The financial statements have been prepared in accordance with the Listing Rules and the Disclosure Guidance and Transparency Rules of the UK Financial Conduct Authority (where applicable), International Financial Reporting Standards (IFRS) and International Financial Reporting Standards Interpretation Committee (IFRIC) interpretations as endorsed by the European Union ("IFRS-EU"), and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The accounting policies applied are consistent with those described in the Annual Report and Financial Statements for the 53 weeks ended 3 December 2017 of Ocado Group plc, with the exception of the early adoption of IFRS 15 "Revenue from Contracts with Customers" and "Clarifications to IFRS 15 Revenue from Contracts with Customers".

The financial statements are presented in pounds sterling, rounded to the nearest hundred thousand unless otherwise stated. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial asset investments and certain financial assets and liabilities, which are held at fair value.

The Directors considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements of the Group.

New standards, amendments and interpretations issued that are effective for the current year

In the current year, the Group has early adopted IFRS 15 "Revenue from Contracts with Customers" as several Ocado Solutions contracts were signed during the year which are impacted by the adoption of IFRS 15. The adoption has had a material impact on the disclosures and amounts reported in these financial statements. See note 1.5 for further information.

The Group has also considered the following new standards, interpretations and amendments to published standards that are effective for the Group for the financial year beginning 4 December 2017 and concluded that they are either not relevant to the Group or that they would not have a significant impact on the Group's financial statements other than disclosures:

Effective Date
VariousAmendments to various IFRSs and IASs including those arising from the IASB's annual improvements project1 January 2017
IAS 7Statement of cash flows (amendments)1 January 2017
IAS 12Income taxes (amendments)1 January 2017

New standards, amendments and interpretations not yet adopted by the Group

The following further new standards, interpretations and amendments to published standards and interpretations which are relevant to the Group have been issued but are not effective for the financial year beginning 4 December 2017 and have not been adopted early:

Effective Date
IFRS 2Share-based payments (amendments)1 January 2018
IFRS 9Financial instruments1 January 2018
IFRS 16Leases1 January 2019
IFRS 10Consolidated financial statements (amendments)Deferred
IAS 28Investments in associates and joint ventures (amendments)Deferred
IFRIC 22Foreign Currency Transactions and Advance Consideration1 January 2018
IFRIC 23Uncertainty over Income Tax Treatments1 January 2019
VariousAmendments to various IFRSs and IASs including those arising from the IASB's annual improvements projectVarious

The following new standards are not yet effective and the impact on the Group is currently under review:

  • IFRS 9 "Financial Instruments", published in July 2014, replaces the existing guidance in IAS 39 "Financial Instruments: Recognition and Measurement". IFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. The Group is assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 9. Our review of IFRS 9 has indicated that the impact of this new standard on the Group's results is not anticipatedto be material.
  • IFRS 16 "Leases" provides guidance on the classification, recognition and measurement of leases to help provide useful information to the users of financial statements. The main aim of this standard is to ensure all leases will be reflected on the Consolidated Balance Sheet, irrespective of substance over form. The new standard will replace IAS 17 "Leases" and is effective for annual periods beginning on or after 1 January 2019 unless adopted early. IFRS 16 is expected to have a significant impact on the amounts recognised in the Group's consolidated financial statements. On adoption of IFRS 16 the Group will recognise within the balance sheet a right of use asset and lease liability for all applicable leases. Within the income statement, rent expense will be replaced by depreciation and interest expense. This will result in a decrease in operating expenses and an increase in finance costs with no net impact.

The standard will also impact a number of statutory measures such as operating profit, cash generated from operations and alternative performance measures, such as EBITDAA, that are used by the Group. The Group’s ongoing review of IFRS 16 indicates that the financial impact will result in an increase in finance leased assets of approximately £278 million, and a corresponding increase in financial liabilities of £297 million, on the Consolidated Balance Sheet based on the current portfolio at the year end.