Metcash Limited Annual Report 2009

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FY2009 Annual Report · Metcash Limited

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OUR MISSION
To be the marketing and distribution leader
in food and other fast-moving consumer goods

OUR

C hampioning the customer

Our stakeholders are entitled to added value

R esponsibility and personal accountability

E mpowering our People and supporting our communities

VALUES – ARE NOTHING WITHOUT INTEGRITY

CONTENTS

Chairman’s and CEO’s Report

Financial Review

IGA Distribution

Australian Liquor Marketers

Campbells Wholesale

Board of Directors

Executive Team

Five-year Review

Corporate Governance Statement 21

Financial Report 2009

Directors’ Report

Income Statement

Balance Sheet

Statement of Changes in Equity

Cash Flow Statement

Notes to the Financial Statements 57

Directors’ Declaration

Auditor’s Independence

Declaration

Independent Audit Report

ASX Additional Information

111

112

113

115

Corporate Information

inside
back cover

annual general meeting

Thursday, 3 September 2009
Ballroom 1
Four Seasons Hotel
199 George Street
Sydney NSW 2000

Commencing 2.30pm

METCASH LIMITED
ABN 32 112 073 480

Metcash is a leading marketing and

distribution company, operating in the

grocery and liquor wholesale industries.
Our customers are independent retailers and the company’s
objective is to champion and support them. We do this by
providing the scale necessary to create competitive buying
power together with marketing, distribution and ﬁ nancial
expertise and support.

METCASH’S BUSINESS PILLARS ARE:

IGA>D IGA Distribution (and IGA Fresh)

ALM

Australian Liquor Marketers

Campbells Wholesale

Metcash is an ASX Top 100 listed public company.

METCASH LIMITED ANNUAL REPORT 2009
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chairman’s &
ceo’s report

We are pleased to announce that the
2009 ﬁ nancial year was very
successful and that Metcash recorded
its tenth consecutive record proﬁ t.

Proﬁ t for the year was generated from
wholesale sales which grew 9.3% to
$10.97 billion. This was a strong
performance in a year of uncertainty
created by the global economic crisis.
Demonstrating excellent proﬁ t/sales
leverage, proﬁ t before tax and
non-recurring item (NRI) grew by 13.8%
to reach $219.7 million. Earnings per
share pre-goodwill amortisation and
NRI increased 13.3% to 29.53 cents per
share. This was above the earnings
guidance given earlier in the year of
28.3 to 29.3 cents per share.

We are also pleased to announce
that the full year dividend of 24 cents
per share has been declared. This is an
increase of 14.3% on the 2008 full year
dividend and is slightly higher than the
increase in proﬁ t before tax and NRI.
This dividend is fully franked at 30%.

The non-recurring item referred to
above is the $17.2 million after tax cost
of terminating an interest rate collar in
the ﬁ rst half of the year. This action was
taken to allow the Company to take
advantage of falling interest rates.

The Metcash balance sheet remains
strong and the Company has
successfully extended its $700 million
syndicated loan facility to May 2012.

Each of the Metcash businesses
performed well during the year
demonstrating the resilience of the
Metcash business model, in good
times and bad.

Last year we advised that a new focus
was being placed on fresh food
distribution, based on the two fresh
produce warehouses obtained from
the Foodland Associated Limited (FAL)
acquisition, and that a national fresh
produce distribution network was to
be put in place.

This was successfully done during the
year and a national fresh produce
distribution network has been
established for an acquisition cost of
$65.8 million. Annualised sales of fresh
products at the end of the ﬁ nancial
year reached a ‘run rate’ of
$950 million per annum.

When announcing the intention to
create the fresh distribution network
we stated that the objective was to
provide competitively priced quality
fresh food to our independent
retailers. This is being achieved
through establishing common national
supplier speciﬁ cations to ensure the
quality and consistency of products,

consumers shopping more at
supermarkets and eating out less. It is
also the result of the targeted ‘local’
market positioning and niche
marketing by IGA retailers.

Pleasingly, a 1.29 times operating
leverage was obtained with IGA
Distribution’s earnings before interest
and tax (EBIT) growing by 14.7% during
the year.

Australian Liquor Marketers (ALM)
wholesale sales increased by 5.6%
during the year. This was a strong result
considering the confusion and
substitution that occurred in the liquor
industry as a consequence of the

developing retail standards to ensure
that the product and category offer is
optimised and to grow the number of
retailers being serviced.

With the exception of the fresh
produce businesses that were
acquired, the 9.3% increase in
wholesale sales has been generated
from internal growth.

IGA Distribution’s wholesale sales
increased 11.3% for the year. Of this,
2.3% came from new stores and
acquisitions, resulting in a comparable
store (that is, like-for-like) sales growth
of 9%. Part of this growth has been due
to the economic crisis that has led to

Australian Government’s decision
to impose higher excise duties on
ready-mixed drinks. This sales growth
was secured by the strategy of
guiding independent liquor retailers
and hoteliers to consolidate their
banners, thus providing a more
effective resistance to the growth of
the two national chains. As evidence
of this, sales to Independent Brands
Australia (IBA) members grew during
the year by 16%.

An operating leverage of 1.46 times
was achieved with EBIT increasing by
8.2% to $33.8 million. This was due to
the continued focus on reducing the
cost of doing business. Additionally, a

Opposite page image: IGA>D
warehouse in Crestmead, Queensland.
Above image: Carlos S dos Santos
(Chairman) and Andrew Reitzer (CEO).

‘Each of the Metcash businesses
performed well during the year
demonstrating the resilience of
the Metcash business model,
in good times and bad.’

speedy reaction to the volume
impact of the ready-to-drink excise
increase enabled the ‘cost to store’
effect to be contained.

Campbell Wholesale (CW) sales grew
by 7.1% to $1.66 billion. While the
traditional Campbells Cash & Carry
business continued to languish, sales
of the important primary products
category lifted by 10.6% due to the
growth in foodservice, soft drinks and
confectionery sales. In line with this,
sales to the modern petrol and
convenience sector grew by 12.2%
with strong confectionery sales
enabling CW’s convenience market
share to increase to 35%.

A more subdued operating leverage
of 1.1 times was obtained with CW’s
EBIT growing by 7.8% during the year.
This reﬂ ected an increased cost of
doing business in the second half due
to costs associated with store closures,
store refurbishments and freight
subsidies in rural areas.

HEALTH, SAFETY, ENVIRONMENT
AND COMMUNITY (HSEC)

Good progress continues to be made
in implementing the Company’s HSEC
program. This encompasses care for
our people with workplace
engagement, development and
competency, health services and safety.

Environmental management, product
safety and public health are also
managed through the HSEC program.

A wide range of development
programs for all levels of management
are provided by the Company,
through face-to-face lectures,
eLearning and distance learning,
while the Metcash Pro-ﬁ t programs
assist employees to derive the
appropriate ‘work/life’ balance.

The programs to reduce packaging
waste and the utilisation of plastic
bags continue and recycling of paper,
cardboard and plastic is in place
at all of the Company’s facilities.

METCASH LIMITED ANNUAL REPORT 2009

chairman’s &
ceo’s report

A Metcash Environmental
Sustainability Committee has been
established, is chaired by the CEO and
has key management as members.
Energy and water consumption
measurement is in place, reduction
targets established and the retroﬁ tting
of the top ten energy and water
consuming sites with energy and
water saving devices and technology
has commenced.

Workplace safety is a high priority. The
Company continues to work hard to
ensure that a strong safety culture is
ingrained in all employees and a high
level of safety is maintained. Last year
we reported a small number of
workplace incidents had affected the
Occupational Health & Safety (OH&S)
severity and duration rates. As a
consequence, key operational risks
were again reviewed and a number
of projects have been commenced
to control identiﬁ ed risk factors.
These include ‘MESSI’, a collision
avoidance system.

The beneﬁ ts of the work over recent
years to improve OH&S are showing
and the continuous improvement
programs in place or underway should
continue to generate further beneﬁ ts.

WAY FORWARD

Last year we advised that Metcash
would be pursuing growth both
internally and through acquisitions and
that, in relation to the latter, a bid was
being prepared to acquire Symbion
Pharmaceuticals’ wholesaling business.
The strong internal generation of
growth has been realised but we
withdrew from the bidding for Symbion
Pharmaceuticals.

We still continue to look for major
acquisition opportunities with each
potential acquisition being tested for
compatibility with Metcash’s business
model and core competencies.

Each of the Metcash businesses has
strategies for increasing sales volumes

and proﬁ ts through internal growth and
these are expected to be achieved
during the 2010 ﬁ nancial year.

The provision of a higher level of
service to our customers, growing and
developing our people and a focus on
reducing the cost of doing business
through continued productivity
improvements remain key planks in the
company’s approach to business.
Metcash cannot be successful if its
customers are not.

The economic and ﬁ nancial
environment remains uncertain but the
resilience of the Metcash business
model has held the company and its
businesses in good stead.

As a precaution, management has put
in place a salary increase deferral for
all employees earning more than
$50,000 per annum. If the Company’s
proﬁ t before tax targets for the 2010
year are met, then the salary increases
that otherwise would have been paid
at the beginning of the year will be
paid. Bonuses for the year will only be
paid if all salary increases have been
paid and bonus targets met.

The Directors have also resolved that
Non-executive Directors fees and
allowances will remain at their present
level until 30 June 2010.

Subject to unemployment and
economic conditions not deteriorating
above current Australian Government
forecasts, earnings per share guidance
for the 2010 ﬁ nancial year is a 7–10%
growth of normalised earnings
per share.

OUR SHAREHOLDERS

We would like to thank you, our
shareholders, for your support over
past years. Your continued support
and investment in the resilient Metcash
business model is appreciated. Since
2001 Metcash has provided strong
returns to shareholders as the Total
Shareholder Return (TSR) graph below
demonstrates.

The Directors and management of
Metcash will continue to work hard to
maintain this record of strong growth
and dividend payments.

TSR under current management vs. market

)
d
e
s
a
b
-
e
r
(
e
c

i
r

p
e
a
h
S

6.00

5.00

4.00

3.00

2.00

1.00

0.00

MTS TSR: 38%

ASX 200 TSR: 6%

Jan 01

Sep 02

May 04

Dec 05

Aug 07

Apr 09

We would like to thank our fellow Directors, employees, customers and suppliers
for their good counsel, hard work and support during the year.

Carlos S dos Santos
Chairman

Andrew Reitzer
CEO

Image: The new ‘mini loader’ installed
in the Laverton, Victoria warehouse.

‘strategies for increasing sales volumes
and proﬁ ts through internal growth are
expected to be achieved during the
2010 ﬁ nancial year’

METCASH LIMITED ANNUAL REPORT 2009

ﬁ nancial
review

TOTAL REVENUE ($m)

TOTAL SALES REVENUE ($m)

7,044.6

8,252.0

2005
2006
2007
2008
2009

9,765.9

10,202.4

11,067.5

2005
2006
2007
2008
2009

7,010.4

8,214.4

9,694.8

10,116.1

10,981.6

6,500

7,500

8,500

9,500

10,500

11,500

6,500

7,500

8,500

9,500

10,500

11,500

WHOLESALE SALES ($m)

6,565.0

7,705.0

2005
2006
2007
2008
2009

9,451.1

10,045.0

10,974.0

2005
2006
2007
2008
2009

MARKET SHARE (%)

13.5

18.5
18.6
18.8
19.0

6,500

7,500

8,500

9,500

10,500

11,500

EBITA ($m)

194.5

223.7

2005
2006
2007
2008
2009

COST OF DOING BUSINESS (%)

288.9

341.3

382.5

2005
2006
2007
2008
2009

68.2

67.2

66.9

65.2

62.4

185

225

265

305

345

385

PROFIT AFTER TAX ($m)

OPERATING CASH FLOW ($m)

81.2

126.8

2005
2006
2007
2008
2009

158.6

197.4

202.5

130.6

2005
2006
2007
2008
2009

177.5

197.6

242.7

248.1

115

135

155

175

195

215

115

150

185

220

255

2009 proﬁ t after tax before non-recurring item was $219.7 million.
A non-recurring cost of $17.2 million after tax was incurred from
terminating an interest rate collar in the ﬁ rst half of the year.

EARNINGS PER SHARE (BASIC) (CENTS)

DIVIDENDS PER SHARE (CENTS)

2005
2006
2007
2008
2009

17.0

21.1

29.7

25.9

26.5

2005
2006
2007
2008
2009

9.5

11.5

17.0

21.0

24.0

2009 earnings per share calculated on proﬁ t after tax before
non-recurring item ($219.7 million) was 28.73 cents.

Notes:
1. 2007 ﬁ gures restated in FY2008.
2. 2005 impacted by FAL acquisition.

FINANCIAL PERFORMANCE

FINANCIAL POSITION

The onset of the economic and
ﬁ nancial crisis became evident just
prior to the Group’s half year results in
September 2009, with central banks
globally, and particularly in Australia,
reducing interest rates by
unprecedented levels. The Group had
previously taken out an interest rate
collar contract to hedge against, at
the time, rising interest rates. At the
previous ﬁ nancial year in 2008, this
instrument had a favourable valuation
to Metcash of some $3.8 million. As a
result of the rapid decline in interest
rates in this period, management took
the decision to close this contract in
November 2008 at a cost of
$24.6 million.

Since exiting the contract, the Group
has enjoyed substantially lower interest
rates on its debt, resulting in a saving
of $5.2 million in the second half
interest expense. The interest rate
collar closure is the only substantial
one-off cost in the annual result for
the Group.

The Group’s turnover growth has
remained strong, with wholesale sales
increasing by 9.3% on the previous
period. The Metcash business model
has remained resilient during the
economic downturn. In addition, the
Group has continued to drive costs
down, with Cost of Doing Business as
a percentage of Gross Proﬁ t reducing
by a further 280 points this year. This
has been due to the ﬁ nalisation of the
withdrawal from Retail Operations for
the Group and a focus on cost control
and supply chain improvement.

As a result of these factors, the Group
was able to better its market
guidance, reporting an Earnings Per
Share (excluding one-off costs and
intangible amortisation) of 29.53 cents
per share and declaring a ﬁ nal
dividend of 14 cents per share. This
brings the total dividend payment to
24 cents per share for the year, a 14.3%
increase over 2008.

The Group’s previously announced
strategy of expanding its capabilities in
the areas of Fresh Foods has resulted in
a substantial investment in the national
fresh produce distribution network. At
30 April 2009, only the South Australian
arm of this network remains to be
ﬁ nalised, which is expected to occur in
the ﬁ rst quarter of the 2010 ﬁ nancial
year. In addition, the Group has
extended the Foodservice capabilities
of the Campbells Wholesale division
with acquisitions in Queensland. The
total investment in these expansions for
the year was $65.8 million. Owing to the
nature of these businesses, a large
proportion of this investment resides
in the Intangibles balance in the
balance sheet.

The Group’s working capital position
has been affected by a number of
factors. The changes to the mix of
business created by the expansion of
the Fresh offering have seen an overall
reduction in both Debtor Days and
Trade Creditor payment terms. In
addition, owing to inbound service
level issues with suppliers and the
restocking of the Blacktown DC dry
grocery distribution centre, which was
closed for repair after the building was
damaged and the stock destroyed
after hail damage in December 2007,
the group’s inventory levels have
increased. This has been necessary to
ensure Metcash’s customers continue
to enjoy best-practice service levels on
a daily basis.

The Company has drawn down an
additional $25 million of its debt
facilities during the period to ﬁ nance
these transactions and, subsequent to
year end, ﬁ nalised negotiations to
extend its $700 million syndicated loan
facility to 31 May 2012.

The Group continues to maintain a
strong balance sheet with a solid cash
position, adequate funding capacity
and is well placed for future growth
and expansion.

Highlight

WHOLESALE SALES (%) 2009

The Group’s turnover
growth has remained
strong, with wholesale
sales increasing by

9.3%

CASH FLOW

The Company has continued its strong
operating cash generation during the
year, with operating cash ﬂ ows
increasing by $50.5 million to
$248.1 million. This is in spite of the
working capital movements noted
above and includes a one-off change
to the Group’s tax paying position as
a result of prior period adjustments
predominantly related to the FAL
acquisition.

The Group has invested a net
$106.2 million in the Produce and
Foodservice networks noted above
and in substantial infrastructure
projects in Laverton, Darwin, Canning
Vale and IT Systems.

The Group has maintained a high
dividend payout ratio (in excess of
80%) and dividend payments for the
year totalled $168.3 million.

METCASH LIMITED ANNUAL REPORT 2009

IGA
Distribution

IGA Distribution (IGA>D) has again
delivered a strong performance,
growing wholesale sales by 11.3% and
EBITA by 14.7% to $315.5 million. This has
been done during times of ﬁ nancial and
economic uncertainty and in a market
dominated by the two chains.

The sales growth demonstrates the
beneﬁ ts from IGA’s targeted ‘local’
market positioning and niche
marketing. Additionally, in tougher
economic times, consumers are
shopping more at supermarkets and
eating out less. By holidaying more
‘at home’ in Australia, they are further
supporting the widely dispersed IGA
store network.

The focus on reducing the Cost of
Doing Business (CODB) continued and
beneﬁ ts were obtained from the
introduction of improved technology
and rationalising warehouse
procedures. This has helped create the
1.29 times ‘leverage’ of EBITA growth to
sales growth for the year.

Market share of 19%, as measured by
AC Nielsen (Nielsen), was maintained
and growth of the market by IGA>D
was 8.3% compared to overall market
growth of 7.4%.

During the year 43 new IGA stores were
opened and 27 extended. This resulted
in the addition of 66,969 square metres
to the IGA retail area. In the 2008
annual report it was stated between
66,000 and 86,000 square metres were
expected to be added in the 2009
year. The upper limit of this expectation
has been exceeded if the area of
non-IGA stores that have joined the
IGA network is included. Additionally,
81 stores were refurbished in 2009.

Adding to the beneﬁ ts of the higher
retail area, sales growth was also
generated through entrepreneurial
IGA store owners driving a
differentiated retail offer, a larger range
of fresh and private label brands to
meet changing consumer needs,
strong branded price promotions to
keep independent retailers
competitive with the two chains and
implementing the independent model
of executing ‘locally’ while behaving
like a chain globally.

Sales of the Company’s generic Black
& Gold range grew by 12% for the year,
reﬂ ecting the brand’s ability to meet
value consumer needs. The Black &
Gold range now consists of 1,011
product items. During the year the new
premium label range IGA ‘Signature’,
was launched. 342 product items are in
the launch phase, and the range is
expected to consist of 600 products by
December 2009. The execution of
these Corporate Brand (Black & Gold
and Signature) strategies provides
independent retailers with products
that can compete with the chains in
this important area.

The IGA brand and network have been
strengthened during the year by retail
excellence, training, retail analytics and
marketing programs.

A key initiative is to increase the Overall
Shopping Experience (OSE) of
customers in IGA stores. This is
measured by identifying criteria within
the Retail Standards Appraisal (RSA)
that is performed on IGA stores. Stores
that fall below an OSE score of 94% are
analysed and action plans put in place
to address and rectify areas of
weakness. In a number of instances, this

has led to retailers increasing their
investment in the stores or
commencing a refurbishment program.

Training is an important aspect of
brand and network development. The
IGA Training Institute has worked with
570 stores and trained over 6,800 staff
through online training. 1,200 staff are
currently enrolled in IGA registered
courses and this number grows each
year. Typical training includes
Certiﬁ cate II, III and IV in Retail
Operations and Fresh Food, Meat and
Seafood department skills.

At the same time, the skills of IGA>D
staff are enhanced through ongoing
training and development such as Disc
Proﬁ ling, Coaching, Leadership and
OH&S.

New opportunities to assist
independent retailers make better use
of their customer data to increase
basket size and provide customers with
more of what they want are being
identiﬁ ed through retail analytics.
A ‘proof of concept’ was tested across
a range of stores using retail sales data
which conﬁ rmed that signiﬁ cant
beneﬁ ts can be achieved across the
IGA network. This expanded project will
be implemented across all IGA stores.

As the IGA brand equity grows, ways
are sought to differentiate the IGA offer
from that of the two chains, through a
focus on consumer lifestyle and
wellbeing. The IGA multimedia
‘Food 4 Life’ program is providing
consumers with convenient,
wholesome, and value-added meal
solutions using ingredients from IGA
stores. This will continue to be a key
driver in delivering a high quality fresh
food offer in IGA supermarkets.

EBITA ($m)

141.6

175.8

2005
2006
2007
2008
2009

TOTAL SALES ($m)

3,864.7

4,659.3

247.3

275.1

315.5

2005
2006
2007
2008
2009

5,824.2

6,066.0

6,681.8

120

170

220

270

320

3,500

4,500

5,500

6,500

7,500

MAJOR ACTIVITIES

SIGNIFICANT ACHIEVEMENTS

FUTURE DIRECTION

•

Marketing and distribution specialists
supplying IGA branded and non-
branded independent grocery stores in
New South Wales, the Australian Capital
Territory, Victoria, Queensland, South
Australia and Western Australia.

Providing expertise tailored to
independent retailers’ requirements,
with a range of marketing,
merchandising, buying, operational
and distribution services.

•

EBITA grew by $31 million achieving
a ratio of 4.73% to sales.

The number of IGA stores grew with
43 new stores as well as 27 extensions
and 81 refurbishments to existing stores.

Expansion and improvement of the
state distribution centres including the
establishment of a national fully
automated distribution centre
in Laverton.

TERMS OF ENGAGEMENT –
PROJECT LION

Project Lion (Leadership, Innovation,
Ownership and Negotiation) was
established early in 2008 to analyse the
IGA business model and ensure that
the structure and relationships between
IGA>D and IGA retailers were optimal.

Business processes have been
reviewed at both the Wholesaler and
Retailer levels. The need to be more
ﬂ exible and adaptable to change in
a dynamic trading environment was
identiﬁ ed at an early stage.

The Culture and Governance
Committee, one of seven committees
formed from the Project Lion process,
undertook an analysis of the IGA
National Board structure and
processes. The Board structure enables
IGA>D and the IGA retailers to
manage the IGA network and make
joint decisions. The resultant report has
revealed strengths and some
opportunities for improvement that will
be worked on. The process is designed
to enhance the protocols and
procedures for a highly effective and
resilient IGA Board structure to provide
the basis for future growth and stability.

•

Implement the ‘Project Lion’ strategies.

Continue to improve consumers’ overall
IGA shopping experience through the
‘Retail Resolution’ process and store
refurbishment.

Implement fresh food strategies to grow
wholesale and retail sales and produce
a consistent and high quality range of
products.

Reduce the cost of doing business.

Grow retail area through new stores
and extensions.

WAREHOUSING AND LOGISTICS

A number of projects have resulted in
improvements in productivity during
the year, including:

•

expanded perishable warehouse
facilities completed in QLD and WA
to cater for increased demand;

improved processes that have been
tested and are being implemented
including radio frequency receiving
and blue tooth scanning of security
items.

A new fully automated ‘mini loader’
distribution centre is being installed
at the Laverton, Victoria, distribution
complex. This will enable major

METCASH LIMITED ANNUAL REPORT 2009

IGA
Distribution

expansion of our small goods range.
It will provide expansion into cross-
docking and the ranging of products
from smaller local suppliers. It also
provides opportunities for new fresh,
organic and confectionery ranges
to ensure product ranges meet
consumers’ needs. Retailers are
expected to start receiving the
beneﬁ ts of the new facility in the
second half of FY2010.

HEALTH, SAFETY, ENVIRONMENT
AND COMMUNITY (HSEC)

•

IGA>D have implemented strategies
in line with Metcash’s HSEC policy
to further reduce packaging waste
and increase the recycling of paper,
cardboard and plastic to reduce
landﬁ ll.

A new corporate branded range
now includes 37 organic products
certiﬁ ed by the Biological Farmers of
Australia (BFA).

Corporate Brand suppliers have
agreed not to use genetically
modiﬁ ed materials in their products.
This has earned a Green rating in
the Greenpeace True Food Guide.

IGA donated $1.5 million in IGA
vouchers to the Bushﬁ re Appeal,
distributed via the Salvation Army.

Strict site speciﬁ c Food Safety Plans
are in place to ensure food safety.

IGA’s national `Fast Food Blitz’ was
launched in May and requires
participants to abstain from eating
unhealthy take away/fast food for
21 days – the length of time
research suggests it takes to make
or break a habit. The program is
designed to encourage healthy
eating and reduce obesity.

Launched in 1998, IGA Community
Chest raises funds to give back to
the local community from the sale
of selected products. Over the last
ﬁ ve years, independent store
owners, IGA Community Chest and
associated programs have raised
over $37 million for local
communities and charities.

•

IGA Community Chest Unsung
Heroes Awards 2008 recognised and
rewarded hundreds of deserving
individuals who give up their time for
the good of others – usually unpaid,
and often without thanks – while
reinforcing IGA’s community focus
at a local level. Unsung Heroes 2009
starts on 1st June 2009.

Food 4 Life is IGA’s healthy living
philosophy. It incorporates
information about healthy shopping,
cooking, eating and living; it’s an
holistic approach to a healthier
lifestyle that Australian consumers
are encouraged to follow.

GENERAL

With our commitment to excellence
at both wholesale and retail levels,
IGA>D and its stakeholders have a
resilient model to ensure continued
growth both now and into the future.

LOU JARDIN
CEO IGA DISTRIBUTION

IGA FRESH

IGA Fresh achieved many key
milestones in its ﬁ rst full year. This
includes the establishment of a
distribution network that enabled the
generation of annualised sales of
$950 million at year end from Fresh
Produce, Meat, Delicatessen and Bakery.

IGA Fresh distribution national
capabilities are underpinned by
11 dedicated fresh produce distribution
centres and two meat processing
facilities. When combined with the
established IGA>D distribution centres,
these provide a platform that ensures
independent supermarkets have a
complete supply chain in place to
compete in today’s market place.

Recruitment has been a major focus to
ensure skilled personnel are in place to
support independent retailers. A
state-wide structure is now in place to
assist customers with their fresh food
buying, merchandising and retailing.

NATIONAL FRESH
PRODUCE NETWORK
The main objective for the 2009 ﬁ nancial
year was the establishment of a national
Fresh Produce network. The acquisition of
targeted produce wholesalers was
completed relatively quickly and a
national network of 11 warehouses
established. The network will be
completed on ﬁ nalising the conversion
of a minority equity interest in a South
Australian wholesaler to a wholly owned
subsidiary. With Fresh Produce annualised
sales of $390 million, the business is well
placed to increase sales volumes. IGA
Fresh Produce now services over 600
retailers nationally providing operational
support while delivering a competitive
offer to ensure independent retailers
continue to compete and grow.

A national fresh produce buying
strategy has been initiated to create
a greater consistency of high quality
products to enable independent
retailers to provide an exceptional
consumer offer. This is further supported
by the IGA 200% Fresh Guarantee.

A private label fresh produce range
under the ‘Field Fresh’ brand was
launched in July 2008. The range has
grown to 70 products with a further
30 under development.

The fresh produce distribution network
also provides the opportunity to supply
foodservice customers. This is an area
where IGA Fresh, in conjunction with
Foodlink, will generate sales under the
brand ‘Foodlink Fresh’.

MEAT
Sales of meat have grown 24% during
the year, generated by providing high
quality, competitive products coupled
with advice and expertise to
independent retailer customers.

In addition to the Malaga (WA)
processing centre acquired from FAL,
Fresh Market Meats has been acquired.
These two sites, in conjunction with the
IGA>D distribution centre, provide a
complete meat offer to WA retailers.

A similar strategy for the east coast is
being developed to provide ‘retail

Bright Supa IGA, Victoria.

MAJOR ACTIVITIES

SIGNIFICANT ACHIEVEMENTS

FUTURE DIRECTION

•

Fresh food concept development
in conjunction with IGA>D.

Develop strategic supplier partnership
through business plan development,
catalogue activity, promotional
programs and advertising panels.

Provide competitive fresh food, retail
and consumer solutions for all
independent channels.

•

Establishment of a national Fresh
product distribution network.

Acquisition of the ‘retail ready’ meat
facility in WA.

$950 million in annualised sales.

IGA Fresh team is now in place.

•

Assist retailers in the execution
of a ‘Fresh’ offer.

Source growth opportunities in the fresh
produce food service area.

Establish retail ready meat program on
the east coast.

Supply chain effectiveness in all areas
of fresh food.

ready’ meat offers. A private label
meat range has been created with
70 products currently available and
a further 15 being developed.

DELICATESSEN
Delicatessen sales have demonstrated
excellent growth with a 30% increase.
The major focus has been to increase
supply chain efﬁ ciencies by nationally
warehousing smallgoods products,
replacing the previous direct delivery
process. This has reduced the demand
for alternative forms of distribution and
provides the retailers with an efﬁ cient
and effective ‘one stop shop’
distribution process. Private label
product development has been very
strong with available products

expected to grow from 56 to 95
by December 2009.

POULTRY
During the year an exclusive
arrangement was agreed with
Lenard’s to supply their range of fresh
poultry products. The combination of
IGA and Lenard’s branding provides
opportunities for IGA retailers to offer
a well recognised consumer poultry
offer exclusive to IGA supermarkets.

BAKERY
Bakery has again shown excellent sales
growth with a 93% increase over the
prior year. The ‘Bakers Oven’ brand
continues to be rolled out with 257
different bakery products now available.

The other key bakery strategy, ‘Quick
Bake’, has proven successful with 210
ovens being delivered to IGA retailers
within the ﬁ rst 12 months. ‘Quick Bake’
enables a range of fresh bread to
be baked in store in approximately
20 minutes.

2009 was an exceptional and exciting
year. An effective fresh food distribution
network has been established that is
adding signiﬁ cant value to participating
IGA retailers. The platform is now in
place to drive top quality fresh food
sales in independent supermarkets.

Harry Rumpler
CEO IGA FRESH

METCASH LIMITED ANNUAL REPORT 2009

Australian
Liquor Marketers

model. IBA, under the Cellarbrations,
Bottle-O and IGA Plus Liquor banners,
is now a key retail partner for all the
major liquor suppliers. It provides an
excellent platform for suppliers to drive
key growth strategies through the
integrated wholesale and retail
network.

BRANDED IBA (IGA PLUS LIQUOR,
CELLARBRATIONS, BOTTLE-O) STORES

April 2006

April 2007

April 2008

April 2009

863

1075

1527

1578

LIQUOR ALLIANCE

Our strategic partners, the Liquor
Alliance, trading under the Thirsty
Camel banner, continued to show
strong growth during the year.
Consolidation of the state-based
brands, under one national brand, has
delivered its members strong buying
and cost efﬁ ciencies during the year.

INCREASED BEER VOLUMES

ALM and IBA are committed to
providing our customers the most
efﬁ cient and cost effective supply
chain model possible. The ability to
have their entire product requirements

MAJOR ACTIVITIES

•

Broad range liquor wholesaler
supplying over 15,000 hotels, liquor
stores, restaurants and other
licensed premises throughout
Australia and New Zealand.

Operates out of 18 distribution
centres throughout Australia and
New Zealand.

Provides a complete service
allowing customers to receive all
their liquor supplies in one delivery,

on one invoice, in full, on time, every
time, together with strong marketing
support and a wide variety of
retail services.

•

Includes a specialist liquor supply and
support division to the on-premise
sector including bars, restaurants and
hotels in both Australia and
New Zealand.

EBITA ($m)

26.1

2005
2006
2007
2008
2009

28.4

30.7

31.2

33.8

SALES ($m)

2,155.6

2005
2006
2007
2008
2009

2,407.7

2,453.2

2,499.3

2,639.4

2,000

2,200

2,400

2,600

2,800

Sales during the ﬁ nancial year showed
a strong growth of 5.6% on last year
while EBITA grew by 8.2%. This produced
excellent leverage of 1.46 times.

ALM continues to grow sales in a
competitive market as a direct result of
the resilience and improved retail offer
of independent retailers.

COST OF DOING
BUSINESS (CODB)

The year has seen the beneﬁ ts of the
restructure undertaken at the start of
2008 ﬁ nancial year and continues to
advantage the ALM business. The
CODB fell against prior year and, while
no major changes to the network
were undertaken during the year,
management focus is maintained
on driving cost efﬁ ciency within our
supplier’s network. Management
emphasis on stock control has
continued to see our stock turns
increase and has resulted in sizeable
improvements in service levels to
our customers.

PREMIX VOLUMES

The government tax change on
premix drinks severely impacted
premix sales during the ﬁ nancial year.
Volume of cases dropped by 35% from
last year and the sales value was
down 11% on the same year. However,
sales of full strength spirits more than
compensated the loss in premix sales.
The volumes of premix sales have
shown signs of recovery at year end.
The effect of this will ﬂ ow into the
2009–2010 ﬁ nancial year.

