Ocado bosses set for £9m pay day

But the numbers turned from black to red further down the income statement, as the group swung to a £9m pre-tax loss (see table). This stemmed partly from greater investment in a new customer fulfilment centre in Andover, and partly from a 25.6 per cent rise in depreciation charges. The latter came after Ocado started depreciating its new software platform, having launched this alongside Morrison's ‘Store Pick’ offering in the second half of last year.

Earnings were also tempered by higher estimates for senior management’s share-based incentive charges. Indeed, after the shares’ impressive run in recent months – buoyed by long-awaited news of international partnerships – Ocado joined the FTSE 100 in May. It now expects bosses’ additional bonuses to total around £9m for the full year. Quite a pay day.

For the full year, Ocado reckons the retail business’s sales should grow by between 10 and 15 per cent, thanks to rising fulfilment capacity and improving UK market share. And although retail’s cash profits will reflect the costs of its largest-ever customer fulfilment centre in Erith, the group expects the “trends” here to improve over the second half as engineering costs per order fall. Meanwhile, cash profits for the solutions business will fall, because of a further planned £4m investment here.

For Peel Hunt, Ocado “is at its inflection point where it is now a technology business”. Analysts reckon that deal flow and the maturity of its long-term contracts will now drive share price growth, as the group “transforms the retail industry”. The broker forecasts adjusted pre-tax losses of £9.8m and losses per share of 1.5p for FY2018 (from pre-tax losses of £0.3m and zero EPS in FY2017 ).