operating information relating to the Group, even where such operating information includes certain financial metrics. Such operating information which is not audited includes, without limitation, average order size and average product wastage. None of the financial information in this document relating to the Group for P1-3 2009 or P1-6 2010 has been audited, nor has any financial information not relating to the Group (unless indicated otherwise). 26.2 Unaudited operating information Unaudited operating information in relation to the Group is derived from the following sources: (i) management accounts for the relevant accounting periods presented; and (ii) internal financial reporting systems supporting the preparation of financial statements. Operating information derived from management accounts or internal reporting systems in relation to Group is to be found principally in the Summary, Part I (Information about the Company), Part III (Selected Historical Financial Information), Part IV (Operating and Financial Review) and Part VII (Unaudited Interim Financial Information relating to the Group for the 24 weeks ended 16 May 2010). Management accounts are prepared using information derived from accounting records used in the preparation of the Groups historical financial information, but may also include certain other management assumptions and analyses. 26.3 Industry and market data Industry data have been obtained from industry publications, market participants and surveys. Such third party providers of information include: IGD, Verdict, Which?, Tesco plc, J Sainsbury plc, John Lewis Partnership plc and Wal-Mart Stores, Inc.

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Where third party information has been used in the Prospectus, the source of such information has been identified. The Company confirms that the information provided by the third parties referred to above has been accurately reproduced. So far as the Company is aware and has been able to ascertain from information published by such third parties, no facts have been omitted which would render the reproduced information inaccurate or misleading. 27. Calculation of issued share capital on Admission

27.1 Options and warrants All references in this document to the issued share capital of the Company on Admission (and the percentage of such issued share capital held by certain Shareholders) have been calculated on the basis that all of the options or warrants held over Ordinary Shares which are exercisable on or prior to Admission (as described in sections 11.1, 11.2 and 12 of this Part XIII) will be exercised prior to or on Admission. 15,816,926 Ordinary Shares are held under options or warrants which are capable of being exercised between 5 July 2010 (being the latest practicable date prior to the publication of this document) and Admission and thereafter. 27.2 Ordinary Shares held under the JSOS As indicated in a number of places in this document, references to the issued share capital of the Company are shown variously to include and exclude the 32,476,700 Ordinary Shares held by the EBT Trustee pursuant to the JSOS. Such Ordinary Shares are issued and fully paid shares which are treated as treasury shares in the Groups consolidated balance sheet. It is to reflect this accounting treatment that such Ordinary Shares are sometimes excluded from the issued share capital figures; such accounting treatment does not affect the issued and fully paid nature of these Ordinary Shares. 28. Securities laws and selling and transfer restrictions

The distribution of this document and the offer of Ordinary Shares in certain jurisdictions may be restricted by law and therefore persons into whose possession this document come should inform themselves about and observe any restrictions, including those set out in the sections that follow. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. 28.1 General No action has been or will be taken in any jurisdiction (other than the UK), that would permit a public offering of the Ordinary Shares, or possession or distribution of this document or any other offering material in any country or jurisdiction where action for that purpose is required. Accordingly, the Ordinary Shares may not be offered or sold, directly or indirectly, and neither this document nor any other offering material or advertisement in connection with the Ordinary Shares may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any and all applicable rules and regulations of any such country or jurisdiction. Persons into whose possession this document come should inform themselves about and observe any restrictions on the distribution of this document, the Securities Note and the Summary and the offer of Ordinary Shares contained in this document. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This document does not constitute an offer to subscribe for any of the Ordinary Shares offered hereby to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction. 28.2 United States The Ordinary Shares have not been and will not be registered under the US Securities Act, or qualified for sale under the laws of any state of the United States. Subject to certain exceptions, the Ordinary Shares may not be offered, sold, pledged, taken up, exercised, resold, transferred or delivered directly or indirectly in the United States or to US persons (as defined in Regulation S) absent registration or pursuant to an exemption from or in a transaction not subject to, the registration requirements of the US Securities Act. The Ordinary Shares will be offered and sold in the United States only to QIBs in