INVESTMENT IN INDEPENDENT
BRANDS AUSTRALIA (IBA)

The IBA model continues to generate
strong growth both in store numbers
and comparable (like-for-like) sales
growth within the current network. The
successful launch of the IGA Plus
Liquor banner in Western Australia
during the year is another step in
growing the footprint of this successful

SIGNIFICANT ACHIEVEMENTS

FUTURE DIRECTION

•

Sales growth up by 5.65% and EBITA up
by 8.2%.

The beneﬁ ts of the 2008 restructure
continue to advantage the network
with the CODB falling by 4%.

Branded IBA stores grow from 1,527 to
1,578 stores in 2009.

‘Thirsty Camel’ banner consolidation
continues to deliver its members strong
buying and cost efﬁ ciencies.

•

Sales and equity growth for the major
IBA brands under ‘Cellarbrations’, ‘The
Bottle-O’ and ‘IGA plus Liquor’.

Continue to reduce controllable costs
to ensure the ALM remains the most
efﬁ cient and cost effective route to
market for all independent liquor outlets.

Working with major suppliers to redirect
beer purchases through ALM
Warehouses across Australia, maximising
beer distribution and enabling

Najda’s Cellarbrations, North
Geelong, Victoria.

Independents to receive one order, one
invoice and one delivery.

•

Continue to strengthen our ‘Liquor
Alliance’ relationship with the further
expansion of the ‘Thirsty Camel’ brand
around Australia.

available through one supply chain is
a key strategy for a large percentage
of our customer base. ALM and IBA
are working with all our major suppliers
to provide this solution so that our
customers can perform in a highly
competitive environment on a level
playing ﬁ eld and provide the end
consumer with a competitively priced
extensive range coupled with
knowledgeable friendly service.

HEALTH, SAFETY, ENVIRONMENT
AND COMMUNITY (HSEC)

•

ALM has implemented strategies in
line with Metcash’s HSEC policy.
There has been a focus to reduce

•

packaging waste and continue
recycling of paper, cardboard and
plastic to reduce landﬁ ll.

Improving data collection processes
from suppliers to facilitate more
accurate reporting via the National
Packaging Covenant.

ID 25 Program is a responsible
service of alcohol education
campaign about the importance of
checking the ID of those deemed
close to the legal age, targeting the
18 to 25 age group.

•

‘Don’t buy it for them’ is an in store
marketing campaign to educate
parents and other legal age
customers not to purchase alcohol

for or on behalf of under age
people.

ALM and IBA continue to support
independent retailers by building
strong brands, enhancing the retail
offer and providing strong promotional
support. Our share of market continues
to grow and IBA is now a key retail
group for all the major liquor suppliers.
ALM is well positioned to continue to
support independent retailers and the
continued consolidation of the retail
liquor market.

FERGUS COLLINS
CEO AUSTRALIAN LIQUOR MARKETERS

METCASH LIMITED ANNUAL REPORT 2009

Campbells
Wholesale

Campbells Wholesale had another
solid year with sales increasing by
7.1% to $1.66 billion and EBITA growing
by 7.8% to $32.9 million. Strong growth
was generated by each of the four
divisions: Campbells Cash & Carry
(CCC), Campbells Wholesale Division
(CWD), C-Store Distribution (CSD) and
Foodlink. Each division is tailored to
meet the needs of their customers in
the route, convenience and hospitality
market segments.

Campbells Wholesale, through its
national network of 45 warehouses, is
a multi-format distributor of grocery,
confectionery, tobacco, liquor, soft
drinks and foodservice products.
Signiﬁ cant gains have been made
through leveraging the ability to offer
a uniform supply solution to all
nationally based customers.

The business has evolved from purely
cash and carry to a full distribution
service. 70% of Campbells Wholesale
volume is based on a full delivery
format, with electronic ordering,
processing and invoicing. Campbells
has also invested substantially in
automated picking technology to
provide the accuracy and efﬁ ciency
in single item picking required by its
convenience customers.

CONVENIENCE/
ROUTE MARKET

Campbells Wholesale has seen a rise
in market share to 35% of the
organised convenience channel. The
2008–2009 year has seen major growth
with both 7-Eleven and BP, through its
CSD division. The CSD model is unique
in that it offers a total supply solution
to oil companies and national
convenience store chains seeking
supply chain efﬁ ciencies, electronic
processing and less forecourt
disruption through a ‘one-stop’
delivery process.

This model is replicated across
regional and remote areas of Australia
through CWD, and the establishment

of Coast and Country distribution
outlets within the stores further
supports the customers’ confectionery
needs. Campbells Wholesale
continues to invest in its network,
especially catering for the distribution
needs in remote areas of Australia –
a state-of-the-art 12,000m2 warehouse
was opened successfully in Darwin in
October 2008.

CCC continues to offer a wide range
of products to its independent route
customers in all capital cities of
Australia. Independent retailers favour
the Cash & Carry format, providing the
retailer with a wide selection of
products and visibility to new products
and market information not normally
available to this channel through
conventional distribution wholesaling.

Campbells Wholesale’s retail banner,
Lucky 7, again grew solidly to 250 sites,
generating retail sales of over
$170 million. The Lucky 7 banner
provides the independent retailer with
a formatted retail offer, range control
and pricing which allows retailers to
compete effectively.

HOSPITALITY

The hospitality market remains an
attractive target for Campbells
Wholesale. Campbells’ fourth division,
Foodlink, based in Perth, is a specialist
foodservice distributor to free trade,
franchised networks and corporate
caterers. Recently Foodlink established
its second operation through the
acquisition of Solomon Food Group in
Murarrie, Brisbane. This is the ﬁ rst step
to the creation of a national network
of Foodlink warehouses.

The foodservice category is also well
represented in Campbells Cash &
Carry and its ‘Catering Connection’
concept, which supplies independent
restaurants, bistros, clubs, pubs and
takeaways outlets.

The feature of a wide range of
foodservice products and the

inclusion of liquor to licensed premises
provides a unique offer to the
foodservice market in Australia.

HEALTH, SAFETY, ENVIRONMENT
AND COMMUNITY (HSEC)

•

Campbells Wholesale has
implemented strategies in line with
Metcash’s HSEC policy. There has
been a focus to reduce packaging
waste and continue recycling of
paper, cardboard and plastic to
reduce landﬁ ll.

•

30,000 plastic totes (containers) are
utilised to replace cartons that were
previously used to package loose
items to the convenience market.

MAJOR ACTIVITIES

•

Primarily focused on the
convenience, route and hospitality
channels of trade. Services customers
who require a total supply solution
across a broad range of fast moving
consumer goods (FMCG) products.

Campbells Wholesale has national
service and distribution covered via:

22 Cash & Carry warehouses (CCC)
and 17 regional warehouse
distribution centres (CWD), servicing
over 100,000 customers across all

•

Campbells Cash & Carry no longer
provides plastic shopping bags,
instead reusing manufacturers
packaging from goods received.

Campbells Wholesale raised over
$100,000 in cash and stock for
victims of the Victorian ﬁ re disaster.

Campbells Wholesale expects its
growth to continue across all divisions
in the new ﬁ nancial year.

PETER DUBBELMAN
CEO CAMPBELLS WHOLESALE

C-Store Distribution delivery
to 7-Eleven, Maroubra,
Western Australia.

Foodlink delivery to Pizza Hut
restaurant Perth, Western Australia.

Cash & Carry,
Bunbury, Western
Australia.

SIGNIFICANT ACHIEVEMENTS

FUTURE DIRECTION

•

states and territories, stocking a broad
range of groceries, confectionery,
cigarettes, foodservice and liquor;

four C-Store Distribution centres (CSD)
supported by specialist confectionery
distribution centres;

the FoodLink Foodservice business in
Western Australia providing the leading
distribution solution to the food
service industry.

•

Sales increased by 7.1% to $1.66 billion.

•

EBITA grew 7.8% to $33 million.

A 12,000m
2 state-of-the-art warehouse
was opened in Darwin to cater for the
distribution needs of remote areas of
northern Australia.

Lucky 7 banner grew from 180 to
250 sites.

Acquisition of the Solomon Food Group
is Brisbane creates ﬁ rst step towards a
national network of FoodLink
warehouses.

•

Continuing to provide the total supply
chain solution to the modern petrol and
convenience channel throughout
metropolitan and regional centres.

Growth of independent convenience
sector through the ‘Lucky 7’ banner.

Expanding the foodservice
offer nationally.

Continued growth in
confectionery markets.

Continue to expand in convenience and
hospitality and small business markets.

EBITA ($m)

17.3

21.2

2005
2006
2007
2008
2009

28.9

30.6

33.0

SALES ($m)

990.1

1,147.4

2005
2006
2007
2008
2009

1,417.4

1,550.8

1,660.4

850

1,050

1,250

1,450

1,650

METCASH LIMITED ANNUAL REPORT 2009

board of directors

1. CARLOS S DOS SANTOS CA (SA)
Non-executive Chairman
Member of the Remuneration
& Nomination Committee

Date of appointment to Metcash
Limited: 18 April 2005.

Mr dos Santos is a chartered
accountant and is a director of various
companies trading in Africa and the Far
East. He has had 39 years’ industry
experience and has been involved with
the Metcash business as a Director
since May 1998.

2. PETER L BARNES
MBA (MELBOURNE), B COMMERCE (HONS)

Non-executive Deputy Chairman
Chairman of the Remuneration &
Nomination Committee

Date of appointment to Metcash
Limited: 18 April 2005.

Mr Peter Barnes is Chairman of Ansell
Ltd, a Director of News Corporation and
Chairman of Samuel Smith & Sons Pty
Ltd. Mr Barnes was formerly an
executive with Philip Morris International
Inc. He held several senior management
positions in Australia and overseas –
including Managing Director Lindeman
Holdings Ltd and President, Asia Region.

3. ANDREW REITZER B COMM MBL
CEO Metcash Group of Companies

Date of appointment to Metcash
Limited: 18 April 2005.

Mr Andrew Reitzer has 31 years’
experience in the retail/ wholesale
industry. Previous positions at Metro
Cash and Carry include Group
Operations Director, heading operations
in Russia and Israel, Marketing Director, IT
Director and managing various
operating divisions.

4. MICHAEL R BUTLER B SC, MBA
Non-executive Director
Member of the Audit Risk
& Compliance Committee

Date of appointment to Metcash
Limited: 8 February 2007.

Mr Butler has extensive experience in
investment banking gained as an
Executive Director of Bankers Trust’s
Corporate Finance group and as
Executive Vice President of its Private
Equity group. He is presently a Non-
executive Director of AXA Asia Paciﬁ c
Holdings Limited, APN Property Group
Limited and Position Partners Pty Ltd. He
was previously a Non-executive Director
and Chairman of Ausdoc Group
Limited, Freightways Express Limited,
Hamilton Island Limited, Members Equity
Bank Pty Limited, Industry Super Holdings
Pty Ltd and Verticon Group Limited.

5. NEIL D HAMILTON LLB (UWA)
Non-executive Director
Member of the Remuneration
& Nomination Committee

Date of appointment to Metcash
Limited: 7 February 2008.

Mr Hamilton is based in Perth and
Sydney and has over 26 years’
experience in the legal profession and
in business with substantial experience
in a number of industries including
investment/funds management,
insurance, banking and resources.

Mr Hamilton is Chairman of IRESS Market
Technology Limited, Mount Gibson Iron
Limited and Northern Iron Limited.

6. MIKE JABLONSKI
Group Merchandise Director

Date of appointment to Metcash
Limited: 18 April 2005.

Mr Jablonski has 37 years’ experience in
the food industry. Previous positions
include: 1984 Merchandise Executive
Foods of OK Bazaars; 1987–1991
Merchandise and Marketing Director of
Score Food Holdings Ltd, 1992–1996
Deputy Group Merchandise Director of
Metro Cash and Carry, 1996–1998
Director of Distribution and Retail
Development of Metro Cash and Carry
Limited. Mr Jablonski is the Group
Merchandise Director of Metcash
Limited. He is responsible for the Group’s
Merchandise Supplier relationships, and
the income derived thereof.

10.

7. EDWIN JANKELOWITZ
B COMM, CA (SA)

Finance Director

Date of appointment to Metcash
Limited: 18 April 2005.

Qualiﬁ ed as a Chartered Accountant
(SA) in 1966. From July 1967 to
November 1979 with Adcock Ingram
Ltd in Head Ofﬁ ce – promoted over
time to Group Company Secretary and
then Finance Director.

Consulting January 1980 to March 1983
– business management and tax.

Caxton Ltd 1983–1997 – Finance
Director; Managing Director; Chairman.
Chairman of other publicly quoted
companies.

Metcash Trading Limited, Metcash
Limited – May 1998 to date – Finance
Director.

Mr Jankelowitz has spent over 35 years
in corporate ofﬁ ces of listed companies.
He was a member of the Income Tax
Special Court in South Africa for 20
years (1977–1997).

8. LOU JARDIN
CEO IGA Distribution

Date of appointment to Metcash
Limited: 18 April 2005.

Mr Jardin has extensive industry
experience, including owning and
operating independent supermarkets
and holding senior positions within a
chain store environment, as well as
warehouse and distribution operations.
He held a senior position with Coles-
Myer for 11 years before joining
Metcash in 1997 as the National
Manager of Company-owned stores. In
1998, Mr Jardin moved to Queensland
as the State General Manager of IGA
Distribution until his current appointment
in May 2000 to the role of CEO IGA
Distribution.

9. RICHARD A LONGES
BA (SYDNEY), LLB (SYDNEY), MBA (NSW)

Solicitor (non-practising)
Non-executive Director
Chairman of the Audit Risk
& Compliance Committee

Date of appointment to Metcash
Limited: 18 April 2005.

Mr Richard Longes has been a Director
of a number of public companies and
a member of various government
bodies and inquiries for more than
20 years. He is currently Chairman of
Austbrokers Holdings Ltd and a Director
of Boral Limited and Investec Bank
(Australia) Ltd.

Mr Longes was formerly a co-founder
and principal of the corporate advisory
and private equity ﬁ rm, Wentworth
Associates, and prior to that a partner
of Freehill Hollingdale & Page, solicitors.

10. V. DUDLEY RUBIN
CA (SA), H DIP BDP, MBA

Non-executive Director
Member of the Audit Committee

Date of appointment to Metcash
Limited: 18 April 2005.

Mr Rubin is a chartered accountant
and is a director of various companies
trading in Africa. He has had 26 years’
industry experience and has been
involved with the Metcash business
as a Director since May 1998.

JOHN RANDALL
BEC, FCPA, FCIS, MAICD

Company Secretary

Mr Randall joined the Company in 1997.
Previously Chief Financial Ofﬁ cer of
Metal Manufactures Limited and
Overseas Telecommunications
Corporation Limited. Member and
former President of the Accounting
Foundation, University of Sydney, a
former National President of the Group
of 100, NSW President and National
Board member of CPA Australia.

METCASH LIMITED ANNUAL REPORT 2009

executive team

1. ANDREW REITZER B COMM MBL
CEO Metcash Group of Companies

3. FERGUS COLLINS
B COMM (HONS) (DUBLIN), B SC MGMT (IRELAND),

Mr Andrew Reitzer has 31 years’
experience in the retail/wholesale
industry. Previous positions at Metro
Cash and Carry include Group
Operations Director, heading operations
in Russia and Israel, Marketing Director, IT
Director and managing various
operating divisions.

2. KEN BEAN MBA, GRAD DIP BUS, DIP. ACC.
Chief Executive, Group Logistics
and Corporate Development

Mr Ken Bean has over 38 years’
experience in the retail wholesale
industry. Previously Ken was General
Manager of Coles-Myer Logistics Pty Ltd
and was also responsible for Coles-Myer
Asia’s buying ofﬁ ces. Ken has also held
senior roles in corporate development
as well as ﬁ nance and administration.
He also has signiﬁ cant industrial
property development and
construction experience and is currently
a member of the Logistics Association
of Australia and the Australian
Logistics Council.

MBA (UQ)

CEO Australian Liquor Marketers

Fergus Collins joined ALM in December
2001 as Commercial Manager
Queensland and was promoted to
General Manager Queensland in May
2004. He became General Manager,
IBA in July 2006. In February 2007, he was
appointed Chief Executive Ofﬁ cer.

Fergus is a member of the Chartered
Institute of Management Accountants
of the UK and a graduate of the
Metcash Executive Leadership Program.

4. PETER DUBBELMAN MBA (MELB)
CEO Campbells Wholesale

Appointed CEO of Campbells
Wholesale in June 1998. Peter has over
25 years’ experience in fast moving
consumer goods distribution primarily
in multi-site general management.

Major growth in the convenience sector
has been achieved through the
successful development of an efﬁ cient
supply chain solution to organised and
franchised retailers and the
development of retail formats in the
independent convenience market.

Good growth in the hospitality sector
has been achieved more recently
through the successful development of
specialist foodservice distribution outlets.

Peter has successfully initiated major
growth of the business through the
establishment of four distinct divisions
each aligned with the speciﬁ c needs of
the convenience, liquor and hospitality
markets throughout Australia.

5. ADRIAN GRATWICKE
BA (HONS), ACA, MBA

General Manager Finance
An experienced ﬁ nance professional,
Mr Gratwicke brings over 21 years’
commercial and industry experience to
his current position as General Manager
Finance. Since joining Metcash in April
1998, he has held several senior roles
including National Accounting
Manager, National Commercial
Manager IGA Distribution and General
Manager Mergers & Acquisitions, Risk
and Investor Relations.

6. BERNARD J HALE B TH (CAN)
Chief Information Ofﬁ cer

Mr Hale was formerly a Director of Metro
Cash and Carry Limited of South Africa.
Mr Bernard Hale has 34 years of IT
industry experience, 25 of which have
been within the Metro Cash and Carry
organisation. Previous positions held in
Metro include Operation Director IT,
Group IT Director, Group Operations
Director (Domestic) and Corporate
Group IT Director.

He was appointed Chief Information
Ofﬁ cer of Metcash Trading Limited on

10.

11.

1 December 2002. Prior to being
appointed to his current role he served
as a Non-executive Director of Metcash
Trading Limited.

7. MIKE JABLONSKI
Group Merchandise Director

Mr Jablonski has 37 years’ experience
in the food industry. Previous positions
include: 1984 Merchandise Executive
Foods of OK Bazaars; 1987–1991
Merchandise and Marketing Director of
Score Food Holdings Ltd, 1992–1996
Deputy Group Merchandise Director of
Metro Cash and Carry, 1996–1998
Director of Distribution and Retail
Development of Metro Cash and Carry
Limited. Mr Jablonski is the Group
Merchandise Director of Metcash
Limited. He is responsible for the Group’s
Merchandise Supplier relationships, and
the income derived thereof.

8. EDWIN JANKELOWITZ
B COMM, CA (SA)

Finance Director

Consulting January 1980 to March 1983
– business management and tax.

Caxton Ltd 1983–1997 – Finance
Director; Managing Director; Chairman.

Chairman of other publicly quoted
companies.

10. DAVID JOHNSTON
M BUS (EMPLOYMENT RELATIONS), FAHRI, JP

Metcash Trading Limited, Metcash
Limited – May 1998 to date – Finance
Director.

Mr Jankelowitz has spent over 35 years
in corporate ofﬁ ces of listed companies.
He was a member of the Income Tax
Special Court in South Africa for 20
years (1977–1997).

9. LOU JARDIN
CEO IGA Distribution

Chief Human Resources Ofﬁ cer

Mr Johnston joined Metcash in
December 2001. He brings over
31 years’ experience in Human
Resources with some of the world’s
most successful FMCG companies.
He has developed and delivered highly
successful culture change initiatives and
executive development programs at
national and international levels, and
pioneering Australian industrial relations
agreements.

Mr Johnston’s current focus at Metcash
is to further strengthen leadership
capability, implement effective
succession and talent development
strategies and continue to develop
ways to make Metcash a great
employer.

11. HARRY RUMPLER
CEO IGA Fresh

Mr Rumpler joined the Company in
November 1997 as National Fresh Food
Manager for Merchandise and was
then appointed to General Manager
IGA Distribution Queensland in 2005.
He was appointed CEO of IGA Fresh
in November 2007.

Mr Rumpler has been in retail for 32
years working in all areas of the business
including operations, merchandise
and buying.

METCASH LIMITED ANNUAL REPORT 2009

ﬁ ve-year
review

INCOME STATEMENT

Net Sales ($’m)

Earnings before interest and taxation ($’m)

Interest, net ($’m)

Operating Proﬁ t before Tax ($’m)

Proﬁ t After Tax ($’m)

BALANCE SHEET

AIFRS

AGAAP

2009

2008

RESTATED
2007

2006

2005

10,981.7

10,116.1

9,694.8

8,214.4

7,010.4

351.8

61.0

290.8

202.5

335.4

51.1

284.3

197.4

282.9

57.2

225.7

158.6

174.0

40.5

133.5

81.2

186.6

1.5

185.1

126.8

4.5

(73.00)

98.8

Metcash Shareholder Equity ($’m)

1,279.4

1,239.7

1,180.2

1,032.9

Net Tangible Assets per share (cents)

Gearing (debt/debt+equity) (%)

12.98

33.5

16.16

33.2

8.65

34.1

(2.40)

42.3

SHARE STATISTICS

Fully Paid Ordinary Shares

764,888,363

764,792,593

762,405,655

747,741,353

427,395,233

Weighted Average Ordinary Shares

764,843,880

763,484,392

753,116,068

593,675,382

427,395,233

Earnings per ordinary share (cents)

Dividends declared per share (cents)

26.47

24.00

25.86

21.00

21.06

17.00

16.99

11.50

29.68

9.50

OTHER STATISTICS

Number of employees (full-time equivalents)

5,358

5,056

5,855

7,033

4,316

Premium label range IGA
‘Signature’ products.

corporate
governance statement

The Directors of Metcash Limited (Metcash or Company) support and adhere to the principles of corporate governance set
out in the Metcash Corporate Governance Statement. In supporting these principles, the Directors acknowledge the need
for the highest standards of behaviour and accountability.

Except for the departures explained in this statement, the Directors believe that the Company’s policies and practices
have complied in all substantial respects with corporate governance best practice in Australia, including the ASX Corporate
Governance Council Principles of Good Corporate Governance (Principles) introduced in March 2003 and revised in
August 2007.

The table below summarises the Company’s compliance with the Corporate Governance Council’s recommendations.

RECOMMENDATION

COMPLY
YES/ NO

REFERENCE/
EXPLANATION

PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

1.1 Companies should establish the functions reserved to the Board and those delegated

to senior executives and disclose those functions.

1.2 Companies should disclose the process for evaluating the performance of senior

executives.

1.3 Companies should provide the information indicated in the guide to reporting

on Principle 1.

PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD VALUE

2.1 A majority of the Board should be Independent Directors.

2.2 The Chair should be an Independent Director.

2.3 The roles of Chair and Chief Executive Ofﬁ cer should not be exercised by the

same individual.

2.4 The Board should establish a Nomination Committee.

2.5 Companies should disclose the process for evaluating the performance of the Board,

its Committees and individual Directors.

2.6 Companies should provide the information indicated in the guide to reporting

on Principle 2.

PRINCIPLE 3 – PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

Page 23

Page 25

Page 26

Yes

3.1 Companies should establish a code of conduct and disclose the code or a summary

Yes

Page 26

of the code as to:
(cid:129)
(cid:129)

the practices necessary to maintain conﬁ dence in the Company’s integrity;
the practices necessary to take into account their legal obligations and the
reasonable expectations of their stakeholders;
the responsibility and accountability of individuals for reporting and investigating
reports of unethical practices.

(cid:129)

3.2 Companies should establish a policy concerning trading in Company securities by
Directors, senior executives and employees, and disclose the policy or a summary
of that policy.

Yes

Page 26

3.3 Companies should provide the information indicated in the guide to reporting

Yes

on Principle 3.

METCASH LIMITED ANNUAL REPORT 2009

corporate
governance statement

RECOMMENDATION

PRINCIPLE 4 – SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

4.1 The Board should establish an Audit Committee.

4.2 The Audit Committee should be structured so that it:

(cid:129)
(cid:129)
(cid:129)
(cid:129)

consists only of Non-executive Directors;
consists of a majority of Independent Directors;
is chaired by an Independent Chair, who is not Chair of the Board;
has at least three members.

COMPLY
YES/ NO

REFERENCE/
EXPLANATION

Yes

Page 27

4.3 The Audit Committee should have a formal charter.

4.4 Companies should provide the information indicated in the guide to reporting

Yes

Page 27

on Principle 4.

PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE

5.1 Companies should establish written policies designed to ensure compliance with ASX
Listing Rule disclosure requirements and to ensure accountability at a senior executive
level for that compliance and disclose those policies or a summary of those policies.

Yes

Page 29

5.2 Companies should provide the information indicated in the guide to reporting

Yes

on Principle 5.

PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS

6.1 Companies should design a communications policy for promoting effective

Yes

Page 29

communication with shareholders and encouraging their participation at general
meetings and disclose their policy or a summary of that policy.

6.2 Companies should provide the information indicated in the guide to reporting

on Principle 6.

PRINCIPLE 7 – RECOGNISE AND MANAGE RISK

7.1 Companies should establish policies for the oversight and management of material

business risks and disclose a summary of those policies.

7.2 The Board should require management to design and implement the risk management
and internal control system to manage the company’s material business risks and report
to it on whether those risks are being managed effectively. The Board should disclose that
management has reported to it as to the effectiveness of the Company’s management
of its material business risks.

Yes

Page 30

Page 31

7.3 The Board should disclose whether it has received assurance from the Chief Executive

Yes

Page 32

Ofﬁ cer (or equivalent) and the Chief Financial Ofﬁ cer (or equivalent) that the
declaration provided in accordance with section 295A of the Corporations Act is
founded on a sound system of risk management and internal control and that the system
is operating effectively in all material respects in relation to ﬁ nancial reporting risks.

7.4 Companies should provide the information indicated in the guide to reporting

on Principle 7.

PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY

8.1 The Board should establish a Remuneration Committee.

8.2 Companies should clearly distinguish the structure of Non-executive Directors’

remuneration from that of Executive Directors and senior executives.

8.3 Companies should provide the information indicated in the guide to reporting

Yes

Page 32

Refer to
Remuneration
Report

on Principle 8.

The Company’s policies and practices and their relationship to the Council’s recommendations are set out in more
detail as follows.

PRINCIPLE 1– LAY SOLID FOUNDATION FOR MANAGEMENT AND OVERSIGHT

RESPONSIBILITIES OF THE BOARD AND MANAGEMENT
The Board of Directors is responsible for setting the strategic direction of the Company and for overseeing and monitoring
its businesses and affairs.

The Board reviews and approves the Company’s strategic and business plans and guiding policies. Day-to-day management
of the Company’s affairs and implementation of its strategy and policy initiatives are delegated to the Chief Executive Ofﬁ cer
and senior executives, who operate in accordance with Board-approved policies and delegated limits of authority.

The principal functions of the Board include:

(cid:129)

charting the direction, strategies and ﬁ nancial objectives of the Company;

(cid:129)

monitoring implementation of those strategies and the operational and ﬁ nancial performance and risk of each
of the Company’s activities;

(cid:129)

reviewing major capital expenditure, acquisitions, divestments and funding;

(cid:129)

reviewing performance, remuneration and succession of senior management;

(cid:129)

monitoring compliance with legal regulatory requirements, including occupational health and safety laws, product
safety and the protection of the environment;

monitoring the Company’s relationships with its stakeholders and compliance with ethical standards and the
Company’s Code of Conduct;

(cid:129)

corporate governance generally.

The Board’s Charter can be found on the Company’s website www.metcash.com under the heading ‘Corporate Governance’.

EVALUATING THE PERFORMANCE OF SENIOR EXECUTIVES
On an annual basis, the Remuneration & Nomination Committee reviews the performance of the Chief Executive Ofﬁ cer
against qualitative and quantitative criteria, which include proﬁ t performance, other ﬁ nancial measures and achievement
of the Company’s strategic objectives. This occurred during the 2009 ﬁ nancial year in accordance with this process.

The Company maintains a performance evaluation process that measures other senior executives against previously agreed
Key Performance Indicators and Key Behavioural Indicators. This process is performed formally once a year with quarterly
reviews and took place for each senior executive during the 2009 ﬁ nancial year.

Senior executives have access to continuing education to update and enhance their skills and knowledge.

PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD VALUE

A MAJORITY OF THE BOARD SHOULD BE INDEPENDENT DIRECTORS

APPOINTMENT TO THE BOARD
The Board’s policy for the selection, appointment and re-appointment of Directors is to ensure that the Board possesses
an appropriate range of skills, experience and expertise to enable the Board to most effectively carry out its responsibilities.
As part of this appointment process, the Directors consider Board renewal and succession plans and whether the Board is
of a size and composition that is conducive to making appropriate decisions.

Prior to Directors standing for re-election, the Remuneration & Nomination Committee reviews the skills and contribution of
the Directors concerned and decides whether the committee supports their re-election. The committee then recommends
their decision to the Board.

When a vacancy exists, or when it is considered that the Board would beneﬁ t from the services of a new Director with particular
skills, the Remuneration & Nomination Committee selects a panel of candidates with appropriate expertise and experience. This
may be supplemented with advice from external consultants if necessary. The Board, on the committee’s recommendation,
then appoints the most suitable candidate who must stand for election at the next general meeting of shareholders.

METCASH LIMITED ANNUAL REPORT 2009

corporate
governance statement

Directors are not appointed for a ﬁ xed term but, under the Company’s Constitution, must be re-elected each three years
by rotation and are subject to Australian Securities Exchange (ASX) Listing Rules and Corporations Act provisions.

BOARD COMPOSITION
Maintaining a balance of experience and skills is an important factor in Board composition. For details of the skills,
experience and expertise of the Individual Directors, and the period of ofﬁ ce held by each Director, please refer to page 16,
headed ‘Board of Directors’, of this report.

The Board of Metcash is currently constituted as follows:

INDEPENDENT NON-EXECUTIVE DIRECTORS
Six Independent Directors hold key positions that include chairing the Board and the Board Committees of Audit Risk &
Compliance and Remuneration & Nomination. They provide an external perspective and checks and balances for the
interests of all shareholders.

The Board’s six Non-executive Directors (at the date of this report), Mr dos Santos, Mr Barnes, Mr Butler, Mr Hamilton,
Mr Longes and Mr Rubin, are considered by the Board to be Independent Directors.

The Board has adopted a deﬁ nition of independence that is derived from the deﬁ nition set out in the Principles. Directors are
considered independent if they are not a member of management and are free of any business or other relationship that
would materially interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of
their judgement.

When assessing the independence of a Director, the Board will consider whether the Director:

(cid:129)

is a substantial shareholder of the Company or an ofﬁ cer of, or otherwise associated directly with, a substantial
shareholder of the Company;

is employed or has previously been employed in an executive capacity by the Company or another group member
and there has not been a period of at least three years between ceasing to hold any such employment and serving
on the Board;

has within the last three years been a principal of a material professional adviser or a material consultant to the
Company or another group member, or an employee materially associated with the service provided;

is a material supplier or customer of the Company or other group member, or an ofﬁ cer of or otherwise associated
directly or indirectly with a material supplier or customer;

(cid:129)

has a material contractual relationship with the Company or another group member other than as a Director of the Company.

The Board regularly assesses whether each Non-executive Director is independent, based on this deﬁ nition, and in light
of information disclosed by those Directors that may be relevant to this assessment.

The six Non-executive Directors are considered to be independent for the reasons set out as follows.

(cid:129)

None of the six Non-executive Directors are substantial shareholders of the Company or associated with a substantial
shareholder of the Company (holding 5% or more of the Company’s issued shares).

Messrs Barnes, Butler, Hamilton and Longes are not employed by, nor have they previously been employed by, the
Company or another group member. Mr dos Santos and Mr Rubin were employed in executive positions by Metoz, the
former group holding company and now a wholly owned Metcash subsidiary. That employment ceased on 18 April 2005
when the Metoz scheme became effective.

A period of more than three years has thus elapsed during which Mr dos Santos and Mr Rubin have remained as Metcash
Directors. Although there has not been ‘...a period of at least three years between ceasing such employment and serving
on the Board’, it is noted that their roles as Metoz employees did not put them in a position of authority, responsibility, and/
or directing the activities of Metcash itself and, that this fact, combined with the four-year elapsed period are important
factors in determining their capacity to bring independent judgement to bear on Metcash Board deliberations. At all
times, they have been Non-executive Directors of Metcash. Given the speciﬁ c facts of their situation, this test does not
preclude them from being considered independent.

(cid:129)

The Board considered all relevant factors and concluded that Mr dos Santos and Mr Rubin are Independent Directors
and accordingly, Mr dos Santos is considered to be an Independent Chairman.

(cid:129)

None of the six Non-executive Directors have a contractual relationship with the group, nor have they been a professional
adviser or consultant to the group or an employee associated with the service provided.

None of the six Non-executive Directors is a material supplier or customer of the Company or an ofﬁ cer of, or otherwise
associated directly or indirectly with, a material supplier or customer. Materiality is assessed as supplying 2.5% or more of
the Company’s annual purchases or a customer representing 2.5% or more of the Company’s annual sales.

