Ocado has narrowed its operating losses and increased its gross sales by a quarter to £427.3m in the year to November 29.

The online grocer – which is planning a £1bn IPO later this year – said underlying sales, stripping out new space and new delivery areas, were up 22%. Revenue increased by 25% to £402.0m. Operating losses reduced by 33% to £14.4m.

Ocado has yet to make a pre-tax profit but EBITDA rose from £500,000 to £9.2m.

The grocer – which stocks Waitrose products – has also beefed up its board as it prepares for its float. Former Reuters finance director David Grigson and Ruth Anderson, a former vice-chairman of KPMG in the UK, are joining as non-executive directors.

Ocado chief financial officer Andrew Bracey said: “Ocado had an excellent year with strong sales performance both in absolute terms and on a like-for-like basis. This has delivered a substantial increase in EBITDA profitability. In a difficult retail environment we have reported good results that show further growth in all areas of the UK that we currently serve.

“As Ocado grows it is essential that we maintain and improve our operational efficiency. Our order picking accuracy averaged 99.4% across the 2009 financial year. Further warehouse efficiency gains have decreased food waste to 0.6% of 2009 financial year gross sales; we believe this is substantially better than industry norms. In 2009, Ocado started to provide customers with product use-by date information both while shopping online and printed on their receipt; this is intended to help customers plan their week’s meals and reduce food waste.”

Ocado is said to be close to appointing investment banks to advise on an IPO. The John Lewis Partnership, which has a 29% stake, has said previously it is supportive of the IPO.

The grocer said it has continued strong growth in the 12-week period from the year end to February 21, with deliveries up 35% by number and revenue up 30% on a like-for-like basis compared with the equivalent period the year before.

Ocado chief executive Tim Steiner said: “The grocery market continues to be highly competitive, nevertheless we aim to continue growing our business in 2010 with further innovations to make the Ocado offer increasingly convenient, accurate and cost-effective for our customers.

“In 2010 we intend to increase the range of products we sell by expanding the Ocado Everyday range and developing a broader offering of products for a multi-cultural Britain. Having been the first UK grocer to introduce full shopping functionality on a smartphone, we intend to expand the range of mobile platforms for handheld Ocado shopping.”