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Amcon Distributing CompanyM e t c a s h i L m i t e d A n n u a l R e p o r t 2 0 1 7 A B N 3 2 1 1 2 0 7 3 4 8 0 Annual Report 2017 Successful Independents Metcash is Australia’s leading wholesaler and distributor, supplying and supporting more than 10,000* Independent Retailers across the food, grocery, liquor and hardware sectors. Our focus is to support Successful Independents to become the ‘Best Store in Town’, by providing our network of strong retail brands with merchandising, operational and marketing support. About us .................................. 2 Chairman’s Report ................... 4 CEO’s Report ........................... 6 Financial Highlights .............. 10 Logistics ................................ 12 Food ...................................... 14 Liquor .................................... 16 Hardware .............................. 18 CSR ....................................... 20 Our people............................. 24 Financial Report .................... 26 Corporate Information ......... 105 * Number of Independent Retail customers 1 #About us About us Our purpose Successful independents Our vision Best store in every town – – Differentiated offer & service Celebrating Individuality – Loved by locals Business partner of choice for suppliers and independents – Australia’s leading portfolio of independent retail brands – World class wholesaler Passionate about independents – Unlocking the potential of our people – Inspiring future leaders Thriving communities, giving shoppers choice – – Championing local entrepreneurs Pipeline of aspiring new business owners – Sustainable Our distribution network Our national distribution network delivers products to more than 10,000 retail premises and a further ~95,000 wholesale customers across the food, grocery, liquor and hardware markets. Our Independent Retail and wholesale customers are supported by distribution centres in each of the major cities, as well as a number of smaller distribution centres in regional areas. Our values Integrity is our foundation Our retail footprint – Supporting our customers and suppliers – Our people are empowered and accountable – Adding value in our community Supermarkets Convenience Hardware Liquor 1 Includes 5,468 Cellarbrations on-premise customers No of Retail Premises 1,683 18 740 7,9851 No of Wholesale Customers >1,400 >90,000 >500 >3,800 Our model Our markets Our retail brands Independence is worth fighting for! M e t cash tailer Shopper led S u p r e p l i R e 2 Food Liquor Hardware 3 #Chairman’s Report Rob Murray Chairman Chairman’s Report I am pleased to present Metcash’s Annual Report for 2017, a year of achievement, change and challenge for the company. During the year we faced some of the most difficult external conditions in our history, particularly in Supermarkets where the continuation of intense competition led to price deflation at very high levels. Our ability to deliver some pleasing financial outcomes and continue to successfully execute our strategic initiatives in these conditions is, I believe, admirable. Our strategy continues to focus on ensuring that independent family-owned retail businesses can thrive across the markets we serve. Key to this is supporting our retail customers to be the ‘Best Store in Town’ with a localised, differentiated offer that is tailored to their local community. We made significant progress in the year with our ‘Best Store in Town’ initiatives, including a further 100 stores completing Supermarkets’ Diamond Store Accelerator program, and an additional 10 stores completing the Sapphire Store Refurbishment program in Hardware. These have led to some truly remarkable stores that are receiving strong customer support. We have provided some more information on our ‘Best Store in Town’ initiatives, together with some case studies profiling how the stores are benefiting from the transformations on pages 14 to 19 of this Annual Report. I hope you find this informative. Earnings performance Underlying profit after tax for the year increased 9.3% over the prior year to $194.8 million. This excludes $22.9 million of costs related to the acquisition and integration of the Home Timber & Hardware Group (HTH), as well as restructuring costs related to our Working Smarter program aimed at simplifying the way we do business. Underlying earnings per share was 20.3 cents, and 17.9 cents including the $22.9 million of costs mentioned above. The success of our Working Smarter program in the year reflects considerable effort and dedication from our people. The importance of this work in the context of the current external environment cannot be underestimated. Acquisition of HTH The acquisition of HTH is very exciting for us. Not only is it a quality national hardware operation, it is also complementary to our Mitre 10 business. The increased scale it provides through the creation of Australia’s second largest hardware player, enables the expanded network to operate more efficiently and competitively. While the acquisition creates new attractive growth opportunities we will look to pursue, our immediate focus is to ensure the integration of the two businesses continues to be smooth and deliver on our expectations. We have a very capable team that is doing a great job, and I am confident this will be achieved. The acquisition is also important for the diversification it provides to our Group earnings, which is in line with our strategic focus on ensuring the financial position of the company remains strong and resilient. 4 Our strategy continues to focus on ensuring that independent family-owned retail businesses can thrive across the markets we serve. We also have a strong focus on organisational culture and employee engagement which is helping underpin our performance. We have a well established program in this area, with a high level of employee participation, which importantly includes the Board and senior leadership team. Your Board continues to be actively involved in this area and was rated highly by both management and external stakeholders in the engagement survey. Earlier this month we announced that Jeff Adams will succeed Ian Morrice as Group Chief Executive, following earlier advice from Ian that he intended to retire from the role in 2018. Ian has held this position since June 2013, and has overseen the repositioning of the company through a consumer focus, a strong balance sheet and a very capable management team to take the business forward. He also led transformation initiatives that have seen many of our Independent Retail customers improve their competitive position. I would like to sincerely thank Ian for his significant effort and achievements. Jeff has broad international experience in the retail and wholesale industries and is ideally suited to lead the company’s continued focus on supporting the success of Independent Retailers. We look forward to Jeff joining us in September this year. On behalf of the Board, I would like to thank our people, the leadership team and all of our partner suppliers and retailers for their ongoing support as we work to ensure a sustainable and healthy Independent Retailer network. I would also like to recognise the support and contribution of my fellow Directors. Together, we have formed a hardworking and cohesive team. Rob Murray Chairman Balance sheet strength The financial highlight for the year was our strong cash performance. This, together with equity raised to partly fund the HTH acquisition, were the key drivers of net debt reducing a further $194.7 million to $80.8 million. Strengthening our financial position has been a strategic priority for a