Mr Barnes is Chairman of Samuel Smith & Sons Pty Ltd and a Director and Chairman of Ansell Limited, suppliers to the
Company. However, the level of purchases involved is not considered material, being less than 0.4% of the Company’s
total purchases.

Mr Hamilton was a Director of Insurance Australia Group Limited and Programmed Maintenance Services Limited,
suppliers of insurance and maintenance services to the Company. However, the value of services provided is less than
0.1% of the Company’s total costs and expenses.

(cid:129)

None of the six Non-executive Directors has a contractual relationship with the Company or another group member,
other than as a Director of the Company.

EXECUTIVE DIRECTORS
The Board has four Executive Directors: Mr Andrew Reitzer, Mr Michael Jablonski, Mr Edwin Jankelowitz and Mr Lou Jardin.
Mr Andrew Reitzer is the Company’s Chief Executive Ofﬁ cer and each of the other three Directors is responsible for key
activities of the Company.

All Directors, whether independent or not, bring an independent judgement to bear on Board decisions.

INDEPENDENT PROFESSIONAL ADVICE
The Board has a policy of enabling Directors to seek independent professional advice at the Company’s expense.
The Board will review in advance the estimated costs for reasonableness, but will not impede the seeking of advice.

COMPANY SECRETARY
All Directors have access to the Company Secretary who is accountable to the Board, through the Chairman,
on all governance matters.

THE CHAIR SHOULD BE AN INDEPENDENT DIRECTOR
The Chair, Mr Carlos dos Santos, is considered by the Board to be an Independent Director. Please see above.

THE ROLES OF CHAIR AND CHIEF EXECUTIVE OFFICER SHOULD NOT BE EXERCISED BY THE SAME INDIVIDUAL
The roles of Chief Executive Ofﬁ cer and Chair are not exercised by the same individual.

THE BOARD SHOULD ESTABLISH A NOMINATION COMMITTEE
The Board has a Remuneration & Nomination Committee.

REMUNERATION & NOMINATION COMMITTEE
The membership of the Remuneration & Nomination Committee consists of the Non-executive Independent Directors who
are listed below, together with details of their qualiﬁ cations and attendance at meetings during the past ﬁ nancial year.

MEMBER

QUALIFICATIONS

P L Barnes (C)

C S dos Santos

N D Hamilton

B Comm (Hons), MBA

CA (SA)

LLB

Responsibilities of the committee include to:

(cid:129)

advise the Board on remuneration of the CEO and senior management;

MEETINGS HELD
DURING 2009
FINANCIAL YEAR

MEETINGS ATTENDED
DURING 2009
FINANCIAL YEAR

METCASH LIMITED ANNUAL REPORT 2009

corporate
governance statement

(cid:129)

advise the Board on performance-linked compensation for management;

(cid:129)

oversee the administration of the Metcash Employees Option Plan;

(cid:129)

advise the Board on directorship and Board Committee appointments, Board succession planning and performance
of the CEO; and

(cid:129)

implement processes to assess the effectiveness of the Board and its Committees.

The Committee consists only of Independent Directors and is chaired by an Independent Director who is not Chairman
of the Board.

The Charter of the Committee can be found on the Company’s website www.metcash.com under the heading
‘Corporate Governance’.

PROCESS FOR EVALUATING THE PERFORMANCE OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
The Board has previously reviewed performance each second year using the services of a recognised Board Performance
Consultant. During the past year, it was decided that annual reviews of the Board, its committees and directors would be
performed using a self-evaluation questionnaire, with an independent review to be conducted each third year using an
external Board Performance Consultant.

The questionnaire used covered the areas of Board structure and role, Board composition and succession, meeting
processes, strategy and planning, performance monitoring and communication.

The process was managed by the Company Secretary on a conﬁ dential basis. Results of the questionnaire were provided
to all Directors with any comments from Directors passed to the Chairman. The results were reviewed by the Chairman
individually with each Director, then by the Remuneration & Nomination Committee and ﬁ nally by the Board.

It was agreed by Directors that the evaluation process had been effective and that the individual discussions with the
Chairman had been frank and open. The overall conclusion was that the Board and its committees are effective, decisions
are made in a timely manner and Directors are adding value to the Company.

PRINCIPLE 3 – PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

ESTABLISH A CODE OF CONDUCT
The Company has a Code of Conduct that applies to Directors and all employees. Subjects covered by the Code include:

(cid:129)

equal employment opportunity, discrimination and harassment;

(cid:129)

security of Company records and assets and conﬁ dentiality guidelines;

(cid:129)

conﬂ ict of interest, acceptance of gifts, entertainment and services;

(cid:129)

fraud, corruption and irregular transactions;

(cid:129)

legal compliance;

(cid:129)

honest ethical behaviour;

(cid:129)

environmental protection and safe working environment.

The Code can be found on the Company’s website www.metcash.com under the heading ‘Corporate Governance’.

Compliance with the Code is checked through the Company’s processes including internal audit, security, human resources
and occupational health and safety. New staff members are required to attend an induction program that includes
behaviour guidelines. Additionally, the Company’s staff appraisal process includes employees’ performance against Key
Behavioural Indicators as well as Key Performance Indicators.

Additionally, the Company has a ‘Serious Complaints’ policy that endeavours to protect those who report, in good faith,
violations of the Code of Conduct. This policy can be found on the Company’s website www.metcash.com under the
heading ‘Corporate Governance’.

TRADING IN COMPANY SECURITIES
The Company has a code for Directors, senior executives and all Metcash employees who are advised of closed trading
periods in March and September each year in respect of security transactions and it can be found on the Company’s
website www.metcash.com under the heading ‘Corporate Governance’.

The Metcash Share Trading Policy restricts trading of Metcash securities by Directors, senior executives and all Metcash
employees who are advised of closed trading periods. Under the policy, no Director, senior executive or Metcash employee
advised of the closed trading period may purchase or sell securities in Metcash during the periods between 1 October and
the date of publication of preliminary half-year results and 1 April and date of publication of preliminary ﬁ nal results, except
with the written authority of the Chairman of Metcash. Such authority will only be granted in exceptional circumstances. The
Chairman may also restrict dealings in securities of Metcash during other periods. Trading in all of these periods is monitored
to ensure Directors, senior executives and all Metcash employees who are advised of closed trading periods have not
traded in Metcash securities.

Further, Directors and members of the Metcash Executive Team (direct reports to the CEO) who wish to deal in Metcash
securities must ﬁ rst notify the Chairman in writing of the proposed dealing, which must not be engaged in until approval has
been given by the Chairman.

The use of derivatives over unvested Metcash securities can have the effect of distorting the proper functioning
of performance hurdles and reducing the intended alignment between management and shareholder.

Metcash employees must not use, or allow to be used, any derivatives in relation to unvested Metcash securities.

In respect of investments in Metcash shares that are ﬁ nanced by margin call loans, Directors and members of the Metcash
Executive Team are required to advise the Chairman of such investments and the Company Secretary is to maintain a
register of such instances. The Chairman is to be advised of any lender’s intention to sell Metcash shares held by Directors
and senior executives to satisfy margin loans.

This policy in no way alters the obligation of Directors to notify the Company Secretary of any change in the beneﬁ cial
ownership of Metcash shares held by them.

PRINCIPLE 4 – SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

THE BOARD SHOULD ESTABLISH AN AUDIT COMMITTEE
The Board has an Audit, Risk & Compliance Committee.

The membership of the Audit Risk & Compliance Committee consists of the Non-executive Independent Directors who are
listed below, together with details of their qualiﬁ cations and attendance at meetings during the past ﬁ nancial year.

MEMBER

R A Longes (C)

M R Butler

V D Rubin

QUALIFICATIONS

BA, LLB, MBA

B Sc, MBA

CA(SA), HDip BDP, MBA

MEETINGS HELD
DURING 2009
FINANCIAL YEAR

MEETINGS ATTENDED
DURING 2009
FINANCIAL YEAR

The function of the Audit Risk & Compliance Committee is to advise on the establishment and maintenance of a framework
of internal control, effective management of ﬁ nancial and other risks, compliance with laws and regulations and
appropriate ethical standards for the management of Metcash. It also gives the Board additional assurance regarding the
quality and reliability of ﬁ nancial information prepared for use by the Board in determining policies or for inclusion in the
ﬁ nancial statements. In accordance with the Principles, the Committee consists only of Independent Directors and is chaired
by an Independent Director who is not the Chairman of the Board.

METCASH LIMITED ANNUAL REPORT 2009

corporate
governance statement

COMMITTEE CHARTER
The Committee’s Charter, which is summarised below, sets out the speciﬁ c responsibilities delegated to it by the Board
and details the manner in which the Committee will operate. The Charter can be found on the Company’s website
www.metcash.com under the heading ‘Corporate Governance’.

The principal terms of reference of the Audit Risk & Compliance Committee are the effective management of ﬁ nancial and
other risks through ensuring that systems and management processes are in place to identify and manage operational,
ﬁ nancial and compliance risks.

Speciﬁ c areas of review include:

(cid:129)

overseeing the establishment of a framework within which risks to the Company are identiﬁ ed and mitigated and risk
avoidance processes are established and the effectiveness of the risk management process monitored;

(cid:129)

ﬁ nancial risk and exposure;

(cid:129)

occupational health and safety;

(cid:129)

environmental issues;

(cid:129)

Hazard Analysis and Critical Control Points (HACCP) based food safety program; and

(cid:129)

integrity of information technology systems.

The Committee reviews the effectiveness of risk management policies and procedures by:

(cid:129)

undertaking annually a comprehensive strategic and budget review of the Group’s activities;

(cid:129)

reviewing monthly ﬁ nancial performance against budget and updated forecasts at least quarterly;

(cid:129)

reviewing the internal audit of the Group’s ﬁ nancial controls, taxation compliance and adherence to policies and regulations;

(cid:129)

reviewing annually the effectiveness and adequacy of the Group’s insurance program;

(cid:129)

the provision of reliable management and ﬁ nancial reporting – this is done by reviewing and assessing the:
–

quality and timing of management reporting to the Board to enable internal and external reporting of the
Company’s risks, operations and ﬁ nancial condition;
accounting policies and practices against generally accepted accounting principles and the requirements
of the Corporations Law, Australian Accounting Standards and Australian Securities Exchange requirements;
half-yearly and annual ﬁ nancial statements;

–

assessing compliance with laws and regulations by monitoring developments and changes in the various rules, laws
and regulations relating to the Company’s business operations and the responsibilities of Directors and reviewing the
extent to which the Board and the Company are meeting their obligations to ensure that all requirements are met;

the maintenance of an effective and efﬁ cient audit function – this is achieved by:
–
recommending to the Board the appointment of external and internal auditors;
–
reviewing the effectiveness of the external and internal audit functions;
–
ensuring audit scopes are adequate and cover areas of anticipated risk;
–
reviewing audit ﬁ ndings and management response;
–
reviewing the independence of the external auditor;
–
ensuring auditors have the necessary access to Company information and staff to fulﬁ l their obligations.

The Audit Risk & Compliance Committee acts to ensure that operational, ﬁ nancial and compliance risks are managed in
accordance with the Board’s risk tolerance. The Company has implemented a Risk Management Framework, which is
supported by specialised risk management teams (refer Principle 7 – Recognise and Manage Risk). The Committee has
obtained assurance regarding the effectiveness of the overall system of risk management through various means. These
means have included direct enquiry of management, internal and external audit reports and the monitoring of ﬁ nancial
and operational results. The Committee meets regularly, in camera, with the Lead External Audit Partner and the Chief
Internal Auditor.

A ‘Charter of Audit Independence’ is in place that details the circumstances in which the Company’s external auditor may
perform non-audit related services and the procedures to be followed to obtain approval for those services where they are
permitted. The Charter also contains the Company’s policies on the hiring of former partners and senior managers of the
external auditor and the rotation of lead and review external audit engagement partners. The Charter can be found on the
Company’s website www.metcash.com under the heading ‘Corporate Governance’.

In principle, the appointment of an external auditor would be based on a tender process conducted by the Audit Risk &
Compliance Committee. The Committee would select suitable candidates for the role, issue and evaluate tenders, interview
the candidates and then make a recommendation to the Board.

PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE

COMPLIANCE WITH ASX LISTING RULE DISCLOSURE REQUIREMENTS
The Metcash Market Disclosure Policy is designed to ensure that:

(cid:129)

there is full and timely disclosure of Metcash’s activities to shareholders and the market, in accordance with Metcash’s
legal and regulatory obligations; and

all stakeholders (including shareholders, the market and other interested parties) have an equal opportunity to receive
and obtain externally available information issued by Metcash.

The policy reﬂ ects Metcash’s obligation to comply with the disclosure requirements of the Listing Rules of the Australian
Securities Exchange (ASX), as well as relevant corporations and securities legislation.

The policy is reviewed regularly to ensure that the policy reﬂ ects any legislative or regulatory requirements or ‘best practice’
developments.

DISCLOSURE RESPONSIBILITIES AND PROCEDURES
Metcash has designated the Chairman, Chief Executive Ofﬁ cer and Company Secretary as ‘Disclosure Ofﬁ cers’. The
Chairman’s approval, or that of his delegate, is required for disclosures. The Company Secretary has responsibility for liaising
with the ASX in relation to all announcement and disclosure issues.

Disclosure Ofﬁ cers have responsibility for reviewing proposed disclosures and making decisions in relation to what
information can or should be disclosed to the market.

All Metcash staff are required to inform a Disclosure Ofﬁ cer of any potential ‘price sensitive’ information concerning Metcash
as soon as they become aware of it. Staff may speak to their Business Pillar Head or a Disclosure Ofﬁ cer if they are in doubt
as to whether information is potentially ‘price sensitive’.

The Market Disclosure Policy can be found on the Company’s website www.metcash.com under the heading
‘Corporate Governance’.

PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS

Metcash Limited believes that shareholder and market conﬁ dence in all its dealings is paramount and is committed to
ensuring it complies with continuous disclosure obligations so that its investors have timely and equal access to important
company information.

Information provided to the ASX is made available on the Company’s website so that all shareholders and other key
stakeholders have timely access to it.

In addition to meeting its continuous disclosure obligations, Metcash ensures shareholders and the broader investment
community have timely access to important company information through a series of regular disclosure events during the
ﬁ nancial year. The calendar for these events is posted on the company’s website.

The Shareholder Communication Policy can be found on the Company’s website www.metcash.com under the heading
‘Corporate Governance’.

The Company is encouraging electronic communication with shareholders to facilitate the speedy and inexpensive
dissemination of information. This is being done through a program to obtain shareholder email addresses to alert them to
new information on the Metcash website and to distribute information to them directly. The Company’s website contains
more than three years of ASX and media announcements and annual reports. This information is shown under the heading
‘Investors’. Electronic proxy voting has been introduced.

METCASH LIMITED ANNUAL REPORT 2009

corporate
governance statement

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of
accountability and discussion of the Company’s strategy and goals. The external auditor attends the Annual General Meeting
to answer shareholder questions about the conduct of the audit and the preparation and content of the Auditor’s Report.

PRINCIPLE 7 – RECOGNISE AND MANAGE RISK

POLICES FOR THE OVERSIGHT AND MANAGEMENT OF MATERIAL BUSINESS RISKS
The Metcash Board is responsible for designing and reviewing Metcash’s Risk Management Policy and for determining
the Company’s appetite for risk, taking into account the Company’s strategic objectives and other factors including
stakeholder expectations. The level of tolerance for risk varies according to the risk area.

The Metcash Group Risk Department, the Internal Audit Department and the Metcash Audit Risk & Compliance Committee,
a Committee of the Metcash Board, implement a continuous process of communication with Metcash’s internal stakeholders
at each stage of the risk management process.

They also conduct annual examinations of Metcash’s external and internal environments, so as to establish the basic
parameters within which risks must be managed.

Metcash’s policies on risk oversight and management of material business risks are summarised in a document entitled
‘Risk Management Policy – Summary’, which can be found on the Metcash website www.metcash.com under the heading
‘Corporate Governance’.

Metcash’s risk management philosophy and practices are documented more fully in the Metcash Risk Management
Framework and Guidelines (Risk Management Framework).

The company has adopted the Australian/New Zealand Standard for Risk Management – AS/NZ 4360:2004 as the basis for its
Risk Management Framework. Metcash has implemented its Risk Management Framework through, amongst other things,
the identiﬁ cation of material business risk categories and the development of risk proﬁ les for all the major segments and
functions of the business.

Material business risks that have been identiﬁ ed and included in the Risk Management Framework are grouped under the
following categories:

(cid:129)

Asset Management;

(cid:129)

Business Continuity;

(cid:129)

Health, Safety, Environment and Community (HSEC);

(cid:129)

Compliance and Legal (Non-HSEC);

(cid:129)

Employee;

(cid:129)

Financial Reporting;

(cid:129)

Criminal Activity;

(cid:129)

Information Technology;

(cid:129)

Reputational;

(cid:129)

Solvency;

(cid:129)

Operations/Warehouse;

(cid:129)

Merchandising, Customer and Supplier (i.e. Supply chain); and

(cid:129)

Strategic/Sustainability.

The risk management process includes the following elements:

(cid:129)

Risk assessment:
–
–
–

risk identiﬁ cation;
risk analysis;
risk treatment;

(cid:129)

Monitoring and review; and

(cid:129)

Recording the risk management process.

ROLES AND RESPONSIBILITIES
In addition to the speciﬁ c responsibilities and reporting roles of the Metcash Group Risk Department and Internal Audit
Department, the Metcash Executive Team is regularly required to report to the Metcash Board as to the emergence of any
signiﬁ cant risk issues and the management of previously reported material risk issues.

The Audit Risk & Compliance Committee is responsible for monitoring management’s risk processes other than corporate
strategy, the oversight of which is a Board responsibility. On behalf of the Metcash Board, the Audit Risk & Compliance
Committee monitors those risk events that could prevent the achievement of Metcash’s corporate strategies.

All Metcash employees are responsible for the management of risk within their areas. Management is responsible for
assessing and monitoring risk and designing cost-effective mitigation to facilitate the achievement of goals and objectives.
Non-management employees are always responsible for ensuring that risk controls within their scope of responsibility
operate effectively as well as advising management of increasing or new risk exposures and signiﬁ cant operational incidents
as they become aware of them.

This ‘front line’ of risk management is supported by specialised risk management teams covering speciﬁ c areas of risk within
Metcash and by independent reviews conducted by the Metcash Internal Audit Department to verify the adequacy and
effectiveness of risk management.

THE BOARD SHOULD REQUIRE MANAGEMENT TO DESIGN AND IMPLEMENT THE RISK MANAGEMENT AND INTERNAL
CONTROL SYSTEM TO MANAGE THE COMPANY’S MATERIAL BUSINESS RISKS AND REPORT TO IT ON WHETHER
THOSE RISKS ARE BEING MANAGED EFFECTIVELY.
Metcash implements a risk oversight and risk management process that is based on Risk Management Standard AUS/NZ
4360. This system is used to proﬁ le all potential risks by identifying, prioritising and managing such risks across the enterprise.

Management has reported to the Board as to the effectiveness of the Company’s management of its material business risks
using this internal system.

The Risk Management Policy and Risk Management Framework utilised at Metcash cover a wide range of activities and are
used to identify, analyse, evaluate, manage and monitor risks across all areas of the business. Risk proﬁ les are fully in place for
existing sites, and are implemented at newly acquired sites. These are prepared in consultation with senior management,
agreed with site business management and are periodically reviewed and updated by risk team members. Ongoing risk
management activities include:

(cid:129)

conﬁ rmation of key controls;

(cid:129)

reporting of incidents: recording and monitoring of key risk indicators (‘real time’ monitoring of residual risk levels);

(cid:129)

follow-up on risk treatment/action plans

(cid:129)

escalation of issues; and

(cid:129)

regular reporting processes to all levels of management.

The ongoing process of communication, consultation, monitoring and review enables management to demonstrate
continuous improvement while encouraging greater ownership by individuals across the business.

The risk management and internal control system provides regular ‘real time’ feedback to management on their
effectiveness in managing business risks. This is supported by the Risk Management platform database (software) which
holds the risk controls library, all risk categories and events, risk proﬁ les for each pillar/business, business/functional objectives,
critical success factors, processes, compliance data and incidents and corrective actions.

The Risk Management Policy and Risk Management Framework documents form an integral part of Company’s risk
management. The Board continues to review these and provide support in deﬁ ning clear accountabilities, responsibilities
and embedding Enterprise Risk Managmeent (ERM) in planning, strategy and company culture. The Board and the Audit
Risk & Compliance Committee remain responsible for the oversight of the risk management process.

Management has reported to the Board as to the effectiveness of the Company’s management of its material risks.

METCASH LIMITED ANNUAL REPORT 2009

corporate
governance statement

CEO AND FINANCE DIRECTOR DECLARATION
The Chief Executive Ofﬁ cer and the Finance Director have provided a declaration in writing to the Board in accordance
with section 295A of the Corporations Act that, among other things, the Company’s ﬁ nancial reports present a true and fair
view, in all material respects, of the Company’s ﬁ nancial condition and operational results and are in accordance with
relevant accounting standards (refer to the Directors’ Report).

The Board has received written assurance from the Chief Executive Ofﬁ cer and the Finance Director that the declaration
provided by them in accordance with section 295A of the Corporations Act (refer to the Directors’ Report) is founded on a
sound system of risk management and internal compliance and control and that the system is operating effectively in all
material respects in relation to ﬁ nancial reporting risks.

PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIVELY

THE BOARD SHOULD ESTABLISH A REMUNERATION COMMITTEE
The Board has established a Remuneration & Nomination Committee. For details of the Committee’s membership,
their attendance at Committee meetings and a summary of the Committee’s Charter, please refer to Principle 2 –
‘The Board should establish a Nomination Committee’.

REMUNERATION POLICY
The Company’s Remuneration Policy can be found on the Metcash Limited website www.metcash.com under the heading
of ‘Corporate Governance’. It is summarised in the ‘Remuneration Report’ contained within the Directors’ Report. Details of
the compensation of senior executives are also contained in the Directors’ Report.

The Company’s policy on prohibiting entering into transactions in associated products which limit the economic risk of
participating in unvested entitlements under any equity-based remuneration schemes is set out in the Metcash Code
for Directors and Executives in Respect of Share Transactions, which can be found on the Company’s website
www.metcash.com.

NON-EXECUTIVE DIRECTORS’ COMPENSATION AND RETIREMENT BENEFITS
Refer to the ‘Remuneration Report’ contained within the Directors’ Report.

TERMINATION ENTITLEMENTS OF CEO AND SENIOR EXECUTIVES
Refer to the ‘Remuneration Report’ contained within the Directors’ Report.

ﬁ nancial
report 09

Directors’ Report

Income Statement

Balance Sheet

Statement of Changes in Equity

Cash Flow Statement

Notes to the Financial Statements

1. Corporate Information

2. Summary of Signiﬁ cant Accounting

Policies

3. Segment Information

4. Revenue and Expenses

5. Income Tax

6. Dividends Paid and Proposed

7. Cash and Cash Equivalents

8. Trade and Other Receivables (current)

9. Inventories

10. Receivables (non-current)

11. Investments in Associates

12. Other Financial Assets (non-current)

13. Property, Plant and Equipment

14. Intangible Assets and Goodwill

15. Share-based Payments

16. Trade and Other Payables (current)

17. Interest-bearing Loans and Borrowings

18. Provisions

19. Contributed Equity and Reserves

20. Financial Risk Management Objectives

and Policies

21. Commitments

22. Related Party Disclosure

23. Directors’ and Executives’ Disclosures

24. Auditor’s Remuneration

25. Business Combinations

26. Earnings per Share

27. Contingent Liabilities

28. Subsequent Events

Directors’ Declaration

Auditor’s Independence Declaration

Independent Audit Report

ASX Additional Information

104

107

108

109

110

111

112

113

115

Corporate Information

Inside Back Cover

METCASH LIMITED ANNUAL REPORT 2009

directors’
report year ended 30 April 2009

Your Directors submit their report for the year ended 30 April 2009.

DIRECTORS

The names and details of the Company’s Directors in ofﬁ ce during the ﬁ nancial year and until the date of this report
are as follows:

Carlos S dos Santos (Chairman)

Peter L Barnes (Deputy Chairman)

Andrew Reitzer (CEO)

Michael R Butler

Neil D Hamilton

Michael R Jablonski

Edwin M Jankelowitz

Joao Louis S Jardim (Lou Jardin)

Richard A Longes

V Dudley Rubin

Directors were in ofﬁ ce for this entire period unless otherwise stated.

For qualiﬁ cations and experience of Directors please refer to ‘Board of Directors’ section of this annual report.

COMPANY SECRETARY

John A Randall

For qualiﬁ cations and experience of the Company Secretary please refer to ‘Board of Directors’ section of this annual report.

INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE

As at the date of this report, the interests of the Directors in the shares and options of Metcash Limited were:

Carlos S dos Santos

Peter L Barnes

Andrew Reitzer

Michael R Butler

Neil D Hamilton

Michael R Jablonski

Edwin M Jankelowitz

Joao Louis S Jardim

Richard A Longes

V Dudley Rubin

EARNINGS PER SHARE

Basic earnings per share

Diluted earnings per share

NUMBER OF
ORDINARY
SHARES

NUMBER OF
OPTIONS OVER
ORDINARY
SHARES

54,100

177,083

–

1,750,000

1,200,000

50,000

–

520,000

–

128,154

15,000

–

650,000

–

CENTS

26.47

26.45

DIVIDENDS

Final dividends for 2009 recommended

– on ordinary shares

Dividends paid in the year

Interim for the year

– on ordinary shares in December 2008

Final for 2008 recommended in the 2008 ﬁ nancial report

– on ordinary shares

Total dividends paid in the year

2009 Dividends declared per share

CORPORATE INFORMATION

CENTS

$’m

14.0

107.1

10.0

12.0

24.0

76.5

91.8

168.3

CORPORATE STRUCTURE
The principal activities during the year of entities within the consolidated entity were the wholesale distribution and
marketing of groceries, liquor and associated products.

EMPLOYEES
The consolidated entity employed 5,358 employees as at 30 April 2009 (2008: 5,698 employees).

REVIEW AND RESULTS OF OPERATIONS

GROUP OVERVIEW
A review of the operations during the period and the results of those operations, appears in the ‘Chairman’s and CEO’s
report’ on page 2.

Summarised operating results are as follows:

BUSINESS SEGMENTS

Food Distribution

Cash & Carry Distribution

Liquor Distribution

Consolidated entity adjustments/(unallocated amounts)

Consolidated entity sales and proﬁ t from ordinary activities before income tax expense

2009

REVENUES
$’m

PROFIT
BEFORE TAX
$’m

6,681.8

1,660.4

2,639.5

10,981.7

85.8

11,067.5

315.5

33.0

33.8

382.3

(91.5)

290.8

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

No signiﬁ cant changes in the state of affairs of the Company occurred during the ﬁ nancial period not otherwise disclosed
in the ‘Chairman’s and CEO’s report’.

METCASH LIMITED ANNUAL REPORT 2009

directors’

report year ended 30 April 2009

SIGNIFICANT EVENTS AFTER THE BALANCE DATE
On 22 May 2009 the Company entered into a new Financing Agreement with new and ongoing Financiers. The Agreement
in large part was an extension of the existing facility and provides the Group with security of funding for the three years to
May 2012. The new Agreement provides Metcash with an unsecured senior loan facility totalling $700 million and split into two
tranches. The ﬁ rst tranche is $500 million and will be fully drawn throughout the term of the Agreement. The second tranche
of $200 million is at call according to the Company’s borrowing requirements and similarly can be repaid when not required.

The new facility has three covenants that the Group must comply with, being a ﬁ xed charges cover ratio (Earnings Before Interest,
Tax, Depreciation, Amortisation and Rent (EBITDAR) divided by Total Net Interest plus Gross Rent Expense), senior leverage ratio
(Total Group Debt divided by Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)) and minimum shareholders
funds (a ﬁ xed ﬁ gure representing the Group share capital and reserves). These covenants and other key terms of the Agreement
remain largely unchanged from the previous Agreement. Interest payable on the facility is based on BBSY plus a margin and
rollover is monthly. The applicable margin is dependent upon an escalation matrix linked to the senior leverage ratio achieved.

Management and the Board of Metcash are pleased to have successfully secured funding for the Group in such difﬁ cult
credit market conditions. The facility provides the Company with an appropriate level of funding to support its growth and
working capital needs. Whilst the debt line is more expensive than that previously enjoyed by the Company, certainty of
funding took precedence. In the Company’s results announcement on 1 June 2009, Management advised that the beneﬁ t
of being able to access lower prevailing cash rates (as a result of terminating the interest rate collar) would be largely offset
by the increased margin applicable under the new Financing Agreement. Management concluded therefore that their
expectations for net interest expense for the ﬁ nancial year 2010 would be similar to 2009 at $61 million.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

Information with respect to likely developments is set out within the ‘Chairman’s and CEO’s report’ elsewhere in this annual report.

DIRECTORS’ MEETINGS

The number of meetings of Directors (including meetings of committees of Directors) held during the year and the number
of meetings attended by each of the Directors were as follows:

Number of meetings held:

Number of meetings attended:

Carlos S dos Santos

Peter L Barnes

Andrew Reitzer

Michael R Butler

Neil D Hamilton

Michael R Jablonski

Edwin M Jankelowitz

Joao Louis S Jardim

Richard A Longes

V Dudley Rubin

COMMITTEE MEETINGS

DIRECTORS’
MEETINGS

REMUNERATION
& NOMINATION

AUDIT RISK &
COMPLIANCE

–

All Directors were eligible to attend all meetings held.

COMMITTEE MEMBERSHIP
As at the date of this report, the Company had an Audit Risk & Compliance Committee and a Remuneration & Nomination
Committee.

Members acting on the committees of the Board during the year were:

AUDIT RISK & COMPLIANCE

REMUNERATION & NOMINATION

R A Longes (c)

M R Butler

V Dudley Rubin

P L Barnes (c)

C S dos Santos

N D Hamilton

For details of the committees, their charters and current membership, please refer to the section ‘Corporate Governance
Statement’.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
i.

The Constitution of the Company permits the grant of an indemnity (to the maximum extent permitted by law) in favour
of each Director, the Company Secretary, past Directors and Secretaries, and all past and present Executive Ofﬁ cers.
The Company has entered into Deeds of Indemnity and Access with F J Conroy, C P Curran, T S Haggai, R S Allan,
J J David, Sir Leo Heilscher, B A Hogan and M Wesslink together with all of the current Directors and certain other ofﬁ cers
of the Company. This indemnity is against any liability to third parties (other than related Metcash companies) by such
ofﬁ cers unless the liability arises out of conduct involving a lack of good faith. The indemnity also includes costs or
expenses incurred by an ofﬁ cer in unsuccessfully defending proceedings relating to that person’s position.

ii.

During the ﬁ nancial year, the Company has paid, or agreed to pay, a premium in respect of a contract of insurance
insuring ofﬁ cers (and any persons who are ofﬁ cers in the future) against certain liabilities incurred in that capacity.
Disclosure of the total amount of the premiums and the nature of the liabilities in respect of such insurance is prohibited
by the contract of insurance.

SHAREHOLDER RETURNS

The ongoing performance of the Group has ensured that returns to shareholders, through both dividends and capital
growth, has continued.

AIFRS

AGAAP

RESTATED

2009

2008

2007

2006

2005

28.7

26.5

24.0

14.3

90.7

16.1

4.12

5.8

25.2

25.9

21.0

23.5

81.2

16.3

4.22

5.0

21.8

21.1

17.0

47.8

80.7

14.2

5.24

3.2

24.9

17.0

11.5

21.1

67.7

19.0

4.60

2.5

31.8

29.7

9.5

(13.6)

32.0

28.8

3.20

3.0

Earnings per share before CULS, CUPS in 2006
and 2007 and non-recurring items (cents)

Basic earnings per share (cents)

Dividends declared per share (cents)

Increase/(decrease) in dividends declared

per share (%)

Dividend payout ratio (%)

Return on equity (%)

Share price (30 April) ($)

Dividend yield (%)

ROUNDING

The amounts contained in this report and in the ﬁ nancial report have been rounded to the nearest $100,000 (where
rounding is applicable) under the option available to the Company under Australian Securities and Investments Commission
(ASIC) Class Order 98/0100. The Company is an entity to which the Class Order applies.

METCASH LIMITED ANNUAL REPORT 2009

directors’

report year ended 30 April 2009

TAX CONSOLIDATION

Metcash Limited has formed a tax consolidation group including its 100% owned Australian subsidiaries. Members of
the group have entered into a tax sharing arrangement in order to allocate income tax expense to the wholly owned
subsidiaries on a modiﬁ ed stand-alone basis. In addition, the agreement provides for the allocation of income tax liabilities
between the entities should the head entity default on its tax payment obligations.

