Metcash Limited
ABN 32 112 073 480
Annual Report
2012
Strengthening
the Independents
About
Metcash
Metcash Limited (Metcash) is
Australia’s leading wholesale
distribution and marketing
company specialising in
grocery, fresh produce,
liquor, hardware and
automotive parts
and accessories.
IFC
2
4
4
6
7
8
9
10
12
14
27
57
61
117
118
121
IBC
About Metcash
Chairman and CEO’s Report
Review of Operations
Metcash Food & Grocery
Australian Liquor Marketers
Mitre 10
Corporate Responsibility and Environment
Diversity at Metcash
Key Management
Board of Directors
Corporate Governance Statement
Directors’ Report
Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
ASX Additional Information
Corporate Information
Metcash now has four divisions, often referred to as its business pillars,
each operating in a distinct wholesaling industry segment:
– Metcash Food & Grocery (now including IGA Distribution (IGA>D),
IGA Fresh, Campbells Wholesale and Merchandising);
– Australian Liquor Marketers (ALM);
– Mitre 10; and
– Automotive Brands Group (ABG) (acquired July 2012).
The Food & Grocery and Australian Liquor Marketers pillars are wholly owned
by Metcash. The company has announced it intends to exercise its right to
acquire the 49.9% of Mitre 10 it does not own and thereby move to 100%
ownership. Metcash has also purchased 75.1% of the Automotive Brands Group
in July 2012.
Predominantly, Metcash’s customers are independently owned grocery, liquor
and hardware stores. The range will be broadened to include independently
owned car parts and accessories stores following the Automotive Brands
Group acquisition.
Metcash’s mission is to be the champion of the independent retailer. It
champions the interests of the independent grocery, liquor, hardware and
automotive parts and accessories sectors through the leadership of our high
calibre staff, partnership with our independent retailer network and our
pioneering approach to warehousing and distribution logistics.
Our network of independent retailers provides the scale necessary to create
competitive buying power. Our marketing and brand building capabilities
provide a platform for independent retailers to operate under unified and
distinct retail brands. Our merchandising ability, distribution logistics and
warehousing capabilities provide the basis for our independent retail customers
the leverage to meet the needs of their consumers.
Our Values
Our core values represent who we are and define how we do business.
These include:
– Championing the Customer
– Our Stakeholders are Entitled to Added Value
– Responsibility and Personal Accountability
– Empowering our People and Supporting our Community
These values underpin the way we interact with each other and our business
partners. We measure how well we live the values in our performance
management process.
Our Priorities
– Provide safe work environments for all employees, supported by relevant
training and working with our employees to help maintain good
work-life balance.
– Working to achieve consistently high service levels for our customers as
Annual General Meeting
we recognise that our success is critically dependent on the success of our
independent retailer network.
– Ensuring our employees are empowered and committed to organisation
goals through improved development programs and communication
channels.
– Working in partnership with our stakeholder network to ensure that we
meet our shared and individual goals.
Thursday 30 August 2012
2.30pm Sydney Room
Sofitel Hotel
61-101 Phillip Street, Sydney NSW
1
Chairman
and CEO’s
Report
Wholesale sales increased
by 1.9% to $12.6 billion,
and underlying EBITA
improved by 3% to
$451.2 million.
Metcash increased
underlying earnings per
share to 34.1 cents which
compares favourably
with the 33.4 cents
achieved in the previous
corresponding period.
Despite the conditions that have beset the Australian retail industry, Metcash
has delivered a result in line with guidance and market expectations. The
groundwork has also been laid for new growth initiatives.
The past year has continued to see prices and margins come under pressure
from the deflationary impacts of the high Australian dollar. Consumer sentiment
remained weak and shoppers became increasingly value conscious, preferring
to purchase items only when discounted.
It is a testament to our strong management team and the resilience of our
business model that the Board has been able to declare a final dividend of
16.5 cents taking the full year fully franked dividend to 28.0 cents, representing
an increase of 3.7% on the prior full year and a payout ratio of 82% of
underlying Earnings Per Share.
Underlying profits exclude a significant items expense of $176.7 million gross
($135.6 million after tax), including joint venture impairment of $105.7 million,
group restructuring costs of $42.5 million and Franklins acquisition and
restructuring costs of $28.5 million. There were also discontinued losses related
to Franklins of $38.9 million gross ($27.2 million after tax). The final reported
net profit after tax for the full year is $90 million.
The joint venture impairment relates to two of our IGA retail joint ventures in
Queensland. The businesses experienced significant trading difficulties due to
a combination of poor weather, natural disasters and the high Australian dollar
impacting tourism, and both companies over extending themselves. Metcash
was asked to assist in developing work-out plans to restructure the companies,
which will result in the closure of unprofitable stores, the sale of other stores
to release cash and the significant restructuring of overheads and costs.
Unfortunately, this has led to the Walters family deciding to exit from all of their
IGA stores, while the Cornetts business will be reduced in scale so that it can
again become a viable operating concern.
With tough trading conditions and a need to adapt to a changing market
environment, management announced it would undertake a review of the
company’s operations in December 2011. The Review was designed to identify
opportunities to place Metcash in a stronger position by cutting costs where
possible, investing for growth where necessary and ensuring investors receive
strong returns into the future. It was conducted throughout January to March
and the results announced to the market in April.
The Review resulted in a number of strategic initiatives which has seen the
consolidation of IGA Distribution, Merchandising, Fresh and Campbells
Wholesale to create Metcash Food & Grocery. It combined the different business
pillars’ property functions in order to better identify and bring to fruition
new site opportunities to achieve maximum leverage across the portfolio of
brands and customer retail offers. The Marketing function was also centralised
and expanded to ensure improved execution and greater ‘share of voice’ in
the marketplace.
Despite the tough market conditions, the market share of the IGA network
dipped only marginally by 0.4%. We have further enhanced the network
by opening 58 new stores, completing extensions to 19 existing stores and
converting six more independent retailers to IGA. A further 79 sites have been
refurbished. These actions have added some 63,215 square metres of floor
space to the IGA network.
The IGA network grew in New South Wales with the addition of 46 Franklins
stores being handed over to independent retailers or being under sale
agreement; nine franchisee stores have converted to Supa IGA with another
one in the process of converting; 18 stores are in negotiation; and 16 stores are
still to be transitioned out of Metcash ownership to be sold to other companies
or closed.
Campbells Cash & Carry branches in regional and rural areas were impacted
by the ongoing decline of the traditional ‘mom and pop’ convenience trade.
This was exacerbated by the worsening trading environment and in particular
$1 milk and bread pricing by the chains. Campbells Cash & Carry EBITA fell by
46.9% as a result.
Metcash Annual Report 2012
2
2
Mitre 10 added a net 25,000 square metres of floor space to its network as
a result of 17 stores being converted to the Mitre 10 brand, extensions to
10 additional stores, and five new Grocery and Hardware Concept stores being
introduced. A third joint venture was announced recently with the Fagg’s group
in Victoria, this will provide a further platform for growth within the Mitre 10
network. Mitre 10 achieved sales growth of 4.5%, encouraging the Board to
exercise its call rights to acquire full ownership of the company.
ALM continued to outperform the market. The IBA stores, which include
Cellarbrations, IGA Plus Liquor and The Bottle-O, along with ALM’s strategic
partner, Thirsty Camel, turned in excellent sales growth, on a like-for-like basis
ALM’s sales increased by 3.6%, an outstanding performance in a falling liquor
market.
Equity Raising
Metcash announced an equity raising which comprised a fully underwritten
institutional placement in order to raise $325 million and a non-underwritten
Share Placement Plan to all eligible shareholders.
The equity raised will be used to fund identified acquisitions and growth
opportunities, as well as providing financial flexibility to pursue additional future
opportunities. An initial focus is the purchase of the car parts and accessories
retailer, ABG for an initial cost of $53.8 million for 75.1% of the company; the
purchase of the shares in Mitre 10 not already held by Metcash, expected to cost
$67 million (including a JV investment); and the automation upgrade of the first
Distribution Centre at a cost of $70-80 million.
ABG is Australia’s largest privately owned distributor and franchise operator
in the automotive parts after-market sector. Its business covers a network
of 241 automotive stores that operate through the Autobarn franchise, the
trade-based Autopro dealer group and to other independents through its Car
Parts division. ABG is the third largest company in this sector, with a 7% share
of a $5.6 billion national market. If Metcash chooses to buy the remaining
24.9% of the business in three to five years, the total cost will be approximately
$72 million.
Metcash plans to start upgrading its Distribution Centres, a project that will take
a number of years to complete. Utilising the latest technology from Europe,
order selection processes will be upgraded and manual handling reduced. This
is expected to significantly lower the cost of doing business and lower OH&S
risks. The new equipment will improve picking efficiencies in the Distribution
Centre and make it easier for retailers as it has the capability to pick store orders
in the exact store layout sequence, speeding up unpacking and restocking.
This also allows denser pallet assembly, which will reduce transport costs and
eliminate errors in handling. The distribution upgrade will reduce costs for both
Metcash and its retailer customers.
In addition, the equity raising will also provide Metcash with funding for
other bolt-on acquisition opportunities within existing business pillars, which
we are currently evaluating. Completion of these acquisitions is expected within
six months.
The Metcash Model
Metcash will continue to champion the independent retailer, which is the
core of our business. As a wholesale distribution and marketing company, we
continue to provide independent retailers with the means to compete effectively.
Our buying power with suppliers, world-class logistics systems and extensive
merchandising, marketing and operational support sets us, and our independent
retailers, apart from the competition.
A prime focus is also our sense of corporate responsibility to the communities
that we serve. Not only does our retail strategy require that we actively
encourage our suppliers to commit to using local ingredients in our IGA
Signature brands, but also that two cents from every IGA Signature product
sold is donated to the local IGA Community Chest. We are very proud of
this initiative, which together with affiliated programs, has raised more
than $60 million during the last 10 years for local community groups and
not-for-profit organisations.
Again, we would like to thank all of our shareholders, our dedicated staff, loyal
customers, suppliers and other stakeholders for their continued faith and support
for the company. We believe that we are about to enter a new and very exciting
chapter in the company’s history, and we look forward to you being with us on
the journey ahead.
“
Metcash will continue to
champion the independent
retailer, which is the core
of our business. As a
wholesale distribution
and marketing company,
we continue to provide
independent retailers with
the means to compete
effectively.
”
Andrew Reitzer
CEO Metcash Group of Companies
Peter Barnes
Chairman
3
Review of
Operations
Metcash
Food &
Grocery
Metcash’s largest pillar
services in excess of 3,100
independent retailers,
including IGA supermarkets,
Lucky 7 convenience stores
and other banner groups.
”
Through its national network of warehouses, Metcash Food & Grocery delivers
competitive wholesale prices for the independent outlets. The division also
supplies marketing, merchandising and buying services to the retailers.
Metcash Food & Grocery comprises IGA Distribution, IGA Fresh, Campbells
Wholesale and Merchandising. The consolidation of these groups into one pillar
was the result of the business restructuring that took place in January.
This year the pillar achieved wholesale sales of $7,711.5 million, EBITA of
$380.8 million – an EBITA margin of 4.94%. This solid growth was achieved
despite continued price deflation in a highly competitive and tough market.
A major highlight of the year was the completion of the acquisition of Interfrank
Group Holdings Pty Ltd, the owner of the Franklins chain of 90 supermarkets,
comprising 80 corporate stores and supply to 10 franchised stores, for a
consideration of approximately $190 million.
Metcash took operational control of Franklins on 30 September, 2011.
The conversion of the stores to the IGA brand, under independent owners,
is currently underway.
All existing Franklins’ franchisees have converted to the Supa IGA format.
The integration of the Franklins support office functions into Metcash has almost
been completed.
Metcash Food & Grocery commenced operation of its new Huntingwood
distribution facility in Sydney during November 2011 integrating the NSW
logistics and supply chain into one of the most modern and environmentally
friendly distribution centres in Australia.
Other highlights for Metcash Food & Grocery included adding 63,215 square
metres of new stores, conversions and extensions to the network. This included
adding 58 new stores; extensions to 19 existing sites; refurbishments to
79 existing sites; and converting six stores to IGA.
In the Fresh Foods area, Metcash built and commissioned a full service meat
processing facility in WA; launched the fresh food franchise model, Harvest
Market; as well as unveiling a new private label in Bakery.
During the year Metcash Food & Grocery created the ‘Your Favourite Brands’
Program to cement IGA’s position as the champion of consumer brands and its
strong and ongoing support to local and national brand suppliers. The ongoing
‘Locked Down Low Prices’ promotional program continued to deliver value for
customers. This program enjoys strong support from retailers, suppliers and
consumers.
Metcash Annual Report 2012
4
Other activity included the continued development of retailer web portals,
the IGA Application for online shopping and consumer websites. The
IGA Application for computers and smart phones is able to scan more than
20,000 products to create shopping lists and recipe information.
Metcash Food & Grocery continued to support the communities in which
it works. IGA Community Chest and associated IGA community programs
continued to underpin the activities of many charities and other philanthropic
ventures and this year achieved the milestone of having donated $60 million to
worthwhile causes since inception. More than $7 million of this was donated to
local schools, clubs and charities during the last 12 months.
5
Review of
Operations
Australian
Liquor
Marketers
Australian Liquor Marketers
(ALM) is a broad-range
liquor wholesaler, supplying
more than 15,000 hotels,
liquor stores, restaurants
and other licensed premises
throughout Australia.
ALM’s wholly owned subsidiary Tasman Liquor Company also operates in a
similar market in New Zealand.
ALM and its related businesses operate out of 15 distribution centres located in
each state and territory in Australia and New Zealand.
Established in December 2003, Independent Brands Australia (IBA) was
established in order to create strong national brands, and provide a suitable
framework for independent liquor retailers to compete with the chains and
secure their long-term sustainability. It provides strong marketing support and a
wide variety of retail services to its independent retailer network ensuring high
standards of execution and access to joint buying power.
IBA has four national independent retail brands: Cellarbrations, IGA Liquor,
Bottle-O and Bottle-O Neighbourhood. These banners serve as a key retail
partner for all the major liquor suppliers.
During 2012 ALM continued to outperform with sales of $2,336.2 million,
EBITA of $34.9 million with an EBITA margin of 1.49%.
During the year Club Partners was added to the IBA structure. Club Partners is
a retail group specifically for clubs which provides marketing and promotional
support throughout Australia. The first full year has seen excellent growth in club
numbers and sales, several strategies have been enacted to sustain continued
growth.
A ‘Cellarbrations on Premise’ strategy has been developed in all major states
to arrest a decline in sales to on-premise customers. It is showing excellent
results, with sales to our customers expanding significantly during the year.
Further initiatives are planned during the coming year to build on this strong
sales platform.
ALM continued its investment in infrastructure to support the independent
liquor retailers in Australia, a highlight being the move from our Silverwater
warehouse in Sydney to the purpose-built Huntingwood facility.
Metcash Annual Report 2012
6
Mitre 10
Mitre 10 is Australia’s
leading independent
hardware wholesaler, the
independent retail Mitre 10
stores are the second largest
player in the Australian
home improvement and
hardware industry.
Mitre 10 is Australia’s only independent home improvement and hardware
wholesaler to the industry comprising 423 Mitre 10 and True Value Hardware
stores. It became part of the Metcash Group in March 2010 after a 50.1%
shareholding was acquired. Metcash announced on June 20, 2012, that it
intended to exercise its right to acquire the remaining 49.9% interest in Mitre 10.
This was the second year of Mitre 10’s ‘Change the Game’ strategy designed to:
1) Strengthen the store network;
2) Harmonise the brand and store standards;
3) Improve merchandise and marketing programs; and
4) Modernise the supply chain.
Mitre 10’s independent store network is growing again after years of store
losses; it comprises 423 branded stores and more than 300 unbranded stores.
Over the last year 17 new stores have been attracted to the network
(33 new stores since the Metcash acquisition); a net 25,000 square metres
have been added to the network, including 13,000 square metres of
extensions to 10 existing stores; and five grocery and hardware concept stores
have been developed.
Mitre 10 has focussed on harmonising the brand to ensure consistency of
branding across its network. More than 60% of the independent Mitre 10
network carries the Blue and White branding, the focus over the next 12 months
will be to improve internal store standards. A new Hardware Store Assessment
has been introduced to drive the change; each store receives a rating out of
100 based on performance of customer service and store standards.
A new merchandise program resulted in impressive increases in warehouse
sales and retail charge-back during the latest year. Significant changes were
made to catalogues, resulting in a cleaner, tighter version which is tailored to
different store sizes.
The rationalisation of ranges and the development of a National Distribution
Centre to support slow moving stock helped to shape a successful year. The
warehouse now contains more than 20,000 lines, while a price reduction on
more than 4,500 lines has enabled the network to compete more effectively
against other national chains.
The Mighty Helpful Mitre 10 brand was brought to life through the sponsorship
of Channel Nine’s high rating The Block, this will continue in 2012. Other
initiatives include launching e-commerce initiatives and a new loyalty program.
A major program is underway to modernise the Mitre 10 supply chain, with a
National Distribution Centre for slow moving stock to commence operations.
This will allow space to be freed up and will allow greater efficiency in each of
the four State Distribution Centres.
7
Corporate
Responsibility and
Environment
Sustainability and corporate
social responsibility projects
are grouped at Metcash
under four key headings –
Our Business (including our
people, buildings, policies
and governance), Our
Products, Our Customers
and Our Suppliers.
Metcash is committed to operating in a sustainable manner. Social, economic,
environmental and ethical considerations continue to be embedded into our
day-to-day business practices.
The Metcash Sustainability Committee, comprising the CEO and key senior
management, has formally adopted a suite of policies to tie together all Metcash
activities in these important areas of business, to guide future projects and to
improve cross function planning and integration.
Sustainable Indicators*
Carbon Emissions (Scope 1 & 2)
Waste to landfill
Recycling
Packaged food donated to Foodbank
*Reporting period is the year to June.
tonnes
tonnes
tonnes
tonnes
2011
102,638
43,360
4,532
225
Metcash was recognised for climate change risk and opportunity planning, for
the second year running and was again admitted into the Carbon Disclosure
Project Leaders’ Index.
The company has voluntarily commenced to report on sustainability
management. This is done through the Carbon Disclosure Project and the
Dow Jones Sustainability Index. The company also reports under the Australian
Packaging Covenant and responds to investor and non-governmental
organisation requests for information.
Metcash and its customers continue to support the communities in which the
company operates. Two cents from every IGA Signature product and one cent
from every Black & Gold product sold goes to the IGA Community Chest. The
IGA Community Chest has raised in excess of $60 million during the last 10
years. More than 8,000 local community groups, not-for-profit organisations
and other community causes have been supported. The funds are allocated by
IGA store owners.
Other community projects have included campaigns that raised more than
$120,000 to help fund two McGrath IGA Breast Care Nurse positions and
Metcash becoming a national donor to Foodbank, which collects usable
but unsaleable packaged products for donation to welfare agencies to feed
vulnerable members of our society. Food donations weighing 225 tonnes
were made in 2012, helping to reduce landfill waste, related fees and carbon
emissions and to deliver 7,000 meals to the under-privileged.
Metcash Annual Report 2012
8
Communication with stakeholders and the wider community is carried out
through a variety of vehicles. These include the company’s annual report,
issuing regular media releases, through the company website www.metcash.com
and through the separate business division websites. Feedback to the company
is encouraged through the consumer support hotline, direct mail, and online
feedback forms.
The company communicates with staff on sustainability issues through the
publication of a bi-monthly staff magazine, quarterly staff DVD and the intranet.
Feedback is invited via email, through anonymous feedback boxes at every
Metcash worksite, as well as through regular surveys.
Metcash recognises that its impact on society and the environment extends
beyond its own business operations to that of suppliers and customers.
Projects have been put in place to encourage suppliers to support sustainable
business practices.
The company works with suppliers on issues raised by consumers to ensure the
private label products continue to improve. Metcash has been a signatory to the
Australian Packaging Covenant since 2000, and has a process in place to review
the packaging of each product in terms of usability and environmental sensitivity.
Private label products contain no genetically modified ingredients. Metcash is
also a member of the Roundtable on Sustainable Palm Oil, and is implementing
a Palm Oil Action Plan in accordance with the membership.
The Metcash Sustainable Supply Chain Management program ensures that
suppliers meet minimum standards for safety, ethics and environmental impact.
The program includes third party auditing of suppliers.
The Sustainability Team offers each Metcash customer the Sustainability@
Retail Support Program. The program is a simple way for retailers to commence
or continue exploring business opportunities, and minimise risks, related to
sustainability. Through the program, retailers are offered an energy audit, access
to finance for implementing projects found in the audit, ongoing monitoring and
review of electricity tariffs.
To complement the Sustainability@Retail Program, retailers are supported
with regular communication through state and national meetings, magazines,
newsletters and websites.
Diversity at Metcash
Metcash recognises the benefits to be gained
from a workforce that brings together a range
of skills, backgrounds and experiences. By
maintaining a diverse workforce, Metcash
seeks to attract and retain the best talent to
deliver the best results for our shareholders.
Metcash’s objectives in this area are enshrined
in the Metcash Diversity Policy. Management
has a particular focus on improving gender
balance in the workplace by enhancing
recruitment practices and increasing the
representation of women in management
roles through improved attraction strategies
and talent management.
Gender at Metcash
Women constitute nearly a third of the
workforce at Metcash, hold 23% of
managerial roles including a Director on
the Metcash Board.
During the 2013 financial year, Metcash will
measure and review the company’s progress
against the following objectives:
–
–
–
–
–
Increase efforts to improving the proportion
of women employed at all levels of
the workplace. Attention will focus on
the number of female applicants to
vacant positions, the number of female
appointments to positions and the number
of females on interview committees
Enhance Metcash’s inclusive culture by
continuing to raise awareness of the
advantages of diversity through training
of senior executives, managers and
employees;
Recognise that employees at all levels
of the company may have domestic
responsibilities and accommodate their
family commitments through flexible work
options;
Pilot a program that provides opportunities
to attract and develop Aboriginal and
Torres Strait Islander employees; and
Develop relationships with disability
employment providers to increase the
representation of employees with a
disability.
9
Key
Management
Andrew Reitzer
B Comm MBL
Adrian Gratwicke
BA (Hons), ACA, MBA
CEO Metcash Group of Companies
Chief Financial Officer
Date of Appointment to Metcash Limited:
18 April 2005.
Andrew Reitzer has 34 years’ experience
in the retail/wholesale industry. Previous
positions at Metro Cash and Carry Limited
include Group Operations Director,
heading operations in Russia and Israel,
Marketing Director, IT Director and
managing various operating divisions.
An experienced finance professional,
Mr Gratwicke brings over 24 years’
commercial and industry experience to
his position as Chief Financial Officer.
Since joining Metcash in April 1998, he
has held several senior roles including
National Accounting Manager, National
Commercial Manager IGA Distribution,
General Manager Mergers & Acquisitions,
Risk and Investor Relations and General
Manager Finance.
Silvestro Morabito
Associate Diploma in Food Retailing (FIT)
Executive Diploma in Retail Management
(ACFRS)
COO Metcash Food & Grocery
Silvestro Morabito has over 32 years
experience in grocery retailing both
locally and internationally. During his
15 years with Safeway in Victoria, he held
various senior positions in operations
and IT. Silvestro was recruited by Dairy
Farm International and held various
senior management roles including
Director of Operations & Merchandising
Manager for Freshfoods (Woolworths NZ)
in New Zealand and CEO of the Cold
Storage Supermarket group in Singapore.
Prior to his appointment as General
Manager, IGA Distribution WA in 2006,
Silvestro was appointed CEO of Action
Supermarkets overseeing the sale of the
supermarkets and the consolidation of
the FAL retail brands. In 2010 he was
appointed CEO of IGA Distribution.
In January 2012 Silvestro was appointed
Chief Operating Officer of Metcash Food
& Grocery.
Metcash Annual Report 2012
10
Fergus Collins
B Comm (Hons) (Dublin),
B Sc Mgmt (Ireland), MBA
CEO Australian Liquor Marketers
Mark Laidlaw
B Ec (Monash), CPA
Greg Watson
LLM, Dip Law
CEO Mitre 10 Australia
General Counsel and Company Secretary
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
Officer and is a graduate of the
Metcash Executive Leadership Program.
Mark Laidlaw joined IGA Distribution
in April 2001 as Commercial Manager,
Victoria and was promoted to General
Manager, Victoria in July 2004. He was
appointed CEO of Mitre 10 Australia in
May 2010 and has extensive experience
in general management, sales,
operations and commercial management.
Greg Watson joined Metcash in April
2005 as Legal Counsel and was
promoted to General Counsel in February
2008. He was appointed Company
Secretary in December 2010.
Greg has 22 years professional and
industry experience initially in private
legal practice, followed by corporate
legal counsel roles with multinational
FMCG organisations.
11
Board
of Directors
Peter L Barnes
B Comm (Hons) MBA
Andrew Reitzer
B Comm MBL
Non-executive
Chairman
CEO Metcash Group
of Companies
Fiona Balfour
BA (Hons), MBA,
Grad Dip Information
Management, FAICD
Non-executive Director
Michael R Butler
B Sc, MBA
Neil D Hamilton
LLB
Non-executive Director
Non-executive Director
Date of Appointment
to Metcash Limited:
18 April 2005.
Date of Appointment
to Metcash Limited:
18 April 2005.
Date of Appointment
to Metcash Limited:
16 November 2010.
Date of Appointment
to Metcash Limited:
8 February 2007.
Date of Appointment
to Metcash Limited:
7 February 2008.
Member of the Audit
Risk & Compliance
Committee.
Michael 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
currently a director of
N. M. Superannuation
Pty Ltd and AMP
Superannuation
Limited. He was
previously a Non-
executive Director and
Chairman of various
public and private
companies.
Chairman of the
Remuneration
& Nomination
Committee.
Neil Hamilton is based
in Perth and has over
30 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.
Neil is Chairman of
OZ Minerals Ltd and
Miclyn Express Offshore
Limited. He was
appointed Chairman
of the Remuneration &
Nomination Committee
on 1 September 2010.
Andrew Reitzer has
34 years’ experience
in the retail/wholesale
industry. Previous
positions at Metro
Cash and Carry
Limited include Group
Operations Director,
heading operations
in Russia and Israel,
Marketing Director,
IT Director and
managing various
operating divisions.
Member of the
Remuneration
& Nomination
Committee.
Peter Barnes is
Chairman of Ansell
Ltd, a Director of
News Corporation
and Chairman of
Samuel Smith & Sons
Pty Ltd. He also serves
as Chairman of the
Melbourne Business
School. Mr Barnes was
formerly an executive
with Philip Morris
International Inc. and
held several senior
management positions
both here in Australia
and overseas.
Peter was appointed
Chairman of Metcash
Limited on 2 September
2010 and has been
involved with the
Metcash business
as a Director since
November 1999.
Member of the
Remuneration
& Nomination
Committee.
Fiona Balfour is
a former Chief
Information Officer and
Member of the Qantas
Executive Committee.
Fiona was subsequently
Chief Information
Officer of Telstra and
executive adviser at
each of Medibank
Private and Link Market
Services.
Fiona is a Director of
Salmat Limited and
TAL Australia. She
is a Member of the
Information Technology
Faculty Advisory Board
of Monash University,
a Councillor of Knox
Grammar School,
a Member and
Councillor of Chief
Executive Women and
a former Trustee of the
National Breast Cancer
Foundation. Fiona
was appointed a Fellow
of Monash University
in 2010.
Metcash Annual Report 2012
12
Edwin Jankelowitz
B Comm, CA (SA)
Richard A Longes
BA, LLB, MBA
Ian R Morrice
MBA
Non-executive Director
Non-executive Director
Non-executive Director
V. Dudley Rubin
CA (SA), H DIP BDP,
MBA
Non-executive Director
Date of Appointment
to Metcash Limited:
18 April 2005.
Date of Appointment
to Metcash Limited:
18 April 2005.
Date of Appointment
to Metcash Limited:
12 June 2012.
Date of Appointment
to Metcash Limited:
18 April 2005.
Member of the Audit
Committee.
Dudley Rubin is a
chartered accountant
and is a director of
various companies
trading in Africa.
He has had 29 years’
industry experience and
has been involved with
the Metcash business
as a Director since
May 1998.
Chairman of the Audit
Risk & Compliance
Committee.
Solicitor (non-
practising).
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, Investec
Bank (Australia) Ltd
and Elanora Country
Club Ltd.
Richard was formerly
a co-founder and
principal of the
corporate advisory and
private equity firm,
Wentworth Associates,
and prior to that a
partner of Freehill
Hollingdale & Page,
solicitors.
Ian Morrice has over
three decades of
retail experience as
Managing Director,
Trading Director and
Retail Director for
some of the UK’s
leading retailers,
including Dixons and
The Kingfisher Group.
Ian was Group CEO
and Managing Director
of New Zealand’s
Warehouse Group
from 2004 to 2011.
Ian’s key areas of
expertise include
strategy, brand and
category development,
multi-channel and
new store format roll-
out, product sourcing
and supply chain
innovation.
Ian is an adviser to
the Board of Spotlight
Pty Ltd and associated
companies.
Edwin Jankelowitz is
Chairman of Kervale
Investments Pty Ltd
and a Non-executive
Director of Chester
Capital Pty Ltd.
He was previously
CFO of Metcash and
was appointed a
Non-executive Director
in 2011.
After qualifying as a
Chartered Accountant
he spent 12 years
with Adcock Ingram
Ltd eventually being
promoted to Group
Company Secretary
and Finance Director.
He then consulted in
business management
and tax before taking a
position with Caxton Ltd
where he progressed
to Finance Director,
Managing Director and
Chairman.
Edwin has spent over
38 years in corporate
offices of listed
companies and was a
member of the Income
Tax Special Court
in South Africa for
20 years.
13
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.
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 Corporate Governance Principles
and Recommendations (Principles).
Summary of Compliance with Principles and Recommendations
The table below summarises the Company’s compliance with the Corporate Governance Council’s recommendations.
Recommendation
Principle 1 – Lay solid foundations for management and oversight
Comply
Yes/No
Reference/
Explanation
1.1 Companies should establish the functions reserved to the Board and those
Yes
www.metcash.com
delegated to senior executives and disclose those functions.
1.2 Companies should disclose the process for evaluating the performance of senior
Yes
Page 16
executives.
1.3 Companies should provide the information indicated in the guide to reporting
Yes
Page 16
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 Officer 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.
Yes
Yes
Yes
Yes
Yes
Page 16
Page 18
Page 18
Page 18
Page 19
2.6 Companies should provide the information indicated in the guide to reporting
Yes
Page 19
on Principle 2.
Principle 3 – Promote ethical and responsible decision-making
3.1 Companies should establish a code of conduct and disclose the code or a summary
Yes
www.metcash.com
of the code as to:
–
–
–
the practices necessary to maintain confidence 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.
Yes
Yes
Page 19
Page 19
Yes
Page 19
3.2 Companies should establish a policy concerning diversity and disclose the policy
Yes
www.metcash.com
or a summary of that policy. The policy should include requirements for the Board
to establish measurable objectives for achieving gender diversity for the Board to
assess annually both the objectives and progress in achieving them.
3.3 Companies should disclose in each annual report the measurable objectives for
achieving gender diversity set by the Board and in accordance with the diversity
policy and progress towards achieving them.
Yes
Page 19
3.4 Companies should disclose in each annual report the proportion of women
Yes
Page 20
employees in the whole organisation, women in senior executive positions and
on the Board.
3.5 Companies should provide the information indicated in the guide to reporting
Yes
Page 20
on Principle 3.
Metcash Annual Report 2012
14
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:
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.
–
–
–
–
4.3 The Audit Committee should have a formal charter.
4.4 Companies should provide the information indicated in the guide to reporting
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
Yes
Page 20
Page 20
Yes
Yes
Page 20
www.metcash.com
Yes
www.metcash.com
5.2 Companies should provide the information indicated in the guide to reporting
Yes
Page 22
on Principle 5.
Principle 6 – Respect the rights of shareholders
6.1 Companies should design a communications policy for promoting effective
Yes
Page 22
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
Yes
Page 22
on Principle 6.
Principle 7 – Recognise and manage risk
7.1 Companies should establish policies for the oversight and management of material
Yes
Page 23
business risks and disclose a summary of those policies.
7.2 The Board should require management to design and implement the risk
Yes
Page 24
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.
7.3 The Board should disclose whether it has received assurance from the Chief
Yes
Page 24
Executive Officer (or equivalent) and the Chief Financial Officer (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 financial
reporting risks.
7.4 Companies should provide the information indicated in the guide to reporting
Yes
Page 24
on Principle 7.
Principle 8 – Remunerate fairly and responsibly
8.1 The Board should establish a Remuneration Committee.
8.2 The Remuneration Committee should be structured so that it:
–
–
–
consists of a majority of Independent Directors;
is chaired by an Independent Chair
has at least three members.
Yes
Yes
Page 25
Page 25
8.3 Companies should clearly distinguish the structure of Non-executive Directors’
Yes
Page 25
remuneration from that of Executive Directors and senior executives.
8.4 Companies should provide the information indicated in the guide to reporting
Yes
Page 25
on Principle 8.
15
Corporate Governance Statement – continued
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 Officer and senior executives, who operate in accordance with Board-approved policies and delegated limits
of authority.
The principal functions of the Board include:
– charting the direction, strategies and financial objectives of the Company;
– monitoring implementation of those strategies and the operational and financial performance and risk of each of the
Company’s activities;
– reviewing major capital expenditure, acquisitions, divestments and funding;
– reviewing performance, remuneration and succession of senior management;
– 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;
– 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 Officer
against qualitative and quantitative criteria, which include profit performance, other financial measures and achievement
of the Company’s strategic objectives. During the 2012 financial year, the Chief Executive Officer’s performance was
reviewed in accordance with the process specified above.
The Company maintains a performance evaluation process which 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 2012 financial 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 its decision to the Board.
When a vacancy exists, or when it is considered that the Board would benefit 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.
Non-executive Directors are not appointed for a fixed term but, under the Company’s Constitution, must stand for
re-election every three years by rotation and are subject to Australian Securities Exchange (ASX) Listing Rules and
Corporations Act provisions.
Metcash Annual Report 2012
16
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 office held by each Director, please refer to
page 12, headed ‘Board of Directors’, of this report.
As of the date of this report the Board comprised of nine Directors, eight of whom are considered to be Non-executive,
and seven of whom are considered by the Board to be Independent Directors.
The Board of Metcash is currently constituted as follows:
Independent Non-executive Directors
Independent Directors hold key positions that include chairing the Board and the Board Audit Risk & Compliance
Committee (AR&CC) and Remuneration & Nomination Committee. They provide an external perspective and checks and
balances for the interests of all shareholders.