number of years, and it is pleasing to report that we have reduced net debt by ~$690 million since FY14. This is a significant achievement. We now have a very strong financial position, and this underpinned the Board’s decision to bring forward the recommencement of dividends with the declaration of a 4.5 cent per share fully franked final dividend for FY17. The Board has also decided to target a dividend payout ratio of 60% commencing in FY18, with interim and final dividends to be weighted similarly to prior practice. Remuneration We have continued to refine our remuneration framework to deliver market-aligned remuneration practices, including taking into consideration concerns raised at last year’s Annual General Meeting. These initiatives include a reduction in the weighting of the Short Term Incentive component in total remuneration, as well as the inclusion of more objective performance measures through moving to a balanced scorecard for all executives. Remuneration outcomes for the year include only one member of our Key Management Personnel (KMP) receiving an increase in fixed remuneration, and total bonuses paid to KMP in respect of FY17 being 44% lower than for the prior year. Fees for Non-Executive Directors were left at a consistent level for the fifth consecutive year. Further remuneration details can be found in our remuneration report commencing on page 37. Going forward, while there is still much to do, we are well positioned to weather the current difficult market conditions and pursue our growth opportunities and cost efficiencies. We have a strong financial foundation, our strategic initiatives are delivering and there is strong leadership through your Board and senior leadership team. 5 #CEO’s Report Ian Morrice Chief Executive Officer CEO’s Report T he last financial year was a very challenging one in many aspects, including highly competitive market conditions leading to increased price deflation, and market disruption from the closure of Masters’ hardware stores. In this context, there were many facets of our performance that were pleasing. The interests and values of Mitre 10 and HTH retailers are closely aligned. Our objective is to continue to build successful Independent Retailers and grow a vibrant independent hardware sector, for the long term. 6 From a financial perspective, the Group delivered growth in underlying earnings and strong cash inflows despite the market challenges, both creditable outcomes. Underlying profit after tax increased 9.3% to $194.8 million, reflecting continued earnings growth in Liquor, and in Hardware which benefited from the successful acquisition of Home Timber & Hardware (HTH). Our Food pillar delivered earnings in line with the prior year, despite facing price and new space competition at levels never before seen in the sector. Supporting Independent Retailers to be the ‘Best Store in Town’ is central to our strategic focus, and the past year saw significant progress on our retailer-centred initiatives. We, and our Independent Retailers, are very passionate about driving growth for their businesses, and I am encouraged to see the network continuing to invest in both new stores and upgrades at an increasing rate despite the difficult market conditions. In Supermarkets, there were 32 new store openings in the year, and a further 100 stores completed the Diamond Store Accelerator (DSA) refurbishment program. This brings total DSA completed stores to ~250, with another ~100 expected in FY18. The DSA refurbished stores are delivering impressive sales growth of well over 10%, on average. In Liquor, retailers have continued investing in the network, with 95 stores completing the ‘refresh’ program and a further 130 cool rooms upgraded, both aimed at improving the shopper experience. In Hardware, our Sapphire Store Refurbishment and upgrades and Core Ranging programs are both delivering strong sales growth. A further 10 stores were upgraded to Sapphire standards during the year, in line with our target. This brings the total completed so far to 22. Typically these Sapphire upgrades deliver greater than 15% uplift in sales per store. The challenging market and economic conditions have reinforced just how important it is that we deliver on our targeted savings from the Working Smarter program. Simplifying the way we operate, and at the same time reducing our costs, is crucial to ensure we remain competitive and meet the future needs of our customers, retailers and suppliers. This year we exceeded our savings target of $35 million, and I am very appreciative of the significant effort, understanding and resilience of our people as we continue to simplify and change the way we operate. Importantly, our cash performance for the year was very strong with operating cash flow of $304.6 million, an increase of $138.8 million on the prior year. This was a key driver of a $194.7 million reduction in net debt to $80.8 million. Debt reduction has been a priority for us in recent years, being a key component of our response to challenging market conditions. This year’s reduction means net debt has now decreased by ~$690 million since FY14. The strength of our financial position has us well placed for future investment in both growth and initiatives to drive cost efficiencies, and was a key factor in the Board bringing forward the recommencement of dividends. I would like to thank shareholders for their support in forgoing dividends over the last two years. The year was also a very important one in our history, with the acquisition of the HTH Group. Combining HTH with our Mitre 10 network has created the second largest Hardware business in Australia, with sales of more than $2 billion per annum. This increased scale has created significant synergy opportunities, and enables us to improve our competitive position and deliver better outcomes for both our independent Hardware retailers, and their customers. This acquisition will also be strongly earnings accretive for shareholders. Operating performance The Group generated sales revenue for the year of $14.12 billion, an increase of 5.4% on the prior year, which includes sales from HTH since its acquisition on 2 October, as well as sales from a 53rd trading week in FY17. Group EBIT increased 7.7% to $296.7 million, reflecting continued earnings growth in the Liquor and Hardware pillars. In Food, sales increased 0.6% to $9.18 billion. Excluding the 53rd week, sales were 1.3% lower than the prior year. Supermarkets sales increased 1.3% to $7.65 billion, and were 0.6% lower excluding the 53rd trading week as the uplift from our strategic initiatives and new store openings were more than offset by significant price deflation, the cycling of sold stores and store closures, increased competitor promotional activity, competitor entry into South Australia and Western Australia, and weak economic conditions in Western Australia. Convenience sales declined 2.7% to $1.53 billion, and were 4.5% down excluding the 53rd trading week due to the impact of lower volumes in both C-Store Distribution and Campbells. Food EBIT was in line with the prior year at $180.0 million. In Supermarkets, our Working Smarter savings enabled us to maintain margins by offsetting the impact of increased tobacco sales, which have lower margins. In Convenience, significant cost reductions from repositioning the business led to an improved 2H17, with earnings breaking even for the half. In Liquor, sales increased 3.5% to $3.33 billion, and were up 1.8% excluding the 53rd trading week. Our IBA (retail) bannered network continued to perform well with further improvement to the quality of stores despite difficult trading conditions. These included intense competition driven mainly by the large retail chains, and weak economic conditions in Western Australia. 