HEALTH, SAFETY, ENVIRONMENTAL AND COMMUNITY (HSEC)

Metcash is committed to being a responsible member of the communities in which we live and work. We endeavour
to achieve high standards of workplace health and safety, fair and equitable conditions of employment, environmental
protection and product safety by striving to always conduct our business in a safe, environmentally sustainable and socially
responsible manner.

The Metcash HSEC Governance Standards Framework provides guidance, policy and principles on what constitutes
acceptable levels of performance for HSEC and enables us to implement and maintain HSEC objectives and targets.
To achieve these targets, the necessary resources are provided at each function and level within the organisation.
By developing measurable objectives consistent with our HSEC values we aim to demonstrate best practice HSEC
leadership in all matters pertaining to Health, Safety, Environment and Community and promote individual responsibility
for HSEC by all employees.

OUR PEOPLE

EMPLOYEE ENGAGEMENT
The Metcash Pro-ﬁ t Program continues to be an integral part of the company’s focus on employee health and well-being
and also to support employee engagement and performance. The program includes the very popular and well attended
‘Camp Metcash’, which provides employees’ children the opportunity to participate in a range of activities over the school
holidays. This program is designed to support parents with managing the care of their children over the holiday periods.

Other Pro-ﬁ t initiatives carried out this year were the annual employee ﬂ u vaccinations and health checks. Employee
counselling services continue to be provided on an ‘as needed’ basis. Flexible work arrangements, including the ability to
purchase additional leave, compress the working week and utilise well-being days, remain features of the company’s efforts
to engage and align employees.

Since 2007, the Company has provided eight weeks’ paid maternity leave.

Metcash continues to offer a range of reward and recognition programs aligned to key business outcomes and employee
performance. These include service awards and CEO awards as well as performance-based incentive payments.

EMPLOYEE DEVELOPMENT
A recent re-organisation of the Learning & Development Department will provide further support to the Company’s talent
strategy and ensure we are building both our people and our organisational capability. In shifting to a more blended learning
and business focused approach the aims are to produce managers who are problem solvers, ﬂ exible and quick in adapting
to changing circumstances (both externally and internally) and whose behaviours reﬂ ect the company’s core values.

The new Metcash Learning & Development team continues to focus on building leadership capability across the
organisation. At the frontline leadership level the company offers the Diploma of Management as well as the introduction
of a new program, the LIFT Warehouse Leadership Program. The High-Performing Manager Program was also conducted with
a select group of managers.

To ensure a focus on the critical behaviours that will drive business performance, the company has launched a new
Leadership Competency Framework. This will be the foundation of all the company’s people processes including
recruitment, succession planning, leadership development and performance management.

The company also continues to support employees in completing accredited vocational and tertiary education through
the Metcash Employee Vocational Education Sponsorship Program (MEVES).

SAFETY

OCCUPATIONAL HEALTH AND SAFETY (OH&S)
In recent years, the Metcash Group has undertaken a major transformation program to set in place the appropriate
accountabilities, standards and tools, to embed a ‘no blame’ safety culture across our business. We have gone back
to basics to ensure our employees are the focus of our safety programs. We aim to ensure every task, every day, is done
safely, as opposed to being driven by ‘paper and reporting compliance’.

Some of the key focus areas include:

(cid:129)

introduction of safety criteria into contractor/subcontractor tenders;

(cid:129)

development of a national Metcash induction program, including online ergonomic assessments for new employees
in the ofﬁ ce and manual handling assessments for new warehouse operators;

(cid:129)

comprehensive OH&S and workers compensation due diligence assessments for business acquisitions;

(cid:129)

improved injury case management through proactively working with all stakeholders including the workforce, health
and legal providers and contractors to make this vision a reality;

involvement in key government risk projects, including manual handling, trafﬁ c management in warehousing and
‘young employee’ targeted programs to develop best practice industry initiatives.

The 2008–2009 OH&S/Injury Management Team strategic projects:

(cid:129)

Following two key signiﬁ cant incidents in 2007–2008, Metcash reviewed key operational risks and identiﬁ ed the following
projects to control risk factors:

–

I-CARE – national strategic injury management model;

MESSI – collision avoidance system;

LIFT – risk management tool for determining and managing manual handling risks for high-volume order picking
warehouse facilities;

Ofﬁ ce Safety – development of an online ergonomic education and assessment tool for new employees; and

Fit For Work – program encompassing pre-employment medicals, random drug and alcohol testing, cause testing and
self testing implemented at every level of the organisation.

The year ahead will see the company-wide adoption of an online safety management and reporting system that will help
identify major safety risk areas across all business activities. This data will generate a snapshot of leading and lagging safety
metrics that will allow us to monitor safety performance, proactively manage risks and share the lessons learned.

METCASH FIVE-YEAR OHS LAG INDICATORS

LTIFR

LTI

2004–05

2005–06

2006–07

2007–08

2008–09

365

33.6

238

25.7

317

27.3

275

30.7

273

Overall, 2009 was a pleasing year with reductions of key OH&S indicators, including lost time injuries, hours lost, claim numbers
and claim costs. Nil signiﬁ cant reportable occurrences took place during the year.

METCASH FIVE-YEAR LTIFR/LTI TREND

400

300

200

100

2004–05

2005–06

2006–07

2007–08

2008–09

METCASH LIMITED ANNUAL REPORT 2009

LTI

LTIFR

directors’

report year ended 30 April 2009

MISSION ZERO
Many of the workplace safety issues that stand between us and the reality of operating free from workplace incidents
are systemic and universal in nature and require holistic solutions to improve the systems, process and controls to adopt
world-class safety performance.

Metcash is addressing these issues through the Mission Zero ﬁ ve-year strategic plan, which is establishing more user-friendly
and easily understood standards and tools to enhance the safety culture of our business.

The underpinning principles of Mission Zero due to be implemented in 2009 are:

(cid:129)

it is unacceptable that our people and those working with us should be injured while undertaking our business activities;

(cid:129)

every employee and contractor has the right to come to work and go home unharmed by any work task or activity.

In order to achieve this vision, we need to operate on the basis that Metcash is intolerant of any injury or incident.
This will require:

(cid:129)

every individual at every level of the organisation taking a personal stand and commit to safety, with the mindset
that ‘the standard we walk past is the standard we set’;

(cid:129)

every employee being responsible for their own workplace safety behaviour.

This vision is achievable if our employees and stakeholders are totally committed to it and are prepared to challenge and
question the ‘way’ we have always done things within the business.

Our Mission Zero vision touches every aspect of the Metcash business, from the buildings we design and construct to the
tasks that we undertake day to day. We will be working more closely with our business partners, employees and contractors
to create safe places to work and visit.

OUR PLACES OF WORK

SUSTAINABILITY
A Sustainability Strategy and Policy has been developed and endorsed by the Board. It covers the four key performance
areas in each of which the Company is undertaking action – Our Business, Our Products, Our Suppliers and Our Customers.

OUR BUSINESS
(cid:129)

Compliance with all relevant legislation

(cid:129)

Carbon emission monitoring and management

(cid:129)

Climate change adaptation and risk management

(cid:129)

A resource efﬁ ciency retroﬁ t program including initiatives such as the conversion of 69% of company vehicles to LPG
fuel at April 2009

(cid:129)

Waste reduction programs

(cid:129)

Integrating sustainability into existing policies, plans and procedures, including the development of an Environmental
Management System.

OUR PRODUCTS
(cid:129)

Improving the resource efﬁ ciency and recyclability of packaging

(cid:129)

Reporting annually to the National Packaging Covenant.

OUR SUPPLIERS
(cid:129)

Working with manufacturers to improve their resource efﬁ ciency in manufacturing our products

(cid:129)

Developing a supplier engagement program.

OUR CUSTOMERS
(cid:129)

A comprehensive Sustainability@Retail support program

(cid:129)

Information sharing and promotion of sustainable in-store initiatives undertaken by our independent retailers.

A Metcash Environmental Sustainability Committee has been established to implement effective sustainability policies and
initiatives throughout the Company. The Committee is chaired by Andrew Reitzer, the CEO, and its members include key
executives who are responsible for implementing the objectives and tasks established by the committee.

In the interest of corporate social responsibility, Metcash works with, supports or partners industry and governmental groups
such as POPAI (Point of Purchase Advertising International), the Victorian Government’s ‘Grow Me the Money Program’,
New South Wales Government’s ‘Sustainability Advantage’, the Green Building Council of Australia and the Department of
Environmental Heritage and the Arts’ Plastic Bag Working Group.

BUSINESS CONTINUITY MANAGEMENT (BCM)
A robust business continuity program is a characteristic of good corporate governance. Metcash continues to develop and
review existing plans and procedures to improve our preparedness in the event of an incident, disaster or community issue
(e.g. pandemic).

OUR PROCESSES AND PRODUCTS

PRODUCT SAFETY/PUBLIC HEALTH
The Company continues to implement strategies to ensure its business units comply with food safety and food labelling
legislation while assisting with the training and implementation of retail food safety programs with its independent
retail customers.

The National Approved Supplier Program ensures Metcash contracted products are produced by suppliers with appropriate
Supplier Quality Assurance certiﬁ cation schemes using safe and ethical methods. The Company-owned food and consumer
products operate under product speciﬁ cation management and trade measurement monitoring systems including regular
physical, chemical, and microbiological batch testing to ensure compliance and consumer safety.

FOOD SAFETY STANDARDS
Hazard Analysis and Critical Control Points (HACCP) based food safety programs are in place at all Metcash warehouses
and are implemented into new businesses as required.

These warehouse programs are reviewed and certiﬁ ed to HACCP (Codex Alimentarius) by third parties. The internal and
external third party audits conducted during the past year conﬁ rmed that all Metcash sites are operating at legislated food
safety standards and have no outstanding major non-conformances.

CRITICAL INFRASTRUCTURE PLANNING
Metcash continues to assist the Food Industry Infrastructure Assurance Action Group to better prepare the community and
the industry’s critical infrastructure sites for possible pandemic, bioterrorism and regional disasters such as major ﬂ oods,
cyclones and bushﬁ re risks.

The pandemic contingency plans developed over the last three years by the Retail Action Working Group with the Food
and Grocery Industry were recently activated and are being monitored weekly to ensure adequate responses meet current
community and staff health needs.

REMUNERATION REPORT (AUDITED)

This report outlines the remuneration arrangements for Directors and executives of Metcash Limited (the Company).

REMUNERATION & NOMINATION COMMITTEE

ROLE
The Remuneration & Nomination Committee of the Board of Directors is responsible for determining and reviewing
compensation arrangements for the Directors, the Chief Executive Ofﬁ cer (CEO) and the senior executive team.

The principal responsibilities of the Committee (which are available on the Company’s website) are to:

(cid:129)

review and advise the Board annually on the remuneration and components of remuneration for the Chief Executive
Ofﬁ cer and executives reporting directly to the Chief Executive Ofﬁ cer;

METCASH LIMITED ANNUAL REPORT 2009

directors’

report year ended 30 April 2009

(cid:129)

review management’s recommendation and advise the Board on performance-linked compensation packages
for management staff, Directors’ and executives’ retirement, pension and superannuation schemes, and employee
participation schemes, including executive share and share option plans and employee share plans;

oversee the administration of the Metcash Employees Option Plan and exercise the Board’s discretionary power
when required;

advise the Board on directorship appointments, and implement processes to assess the Board and its committees,
review the Board’s required status, experience, mix of skills, and other qualities, including gender, and provide a Directors’
orientation and education program;

(cid:129)

regularly evaluate and advise the Board on the performance of the Chief Executive Ofﬁ cer;

(cid:129)

advise the Board on the successor to the Chief Executive Ofﬁ cer; and

(cid:129)

assess the effectiveness of the Board as a whole and its committees as set out in Section 7 of the Metcash Board Charter.

The Remuneration & Nomination Committee assesses the appropriateness of the nature and amount of remuneration of
Directors and senior executives on a periodic basis by reference to relevant employment market conditions with the overall
objective of ensuring maximum stakeholder beneﬁ t from the retention of a high quality Board and executive team.

COMPENSATION STRUCTURE
In accordance with best practice corporate governance, the structure of Non-executive Director and senior executive
remuneration is separate and distinct.

NON-EXECUTIVE DIRECTOR COMPENSATION
Aggregate Non-executive Directors’ remuneration is determined from time to time at a general meeting. The current limit,
$1,000,000, was agreed by members at the 1 September 2005 Annual General Meeting.

Non-executive Directors are paid an annual fee, which is periodically reviewed. The Remuneration & Nomination Committee
has responsibility for reviewing and recommending the level of remuneration for Non-executive Directors. External
professional advice is sought before any changes are made to the amount paid to Directors within the overall maximum
amount approved by shareholders. Additional amounts are paid to the Chairman and Deputy Chairman to recognise the
responsibilities involved with those positions. Directors performing committee duties are paid additional fees. The current fees
were based on independent advice and are:

BASE FEE

CHAIR FEE

COMMITTEE FEE

SUPERANNUATION

TOTAL

Chairman

$105,000

$157,500

$10,500

$13,745

$286,745

Deputy Chairman/Chairman Remuneration

& Nomination Committee

$105,000

$73,500

Chairman, Audit Risk & Compliance
Committee

Directors (3)

$105,000

$315,000

$26,250

–

$630,000

$257,250

–

$31,500

$42,000

$13,745

$192,245

$11,813

$143,063

$31,185

$377,685

$70,488

$999,738

Non-executive Directors do not receive bonuses and are not entitled to participate in the Company’s share option scheme.

A retirement beneﬁ t was paid to Non-executive Directors for past service. The beneﬁ ts were in accordance with Section
8.3(g) and (h) of the Company’s Constitution and Section 200 of the Corporations Law.

The retirement beneﬁ t scheme was discontinued as at the date of the 2005 Annual General Meeting and accrued beneﬁ ts
(as shown below) were frozen at that time. Directors’ fees were increased based on independent advice to reﬂ ect the
cessation of this beneﬁ t.

ACCRUED BENEFITS

R A Longes

P L Barnes

211,619

423,238

SENIOR EXECUTIVE AND EXECUTIVE DIRECTOR COMPENSATION
It is the policy of Metcash to remunerate employees in appropriate ways that recognise the market’s value of individual skills,
the need to attract and retain essential key skills for the growth and development of the Company and to provide sufﬁ cient
incentive to ensure alignment with shareholder expectations.

The Remuneration & Nomination Committee recognises that the Group operates in a very competitive environment and
that its performance depends on the quality of its people. To continue to prosper, the Group must be able to attract,
motivate and retain highly skilled executives.

The guiding principles of the Group’s remuneration policy are to:

(cid:129)

provide competitive rewards to attract and retain executive talent;

(cid:129)

apply Key Performance Indicators (KPIs) to deliver results across the Group and to a signiﬁ cant portion of the total reward;

(cid:129)

link rewards to executives to the creation of value to shareholders;

(cid:129)

assess and reward executives using ﬁ nancial and non-ﬁ nancial measures of performance;

(cid:129)

ensure remuneration arrangements between executives are equitable and facilitate the deployment of human
resources around the Group; and

limit severance payments on termination to pre-established contractual arrangements that do not commit the Group to
making unjustiﬁ ed payments in the event of non-performance.

ADVISERS
The Chief Executive Ofﬁ cer and the Chief Human Resources Ofﬁ cer have assisted the Committee in its deliberations during
the year. In addition, independent advisers were retained to provide assistance and advice on market-related remuneration
and short, medium and long-term incentives.

SERVICE CONTRACTS
Service contracts exist for senior executives including the Chief Executive Ofﬁ cer. They are unlimited in term but capable of
termination on 15 months’ notice in the case of the Chief Executive Ofﬁ cer and nine months’ notice in the case of
executives who are direct reports to the Chief Executive Ofﬁ cer. The Group retains the right to terminate a contract
immediately, by making payments equal to the notice period, in lieu of notice. In addition, should termination be as a result
of redundancy, a further payment of nine months of ﬁ xed remuneration (base salary plus superannuation) is payable to the
Chief Executive Ofﬁ cer and six months’ further payment to executives who are direct reports to the Chief Executive Ofﬁ cer.

The Chief Executive Ofﬁ cer and executives who are direct reports to the Chief Executive Ofﬁ cer may terminate their
employment by giving three months’ notice.

The service contracts typically outline the components of remuneration paid to executives, but do not prescribe how
remuneration levels are viewed each year to take account of cost-of-living changes, any change in the scope of the role
performed by the executive and any changes required to meet the principles of the remuneration policy.

REMUNERATION
Remuneration is divided into two components. The ﬁ rst is the ﬁ xed or base component, which is made up of base salary
and superannuation beneﬁ ts. The second is the ‘at risk’ component, which is subject to KPIs and performance hurdles and is
generally made up of short- and long-term incentives that take the form of cash payments and/or participation in the
equity plans. The amount of ‘at risk’ remuneration, if any, that is earned by an executive is wholly dependent on that
executive’s and the Group’s performance against those pre-determined KPIs and performance hurdles.

METCASH LIMITED ANNUAL REPORT 2009

directors’

report year ended 30 April 2009

FIXED REMUNERATION

BASE SALARY AND BENEFITS
Base salaries are determined by reference to the scope and nature of the individual’s role and their performance and
experience. Market data is used to benchmark salary levels. Particular consideration is given to competitive remuneration
levels and the need to retain talent.

SUPERANNUATION BENEFITS
Superannuation beneﬁ ts are delivered in accordance with the Australian Government’s Superannuation Guarantee Levy,
which currently sits at 9% of ﬁ xed remuneration to a maximum of $152,720 per annum ($166,465 including superannuation)
and for amounts above that at a ﬂ at $13,745 per annum.

AT RISK REMUNERATION
At risk remuneration is delivered as short- and long-term incentives. As applied to the Company’s senior management,
if the maximum bonuses are earned, 45.1% of short-term income is at risk.

SHORT-TERM INCENTIVES – BONUS SCHEMES
Each Business Pillar and the Corporate Team have separate bonus schemes, designed to align each executive’s incentives
to the ﬁ nancial objectives of the pillar concerned which aggregate to overall group objectives. Two KPIs are utilised – sales
and proﬁ t – to form a matrix to measure performance usually with the previous year’s sales and proﬁ t results as the origin,
or zero point. The targets vary from business to business depending on the circumstances and objectives of each pillar.
However, they are all constructed so as to provide a stretch to exceed sales and proﬁ t budgets. Bonuses are normally
paid at six-monthly intervals with the ﬁ rst payment based on the ﬁ rst half results and the second payment based on
the achievement for the full year less the ﬁ rst half payment.

For the 2009 year, the payment for achieving the minimum target was set at 33.3% of the maximum; a payment of 86.7%
of the maximum payment for the achievement of budget and 100% was paid for meeting the stretch objectives.

The stretch target is normally set so as to meet and exceed market guidance on anticipated earnings.

All short-term incentive schemes operate on the condition that they are self-liquidating. That is, that the cost of the bonus
has been deducted from proﬁ t earned for the year prior to determining the level of performance achieved.

1. BONUS ELIGIBILITY CRITERIA
The bonus scheme is designed to provide an incentive to those whose decisions and actions make a signiﬁ cant contribution
to the achievement of the Company’s ﬁ nancial objectives.

2. PARTICIPANTS ELIGIBLE FOR BONUS AT 75% OF FIXED REMUNERATION (EXECUTIVE MANAGEMENT BONUS SCHEME)

(NUMBER OF PARTICIPANTS: 56)

These positions have a high level/critical strategic accountability that directly impacts on company performance.
To be considered eligible, the position:

(cid:129)

operates as a member of the Metcash Executive Management Team or Pillar Executive Management Team;

(cid:129)

has objectives that are deﬁ ned in terms of group/pillar objectives;

(cid:129)

has signiﬁ cant input into the group/pillar strategic plan and direction;

(cid:129)

has direct impact on proﬁ tability.

3. PARTICIPANTS ELIGIBLE FOR BONUS AT 50% FIXED REMUNERATION (MANAGEMENT BONUS SCHEME)

(NUMBER OF PARTICIPANTS: 151)

These positions either provide specialist knowledge relied upon by the Company or are a national or state member of
a Pillar Executive Management Team directly responsible for the achievement of sales and proﬁ t targets and contribute
strategically to group and or business pillar objectives.

To be eligible, the position:

(cid:129)

has extensive specialist technical or professional knowledge in an area of expertise;

(cid:129)

has high level budgetary and/or strategic responsibility;

(cid:129)

is responsible for several related activities, i.e. a whole function.

4. PARTICIPANTS ELIGIBLE FOR BONUS AT 25% OF FIXED REMUNERATION (METCASH BONUS SCHEME)

(NUMBER OF PARTICIPANTS: 318)

These positions are generally compliance and/or process driven. To be considered eligible, the position:

(cid:129)

has a positive contribution to proﬁ tability;

(cid:129)

is a specialist in a ﬁ eld;

(cid:129)

has a direct impact on sales and proﬁ t; or

(cid:129)

may have an element of retention or attraction.

5. OTHER INCENTIVE SCHEMES
Other incentive schemes are also in operation and designed speciﬁ cally for warehouse supervisors, re-buyers, stock controllers,
merchandisers and other specialist key roles and are based on achievement of internal KPIs e.g. cost per case etc.

LONG-TERM RETENTION PLAN (THE PLAN)
The objective of the Plan is to ensure the retention by the Company of key senior executives, while providing further
incentives to increase total shareholders’ return.

In order to provide a more complete description of the Plan, details of the starting point from which the incentive is earned
are provided below.

A long-term retention payment of $5 million to the Chief Executive Ofﬁ cer and $2 million to each of the Finance Director,
Group Merchandising Director, CEO of IGA Distribution and the Chief Information Ofﬁ cer (entered into in August 2006)
subject to achievement of speciﬁ c hurdles over a ﬁ ve-year period (a compounding 12.5% increase in earnings per share
based on 2005 earnings per share adjusted for material changes to the number of shares issued) and only payable on
successful achievement of the hurdles in 2010 and if the executive is still employed by the Company at the time.

If the compound annual growth from the base year be equal to or greater than the target, then the maximum amount
($5 million or $2 million) will be payable.

Should the compound annual growth rate be less than 40% of the target at the end of the ﬁ ve-year period, no payment
will be made.

Should the compound annual growth rate achieved by the Company be greater than or equal to 40% of the target,
then the amount paid will be increased to the maximum amount on a pro-rata basis.

A long-term retention payment of $1 million to each of the Chief Executive Ofﬁ cer Campbell’s Wholesale, Chief Executive
Ofﬁ cer, Logistics and Corporate Development, Chief Executive Ofﬁ cer ALM and the Chief Human Resources Ofﬁ cer (entered
into in April 2007) subject to achievement of speciﬁ c hurdles over a ﬁ ve-year period (a compounding 10% increase in
earnings per share based on 2007 earnings per share adjusted for material changes to the number of shares issued) and only
payable on successful achievement of the hurdles in 2012 and if the executive is still employed by the Company at that time.

If the compound annual growth from the base year be equal to or greater than the target, then the maximum amount
($1 million) will be payable.

Should the compound annual growth rate be less than 40% of the target at the end of the ﬁ ve-year period, no payment
will be made.

Should the compound annual growth rate achieved by the Company be greater than or equal to 40% of the target,
then the amount paid will be increased to the maximum amount on a pro-rata basis.

METCASH LIMITED ANNUAL REPORT 2009

directors’

report year ended 30 April 2009

A long-term retention payment of $1 million to each of the Chief Executive Ofﬁ cer, IGA Fresh and the General Manager
Finance (entered into in May 2009) subject to achievement of speciﬁ c hurdles over a ﬁ ve-year period (a compounding 8%
increase in earnings per share based on 2009 earnings per share adjusted for material changes to the number of shares
issued) and only payable on successful achievement of the hurdles in 2014 and if the executive is still employed by the
Company at that time and a member of the Metcash Executive Team.

If the compound annual growth from the base year be equal to or greater than the target, then the maximum amount
($1 million) will be paid.

Should the compound annual growth rate be less than 40% of the target at the end of the ﬁ ve-year period, no payment
will be made.

Should the compound annual growth rate achieved by the Company be greater than or equal to 40% of the target,
then the amount paid will be increased to the maximum amount of a pro-rata basis.

These two positions were not previously included in Plan, but the executives concerned were issued with share options
in 2008 (refer below). They have now been included in the Plan because of the need to ensure their equitable treatment
in relation to other members of the Executive Team and to ensure effective retention arrangements are in place.

In recognition that these two executives have the opportunity to earn beneﬁ ts from the options issued to them in 2008, but
which beneﬁ ts are not available to the other members of the Executive Team, in the event they have exercised any of their
options during the period up to 30 April 2014, the amount which would otherwise have been payable to them under the
retention plan will be reduced by an amount equal to the pre-tax proﬁ ts in respect of exercising the options. In this case,
pre-tax proﬁ t is calculated using the number of options exercised and the difference between the market price of the
options on the day of exercise and the price at which the options were issued. It should be noted that options not exercised
by 7 February 2014 will be cancelled. The maximum amount payable to these two executives under the retention plan will
be $1 million less any applicable pre-tax proﬁ t earned from exercising the 2008 options.

Earnings per share growth has been selected as the performance measure for long-term incentives as it directly relates
to the performance of the Company and is not distorted by external inﬂ uences.

OPTIONS
The performance hurdle for options issued to Executive Directors in 2005, as agreed by members at the Annual General
Meeting held on 1 September 2005, was that, in each of the years in which options became available for exercise, earnings
per share for the ﬁ nancial year preceding the tranche exercise date must be at least equal to a 12.5% annual increase of
earnings per share compounded from the 2005 earnings per share, adjusted for any dilution that might occur as a
consequence of any alteration to the number of ordinary shares issued.

Before options are exercised by Executive Directors, agreement is obtained from the Remuneration & Nomination Committee,
which veriﬁ es that the hurdle has been achieved with conﬁ rmation obtained from the Company’s external auditor.

Options were issued in February 2008 to the CEO, IGA Fresh and the General Manager Finance but were not offered to
Executive Directors and other members of the Executive Team included in the Plan. A performance hurdle applies to these
options, the hurdle being a compounding 10% increase in earnings per share based on earnings per share for the 2007
ﬁ nancial year is to be achieved in the ﬁ nancial year prior to the ﬁ nancial year in which a tranche of options becomes able
to be exercised.

Before options are exercised by members of the Executive Team, agreement is obtained from the Remuneration & Nomination
Committee which veriﬁ es that the hurdle has been achieved with conﬁ rmation from the Company’s external auditor.

Options are issued to all of the Company’s staff and performance hurdles have not been applied to options issued
to other employees.

SALARY REVIEWS AND BONUSES FY2009–2010
As a precaution, management have put in place a salary increase deferral for all employees earning more than $50,000 per
annum. If the Company’s proﬁ t before tax targets for the 2010 year are met, then the salary increases that otherwise would
have been paid at the beginning of the year will be paid. Bonuses for the year will only be paid if all salary increases have
been paid and bonus targets met.

The Directors have also resolved that Non-executive Directors fees and allowances will remain at their present level until
30 June 2010.

AT RISK REMUNERATION AND COMPANY PERFORMANCE
The ‘at risk’ remuneration, with the short-term focus on sales and proﬁ t and the long-term segment inﬂ uenced by earnings
per share and share price, has contributed to the growth in the shareholder returns as identiﬁ ed in the Shareholder Returns
section of the Directors’ Report.

DETAILS OF KEY MANAGEMENT PERSONNEL

DIRECTORS

EXECUTIVES

Carlos S dos Santos

Non-executive Chairman

Ken Bean

CEO Group Logistics and Corporate

Peter L Barnes

Andrew Reitzer

Non-executive Deputy Chairman

Chief Executive Ofﬁ cer

Michael R Butler

Non-executive Director

Neil D Hamilton

Non-executive Director

Development

Fergus Collins

CEO Australian Liquor Marketers

Peter Dubbelman

CEO Campbells Wholesale

Adrian Gratwicke

General Manager Finance

Michael R Jablonski

Group Merchandise Director

Bernard Hale

Chief Information Ofﬁ cer

Edwin M Jankelowitz

Finance Director

Lou Jardin

CEO IGA Distribution

Richard A Longes

Non-executive Director

V Dudley Rubin

Non-executive Director

David Johnston

Chief Human Resources Ofﬁ cer

Harry Rumpler

CEO IGA Fresh

METCASH LIMITED ANNUAL REPORT 2009

directors’

report year ended 30 April 2009

COMPENSATION OF KEY MANAGEMENT PERSONNEL

COMPENSATION FOR KEY MANAGEMENT PERSONNEL AND THE FIVE HIGHEST PAID EXECUTIVES OF THE COMPANY
AND THE GROUP FOR THE YEAR ENDED 30 APRIL 2009

SHORT-TERM

POST-
EMPLOYMENT

LONG-TERM

TERMINATION
BENEFITS

SHARE-BASED
PAYMENTS

TOTAL

RELATED (%)
TOTAL
PERFORMANCE

SALARY
AND FEES
$

BONUS
$

OTHER
BENEFITS
$

SUPER-
ANNUATION
$

BONUS
AND LEAVE

TERMINATION
BENEFITS
$

EXPENSE
$

DIRECTORS
C S dos Santos
P Barnes
A Reitzer
M Butler
N Hamilton
M Jablonski
E Jankelowitz
L Jardin
R Longes
D Rubin

EXECUTIVES
K Bean
F Collins
P Dubbelman
A Gratwicke
B Hale
D Johnston
H Rumpler

257,250
176,375

–
–
1,614,459 1,215,021
–
–
487,350
492,081
407,350
–
–

114,125
115,612
651,980
681,666
645,921
129,687
114,125

470,946
501,524
461,922
403,029
472,058
343,805
333,024

403,922
321,000
378,610
302,400
403,186
317,588
246,400

7,487,508 4,974,908

–
–
3,578
–
–
23,000
–
23,000
–
–

–
14,000
23,000
–
–
–
–

86,578

20,421
15,480
95,833
10,271
10,856
13,642
13,642
99,701
11,672
10,271

99,742
13,642
49,978
26,138
97,642
104,945
13,642

–
–
1,050,315
–
–
419,122
419,350
421,176
–
–

214,690
212,801
214,907
10,030
413,122
210,856
11,443

–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–

–
–
242,289
–
–
131,240
131,240
131,240
–
–

49,097
6,137
49,097
60,286
180,983
49,097
60,286

277,671
191,855
4,221,495
124,396
126,468
1,726,334
1,737,979
1,728,388
141,359
124,396

1,238,397
1,069,104
1,177,514
801,883
1,566,991
1,026,291
664,795

707,518

3,597,812

– 1,090,992 17,945,316

COMPENSATION FOR KEY MANAGEMENT PERSONNEL AND THE FIVE HIGHEST PAID EXECUTIVES OF THE COMPANY
AND THE GROUP FOR THE YEAR ENDED 30 APRIL 2008

DIRECTORS
C S dos Santos
P Barnes
A Reitzer
M Butler
N Hamilton
M Jablonski
E Jankelowitz
L Jardin
R Longes
D Rubin
A E Harris, AC+

EXECUTIVES
K Bean
F Collins
P Dubbelman
A Gratwicke
B Hale
D Johnston
H Rumpler

211,690
145,000

–
–
1,471,924 1,935,923
–
–
792,050
799,740
711,202
–
–
–

125,513
14,872
607,517
636,765
601,458
125,000
110,000
145,833

430,845
453,778
427,953
314,356
436,165
332,515
279,998

654,128
350,000
552,138
463,250
657,639
516,151
327,997

6,871,182 7,760,218

+ Retired 30 August 2007.
48

–
–
3,269
–
–
23,000
–
23,000
–
–
–

–
14,000
23,000
–
–
–
–

86,269

13,055
11,784
106,990
12,121
888
13,055
13,055
186,329
11,250
9,900
–

101,778
13,055
49,022
24,291
97,056
86,878
13,055

–
–
1,048,728
–
–
417,229
417,396
419,112
–
–
–

215,535
219,205
213,207
23,594
450,416
209,702
14,939

–
–
–
–
–
–
–
–
–
–
301,882

–
–
–
–
–
–
–

–
–
371,186
–
–
201,059
201,059
201,059
–
–
–

75,216
28,207
75,216
9,402
440,371
75,216
9,402

224,745
156,784
4,938,020
137,634
15,760
2,053,910
2,068,015
2,142,160
136,250
119,900
447,715

1,477,502
1,078,245
1,340,536
834,893
2,081,647
1,220,462
645,391

763,562

3,649,063

301,882 1,687,393 21,119,569

–
–
58.21%
–
–
59.00%
58.88%
54.30%
–
–

52.73%
49.31%
53.31%
46.48%
62.81%
55.22%
47.85%

52.75%

–
–
66.97%
–
–
67.83%
67.74%
61.26%
–
–
–

62.90%
53.62%
61.72%
56.61%
71.96%
64.84%
52.28%

60.83%

OPTIONS EXERCISED AS PART OF REMUNERATION FOR THE YEAR ENDED 2008 AND 2009

VALUE OF OPTIONS EXERCISED DURING THE YEAR

A Reitzer
M Jablonski
E Jankelowitz
L Jardin
K Bean
F Collins
P Dubbelman
A Gratwicke
B Hale
D Johnston
J Randall
H Rumpler

There were no options issued to Executive Directors during the current or prior ﬁ nancial years.