The Board has adopted a definition of independence which is derived from the definition 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:
– is a substantial shareholder of the Company or an officer 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 officer of or otherwise associated
directly or indirectly with a material supplier or customer;
– 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 definition, and in light of
information disclosed by those Directors that may be relevant to this assessment.
With the exception of Mr Jankelowitz Non-executive Directors are considered to be independent for the reasons set out
as follows.
– None of the Directors referred to above is a substantial shareholder 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, Longes, Morrice and Mrs Balfour are not employed by, nor have they previously been
employed by, the Company or another Group member. Mr Rubin was 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 Rubin remained as a Metcash Director. 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 his role as a Metoz employee did not put him in a position of authority, responsibility, and/or directing
the activities of the Company itself and, that this fact, combined with the seven year elapsed period are important
factors in determining his capacity to bring independent judgement to bear on Metcash Board deliberations. At all
times, he has been a Non-executive Director of Metcash. Given the specific facts of his situation, this test does not
preclude him from being considered independent, and having considered all relevant factors the Board has concluded
that Mr Rubin is an Independent Director.
– None of the Non-executive Directors referred to above 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 Non-executive Directors referred to above is a material supplier or customer of the Company or an
officer 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.
17
Corporate Governance Statement – continued
– Mr Barnes is Chairman of Ansell Limited, a Director of News Corporation and Chairman of Samuel Smith & Sons
Pty Ltd, he also serves as Chairman of the Melbourne Business School. Mrs Balfour is a Director of Salmat Limited.
Mr Butler is Chairman of AMP Superannuation Limited and all these organisations are suppliers to the Company under
normal commercial terms and conditions. However, the level of purchases involved is not considered material, being
less than 0.2% of the Company’s total purchases.
– None of the Non-executive Directors referred to above has a contractual relationship with the Company or another
group member, other than as a Director of the Company.
Mr Edwin Jankelowitz retired as an executive of the Company on 31 March 2011. Mr Jankelowitz remained a Director of
the Company from that date. The Board considers Mr Jankelowitz to be a Non-executive Director but not an Independent
Director.
Executive Directors
The Board has one Executive Director, Mr Andrew Reitzer. Mr Andrew Reitzer is the Company’s Chief Executive Officer.
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 Directors from seeking 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 Peter Barnes is considered by the Board to be an Independent Director.
The roles of Chair and Chief Executive Officer should not be exercised by the same individual
The roles of Chief Executive Officer 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 qualifications and attendance at meetings during the past financial year.
Qualifications
2012 financial year
2012 financial year
Meetings Held during
Meetings Attended during
Member
P L Barnes
BComm (Hons), MBA
N D Hamilton (Chairman)
LLB
F Balfour
BA (Hons), MBA
Responsibilities of the Committee include to:
– advise the Board on remuneration of the CEO and senior management;
– advise the Board on performance-linked compensation for management;
5
5
5
5
5
5
– oversee the administration of the Metcash Performance Rights Plan and the Metcash Employees Option Plan;
– advise the Board on directorship and Board Committee appointments, Board succession planning and performance of
the CEO; and
– 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’.
Metcash Annual Report 2012
18
Process for evaluating the performance of the Board, its Committees and Individual Directors
Annual reviews of the Board, its Committees and Directors are performed using a self-evaluation questionnaire, with
an independent review to be conducted each third year using a recognised external Board Performance Consultant.
This process was first adopted in 2008.
An internal Board Performance review was conducted in 2012. The Board Performance review covered the areas of:
Board structure and role; Committees; Board composition and succession; meeting processes; strategy and planning;
performance monitoring; communication; and progress towards addressing the key recommendations from the 2011
external Board Performance review.
The Directors agreed 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 comprise an appropriate level of
knowledge and attributes reflective of the Company’s needs and necessary to maintain effective governance.
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:
– equal employment opportunity, discrimination and harassment;
– security of Company records and assets and confidentiality guidelines;
– conflict of interest, acceptance of gifts, entertainment and services;
– fraud, corruption and irregular transactions;
– legal compliance;
– honest ethical behaviour;
– 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 functions and related 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’.
The Company also has a ‘Serious Complaints’ policy which 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’.
Establish a Diversity Policy
The Metcash Diversity Policy was approved by the Board of Metcash in May 2011 and was introduced across the business
supported by an educational program detailing our aspirational goals, changes to processes and procedures and giving
practical advice and guidance on how the Policy is to be implemented.
The Policy is now located on the Company’s website, www.metcash.com under the heading ‘Corporate Governance’.
The Company’s approach to diversity is in the broad context however, the Board and management recognises that it has
an immediate issue to address and that is gender balance.
Set measurable objectives and report progress towards achieving them
Metcash’s measurable objectives for achieving gender diversity are set by the Board as required by the Policy and include:
– Increasing female representation at the Business Unit Leader (BUL) level;
– Increasing women performing Supervisor/Managerial roles across Metcash; and
– Decreasing the female to male ‘pay gap’ within the business.
In the 12 months since May 2011:
– Female representation at the Business Unit Leader level has gone from 4% to 9%.
– The ‘pay gap’ at the BUL level has narrowed and female BUL earnings have moved from 78% to 97% of men’s
BUL earnings.
– Average pay for women across all levels (excluding Executives) is up 10% year on year from 86% to 96% of men’s
average earnings.
– The number of women performing Supervisor/Managerial roles across Metcash has seen an increase of 3% year
on year.
– Female representation on the Board is 11.1%.
19
Corporate Governance Statement – continued
Disclose the proportion of women employees in the whole organisation, Senior Executive positions and on
the Board
Current proportion of women at each level across the Metcash Group as reported in the most recent EOWA submission:
Female
Male
Female
Male
Female
Full Time Part Time Full Time Part Time
Casual
Casual
Total
Senior Exec
Business Unit Leader
Senior Manager
0
4
35
Supervisor/Manager
153
0
0
3
7
13
41
153
440
0
0
0
1
Employee
Total
819
239
2439
105
1011
249
3086
106
0
0
0
0
443
443
Male
Total
13
41
153
441
Female
Male
Total
%
%
13
45
191
601
0% 100%
9%
91%
20%
80%
27%
73%
0
0
0
0
0
4
38
160
651
1501
3195 4696
32%
68%
651
1703
3843 5546
31%
69%
From June 2012, Metcash enters its second phase of diversity initiatives and will focus on the following key aspects:
– Building a culture around successful flexible working arrangements, including the introduction of a management
tool kit;
– Roll out of education program around sub-conscious bias and how it impacts every-day decision making;
– Continuing a relationship with Job Support to implement a plan to increase disability employment opportunities
through their programs; and
– Piloting an Indigenous Recruitment Portfolio to increase the indigenous employee population within Metcash.
Principle 4 – Safeguard integrity in financial reporting
The Board should establish an Audit Committee
The Board has an Audit, Risk & Compliance Committee (AR&CC) which reports regularly to the Board.
The membership of the AR&CC consists of the Non-executive Independent Directors who are listed below, together with
details of their qualifications and attendance at meetings during the past financial year.
Member
R A Longes (Chairman)
M R Butler
V D Rubin
Qualifications
BA, LLB, MBA
B Sc, MBA
CA(SA), HDip BDP, MBA
Meetings held during
Meetings attended during
2012 financial year
2012 financial year
6
6
6
6
6
6
The function of the AR&CC is to advise on the establishment and maintenance of a framework of internal control, effective
management of financial and other risks, compliance with laws and regulations and appropriate ethical standards for
the management of the Company. It also gives the Board additional assurance regarding the quality and reliability of
financial information prepared for use by the Board in determining policies or for inclusion in the financial 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.
Committee Charter
The Committee’s Charter, which is summarised below, sets out the specific 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 financial and
other risks through ensuring that systems and management processes are in place to identify and manage operational,
financial and compliance risks.
Metcash Annual Report 2012
20
Specific areas of review include:
– overseeing the establishment of a framework within which risks to the Company are identified and mitigated and risk
avoidance processes are established and the effectiveness of the risk management process monitored;
– financial risk and exposure;
– occupational health and safety;
– environmental issues;
– Hazard Analysis and Critical Control Points (HACCP) based food safety program; and
– integrity of information technology systems.
The Committee reviews the effectiveness of risk management policies and procedures by:
– reviewing monthly financial performance against budget and updated forecasts at least quarterly;
– reviewing the internal audit of the Group’s financial controls, taxation compliance and adherence to policies and
regulations;
– reviewing annually the effectiveness and adequacy of the Group’s insurance program;
– the provision of reliable management and financial 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 financial 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 financial 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 efficient 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 findings and management response;
− reviewing the independence of the external auditor;
− ensuring auditors have the necessary access to Company information and staff to fulfil their obligations.
The AR&CC acts to ensure that operational, financial 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 financial and operational results.
The Committee meets regularly, in private, with the Lead External Audit Partner and the Chief Audit Executive.
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 AR&CC.
The Committee would select suitable candidates for the role, issue and evaluate tenders, interview the candidates and
then make a recommendation to the Board.
21
Corporate Governance Statement – continued
Principle 5 – Make timely and balanced disclosure
Compliance with ASX Listing Rule Disclosure Requirements
The Metcash Market Disclosure Policy is designed to ensure that:
– there is full and timely disclosure of the Company’s activities to shareholders and the market, in accordance with the
Company’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 the Company.
The policy reflects the Company’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 reflects any legislative or regulatory requirements or ‘best
practice’ developments.
Disclosure responsibilities and procedures
The Company has designated the Chairman, Chief Executive Officer and Company Secretary as ‘Disclosure Officers’.
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 Officers have responsibility for reviewing proposed disclosures and making decisions in relation to what
information can or should be disclosed to the market.
All company staff are required to inform a Disclosure Officer of any potential ‘price sensitive’ information concerning the
Company as soon as they become aware of it. Staff may speak to their Business Pillar CEO or a Disclosure Officer 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
The Company believes that shareholder and market confidence 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
financial 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 continues to encourage electronic communication with shareholders to facilitate the speedy and inexpensive
dissemination of information. This is being done through a program to obtain and update shareholder email addresses, to
alert them to new information on the Metcash website and to distribute information, including the Annual Report, to them
directly. The Company’s website contains more than five years of ASX and media announcements and Annual Reports.
This information is shown under the heading ‘Investor Centre’. Provision has also been made for electronic proxy voting.
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.
Metcash Annual Report 2012
22
Principle 7 – Recognise and manage risk
Establish Policies for the oversight and management of material business risk
The 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 Group Risk and Assurance Department with oversight from the AR&CC, a Committee of the Board, implements a
continuous process of communication with internal stakeholders at each stage of the risk management process. It also
conducts annual examinations of Metcash’s external and internal environments, so as to establish the parameters within
which risks must be managed.
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’.
The Company’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 ISO 31000:2009 as the basis for its Risk Management Framework. Metcash has
implemented its Risk Management Framework through, amongst other things, the identification of material business risk
categories and the development of risk profiles for all the major segments and functions of the business.
Material business risks that have been identified and included in the Risk Management Framework are grouped under
the following categories:
– Asset Management;
– Business Continuity;
– Health, Safety, Environment, Community (HSEC);
– Compliance and Legal (Non-HSEC);
– Employee;
– Financial Reporting;
– Criminal Activity;
– Information Technology;
– Reputational;
– Solvency;
– Operations/Warehouse;
– Merchandising, Customer and Supplier (i.e. Supply chain); and
– Strategic/Sustainability.
The risk management process includes the following elements:
– Risk assessment;
– risk identification;
– risk analysis;
– risk treatment;
– Monitoring and review; and
– Recording the risk management process.
Roles and responsibilities
In addition to the specific responsibilities and reporting roles of the Group Risk and Assurance Department, the Metcash
Executive Team is regularly required to report to the Board as to the emergence of any significant risk issues and the
management of previously reported material risk issues.
The AR&CC is responsible for monitoring management’s risk processes other than corporate strategy, the oversight of
which is a Board responsibility. On behalf of the Board, the AR&CC monitors those risk events that could prevent the
achievement of the Company’s corporate strategies.
23
Corporate Governance Statement – continued
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. These employees are also required to advise management of increasing or new risk exposures and
significant operational incidents as they become aware of them.
This ‘front line’ of risk management is supported by specialised risk management teams covering specific areas of risk
within Metcash and by independent reviews conducted by the Metcash Assurance 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 ISO
31000:2009. This system is used to profile all potential risks by identifying, prioritising and managing such risks across
the Company.
In accordance with the Board’s direction management has designed and implemented this risk management and internal
control system and 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 profiles are in
place for existing and 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:
– confirmation of key controls;
– reporting of incidents: recording and monitoring of key risk indicators (monitoring of residual risk levels);
– follow-up on risk treatment/action plans;
– escalation of issues; and
– regular reporting processes to all levels of management.
The ongoing process of communication, consultation, monitoring and review enables management to demonstrate
continuous improvement whilst encouraging greater ownership by individuals across the business.
The risk management and internal control system provides regular 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 profiles for each pillar/business, business/functional objectives, critical
success factors, processes, compliance data, incidents and corrective actions.
The Risk Management Policy and Risk Management Framework documents form an integral part of the Company’s risk
management. The Board continues to review these and provide support in defining clear accountabilities, responsibilities
and embedding Enterprise Risk Management in planning, strategy and company culture. The Board and the AR&CC
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
business risks.
Chief Executive Officer and Chief Financial Officer Declaration
The Chief Executive Officer and the Chief Financial Officer provided a declaration in writing to the Board in accordance
with section 295A of the Corporations Act that, among other things, the Company’s financial reports present a true and
fair view, in all material respects, of the Company’s financial 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 Officer and the Chief Financial Officer that the
declaration provided by them in accordance with section 295A of the Corporations Act 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 financial reporting risks.
Metcash Annual Report 2012
24
Principle 8 – Remunerate fairly and responsibly
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’.
Distinguish the structure of Non-executive Directors’ remuneration from that of Executive Directors and
Senior Executives
Remuneration Policy
The Company’s Remuneration Policy can be found on the Metcash 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 as well as the structural differences of the remuneration of Non-executive Directors,
as compared with that of Executive Directors and Senior Executives are also contained in section 3 (page 40) of the
Remuneration Report contained within the Directors’ Report.
The Company’s policy which prohibits Directors and Executives from 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 Company 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 section 12 (page 53) of the ‘Remuneration Report’ contained within the Directors’ Report.
Termination entitlements of CEO and senior executives
Refer to section 9 (page 50) of the ‘Remuneration Report’ contained within the Directors’ Report.
25
Financial
Report
Contents
Inventories
Income Tax
Directors’ Report
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
1 Corporate Information
2 Summary of Significant Accounting Policies
3 Segment Information
4 Revenues and Expenses
5
6 Dividends Paid and Proposed
7 Cash and Cash Equivalents
8 Trade and Other Receivables (Current)
9
10 Derivative Financial Instruments
11 Receivables (Non-Current)
12 Investments in Associates
13 Other Financial Assets (Non-Current)
14 Property, Plant and Equipment
15 Intangible Assets and Goodwill
16 Trade and Other Payables
17 Interest Bearing Loans and Borrowings
18 Derivative Financial Instruments
19 Provisions
20 Other Financial Liabilities
21 Contributed Equity and Reserves
22 Financial Risk Management Objectives and Policies
23 Commitments
24 Related Party Disclosure
25 Shared-based Payments
26 Directors’ and Executives’ Disclosures
27 Information Relating to Metcash Limited (the Parent Entity)
28 Auditor’s Remuneration
29 Business Combinations
30 Earnings per Share
31 Discontinued Operations
32 Contingent Assets and Liabilities
33 Subsequent Events
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate Information
27
57
58
59
60
61
61
61
72
74
75
77
78
78
80
80
81
81
83
83
84
86
87
88
88
89
89
91
96
98
104
107
111
111
112
113
113
114
115
117
118
119
121
IBC
Metcash Annual Report 2012
26
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
Your Directors submit their report of Metcash Limited (the Company) and its controlled entities (the Group) for the year ended
30 April 2012.
DIRECTORS
The names and details of the Company’s Directors in office during the financial year and up to the date of this report are as
follows:
Peter L Barnes (Chairman)
Andrew Reitzer (CEO)
Fiona E Balfour
Michael R Butler
Neil D Hamilton
Edwin M Jankelowitz
Richard A Longes
Ian R Morrice (appointed 12 June 2012)
V Dudley Rubin
Directors were in office for this entire period unless otherwise stated.
REVIEW AND RESULTS OF OPERATIONS
Summary Results &
Underlying Earnings Reconciliation (Unaudited)
Segment result (Note 3)
Share based payments and other unallocated amounts (Note 3)
Underlying EBITA
Net finance costs (Note 3)
Underlying profit before tax
Tax expense on underlying profit
Non controlling interests
Underlying earnings (i)
Amortisation of customer relationships (Note 4(v))
Significant items expense (Note 4(vi))
Tax benefit on significant items
Net profit for the period from continuing operations attributable
to equity holders of the parent
Net loss after tax from discontinued operations attributable to
equity holders of the parent
Net profit for the period
2012
$'m
453.8
(2.6)
451.2
(67.6)
383.6
(112.9)
(8.2)
262.5
(9.7)
(176.7)
41.1
117.2
(27.2)
90.0
2011
$'m
444.4
(6.4)
438.0
(66.3)
371.7
(106.1)
(9.4)
256.2
(7.9)
(6.9)
-
241.4
-
241.4
Earnings per share (EPS)
equivalent
2012
cps
2011
cps
34.1
33.4
15.2
31.5
11.7
31.5
(i) Underlying earnings represents reported profit after tax from continuing operations attributable to equity holders of the parent, excluding
intangible amortisation and significant items after tax, as reconciled in the table above. Underlying earnings per share (EPS) is calculated
by dividing underlying earnings by the weighted average shares outstanding during the period.
The Directors have provided underlying earnings information after careful consideration of the requirements and guidelines contained in
ASIC Regulatory Guide 230 (Disclosing non-IFRS financial information). Underlying earnings information, including this reconciliation to
net profit, has been provided in order to meet the demands from users of the financial reports for information to better understand aspects
of the Group’s performance. The Directors believe that underlying earnings is the most appropriate measure of the maintainable earnings
of the Group and thereby best reflects the core drivers and ongoing influences upon those earnings. For this reason, the impact of
significant items is excluded from the measurement of underlying earnings and specific information on these items is provided under Note
4 of these financial statements. Underlying earnings and underlying EPS are used for the purposes of providing guidance to shareholders
and the market and are calculated on a consistent basis each year. Underlying earnings and underlying EPS are also used as the basis
for short and long term incentive scheme rewards as detailed in the remuneration report.
3
27
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
The Group recorded an underlying profit of $262.5 million for the 2012 financial year, up 2.5% on the 2011 result. The Group
generated $12.3 billion of wholesale sales revenue which was down marginally against the prior year which included a 53rd
week. The trading environment during 2012 was difficult and impacted participants across the Australian retail sector. Metcash
completed a comprehensive review of its strategy in order to combat the effects of on-going deflation, rising utility costs, a
highly value driven consumer and a persistent marketing war between the two large grocery chains.
By maintaining market share and driving costs out of the business, Metcash increased its underlying EPS by 2.1% to 34.1
cents. As a result, the Board was pleased to announce a final fully franked dividend of 16.5 cents per share (total 2012
dividends 28.0 cents), which was up 3.7% on the prior year.
However, the tough trading conditions and the strategic review initiative have necessitated the recognition of significant item
expenses totalling $176.7 million ($135.6 million after tax). This included an impairment charge of $105.7 million in respect of
Metcash’s investment in the Cornetts and Walters Queensland joint venture businesses. Metcash’s strategic review, which
concluded in April 2012, is expected to position the Group for solid returns into the future. The results include a significant item
charge of $42.5 million from this group restructure, arising mainly from costs associated with the closure or sale of 15
Campbells branches and redundancy costs associated with the formation of the new Food & Grocery division. Metcash
completed the acquisition of the Franklins group in September 2011. This acquisition facilitated the rationalisation of a number
of warehouses in NSW, which are being consolidated into the new facility at Huntingwood. The costs of acquisition and the
related distribution centre closure costs have resulted in $28.5 million in significant items expenses. Further details of these
significant items are provided in Note 4(vi) to the financial statements.
The trading result for the Franklins retail stores has been classified within discontinued operations in these financial
statements (Note 31). The Franklins corporate stores recorded a retail loss of $27.2 million after tax for the period. Metcash
intends to re-badge the Franklins stores to IGA and dispose of them to independent retailers. It is anticipated that the superior
retailing skills of independent operators together with their focussed and localised differentiated offers will see these stores
quickly turned around.
The reported net profit for the period attributable to equity holders was $90.0 million (2011: $241.4m), with the reduction due
to the recognition of the abovementioned significant items and discontinued operations. Despite this, the Group generated
operating cashflows of $284.3 million during 2012, up considerably over the prior year. These cashflows were partly invested
in the Franklins acquisition and also applied towards providing a consistently high and fully franked dividend return to our
shareholders. The shareholder returns over the last five years have been presented in the following table.
SHAREHOLDER RETURNS
Basic earnings per share (cents)
Earnings per share from continuing operations before significant items (cents)
Dividend declared per share (cents)
Dividend payout ratio on earnings per share (%) (i)
Return on equity (%) (ii)
Share price at balance date ($)
Dividend yield (%)(i)
YEAR ENDED 30 APRIL
2012
2011
2010
2009
2008
11.7
34.1
28.0
82.1
18.9
3.98
7.0
31.5
33.4
27.0
80.8
17.2
4.08
6.6
29.7
32.0
26.0
83.3
17.3
4.15
5.8
26.5
29.5
24.0
83.6
17.2
4.12
5.0
25.9
26.1
21.0
83.0
15.6
4.22
3.2
(i)
(ii)
Calculated using underlying earnings per share as calculated in the review and results of operations
Calculated using underlying earnings as calculated in the review and results of operations
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
During the year, Metcash completed the acquisition of the Franklins group, as detailed in Note 29 to the financial statements.
Metcash also announced the results of its strategic review in April 2012, which is addressed in the review and results of
operations.
4
Metcash Annual Report 2012
28
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Metcash intends to dispose of the Franklins corporate stores to independent retailers and further integrate Franklins into the
Metcash group.
Subsequent to the end of the financial year, Metcash also announced that it would raise $325 million in additional capital
through a fully underwritten institutional placement and up to $50 million through a Share Placement Plan to Metcash
shareholders with a record date of 27 June 2012, details of which are provided in Note 33 to the financial statements.
Metcash also announced the acquisition of a 75.1% equity interest in the Automotive Brands Group and, conditionally,
announced its intention to take full ownership of the Mitre 10 business. Further details of these acquisitions have been
provided in Note 33 to the financial statements.
EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
DIVIDENDS ON ORDINARY SHARES
Final dividend for the 2012 year - payable in July 2012 (i)
Dividends paid during the year:
Interim dividend for the 2012 year - paid in December 2011
Final dividend for the 2011 year - paid in July 2011
Total dividends paid during the 2012 financial year
Total dividends declared in respect of the 2012 financial year (i)
2012
CENTS
11.69
11.66
$’m
127.3
88.7
123.0
211.7
216.0
CENTS
16.5
11.5
16.0
27.5
28.0
(i) Subsequent to the end of the financial year, Metcash announced that it would raise approximately $325 million in additional ordinary share capital through a
fully underwritten institutional placement (Note 33). The shares issued under the institutional placement will be entitled to receive the 2012 final dividend of
16.5 cents per share. The 2012 final dividend amount of $127.3 million and the total 2012 dividends declared amount of $216.0 million included in this table
do not include the additional amount payable as a result of the institutional placement, as it is not yet possible to determine the number of shares that will be
issued
SUBSEQUENT EVENTS
(a)
Equity raising
On 28 June 2012 Metcash announced that it would raise approximately $325 million in additional ordinary share capital
through a fully underwritten institutional placement. The issue price of the new shares will be determined through a book build
from an underwritten floor price, determined as a discount to the previous day’s closing share price. The shares issued under
the institutional placement will be entitled to receive the 2012 final dividend declared of 16.5 cents per share.
Metcash also announced that subsequent to the institutional placement it would offer a Share Placement Plan (SPP) to
Metcash shareholders with a record date of 27 June 2012. The SPP proceeds will be capped at $50 million and will not be
underwritten. The SPP will allow eligible shareholders to apply for up to $15,000 of ordinary shares at the lesser of the
dividend adjusted institutional placement offer price and the 5 day volume weighted average price less a discount at the end of
the SPP offer period. The offer period is expected to run from 9 July 2012 to 23 July 2012. Ordinary shares issued under the
SPP will not be entitled to receive the 2012 final dividend.
5
29
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
SUBSEQUENT EVENTS (Continued)
(b)
Business acquisitions
Mitre 10 Group
Metcash currently holds a 50.1% equity interest in Mittenmet Limited (Mittenmet), through ownership of 100% of the ordinary
shares issued by Mittenmet. Mittenmet is the parent entity of the Mitre 10 group. The remaining 49.9% equity interest in
Mittenmet is currently held by the owners of Redeemable Convertible Preference Shares (RCPS) issued by Mittenmet.
On 20 June 2012 the Group announced that, subject to the Mittenmet group’s financial statements for the year ended June
2012 being in accordance with Metcash’s expectations and there being no material adverse changes to the market or
operations prior to the financial statements being finalised, it intended to exercise its right to require Mittenmet Limited to
redeem all of its issued RCPS. If the RCPS are redeemed, Metcash will hold a 100% equity interest in Mittenmet. The
redemption price for the RCPS is based on a formula that is set out in the 2010 Mitre 10 Scheme Booklet. Broadly, the RCPS
redemption price reflects the RCPS proportionate share of a multiple of 5.8 times the Mittenmet group EBITDA for the year
ended June 2012 and other adjustments, including for net debt at 30 June 2012.
Autobarn & Autopro Group
On 28 June 2012 the Group entered into a binding agreement to acquire a 75.1% equity interest in the Automotive Brands
Group for $53.8 million, with settlement expected to occur early in July 2012. The Automotive Brands Group is the franchisor
and distributor of aftermarket automotive parts to retail stores trading under the Autobarn and Autopro brand names. It also
supplies other independent automotive parts stores. The equity interest acquired by Metcash is subject to an adjustment after
the finalisation of the results for the year ending on 30 June 2013, at which point the ownership structure will be confirmed.
Metcash’s equity interest will increase above 75.1% if the 2013 EBITDA is lower than expected.
Except as noted above, there are no events that have occurred after the end of the financial year that would materially affect
the reported results or would require disclosure in this report.
CORPORATE INFORMATION
Corporate structure
The principal activities of the Group during the year were the wholesale distribution and marketing of groceries, liquor,
hardware and associated products.
6
Metcash Annual Report 2012
30
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
DIRECTORS QUALIFICATIONS AND EXPERIENCE
The qualifications and experience of Directors is set out below.
Peter L Barnes
B COMMERCE (HONS) MBA
Non Executive Chairman
Date of Appointment to Metcash Limited:
18 April 2005
Peter Barnes is Chairman of Ansell Limited, a Director of News Corporation and Chairman of Samuel Smith & Sons Pty Ltd.
He also serves as Chairman of the Melbourne Business School. Mr Barnes was formerly an executive with Phillip Morris
International Inc. and held several senior management positions both here in Australia and overseas. Peter was appointed
Chairman of Metcash Limited on 2 September 2010 and has been involved with the Metcash business as a director since
November 1999.
Andrew Reitzer
B COMM MBL
CEO Metcash Group of Companies
Date of Appointment to Metcash Limited:
18 April 2005
Andrew Reitzer has 34 years’ experience in the retail/wholesale industry. Previous positions at Metro Cash and Carry Limited
include Group Operations Director, heading operations in Russia and Israel, Marketing Director, IT Director and managing
various operating divisions.
Fiona E Balfour
BA (Hons), MBA, GRAD DIP INFORMATION MANAGEMENT, FAICD
Non Executive Director
Date of Appointment to Metcash Limited:
16 November 2010
Fiona Balfour is a former Chief Information Officer and Member of the Qantas Executive Committee with responsibilities for
information technology, procurement, property and human resource services for Qantas worldwide. Fiona was subsequently
Chief Information Officer of Telstra and executive advisor at each of Medibank Private and Link Market Services.
Fiona is an Independent Non-executive Director of Salmat Limited, an Independent Non-executive Director of TAL Australia, a
Member of the Information Technology Faculty Advisory Board of Monash University, a Councillor of Knox Grammar School
and a Member and Councillor of Chief Executive Women. She is a former Non-executive director of Societe Internationale of
Télécommunications Aéronautiques (SITA SC) – Geneva, Switzerland; and former Trustee of the National Breast Cancer
Foundation. Fiona was appointed a Fellow of Monash University in 2010.
Michael R Butler
B SC, MBA, FAICD
Non executive Director
Date of Appointment to Metcash Limited:
8 February 2007
Michael 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 currently a director of N.M. Superannuation
Pty Ltd and AMP Superannuation Limited. He was previously a Non executive Director and Chairman of various public and
private companies.
Neil D Hamilton
LLB
Non executive Director
Date of Appointment to Metcash Limited:
7 February 2008
Neil Hamilton is based in Perth and has over 30 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.
Neil is Chairman of OZ Minerals Ltd and Miclyn Express Offshore Limited. He was appointed Chairman of the Remuneration
& Nomination Committee on 1 September 2010.
7
31
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
Edwin M Jankelowitz
B COMM, CA (SA)
Non executive Director
Date of Appointment to Metcash Limited:
18 April 2005
Edwin Jankelowitz is Chairman of Kervale Investments Pty Ltd and a Non-executive director of Chester Capital Pty Ltd. He
was previously CFO of Metcash and was appointed a Non-executive Director in 2011.
After qualifying as a Chartered Accountant he spent 12 years with Adcock Ingram Ltd eventually being promoted to Group
Company Secretary and Finance Director. He then consulted in business management and tax before taking a position with
Caxton Ltd where he progressed to Finance Director, Managing Director and Chairman.
Edwin has spent over 38 years in corporate offices of listed companies and was a member of the Income Tax Special Court in
South Africa for 20 years.
Richard A Longes
BA, LLB, MBA
Non executive Director
Date of Appointment to Metcash Limited:
18 April 2005
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.
Richard was formerly a co-founder and principal of the corporate advisory and private equity firm, Wentworth Associates, and
prior to that a partner of Freehill Hollingdale & Page, solicitors.
Ian R Morrice
MBA
Date of Appointment to Metcash Limited: 12 June 2012
Ian Morrice has over three decades of retail experience as Managing Director, Trading Director and Retail Director for some of
the UK’s leading retailers, including Dixons and The Kingfisher Group. Ian was Group CEO and Managing Director of New
Zealand’s Warehouse Group from 2004 to 2011.
Ian’s key areas of expertise include strategy, brand and category development, multi-channel and new store format roll-out,
product sourcing and supply chain innovation.
Ian is an Advisor to the Board of Spotlight Pty Ltd and associated companies.
V Dudley Rubin
CA (SA), H DIP BDP, MBA
Non executive Director
Date of Appointment to Metcash Limited:
18 April 2005
Dudley Rubin is a chartered accountant and is a director of various companies trading in Africa. He has had 29 years’ industry
experience and has been involved with the Metcash business as a director since May 1998.
COMPANY SECRETARY
Greg Watson
General Counsel and Company Secretary
Greg Watson joined Metcash in April 2005 as Legal Counsel and was promoted to General Counsel in February 2008. He was
appointed Company Secretary in December 2010.
Greg has over 21 years professional and industry experience initially in private legal practice, followed by corporate legal
counsel roles with multinational FMCG organisations. Greg is a graduate of the Metcash Executive Leadership Program.
8
Metcash Annual Report 2012
32
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
DIRECTORS’ MEETINGS
The number of meetings of Directors (including meetings of committees of Directors) held during the year and the number of
meetings attended is as follows:
Number of meetings held:
Number of meetings attended:
Peter L Barnes
Andrew Reitzer
Fiona E Balfour
Michael R Butler
Neil D Hamilton
Edwin M Jankelowitz
Richard A Longes
V Dudley Rubin
All Directors were eligible to attend all meetings held.
COMMITTEE MEMBERSHIP
DIRECTORS'
MEETINGS
REMUNERATION
& NOMINATION
AUDIT RISK &
COMPLIANCE
9
9
9
9
9
9
8
7
6
5
5
-
5
-
5
-
-
-
6
-
-
-
6
-
-
6
6
At the date of this report, the Company had an Audit Risk & Compliance Committee and a Remuneration & Nomination
Committee. Members acting on these Board committees during the year were:
AUDIT RISK & COMPLIANCE
REMUNERATION & NOMINATION
Richard A Longes (chairman)
Neil D Hamilton (chairman)
Michael R Butler
V Dudley Rubin
Fiona E Balfour
Peter L Barnes
INTERESTS IN SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE
As at the date of this report, the Directors held the following shares and options in Metcash Limited:
Peter L Barnes
Andrew Reitzer
Fiona E Balfour
Michael R Butler
Neil D Hamilton
Edwin M Jankelowitz
Richard A Longes
Ian R Morrice(i)
V Dudley Rubin
(i) Mr Morrice was appointed as a Non-executive Director on 12 June 2012.
NUMBER OF
ORDINARY SHARES
177,083
1,750,000
13,600
50,000
20,000
320,000
128,154
-
15,000
9
NUMBER OF OPTIONS
OVER ORDINARY
SHARES
-
-
-
-
-
-
-
-
-
33
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
SHARE OPTIONS & PERFORMANCE RIGHTS
Unissued shares
As at the date of this report, there were 14,925,014 unissued ordinary shares under option (15,361,985 at balance date). As
at the date of this report, there were 2,721,237 unissued ordinary shares under performance rights (2,749,718 at balance
date). Refer to Note 25 of the financial statements for further details of the performance rights and options outstanding.
Shares issued as a result of options and performance rights
During the financial year, employees and executives have exercised options to acquire 2,492,220 fully paid ordinary shares in
the Company at a weighted average exercise price of $3.93 per share. Since the end of the financial year no options have
been exercised. There were no shares issued in the Company during or since the end of the financial year in respect of
performance rights.
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 Officers. The
Company has entered into Deeds of Indemnity and Access with F J Conroy, C P Curran, T A Haggai, R A Allan, J J
David, Sir Leo Hielscher, B A Hogan, M Wesslink, Joao Louis Jardim (Lou Jardin), C dos Santos and M Jablonski
together with all of the current Directors and certain other officers of the Company. This indemnity is against any liability
to third parties (other than related Metcash companies), by such officers unless the liability arises out of conduct
involving a lack of good faith. The indemnity also includes costs or expenses incurred by an officer in unsuccessfully
defending proceedings relating to that person’s position.
