The Board remains focused on good corporate governance as we believe that it provides a foundation for the creation of long-term value of the Group.

Dear Shareholder,

On behalf of the Board, I am delighted to present Ocado's Statement of Corporate Governance.

The Board remains focused on good corporate governance as we believe that it provides a foundation for the creation of long-term value of the Group. While the Board recognises the importance of Ocado's entrepreneurial culture to help with the rapid growth of the business and to enable the business to lead the online grocery retail market, the Board considers that the Group's robust governance framework and its culture and values help sustain the Company's success. A challenge for the Board is to adapt to the rapidly changing UK retail market, and as it begins to grow the platform business, to respond to the challenges of, and to take advantage of the opportunities presented by the international retail and technology markets.

Leadership and Adapting to the Strategy

As well as providing entrepreneurial leadership and overseeing our strategy we have overall responsibility for the Group's performance and mitigating the business risks we, and the industry more broadly, face.

To ensure the Board is equipped to fulfil those obligations successfully we need to ensure that the Board has a diverse range of skills and experiences which collectively are both complementary and directly relevant to Ocado's strategy. This year, as part of the annual Board performance review, the Board conducted a review of its skills and experience. This review formed the basis of Board discussions about succession plans and the desired make-up of the Board for the future needs of the business. On 28 January 2016 we announced some changes to the Board. Firstly, the appointment of Andrew Harrison, as Non-Executive Director with effect from 1 March 2016. This appointment brings fresh insight to the Board and we will benefit from his significant technology and retail experience. In addition, David Grigson will step down from the position of Senior Independent Director with effect from the AGM on 4 May 2016. David has made a significant contribution to the Board over the last six years, and he leaves with our sincere thanks and best wishes. Further details are set out in the report on the activities of the Nomination Committee.

It is also important to ensure that all of the Directors develop a good understanding of the Group's operations and are best placed to make informed decisions. The report outlines many of the topics of Board discussion in the Statement of Corporate Governance.

Accountability

While the Executive Directors are responsible for the day-to-day management of the business, the entire Board leads the Group and provides the debate and constructive challenge to management necessary to create accountability and drive performance. The Audit Committee has played an important role in overseeing the implementation of risk and assurance systems in the Group, including in relation to strategically important projects such as the Ocado Smart Platform and the new CFCs. While crucial to delivering value to shareholders, monetising intellectual property and expansion of the platform business into overseas markets present risks to the business, including those risks associated with the implementation of unproven technology and systems. With the support of management, the Board and the Audit Committee discussed these principal risks and their mitigants as well as the processes for identifying and managing the risks and assurance actions. Understanding the Group's principal risks and related mitigating actions is an important part of the assessment made by the Directors with regards to the Group's viability over the longer term. We make a viability statement for the first time in this Annual Report (see How We Manage Our Risks). Further information on accountability is provided in the Audit Committee Report.

Remuneration and Engagement with Shareholders

Our Executive Director remuneration arrangements are intended to support the achievement of our business objectives. With the support of the Remuneration Committee oversight, we continue to believe that the current remuneration packages help to appropriately incentivise management to sustain long-term value for shareholders. The Directors' Remuneration Policy put in place in 2014, with its emphasis on long-term incentives, aims to reward achievement of core financial objectives and outstanding growth in the value of the Group relative to the FTSE 100 over the longer term. The Directors' Remuneration Report contains further details.

It is important that our shareholders remain supportive including with regards to the Directors' Remuneration Policy. We believe, based on shareholder feedback sought and the results of voting at general meetings, that the vast majority of shareholders consider that our remuneration arrangements are the most appropriate way to incentivise the Executive Directors and senior management to create and sustain long-term value. I welcome the opportunity to discuss remuneration, governance and other matters with shareholders as this provides important feedback to the Company about its direction and performance.

Annual General Meeting

Our Annual General Meeting will be held at 11 am on 4 May 2016 at Peterborough Court, 133 Fleet Street, London, EC4A 2BB. It provides an excellent opportunity to meet the Directors and I would like to encourage our shareholders to attend.

Lord Rose

Chairman

Ocado Group plc