Ocado - comment

Technology Revenues of £277m were ahead of our expectations, and this is reflected in EBITDA of £73m vs our forecast of £51m (excluding Ocado Retail). Capex of £213m was £100m less than our forecast, which reflected lower module additions. The deconsolidation of the Ocado Retail business will remove much of the noise around what is predominantly a logistics business. The book value of the 50% share in the Ocado Retail business is £750m (we had valued it at £800m), and the division will be accounted for as an equity investment in future; we expect M&S will look to buy out Ocado at some point which will leave an income stream similar to the Morrisons JV. We will be updating our model after this morning’s investor call.