(ii) During the financial year, the Company has paid, or agreed to pay, a premium in respect of a contract of insurance
insuring officers (and any persons who are officers 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.
ROUNDING
The amounts contained in this report and in the financial 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.
10
Metcash Annual Report 2012
34
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
REMUNERATION REPORT
1.
MESSAGE FROM THE CHAIRMAN OF THE REMUNERATION & NOMINATION COMMITTEE
(UNAUDITED)
The Metcash Limited Remuneration and Nomination Committee present the Remuneration Report for the year ended 30 April
2012. The remuneration report outlines the remuneration arrangements for key management personnel (‘KMP’) comprising
the Group Executives and the Non-Executive directors.
Metcash is a marketing and distribution specialist operating in the competitive grocery, liquor and hardware industries. As
“Champion of the Independent Retailer”, Metcash provides the scale necessary to create competitive buying power, together
with marketing, distribution, financial expertise and support. Metcash’s collective relationships with the independent retailers
and suppliers compete as the ‘Third Force’ in Australia’s consumer staples market against the vertically integrated chains.
Metcash generates wholesale revenue through its distribution and marketing activities, leaving the independent retailer to earn
the retail revenue from sales to the end consumer. The nature of these operations therefore requires expertise across
distribution and retail and competition for high calibre staff in these areas is intense.
Metcash’s Board is committed to a remuneration framework which ensures that Metcash attracts and retains a high quality
Executive team who are appropriately rewarded for achieving financial outcomes for the Company which provide shareholders
with reasonable returns. To achieve this, a significant portion of executive remuneration is at risk and subject to company
performance. The Company’s remuneration policy and structure for its Group Executives is unchanged from the previous year
and comprises a combination of the following two main components:
•
•
a fixed component which is the total base salary and includes compulsory employer superannuation contributions;
and
a variable ‘at risk’ component which is performance based and comprises a cash based short term incentive (‘STI’)
plan that is linked to both the performance of the Company and individual performance, and an executive long term
incentive (‘LTI’) Program under which executives, at the discretion of the Board, are offered performance rights which
vest if the Company achieves certain hurdles over a three year period.
The combination of fixed and variable ‘at risk’ remuneration ensures that Metcash’s remuneration policies are consistent with
generally accepted best practice.
In the 2012 financial year the Remuneration and Nomination Committee undertook a review of Metcash’s remuneration report
and has made significant changes to the form and content of the report which now includes a remuneration guide. The
Committee has also specifically addressed key information in relation to the Company’s STI and LTI schemes and the basis
for determining who are the KMP and KMP remuneration. The Company is committed to disclosing Metcash’s KMP
remuneration in a clear and transparent manner.
Events and Board Decisions Affecting Remuneration
Particular events and actions that occurred during the current financial year that have impacted the Company’s remuneration
structure and outcomes for 2012 and will affect the outcomes for the 2013 financial year were as follows:
• The Board reviewed the roles and responsibilities of the members of the Executive and in the current financial year
Messrs Bean, Dubbelman, Hale, Jablonski, Johnston, Rumpler and Watson, were not considered KMP.
• On 25 January 2012, the Company announced the amalgamation of the IGA>D, IGA Fresh and Campbells Cash and
Carry business pillars as well as the merchandising and advertising functions into a single Food and Grocery division.
Mr Morabito was appointed as the Chief Operating Officer (‘COO’) of this division and he was promoted to a higher
remuneration grading in recognition of his increased responsibilities.
11
35
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
•
•
The Fixed Annual Remuneration (‘FAR’) of the CEO and KMP were reviewed with regard to market pay movements
and the material increase in the scope of Mr Morabito’s responsibilities.
A marginal increase to FAR was approved for the CEO. The total reported pay level for the CEO for 2011/2012 is
$1,120,897 which is down by $3,494,412 from his reported pay level in the previous year. The reduction primarily
reflects the decreased likelihood that the performance hurdle for the ‘at risk’ cash LTI will be met and therefore that
the incentive will vest and become payable when the plan concludes in 2013.
Market related adjustments were made to other KMP remuneration.
The ‘at target’ pay levels for the CEO and KMP are set with reference to other S&P/ASX 51-100 companies and
peers with the Consumer Staples group.
On behalf of the Committee, I commend the guide and this year’s remuneration report to you.
Neil Hamilton
Chairman, Remuneration & Nomination Committee
12
Metcash Annual Report 2012
36
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
2.
EXECUTIVE REMUNERATION GUIDE (UNAUDITED)
Overview
This short guide is intended to provide shareholders with an overview of KMP remuneration outcomes for 2012 having regard
to the Company’s 2012 performance, as well as a brief update on the actions that the Board and Remuneration & Nomination
Committee have taken to improve the reporting of the Company’s remuneration practices. This guide is not audited and the
information provided is in addition to the audited information set out in sections 3 to 12 of the formal remuneration report.
Company Performance
The 2012 financial year was challenging. Deflation evident since 2010, fuelled by the high Australian dollar, continued to
impact Metcash’s core food and grocery business and the industry in general. The Board and Executives have remained
focussed on achieving sustainable performance, in spite of the constraints.
Total sales for the year were $12,255.1 million and underlying EBITA rose by 3.0%, with underlying profit after tax for the year
increasing by 2.5% translating into an underlying EPS growth of 2.1%. Net profit for the year attributable to equity holders of
the parent was $90.0 million (2011: $241.4 million). Net profit was affected by the following items, the final calculation of which
has been independently audited (the references to Notes are to the attached financial statements):
the Franklins acquisition and restructure costs of $28.5 million ($21.9 million after tax) (refer Note 4);
•
• group restructuring costs of $42.5 million ($30.5 million after tax), as announced to the ASX on 3 April 2012 (refer Note 4);
• associate impairment of $105.7 million ($83.2 million after tax), as announced to the ASX on 3 April 2012 (refer Note 4);
and
• a $27.2 million loss after tax from discontinued operations (refer Note 31).
A full reconciliation between underlying earnings and reported profit is included in the review and results of operations section
of the Directors’ Report. The effect of these items is shown in the reported figures below.
EBITA Reported
EBITA Underlying
EPS Reported
EPS Underlying
Cents/share
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Total Revenue
Wholesale Revenue
2008
2009
2010
2011
2012
PBT Reported
400
300
200
100
0
2008
2009
2010
2011
2012
$’m
500.0
400.0
300.0
200.0
100.0
0.0
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
13
37
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
2012 Remuneration Outcomes
Short term incentive
As outlined below, Company performance was reflected in executive remuneration outcomes for 2012. The key metrics used
in determining the quantum of STI payable are sales which was $12,255.1 million (2011: $12,364.0 million), underlying
earnings before interest, tax and amortisation of $451.2 million (2011: $438.0 million) and underlying profit after amortisation
and before tax which was $373.9 million (2011: $363.8 million).
Within the Group each Business Pillar and the Corporate Team have separate STI schemes, designed to align each
executive's incentives to the financial objectives of the pillar or team concerned and which aggregate to overall group
objectives. Two key KPIs are utilised, being - sales revenue and profit. The Board considers and forms a matrix to measure
performance starting at a base level that the Board considers to be the minimum level of acceptable performance (plus the
cost of the STI payments as the scheme is self funding) to qualify for an STI payment, moving to a target (usually budget) at
which approximately 73% of the STI is achieved with provision to earn up to 100% of the STI at a stretch performance level.
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 profit budgets.
STI payments for the year were paid at an average of approximately 43% of the maximum entitlement, with the remainder
being forfeited. This reflected a 40% achievement against corporate sales and profit targets, whilst business pillar
achievement levels ranged from zero to 93% of maximum. The actual results by KMP are presented in Tables 6.1 and 6.2.
Long term incentive
Metcash experienced significant growth in the four years preceding the 2011 financial year and in accordance with the
Group’s legacy LTI plans the following entitlements accrued to executives in the 2012 financial year:
•
•
•
The April 2007 Cash LTI incentive of $1 million achieved 85.26% of target entitling the scheme participants to a
payment of $852,644 (full details of the scheme are contained in section 8 of this report)
20% of the options issued to Mr Gratwicke and Mr Rumpler in 2008 vested in the current period. The options have an
exercise price of $4.27 per option and expire on 7 February 2014 (full details of the scheme are contained in section
8 of this report); and
The Performance Rights granted under the Rights Plan in December 2010 and December 2011 will each be subject
to a performance test in FY2013 and FY2014 respectively. Present forecasts indicate that they are unlikely to meet
the minimum performance hurdles
Remuneration actually received
The accounting standards require the calculation of remuneration on an accrual basis of including the use of sophisticated
valuation models for long term share based incentives. The accounting standards require the recognition of long term
incentives over the associated vesting period based on assumptions that may or may not eventuate and without regard to the
actual economic benefit ultimately derived by the executive from the incentive. Because of potential confusion in interpreting
remuneration table values the Board has provided details of actual remuneration received by executives during the reporting
period in the unaudited table below. These figures represent the fixed remuneration actually paid over 2012, as well as the
value of STI benefits that will be received as a result of performance in 2012 and the value of LTI’s for 2012. The audited
accounting value of remuneration received during the 2012 financial year, reported in accordance with statutory obligations
and the accounting standards, has been presented in table 10.1 of the remuneration report.
14
Metcash Annual Report 2012
38
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
Table 2.1 Remuneration actually received (unaudited)
Name
A Reitzer
A Gratwicke
S Morabito
F Collins
M Laidlaw
Total
Fixed (1)
$
STI(2)
$
2,134,928
600,000
709,302
852,966
537,731
516,103
227,052
124,620
259,255
249,482
LTI(3)
$
-
949
3,491
857,389(5)
-
Other(4)
$
Total
$
36,957
2,771,885
58,555
48,048
48,425
14,445
995,858
1,029,125
1,702,800
780,030
4,751,030
1,460,409
861,829
206,430
7,279,698
(1) Fixed remuneration includes superannuation and accrued annual leave
(2) The STI amount represents the value of STI to be paid in July 2012 and relates to the achievement of the relevant
performance conditions in respect of the 2012 financial year as set out in Table 10.1 of the Remuneration Report.
(3) The value of share based long term incentives calculated in accordance with the accounting standards is reported in Table
10.1 of the Remuneration Report. The above LTI column is unaudited and records the actual economic value realised by
the executive as a result of exercising options or performance rights vesting. The economic value of performance rights
reflects the market value of shares issued to the executive when the performance rights vest and are converted into
shares. The economic value of options represents the difference between the exercise price of the options and the value of
the relevant shares on exercise date.
(4) Other amounts include the value of other benefits that have been determined in accordance with the accounting standards,
and are consistent with the amounts disclosed in the ‘other remuneration’ in Table 10.1 of the Remuneration Report. The
other amounts also include accrued long service leave.
(5) Mr Collins was a participant in the April 2007 Cash LTI plan which provided maximum reward of up to $1 million subject to
the achievement of hurdles over a five-year period. The audited results reflect an achievement of 85.26% based on
performance over the five year period from 2007 to 2012. In accordance with the Accounting Standards an accrual for the
LTI of $200,000 was made for each of the 2008, 2009, 2010 and 2011 financial years and $52,644 during the current year.
The total amount payable to Mr Collins under the 2007 LTI plan is therefore $852,644, as set out in section 8 of this report.
Initiatives
In addition to this Guide and the actual remuneration table above (which reflects recommendation 8 of the Productivity
Commission’s 2010 Report into Executive Remuneration), the report now includes:
• more detailed disclosure of STI targets in line with suggestions for improvement from shareholders and other
stakeholders;
• voluntary disclosure of the procedures in place for the engagement of external remuneration consultants and the fees
paid to them, even though the Company is not required to report these fees until next year’s report; and
• clearer discussion of the Company’s remuneration governance structures and the link between the Company’s
performance and remuneration outcomes.
The Remuneration and Nomination Committee has initiated a review of the Company’s total targeted remuneration offer,
including its market competitiveness for future financial years. Following this review, the Board, adopting the recommendation
of the Remuneration and Nomination Committee, has resolved to update the Company’s at risk remuneration to introduce the
following elements.
Short term incentive:
• maximum target performance by members of the Executive Team will result in the payment of an STI equal to 12
months fixed remuneration;
• deferring the release of 25% of any STI awarded to a member of the Executive Team for a 12 month period;
• should the Executive no longer be employed by the Company on the scheduled payment date, the deferred
component will be forfeited;
releasing the deferred 25% component of the STI by way of Metcash equity, and
•
• For calculation of FY2013 STI, the Board will adjust, as considered appropriate, for the impacts of significant items.
Long term incentive:
• commencing with the FY2013 grant, the performance hurdles will be indexed by reference to a calculation based on
the inflation/deflation on the Company’s goods sold in the current year as compared to the prior year, thereby
providing targets that reward management performance unaffected by inflation.
15
39
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
3.
WHO DOES THIS REPORT COVER? (AUDITED)
This Remuneration Report, which comprises sections 3 to 12 inclusive, is prepared in accordance with the statutory
requirements (section 300A) of the Corporations Act 2001. The information set out in sections 3 to 12 of this remuneration
report has been audited in accordance with section 308(3C) of the Corporations Act 2011 and accounting standards.
The report sets out the remuneration details for the Non-Executive Directors, the CEO and the group executives of Metcash,
who together have the authority and responsibility for planning, directing and controlling the activities of the Group. For the
purposes of this report, the CEO and the group executives are referred to as the KMP.
Non-Executive Directors(1)
Name
Peter Barnes
Fiona Balfour
Michael Butler
Neil Hamilton
Edwin Jankelowitz
Richard Longes
Dudley Rubin
Position
Chairman
Director
Director
Director
Director
Director
Director
All non-executive directors held their current positions for the entire 2012 financial year
(1)
KMP
Name
A Reitzer
A Gratwicke
S Morabito
F Collins
M Laidlaw
Senior Managers
Position
Chief Executive Officer & Director
Chief Financial Officer
Period KMP
The whole year
The whole year
Chief Operating Officer, Food & Grocery
The whole year
Chief Executive Officer, ALM
Chief Executive Officer, Mitre 10
The whole year
The whole year
Name
H Rumpler
Position
IGA Fresh
M Jablonski
Merchandise
Period
The whole year
The whole year
Disclosures relating to Messrs Rumpler and Jablonski have been included as the 4th and 5th highest remunerated senior
managers of the Company for the year.
16
Metcash Annual Report 2012
40
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
4.
HOW REMUNERATION DECISIONS ARE MADE (AUDITED)
The diagram below illustrates how decisions are made with respect to remuneration of KMP and non-executive directors.
Maintains overall responsibility and accountability for oversight of Metcash’s remuneration policy and
practices.
BOARD
Approves, having regard to recommendations of the Remuneration & Nomination Committee:
•
•
the CEO’s remuneration package;
the remuneration and terms of any incentives for any executive directors, the Head of Internal Audit, the
Company Secretary and all other direct reports to the CEO, at least annually; and
the remuneration of the non-executive directors.
•
REMUNERATION AND OTHER
EXTERNAL CONSULTANTS
Support the Remuneration & Nomination
Committee by providing independent:
•
•
•
advice on remuneration quantum and
structure;
benchmarking data and market
practice information about other listed
companies; and
advice regarding legal and regulatory
issues that impact on remuneration
arrangements.
REMUNERATION & NOMINATION
COMMITTEE
Primarily responsible for:
•
•
•
reviewing and advising the Board
annually on the remuneration and
components of remuneration for the
CEO and his direct reports;
reviewing and making
recommendations to the Board
regarding the design of all executive
incentive plans and the total proposed
payments from each executive
incentive plan; and
reviewing and recommending to the
Board the level of remuneration for
non-executive directors.
The process the Remuneration & Nomination Committee uses for engaging external consultants is designed to ensure their
independence from management and, in particular, KMP.
PricewaterhouseCoopers was the only remuneration consultant who provided advice to the Remuneration & Nomination
Committee during FY2012.
Next financial year, the Company will be required to disclose certain information about remuneration consultants who provide
a “remuneration recommendation”, as the term is defined in the Corporations Act 2001. While the requirements do not apply to
the Company for FY2012, the Company has chosen to disclose, in the table below, certain details about the engagement of
PricewaterhouseCoopers in the interests of transparency.
Remuneration
consultant
Pricewaterhouse
Coopers
Appointed
by
Remuneration
& Nomination
Committee
Nature of work
Benchmarking in relation to CEO and
CFO remuneration, preliminary analysis of
LTI structure and advice on LTI
performance hurdle
Fees paid
$47,500
17
41
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
5.
KMP REMUNERATION (AUDITED)
Policy and Approach
The Board is committed to developing and maintaining a remuneration framework that attracts and retains quality executives
and aligns the interests of the members of the KMP with shareholder interests by rewarding high performance that results in
increased shareholder value. The particular principles that guide the Remuneration and Nomination Committee when they set
KMP remuneration are listed below.
• Attract and retain talent - Metcash operates in the highly competitive food, liquor and hardware industries. Remuneration
packages are structured to ensure that they remain market competitive and take into account the individual’s role and
performance. Fixed salaries are determined, in part, by reference to benchmarking data relating to companies in the ASX
Top 51-100. In addition, business specific criteria are considered. The “at-risk” components of remuneration (featuring
short and long term elements) are designed to motivate individual and group performance. The fixed and variable ‘at risk’
remuneration in aggregate is designed to be competitive in the market place and align with shareholder outcomes.
• Link remuneration to performance - A proportion of KMP remuneration is “at-risk”, which means that it is only delivered
if certain performance conditions are met. KMP are prohibited by law from hedging their “at-risk” remuneration. At risk
includes both short and long term outcomes to meet market best practice.
• Align remuneration to creation of shareholder value - KMP receive fixed remuneration and short and long term at risk
incentives designed to motivate and help achieve superior business and financial performance, benefitting shareholders.
Both short and long term KPI’s are designed to provide appropriate alignment between management and shareholders.
• Metcash’s current Key Performance Indicators (KPI’s)
Short term incentive
Metcash’s current short term cash based incentive plan is designed to reward executives for delivering on pre-determined
revenue and underlying profit before tax targets. The performance conditions are set at the beginning of each financial
year and are designed to drive successful and sustainable financial and business outcomes which are set with reference to
Board approved objectives, plans and budgets. The CEO and CFO short term cash payments are determined with
reference to Group revenue and underlying profit before tax and business pillar CEO’s with reference to Group and pillar
revenue and underlying profit before tax. Performance criteria are disclosed in section 6 of the remuneration report.
If the minimum growth targets are not met, no STI is payable.
Long term incentive
The Company’s current LTI Plan is the Metcash Performance Rights Plan (‘Rights Plan’). All Performance Rights granted
by the Company are subject to performance hurdles. These hurdles have attached objectives that must be satisfied on a
prolonged basis (usually 3 years) and which directly improve company value.
The Board considers underlying earnings per share (EPS) to be the most appropriate reflection of the underlying ongoing
profitability of the Company. There is genuine scope for individual executive performance to impact EPS outcomes and so
the Board considers EPS to be a more effective hurdle for its LTI program than largely market-based hurdles such as
relative TSR, which can vary due to external factors such as market sentiment (which do not necessarily reflect company
or executive performance). In 2012 the Board has conducted a review of remuneration and taken independent advice in
relation to the correlation between shareholder return and remuneration and concluded that earnings per share remains
the best measure of alignment between LTI and shareholder returns. Therefore, the Board has chosen the measures it
believes best meet shareholder alignment.
The Board sets and reviews the Rights Plan EPS hurdle rates annually. The earnings per share targets for each new grant
are based on factors including the Company’s strategic objectives and business plans, financial performance, state of the
industry/market and other operational measures.
For 2012, consistent with the prior year, hurdles were set at between 5% and 10% compound underlying earnings per
share growth over a three year vesting period as follows:
Achieving 5% underlying earnings per share growth results in 50% vesting.
Achieving 10% underlying earnings per share growth results in 100% vesting.
•
•
Pro-rata vesting occurs for EPS growth over 5% and under 10%. Any LTIs that do not vest are forfeited.
18
Metcash Annual Report 2012
42
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
Determination of underlying earnings
Company value improvement is expressed as an increase in revenue, underlying profit before tax and underlying earnings
per share. To provide an accurate and consistent basis of measuring this growth in value, a calculation is used to
determine underlying earnings per share. This reflects reported earnings per share from continuing operations excluding
intangible amortisation and significant items (whether positive or negative). In determining underlying earnings, the Board
takes into account material impacts on earnings arising from significant items. Having regard to STI, the impacts from
these items are taken into account when determining the STI grids. Having regard to LTI, adjustments, as considered
appropriate, are made to the calculation to account for these impacts. A reconciliation of underlying earnings to net profit is
presented in the review and results of operations in the Directors’ Report.
In addition to these core principles, the Board is committed to promoting transparency around its remuneration arrangements
and to providing shareholders and other stakeholders with clear, complete and concise information about Metcash’s
remuneration structures.
Remuneration Framework - key aspects of KMP Remuneration
Fixed Remuneration
What is included in
fixed remuneration?
Fixed remuneration comprises fixed salary, statutory superannuation benefits and any
additional benefits that form part of the arrangement including motor vehicle lease and salary
sacrifice superannuation contributions.
How is fixed
remuneration set?
Fixed remuneration is determined based on the scope and nature of an individual’s role,
qualifications, performance and experience. Market data, including in relation to the ASX 51-
100 and the company’s peers, is used to benchmark salary levels. Metcash’s policy is to
position fixed remuneration at the 65th percentile of the ASX 100. Remuneration levels need to
be competitive with those of Metcash’s competitors (including much larger businesses such as
Woolworths and Wesfarmers) so that the Company can attract and retain quality people.
How and when is
fixed remuneration
reviewed?
The Remuneration and Nomination Committee reviews KMP remuneration each year, based
on market trends and individual performance, and recommends any adjustments to the Board.
All adjustments must be approved by the Board.
Short Term Incentive (STI)
What is the STI
program?
What are the KPIs
STI is an “at-risk” component of KMP remuneration which gives KMP the opportunity to receive
an annual cash payment, dependent on performance against set key performance indicators
(KPIs).
The STI program and the KPIs set under it are intended to motivate and reward high
performance and link performance and reward.
All STIs are structured to encourage the relevant individual to exceed annual sales and profit
targets.
KPIs are tailored for individual members of the KMP depending on their role and sphere of
influence, but are all financial in nature and based on a combination of group and/or divisional
measures (primarily sales revenue and underlying profit measures).
The Board believes that financial targets are appropriate because they align with key drivers of
the business and are objectively measurable.
What is the maximum
potential STI level?
KMPs are eligible to receive an STI payment of up to a maximum of 75% of total fixed
remuneration, depending on their performance against KPIs.
19
43
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
Long Term Incentive (LTI)
What is the LTI
program?
LTI is an equity based “at-risk” component of KMP remuneration tied to the Company’s longer
term performance.
Metcash operates a Performance Right Plan introduced in June 2010. Participation in the
Performance Rights Plan gives members of the KMP an opportunity to acquire shares in the
Company if they achieve outcomes linked to the creation of long term sustainable growth for
shareholders over a performance period of at least three years. Additionally, legacy equity
programs remain open that include option and cash based incentives.
Full details are provided in Sections 7 and 8.
Why was the LTI
program adopted?
The LTI program encourages members of the KMP to focus on long term company
performance and the achievement of sustainable growth. It provides KMPs with the
opportunity to receive equity based rewards and thereby aligns their interests with
shareholder’s interests and encourages them to take a shareholder’s perspective.
What are the
performance
hurdles?
The Board believes earnings per share growth is the most appropriate measure of value
creation and considers “underlying” earnings per share to be the most accurate and consistent
basis of measuring this growth in value.
“Underlying” EPS represents reported earnings per share from continuing operations excluding
amortisation and significant items which best reflects the underlying ongoing profitability of the
Company. In determining underlying EPS, both positive and negative significant items are
excluded. A reconciliation of underlying earnings to net profit is presented in the review and
results of operations in the Directors’ Report.
What happens to LTIs
when an executive
ceases employment?
When a KMP ceases to be an employee of Metcash their unvested LTIs will lapse, except in
instances of death and disability or special circumstances as determined by the Board.
Proportion of fixed and at-risk remuneration
The relative proportions of KMP’s total remuneration granted during FY 2012 are set below:
Table 5.1 proportion of fixed and at-risk remuneration
% of Total Maximum Remuneration (annualised)
‘At risk’ – performance-
based(1)
Fixed Remuneration
STI
LTI
59.0%
46.9%
41.0%
34.3%
0.0%
18.8%
CEO
Other KMP
(1) These amounts are based on the KMP’s maximum STI and LTI opportunities. LTI value is calculated by multiplying the share performance right on grant date
by the closing share price on grant date. This assumes the performance conditions detailed in section 7 are met. The LTI does not include any value for
grants made in prior financial years.
Together, the STI and LTI components comprise a significant proportion of total remuneration, which means that a significant
amount of the CEO’s and KMP remuneration is tied to the success of Metcash and the creation of shareholder value.
There were no at risk LTI grants made to the CEO in the current period as Mr Reitzer is currently eligible for a three year cash
based LTI. The performance period for this grant commenced on 1 May 2010 and concludes on 30 April 2013. This grant will
be subject to a growth in underlying earnings per share performance hurdle, which will be tested at the end of the performance
period (refer section 8 for full details of the grant).
20
Metcash Annual Report 2012
44
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
Graph: proportion of fixed and at-risk remuneration
LTI
0%
STI
41%
FAR
59%
FAR
47%
LTI
19%
STI
34%
CEO
KMP
Company performance and remuneration
A snapshot of Metcash’s performance as measured by a range of financial and other indicators is outlined in the table below.
Table 5.2 – 5 year performance against key annual performance metrics
r
a
e
Y
l
a
i
c
n
a
n
F
i
Closing
share
price
(A$)
Share Performance
Earnings Performance
Liquidity
Dividend
p/share
(c/share)
Underlying
EPS
(c/share)
Reported
EPS
(c/share)
Underlying
EBITA ($M)
Reported
NPAT
($M)
Cash flow
from
Operations
($M)
Gearing
(Debt/(Debt
+Equity)
2011/12
2010/11
2009/10
2008/09
2007/08
3.98
4.08
4.15
4.12
4.22
28.0
27.0
26.0
24.0
21.0
34.1
33.4
32.0
29.5
26.1
11.7
31.5
29.7
26.5
25.9
451.2
438.0
401.2
371.3
333.1
90.0
241.4
227.6
202.5
197.4
284.3
142.5
294.7
248.1
197.5
42.6%
36.7%
35.5%
33.5%
33.2%
21
45
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
6.
DETERMINING STI OUTCOMES (AUDITED)
The STI program focuses behaviour towards achieving superior company and business unit performance, which deliver better
results to shareholders.
Key Performance Indicators are established and measured at different levels throughout the business:
• Corporate level - applies to most KMP
• Business level - applies to the KMP from each business pillar
After the end of each financial year, KMP performance is assessed against their individual KPIs to determine the amount of
STI to be awarded. STI awards are then paid in June or July of each year after release of the audited financial results. The
tables below set out the outcome of the assessment process for the CEO and other members of the KMP for 2012. Any STI
not paid is forfeited.
Table 6.1 STI vesting for CEO
KPI
Group Sales and underlying PBT
Table 6.2 STI vesting other KMP
KPI
A Gratwicke (CFO)
Group Sales and underlying PBT
S Morabito (COO, Food & Grocery)
Group Sales and underlying PBT
Sales and EBIT for IGA>D business
F Collins (CEO, ALM)
Group Sales and underlying PBT
Sales and EBIT for ALM business
M Laidlaw (CEO, Mitre 10)
Sales and EBIT for Mitre 10 business
H Rumpler (IGA Fresh)
Group Sales and underlying PBT
Sales and EBIT for Fresh business
M Jablonski (Merchandise)
Group Sales and underlying PBT
Maximum STI
($)
1,500,000
Vested
40%
STI achieved
($)
600,000
STI forfeited
($)
900,000
Maximum STI
($)
Vested
STI achieved
($)
STI forfeited
($)
567,630
311,551
311,551
216,046
216,046
270,375
170,198
170,198
562,298
40%
40%
-
40%
80%
93%
40%
67%
40%
227,052
340,578
124,620
-
86,418
172,837
186,931
311,551
129,628
43,209
249,482
20,893
68,079
113,465
102,119
56,733
224,919
337,379
The following two financial KPIs are used to assess performance for most members of the KMP:
• Group underlying profit before tax (PBT)
• Group sales revenue - as defined in the profit and loss accounts but exclusive of internal sales or sales not made
outside of the Metcash Group and its associated companies, but including sales to discontinued operations.
These two KPIs are used because they are clear, objective and regularly reported indicators of the performance of Metcash
and its different businesses, warehouses and stores.
The KPIs for the KMP from each business pillar include targets linked to the financial performance of their particular business
unit, to drive them to strive towards achieving better than target performance in their areas of direct responsibility.
For FY2012, the potential (or maximum) STI payable was typically set at a stretch above target sales and earnings levels.
Target sales and earnings were set at a level consistent with guidance provided to the market for FY2012. This stretch target
was only partially achieved at Group level during FY2012 and this resulted in the partial payment of STI rewards at the 40%
level. The Mitre 10, ALM and IGA Fresh business pillar results were reflected in actual STI rewards closer to their individual
stretch targets. The IGA>D pillar result did not achieve the minimum hurdle and no STI reward was payable.
22
Metcash Annual Report 2012
46
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
7.
LONG TERM INCENTIVE (AUDITED)
Objective
The objectives of the LTI program are to ensure the Company is able to attract and retain its key group executives, whilst
incentivising these executives to achieve challenging financial performance hurdles which will increase shareholder value.
Since 2010, the Board has operated the Metcash Performance Rights Plan (‘Rights Plan’).
Summary of Performance Rights
The table below sets out the Performance Rights granted to members of the KMP under the Rights Plan.
Table 7.1 Performance Rights granted to KMP
Participants
Andrew Reitzer
Adrian Gratwicke
Silvestro Morabito
Fergus Collins
Mark Laidlaw
Harry Rumpler
Michael Jablonski
The Rights Plan
Grant date
Dec 2011
Dec 2010
Dec 2011
Dec 2010
Dec 2011
Dec 2010
Dec 2011
Dec 2010
Dec 2011
Dec 2010
Dec 2011
Dec 2010
Dec 2011
Dec 2010
Vesting
date
30-Jun-14
30-Jun-13
30-Jun-14
30-Jun-13
30-Jun-14
30-Jun-13
30-Jun-14
30-Jun-13
30-Jun-14
30-Jun-13
30-Jun-14
30-Jun-13
30-Jun-14
30-Jun-13
Number
of rights
granted
-
-
73,204
59,770
72,516
70,171
55,725
53,923
46,201
49,166
43,899
42,479
71,936
70,171
Fair value per
right (at grant
date)
N/A
N/A
$3.62
$3.62
$3.62
$3.62
$3.62
$3.62
$3.62
$3.62
$3.62
$3.62
$3.62
$3.62
Vested
in
FY2012
N/A
N/A
Forfeited
in FY
2012
N/A
N/A
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Performance Rights (granted under the Rights Plan) replaced share options as the Company’s long term incentive vehicle
from 30 June 2010. Further details of Performance Rights are provided in Note 26 to the financial statements.
The key terms of the Rights Plan include:
• Each Performance Right is an entitlement to receive a fully paid ordinary share in the Company on terms and
conditions determined by the Board, including vesting conditions linked to service and performance over a 3 year
period;
• Performance Rights are offered at no cost to participants; and
• Performance Rights do not carry voting or dividend rights, however shares allocated upon vesting of Performance
Rights will carry the same rights as other ordinary shares.
23
47
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
8.
LONG TERM INCENTIVES – LEGACY PLANS (AUDITED)
April 2007 Cash LTI
A long term retention incentive of $1 million was granted to each of Mr Dubbelman (CEO Campbell’s Wholesale), Mr Bean
(CEO, Logistics and Corporate Development), Mr Collins (CEO ALM) and Mr Johnston (Chief Human Resources Officer). The
vesting of these grants was subject to the achievement of hurdles over a five-year period (a compounding 10% increase in
underlying 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 performance hurdles described above in 2012, and
if the Executive is still employed by the Company at that time.
If the compound annual growth achieved by the Company from the base year was:
•
•
•
equal to or greater than the target, then the maximum amount ($1 million) will be payable;
less than 40% of the target at the end of the five-year period, no payment will be made or;
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.
This plan concluded on 30 April 2012 and the audited results reflect an achievement of 85.26% of target. In accordance with
the rules of the Plan, each of the participants will be paid $852,644 in July 2012.
May 2009 Cash LTI
A long term retention incentive of $1 million was granted in May 2009 to Mr Gratwicke (then GM Finance, now CFO) and Mr
Rumpler (CEO of IGA Fresh). The vesting of the long term incentive grant is subject to achievement of the performance
hurdles over a five year period (a compounding 8% increase in underlying earnings per share based on 2009 underlying
earnings per share adjusted for material changes to the number of shares issued) and only payable:
•
•
on successful achievement of the performance hurdles described above 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 achieved by the Company from the base year is;
•
•
•
equal to or greater than the target, then the maximum amount ($1 million) will be paid;
less than 40% of the target at the end of the five year period, no payment will be made or;
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.
Prior to this grant Messrs Gratwicke and Rumpler were not invited to participate in any cash based LTI plan. This incentive
was provided in 2009 to ensure their equitable treatment in relation to other members of the Executive Team and to ensure
effective retention arrangements are in place.
However, in recognition that these two executives have the opportunity to earn benefits from the options issued to them in
2008 (see discussion under “Options” section below), and as these benefits 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 this 2009 LTI grant will be reduced by an amount equal to the pre-tax
profits in respect of exercising the options.
In this case, pre-tax profit 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. Therefore, the maximum amount payable to these two executives under the
retention plan will be $1 million less any applicable pre-tax profit earned from exercising the 2008 options.
24
Metcash Annual Report 2012
48
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
May 2010 Cash LTI
In May 2010 a three year retention incentive was granted to Mr Reitzer (Group CEO). The performance period for this grant
commenced on 1 May 2010 and concludes on 30 April 2013. This grant will be subject to a growth in underlying earnings per
share performance hurdle and tested at the end of the performance period.
A minimum payment of $3 million will be paid for the achievement of a 5% annual compounded growth in underlying earnings
per share for the three years, based on underlying earnings for the 2010 year, and a maximum payment of $5 million for the
achievement of a 10% or better growth in compounded underlying earnings per share over that period. Pro rata payments are
to be made for achievements between 5% and 10%.
September 2005 Options
Options issued under the 2005 option plan that had not been exercised by 1 September 2011 lapsed in accordance with the
terms and conditions of the plan.