DETAILS OF BONUS PROVIDED FOR IN YEAR ENDED 30 APRIL 2009

2009
$

2008
$

–
–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
4,851
–
–
1,162,800
247,360
37,224
–

DIRECTORS

C S dos Santos
P Barnes
A Reitzer
M Butler
N Hamilton
M Jablonski
E Jankelowitz
L Jardin
R Longes
D Rubin

EXECUTIVES

K Bean
F Collins
P Dubbelman
A Gratwicke
B Hale
D Johnston
H Rumpler

POTENTIAL
BONUS
$

BONUS
PAYABLE
$

BONUS
FORFEITED
$

–
–
1,301,809
–
–
522,161
527,230
522,160
–
–

432,773
401,250
405,653
324,000
431,985
340,272
264,000

–
–
1,215,021
–
–
487,350
492,081
407,350
–
–

403,922
321,000
378,610
302,400
403,186
317,588
246,400

–
–
86,788
–
–
34,811
35,149
114,810
–
–

28,851
80,250
27,043
21,600
28,799
22,684
17,600

All bonuses for the year ended 30 April 2009 were paid either in December 2008, April 2009 or June 2009.

METCASH LIMITED ANNUAL REPORT 2009

directors’

report year ended 30 April 2009

DETAILS OF BONUS PROVIDED FOR IN YEAR ENDED 30 APRIL 2008

DIRECTORS

C S dos Santos
P Barnes
A Reitzer
M Butler
N Hamilton
M Jablonski
E Jankelowitz
L Jardin
R Longes
D Rubin
A E Harris, AC (Retired 30 August 2007)

EXECUTIVES

K Bean
F Collins
P Dubbelman
A Gratwicke (appointed 11 February 2008)
B Hale
D Johnston
H Rumpler (appointed 1 November 2007)

POTENTIAL
BONUS
$

BONUS
PAYABLE
$

BONUS
FORFEITED
$

–
–
1,935,923
–
–
792,050
799,740
792,050
–
–
–

654,128
375,000
615,324
463,250
657,639
516,151
369,597

–
–
1,935,923
–
–
792,050
799,740
711,202
–
–
–

654,128
350,000
552,138
463,250
657,639
516,151
327,997

–
–
–
–
–
–
–
80,848
–
–
–

–
25,000
63,186
–
–
–
41,600

All bonuses for the year ended 30 April 2008 were paid either in December 2007, April 2008 or June 2008.

SHARE OPTIONS

UNISSUED SHARES
As at the date of this report, there were 32,033,621 unissued ordinary shares under option (32,202,323 at the reporting date).
Refer to Note 15 of the ﬁ nancial statements for further details of the options outstanding.

SHARES ISSUED AS A RESULT OF OPTIONS
During the ﬁ nancial year, employees and executives have exercised options to acquire 95,770 fully paid ordinary shares in
Metcash Limited at a weighted average exercise price of $3.43. Since the end of the ﬁ nancial year, a further 23,340 options
have been exercised, at a weighted average exercise price of $3.92.

CEO AND FINANCE DIRECTOR DECLARATION

The Chief Executive Ofﬁ cer and Finance Director have provided a declaration that states:

With regard to the integrity of the ﬁ nancial report of Metcash Limited for the period to 30 April 2009:

ii.

The ﬁ nancial statements and associated notes comply in all material respects with the accounting standards
as required by Section 296 of the Corporations Act 2001;

The ﬁ nancial statements and associated notes give a true and fair view, in all material respects, of the ﬁ nancial position
as at 30 April 2009 and performance of the Company for the period then ended as required by Section 297 of the
Corporations Act 2001;

iii.

In our opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.

With regard to the ﬁ nancial records and systems of risk management and internal compliance and control of Metcash
Limited for the period ended 30 April 2009:

ii.

The ﬁ nancial records of the Company have been properly maintained in accordance with Section 286 of the
Corporations Act 2001;

The statements made in (a) above regarding the integrity of the ﬁ nancial statements are founded on a sound system
of risk management and internal compliance and control which, in all material respects, implements the policies
adopted by the Board of Directors;

iii.

The risk management and internal compliance and control systems of the Company relating to ﬁ nancial reporting,
compliance and operations objectives are operating efﬁ ciently and effectively, in all material respects.

iv.

Subsequent to 30 April 2009, no changes or other matters have arisen that would have a material effect on the
operation of risk management and internal control and control systems of the Company.

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration for the year ended 30 April 2009 has been received and is included on page 112.

NON-AUDIT SERVICES

The following non-audit services were provided by the entity’s auditor, Ernst & Young. The Directors are satisﬁ ed that the
provision of non-audit services is compatible with the general standard of independence for auditors imposed by the
Corporations Act. The nature and scope of each type of non-audit service provided means that auditor independence
was not compromised.

Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:

Tax compliance

Assurance-related

$683,041

$17,800

Signed in accordance with a resolution of the Directors.

Andrew Reitzer
Director

Sydney, 17 July 2009

METCASH LIMITED ANNUAL REPORT 2009

income
statement for the year ended 30 April 2009

Revenue

Cost of sales

Gross proﬁ t

Distribution costs

Administrative costs

Share of proﬁ t of associates

Termination of derivative ﬁ nancial instrument

Finance costs

Other ﬁ nance costs

Proﬁ t before income tax

Income tax expense

Net proﬁ t for period

Proﬁ t attributable to minority interest

Proﬁ t attributable to the members

of the parent company

Earnings per share (cents per share)

– basic earnings per share

– diluted earnings per share

Franked dividends per share

METCASH GROUP

METCASH LIMITED

NOTES

2009
$’m

2008
$’m

4(a)

11,067.5

(9,950.9)

1,116.6

(369.5)

(363.5)

1.9

(24.6)

(70.2)

290.7

(87.5)

203.2

(0.7)

4(f)

4(g)

10,199.1

(9,137.0)

1,062.1

(335.4)

(383.7)

3.2

–

(61.9)

284.3

(86.8)

197.5

–

2009
$’m

390.8

–

390.8

–

(4.5)

–

(202.7)

183.6

–

183.6

–

2008
$’m

383.2

–

383.2

–

(4.8)

–

(217.9)

160.5

–

160.5

–

202.5

197.5

183.6

160.5

26.47

26.45

24.00

25.86

25.74

21.00

–

balance
sheet as at 30 April 2009

METCASH GROUP

METCASH LIMITED

NOTES

2009
$’m

2008
$’m

2009
$’m

2008
$’m

ASSETS

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Derivative ﬁ nancial instruments

Income tax receivable

Other

Total current assets

Non-current assets

Receivables

Investments in associates accounted for using

the equity method

Other ﬁ nancial assets

Property, plant and equipment

Net Deferred tax assets

Intangible assets and goodwill

Total non-current assets

TOTAL ASSETS

LIABILITIES

Current liabilities

Trade and other payables

Interest-bearing loans and borrowings

Income tax payable

Provisions

Total current liabilities

Non-current liabilities

Interest bearing loans and borrowings

Provisions

Total non-current liabilities

TOTAL LIABILITIES

NET ASSETS

EQUITY

Contributed equity

Other equity

Reserves

Retained earnings

Parent Interest

Minority Interest

TOTAL EQUITY

–

850.4

–

10.1

–

860.5

–

148.6

967.7

680.5

–

5.6

180.5

975.1

576.7

3.8

10.2

4.6

–

1,125.3

–

1,802.4

1,750.9

1,125.3

40.1

35.8

84.1

0.2

163.4

16.2

1,180.1

1,484.1

3,286.5

80.5

0.2

140.0

20.1

1,116.1

1,392.7

3,143.6

–

4,616.1

–

4,616.1

5,741.4

4,616.1

5,476.6

1,188.0

1,153.9

6.9

42.2

72.7

5.7

–

73.1

1,309.8

1,232.7

–

42.0

–

42.0

–

638.2

59.1

697.3

2,007.1

1,279.4

1,889.7

(765.9)

23.9

129.7

610.6

60.6

671.2

1,903.9

1,239.7

1,889.4

(765.9)

20.7

95.5

3,019.7

2,817.0

–

3,019.7

3,061.7

2,679.7

–

2,817.0

2,659.6

2,555.7

2,555.4

–

16.9

107.1

–

12.4

91.8

1,277.4

1,239.7

2,679.7

2,659.6

2.0

–

1,279.4

1,239.7

2,679.7

2,659.6

METCASH LIMITED ANNUAL REPORT 2009

statement of changes
in equity for the year ended 30 April 2009

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statement of changes
in equity for the year ended 30 April 2009

METCASH LIMITED

CONTRIBUTED
EQUITY
$’m

SHARE-BASED
PAYMENTS
$’m

RETAINED
EARNINGS
$’m

TOTAL
EQUITY
$’m

AT 1 MAY 2008

Total equity at the beginning of the ﬁ nancial period

2,555.4

12.4

Net income/(expenses) recognised directly in equity

Proﬁ t for the period

Total recognised income/expense for the period

Exercise of options

Issue of share capital

Cost of share-based payment

Dividends

AT 30 APRIL 2009

–

0.3

–

4.5

–

91.8

–

183.6

–

2,659.6

–

183.6

0.3

–

4.5

(168.3)

Total equity at the end of the ﬁ nancial period

2,555.7

16.9

107.1

2,679.7

AT 1 MAY 2007

Total equity at the beginning of the ﬁ nancial period

2,551.8

7.6

Net income/(expenses) recognised directly in equity

Proﬁ t for the period

Total recognised income/expense for the period

Exercise of options

Issue of share capital

Cost of share-based payment

Dividends

AT 30 APRIL 2008

–

3.6

–

4.8

–

76.3

–

160.5

–

2,635.7

–

160.5

3.6

–

4.8

(145.0)

Total equity at the end of the ﬁ nancial period

2,555.4

12.4

91.8

2,659.6

METCASH LIMITED ANNUAL REPORT 2009

cash ﬂ ow
statement for the year ended 30 April 2009

METCASH GROUP

METCASH LIMITED

NOTES

2009
$’m

2008
$’m

2009
$’m

2008
$’m

Cash from operating activities:

Receipts from customers

Receipts from related parties

Payments to suppliers and employees

Income taxes paid

GST paid

Dividends received

Borrowing costs

Interest received

Total cash from operating activities

Cash ﬂ ows from investing activities:

Proceeds from sale of plant and equipment

Proceeds from sale of retail stores

Payment on acquisition of businesses

Purchase of property, plant and equipment

Payments for intangibles

Payment on acquisition of associates

Loan (to)/from subsidiaries

Loan to associates

Loan (to)/from other entities

Proceeds from repayments of non-current receivables

Net cash used by investing activities

Cash ﬂ ows from ﬁ nancing activities:

Proceeds from the issue of ordinary shares

Payment to terminate derivative ﬁ nancial instrument

Proceeds from borrowings – other

Repayments of borrowings – other

Payment of ﬁ nance lease principal

Payment of dividends on ordinary shares

Net cash used by ﬁ nancing activities

Net cash increase/(decrease) in cash and

cash equivalents

Cash and cash equivalents at beginning of year

Effect of exchange rate changes on cash

Cash and cash equivalents at end of year

11,818.3

10,855.5

–

(11,380.9)

(10,429.2)

(31.0)

(104.8)

1.3

(64.0)

9.2

248.1

7.1

(65.8)

(36.7)

(21.3)

(1.6)

–

(16.1)

21.1

(106.2)

0.3

(24.6)

550.0

(525.0)

(6.1)

(168.3)

(173.7)

(31.8)

180.5

(0.1)

148.6

(63.8)

(113.5)

1.5

(60.1)

7.1

197.5

21.6

5.7

(5.8)

(31.8)

(15.1)

(1.0)

–

(12.5)

(8.2)

35.1

(12.0)

3.6

–

575.0

(575.0)

(5.4)

(145.0)

(146.8)

38.7

141.9

(0.1)

180.5

–

207.2

–

183.6

(202.7)

–

222.7

–

160.5

(217.9)

–

188.1

165.3

–

(20.1)

(23.9)

–

(20.1)

(23.9)

0.3

3.6

–

(168.3)

(168.0)

(145.0)

(141.4)

–

notes to the ﬁ nancial
statements for the year ended 30 April 2009

1 CORPORATE INFORMATION

The ﬁ nancial report of Metcash Limited (the Company) for the year ended 30 April 2009 was authorised for issue in
accordance with a resolution of the Directors on 17 July 2009.

Metcash Limited and its controlled entities (the Group), is a company limited by shares incorporated in Australia whose
shares are publicly traded on the Australian Securities Exchange. The nature of the operations and principal activities of the
Group are described in the Directors’ Report.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(i) BASIS OF ACCOUNTING
The ﬁ nancial report is a general purpose ﬁ nancial report that has been prepared in accordance with the requirements of
the Corporations Act 2001 and Australian Accounting Standards and other authoritative pronouncements of the Australian
Accounting Standards Board.

The ﬁ nancial report has been prepared using the historical cost basis except for derivative ﬁ nancial instruments, which have
been measured at fair value.

The ﬁ nancial report is presented in Australian dollars and all values are rounded to the nearest $100,000 unless otherwise
stated under the option available to the Company under ASIC Class Order 98/100. The Company is an entity to which the
class order applies.

(ii) STATEMENT OF COMPLIANCE
The ﬁ nancial report complies with Australian Accounting Standards. The ﬁ nancial report also complies with International
Financial Reporting Standards (IFRS).

(a) CHANGES IN ACCOUNTING POLICY
Since 1 May 2008 the Group has adopted the following Standards and Interpretations, mandatory for annual periods
beginning on or after 1 May 2008. Adoption of these Standards and Interpretations did not have any effect on the ﬁ nancial
position or performance of the Group.

REFERENCE

TITLE

SUMMARY

AASB 2007-4

Amendments to Australian Accounting
Standards arising from ED 151 and Other
Amendments [AASB 1, 2, 3, 4, 5, 6, 7, 102,
107, 108, 110, 112, 114, 116, 117, 118, 119,
120, 121, 127, 128, 129, 130, 131, 132, 133,
134, 136, 137, 138, 139, 141, 1023 & 1038]

Amendments arising as a result of the AASB decision
that, in principle, all options that currently exist under
IFRSs should be included in the Australian equivalents
to IFRSs and additional Australian disclosures should
be eliminated, other than those now considered
particularly relevant in the Australian reporting
environment.

AASB Interpretation 4
(revised)

Determining whether an Arrangement
contains a Lease

The revised Interpretation speciﬁ cally scopes out
arrangements that fall within the scope of AASB
Interpretation 12.

The adoption of these standards has only affected the disclosure in these ﬁ nancial statements. There has been no effect
on proﬁ t and loss or the ﬁ nancial position of the entity.

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(b) STANDARDS ISSUED BUT NOT YET EFFECTIVE
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have
not been adopted by the Group for the annual reporting period ending 30 April 2009. These are outlined in the table below:

REFERENCE

TITLE

SUMMARY

AASB 8 and
AASB 2007-3

AASB 101
(Revised), AASB
2007-8 and AASB
2007-10

Operating
Segments and
consequential
amendments to
other Australian
Accounting
Standards

Presentation of
Financial
Statements and
consequential
amendments to
other Australian
Accounting
Standards

AASB 127
(Revised), AASB
2008-3

Consolidated and
Separate Financial
Statements

New standard replacing
AASB 114 Segment
Reporting, which adopts
a management reporting
approach to segment
reporting.

Introduces a statement of
comprehensive income.
Other revisions include
impacts on the
presentation of items in the
statement of changes in
equity, new presentation
requirements for
restatements or
reclassiﬁ cations of items in
the ﬁ nancial statements,
changes in the
presentation requirements
for dividends and changes
to the titles of the ﬁ nancial
statements.

Under the revised standard,
a change in the ownership
interest of a subsidiary (that
does not result in loss of
control) will be accounted
for as an equity transaction.

APPLICATION
DATE OF
STANDARD

1 January
2009

IMPACT ON GROUP FINANCIAL
REPORT

AASB 8 is a disclosure standard
and as such will have no direct
impact on the amounts
included in the Group’s
ﬁ nancial statements.

APPLICATION
DATE FOR
GROUP

1 May 2009

1 January
2009

1 May 2009

The amendments are
expected to only affect the
presentation of the Group’s
ﬁ nancial report and will not
have a direct impact on the
measurement and recognition
of amounts under the current
AASB 101. The Group has not
determined at this stage
whether to present the new
statement of comprehensive
income as a single statement
or as two statements.

1 July 2009

1 May 2010

The Group intends to acquire
business entities in the future
and outstanding non-
controlling interests. Impact
to the Group’s ﬁ nancial report
is unable to be assessed.
No impact on previous
acquisitions.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

REFERENCE

TITLE

SUMMARY

AASB 3 (Revised) Business

Combinations

AASB 123
(Revised) and
AASB 2007-6

Borrowing Costs

The revised standard
introduces a number of
changes to the accounting
for business combinations,
the most signiﬁ cant of
which allows entities a
choice for each business
combination entered into
– to measure a non-
controlling interest (formerly
a minority interest) in the
acquiree either at its fair
value or at its proportionate
interest in the acquiree’s
net assets. This choice will
effectively result in
recognising goodwill
relating to 100% of the
business (applying the fair
value option) or
recognising goodwill
relating to the percentage
interest acquired. Also,
under the revised standard,
transaction costs under
business combination are
expensed and contingent
considerations are
recognised at fair values.
The changes apply
prospectively.

Borrowing Costs and
consequential
amendments to other
Australian Accounting
Standards

APPLICATION
DATE OF
STANDARD

1 July 2009

IMPACT ON GROUP FINANCIAL
REPORT

Refer to AASB 127 (Revised),
AASB 2008-3 Above.

APPLICATION
DATE FOR
GROUP

1 May 2010

1 January
2009

The Group has borrowing costs
associated with qualifying
assets. The amendments are
not expected to have any
impact on the Group ﬁ nancial
report.

1 May 2009

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

APPLICATION
DATE FOR
GROUP

1 May 2009

APPLICATION
DATE OF
STANDARD

1 January
2009

IMPACT ON GROUP FINANCIAL
REPORT

The Group has an employee
option plan in place. The
Group may issue employee
options in the future. The
impact of this standard is
unable to be assessed at
this stage.

1 January
2009

No material impact on the
Group is expected from the
adoption of the Standard.

1 May 2009

1 January
2009

No material impact on the
Group is expected from the
adoption of the Standard.

1 May 2009

REFERENCE

TITLE

SUMMARY

AASB 2008-1

Amendments to
Australian
Accounting
Standard – Share-
based Payments:
Vesting Conditions
and Cancellations

AASB 2008-2

AASB 2008-5

Amendments to
Australian
Accounting
Standards –
Puttable Financial
Instruments and
Obligations arising
on Liquidation

Amendments to
Australian
Accounting
Standards arising
from the Annual
Improvements
Project

The amendments clarify
the deﬁ nition of ‘vesting
conditions’, introducing the
term ‘non-vesting
conditions’ for conditions
other than vesting
conditions as speciﬁ cally
deﬁ ned and prescribe the
accounting treatment of
an award that is effectively
cancelled because a
non-vesting condition
is not satisﬁ ed.

The amendments provide
a limited exception to the
deﬁ nition of a liability so as
to allow an entity that issues
puttable ﬁ nancial
instruments with certain
speciﬁ ed features, to
classify those instruments as
equity rather than ﬁ nancial
liabilities.

The improvements project
is an annual project that
provides a mechanism for
making non-urgent, but
necessary, amendments
to IFRSs. The IASB has
separated the
amendments into two
parts: Part I deals with
changes the IASB identiﬁ ed
resulting in accounting
changes; Part II deals with
either terminology or
editorial amendments that
the IASB believes will have
minimal impact.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

REFERENCE

TITLE

SUMMARY

AASB 2008-6

AASB 2008-7

Further
Amendments to
Australian
Accounting
Standards arising
from the Annual
Improvements
Project

Amendments to
Australian
Accounting
Standards – Cost of
an Investment in a
Subsidiary, Jointly
Controlled Entity or
Associate

AASB 2008-8

Amendments to
Australian
Accounting
Standards – Eligible
Hedged Items

Refer to AASB 2008-5
above.

The main amendments of
relevance to Australian
entities are those made to
AASB 127 deleting the ‘cost
method’ and requiring all
dividends from a subsidiary,
jointly controlled entity or
associate to be recognised
in proﬁ t or loss in an entity’s
separate ﬁ nancial
statements (i.e. parent
company accounts). The
distinction between
pre- and post-acquisition
proﬁ ts is no longer required.
However, the payment of
such dividends requires the
entity to consider whether
there is an indicator of
impairment.
AASB 127 has also been
amended to effectively
allow the cost of an
investment in a subsidiary,
in limited reorganisations,
to be based on the
previous carrying amount
of the subsidiary (that is,
share of equity) rather
than its fair value.

The amendment to AASB
139 clariﬁ es how the
principles underlying hedge
accounting should be
applied when (i) a
one-sided risk in a hedged
item and (ii) inﬂ ation in a
ﬁ nancial hedged item
existed or was likely to exist.

APPLICATION
DATE OF
STANDARD

1 July 2009

IMPACT ON GROUP FINANCIAL
REPORT

No material impact on the
Group is expected from the
adoption of the Standard.

APPLICATION
DATE FOR
GROUP

1 May 2009

1 January
2009

Refer to AASB 127 (Revised),
AASB 2008-3 above.

1 May 2009

1 July 2009

No material impact on the
Group is expected from the
adoption of the Standard.

1 May 2010

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

APPLICATION
DATE OF
STANDARD

IMPACT ON GROUP FINANCIAL
REPORT

Ending on or
after 30 June
2009

No material impact on the
Group is expected from the
adoption of the Standard.

APPLICATION
DATE FOR
GROUP

1 May 2009

1 January
2009

1 May 2009

This amendment relates to a
disclosure standard so it will
have no direct material impact
on the amounts included in the
Group’s ﬁ nancial report.
However, it will result in
additional disclosure included
in the Group’s ﬁ nancial report.

1 July 2008

1 May 2009

The Group does not have any
customer loyalty programs and
as such this interpretation is not
expected to have any impact
on the Group’s ﬁ nancial report.

REFERENCE

TITLE

SUMMARY

The amendments clarify
that on reclassiﬁ cation of
a ﬁ nancial asset out of the
‘at fair value through proﬁ t
or loss’ category all
embedded derivatives
have to be assessed and,
if necessary, separately
accounted for in ﬁ nancial
statements.

The amended IFRS 7
requires fair value
measurements to be
disclosed by the source of
inputs, using the following
three-level hierarchy:

(cid:129)

Quoted prices in active
markets for identical
assets or liabilities
(Level 1)

Inputs other than
quoted prices included
in Level 1 that are
observable for the asset
or liability, either directly
(as prices) or indirectly
(derived from prices)
(Level 2)

Inputs for the asset or
liability that are not
based on observable
market data
(unobservable inputs)
(Level 3)

Deals with the accounting
for customer loyalty
programmes, which are
used by companies to
provide incentives to their
customers to buy their
products or use their
services.

Amendments to
International
Financial
Reporting
Standards

Embedded
Derivatives
(Amendments to
IFRIC 9 and IAS 39)

Amendments to
IFRS 7

Amendments to
International
Financial
Reporting
Standards

AASB
Interpretation 13

Customer Loyalty
Programmes

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

APPLICATION
DATE OF
STANDARD

1 October
2008

IMPACT ON GROUP FINANCIAL
REPORT

No material impact on the
Group is expected from the
adoption of the Standard.

APPLICATION
DATE FOR
GROUP

1 May 2009

1 July 2008

No material impact on the
Group is expected from the
adoption of the Standard.

1 May 2009

No material impact on the
Group is expected from the
adoption of the Standard.

1 July 2009

Applies

prospectively

to transfer of

assets from

customers

received on

or after 1 July

2009

REFERENCE

TITLE

SUMMARY

AASB
Interpretation 18

Hedges of a Net
Investment in a
Foreign Operation

AASB
Interpretation 17
and AASB
2008-13

Distributions of
Non-cash Assets
to Owners and
consequential
amendments to
other Australian
Accounting
Standards

AASB
Interpretation 18

Transfers of Assets
from Customers

This interpretation requires
that the hedged risk in a
hedge of a net investment
in a foreign operation is the
foreign currency risk arising
between the functional
currency of the net
investment and the
functional currency of any
parent entity. This also
applies to foreign
operations in the form of
joint ventures, associates
or branches.

The Interpretation outlines
how an entity should
measure distributions of
assets, other than cash,
as a dividend to its owners
acting in their capacity as
owners. This applies to
transactions commonly
referred to as spin-offs, split
offs or demergers and
in-specie distributions.

This Interpretation provides
guidance on the transfer of
assets such as items of
property, plant and
equipment or transfers of
cash received from
customers. It requires a
transferred asset (which is
controlled by the entity) to
recognise that asset at fair
value. It also requires
revenue from ongoing
access to goods/services
to be recognised over the
period that access is
provided and revenue from
connection to a network to
be recognised when the
connection to the network
is completed.

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(iii) BASIS OF CONSOLIDATION
The consolidated ﬁ nancial statements comprise the ﬁ nancial statements of Metcash Limited and its subsidiaries as at 30 April 2009.

The ﬁ nancial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting
policies.

Controlled entities are all those entities over which the Group has the power to govern the ﬁ nancial and operating policies so as to
obtain beneﬁ ts from their activities.

Controlled entities are consolidated from the date on which control is transferred to the Group and cease to be consolidated from
the date on which control is transferred out of the Group.

In preparing the consolidated ﬁ nancial statements all intercompany balances and transactions have been eliminated in full.

Investments in subsidiaries held by Metcash Limited are accounted for at cost in the separate ﬁ nancial statements of the parent entity.

The acquisition of subsidiaries is accounted for using the purchase method of accounting. The purchase method of accounting
involves allocating the costs of the business combination to the fair value of the assets acquired and the liabilities and contingent
liabilities assumed at the date of acquisition.

Minority interests not held by the Group are allocated their share of net proﬁ t after tax in the income statement and are presented
within equity in the consolidated balance sheet, separately from the parent shareholders’ equity.

(iv) REVERSE ACQUISITION
In accordance with AASB 3 Business Combinations, in 2005 when Metcash Limited (the legal parent) acquired the Metoz group
(being Metoz Holdings Limited and its controlled entities including Metcash Trading Limited (the legal subsidiary)), the acquisition
was deemed to be a reverse acquisition. The consolidated ﬁ nancial statements are issued under the name of the legal parent
(Metcash Limited) but are a continuation of the ﬁ nancial statements of the deemed acquirer under the reverse acquisition rules
(Metcash Trading Limited).

(v) SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

(a) SIGNIFICANT ACCOUNTING JUDGEMENTS
In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those
involving estimations, which have a signiﬁ cant effect on the amounts recognised in the ﬁ nancial statements:

CONTRACTUAL CUSTOMER RELATIONSHIPS
Identifying those acquired relationships with customers that meet the deﬁ nition of separately identiﬁ able intangibles that have
a ﬁ nite life.

(b) SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events.
The key estimates and assumptions that have a signiﬁ cant risk of causing a material adjustment to the carrying amounts of certain
assets and liabilities within the next annual reporting period are:

IMPAIRMENT OF GOODWILL
The Group determines whether goodwill is impaired on an annual basis. This requires an estimation of the recoverable amount of
the cash generating units to which the goodwill is allocated.

The assumptions used in this estimation of the recoverable amount and the carrying amount of goodwill is discussed in Note 14.

CONTRACTUAL CUSTOMER RELATIONSHIPS
The useful life of contractual customer relationships of 25 years is based on management’s expectation of future attrition rates
based on historical rates experienced.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(vi) FOREIGN CURRENCY TRANSLATION

TRANSLATION OF FOREIGN CURRENCY TRANSACTIONS
Both the functional and presentation currency of Metcash Limited and its Australian subsidiaries is Australian dollars (A$).

Transactions in foreign currencies are initially recorded in the functional currency at the exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the
balance sheet date. All exchange differences in the consolidated ﬁ nancial report are taken to proﬁ t or loss.

TRANSLATION OF FINANCIAL REPORTS OF OVERSEAS OPERATIONS
The functional currency of the overseas subsidiaries is as follows:

(cid:129)

Tasman Liquor Company Limited is New Zealand dollars.

(cid:129)

Metoz Holdings Limited is South African rand.

(cid:129)

Pinnacle Holdings Limited is British pounds sterling.

(cid:129)

Soetensteeg 2–61 Exploitatiemaatschappij BV is euros.

(cid:129)

Wickson Corporation NV is euros.

As at the reporting date the results of the overseas subsidiaries are translated into the presentation currency of Metcash Limited.
Assets and liabilities are translated at the rate of exchange ruling at the balance sheet date and their income statements are
translated at the weighted average exchange rate for the year.

The exchange differences arising on the translation are taken directly to the foreign currency translation reserve.

(vii) CASH AND CASH EQUIVALENTS
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash, which are subject to an insigniﬁ cant risk of changes in value and have a maturity of three
months or less at the date of acquisition.

(viii) TRADE AND OTHER RECEIVABLES
Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectable debts. An estimate
for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

(ix) INVESTMENTS AND OTHER FINANCIAL ASSETS
All investments are initially recognised at cost, being the fair value of the consideration given and including acquisition charges
associated with the investment.

After initial recognition, investments, which are classiﬁ ed as held for trading and available-for-sale, are measured at fair value. Gains
or losses on investments held for trading are recognised in the income statement.

For investments that are actively traded in organised ﬁ nancial markets, fair value is determined by reference to Stock Exchange
quoted market bid prices at the close of business on the balance sheet date.

(x) DERIVATIVE FINANCIAL INSTRUMENTS
Derivative ﬁ nancial instruments (interest rate collar) are initially recognised at fair value on the date on which a derivate contract is
entered into and are subsequently measured to fair value. Derivatives are carried as assets when their fair value is positive and as
liabilities when their fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives, except for those that qualify as cash ﬂ ow hedges, are taken
directly to proﬁ t or loss for the year.

The fair value of interest rate collar contracts are determined by reference to market values for similar instruments.

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

For the purposes of hedge accounting, hedges are classiﬁ ed as:

(cid:129)

fair value hedges, when they hedge the exposure to changes in the fair value of recognised asset or liability; or

(cid:129)

cash ﬂ ow hedges, when they hedge the exposure to variability in cash ﬂ ows that is attributable either to a particular risk
associated with a recognised asset or liability or to a forecast transaction.

The Group has no hedges that meet the strict criteria for hedge accounting and therefore any gains or losses arising from changes
in the fair value of derivatives are taken directly to proﬁ t or loss for the year.

(xi) INVESTMENT IN ASSOCIATES
The Group’s investments in its associates are accounted for using the equity method of accounting in the consolidated ﬁ nancial
statements. These are the entities in which the Group has signiﬁ cant inﬂ uence and which are neither subsidiaries nor joint ventures.

The ﬁ nancial statements of the associates are used by the Group to apply the equity method.

The investments in associates are carried in the consolidated balance sheet at cost plus post-acquisition changes in the Group’s
share of net assets of the associate, less any impairment in value. Goodwill relating to an associate is included in the carrying
amount of the investment and is not amortised. The consolidated income statement reﬂ ects the Group’s share of the results of
operations of the associates.

Where there has been a change recognised directly in the associate’s equity, the Group recognises its share of any changes and
discloses this in the consolidated statement of changes in equity.

(xii) INVENTORIES
Inventories are valued at the lower of cost or net realisable value. Costs incurred in bringing each product to its present location
and condition are accounted for using the standard cost method. Cost is determined by deducting from the supplier’s invoice price
any purchase incentives, allowances, discounts and net marketing income.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.

(xiii) PROPERTY, PLANT AND EQUIPMENT

COST
All classes of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated
impairment losses.

DEPRECIATION
Depreciation is provided on a straight-line basis on all property, plant and equipment, other than freehold land.

Major depreciation periods are:

Freehold buildings

Plant and equipment

2009

2008

50 years

5–15 years

IMPAIRMENT
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable.

For an asset that does not generate largely independent cash inﬂ ows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs.

If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash
generating units are written down to their recoverable amount.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash ﬂ ows are discounted to their present value using a pre-tax discount rate that reﬂ ects
current market assessments of the time value of money and the risks speciﬁ c to the asset.

Impairment losses are recognised in the income statement.

DE-RECOGNITION
An item of property, plant and equipment is de-recognised upon disposal or when no future economic beneﬁ ts are
expected to arise from the continued use of the asset.

Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds
and the carrying amount of the item) is included in the income statement in the period the item is de-recognised.

(xiv) IMPAIRMENT OF ASSETS
At each reporting date, the Group assesses whether there is any indication that the value of an asset may be impaired. Where
an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of
an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.

Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset,
unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate
cash inﬂ ows that are largely independent of those from other assets or groups of assets. In this case, the recoverable amount
is determined for the cash-generating unit to which the asset belongs.

In assessing value in use, the estimated future cash ﬂ ows are discounted to their present value using a pre-tax discount rate
that reﬂ ects current market assessments of the time value of money and the risks speciﬁ c to the asset.

(xv) LEASES
Leases are classiﬁ ed at their inception as either operating or ﬁ nance leases based on the economic substance of the
agreement so as to reﬂ ect the risks and beneﬁ ts incidental to ownership.

OPERATING LEASES

(i) GROUP AS A LESSEE
Operating leases are those where the lessor effectively retains substantially all of the risks and beneﬁ ts of ownership of the
leased item. Operating lease payments are recognised as an expense on a straight-line basis.

(ii) GROUP AS A LESSOR
Leases in which the Group retains substantially all the risks and beneﬁ ts of the leased asset are classiﬁ ed as operating leases.
Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and
recognised as an expense over the lease term on the same basis as rental income.

FINANCE LEASES
Leases that transfer to the Group substantially all of the risks and beneﬁ ts incidental to ownership of the leased item
are capitalised at the inception of the lease at the lower of fair value of the leased property or the present value of the
minimum lease payments.

Capitalised leases are disclosed as property, plant and equipment under lease. A lease liability of equal value is also recognised.

Minimum lease payments are apportioned between ﬁ nance charges and reduction of the lease liability so as to achieve
a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.
Capitalised lease assets are depreciated over the shorter of the assets estimated useful life of the assets and the lease term.

The cost of improvements to or on leasehold property is capitalised, disclosed as leasehold improvements and amortised over
the shorter of the unexpired period of the lease or the estimated useful lives of the improvements, whichever is the shorter.

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(xvi) GOODWILL
Goodwill acquired in a business combination is initially measured at cost, being the excess of the cost of the business
combination over the Group’s interest in the net fair value of the acquirer’s identiﬁ able assets, liabilities and contingent liabilities.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Goodwill is not amortised. Goodwill is reviewed for impairment, annually or more frequently if events or changes
in circumstances indicate that the carrying value may be impaired.

As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to beneﬁ t
from the combination’s synergies.

Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates.
Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised.

When goodwill forms part of a cash-generating unit and an operation within that unit is disposed of, the goodwill associated
with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on
disposal of the operation.

Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the
portion of the cash-generating unit retained.

Impairment losses for goodwill are not subsequently reversed.

(xvii) INTANGIBLE ASSETS
Intangible assets acquired separately or in a business combination are initially measured at cost. Following initial recognition,
the cost model is applied to the class of intangible assets.

The useful lives of these intangible assets are assessed to be either ﬁ nite or indeﬁ nite. Where amortisation is charged on
assets with ﬁ nite lives, this expense is taken to the proﬁ t or loss on a straight-line basis.

Intangible assets (excluding software development costs) created within the business are not capitalised and expenditure
is charged against proﬁ ts in the period in which the expenditure is incurred.

Intangible assets are tested for impairment where an indicator of impairment exists. Useful lives are also examined
on an annual basis and adjustments, where applicable, are made on a prospective basis.

Contractual customer relationships are recognised as intangible assets when the criteria speciﬁ ed in AASB 138 Intangible
Assets have been met. Contractual customer relationships are assessed to have a ﬁ nite life and are amortised over the
asset’s useful life.

The carrying value of these assets are reviewed for impairment where an indicator of impairment exists.

Software development costs incurred on an individual project are carried forward when future recoverability can
reasonably be assured. Following the initial recognition of software development costs, the cost model is applied requiring
the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses.

Any costs carried forward are amortised over the assets’ useful economic lives.

The carrying value of software development costs is reviewed for impairment annually when an asset is not in use or more
frequently when an indicator of impairment arises during a reporting period indicating that the carrying value may not
be recoverable.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in the income statements when the asset is de-recognised.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The estimated useful lives of existing ﬁ nite intangible assets are as follows:

(cid:129)

Customer contracts – 25 years

(cid:129)

Software development costs – ﬁ ve years

(cid:129)

Other – 10 years.

(xviii) TRADE AND OTHER PAYABLES
Trade payables and other payables are carried at amortised costs. They represent liabilities for goods and services provided
to the Group prior to the end of the ﬁ nancial year that are unpaid and arise when the Group becomes obliged to make
future payments in respect of the purchase of these goods and services.

(xix) EMPLOYEE LEAVE BENEFITS

(a) WAGES, SALARIES, ANNUAL LEAVE AND SICK LEAVE
Liabilities for wages and salaries, including non-monetary beneﬁ ts, annual leave and accumulating sick leave expected to
be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to
the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for
non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

(b) LONG SERVICE LEAVE
The liability for long service leave is recognised in the provision for employee beneﬁ ts and measured as the present value
of expected future payments to be made in respect of services provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the reporting date on
national government bonds with terms to maturity and currencies that match as closely as possible the estimated future
cash outﬂ ows.

(xx) INTEREST-BEARING LOANS AND BORROWINGS
All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated
with the borrowing.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the
effective interest method.

Gains and losses are recognised in proﬁ t or loss when the liabilities are de-recognised.

(xxi) PROVISIONS
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outﬂ ow of resources embodying economic beneﬁ ts will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.

Where the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating
to any provision is presented in the income statement net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reﬂ ects the risks
speciﬁ c to the liability.

Where discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

Provisions for store lease and remediation are raised where the economic entity is committed by the requirements of the
lease agreement. The future lease costs, net of any income from sub-leasing, are discounted to their net present value in
determining the provision.

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Dividends payable are recognised when a legal or constructive obligation to pay the dividend arises, typically following
approval of the dividend at a meeting of directors.

(xxii) SHARE-BASED PAYMENT TRANSACTIONS
The Group provides beneﬁ ts to employees (including executive directors) of the Group in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).

The Group provides beneﬁ ts to executive directors, senior executives and its employees in the form of the Employee Share
Option Plan (ESOP).

The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined using a binomial model, further details of
which are given in Note 15.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the
price of the shares of Metcash Limited (market conditions).

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in
which the performance conditions are fulﬁ lled, ending on the date on which the relevant employees become fully entitled
to the award (vesting date).

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reﬂ ects (i) the
extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the
Group, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment
is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the
determination of fair value at grant date.

Where the terms of an equity-settled award are modiﬁ ed, as a minimum an expense is recognised as if the terms had not
been modiﬁ ed. In addition, an expense is recognised for any increase in the value of the transaction as a result of the
modiﬁ cation, as measured at the date of modiﬁ cation.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense
not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award,
and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they
were a modiﬁ cation of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reﬂ ected as additional share dilution in the computation of earnings per share.

(xxiii) REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the economic beneﬁ ts will ﬂ ow to the entity and the revenue
can be reliably measured. The following speciﬁ c recognition criteria must also be met before revenue is recognised:

SALE OF GOODS
Revenue is recognised when the signiﬁ cant risks and rewards of ownership of the goods have passed to the buyer and
can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery of the goods to
the customer.

RENDERING OF SERVICES
Revenue from promotional activities is recognised when the promotional activities occur.

INTEREST

Revenue is recognised as the interest is earned.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

DIVIDENDS
Revenue is recognised when the right to receive the payment is established.

RENTAL INCOME
Rental income is accounted for on a straight-line basis over the lease term. Contingent rental income is recognised
as income in the periods in which it is earned.

(xxiv) INCOME TAX
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from, or paid to the taxation authority. The tax rates and tax laws used to compute the amount are those that are enacted
or substantively enacted by the balance sheet date.

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets
and liabilities and their carrying amounts for ﬁ nancial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences:

(cid:129)

except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is
not a business combination and, at the time of the transaction, affects neither the accounting nor taxable proﬁ t or loss; and

in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that
the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward unused tax assets and
unused tax losses, to the extent that it is probable that taxable proﬁ t will be available against which the deductible
temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:

(cid:129)

except where the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting nor taxable proﬁ t or loss; and

in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse
in the foreseeable future and taxable proﬁ t will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is
no longer probable that sufﬁ cient taxable proﬁ t will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted
at the balance sheet date.

Deferred tax assets and deferred liabilities are offset only if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.

(xxv) OTHER TAXES
Revenues, expenses and assets are recognised net of the amount of GST except:

(cid:129)

when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case
the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

(cid:129)

receivables and payables which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables

in the balance sheet.

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Cash ﬂ ows are included in the Cash Flow Statement on a gross basis and the GST component of cash ﬂ ows arising from
investing and ﬁ nancing activities, which is recoverable from, or payable to, the taxation authority, is classiﬁ ed as operating
cash ﬂ ow.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.

(xxvi) EARNINGS PER SHARE
Basic earnings per share is calculated as net proﬁ t attributable to members of the parent, adjusted to exclude any costs
of servicing equity (other than dividends) divided by the weighted average number of ordinary shares, adjusted for any
bonus element.

Diluted earnings per share is calculated as net proﬁ t attributable to members of the parent, adjusted for:

(cid:129)

costs of servicing equity (other than dividends);

(cid:129)

the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised
as expenses; and

other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential
ordinary shares, divided by the weighted average number of ordinary shares and dilutive potential ordinary shares,
adjusted for any bonus element.

(xxvii) CONTRIBUTED EQUITY
Ordinary shares are classiﬁ ed as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.

(xxviii) BORROWING COSTS
Borrowing costs are recognised as an expense when incurred.

3 SEGMENT INFORMATION

SEGMENT PRODUCTS AND LOCATIONS
The Group’s primary segment reporting format is business segments as the Group’s risks and rates of return are affected
predominantly by differences in the products and services provided. The economic entity predominantly operates in the
industries indicated. Food distribution activities comprise the distribution and marketing of grocery and tobacco supplies
to retail outlets, convenience stores and hospitality outlets. Liquor distribution activities comprise the distribution of liquor
products to retail outlets and hotels. Cash and Carry Distribution comprises the distribution of grocery and tobacco supplies
via cash and carry warehouses. Geographically the Group operates predominantly in Australia. The New Zealand operation
represents less than 5% of revenue, results and assets of the consolidated entity.

SEGMENT ACCOUNTING POLICIES
The selling price between segments is at normal selling price and is paid under similar terms and conditions as any other
customers of the economic entity.

3 SEGMENT INFORMATION (continued)

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METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

4 REVENUE AND EXPENSES

(a) REVENUE

Sale of goods

Rent

Interest from other person/corporation

Fair value gain on derivative ﬁ nancial instrument

Dividend income

Other revenue

(b) OTHER INCOME

METCASH GROUP

METCASH LIMITED

2009
$’m

2008
$’m

2009
$’m

2008
$’m

10,981.7

10,116.1

76.6

9.2

–

66.0

7.0

3.8

–

6.2

11,067.5

10,199.1

–

183.6

207.2

390.8

–

160.5

222.7

383.2

Net proﬁ t from disposal of property, plant and equipment

0.1

5.3

Depreciation of property, plant and equipment

Amortisation of intangibles – software

Amortisation of Intangibles – customer contracts

Impairment of trade receivables

Inventories obsolescence provision

(d) OPERATING LEASE RENTAL

Minimum lease payments

(e) EMPLOYEE BENEFITS EXPENSE

Wages and salaries

Deﬁ ned contribution plan expense

Workers compensation costs

Share-based payments

Other employee beneﬁ ts costs

(f) SIGNIFICANT ITEM

27.5

12.9

6.2

10.7

7.8

28.9

12.8

5.9

9.3

13.5

83.2

88.0

364.2

31.6

8.5

4.5

7.8

362.4

32.8

8.7

4.8

7.6

–

4.5

–

4.8

–

Termination of derivative ﬁ nancial instrument

24.6

–

Metcash Limited entered into an interest rate collar as

a condition of its syndicated loan agreement. Due to
signiﬁ cant movements in interest rates, steps were taken
to terminate the derivative ﬁ nancial instrument

(g) OTHER FINANCE COSTS

Interest expense

Fair value loss on derivative ﬁ nancial instrument

66.4

3.8

70.2

61.9

–

61.9

202.7

–

202.7

217.9

–

217.9

5 INCOME TAX

The major components of income tax expense are:

CURRENT INCOME TAX

Current income tax charge

Deferred income tax

relating to origination and reversal of temporary differences

Income tax expense reported in the income statement

A reconciliation between tax expense and the product of
accounting proﬁ t before income tax multiplied by the
Group’s applicable income tax rate is as follows:

Accounting proﬁ t before income tax

At the Group’s statutory income tax rate of 30% (2008: 30%)

Expenditure not allowable for income tax purposes

Income not assessable for income tax purposes

Adjustments in respect of current income tax of previous years

Income tax expense reported in the consolidated income
statement at an effective tax rate of 30% (2008: 31%)

DEFERRED INCOME TAX

Deferred income tax of the Metcash Group at 30 April

relates to the following:

DEFERRED TAX LIABILITIES

Accelerated depreciation for tax purposes

Deferred expenditure

Intangibles

Other receivables

Set off of deferred tax assets

DEFERRED TAX ASSETS

Provisions

Project Costs

Other

Set off of deferred tax liabilities

Deferred tax income expense

METCASH GROUP

METCASH LIMITED

2009
$’m

2008
$’m

2009
$’m

2008
$’m

83.6

54.2

3.9

87.5

32.6

86.8

290.7

87.2

1.6

–

(1.3)

284.3

85.3

1.5

–

87.5

86.8

–

183.6

55.1

1.4

(56.5)

–

160.5

48.2

1.4

(49.6)

–

BALANCE SHEET

INCOME STATEMENT

2009
$’m

2008
$’m

2009
$’m

2008
$’m

–

5.6

41.4

2.6

(49.6)

–

50.4

3.1

12.3

(49.6)

16.2

0.1

6.7

40.1

3.8

(50.7)

–

48.0

7.4

15.4

(50.7)

20.1

(0.1)

(1.1)

1.3

(1.2)

(2.4)

4.3

3.1

(0.8)

0.2

(1.6)

3.8

(2.6)

5.6

28.0

3.9

32.6

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

5 INCOME TAX (continued)

In the prior year, deferred tax assets of $70.7 million have been presented in non-current assets and deferred tax liabilities of
$50.6 million in non-current liabilities. To the extent that there exists a legally enforceable right to set off current tax against
current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation
authority, deferred tax assets and deferred tax liabilities are set off. Accordingly, the comparative prior year balances were
reclassiﬁ ed and the net deferred tax assets presented in other non-current assets.

At 30 April 2009, there is no recognised or unrecognised deferred income tax liability (2008: $nil) for taxes that would be
payable on the unremitted earnings of certain of the Group’s subsidiaries and associates as the Group has no liability for
additional taxation should these earnings be remitted.

The Group has an unrecognised beneﬁ t relating to capital losses in Australia of $18 million that are available indeﬁ nitely for
offset against future capital gains.

TAX CONSOLIDATION
Metcash Limited and its 100% owned Australian resident subsidiaries have formed a tax consolidated group with effect from
1 July 2005. Metcash Limited is the head entity of the tax consolidated group. Members of the group have entered into a tax
sharing arrangement in order to allocate income tax expense to the wholly owned subsidiaries on a modiﬁ ed stand-alone
basis. In addition the agreement will provide for the allocation of income tax liabilities between the entities should the head
entity default on its tax payment obligations.

As a result of the entry of Metcash Limited and its 100% owned Australian resident subsidiaries into a tax consolidated group,
the Group is required to reset the tax values of assets in the subsidiaries using the Allocable Cost Amount (ACA) method. At
the date of reporting, the impact of resetting the tax values of subsidiaries’ assets on current year earnings and deferred tax
assets and liabilities has not been ﬁ nalised.

TAX EFFECT ACCOUNTING BY MEMBERS OF THE TAX CONSOLIDATED GROUP
Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement provides
for the allocation of current taxes to members of the tax consolidated group in accordance with a group allocation
method using modiﬁ ed stand-alone tax calculation as the basis for allocation. Deferred taxes or members of the tax
consolidated group are measured and recognised in accordance with the principles of AASB 112 Income Taxes.

Under the tax funding agreement, funding is based upon the amounts allocated and recognised by the member entities.
Accordingly, funding results in an increase/decrease in the subsidiaries’ intercompany accounts with the tax consolidated
group head company, Metcash Limited.

In preparing the accounts for Metcash Limited for the current year, the following amounts have been recognised as
tax-consolidation contribution adjustments:

Total (decrease)/increase to inter-company assets of Metcash Limited

METCASH LIMITED

2009
$’m

52.1

2008
$’m

(10.1)

6 DIVIDENDS PAID AND PROPOSED

(a) DIVIDENDS PAID ON ORDINARY SHARES DURING THE YEAR

(i) Final franked dividend for 2008: 12.0c (2007: 10.0c)

(ii) Interim franked dividend for 2009: 10.0c (2008: 9.0c)

Dividends declared (not recognised as a liability

as at 30 April 2009)

METCASH GROUP

METCASH LIMITED

2009
$’m

91.8

76.5

168.3

2008
$’m

76.3

68.7

145.0

2009
$’m

91.8

76.5

168.3

2008
$’m

76.3

68.7

145.0

Franked dividends for 2009: 14.0c per share (2008: 12.0c)

107.1

91.8

107.1

91.8

(b) FRANKING CREDIT BALANCE

The amount of franking credits available for the subsequent

ﬁ nancial year are:

– franking account balance as at the end of the ﬁ nancial

year at 30% (2008: 30%)

– franking credits that will arise from the payment of income

tax payable as at the end of the ﬁ nancial year

The amount of franking credits available for future reporting

period:

– amount of franking credit of dividends declared but not

recognised as distribution to shareholders during the period

The tax rate at which paid dividends have been franked is 30% (2008: 30%).

Dividends declared have been franked at the rate of 30% (2008: 30%).

83.6

16.3

125.4

11.5

(45.9)

54.0

(39.3)

97.6

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

7 CASH AND CASH EQUIVALENTS

Cash at bank and on hand

(a) RECONCILIATION OF NET PROFIT AFTER TAX TO NET CASH

FLOWS FROM OPERATIONS

Net proﬁ t

Adjustments for:

Depreciation

Amortisation

Net (proﬁ t)/loss on disposal of property, plant and equipment

Share of associates’ net proﬁ t

Dividends received from associates

Termination of derivative ﬁ nancial instrument

Deferred borrowing costs

Share-based payments

Net (proﬁ t) on disposal of retail business

Changes in assets and liabilities, net of the effects of purchase

and disposal of subsidiaries

(Increase)/decrease in trade and other receivables

(Increase)/decrease in other current assets

(Increase)/decrease in inventories

(Increase)/decrease in deferred tax assets

(Decrease)/increase in payables and provisions

(Decrease)/increase in tax payable

(Decrease)/increase in derivative ﬁ nancial instruments

Net cash from operating activities

(b) NON-CASH FINANCING AND INVESTING ACTIVITIES

Acquisition of assets by means of ﬁ nance lease

Capitalisation of debtor to investment in associate

METCASH GROUP

METCASH LIMITED

2009
$’m

148.6

2008
$’m

180.5

2009
$’m

–

2008
$’m

–

203.2

197.5

183.6

160.5

27.5

19.1

(0.1)

(1.9)

1.3

24.6

2.8

4.5

–

(6.4)

(1.0)

(103.0)

4.0

17.0

52.7

3.8

248.1

7.5

1.8

28.9

18.8

(5.3)

(3.2)

1.5

–

1.7

4.8

(3.6)

(52.1)

0.8

8.2

32.1

(19.8)

(9.0)

(3.8)

197.5

8.6

–

4.5

–

4.8

–

188.1

165.3

–

8 TRADE AND OTHER RECEIVABLES (CURRENT)

Trade receivables – Securitised (i)

Trade receivables – Non-securitised (ii)

Allowance for impairment loss

Customer loans (iii)

Other receivables (iv)

Related-party receivables: (v)

wholly owned subsidiaries

METCASH GROUP

METCASH LIMITED

2009
$’m

735.6

134.3

(22.8)

847.1

38.6

82.0

–

967.7

2008
$’m

778.2

32.4

(12.9)

797.7

49.7

127.7

–

975.1

2009
$’m

2008
$’m

–

1,125.3

850.4

(i) The economic entity has securitised certain trade receivables from 5 April 2007 by way of granting an equitable interest
over those receivables to a special purpose trust managed by a major Australian bank. The terms of the securitisation
require, as added security, that at any time the book value of the securitised receivables must exceed by at least a
certain proportional amount, the funds provided by the trust to the economic entity as a consequence of securitisation.
At the end of the ﬁ nancial year (refer to Note 17iii) trade receivables of $735.6 million (2008: $778.2) had been securitised
as disclosed above, with $125.0 million (2008: $200.0 million) of funds received. The resultant security margin exceeded
the minimum required at that date.

(ii) Trade receivables are non-interest bearing and terms vary by business unit. At 30 April 2009, 94.2% of trade receivables
are required to be settled within 30 days and 5.8% of trade receivables have terms extending from 30 days to 84 days.
The amount of the allowance/impairment loss has been measured as the difference between the carrying amount of
the trade receivables and the estimated future cash ﬂ ows expected to be received from the relevant debtors.

(iii) Customer loans receivable are current and have repayment terms of less than 12 months. $17.0 million (2008: $15.5 million)

of loans are non-interest bearing. $21.6 million (2008: $34.2) of loans have annual interest of 7.66% (2008: 8.54%).

(iv) Other receivables are non-interest bearing and have repayment terms of less than 12 months.

(v) For terms and conditions relating to related party receivables refer to Note 22. Amounts receivable from related parties
are neither past due nor impaired. These receivables are non-interest bearing. The credit quality of these receivables is
good. The amount of this receivable is considered to be recoverable in full.

IMPAIRED TRADE RECEIVABLES
During the year ended 30 April 2009, receivables to the value of $5.5 million (2008 $3.2 million) were considered impaired
and written off. As at 30 April 2009 trade receivables with a notional value of $22.8 million (2008 $12.9 million) were provided
for as potential impairment. Movement in the allowance for impairment loss:

At 1 May

Charge for the year

Accounts written off as non-recoverable

Amounts reclassiﬁ ed from other payables

Closing balance

METCASH GROUP

2009
$’m

(12.9)

(10.7)

5.5

(4.7)

(22.8)

2008
$’m

(6.8)

(9.3)

3.2

–

(12.9)

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

8 TRADE AND OTHER RECEIVABLES (CURRENT) (continued)

DEBTORS AGEING
As at 30 April 2009, the analysis of trade receivables for the Metcash Group that were past due but not impaired is as follows:

NEITHER PAST
DUE OR
IMPAIRED
$’m

LESS THAN
30 DAYS
OVERDUE
$’m

MORE THAN 30
LESS THAN 60
$’m

MORE THAN 60
LESS THAN 90
$’m

MORE THAN 90
LESS THAN 120
$’m

MORE
THAN 120
$’m

2009

2008

689.3

81.4%

623.1

78.1%

108.3

12.8%

132.4

16.6%

12.6

1.5%

14.9

1.9%

7.3

0.9%

10.8

1.3%

7.3

0.9%

5.6

0.7%

22.3

2.6%

10.9

1.4%

TOTAL
$’m

847.1

100.0%

797.7

100.0%

The credit quality of the unimpaired trade receivables is good. Metcash believe that the above trade receivables will be
fully recovered.

CUSTOMER LOANS AGEING
As at 30 April 2009, the analysis of customer loans receivable for the Metcash Group that were past due but not impaired is
as follows:

NEITHER PAST
DUE OR
IMPAIRED
$’m

LESS THAN
30 DAYS
OVERDUE
$’m

MORE THAN 30
LESS THAN 60
$’m

MORE THAN 60
LESS THAN 90
$’m

MORE THAN 90
LESS THAN 120
$’m

MORE
THAN 120
$’m

2009

2008

34.5

49.6%

61.9

79.1%

2.3

3.3%

0.3

0.4%

2.2

3.2%

0.3

0.3%

2.1

3.0%

0.2

0.3%

1.8

2.6%

0.2

0.2%

26.6

38.3%

15.4

19.7%

TOTAL
$’m

69.5

100.0%

78.3

100.0%

The credit quality of the customer loans is good. As these amounts do not contain impaired assets Metcash believe that the
above receivables will be fully recovered.

OTHER RECEIVABLES AGEING
As at 30 April 2009, the analysis of other receivables for the Metcash Group that were past due but not impaired is as follows:

NEITHER PAST
DUE OR
IMPAIRED
$’m

LESS THAN
30 DAYS
OVERDUE
$’m

MORE THAN 30
LESS THAN 60
$’m

MORE THAN 60
LESS THAN 90
$’m

MORE THAN 90
LESS THAN 120
$’m

MORE
THAN 120
$’m

2009

2008

73.3

89.4%

96.7

75.7%

6.4

7.8%

21.9

17.1%

1.4

1.7%

4.9

3.8%

0.2

0.2%

3.0

2.4%

0.4

0.5%

0.2

0.2%

0.3

0.4%

1.0

0.8%

TOTAL
$’m

82.0

100.0%

127.7

100.0%

The credit quality of the unimpaired other receivables is good. Metcash believe that all the above other receivables will be
fully recovered.

8 TRADE AND OTHER RECEIVABLES (CURRENT) (continued)

CUSTOMER LOAN SECURITY
As at balance date, Metcash provided loans to a number of customers. The outstanding loan balance can be summarised
as follows:

Current loans

Non-current loans

METCASH GROUP

2009
$’m

38.6

30.9

69.5

2008
$’m

49.7

28.6

78.3

For certain loans, customers are required to provide security in the event of default. These may include bank guarantees,
ﬁ xed and ﬂ oating charges and security over property assets. The fair value of these securities as at 30 April 2009 was
$25.2 million (2008: $28.1 million).

9 INVENTORIES

Finished goods (at net realisable value)

Total inventories at the lower of cost and net realisable value

METCASH GROUP

METCASH LIMITED

2009
$’m

680.5

2008
$’m

576.7

2009
$’m

–

2008
$’m

–

Inventory write-downs recognised as an expense totalled $7.8 million (2008: $13.5 million) for the Group and $nil (2008: $nil)
for the Company. The expense is included in the cost of sales line item as a cost of inventory.

10 RECEIVABLES (NON-CURRENT)

Customer loans (i)

Other receivables (ii)

Total

METCASH GROUP

METCASH LIMITED

2009
$’m

30.9

9.2

40.1

2008
$’m

28.6

7.2

35.8

2009
$’m

–

2008
$’m

–

(i)

Customer loans receivable are non-current and have repayment terms of greater than 12 months. $6 million
(2008: $5.0 million) of loans are non-interest bearing. $24.9 million (2008: $23.6 million) of loans have annual interest
of 7.66% (2008: 8.54%). Refer to Note 8 for ageing analysis.

(ii)

Other receivables are non-interest bearing and have repayment terms greater than 12 months. These receivables
are all neither past due nor impaired.

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

11 INVESTMENTS IN ASSOCIATES

Investments in associates

INTEREST IN ASSOCIATES

METCASH GROUP

METCASH LIMITED

2009
$’m

84.1

2008
$’m

80.5

2009
$’m

–

OWNERSHIP INTEREST

PRINCIPAL ACTIVITIES

BALANCE DATE

Produce Traders Trust

Distribution of fruit and vegetables

Abacus Independent Retail Property Trust Retail property investment

Ritchies Stores Pty Ltd

BMS Retail Group Pty Ltd

Dramet Pty Ltd

Coco’s Fresh Food Markets

Dart Trading Co Pty Ltd

Bamlane Pty Ltd

Mundin Pty Ltd

G’Butt Pty ltd

Mussen Pty Ltd

Ully Pty Ltd

Adcome Pty Ltd

Metfood Pty Limited

Grocery retailing

Negotiate to reduce costs
for Metcash and Foodstuffs

Progressive Trading Pty Ltd (Progressive)

Grocery retailing

30 June

30 April

30 June

2009
%

40.0

25.0

26.0

25.1

26.0

40.0

50.0

55.4

2008
$’m

–

2008
%

40.0

25.0

26.0

25.1

26.0

–

40.0

50.0

55.4

Metcash has a direct ownership of 49.0% in Progressive, and an indirect ownership of 6.4% via the 25.1% interest in BMS Retail
Group Pty Ltd. Although the Group’s total ownership interest in Progressive is greater than 50%, it is still considered to be an
associate of the Group, as Metcash Limited do not have the power to govern the ﬁ nancial and operating policies of
Progressive.

11 INVESTMENTS IN ASSOCIATES (continued)

The following table illustrates summarised ﬁ nancial information relating to the Group’s investment in associates.

SHARE OF ASSOCIATES’ PROFIT

METCASH GROUP

Proﬁ t/(loss) before income tax

Income tax expense

Proﬁ t after income tax

SHARE OF ASSOCIATES’ BALANCE SHEET:

Current assets

Non-current assets

Total Assets

Current liabilities

Non-current liabilities

Total Liabilities

Net assets

2009
$’m

2.8

(0.9)

1.9

60.0

127.4

187.4

(81.7)

(50.4)

(132.1)

55.3

2008
$’m

4.6

(1.4)

3.2

21.6

70.1

91.7

(31.7)

(36.7)

(68.4)

23.3

There were no impairment losses relating to the investments in associates and no capital commitments or other
commitments relating to the associates.

12 OTHER FINANCIAL ASSETS (NON-CURRENT)

Investment in shares (unlisted)

Investments in subsidiaries

METCASH GROUP

METCASH LIMITED

2009
$’m

0.2

–

0.2

2008
$’m

0.2

–

0.2

2009
$’m

–

2008
$’m

–

4,616.1

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

13 PROPERTY, PLANT AND EQUIPMENT

METCASH GROUP

METCASH LIMITED

LAND AND
BUILDINGS
$’m

PLANT AND
EQUIPMENT
$’m

TOTAL
$’m

LAND AND
BUILDINGS
$’m

PLANT AND
EQUIPMENT
$’m

TOTAL
$’m

YEAR ENDED 30 APRIL 2009

At 1 May 2008,

net of accumulated
depreciation and impairment

Additions
Disposals
Depreciation charge for the year
At 30 April 2009,

net of accumulated
depreciation and impairment

At 1 May 2008,
Cost or fair value
Accumulated depreciation and

impairment

Net carrying amount
At 30 April 2009,

Cost or fair value
Accumulated depreciation and

impairment

Net carrying amount

YEAR ENDED 30 APRIL 2008

At 1 May 2007,

net of accumulated
depreciation and impairment

Additions
Disposals
Depreciation charge for the year
At 30 April 2008,

net of accumulated
depreciation and impairment

At 1 May 2007,

Cost or fair value
Accumulated depreciation and

impairment

Net carrying amount
At 30 April 2008,

Cost or fair value
Accumulated depreciation and

impairment

Net carrying amount

51.4
–
–
(0.8)

88.6
52.0
(1.1)
(26.7)

140.0
52.0
(1.1)
(27.5)

50.6

112.8

163.4

55.8

236.6

292.4

(4.4)
51.4

(148.0)
88.6

(152.4)
140.0

55.2

269.6

324.8

(4.6)
50.6

(156.8)
112.8

(161.4)
163.4

58.1
–
(4.0)
(2.7)

86.2
41.1
(12.5)
(26.2)

144.3
41.1
(16.5)
(28.9)

51.4

88.6

140.0

64.7

208.1

272.8

(6.6)
58.1

(121.9)
86.2

(128.5)
144.3

55.8

236.6

292.4

(4.4)
51.4

(148.0)
88.6

(152.4)
140.0

–
–
–
–

–

–
–

–

–
–

–
–
–
–

–

–
–

–

–
–

–
–
–
–

–

–
–

–

–
–

–
–
–
–

–

–
–

–

–
–

–
–
–
–

–

–
–

–

–
–

–
–
–
–

–

–
–

–

–
–

The carrying value of plant and equipment held under ﬁ nance leases and hire purchase contracts at 30 April 2009
is $17.7 million (2008: $18.2 million).