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reliance on Rule 144A or under exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in offshore transactions outside the United States in reliance on Regulation S. Any offer or sale of the Ordinary Shares in the United States in reliance on Rule 144A or another exemption from the registration requirements of the US Securities Act will be made by broker-dealers who are registered as such under the US Exchange Act. Until the expiration of 40 days after the later of the commencement of the offering and the original issue or sale date of the Ordinary Shares offered in the offering, an offer, sale or transfer of the shares within the United States by a dealer may violate the registration requirements of the US Securities Act if such offer or sale is made otherwise than pursuant to an exemption from registration under the US Securities Act. Each subscriber or purchaser of the Ordinary Shares outside the United States pursuant to Regulation S will be deemed, by its acceptance of the Ordinary Shares, to have represented and agreed, on its behalf and on behalf of any investor accounts for which it is subscribing for or purchasing the shares, that none of the Group or any of the Groups affiliates nor the Underwriters, nor any person representing the Group, any of its affiliates or the Underwriters, has made any representation to it with respect to the offering or sale of any shares, other than the information contained in this document, which Prospectus has been delivered to it and upon which it is solely relying in making its investment decision with respect to the Ordinary Shares, has had access to such financial and other information concerning the Company and the shares as it has deemed necessary in connection with its decision to purchase any of the Ordinary Shares, and that: The subscriber or purchaser understands and acknowledges that the Ordinary Shares have not been and will not be registered under the US Securities Act, or with any securities regulatory authority of any state of the United States, and may not be offered, sold or otherwise transferred except in compliance with the registration requirements of the Securities Act or any other applicable securities law or pursuant to an exemption therefrom or in any transaction not subject thereto; The subscriber or purchaser and the person, if any, for whose account or benefit the subscriber or purchaser is acquiring the Ordinary Shares acquiring the Ordinary Shares in an offshore transaction meeting the requirements of Regulation S and is located outside the United States at the time the buy order for the Ordinary Shares was originated and continues to be outside of the United States and has not purchased the Ordinary Shares for the benefit of any person in the United States or entered into any arrangement for the transfer of the Ordinary Shares to any person in the United States; The subscriber or purchaser is not an affiliate of the Group or a person acting on behalf of such affiliate; and it is not in the business of buying and selling securities or, if it is in such business, it did not acquire the Ordinary Shares from the Group or an affiliate thereof in the initial distribution of the Ordinary Shares; The subscriber or purchaser is aware of the restrictions on the Offers and sale of the Ordinary Shares pursuant to Regulation S described in this document and agrees to give any subsequent purchasers of such Ordinary Shares notice of any restrictions on the transfer thereof; The Ordinary Shares have not been offered to it by means of any directed selling efforts as defined in Regulation S or as the result of a general solicitation as defined in Regulation D; and The Group shall not recognise any offer, sale, pledge or other transfer of the Ordinary Shares made other than in compliance with the above-stated restrictions.

Terms defined in Regulation S shall have the same meaning when used in the foregoing paragraph. Each subscriber or purchaser of the Ordinary Shares within the United States pursuant to Rule 144A or an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act will be deemed by its acceptance of the Ordinary Shares to have represented and agreed on its behalf and on behalf of any investor accounts for which it is subscribing for or purchasing the shares, that none of the Group or any of the Groups affiliates nor the Underwriters, nor any person representing the Group, any of its affiliates or the Underwriters, has made any representation to it with respect to the offering or sale of any shares, other than the information contained in this document, which Prospectus has been delivered to it and upon which it is solely relying in making its investment decision with respect to the