February 2008 Options
Options were issued in February 2008 to Mr Gratwicke (then GM Finance, now CFO) and Mr Rumpler (CEO IGA Fresh), but
were not offered to Executive Directors and other members of the Executive Team. A performance hurdle applies to these
options, the hurdle being a compounding 8% increase in underlying earnings per share based on earnings per share for the
2007 financial year, which must be achieved in the financial year prior to the financial year in which a tranche of options
becomes able to be exercised.
Before these options are exercised by these members of the Executive Team, agreement is obtained from the Remuneration
and Nomination Committee which verifies that the hurdle has been achieved with confirmation from the Company’s external
auditor. The options met the performance hurdle for FY 2012.
Table 8.1 Legacy LTI Table
Number
of
Rights /
Options
granted
Fair
value
per
Right /
Option
Maximum
Cash
Payment
Vested
in
FY2012
Forfeited
in
FY2012
Vesting dates
1 May 2010 to 30 April 2013
N/A
N/A
$5,000,000
0.0%
0.0%
1 Sep 2005 to 1 Sep 2010
1,200,000
$1.27
N/A
0.0%
100.0%
1 May 2009 to 30 April 2014
N/A
N/A
$1,000,000
0.0%
0.0%
7 Feb 2008 to 7 Feb 2013
500,000
$0.88
7 Feb 2008 to 7 Feb 2013
350,000
$0.88
1 Sep 2005 to 1 Sep 2010
50,000
$1.27
N/A
N/A
N/A
20.0%
0.0%
20.0%
0.0%
0.0%
0.0%
1 May 2007 to 30 Apr 2012
N/A
N/A
$1,000,000
85.3%
14.7%
1 Sep 2005 to 1 Sep 2010
50,000
$1.27
7 Feb 2008 to 7 Feb 2013
350,000
$0.88
1 Sep 2005 to 1 Sep 2010
50,000
$1.27
N/A
N/A
N/A
0.0%
0.0%
20.0%
0.0%
0.0%
100.0%
1 May 2009 to 30 April 2014
N/A
N/A
$1,000,000
0.0%
0.0%
7 Feb 2008 to 7 Feb 2013
500,000
$0.88
1 Sep 2005 to 1 Sep 2010
50,000
$1.27
1 Sep 2005 to 1 Sep 2010
130,000
$1.27
N/A
N/A
N/A
20.0%
0.0%
0.0%
0.0%
0.0%
100.0%
Grant
Date
May-10
Sep-05
May-09
Feb-08
Feb-08
Sep-05
Apr-07
Sep-05
Feb-08
Sep-05
May-09
Feb-08
Sep-05
Sep-05
Type
LTI -
Cash
LTI -
Options
LTI -
Cash
LTI -
Options
LTI -
Options
LTI –
Options
LTI -
Cash
LTI –
Options
LTI -
Options
LTI -
Options
LTI -
Cash
LTI -
Options
LTI -
Options
LTI -
Options
Name
A Reitzer
A Gratwicke
S Morabito
F Collins
M Laidlaw
H Rumpler
M Jablonski
25
49
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
9.
SUMMARY OF SERVICE AGREEMENTS (AUDITED)
The remuneration and other terms of employment for KMP are formalised in service agreements. The material terms of the
KMP’s service agreements are set out below.
Table 9.1 Service Agreements
Name
A Reitzer(1)
A Gratwicke
S Morabito
F Collins
M Laidlaw
Agreement Term
Executive
Notice
Metcash
Notice
Redundancy
Ongoing unless notice given
3 months
15 months
Metcash Notice + 9 months
Ongoing unless notice given
3 months
Ongoing unless notice given
3 months
Ongoing unless notice given
3 months
Ongoing unless notice given
3 months
9 months
9 months
9 months
9 months
9 months
Metcash Notice + 6months
Metcash Notice + 6months
Metcash Notice + 6months
Metcash Notice + 6months
Metcash Notice + 6months
M Jablonski
Ongoing unless notice given
3 months
H Rumpler
Mr Rumpler will cease employment with Metcash on 11 October 2012. Details of his
termination payments are included in table 10.1 of this remuneration report.
New service contracts entered into post the introduction of the new termination benefits legislation in 2009 contain similar elements to other executives’
service contracts and any termination benefits provided under contracts that are subject to the new law will comply with the new twelve months of base salary
cap.
(1) Mr Reitzer’s contract has not been amended since the new federal legislation relating to termination benefits was introduced in November 2009.
(2) Executives who resign or whose employment is terminated for cause and whose short term or long term incentives are unvested at the time, forfeit their
entitlements to those unvested incentives. Executives who are retrenched or who retire from full time work before vesting of short or long term incentives or
who die whilst employed by the Company, may be allowed (or their Estate may be allowed) to keep all or part of those unvested incentives, at the discretion
of the Board.
(3) In some circumstances surrounding termination of employment, the company may require individuals to enter into non-compete arrangements with the
company, to protect the company's rights. These non-compete arrangements may require a payment to the individual in consideration of these arrangements.
26
Metcash Annual Report 2012
50
Directors’ Report – Year ended 30 April 2012
T
h
e
a
m
o
u
n
t
i
l
n
c
u
d
e
d
i
n
t
e
r
m
n
a
i
t
i
o
n
b
e
n
e
f
i
t
s
r
e
p
r
e
s
e
n
t
s
a
m
o
u
n
t
s
d
u
e
t
o
i
h
m
i
n
a
c
c
o
r
d
a
n
c
e
w
i
t
h
h
s
i
l
e
m
p
o
y
m
e
n
t
c
o
n
t
r
a
c
t
.
2
7
i
h
g
h
e
s
t
r
e
m
u
n
e
r
a
e
d
s
e
n
o
r
t
i
m
a
n
a
g
e
r
o
f
t
h
e
C
o
m
p
a
n
y
.
(
4
)
M
r
l
J
a
b
o
n
s
k
i
i
s
t
i
h
e
m
e
r
c
h
a
n
d
s
n
g
b
u
s
n
e
s
s
i
i
u
n
i
t
l
e
a
d
e
r
a
n
d
h
s
i
r
e
m
u
n
e
r
a
t
i
o
n
h
a
s
b
e
e
n
i
l
n
c
u
d
e
d
f
o
r
t
h
e
f
u
l
l
y
e
a
r
o
n
t
h
e
b
a
s
s
i
t
h
a
t
h
e
i
s
t
h
e
5
t
h
m
e
t
,
w
h
c
h
i
r
e
s
u
l
t
s
i
n
t
h
e
r
e
v
e
r
s
a
l
o
f
t
h
e
,
,
$
1
6
6
6
6
6
6
p
r
e
v
o
u
s
y
i
l
r
e
c
o
g
n
s
e
d
i
a
s
a
n
e
x
p
e
n
s
e
.
C
o
l
l
i
n
s
u
n
d
e
r
t
h
e
2
0
0
7
L
T
I
l
p
a
n
i
s
t
f
h
e
r
e
o
r
e
$
8
5
2
,
6
4
4
,
a
s
s
e
t
o
u
t
i
n
s
e
c
t
i
o
n
8
o
f
t
h
s
i
r
e
p
o
r
t
.
(
3
)
M
r
R
u
m
p
e
r
l
w
a
s
t
h
e
I
G
A
F
r
e
s
h
i
b
u
s
n
e
s
s
u
n
i
t
l
e
a
d
e
r
a
n
d
h
s
i
r
e
m
u
n
e
r
a
t
i
o
n
h
a
s
b
e
e
n
i
l
n
c
u
d
e
d
f
o
r
t
h
e
f
u
l
l
y
e
a
r
o
n
t
h
e
b
a
s
s
i
t
h
a
t
h
e
i
s
t
h
e
4
t
h
a
c
c
r
u
a
l
f
o
r
t
h
e
L
T
I
o
f
,
$
2
0
0
0
0
0
w
a
s
l
a
s
o
m
a
d
e
f
o
r
e
a
c
h
o
f
t
h
e
2
0
0
8
,
2
0
0
9
,
2
0
1
0
a
n
d
2
0
1
1
f
i
n
a
n
c
a
i
l
y
e
a
r
s
.
T
h
e
t
o
t
a
l
a
m
o
u
n
t
p
a
y
a
b
e
l
t
o
M
r
(
2
)
T
h
s
i
a
m
o
u
n
t
i
l
n
c
u
d
e
s
a
c
u
r
r
e
n
t
y
e
a
r
a
c
c
r
u
a
l
o
f
$
5
2
,
6
4
4
i
n
l
r
e
a
t
i
o
n
t
o
t
h
e
2
0
0
7
C
a
s
h
L
T
I
l
p
a
n
.
I
n
a
c
c
o
r
d
a
n
c
e
w
i
t
h
t
h
e
A
c
c
o
u
n
t
i
n
g
S
t
a
n
d
a
r
d
s
a
n
i
h
g
h
e
s
t
r
e
m
u
n
e
r
a
e
d
s
e
n
o
r
t
i
m
a
n
a
g
e
r
o
f
t
h
e
C
o
m
p
a
n
y
.
M
r
R
u
m
p
e
r
l
w
i
l
l
c
e
a
s
e
l
e
m
p
o
y
m
e
n
t
w
i
t
h
t
h
e
C
o
m
p
a
n
y
w
i
t
h
e
f
f
e
c
t
f
r
o
m
1
1
O
c
t
o
b
e
r
2
0
1
2
.
t
h
e
c
u
m
u
a
l
t
i
v
e
a
m
o
u
n
t
p
a
y
a
b
e
l
i
s
r
e
d
u
c
e
d
.
T
h
e
c
u
r
r
e
n
t
y
e
a
r
l
v
a
u
a
t
i
o
n
r
e
s
u
l
t
i
s
t
h
a
t
i
t
h
e
u
n
d
e
r
l
y
n
g
E
P
S
p
e
r
f
o
r
m
a
n
c
e
h
u
r
d
e
l
i
s
u
n
l
i
k
e
y
l
t
o
b
e
T
o
t
a
l
5
,
9
4
9
,
7
2
4
1
,
8
6
6
,
8
7
2
2
6
4
,
7
5
1
1
0
6
,
2
2
5
1
0
9
,
7
5
3
(
1
,
5
5
4
,
0
8
1
)
2
1
5
,
3
0
5
6
,
9
5
8
,
5
4
9
6
.
0
%
3
.
1
%
(
1
)
T
h
e
p
r
o
b
a
b
i
l
i
t
y
o
f
M
r
R
e
i
t
z
e
r
’
s
c
a
s
h
b
a
s
e
d
L
T
I
(
r
e
f
e
r
s
e
c
t
i
o
n
8
)
v
e
s
t
i
n
g
a
t
t
h
e
e
n
d
o
f
t
h
e
p
e
r
f
o
r
m
a
n
c
e
p
e
r
i
o
d
i
s
a
s
s
e
s
s
e
d
a
t
e
a
c
h
r
e
p
o
r
t
i
n
g
d
a
t
e
.
W
h
e
r
e
t
h
e
p
r
o
r
a
a
t
l
v
a
u
a
t
i
o
n
o
f
t
h
e
c
a
s
h
i
n
c
e
n
t
i
v
e
i
s
a
s
s
e
s
s
e
d
a
s
b
e
n
g
i
l
e
s
s
t
h
a
n
t
h
e
c
u
m
u
a
t
i
v
e
l
a
m
o
u
n
t
i
p
r
e
v
o
u
s
y
l
r
e
c
o
g
n
s
e
d
i
a
s
a
n
e
x
p
e
n
s
e
M
L
a
d
a
w
i
l
F
C
o
l
l
i
n
s
S
M
o
r
a
b
i
t
o
A
G
r
a
t
w
c
k
e
i
E
x
e
c
u
t
i
v
e
s
C
E
O
A
R
e
i
t
z
e
r
2
0
1
2
5
1
6
,
1
0
3
5
3
7
,
7
3
1
8
5
2
,
9
6
6
7
0
9
,
3
0
2
2
4
9
,
4
8
2
2
5
9
,
2
5
5
1
2
4
,
6
2
0
2
2
7
,
0
5
2
2
,
1
3
4
,
9
2
8
6
0
0
,
0
0
0
K
M
P
4
,
7
5
1
,
0
3
0
1
,
4
6
0
,
4
0
9
H
R
u
m
p
e
r
l
3
M
J
a
b
o
n
s
k
4
l
i
1
,
1
9
8
,
6
9
4
7
2
5
,
9
6
0
4
7
2
,
7
3
4
4
0
6
,
4
6
3
2
2
4
,
9
1
9
1
8
1
,
5
4
4
2
6
4
,
7
5
1
2
6
4
,
7
5
1
-
-
-
-
-
-
-
2
3
,
0
0
0
2
3
,
0
0
0
-
8
3
,
2
2
5
3
6
,
9
8
4
4
2
,
6
9
5
-
-
3
1
,
3
5
8
1
5
,
6
7
9
1
5
,
6
7
9
7
8
,
3
9
5
1
5
,
6
7
9
1
5
,
6
7
9
1
5
,
6
7
9
1
5
,
6
7
9
(
3
8
,
2
0
6
)
(
2
2
,
7
2
3
)
(
1
5
,
4
8
3
)
(
2
4
,
1
4
2
)
7
3
,
5
1
7
9
4
2
,
6
9
3
9
9
2
,
7
4
2
4
9
,
3
7
5
1
,
9
3
5
,
4
3
5
(
1
,
5
1
5
,
8
7
5
)
1
6
5
,
9
3
0
5
,
0
2
3
,
1
1
4
1
4
,
4
4
5
6
4
,
0
8
4
2
4
8
,
0
4
8
(
9
,
1
9
6
)
(
1
8
,
5
5
2
)
6
2
,
0
7
0
5
4
,
8
4
4
6
7
,
5
6
8
8
5
7
,
7
7
9
8
9
5
,
1
8
1
1
,
0
9
6
,
1
5
7
1
,
0
5
3
,
1
0
0
2
2
.
3
%
2
3
.
2
%
2
1
.
3
%
(
0
.
3
%
)
3
6
.
3
%
3
2
.
8
%
1
6
.
4
%
2
5
.
6
%
(
2
.
6
)
%
7
.
4
%
2
.
6
%
3
.
3
%
7
.
2
%
(
2
.
1
%
)
5
.
0
%
6
.
4
%
3
,
5
4
6
1
5
,
6
7
9
(
1
,
6
3
3
,
2
5
6
)
1
-
1
,
1
2
0
,
8
9
7
(
9
5
.
2
%
)
1
0
.
0
%
$
R
e
m
u
n
e
r
a
t
i
o
n
F
i
x
e
d
$
S
T
I
$
$
$
b
e
n
e
f
i
t
s
b
e
n
e
f
i
t
s
s
u
p
e
r
a
n
n
u
a
t
i
o
n
i
T
e
r
m
n
a
t
i
o
n
O
t
h
e
r
b
e
n
e
f
i
t
s
–
l
E
m
p
o
y
m
e
n
t
P
o
s
t
$
L
e
a
v
e
L
T
I
a
n
d
$
P
a
y
m
e
n
t
s
)
b
a
s
e
d
L
T
I
(
S
h
a
r
e
$
T
o
t
a
l
P
e
r
f
o
r
m
a
n
c
e
S
h
a
r
e
B
a
s
e
d
R
e
l
a
t
e
d
P
a
y
m
e
n
t
s
1
0
1
0
.
1
.
i
F
x
e
d
a
n
d
A
t
i
R
s
k
R
e
m
u
n
e
r
a
t
i
o
n
R
E
M
U
N
E
R
A
T
O
N
T
A
B
L
E
S
I
(
A
U
D
T
E
D
I
)
Y
e
a
r
e
n
d
e
d
3
0
A
p
r
i
l
2
0
1
2
I
D
R
E
C
T
O
R
S
’
R
E
P
O
R
T
I
M
E
T
C
A
S
H
F
N
A
N
C
A
L
R
E
P
O
R
T
2
0
1
2
I
51
Directors’ Report – Year ended 30 April 2012
2
8
l
e
m
p
o
y
m
e
n
t
.
M
r
J
a
n
k
e
o
w
l
i
t
z
h
e
d
l
2
0
0
5
o
p
t
i
o
n
s
w
h
c
h
i
l
a
p
s
e
d
i
n
t
h
e
c
u
r
r
e
n
t
p
e
r
i
o
d
.
m
o
n
h
s
t
l
s
a
a
r
y
h
a
s
b
e
e
n
p
a
d
i
t
o
M
r
J
a
n
k
e
o
w
l
i
t
z
,
f
o
l
l
o
w
n
g
i
h
s
i
i
t
e
r
m
n
a
t
i
o
n
a
s
F
n
a
n
c
e
D
i
i
r
e
c
t
o
r
.
T
h
s
i
a
m
o
u
n
t
w
a
s
s
t
i
p
u
a
t
e
d
l
i
n
h
s
i
c
o
n
t
r
a
c
t
o
f
Y
e
a
r
e
n
d
e
d
3
0
A
p
r
i
l
2
0
1
2
I
D
R
E
C
T
O
R
S
’
R
E
P
O
R
T
I
M
E
T
C
A
S
H
F
N
A
N
C
A
L
R
E
P
O
R
T
2
0
1
2
I
(
1
)
M
r
J
a
n
k
e
o
w
l
i
t
z
r
e
t
i
r
e
d
i
a
s
F
n
a
n
c
e
D
i
r
e
c
t
o
r
o
n
3
1
M
a
r
c
h
2
0
1
1
a
n
d
b
e
c
a
m
e
a
n
o
n
-
e
x
e
c
u
t
i
v
e
D
i
r
e
c
t
o
r
o
n
1
A
p
r
i
l
2
0
1
1
.
A
n
a
m
o
u
n
t
e
q
u
a
l
t
o
n
n
e
i
E
J
a
n
k
e
o
w
l
i
t
z
1
B
H
a
e
l
K
B
e
a
n
G
W
a
t
s
o
n
D
J
o
h
n
s
t
o
n
H
R
u
m
p
e
r
l
M
J
a
b
o
n
s
k
l
i
P
D
u
b
b
e
m
a
n
l
M
L
a
d
a
w
l
i
F
C
o
l
l
i
n
s
S
M
o
r
a
b
i
t
o
A
G
r
a
t
w
c
k
e
i
E
x
e
c
u
t
i
v
e
s
C
E
O
A
R
e
i
t
z
e
r
2
0
1
1
8
,
5
5
1
,
4
8
3
3
,
8
1
7
,
3
3
9
6
6
7
,
5
5
4
1
2
2
,
7
5
4
4
7
1
,
2
2
5
6
0
2
,
2
4
8
6
0
3
,
3
7
4
5
4
1
,
6
3
0
4
6
6
,
4
7
8
6
9
1
,
5
8
2
5
0
9
,
7
2
1
5
4
3
,
7
4
2
7
0
2
,
5
9
3
6
9
0
,
7
2
6
3
0
6
,
1
4
2
5
1
,
9
5
2
2
1
5
,
5
4
6
2
7
3
,
6
4
1
2
7
4
,
1
4
0
2
2
8
,
4
1
0
1
7
7
,
9
8
4
3
3
0
,
7
6
3
1
8
3
,
3
3
3
2
5
4
,
1
7
2
3
2
5
,
4
7
6
2
9
5
,
7
8
0
1
,
9
3
7
,
8
5
6
9
0
0
,
0
0
0
5
5
6
,
6
2
2
5
5
6
,
6
2
2
-
-
-
-
-
-
-
-
-
-
-
-
9
0
,
8
2
1
1
8
3
,
3
1
4
3
,
1
9
4
,
8
3
1
4
0
9
,
3
2
7
1
6
,
8
0
3
,
7
3
6
-
-
-
-
-
2
3
,
0
0
0
2
7
,
5
0
0
2
3
,
0
0
0
-
1
4
,
0
0
0
-
-
1
2
,
2
2
7
5
,
2
5
1
1
5
,
0
7
6
1
5
,
0
7
6
1
5
,
0
7
6
1
5
,
0
7
6
1
5
,
0
7
6
1
5
,
0
7
6
1
5
,
0
7
6
1
5
,
0
7
6
1
5
,
0
7
6
1
5
,
0
7
6
2
0
9
,
9
9
4
2
1
3
,
1
2
5
2
1
2
,
7
9
0
2
1
0
,
1
0
2
1
2
,
3
7
6
5
,
2
8
3
1
5
,
2
7
7
4
1
,
1
8
0
2
1
1
,
7
8
6
2
5
8
,
7
9
1
7
1
,
1
8
2
-
1
2
,
9
2
8
1
6
,
7
9
1
3
4
,
1
1
7
2
5
,
3
0
1
1
8
,
7
5
6
5
8
,
8
4
3
2
6
,
9
7
1
4
8
,
0
7
3
1
9
,
2
1
4
5
5
,
1
3
0
6
4
,
2
6
3
2
,
8
2
9
1
,
5
4
5
,
3
7
3
1
9
8
,
1
6
8
9
2
8
,
6
3
2
9
3
7
,
4
5
8
1
,
1
3
1
,
0
1
6
1
,
0
3
9
,
6
6
2
9
5
5
,
9
8
3
1
,
1
0
2
,
6
6
9
7
9
7
,
3
8
3
1
,
0
5
7
,
9
9
0
1
,
1
6
9
,
4
5
7
1
,
3
2
4
,
6
3
6
3
9
.
6
5
%
1
9
.
8
5
%
3
2
.
7
4
%
4
6
.
5
6
%
3
2
.
8
3
%
4
4
.
1
6
%
4
3
.
0
1
%
4
5
.
6
9
%
3
2
.
4
4
%
2
9
.
0
2
%
4
4
.
7
4
%
3
2
.
5
5
%
4
2
.
2
8
%
2
.
2
9
%
0
.
1
8
%
6
.
5
2
%
1
.
8
1
%
3
.
6
4
%
2
.
2
4
%
1
.
8
0
%
6
.
1
6
%
2
.
4
5
%
6
.
0
3
%
1
.
8
2
%
4
.
7
1
%
4
.
8
5
%
3
,
3
2
1
1
5
,
0
7
6
1
,
7
3
2
,
9
4
5
2
6
,
1
1
1
4
,
6
1
5
,
3
0
9
5
6
.
1
8
%
0
.
5
7
%
$
R
e
m
u
n
e
r
a
t
i
o
n
F
i
x
e
d
$
S
T
I
$
$
$
i
T
e
r
m
n
a
t
i
o
n
O
t
h
e
r
b
e
n
e
f
i
t
s
–
b
e
n
e
f
i
t
s
b
e
n
e
f
i
t
s
s
u
p
e
r
a
n
n
u
a
t
i
o
n
$
L
e
a
v
e
L
T
I
a
n
d
P
o
s
t
l
E
m
p
o
y
m
e
n
t
$
P
a
y
m
e
n
t
s
)
b
a
s
e
d
L
T
I
(
S
h
a
r
e
$
T
o
t
a
l
P
e
r
f
o
r
m
a
n
c
e
B
a
s
e
d
S
h
a
r
e
R
e
l
a
t
e
d
P
a
y
m
e
n
t
s
Metcash Annual Report 2012
52
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
Name
Non Executive Director
E Jankelowitz1
Chief Executive Officer
A Reitzer
Executives
A Gratwicke
S Morabito
F Collins
M Laidlaw
H Rumpler
M Jablonski2
P Dubbelman2
D Johnston2
Value of Options exercised during
the year
Value of Options lapsed during the
year
2012
$
2011
$
2012
$
2011
$
-
-
949
3,491
4,745
-
9,745
-
-
-
237,432
13,858
-
102,336
16,202
4,234
-
-
-
181,932
217,960
126,368
-
-
-
9,745
-
13,858
-
-
-
-
-
-
-
-
-
-
-
-
(1) Mr Jankelowitz was Finance Director and operated in an executive capacity until his retirement from that position on 31 March 2011. Mr Jankelowitz became
a non-executive director on 1 April 2011 and has operated solely in that capacity since that date
(2) Messrs Rumpler, Jablonski, Dubbelman and Johnston were not KMP for the current financial year. Messrs Rumpler and Jablonski’s information is disclosed
on the basis that they were the 4th and 5th highest remunerated senior managers of the Company.
11.
DIRECTORS AND KEY MANAGEMENT PERSONNEL SHARE AND OPTION HOLDINGS (AUDITED)
For details of shares, performance rights and share options held by KMP, refer to Note 26 in the annual financial statements.
NON-EXECUTIVE DIRECTORS (AUDITED)
12.
Policy
The objectives of Metcash’s policy regarding fees for non-executive directors are to:
• Safeguard independence - To preserve the independence of non-executive directors, fees do not include any
performance-related element; and
• Be market competitive - Fees are set at a level competitive with non-executive directors in the ASX 100 and take
into account the time commitment of overseeing the large and diverse business of the Metcash Group.
To align individual interests with shareholders’ interests, non-executive directors are encouraged to hold Metcash shares.
With the exception of options issued to Edwin Jankelowitz (previously an executive director and now a Non-Executive
Director) under previous legacy long-term incentive plans, non-executive directors fund their own share purchases. All non-
executive directors must comply with Metcash’s share trading policy.
Review of levels of remuneration
Non-executive directors’ remuneration is within an aggregate limit determined, from time to time, by members at a general
meeting. The current limit of $1,300,000 was agreed by members at the Annual General Meeting held on 2 September 2010.
The Remuneration and 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 non-
executive directors within the overall maximum amount approved by shareholders.
29
53
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
Structure
Non-executive director remuneration, except for certain legacy entitlements as detailed below, is structured as follows:
• All non-executive directors are paid an annual fixed fee;
• Non-executive directors also performing chairperson or committee duties are paid an additional fixed fee for each
role;
• Non-executive directors are not entitled to participate in any of the Group’s short or long term incentive schemes; and
• No additional benefits are paid to non-executive directors upon retirement from office
Current per annum fixed fee structure
The current per annum fee structure is set out in the following table. These fee levels are within the aggregate limit approved
by members and took effect from the 2 September 2010 Annual General Meeting. They have applied throughout the current
2012 financial year.
Table 11.1 Non Executive Director Fee Structure
Name
P Barnes
N Hamilton
R Longes
F Balfour
M Butler
D Rubin
E Jankelowitz
Base Fee
$
115,000
115,000
115,000
115,000
115,000
115,000
115,000
805,000
Chair Fee
$
172,500
23,000
28,000
-
-
-
-
223,500
Committee
Fee
$
11,500
-
-
11,500
11,500
11,500
-
46,000
Super-
annuation
$
15,199
12,420
12,870
11,385
11,385
11,385
10,350
84,994
Total
$
314,199
150,420
155,870
137,885
137,885
137,885
125,350
1,159,494
Non-Executive Directors’ Remuneration for 2012
The fees paid or payable to non-executive directors in relation to the 2012 financial year are set out in the following table. The
general increase in amounts paid reflects the full year effect of the changes made following the aggregate fee limit increase
that was approved at the 2 September 2010 Annual General Meeting and, for certain directors, changes in roles (including
appointment as a director and appointment/cessation of chairperson/committee memberships). As noted above, per annum
fee levels have not changed since 2 September 2010.
30
Metcash Annual Report 2012
54
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
Table 11.2 Non-Executive Director Remuneration
Name
P Barnes
N Hamilton
R Longes
F Balfour
M Butler
D Rubin
E Jankelowitz3
C dos Santos
Total
Financial
Year
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
Fixed
Fees1
$
299,000
248,493
138,000
128,625
143,000
138,104
126,500
47,518
126,500
121,917
126,500
121,917
115,000
9,583
-
190,546
1,074,500
1,006,703
Post Employment
(Superannuation)2
$
Other 3
($)
Total
$
314,199
263,508
150,420
140,201
155,870
150,533
137,885
51,795
137,885
132,890
137,885
132,890
125,350
N/A
15,199
N/A
15,015
N/A
12,420
N/A
11,576
N/A
12,870
N/A
12,429
N/A
11,385
N/A
4,277
N/A
11,385
N/A
10,973
N/A
11,385
N/A
10,973
N/A
10,350
10,446 1,545,373
863
N/A
-
-
N/A
11,632
202,178
84,994 1,159,494
N/A
77,738 1,084,441 1,545,373
(1) Fixed fees represent base director fees, chairperson and committee fees. Directors fees that are salary sacrificed are included in this amount.
(2) Post employment benefits comprise statutory superannuation obligations.
(3) Mr Jankelowitz was Finance Director and operated in an executive capacity until his retirement from that position on 31 March 2011. Mr Jankelowitz became
a non-executive director on 1 April 2011 and has operated solely in that capacity since that date. Accordingly, the fixed fees, short term benefits and post
employment benefits (superannuation) noted above reflect remuneration derived in his capacity as non-executive director. The other benefits of $Nil (2011:
$1,545,373) reflect remuneration derived while Mr Jankelowitz acted in an executive capacity (up to 31 March 2011). Further details of Mr Jankelowitz 2011
remuneration have been provided in section 10. Mr Jankelowitz held 2005 options which lapsed in the current period.
Legacy entitlements
Metcash previously operated a retirement benefit scheme for non-executive directors, which was discontinued at the 2005
Annual General Meeting. The benefits were in accordance with Section 8.3(g) and (h) of the Company’s Constitution and
Section 200 of the Corporations Law.
The accrued retirement benefits were frozen as at the date of the 2005 Annual General Meeting. These benefits, which are
inclusive of superannuation, are payable to the following directors in cash upon ceasing to be a director of Metcash Limited.
Retirement benefit (fixed)
P Barnes
R Longes
$
211,619
211,619
423,238
In addition, E Jankelowitz held options in Metcash Limited as a result of past service as an executive. These options are
detailed in Note 26 to the annual financial statements.
This concludes the remuneration report.
31
55
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
CEO AND CFO DECLARATION
The Chief Executive Officer and Chief Financial Officer declare:
(a) With regard to the integrity of the financial report of Metcash Limited (the Company) for the financial year ended 30 April
2012, after having made appropriate inquiries, in our opinion:
(i)
The financial statements and associated notes for the consolidated entity comply with the accounting standards
and regulations as required by Section 296 of the Corporations Act 2001 and International Financial Reporting
Standards;
The financial statements and associated notes for the consolidated entity give a true and fair view of the financial
position as at 30 April 2012 and performance of the consolidated entity for the twelve months then ended as
required by Section 297 of the Corporations Act 2001;
As at the date of this declaration, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
(iv) As at the date of this declaration, there are reasonable grounds to believe that the members of the Extended
Closed Group (as that term is defined in the Metcash Deed of Cross Guarantee, dated 18 April 2012), will be able
to meet any obligations or liabilities to which they are, or may become subject by virtue of the Deed of Cross
Guarantee.
(b) With regard to the financial records and systems of risk management and internal compliance and control of the
Company for the financial year ended 30 April 2012:
(i)
The financial records of the Company and each entity in the consolidated group have been properly maintained in
accordance with Section 286 of the Corporations Act 2001;
The statements made in (a) and (b)(i) above are founded on a sound system of risk management and internal
compliance and control which is operating effectively, in all material respects, in relation to financial reporting
risks;
The risk management and internal compliance and control systems of the Company relating to financial reporting,
compliance and operations objectives including material business risks are operating efficiently and effectively, in
all material respects. Management has reported to the Board as to the effectiveness of the Company’s
management of its material business risks.
(ii)
(iii)
(ii)
(iii)
(iv) Subsequent to 30 April 2012, 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
118.
The auditor’s independence declaration for the period ended 30 April 2012 has been received and is included on page 94.
NON-AUDIT SERVICES
The following non-audit services were provided by the entity’s auditor, Ernst & Young. The Directors are satisfied that the
provision of non-audit services is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence
was not compromised.
The amount payable to Ernst & Young in tax compliance should be seen in the context of the tax audit which the company has
undergone and the significant work which has been required in responding to the Australian Taxation Office queries.
Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:
Tax compliance
ATO income tax audit advice
Assurance-related
Other
Signed in accordance with a resolution of the Directors.
$ 1,136,292
$ 1,171,504
$ 216,958
$ 57,000
Andrew Reitzer
Director
Sydney, 28 June 2012
32
Metcash Annual Report 2012
56
Statement of Comprehensive Income – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
STATEMENT OF COMPREHENSIVE INCOME
Year ended 30 April 2012
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative costs
Share of profit/(loss) of associates
Significant items
Franklins acquisition and restructure costs
Group restructuring: costs
Group restructuring: profit on asset disposal
Associate impairment
Finance costs
Profit from continuing operations before income tax
Income tax expense
Net profit for the period from continuing operations
Net loss after tax for the period from discontinued operations
Net profit for the period
Other comprehensive income
Foreign currency translation adjustments
Cash flow hedge adjustment
Income tax benefit on items of other comprehensive income
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Profit for the period is attributable to:
Equity holders of the parent
Non controlling interests
Total comprehensive income for the period is attributable to:
Equity holders of the parent
Non controlling interests
NOTES
4(i)
2012
$’m
2011
$’m
12,366.3
(11,086.1)
1,280.2
12,461.6
(11,186.9)
1,274.7
12
4(vi)
4(vi)
4(vi)
4(vi)
4(vii)
5
31
(436.9)
(389.4)
0.3
(28.5)
(49.7)
7.2
(105.7)
(80.3)
197.2
(71.8)
125.4
(27.2)
98.2
1.0
(6.4)
1.9
(3.5)
94.7
90.0
8.2
98.2
86.5
8.2
94.7
(423.8)
(407.9)
(1.7)
(6.9)
-
-
-
(77.5)
356.9
(106.1)
250.8
−
250.8
(0.3)
−
0.1
(0.2)
250.6
241.4
9.4
250.8
241.2
9.4
250.6
31.46
31.41
Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the company:
- basic earnings per share (cents)
- diluted earnings per share (cents)
15.22
15.18
30
30
Earnings per share for profit/(loss) from discontinued operations attributable to the ordinary equity holders of the company:
- basic earnings per share (cents)
- diluted earnings per share (cents)
(3.53)
(3.52)
30
30
-
-
Earnings per share attributable to ordinary equity holders of the company:
- basic earnings per share (cents)
- diluted earnings per share (cents)
30
30
11.69
11.66
31.46
31.41
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
33
57
Statement of Financial Position – As at 30 April 2012
METCASH FINANCIAL REPORT 2012
STATEMENT OF FINANCIAL POSITION
As at 30 April 2012
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Disposal groups and assets held for sale
Derivative financial instruments
Income tax receivable
Prepayments and other
Total current assets
Non-current assets
Derivative financial instruments
Trade and other receivables
Investments in associates accounted for using the equity method
Other financial 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
Derivative financial instruments
Provisions
Income tax payable
Other financial liabilities
Total current liabilities
Non-current liabilities
Interest bearing loans and borrowings
Provisions
Other financial liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Other equity
Other reserves
Retained earnings
Parent interest
Non controlling interests
TOTAL EQUITY
NOTES
2012
$’m
2011
$’m
7
8
9
31
10
32
10
11
12
13
14
5
15
16
17
18
19
20
17
19
20
21
21
21
21
51.5
986.1
833.6
116.5
-
24.4
6.5
2,018.6
27.8
51.3
68.3
0.2
224.4
95.5
1,551.9
2,019.4
152.9
1,007.3
954.9
9.9
0.9
-
5.8
2,131.7
-
80.6
92.1
0.2
197.6
6.6
1,291.1
1,668.2
4,038.0
3,799.9
1,372.7
17.8
5.2
155.1
24.9
0.4
1,576.1
974.0
151.4
1.4
1,126.8
1,376.5
8.6
1.4
73.4
14.3
0.2
1,474.4
826.7
54.2
1.8
882.7
2,702.9
2,357.1
1,335.1
1,442.8
1,914.7
(765.9)
26.0
86.3
1,261.1
74.0
1,335.1
1,904.9
(765.9)
28.2
208.0
1,375.2
67.6
1,442.8
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
34
Metcash Annual Report 2012
58
Statement of Changes in Equity – Year ended 30 April 2012
3
5
T
h
e
a
b
o
v
e
S
t
a
t
e
m
e
n
t
o
f
C
h
a
n
g
e
s
i
n
E
q
u
i
t
y
s
h
o
u
d
b
e
l
r
e
a
d
i
n
c
o
n
u
n
c
t
i
j
o
n
w
i
t
h
t
h
e
a
c
c
o
m
p
a
n
y
n
g
i
n
o
t
e
s
.