7 CEO’s Report continued Safety Metcash continues to have a strong focus on workplace safety and reducing injury. I am pleased to report that the Lost Time Injury Frequency Rate for the year declined to 10.1 for the year, compared with 10.3 in the prior year. This reflects a decrease in the number of LTIs to 90, compared with 94 in the prior year. There was also a 44% reduction in our High Potential Incident measure for the year, which was a good improvement. We are determined to continue reducing our rate of injury and are driving greater automation of processes to reduce the risk of manual handling. We are also continuing to pursue increased awareness across our operations around the safety of our people. Outlook Group earnings for FY18 will cycle the inclusion of the 53rd trading week in FY17. In Liquor, we expect moderate growth in the overall Liquor market with the business remaining focused on building and improving the quality of its IBA (retail) bannered network. In Hardware, positive market conditions remain. The business continues to focus on delivering synergies related to the acquisition of HTH, and these are expected to be at the upper end of our targeted range of $15 million – $20 million (annualised) by the end of FY18. FY18 will also include a full year of earnings from HTH. Our Liquor business’ focus on converting existing wholesale customers to our IBA network included the acquisition of Thirsty Camel in NSW and Tasmania, and Big Bargain in Tasmania, bringing a combined 79 stores into the network. We also acquired Porters Liquor in the second half which added a further 21 stores to the IBA retail network. Liquor EBIT increased 7.9% to $67.0 million reflecting increased sales volumes, improved margins from the conversion of wholesale customers to the IBA network, savings from the Working Smarter program, and inclusion of the 53rd trading week. In Hardware, sales increased 52.3% to $1.61 billion, and includes seven months of sales from HTH. Mitre 10 sales increased 2.9%, or 1.4% excluding the 53rd week, underpinned by our “shopper led” initiatives. We are making great headway with our Competitive Pricing program and Digital Data and Insights initiatives, which are improving the competitiveness of our retailer network. Hardware EBIT increased 48% to $48.5 million reflecting a ~$12 million contribution from HTH in 2H17, and improved earnings in Mitre 10 due to increased sales volumes and cost efficiencies. Integrating two sizable businesses to create the Independent Hardware Group is a significant task. I am pleased to report that we are in line with our plan to complete the integration by the end of FY18. Our achievements to date are a testament to the quality and effort of our people, particularly our Hardware team. We have received strong support and goodwill from Independent Retailers, which is key to the integration. Other key areas such as property rationalisation, forming an integrated management structure, and merchandising synergies are also progressing well. Food EBIT $180.0m Liquor EBIT $67.0m Hardware EBIT $48.5m 8 $194.8m UNDERLYING PROFIT AFTER TAX In Food, we expect a continuation of the significant external headwinds experienced in FY17. The business will continue to progress initiatives to support Australian Independent Retailers to be the ‘Best Store in Town’. We expect Working Smarter savings to help mitigate the impact of difficult market conditions including price deflation, cost inflation and the necessary investment in new initiatives. We have good businesses, and very capable, passionate and enthusiastic people, retailers and suppliers. We have a strong balance sheet and see great opportunities ahead in each of our pillars. I feel very encouraged by what we have achieved this year, and positive about what can be achieved in the future. Our focus also remains on ensuring we continue to be the partner of choice for suppliers and Independent Retailers, and this is an important objective for each of our teams. Our independent network operates successfully through a very strong interdependency between Metcash as the wholesaler, our suppliers and our retailers. Competition remains intense, but by working closely with our supplier partners we can ensure that Independent Retailers are able to provide a competitive localised, differentiated offer that is tailored to their local community, enabling them to achieve ‘The Best Store in Town’ for their shoppers. I would like to sincerely thank all our people across the Metcash businesses for their considerable efforts, resilience and commitment during my time as CEO. It has been a real privilege to lead such a passionate team who fight for the success of independent family businesses every day. Finally, thank you to all our retail customers for your passion and belief in being the ‘Best Store in their Town’, and at the heart of the communities in which you operate. The success of independent family-owned businesses is core to our purpose of “Successful Independents”, and vital to the Australian economy and communities. Ian Morrice Chief Executive 9 #Financial Highlights Financial Highlights Strong financial position $14.12 billion GROUP SALES REVENUE $194.8m UNDERLYING PROFIT AFTER TAX $304.6m OPERATING CASHFLOW $80.8m NET DEBT 10 , $ 1 4 1 2 1 9 m . $ 1 9 4 8 m . $ 2 9 6 7 m . 2 0 3 c . $ 3 0 4 6 m . ($m) 13 14 15 16 17 13 14 15 16 17 13 14 15 16 17 13 14 15 16 17 13 14 15 16 17 Sales Revenue EBIT (Underlying) PAT (Underlying) EPS (Underlying) Operating cash flows Financial Performance Sales revenue ($m) Underlying EBIT ($m) Finance costs, net ($m) Underlying profit after tax ($m) Reported profit after tax ($m) Operating cash flows ($m) Cash realisation ratio (%) Financial Position Shareholder equity ($m) Net debt (hedged) ($m) Gearing ratio (net hedged) (%) Return on funds employed (%) Share Statistics Fully paid ordinary shares Weighted average ordinary shares Underlying earnings per share (cents) Reported earnings per share (cents) Dividends declared per share (cents) Dividend payout ratio (%) Other Statistics Number of employees (full-time equivalents) 1 FY17 includes a 53rd week of trading 20171 2016 2015 2014 2013 14,121.9 13,402.5 13,244.3 13,045.1 12,767.8 296.7 25.5 194.8 171.9 304.6 118% 275.4 27.0 178.3 216.5 165.8 70% 297.3 55.1 173.6 (384.2) 231.7 97% 368.4 57.3 218.4 169.2 388.7 137% 437.7 61.7 261.2 206.0 299.8 94% 1,637.4 1,369.1 1,156.6 1,594.0 1,624.2 80.8 4.7% 18.5% 975.6 958.8 20.3 17.9 4.5 22% 275.5 16.8% 16.5% 928.4 928.4 19.2 23.3 - - 667.8 36.6% 14.4% 928.4 907.0 19.1 (42.4) 6.5 34% 766.9 32.5% 15.8% 888.3 882.7 24.7 19.2 18.5 75% 719.8 30.7% 19.6% 880.7 859.7 30.4 24.0 28.0 92% 6,708 5,807 6,398 6,174 5,794 11 #Logistics Logistics Australia’s leading wholesaler Major Distribution Centre Smaller Distribution Centre 12 NRL fields can fit into one of our largest distribution centres at Huntingwood, NSW. We also make it more efficient for suppliers, whether they operate at a national or local level, to reach what would otherwise be a very diverse and disparate network of Independent Retailers. Widest distribution network in Australia Our Independent Retail and wholesale customers are supported by seven large distribution centres across the major cities, as well as smaller distribution centres in regional areas. Metcash has the widest retail distribution network in Australia. Housing grocery, convenience, hardware and liquor products, we service Independent Retailers in all corners of Australia, including; Cape York and Cooktown in the North East, Dampier and Broome in the North West, Albany and Denmark