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Ordinary Shares, has had access to such financial and other information concerning the Company and the shares as it has deemed necessary in connection with its decision to purchase any of the Ordinary Shares, and that: The subscriber or purchaser acknowledges that the Ordinary Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state of the United States and are subject to significant restrictions on transfer; The subscriber or purchaser (i) is a QIB, (ii) is aware that the sale to it is being made in reliance on Rule 144A or another exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act, and (iii) is acquiring such Ordinary Shares for its own account or for the account of a QIB, in each case for investment and not with a view to, or for offer or sale in connection with, any resale or distribution of the Ordinary Shares in violation of the US Securities Act or any state securities laws; The subscriber or purchaser is aware that the Ordinary Shares are being offered in the United States in a transaction not involving any public offering in the United States within the meaning of the US Securities Act; If, in the future, the subscriber or purchaser decides to offer, resell, pledge or otherwise transfer such Ordinary Shares, such Ordinary Shares may be offered, sold, pledged or otherwise transferred only (i) to a person whom the beneficial owner and/or any person acting on its behalf reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A, (ii) in accordance with Regulation S, (iii) in accordance with Rule 144 (if available), in each case in accordance with any applicable securities laws of any state of the United States or any other jurisdiction or (iv) in another transaction exempt from or not subject to the registration requirements of the US Securities Act; The Ordinary Shares have not been offered to it by means of any general solicitation or general advertising; The Ordinary Shares are restricted securities within the meaning of Rule 144(a)(3) and no representation is made as to the availability of the exemption provided by Rule 144 for resales of any Ordinary Shares; The purchaser will not deposit or cause to be deposited such Ordinary Shares into any depositary receipt facility established or maintained by a depositary bank other than a Rule 144A restricted depositary receipt facility, so long as such Ordinary Shares are restricted securities within the meaning of Rule 144(a)(3); and The Group shall not recognise any offer, sale pledge or other transfer of the Ordinary Shares made other than in compliance with the above-stated restrictions.

Each subscriber or purchaser acknowledges that the Group and the Underwriters will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements, and agrees that if any of the acknowledgements, representations or warranties deemed to have been made by such subscriber or purchaser by its subscription for or purchase of shares are no longer accurate, it shall promptly notify the Group and the Underwriters; if they are acquiring any Ordinary Shares as a fiduciary or agent for one or more investor accounts, each subscriber or purchaser they represents that they have sole investment discretion with respect to each such account and full power to make the foregoing acknowledgements, representations and agreements on behalf of each such account. The Ordinary Shares, to the extent they are in certificated form and unless otherwise determined by the Group in accordance with applicable law, will bear a legend to the following effect:

THE SECURITY EVIDENCED HEREBY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE US SECURITIES ACT) OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHO THE SELLER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE US SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE

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REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE US SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE US SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (4) IN ACCORDANCE WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER THE US SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE US SECURITIES ACT FOR RESALES OF THIS SECURITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, THIS SECURITY MAY NOT BE DEPOSITED INTO ANY UNRESTRICTED DEPOSITARY RECEIPT FACILITY IN RESPECT OF SECURITIES ESTABLISHED OR MAINTAINED BY A DEPOSITARY BANK; and the Company shall not recognise any offer, sale, pledge or other transfer of the Ordinary Shares made other than in compliance with the above-stated restrictions.

Terms defined in Rule 144A shall have the same meaning when used in the foregoing paragraph. Each subscriber or purchaser of the Ordinary Shares will be deemed by its acceptance of the Ordinary Shares to have represented and agreed that it is purchasing the Ordinary Shares for its own account, or for one or more investor accounts for which it is acting as a fiduciary or agent, in each case for investment, and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the US Securities Act or any state securities laws, subject to any requirement of law that the disposition of its property or the property of such investor account or accounts be at all times within its or their control and subject to its or their ability to resell such Ordinary Shares pursuant to Rule 144A, Regulation S or any other exemption from registration available under the US Securities Act. 28.3 European Economic Area In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a relevant member state), with effect from and including the date on which the Prospectus Directive was implemented in that relevant member state (the relevant implementation date), no Ordinary Shares have been offered or will be offered pursuant to the Offers to the public in that relevant member state prior to the publication of a prospectus in relation to the Ordinary Shares which has been approved by the competent authority in that relevant member state or, where appropriate, approved in another relevant member state and notified to the competent authority in the relevant member state, all in accordance with the Prospectus Directive, except that with effect from and including the relevant implementation date, offers of Ordinary Shares may be made to the public in that relevant member state at any time: to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities; to any legal entity which has two or more of: (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than e43 million; and (iii) an annual turnover of more than e50 million as shown in its last annual or consolidated accounts; to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or in any other circumstances which do not require the publication by the Company of a prospectus pursuant to Article 3(2) of the Prospectus Directive, provided that no such offer of Ordinary Shares shall result in a requirement for the publication of a prospectus pursuant to Article 3 of the Prospectus Directive or any measure implementing the Prospectus Directive in a relevant member state and each person who initially acquires any Ordinary Shares or to whom any offer is made under the Offers will be deemed to have represented, acknowledged and agreed that it is a qualified investor within the meaning of Article 2(1)(e) of the Prospectus Directive.