1
,
9
0
4
.
9
(
7
6
5
.
9
)
2
2
.
3
A
t
3
0
A
p
r
i
l
2
0
1
1
1
,
9
0
4
.
9
(
7
6
5
.
9
)
i
i
D
v
d
e
n
d
s
p
a
d
i
n
e
t
o
f
t
a
x
E
x
e
r
c
s
e
i
o
f
o
p
t
i
o
n
s
S
h
a
r
e
-
b
a
s
e
d
p
a
y
m
e
n
t
s
t
h
e
i
r
c
a
p
a
c
i
t
y
a
s
o
w
n
e
r
s
:
T
r
a
n
s
a
c
t
i
o
n
s
w
i
t
h
o
w
n
e
r
s
i
n
1
2
.
7
-
-
T
o
t
a
l
c
o
m
p
r
e
h
e
n
s
v
e
i
i
n
c
o
m
e
,
-
-
-
-
-
A
t
1
M
a
y
2
0
1
0
1
,
8
9
2
.
2
(
7
6
5
.
9
)
A
t
3
0
A
p
r
i
l
2
0
1
2
1
,
9
1
4
.
7
(
7
6
5
.
9
)
i
i
D
v
d
e
n
d
s
p
a
d
i
E
x
e
r
c
s
e
i
o
f
o
p
t
i
o
n
s
S
h
a
r
e
-
b
a
s
e
d
p
a
y
m
e
n
t
s
t
h
e
i
r
c
a
p
a
c
i
t
y
a
s
o
w
n
e
r
s
:
T
r
a
n
s
a
c
t
i
o
n
s
w
i
t
h
o
w
n
e
r
s
i
n
n
e
t
o
f
t
a
x
A
t
1
M
a
y
2
0
1
1
T
o
t
a
l
c
o
m
p
r
e
h
e
n
s
v
e
i
i
n
c
o
m
e
,
9
.
8
-
-
-
-
-
-
-
2
2
.
3
2
6
.
-
-
-
1
9
.
7
2
3
.
6
1
3
.
-
-
-
(
1
9
9
.
4
)
2
0
8
.
0
-
-
2
4
1
.
4
1
6
6
.
0
(
2
1
1
.
7
)
8
6
.
3
-
-
2
0
8
.
0
9
0
.
0
1
2
.
8
(
6
9
)
.
-
-
-
-
1
2
.
8
1
2
.
8
-
-
-
-
1
2
.
8
-
-
-
(
0
3
)
.
(
6
6
)
.
(
5
9
)
.
-
-
-
(
6
9
)
.
1
.
0
-
-
-
-
(
0
.
1
)
0
.
1
(
4
.
5
)
-
-
-
1
,
3
7
5
.
2
(
1
9
9
.
4
)
1
2
.
7
2
.
6
1
,
3
1
8
.
1
2
4
1
.
2
1
,
2
6
1
.
1
(
2
1
1
.
7
)
1
.
3
9
.
8
6
7
.
6
(
1
.
3
)
-
-
5
9
.
5
9
.
4
7
4
.
0
(
1
.
8
)
-
-
1
,
4
4
2
.
8
(
2
0
0
.
7
)
1
2
.
7
2
6
.
1
,
3
7
7
.
6
2
5
0
.
6
1
,
3
3
5
.
1
(
2
1
3
.
5
)
1
3
.
9
8
.
(
4
.
5
)
-
1
,
3
7
5
.
2
8
6
.
5
6
7
.
6
8
.
2
1
,
4
4
2
.
8
9
4
.
7
I
M
E
T
C
A
S
H
F
N
A
N
C
A
L
R
E
P
O
R
T
2
0
1
2
I
Y
e
a
r
e
n
d
e
d
3
0
A
p
r
i
l
2
0
1
2
S
T
A
T
E
M
E
N
T
O
F
C
H
A
N
G
E
S
I
N
E
Q
U
T
Y
I
$
’
m
E
q
u
i
t
y
O
t
h
e
r
E
q
u
i
t
y
P
a
y
m
e
n
t
s
$
’
m
$
’
m
C
o
n
t
r
i
b
u
t
e
d
S
h
a
r
e
-
b
a
s
e
d
$
’
m
E
a
r
n
n
g
s
i
R
e
t
a
i
n
e
d
$
’
m
R
e
s
e
r
v
e
C
a
p
i
t
a
l
$
’
m
R
e
s
e
r
v
e
T
r
a
n
s
l
a
t
i
o
n
C
u
r
r
e
n
c
y
F
o
r
e
i
g
n
$
’
m
R
e
s
e
r
v
e
H
e
d
g
e
C
a
s
h
F
o
w
l
O
w
n
e
r
s
C
o
n
t
r
o
l
l
i
n
g
$
’
m
’
$
m
$
’
m
o
f
t
h
e
P
a
r
e
n
t
I
n
t
e
r
e
s
t
T
o
t
a
l
E
q
u
i
t
y
N
o
n
59
Statement of Cash Flows – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
STATEMENT OF CASH FLOWS
Year ended 30 April 2012
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received
Interest received
Finance costs
Income tax paid
Goods and services tax paid
Net cash generated by operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Payments for intangibles
Proceeds from loans repaid by other entities
Loans to other entities
Payment on acquisition of businesses
Proceeds from sale of business assets
Payment on acquisition of associates
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from the issue of ordinary shares
Payment of refinancing costs
Proceeds from borrowings – other
Repayments of borrowings – other
Payment of dividends on ordinary shares
Payment of dividends to non controlling interests
Repayment of finance lease principal
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Add opening cash brought forward
Effect of exchange rate changes on cash
Cash and cash equivalents at the end of the period
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
NOTES
2012
$m
2011
$m
13,569.7
(12,975.6)
1.1
12.7
(76.9)
(110.3)
(136.4)
284.3
7
13,222.6
(12,772.2)
1.6
9.7
(72.3)
(116.8)
(130.1)
142.5
7.1
(75.9)
(17.9)
18.0
(18.3)
(205.5)
23.5
(1.6)
(270.6)
9.8
(3.4)
1,930.0
(1,829.2)
(211.7)
(1.8)
(9.2)
(115.5)
(101.8)
152.9
0.4
51.5
29(a)
21
6
7
0.9
(34.7)
(21.6)
15.5
(27.0)
(14.9)
-
(0.5)
(82.3)
12.7
(1.5)
500.0
(420.0)
(199.4)
(1.3)
(8.3)
(117.8)
(57.6)
210.6
(0.1)
152.9
36
Metcash Annual Report 2012
60
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
1.
CORPORATE INFORMATION
The financial report of Metcash Limited (the Company) and its controlled entities (the Group) for the year ended 30 April 2012
was authorised for issue in accordance with a resolution of the Directors on 28 June 2012.
Metcash Limited 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.
(i)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial report is a general purpose financial 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 financial report has been prepared using the historical cost basis except for derivative financial instruments which have
been measured at fair value and share rights which have been valued on a binomial basis.
The financial 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.
The financial statements present the results of the current year, which comprised the 52 week period that commenced on 2
May 2011 and ended on 29 April 2012. The prior period results comprise the 53 week period that commenced on 26 April
2010 and ended on 1 May 2011.
(ii)
STATEMENT OF COMPLIANCE
The financial report complies with Australian Accounting Standards. The financial report also complies with International
Financial Reporting Standards (IFRS).
(a)
Changes in accounting policy
The accounting policies adopted are consistent with those of the previous financial year except as follows:
The Group has adopted the following new and amended Australian Accounting Standards and AASB Interpretations as of 1 May
2011. Adoption of these standards and interpretations has not had a material effect on the financial position or performance of
the Group:
• AASB 124 Related Party Disclosures (amendment);
• AASB 132 Financial Instruments: Presentation (amendment);
• AASB Int 14 Prepayments of a Minimum Funding Requirement (amendment);
•
Improvements to AASBs
-
AASB 3 Business Combinations: Measurement options available for non-controlling interests were
amended;
AASB 3 Business Combinations (Contingent consideration arising from business combination prior to
adoption of AASB 3 (as revised in 2008)) ;
AASB 3 Business Combinations (Un-replaced and voluntarily replaced share-based payment awards);
AASB 7 Financial Instruments — Disclosure;
AASB 101 Presentation of Financial Statements;
AASB 127 Consolidated and Separate Financial Statements; and
AASB 134 Interim Financial Statements.
-
-
-
-
-
-
• AASB Int 13 Customer Loyalty Programmes (determining the fair value of award credits);
• AASB Int 19 Extinguishing Financial Liabilities with Equity Instruments;
• AASB 2010-4 Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB
1,7,101,134 and Interpretation 13]; and
• AASB 2010-5 Amendments to Australian Accounting Standards [AASB 1,3,4,5,101,107,112,118,119,121,132,133,
134,137,139,140,1023&1038 and Interpretations 112,115,127,132 &1042]
37
61
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
2.
(b)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Australian Accounting Standards issued but not yet effective/Early adoption of Australian Accounting
Standards
A number of new accounting standards have been issued but were not effective during the year ending 30 April 2012. The Group
has elected not to early adopt any of these new standards or amendments in this financial report. The Group has yet to fully
assess the impact the following accounting standards and amendments to accounting standards will have on the financial
statements, when applied in future periods:
• AASB 1054: Australian Additional Disclosures;
• AASB 2010-6: Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets [AASB
1 & AASB 7];
• AASB 2010-9: Amendments to Australian Accounting Standards – Severe Hyperinflation and Removal of Fixed Dates
for First-time adopters [AASB 1];
• AASB 2011-5: Amendments to Australian Accounting Standards – Extending Relief from Consolidation, the Equity
Method and Proportionate Consolidation [AASB 127, AASB 128 & AASB 131];
• AASB 2010-8: Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB
112];
• AASB 2011-3: Amendments to Australian Accounting Standards – Orderly Adoption of Changes to the ABS GFS
Manual and Related Amendments [AASB 1049];
• AASB 2011-9: Amendments to Australian Accounting Standards – Presentation of Other Comprehensive Income [AASB
101];
• AASB 9: Financial Instruments;
• AASB 10: Consolidated Financial Statements;
• AASB 11: Joint Arrangements;
• AASB 12: Disclosure of Interests in Other Entities;
• AASB 13: Fair Value Measurement;
• AASB 119: Employee Benefits;
• AASB 2011-4: Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel
Disclosure Requirements [AASB 124]; and
• AASB 1053: Application of Tiers of Australian Accounting Standards.
(iii)
BASIS OF CONSOLIDATION
The financial statements comprise the consolidated financial statements of Metcash Limited and its controlled entities as at 30
April 2012.
The financial statements of controlled entities 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 financial and
operating policies so as to obtain benefits 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 financial statements, all intercompany balances and transactions have been eliminated in full.
Investments in controlled entities held by Metcash Limited are accounted for at cost in the separate financial statements of the
parent entity less any impairment charges. Dividends received from controlled entities are recorded as a component of other
revenues in the separate income statement of the parent entity, and do not impact the recorded cost of the investment.
The acquisition of controlled entities 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. The difference between the above items and the fair value of the
consideration (including the fair value of any pre-existing investment in the acquiree) is goodwill or a discount on acquisition.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability will be
recognised in accordance with AASB 139 either in profit or loss or as a change to other comprehensive income.
38
Metcash Annual Report 2012
62
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(iii)
BASIS OF CONSOLIDATION (Continued)
Non-controlling interests not held by the Group are allocated their share of net profit after tax in the consolidated statement of
comprehensive income and are presented within equity in the consolidated statement of financial position, separately from the
parent shareholders' equity.
For those controlled enties with non-coterminous year ends, management accounts for the relevant period to the Group’s
reporting date have been consolidated. In the opinion of the Directors, the expense of providing additional coterminous
statutory accounts, together with consequential delay in producing the Group’s financial statements, would outweigh any
benefit to shareholders.
(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 financial statements are issued under the name of the
legal parent (Metcash Limited) but are a continuation of the financial statements of the deemed acquirer under the reverse
acquisition rules (Metcash Trading Limited).
(v)
(a)
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
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 significant effect on the amounts recognised in the financial statements:
Purchase price allocation
Determining the acquisition date fair value of assets acquired and liabilities assumed on acquisition of controlled entities. The
basis for determining the purchase price allocation is discussed in Note 29.
Contractual customer relationships
Identifying those acquired relationships with customers that meet the definition of separately identifiable intangibles that have
a finite 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 significant risk of causing a material adjustment to the carrying
amounts of certain assets and liabilities within the next annual reporting period are:
Provision for restructuring
The Group has recognised a provision in accordance with the accounting policy described in Note 2(xxi). The Group has
made assumptions in relation to the cost of employee redundancies and the costs associated with the early exit of stores
earmarked for closure.
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 are discussed in Note 15.
Impairment of investment in associates
The Group assesses the recoverable amount of its investment in associates when an indicator of impairment is identified. In
assessing the recoverable amount assumptions are made about the growth prospects of the associate and in determining the
discount rate used to calculate the net present value of future cash flows when a discounted cash flow model is used. These
assumptions are discussed in Note 12.
Contractual customer relationships
The useful life of contractual customer relationships of between 10 to 25 years is based on management’s expectation of
future attrition rates based on historical rates experienced.
39
63
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
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 reporting date. All exchange differences, other than those that arise as a result of translating foreign subsidiaries from
functional currency to presentation currency are taken to profit or loss in the consolidated financial report.
Translation of financial reports of overseas operations
The functional currency of the overseas subsidiaries is as follows:
Tasman Liquor Company Limited is New Zealand dollars.
•
• Metoz Holdings Limited is South African rand.
• Soetensteeg 2–61 Exploitatiemaatschappij BV 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 reporting date whilst all elements contained
within the consolidated statement of comprehensive income 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 insignificant 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.
Trade receivables provided as security under the Group’s securitisation facility as detailed in Note 8 are only de-recognised
when the receivable is settled by the debtor as the Group retains the significant risks and rewards associated with these
receivables until settlement is received.
(ix)
INVESTMENTS AND OTHER FINANCIAL ASSETS
All investments are initially recognised at cost, being the fair value of the consideration given. After initial recognition,
investments which are classified as held for trading or available-for-sale are measured at fair value. Gains or losses on
investments held for trading are recognised in the consolidated statement of comprehensive income.
For investments that are actively traded in organised financial markets, fair value is determined by reference to Stock
Exchange quoted market bid prices at the close of business on the relevant reporting date.
(x)
DERIVATIVE FINANCIAL INSTRUMENTS
The Group uses derivative financial instruments (including forward currency contracts and interest rate swaps) to hedge its
risks associated with foreign currency and interest rate fluctuations. Such derivative financial instruments are initially
recognised at fair value on the date at which a derivative contract is entered into and are subsequently remeasured to fair
value. The fair value of derivative contracts is determined by reference to market values for similar instruments. Derivatives
are carried as assets when their fair value is positive and as liabilities when their fair value is negative.
The fair values of forward currency contracts are calculated by reference to current forward exchange rates for contracts with
similar maturity profiles. The fair values of interest rate swaps are determined using a valuation technique based on cash flows
discounted to present value using current market interest rates.
40
Metcash Annual Report 2012
64
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(x)
DERIVATIVE FINANCIAL INSTRUMENTS (Continued)
Any gains or losses arising from changes in the fair value of derivatives, except for those that qualify as cash flow hedges, are
taken directly to profit or loss for the year.
For the purposes of hedge accounting, hedges are classified as:
•
•
fair value hedges, when they hedge the exposure to changes in the fair value of a recognised asset or liability; or
cash flow hedges, when they hedge the exposure to variability in cash flows that is attributable either to a particular
risk associated with a recognised asset or liability or to a forecast transaction.
Hedges that meet the strict criteria for hedge accounting are accounted as follows:
•
•
for cash flow hedges the effective portion of the gain or loss on the hedging instrument is recognised directly in
equity, while the ineffective portion is recognised in profit or loss.
for fair value hedges, the carrying amount of the hedged item is adjusted for gains and losses attributable to the risk
being hedged and the derivative is remeasured to fair value. Gains and losses from both are taken to profit or loss.
(xi)
INVESTMENT IN ASSOCIATES
The Group’s investments in its associates are accounted for using the equity method of accounting in the consolidated
financial statements. These are the entities in which the Group has significant influence and which are neither subsidiaries nor
joint ventures.
The investments in associates are carried in the consolidated statement of financial position 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 statement of comprehensive income
reflects 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
2012
50 years
5 – 15 years
2011
50 years
5 – 15 years
De-recognition
An item of property, plant and equipment is de-recognised upon disposal or when no future economic benefits 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 statement of comprehensive income in the period the item is de-recognised.
41
65
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(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
inflows 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 (CGU) to which the asset belongs. When the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses are recognised in the consolidated statement of comprehensive income.
Goodwill
Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the
goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised.
Impairment losses for goodwill are not subsequently reversed.
Trade names
Indefinite life trade name balances will be tested annually for impairment at the same time as goodwill is tested. Finite useful
life trade names are tested for impairment when an indicator of impairment is identified.
(xv)
LEASES
Leases are classified at their inception as either operating or finance leases based on the economic substance of the
agreement so as to reflect the risks and benefits incidental to ownership.
Operating leases
(a)
Group as a lessee
Operating leases are those leases where the lessor effectively retains substantially all of the risks and benefits of ownership of
the leased item. Operating lease payments are recognised as an expense on a straight-line basis.
(b)
Group as a lessor
Leases in which the Group retains substantially all the risks and benefits of the leased asset are classified 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 the risks and benefits 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 finance charges and a 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 and the lease term.
The cost of improvements to or on leasehold property are 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.
42
Metcash Annual Report 2012
66
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
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 identifiable assets, liabilities and contingent
liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised.
When goodwill forms part of a group of cash generating units 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 groups of cash-generating units retained.
(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 finite or indefinite. Where amortisation is charged on
assets with finite lives, this expense is taken to the profit 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 profits in the period in which the expenditure is incurred.
Intangible assets with finite useful lives 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.
Trade names are recognised as intangible assets where a registered trade mark is acquired with attributable value. Trade
names are valued on a relief from royalty method. Trade names are considered to be indefinite life intangibles and are not
amortised, unless there is an intention to discontinue use of the name in which case it is amortised over its estimated
remaining useful life.
Contractual customer relationships are recognised as intangible assets when the criteria specified in AASB 138 Intangible
Assets have been met. Contractual customer relationships are assessed to have a finite life and are amortised over the
asset’s useful life.
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 consolidated statement of comprehensive income
when the asset is de-recognised.
The estimated useful lives of existing finite life intangible assets are as follows:
-
-
-
Customer contracts – ten to twenty five years;
Software development costs – five to ten years; and
Other – ten years.
43
67
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(xviii) TRADE AND OTHER PAYABLES
Trade payables and other payables are carried at amortised cost. They represent liabilities for goods and services provided to
the Group prior to the end of the financial 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
Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be
settled within 12 months of the reporting date are recognised in provisions 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.
Long service leave
The liability for long service leave is recognised in the provision for employee benefits 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 that match as closely as possible, the estimated future cash outflows.
(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 profit 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 outflow of resources embodying economic benefits 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 probable. The expense relating to any
provision is presented in the consolidated statement of comprehensive income 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 reflects the risks
specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance 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.
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 benefits to employees 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 benefits to
executive directors, senior executives and its employees in the form of the Metcash Executive and Senior Managers
Performance Rights Plan (Rights Plan) and the Metcash Employee Option Plan (MEOP).
44
Metcash Annual Report 2012
68
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(xxii) SHARE-BASED PAYMENT TRANSACTIONS (Continued)
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 an appropriate valuation model, further
details of which are given in Note 25.
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 fulfilled, 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 reflects (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 modified, as a minimum an expense is recognised as if the terms had not
been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the
modification, as measured at the date of modification.
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
modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options and performance rights are reflected 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 benefits will flow to the Group and the revenue can
be reliably measured. The specific recognition criteria described below must also be met before revenue is recognised.
Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed
to the buyer, usually on acceptance of delivery of the goods.
Rendering of services
Revenue from promotional activities is recognised when the promotional activities occur.
Interest
Revenue is recognised as the interest is earned.
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) FINANCE COSTS
Finance costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other finance costs
are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection
with the borrowing of funds.
45
69
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(xxv)
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 relevant reporting date.
Deferred income tax is provided on all temporary differences at the reporting date, between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
•
•
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 profit
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 profit will be available against which the deductible temporary
differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:
•
•
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 profit 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 profit will be available against which the temporary differences can
be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit 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
relevant reporting date.
Deferred tax assets and deferred tax 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 consolidated statement of
comprehensive income.
(xxvi) OTHER TAXES
Revenues, expenses and assets are recognised net of the amount of GST except:
• 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
•
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 consolidated statement of financial position.
46
Metcash Annual Report 2012
70
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(xxvi) OTHER TAXES (Continued)
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority, is classified as an operating
cash flow.
Commitments and contingencies are disclosed net of the amount of GST recoverable or payable.
(xxvii) EARNINGS PER SHARE
Basic earnings per share is calculated as net profit 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 profit attributable to members of the parent, adjusted for:
•
•
•
costs of servicing equity (other than dividends);
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.
(xxviii) CONTRIBUTED EQUITY
Ordinary shares are classified 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.
(xxix) NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair
value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be
recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only
when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition.
Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within a
reasonable period of time.
In the statement of comprehensive income, income and expenses from discontinued operations are reported separately from
income and expenses from continuing operations, down to the level of profit after taxes, even when the Group retains a non-
controlling interest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reported separately in the
statement of comprehensive income. Property, plant and equipment and intangible assets once classified as held for sale are
not depreciated or amortised.
(xxx)
FINANCIAL GUARANTEE CONTRACTS
Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the
holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a
debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs
that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best
estimate of the expenditure required to settle the present obligation at the reporting date and the amount recognised less
cumulative amortisation.
47
71
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
3.
SEGMENT INFORMATION
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the CEO (the
chief operating decision maker) in assessing performance and in determining the allocation of resources.
The operating segments are identified by management based on the differences in the products and services provided.
Discrete financial information about each of these operating segments is reported to the CEO on at least a monthly basis.
The reportable segments are based on the aggregated operating segments determined by the similarity of the products sold,
as these are the sources of the Group’s major risks and have the most effect on the rates of return.
Segment products and locations
The Group predominantly operated in the industries indicated:
•
Food Distribution activities comprise the distribution of dry grocery, perishable and general merchandise supplies to
retail outlets.
• Cash and Carry Distribution comprises the distribution of dry grocery, perishable and general merchandise supplies
via cash and carry warehouses.
•
Liquor Distribution activities comprise the distribution of liquor products to retail outlets and hotels.
• Hardware Distribution comprises the distribution of hardware supplies to retail outlets.
On 25 January 2012 the Company announced the amalgamation of IGA>D, IGA Fresh, Campbells Cash and Carry and all the
associated merchandising and marketing functions into a single Food & Grocery business pillar. From 1 May 2012, the
reportable operating segments will be Food & Grocery, Liquor and Hardware.
Geographically the Group operates predominantly in Australia. The New Zealand operation represents less than 10% of
revenue, results and assets of the Group.
Segment accounting policies
The selling price between segments is at normal selling price and is paid under similar terms and conditions as any other
customer of the Group. Sales revenue (wholesale sales) from the sale of goods within Franklins from its wholesale operations
(food distribution segment – continuing operations) to its retail operations (corporate stores – discontinued operations) have
been eliminated from the food distribution segment. Accordingly, the food distribution segment results include wholesale sales
by Franklins to franchised stores only, and the discontinued operations results include retail sales by Franklins corporate
stores to end consumers.
Major customers
The Group does not have a single external customer which represents greater than 10% of the Group's revenue.
48
Metcash Annual Report 2012
72
*
I
t
n
e
r
s
e
g
m
e
n
t
t
r
a
n
s
a
c
t
i
o
n
s
t
b
e
w
e
e
n
F
o
o
d
D
s
t
r
i
b
u
i
t
i
i
o
n
a
n
d
C
a
s
h
a
n
d
C
a
r
r
y
D
s
t
r
i
b
u
t
i
o
n
d
u
r
i
n
g
2
0
1
1
a
n
d
2
0
1
2
h
a
v
e
b
e
e
n
e
l
i
i
m
n
a
t
e
d
Notes to the Financial Statements – Year ended 30 April 2012
4
9
N
e
t
p
r
o
f
i
t
i
f
r
o
m
c
o
n
t
i
n
u
n
g
o
p
e
r
a
t
i
o
n
s
b
e
f
o
r
e
i
n
c
o
m
e
t
a
x
O
t
h
e
r
R
e
n
t
i
n
c
o
m
e
R
e
n
t
e
x
p
e
n
s
e
i
S
g
n
i
f
i
c
a
n
t
i
t
e
m
s
N
e
t
f
i
n
a
n
c
e
c
o
s
t
s
S
h
a
r
e
b
a
s
e
d
p
a
y
m
e
n
t
s
A
m
o
r
t
i
s
a
t
i
o
n
o
f
c
u
s
t
o
m
e
r
S
e
g
m
e
n
t
p
r
o
f
i
t
b
e
f
o
r
e
t
a
x
l
r
e
a
t
i
o
n
s
h
p
s
a
n
d
i
l
i
c
e
n
c
e
a
g
r
e
e
m
e
n
t
s
R
e
n
t
i
n
c
o
m
e
T
o
t
a
l
s
e
g
m
e
n
t
r
e
v
e
n
u
e
I
n
t
e
r
-
s
e
g
m
e
n
t
r
e
v
e
n
u
e
s
e
l
i
i
m
n
a
t
i
o
n
I
n
t
e
r
e
s
t
f
r
o
m
o
t
h
e
r
p
e
r
s
o
n
s
/
c
o
r
p
o
r
a
t
i
o
n
s
T
o
t
a
l
r
e
v
e
n
u
e
i
f
r
o
m
c
o
n
t
i
n
u
n
g
o
p
e
r
a
t
i
o
n
s
i
)
S
e
g
m
e
n
t
r
e
v
e
n
u
e
r
e
c
o
n
c
i
l
i
a
t
i
o
n
t
o
t
h
e
s
t
a
t
e
m
e
n
t
o
f
c
o
m
p
r
e
h
e
n
s
i
v
e
i
n
c
o
m
e
i
i
)
S
e
g
m
e
n
t
p
r
o
f
i
t
b
e
f
o
r
e
t
a
x
r
e
c
o
n
c
i
l
i
a
t
i
o
n
t
o
t
h
e
s
t
a
t
e
m
e
n
t
o
f
c
o
m
p
r
e
h
e
n
s
i
v
e
i
n
c
o
m
e
1
9
7
.
2
(
1
.
3
)
(
1
7
6
.
7
)
(
9
8
.
5
)
9
8
.
5
(
9
.
7
)
(
1
.
3
)
(
6
7
.
6
)
4
5
3
.
8
2
0
1
2
’
$
m
3
5
6
.
9
(
3
.
8
)
(
6
.
9
)
(
8
6
.
4
)
8
6
.
4
(
7
.
9
)
(
2
.
6
)
(
6
6
.
3
)
4
4
4
.
4
2
0
1
1
$
’
m
1
2
,
3
6
6
.
3
1
2
,
4
6
1
.
6
(
1
,
0
5
4
.
8
)
1
3
,
3
0
9
.
9
2
0
1
2
’
$
m
1
2
.
7
9
8
.
5
1
3
,
2
9
0
.
7
(
9
2
6
.
7
)
2
0
1
1
$
’
m
1
1
.
2
8
6
.
4
3
.
S
E
G
M
E
N
T
I
N
F
O
R
M
A
T
O
N
I
(
C
o
n
t
i
n
u
e
d
)
S
e
g
m
e
n
t
p
r
o
f
i
t
b
e
f
o
r
e
t
a
x
3
8
0
.
8
3
6
1
.
8
1
6
.
9
3
1
.
8
3
9
7
.
7
3
9
3
.
6
3
4
.
9
3
0
.
1
T
o
t
a
l
s
e
g
m
e
n
t
r
e
v
e
n
u
e
I
n
t
e
r
-
s
e
g
m
e
n
t
r
e
v
e
n
u
e
s
8
,
3
3
5
.
5
8
,
3
9
4
.
2
1
,
7
1
8
.
2
1
,
7
0
9
.
9
1
0
,
0
5
3
.
7
1
0
,
1
0
4
.
1
2
,
4
2
3
.
0
,
2
3
8
9
.
0
9
6
8
.
0
8
3
4
.
3
-
-
9
6
8
.
0
8
3
4
.
3
8
6
.
8
9
2
.
4
8
3
3
.
2
2
1
.
2
-
7
9
7
.
6
2
0
.
7
1
3
,
3
0
9
.
9
1
3
,
2
9
0
.
7
4
5
3
.
8
4
4
4
.
4
-
,
1
0
5
4
.
8
9
2
6
.
7
S
a
e
s
l
t
o
e
x
t
e
r
n
a
l
c
u
s
t
o
m
e
r
s
7
,
3
6
7
.
5
7
,
5
5
9
.
9
1
,
7
1
8
.
2
1
,
7
0
9
.
9
9
,
0
8
5
.
7
9
,
2
6
9
.
8
2
,
3
3
6
.
2
,
2
2
9
6
.
6
8
3
3
.
2
7
9
7
.
6
1
2
,
2
5
5
.
1
1
2
,
3
6
4
.
0
S
e
g
m
e
n
t
R
e
v
e
n
u
e
B
u
s
i
n
e
s
s
s
e
g
m
e
n
t
s
F
o
o
d
&
G
r
o
c
e
r
y
D
i
s
t
r
i
b
u
t
i
o
n
i
L
q
u
o
r
D
i
s
t
r
i
b
u
t
i
o
n
H
a
r
d
w
a
r
e
D
i
s
t
r
i
b
u
t
i
o
n
R
e
s
u
l
t
s
f
r
o
m
F
o
o
d
D
i
s
t
r
i
b
u
t
i
o
n
C
a
s
h
a
n
d
C
a
r
r
y
T
o
t
a
l
*
i
c
o
n
t
i
n
u
n
g
o
p
e
r
a
t
i
o
n
s
2
0
1
2
$
’
m
2
0
1
1
$
’
m
D
i
s
t
r
i
b
u
t
i
o
n
2
0
1
2
$
’
m
2
0
1
1
$
’
m
2
0
1
2
$
’
m
2
0
1
1
$
’
m
2
0
1
2
$
’
m
2
0
1
1
$
’
m
2
0
1
2
$
’
m
2
0
1
1
$
’
m
2
0
1
2
’
$
m
2
0
1
1
$
’
m
F
o
r
t
h
e
y
e
a
r
e
n
d
e
d
3
0
A
p
r
i
l
2
0
1
2
I
M
E
T
C
A
S
H
F
N
A
N
C
A
L
R
E
P
O
R
T
2
0
1
2
I
I
N
O
T
E
S
T
O
T
H
E
F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
I
73
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
4.
REVENUES AND EXPENSES
Revenue
(i)
Sale of goods
Rent
Interest from other persons/corporations
Other income
(ii)
Net profit from disposal of property, plant and equipment
(iii) Operating lease rental
Minimum lease payments - warehouse and other
Minimum lease payments - stores
Employee benefit expense
(iv)
Salaries and wages
Defined contribution plan expense
Workers compensation costs
Share based payments
Other employee benefit costs
Other expenses
(v)
Depreciation/amortisation
- Depreciation of property, plant and equipment
-
-
Amortisation of software
Amortisation of customer relationships and licence agreements
Trade receivables written off or impaired
Inventories net realisable value provision
Impairment of software development intangibles
Significant items
(vi)
Franklins acquisition and restructure costs (a)
Acquisition costs
-
- Distribution centre closure costs
Group restructuring (b)
Lease tail and exit costs
-
- Redundancy costs
-
-
- Other closure costs
-
Impairment - property, plant & equipment
Impairment - goodwill
Profit on disposal of business assets
Associate impairment (c)
Loans and receivables
-
-
Equity accounted investment
- Customer contract intangibles
- Restructure costs (provided)
- Restructure costs (paid)
(vii) Finance costs
Interest expense
Deferred borrowing cost
50
2012
$’m
2011
$’m
12,255.1
98.5
12.7
12,366.3
12,364.0
86.4
11.2
12,461.6
0.2
0.3
105.8
98.5
404.0
32.4
11.0
1.3
4.6
34.0
10.7
9.7
54.4
17.5
5.8
2.2
6.3
22.2
28.5
17.0
11.5
9.9
2.5
8.8
(7.2)
42.5
50.8
24.6
9.1
12.5
8.7
105.7
76.9
3.4
80.3
94.5
86.4
402.6
31.7
10.5
2.6
4.7
34.1
11.3
7.9
53.3
13.6
5.1
-
6.9
-
6.9
-
-
-
-
-
-
-
-
-
-
-
-
-
73.9
3.6
77.5
Metcash Annual Report 2012
74
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
4.
REVENUES AND EXPENSES (Continued)
(a) Franklins acquisition and restructure costs
Metcash acquired Interfrank Group Holdings Pty Ltd (the Franklins Group) on 30 September 2011. During the current and
prior periods, Metcash incurred legal and other costs in relation to the Australian Competition and Consumer Commission
(ACCC) proceedings and in relation to the completion of the acquisition of $6.3 million (2011: $6.9 million). The Franklins
acquisition will also facilitate the relocation and closure of the Blacktown, Silverwater, Yennora and Liverpool CSD distribution
facilities to the new Huntingwood distribution centre. The $22.2 million expense comprises lease exit and make-good
obligations, the impairment of plant and equipment and various other closure and relocation costs.