in the South West and Tarwin Lower and Foster in the South East. Along with capital cities and regional centres, Metcash also supports independents in areas that others don’t reach. We provide products to some of Australia’s remotest locations, such as Halls Creek WA, Coober Pedy SA, Tennant Creek NT, Cobar NSW to name just a few. World class wholesale distribution Across our people, processes, tools and systems, Metcash is investing to ensure that we continue to be Australia’s leading wholesaler. Key to our operational excellence is our investment in automation, with the introduction of new state of the art material handling systems in a number of our distribution centres. These systems improve safety, support Independent Retailers by improving efficiency and optimise Metcash’s cost to serve equation. Partner of choice for retailers and suppliers There is a very strong interdependency between Metcash as the wholesaler, our suppliers and our retailers. We work closely with our key supplier partners under a Vendor Managed Inventory program, which involves using supplier intelligence to ensure that we order optimum levels of stock to support our retail partners. Our world class operations in action Utilising our logistics flexibility to support the community of Beechworth Using our distribution capability to be ‘first to market’ with Coca-Cola No Sugar Partnering with Community Enterprises Queensland to supply Thursday Islands In early 2016, Beechworth Ritchies IGA was gutted after flames tore through the building leaving the local community without a supermarket. To ensure that residents could continue to have access to a local supermarket, a temporary store was quickly created out of little more than a tin shed. Ritchies and Metcash teams filled the temporary store quickly with deliveries made on a 12 pallet rigid perishable truck, as the store could only receive rigid vehicles due to its residential location. Metcash has been combining chilled, frozen, dry grocery and liquor on the one truck 3-4 times per week since the reopening. The store has performed very well and the new store re-build is underway. Early collaboration between Coca-Cola and Metcash’s merchandise and logistics teams and Independent Retailers, enabled Metcash to be first to market for the launch of Coca-Cola No Sugar in June 2017. The first to market opportunity involved the delivery of 67,553 cases and 798 pallets on 37 trucks, which were delivered within the first five hours of release. Over half of our extensive IGA retail network received Coca-Cola No Sugar within just four days of the product’s launch. Metcash in its supply to remote communities, services the Islanders Board of Community Enterprises Queensland (CEQ). We provide CEQ with approximately 320,000 cases of dry and perishable goods per annum for the Torres Straight Island Communities. We closely partner with CEQ to facilitate the organisation’s growth plans. Trucks travel over 40 million kilometres per year making Metcash deliveries to Independent Retailers throughout Australia. M etcash is a world class wholesaler supplying leading independent retail brands across Australia within the food, grocery, liquor and hardware sectors. Our people are our best asset, and we have around 5,000 of the company’s ~6,700 employees working in our wholesale distribution operations, dedicated to ensuring the best possible level of service to our extensive network of Independent Retail customers. By combining their buying power we are able to improve their competitive position against larger competitors. We are able to provide Independent Retailers with a competitive and efficient scale of operation across the wide range of products that we sell. 12 13 #Food Food Helping independent retailers thrive Best stores in town Super IGA: IGA: IGA-Xpress: Friendly Grocer/Eziway: Retail Stores: 397 823 206 257 M etcash has come a long way from its origins in 1924 as a standalone corner store in Sydney’s Wolloomooloo. Servicing over ~1,680 supermarket customers through bannered stores such as IGA, Foodland, Friendly Grocer and Eziway, Metcash offers a wide range of core wholesale grocery, fresh produce, meat, bakery and deli products. Our Convenience business comprises two integrated wholesale distribution arms established to service the Australian petrol and convenience sector across Australia; Campbells Wholesale & C-Store Distribution. ‘Best Store in Town’ The consumer is the central player in all our plans and with an ever changing retail landscape, Metcash’s continued focus is to support the success of our Independent Retail 14 customers, providing them with all the tools they need to become the ‘Best Store in Town’. Two key initiatives have been introduced in recent years with consumers in mind. Our Price Match program ensures that our pricing remains competitive with the major supermarket chains for both branded and private label products, and is now incorporated in ~1,000 supermarkets in the IGA network. Store environment is also a focus, and the Diamond Store Accelerator (DSA) program is a unified store refurbishment program across the IGA banner, which aims to improve the shopping experience for the customer. This places an increased emphasis on the amount of floor space given to fresh produce and ready-made meals, improves customer access and the overall layout of the store. To date over 250 refurbishments have been completed, and the majority of participating stores have witnessed a significant increase in sales as a result. Continued investment in the retail network led to 32 new stores opening during the year, and another ~35 new stores being in the pipeline for opening in FY18. Multi-store owners are also investing in new store formats that are tailored to meet the needs of their local community. Great examples of these are IGA’s Romeo’s Food Hall in Sydney’s CBD and Ritchies SUPA IGA in Dromana, Victoria (see opposite). Metcash also recently introduced a new mid-tier private label range called Community Co. The range offers 100 new products which seek to deliver greater value and quality to consumers while making a contribution to the community through the Community Chest Fund. Earnings performance* Including the benefit of a 53rd trading week, our Food business delivered underlying EBIT for the year of $180.0 million, in line with the prior year. Weak economic conditions in Western Australia and intense competition led to a continuation of difficult market conditions for the business. Sales improved 1.3% to $7.65 billion, and pleasingly our IGA retail sales on a like for like basis were positive for the third financial year in a row. *A full review of the financial results is presented in the Operating and Financial Review on pages 29 to 31 of the Annual Report. Taylor Road IGA IGA Romeo’s Food Hall Ritchies SUPA IGA Nedlands, WA Sydney, NSW Dromana, Victoria Designed to cater to the needs of city workers, commuters and people living in the inner-city, this one-of-a kind store, located in the business heart of Sydney, offers their customers a fresh, variety-driven range of delicious meals and snacks which they can buy on- the-go to eat at work or home. The Romeo’s passion for high quality, gourmet fresh food and tailored product has customers coming back every day – even twice a day! “This is the next step in retailing for the Romeo Group. It has been designed with choice and convenience at its core.” -Joseph Romeo James and Rita Kelly’s Taylor Road store has been designed so that customers’ five senses compete each time they walk in the store – colourful bursts of flowers, freshly brewed coffee and fresh baked muffins, are complemented by signature lines, with the store