For the purpose of this document, the expression offer of any Ordinary Shares to the public in relation to any Ordinary Shares in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the Offers of any Ordinary Shares to be offered so as to

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Additional Information

enable an investor to decide to purchase any Ordinary Shares, as the same may be varied in that relevant member state by any measure implementing the Prospectus Directive in that relevant member state. In the case of any Ordinary Shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, such financial intermediary will also be deemed to have represented, acknowledged and agreed that the Ordinary Shares acquired by it in the Offers have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any Ordinary Shares to the public other than their offer or resale in a relevant member state to qualified investors as so defined or in circumstances in which the prior consent of the JGCs has been obtained to each such proposed offer or resale. The Company, the JGCs and their affiliates, and others will rely upon the truth and accuracy of the foregoing representation, acknowledgement and agreement. 28.4 Australia This document is not a disclosure document under Chapter 6D of the Australian Corporations Act 2001 (Cth) (the Australian Corporations Act), has not been and will not be, lodged with the Australian Securities and Investments Commission and does not purport to include the information required of a disclosure document under Chapter 6D of the Australian Corporations Act. Accordingly: (i) the offer of the Ordinary Shares in Australia may only be made to persons who are sophisticated investors (within the meaning of Section 708 (8) of the Australian Corporations Act) or to professional Investors (within the meaning of Section 708 (11) of the Australian Corporations Act) or otherwise pursuant to one or more exemptions contained in Section 708 of the Australian Corporations Act, so that it is lawful to offer, or invite applications for, the Ordinary Shares without disclosure to persons under Chapter 6D of the Australian Corporations Act; and (ii) this document may only be made available in Australia to persons as set out in (i) above. If you acquire Ordinary Shares, then you (i) represent and warrant that you are a person to whom an offer of securities can be made without a disclosure document in accordance with Subsections 708 (8) or (11) of the Australian Corporations Act and (ii) agree not to sell or offer for sale any Ordinary Shares in Australia within 12 months after their issue to the offeree or invitee under this document, except in circumstances where disclosure to investors under Chapter 6D would not be required under the Australian Corporations Act. No person receiving a copy of this document may treat the same as constituting an invitation or offer to such person unless such an invitation or offer could lawfully be made to such person without contravention of any registration or other legal requirements. In such circumstances, this document is to be treated as received for information only and should not be copied or redistributed. 28.5 Canada The Ordinary Shares have not been, and will not be, qualified by a prospectus in accordance with the prospectus requirements under applicable securities law in any Canadian jurisdiction and therefore may not be offered or sold, directly or indirectly, in Canada except in compliance with applicable Canadian securities laws. 28.6 Japan The Ordinary Shares have not been and will not be registered under the Securities and Exchange Law of Japan (Law No. 25 of 1948 as amended) (the Securities and Exchange Law), and may not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, a resident of Japan, or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and other relevant laws and regulations of Japan. 28.7 Switzerland The Ordinary Shares will not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (SIX) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses

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Part XIII

Additional Information

under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the Company or the Ordinary Shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of Ordinary Shares will not be supervised by, the Swiss Financial Market Supervisory Authority (FINMA), and the offer of Ordinary Shares has not been and will not be authorised under the Swiss Federal Act on Collective Investment Schemes (CISA). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of Ordinary Shares. 29. Documents available for inspection

Copies of the following documents may be inspected at the registered office of the Company, Titan Court, 3 Bishops Square, Hatfield Business Park, Hatfield, Hertfordshire AL10 9NE and the offices of Slaughter and May, One Bunhill Row, London EC1Y 8YY during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) for the duration of the Offers: the Final Articles; the historical financial information relating to the Group and the report thereon by PricewaterhouseCoopers LLP, as set out in Part V of this document; the unaudited pro forma financial information and the PricewaterhouseCoopers LLP, as set out in Part VI of this document; report thereon by

the written consent letters of PricewaterhouseCoopers LLP referred to in section 22 of this Part XIII; and a copy of this document.