(b) Group restructuring costs
On 3 April 2012 Metcash announced the results of a strategic review that had been foreshadowed at the half year. The ‘Group
restructure’ includes the lease obligations, redundancy, impairment and other costs associated with the closure or sale of 15
regional Campbells Cash and Carry branches. Metcash has also incurred redundancy costs in respect of the consolidation of
the IGA Distribution, Fresh and Campbells business pillars into the new Food and Grocery division, along with the
centralisation of merchandising, marketing and property functions. The Group restructure also included a review of non-core
assets, which led to the disposal of the Foodlink WA business to Bidvest for a profit of $7.2 million, and the exit or impairment
of other surplus assets.
(c) Associate impairment
The Group holds associate investments in the Cornetts and Walters joint venture businesses, which operate retail stores in
Queensland (Note 12). These businesses have been impacted by various factors including a weak Queensland economy,
deflation, rapid expansion, succession planning issues and natural disasters. The Group has recorded an expense of $105.7
million during the current period in relation to asset impairments and the costs associated with the restructure of these
businesses. A restructure plan has been jointly developed, which will include the disposal of a number of stores to other
retailers and some store closures, along with overhead savings.
5.
INCOME TAX
The major components of income tax expense are:
Current income tax
Current income tax charge
Adjustments in respect of current income tax of previous years
Deferred income tax relating to origination and reversal of temporary differences
Income tax expense reported in the statement of comprehensive income
A reconciliation between tax expense and the product of accounting profit
before income tax multiplied by the Group’s applicable income tax rate is as follows:
Accounting profit before income tax
At the Group’s statutory income tax rate of 30% (2011: 30%)
Expenditure not allowable for income tax purposes – continuing operations
Expenditure not allowable for income tax purposes – significant items
Research and development deduction
Adjustments in respect of current income tax of previous years
Income tax expense reported in the statement of comprehensive income at an effective tax rate
of 30% (2011: 30%)
Income tax attributable to continuing operations
Income tax benefit attributable to discontinued operations
51
2012
$’m
2011
$’m
111.4
(0.7)
(38.9)
71.8
197.2
59.2
1.4
11.9
-
(0.7)
88.5
(3.0)
20.6
106.1
356.9
107.1
0.8
2.1
(0.9)
(3.0)
71.8
106.1
71.8
(11.7)
60.1
106.1
-
106.1
75
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
5. INCOME TAX (Continued)
Deferred income tax
Deferred income tax of the Group at 30 April relates to the following:
Deferred tax liabilities
Intangibles
Accelerated depreciation for tax purposes
Other
Set off against deferred tax assets
Deferred tax assets
Provisions
Other
Unutilised tax losses
Set off from deferred tax liabilities
Recognised net deferred tax assets
Opening balance
Credited/(charged) to statement of comprehensive income
Acquisitions / disposals
Closing balance
STATEMENT OF
FINANCIAL POSITION
2011
2012
$’m
$’m
47.2
2.3
1.6
(51.1)
-
133.2
1.2
12.2
(51.1)
95.5
6.6
38.9
50.0
95.5
45.4
3.2
0.7
(49.3)
-
53.1
0.4
2.4
(49.3)
6.6
27.2
(20.6)
-
6.6
At 30 April 2012, there is no recognised or unrecognised deferred income tax liability (2011: $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 unrecognised gross capital losses of $20 million ($2011: $20 million) that are available indefinitely 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 modified standalone 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. During the current period Interfrank Group Holdings Pty Ltd and SSA Holdings Pty Ltd joined
the tax consolidated group.
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
modified stand alone tax calculation as the basis for allocation. Deferred taxes of 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.
52
Metcash Annual Report 2012
76
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
6.
DIVIDENDS PAID AND PROPOSED
(a) Dividends paid and declared on ordinary shares during the year
Dividends paid on ordinary shares during the year
Final fully franked dividend for 2011: 16.0c (2010: 15.0c)
Interim fully franked dividend for 2012: 11.5c (2011: 11.0c)
Dividends declared (not recognised as a liability as at 30 April 2012)
Final fully franked dividend for 2012: 16.5c (2011: 16.0c) (i)
2012
$’m
2011
$’m
123.0
88.7
211.7
114.8
84.6
199.4
127.3
123.0
(i)
Subsequent to the end of the financial year, Metcash announced that it would raise approximately $325 million in additional ordinary share capital
through a fully underwritten institutional placement (Note 33). The shares issued under the institutional placement will be entitled to receive the 2012 final
dividend of 16.5 cents per share. The 2012 final dividend amount of $127.3 million included in this table does not include the additional amount payable
as a result of the institutional placement, as it is not yet possible to determine the number of shares that will be issued.
(b) Franking credit balance of Metcash Limited
Franking account balance as at the end of the financial year at 30% (2011: 30%)
Franking credits that will arise from the payment of income tax payable as at the end of the
financial year
Amount of franking credit on dividends declared but not recognised as a distribution to
shareholders during the period (i)
2012
$’m
2011
$’m
135.4
128.6
24.9
14.3
(54.6)
105.7
(52.7)
90.2
(i)
(ii)
Subsequent to the end of the financial year, Metcash announced that it would raise approximately $325 million in additional ordinary share capital
through a fully underwritten institutional placement (Note 33). The shares issued under the institutional placement will be entitled to receive the 2012 final
dividend of 16.5 cents per share. The franking credit amount of $54.6 million included in this table does not include the additional amount payable as a
result of the institutional placement, as it is not yet possible to determine the number of shares that will be issued and the resulting dividend payable.
The franking credit balance of $105.7 million includes franking credits associated with the income tax receivable of $24.4 million paid in respect of the
Action Stores disputed tax (Note 32).
(c) Tax rates
The tax rate at which paid dividends have been fully franked is 30% (2011: 30%). Dividends declared have been fully franked
at the rate of 30% (2011: 30%).
53
77
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
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 profit for the period
Adjustments for:
Depreciation and amortisation
Net (profit)/loss on disposal of property, plant and equipment
Share of associates’ net (profit)/loss
Dividends received from associates
Deferred borrowing costs
Share based payments
Significant items:
Group restructuring – impairment of property, plant & equipment (Note 4(vi)(b))
Group restructuring – impairment of goodwill (Note 4(vi)(b))
Group restructuring – profit on disposal of business assets (Note 4(vi)(b))
Associate impairment – loans and receivables (Note (vi)(c))
Associate impairment – equity accounted investment (Note (vi)(c))
Associate impairment – customer contract intangible (Note (vi)(c))
Changes in assets and liabilities, net of purchase and disposal of subsidiaries
(Increase)/decrease in trade and other receivables
(Increase)/decrease in assets held for sale
(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
Cash from operating activities
(b) Non-cash financing and investing activities
Acquisition of assets by means of finance lease
8.
TRADE AND OTHER RECEIVABLES (CURRENT)
Trade receivables - securitised (i)(Note 17 (iv))
Trade receivables - non-securitised (i)
Allowance for impairment loss
Customer loans (ii)
Allowance for impairment loss
Marketing debtors (iii)
Other receivables (iii)
2012
$’m
2011
$’m
51.5
152.9
98.2
250.8
54.4
(0.2)
(0.3)
1.1
3.4
1.3
9.9
2.5
(7.2)
50.8
24.6
9.1
13.8
2.7
0.6
154.0
(34.8)
(85.7)
(13.9)
284.3
53.3
(0.3)
1.7
1.6
3.6
2.6
-
-
-
-
-
-
(3.1)
-
(0.9)
(203.3)
20.6
47.2
(31.3)
142.5
4.3
4.1
2012
$’m
2011
$’m
689.1
194.5
(43.4)
840.2
23.6
(1.6)
862.2
30.5
93.4
986.1
694.8
181.3
(20.4)
855.7
32.0
(3.5)
884.2
41.2
81.9
1,007.3
(i)
Trade receivables are non-interest bearing and repayment terms vary by business unit. At 30 April 2012, 93.6% of trade
receivables are required to be settled within 30 days and 6.4% of trade receivables have terms extending from 30 days
to 84 days. The amount of the allowance for impairment loss has been measured as the difference between the carrying
amount of the trade receivables and the estimated future cash flows expected to be received from the relevant debtors.
54
Metcash Annual Report 2012
78
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
8. TRADE AND OTHER RECEIVABLES (CURRENT) (Continued)
(ii) Customer loans receivable are current and have repayment terms of less than 12 months. $0.7 million (2011: $0.4
million) of loans are non-interest-bearing. $22.9 million (2011: $31.6 million) of loans have a weighted average annual
interest rate of 8.71% (2011:7.95%).
(iii) Marketing debtors and other receivables are non-interest bearing and have repayment terms of less than 12 months.
IMPAIRED TRADE RECEIVABLES AND OTHER CURRENT RECEIVABLES
During the year ended 30 April 2012 receivables of the value of $15.7 million (2011: $14.1 million) were considered non-
recoverable and written off. As at 30 April 2012, trade receivables and other current receivables with a notional value of $45.0
million (2011: $23.9 million) were provided for as impaired.
As at 1 May
Accounts written off as non recoverable
Charge for the year
Charge for the year - significant items
As at 30 April
TRADE DEBTORS AGEING
2012
$’m
(23.9)
15.7
(17.5)
(19.3)
(45.0)
2011
$’m
(24.4)
14.1
(13.6)
-
(23.9)
As at 30 April 2012, the ageing analysis of trade receivables for the Group that were not impaired is as follows:
NEITHER
PAST DUE
OR
IMPAIRED
$’m
662.7
78.9%
654.4
76.6%
LESS
THAN 30
DAYS
OVERDUE
$’m
123.4
14.7%
136.1
15.9%
MORE
THAN 30
LESS
THAN 60
$’m
19.7
2.3%
12.3
1.4%
MORE
THAN 60
LESS
THAN 90
$’m
8.4
1.0%
12.4
1.4%
MORE
THAN 90
LESS
THAN 120
$’m
8.4
1.0%
7.2
0.8%
MORE
THAN 120
$’m
17.6
2.1%
33.3
3.9%
TOTAL
$’m
840.2
100.0%
855.7
100.0%
2012
2011
The credit quality of the unimpaired trade receivables is good. Metcash believes that the above trade receivables will be
recovered.
CUSTOMER LOANS AGEING
As at 30 April 2012, the ageing analysis of current and non current customer loans for the Group that were not impaired is as
follows:
NEITHER
PAST DUE
OR IMPAIRED
$’m
63.0
92.9%
87.7
85.6%
LESS
THAN 30
DAYS
OVERDUE
$’m
1.1
1.6%
0.0
0.0%
MORE
THAN 30
LESS
THAN 60
$’m
0.6
0.9%
0.3
0.3%
MORE
THAN 60
LESS
THAN 90
$’m
0.3
0.4%
0.3
0.3%
MORE
THAN 90
LESS
THAN 120
$’m
0.1
0.1%
1.0
1.0%
MORE
THAN 120
$’m
2.7
4.0%
13.2
12.9%
TOTAL
$’m
67.8
100.0%
102.5
100.0%
2012
2011
The credit quality of the unimpaired customer loans is good. Metcash believes that the above loans will be recovered.
55
79
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
8. TRADE AND OTHER RECEIVABLES (CURRENT) (Continued)
OTHER RECEIVABLES AGEING
As at 30 April 2012, the analysis of other receivables for the Group that were not impaired is as follows:
NEITHER
PAST DUE
OR IMPAIRED
LESS THAN
30 DAYS
OVERDUE
MORE
THAN 30
LESS
THAN 60
MORE
THAN 60
LESS
THAN 90
MORE
THAN 90
LESS THAN
120
$’m
128.0
98.9%
126.0
97.2%
$’m
0.4
0.3%
2.5
1.9%
$’m
0.8
0.6%
1.1
0.8%
$’m
0.1
0.1%
0.0
0.0%
$’m
0.0
0.0%
0.0
0.0%
MORE
THAN 120
$’m
0.1
0.1%
0.1
0.1%
TOTAL
$’m
129.4
100.0%
129.7
100.0%
2012
2011
The credit quality of the unimpaired other receivables is good. Metcash believes that the above other receivables will be
recovered.
CUSTOMER LOAN SECURITY
Current loans
Non-current loans
2012
$’m
22.0
45.8
67.8
2011
$’m
28.5
74.0
102.5
For certain customer loans, customers are required to provide security in the event of default. These may include bank
guarantees, fixed and floating charges and security over property assets. The fair value of these securities as at 30 April 2012
was $34.2 million (2011: $30.7 million).
9.
INVENTORIES
2012
$’m
2011
$’m
Total finished goods inventories at the lower of cost and net realisable value
833.6
954.9
Inventory write-downs recognised as an expense totalled $10.9 million (2011: $5.1 million). $5.8 million of the write down is
included in the cost of sales line item as a cost of inventory and the remaining $5.1 million is included in significant items.
10.
DERIVATIVE FINANCIAL INSTRUMENTS
Current
Interest rate swap contracts (i)
Non current
Cross currency interest rate swaps – US Private Placement(i)
(i) Derivatives that are designated and effective as hedging instruments are carried at fair value
2012
$’m
2011
$’m
-
0.9
27.8
-
56
Metcash Annual Report 2012
80
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
11.
RECEIVABLES (NON-CURRENT)
Customer loans (i)
Impairment - significant items (ii)
Other receivables (iii)
2012
$’m
77.3
(31.5)
5.5
51.3
2011
$’m
74.0
-
6.6
80.6
(i) Customer loans receivable are non-current and have repayment terms of greater than 12 months. $1.9 million (2011:
$6.4 million) of loans are non-interest bearing. $75.4 million (2011: $67.6 million) of the loans have a weighted average
annual interest rate of 8.15% (2011: 8.34%). Refer to Note 8 for ageing analysis and credit quality.
(ii) Other than the amount shown in the table, there were no movements in impairment during the current period.
(iii) Other receivables are non-interest-bearing and have repayment terms greater than 12 months. These receivables are all
neither past due nor impaired. Refer Note 8 for ageing analysis and credit quality.
NON CURRENT RECEIVABLES FAIR VALUE
The fair value of non-current receivables is calculated based on cash flows discounted at a rate reflecting current market rates
adjusted for counter party credit risk. The fair value and carrying values of non-current receivables of the Group are as
follows:
Customer loans
Other receivables
12.
INVESTMENTS IN ASSOCIATES
Opening balance
Capital contributions to associates
Share of profit/(loss) of associates
Dividends received
Impairment – significant items
CARRYING
AMOUNT
2012
$’m
45.8
5.5
51.3
CARRYING
AMOUNT
2011
$’m
74.0
6.6
80.6
FAIR
VALUE
2012
$’m
46.8
5.5
52.3
FAIR
VALUE
2011
$’m
76.0
6.6
82.6
2012
$’m
92.1
1.6
0.3
(1.1)
(24.6)
68.3
2011
$’m
94.8
0.5
(1.7)
(1.5)
-
92.1
During the current period the Group became aware of financial difficulties faced by two of its associates, Cornetts and Walters.
The recoverable amount of the Group’s investment was estimated through the use of a discounted cash flow model, on a
value in use basis, using a pre-tax discount rate of 10%. The recoverable amount was compared to the carrying value and an
impairment loss of $24.6 million was recognised for the difference in the Statement of Comprehensive Income (Note 4(vi)(c)).
57
81
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
12. INVESTMENT IN ASSOCIATES (Continued)
Interest in associates
PRINCIPAL ACTIVITIES
BALANCE
DATE
Abacus Independent Retail Property Trust
Plumpton Park Developments Pty Limited
Ritchies Stores Pty Ltd
BMS Retail Group Pty Ltd
Dramet Pty Ltd
Dart Trading Co Pty Ltd
Bamlane Pty Ltd
Mundin Pty Ltd
G'Butt Pty ltd
Mussen Pty Ltd
Ully Pty Ltd
Adcome Pty Ltd
Lecome Pty Ltd
Metfood Pty Limited
Retail property investment
Property development
Grocery retailing
Grocery retailing
Grocery retailing
Grocery retailing
Grocery retailing
Grocery retailing
Grocery retailing
Grocery retailing
Grocery retailing
Grocery retailing
Grocery retailing
Merchandise services for Metcash and
Foodstuffs
Progressive Trading Pty Ltd (Progressive) (ii) Grocery retailing
Hardware retailing
Sunshine Hardware Pty Ltd
Hardware retailing
Northern Hardware Pty Ltd
30 June
30 June
30 June
30 June
30 June
30 June
30 June
30 June
30 June
30 June
30 June
30 April
30 April
30 April
30 April
30 June
30 June
OWNERSHIP
INTEREST
2012
2011
%
%
25.0
50.0
26.0
25.1
26.0
26.0
26.0
26.0
26.0
26.0
26.0
45.0
50.0
50.0
52.2
49.0
49.9
25.0
-
26.0
25.1
26.0
26.0
26.0
26.0
26.0
26.0
26.0
45.0
50.0
50.0
55.4
49.0
49.9
(i) Metcash has a direct ownership of 45.3% in Progressive, and an indirect ownership of 6.9% 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 does not have the power to govern the financial and
operating policies of Progressive.
The following table illustrates the summarised financial information relating the Group’s investment in associates.
Share of associates’ profit:
2012
$’m
0.6
(0.3)
0.3
2012
$’m
69.3
127.6
196.9
(119.7)
(43.2)
(162.9)
34.0
2011
$’m
(2.4)
0.7
(1.7)
2011
$’m
86.7
150.4
237.1
(130.4)
(46.2)
(176.6)
60.5
Profit/(loss) before income tax
Income tax benefit/(expense)
Profit/(loss) after income tax
Share of associates’ statement of financial position:
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
58
Metcash Annual Report 2012
82
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
13.
OTHER FINANCIAL ASSETS (NON-CURRENT)
Investment in shares (unlisted)
14.
PROPERTY, PLANT AND EQUIPMENT
Year ended 30 April 2012
At 1 May 2011
Opening balance
Additions
Acquisition from business combination (Note 29)
Disposals
Exchange differences
Impairment charged to significant items
Impairment reversal
Depreciation
Closing balance
At 30 April 2012
Cost or fair value
Accumulated depreciation & impairment
Net carrying amount
Year ended 30 April 2011
At 1 May 2010
Opening balance
Additions
Acquisition from business combination
Disposals
Exchange differences
Depreciation
Closing balance
At 30 April 2011
Cost or fair value
Accumulated depreciation & impairment
Net carrying amount
2012
$’m
2011
$’m
0.2
0.2
LAND &
BUILDINGS
$’m
PLANT &
EQUIPMENT
$’m
75.3
0.5
-
(5.5)
-
-
-
(1.0)
69.3
77.1
(7.8)
69.3
122.3
75.4
1.2
(1.4)
(0.1)
(9.9)
0.6
(33.0)
155.1
354.1
(199.0)
155.1
LAND &
BUILDINGS
PLANT &
EQUIPMENT
$’m
$’m
TOTAL
$’m
197.6
75.9
1.2
(6.9)
(0.1)
(9.9)
0.6
(34.0)
224.4
431.2
(206.8)
224.4
TOTAL
$’m
64.7
12.1
-
-
-
(1.5)
75.3
130.0
26.0
1.3
(2.3)
(0.1)
(32.6)
122.3
194.7
38.1
1.3
(2.3)
(0.1)
(34.1)
197.6
82.1
(6.8)
75.3
279.0
(156.7)
122.3
361.1
(163.5)
197.6
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 30 April 2012 is $13.0
million (2011: $15.8 million)
59
83
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
15.
INTANGIBLE ASSETS AND GOODWILL
SOFTWARE
DEVELOPMENT
COSTS
CUSTOMER
CONTRACTS GOODWILL
TRADE
NAME
OTHER
TOTAL
$'m
$'m
$'m
$'m
$'m
$'m
70.2
16.8
-
-
(2.2)
(10.7)
151.1
1.1
28.1
-
(9.1)
(9.3)
1,040.3
-
256.0
(10.2)
(2.5)
-
74.1
161.9
1,283.6
167.9
(93.8)
74.1
215.5
1,286.1
(53.6)
161.9
(2.5)
1,283.6
27.2
-
3.2
-
-
(0.1)
30.3
30.4
(0.1)
30.3
2.3
-
-
-
-
(0.3)
2.0
3.0
(1.0)
2.0
1,291.1
17.9
287.3
(10.2)
(13.8)
(20.4)
1,551.9
1,702.9
(151.0)
1,551.9
SOFTWARE
DEVELOPMENT
COSTS
CUSTOMER
CONTRACTS GOODWILL
TRADE
NAME
OTHER
TOTAL
$'m
$'m
$'m
$'m
$'m
$'m
63.1
18.4
156.3
2.4
1,032.8
-
27.2
-
2.6
1,282.0
- 20.8
-
-
-
7.8
- (0.3)
-
-
- 7.8
(0.3)
-
(11.3)
(7.6)
-
-
(0.3)
(19.2)
70.2
151.1
1,040.3
27.2
2.3
1,291.1
168.6
186.3
1,040.3
27.2
3.0
1,425.4
(98.4)
70.2
(35.2)
151.1
-
1,040.3
-
27.2
(0.7)
2.3
(134.3)
1,291.1
Year ended 30 April
2012
At 1 May 2011
Net carrying amount
Additions
Acquisition from business
combination (Note 29)
Disposals
Impairment
Amortisation
At 30 April 2012
Net carrying amount
At 30 April 2012
Cost (gross carrying amount)
Accumulated amortisation and
impairment
Net carrying amount
Year ended 30 April 2011
At 1 May 2010
Net carrying amount
Additions
Acquisition from business
combination (Refer Note 29)
Exchange differences
Amortisation
At 30 April 2011
Net carrying amount
At 30 April 2011
Cost (gross carrying amount)
Accumulated amortisation and
impairment
Net carrying amount
(d) DESCRIPTION OF THE GROUP’S INTANGIBLE ASSETS AND GOODWILL
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. Useful lives range from five to ten years. Software development costs are tested for impairment where an
indicator of impairment exists. Useful lives are also estimated on an annual basis and adjustments, where applicable, are
made on a prospective basis.
60
Metcash Annual Report 2012
84
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
15. INTANGIBLE ASSETS AND GOODWILL (Continued)
Customer contracts
Customer contracts are acquired either through business combinations or through direct acquisition of contractual
relationships. The carrying amount represents the costs less accumulated amortisation. Customer contracts are amortised
over 10 to 25 years. The amortisation has been recognised in the statement of comprehensive income in the line item
"Administrative Costs". If an impairment indication arises, the recoverable amount is estimated and an impairment loss is
recognised to the extent that the recoverable amount is less than the carrying amount.
Trade names
Trade names have been acquired through business combinations and are carried at cost less any impairment losses. These
intangible assets have been determined to have either a finite or an indefinite useful life. Trade names with indefinite useful
lives will be subjected to impairment testing on an annual basis or whenever there is an indication of impairment. Impairment
testing was carried out in February 2012. Trade names with finite useful lives are amortised over their expected useful lives and
impairment testing is performed when an indicator of impairment is identified.
Other
The Group entered into an Alliance Agreement with Lenards Pty Ltd in 2009 to offer customers the opportunity to purchase
products under Lenards Franchise. The agreement fee is being amortised over 10 years, on a straight line basis. The
intangible is carried at cost less accumulated amortisation.
(e)
IMPAIRMENT TESTS FOR GOODWILL AND INTANGIBLES WITH INDEFINITE USEFUL LIVES
Goodwill
Description of cash generating units
(i)
Goodwill acquired through business combinations have been allocated to the lowest level within the entity at which the
goodwill is monitored by management, being the four business pillars (IGA, CCC, ALM and Mitre 10), which are reportable
segments (Food Distribution, Cash and Carry Distribution, Liquor Distribution and Hardware Distribution). Under AIFRS,
goodwill and intangibles with indefinite lives must be tested annually and when impairment indicators arise, provided the
testing is done at the same time each year. Impairment testing was conducted in February 2012 for all CGUs excluding Cash
and Carry Distribution. Impairment testing for this unit was conducted in April 2012 on the basis that indicators of impairment
as a result of the Group restructure were identified.
The recoverable amounts of the group of CGUs have been determined based on value in use calculations using cash flow
projections based on financial projections covering a five year period.
(ii)
The Group has applied the following key assumptions in its cash flow projections:
Key assumptions used in valuations
Budgeted gross margins – These have been estimated based on the utilisation of existing assets and on the average gross
margins achieved immediately before the budgeted year, increased for expected efficiency improvements.
Discount rates – The weighted average cost of capital for the Group based on risk free rates of return, the Group’s risk profile
relative to the market, the marginal cost of borrowing for the Group, its average level of gearing and a market risk premium.
Future growth – The growth rate is driven by population growth, estimated food and hardware inflation and changes in
market share.
The pre-tax discount rate applied to cash flow projections is 8.51% (2011: 9.92%) and cash flows beyond the five year period
are extrapolated using a 2.5% growth rate (2011: 2.5%) which is based on the historical population and applicable product
inflation and growth rates for each group of CGUs.
61
85
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
15. INTANGIBLE ASSETS AND GOODWILL (Continued)
Sensitivity to changes in assumptions
(iii)
The table below summarises the goodwill attributed to each group of CGU’s and the potential impairment trigger point at the
impairment testing date of February 2012, except Campbells Wholesale which was tested in April 2012 after the group
restructure announcement:
Group of CGUs
IGA Distribution
Campbells Wholesale
Australian Liquor Marketers
Mitre 10
Discount Rate at
Which
Impairment is
Triggered
%
*
13.48%
11.87%
13.12%
Goodwill
$'m
1,135.1
22.7
88.9
36.8
* 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.
Trade names
(i) Trade names comprise the Mitre 10 brand name
(ii) Key assumptions used in assessing the recoverable amount of the Mitre 10 brand:
Royalty rate - An estimate based on similar royalty rates for similar types of franchising store formats in a similar industry from
a global analysis.
Budgeted gross margins - These have been estimated based on the utilisation of existing assets and on the average gross
margins achieved immediately before the budgeted year, increased for expected efficiency improvements.
Discount rates - The weighted average cost of capital for the Mitre 10 Group based on risk free rates of return, the group's
risk profile relative to the market, the marginal cost of borrowing for the group, its average level of gearing and a market risk
premium.
Future growth - Driven by population growth, estimated inflation and changes in market share.
(iii) Sensitivity to changes in assumptions
No reasonably possible change in any of the above key assumptions would cause the carrying value of the trade names to
materially exceed its recoverable amount.
16.
TRADE AND OTHER PAYABLES
Trade payables
Accruals
2012
$’m
1,112.2
260.5
1,372.7
2011
$’m
1,205.4
171.1
1,376.5
Trade payables and accruals are non-interest-bearing and are normally settled within 30-day terms. Due to the short term
nature of these payables, their carrying value approximates their fair value.
62
Metcash Annual Report 2012
86
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
17.
INTEREST BEARING LOANS AND BORROWINGS
Current
Finance lease obligations (i)
Bank loans - working capital (ii)
Non-current
Finance lease obligations (i)
Bank loans - syndicated (iii)
Debt securitisation (iv)
US private placement (v)
Deferred borrowing costs
2012
$’m
6.8
11.0
17.8
9.1
600.0
130.0
240.0
(5.1)
974.0
2011
$’m
8.6
-
8.6
11.5
500.0
320.0
-
(4.8)
826.7
(i) Finance leases have an average lease term of 5.4 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 9.19% (2011: 9.47%). Certain
lease liabilities are secured by a charge over the leased asset.
(ii) Working capital bank loans provide short term funding under two unsecured revolving facilities of $150 million and $75
million, which both expire in February 2013. Interest payable on these facilities is based on BBSY or the cash rate plus a
margin. These bank loans are subject to certain financial undertakings as detailed in Note 17 (vi) below.
(iii) Syndicated bank loans are a three and four year senior unsecured loan note subscription facility, which expire in
December 2014 ($400 million) and December 2015 ($300 million). Interest payable on the facility is based on BBSY plus
a margin and rollover is quarterly. The applicable margin is dependent upon an escalation matrix linked to the senior
leverage ratio achieved. These bank loans are subject to certain financial undertakings as detailed in Note 17 (vi) below.
(iv) Under the $400 million debt securitisation facility, an equitable interest has been granted in certain trade receivables to a
special purpose trust, which is managed by a major Australian bank. The facility is subject to the periodic renewal of
liquidity support by a major Australian bank, which is currently committed until May 2013. The Group has therefore
classified the facility as non-current at April 2012. Interest payable on the facility is based on BBSY plus a margin.
The terms of the facility require that, at any time, the book value of the securitised receivables must exceed by at least a
certain proportional amount, the funds drawn under the facility. At the end of the financial year, trade receivables of
$689.1 million (2011: $694.8 million) had been securitised, with $130 million (2011: $320 million) of funds drawn under
the facility. The resultant security margin exceeded the minimum required at that time.
The 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 Group to remit funds when due,
or a substantial deterioration in the overdue proportion of certain trade receivables.
The Group considers that it does not control the special purpose trust as it does not have power to determine the
operating and financial policies of the trust, nor is the Group exposed to the risks and benefits of the trust. Accordingly,
the Group does not consolidate the trust in its financial report.
(v) US private placement (USPP) comprises three tranches of fixed coupon debt of US$70 million maturing September
2018, US$35 million maturing September 2019, and US$120 million maturing September 2023. The foreign exchange
and fixed interest rate risk has been hedged using a series of cross currency interest rate swaps that mitigate these risks.
The financial effect of these hedges is to convert the US$225 million of USPP fixed interest rate debt into A$210.1 million
of floating rate debt with interest payable at BBSW plus a margin.
The US$225 million USPP debt has been revalued at balance date to A$240.0 million and presented as interest bearing
debt as disclosed above. The mark-to-market fair value of the associated cross currency interest rate swaps are
separately disclosed within derivative financial instruments ($27.8 million – Note 10), associated interest within other
receivables ($0.5 million – Note 8), the cash flow hedge reserve ($1.1 million – Note 21), and associated deferred tax
assets ($0.5 million – Note 5). Together, these five components reflect the A$210.1 million of hedged debt.
The USPP debt is subject to certain financial undertakings as detailed in Note 17 (vi) below.
63
87
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
17. INTEREST BEARING LOANS AND BORROWINGS (Continued)
(vi) The Group must comply with three primary covenants which apply to the syndicated bank facility, both working capital
bank facilities and the USPP debt. These covenants are: a fixed charges cover ratio (Earnings Before Interest, Tax,
Depreciation, Amortisation and Net Rent (EBITDAR) divided by Total Net Interest plus Net Rent Expense), a senior
leverage ratio (Total Group Debt divided by Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)) and
minimum shareholders funds (a fixed figure representing the Group share capital and reserves).
(a)
FAIR VALUE
The carrying amount of the Group's current and non-current borrowings approximates their fair value. The weighted average
effective interest rate on the syndicated and working capital bank loans, the debt securitisation and the USPP debt, after
taking into account cross currency and interest rate swaps, at the end of the financial year was 6.51% (2011: 6.18%).
(b) DEFAULTS OR BREACHES
At the reporting date, 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 are disclosed in Note 22.
18.
DERIVATIVE FINANCIAL INSTRUMENTS
2012
$’m
4.9
0.3
5.2
2012
$’m
92.4
21.2
41.5
-
155.1
3.1
134.3
14.0
151.4
2011
$’m
-
1.4
1.4
2011
$’m
60.5
8.9
3.7
0.3
73.4
28.7
25.5
-
54.2
Interest rate swap contracts (i)
Foreign currency forward contracts (i)
(i)
Derivatives that are designated and effective as hedging instruments are carried at fair value.
19.
PROVISIONS
Current
Employee entitlements
Rental subsidy (b) (i)
Restructuring (b) (ii)
Other
Non-current
Employee entitlements
Rental subsidy (b) (i)
Restructuring (b)(ii)
Total
64
Metcash Annual Report 2012
88
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
19. PROVISIONS (Continued)
(a) Movements in provisions (other than employee entitlements)
Rental subsidy
$’m
Restructuring
$’m
Other
$’m
34.4
-
-
144.4
(16.7)
(11.3)
4.7
155.5
38.5
2.0
(5.3)
(0.8)
34.4
3.7
1.5
62.2
-
(11.9)
-
-
55.5
14.8
1.5
(12.6)
-
3.7
0.3
-
-
-
(0.3)
-
-
-
0.7
-
(0.4)
-
0.3
Total
$’m
38.4
1.5
62.2
144.4
(28.9)
(11.3)
4.7
211.0
54.0
3.5
(18.3)
(0.8)
38.4
1 May 2011
Arising during the year
Arising from significant items
Attributable to Franklins acquisition
Utilised
Released
Discount rate adjustment and imputed interest
30 April 2012
1 May 2010
Arising during the year
Utilised
Unused amounts released
30 April 2011
(b)
(i)
Nature and timing of provisions
Rental subsidy provision
In certain situations, Metcash will take the head lease on a retail property. When this occurs, the properties are typically sub
leased to the retail customers on commercial terms and conditions which equate to ‘back-to-back’ arrangements whereby the
lease expense to the landlord matches the lease rental to the retailer. Atypically, Metcash has assumed leases through
acquisitions whereby the lease rental is considered ‘onerous’. In these situations, where the head lease rental expense
exceeds the expected sub lease rental income, a provision is raised for the difference in rental streams for the period of the
actual or expected sub lease.
(ii)
Restructure provision
Details of the restructure provision are included in Note 4(vi).
20.
OTHER FINANCIAL LIABILITIES
Current
Lease incentives
Non - current
Lease incentives
21.
(a)
CONTRIBUTED EQUITY AND RESERVES
Ordinary shares:
Ordinary shares issued and fully paid
65
2012
$’m
2011
$’m
0.4
1.4
0.2
1.8
2012
$'m
2011
$'m
1,914.7
1,904.9
89
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
21. CONTRIBUTED EQUITY AND RESERVES (Continued)
Movements in ordinary shares on issue
At 1 May
Issued during the year:
- Exercise of employee options - at 392.5 cents per share
- Exercise of employee options - at 401.3 cents per share
- Exercise of employee options - at 426.7 cents per share
At 30 April
2012
NUMBER OF
SHARES
2011
$'m
NUMBER OF
SHARES
$'m
768,853,644 1,904.9
765,644,031
1,892.2
9.8
2,489,364
-
-
-
2,856
771,345,864 1,914.7
1,649,613
1,560,000
- -
768,853,644
6.4
6.3
1,904.9
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
(b)
Reserves:
SHARE-
BASED
PAYMENTS
$'m
CAPITAL
PROFITS
$'m
CASH
FLOW
HEDGE
$'m
FOREIGN
CURRENCY
TRANSLATION
$'m
19.7
-
2.6
-
22.3
-
1.3
-
23.6
12.8
-
-
-
12.8
-
-
-
12.8
(0.1)
-
-
0.1
-
-
-
(4.5)
(4.5)
(6.6)
(0.3)
-
-
(6.9)
1.0
-
-
(5.9)
TOTAL
$'m
25.8
(0.3)
2.6
0.1
28.2
1.0
1.3
(4.5)
26.0
At 1 May 2010
Foreign currency translation adjustments
Share-based payments
Movement in fair value of derivatives
At 30 April 2011
Foreign currency translation adjustments
Share-based payments
Movement in fair value of derivatives
At 30 April 2012
Nature and purpose of reserves
Share-based payments reserve
This reserve is used to record the value of equity benefits provided to employees and executive directors as part of their
remuneration. Refer to Note 25 for further details of these plans.