stocking in excess of 290 locally produced WA products. The store caters for the lunchtime and home-ward bound shoppers with ready-to-go meals including roast dinners, casseroles, gourmet pies and delicious salads created by in-house chefs. The store’s success also comes from servicing community needs, and going above and beyond when it comes to customer service. “Our success comes through creating an enjoyable shopping experience for our local community.” -James Kelly The Ritchies’ latest DSA store in Dromana is an up-market format full of fresh and unique products that clearly differentiates them from their competitors. The store showcases products such as artisan bread, hand- rolled sushi, dry-aged beef and even bespoke peanut butter. Less than a week after the store opening, sales were up 50 per cent on the same time last year as customers welcomed the up-market selection of cheese, bread, meat and ready-to- eat meals. “With customers shopping up to three to four times a week, independent stores are well positioned to benefit due to their convenient location, but only if the product range is right. We continue to see positive results from the investments in our store network. We have a focus on further upgrades and will use the proven DSA program which has been developed alongside Metcash.” - Fred Harrison 15 #Liquor Liquor Cellarbrations: Bottle-O/ Bottle-O Neighbourhood: IGA Liquor: Other: Retail Stores: 553 457 462 1,045 Helping independent retailers thrive Investing for growth Best stores in town M etcash is Australia’s largest broad range liquor wholesaler. Our Liquor pillar has two divisions; Australian Liquor Marketers (ALM) and Independent Brands Australia (IBA). The liquor division and its related businesses operate out of 15 distribution centres located in each state and territory in Australia, and in New Zealand. Australian Liquor Marketers (ALM) ALM is a broad range liquor wholesaler supplying approximately 12,000 hotels, liquor stores, restaurants and other licensed premises throughout Australia. It also has a specialist on-premise liquor division supplying bars, pubs, restaurants and hotels. 16 Independent Brands Australia (IBA) Our IBA banner group is the second largest retail group in Australia. It includes strong national brands with a framework that enables independent liquor retailers to compete equally with larger competitors, and support their long-term sustainability. We do this through group buying power, providing strong marketing support and promotional programs, and through a wide variety of retail services to ensure high store standards. Our IBA network includes 2,517 stores across brands such as Cellarbrations, The Bottle-O, IGA Liquor, Duncans, Thirsty Camel, Big Bargain and Porters. In FY17, sales to the IBA network represented ~55% of Liquor pillar sales. Both ALM and IBA work to support Independent Retailers provide end customers with a competitively priced, extensive liquor range. This includes providing the most efficient and cost effective supply chain possible. ‘Best Store in Town’ The smaller store format, and localised product range of our IBA retailer network, continue to position our network well for the shopper trend of buying smaller quantities per visit, but shopping more often. Our product range is tailored to reflect our local customers’ requirements from both a range and price perspective, and there is a key focus on providing shoppers with knowledgeable friendly service. The network continues to invest in improving the shopper experience, and FY17 saw a further ~95 stores complete the store refresh program, and ~130 stores underwent upgrades to their cool rooms. Earnings performance* Our Liquor business continued to grow earnings with EBIT up 7.9% to $67.0 million for the year. Sales increased 3.5% to $3.33 billion and like-for-like sales in our IBA bannered network increased 1.7%. The IBA bannered network has recorded sales at a compound annual growth rate of ~7% over the past three years. Investing for growth We continued to focus on converting existing wholesale customers to our IBA network as well as progressing our consolidation strategy. This included the acquisition of Thirsty Camel in NSW and Tasmania, Big Bargain in Tasmania, and the acquisition of Porters Liquor. IBA will continue to apply the best retail offer by location to maximise the sales of our independent retail customers. Porters Liquor Porters Liquor is a well-recognised premium brand, positioned to capitalise on the growing trend to higher quality products. It now forms part of our IBA banner group, and provides significant growth opportunity for our Liquor business. This includes a potential expansion in store footprint from 30 to around 100 nationally. Montrose IGA Plus Liquor The Bottle-O Wyee Cellars Montrose, VIC Wyee NSW Based at the foot of the Yarra Valley, Brad Munro has transformed IGA Montrose into a destination store for shoppers looking for premium wine, spirits and craft beer local to that region. The personalised service shoppers get from the Montrose IGA team, showcases their product knowledge, and along with their newly launched ‘Cellar Selections’ premium range, shoppers now have access to a truly localised offer. “We sought to be the best liquor store in the area, and have achieved this through the creation of our differentiated localised offer, together with personalised service and in-depth knowledge on products, especially local wines, beers and spirits.” - Brad Munro Chris Jameson recently relocated and renovated her Bottle-O store at Wyee, NSW to the highest standard, and it is now a standout at the Wyee community shopping centre. The new store has an extended product range tailored to the local community, and together with high service levels, is attracting significantly more customers than when operating from the original store. The upgraded store has now become a repeat finalist in the NSW IBA Bottle-O of the year awards. “Our new store is proving very popular with local shoppers and we have seen sales grow more than 25%. Staying close to our customers and market trends, and having the flexibility to adapt is key to our success.” - Chris Jameson *A full review of the financial results is presented in the Operating and Financial Review on pages 29 to 31 of the Annual Report. 17 #Hardware Hardware Mitre 10: HTH and related brands: True Value Hardware: Retail Stores: 372 368 67 Helping independent retailers thrive Best stores in town I n October 2016, Metcash purchased the Home Timber & Hardware Group which, combined with our Mitre 10 business, created the second largest player in the Australian Hardware market. The combined business, named the Independent Hardware Group (IHG) is a wholesaler and distributor with sales of more than $2 billion, servicing ~740 bannered stores and over 500 un-bannered stores. It is the largest channel of independent home improvement and hardware operators in Australia, with trade sales as its strength. Our store network ranges from large format warehouses to smaller format convenience operations, trade centres and frame and truss sites, each catering to a broad mix of trade and DIY consumers. Under the IHG network, we have a clear mandate to support the growth of Independents within the hardware sector in Australia. Our culture is built on being a low-cost and transparent business partner to our members. Partnership is also the culture on which the relationship with our suppliers is founded. ‘Best Store in Town’ IHG is committed to supporting our independent store owners to be ‘The Best Store in Town’. This means having a differentiated store offer that includes being locally owned, with a tailored ‘shopper led’ range of competitively priced products, together with superior customer service and convenient store layouts with high standards. The rollout of our Sapphire Store Refurbishment program in Mitre 10 continued during the year, with investment in a further 10 stores. This takes the total stores upgraded to Sapphire standard to 22, with the average sales uplift for these stores ~17%. Our Core Ranging program, which includes offering customers more choice, has now been implemented in over 50 stores and is delivering strong sales growth across key ranges such as fasteners, hand tools, power tools, paint and cement. Earnings performance* Our Hardware business continued to deliver earnings growth with EBIT of $48.5 million for the year, up from $32.8 million in the prior year. This included $12 million of EBIT from HTH for the period since acquisition, and increased earnings in Mitre 10. 