For the purposes of PR 3.2.4, the Prospectus will be published in printed form and available free of charge for the duration of the Offers at the registered office of the Company at Titan Court, 3 Bishops Square, Hatfield Business Park, Hatfield, Hertfordshire AL10 9NE and at the offices of the JGCs. In addition, the Prospectus will be published in electronic form and available on the Offer Website at www.ocadoshares.com, subject to certain access restrictions applicable to persons resident outside the UK. Dated 6 July 2010

274

DEFINITIONS The following definitions apply throughout this document unless the context requires otherwise: 2008 Agreement means the agreement between Ocado, Waitrose and John Lewis dated 20 February 2008 (as amended on 22 August 2008), more fully described in section 17.1 of Part XIII (Additional Information); means the agreement between Ocado, Waitrose and John Lewis dated 25 May 2010, more fully described in section 17.1 of Part XIII (Additional Information); means the admission of the Ordinary Shares to the premium listing segment of the Official List and to trading on the London Stock Exchanges main market for listed securities which is expected to be on 26 July 2010; means the articles of association of the Company at the date of this document; has the same meaning as the Underwriters; Barclays Capital, the investment banking division of Barclays Bank PLC, a company incorporated in England and Wales with registered number 1026167; means the board of directors of Ocado or the Company from time to time as the context may require; means the branding agreement between Ocado and Waitrose dated 13 October 2000 as replaced by the Branding Arrangements, more fully described in section 17.1 of Part XIII (Additional Information); means the branding arrangements which replaced the Branding Agreement, as set out in the 2008 Agreement and the 2010 Agreement, more fully described in section 17.1 of Part XIII (Additional Information); means the Groups core business, being the online sale of groceries via the Website; means any day other than a Saturday or Sunday on which banks are open for business in London, other than for the purposes of trading and settlement in sterling; means compound annual growth rate; means recorded on the relevant register as being held in Certificated form and title to which may be transferred by means of a stock transfer form; means either Ocados customer fulfilment centre, a dedicated highly automated warehouse used for the operation of the Business and more fully described in Part I (Information about the Company) or, generally, a customer fulfilment centre (as the context requires); means Barclays Capital and HSBC Bank plc; means Jefferies International Limited, Lloyds TSB Corporate Markets and Numis Securities Limited; means the Companies Act 2006;

2010 Agreement

Admission

Articles Banks Barclays Capital

Board Branding Agreement

Branding Arrangements

Business Business Day

CAGR Certificated or in Certificated form CFC

Co-Bookrunners Co-Lead Managers Companies Act

275

Definitions Company means Ocado Group plc, a company incorporated in England and Wales with registered number 7098618 whose registered office is at Titan Court, 3 Bishops Square, Hatfield Business Park, Hatfield, Hertfordshire AL10 9NE; means www.ocadogroup.com; means the High Court of Justice of England and Wales; means The Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended from time to time; the offer of Ordinary Shares to Eligible Customers and Eligible Employees at the Offer Price pursuant to the terms and conditions of the Customer and Employee Offer which are set out in Part X (Terms and Conditions of the Customer and Employee Offer); means the form on the Offer Website pursuant to which Eligible Customers and Eligible Employees can apply online to purchase or subscribe for Ordinary Shares in the Customer and Employee Offer; means the directors of the Company whose names are set out in Part II (Directors) or the directors of Ocado from time to time as the context may require; means the disclosure and transparency rules made by the FSA under Part VI of FSMA; means operating profit/(loss) before interest (including interest on finance leases), taxation, depreciation, amortisation and impairment loss; means EBITDA as a percentage of gross sales; means the trustee from time to time of the employee benefit trust established for the purposes of the JSOS, currently Appleby Trust (Jersey) Limited; means Ocado customers who are resident in the UK and who spent more than 300 with Ocado between 1 January 2010 and 24 June 2010; means all of the Groups employees and officers as at the date of this document who are over the age of 18 and resident in the UK or the Republic of Ireland; means the Ocado 2001 Executive Share Option Scheme as described in section 11.1 of Part XIII (Additional Information); means Tim Steiner, Neill Abrams, Andrew Bracey and Jason Gissing; the Ordinary Shares and Preference Shares that are in issue at the date of this document (including the 32,476,700 Ordinary Shares issued to the EBT Trustee which are presented as treasury shares in the Groups consolidated balance sheets); means the articles of association of the Company resolved to be adopted by a written members resolution dated 23 June 2010, subject to, and with effect upon, Admission; means the UK Financial Services Authority;