Capital profits reserve
The capital profits reserve is used to accumulate realised capital profits. The reserve can be used to pay dividends or issue
bonus shares.
Cash flow hedge reserve
This reserve records the portion of the unrealised gain or loss on a hedging instrument in a cash flow hedge that is determined
to be an effective hedge.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries. It is also used to record the effect of hedging net investments in foreign operations.
66
Metcash Annual Report 2012
90
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
21. CONTRIBUTED EQUITY AND RESERVES (Continued)
Retained earnings
At 1 May
Profit for the period
Dividends paid
At 30 April
Other equity
At 30 April
2012
$'m
2011
$'m
208.0
90.0
(211.7)
86.3
166.0
241.4
(199.4)
208.0
(765.9)
(765.9)
The other equity account is used to record the reverse acquisition adjustment on application of AASB 3 Business
Combinations in 2005. Refer also Note 2(a)(iv).
22.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise bank loans, bonds and overdrafts, finance and operating leases, cash
and short-term deposits and derivatives.
The main purpose of these instruments is to raise finance for the Group’s operations. The Group has various other financial
assets and liabilities such as trade receivables and payables, which arise directly from its operations.
The Group manages its exposure to key financial risks including interest rate and credit risks in accordance with the Group's
financial risk management policies. The objective of the policy is to support delivery of the Group's financial targets while
protecting future financial security.
The Group enters into a limited number of derivative transactions from time to time principally to manage interest rate and
foreign currency risks arising from the Group’s operations and its sources of finance.
The main risks arising from the Group’s financial instruments are cash flow interest rate risk, foreign exchange risk, and credit
risk. The Board reviews and agrees policies for managing each of these risks and they are detailed below.
Details of the significant 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 financial instrument,
financial liability and equity instrument are disclosed in Note 2 Summary of Significant 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 bank debt obligations with
a floating interest rate.
Metcash manages this risk by entering into interest rate swap contracts with various major Australian banks. At 30 April 2012
the principal hedged was $370 million with a weighted average hedge maturity of 1 year and a weighted average interest rate
of 5.12%. The Group considers these derivatives to be effective hedges in accordance with AASB 139 Financial Instruments:
Recognition and Measurement and therefore treats them as cash flow hedges. These interest rate swap contracts, which had
a notional principal value of $370 million (2011: $300 million) had a fair value at the end of the financial year of negative $4.9
million (2011: positive $0.9 million). These contracts are exposed to fair value movements if the interest rate changes.
67
91
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
At balance date, the Group had the following mix of financial assets and liabilities exposed to Australian variable interest rate
risk that, except as indicated, are not designated in cash flow hedges:
Financial assets
Cash and cash equivalents
Financial liabilities
Bank loans - working capital
Bank loans – syndicated
Debt securitisation
US private placement(i)
Less: Interest rate swaps notional principal value - designated as cash flow hedges
Net exposure
2012
$’m
2011
$’m
51.5
152.9
(11.0)
(600.0)
(130.0)
(210.1)
370.0
(581.1)
(529.6)
-
(500.0)
(320.0)
-
300.0
(520.0)
(367.1)
(i)
The US private placement liability is presented inclusive of the associated cross currency interest rate swap hedge
contracts which effectively convert the US$225 million facility into A$210.1 million of variable rate funding (Note 17 v).
Refer to Note 17 for details of bank loans, debt securitisation and US private placement.
The Group's treasury policy requires core debt is hedged between a minimum and maximum range over certain maturity
periods. Core debt is defined as the minimum level of drawn debt which is expected to occur over the year. As at 30 April
2012, the interest rate swap hedges of $370 million fell within the required range.
Sensitivity analysis
The Group constantly analyses its interest rate exposure. Within this analysis, consideration is given to potential renewal of
existing positions, alternative financing, alternative hedging positions and the mix of fixed and floating interest rates.
The table below shows the effect on post tax profit and other comprehensive income at balance date if interest rates had
moved by either 0.25% higher or 0.25% lower. These movements have been selected as they are considered reasonable,
given 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 of the Group’s interest rate derivatives that hedge core debt.
If interest rates were to increase by 0.25% (25 basis points)
If interest rates were to decrease by 0.25% (25 basis points)
PROFIT AFTER TAX
HIGHER/(LOWER)
OTHER COMPREHENSIVE
INCOME
HIGHER/(LOWER)
2012
$’m
(0.9)
0.9
2011
$’m
(0.6)
0.6
2012
$’m
0.6
(0.6)
2011
$’m
1.4
(1.5)
The movements in profit are due to higher/lower interest costs from variable rate bank debt and other loans net of interest rate
derivatives that hedge core debt. The movement in other comprehensive income is due to cash flow hedge fair value
adjustments on interest rate swap contracts.
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, the Group manages assets with liquidity in mind, and monitors future cash flows and
liquidity on a daily basis. The Group has five different sources of primary debt funding, of which 64.8% have been utilised at
30 April 2012. The Group monitors forecasts of liquidity reserves on the basis of expected cash flow.
68
Metcash Annual Report 2012
92
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
Remaining contractual maturities
Remaining contractual liabilities consist of non-interest bearing trade and other payables amounting to $1,372.7 million for the
Group and are due in one year or less.
Maturity analysis of financial assets and liabilities based on contracted date
The risk implied from the values shown in the table below reflects a balanced view of cash inflows and outflows. Leasing
obligations, trade payables and other financial liabilities mainly originate from the financing of assets that are used in 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 reflects the contracted date of settlement
of financial assets and liabilities. This is also the expected date of settlement.
YEAR ENDED 30 APRIL 2012
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Financial liabilities
Trade and other payables
Finance lease liability
Financial guarantee contracts
Bank and other loans
Derivative financial instruments
YEAR ENDED 30 APRIL 2011
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Financial liabilities
Trade and other payables
Finance lease liability
Bank and other loans
Derivative financial instruments
69
1 YEAR OR LESS
1-5 YEARS
MORE THAN 5
YEARS
$’m
$’m
$’m
TOTAL
$’m
51.5
986.1
-
1,037.6
-
51.3
-
51.3
-
-
27.8
27.8
51.5
1,037.4
27.8
1,116.7
1,372.7
7.7
0.2
70.4
0.9
1,451.9
-
10.4
-
845.2
4.3
859.9
-
-
-
257.8
-
257.8
1,372.7
18.1
0.2
1,173.4
5.2
2,569.6
1 YEAR OR LESS
1-5 YEARS
$’m
152.9
1,007.3
-
1,160.2
1,376.5
8.9
50.1
1.4
1,436.9
$’m
-
80.6
0.9
81.5
-
14.2
819.5
-
833.7
MORE THAN 5
YEARS
$’m
-
-
-
-
-
-
-
-
-
TOTAL
$’m
152.9
1,087.9
0.9
1,241.7
1,376.5
23.1
869.6
1.4
2,270.6
93
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
At balance date, the Group had unused credit facilities available for its immediate use as follows:
TOTAL
FACILITY
$’m
DEBT USAGE
$’m
GUARANTEES
& OTHER
USAGE
$’m
CASH
$’m
FACILITY
AVAILABLE
$’m
Syndicated facility
Securitisation facility
US private placement (i)
Bank guarantee facility (ii)
Working capital/guarantees
Working capital
Cash & cash equivalents
700.0
400.0
210.1
25.3
150.0
75.0
1,560.4
-
1,560.4
600.0
130.0
210.1
-
-
11.0
951.1
-
951.1
-
-
-
21.8
38.8
-
60.6
-
60.6
-
-
-
-
-
-
-
51.5
51.5
100.0
270.0
-
3.5
111.2
64.0
548.7
51.5
600.2
(i) The US Private Placement liability is presented inclusive of the associated cross currency interest rate swap hedge
contracts which effectively convert the US$225 million facility into A$210.1 million of variable rate funding. (Note 17 v)
(ii) Bank guarantee facility is used by Franklins Pty Limited to issue bank guarantees for leases and workcover obligations.
The facility is indemnified by Metcash Trading Limited.
Derivative financial liabilities
The table below details the liquidity risk arising from derivative liabilities held by the Group at the reporting date.
Year ended 30 April 2012
Derivative liabilities - net settled
Derivative liabilities - gross settled
- Inflows
- Outflows
Net maturity
Year ended 30 April 2011
Derivative liabilities - net settled
Derivative liabilities - gross settled
- Inflows
- Outflows
Net maturity
1-6 MTHS
6-12 MTHS
1-5 YEARS
>5 YEARS
TOTAL
$’m
$’m
$’m
$’m
$’m
(1.4)
19.4
(19.7)
(1.7)
-
11.0
(12.0)
(1.0)
(1.8)
(2.0)
-
(5.2)
3.3
(3.3)
(1.8)
-
-
(2.0)
-
22.7
-
(23.0)
(5.5)
-
-
-
-
3.2
(3.6)
(0.4)
-
-
-
-
-
-
-
14.2
(15.6)
(1.4)
Net settled derivatives comprise interest rate swap contracts that are used to hedge floating rate interest payable on bank
debts. Gross settled derivatives comprise forward exchange contracts that are used to hedge anticipated purchase
commitments.
Credit risk
The Group trades with a large number of customers and it is Group policy that all customers who wish to trade on credit terms
are subject to credit verification procedures. In addition, where a loan has been provided, the Group will seek to take security
over certain assets of the customer wherever possible.
The management of the receivables balance is the key in the minimisation of the Group’s potential bad debt exposure.
Receivables balances are monitored on an ongoing basis and a formal review of all balances occurs every 6 months. Where
necessary, appropriate provisions are established.
70
Metcash Annual Report 2012
94
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
As identified in Note 8 (Trade and Other Receivables), the current level of impairment provision represents 4.6%of the
receivables balance.
All derivatives are transacted with financial institutions that have high investment grade credit ratings. As at 30 April 2012, all
derivative counterparts had a credit rating of AA- or better.
The Group has granted a financial guarantee relating to the bank loan of its associate, Adcome Pty Ltd. The guarantee
represents a put option held by Adcome's bank, whereby the holder has the right to require the non Metcash shareholders to
‘put’ their remaining shares in Adcome Pty Ltd back to Metcash within an agreed period and under certain prescribed
circumstances in return for repayment of the debt by Adcome Pty Ltd to the holder. The estimate of the maximum amount
payable in respect of the put option, if exercised, is $58.3m, as defined in the option deed. The fair value of the financial
guarantee contract liability of $0.2 million has been recognised as a liability in these financial statements during the current
year.
There are no significant concentrations of credit risk within the Group.
Foreign currency risk
The Group is exposed to foreign exchange fluctuations on transactions and balances in New Zealand dollars in respect of the
Tasman Liquor business unit. These operations represent less than 5% of total sales and total profit after tax, and as such the
exposure is minimal.
In addition, the Group undertakes some foreign currency transactions when purchasing goods and services. The Group enters
into forward foreign exchange contracts to manage the risk associated with anticipated purchase commitments denominated
in foreign currencies.
The amount of foreign exchange cover is based on anticipated future purchases in light of current conditions in foreign
markets, commitments from customers and experience.
The Group’s exposure to foreign exchange risk on principal and interest payments in relation to the US$225 million USPP
facility have been hedged using cross currency interest rate swaps (Note 17(v)).
Price risk
The 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 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 underlying earnings per share has been set by the Board. A
dividend reinvestment plan is in existence, but has been suspended by the Board. The plan is able to be reinstituted at any
time.
The Group provides benefits to employees 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 these benefits
in the form of the Metcash Executive and Senior Managers Performance Rights Plan (Rights Plan) and the Metcash Employee
Option Plan (MEOP). Details are disclosed in Note 25.
The Board and management set out to achieve and maintain Statement of Financial Position ratios that would satisfy an
investment grade rating. Certain Statement of Financial Position ratios are imposed under the Group’s banking facilities, as
summarised in Note 17.
Management monitor capital through the gearing ratio (debt / total capital). The gearing ratios at 30 April 2012 and 2011 were
42.6% and 36.7% respectively. This is within an acceptable target range.
71
95
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
Fair value
The Group uses various methods in estimating the fair value of a financial instrument. The different methods have been
defined as follows:
•
•
•
Level 1: the fair value is calculated using quoted prices in active markets
Level 2: the fair value is estimated using 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 3: the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
The table below analyses financial instruments carried at fair value, by valuation method:
Year ended 30 April 2012
Derivative financial assets
Derivative financial liabilities
Year ended 30 April 2011
Derivative financial assets
Derivative financial liabilities
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
$’m
$’m
$’m
$’m
-
-
-
27.8
(5.2)
22.6
-
-
-
27.8
(5.2)
22.6
-
-
0.9
(1.4)
(0.5)
-
-
-
0.9
(1.4)
- (0.5)
The carrying amount of the financial assets and liabilities recorded in the financial statements approximates their fair value as
at the reporting date.
23.
(a)
COMMITMENTS
Operating lease commitments
The Group has entered into commercial leases on certain forklifts, land and buildings. These leases have an average lease
term of 10.8 years and an implicit interest rate of 8.7% (2011: 8.4%). Contingent rentals are payable to reflect movements in
the Consumer Price Index on certain leases and to reflect 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:
Within 1 year
After 1 year but not more than 5 years
More than 5 years
Aggregate lease expenditure contracted for at reporting date
(b)
Operating lease receivables
2012
$’m
209.5
622.9
691.1
1,523.5
2011
$’m
158.5
552.6
389.8
1,100.9
Certain properties under operating lease have been sublet to third parties. These leases have an average lease term of 12.0
years and an implicit interest rate of 8.7% (2011: 8.4%). 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
72
2012
$’m
83.9
263.2
372.4
719.5
2011
$’m
73.8
283.7
257.5
615.0
Metcash Annual Report 2012
96
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
23. COMMITMENTS (Continued)
(c)
Finance lease commitments
The Group has finance leases for various items of vehicles and equipment. The weighted average interest rate implicit in the
leases is 9.19% (2011: 9.47%). Future minimum lease payments under finance 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 finance charges
Present value of minimum lease payments
FUTURE MINIMUM
LEASE PAYMENTS
2012
$’m
7.7
10.4
-
18.1
(2.2)
15.9
2011
$’m
8.9
14.2
-
23.1
(3.0)
20.1
PRESENT VALUE OF
MINIMUM LEASE
PAYMENTS
2012
$’m
2011
$’m
6.8
9.1
-
15.9
-
15.9
8.6
11.5
-
20.1
-
20.1
73
97
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
24.
RELATED PARTY DISCLOSURE
(a) Subsidiaries
The consolidated financial statements include the financial statements of Metcash Limited and the subsidiaries listed in the
following table.
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 Pacific 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.
Cornerstone Retail Pty Ltd (ii)
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
Garden Fresh Produce Pty Ltd
Garden Fresh Produce Trust
Gawler Supermarkets Pty. Ltd.
Global Liquor Wholesalers Pty Limited
GP New Co Pty Ltd
Green Triangle Meatworks Pty Limited
Harvest Liquor Pty. Ltd.
IGA Community Chest Limited (ii)
IGA Distribution (SA) Pty Limited (i)
IGA Distribution (Vic) Pty Limited (i)
IGA Distribution (WA) Pty Limited (i)
Metcash Food & Grocery Pty Ltd (i)
IGA Fresh (Northern Queensland) Pty Limited (i)
IGA Fresh (NSW) Pty Limited (i)
IGA Pacific Pty Limited
IGA Retail Network Limited
IGA Retail Services Pty Limited (i)
Independent Brands Australia Pty Limited (i)
Interfrank Group Holdings Pty Ltd**(i)
COUNTRY OF INCORPORATION
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
EQUITY INTEREST
HELD BY THE GROUP
2011 %
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
2012 %
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
74
Metcash Annual Report 2012
98
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
24. RELATED PARTY DISCLOSURE (Continued)
NAME
Jewel Food Stores Pty. Ltd.
Jewel Superannuation Fund Pty Ltd
Jorgensens Confectionery Pty. Limited
Keithara Pty. Ltd.
Knoxfield 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.
Mittenmet Limited *
Moorebank Transport Pty Ltd
Moucharo Pty. Ltd.
Newton Cellars Pty Ltd
NFRF Developments Pty Ltd
Nu Fruit Pty. Ltd.
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
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.
Soetensteeg 2 61 Exploitatiemaatschappij BV
SR Brands Pty Ltd
SSA Holdings Pty Ltd (Scanning Systems Australia)
Scanning Systems (Aust) Pty Ltd
Smart IP Co Pty Ltd
Scanning Systems (Fuel) 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(i)
Wimbledon Unit Trust
75
COUNTRY OF
INCORPORATION
EQUITY INTEREST
HELD BY THE GROUP
2011
%
2012
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
South Africa
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Netherlands
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50.1
100
100
100
51
51
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50.1
100
100
100
51
51
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
100
100
100
-
-
-
-
100
100
100
100
100
100
100
99
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
24.
RELATED PARTY DISCLOSURE (Continued)
* Mittenmet Limited
The consolidated financial statements include the financial statements of Mittenmet Limited and the subsidiaries listed in the
following table.
EQUITY INTEREST HELD
BY THE GROUP
NAME
ACN 008 698 093 (WA) Pty Ltd
Anzam (Aust.) Pty Ltd
Australian Hardware Support Services Pty Ltd
Chelsea Heights Operations Pty Limited
DIY Superannuation Pty Ltd
Echuca Hardware Pty Ltd
Handyman Stores Pty Ltd
Hardware Property Trust
Himaco Pty Ltd
Lilydale Operations Pty Limited
Mega Property Management Pty Ltd
Mitre 10 Pty Ltd (formerly Mitre10 Limited)
Mitre 10 Australia Pty Ltd (formerly Mitre10 Australia Ltd)
Mitre 10 Mega Pty Ltd
Narellan Hardware Pty Ltd
National Retail Support Services Pty Ltd
Northern NSW Timber and Hardware Pty Ltd
South Coast Operations Pty Ltd
South West Operations Pty Ltd
Sydney Importing Co Limited (In Liquidation)
Timber and Hardware Exchange Pty Ltd
WA Hardware Services Pty Ltd
** Interfrank Group Holdings Pty Ltd
COUNTRY OF
INCORPORATION
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
2012
%
99.44
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
97.65
52
100
2011
%
99.44
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
97.65
52
100
The consolidated financial statements include the financial statements of Interfrank Group Holdings Pty Ltd and the subsidiaries
listed in the following table:
NAME
COUNTRY OF INCORPORATION
EQUITY INTEREST HELD
BY THE GROUP
2012
%
2011
%
Franklins Pty Ltd
Franklins Supermarket Holdings Pty Ltd
Franklins Franchising Pty Ltd
Franklins Bankstown Square Pty Ltd
Franklins Bass Hill Pty Ltd
Franklins Blacktown Pty Ltd
Franklins Bonnyrigg Pty Ltd
Franklins Ulladulla Pty Ltd
Franklins Casula Pty Ltd
Franklins Cronulla Pty Ltd
Franklins Drummoyne Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
76
Metcash Annual Report 2012
-
-
-
-
-
-
-
-
-
-
-
100
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
24.
RELATED PARTY DISCLOSURE (Continued)
NAME
COUNTRY OF INCORPORATION
Franklins Liverpool Pty Ltd
Franklins Macquarie Pty Ltd
Franklins Maroubra Pty Ltd
Franklins Merrylands Pty Limited
Franklins Morrebank Pty Limited
Franklins North Rocks Pty Ltd
Franklins Pennant Hills Pty Ltd
Franklins Penrith Nepean Pty Ltd
Franklins Penrith Plaza Pty Ltd
Franklins Rockdale Plaza Pty Ltd
Franklins Singleton Pty Ltd
Franklins Spit Junction Pty Ltd
Franklins Westleigh Pty Ltd
Franklins Wetherill Park Pty Ltd
Franklins Wentworthville Pty Ltd
Fresco Supermarket Holdings Pty Ltd
FW Viva 3 Pty Ltd
(b)
Ultimate parent
Metcash Limited is the ultimate parent entity.
(c)
Entities subject to class order relief
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
EQUITY INTEREST HELD
BY THE GROUP
2012
%
2011
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Pursuant to an order from ASIC under section 340(1) of the Corporations Act dated 23 April 2012 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 lodgement of their financial 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 18 April 2012. The entities marked (ii) are also party to the Deed of Cross Guarantee, but are not eligible for
inclusion in the financial reporting relief. The effect of the deed is that Metcash Limited has guaranteed to pay any deficiency
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.
During 2012, the following companies were added to the closed group: Global Liquor Wholesalers Pty Limited, IGA Fresh
(Northern Queensland) Pty Limited, IGA Fresh (NSW) Pty Limited, IGA Retail Services Pty Limited, Interfrank Group Holdings
Pty Ltd, Independent Brands Pty Limited and Wickson Corporation Pty Limited.
77
101
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
24.
RELATED PARTY DISCLOSURE (Continued)
The Statement of Comprehensive Income and Statement of Financial Position of the entities that are members of the ‘Closed
Group’ are as follows:
(i) Statement of Comprehensive Income
Profit before income tax
Income tax expense
Net profit for the period
Retained profits at the beginning of the financial year
Dividends provided for or paid
Retained profits at the end of the financial year
(ii) Statement of Financial Position
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Disposal group assets held for sale
Other
Total current assets
Non-current assets
Derivative financial instruments
Receivables
Investments
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 profits
Total equity
CLOSED GROUP
2012
$’m
2011
$’m
157.5
(54.2)
103.3
(428.3)
(211.7)
(536.7)
314.5
(94.3)
220.2
(449.1)
(199.4)
(428.3)
24.1
869.1
778.7
116.5
29.9
1,818.3
27.8
51.3
2,521.1
190.4
95.6
1,306.7
4,192.9
6,011.2
1,241.8
17.7
20.9
146.9
1,427.3
3,787.7
151.1
3,938.8
5,366.1
645.1
1,914.7
(765.9)
33.0
(536.7)
645.1
116.9
820.7
907.8
9.9
5.7
1,861.0
-
80.6
2,547.5
92.9
17.8
1,045.9
3,784.7
5,645.7
1,101.9
6.6
12.0
31.6
1,152.1
3,727.5
20.3
3,747.8
4,899.9
745.8
1,904.9
(765.9)
35.1
(428.3)
745.8
78
Metcash Annual Report 2012
102
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
24.
RELATED PARTIES (Continued)
(d)
Transactions with related parties
RELATED PARTY
Group
Associates
Sales to associates
Dividends received from associates
SALES TO
RELATED
PARTIES
$’m
PURCHASES
FROM
RELATED
PARTIES
$’m
OTHER
TRANSACTIONS
WITH RELATED
PARTIES
$’m
2012
2011
2012
2011
1,152.9
1,236.5
-
-
-
-
1.1
1.6
Other transactions with Key Management Personnel
Mr Barnes is Chairman of Samuel Smith and Sons Pty Ltd and a Director of Ansell Limited. Mrs Balfour is a director of
Salmat Limited. Mr Butler is Chairman of AMP Superannuation Ltd. All organisations are suppliers to the Group under
normal commercial terms and conditions. The total level of purchases from all companies is less than 0.2% of Metcash’s
annual purchases and is not considered material.
Parent
Associates
There were no transactions between the parent and its associates during the year (2011: nil).
Subsidiaries
Dividend received
Interest accrued
Sales to subsidiaries
2012
2011
2012
2011
2012
2011
-
-
-
-
15.1
9.7
-
-
-
-
-
-
1.9
-
2.7
1.7
-
-
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 agreement are set out in Note 5.
(e)
Amounts due from and payable to related parties
Related party
Group
Associates
Trade receivables - gross
Provision for impairment (Note 4)
Loans receivable – gross
Provision for impairment (Note 4)
79
2012
$’m
2011
$’m
111.5
(17.7)
93.8
48.8
(33.1)
15.7
139.7
-
139.7
56.3
-
56.3
103
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
24.
RELATED PARTIES (Continued)
Related party
Parent
Subsidiaries
Loans receivable
Loans payable
2012
$’m
2011
$’m
1,825.5
3,686.6
1,562.4
3,445.7
Terms and conditions of amounts due from and payable to related parties
Loans and trade receivables are due and payable on normal commercial terms and conditions.
25.
SHARE-BASED PAYMENTS
(a) Types of share-based payment plans
The Group has two share-based incentive plans for employees and executive directors of the Group: the Metcash Executives
and Senior Managers Performance Rights Plan (Rights Plan) and the Metcash Employees Option Plan (MEOP). Fully paid
ordinary shares issued under these plans rank equally with all other existing fully paid ordinary shares, in respect of voting and
dividends rights.
Metcash Executives and Senior Managers Performance Rights Plan (Rights Plan)
The Rights Plan provides selected employees with the opportunity to be rewarded with fully paid ordinary shares as an
incentive to create long term growth in value for Metcash shareholders. The plan is administered by a trustee who may
acquire (and hold in trust) shares for the benefit of participants. These shares are purchased on market or issued to the
trustee once the performance rights vest.
The essential elements of the Rights Plan are as follows:
•
each Performance Right is an entitlement to receive a fully paid ordinary share in the Company on terms and
conditions determined by the Board, including vesting conditions linked to service and performance over a 3 year
period;
• Performance Rights are offered at no cost to the employee and as such, significantly fewer Performance Rights are
offered than was the case with options;
• Performance Rights are offered annually with vesting after 3 years subject to achievement of hurdle rates. For the
2011 and 2012 financial years this was set between 5% and 10% compound underlying earnings per share growth.
(i.e. 5% underlying earnings per share growth earns 50% of the Performance Rights allocation and 10% underlying
earnings per share growth earns 100% of the allocation). Pro rata payments are to be made for achievements
between 5% and 10%. If the vesting conditions are satisfied, the Performance Rights vest and shares will be issued
to the employee;
underlying earnings per share is calculated on the Group’s underlying profit, adjusted for non-recurring and
significant items such as goodwill impairment or amortisation, or other non cash accounting items;
persons offered Performance Rights will not be offered options under the MEOP or any other form of long term
incentive;
•
•
• Performance Rights do not carry voting or dividend rights, however shares issued upon vesting of Performance
•
Rights will carry the same rights as other ordinary shares; and
the number of Performance Rights granted is determined by dividing the value of an employee’s long term incentive
entitlement by the Company’s share price at the time of issue.
Metcash Employee Option Plan (MEOP) (Legacy Plan)
Metcash previously issued invitations to eligible employees and executive directors to participate in the Employee Share
Option Plan. The last tranche of options was issued in 2009 and the plan will cease in 2014 when the last options expire.
80
Metcash Annual Report 2012
104
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
25.
SHARE-BASED PAYMENTS (Continued)
(a) Types of share-based payment plans (continued)
The exercise price of options was 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:
• 60% of the options issued to a participant become exercisable from the third anniversary of the grant date;
• a further 20% become exercisable from the fourth anniversary of the grant date; and
•
the remaining 20% become exercisable from the fifth 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.
An option may be exercised immediately in the event of:
• any party becoming entitled to acquire shares by way of a compulsory acquisition; or
• 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.
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.
(b) Summary of rights and options granted
Rights Plan
The following table illustrates the movement in the number of Performance Rights during the period:
Outstanding at the beginning of the year
Granted during the year
Vested during the year
Expired/forfeited during the year
Outstanding at the end of the year
The outstanding balance as at 30 April 2012 is represented by:
VESTING DATE
30 June 2013
30 June 2014
Total
2012
NUMBER
2011
NUMBER
1,399,385
1,512,804
-
(162,471)
2,749,718
-
1,415,137
-
(15,752)
1,399,385
TOTAL EXERCISABLE
1,310,241
1,439,477
2,749,718
-
-
-
REMAINING
CONTRACTUAL
LIFE (YEARS)
1.2
2.2
Weighted average fair value
The weighted average fair value of Performance Rights granted during the year was $3.620 per Performance Right (2011:
$3.623).
81
105
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
25.
SHARE-BASED PAYMENTS (Continued)
(b)
Summary of rights and options granted (continued)
Pricing model
The Performance Rights issued have been valued using the Black Scholes option pricing model. The following table lists the
inputs to the valuation model.
Dividend yield
Risk free rate
Expected volatility
Life of Performance Rights
Exercise price
Share price at measurement date
MEOP
2012
2011
6.41%
3.69%
17.64%
927 days
-
$4.21
6.19%
5.36%
16.63%
940 days
-
$4.20
The following table illustrates the number of options, exercise prices and movements during the year ended 30 April 2012 and
30 April 2011:
Outstanding at the beginning of the year
Reinstated during the year
Exercised during the year:
Expired during the year
Outstanding at the end of the year
The outstanding balance as at 30 April 2012 is represented by:
2012
EXERCISE
PRICE
$
Various
3.925
4.013
4.267
Various
2011
NUMBER
30,235,024
17,700
(1,649,613)
(1,560,000)
-
(2,916,790)
24,126,321
2011
EXERCISE
PRICE
$
Various
3.925
4.013
4.267
Various
2012
NUMBER
24,126,321
122,150
(2,489,364)
-
(2,856)
(6,394,266)
15,361,985
EXPIRY DATE
7 February 2014
EXERCISE
PRICE
$
4.267
TOTAL
OUTSTANDING
(NUMBER)
15,361,985
EXERCISABLE
(NUMBER)
12,289,588
REMAINING
CONTRACTUAL
LIFE
(YEARS)
1.8
82
Metcash Annual Report 2012
106
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
26.
DIRECTORS’ AND EXECUTIVES DISCLOSURES
a)
Details of Key Management Personnel
Directors
Peter L Barnes
Andrew Reitzer
Fiona E Balfour
Michael R Butler
Neil D Hamilton
Edwin M Jankelowitz
Richard A Longes
Ian R Morrice(i)
V Dudley Rubin
Non-executive Chairman
Chief Executive Officer
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Executives
Fergus Collins
Adrian Gratwicke
Silvestro Morabito
Mark Laidlaw
CEO Australian Liquor Marketers
Chief Financial Officer
CEO Food & Grocery
CEO Mitre10
(i) Mr Morrice was appointed as a non-executive Director on 12 June 2012
b) (i) Performance Rights holding of Key Management Personnel
30 April 2012
Balance 1
May 2011
Granted as
remuneration
Vested during
the year
Changed,
forfeited or
lapsed during
the year
Balance 30
April 2012
Balance at
report date
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Directors
P Barnes
A Reitzer
F Balfour
M Butler
N Hamilton
E Jankelowitz
R Longes
I Morrice(i)
D Rubin
Executives
F Collins
A Gratwicke
M Jablonski(ii)
M Laidlaw
S Morabito
H Rumpler(ii)
Total
(i) Mr Morrice was appointed as a Non-executive Director on 12 June 2012.
(ii) Messers Jablonski and Rumpler’s performance rights are disclosed on the basis that they were the 4th and 5th highest remunerated senior managers.
55,725
73,204
71,936
46,201
72,516
43,899
363,481
109,648
132,974
142,107
95,367
142,687
86,378
709,161
53,923
59,770
70,171
49,166
70,171
42,479
345,680
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
109,648
132,974
142,107
95,367
142,687
86,378
709,161
83
107
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
26. DIRECTORS’ AND EXECUTIVES DISCLOSURES (Continued)
b) (ii) Performance Rights holding of Key Management Personnel (Continued)
30 April 2011
Directors
P Barnes
A Reitzer
F Balfour
M Butler
N Hamilton
R Longes
D Rubin
E Jankelowitz (i)
Executives
K Bean
F Collins
P Dubbelman
A Gratwicke
B Hale
M Jablonski (ii)
D Johnston
M Laidlaw
S Morabito
H Rumpler
G Watson
Total
Balance 1
May 2010
Granted
during the
year
Vested
during the
year
Changed,
forfeited or
lapsed during the
year
Balance 30
April 2011
Balance at
report date
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58,159
53,923
54,514
59,770
58,083
70,171
45,728
49,166
70,171
42,479
23,628
585,792
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58,159
53,923
54,514
59,770
58,083
70,171
45,728
49,166
70,171
42,479
23,628
585,792
-
-
-
-
-
-
-
-
58,159
53,923
54,514
59,770
58,083
70,171
45,728
49,166
70,171
42,479
23,628
585,792
(i) Mr Jankelowitz retired as Finance Director on 31 March 2011 and was appointed non-executive Director on 1 April 2011.
(ii) Mr Jablonski retired from the Metcash Board on 2 September 2010 and continued in his Executive role as Group Merchandising Director.
c) (ii) Option holding of Key Management Personnel (MEOP)
Balance 1
May 2011
Granted
during the
year
Exercised
during the
year
Disposed,
forfeited or
lapsed during
the year
Balance at
30 Apr 2012
Vested
during the
year
Vested and
Exercisable
at 30 Apr
2012
Balance at
report date
-
1,200,000
-
-
-
130,000
-
-
-
50,000
510,000
130,000
400,000
387,125
550,000
3,357,125
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,200,000)
-
-
-
(130,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(50,000)
(10,000)
-
-
(37,125)
(50,000)
(147,125)
-
-
-
-
(130,000)
350,000
(50,000)
350,000
-
500,000
-
(1,510,000) 1,700,000
-
500,000 100,000
-
70,000
70,000
100,000
340,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
400,000
-
280,000
280,000
400,000
-
500,000
-
350,000
350,000
500,000
1,360,000 1,700,000
30 April 2012
Directors
P Barnes
A Reitzer
F Balfour
M Butler
N Hamilton
E Jankelowitz
R Longes
I Morrice(i)
D Rubin
Executives
F Collins
A Gratwicke
M Jablonski(ii)
M Laidlaw
S Morabito
H Rumpler(ii)
Total
(i)
Mr Morrice was appointed as a Non-executive Director on 12 June 2012.
Messers Jablonski and Rumpler’s options are disclosed on the basis that they were the 4th and 5th highest remunerated senior managers.