18 *A full review of the financial results is presented in the Operating and Financial Review on pages 29 to 31 of the Annual Report. Johnson Brothers Mitre 10 Womersley’s Mitre 10 Provans Home Timber and Hardware Mona Vale NSW Chelsea VIC Clifton Hill VIC Johnson Brothers have been servicing Sydney’s local Northern Beaches community for over 60 years. This year they opened a new ‘Best Store in Town’, relocating their existing store to larger premises to cater for their growing Trade and DIY business. In addition to its high store standards and ‘shopper led range’ of competitively priced products, the site now has separate trade and retail entrances, an undercover drive through, a trade paint offer, and a garden centre as well as 150+ parking spots. “Our upgraded store format is proving very popular with customers and we are seeing good sales growth” - Ged Johnson The Womersley family is one of the founders of the Mitre 10 business. With their Chelsea store positioned in close proximity to a large Hardware chain competitor, the family embarked on a transformation of the store through Metcash’s Sapphire program in 2016 to improve its competitiveness. The store has experienced good growth through its focus on high store standards, including providing ‘Mighty Helpful’ service and having a strong differentiated offer for its trade customers. “With competition close by, our Sapphire store upgrade and our strong trade offer are helping deliver a competitive business that is tailored to our local customer base.” - Peter Womersley With its origin dating back to the 1880s, the Provans store has been in Barry Rosenburg’s family for more than two generations. Barry’s store became part of the IHG Group following the acquisition of HTH last October, and is a great example of being the ‘Best Store in Town’. Provans has a reputation for being the leading supplier to the trade in Melbourne for restoring heritage houses. Around 90% of the stores sales are to trade customers, and the store is ideally set up to ensure its extensive timber offer remains under cover during collection, and that tradies can move through the site quickly. The high level of service, product offer and store standards saw Provans awarded Home Time & Hardware’s “Store of the Year” in 2017. “We recognise the benefits of scale and are pleased to be part of the larger IHG network” - Barry Rosenberg 19 #Corporate Social Responsibility #CSR Corporate Social Responsibility Supporting local communities T he Metcash business has always been driven by its strong connection to the communities we serve. For us, good Corporate Social Responsibility is about our role within the broader community, our connections within it and supporting our locals to be the heart and soul of communities right around the country. We focus on having an integrated approach to community initiatives, partnering with our customers, suppliers and people to strengthen our level of engagement. We acknowledge responsibility for the impact our business operations may have on the environment, and continue to pursue opportunities to reduce this. Our communities A key element of our vision is to support communities to thrive. Engaging and supporting our communities and our customers to help deliver this vision is an integral part of what we do. Our support includes financial donations through our Independent Retailer network, the donation of staff time, and the donation of food and products to those in our communities who are most vulnerable. Our Independent Retailer network has donated over $80 million into local communities over the past 25 years through the Community Chest Fund. This has supported over 7,000 charities at a national, state and local level, including schools, sporting clubs, country fire services, hospitals and disaster relief services. 20 Many communities have benefited from the purchase of much needed medical equipment, school equipment, local fire-fighting equipment as well as through disaster relief support such as food and gift vouchers. During the year, IGA’s across NSW and the ACT donated $150,000 to the Humpty Dumpty Foundation to support the purchase of medical equipment for hospitals. In Victoria, the IGA network donated $50,000 to the Royal Children’s Hospital Good Friday Appeal. The IGA network has a proud history of supporting local communities in times of need. During the year, the Queensland IGA network donated $100,000 in gift cards to residents affected by Cyclone Debbie. In the worst impacted areas, IGA West Mackay, SUPA IGA Sarina, SUPA IGA Bowen and SUPA IGA Proserpine donated our Community Co water and UHT long life milk to local SES centres to assist those impacted by the cyclone. At a national level, we have long- standing support partnerships with the Special Olympics, St Vincent de Paul and the McGrath Foundation. All three charities received both in kind support through staff volunteerism, as well as financial support. We also have a long-standing partnership with Foodbank. Foodbank rescues surplus but edible food and groceries from the country’s farmers, manufacturers and retailers, and donates this to over 2,600 charities and 1,750 schools. Since 2012, Metcash has donated over one million kilograms of food to Foodbank. Living healthier lives – promoting healthy families and healthy communities As we aspire to be healthier and happier, it is important that we deliver nutritious healthy food options, as well as supporting educational materials on food and living a healthy lifestyle. Under the IGA Family Program, we strive to support local communities by providing members with tools to promote healthy lifestyles for a healthier, happier Australia. This includes providing communities with access to healthy and affordable recipes, arts and craft activities that encourage creativity and recycling, fact sheets to teach children about the origins of food, as well as special offers to help our members shop to a budget. Since the program’s inception one year ago, over 16,000 families have become members of the IGA Family Program. Special Olympics - celebrating a 25 year partnership with IGA Sallie Jones from Gippsland Jersey, our IGA Family program Ambassador, providing members with nutritious recipes using milk from her farm Safety and wellbeing The safety and health of our people, contractors and visitors is at the core of everything we do. We continue to strive for improvement and to be world class in safety. During the year we implemented additional initiatives to improve our safety performance, including progressing greater automation of processes to reduce the risk of manual handling, as well as increasing awareness across our operations around the safety of our people, contractors and visitors. Our Lost Time Injury Frequency Rate (LTIFR) reduced to 10.1 for the year, from a LTIFR