Corporate Website Court CREST Regulations Customer and Employee Offer

Customer and Employee Offer Application Form

Directors

Disclosure and Transparency Rules EBITDA

EBITDA margin EBT Trustee

Eligible Customers

Eligible Employees

ESOS Executive Directors Existing Shares

Final Articles

FSA

276

Definitions FSMA FTE FYE 2007 FYE 2008 FYE 2009 Goldman Sachs International means the Financial Services and Markets Act 2000 (as amended); means full time equivalent; means the financial year (that is, the period of 52 weeks) ended 2 December 2007; means the financial year (that is, the period of 52 weeks) ended 30 November 2008; means the financial year (that is, the period of 52 weeks) ended 29 November 2009; means Goldman Sachs International, an unlimited company incorporated in England and Wales with registered number 2263951; means gross profit expressed as a percentage of gross sales; means the Company and its subsidiaries (as defined in the Companies Act); means Her Majestys Revenue & Customs; means the company of that name incorporated in England and Wales with registered number 00014259; means International Financial Reporting Standards as adopted for use in the EU; the offer of Ordinary Shares to certain institutions at the Offer Price as summarised in section 5.1 of Part IX (Information about the Offers); means any person who acquires Shares pursuant to the Offers; means information technology; means the company of that name incorporated in England and Wales with the registered number 01978621; means John Lewis plc, the parent company of Waitrose. John Lewis was incorporated in England and Wales with registered number 233462 and its registered office is 171 Victoria Street, London SW1E 5NN; means John Lewis Partnership Pensions Trust, which is the corporate trustee of the John Lewis Partnership Trust for Pensions. The John Lewis Pension Fund was incorporated in England and Wales with registered number 372106 and its registered office is 171 Victoria Street, London SW1E 5NN; means Goldman Sachs International, J.P. Morgan Cazenove and UBS Limited; means J.P. Morgan Securities Ltd., a company incorporated in England and Wales with registered number 2711006, which operates its investment banking business in the UK under the name J.P. Morgan Cazenove; means the Companys joint share ownership scheme, more fully described in section 11.3 of Part XIII (Additional Information);