14 INTANGIBLE ASSETS AND GOODWILL

METCASH GROUP

METCASH LIMITED

SOFTWARE
DEVELOPMENT
$’m

CUSTOMER
CONTRACTS
$’m

GOODWILL
$’m

OTHER
$’m

TOTAL
$’m

YEAR ENDED 30 APRIL 2009

At 1 May 2008

Net carrying amount

Additions

Acquisition from business

combination (Refer Note 25)

Amortisation

At 30 April 2009

Net carrying amount

At 30 April 2009

46.2

12.4

–

(12.9)

138.8

5.2

–

(6.1)

931.1

0.2

62.3

–

3.0

–

(0.1)

1,116.1

20.8

62.3

(19.1)

45.7

137.9

993.6

2.9

1,180.1

Cost (gross carrying amount)

153.3

159.0

993.6

3.0

1,308.9

Accumulated amortisation and

impairment

Net carrying amount

YEAR ENDED 30 APRIL 2008

At 1 May 2007

(107.6)

45.7

(21.1)

137.9

–

993.6

(0.1)

2.9

(128.8)

1,180.1

Cost (gross carrying amount)

129.1

151.1

924.6

Accumulated amortisation and

impairment

Net carrying amount

(81.7)

47.4

(8.8)

142.3

–

924.6

YEAR ENDED 30 APRIL 2008

At 1 May 2007

Net carrying amount

Additions

Acquisition from business

combination

Amortisation

At 30 April 2008

47.4

11.4

–

(12.6)

142.3

2.5

–

(6.0)

924.6

4.1

2.4

–

Net carrying amount

46.2

138.8

931.1

–

1,204.8

(90.5)

1,114.3

18.0

2.4

(18.6)

1,116.1

–

CUSTOMER CONTRACTS

VALUATION APPROACH
To value the customer relationships on acquisition, the multi-period excess-earnings (MEEM) approach that attributes value
to intangible assets by reference to the excess earnings generated by an intangible has been applied. Speciﬁ cally the
MEEM approach adjusts the earnings stream and cash ﬂ ows generated by a customer relationship having regard to the
longevity of the customer relationship. That is the period over which the relationship is expected to generate economic
beneﬁ t. In the case of valuing a relationship with a number of similar customers, this will typically be modelled by reference
to the attrition in relationships over time.

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

14 INTANGIBLE ASSETS AND GOODWILL (continued)

The following describes the key assumptions applied by management in the valuation of contractual customer relationships:

(cid:129)

Cash ﬂ ow forecasts
growth rates.

– Cash ﬂ ow forecasts are based on historical results extrapolated out to 25 years using forecast

Forecast growth rates
performance.

– Forecast growth rates are based on past performance and management’s expectation for future

Forecast attrition rates
of future attrition.

– Attrition rates are based on historical rates experienced and management’s expectations

(cid:129)

Discount rates

– A discount rate approximating the weighted average cost of capital has been applied.

The Company has arrived at a valuation of customer relationships from the acquisition of the FAL business of $148 million with
a ﬁ nite life and amortised over 25 years, straight line. It also purchased other customer relationships amounting to $5.5 million
(2008: $5.6million) with a ﬁ nite life and amortised over 25 years straight line. Amortisation of $6.1 million has been charged to
the proﬁ t and loss (in the administrative costs line) in the current ﬁ nancial year for all customer relationships.

SOFTWARE DEVELOPMENT COSTS
Development costs have been capitalised at cost and are amortised using the straight-line method over the asset’s useful
economic life which has been assessed as ﬁ ve years. Software development costs are tested for impairment where an
indicator of impairment exists. Useful lifes are also estimated on an annual basis and adjustments, where applicable, are
made on a prospective basis.

OTHER
The company entered into an Alliance Agreement with Lenard’s Pty Ltd during the year to offer customers the opportunity
to purchase products under a Lenards Franchise. The agreement fee will be amortised over 10 years, straight line.

GOODWILL
Goodwill acquired through business combinations have been allocated to the three business pillars (IGA>D, CCC and ALM),
which are reportable segments.In IGA>D these are further allocated by states. Under AIFRS, goodwill and intangibles with
indeﬁ nite lives have to be tested annually and when impairment indicators arise, provided the testing is done at the same
time each year. Management has elected to conduct the impairment testing in December 2008. The cash generating units
(CGU) used for impairment testing are as follows:

IGA>D NSW, IGA>D Victoria, IGA>D Queensland, IGA>D South Australia, IGA>Western Australia, Campbells Wholesale and
Australian Liquor Marketers.

The recoverable amount of the CGUs has been determined based on fair value less costs to sell calculation using cash ﬂ ow
projections based on ﬁ nancial projections approved by senior management covering a ﬁ ve-year period.

The pre-tax discount rate applied to cash ﬂ ow projections is 12.26% (2008: 13.1%) and cash ﬂ ows beyond the ﬁ ve-year period
are extrapolated using a 2.5 % growth rate (2008: 2.5%), which is based on the historical population and applicable food
inﬂ ation and liquor growth rates for each CGU.

The following describes the key assumptions on which management has based its cash ﬂ ow projection:

(cid:129)

Budgeted gross margins
margins achieved immediately before the budgeted year, increased for expected efﬁ ciency improvements.

. These have been estimated based on utilisation of existing assets and on the average gross

(cid:129)

Risk free rate

based on current Australian Government 10 year bond rate at the date of the impairment test.

(cid:129)

Future growth

driven by population growth, food inﬂ ation and changes in market share.

14 INTANGIBLE ASSETS AND GOODWILL (continued)

The table below summarises the Goodwill attributed to each CGU and potential impairment trigger point at the impairment
testing date of December 2008:

CGU

IGAD>NSW

IGAD>Victoria

IGAD>Queensland

IGAD>South Australia

IGAD>Western Australia

Campbells Wholesale

Australian Liquor Marketers

GOODWILL
$’m

DISCOUNT RATE AT WHICH
IMPAIRMENT IS TRIGGERED
%

67.2

63.7

145.4

45.3

533.1

32.9

89.1

15.23%

18.04%

* Management believe that no reasonably possible change in any of the above key assumptions would cause the carrying value of the unit to materially exceed

its recoverable amount.

15 SHARE-BASED PAYMENTS

SHARE-BASED PAYMENT PLANS
During the year no options were issued to Executive Directors other than as disclosed in Note 23 (b).

The following table illustrates the number and exercise prices and movements during the year ended 30 April 2009 and
30 April 2008:

Outstanding at the beginning of the year

Reinstated during the year

Granted during the year

Exercised during the year

2009
NUMBER

2008
EXERCISE PRICE

2009
NUMBER

2008
EXERCISE PRICE

13,523,106

21,325

21,091,806

–

18,007,840

–

various

4.267

32,255

various

–

(38,000)

(57,770)

–

1.870

3.925

(510,000)

(1,837,938)

(39,000)

–

2.430

1.268

1.870

–

Expired during the year

(2,338,144)

various

(2,130,051)

various

Outstanding at the end of the year

32,202,323

–

13,523,106

–

The outstanding balance as at 30 April 2009 is represented by:

(cid:129)

340,000 options over ordinary shares with an exercise price of $2.430 exercisable until 2 September 2010.

(cid:129)

3,800,000 options over ordinary shares with an exercise price of $4.0134 exercisable until 2 September 2011.

(cid:129)

8,675,181 options over ordinary shares with an exercise price of $3.9251 exercisable until 2 September 2011.

(cid:129)

19,387,142 options over ordinary shares with an exercise price of $4.267 exercisable until 7 February 2014.

The weighted average fair value of options granted during the year was $0.88 (2008: nil).

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

15 SHARE-BASED PAYMENTS (continued)

The fair value of the equity-settled share options granted is estimated at the date of the grant using a binomial model taking
into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model
in the year ending 30 April 2009 and 30 April 2008:

Dividend yield (%)

Expected Volatility (%)

Risk-free rate (%)

Expected Life of Options (years)

Option exercise price ($)

Weighted average share price ($)

2009

5.00

23.88

6.70

6.00

4.27

4.22

2008

–

EMPLOYEE SHARE OPTION PLAN (ESOP)
The Board may at such times as it determines issue invitations to eligible employees and hurdle participants to participate
in the Employee Share Option Plan. Eligibility is usually achieved after three months of employment.

The purpose of the scheme is to:

(cid:129)

create a joint purpose of success between Metcash and its employees;

(cid:129)

involve employees directly in the outcomes achieved by Metcash; and

(cid:129)

add wealth for employees and other shareholders.

The exercise price of options is determined as the closing price on the Stock Exchange Automated Trading System (SEATS),
excluding special crossings, overnight sales and exchange traded option exercises of the shares on the grant date, or such
other price as determined by the Board.

The vesting of options occurs as follows:

(cid:129)

60% of the options issued to a participant become exercisable from the third anniversary of the grant date;

(cid:129)

a further 20% become exercisable from the fourth anniversary of the grant date; and

(cid:129)

the remaining 20% become exercisable from the ﬁ fth anniversary of the grant date.

Options must be exercised prior to the sixth anniversary of the grant date, at which time they expire.

Where an employee ceases to be employed by any Group Company the options issued to that participant will
automatically lapse, except where the employee has ceased to be an employee by reason of total and permanent
disability, death, retirement and such other circumstances as the Board may determine. In these circumstances, the Board
may give its written approval to the Participant or their personal representative to exercise the options during such further
period as the Board may determine.

In addition, options will lapse on the winding up of the company or where the Participant has acted fraudulently or dishonestly.

In the event of:

(cid:129)

any party becoming entitled to acquire shares by way of a compulsory acquisition;

(cid:129)

a resolution being passed by the Company to which any party becomes or will become ‘entitled’ to 100% of the
issued shares; or

a participant’s employment being terminated by any Group Company at any time within the period of six months
after any party who is not at the grant date ‘entitled’ to 50% or more of the shares becomes so entitled,

then an option may be exercised immediately.

Exercise prices or option holdings will be pro-rated in the event of a Bonus issue, rights issue or reorganisation of the share
capital of the Company.

16 TRADE AND OTHER PAYABLES (CURRENT)

Trade payables

Other payables

METCASH GROUP

METCASH LIMITED

2009
$’m

989.0

199.0
1,188.0

2008
$’m

999.9

154.0
1,153.9

2009
$’m

–

–
–

2008
$’m

–

–
–

Trade and other payables are non-interest bearing and are normally settled within 30-day terms.

(a) FAIR VALUE
Due to the short-term nature of these payables, their carrying value is assumed to approximate their fair value.

17 INTEREST-BEARING LOANS AND BORROWINGS

CURRENT
Secured liabilities
Finance lease obligation (i)

NON-CURRENT
Finance lease obligation (i)
Bank loans (ii)
Debt securitisation (iii)
Loans from subsidiaries (iv)

METCASH GROUP

METCASH LIMITED

2009
$’m

2008
$’m

2009
$’m

2008
$’m

6.9
6.9

17.3
495.9
125.0
–
638.2

5.7
5.7

17.3
393.3
200.0
–
610.6

–
–

–
–
–
3,019.7
3,019.7

–
–

–
–
–
2,817.0
2,817.0

(i)

Finance leases have an average lease term of ﬁ ve years with the option to purchase the asset at the completion
of the lease term for the asset’s market value. The average discount rate implicit in the lease is 8.14% (2008: 7.69%).
Secured lease liabilities are secured by a charge over the leased asset.

(ii)

Bank loans are a three-year senior unsecured syndicated loan note subscription facility. The syndicated facility has
been provided to Metcash by a syndicate of lenders. The bank loans are covered by certain ﬁ nancial undertakings.
Refer to Note 28 Subsequent Events for the new Financing Agreement.

(iii)

The securitisation ﬁ nance has no ﬁ nite term and is not expected to be repaid in the ordinary course of business in the
coming ﬁ nancial year. The securitisation facility may be terminated by the trust manager at short notice in the event of an
act of default, which includes the insolvency of any of the individual companies securitising trade receivables, failure of the
economic entity to remit funds when due, or a substantial deterioration in the overdue proportion of the eligible receivables.

(iv)

Loans from subsidiaries are repayable on 12 October 2010 and attract a variable interest rate. The interest rate
at 30 April 2009 was 3.91% (2008: 8.91%).

(a) FAIR VALUE
The carrying amount of the Group’s current and non-current borrowings approximate their fair value.

(b) DEFAULTS OR BREACHES
During the current and prior years, there were no defaults or breaches on any of the loans.

(c) INTEREST RATE RISK AND LIQUIDITY RISK
Details regarding interest rate risk and liquidity risk is disclosed in Note 20.

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

18 PROVISIONS

CURRENT

Employee entitlements
Rental subsidy (i)
Lease and remediation
Other (ii)

NON-CURRENT

Employee entitlements
Rental subsidy (i)
Other (ii)

METCASH GROUP

METCASH LIMITED

2009
$’m

60.7
9.3
2.3
0.4

72.7

25.8
31.0
2.3
59.1

2008
$’m

63.3
9.4
0.1
0.3

73.1

22.4
38.2
–
60.6

2009
$’m

2008
$’m

–
–
–
–

–

–
–
–
–

–

–
–
–
–

–

–
–
–
–

–

Total

131.8

133.7

(a) MOVEMENTS IN PROVISIONS

1 May 2008
Arising during the year
Utilised
Unused amounts released

30 April 2009

METCASH GROUP

RENTAL
SUBSIDY
$’m

LEASE AND
REMEDIATION
$’m

47.6
1.7
(3.9)
(5.1)

40.3

0.1
2.2
–
–

2.3

OTHER
$’m

0.3
2.7
(0.3)
–

2.7

TOTAL
$’m

48.0
6.6
(4.2)
(5.1)

45.3

(b) NATURE AND TIMING OF PROVISIONS

(i) RENTAL SUBSIDY PROVISION
From time to time, Metcash will enter into head lease arrangements on certain retail properties. These properties are typically
sub-leased to retail customers on commercial terms and conditions. Where the head lease rental expense exceeds the
sub-lease rental income, a provision is raised for the difference in rental streams for the period of the sub-lease. These cash ﬂ ow
differentials are then discounted back to their present value using a discount rate for an equivalent security of similar terms.

(ii) Other current provisions contain a number of insigniﬁ cant balances, the costs of which are expected to be incurred
within the next ﬁ nancial year. Non-current provisions represent the future payment for the exercise of a put option held by
the vendor of Market Garden Produce.

19 CONTRIBUTED EQUITY AND RESERVES

(a) ORDINARY SHARES:

Issued and fully paid

METCASH GROUP

METCASH LIMITED

2009

2008

2009

2008

1,889.7

1,889.4

2,555.7

2,555.4

19 CONTRIBUTED EQUITY AND RESERVES (continued)

METCASH GROUP

2009

2008

NUMBER
OF SHARES

$’m

NUMBER
OF SHARES

$’m

MOVEMENTS IN ORDINARY SHARES ON ISSUE

At 1 May

764,792,593

1,889.4

762,405,655

1,885.8

Issued during the year:
– Exercise of employee options –
1,837,938 ordinary shares at 126.8 cents per share
– Exercise of employee options –
39,000 ordinary shares at 187.0 cents per share
– Exercise of employee options –
510,000 ordinary shares at 243.0 cents per share
– Exercise of employee options –
38,000 ordinary shares at 187.0 cents per share
– Exercise of employee options –
57,770 ordinary shares at 392.5 cents per share

–

38,000

57,770

–

0.1

0.2

1,837,938

39,000

510,000

–

2.3

0.1

1.2

–

At 30 April

764,888,363

1,889.7

764,792,593

1,889.4

METCASH LIMITED

2009

2008

NUMBER
OF SHARES

$’m

NUMBER
OF SHARES

$’m

MOVEMENTS IN ORDINARY SHARES ON ISSUE

At 1 May

764,792,593

2,555.4

762,405,655

2,551.8

–

38,000

57,770

–

0.1

0.2

1,837,938

39,000

510,000

–

2.3

0.1

1.2

–

At 30 April

764,888,363

2,555.7

764,792,593

2,555.4

(a) Fully paid ordinary shares carry one vote per share and carry the right to dividends.

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

19 CONTRIBUTED EQUITY AND RESERVES (continued)

RESERVES

METCASH GROUP

METCASH LIMITED

SHARE-BASED
PAYMENTS
$’m

CAPITAL
RESERVES
$’m

FOREIGN
CURRENCY
TRANSLATION
$’m

TOTAL
$’m

SHARE-BASED
PAYMENTS
$’m

At 1 May 2007

Currency translation differences

Share-based payments

At 30 April 2008

Currency translation differences

Share-based payments

At 30 April 2009

7.8

–

4.8

12.6

–

4.5

17.1

12.8

–

12.8

–

12.8

(3.3)

(1.4)

–

(4.7)

(1.3)

–

(6.0)

17.3

(1.4)

4.8

20.7

(1.3)

4.5

23.9

7.6

–

4.8

12.4

–

4.5

16.9

TOTAL
$’m

7.6

–

4.8

12.4

–

4.5

16.9

NATURE AND PURPOSE OF RESERVES

SHARE-BASED PAYMENTS RESERVE
This reserve is used to record the value of equity beneﬁ ts provided to employees and directors as part of their remuneration.
Refer to Note 15 for further details of these plans.

CAPITAL PROFITS RESERVE
The capital proﬁ ts reserve is used to accumulate realised capital proﬁ ts. The reserve can be used to pay dividends or issue
bonus shares.

FOREIGN CURRENCY TRANSLATION RESERVE
The foreign currency translation reserve is used to record exchange differences arising from the translation of the ﬁ nancial
statements of foreign subsidiaries. It is also used to record the effect of hedging net investments in foreign operations.

RETAINED EARNINGS

At 1 May

Proﬁ t/(loss) for the period

Dividends

At 30 April

OTHER EQUITY

At 30 April

METCASH GROUP

METCASH LIMITED

2009
$’m

95.5

202.5

(168.3)

129.7

2008
$’m

43.1

197.4

(145.0)

95.5

2009
$’m

91.8

183.6

(168.3)

107.1

2008
$’m

76.3

160.5

(145.0)

91.8

(765.9)

–

NATURE AND PURPOSE
The other equity account is used to record the reverse acquisition adjustment on application of AASB 3 Business Combinations
in 2005.

20 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (GROUP AND COMPANY)
The Group’s principal ﬁ nancial instruments comprise bank loans and overdrafts, ﬁ nance and operating leases and cash and
short-term deposits.

The main purpose of these instruments is to raise ﬁ nance for the Group’s operations. The Group has various other ﬁ nancial
assets and liabilities such as trade receivables and payables, which arise directly from its operations.

The Group manages its exposure to key ﬁ nancial risks including interest rate and credit risks in accordance with the Group’s
ﬁ nancial risk management policy. The objective of the policy is to support delivery of the Group’s ﬁ nancial targets while
protecting future ﬁ nancial securities.

The Group also enters into a small number of derivative transactions from time to time principally to manage interest rate
risks arising from the Group’s operations and its sources of ﬁ nance.

The main risks arising from the Group’s ﬁ nancial instruments are cash ﬂ ow interest rate risk and credit risk. The Board reviews
and agrees policies for managing each of these risks and they are detailed below.

Details of the signiﬁ cant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of ﬁ nancial instrument,
ﬁ nancial liability and equity instrument are disclosed in Note 2 Summary of Signiﬁ cant Accounting Policies.

RISK EXPOSURES AND LIQUIDITY RISK EXPOSURES

INTEREST RATE RISK
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt
obligations with a ﬂ oating interest rate.

The Group enters into interest rate collars designated to limit the Group’s exposure to volatility in interest payments from
time to time.

As at 30 April 2009, the Group has no interest rate derivative ﬁ nancial instruments. The interest rate collar in effect at 30 April
2008 was terminated on 12 November 2008.

DERIVATIVE FINANCIAL INSTRUMENTS

Interest rate collar

METCASH GROUP

METCASH LIMITED

2009
$’m

–

2008
$’m

3.8

2009
$’m

–

2008
$’m

–

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

20 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

The consolidated entity exposure to interest rate risk and the effective rates of ﬁ nancial assets and liabilities, both recognised
and unrecognised at balance date, are as follows:

FINANCIAL INSTRUMENTS

(i) FINANCIAL ASSETS

Fixed rate

Trade and other
receivables

Floating rate

Cash

Total ﬁ nancial assets

(ii) FINANCIAL LIABILITIES

Fixed rate

1 YEAR OR LESS

OVER 1 TO 5 YEARS

MORE THAN 5 YEARS

TOTAL CARRYING
AMOUNT AS PER THE
BALANCE SHEET

WEIGHTED AVERAGE
EFFECTIVE
INTEREST RATE

2009
$’m

2008
$’m

2009
$’m

2008
$’m

2009
$’m

2008
$’m

2009
$’m

2008
$’m

2009
%

2008
%

21.6

34.2

30.9

23.5

148.6

170.2

180.5

214.7

–

30.9

23.5

–

52.5

57.7

7.66

8.54

148.6

201.1

180.5

238.2

3.0

–

6.64

–

Finance lease liability*

6.9

5.7

17.1

15.2

0.2

2.1

24.2

23.0

8.14

7.69

Weighted average

interest rate

Floating rate

8.19%

7.98%

8.13%

7.72%

6.42%

6.70%

Bank and other loans**

–

620.9

593.3

Non-interest bearing

Trade and other payables

1,188.0

1,153.9

–

620.9

593.3

4.02

8.31

1,188.0

1,153.9

–

Total ﬁ nancial liabilities

1,194.9

1,159.6

638.0

608.5

0.2

2.1

1,833.1

1,770.2

* Finance leases have an average lease term of ﬁ ve years with the option to purchase the asset at the completion of the lease term for the asset’s market value.

The average discount rate implicit in the lease is 8.14% (2008: 7.69%). Secured lease liabilities are secured by a charge over the leased asset.

** Bank loans are a three-year senior unsecured syndicated loan note subscription facility. The syndicated facility has been provided to Metcash by a syndicate

of lenders. Refer to Note 28 for the new Financing Agreement signed after balance date.

At the reporting date, the carrying value of all ﬁ nancial assets and liabilities approximate their net fair values.

The other ﬁ nancial instruments of the Group and parent that are not included in the above tables are non-interest bearing
and are therefore not subject to interest rate risk.

LIQUIDITY RISK AND FUNDING MANAGEMENT
Liquidity risk is the risk that the Group will be unable to meet its payment obligations when they fall due under normal and
stress circumstances. To limit this risk, management manages assets with liquidity in mind, and monitors future cash ﬂ ows and
liquidity on a daily basis. The Group has two independent sources of debt funding of which at 30 April 2009, 51.7% have
been utilised.

REMAINING CONTRACTUAL MATURITIES
Remaining contractual liabilities consist of non-interest-bearing liabilities amounting to $1,188 million for the Group and nil for
the Parent and are due one year or less.

20 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

MATURITY ANALYSIS OF FINANCIAL LIABILITIES BASED ON CONTRACTED DATE
The risk implied from the values shown in the table below reﬂ ects a balanced view of cash inﬂ ows and outﬂ ows. Leasing
obligations, trade payables and other ﬁ nancial liabilities mainly originate from the ﬁ nancing of assets used in our ongoing
operations such as property, plant, equipment and investments in working capital such as inventories and trade receivables.
These assets are considered in the Group’s overall liquidity risk. The following table reﬂ ects the contracted date of settlement
of ﬁ nancial liabilities.

METCASH GROUP

METCASH LIMITED

1 YEAR
OR LESS
$’m

1–5
YEARS
$’m

MORE
THAN
5 YEARS
$’m

TOTAL
$’m

1 YEAR
OR LESS
$’m

1–5
YEARS
$’m

MORE
THAN
5 YEARS
$’m

TOTAL
$’m

YEAR ENDED 30 APRIL 2009

Financial liabilities

Trade and other payables

1,188.0

Finance lease liability

Bank and other loans

Loans from subsidiaries

8.6

41.4

–

18.0

640.5

–

1.8

–

1,188.0

28.4

681.9

–

1,238.0

658.5

1.8

1,898.3

–

3,193.2

Interest due on loans from subsidiaries will not be settled, but rolled into the principal each year. Management expects these
loans to not be settled before 12 October 2010, at which point the amount due will be $3,193.2 million.

The Group monitors forecasts of liquidity reserves on the basis of expected cash ﬂ ow.

At balance date, the Group had unused credit facilities available for its immediate use as follows:

Senior facility

Bills

Overdraft/Guarantees

Cash and cash equivalents

TOTAL
FACILITY
$’m

700.0

400.0

150.0

1,250.0

–

1,250.0

DEBT
USAGE
$’m

500.0

125.0

21.6

646.6

–

646.6

CASH
$’m

FACILITY
AVAILABLE
$’m

–

148.6

200.0

275.0

128.4

603.4

148.6

752.0

SENSITIVITY ANALYSIS
The table below shows the effect on proﬁ t after tax (PAT) at balance date if interest rates had moved by 0.5% higher or
0.25% lower. These movements have been selected as they are considered reasonable, giving the current economic climate
and the current levels of short- and long-term Australian interest rates. It is assumed within this calculation that all other
variables have been held constant and that the borrowings are in Australian dollars. It also includes the impact any interest
rate derivatives that the company may have in place.

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

20 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

If interest rates were to increase by 0.50% (50 basis points),

proﬁ t after tax (PAT) would increase/(decrease) by:

If interest rates were to decrease by 0.25% (25 basis points),

proﬁ t after tax (PAT) would increase/(decrease) by:

METCASH GROUP PROFIT AFTER TAX
HIGHER/(LOWER)

METCASH LIMITED PROFIT AFTER TAX
HIGHER/(LOWER)

2009
$’m

(3.1)

1.6

2008
$’m

(0.6)

0.6

2009
$’m

2008
$’m

–

CREDIT RISK
The Group trades with a large number of customers across the business operations and it is Group policy that all customers
who wish to trade on credit terms are subject to credit veriﬁ cation procedures. In addition, in certain circumstances where
a loan has been provided, the Group takes security over certain assets of the customer.

The management of the receivables balance is key in the minimisation of the potential bad debt exposure to the company.
Receivables balances are monitored on an ongoing basis and a formal review of all balances occurs every six months and
where necessary appropriate provisions are established.

As identiﬁ ed in Note 8 Trade and Other Receivables, the current level of impairment provision represents less than 2.6% of the
receivables balance, indicating that the balances are actively and effectively managed.

There are no signiﬁ cant concentrations of credit risk within the Group.

FOREIGN CURRENCY RISK
The Group’s exposure to foreign exchange ﬂ uctuations is minimal. The Operations denominated in New Zealand dollars
represent less than 5% of total sales and total proﬁ t after tax.

In addition, the Group undertakes some foreign currency transactions in the purchases of goods and services. These are
minimal and no speciﬁ c derivative transactions are undertaken to hedge against any foreign currency exposure.

PRICE RISK
The Metcash Group purchases energy in the form of electricity, petrol and oil, LPG and water from various sources. These
costs represent less than 5% of combined Distribution and Administrative expenses. The group enters into periodic contracts
for supply of these products via third party tender. No derivative price instruments are used to manage price risk associated
with these commodities as the Group’s exposure to commodity and equity security price risk is minimal.

CAPITAL MANAGEMENT
The Board’s intention is to return earnings to shareholders while retaining adequate funds within the business to reinvest in future
growth opportunities. A minimum payout ratio of 60% of reported Earnings Per Share has been set by the Board. A Dividend
Reinvestment Plan is in existence and is currently suspended as the Board considers the Company has sufﬁ cient Capital and
is generating sufﬁ cient cash ﬂ ow to pay dividends as and when they fall due. The plan is able to be reinstituted at any time.

The Group provides beneﬁ ts to employees (including executive directors) of the Group in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).
The Group provides beneﬁ ts to executive directors, senior executives and its employees in the form of the Employee Share
Option Plan (ESOP). Details are disclosed in Note15.

Management and the Board remained focused on seeking growth opportunities, both organic and via acquisition.

The Board and Management set out to achieve and maintain balance sheet ratios that would satisfy an investment grade
rating. Certain balance sheet ratios are imposed by the Syndicated Debt Facility. The nature and calculation of these ratios
are not disclosed due to commercial sensitivity.

Management monitor capital through the gearing ratio (debt / total capital). The gearing ratios at 30 April 2009 and 2008
were 33.5% and 33.2% respectively. This is within an acceptable target range.

21 COMMITMENTS

(a) OPERATING LEASE COMMITMENTS
The Group has entered into commercial leases on certain forklifts, land and buildings. These leases have an average lease
term of ﬁ ve years and an implicit interest rate of 7.9%. Contingent rentals are payable to reﬂ ect movements in the Consumer
Price Index on certain leases and to reﬂ ect the turnover of certain stores occupying the land and buildings. Future minimum
rentals payable under non-cancellable operating leases as at 30 April are as follows:

METCASH GROUP

METCASH LIMITED

Within 1 year

After 1 year but not more than 5 years

More than 5 years

2009
$’m

138.1

455.6

447.8

Aggregate lease expenditure contracted for at reporting date

1,041.5

2008
$’m

122.8

404.0

348.1

874.9

2009
$’m

2008
$’m

–

(b) OPERATING LEASE RECEIVABLES
Certain properties under operating lease have been sublet to third parties. These leases have an average lease term of
ﬁ ve years and an implicit interest rate of 7.9%. The future lease payments expected to be received at the reporting date are:

Within 1 year

After 1 year but not more than 5 years

More than 5 years

METCASH GROUP

METCASH LIMITED

2009
$’m

62.3

199.2

264.0

525.5

2008
$’m

56.0

174.1

222.8

452.9

2009
$’m

2008
$’m

–

(c) FINANCE LEASE COMMITMENTS
The Group has ﬁ nance leases for various items of vehicles and equipments. The weighted average interest rate impact in the
leases is 8.14% (2008: 7.69%). The parent company has no ﬁ nance lease commitments. Future minimum lease payments
under ﬁ nance leases together with the present value of the net minimum lease payments for the Group are as follows:

Within 1 year

After 1 year but not more than 5 years

More than 5 years

Less amounts representing ﬁ nance charges

Present value of minimum lease payments

FUTURE MINIMUM
LEASE PAYMENTS

PRESENT VALUE OF
MINIMUM LEASE PAYMENTS

2009
$’m

8.6

18.0

1.8

28.4

(4.2)

24.2

2008
$’m

7.2

16.6

3.5

27.3

(4.4)

22.9

2009
$’m

8.7

15.3

0.2

24.2

–

24.2

2008
$’m

5.6

15.1

2.2

22.9

–

22.9

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

22 RELATED PARTY DISCLOSURE

(a) SUBSIDIARIES
The consolidated ﬁ nancial statements include the ﬁ nancial statements of Metcash Limited and the subsidiaries listed in the
following table.

PERCENTAGE OF EQUITY INTEREST
HELD BY THE CONSOLIDATED ENTITY

NAME

A.C.N. 131 933 376 Pty Ltd

Action Holdco Pty Limited

Action Holdings Pty Ltd (i)

Action Projects Proprietary Limited

Action Supermarkets Pty Ltd (i)

Amalgamated Confectionery Wholesalers Pty. Ltd. (i)

Arrow Pty Limited

Australian Asia Paciﬁ c Wholesalers Pty Ltd

Australian Liquor Marketers (QLD) Pty Ltd (i)

Australian Liquor Marketers (WA) Pty Ltd (i)

Australian Liquor Marketers Pty. Limited (i)

Blue Lake Exporters Pty Ltd

Bofeme Pty Ltd

Campbells Cash and Carry Pty. Limited (i)

Casuarina Village Shopping Centre Pty. Ltd.

City Ice and Cold Storage Company Proprietary Limited

Clancy’s Food Stores Pty Limited

Composite Buyers Finance Pty. Ltd.

Composite Buyers Pty Limited

Composite Pty. Ltd.

Cotswrap Pty. Limited

Davids Food Services Pty Ltd

Davids Group Staff Superannuation Fund Pty. Ltd.

Denham Bros. Pty Limited

Drumstar V2 Pty Ltd

FAL Properties Pty. Ltd.

FAL Share Plan Nominees Pty Ltd

FAL Superannuation Fund Pty Ltd

Five Star Wholesalers Pty. Ltd.

Foodchain Holdings Pty Ltd

Foodland Properties Pty Ltd

Foodland Property Holdings Pty. Ltd.

Foodland Property Unit Trust

Gawler Supermarkets Pty. Ltd.

GP New Co Pty Ltd

Green Triangle Meatworks Pty Limited

Harvest Liquor Pty. Ltd.

IGA Community Chest Limited (ii)

COUNTRY OF
INCORPORATION

Australia

2009
%

100

2008
%

–

100

22 RELATED PARTY DISCLOSURE (continued)

NAME

IGA Distribution (SA) Pty Limited (i)

IGA Distribution (Vic) Pty Limited (i)

IGA Distribution (WA) Pty Limited (i)

IGA Distribution Pty Limited (i)

IGA Fresh (Northern Queensland) Pty Limited

IGA Fresh (NSW) Pty Limited (formerly RKH Services Pty Ltd)

IGA Paciﬁ c Pty Limited

IGA Retail Network Limited (ii)

IGA Retail Services Pty Limited

Independent Brands Australia Pty Limited (ii)

Jewel Food Stores Pty. Ltd.

Jewel Superannuation Fund Pty Ltd

Jorgensens Confectionery Pty. Limited

Keithara Pty. Ltd.

Knoxﬁ eld Transport Service Pty. Ltd.

M C International Australia Pty Limited

Melton New Co Pty Ltd

Metcash Export Services Pty Ltd

Metcash Holdings Pty Ltd

Metcash Management Pty Limited

Metcash Services Proprietary Limited

Metcash Storage Pty Limited

Metcash Trading Limited (i)

Metoz Holding Limited

Metro Cash & Carry Pty Limited

Mirren (Australia) Pty. Ltd.

Moorebank Transport Pty Ltd

Moucharo Pty. Ltd.

Newton Cellars Pty Ltd

NFRF Developments Pty Ltd

Nu Fruit Pty. Ltd.