of 10.3 in the prior year . This reflects a decrease in the number of LTIs to 90, compared with 94 in the prior year. There was also a significant reduction in our High Potential Incident measure, which reduced from 63 incidents in the prior year to 35 in FY17. In addition to safety, the wellbeing of our people is a top priority. Reflecting this, the company provides the opportunity for employees to access a range of employee benefits to promote the wellbeing of our employees. These include wellbeing leave days, volunteering days, flexible working arrangements, counselling services, paid parental leave and allowing eligible employees to access an additional week of leave per year. 25 20 15 10 5 0 250 200 150 100 50 0 12 13 14 15 16 17 12 13 14 15 16 17 Lost Time Injury Frequency Rate Lost Time Injuries The LTIFR for FY16 has been restated from 8.5 to 10.3 following a review of our safety statistics reporting carried out by PwC. 21 IGA Marketing team volunteer day helping to support Vinnies Metcash donates to Foodbank IGA Retailers supporting the Humpty Dumpty Foundation through Community Chest donations Energy and emissions Waste and packaging Our energy savings initiatives have delivered a 6.3% reduction in emissions at our Distribution Centres, which account for the majority of the company’s energy consumption. The driver of this improvement was the implementation of a number of energy savings projects, including LED lighting retrofitting and the implementation of monitoring programs to review energy usage on a regular basis. Energy reduction is an ongoing priority for us, and we are optimistic that further opportunities will arise through the use of more energy efficient technologies that are currently under review. Waste and its diversion to recycling is an important area of focus for our business, and we are proud to play a stewardship role in these areas. We are committed to the Australian Packaging Covenant, and continue to work closely with our partner suppliers to reduce the volume of product packaging. Our programs to increase the amount of material that is recycled, rather than being sent to landfill, are delivering good results. This year we diverted ~16% of waste from landfill. We are committed to improving our performance in these areas, and further opportunities are being developed by work teams, primarily at our distribution centres. Diversity, inclusion and our people Inclusion and diversity are fundamental to our culture and core values. We recognise that each person has unique strengths, and that high performance is underpinned by embracing those strengths. In addition to being a member of the Diversity Council of Australia (DCA), the company has established a Diversity and Inclusion Council that is responsible for driving greater awareness of diversity and inclusion across the organisation, as well as creating a comprehensive action plan for the Metcash group. We believe that encouraging diversity will contribute to high performance by driving business results, encouraging greater innovation, and by attracting, recruiting, engaging and retaining a diverse team of high quality people. The Metcash workforce is currently comprised of 33% females and 67% males. Women now hold 30% of all senior manager roles in the company. Woman account for 43% of the Metcash Board of Directors, which is well ahead of the ASX 200 average. Sourcing with integrity As a business we are responding to the expectations of our communities, this has been evidenced by the launch of the Community Co brand during the year which seeks to deliver greater value and quality to consumers. Fundamental to this is ensuring that our products are developed in accordance with expectations including responsible sourcing. Our progress in responsible sourcing included the following during the year: > > > > > Use of 100% Certified Sustainable Palm Oil (CSPO) across our private label brands. This includes a mix of mass balance and segregated palm oil. Sourcing the majority of our Tuna using sustainable fishing methods (FAD Free) Ensuring that 100% of our private label brand tissues, toilet paper and kitchen towels are sourced from third-party certified sustainable sources The introduction of sow stall free pork in our Community Co range Significant progress towards our target of achieving 100% cage free eggs in our private label brands by 2018 We are a member of the Roundtable on Sustainable Palm Oil (RSPO), and continue to work with our suppliers to ensure that Palm Oil used in our private label products is from sustainable sources. Our environment We are committed to reducing our impact on the environment, and work with our people, suppliers and customers to identify areas for improvement. We report annually against a number of compulsory and voluntary programs, including: > > > > > Dow Jones Sustainability Index (DJSI) Carbon Disclosure Project (CDP) National Greenhouse and Energy Reporting Act (NGERS) Australian Packaging Covenant (APC) Western Australian Waterwise Business Program There were no breaches of environmental laws or regulations in the year. 22 23 #Our people #Our board Our people Senior management Our board Ian Morrice MBA CEO Metcash Group Ian has over three decades of retail experience as Managing Director, Trading Director and Retail Director for some of the UK’s leading retailers, including the Kingfisher Group and Dixons Retail. Ian was Group Chief Executive Officer and Group Managing Director of New Zealand’s Warehouse Group. Steven Cain M.Eng CEO Supermarkets & Convenience Steven joined Metcash in 2015 with significant local & international business experience through previous directorships at Coles, Asda (UK), Pacific EquIty Partners & ITV (UK). Steven has attended management programs at Harvard & London Business Schools, and has a Master of Chemical Engineering Degree from Imperial College London. Mark Laidlaw B.Ec, CPA CEO Independent Hardware Group Mark joined Metcash in 2001 and was appointed CEO of Mitre 10 Australia in May 2010. Mark has extensive experience in general management, sales, operations and commercial management and prior to joining Metcash, Mark worked for Mobil Oil. Scott Marshall B.Business CEO Australian Liquor Marketers Scott began his career with Metcash in the ALM business 24 years ago and was appointed CEO of ALM in December 2013. His areas of experience cover warehousing operations and management, sales, retail operations, state general management and marketing management. Robert Murray MA Hons, Economics (Cantab) Ian Morrice MBA Patrick Allaway BA, LLB Non-executive Chairman CEO, Executive Director Non-executive Director Chair of the Nomination Committee. Chair of the Audit, Risk & Compliance Committee, Member of the Nomination Committee. Fiona Balfour BA (Hons), MBA, Grad Dip IM, FAICD Non-executive Director Chair of People & Culture Committee, Member of the Nomination Committee. Brad Soller B.Comm, B.Acc, M.Comm, CA (SA) CFO Metcash Group Brad joined Metcash in January 2015 and prior to that was the CFO of David Jones and CFO of Lendlease. Brad is a Chartered Accountant having worked with PwC in both London and Johannesburg. Linda Venables B.Sc Hons Edwin Gear B.Sc, MBA Penny Coates BA Hons, Chartered Fellow CIPD, GAICD Chief Logistics Officer – Food & Liquor Linda started with Metcash in October 2013 and was appointed Chief Logistics Officer in February 2015. Linda’s career spans both FMCG and Retail, including 3rd party logistics in Europe and the Australian retail market. Linda also has extensive systems implementation, program management and M&A experience. Chief Information Officer Chief People & Culture Officer Edwin joined Metcash in 2014 and was appointed as Group