Gross margin Group HMRC HSBC Bank plc IFRS-EU Institutional Offer

Investors IT Jefferies International Limited John Lewis

John Lewis Pension Fund

Joint Global Co-ordinators or JGCs J.P. Morgan Cazenove

JSOS

277

Definitions LGV means Ocados large goods vehicles; Category N3 motor vehicles used for the carriage of goods and having a maximum mass exceeding 12 tonnes; means the listing rules made by the UK Listing Authority under Part VI of FSMA; is the trading name of Lloyds TSB Bank plc, a company incorporated in England and Wales with registered number 00002065; means Lombard Vehicle Management Limited, Lombard Vehicle Management (1) Limited, Lombard Vehicle Management (2) Limited and Lombard Vehicle Management (3) Limited; means the London Stock Exchange plc; means those Selling Shareholders who have given non-binding indications of interest in selling Ordinary Shares pursuant to the Offers and who are party to the Selling Shareholders Agreement; means these Shareholders listed as such in section 8 of Part XIII (Additional Information); is the trading name of Mercedes-Benz Financial Services UK Limited; means those Shareholders holding (as at 5 July 2010, the latest practicable date prior to the publication of this document) individually less than 1.33 per cent. of the issued share capital of the Company who the Company has offered the opportunity to sell some or all of their Ordinary Shares pursuant to the Offers; the code set out at Annex 1 to Rule 9 of the Listing Rules; means the 100 million facility granted to Ocado by Lloyds, Barclays and HSBC described in section 17.3 of Part XIII (Information about the Company); the new Ordinary Shares to be allotted and issued under the Offers or pursuant to the exercise of options or warrants to subscibe for Ordinary Shares in the Company prior to Admission; means the company of that name incorporated in England and Wales with registered number 02285918; means Ocado Limited, a company incorporated in England and Wales with registered number 3875000 whose registered office is at Titan Court, 3 Bishops Square, Hatfield Business Park, Hatfield, Herts AL10 9NE; means the company of that name incorporated in the Republic of Ireland with registered number 479792 whose registered office is at 1 Adelaide Court, Adelaide Road, Dublin 2; means the telephone helpline available at 0800 141 2954; means ordinary shares of 1 pence each in the share capital of Ocado;

Listing Rules Lloyds TSB Corporate Markets

Lombard

London Stock Exchange Major Selling Shareholders

Major Shareholder Mercedes-Benz Charterway Minor Selling Shareholders

Model Code New Facility

New Ordinary Shares

Numis Securities Limited Ocado

Ocado Information Technology Limited Ocado IPO Helpline Ocado Limited Ordinary Shares

278

Definitions Ocado Limited Preference Shares Ocado Share Account means convertible preference shares of 1 pence each in the share capital of Ocado; means the arrangements for the holding of Ordinary Shares through a nominee, the terms and conditions of which are set out in Part XI (Terms and Conditions of the Ocado Share Account); means the price at which Ordinary Shares comprised in the Offers will be issued or sold to investors; means those Ordinary Shares comprised in the Offers; means www.ocadoshares.com; means the Institutional Offer and the Customer and Employee Offer; means the Official List of the UK Listing Authority; means the articles of association of the Company adopted on 19 December 2009 which will be replaced by the Final Articles; means the ordinary shares with a nominal value of two pence each in the share capital of the Company; means the arrangements pursuant to which the Stabilising Manager may procure purchasers for or failing which itself purchases or nominates purchasers for, the Over-allotment Shares, as more particularly described in Part IX (Information about the Offers); means the option granted by UBS Holdings Cayman Limited to the Stablising Manager to buy Ordinary Shares at the Offer Price in accordance with the Over-allotment Arrangements; the Ordinary Shares which the Stabilising Manager, pursuant to the Over-allotment Arrangements, may purchase from UBS Holdings Cayman Limited; means the 12 week period ended 22 February 2009; means the 12 week period ended 21 February 2010; means the 24 week period ended 17 May 2009; means the 24 week period ended 16 May 2010; means convertible preference shares of two pence each in the share capital of the Company which will convert to Ordinary Shares on Admission; means the range of prices within which the Offer Price is expected to fall, being 200 pence to 275 pence per Ordinary Share; means the statement expected to be published by the Company on or around 21 July 2010, in which the Offer Price will be announced; means this document; means the prospectus rules made by the UK Listing Authority under Part IV of FSMA;

Offer Price Offer Shares Offer Website Offers Official List Old Articles Ordinary Shares Over-allotment Arrangements