(ii)
84
Metcash Annual Report 2012
108
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
26. DIRECTORS’ AND EXECUTIVES DISCLOSURES (Continued)
c) (ii) Option holding of Key Management Personnel (MEOP) (continued)
30 April 2011
Directors
C S dos Santos (i)
P Barnes
A Reitzer
F Balfour
M Butler
R Longes
N Hamilton
D Rubin
E Jankelowitz (iii)
Executives
K Bean
F Collins
P Dubbelman
A Gratwicke
B Hale
M Jablonski (ii)
D Johnston
M Laidlaw (iv)
S Morabito
H Rumpler
G Watson (iv)
Total
Balance at
1 May 2010
Options
exercised
Other
adjustments
Balance at
30 Apr 2011
Vested
during the
year
Vested at 30
Apr 2011
Exercisable
at 30 Apr
2011
Balance at
report date
-
-
1,200,000
-
-
-
-
-
650,000
400,000
50,000
400,000
543,000
650,000
650,000
400,000
-
399,700
550,000
-
5,892,700
-
-
-
-
-
-
-
-
(520,000)
-
-
(400,000)
(33,000)
-
(520,000)
(320,000)
-
(12,575)
-
-
(1,805,575)
-
-
-
-
- 1,200,000
-
-
-
-
-
-
-
-
-
-
130,000
-
-
-
-
-
-
-
-
-
-
-
-
960,000
-
-
-
-
-
-
-
-
-
-
960,000 1,200,000^
-
-
-
-
-
130,000^
-
-
-
-
-
-
80,000
400,000
-
-
10,000
50,000
80,000
-
-
310,000
510,000
-
-
650,000
-
-
130,000
-
80,000
80,000
-
210,000
400,000
400,000
210,000
387,125
-
310,000
550,000
-
362,000
-
362,000
762,000 4,849,125 1,290,000
400,000
50,000
-
310,000
520,000
-
80,000
260,000
247,125
350,000
222,000
3,399,125
400,000
50,000
-
310,000
520,000
-
80,000
260,000
247,125
350,000
222,000
400,000
50,000
-
510,000
650,000^
130,000^
80,000
400,000
387,125
550,000
362,000
3,399,125 4,849,125
The were no options granted during the FY2011 financial year to the above Directors or executives.
(i) Mr dos Santos retired from the Metcash Board on 2 September 2010.
(ii) Mr Jablonski retired from the Metcash Board on 2 September 2010 and continued in his Executive role as Group Merchandising Director.
(iii) Mr Jankelowitz retired as Finance Director on 31 March 2011 and was appointed Non-Executive Director on 1 April 2011.
(iv) Mr Laidlaw and Mr Watson were appointed to executive roles during the 2011 year. Their option holdings at the time of appointment are shown as other
^ Final 20% of the options granted in 2005 did not meet the performance hurdle and did not vest. These options were cancelled from the register on 2 September
adjustments.
2011.
85
109
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
26.
DIRECTORS’ AND EXECUTIVES DISCLOSURES (Continued)
d)
Shareholding of Key Management Personnel
Balance
at 1 May
2011
Grant as
remuneration
On market
trade
177,083
1,750,000
13,600
50,000
20,000
320,000
128,154
-
15,000
Name
Directors
P Barnes
A Reitzer
F Balfour
M Butler
N Hamilton
E Jankelowitz
R Longes
I Morrice(i)
D Rubin
Executives
F Collins
A Gratwicke
M Laidlaw
S Morabito
Total
(i) Mr Morrice was appointed as a Non-executive Director on 12 June 2012.
1,600
53,950
-
18,275
2,547,662
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(50,000)
-
-
(22,825)
(72,825)
-
-
-
-
-
-
-
-
-
Options
exercised
Other
adjustments
Balance at
30 April
2012
Balance at
report date
-
-
-
-
-
-
-
-
-
50,000
10,000
-
37,125
97,125
-
-
-
-
-
-
-
-
-
-
-
-
-
-
177,083
1,750,000
13,600
50,000
20,000
320,000
128,154
-
15,000
1,600
63,950
-
32,575
2,571,962
177,083
1,750,000
13,600
50,000
20,000
320,000
128,154
-
15,000
1,600
63,950
-
32,575
2,571,962
30 April 2011
Directors
C S dos Santos (i)
P Barnes
A Reitzer
F Balfour (iv)
M Butler
N Hamilton
M Jablonski (ii)
E Jankelowitz (iii)
R Longes
D Rubin
Executives
K Bean
F Collins
P Dubbelman
A Gratwicke
B Hale
D Johnston
M Laidlaw
S Morabito
H Rumpler
G Watson
Total
Balance
at 1 May
2010
54,100
177,083
1,750,000
-
50,000
20,000
-
320,000
128,154
15,000
-
1,600
50,350
45,950
610,000
80,000
-
5,700
-
-
3,307,937
Granted as
remuneration
On market
trade
Options
exercised
Other
adjustments
Balance at
30 April
2011
Balance at
report date
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(520,000)
(520,000)
-
-
-
-
(400,000)
(25,000)
(110,000)
(320,000)
-
-
-
-
(1,895,000)
-
-
-
-
-
-
520,000
520,000
-
-
-
-
400,000
33,000
-
320,000
-
12,575
-
-
1,805,575
-
-
-
13,600
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,600
54,100
177,083
1,750,000
13,600
50,000
20,000
-
320,000
128,154
15,000
-
1,600
50,350
53,950
500,000
80,000
-
18,275
-
-
3,232,112
54,100
177,083
1,750,000
13,600
50,000
20,000
-
320,000
128,154
15,000
-
1,600
50,350
53,950
500,000
80,000
-
18,275
-
-
3,232,112
(i) Mr dos Santos retired from the Metcash Board on 2 September 2010.
(ii) Mr Jablonski retired from the Metcash Board on 2 September 2010 and continues in his Executive role as Group Merchandise Director.
(iii) Mr Jankelowitz retired as Finance Director on 31 March 2011 and was appointed Non-Executive Director on 1 April 2011.
(iv) Mrs Balfour was appointed to the Metcash Board on 16 November 2010. Her shareholding as at that date is reflected as an other adjustment.
86
Metcash Annual Report 2012
110
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
26.
DIRECTORS’ AND EXECUTIVES DISCLOSURES (Continued)
e)
Compensation by category
Short-term
Long-term
Post employment
Termination benefits
Share-based payments
Total
2012
$’m
9.0
(1.6)
0.2
0.3
0.2
8.1
2011
$’m
13.6
3.2
0.2
0.6
0.4
18.0
There were no other transactions and balances with key management personnel.
27.
INFORMATION RELATING TO METCASH LIMITED (THE PARENT ENTITY)
In accordance with the amendment to the Corporations Act 2001, the company has replaced the separate entity financial
statements with the following note.
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Contributed equity
Retained earnings
Share based payments reserve
Total equity
Net profit for the period
Total comprehensive income for the year, net of tax
METCASH LIMITED
2012
$’m
1,825.5
6,441.6
3,707.7
3,707.7
2,733.9
2,580.7
129.6
23.6
2,733.9
218.3
218.3
2011
$’m
1,562.4
6,178.5
3,462.6
3,462.6
2,715.9
2,570.9
123.0
22.0
2,715.9
207.5
207.5
Metcash Limited has provided guarantees as part of the Closed Group arrangements as disclosed in Note 24(c).
28.
AUDITORS REMUNERATION
Amounts received or due and receivable by
Ernst & Young (Australia) for:
- an audit or review of the financial report of the entity and any other entity in the Group
- assurance related
Other services in relation to the entity and any other entity in the Group
- tax compliance
- tax ATO audit
- other
87
2012
$
2011
$
1,845,000
216,958
2,061,958
1,553,000
129,900
1,682,900
1,136,292
1,171,504
57,000
4,426,754
883,987
767,984
-
3,334,871
111
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
29.
BUSINESS COMBINATIONS
The Metcash Group acquired the following entities or assets:
Date of acquisition
Entity purchased
30 September 2011
30 June 2011
22 September 2011
1 October 2011
30 January 2012
Interfrank Group Holdings Pty Ltd (Franklins Group)
SSA Holdings Pty Ltd (Scanning Systems Australia)
Mitre 10 Colac
Mitre 10 Mooroopna
Mitre 10 Port Macquarie
(i)
Acquisition of business assets
Details of the preliminary fair value of the assets and liabilities acquired are as follows:
(a)
Purchase consideration:
Cash paid during the period
Cash consideration accrued at the end of the period (i)
Total purchase consideration
Less: (cash acquired)/overdraft assumed
Net purchase consideration
Add: fair value of net identifiable liabilities assumed/(assets acquired) (b)
Goodwill
%
Acquired
100%
100%
100%
100%
100%
(c)
(d)
(d) (i)
(d) (i)
(d) (i)
Franklins
$’m
Other
$'m
187.2
2.5
189.7
-
189.7
50.2
239.9
18.5
1.1
19.6
(0.2)
19.4
(3.3)
16.1
Total
$’m
205.7
3.6
209.3
(0.2)
209.1
46.9
256.0
(i) The Franklins cash accrued consideration includes $2.5 million of contingent consideration, being the maximum amount
payable in cash in the event certain landlord and other property related consents are subsequently received.
(b)
Assets and liabilities acquired
The assets and liabilities arising from the acquisition are as follows:
Receivables
Inventories
Other current assets
Disposal group assets
Property, plant and equipment
Intangibles
Deferred tax assets/(liabilities)
Provisions and creditors
Provision for rental subsidy
Interest bearing loans and borrowings
Fair value of net identifiable (liabilities) assumed/assets acquired
7.9
29.3
1.3
109.4
-
23.8
51.7
(98.9)
(144.4)
(30.3)
(50.2)
0.4
2.4
-
-
1.2
7.5
(1.7)
(3.6)
-
(2.9)
3.3
8.3
31.7
1.3
109.4
1.2
31.3
50.0
(102.5)
(144.4)
(33.2)
46.9
Franklins Group
(c)
Metcash acquired 100% of the equity in the Franklins Group from Pick n Pay Retailers Pty Ltd. The acquisition will enable
Metcash to grow its core business of wholesale sales to the independent IGA network and to realise the associated distribution
synergies. Metcash plans to dispose of the corporate retail stores as disclosed in Note 31.
The statement of comprehensive income includes wholesale sales revenue from continuing operations of $36.3 million. The
results from discontinued operations are disclosed in Note 31.
Disclosure of the revenues and net profit, had the acquisition occurred at the beginning of the reporting period, is impractical
because the results are not determinable and are subject to significant retrospective assumptions and estimates. The
accounting for the Franklins business combination is provisional as at April 2012.
Other business combinations
(d)
The results of Scanning Systems Australia, Mitre 10 Colac, Mitre 10 Mooroopna, Mitre 10 Port Macquarie and other minor
acquisitions from the date of acquisition to 30 April 2012 have not been disclosed separately as they are not significant to the
Group results. The revenue and net profit for the period, had these acquisitions occurred at the beginning of the reporting period,
have not been disclosed as they are not significant to the Group results as reported. The accounting for the above business
combinations is provisional as at April 2012.
88
Metcash Annual Report 2012
112
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
30.
EARNINGS PER SHARE
The following reflects the income data used in the basic and diluted earnings per share computations:
Net profit from continuing operations
Earnings used in calculating basic and diluted earnings per share from continuing
operations
2012
$m
2011
$m
117.2
241.4
117.2
241.4
Net profit/(loss) from discontinued operations
Earnings used in calculating basic and diluted earnings per share from discontinued
operations
(27.2)
(27.2)
-
-
Net profit attributable to ordinary equity holders of Metcash Limited
Earnings used in calculating basic and diluted earnings per share
90.0
90.0
241.4
241.4
The following reflects the share data used in the basic and diluted earnings per share computations:
Weighted average number of ordinary shares used in calculating basic earnings per
share
Effect of dilutive securities:
Share options and performance rights
Weighted average number of ordinary shares used in calculating diluted earnings
per share
2012
NUMBER
2011
NUMBER
770,441,432
767,676,470
2,036,999
1,133,920
772,478,431
768,810,390
Subsequent to the end of the financial year, Metcash announced that it would raise approximately $325 million in additional
ordinary share capital through a fully underwritten institutional placement and up to $50 million through a Share Placement
Plan to Metcash shareholders with a record date of 27 June 2012, details of which are provided in Note 33 to the financial
statements. It is not yet possible to determine the number of shares that will be issued.
31.
DISCONTINUED OPERATIONS
On 30 September 2011, being the date of acquisition of the Franklins Group, Metcash announced its intention to dispose of
Franklins corporate retail stores to independent retailers. These retail operations, along with a surplus property development
joint venture, have been classified as discontinued operations. Accordingly, the inventory, property, plant and equipment,
software intangibles and goodwill associated with the corporate retail stores and the loans and equity accounted investment in
the property joint venture have been classified as disposal group assets. Metcash plans to dispose of these assets as soon as
practicable. Otherwise, the wholesale operations of the Franklins Group have been classified as continuing operations within
the Food Distribution segment.
2012
$'m
2011
$'m
Revenue from sale of goods - retail
Cost of sales and direct costs - retail
Administrative expenses
Finance costs
Loss before income tax
Income tax benefit
Net loss from discontinued operations
Net loss is attributable to:
Equity holders of the parent
−
The net cash inflow from operations, per the Statement of Cash Flows, includes cash outflows of $43.7 million from
discontinued operations. There were no investing or financing cash flows specifically related to discontinued operations.
385.2
(408.4)
(12.9)
(2.8)
(38.9)
11.7
(27.2)
−
−
−
−
−
−
−
(27.2)
89
113
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
32.
CONTINGENT ASSETS AND LIABILITIES
Bank guarantees to third parties in respect of property lease obligations
Bank guarantees in respect of Workcover
Standby letter of credit
Face value of the outstanding charges due to American Express (a)
Put options to third parties (b)
Contingent loan to a third party (c)
(a)
American Express charge card
2012
$’m
30.1
30.0
0.5
281.0
13.3
0.3
2011
$’m
23.6
3.8
1.2
253.7
13.5
-
On the 9th May 2007 Metcash Trading Limited entered into an agreement with American Express (Amex), due to expire on 31
July 2012, 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.
(b)
Put options for sale of retail store assets
The Group has 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-financial assets back to the Group within an agreed period and under certain
prescribed circumstances. The estimate of the financial effect of the put options, if exercised, is the aggregate of the purchase
price as defined in the option deed or business sale agreement.
(c)
Contingent loans
The Group has granted a loan to a customer for the purchase of a supermarket business. A portion of the loan receivable has
a deferred component in the amount of $0.3m which is repayable upon the achievement of certain conditions, as specified in
the loan document. If the stated conditions are not achieved, the customer is released from the obligation to repay the
deferred component to the Group.
(d)
Australian Tax Office
Metcash has been subject to an income tax audit by the Australian Tax Office (ATO) covering the 2005 - 2008 income years,
which has resulted in the following two disputed items. The ATO have advised Metcash that there are no other areas under
consideration and that the audit has otherwise been concluded.
Action Stores
Metcash received notices of amended assessments dated 26 May 2011 and 13 June 2011 from the Australian Taxation Office
(ATO) seeking payment of a total of $48.8 million. The amended assessments are in relation to a disputed tax liability arising
from the sale of various ex-Action Supermarket retail businesses (Action Stores) during the 2007 and 2008 fiscal years that
resulted in a net tax loss. The Action Stores were acquired by Metcash in fiscal 2006 as a part of the acquisition of Foodland
Associated Limited (FAL), and were sold as part of Metcash’s ongoing business activities to enhance Australia’s independent
retailer network. The total amount in dispute comprises primary tax of $32.9 million and then flowing from that, interest and
penalties of $15.9 million.
90
Metcash Annual Report 2012
114
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
32.
CONTINGENT LIABILITIES (Continued)
Metcash intends to challenge the amended assessments, which assert that the net tax losses from the sale of the Action
Stores should be treated as being on capital account. These net tax losses were incurred as part of Metcash’s ordinary
business activities and as such, Metcash has always considered the correct treatment to be on revenue account.
Metcash has received external advice in relation to the dispute. Metcash has lodged objections to these amended
assessments, and if necessary will appeal the decision to the Federal Court. Metcash is firmly of the opinion that the treatment
it has adopted is appropriate to the circumstances. Based on the strength of its position, Metcash has not recorded an
expense in relation to the amended assessments in the current or prior year results presented in these financial statements.
In accordance with ATO policy, Metcash entered into a 50/50 payment agreement with the ATO in relation to the disputed tax
liability of $48.8 million. Under the agreement, Metcash has paid the ATO 50% of the disputed tax liability ($24.4 million) in
June/July 2011 and in return the ATO has agreed not to seek recovery of the balance until the Commissioner has determined
the objection or when a decision is handed down by the relevant appellate tribune or court (as appropriate). The payment
amount of $24.4 million has been disclosed as income tax receivable in the statement of financial position.
Foreign Tax Credits
Metcash received notices of amended foreign tax credit (FTC) determinations dated 29 May 2012 from the ATO seeking
payment of a total of $23.4 million. The amended determinations are in relation to the imposition of what is effectively double
taxation on interest income derived by Metcash’s foreign subsidiaries on intercompany loans during the 2006 and 2007 fiscal
years. The ATO contends that Metcash is not entitled to any credit for taxes it has already paid on this interest income in
South Africa.
The total amount in dispute comprises primary tax of $23.4 million. The ATO has not sought to impose any penalties or
interest in respect of this amount.
Metcash has received external advice in relation to its position. Metcash is firmly of the view that:
•
•
the imposition of double taxation is both inconsistent with the law and contrary to public policy; and
the Commissioner is in any event out of time to issue such amended FTC determinations given the period of time
elapsed since the original determinations.
Metcash has lodged objections to these determinations, and if necessary will appeal the decision to the Federal Court. Based
on the strength of its position, Metcash has not recorded an expense in relation to the amended determinations in the current
year results presented in these financial statements.
As the relevant subsidiaries subsequently became members of the Australian tax group, the FTC dispute is restricted solely to
the 2006 and 2007 income years. There will be no impact in respect of the 2008 and subsequent income years in connection
with this matter.
33.
SUBSEQUENT EVENTS
(a) Equity raising
On 28 June 2012 Metcash announced that it would raise approximately $325 million in additional ordinary share capital
through a fully underwritten institutional placement. The issue price of the new shares will be determined through a book build
from an underwritten floor price, determined as a discount to the previous day’s closing share price. The shares issued under
the institutional placement will be entitled to receive the 2012 final dividend declared of 16.5 cents per share.
91
115
Notes to the Financial Statements – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2012
33.
SUBSEQUENT EVENTS (Continued)
Metcash also announced that subsequent to the institutional placement it would offer a Share Placement Plan (SPP) to
Metcash shareholders with a record date of 27 June 2012. The SPP proceeds will be capped at $50 million and will not be
underwritten. The SPP will allow eligible shareholders to apply for up to $15,000 of ordinary shares at the lesser of the
dividend adjusted institutional placement offer price and the 5 day volume weighted average price less a discount at the end of
the SPP offer period. The offer period is expected to run from 9 July 2012 to 23 July 2012. Ordinary shares issued under the
SPP will not be entitled to receive the 2012 final dividend.
(b)
Business acquisitions
Mitre 10 Group
Metcash currently holds a 50.1% equity interest in Mittenmet Limited (Mittenmet), through ownership of 100% of the ordinary
shares issued by Mittenmet. Mittenmet is the parent entity of the Mitre 10 group. The remaining 49.9% equity interest in
Mittenmet is currently held by the owners of Redeemable Convertible Preference Shares (RCPS) issued by Mittenmet.
On 20 June 2012 the Group announced that, subject to the Mittenmet group’s financial statements for the year ended June
2012 being in accordance with Metcash’s expectations and there being no material adverse changes to the market or
operations prior to the financial statements being finalised, it intended to exercise its right to require Mittenmet Limited to
redeem all of its issued RCPS. If the RCPS are redeemed, Metcash will hold a 100% equity interest in Mittenmet. The
redemption price for the RCPS is based on a formula that is set out in the 2010 Mitre 10 Scheme Booklet. Broadly, the RCPS
redemption price reflects the RCPS proportionate share of a multiple of 5.8 times the Mittenmet group EBITDA for the year
ended June 2012 and other adjustments, including for net debt at 30 June 2012.
Autobarn & Autopro Group
On 28 June 2012 the Group entered into a binding agreement to acquire a 75.1% equity interest in the Automotive Brands
Group for $53.8 million, with settlement expected to occur early in July 2012. The Automotive Brands Group is the franchisor
and distributor of aftermarket automotive parts to retail stores trading under the Autobarn and Autopro brand names. It also
supplies other independent automotive parts stores. The equity interest acquired by Metcash is subject to an adjustment after
the finalisation of the results for the year ending on 30 June 2013, at which point the ownership structure will be confirmed.
Metcash’s equity interest will increase above 75.1% if the 2013 EBITDA is lower than expected.
Except as noted above, there are no events that have occurred after the end of the financial year that would materially affect
the reported results or would require disclosure in this report.
92
Metcash Annual Report 2012
116
Directors’ Declaration
METCASH FINANCIAL REPORT 2012
DIRECTORS’ DECLARATION
Year ended 30 April 2012
In accordance with a resolution of the directors of Metcash Limited, I state that:
1. In the opinion of the directors:
a. The financial statements, notes and the additional disclosures included in the directors’ report designated as audited,
of Metcash Limited are in accordance with the Corporations Act 2001, including:
i. Giving a true and fair view of its financial position as at 30 April 2012 and of its performance for the year ended on
that date; and
ii. Complying with Accounting Standards (including the Australian Accounting Interpretations) and Corporations
Regulations 2001; and
b. The financial statements and notes also comply with international Financial Reporting Standards as disclosed in Note
2(a)
c. 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 financial year ending 30 April 2012.
3. 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 identified in Note 24 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, 28 June 2012
93
117
Directors’ Report – Year ended 30 April 2012
Auditor’s Independence Declaration
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
The Group recorded an underlying profit of $262.5 million for the 2012 financial year, up 2.5% on the 2011 result. The Group
generated $12.3 billion of wholesale sales revenue which was down marginally against the prior year which included a 53rd
week. The trading environment during 2012 was difficult and impacted participants across the Australian retail sector. Metcash
completed a comprehensive review of its strategy in order to combat the effects of on-going deflation, rising utility costs, a
highly value driven consumer and a persistent marketing war between the two large grocery chains.
Auditor's Independence Declaration to the Directors of Metcash Limited
By maintaining market share and driving costs out of the business, Metcash increased its underlying EPS by 2.1% to 34.1
cents. As a result, the Board was pleased to announce a final fully franked dividend of 16.5 cents per share (total 2012
dividends 28.0 cents), which was up 3.7% on the prior year.
In relation to our audit of the financial report of Metcash Limited for the year ended 30 April 2012, to the
However, the tough trading conditions and the strategic review initiative have necessitated the recognition of significant item
best of my knowledge and belief, there have been no contraventions of the auditor independence
expenses totalling $176.7 million ($135.6 million after tax). This included an impairment charge of $105.7 million in respect of
requirements of the Corporations Act 2001 or any applicable code of professional conduct.
Metcash’s investment in the Cornetts and Walters Queensland joint venture businesses. Metcash’s strategic review, which
Auditor's Independence Declaration to the Directors of Metcash Limited
concluded in April 2012, is expected to position the Group for solid returns into the future. The results include a significant item
charge of $42.5 million from this group restructure, arising mainly from costs associated with the closure or sale of 15
Campbells branches and redundancy costs associated with the formation of the new Food & Grocery division. Metcash
In relation to our audit of the financial report of Metcash Limited for the year ended 30 April 2012, to the
completed the acquisition of the Franklins group in September 2011. This acquisition facilitated the rationalisation of a number
best of my knowledge and belief, there have been no contraventions of the auditor independence
Ernst & Young
of warehouses in NSW, which are being consolidated into the new facility at Huntingwood. The costs of acquisition and the
requirements of the Corporations Act 2001 or any applicable code of professional conduct.
related distribution centre closure costs have resulted in $28.5 million in significant items expenses. Further details of these
significant items are provided in Note 4(vi) to the financial statements.
The trading result for the Franklins retail stores has been classified within discontinued operations in these financial
statements (Note 31). The Franklins corporate stores recorded a retail loss of $27.2 million after tax for the period. Metcash
intends to re-badge the Franklins stores to IGA and dispose of them to independent retailers. It is anticipated that the superior
retailing skills of independent operators together with their focussed and localised differentiated offers will see these stores
quickly turned around.
Michael J Wright
Ernst & Young
Partner
28 June 2012
The reported net profit for the period attributable to equity holders was $90.0 million (2011: $241.4m), with the reduction due
to the recognition of the abovementioned significant items and discontinued operations. Despite this, the Group generated
operating cashflows of $284.3 million during 2012, up considerably over the prior year. These cashflows were partly invested
in the Franklins acquisition and also applied towards providing a consistently high and fully franked dividend return to our
shareholders. The shareholder returns over the last five years have been presented in the following table.
Michael J Wright
Partner
28 June 2012
SHAREHOLDER RETURNS
Basic earnings per share (cents)
Earnings per share from continuing operations before significant items (cents)
Dividend declared per share (cents)
Dividend payout ratio on earnings per share (%) (i)
Return on equity (%) (ii)
Share price at balance date ($)
Dividend yield (%)(i)
YEAR ENDED 30 APRIL
2012
2011
2010
2009
2008
11.7
34.1
28.0
82.1
18.9
3.98
7.0
31.5
33.4
27.0
80.8
17.2
4.08
6.6
29.7
32.0
26.0
83.3
17.3
4.15
5.8
26.5
29.5
24.0
83.6
17.2
4.12
5.0
25.9
26.1
21.0
83.0
15.6
4.22
3.2
(i)
(ii)
Calculated using underlying earnings per share as calculated in the review and results of operations
Calculated using underlying earnings as calculated in the review and results of operations
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
During the year, Metcash completed the acquisition of the Franklins group, as detailed in Note 29 to the financial statements.
Metcash also announced the results of its strategic review in April 2012, which is addressed in the review and results of
operations.
4
Metcash Annual Report 2012
Metcash Annual Report 2012
Liability limited by a scheme approved
under Professional Standards Legislation
28
118
118
Metcash AR12_financials_to print.indd 28
16/07/12 8:34 AM
Directors’ Report – Year ended 30 April 2012
METCASH FINANCIAL REPORT 2012
DIRECTORS’ REPORT
Year ended 30 April 2012
The Group recorded an underlying profit of $262.5 million for the 2012 financial year, up 2.5% on the 2011 result. The Group
generated $12.3 billion of wholesale sales revenue which was down marginally against the prior year which included a 53rd
week. The trading environment during 2012 was difficult and impacted participants across the Australian retail sector. Metcash
completed a comprehensive review of its strategy in order to combat the effects of on-going deflation, rising utility costs, a
highly value driven consumer and a persistent marketing war between the two large grocery chains.
By maintaining market share and driving costs out of the business, Metcash increased its underlying EPS by 2.1% to 34.1
Auditor's Independence Declaration to the Directors of Metcash Limited
cents. As a result, the Board was pleased to announce a final fully franked dividend of 16.5 cents per share (total 2012
dividends 28.0 cents), which was up 3.7% on the prior year.
In relation to our audit of the financial report of Metcash Limited for the year ended 30 April 2012, to the
However, the tough trading conditions and the strategic review initiative have necessitated the recognition of significant item
best of my knowledge and belief, there have been no contraventions of the auditor independence
expenses totalling $176.7 million ($135.6 million after tax). This included an impairment charge of $105.7 million in respect of
requirements of the Corporations Act 2001 or any applicable code of professional conduct.
Metcash’s investment in the Cornetts and Walters Queensland joint venture businesses. Metcash’s strategic review, which
concluded in April 2012, is expected to position the Group for solid returns into the future. The results include a significant item
charge of $42.5 million from this group restructure, arising mainly from costs associated with the closure or sale of 15
Campbells branches and redundancy costs associated with the formation of the new Food & Grocery division. Metcash
completed the acquisition of the Franklins group in September 2011. This acquisition facilitated the rationalisation of a number
of warehouses in NSW, which are being consolidated into the new facility at Huntingwood. The costs of acquisition and the
related distribution centre closure costs have resulted in $28.5 million in significant items expenses. Further details of these
Ernst & Young
significant items are provided in Note 4(vi) to the financial statements.
The trading result for the Franklins retail stores has been classified within discontinued operations in these financial
statements (Note 31). The Franklins corporate stores recorded a retail loss of $27.2 million after tax for the period. Metcash
intends to re-badge the Franklins stores to IGA and dispose of them to independent retailers. It is anticipated that the superior
Michael J Wright
Partner
retailing skills of independent operators together with their focussed and localised differentiated offers will see these stores
quickly turned around.
28 June 2012
The reported net profit for the period attributable to equity holders was $90.0 million (2011: $241.4m), with the reduction due
to the recognition of the abovementioned significant items and discontinued operations. Despite this, the Group generated
operating cashflows of $284.3 million during 2012, up considerably over the prior year. These cashflows were partly invested
in the Franklins acquisition and also applied towards providing a consistently high and fully franked dividend return to our
shareholders. The shareholder returns over the last five years have been presented in the following table.
SHAREHOLDER RETURNS
Basic earnings per share (cents)
Earnings per share from continuing operations before significant items (cents)
Dividend declared per share (cents)
Dividend payout ratio on earnings per share (%) (i)
Return on equity (%) (ii)
Share price at balance date ($)
Dividend yield (%)(i)
(i)
(ii)
Calculated using underlying earnings per share as calculated in the review and results of operations
Calculated using underlying earnings as calculated in the review and results of operations
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
YEAR ENDED 30 APRIL
2012
2011
2010
2009
2008
11.7
34.1
28.0
82.1
18.9
3.98
7.0
31.5
33.4
27.0
80.8
17.2
4.08
6.6
29.7
32.0
26.0
83.3
17.3
4.15
5.8
26.5
29.5
24.0
83.6
17.2
4.12
5.0
25.9
26.1
21.0
83.0
15.6
4.22
3.2
During the year, Metcash completed the acquisition of the Franklins group, as detailed in Note 29 to the financial statements.
Metcash also announced the results of its strategic review in April 2012, which is addressed in the review and results of
operations.
4
Metcash Annual Report 2012
Liability limited by a scheme approved
under Professional Standards Legislation
118
28
Metcash AR12_financials_to print.indd 28
16/07/12 8:34 AM
Independent Auditor’s Report
Independent auditor's report to the members of Metcash Limited
Report on the financial report
We have audited the accompanying financial report of Metcash Limited, which comprises the
consolidated statement of financial position as at 30 April 2012, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes comprising a summary of significant
accounting policies and other explanatory information, 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.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal controls as the directors determine are necessary to enable the
preparation of the financial report that is free from material misstatement, whether due to fraud or
error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
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. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor's 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, the auditor considers 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.
Liability limited by a scheme approved
under Professional Standards
Legislation
119
Independent Auditor’s Report – Continued
Opinion
In our opinion:
a.
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 consolidated entity's financial position as at 30 April
2012 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations
2001; and
b.
the financial report also complies with International Financial Reporting Standards as
disclosed in Note 2.
Report on the remuneration report
We have audited the Remuneration Report included in pages 40 to 55 of the directors' report for the
year ended 30 April 2012. 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.
Opinion
In our opinion, the Remuneration Report of Metcash Limited for the year ended 30 April 2012,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
Michael J Wright
Partner
Sydney
28 June 2012
Metcash Annual Report 2012
120
ASX Additional Information – Year ended 30 April 2012
Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is as follows:
The information is current as at 10 July 2012.
Distribution of Equity Securities
The number of shareholders, by size of holding, in each class of shares is:
Size of Holding
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001–9,999,999,999
Total
Number of shareholders
8,643
22,621
7,251
4,949
177
43,641
The were 3,091 shareholders holding less than a marketable parcel of Metcash ordinary shares.
Twenty largest shareholders
The names of the 20 largest holders of quoted shares are:
Name
Number
of Shares
Percentage
of Shares
192,241,433
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
132,647,555
NATIONAL NOMINEES LIMITED
105,662,543
J P MORGAN NOMINEES AUSTRALIA LIMITED
34,874,249
CITICORP NOMINEES PTY LIMITED
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED 18,267,434
8,446,757
JP MORGAN NOMINEES AUSTRALIA LIMITED
8,065,000
COGENT NOMINEES PTY LIMITED
7,914,662
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
7,307,097
AMP LIFE LIMITED
7,038,973
CITICORP NOMINEES PTY LIMITED
6,654,331
COGENT NOMINEES PTY LIMITED
6,138,502
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 3
6,052,873
CS FOURTH NOMINEES PTY LTD
5,057,000
COGENT NOMINEES PTY LIMITED
4,784,833
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
4,784,560
MILTON CORPORATION LIMITED
4,266,165
RBC DEXIA INVESTOR SERVICES AUSTRALIANOMINEES PTY LIMITED
4,239,855
PAN AUSTRALIAN NOMINEES PTY LIMITED
3,600,000
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
3,084,933
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
22.245
15.349
12.227
4.035
2.114
0.977
0.933
0.916
0.846
0.815
0.770
0.710
0.700
0.585
0.554
0.554
0.494
0.491
0.417
0.357
571,128,755
66.087
Substantial shareholders
The following is extracted from the Company’s register of substantial shareholders:
Deutsche Bank AG
National Australia Bank Limited Group
Voting Rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
Number of shares
47,922,622
49,179,774
121
Corporate
Information
ABN 32 112 073 480
Directors
Peter Barnes (Chairman)
Andrew Reitzer (CEO)
Fiona Balfour
Michael Butler
Neil Hamilton
Edwin Jankelowitz
Ian Morrice (from 12 June 2012)
Richard Longes
V Dudley Rubin
Company Secretary
Greg Watson
Registered Office
50 Waterloo Road
Macquarie Park NSW 2113
Telephone: 61 2 9751 8200
Share Register
Boardroom Pty 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 9741 3027
50 Waterloo Road
Macquarie Park NSW 2113
Postal Address
PO Box 6226, Silverwater Business Centre,
Silverwater, NSW 1811
Metcash Food & Grocery
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,
Silverwater, NSW 1811
Australian Liquor Marketers
Head Office
Ph: 61 2 9741 3000
Fax: 61 2 9741 3009
4 Newington Road
Silverwater NSW 2128
Postal Address
PO Box 6226, Silverwater Business Centre,
Silverwater, NSW 1811
Mitre 10
Head Office
Ph: 61 3 9703 4200
Fax: 61 3 9703 4222
12 Dansu Court
Hallam VIC 3803
Postal Address
Locked Bag 10, Doveton VIC 3177
Automotive Brands Group
Head Office
72-92 Station Street
Nunawading VIC 3131
Ph: 61 3 8878 1111
Fax: 61 3 8878 2266
www.metcash.com