CIO in April 2015. Edwin is responsible for IT’s cross- functional collaboration with group companies. Before joining Metcash Edwin held various executive roles in merchandising, logistics and technology with Foodstuffs Wellington and Mitre10 in New Zealand and Supergroup in South Africa. Penny joined Metcash in 2015 as Chief People & Culture Officer. Penny has extensive international HR and line management experience gained in the retail, financial services and professional services industries. Prior to joining Metcash Penny worked for TAL as their Chief Customer Service & Operations Officer. Tonianne Dwyer BJuris Hons, LLB Hons, GAICD Non-executive Director Member of the Audit, Risk & Compliance Committee, Member of the Nomination Committee. Murray Jordan MPA Non-executive Director Member of the Audit, Risk & Compliance Committee, Member of the Nomination Committee and People & Culture Committee. Helen Nash BA Hons, GAICD Non-executive Director Member of the People & Culture Committee, Member of the Nomination Committee. Julie Hutton B Asian Studies (Viet), LLB, LLM, GAICD Company Secretary For Directors’ biographies, please see page 34 of the Annual Report. For more information on Board evaluation, please refer to the Corporate Governance page on our website: www.metcash.com/corporate-governance 24 25 #Financial Report Financial Report For the year ended 30 April 2017 Contents Directors’ Report Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Auditor’s Independence Declaration Independent Auditor’s Report 27 54 55 56 57 58 96 97 98 26 For the year ended 30 April 2017 Directors’ Report • • • • 27 Directors’ Report (continued) For the year ended 30 April 2017 28 29 Directors’ Report (continued) For the year ended 30 April 2017 30 31 Directors’ Report (continued) For the year ended 30 April 2017 32 33 Directors’ Report (continued) For the year ended 30 April 2017 34 35 Directors’ Report (continued) For the year ended 30 April 2017 36 37 Directors’ Report (continued) For the year ended 30 April 2017 • • • • • • • • • • • 38 39 Directors’ Report (continued) For the year ended 30 April 2017 • • • • • • • • • 40 41 Directors’ Report (continued) For the year ended 30 April 2017 • • • • 42 43 Directors’ Report (continued) For the year ended 30 April 2017 44 45 Directors’ Report (continued) For the year ended 30 April 2017 46 47 Directors’ Report (continued) For the year ended 30 April 2017 48 • • • • • • • 49 Directors’ Report (continued) For the year ended 30 April 2017 50 51 Directors’ Report (continued) For the year ended 30 April 2017 97 52 53 Statement of comprehensive income For the year ended 30 April 2017 Statement of financial position As at 30 April 2017 54 55 Statement of changes in equity For the year ended 30 April 2017 Statement of cashflows For the year ended 30 April 2017 56 57 Notes to the financial statements For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 • • • 58 59 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 60 61 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 62 63 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 64 65 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 66 • • • 67 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 • • • 68 69 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 70 71 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 • • • • 72 73 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 74 75 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 76 77 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 78 79 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 • • • • • • • • 80 81 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 82 83 Notes to the financial statements (continued) For the year ended 30 April 2017 84 Notes to the financial statements (continued) For the year ended 30 April 2017 • • • 85 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 • • 86 87 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 88 89 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 • • • • 90 • • • 91 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 92 93 Notes to the financial statements (continued) For the year ended 30 April 2017 Notes to the financial statements (continued) For the year ended 30 April 2017 94 95 Directors’ declaration For the year ended 30 April 2017 96 97 98 99 100 101 • • • • • • 39 52 102 103 ASX Information Year ended 30 April 2017 Corporate Information ABN 32 112 073 480 Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is as follows: The information is current as at 30 June 2017: Distribution of Equity Securities The number of shareholders, by size of holding, in each class of share is: Size of Holding 1-1,000 1,001-5,000 5,001-10,000 Number Of Shareholders Size of Holding Number Of Shareholders 6,445 11,990 4,407 10,001-100,000 100,001-9,999,999,999 Total 3,731 156 26,729 There were 1,414 shareholders holding less than a marketable parcel of Metcash ordinary shares. Twenty largest holders of quoted shares The names of the 20 largest holders of quoted shares are: Number Of Shares Percentage Of Shares Name HSBC Custody Nominees J P Morgan Nominees Australia Citicorp Nominees Pty Limited National Nominees Limited BNP Paribas Nominees Pty Ltd BNP Paribas Noms Pty Ltd Bond Street Custodians Limited HSBC Custody Nominees Citicorp Nominees Pty Limited BNP Paribas Nominees Pty Ltd Buttonwood Nominees Pty Ltd RBC Investor Services UBS Nominees Pty Ltd Bainpro Nominees Pty Limited HSBC Custody Nominees Ecapital Nominees Pty Limited Bond Street Custodians Ltd National Nominees Limited HSBC Custody Nominees Powerwrap Limited Total Substantial Shareholders The following is extracted from the Company’s register of substantial shareholders: Number Of Shares Allan Gray Australia Pty Ltd 148,303,522 Macquarie Group Limited BT Investment Management Limited 124,840,430 Dimensional Equities Lazard Asset Management Pacific Co 60,146,842 JPMorgan Chase & Co. Voting Rights All ordinary shares (whether fully paid or not) carry one vote per share without restriction. 104 394,056,393 154,760,650 104,491,061 37,876,122 23,168,728 19,701,687 9,158,056 8,623,107 7,899,631 4,950,000 4,400,000 4,337,923 3,759,613 2,043,954 2,013,641 1,841,874 1,477,298 1,396,324 1,284,713 998,219 788,238,994 40.389% 15.862% 10.710% 3.882% 2.375% 2.019% 0.939% 0.884% 0.810% 0.507% 0.451% 0.445% 0.385% 0.209% 0.206% 0.189% 0.151% 0.143% 0.132% 0.102% 80.792% Number Of Shares 59,492,070 48,864,690 48,853,745 m o c . o h c n o m n a e d / o h c n o m n a e d : © y h p a r g o t o h P . u a m o c . e v i t a e r c o h c n o m : n g i s e D Directors Robert Murray (Chair) Ian Morrice (Group CEO) Patrick Allaway Fiona Balfour Tonianne Dwyer Murray Jordan Helen Nash Company Secretary Julie Hutton Share Register Boardroom Pty Limited GPO Box 3993 Sydney NSW 2001 1300 737 760 61 2 9290 9600 Auditor Ernst & Young 200 George Street Sydney NSW 2000 Australia Metcash Food & Grocery (Head Office) 1 Thomas Holt Drive Macquarie Park NSW 2113 61 2 9741 3000 PO Box 557 Macquarie Park NSW 1670 Australian Liquor Marketers (Head Office) 1 Thomas Holt Drive Macquarie Park NSW 2113 61 2 9741 3000 PO Box 557 Macquarie Park NSW 1670 Independent Hardware Group (Head Office) 15 Corporate Drive Heatherton VIC 3202 61 2 9248 5555 61 3 9264 5000 National Office 1 Thomas Holt Drive Macquarie Park NSW 2113 PO Box 557 Macquarie Park NSW 1670 61 2 9741 3000 www.metcash.com Locked Bag 10 Doveton VIC 3177 Corporate Governance A copy of the Corporate Governance Statement can be found on our website. Visit www.metcash.com/ investor-centre/corporate-information/ corporategovernance. 105 www.metcash.com
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