Over-allotment Option

Over-allotment Shares

P1-3 2009 P1-3 2010 P1-6 2009 P1-6 2010 Preference Shares

Price Range

Pricing Statement

Prospectus Prospectus Rules

279

Definitions Receiving Agent means Capita Registrars Limited, incorporated in England and Wales (with registration number 2605568) whose registered office is The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU; means Capita Registrars Limited, incorporated in England and Wales (with registration number 2605568) whose registered office is The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU; means the registrar of Companies in England and Wales within the meaning of the Companies Act; means the scheme of arrangement under sections 895 to 899 of the Companies Act between Ocado and holders of Ocado Ordinary Limited Shares and Ocado Limited Preference Shares, the effective date of which was 9 February 2010; means stamp duty reserve tax; means the US Securities and Exchange Commission; means those persons holding options or warrants over Ordinary Shares or Preference Shares (as at 5 July 2010, being the latest practicable date prior to the publication of this document) to whom the Company has offered the opportunity to sell some or all of the New Ordinary Shares which will be issued upon the exercise of their options or warrants pursuant to the Offers; means the agreement between the Company, the Underwriters and the Major Selling Shareholders dated 5 July 2010, details of which are set out in section 17.4 of Part XIII (Additional Information); means each of the Major Selling Shareholders and some or all of the Minor Selling Shareholders and some or all of the Selling Optionholders as set out in section 2 of Part IX (Information about the Offers); is expected to be 26 July 2010, the date on which the sale or issue of Ordinary Shares pursuant to the Institutional Offer will be completed; means a statement of a persons holding of Ordinary Shares in the Ocado Share Account; means Capita IRG Trustees Limited (details of which are set out in Part XI (Terms and Conditions of the Ocado Share Account)) or any other person appointed by the Company or Receiving Agent to act as the nominee shareholder of Ordinary Shares in the Ocado Share Account; means a holder for the time being of Ordinary Shares; means a stock keeping unit, that is each individual product line stocked; means the sourcing agreement between Ocado and Waitrose dated 13 October 2000 as progressively amended, superseded and updated from time to time, more fully described in section 17.1 of Part XIII (Additional Information);

Registrar

Registrar of Companies Scheme

SDRT SEC Selling Optionholders

Selling Shareholders Agreement

Selling Shareholders

Settlement Date

Share Account Statement Share Nominee

Shareholder SKU Sourcing Agreement

280

Definitions Spoke means the trans-shipment sites used for the intermediate delivery of customers orders as more fully described in Part I (Information about the Company); means Goldman Sachs International; means the agreement described in section 17.5 of Part XIII (Additional Information); means the subscriber ordinary share of 110 pence in the capital of the Company whose rights became deferred in accordance with its terms upon the Scheme becoming effective; the City Code on Takeovers and Mergers; means UBS Limited, a company incorporated in England and Wales with registered number 2035362; means the United Kingdom of Great Britain and Northern Ireland; means the UK Corporate Governance Code published by the Financial Reporting Council, as in force from time to time; means the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the FSMA and in the exercise of its functions in respect of the admission of securities to the Official List other than in accordance with Part VI of the FSMA; means recorded on the relevant register as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST; means Goldman Sachs International, J.P. Morgan Cazenove, UBS Limited, Barclays Capital, HSBC Bank plc, Jefferies International Limited, Lloyds TSB Corporate Markets and Numis Securities Limited; means the agreement between the Company, the Underwriters and the Directors dated 6 July 2010, details of which are set out in section 17.4 of Part XIII (Additional Information); means the Underwriting Shareholders Agreement; Agreement and the Selling

Stabilising Manager Stock Lending Agreement Subscriber Ordinary Share

Takeover Code UBS Investment Bank or UBS Limited UK or United Kingdom UK Corporate Governance Code UK Listing Authority

Uncertificated or in Uncertificated form Underwriters

Underwriting Agreement

Underwriting and Selling Shareholder Agreements US, USA or United States

means the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and all other areas subject to its jurisdiction; means the US Securities Act of 1933, as amended; means the Union of Shop, Distributive and Allied Workers; means Waitrose Limited, a company incorporated in England and Wales with registered number 99405; means the online retail business of Waitrose, by which customer orders placed online are delivered from Waitrose shops, and run currently from the website www.waitrosedeliver.com; and means www.ocado.com, Ocados public website from which the Business operates.

US Securities Act Usdaw Waitrose WaitroseDeliver

Website

281

Merrill Corporation Ltd, London 10ZBD49501

Ocado Group plc, Titan Court, 3 Bishops Square, Hatfield Business Park, Hatfield, Herts AL10 9NE