NZ Holdco Limited (ii)

Payless Superbarn (N.S.W.) Pty Ltd

Payless Superbarn (VIC.) Pty. Ltd.

Pinnacle Holdings Corporation Pty Limited

Plympton Properties Pty. Ltd.

Property Reference Pty. Limited

QIW Pty Limited

Queensland Independent Wholesalers Pty Limited

Quickstop Pty Ltd (i)

Rainbow Supermarkets Pty Ltd

COUNTRY OF
INCORPORATION

Australia

South Africa

Australia

PERCENTAGE OF EQUITY INTEREST
HELD BY THE CONSOLIDATED ENTITY

2009
%

100

2008
%

100

–

100

METCASH LIMITED ANNUAL REPORT 2009

notes to the ﬁ nancial
statements for the year ended 30 April 2009

22 RELATED PARTY DISCLOSURE (continued)

NAME

Rainbow Unit Trust

Rainfresh Vic Pty. Ltd.

Regeno Pty Limited

Regzem (No 3) Pty. Ltd.

Regzem (No 4) Pty. Ltd.

Rennet Pty. Ltd.

Retail Merchandise Services Pty. Limited

Retail Stores Development Finance Pty. Limited

Rockblock Pty. Ltd.

R.S.D.F. Nominees Pty. Ltd.

COUNTRY OF
INCORPORATION

Australia

Soetensteeg 2 61 Exploitatiemaatschappij BV

Netherlands

SR Brands Pty Ltd

Stonemans (Management) Proprietary Limited

Stonemans Self Service Pty. Ltd.

Tasher No 8 Pty. Ltd.

Tasman Liquor Company Limited

Vawn No 3 Pty. Ltd.

Wickson Corporation Pty Limited

Wimbledon Unit Trust

(b) ULTIMATE PARENT
Metcash Limited is the ultimate parent entity.

Australia

New Zealand

Australia

PERCENTAGE OF EQUITY INTEREST
HELD BY THE CONSOLIDATED ENTITY

2009
%

100

2008
%

100

–

100

(c) ENTITIES SUBJECT TO CLASS ORDER RELIEF
Pursuant to an order from ASIC under section 340(1) of the Corporations Act dated 26 April 2006 which is based on Class
Order 98/1418 (Order), relief has been granted to certain controlled entities of Metcash Limited, being those marked (i),
from the Corporations Act requirements for preparation, audit and lodgment of their ﬁ nancial reports. As a condition of the
Order, Metcash Limited and the controlled entities, being those marked as (i) (the Closed Group) entered into a Deed of
Cross Guarantee on 27 April 2006 or assumption deed on 17 January 2007. The entities marked (ii) are also party to the Deed
of Cross Guarantee, but are not eligible for inclusion in the ﬁ nancial reporting relief. The effect of the deed is that Metcash
Limited has guaranteed to pay any deﬁ ciency in the event of winding up of these controlled entities. These controlled
entities have also given similar guarantees in the event that Metcash Limited is wound up.

100

22 RELATED PARTY DISCLOSURE (continued)

The consolidated income statement and balance sheet of the entities that are members of the ‘Closed Group’ are as follows:

(i) INCOME STATEMENT

Proﬁ t before income tax

Income tax expense

Proﬁ t after tax

Net proﬁ t for the ﬁ nancial year

Retained proﬁ ts at the beginning of the ﬁ nancial year

Dividends provided for or paid

Retained proﬁ ts at the end of the ﬁ nancial year

(ii) BALANCE SHEET

ASSETS

Current Assets

Cash and cash equivalents

Trade and other receivables

Inventories

Derivative ﬁ nancial instruments

Income tax receivable

Other

Total Current Assets

Non-Current Assets

Receivables

Investments

Property, plant and equipment

Net Deferred tax assets

Intangible assets

Total Non-Current Assets

Total Assets

CLOSED GROUP

2009
$’m

2008
$’m

293.4

(89.4)

204.0

95.5

(168.3)

131.2

135.3

819.5

680.5

–

5.6

280.8

(86.6)

194.2

46.3

(145.0)

95.5

181.8

849.0

559.0

3.8

10.1

4.6

1,640.9

1,608.3

40.1

35.8

2,439.7

2,435.8

104.8

14.3

1,017.2

3,616.1

5,257.0

102.4

14.3

1,005.6

3,593.9

5,202.2

METCASH LIMITED ANNUAL REPORT 2009

101

notes to the ﬁ nancial
statements for the year ended 30 April 2009

22 RELATED PARTY DISCLOSURE (continued)

LIABILITIES

Current Liabilities

Trade and other payables

Interest-bearing loans and borrowings

Current tax liabilities

Provisions

Total Current Liabilities

Non-Current Liabilities

Interest-bearing loans and borrowings

Provisions

Total Non-current Liabilities

Total Liabilities

NET ASSETS

EQUITY

Contributed equity

Other equity

Reserves

Retained proﬁ ts

TOTAL EQUITY

(d) TRANSACTIONS WITH RELATED PARTIES

RELATED PARTY

CONSOLIDATED

Associates

Sales to Associates

Dividends received from associates

2009

2008

2009

2008

102

CLOSED GROUP

2009
$’m

2008
$’m

1,053.3

1,016.3

5.0

42.0

26.7

3.8

–

28.1

1,127.0

1,048.2

2,826.8

2,893.3

18.5

2,845.3

3,972.3

1,284.7

1,889.7

(765.9)

29.7

131.2

16.6

2,909.9

3,958.1

1,244.1

1,889.4

(765.9)

25.1

95.5

1,284.7

1,244.1

SALES TO
RELATED
PARTIES
$’m

PURCHASES
FROM
RELATED
PARTIES
$’m

OTHER
TRANSACTIONS
WITH RELATED
PARTIES
$’m

1,188.3

910.1

–

1.3

1.5

22 RELATED PARTY DISCLOSURE (continued)

OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
Mr Barnes is Chairman of Samuel Smith and Sons Pty Ltd and a Director of Ansell. Both organisations are suppliers to the entity
under normal commercial terms and conditions. However, the total level of purchases from both companies is less than 0.4%
of Metcash’s annual purchases and is not considered material.

Mr Hamilton was a Director of Insurance Australia Group Limited and Programmed Maintenance Services Limited, suppliers
of insurance and maintenance services to the Company. However, the value of services provided is less than 0.1% of the
Company’s total costs and expenses.

PARENT

ASSOCIATES
There were no transactions between the parent and its associates during the year (2008: nil).

RELATED PARTY

Subsidiaries

Dividend received

Current tax payable/(receivable) assumed
from wholly owned consolidated entities

Management fees received

Interest Paid

2009

2008

2009

2008

2009

2008

2009

2008

SALES TO
RELATED
PARTIES
$’m

PURCHASES
FROM
RELATED
PARTIES
$’m

OTHER
TRANSACTIONS
WITH RELATED
PARTIES
$’m

–

183.6

160.5

42.0

(10.1)

207.2

222.7

202.7

217.9

TERMS AND CONDITIONS OF TRANSACTIONS WITH RELATED PARTIES
All transactions with related parties are made on normal commercial terms and conditions.

Terms and conditions of the tax funding arrangement are set out in Note 5.

METCASH LIMITED ANNUAL REPORT 2009

103

notes to the ﬁ nancial
statements for the year ended 30 April 2009

22 RELATED PARTY DISCLOSURE (continued)

(e) AMOUNTS DUE FROM OR PAYABLE TO RELATED PARTIES

RELATED PARTY

CONSOLIDATED

Associates

Trade Accounts Receivable

Loans Receivable

PARENT

Subsidiaries

Loans receivable

Loans Payable

2009
$’m

2008
$’m

127.1

23.5

88.3

24.2

1,125.3

3,019.7

850.4

2,817.0

TERMS AND CONDITIONS OF AMOUNTS DUE FROM AND PAYABLE TO RELATED PARTIES
Loans and trade accounts receivable are due and payable on normal commercial terms and conditions.

For the year ending 30 April 2009, the Group has not made any allowance for impairment loss relating to trade accounts
receivable or loans due from associates.

23 DIRECTORS’ AND EXECUTIVES’ DISCLOSURES

(a) DETAILS OF KEY MANAGEMENT PERSONNEL

DIRECTORS

EXECUTIVES

Carlos S dos Santos

Non-executive Chairman

Ken Bean

Peter L Barnes

Andrew Reitzer

Non-executive Deputy Chairman

Chief Executive Ofﬁ cer

Michael R Butler

Non-executive Director

Neil D Hamilton

Non-executive Director

CEO Group Logistics and Corporate
Development

Fergus Collins

CEO Australian Liquor Marketers

Peter Dubbelman

CEO Campbells Wholesale

Adrian Gratwicke

General Manager Finance

Michael R Jablonski

Group Merchandise Director

Bernard Hale

Chief Information Ofﬁ cer

Edwin M Jankelowitz

Finance Director

Lou Jardin

CEO IGA Distribution

Richard A Longes

Non-executive Director

V Dudley Rubin

Non-executive Director

David Johnston

Chief Human Resources Ofﬁ cer

Harry Rumpler

CEO IGA Fresh

The Group has applied the exemption under Corporations Amendments Regulations 2006, which exempts listed companies
from providing remuneration disclosures in relation to their Key Management Personnel in their annual ﬁ nancial reports by
Accounting Standard AASB 124 Related Party Disclosures. These disclosures are provided on pages 48 to 50 of the Directors’
Report designated as audited.

104

23 DIRECTORS’ AND EXECUTIVES’ DISCLOSURES (continued)

(b) OPTION HOLDING OF KEY MANAGEMENT PERSONNEL

Total

5,490,000

1,000,000

30 APRIL 2009

DIRECTORS
C S dos Santos
P Barnes
M Butler
R Longes
D Rubin
A Reitzer
M Jablonski
E Jankelowitz
L Jardin

EXECUTIVES
K Bean
F Collins
P Dubbelman
A Gratwicke
B Hale
D Johnston
H Rumpler

BALANCE AT
BEGINNING
OF PERIOD
1 MAY 2008

–
–
–
–
–
1,200,000
650,000
650,000
650,000

400,000
50,000
400,000
50,000
990,000
400,000
50,000

30 APRIL 2008

DIRECTORS
C S dos Santos
A E Harris, AC
R Longes
P Barnes
D Rubin
B Hogan, AM
M Butler
A Reitzer
M Jablonski
E Jankelowitz
L Jardin
EXECUTIVES
K Bean
F Collins
P Dubbelman
A Gratwicke
B Hale
D Johnston
H Rumpler

Total

BALANCE AT
BEGINNING
OF PERIOD
1 MAY 2007

–
–
–
–
–
–
–
1,200,000
650,000
650,000
650,000

400,000
51,600
400,000
50,000
1,500,000
480,000
50,000

6,081,600

GRANTED AS
REMUNERATION

OPTIONS
EXERCISED

OTHER
ADJUSTMENTS

BALANCE AT
END OF PERIOD
30 APRIL 2009

VESTED AT 30 APRIL 2009

TOTAL

EXERCISABLE

–
–
–
–
–
–
–
–
–

–
–
–
500,000
–
–
500,000

–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–

–

–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–

–

–
–
–
–
–
1,200,000
650,000
650,000
650,000

400,000
50,000
400,000
550,000
990,000
400,000
550,000

–
–
–
–
–
720,000
390,000
390,000
390,000

240,000
30,000
240,000
30,000
170,000
240,000
30,000

–
–
–
–
–
720,000
390,000
390,000
390,000

240,000
30,000
240,000
30,000
170,000
240,000
30,000

6,490,000

2,870,000

VESTED AT 30 APRIL 2008

GRANTED AS
REMUNERATION

OPTIONS
EXERCISED

OTHER
ADJUSTMENTS

BALANCE AT
END OF PERIOD
30 APRIL 2008

TOTAL

EXERCISABLE

–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–

–

–
–
–
–
–
–
–
–
–
–
–

–
(1,600)
–
–
(510,000)
(80,000)
–

(591,600)

–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–

–

–
–
–
–
–
–
–
1,200,000
650,000
650,000
650,000

400,000
50,000
400,000
50,000
990,000
400,000
50,000

5,490,000

–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–

–

–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–

–

METCASH LIMITED ANNUAL REPORT 2009

105

notes to the ﬁ nancial
statements for the year ended 30 April 2009

23 DIRECTORS’ AND EXECUTIVES’ DISCLOSURES (continued)

30 APRIL 2009

DIRECTORS
C S dos Santos
P Barnes
A Reitzer
M Butler
N Hamilton
M Jablonski
E Jankelowitz
L Jardin
R Longes
D Rubin

EXECUTIVES
K Bean
F Collins
P Dubbelman
A Gratwicke
B Hale
D Johnston
H Rumpler

Total

30 APRIL 2008

DIRECTORS
C S dos Santos
P Barnes
A Reitzer
M Butler
N Hamilton
M Jablonski
E Jankelowitz
L Jardin
R Longes
D Rubin
A E Harris, AC*

EXECUTIVES
K Bean
F Collins
P Dubbelman
A Gratwicke
B Hale
D Johnston
H Rumpler

Total

BALANCE AT
BEGINNING
OF PERIOD
1 MAY 2008

54,100
177,083
1,750,000
50,000
–
–
520,000
329,986
128,154
15,000

–
1,600
500,350
35,242
510,000
80,000
–

4,151,515

BALANCE AT
BEGINNING
OF PERIOD
1 MAY 2007

100
177,083
1,750,000
–
–
–
520,000
329,986
128,154
7,800
404,695

–
–
550,350
–
–
–
–

3,868,168

GRANTED AS
REMUNERATION

ON MARKET
TRADE

OPTIONS
EXERCISED

OTHER
ADJUSTMENTS
(DRP ISSUE)

BALANCE AT
END OF PERIOD
30 APRIL 2009

–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–

–

–
–
–
–
–
–
–
(329,986)
–
–

–
–
(100,000)
–
(240,000)
–
–

(669,986)

–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–

–

–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–

–

54,100
177,083
1,750,000
50,000
–
–
520,000
–
128,154
15,000

–
1,600
400,350
35,242
270,000
80,000
–

3,481,529

GRANTED AS
REMUNERATION

ON MARKET
TRADE

OPTIONS
EXERCISED

OTHER
ADJUSTMENTS
(DRP ISSUE)

BALANCE AT
END OF PERIOD
30 APRIL 2008

–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–

–

54,000
–
–
50,000
–
–
–
–
–
7,200
–

–
–
(50,000)
35,242
–
–
–

96,442

–
–
–
–
–
–
–
–
–
–
–

–
1,600
–
–
510,000
80,000
–

591,600

–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–

–

54,100
177,083
1,750,000
50,000
–
–
520,000
329,986
128,154
15,000
404,695

–
1,600
500,350
35,242
510,000
80,000
–

4,556,210

* Number of shares held as at date of retirement.

106

23 DIRECTORS’ AND EXECUTIVES’ DISCLOSURES (continued)

(d) COMPENSATION BY CATEGORY

Short-Term

Long-Term

Post-Employment

Termination Beneﬁ ts

Share-Based Payments

Total

METCASH GROUP

2009
$’m

12.5

3.6

0.7

–

1.1

17.9

2008
$’m

14.7

3.6

0.8

0.3

1.7

21.1

The Group has applied the option under Corporations Amendments Regulation 2006 to transfer key management personnel
remuneration disclosures, required by AASB 124 Related Party Disclosures paragraphs Aus 25.4 to Aus 25.7.2, to the
Remuneration Report section of the Directors’ Report.

The remuneration report has been audited.

(e) LOANS TO KEY MANAGEMENT PERSONNEL
There are no loans to key management personnel.

(f) OTHER TRANSACTIONS AND BALANCES WITH KEY MANAGEMENT PERSONNEL
There are no other transactions and balances with key management personnel.

24 AUDITOR’S REMUNERATION

METCASH GROUP

METCASH LIMITED

2009
$

2008
$

2009
$

2008
$

Amounts received or due and receivable by Ernst & Young

(Australia) for:

– an audit or review of the ﬁ nancial report of the entity

and any other entity in the consolidated entity

1,580,500

1,419,472

– other services in relation to the entity and any other

entity in the consolidated entity

– tax compliance

– assurance related

– other services

–

683,041

17,800

–

807,000

137,000

–

2,281,341

2,363,472

–

METCASH LIMITED ANNUAL REPORT 2009

107

notes to the ﬁ nancial
statements for the year ended 30 April 2009

25 BUSINESS COMBINATIONS

The Metcash Group acquired the assets of the following entities:

DATE OF ACQUISITION

ENTITY PURCHASED

% ACQUIRED

2 June 2008

3 July 2008

Market Garden Produce (MGP)

Solomons Food Group (SFG) – Produce

16 August 2008

APFB GemFruitz (APFB)

28 December 2008

IGA Fresh (NSW) Pty Ltd (formerly RKH Services Pty Ltd)

28 November 2008

Rainfresh Group (Rainfresh Pty Ltd, Nufruit Pty Ltd, NFRF Developments Pty Ltd)

5 February 2009

Solomons Food Group (SFG) – Food Service

1 April 2009

Kelly’s Providores Pty Ltd

100%

100% (1)

26% (2)

51%

100% (1)

(1) Acquisition of business assets.
(2) Acquisition of minority interest. On 29 February 2008, Metcash acquired 74% of RKH Services Pty Ltd (Dark Earth) demerged Australian business. Dark Earth’s

trading results from 29 February 2008, when economic beneﬁ ts passed to Metcash, are included in Metcash results for the year. The total cost of the
combination was $2.4 million and comprised cash and transaction costs directly attributable to the combination. IGA Fresh (NSW) Pty Ltd is now 100% owned.

Details of the fair value of the assets and liabilities acquired are as follows:

(b) PURCHASE CONSIDERATION

Cash paid to date

Direct costs relating to the acquisition

Total purchase consideration

Cash acquired

Net purchase consideration

Deferred Consideration

Fair value of net identiﬁ able assets acquired (c)

Goodwill

Accounts Receivable

Property, plant and equipment

Inventory

Goodwill

Creditors and Employee beneﬁ ts provision

Deferred tax asset relating to employee beneﬁ ts provision

Minority Interest

Fair value of net identiﬁ able assets acquired

TOTAL
$’m

63.1

2.8

65.9

(0.1)

65.8

2.3

(6.9)

61.2

TOTAL
$’m

10.2

7.8

1.0

1.1

(12.2)

0.3

(1.3)

6.9

The fair value of the identiﬁ able assets and liabilities of MGP, SFG, APFB, Kelly’s, IGA Fresh (NSW) Pty Ltd and Rainfresh Group
approximated their carrying values at the dates of acquisition.

The results of MGP, SFG, APFB, Kelly’s, IGA Fresh (NSW) Pty Ltd and Rainfresh Group from acquisition have not been disclosed
separately as they are not signiﬁ cant to the total Group results.

108

25 BUSINESS COMBINATIONS (continued)

The revenue and results of the total Metcash Group for the period ended 30 April 2009, as though MGP, SFG, APFB, Kelly’s ,
IGA Fresh and Rainfresh had been acquired on 1 May 2008, would not be signiﬁ cantly different to the Group results as
currently reported.

The accounting for the above business combinations is provisional as at 30 April 2009.

ACQUISITION OF OTHER BUSINESSES
Effective 11 May 2009, Metcash acquired the assets of Fresh Market Meats for $4.1 million.

26 EARNINGS PER SHARE

2009
$’m

2008
$’m

The following reﬂ ects the income and share data used in the basic and diluted earnings

per share computations:

Net proﬁ t attributable to ordinary equity holders of Metcash Limited

202.5

197.5

Adjustments:

Earnings used in calculating basic and diluted earnings per share

202.5

197.5

NUMBER

Weighted average number of ordinary shares used in calculating basic earnings per share

764,843,880

763,484,392

Effect of dilutive securities:

Share options

579,379

3,418,952

Weighted average number of ordinary shares used in calculating dilutive earnings per share

765,423,259

766,903,344

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date
and the date of completion of these ﬁ nancial statements.

27 CONTINGENT LIABILITIES

The Company and certain controlled entities have granted

Bank guarantees to third parties in respect of property lease
obligations to the value of

The Company and certain controlled entities have granted

Bank guarantees in respect of Workcover in WA

The total face value of the outstanding charges due to

American Express under the charge card arrangement is

The Company and certain controlled entities have granted

put options to third parties to the value of

METCASH GROUP

METCASH LIMITED

2009
$’m

2008
$’m

2009
$’m

2008
$’m

18.4

3.2

77.3

13.6

20.2

3.2

38.1

13.6

–

FRANKLINS
Following the termination of the Franklins supply contract in January 2005, Franklins commenced proceedings against Metcash
in the NSW Supreme Court for unquantiﬁ ed damages, alleging failure to pass on all rebates to which Franklins was entitled. The
case proceeded in late 2006 with a hearing to determine the terms of the contract as a separate issue to the quantum of any
damages that Franklins may have suffered. The court decided to rectify the contract in accordance with Metcash’s
submissions but the actual form of the rectiﬁ cation ordered did not accord precisely with the rectiﬁ cation sought by Metcash.

METCASH LIMITED ANNUAL REPORT 2009

109

notes to the ﬁ nancial
statements for the year ended 30 April 2009

27 CONTINGENT LIABILITIES (continued)

Subsequently, Metcash ﬁ led a motion seeking clariﬁ cation of the rectiﬁ cation order, as well as judgment and costs.

On 13 September 2007 and 17 October 2007, the judge dismissed all Applications before him and noted that both parties
intended to seek leave to appeal to the NSW Court of Appeal. In the meantime, Franklins had ﬁ led an Application for leave
to Appeal to the Court of Appeal, and Metcash ﬁ led an Application for Leave to Cross-Appeal.

The Court of Appeal heard the Leave Applications (i.e. not the appeals themselves) on 14 March 2008 and granted leave
to appeal to Franklins and granted Metcash leave to cross-appeal.

The appeal and cross-appeal were heard from 23 to 26 March 2009. At the conclusion of the proceedings, the Court
of Appeal reserved its judgment. The written judgment is expected to be delivered in the latter part of 2009.

AMERICAN EXPRESS CHARGE CARD
On 9 May 2007 Metcash Trading Limited entered into an agreement with American Express (Amex), due to expire on 31 July
2010, in relation to Customer Charge Cards. Under the agreement, should a customer default on payment, where Amex has
previously made a payment to Metcash Trading Limited, then Metcash Trading Limited must pay Amex an amount equal to
the charge outstanding.

The maximum amount payable shall be limited to the actual face value of the outstanding charge due to Amex. This does
not include any interest or other fees payable by the customer to Amex. Metcash Trading Limited shall have no other
obligation to Amex in respect of the outstanding charge and shall not be liable for any costs, loss or liability of any nature
whatsoever incurred by Amex as a result of the failure by the customer to make payment.

PUT OPTIONS FOR SALE OF RETAIL STORE ASSETS
The Company and certain controlled entities have granted put options relating to the sale of retail store assets to certain
customers and associates. The holders of the put option have the right to ‘put’ these non-ﬁ nancial assets back to the
Company within an agreed period and under certain prescribed circumstances. The estimate of the ﬁ nancial effect of the
put options, if exercised, is the aggregate of the purchase price as deﬁ ned in the option deed or business sale agreement.

28 SUBSEQUENT EVENTS

On 22 May 2009 the Company entered into a new Financing Agreement with new and ongoing Financiers. The Agreement
in large part was an extension of the existing facility and provides the Group with security of funding for the three years to
May 2012. The new Agreement provides Metcash with an unsecured senior loan facility totalling $700 million and split into two
tranches. The ﬁ rst tranche is $500 million and will be fully drawn throughout the term of the Agreement. The second tranche
of $200 million is at call according to the Company’s borrowing requirements and similarly can be repaid when not required.

The new facility has three covenants that the Group must comply with, being a ﬁ xed charges cover ratio (Earnings Before
Interest, Tax, Depreciation, Amortisation and Rent (EBITDAR) divided by Total Net Interest plus Gross Rent Expense), senior
leverage ratio (Total Group Debt divided by Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)) and
minimum shareholders funds (a ﬁ xed ﬁ gure representing the Group share capital and reserves). These covenants and other
key terms of the Agreement remain largely unchanged from the previous Agreement. Interest payable on the facility is
based on BBSY plus a margin and rollover is monthly. The applicable margin is dependent upon an escalation matrix linked to
the senior leverage ratio achieved.

110

directors’
declaration for the year ended 30 April 2009

In accordance with a resolution of the directors of Metcash Limited, I state that:

In the opinion of the directors:

a. The ﬁ nancial statements, notes and the additional disclosures included in the directors’ report designated as audited,

of the company and of the consolidated entity are in accordance with the Corporations Act 2001, including:

i. Giving a true and fair view of the Company’s and consolidated entity’s ﬁ nancial position as at 30 April 2009 and

of their performance for the year ended on that date; and

ii. Complying with Accounting Standards and Corporations Regulations 2001; and

b. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become

due and payable.

2. This declaration has been made after receiving the declarations required to be made to the directors in accordance

with section 295A of the Corporations Act 2001 for the ﬁ nancial year ending 30 April 2009.

In the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the
members of the Closed Group identiﬁ ed in Note 22 will be able to meet any obligation or liabilities to which they are or
may become subject, by virtue of the Deed of Cross Guarantee.

On behalf of the Board

Andrew Reitzer
Director

Sydney, 17 July 2009

METCASH LIMITED ANNUAL REPORT 2009

111

auditor’s independence
declaration for the year ended 30 April 2009

Auditor’s Independence Declaration to the Directors of Metcash Limited

In relation to our audit of the financial report of Metcash Limited for the financial year ended 30
April 2009, to the best of my knowledge and belief, there have been no contraventions of the
auditor independence requirements of the Corporations Act 2001 or any applicable code of
professional conduct.

Ernst & Young

Neil Wykes
Partner
Sydney
17 July 2009

112

Liability limited by a scheme approved under
Professional Standards Legislation

independent
audit report to members of Metcash Limited

the year ended 30 April 2009

Independent auditor’s report to the members of Metcash Limited

We have audited the accompanying financial report of Metcash Limited, which comprises the balance sheet as at 30 April 2009, and
the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of
significant accounting policies, other explanatory notes and the directors’ declaration of the consolidated entity comprising the
company and the entities it controlled at the year’s end or from time to time during the financial year.

The Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with
Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This
responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial
report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies;
and making accounting estimates that are reasonable in the circumstances. In Note 2, the directors also state that the financial
report, comprising the financial statements and notes, complies with International Financial Reporting Standards as issued by the
International Accounting Standards Board. The directors are also responsible for the remuneration disclosures contained in the
remuneration report.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with
Australian Auditing Standards and International Standards on Auditing. These Auditing Standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether
the financial report is free from material misstatement and that the remuneration disclosures comply with Accounting Standard AASB
124 Related Party Disclosures.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The
procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial report,
whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity’s preparation
and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit we have complied with the independence requirements of the Corporations Act 2001. We have given to the
directors of the company a written Auditor’s Independence Declaration, a copy of which is included by reference in the directors’
report. In addition to our audit of the financial report, we were engaged to undertake the non-audit services disclosed in the notes to
the financial statements. The provision of these services has not impaired our independence.

Liability limited by a scheme approved under
Professional Standards Legislation

METCASH LIMITED ANNUAL REPORT 2009

113

independent
audit report to members of Metcash Limited

the year ended 30 April 2009

Auditor’s Opinion

In our opinion:
1. The financial report of Metcash Limited is in accordance with the Corporations Act 2001, including:

(i)

(ii)

giving a true and fair view of the financial position of Metcash Limited and the
consolidated entity at 30 April 2009 and of their performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001.

the financial report also complies with International Financial Reporting Standards as issued by the International Accounting
Standards Board.

Report on the Remuneration Report
We have audited the Remuneration Report included in 41 to 50 of the directors’ report for the year ended 30 April 2009. The
directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with
section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our
audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion

In our opinion the Remuneration Report of Metcash Limited for the year ended 30 April 2009, complies with section 300A of the
Corporations Act 2001

Ernst & Young

Neil Wykes
Partner
Sydney
17 July 2009

114

ASX additional
information for the year ended 30 April 2009

Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is as follows.
The information is current as at 17 July 2009.

(a) DISTRIBUTION OF EQUITY SECURITIES
The number of shareholders, by size of holding, in each class of share are:

(b) TWENTY LARGEST SHAREHOLDERS
The names of the 20 largest holders of quoted shares are:

SIZE OF HOLDING

1–1,000

1,001–5,000

5,001–10,000

10,001–100,000

100,001–999,999,999

Total

NUMBER OF
SHAREHOLDERS

6,307

16,704

4,941

3,202

151

31,305

NUMBER OF SHARES

PERCENTAGE OF
ORDINARY SHARES

HSBC Custody Nominees (Australia) Limited

National Nominees Limited

J P Morgan Nominees Australia Limited

Citicorp Nominees Pty Limited

ANZ Nominees Limited

RBC Dexia Investor Services Australia Nominees Pty Limited

Cogent Nominees Pty Limited

RBC Dexia Investor Services Australia Nominees Pty Limited

AMP Life Limited

Cogent Nominees Pty Limited

Queensland Investment Corporation

Australian Foundation Investment Company Limited

RBC Dexia Investor Services Australia Nominees Pty Limited

UBS Nominees Pty Ltd

RBC Dexia Investor Services Australia Nominees Pty Limited

Australian Reward Investment Alliance

Citicorp nominees Pty Limited

ANZ Nominees Limited

RBC Dexia Investor Services Australia Nominees Pty Limited

Citicorp Nominees Pty Limited

185,655,112

106,808,825

105,611,019

28,955,859

28,029,766

21,614,782

14,381,352

9,577,465

8,844,444

6,178,138

5,596,871

4,500,000

4,262,794

4,251,569

4,028,465

4,018,046

3,417,412

3,199,051

2,906,425

2,874,626

24.271

13.963

13.807

3.785

3.664

2.826

1.880

1.252

1.156

0.808

0.732

0.588

0.557

0.556

0.527

0.525

0.447

0.418

0.380

0.376

554,712,021

72.518

METCASH LIMITED ANNUAL REPORT 2009

115

ASX additional

information for the year ended 30 April 2009

NAME

Westpac Banking Corporation Group

Perennial Investment Partners Limited (PIPL)

Barclays Global Investors Australia Limited

NUMBER OF SHARES

85,870,034

85,366,361

38,595,739

(d) VOTING RIGHTS
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.

116

corporate
information

ABN 32 112 073 480

DIRECTORS

Carlos S dos Santos (Chairman)

Peter L Barnes (Deputy Chairman)

Andrew Reitzer (CEO)

Michael R Butler

Neil D Hamilton

Michael R Jablonski

Edwin M Jankelowitz

Joao Louis S Jardim (Lou Jardin)

Richard A Longes

V Dudley Rubin

COMPANY SECRETARY

John A Randall

REGISTERED OFFICE

50 Waterloo Road
Macquarie Park NSW 2113

Telephone: 61 2 9751 8200

SHARE REGISTER

Registries Limited
GPO Box 3993
Sydney NSW 2001

Telephone: 61 2 9290 9600

Facsimile: 61 2 9279 0664

AUDITOR

Ernst & Young

INTERNET ADDRESS

www.metcash.com

NATIONAL OFFICE

Ph: 61 2 9751 8200

Fax: 61 2 9889 1557

50 Waterloo Road
Macquarie Park NSW 2113

Postal Address
PO Box 6226
Silverwater Business Centre NSW 1811

IGA DISTRIBUTION HEAD OFFICE

Ph: 61 2 9751 8200

Fax: 61 2 9741 3055

50 Waterloo Road
Macquarie Park NSW 2113

Postal Address
PO Box 6226
Silverwater Business Centre NSW 1811

AUSTRALIAN LIQUOR MARKETERS HEAD OFFICE

Ph: 61 2 9741 3450

Fax: 61 2 9741 3009

4 Newington Road
Silverwater NSW 2128

Postal Address
PO Box 6226
Silverwater Business Centre NSW 1811

CAMPBELLS WHOLESALE HEAD OFFICE

Ph: 61 2 9741 3000

Fax: 61 2 9751 8298

4 Newington Road
Silverwater NSW 2128

Postal Address
PO Box 6226
Silverwater Business Centre NSW 1811

This annual report was produced using Monza Recycled paper.

MONZA RECYCLED

Monza Recycled contains 55% recycled ﬁ ber (25% post consumer
and 30% pre consumer) and FSC Certiﬁ ed pulp, which ensures that all
virgin pulp is derived from well-managed forests and controlled sources.
It is manufactured by an ISO 14001 certiﬁ ed mill.
Monza Recycled is an FSC Mixed Sources Certified paper.

Cert no. SGS-COC-003898

METCASH LIMITED

CORPORATE OFFICE

50 Waterloo Road
Macquarie Park NSW 2113

Postal Address
PO Box 6226
Silverwater Business Centre NSW 1811

Ph: 61 2 9751 8200
Fax: 61 2 9889 1557